Seven Bank : Financial Results for the First Quarter of Fiscal 2020

Financial Results

for the First Quarter of Fiscal 2020

August 7, 2020

Seven Bank, Ltd.

1	Impact of Novel Coronavirus Infection

Today's Agenda

2

Results for First Quarter of Fiscal Year Ending March 31, 2021

3	Forecast for Fiscal Year
Ending March 31, 2021

1	Impact of Novel Coronavirus Infection

Today's Agenda

2

Results for First Quarter of Fiscal Year Ending March 31, 2021

3	Forecast for Fiscal Year
Ending March 31, 2021

Impact of Novel Coronavirus Infection (1)

The number of transactions at ATMs has been on a recovery trend since the lifting of the state of emergency,

but the outlook remains unpredictable.

Year-on-year change in monthly average
	transactions per ATM	106.2%
				105.5%
				103.0%
				102.3%
				100.9%
			100.0%
				March
			97.7%	March 25 [Tokyo] Request to
				voluntarily refrain from going
	95.6%	95.7%	95.5%	out on weekends
95.1%

April

April 7 [Government] State of emergency declared in seven prefectures

April 10 [Tokyo] Request for closures of various facilities

April 16 [Government] State of emergency extended nationwide

May

May 25 [Nationwide]

State of emergency lifted

101.2%101.1%

98.8%

93.2%

91.5%

July

July 15 [Tokyo]

Infection level reaches

the worst

July 22 [Excluding Tokyo] Go

To Travel campaign launched

2019/4	5	6	7	8	9	10	11	12	2020/1	2	3	4	5	6	7
									Copyright (c) 2020 Seven Bank, Ltd. All rights reserved.	3

Impact of Novel Coronavirus Infection (2)

Year-on-year change in monthly average
transactions per ATM
Nationwide: comparison by area	Comparison between the 7&i Group and others

100

70

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

April 7: Seven prefectures where the state of emergency was first declared Other

100

60

Jan.	Feb.	Mar.	Apr.	May	Jun.	July
	As of the end of		The 7&i Group		Outside the 7&i Group
	June 2020		22,844 units		2,416 units

Inside the 7&i Group: comparison by type of	Other than the 7&i Group: comparison by
outlets	location
100	100

0

0

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

7-Eleven

York-Benimaru

Sogo, Seibu

Food SM

Stations

Office buildings

Airports

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved.	4

Novel Coronavirus Infection Response Policy and Strategy

Response Policy

• Priority on safety and security of customers, business partners, and employees
• Ensure stable operation of ATMs, as social infrastructure, so that they would not stop
• Amid coexistence with the coronavirus, promote various innovations
  including in-house business process, work style, business administration

Strategy

Response that takes into account daily life with

the coronavirus and after the pandemic

Changes were accelerated after the spread of the coronavirus

Remote, non-face-to-face		Cashless
Online		Digitization

A world where diverse options are required

• Steadily accumulate measures essential for the future growth

Key fields	Individuals

BPOForeign residents

Corporate Security

ATM business

Further

evolution

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved.

5

1	Impact of Novel Coronavirus Infection

Today's Agenda

2

Results for First Quarter of Fiscal Year Ending March 31, 2021

3	Forecast for Fiscal year
Ending March 31, 2021

Financial Results Digest for First Quarter of

Fiscal Year Ending March 31, 2021

Results for the First Quarter of Fiscal

Year Ending March 31, 2021

• Both consolidated and non-consolidated(Seven Bank) income and profit declined

• Number of ATM transactions declined mainly due to the coronavirus crisis

(Year-on-year comparison of number of total ATM transactions in 1Q: down 4.8% in Japan, down 7.9% in the U.S.)

• Consolidated subsidiaries made profit contributions

• U.S. subsidiary FCTI achieved an increase in profit owing to the impact of controlling interest expenses, etc.

	Ordinary profit	[consolidated] ¥8.3 billion > [non-consolidated] ¥8.1 billion
	Net income	[consolidated] ¥6.7 billion > [non-consolidated] ¥5.6 billion

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved.	7

Income Statement (Consolidated)

 Declines in both income and profit		(Billion yen)
	Three months	Three months
	ended June 30,	ended June 30,
	2019	2020
	Changes from	Comparison
			FY19 1Q with FY19 1Q
Ordinary income	36.8	33.0	(3.8)	(10.3%)
Ordinary expenses	25.7	24.6	(1.1)	(4.2%)
Ordinary profit	11.1	8.3	(2.8)	(25.2%)
Net income	7.6	6.7	(0.9)	(11.8%)

Notes:

1. Amounts less than one hundred million yen have been truncated.
2. Previous-yearcomparisons are based on the units used in these materials.
3. Exchange rates per USD 1 on the consolidated income statement FY19 1Q $1 = ¥110.22, FY20 1Q $1 = ¥108.86
4. Net income is net income attributable to owners of the parent.

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved.	8

Income Statement (Seven Bank)

 Declines in both income and profit			(Billion yen)
		Three months	Three months
		ended June 30,	ended June 30,
		2019	2020	Changes from	Comparison
				FY19 1Q with FY19 1Q
	Ordinary income	29.8	26.5	(3.3)	(11.0%)
	ATM-related fee income	27.0	23.8	(3.2)	(11.8%)
	Ordinary expenses	18.4	18.4	(0.0)	(0.0%)
	Ordinary profit	11.3	8.1	(3.2)	(28.3%)
	Net income	7.8	5.6	(2.2)	(28.2%)
	EBITDA	14.8	11.2	(3.6)	(24.3%)
	No. of ATMs installed at end of term (units)	25,252	25,260	8	+0.0%
	ATM-related fee income per transaction	135.0	124.8	(10.2)	(7.5%)
	(yen)
	Daily average transactions per ATM	89.6	85.4	(4.2)	(4.6%)
	(transactions/ATM/day)
	Total no. of transactions (million)	205	195	(10)	(4.8%)

Note: All EBITDA in this material are Ordinary profit + Depreciation and amortization.

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved.	9

ATM Platform Business Figures (Seven Bank)

Number of Transactions and Daily Average	Number of ATMs
Transactions per ATM

					Daily average transactions per ATM (right axis)
	Daily average transactions per ATM		No. of transactions (left axis)
	95.57
		89.69	91.37	92.03
				Non-banks,etc.	85.4
	(Million
	transactions)	<212>	<221>	<210>
		<205>
			35	<195>
200			25
21	39

38

100				187	186
183		170		157
					Deposit-taking financial institutions
0

100.0 (Units) <25,252>

90.0 25,000

2,389

80.0

20,000

22,863

15,000

10,000

Outside the 7&i Group
<25,342>	<25,207>	<25,215>	<25,260>
2,426	2,317	2,384	2,416

22,916

22,890

22,831

22,844

Inside the 7&i Group

FY19				FY20
1Q	2Q	3Q	4Q	1Q

Notes:

FY19				FY20
Jun. 30	Sep. 30	Dec. 31	Mar. 31	Jun. 30

1. Total number of transactions and daily average transactions per ATM do not include balance inquiries, e-money charges, PIN changes, and withdrawal limit changes.
2. In this report, securities, life insurance, credit card, consumer credit and consumer financing companies are all referred to as "non-banks, etc."
3. ATM-relatedfee income per transaction for FY20 1Q: ¥124.8
   ATM-related fee income per transaction = ATM-related fee income / (Total of transactions - Total of transactions without ATM-related fee income [i.e. sales proceeds deposits])

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 10

Settlement and Account Business Figures (Seven Bank)

Number of individual accounts and

balance of deposits

No. of accounts (right axis)

Balance of deposits (left axis)

				No. of accounts
(Billion yen)			2,142	2,179	2,221
	2,087
			2,054
500

400				134.8
		138.3	134.0
140.1
139.0
			Balance of time deposits
300

200				324.7	324.5	352.7
301.6	305.2
100			Balance of ordinary deposits
0		FY19				FY20
		Jun. 30	Sep. 30	Dec. 31	Mar. 31	Jun. 30

(1,000 accounts)

2,500

2,300

2,100

Personal loan services

June 30, 2019

June 30, 2020

Balance at
end of	22.8	22.6
period
(Billion yen)

International money transfer services

	FY19 1Q	FY20 1Q
Number of
transactions	291	283
(Thousands of
transactions)

Debit services

	FY19 1Q	FY20 1Q
Number of
transactions	3,133	4,212
(Thousands of
transactions)

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 11

1. Pay Recharging Transactions

Continue to remain steady after the Point Reward Project for Consumers using Cashless

Payment ended -> a certain level of awareness has been achieved

Non-financial companies:

Number of transactions

Changes in the number of transactions with the number in September 2019 as the base

3.5

3

2.5

2

1.5	Example of XX Pay Recharging services available for use

1

0.5

Sept. 2019 Oct. 2019

Nov. 2019 Dec. 2019

Jan.2020

Feb. 2020

Mar. 2020

Apr. 2020

May 2020

Jun. 2020

Jul. 2020

Point Reward Project for Consumers using Cashless Payment

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 12

Participation in the Individual Number Card Points service

Create new ATM values that go beyond the existing concepts

Cultivate the world of ATM+

-Realize service that goes beyond cash

Upgrade digital servicefrom real contact points to a supporting terminal

Participation in the Individual Number Card Points service with ATMs

the Individual Number Card Points : the government offers points through cashless settlement service providers for a limited period of time

Consumers can "book and apply for the Individual Number Card Points" simply from a Seven Bank ATM

※ Scheduled to start service on August 31, 2020

Image of transaction procedure

1. Manually input ID of the settlement means (or set up the e-moneymedium)
2. Manually input the security code tied to the settlement means ID (no need to input it for e-moneymedium)
3. Insert "Individual Number Cards" in ATM
4. Input pin (the password for user verification for Japanese Public Key Infrastructure)

Settlement ID

xxx

Settlement method ID

Security code

Application result

the Individual

Number Card

Points

		Settlement
		service
Settlement method ID		provider
Security code
AA Money
		CC Pay
Validation result
DD Card

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 13

Income Statement (FCTI)

					(Million USD)
 Income declined	Three months	Three months
while profit increased
ended March 31,	ended March 31,
		2019	2020
		Changes from	Comparison
				FY19 1Q with FY19 1Q
	Ordinary income	63.4	58.1	(5.3)	(8.3%)
	Ordinary expenses	62.0	53.7	(8.3)	(13.3%)
	Ordinary profit	1.3	4.3	3.0	+230.7%
	Net income	1.2	4.2	3.0	+250.0%
	EBITDA	3.0	6.0	3.0	+100.0%
	No. of ATMs installed at end of term (units)	12,374	10,759	(1,615)	(13.0%)
	At SEI (units)	8,352	8,480	128	+1.5%
	Daily average transactions per ATM	41.7	44.7	3.0	+7.1%
	(transactions/ATM/day)
	At SEI (transactions/ATM/day)	55.0	53.1	(1.9)	(3.4%)
	Total no. of transactions (million)	47.7	43.9	(3.8)	(7.9%)

Notes:

1. Total number of transactions for U.S. ATMs includes balance inquiries.
2. Number of ATMs as of June 30, 2020: 10,663 (preliminary figure)

At SEI: 8,494 units

Other than SEI: 2,169

3. 1Q (January-March), 2Q (April-June), 3Q (July-September), 4Q (October-December)

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 14

U.S. ATM Figures (FCTI)

Number of ATMs and daily average transactions per ATM at SEI

Daily average transactions per ATM (right axis)

Number of ATMs (left axis)

									Daily average transactions per ATM at SEI (right axis)		(Transactions/ATM/day)
				56.1								60.0
			55.0	55.7				55.4
															54.2
																53.1			55.0
(No. of ATMs)							ATMs installed at locations other than SEI stores
15,000
			<12,374>	<12,165>	<11,948>
			4,022										<10,886>			<10,759>	<10,663>
10,000			3,782	3,524				2,421			2,279	2,169
5,000			8,352	8,383	8,424				8,465			8,480	8,494
						ATMs installed at SEI s	tores
0
			FY19													FY20
			1Q		2Q				3Q	4Q	1Q		2Q

• The number of transactions at ATMs declined after the declaration of the state of emergency by the U.S. in March 2020, but it has started recovering recently.
• Seven-Elevenoutlets in the U.S. also continued operating as social infrastructure.

Notes:

1. 1Q (January-March), 2Q (April-June), 3Q (July-September), 4Q (October-December)
2. The figures for 2Q FY20 are preliminary.

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 15

1	Impact of Novel Coronavirus Infection

Today's Agenda

2

Results for First Quarter of Fiscal Year Ending March 31, 2021

3	Forecast for Fiscal Year
Ending March 31, 2021

Business and Dividend Forecasts for the

Fiscal Year Ending March 31, 2021

Forecast for the fiscal year ending March	 See the next page for preconditions of the calculation
31, 2021
	Consolidated			Non-consolidated
Ordinary income: ¥134.2 billion		Ordinary income: ¥109.8 billion
	(down ¥14.3 billion, or 9.6%, year-on-year)	(down ¥10.4 billion, or 8.6%, year-on-year)
Ordinary profit: ¥32.8 billion		Ordinary profit: ¥32.4 billion
	(down ¥7.0 billion, or 17.5%, year-on-year)		(down ¥12.6 billion, or 28.0%, year-on-year)
Net income		Net income: ¥22.4 billion
attributable to owners of parent: ¥23.0 billion
(down ¥5.2 billion, or 18.8%, year-on-year)

(down ¥3.1 billion, or 11.8%, year-on-year)

Dividend forecast for the fiscal year ending	 Maintain the same dividend amount in the previous fiscal year
March 31, 2021

• Interim dividend of ¥5.50 and year-end dividend of ¥5.50 for annual dividend of ¥11.00

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 17

Preconditions for Calculation of Business Forecast

	Outlook
Number of infected people	Further expansion of the infection and strong concerns over a second wave
Economic activity	Gradually resuming but situation is difficult
Consumption behavior
Telecommuting	30 to 40% It may expand depending on the situation
Excursions, downtown areas	Restrictions corresponding to infection status -> avoiding 3Cs (new norm)
Holding of events
Inbound	Entry restrictions -> possibility of partial easing

• Outlook of economy is extremely opaque
• There are concerns that the infection will continue to expand and prolong in the second

quarter and onwards, and the impact of voluntary restrictions and the new lifestyle on the business environment will remain at least till the end of the fiscal year.

• The number of ATM transactions is expected to remain at a level similar to the

current level.

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 18

Income Statement (Consolidated)

(Billion yen)

FY19 results	FY20 plan (announced in August 2020)

	Full year	1H	Full year		1H
	Changes from	Changes from
				FY19		FY19 1H
Ordinary income	148.5	74.5	134.2	(14.3)	67.8	(6.7)
Ordinary expenses	108.7	54.3	101.3	(7.4)	49.7	(4.6)
Ordinary profit	39.8	20.1	32.8	(7.0)	18.0	(2.1)
Net income	26.1	13.0	23.0	(3.1)	12.6	(0.4)

Notes:

1. Exchange rates per USD 1 on the consolidated income statement FY19 $1 = ¥109.0, FY19 H1 $1 = ¥110.06, FY20 plan $1 = ¥108.00
2. Net income is net income attributable to owners of the parent.

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 19

Income Statement (Seven Bank)

									(Billion yen)
		FY19 results		FY20 plan (announced in August 2020)
		Full year		1H	Full year		1H
			Changes from		Changes from
						FY19			FY19 1H
Ordinary income		120.2		60.2	109.8	(10.4)	54.8			(5.4)
ATM-related fee income		108.7		54.5	98.0	(10.7)	49.1			(5.4)
Ordinary expenses		75.2		36.9	77.3	2.1	37.8			0.9
Interest expenses		0.6		0.3	0.6	(0.0)	0.2			(0.1)
ATM placement fee expenses		15.7		7.9	15.9	0.2	7.9			(0.0)
Outsourcing expenses		18.9		9.3	20.8	1.9	10.1			0.8
Maintenance fees		3.7		1.8	4.1	0.4	1.9			0.1
Depreciation and amortization		13.6		6.9	13.0	(0.6)	6.2			(0.7)
Ordinary profit		45.0		23.2	32.4	(12.6)	16.9			(6.3)
Extraordinary losses		5.1		2.6	0.0	(5.1)	0.0			(2.6)
Total income taxes		12.2		6.3	9.9	(2.3)	5.0			(1.3)
Net income		27.6		14.2	22.4	(5.2)	11.8			(2.4)
EBITDA		58.6		30.1	45.5	(13.1)	23.2			(6.9)
Note: All EBITDA in this material are Ordinary profit + Depreciation and amortization.
					Copyright (c) 2020 Seven Bank, Ltd. All rights reserved.	20

Principal Figures (Seven Bank)

	FY19 results		FY20 plan (announced in August 2020)
	Full year		1H	Full year		1H
		Changes from		Changes from
					FY19			FY19 1H
No. of ATMs installed at end of term	25,215		25,342	25,515	300	25,300		(42)
(units)
ATM-related fee income per	130.9		133.8	124.0	(6.9)	124.4		(9.4)
transaction (yen)
Daily average transactions per ATM	92.1		90.5	87.5	(4.6)	87.6		(2.9)
(transactions/ATM/day)
Total no. of transactions (million)	849		417	807	(42)	403		(14)
No. of individual accounts	2,179		2,087	2,400	221	--		--
(thousands of accounts)
Balance of individual deposits	458.6		444.3	497.5	38.9	--		--
(billion yen)
Balance of personal loans (billion yen)	23.2		22.9	26.0	2.8	--		--

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 21

Income Statement (FCTI)

							(Million USD)
	Fiscal year ended December	Fiscal year ending December 31, 2020 plan
	31, 2019			(announced in August 2020)
	Full year		1H	Full year	Changes from	1H	Changes from
					FY19		FY19 1H
Ordinary income	254.0		128.0	213.0	(41.0)	114.3	(13.7)
Ordinary expenses	247.7		128.6	194.4	(53.3)	100.8	(27.8)
Interest expenses	35.2		19.1	16.9	(18.3)	10.2	(8.9)
ATM placement fee expenses	139.7		70.6	112.9	(26.8)	58.2	(12.4)
Outsourcing expenses	17.4		8.9	15.2	(2.2)	8.1	(0.8)
Maintenance fees	17.4		8.6	15.3	(2.1)	8.1	(0.5)
Depreciation and amortization	6.7		3.3	6.8	0.1	3.3	0.0
Ordinary profit	6.3		(0.6)	18.6	12.3	13.5	14.1
Extraordinary losses	(0.5)		(0.4)	(2.0)	(1.5)	(0.0)	0.4
Net income	6.6		(0.3)	20.5	13.9	13.5	13.8
EBITDA	13.1		2.7	25.5	12.4	16.8	14.1
No. of ATMs installed at end of term (units)	10,886		12,165	8,640	(2,246)	10,660	(1,505)
At SEI (units)	8,465		8,383	8,640	175	8,490	107
Daily average transactions per ATM	43.1		43.7	46.5	3.4	45.1	1.4
(transactions/ATM/day)
At SEI (transactions/ATM/day)	55.4		55.4	52.6	(2.8)	53.7	(1.7)
Total no. of transactions (million)	191.6		96.1	171.5	(20.1)	88.2	(7.9)
Notes:

1. Total number of transactions for U.S. ATMs includes balance inquiries.
2. 1Q (January-March), 2Q (April-June), 3Q (July-September), 4Q (October-December)

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 22

Shareholder Returns

Stable dividend payment

• With dividend payment twice a year as the basis of shareholder returns, ensure stable and continuous dividend payment, with a payout ratio of 40% or more set as the minimum goal.

Dividend Forecast

FY20 Forecast: annual dividend of ¥11.00 per share

(approximately ¥12.97 billion in total dividends)

Dividends and payout ratio

99.0

	Payout ratio (%)		56.3
		47.0	49.6
	42.6
40.9

		<10.00>	<11.00>	<11.00>	<11.00>
<8.50>	<9.00>
		6.00	5.50	5.50
		5.25
	4.75		Year-end
4.50
4.00	4.25	4.75	5.00	5.50	5.50
Interim
FY15	16	17	18	19	20 (Forecast)

Copyright (c) 2020 Seven Bank, Ltd. All rights reserved. 23

These presentation materials contain forward looking statements concerning forecasts, expectations, goals and plans related to the financial results of Seven Bank, Ltd. ("Seven Bank") and its consolidated subsidiaries, etc. Except for concrete historical facts, these forward looking statements are based on the information available when they were written. As such, these forward-looking statements may contain some premises (assumptions). These statements and premises (assumptions) are subjective and subject to various risks and uncertainties. As a result of such risks and uncertainties, the actual financial results of Seven Bank may differ substantially from these forecasts and expectations. Such risks and uncertainties include, without limitation, system malfunctions, disasters, crimes and other various risks entailed in the ATM Platform Business, Settlement and Account Business and Overseas Business. Any information in these materials, which is other than that of Seven Bank and its consolidated subsidiaries, etc. is based on publicly available information, and we have not validated the accuracy or appropriateness of such information and do not guarantee its accuracy. All rights reserved.