Analyst Meeting Analyst Meeting Presentation Material Presentation Material November 29, 2006 Mitsui Trust Financial Group
Agenda Ⅰ . Management Strategies ・ Management Direction ・ Enhancement of Profitability ・ Financial Summary ・ Revenues by Business Unit ・ Recomposition of Revenue Structure ・ Expense Situation ・ Profitability & Efficiency ・ Strengthening of Balance Sheet Ⅱ . Business Operations 1. Fee Business 2. Banking Business 3. New Businesses Ⅲ . Strengthening of Balance Sheet ・ Disposal of NPLs ・ NPL Balance & NPL Ratio ・ Equity Portfolio & Deferred Tax Assets ・ Capital Mitsui Trust Financial Group 1
Ⅰ . Management Strategies • Management Direction Enhancement of Profitability • Financial Summary Revenues by Business Unit • Recomposition of Revenue Structure Expense Situation • Profitability & Efficiency Strengthening of Balance Sheet Mitsui Trust Financial Group 2
Management Direction Management Direction Mitsui Trust Financial Group ～ FY3/06 FY3/07 ～ Actions Enhancement of concentration Recomposition of on high margin & high growth business segments revenue structure to increase Enhancement Turn new businesses to revenues profit drivers of Profitability Increasing strategic Efficient expense while maintaining management efficient management To complete final Maintenance and Strengthening of disposal of NPLs & improvement of reduction of equity Balance Sheet sound financial base portfolio Mitsui Trust Financial Group 3
Enhancement of Profitability Items 1H.FY3/07 Actual FY3/07 Plan Enhancement of Profitability Investment trust & Sales of ¥441.1 bn (Record High) Sales amount: ¥940 bn Annuity insurance sales （ ¥63 bn increase, or 17 % increase YoY ） Revenue: ¥37 bn Revenues of ¥16.1 bn (Record High) Real estate related revenue ¥2 bn increase from （ ¥3.1 bn increase, or 24 % increase YoY ） initial plan Loan balance* of ¥1,991.3 bn End balance increase: Housing loans （ ¥72.4 bn increase from 3/06 ） ¥226 bn (after securitization) Loan end balance: ¥73 bn Loan balance* of ¥26.8 bn “Business loans” （ ¥20.2 bn increase from 3/06 ） ¥23 bn increase from initial plan (CMTB’s portion) Loan end balance: ¥104 bn Corporate restructuring & Loan balance of ¥60.7 bn revitalization finance ¥2 bn increase from initial plan （ ¥19.5 bn increase from 3/06 ） *1 CMTB, non-consolidated *2 MTH, consolidated Mitsui Trust Financial Group 4
Financial Summary 1H.FY3/07 Highlights & FY3/07 Outlook a b c:b-a d e f:e-d (Yen bn) CMTB+MATB Actual e:d-b Combined totals 1H.FY3/06 1H.FY3/07 Change % FY3/06 FY3/07 Change % Gross operating profit *1 129.6 124.6 (4.9) (4)% 283.3 278.0 (5.3) (2)% 8.8 - (8.8) - 16.2 - (16.2) - Of which housing loan securitization profit 49.6 47.8 (1.7) (3)% 100.2 98.0 (2.2) (2)% Operating expenses [minus] 38% 38% 0% 0% 35% 35% 0% 0% Overhead ratio Pre-provision profit *2 80.0 76.8 (3.2) (4)% 183.0 180.0 (3.0) (2)% 9.9 7.2 (2.6) (26)% 26.5 5.0 (21.5) (81)% Net stock related profit 2.5 3.5 1.0 40% 3.6 3.5 (0.1) (3)% Of which capital gain on alternative investments 22.9 13.6 (9.3) (41)% 65.6 20.0 (45.6) (70)% Credit Costs [minus] 63.4 67.2 3.8 6% 125.2 155.0 29.8 24% Recurring profit Gain on partial w ithdraw al of employee retirement benefit - 15.8 15.8 - - 15.8 15.8 - trust 0.0 10.6 10.5 - 0.1 43.0 42.9 - Deferred income taxes [minus] 59.8 70.1 10.2 17% 118.2 120.0 1.8 2% Net income MTH, Consolidated 1H.FY3/06 1H.FY3/07 Change % FY3/06 FY3/07 Change % 67.6 68.4 0.8 1% 138.3 160.0 21.7 16% Recurring profit 58.6 66.9 8.3 14% 119.6 120.0 0.4 0% Net income ROE *3 22% 21% (1)% 23% 19% (4)% *1 Before trust a/c credit costs *2 Effective net operating profit before trust a/c credit costs & provision(reversal) of general reserve *3 Calculated using average balance of outstanding capital Mitsui Trust Financial Group 5
Revenues by Business Unit Revenues by Business Unit a b c:b-a d e f:e-d （ Yen bn ） CMTB+MATB Actual Outlook Combined totals 1H.FY3/06 1H.FY3/07 Change % FY3/06 FY3/07 Change % Asset management business 59.6 63.2 3.6 6% 125.9 138.0 12.1 10% 17.2 15.5 (1.7) (10)% 34.4 34.5 0.1 0% Investment trusts & Annuity insurance sales 5.0 9.6 4.6 92% 12.2 21.0 8.8 72% Of which investment trusts CMTB 13.0 16.1 3.1 24% 30.3 37.0 6.7 22% Real estate 8.1 7.8 (0.3) (4)% 16.7 15.0 (1.7) (10)% Stock transfer agency 12.2 13.2 1.0 8% 25.7 26.5 0.8 3% Pension MATB 5.0 6.5 1.5 30% 10.5 14.0 3.5 33% Securities 2.7 4.3 1.6 59% 6.1 9.0 2.9 48% Of which Investment advisory fee & trust fee Banking business 70.0 61.4 (8.6) (12)% 157.4 140.0 (17.4) (11)% 16.9 18.3 1.4 8% 33.8 38.5 4.7 14% Loans to individuals 6.3 4.0 (2.3) (37)% 11.5 8.0 (3.5) (30)% Real estate asset finance 2.3 6.2 3.9 170% 24.5 18.5 (6.0) (24)% Alternative investments 8.8 - (8.8) - 16.2 - (16.2) - Housing loan securitization profit 129.6 124.6 (4.9) (4)% 283.3 278.0 (5.3) (2)% Gross operating profit Operating expenses 49.6 47.8 (1.7) (3)% 100.2 98.0 (2.2) (2)% 80.0 76.8 (3.2) (4)% 183.0 180.0 (3.0) (2)% Pre-provision profit Mitsui Trust Financial Group 6
Recomposition of Revenue Structure Recomposition of Revenue Structure Composition of gross operating profit Conventional Banking Business � Corporate loans 25% 25% 31% � Bond investment, etc. 44% Strategic Products 56% � Loans to individuals 14% 15% (Housing loans, etc.) 12% � Real estate asset finance 3% 3% 4% � Alternative investments 75% 5% 75 % 7% 12% � Asset management business 9% 69 % —Investment trust & 5% 11% Annuity insurance sales 56 % 3% 4% —Real estate business 44 % 1% 50% 49% —Stock transfer agency 44% —Pension/Securities, etc. 36% 28% � New Businesses —“Business loan” 2% 2% 0% —Corporate restructuring & revitalization finance FY3/04 FY3/05 FY3/06 1H.FY3/07 FY3/07 (Plan) Mitsui Trust Financial Group 7
Expense Situation # of Employees (MTH, consolidated) & Operating Expenses (CMTB+MATB) # of Consulplazas * Strategy 11,000 20 Bank employees + temporary staffs (Consulplazas) (employees) Consulplazas 19 19 Proactive investment of management resources 10,500 Operating 10,200 Expenses 18 in high margin & high growth business segments 9,957 10,000 17 17 17 9,561 9,609 Maintain current efficiency level 9,500 OHR 16 16 9/06 (actual) : 38.4 % 9,000 15 3/05 3/06 9/06 3/07 As of Operating Expenses YoY Comparison （ CMTB+MATB ） 1H.FY3/07 ： Excluding allowance for Personnel Non-Personnel Tax (%) OHR retirement benefit (Yen bn) 50% 57.7 41% 60 51.5 38% 38% 49.6 47.8 40% 45 Substantial 31.1 30% increase in OE 31.3 29.9 31.3 30 due to strategic 20% investments of management 15 10% 23.7 18.0 resources 17.2 14.3 0 0% 1H.FY3/05 1H.FY3/06 1H.FY3/07 1H.FY3/07 1H.FY3/05 1H.FY3/06 1H.FY3/07 Mitsui Trust Financial Group 8 * Consulplazas: in-store mini-branches
Profitability & Efficiency Profitability & Efficiency: 1H.FY3/07 Comparison of Major Banking Groups 2.5 % Good 3% Profitability & Efficiency: Gross operating profit Top among major banking groups Total assets (end balance ） Mitsui Trust 2.0 % 2% Gross operating profit High =2.0 % Total assets ↑ Other major banking groups Profitability Overhead ratio = 38.4 % ↓ Low 1.5 % 2% Poor 1.0 % 1% 55% 50% 45% 40% 35% 30% Low ← Efficiency → High Overhead ratio Mitsui Trust Financial Group 9
Strengthening of Balance Sheet Items 1H.FY3/07 Actual FY3/07 Plan Strengthening of Balance Sheet NPL ratio *1 Maintain under 2 % Actual: 1.8 % Same level as of 3/06 Significantly decreased to ¥13.6 bn Credit costs *1 Estimate: ¥20.0 bn from ¥22.9 bn of 1H.FY3/06 Reduction of equity portfolio *2 Actual: 60 % of Tier1 from 62 % in 3/06 Maintain same level DTAs *2 Actual: 16 % of Tier1 from 18 % in 3/06 Lower 10 % of Tier1 Retained earnings *1 Increase to ¥350 bn level ¥48.7 bn Increased to ¥302.7 bn *1 CMTB, Non-consolidated *2 MTH, Consolidated Mitsui Trust Financial Group 10
Ⅱ . Business Operations 1. Fee Business 2. Banking Business 3. New Businesses Mitsui Trust Financial Group 11
Ⅱ - 1. Fee Business • Investment Trust & Annuity Insurance Sales • Real Estate Business • Stock Transfer Agency Business • Pension & Securities Business of MATB Mitsui Trust Financial Group 12
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