The 7th Japanese Financial Service Conference The 7th Japanese Financial Service Conference Mitsui Trust Financial Group Mitsui Trust Financial Group Management Strategies Management Strategies September 8, 2005 Mitsui Trust Holdings, Inc.
Agenda Ⅰ . Management Strategies ・ Management Direction ・ Trend of Financial Results ・ Profitability & Efficiency ・ Recomposition of Revenue Structure ・ Low Cost Operations Ⅱ . Financial Highlights & Key Initiatives 1. Financial Highlights 2. Efficiency in Banking Business 3. Enhancement of Fee Business Ⅲ . Strengthening of Balance Sheet ・ ・ Disposal of NPLs NPLs Balance & NPLs Ratio ・ ・ Equity Portfolio Bond Portfolio ・ ・ Deferred Tax Assets Capital Ⅳ . New Businesses Mitsui Trust Financial Group 1
Ⅰ . Management Strategies • Management Direction • Trend of Financial Results • Profitability & Efficiency • Recomposition of Revenue Structure • Low Cost Operations Mitsui Trust Financial Group 2
Management Direction Management Direction Mitsui Trust Financial Group Actions FY3/05 ～ Enhancement of Profitability ～ Steady Achievement ・ Increase revenues *1 Recomposition of revenue structure ・ Low cost operations Thoroughly efficient management *1 Gross operating profit ～ Strengthen Balance Sheet ～ ・ Final disposal of NPLs Nearly completed ・ Reduction of equity portfolio Mitsui Trust Financial Group 3
Trend of Financial Results Pre-provision Profit Recurring Profit & Net Income Record high 200.0 240.0 (Yen bn) 1 4 9 . 9 (Yen bn) Record high 1 2 6 . 8 200.6 9 2 . 1 8 3 . 3 191.1 189.3 5 3 . 8 181.2 2 3 . 9 180.0 164.4 162.6 0.0 146.5 144.1 139.0 ( 3 7 . 9 ) 122.8 120.0 ( 1 0 3 . 6 ) Pre-provision profit (200.0) Recurring profit Pre-provision profit excluding net bond related profit Net income 60.0 ( 2 8 4 . 9 ) ( 3 5 4 . 4 ) 0.0 (400.0) F Y 3 / 0 1 F Y 3 / 0 2 F Y 3 / 0 3 F Y 3 / 0 4 F Y 3 / 0 5 FY3/01 FY3/02 FY3/03 FY3/04 FY3/05 FY3/01: Chuo Mitsui (CMTB), FY3/02 and after: CMTB+Mitsui Asset (MATB) Mitsui Trust Financial Group 4
Profitability & Efficiency Profitability & Efficiency: FY3/05 Comparison of Major Banking Groups Good 3% 2.5% Mitsui Trust Profitability & Efficiency: Gross operating profit Total assets Top among major banking groups (end balance ） 2.0% 2% High ↑ Profitability ↓ Low 2% 1.5% Poor Other major banking groups 1% 1.0% 55% 50% 45% 40% 35% 30% Low ← Efficiency → High Overhead ratio Mitsui Trust Financial Group 5
Recomposition of Revenue Structure Weight of strategic products relative to total revenues exceeded 50% Recomposition of Revenue Structure FY3/03 FY3/04 FY3/06 planned FY3/05 Conventional Banking Business *1 (Composition of gross � Corporate loans operating profit) � Bond investment, etc. 41% 57% 45% 63% *1 Financial intermediary business from household to corporate sector and bond investments Strategic Products � Loans to individuals (Housing loans, etc.) � Real estate non-recourse loans 15% 15% � Asset management — Investment trust & Annuity 14% 59% 55% 9% insurance sales 13% 9% 43% — Real estate 5% 37% 2% — Stock transfer agency 30% 28% — Pension/Securities, etc. 22% 23% � Alternative investments 5% 3% 1% 0% Mitsui Trust Financial Group 6
Low Cost Operations Low Cost Operations (CMTB+MATB) Items FY3/05 Actual FY3/06 Planned Actual ： Operating ¥ 107.0 bn Remain nearly flat Expenses (21.0) bn, or (16) % from FY3/04 Overhead 36 %: Top among major banks Keep current efficiency Ratio Operating Expenses (CMTB+MATB) # of Employees & # of Branches (Yen bn) 54% (people) (branches) 190.0 52% 7,852 Taxes 200.0 8,000 200 178.4 Non-personnel-related 7,362 50% 163.6 6,787 Personnel-related 44% OHR 149.4 166 6,021 41% 150.0 6,000 150 149 128.0 96.0 5,236 36% 36% 92.8 107.0 107.5 119 87.4 76.1 4,819 100.0 4,000 100 67.9 72 68 61.5 61.3 50.0 67 2,000 # of employees (left) 50 87.0 77.7 69.6 # of branches (right) 67.4 55.4 40.1 40.0 # of employees: MTH+CMTB+MATB # of branches: CMTB (Planned) 0.0 0 0 3/00 3/01 3/02 3/03 3/04 3/05 FY3/00 FY3/01 FY3/02 FY3/03 FY3/04 FY3/05 FY3/06 As of MTH: Mitsui Trust Holdings Mitsui Trust Financial Group 7
Ⅱ . Financial Highlights & Key Initiatives 1. Fiancial Highlights 2. Efficiency in Banking Business 3. Enhancement of Fee Business Mitsui Trust Financial Group 8
Ⅱ -1. Financial Highlights • Financial Summary • Revenues by Business Unit Mitsui Trust Financial Group 9
Financial Summary FY3/05 Highlights & FY3/06 Outlook a b d (Yen bn) CMTB+MATB Actual c:b-a Outlook e:d-b Combined totals FY3/04 FY3/05 Change FY3/06 Change 309.3 298.1 (11.1) 297.5 (0.6) Gross operating profit *1 128.0 107.0 (21.0) 107.5 0.5 Operating expenses 41% 36% (5)% 36% 0% Overhead ratio 181.2 191.1 9.8 190.0 (1.1) Pre-provision profit *2 Pre-provision profit excl. net bond 146.5 200.6 54.0 200.0 (0.6) related profit 39.7 15.8 (23.8) (10.0) (25.8) Net stock related profit 126.8 149.9 23.1 130.0 (19.9) Recurring profit (66.9) (47.1) (19.7) - (47.1) Deferred income taxes 83.3 92.1 8.8 120.0 27.9 Net income 58.3 43.9 (14.4) 35.0 (8.9) Credit costs MTH, Consolidated FY3/04 FY3/05 Change FY3/06 Change 105.3 157.4 52.0 140.0 (17.4) Recurring profit 50.7 94.0 43.2 120.0 26.0 Net income ROE *3 13% 19% 22% 3% 6% *1 Before trust a/c credit costs *2 Effective net operating profit before trust a/c credit costs & transfer to the general reserve *3 Outstanding of capital is average balance Mitsui Trust Financial Group 10
Revenues by Business Unit Revenues by Business Unit a b d (Yen bn) Total of CMTB & MATB Actual c:b-a Outlook e:d-b Revenues ("Gross operating profit") FY3/04 FY3/05 Change FY3/06 Change 222.6 189.5 (33.0) 182.5 (7.0) Banking business 139.6 142.8 3.2 131.0 (11.8) Financing business Excl. a, b (3 a/c total), others 45.6 46.0 0.4 46.0 0.0 a Loans to individuals, Non-recourse loans 2.7 10.1 7.4 15.5 5.4 b Alternative investments 34.7 (9.4) (44.2) (10.0) (0.6) Net bond related profit 86.6 108.5 21.9 115.0 6.5 Asset management (fee) business 15.3 26.0 10.7 27.0 1.0 Sales of investment trusts & annuity insurance CMTB 13.6 25.3 11.7 26.0 0.7 Real estate 15.0 15.7 0.7 17.5 1.8 Stock transfer agency 25.4 24.9 (0.5) 26.5 1.6 Pension MATB 7.8 8.8 1.0 10.5 1.7 Securities 9.4 7.5 (1.9) 7.5 0.0 Others 309.3 298.1 (11.1) 297.5 (0.6) Revenues ("Gross operating profit") total 128.0 107.0 (21.0) 107.5 0.5 Operating expenses Pre-provision profit 181.2 191.1 9.8 190.0 (1.1) Mitsui Trust Financial Group 11
Ⅱ -2. Efficiency in Banking Business • Recomposition of Loan Portfolio • Housing Loans • Real Estate Asset Finance • Loan Volume • Yields & Margins • Alternative Investments Mitsui Trust Financial Group 12
Recomposition of Loan Portfolio � Credit loss rate of loans to individuals: Composition of loans to individuals and real Stable at 0.01% estate non-recourse loans: Reached 38% at 3/05 � Real estate non-recourse loans: No defaults Recomposition of Loan Portfolio 100% 80% 6 2 % 6 9 % 7 7 % 60% 8 3 % 8 9 % 9 0 % 38% 40% 31% 23% 2 8 % 17% 20% 2 6 % 11% 10% 2 1 % 1 7 % 1 1 % 1 0 % 1 0 % 5 % 2 % 0% 3/95 3/97 3/99 3/01 3/03 3/05 As of Real estate non-recouse loans Loans to individuals Mitsui Trust Financial Group 13
Housing Loans Steady growth in housing loan net increase “ Route sales (channels with real estate agents and developers) ” FY3/03 FY3/04 FY3/05 strategy brings in successful differentiation from competitors ¥ 266.5 bn ¥ 271.4 bn ¥ 292.3 bn Loans to Individuals Housing Loans Origination 28,000 (Yen bn) 3,241.5 (Managerial basis) （ (Preliminary) # of loans ） 24,416 Before housing loan securitization 2,977.0 2,921.5 3,000 2,858 (After 2,728.1 21,291 (After securitization 2,712.2 19,918 securitization 21,000 1,244 2,437.2) 2,431.8) 4,234 (After securitization 2,427.3 3,724 2,500 （ Planned ） 2,550.4) 20,314 2,348.1 1,354 （ (After 83% of 1,415 (After total ） securitization securitization 14,000 2,055.8 1,887.5) 15,703 1,858.4) （ 74% of 2,000 (After 14,779 total ） securitization （ 74% of 1,894.0) total ） Loans to individuals 7,000 Of which, housing loans 1,500 Over the counter, etc. ~ Client companies channel Brokers channel 1,000 0 0 3/04 3/05 7/05 3/06 FY3/03 FY3/04 FY3/05 Mitsui Trust Financial Group 14
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