Shinsei Bank: Institutional Banking Group Evolution Merrill Lynch Japan Conference “Business and Financial Overview” September 9, 2005 2006 Merrill Lynch Japan Conference September 7, 2006 Thierry Porté President and Chief Executive Officer 0
Forw ard Looking Statement � The following materials contain statements that constitute forward-looking statements, plans for the future, management targets, etc. relating to the Company and its subsidiaries. These forward-looking statements are based on current assumptions of future events and trends, which may be incorrect. Actual results may differ materially from those in the statements as a result of various factors. � Unless otherwise noted, the financial data contained in these materials are presented under Japanese GAAP. The Company disclaims any obligation to update or to announce any revision to forward-looking statements to reflect future events or developments. Unless otherwise specified, all the financials are shown on a consolidated basis. � Information concerning financial institutions other than the Company and its subsidiaries are based on publicly available information. � These materials do not constitute an invitation or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever. 1
Agenda � Section 1: A Different Kind of Japanese Bank � Section 2: Financial Highlights � Section 3: The Three Strategic Business Pillars » Institutional Banking » Consumer and Commercial Finance » Retail Banking � Section 4: Key Corporate Imperatives � Section 5: Conclusion 2
A Different Kind of Japanese Bank Strategic Transformation to a Leading Japanese Financial Services Strategic Transformation to a Leading Japanese Financial Services Company – One of the Most Impressive Turnaround Stories in Japan Company – One of the Most Impressive Turnaround Stories in Japan r e u t u F n d w a N o O I P e i n s S h i o f h B i r t Sustainable Growth Revenue Generation Building the Platform • Enhancing profitability and • Revenue quality and diversification diversification • Balance sheet clean-up • Solutions to meet customer needs • Expanding the franchise • Diversification of funding sources • Cross-selling initiatives • Product penetration • State-of-the-art and cost-efficient • Customer segmentation • Business intelligence technology • Strengthening the three strategic • Attracting and retaining talent business pillars • Creation of strategic business model March 2000 February 2004 Current Net Income 1,2 Shareholders’ Equity Return on Equity 1,2 Return on Assets 1,2 JPY Billion JPY Billion % % 120 1,000 15.0% 1.6% 855 101 12.4% 1.2% 100 800 1.2% 582 80 10.0% 600 6.6% 0.8% 60 35 400 0.3% 40 5.0% 0.4% 200 20 0.0% 0 0 0.0% FY2000 FY2005 FY2000 FY2005 3/2001 3/2006 FY2000 FY2005 1 Cash basis excluding amortization of total intangibles 3 2 Excludes one-time gain from DIC equity portfolio (JPY 55Billion) in FY2000
A Different Kind of Japanese Bank Setting Shinsei Bank Apart Setting Shinsei Bank Apart Responsible to Responsible to Customer Customer More Global Than More Local Than More Local Than More Global Than Shareholders and Shareholders and Focused Focused Local Competition Global Competition Global Competition Local Competition Society Society Empowered Innovative Products Proud Heritage Transparency Value-Focused Long-Term Approach High Standards Better Service Flexible Ethics and Integrity Open Thinking Decisions Made in Japan Open-Minded Japan First and Last Measures and Rewards Useful Network Long Term Profitable Growth Long Term Profitable Growth Strong Results Strong Results Established Recognized Recognized Established Diversified Income Diversified Income and Appreciated and Appreciated Three Pillar Three Pillar Growing Profitable Growing Profitable Banking Approach Strategic Business Model Strategic Business Model Banking Approach Customer Base Customer Base 4
A Different Kind of Japanese Bank A Business Model Organized Around The Customer A Business Model Organized Around The Customer Revenue � Unique hybrid banking model � Value-added solutions � Integrated product Institutional specialists and relationship � Attractive and innovative Banking manager teams providing value proposition Retail 41% 1, 2 innovative solutions � Strong brand recognition Banking � Highly efficient and effective 15% 1 Customers “bricks and clicks” distribution model � Implementation of Shinsei’s Consumer expertise and � Synergies with Institutional Commercial / Retail Banking businesses Finance � Organic growth and 44% 1 opportunistic strategic acquisitions Risk Management Corporate Governance Technology Platform 1 Percentage of total revenue contribution for the fiscal year ended March 31, 2006, management accounting basis 2 Includes revenue (losses) of ALM/Corporate/Other 5
A Different Kind of Japanese Bank World-class Corporate Governance and Management World-class Corporate Governance and Management Board of Directors Board of Directors Executive Directors Thierry Porté Junji Sugiyama President, CEO, Shinsei Bank, Limited Chairman, Shinsei Bank, Limited Non-executive International Directors Non-executive Domestic Directors Michael J. Boskin Professor, Stanford University Shigeru Kani Former Director, Administration Department, The Bank of Japan Professor, Yokohama College of Emilio Botín Chairman, Grupo Santander Commerce Senior Corporate Advisor, Mitsubishi Timothy C. Collins Minoru Makihara CEO, Ripplewood Holdings, LLC Corporation Yasuharu Nagashima Lawyer J. Christopher Flowers Chairman, J.C. Flowers & Co., LLC Fred H. Langhammer Nobuaki Ogawa Chairman, Global Affairs, The Estée Lawyer Lauder Companies, Inc. Former Vice Chairman, Exxon Mobil Former Director, Japan Corporate Lucio A. Noto Hiroyuki Takahashi Corporation Auditors Association John S. Wadsworth, Jr. Teruaki Yamamoto President, APLUS Co., Ltd. Advisory Director, Morgan Stanley Senior Advisors Senior Advisors Takashi Imai Senior Advisor, Honorary Chairman, Nippon Steel Corporation John S. Reed Former Chairman, Citigroup Inc. Paul A. Volcker Former Chairman, Board of Governors of the Federal Reserve System Masamoto Yashiro Former Chairman, CEO, Shinsei Bank, Limited 6
A Different Kind of Japanese Bank Growing Recognition and Credibility Growing Recognition and Credibility Shinsei Bank Recognition Shinsei Bank Recognition � Best Bank in Japan 2004 and 2006 (Euromoney) � #1 Financial Institution in Corporate Governance 2005 ranked by The Japan Corporate Governance Research Institute Inc. � IPO of the Year 2004 (Thomson DealWatch) � Bank of the Year for Japan 2003 (The Banker) � Best Local Bank Japan 2002 (FinanceAsia) Institutional Banking Recognition Retail Banking Recognition Institutional Banking Recognition Retail Banking Recognition � Securitization Deal of the Year, Japan, 2003, � #1 in Customer Satisfaction Ranking 2004, 2004 (Asiamoney) 2005 and 2006 (Nihon Keizai Shimbun) � � Japanese Securitization of the Year 2004 (IFR) Best Retail Bank, Japan, 2004, 2005 and � Excellence in Internet Banking Awards 2005 Deal of the Year, Japan, 2004 (ISR) (The Asian Banker) � Most Innovative Deal, 2004 (FinanceAsia) � Good Design Award 2005 for “32 Color Cash � Deal of the Year, Japan, 2003 (Thomson Cards” DealWatch) 7
Financial Highlights Strong FY2005 Results Validate our Business Model Strong FY2005 Results Validate our Business Model FY 2005 Highlights (All figures compared to FY2004) � � Total revenue increased by 54% Cash basis net income increased by 36% Total Revenue 1 Net Income (Reported and Cash Basis 2 ) JPY Billion JPY Billion 300 273 120 101 178 90 74 76 200 67 60 100 30 0 0 FY2004 FY2005 FY2004 FY2005 � � Ordinary business profit increased by 68% Earning assets increased by 27% Ordinary Business Profit 1 Earning Assets JPY Billion JPY Billion 200 8000 6,749 137 5,315 150 6000 81 100 4000 50 2000 0 0 FY2004 FY2005 FY2004 FY2005 1 Management accounting basis 8 2 Cash basis excludes amortization of total intangibles
Financial Highlights Diversified Revenue Streams Diversified Revenue Streams Net Interest Income and Non-NII Revenue Composition Major Components of Net Interest Income: Net Interest Income and Non-NII Revenue Composition FY2004 vs. FY2005 JPY Bn FY2004 vs. FY2005 JPY Bn � Institutional Banking (IB) % of Non Interest income to total revenue IB Corporate loans, Non-recourse loans 69.9% 62.4% CCF � Consumer and Commercial Finance (CCF) Retail Credit cards, Cashing loans, Consumer finance Net Interest Income 1 � Retail Banking 100 Housing loans, Deposit products 32.1 50 35.3 38.0 17.2 16.8 15.2 0 Major Components of Non Interest Income: Non-Interest Income 1 � Institutional Banking 200 Capital markets activities, Non-recourse finance, Credit trading, Securitization, Principal investment, Asset 150 84.4 management, M&A � Consumer and Commercial Finance 100 Installment sales credit, general and auto leasing 61.7 � Retail Banking 81.7 50 Deposit-related non-interest income, Asset management 25.9 (mutual funds and annuity products), Forex 25.5 22.2 0 FY2004 FY2005 9 1 Excludes revenue (losses) of ALM/Corporate/Other
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