J Trust 8508

Jトラスト

Recent Updates

2022-05-16

Upward revision of full-year FY12/22

2022-05-16

Q1 FY12/22 flash update

2022-03-28

Full-year FY12/21 report update

Get in touch

Akasaka Enoki-zaka Bldg., 1-7-1 Akasaka, Minato-ku, Tokyo 107-0052

https://www.jt-corp.co.jp/

03-4330-9100

Summary

Active in financial, real estate, banking, and international segments. Financial is the overwhelming revenue and profits contributor, consisting mostly of credit card and other consumer finance.

Consumer Finance

Key dates

2014-01-16

Coverage initiation

Full Report

2022-05-16

Q1 FY12/22 flash update

2022-05-16

Full-year FY12/21 flash update

2022-02-16

Q3 FY12/21 flash update

2021-11-15

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Key financial data

Income statement	FY03/17	FY03/18	FY03/19	FY12/19	FY12/20		FY12/21	FY12/22
(JPYmn)	IFRS	IFRS	IFRS	IFRS	IFRS	Adjusted	IFRS	Est.
Operating revenue	66,453	74,321	74,935	24,728	32,652	39,387	42,325	71,300
YoY	-	11.8%	0.8%	-	-	-	7.5%	68.5%
Operating profit (loss)	606	4,759	-32,600	-5,130	-4,752	-2,403	5,260	5,500
YoY	-	684.7%	-	-	-	-	-	4.6%
Operating profit margin	0.9%	6.4%	-	-	-	-	12.4%	7.7%
Pre-tax profit (loss)	-433	2,898	-31,135	-5,526	-2,978	-619	5,899	7,000
YoY	-	-	-	-	-	-	-	18.7%
Pre-tax profit margin	-	3.9%	-	-	-	-	13.9%	9.8%
Profit (loss) attributable to owners of parent	-1,270	-731	-36,107	-3,260	-5,342	-5,342	1,123	4,600
YoY	-	-	-	-	-	-	-	309.6%
Net profit	-	-	-	-	-	-	2.7%	6.5%
Per-share data (split-adjusted; JPY)
No. of shares outstanding('000 shares)	112,537	112,597	115,470	115,470	115,470		115,470
EPS	-11.9	-7.1	-349.7	-30.8	-50.5	-50.5	10.6	40.3
EPS (fully diluted)	-11.9	-7.1	-349.7	-30.8	-50.5		10.6
Dividend per share	12.0	12.0	7.0	1.0	-		1.0	10.0
Book value per share	1,459.9	1,401.6	984.0	944.3	865.2		903.7
Balance sheet (JPYmn)
Cash and cash equivalents	80,666	84,723	87,150	81,913	60,593		74,648
Trade and other receivables	78,416	92,723	106,735	113,942	87,599		44,345
Marketable securities in banking business	30,459	37,159	46,599	52,805	14,176		40,471
Loans in the banking business	311,480	343,400	326,234	370,174	118,159		338,593
Operational investment securities	21,494	3,242	2,855	1,895	505		274
Other financial assets	38,066	46,300	33,416	40,893	18,451		28,554
Inventories	6,848	6,937	6,742	7,285	42		1,358
Tangible fixed assets	5,622	3,028	5,119	9,871	6,032		7,708
Goodwill	32,140	29,578	33,508	35,901	28,290		30,260
Total assets	619,865	656,961	668,377	731,384	530,462		610,631
Trade and other payables	8,110	9,811	14,613	16,137	14,888		14,657
Deposits by banking business	364,462	403,509	437,010	483,402	184,239		437,755
Liabilities directly related to assets held for sale	-	-	-	-	141,109		-
Bonds and loans payable	72,139	78,727	86,002	85,105	67,803		26,939
Other financial liabilities	8,182	5,272	13,383	19,911	9,425		11,837
Total liabilities	463,952	506,184	557,650	612,478	428,004		502,685
Equity attributable to owners of the parent	150,284	144,366	104,173	99,977	91,599		95,670
Non-controlling interests	5,628	6,409	6,554	18,928	10,858		12,275
Total equity	155,913	150,776	110,727	118,905	102,458		107,945
Total interest-bearing debt	72,139	78,727	86,002	85,105	67,803		26,939
Cash flow statement(JPYmn)
Cash flows from operating activities	-12,413	4,581	18,831	-20,829	6,813		15,408
Cash flows from investing activities	-4,468	-7,603	-15,190	15,431	-8,422		-10,002
Cash flows from financing activities	10,612	7,798	-525	18	-8,638		-6,129
Financial ratios
ROA (pre-tax profit based)	-0.1%	0.5%	-4.7%	-0.8%	-0.5%	-0.1%	1.0%
ROE	-0.8%	-0.5%	-29.1%	-3.2%	-5.6%	-5.6%	1.2%
Equity ratio	24.2%	22.0%	15.6%	13.7%	17.3%	17.3%	15.7%

Source: Shared Research based on company data
Note: The company is applying the International Financial Reporting Standards (IFRS ) from FY03/18.
Note: Year-on-year rises of over 1,000% are shown by “-”.
Note: Since FY12/19 was an irregular nine-month (April–December) fiscal year, YoY growth rates are not shown.
Note: In FY03/19 results, figures down to pre-tax profit exclude results for discontinued operations (Highlights Entertainment).
Note: In FY12/19 results, figures down to pre-tax profit exclude results for discontinued operations (Keynote, J Trust Card, JT Chinae Savings Bank, JT Savings Bank, and KeyHolder [including subsidiaries]). Reflects retroactive adjustments due to finalization of provisional accounting treatment for share exchange with allfuz.
Note: In FY12/20 results, figures down to pre-tax profit exclude results for discontinued operations (Keynote, J Trust Card, JT Chinae Savings Bank, and KeyHolder [including subsidiaries]). JT Savings Bank was classified as a continuing business in figures down to pre-tax profit due to the postponement of the share transfer. Figures for JT Capital have been retroactively adjusted to be included in discontinued operations due to the completion of the share transfer in Q3 FY12/21.

Executive summary

J Trust is a financial services group operating banking and finance businesses in Asia. Since 2009, the company has expanded its business through acquisitions of domestic consumer finance and credit card companies, and in 2012 it launched a South Korean savings bank business, leveraging the expertise it had developed in Japan. In the years leading up to FY03/15 it used approximately JPY97.6bn raised in a rights offering to acquire a finance company and a savings bank in South Korea, and a commercial bank in Indonesia. In August 2019, it bought a commercial bank in Cambodia.

At its Financial Business in Japan (FY12/21: 23.1% of operating revenue), the company concentrated on growth of the consumer finance, credit card, credit guarantee, and servicer (receivables purchase and collection) businesses through FY03/15. From FY03/16 onward, after effectively exiting the unsecured consumer finance loans business, which had limited medium-term growth potential, the company has been expanding the real estate related credit guarantee business and the servicer business, and logging stable profit.

The company’s Financial Business in South Korea and Mongolia (FY12/21: 35.0% of operating revenue) is comprised of a savings bank business in Korea and a servicer business. J Trust launched a consumer finance business in South Korea in 2009. In 2012 it acquired a savings bank license in South Korea and entered the industry with the launch of JT Chinae Savings Bank (mainly providing loans to individuals and business owners and business loans to companies) and from FY03/13 to FY03/15 it grew loan balances in the savings bank business primarily through M&A. The core is JT Savings Bank, but the company will add JT Chinae Savings Bank in April 2022, returning to a two-savings bank structure (it sold JT Chinae Savings Bank in FY12/20 for business restructuring and JT Capital in FY12/21, but plans to make JT Chinae Savings Bank a consolidated subsidiary in April 2022 through a share exchange with Nexus Bank Co., Ltd.)

The company’s Financial Business in Southeast Asia (FY12/21: 39.5% of operating revenue) includes banks in Indonesia and Cambodia. In Indonesia, the company acquired Bank Mutiara in November 2014, renaming it PT Bank JTrust Indonesia Tbk. J Trust moved to bolster the bank’s reserves in FY03/19 in preparation for the write-off of all non-performing loans and also began implementing new lending and credit screening procedures so as to put the bank’s loan portfolio on a firmer financial footing. Despite the impact of the COVID-19 pandemic starting in February 2020, the company expects J Trust Bank Indonesia is expected to return to the black during FY12/21. Elsewhere in Southeast Asia, the company acquired a majority stake in ANZ Royal Bank (Cambodia) Ltd. in August 2019, making the Cambodian commercial bank a consolidated subsidiary and changing its name to JTrust Royal Bank, thereby expanding its business in deposits and loans.

The company has been working to reorder its business portfolio since Q3 FY12/20. Due to this concerted restructuring, the company’s core businesses are now credit guarantee and receivables collection operations in Financial Business in Japan, savings bank operations in South Korea, and banking in Southeast Asia. In February 2022, the company announced it would acquire all outstanding shares of H.S. Securities Co., Ltd. from HS Holdings Co., Ltd. (TSE JASDAQ: 8699) to make it a subsidiary, focusing on creating synergies with the general securities company that has an investment banking division.

Trends and outlook

FY12/21 results: For FY12/21, the company reported full-year consolidated operating revenue of JPY42.3bn (+7.5% YoY), operating profit of JPY5.3bn (versus loss of JPY2.4bn in FY12/20), a pre-tax loss of JPY5.9bn (versus loss of JPY619mn in FY12/20), and profit attributable to owners of parent of JPY1.1bn (versus a loss of JPY5.3bn in FY12/20). Pre-tax profit fell short of the revised company forecast of JPY8.3bn. While the company booked a gain of about JPY1.7bn on valuation of the shares of the current HS Holdings, the gain on sales of Nexus Bank shares fell short of the forecast by about JPY1.9bn, and the company booked a loss on valuation of Nexus Bank shares of about JPY2.4bn.

FY12/22 full-year company forecast (out May 13, 2022): The company forecasts consolidated operating revenue of JPY71.3bn (+68.5% YoY), operating profit of JPY5.5bn (+4.6% YoY), pre-tax profit of JPY7.0bn (+18.7% YoY), and profit attributable to owners of parent of JPY4.6bn (+309.6% YoY). Reasons for the revision are lower credit costs and cost of funds in the Financial Business in Southeast Asia, increased interest income from the savings bank business in the Financial Business in South Korea and Mongolia, profit from negative goodwill arising from the acquisition of HS Securities shares, and recording a gain on sales of investment securities following the delisting of Nexus Bank shares.
Operating revenue of JT Chinae Savings Bank, which became a subsidiary in April 2022, will be added to consolidated operating revenue from Q2 onward. Negative goodwill is expected to arise in association with the share swap with Nexus Bank, but this is not factored into the revised full-year forecast, because the amount is undermined.

Strengths and weaknesses

Shared Research views J Trust’s strengths as its ability to proactively develop finance businesses in Asia based on its expertise accumulated in Japan, its purchasing ability, and the management’s business execution skills. Its weaknesses are that it is easily affected by regulations, and its rapid growth entails the risk of personnel shortages. (See "Strengths and weaknesses" section for further details.)

Recent updates

Upward revision of full-year FY12/22

2022-05-13

On May 13, 2022, J Trust Co., Ltd. announced an upward revision of its full-year FY12/22 forecast.

On the same day, the company revised up its its full-year FY12/22 earnings forecast to reflect Q1 results. Revised forecasts are operating revenue of JPY71.3bn, operating profit of JPY5.5bn, pre-tax profit of JPY7.0bn, and profit attributable to owners of parent of JPY4.6bn.

Reasons for the revision are lower credit costs and cost of funds in the Financial Business in Southeast Asia, increased interest income from the savings bank business in the Financial Business in South Korea and Mongolia, profit from negative goodwill arising from the acquisition of HS Securities shares, and recording a gain on sales of investment securities following the delisting of Nexus Bank shares. Operating revenue of JT Chinae Savings Bank, which became a subsidiary in April 2022, will be added to consolidated operating revenue from Q2 onward. Negative goodwill is expected to arise in association with the share swap with Nexus Bank, but this is not factored into the revised full-year forecast, because the amount is undermined.

Trends and outlook

Quarterly trends and results

Cumulative		FY12/20				FY12/21				FY12/21	FY12/22	FY12/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1	% of Est.	Revised Est.
		Post-retroactive adjustment	Post-retroactive adjustment	Post-retroactive adjustment	Post-retroactive adjustment					Retroactive adjustments
Operating revenue		11,011	21,625	29,035	39,387	10,867	22,340	30,624	42,325	9,865	12,351	17.3%	71,300
	YoY	-	-	-	-	-1.3%	3.3%	5.5%	7.5%	-	25.2%		68.5%
Operating expenses		5,168	11,851	15,280	20,787	5,340	11,403	15,298	23,017	4,859	5,342
	YoY	-	-	-	-	3.3%	-3.8%	0.1%	10.7%	-	9.9%
SG&A expenses		5,634	11,091	15,429	20,898	5,599	11,083	15,935	21,560	5,214	5,146
	YoY	-	-	-	-	-0.6%	-0.1%	3.3%	3.2%	-	-1.3%
Other revenues		123	370	477	619	4,508	7,342	8,635	8,731	4,507	174
	YoY	-	-	-	-	-	-	-	-	-	-96.1%
Other expenses		12	93	104	723	34	35	197	1,218	33	93
	YoY	-	-	-	-	183.3%	-62.4%	89.4%	68.5%	-	181.8%
Operating profit		320	-1,040	-1,301	-2,403	4,400	7,160	7,827	5,260	4,266	1,942	35.3%	5,500
	YoY	-	-	-	-	-	-	-	-	-	-54.5%		4.6%
Financial revenue		89	154	111	2,052	1,579	1,160	1,635	3,020	1,579	2,304
	YoY	-	-	-	-	-	653.2%	-	47.2%	-	45.9%
Financial expense		190	159	358	268	80	869	1,095	2,728	77	470
	YoY	-	-	-	-	-57.9%	446.5%	205.9%	917.9%	-	510.4%
Equity in earnings of affiliates						314	113	-7	347	314	218
	YoY	-	-	-	-	-	-	-	-	-	-30.6%
Pre-tax profit		219	-1,045	-1,548	-619	6,213	7,565	8,360	5,899	6,082	3,995	57.1%	7,000
	YoY	-	-	-	-	-	-	-	-	-	-34.3%		18.7%
Quarterly net income from ongoing business		624	-1,170	-2,480	-8,384	2,808	3,782	4,877	3,587	2,707	3,690
	YoY	-	-	-	-	350.0%	-	-	-	-	36.3%
Quarterly net income from discontinued operations		893	1,024	3,656	2,369			-2,646	-2,646	100
	YoY	-	-	-	-	-	-	-	-	-	-
Profit attributable to owners of parent		1,541	442	2,414	-5,342	2,829	3,894	2,405	1,123	2,829	3,628	78.9%	4,600
	YoY	-	-	-	-	83.6%	781.0%	-0.4%	-	-	28.2%		309.6%
Quarterly		FY12/20				FY12/21				FY12/21	FY12/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q1
		Post-retroactive adjustment	Post-retroactive adjustment	Post-retroactive adjustment	Post-retroactive adjustment					Retroactive adjustments
Operating revenue		11,011	10,614	7,410	10,352	10,867	11,473	8,284	11,701	9,865	12,351
	YoY	-	-	-	-	-1.3%	8.1%	11.8%	13.0%	-	25.2%
Operating expenses		5,168	6,683	3,429	5,507	5,340	6,063	3,895	7,719	4,859	5,342
	YoY	-	-	-	-	3.3%	-9.3%	13.6%	40.2%	-	9.9%
Operating gross profit		5,843	3,931	3,981	4,844	5,527	5,410	4,389	3,982	5,006	7,009
	YoY	-	-	-	-	-5.4%	37.6%	10.2%	-17.8%	-	40.0%
	Operating GPM	53.1%	37.0%	53.7%		50.9%	47.2%	53.0%	34.0%	50.7%	56.7%
SG&A expenses		5,634	5,457	4,338	5,469	5,599	5,484	4,852	5,625	5,214	5,146
	YoY	-	-	-	-	-0.6%	0.5%	11.8%	2.9%	-	-1.3%
	SG&A, % of operating revenue	51.2%	-	-	-	51.5%	47.8%	58.6%	48.1%	52.9%	41.7%
Other revenues		123	247	107	142	4,508	2,834	1,293	96	4,507	174
	YoY	-	-	-	-	-	-	-	-32.4%	-	-96.1%
Other expenses		12	81	11	619	34	1	162	1,021	33	93
	YoY	-	-	-	-	183.3%	-98.8%	1,372.7%	64.9%	-	181.8%
Operating profit		320	-1,360	-261	-1,102	4,400	2,760	667	-2,567	4,266	1,942
	YoY	-	-	-	-	-	-	-	-	-	-
	Operating profit margin	2.9%	-	-	-	40.5%	24.1%	8.1%	-	43.2%	15.7%
Financial revenue		89	65	-43	1,941	1,579	-419	475	1,385	1,579	2,304
	YoY	-	-	-	-	-	-	-	-28.6%	-	45.9%
Financial expense		190	-31	199	-90	80	789	226	1,633	77	470
	YoY	-	-	-	-	-57.9%	-	13.6%	-	-	510.4%
Equity in earnings of affiliates						314	-201	-120	354	314	218
	YoY	-	-	-	-	-	-	-	-	-	-30.6%
Pre-tax profit		219	-1,264	-503	929	6,213	1,352	795	-2,461	6,082	3,995
	YoY	-	-	-	-	-	-	-	-	-	-
	Pre-tax profit margin	2.0%	-	-	9.0%	57.2%	11.8%	9.6%	-	61.7%	32.3%
Quarterly net income from ongoing business		624	-1,794	-1,310	-5,904	2,808	974	1,095	-1,290	2,707	3,690
	YoY	-	-	-	-	350.0%	-	-	-	-	36.3%
Quarterly net income from discontinued operations		893	131	2,632	-1,287			-2,646		100
	YoY	-	-	-	-	-	-	-	-	-	-
Profit attributable to owners of parent		1,541	-1,099	1,972	-7,756	2,829	1,065	-1,489	-1,282	2,829	3,628
	YoY	-	-	-	-	83.6%	-	-	-	-	28.2%
	Profit margin	14.0%	-	-	-	26.0%	9.3%	-	-	28.7%	29.4%

Source: Shared Research based on company data
Note: In FY03/19 results, figures down to pre-tax profit exclude results for discontinued operations (Highlights Entertainment).
Note: In FY12/19 results, figures down to pre-tax profit exclude results for discontinued operations (Keynote, J Trust Card, JT Chinae Savings Bank, JT Savings Bank, and KeyHolder (including subsidiaries). Reflects retroactive adjustments due to finalization of provisional accounting treatment for share exchange with allfuz.
Note: In FY12/20 results, figures down to pre-tax profit exclude results for discontinued operations (Keynote, J Trust Card, JT Chinae Savings Bank, and KeyHolder [including subsidiaries]). JT Savings Bank was classified as a continuing business in figures down to pre-tax profit due to the postponement of the share transfer. Figures for JT Capital have been retroactively adjusted to be included in discontinued operations due to the completion of the share transfer in Q3 FY12/21.

Results by segment (cumulative)

Cumulative			FY12/20				FY12/21				FY12/21	FY12/22	FY12/22
(JPYmn)			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1	% of Est.	Revised Est.
											Retroactive adjustments
Operating revenue			11,011	21,625	29,035	39,387	10,867	22,340	30,624	42,325	9,865	12,351	17.3%	71,300
	YoY		-	-	-	-	-1.3%	3.3%	5.5%	7.5%	-	25.2%		68.5%
	Financial Business in Japan		2,258	4,561	6,876	10,038	2,195	4,640	6,853	9,780	2,194	2,158	25.1%	8,612
		YoY	-	-	-	-	-2.8%	1.7%	-0.3%	-2.6%	-	-1.6%		-11.9%
	Financial Business in South Korea and Mongolia		4,365	8,567	9,364	12,388	4,636	9,424	11,045	14,798	3,631	4,220	12.1%	34,999
		YoY	-	-	-	-	6.2%	10.0%	18.0%	19.5%	-	16.2%		136.5%
	Financial Business in Southeast Asia		4,102	7,941	11,963	15,885	3,820	7,752	12,016	16,718	3,802	5,748	24.0%	23,953
		YoY	-	-	-	-	-6.9%	-2.4%	0.4%	5.2%	-	51.2%		43.3%
	Investment Business		281	503	582	754	188	427	409	410	171	-	-	288
		YoY	-	-	-	-	-33.1%	-15.1%	-29.7%	-45.6%	-	-		-29.8%
	Other		151	326	247	320	144	361	299	616	66	223	5.6%	3,999
		YoY	-	-	-	-	-4.6%	10.7%	21.1%	92.5%	-	237.9%		549.2%
Operating profit			320	-1,040	-1,301	-2,403	4,400	7,160	7,827	5,260	4,266	1,942	35.3%	5,500
	YoY		-	-	-	-	-	-	-	-	-	-		4.6%
	Operating profit margin		2.9%	-	-	-	40.5%	32.1%	25.6%	12.4%	43.2%	15.7%		7.7%
	Financial Business in Japan		1,171	2,237	3,427	4,860	1,182	2,430	3,629	4,588	1,188	1,128	30.8%	3,663
		YoY	-	-	-	-	0.9%	8.6%	5.9%	-5.6%	-	-5.1%		-20.2%
		Segment profit margin	51.9%	49.0%	49.8%	48.4%	53.8%	52.4%	53.0%	46.9%	54.1%	52.3%		42.5%
	Financial Business in South Korea and Mongolia		759	1,356	1,979	2,018	1,179	2,189	2,804	3,208	1,044	1,175	18.5%	6,352
		YoY	-	-	-	-	55.3%	61.4%	41.7%	59.0%	-	12.5%		98.0%
		Segment profit margin	17.4%	15.8%	21.1%	16.3%	25.4%	23.2%	25.4%	21.7%	28.8%	27.8%		18.1%
	Financial Business in Southeast Asia		-1,204	-2,894	-4,322	-5,541	-521	-2,084	-2,981	-6,372	-521	508	-	-1,674
		YoY	-	-	-	-	-	-	-	-	-	-		-
		Segment profit margin	-	-	-	-	-	-	-	-	-	8.8%		-
	Investment Business		-473	-822	-1,223	-1,651	3,038	5,390	6,028	5,445	3,038	-422	-	-1,438
		YoY	-	-	-	-	-	-	-	-	-	-		-
		Segment profit margin	-	-	-	-	-	-	-	-	1,776.6%	-		-
	Other		-169	-274	-164	-310	-30	-41	-22	430	-138	-27	-	58
		YoY	-	-	-	-	-	-	-	-	-	-		-86.5%
		Segment profit margin	-	-	-	-	-	-	-	69.8%	-	-		1.5%
	Adjustments		795	431	613	496	42	273	255	60	161	70
	Company-wide expenses		-558	-1,074	-1,611	-2,275	-490	-997	-1,886	-2,101	-506	-490
Quarterly			FY12/20				FY12/21				FY12/21	FY12/22
(JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q1
											Retroactive adjustments
Operating revenue			11,011	10,614	7,410	10,352	10,867	11,473	8,284	11,701	9,865	12,351
	YoY		-	-	-	-	-1.3%	8.1%	11.8%	13.0%	-	25.2%
	Financial Business in Japan		2,258	2,303	2,315	3,162	2,195	2,445	2,213	2,927	2,194	2,158
		YoY	-	-	-	-	-2.8%	6.2%	-4.4%	-7.4%	-	-1.6%
	Financial Business in South Korea and Mongolia		4,365	4,202	797	3,024	4,636	4,788	1,621	3,753	3,631	4,220
		YoY	-	-	-	-	6.2%	13.9%	103.4%	24.1%	-	16.2%
	Financial Business in Southeast Asia		4,102	3,839	4,022	3,922	3,820	3,932	4,264	4,702	3,802	5,748
		YoY	-	-	-	-	-6.9%	2.4%	6.0%	19.9%	-	51.2%
	Investment Business		281	222	79	172	188	239	-18	1	171	-
		YoY	-	-	-	-	-33.1%	7.7%	-	-99.4%	-	-
	Other		151	175	-79	73	144	217	-62	317	66	223
		YoY	-	-	-	-	-4.6%	24.0%	-	334.2%	-	237.9%
Operating profit			320	-1,360	-261	-1,102	4,400	2,760	667	-2,567	4,266	1,942
	YoY		-	-	-	-	-	-	-	-	-	-54.5%
	Operating profit margin		2.9%	-	-	-	40.5%	24.1%	8.1%	-	43.2%	15.7%
	Financial Business in Japan		1,171	1,066	1,190	1,433	1,182	1,248	1,199	959	1,188	1,128
		YoY	-	-	-	-	0.9%	17.1%	0.8%	-33.1%	-	-5.1%
		Segment profit margin	51.9%	46.3%	51.4%	45.3%	53.8%	51.0%	54.2%	32.8%	54.1%	52.3%
	Financial Business in South Korea and Mongolia		759	597	623	39	1,179	1,010	615	404	1,044	1,175
		YoY	-	-	-	-	55.3%	69.2%	-1.3%	935.9%	-	12.5%
		Segment profit margin	17.4%	14.2%	78.2%	1.3%	25.4%	21.1%	37.9%	10.8%	28.8%	27.8%
	Financial Business in Southeast Asia		-1,204	-1,690	-1,428	-1,219	-521	-1,563	-897	-3,391	-521	508
		YoY	-	-	-	-	-	-	-	-	-	-
		Segment profit margin	-	-	-	-	-	-	-	-	-	8.8%
	Investment Business		-473	-349	-401	-428	3,038	2,352	638	-583	3,038	-422
		YoY	-	-	-	-	-	-	-	-	-	-
		Segment profit margin	-	-	-	-	-	-	-	-	1,776.6%	-
	Other		-169	-105	110	-146	-30	-11	19	452	-138	-27
		YoY	-	-	-	-	-	-	-82.7%	-	-	-
		Segment profit margin	-	-	-	-	-	-	-	142.6%	-	-
	Adjustments		795	-364	182	-117	42	231	-18	-195	161	70
	Company-wide expenses		-558	-516	-537	-664	-490	-507	-889	-215	-506	-490

Source: Shared Research based on company data
Note: In FY12/20 results, figures down to pre-tax profit exclude results for discontinued operations (Keynote, J Trust Card, JT Chinae Savings Bank, and KeyHolder (including subsidiaries). JT Savings Bank was classified as a continuing business in figures down to pre-tax profit due to the postponement of the share transfer. Figures for JT Capital have been retroactively adjusted to be included in discontinued operations due to the completion of the share transfer in Q3 FY12/21.

Q1 FY12/22 results

Overview

Operating revenue: JPY12.4bn (+25.2% YoY; 17.3% of revised company forecast)
Operating profit: JPY1.9bn (-54.5% YoY; 35.3%)
Profit attributable to owners of parent: JPY3.6bn (+28.2% YoY; 78.9%)

Key takeaways from the latest earnings report:

Operating revenue: In Q1 FY12/22, operating revenue increased by JPY2.5bn YoY to JPY12.4bn. Factors contributing to operating revenue growth were increases of JPY1.9bn in the Financial Business in Southeast Asia, JPY589mn in the Financial Business in South Korea and Mongolia, and JPY157mn in Other Business, offset against declines of JPY36mn in the Financial Business in Japan and JPY171mn in Investment Business. Interest income went up in the Financial Business in Southeast Asia due to greater lending in the banking business and an increase in securities held.

Operating profit: Operating profit fell by JPY2.3bn YoY to JPY1.9bn. Factors contributing to the operating profit decline were increases of JPY1.0bn in the Financial Business in Southeast Asia, JPY131mn in the Financial Business in South Korea and Mongolia, and JPY111mn in Other Business, offset against declines of JPY60mn in the Financial Business in Japan, JPY3.5bn in Investment Business, JPY91mn in adjustments, and JPY16mn increase in companywide expenses. The Financial Business in Southeast Asia turned profitable by reducing credit costs, cost of funds, and other expenses. The YoY profit decline in Investment Business is in reaction to being awarded a partial settlement in Q1 FY12/21 after J Trust Asia won in lawsuits in Singapore courts.

Earnings forecast revision: The company revised up its full-year FY12/22 earnings forecast to reflect Q1 results. Revised forecasts are operating revenue of JPY71.3bn, operating profit of JPY5.5bn, pre-tax profit of JPY7.0bn, and profit attributable to owners of parent of JPY4.6bn.

Company forecast for FY12/22 and medium-term outlook

Quantitative targets

Company FY12/22 forecast

(JPYmn)		FY12/21	FY12/22	FY12/23	FY12/24	CAGR
(JPYmn)		Act.	Revised Est.	Est.	Est.	CAGR
Operating revenue		42,325	71,300	95,200	115,200	39.6%
	YoY		68.5%	33.5%	21.0%
	Financial Business in Japan	9,780	8,612
	Financial Business in South Korea and Mongolia	14,798	34,999
	Financial Business in Southeast Asia	16,718	23,953
	Investment Business	410	288
	Other Business	616	3,999
SG&A expenses		21,560
	SG&A, % of operating revenue	50.9%
Operating profit		5,260	5,500	12,300	17,700	49.9%
	YoY		4.6%	155.0%	43.9%
	Operating profit margin	12.4%	7.7%	12.9%	15.4%
	Financial Business in Japan	4,588	3,663	3,800	4,300
	Financial Business in South Korea and Mongolia	3,208	6,352	9,000	10,700
	Financial Business in Southeast Asia	-6,372	-1,674	1,500	3,800
	Investment Business	5,445	-1,438	-600	-200
	Other Business	430	58
Pre-tax profit		5,899	7,000
	Pre-tax profit margin	13.9%	9.8%
profit attributable to owners of parent		1,123	4,600	8,000	11,700	118.4%
	Profit margin	2.7%	6.5%	8.4%	10.2%

Source: Shared Research based on company data and interviews

On May 13, 2022, the company revised up its its full-year FY12/22 earnings forecast to reflect Q1 results. Revised forecasts are operating revenue of JPY71.3bn, operating profit of JPY5.5bn, pre-tax profit of JPY7.0bn, and profit attributable to owners of parent of JPY4.6bn.

The following comments are based on information obtained at the beginning of FY12/22. Shared Research plans to update the report after interviews with the company.

FY12/22

The company forecast for FY12/22 calls for operating revenue of JPY71.3bn, operating profit of JPY4.8bn, pre-tax profit of JPY4.7bn, and profit attributable to owners of parent of JPY1.4bn.
The operating profit forecast of JPY4.8bn targets an increase of JPY3.6bn YoY, as the company estimates that the FY12/21 operating profit of JPY5.3bn would have been approximately JPY1.2bn excluding one-time factors.
The company expects goodwill to arise from the share exchange with Nexus Bank (due to IFRS 3, Business Combinations), but the amount has not yet been determined and is therefore not included in the forecast.
The acquisition of H.S. Securities as a subsidiary is not included in the forecast, as it is necessary to closely examine its earnings forecast due to the differences in accounting standards.
The dividend forecast for end-FY12/22 is JPY10, in line with the company's profit growth forecast for 2022 and beyond.

Financial Business in Japan

In the credit guarantee business, supported by a foundation of steady guarantee fee income from the existing credit guarantee balance, the company will promote the development of new products (diversification) to shift from a profit structure centered on condominium loan guarantees to one centered on guarantees for real estate-secured loans and reverse mortgage-type products and a guarantee business utilizing crowdfunding.
In the receivables collection business, while other servicers have been reluctant to bid for the purchase of loans due to the impact of the COVID-19 pandemic, the company will actively participate in the bidding process to purchase loans. In particular, it plans to focus on the purchase of large credit card receivables.
The company plans to develop a new financial instruments business based on the Financial Instruments and Exchange Act. It plans to expand its customer base and service lineup by combining H.S. Securities' sales platform and strengths with the company's financial and other services.

Financial Business in South Korea and Mongolia

Continue to pursue improvement in asset quality instead of focusing on growth in quantity.
JT Chinae Savings Bank, which the company expects to post stable earnings, will become a subsidiary following the share exchange with Nexus Bank. The company belives this will create synergies with its group in Korea that will lead to earnings growth.

Financial Business in Southeast Asia

The company expects the impact of the COVID-19 pandemic to continue, which will reduce interest income as new loans are curtailed, increase bad debt expenses due to NPLs, and cause a dip in loan collections. The company plans to continue to promote restructuring, but its basic understanding is that time is still needed for the effects of the pandemic to subside.
BJI plans to aggressively increase its loan balance while reducing NPL risk. It will strive to reduce funding costs and focus on acquiring small deposits.
The company plans to develop a mortgage business alliance with an Indonesian subsidiary under the Iida Group.
JTRB plans to focus on strengthening the development of new customer segments and expanding transactions with large corporations under its policy of expanding deposits and loans.

Investment

The company plans to continue to collect receivables from Group Lease PCL.
Since the full amount has already been provided for, the company expects to recognize revenue each time a collection is made.

Medium-term outlook

The company returned to the black in FY12/21. The company believes that it is entering a new growth phase in 2022.
The company targets operating revenue of JPY115.2bn in FY12/24 (a CAGR of 39.6% from FY12/2021 to FY12/2024). It aims for operating profit of JPY17.7bn in FY12/24 (a CAGR of 49.9%). The company expects its OPM to improve starting in 2023 as business restructuring progresses and the Financial Business in Southeast Asia turns into the black.
Positive factors from M&A, such as H.S. Securities becoming a subsidiary, have not yet been reflected in the forecast.

Business description

Company Overview

J Trust got its start in business finance and is now the holding company for a group of companies involved in banking and finance businesses in Asia. It has four segments: Financial Business in Japan (credit guarantees and receivables collection); Financial Business in South Korea and Mongolia (savings banking, installment loans, and receivables collection), Financial Business in Southeast Asia (banking, finance, and receivables collection), and Investment (mainly through J Trust Asia).

J Trust grew its business from 2009 onward with acquisitions of consumer finance and credit card companies in Japan. In 2012 it launched a savings bank business in South Korea using expertise acquired in Japan. In the years leading up to 2015 it used approximately JPY97.6bn raised in a rights offering, to buy finance and savings bank companies in South Korea and a commercial bank in Indonesia through 2015. In 2019, the company acquired a commercial bank in Cambodia, and in February 2022, it acquired H.S. Securities, which has investment banking operations.

J Trust has the following segment and business classifications, which serve as the basis for information disclosure: Financial Business in Japan, Financial Business in South Korea and Mongolia, Financial Business in Southeast Asia, Investment, and Other. The company’s primary businesses are the Financial Business in Japan, the Financial Business in South Korea and Mongolia, and the Financial Business in Southeast Asia.

Business structure and operating companies

Business segment		Business	Operating entity
Financial Business in Japan
	Credit guarantee	Primarily credit guarantees for business loans to SMEs and small business owners by banks and credit unions, consumer loans and condo loans, and crowdfunding	Nihon Hoshou
	Receivables collection	Collection of loan receivables purchased from financial institutions and non-bank lenders	Partir Servicer, Nihon Hoshou
Financial Business in South Korea and Mongolia
	Receivables collection	Collection of loan receivables	TA Asset Management
	Capital	Leasing and instalment payments	JT Capital
	Finance	Lending	J Trust Credit NBIF
Financial Business in Southeast Asia

	Receivables collection	Collection of loan receivables	PT J Trust Investment Indonesia, PT Turnaround Asset Indonesia
	Finance	Financing for farm equipment loans, etc.	PT JTrust Olympindo Multi Finance
Investment		Investment in Japan and overseas	J Trust Asia Pte. Ltd.
Other		Systems business offering computer operations/management, outsourced software development, and operational guidance	Robot System
Other		Real-estate business	Nihon Funding Co., Ltd

Source: Shared Research based on company data

Performance by segment

			FY03/17	FY03/18	FY03/19	FY12/19	FY12/20	FY12/21
(JPYmn)			IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
Operating revenue			66,453	74,321	74,935	24,728	39,387	42,325
	YoY		-	11.8%	0.8%	-	-	7.5%
	Financial Business in Japan		9,761	9,027	10,554	7,364	10,038	9,780
		YoY	-	-7.5%	16.9%	-	-	-
		% of total operating revenue	14.7%	12.1%	14.1%	29.8%	25.5%	23.1%
	Financial Business in South Korea and Mongolia		29,178	35,855	39,515	6,755	12,388	14,798
		YoY	-	22.9%	10.2%	-	-	-
		% of total operating revenue	43.9%	48.2%	52.7%	27.3%	31.5%	35.0%
	Financial Business in Southeast Asia		14,325	13,578	13,025	9,673	15,885	16,718
		YoY	-	-5.2%	-4.1%	-	-	-
		% of total operating revenue	21.6%	18.3%	17.4%	39.1%	40.3%	39.5%
	General Entertainment Business		2,072	-	1,520	-	-	-
		YoY	-	-	-	-	-	-
		% of total operating revenue	3.1%	0.0%	2.0%	-	-	-
	Real Estate Business		6,266	6,907	6,440	-	-	-
		YoY	-	10.2%	-6.8%	-	-	-
		% of total operating revenue	9.4%	9.3%	8.6%	-	-	-
	Investment Business		2,462	7,290	1,036	734	754	410
		YoY	-	196.1%	-85.8%	-	-	-
		% of total operating revenue	3.7%	9.8%	1.4%	3.0%	1.9%	1.0%
	Other		2,384	1,662	2,843	201	320	616
		YoY	-	-30.3%	71.1%	-	-	-
		% of total operating revenue	3.6%	2.2%	3.8%	0.8%	0.8%	1.5%
Segment profit (loss)			4,173	7,125	-32,600	-986	-2,403	5,260
	YoY		-	70.7%	-557.5%	-	-	-
	Financial Business in Japan		5,582	4,167	4,251	3,082	4,860	4,588
		YoY	-	-25.3%	2.0%	-	-	-
		% of total operating revenue	134.8%	58.4%	-	-	-	88.2%
	Financial Business in South Korea and Mongolia		3,197	3,555	4,880	2,160	2,018	3,208
		YoY	-	11.2%	37.3%	-	-	-
		% of total operating revenue	77.2%	49.9%	-	-	-	61.7%
	Financial Business in Southeast Asia		-3,980	1,545	-17,712	-4,667	-5,541	-6,372
		YoY	-	-	-	-	-	-
		% of total operating revenue	-	21.7%	-	-	-	-122.5%
	General Entertainment Business		-856	-2,403	-15	-	-	-
		YoY	-	-	-	-	-	-
		% of total operating revenue	-	-	-	-	-	-
	Real Estate Business		480	659	91	-	-	-
		YoY	-	37.3%	-86.2%	-	-	-
		% of total operating revenue	11.6%	9.2%	-	-	-	-
	Investment Business		-198	-2,852	-20,568	-1,768	-1,651	5,445
		YoY	-	-	-	-
		% of total operating revenue	-	-	-	-	-	104.7%
	Other		-82	57	39	-407	-310	430
		YoY	-	-	-31.6%	-	-	-
		% of total operating revenue	-	0.8%	-	-	-	8.3%

Source: Shared Research based on company data
Note: Since FY12/19 was an irregular nine-month (April–December) fiscal year, YoY growth rates are not shown.
Note: In FY12/20, the Real Estate and General Entertainment segments were classified as discontinued operations, so FY12/19 figures have been adjusted to exclude these.

Financial Business in Japan (share of operating revenue: 23.1%)

The Financial Business in Japan is comprised mainly of the credit guarantee and servicer businesses, and its key subsidiaries are Nihon Hoshou and Partir Servicer. The former provides credit guarantee services and receivables collection services, while the latter engages in receivables collection.

Credit guarantee

In the credit guarantee business, when a borrower is unable to or has difficulties repaying a loan, the guarantee company pays the bank in lieu of the borrower. When a borrower is unable to pay off a loan, Nihon Hoshou pays off the loan to the loan provider, and that loan amount becomes a cost to Nihon Hoshou.

The company carries on this business through its consolidated subsidiary Nihon Hoshou. As of end-FY12/21, Nihon Hoshou had tie-ups with the following financial institutions in the credit guarantee business: Ehime Bank, Kagawa Bank, Tokushima Taisho Bank, Kawasaki Shinkin Bank, Kinki Sangyo Credit Union, Seikyo Shinkumi, Saikyo Bank, Shonan Shinkin Bank, Tokyo Star Bank, and SBJ Bank.

In real estate-secured loans, the company began new guarantees with Mitsui Fudosan Realty Co., Ltd. in April 2021 and with Keihan Real Estate Co., Ltd. in December 2021.

A financial guarantee contract is initially recognized at fair value and booked under trade and other liabilities in the consolidated statement of financial position.

Credit guarantee balance

			FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY12/19	FY12/20	FY12/21
(JPYmn)								(9mths)
Total credit guarantee balance			36,712	53,354	85,975	141,881	202,810	210,824	209,819	204,278
	YoY		-10.1%	45.3%	61.1%	65.0%	42.9%	-	-	-2.6%
	Unsecured		13,890	15,376	14,829	16,168	18,019	15,808	12,325	8,562
		YoY	-33.9%	10.7%	-3.6%	9.0%	11.4%	-	-	-30.5%
		% of total	37.8%	28.8%	17.2%	11.4%	8.9%	7.5%	5.9%	4.2%
	Secured		22,821	37,978	71,146	125,712	184,791	195,015	197,493	195,716
		YoY	15.1%	66.4%	87.3%	76.7%	47.0%	-	-	-0.9%
		% of total	62.2%	71.2%	82.8%	88.6%	91.1%	92.5%	94.1%	95.8%

Source: Shared Research based on company data
Note: The guarantee fee ratio = guarantee commission received / credit guarantee balance (average of the start and end of the fiscal year).

Through FY03/14 Nihon Hoshou’s guarantees outstanding rose as the number of alliance banks increased and guarantee commissions received also grew. In FY03/15, the credit guarantee balance fell temporarily, because the transfer of the KC Card brand (in January 2015) included the credit guarantee business, which reduced the number of local financial institutions that were partners in the credit guarantee business by six. However, Nihon Hoshou has since gotten the portfolio of loans on which it has provided credit guarantees back on a stable footing with the aid of addition of new types of credit guarantee products.

Background to loan guarantee business

Nihon Hoshou intends to partner with more banks and build up its credit guarantee balance, the bulk of which is for condominium loans. The interest rate on condominium loans tends to be lower than on consumer loans, and Nihon Hoshou’s income is only around 1% of loan amounts. But this business has potential for medium term growth because contracts are large at around JPY95–100mn per contract—compared with JPY500,000 for consumer loans—meaning the loan balance is easy to grow. Furthermore, they are secured and write-off risks are limited. Note that Nihon Hoshou has managed to maintain its occupancy rate above 98% due to careful selection of property areas (98% occupancy in Tokyo, Nagoya, Osaka, and Fukuoka), choosing buildings that are only a 10-minute walk from the nearest station, and strict selection of housing manufacturers that provide adequate property management and repair services. Currently, the company is building a system to increase the balance of condominium loan guarantees by providing one-stop services covering land procurement, building construction, investor development, sales, and loan guarantees. It is also focusing on guarantees for loans for pre-owned condominiums. The company is also diversifying its credit guarantee products to include guarantees for overseas real estate-backed loans and reverse mortgages targeting high-net-worth borrowers.

New initiatives in the credit guarantee business

The company is focusing on jointly conducting product structuring, promotions, and credit guarantee services in the crowdfunding market. Through the offering by partner companies of funds that incorporate Nihon Hoshou's debt guarantees, the company handles guarantees in loan crowdfunding and real estate purchase guarantees in real estate investment crowdfunding. As of December 2021, the company's transaction volume had reached JPY5.0bn.

In the loan crowdfunding business, the company has begun providing guarantees through "cool," which is operated by the ZUU Group's Cool and Cool Services. In real estate investment crowdfunding, the company has begun providing guarantees through Ooya.com and other crowdfunding sites operated by Gro-Bels Co., Ltd. (formerly Keynote Co., Ltd.), a member of the Mirainovate (formerly Prospect Co., Ltd.) group.

Servicer business

The servicer business came into being in 1999 to deal with bad debts held by financial institutions under the Act on Special Measures Concerning Claim Management and Collection Businesses. Within Financial Business in Japan, Partir Servicer is the main company involved in receivables collection.

The servicer (receivables collection) business involves managing and recovering “specific monetary debts” either on behalf of a financial institution or transferred from one. Specified monetary debts are those based on guarantee contracts or loan receivables, leasing and credit card receivables owed to a financial institution and those belonging to an entity in the midst of legal bankruptcy proceedings. Servicers buy non-performing loans (NPLs) from financial institutions at a discount to fully claimable amounts. The purchased debts are accounted for at book value as purchased receivables under current assets.

Money recovered from debtors is the company’s revenue and accounted for as collection of purchased receivables, loan interest income, and gains on the book value adjustments of purchased receivables in the income statement. Operating expenses in this business are recorded as receivable purchase costs, because they refer to the price required to acquire the receivables (the amortized cost method is used for receivables with which it is possible to estimate future cash flows).

J Trust’s strengths lie in its ability to collect debts owed by individuals. Further, the company says that its ability to analyze collection gives it a competitive advantage when bidding. J Trust said that it has been able to blend the expertise gained by its past acquisitions of a variety of companies which enables it to have a high collection rate.

Gains from recovering written-off NPLs

In Japanese accounting standards, gains from recovering written-off NPLs reflect revenue from collection of NPLs—purchased receivables assumed by Nihon Hoshou from defunct Takefuji—that have already been written off the balance sheet. Written-off NPLs have no book value, so recovery implies zero-cost profits. Through use of its proprietary expertise, the company is making progress in recoveries. Under current IFRS standards, the book value is calculated based on estimated cash flows and recorded as purchased receivables in the statement of financial position, and revenue is recorded as interest income.

As of end-FY12/21, the off-balance sheet loan balance (claimable loans) assumed from the former Takefuji Corp amounted to approximately JPY126.6bn. The average amount recovered on a monthly basis appears to exceed JPY200mn.

Financial Business in South Korea and Mongolia (share of operating revenue: 35.0%)

The company entered the savings bank market by taking over some assets and liabilities of Mirae Savings Bank, which ceased operations in 2012. During this period, more and more Japanese companies were expanding into Korean savings banks. The ORIX Group acquired Pureun 2 Mutual Savings Bank in 2010 to launch ORIX Savings Bank, and also acquired Smile Savings Bank in 2013

Providers of consumer loans in South Korea

Three groups provide consumer loans in South Korea. The first tier comprises banks; the second tier is non-bank deposit taking institutions, specialist credit companies and others); the third tier is money lending organizations. Savings banks fall under the second tier.

	Tier	Broad classification	Detailed classification
Regulated sector	Tier 1	Banks	General banks (city banks, regional banks, foreign banks)
	Tier 1	Banks	Specialist banks (farm co-ops, fisheries co-ops Korea Development Bank etc.)
	Tier 2	Non-bank deposit taking institutions	Savings banks
			Credit co-ops (co-ops, Saemaul finance firms)
			General finance companies
		Specialist credit companies	Capital companies
		Specialist credit companies	Credit card companies
		Other	Insurance companies
		Other	Securities companies
Unregulated sector	Tier 3	Money lending organizations	Money lending companies

Source: Shared Research based on company data
Note: Regulated financial institutions are those under the direct control and supervision of, and licensed by, South Korean regulators.
Note: The above are not legal classifications criteria but are conventions used in the South Korean society.

The banks target creditworthy customers; the non-banks target both creditworthy customers and those needing finance in an emergency; the money lending companies target those with poor credit ratings. Customers are given a personal credit rating according to their creditworthiness. Capital companies’ customers mainly range from grade 1 to grade 4, savings banks’ customers from grade 5 to grade 9, and the money lenders’ customers from grade 7 to grade 9.

Stricter restrictions on lending have been applied to banks in the first tier. The interest rate ceiling was lowered from 49.0% to 44.0% in July 2010, to 39.0% in June 2011, and to 34.9% in April 2014. It was lowered again to 27.9% in March 2016, to 24.0% in February 2018, and to 20.0% in July 2021.

The company has been involved in the consumer finance business in Japan since the late 2000s amidst tightening regulations such as the reduction of maximum interest rates and the introduction of limits on total volume. This experience has allowed it to flexibly adopt countermeasures against the trend of tighter regulations on personal loans in South Korea.

Mutual savings banks

Mutual savings banks are small financial institutions serving SMEs and providing home loans in various regions.

Mutual savings banks’ business operations

Key business areas	Main products and services
Deposits	Ordinary deposits, savings deposits, free deposits
	Periodic deposits (time deposits, accommodation drafts)
	Installment deposits: trust deposits (free installment deposits, periodic installment deposits)
Lending	Personal loans, loans secured by real estate and chattels, low-interest government guaranteed financial products aimed at people on low incomes
Lending	Development of products suited to regions’ and customers’ characteristics, stimulating relationship banking
Ancillary businesses	Domestic exchange (settlement of payables and receivables for domestic financial institutions and funds transfers)
	Sale of insurance products
	Installment finance (mutual savings banks that meet certain conditions (period of at least two years, maintaining BIS capital ratio of at least 10%) may operate installment finance businesses) (JT Savings Bank meets the criteria)
	Mutual savings banks may operate a number of businesses in addition to the above, and the scope is expanding

Source: Shared Research based on company data

There are major differences in how money lenders and mutual savings banks raise funds. Shared Research thinks that the mutual savings banks have a competitive edge in this respect. Money lenders in South Korea are restricted in raising funds from banks and other regulated financial institutions. They are allowed to make private placements of bonds, but public bond issuances need approval from the Financial Supervisory Service. According to J Trust, mutual savings banks can accumulate low-cost deposits, while making loans at similar interest rates to the money lenders.

JT Savings Bank

The financial business in South Korea was previously made up of three businesses: the savings bank business (JT Chinae Savings Bank and JT Savings Bank), the capital business which is part of the specialty finance industry (JT Capital), and the receivables collection business (TA Asset Management). In FY12/20, as a part of restructuring, the company sold J Trust Card (parent of JT Chinae Savings Bank) to SAMURAI & J PARTNERS (currently Nexus Bank), signed a basic agreement to transfer JT Savings Bank to VI Financial Investment Corporation (South Korea), and completed the transfer of JT Capital shares in August 2021.

However, the share transfer was cancelled for JT Savings Bank (November 2021), as the deadline for concluding a share purchase agreement with the transferee passed without the parties reaching agreement on terms. In January 2022, the company decided to conduct a share exchange with Nexus Bank Co., Ltd. JT Chinae Savings Bank is scheduled to become a consolidated subsidiary of the company in April 2022, which will make the company return to a two-savings bank structure.

Performance for Financial Business in South Korea and Mongolia and its main subsidiaries

			FY03/17	FY03/18	FY03/19	FY12/19	FY12/20	FY12/21
(JPYmn)			IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
Operating revenue			29,178	35,855	39,515	6,755	12,388	14,798
	Savings banks		24,043	28,840	31,851	22,932	11,803	14,293
		JT Chinae Savings Bank	18,928	21,064	21,695	14,932	-	-
		JT Savings Bank	5,115	7,776	10,156	8,000	11,803	14,293
	TA Asset Management		1,879	1,519	1,993	2,385	1,144	391
Segment profit			3,197	3,555	4,880	2,160	2,018	3,208
	Savings banks		3,468	3,158	4,112	5,511	2,921	3,704
		JT Chinae Savings Bank	2,846	1,592	2,459	3,577	-	-
		JT Savings Bank	622	1,566	1,653	1,934	2,921	3,704
	TA Asset Management		1,349	482	887	1,770	242	-664
Loans in the banking business			236,873	266,996	277,940	284,258	131,723	166,315

Source: Shared Research based on company materials

TA Asset Management

Establishment of loan servicing business

J Trust purchased South Korean consumer finance company Neoline Credit in 2011, and in March 2014 it bought South Korean loan companies KJI Consumer Finance LLC (currently TA Asset Management LLC) and HICAPITAL Co., Ltd. In August 2014, J Trust transferred its loan businesses operated by KJI, HICAPITAL, and Neoline Credit to Chinae Savings Bank. After the business transfer, KJI, HICAPITAL, and Neoline Credit began operating as TA Asset Management, with the organization specializing in purchasing and recovering NPLs.

TA Asset Management earnings

TA Asset Management’s claimable loan balance was JPY29.0bn at end-FY03/19, and declined to JPY3.3bn by end-December 2019, because the company sold JPY26.4bn worth of claimable loans on market. We understand that purchase prices on South Korea’s secondary market for NPLs rose strongly and the company booked gains of JPY1.8bn on the sale. As of end-December 2020, the balance of purchased receivables was JPY2.1bn.

TA Asset Management’s operating revenue comes from interest on loans, gains on the book value adjustments of purchased receivables, gains on recovering written-off NPLs, and other operating revenue. In FY03/18, TA Asset Management’s main revenue source was interest on loans, which is generated when the company recovers purchased NPLs, and gains on the book value adjustments.

TA Asset Management earnings

		FY03/17	FY03/18	FY03/19	FY12/19	FY12/20	FY12/21
(JPYmn)		IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
Operating revenue		1,879	1,519	1,993	2,385	1,144	391
	YoY	-	-19.2%	31.2%	-	-	-
	Interest on loans	461	885	938	468	233	329
	Book value adjustment loss (purchased receivables)	717	406	906	149	899	60
	Collection on purchased receivables	-	-	-	-	-	-
	Gain on bad debts recovered	84	47	33	17	2	1
	Other financial revenue	414	134	114	1,750	9	1
Operating expenses		-117	333	264	-1	190	474
	Credit costs	-117	304	254	-9	77	432
	Other operating expenses	-	-	9	8	113	42
Operating gross profit
	YoY
	Operating GPM
SG&A expenses		669	718	849	616	637	583
	YoY	-	7.3%	18.2%	-27.4%	3.4%	-8.5%
	SG & A ratio	35.6%	47.3%	42.6%	25.8%	55.7%	-
	Credit costs	-	-	-	-	-	-
	Personnel	390	425	461	319	388	352
Operating profit (loss)		1,349	482	887	1,770	242	-664
	YoY	-	-64.3%	84.0%	99.5%	-86.3%	-
	Operating profit margin	71.8%	31.7%	44.5%	74.2%	21.2%	-

Source: Shared research based on company data

Financial Business in Southeast Asia (share of operating revenue: 39.5%)

In Indonesia, J Trust operates PT Bank JTrust Indonesia Tbk. (the former PT Bank Mutiara Tbk.; BJI), a commercial bank; PT JTrust Investments Indonesia (JTII), which is involved in collections of NPLs; PT Turnaround Asset Indonesia (TAID); and PT JTrust Olympindo Multi Finance (JTO), which conducts financing services. The company is following its South Korean structure in Indonesia with a three-pronged business structure of banking, receivables collections, and financing. In August 2019, the company purchased 55% of the shares of ANZ Royal Bank (Cambodia) Ltd. and made it a consolidated subsidiary from August 2019. The company changed its name to JTrust Royal Bank Plc. (JTRB).

PT Bank JTrust Indonesia (BJI)

Bank Mutiara (currently PT Bank JTrust Indonesia) became a subsidiary in November 2014

In November 2014, the company acquired 99.0% of shares in Bank Mutiara Tbk. (currently PT Bank JTrust Indonesia Tbk.), an Indonesian commercial bank, and consolidated it as a subsidiary. Indonesian law dictates that foreign entities may only hold up to 40% of ownership in a commercial bank, but as a special case, J Trust has been allowed to hold up to a 100% share in PT Bank JTrust Indonesia, as the bank had been rescued by the Indonesia Deposit Insurance Corporation.

PT Bank JTrust Indonesia is an Indonesian commercial bank with a branch network of 62 branches spread across Indonesia and with total assets of about IDR13tn as of the end of March 2014 (JPY120bn; based on an exchange rate of IDR/JPY0.009 as of November 19, 2014). In November 2008, Bank Mutiara came under the control of the Indonesia Deposit Insurance Corporation (Lembaga Penjamin Simpanan [LPS]). Bank Mutiara restructured its operations under LPS’ supervision, and LPS began the public bidding process for the sale of all shares in Bank Mutiara in March 2014.

PT Bank JTrust Indonesia’s primary revenue source comes from interest on loans (operating revenue in the banking business). PT Bank JTrust Indonesia worked to reform its management structure from FY03/16. Under a new management team, it aimed to increase the loan balance in a stable way by reducing low-interest and large-lot corporate loans of about JPY1.0bn, focusing on loans for consumers and loans acquired from collaborating with Fintech companies such as P2P lenders, and expanding business alliances with multi-finance companies. However, in FY03/19, the company reshuffled the management and changed its management policy following an increase in NPLs.

The main line items under operating expenses are the deposit interest rate, credit costs, and SG&A expenses. PT Bank JTrust Indonesia’s deposits were held mostly by large time deposit accounts holders, making the cost of funds relatively high. However, the company is working to decrease the average deposit interest rate by increasing the CASA ratio (ratio of current account and savings account deposits as a percentage of overall deposits).

PT Bank JTrust Indonesia earnings

			FY03/17	FY03/18	FY03/19	FY12/19	FY12/20	FY12/21
(JPYmn)			IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
Loans in the banking business			89,630	90,791	63,577	47,520	51,504	80,500
	YoY		-	1.3%	-30.0%	-25.3%	8.4%	56.3%
Deposits by banking business			114,081	119,588	123,677	115,752	105,669	149,614
	YoY		-	4.8%	3.4%	-6.4%	-8.7%	41.6%
Operating revenue			13,573	13,818	11,779	6,710	8,593	8,007
	YoY		-	1.8%	-14.8%	-43.0%	28.1%	-6.8%
	Operating revenue / Loan balance		-	11.4%	11.7%	9.2%	11.0%	8.0%
Operating expenses			11,871	8,685	11,472	3,897	10,028	8,374
	Deposit interests		8,080	8,053	7,893	5,613	7,321	6,670
		Deposit interests / Deposit balance	-	6.9%	6.5%	4.8%	6.9%	4.5%
	Credit costs		2,286	-686	1,530	-3,559	486	1,076
		Reserve ratio	2.6%	-	2.0%	-	1.0%	1.6%
	Other operating expenses		1,505	1,318	2,049	1,843	2,221	628
SG&A expenses			4,244	4,905	5,332	4,685	3,826	4,156
	YoY		-	15.6%	8.7%	-12.1%	-18.3%	8.6%
	SG & A ratio		31.3%	35.5%	45.3%	69.8%	44.5%	51.9%
	Personnel		1,906	2,158	2,288	1,451	1,922	2,076
	Other		2,338	2,747	3,044	3,234	1,904	2,080
Operating profit (loss)			-4,149	1,106	-5,901	-276	-5,030	-3,852
	YoY		-	-	-	-	-	-
	Operating profit margin		-	8.0%	-	-	-	-

Source: Shared Research based on company materials

Indonesian business environment

Indonesia is an attractive market with a population of 260mn, GDP growth rate averaging over 6% since 2010, with half of the population under 28 years old and prospects for an expanding middle class. At the same time, the country consists of a group of islands that stretch over a wide area, and 120 million Indonesians (or 46% of the total population) live in non-urban areas. Such individuals only rarely deal with financial institutions.

PT JTrust Investments Indonesia (JTII)

In June 2015, the company established PT JTrust Investments Indonesia (JTII; ownership is J Trust Asia Pte. Ltd. 84.36% and the company 14.79%). In October 2015, it purchased NPLs from PT Bank JTrust Indonesia, and dedicated itself to managing and collecting the receivables. The aim of setting up and launching operations at JTII was to get first-mover advantage with an eye on future market growth in a country where there was a dearth of specialist receivables collection companies.

The company has significantly increased the number of debt management and collection staff from 39 at end-March 2019 to 75 at end-December 2019 in an effort to capture profit opportunities by combining its expertise in debt management and collection cultivated in Japan and Korea. The company is also currently purchasing NPLs from companies other than BJI.

PT JTrust Olympindo Multi Finance (JTO)

The company acquired a 60% stake in PT Olympindo Multi Finance (OMF, now JTO) in October 2018. Established in 1993, Olympindo Multi Finance is a veteran of the automobile loan industry specializing in multi-finance business for used car loans. It had 40 branches nationwide in Indonesia and a broad network of financial institutions including major banks at that time. In recent years however credit risk in the automobile loan industry in Indonesia has been rising, worsening the fundraising environment for independent multi-finance companies.

The fundraising environment for JTO improved with the backing of PT Bank JTrust Indonesia, and from October 2018 it started joint finance operations with PT Bank JTrust Indonesia and resumed dealings with large used car dealers, which had been on a downtrend. This led to an upturn in monthly new loan numbers and amounts for JTO. In May 2019, the company made 997 new loans and lent IDR115.4bn, 4.3x and 6.0x the respective April 2018 levels.

In addition to its mainstay business of used vehicle financing, since July 2018 the company has entered business partnerships with dealers that sell agricultural equipment brands such as Kubota, Yanmar and Kioti (Korean agricultural machinery). In January 2019, the company entered a new business alliance with PT Rutan and added the Iseki brand to its lineup.
In 2020, however, new lending was temporarily suspended, except for agricultural equipment financing and microfinance, in response to the COVID-19 pandemic. Since then, JTO has strategically curbed lending.

PT Turnaround Asset Indonesia (TAID)

TAID was established as a subsidiary of TAA, which is well known in Korea, targeting Korean financial institutions. It launched in March 2021. Currently, TAID purchases receivables from Korean financial institutions and is entrusted with the collection of such receivables. Moving forward, the company plans to have JTII purchase real estate-secured loans based on its accumulated know-how, and TAID purchase unsecured loans based on its expertise in Korea. It will target small receivables from individuals in order to utilize the expertise in collecting unsecured receivables from individuals that the company has cultivated in Korea and Japan.

JTrust Royal Bank (JTRB)

In May 2018, the company decided to acquire 55.0% of total common shares issued by ANZ Royal Bank (Cambodia) Ltd. and completed the acquisition in August 2019. The bank became the company’s consolidated and specified subsidiary and changed its name to JTrust Royal Bank Plc. (JTRB) (Results consolidated from August 2019.)

At end-December 2018 the Cambodian banking market comprised 42 commercial banks and 14 specialist banks for a total of 56. It is a growth market with total assets of KHR1,397tn (KHR4,018/USD, or roughly JPY3.8tn), which saw a 20.9% increase YoY. Total assets for ANZ Royal Bank Cambodia at that time were JPY102.5bn (2.7% of total assets), ranking it No. 10 out of 56. Pre-tax profit was JPY2.9bn. It had 10 locations in the capital Phnom Penh, four in the regions, and 409 employees. JTRB has two segments: retail and corporate. Its business strategy targets the top 1% of companies in Cambodia and wealthiest 5% of the population.

Following its consolidation, J Trust plans to expand JTRB’s business strategy to encompass the middle class market, which has a larger market size and higher growth potential.
As of end-December 2021, JTRB's loans outstanding totaled JPY102.1bn and the company maintained its policy of expanding JTRB's operations and was focusing on securing stable earnings. Further, the company is working to strengthen its acquisition of low interest rate deposits with funding costs in mind. In January 2022, the company held grand openings for branches in the Sen Sok and Chbar Ampov districts in northern Phnom Penh.

Reference: JTrust Royal Bank earnings

			FY03/17	FY03/18	FY03/19	FY12/19	FY12/20	FY12/21
(JPYmn)			IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
Loans in the banking business			-	-	-	52,646	69,041	102,116
	YoY		-	-	-	-	31.1%	47.9%
Deposits by banking business			-	-	-	64,386	84,085	122,904
	YoY		-	-	-	-	30.6%	46.2%
Operating revenue			-	-	-	1,733	5,259	7,693
	YoY		-	-	-	-	203.5%	46.3%
	Operating revenue/loans		-	-	-	3.3%	7.6%	7.5%
Operating expenses			-	-	-	262	1,462	2,707
	Deposit interests		-	-	-	129	1,051	2,530
		Deposit interests / Deposit balance	-	-	-	0.2%	1.2%	2.1%
	Credit costs		-	-	-	82	261	-9
		Reserve ratio	-	-	-	0.2%	0.4%	0.0%
	Other operating expenses		-	-	-	50	148	186
SG&A expenses			-	-	-	1,165	3,034	3,562
	YoY		-	-	-	-	160.4%	17.4%
	SG & A ratio		-	-	-	67.2%	57.7%	46.3%
	Personnel		-	-	-	644	1,506	1,762
	Other		-	-	-	521	1,528	1,800
Operating profit (loss)			-	-	-	299	759	1,365
	YoY		-	-	-	-	153.8%	79.8%
	Operating profit margin		-	-	-	17.3%	14.4%	17.7%

Source: Shared Research based on company data
The above data are before consolidation adjustments.

Strengths and weaknesses

Strengths

Ability to proactively develop business in Asia by leveraging expertise gained in Japan and South Korea:

J Trust has accumulated expertise in various aspects of the consumer finance business in Japan, including acquisitions, operations, and dealing with regulations. It also has a strong reputation in recovering receivables in South Korea. The ability to leverage such expertise in Asia is one of the company’s strengths. J Trust believes that the changes observed in the business environment for consumer lending in Japan in the 2000s will also play out in South Korea. It believes that South Korea will lower maximum interest rates, that interest rates on consumer loans will fall, and that banks will account for an increasing share of loans to consumers. In response to such changes in business conditions, the company notes that it has been able to employ a proactive business strategy offering low-interest products to quality customers ahead of its competitors based on its experience in consumer lending in Japan. Servicer business TA Asset Management in South Korea has established expertise in managing and recovering receivables, and the company has already launched a similar business in Indonesia (TAID). J Trust said it would focus on purchasing receivables from South Korean financial institutions there. Shared Research thinks that it will be able to establish a frontrunner position in the developing servicer market in Indonesia.

Purchasing ability:

The company excels in buying undervalued businesses and receivables. The company uses its proprietary knowledge and business models to collect efficiently. These qualities bear fruit in how the company recovers written-off receivables of Takefuji Corp (defunct) and credit guarantee services where the company strategically partners with banks, introducing customers and dispatching specialists. In addition, the company voluntarily adopted IFRS from Q1 FY03/18. This means it will no longer have to apply straight-line amortization of goodwill required under Japanese accounting standards for future large-scale M&A deals, although under IFRS goodwill will require review by an audit firm based on an impairment test. With the move to IFRS, the company believes there is little chance for existing goodwill particularly in the Indonesian business to negatively impact consolidated earnings for the group, provided the present management stance is maintained.

Management can execute:

Shared Research believes J Trust excels at developing businesses in new areas ahead of its rivals. Senior management led by President Fujisawa has been instrumental in this respect, exerting its market analysis and execution capabilities. Senior management led all the activities to date: launch of South Korean savings bank services (2012), rights offering (2013), the acquisition of Indonesian commercial bank PT Bank Mutiara Tbk in 2014, and the acquisition of a commercial bank in Cambodia in 2019. In February 2022, the company acquired H.S. Securities from HS Holdings and made it a subsidiary.

Weaknesses

Susceptible to regulation:

The company’s main businesses, its Financial Business in Japan, its Financial Business in South Korea and Mongolia, and its Financial Business in Southeast Asia, are all regulated businesses. Specifically, its Financial Business in Japan is regulated under the Moneylending Business Act and the Servicer Act, its Financial Business in South Korea and Mongolia is regulated under the Mutual Savings Bank Act, and its Southeast Asia business is regulated by capital adequacy requirements as well as other various regulations. As a result, changes in the regulatory environment can lead to fluctuations in the company’s earnings. Until FY03/14, the domestic unsecured loan business was impacted by an amendment to the Moneylending Business Act, etc., and as of September 2016 the company said it was difficult to expect growth in this business, and had effectively exited it.

Rapid growth entails risk of personnel shortages:

The company may face problems arising from personnel shortages when undertaking due diligence related to acquisitions or conducting post-acquisition operations. The company employed a large number of accounting officers in preparation of the IFRS adoption, and it is also bringing on M&A personnel and reinforcing its human resources through new hires in fields such as internal control and auditing. Despite these efforts, however, personnel shortages remain a weakness for the company.

Key group companies

J Trust has set up a holdings structure where each group company operates under J Trust. Among the group companies, JT Chinae Savings Bank and Nihon Hoshou in particular provide significant earnings contributions.

Company name	Ownership		Main business
Nihon Hoshou	100.00%		Credit guarantee business, Finance business
Partir Servicer Co., Ltd.	100.00%	Indirect holdings	Receivables collections business
Robot System	100.00%	Indirect holdings	Systems business
Nihon Funding Co., Ltd.	100.00%		Real Estate Business
J Trust System	100.00%		Systems business
JT Savings Bank Co., Ltd.	100.00%		Savings bank business
TA Asset Management	100.00%		Receivables collections business
J Trust Credit NBFI	100.00%	Indirect holdings	Finance business
PT Bank Jtrust Indonesia Tbk.	74.23%	Indirect holdings 20.35％	Bank business
PT JTUST INVESTMENTS INDONESIA	73.79%	Indirect holdings 26.01％	Receivables collections business
PT JTrust Olympindo Multi Finance	67.90%	Indirect holdings	Finance
PT TURNAROUND ASSET INDONESIA	100.00%	Indirect holdings	Receivables collections business
J Trust Royal Bank Plc.	55.00%		Bank business
JTRUST ASIA PTE. LTD.	90.68%	Indirect holdings 9.32％	Investment business

2021年12月末現在

Historical performance

Full-year FY12/21 results

Overview

Operating revenue: JPY42.3bn (+7.5% YoY; 100.5% of revised company forecast)
Operating profit: JPY5.3bn (loss of JPY2.4bn in FY12/20; 95.6%)
Pre-tax profit: JPY5.9bn (loss of JPY619mn in FY12/20; 71.5%)
Profit attributable to owners of parent: JPY1.1bn (loss of JPY5.3bn in FY12/20; 56.2%)

JT Capital was removed from the scope of consolidation in Q3 FY12/21 and classified as a discontinued operation, so relevant figures for FY12/20 have been retrospectively adjusted. JT Savings Bank was classified as a discontinued operation in FY12/20, but reclassified as a continuing operation in Q1 FY12/21, so relevant figures for FY12/20 have been retrospectively adjusted.

For full-year FY12/21, the company reported operating revenue of JPY42.3bn (+7.5% YoY), operating income of JPY5.3bn (versus a loss of JPY2.4bn in FY12/20), pre-tax profit of JPY5.9bn (versus a loss of JPY619mn), and profit attributable to owners of parent of JPY1.1bn (versus loss of JPY5.3bn). The company returned to the black after posting an operating loss in FY12/20.
Operating revenue and operating profit came in largely in line with the revised company forecast. However, pre-tax profit and profit attributable to owners of the parent were lower than forecast. Pre-tax profit of JPY5.9bn fell JPY2.4bn short of the revised company forecast of JPY8.3bn. While the company booked a gain of about JPY1.7bn on valuation of the shares of the current HS Holdings, the gain on sales of Nexus Bank shares fell short of the forecast by about JPY1.9bn, and the company booked a loss on valuation of Nexus Bank shares of about JPY2.4bn. This represented a temporary loss.

Consolidated operating revenue was up JPY2.9bn YoY. By individual segment, on the plus side, operating revenue was up JPY2.4bn YoY at its Financial Business in South Korea and Mongolia, up JPY833mn YoY at its Financial Business in Southeast Asia, and up JPY296mn at its Other business segment. On the minus side, operating revenue was down JPY258mn YoY at its Financial Business in Japan and down JPY344mn YoY at its Investment Business. Consolidated operating profit was up JPY7.7bn YoY, reflecting a YoY increase of JPY7.1bn at its Investment Business, a YoY decrease of JPY831mn at its Financial Business in Southeast Asia, a YoY increase of JPY1.2bn at its Financial Business in South Korea and Mongolia, a YoY decrease of JPY272mn at its Financial Business in Japan, a YoY increase of JPY740mn at its Other business segment, a YoY decrease of JPY436mn for adjustments, and a YoY increase in companywide expenses of JPY174mn.

Pre-tax profit was JPY5.9bn, up JPY6.5bn versus FY12/20, JPY1.1bn less than the JPY7.7bn YoY jump in earnings at the operating profit level. The difference largely reflected changes in financial income and expenses, with financial income rising JPY968mn YoY versus a JPY2.5bn rise in financial expenses and a gain of JPY347mn on its holdings in equity-method subsidiaries. Profit attributable to owners of parent was JPY1.1bn, up JPY6.5bn YoY. Under discontinued operations, the company reported a loss of JPY2.5bn on the sale of its stake in JT Capital.

In August 2021, the company completed the transfer of shares in JT Capital in Korea. The share transfer of JT Savings Bank had been decided in April 2021, but the parties were unable to reach an agreement on the details of the transfer by the share purchase deadline, resulting in the cancellation of the transfer in November 2021. In January 2022, the company decided to complete a share exchange with Nexus Bank Co., Ltd., and JT Chinae Savings Bank is scheduled to become a consolidated subsidiary of the company in April 2022.

Results by segment

Financial Business in Japan

Operating revenue: JPY9.8bn (-2.6% YoY; 117% of revised full-year company forecast)
Operating profit: JPY4.6bn (+5.6% YoY; 124.9%)

J Trust’s Financial Business in Japan is engaged mainly in the credit guarantee business and receivables collections (including Partir Servicer). The company has diversified its credit guarantee products, offering credit guarantees for condominium loans, real estate secured loans, and crowdfunding loans. For the full-year FY12/21, the segment reported operating revenue of JPY9.8bn (-2.6% YoY) and a segment profit of JPY4.6bn (-5.6% YoY).

Commission income from credit guarantees decreased owing to a decline in the outstanding balance of condominium and individual installment loan guarantees. However, collections on purchased receivables at Partir Servicer proceeded steadily, and interest income on purchased receivables increased. On the profit front, at Partir Servicer, provision for doubtful accounts increased as a result of a review of future cash flows of purchased receivables, resulting in an YoY decline in segment profit. As of the end of FY12/21, the balance of loans for which the company has provided guarantees totaled some JPY204.3bn (-2.6% YoY), with JPY195.7bn of this being secured loans and JPY8.6bn being unsecured. Reflecting active buying of receivables, its portfolio of purchased receivables grew by 3.3% YoY, to JPY16.8bn.

As of end-FY12/21, the company had guarantees outstanding on a total of JPY154.7bn condominium loans. Included in this was JPY4.4bn in guarantees outstanding on loans made for pre-owned condominiums (FY12/21), a new business line the company started in November 2020. As part of its overall effort to grow its condominium loan guarantee business, the company has expanded its sales team so as to provide the support needed to carry out new condominium development projects from start to finish (including the purchase of land, building construction, recruiting investors, condominium sales, and guarantees on the mortgage loans). As part of this effort, the company is working together with financial institutions to establish a structure that increases cash flow and provides more attractive returns to the investors.

Partir Servicer has been active in bidding for loan receivables even while many of its competitors chose to refrain from bidding amid the pandemic. As a result, the company has been able to steadily expand its loan receivable portfolio (including consumer credit card loans, auto loans, and installment loans), pushing up the balance of its loan receivables portfolio to roughly JPY910bn through strategic sales of receivables, with Partir Servicer accounting for JPY785.2bn of this.

J Trust had completed the transfer of shares in J Trust Card in FY12/20 and in JT Capital in FY12/21. However, in January 2022, the company decided to conduct a share exchange with Nexus Bank Co., Ltd., and the former J Trust Card (now Nexus Card) is scheduled to become a consolidated subsidiary again in April 2022.

Financial Business in South Korea and Mongolia

Operating revenue: JPY14.8bn (+19.5% YoY; 108.1% of revised full-year company forecast)
Operating profit: JPY3.2bn (+59.0% YoY; 119.5%)

For full-year FY12/21, the Financial Business in South Korea and Mongolia segment reported operating revenue of JPY14.8bn (+19.5 YoY) and a segment profit of JPY3.2bn (+59.0% YoY). Operating revenue and profit was up YoY at the mainstay JT Savings Bank business underpinned by increases in interest income, the sale of receivables, and dividend income on securities held. As of the end-FY12/21, loans outstanding at the banking business totaled JPY166.3bn. Following the completion of the sales of JT Capital during the course of Q3, the company swtiched its status to discontinued operations and excluded it from consolidated results. As a result, operating loans outstanding fell 96.2% YoY to JPY1.6bn.

In South Korea, the company’s operations include the savings bank business operated by JT Savings Bank and the non-performing receivables purchasing/collections business operated by TA Asset Management. In Mongolia, the company has a financing business operated by J Trust Credit NBFI.
In Q3 FY12/21, the company classified JT Capital as discontinued operations due to the transfer of its shares. JT Capital had been engaged in installment sales and leasing operations.
The company decided to transfer shares of JT Savings Bank to another company in April 2021, but ended up canceling the sale on November 30, 2021.

In January 2022, the company decided to conduct a share exchange with Nexus Bank Co., Ltd., and in April 2022, Nexus Bank's consolidated subsidiaries Samurai Technology, Nexus Card, and JT Chinae Savings Bank are slated to become consolidated subsidiaries of the company. As a result, the Financial Business in South Korea and Mongolia has returned to a two-savings banks structure. The total assets of the two banks will make them the seventh-largest of the 79 savings banks in Korea.

Financial Business in Southeast Asia

Operating revenue: JPY16.7bn (+5.2% YoY; 88.4% of revised full-year company forecast)
Operating loss: JPY6.4bn (versus year-earlier loss of JPY5.5bn; versus loss of JPY4.4bn under revised full-year forecast)

The company’s operations in Indonesia consist mainly of the banking business operated by PT Bank JTrust Indonesia (BJI), the receivables collections businesses operated by PT JTrust Investments Indonesia (JTII) and PT Turnaround Asset Indonesia (TAID), and the farm equipment financing and other financing businesses operated by PT JTrust Olympindo Multi Finance (JTO). Its operations in Cambodia consist entirely of the banking business operated by J Trust Royal Bank Plc (JTRB).

For full-year FY12/21, the segment reported operating revenue of JPY16.7bn (+5.2% YoY). While its banking business saw its interest income rise on the growth of its loan portfolio, overall segment revenue finished down owing to a decline in operating loans outstanding at JTO, a decline in securities holdings at the banking business, and a decline in collections of receivables.

The segment operating loss was JPY6.4bn, much larger than the JPY4.4bn loss projected under the company's revised forecast. While there was a reactionary decrease from the loss on sales of securities recorded in the previous year and a reversal of the provision for litigation losses, interest expenses on deposits and bad debt expenses in the banking business increased. In addition, the company posted an impairment loss on goodwill (approximately JPY700mn) due to the revision of JTO's business plan. Excluding the impairment loss, the operating loss was down approximately JPY900mn, within the company's forecast.

PT Bank JTrust Indonesia (BJI)

BJI's operating loss was approximately JPY3.8bn, greater than the company's plan of about JPY3.4bn. However, BJI's real asset portfolio is showing improvement. The operating loss was roughly JPY2.7bn when excluding the conservative allowance for loan losses of JPY1.0bn for loans to non-group multi-finance companies that have fallen behind in payments to other banks (BJI is making progress in collecting on these loans).

As of end-FY12/21, BJI reported total loans outstanding of JPY80.5bn, an increase of JPY29.0bn YoY (+56.3% YoY). The gains here reflected concerted efforts by BJI to grow its loan portfolio following the strengthening of risk management procedures that accompanied the reforms in its overall management structure since January 2020. Prior to the changes, 14.98% of BJI's loans were considered nonperforming on a gross basis; of the new loans made since the changes went into effect in January 2020, only 0.02% have been classified as nonperforming. With loans made since the new risk management procedures were put into place now accounting for roughly 74% of all loans outstanding, BJI has made great strides towards improving the quality of its overall loan portfolio. More precisely, by replacing nonperforming loans with higher quality credits, BJI has been able to bring the nonperforming loan ratio on its entire loan portfolio down to 3.90% on a gross basis and down to 2.33% on a net basis (which takes into account loan loss reserves).

On the deposit side of the business, BJI has been seeing deposit balances continue to rise off the bottom logged in June 2020. By bringing in more small savers and new accounts, the company is looking to bring down its overall cost of funding from deposits and improve its interest income. Evincing the success of these efforts, the company said that its cost of funding from deposits in December 2021 was down to a record-low 4.74%, or roughly half of what it was (9.30%) when BJI first entered the Indonesia banking business in 2015. By depending less on large depositors and focusing its marketing efforts on small savers, BJI has been able to bring its new savings account opening numbers up from around 500 per month between 2015 and 2017 to over 1,500 new accounts a month in 2021.

In other areas, the company announced in November 2021 that it had entered into an partnership agreement with the Iida Group (Japan's largest builder of detached housings) to provide mortgage loans for the homes being built in Iida's REIWA Town housing development project in Indonesia. Further, the company began selling 30-year mortgages, a first in Indonesia.

With regard to BJI, the company is looking for business and capital alliances to form strategic partnerships, while also considering debt purchasing or M&A with financially distressed financial institutions. In fact, the company has concluded a comprehensive business alliance with PT Asuransi Jiwa Sequis Financial (a wholly owned subsidiary of PT Asuransi Jiwa Sequis Life, a joint venture between Indonesian conglomerate GSK Group and Nippon Life Insurance Company). As for JTO, the business environment has deteriorated due to the COVID-19 pandemic, and the company is considering the direction of its business, including a possible change in business format. WIth regard to JTII and TAID, the market is expected to expand due to the increase in non-performing loans, and the company expects to see profit opportunities.

The capital adequacy ratio as of end-FY12/21 was 15.9%. The company recapitalized BJI in response to the Indonesian Financial Services Agency's requirement to achieve a capital adequacy ratio of 14.0% in accordance with revised financial regulations in Indonesia.

PT JTrust Olympindo Multi Finance (JTO)

JTO's loan balances continued to dwindle as management purposely cut back on extending new loans and focused instead on its receivables management and collections business, and on strengthening ties with BJI and its more stable farm equipment loan business (which has been unaffected by the pandemic). Along with this strategic reorientation of its business, JTO downsized its branch network and reduced its headcount by roughly 1,000 employees. Along with the downsizing of its loan portfolio to JPY5.7bn as of end-FY12/21, JTO reported that its nonperforming loan ratio had risen to 10.19% on a gross basis and 3.46% on a net basis.

PT JTrust Investments Indonesia (JTII) and PT Turnaround Asset Indonesia (TAID)

As the pandemic expanded, JTII's receivables collections business focused on purchasing real estate-secured loan receivables. The COVID-19 pandemic made it difficult to make timely sales of the properties backing its real estate-secured loans due to the closure of local land agency and registry offices in Indonesia (July–September 2021). Collections during the October–December quarter were up 57% QoQ, due in part to a decline in the number of infections. Meanwhile, TAID, which launched in March 2021, plans to leverage the company's experience in South Korea to develop around the purchase of unsecured loan receivables. It will pursue a receivables collection business for fintech companies, which the company sees as a growth field.

J Trust Royal Bank Plc (JTRB)

Deposit balances at JTRB continued to rise during FY12/21, hitting JPY102.1bn at end-FY12/21 for a YoY increase of JPY33.1bn or 47.9%. Aided by the rapid growth in the Cambodian banking industry, which is currently growing at the rate of 15–20% per annum, JTRB has grown its loan book by focusing on business loans while at the same time keeping credit quality high (with only 0.45% on loans behind on payments for more than 90 days) and benefiting from a low cost of funding from deposits (2.7%).

JTRB is focusing on expanding business with new customer segments, especially large corporations, and is focusing on expanding its products for high-net-worth individuals and online banking services.

Investment

Operating revenue: JPY410mn (-45.6% YoY; 63.5% of revised full-year company forecast)
Operating profit: JPY5.4bn (versus year-earlier loss of JPY1.7bn; 102.7%)

J Trust’s investment business consists mainly of the investment business and investee management support business operated by J Trust Asia. However, much of J Trust Asia’s recent focus has been on collecting the amounts owed to it by Group Lease Holdings Pte. Ltd. (GLH) and its former CEO Mitsuji Konoshita. The operating profit reported for FY12/21 reflects the partial payments of damages awarded to J Trust Asia in a Singapore lawsuit against GLH and Mr. Konoshita. Pursuant to the Singapore court’s ruling, J Trust Asia received a partial payment of JPY7.8bn from the defendants (booked as other revenue). In August 2021, the company filed a lawsuit seeking to recover damages related to USD124mn that were not included in that prevailing judgment.

Other businesses

The Other businesses reported operating revenue of JPY616mn and operating profit of JPY430mn.

Cumulative Q3 FY12/21 results

Overview

Operating revenue: JPY30.6bn (+5.5% YoY; 72.7% of revised company forecast)
Operating profit: JPY7.8bn (versus loss of JPY1.3bn in Q3 FY12/20; 142.2%)
Profit attributable to owners of parent: JPY2.4bn (-0.4% YoY; 120.3%)

For the nine-month period through Q3 FY12/21, J Trust posted operating revenue of JPY30.6bn (+5.5% YoY), operating profit of JPY7.8bn (versus year-earlier loss of JPY1.3bn), and a profit attributable to owners of parent of JPY2.4bn (-0.4% YoY). While earnings at all levels are on track to exceed its full-year estimates, the company decided not to revise its full-year forecast due to the uncertainties stemming from the new variants of the coronavirus and the ongoing restructuring of its business portfolio.

Consolidated operating revenue was up JPY1.6bn versus the same nine-month period the previous year. By individual segment, on the plus side, operating revenue was up JPY1.7bn YoY at its Financial Business in South Korea and Mongolia, up JPY53mn YoY at its Financial Business in Southeast Asia, and up JPY52mn at its Other business segment. On the minus side, operating revenue was down JPY23mn YoY at its Financial Business in Japan and down JPY173mn YoY at its Investment Business. Consolidated operating profit was up JPY9.1bn YoY, reflecting YoY increases of JPY7.3bn at its Investment Business, JPY1.3bn at its Financial Business in Southeast Asia, JPY825mn at its Financial Business in South Korea and Mongolia, JPY202mn at its Financial Business in Japan, and JPY142mn at its Other business segment.

Pre-tax profit was JPY8.4bn up JPY9.9bn versus the same nine-month period last year, JPY780mn more than the JPY9.1bn YoY jump in earnings at the operating profit level. The difference largely reflected changes in financial income and expenses, with financial income rising JPY1.5bn YoY (including JPY452bn in gains on sales of investment securities and JPY912mn in valuation gains of investment securities holdings) versus a JPY737mn rise in financial expenses (including JPY998mn in valuation losses on holdings of Nexus Bank Series A preferred shares) and a loss of JPY7mn on its holdings in equity-method subsidiaries. After-tax profit attributable to parent company shareholders was JPY2.4bn down JPY9mn YoY. Under discontinued operations, the company reported a loss of JPY2.5bn on the sale of its stake in JT Capital.

J Trust completed the sale of its entire interest in South Korean subsidiary JT Capital in August 2021. With respect to JT Savings Bank, the company noted that although it had signed a memorandum of understanding in April 2021 in which it had agreed to sell its entire stake in JT Savings Bank to VI Investment Corporation or to another approved buyer, that it ended up canceling the sale because the two parties had been unable to reach an agreement as to the terms of the sale by the November 30, 2021 deadline set forth in the memorandum of understanding.

Breakdown of results by segment

Financial Business in Japan

Operating revenue: JPY6.9bn (-0.3% YoY; 82% of revised full-year company forecast)
Operating profit: JPY3.6bn (+5.9% YoY; 98.8%)

J Trust’s Financial Business in Japan is engaged mainly in the credit guarantee business and receivables collections (including Partir Servicer). The company has diversified its credit guarantee products, offering credit guarantees for condominium loans, real estate secured loans, and crowdfunding loans. For the nine-month period through Q3 FY12/21, the segment reported operating revenue of JPY6.9bn (-0.3% YoY) and a segment profit of JPY3.6bn (+5.9% YoY).

Commission income from credit guarantees decreased owing to a decline in the outstanding balance of condominium and individual installment loan guarantees. However, collections on purchased receivables proceeded steadily, and interest income on purchased receivables increased. In addition, provision for doubtful accounts declined as a result of a review of future cash flows, resulting in an YoY rise in segment profit. As of the end of Q3 FY12/21, the balance of loans for which the company has provided guarantees totaled some JPY204.7bn (-2.9% YoY), with JPY195.2bn of this being secured loans and JPY9.4bn being unsecured. The company aims to raise its outstanding balance of loan guarantees to JPY300bn. Reflecting active buying of receivables, its portfolio of purchased receivables grew by 5.9% YoY, to JPY17.0bn.

As of the end of Q3 FY12/21, the company had guarantees outstanding on a total of JPY154.5bn condominium loans. Included in this was guarantees on loans made for pre-owned condominiums, a new business line the company started in November 2020. For the nine-month period through Q3 FY12/21, the company reported that it had provided guarantees on a total JPY2.8bn in loans for pre-owned condominiums (versus its original target of JPY2.4bn). As part of its overall effort to grow its condominium loan guarantee business, the company has expanded its sales team so as to provide the support needed to carry out new condominium development projects from start to finish (including the purchase of land, building construction, recruiting investors, condominium sales, and guarantees on the mortgage loans). As part of this effort, the company is working together with financial institutions to establish a structure that increases cash flow and provides more attractive returns to the investors.

Partir Servicer has been active in bidding for loan receivables even while many of its competitors chose to refrain from bidding amid the pandemic. As a result, the company has been able to steady expand its loan receivable portfolio (including consumer credit card loans, auto loans, and installment loans), pushing up the balance of its loan receivables portfolio to roughly JPY960bn, with Partir Servicer accounting for JPY838bn of this.

Financial Business in South Korea and Mongolia

Operating revenue: JPY11.0bn (+18.0% YoY; 80.6% of revised full-year company forecast)
Operating profit: JPY2.8bn (+41.7% YoY; 104.4%)

For the nine-month period through Q3 FY12/21, the Financial Business in South Korea and Mongolia segment reported operating revenue of JPY11.0bn (+18.0% YoY) and a segment profit of JPY2.8bn (+41.7% YoY). The growth in top-line revenue was underpinned by increases in interest income and unrealized gains on securities in the savings bank business. As of the end of Q3, loans outstanding at the banking business totaled JPY140.3bn (+20.4% YoY). Following the completion of the sales of JT Capital during the course of Q3, its status was switched to discontinued operations and it was excluded from consolidated results. Of the JPY11.1bn in proceeds the company received from the sale of its stake in JT Capital, after setting aside some to repay interest-bearing loans, the company plans to direct much of the remaining amount towards its financial businesses in Japan and Southeast Asia (BJI).

In South Korea, the company’s operations include the savings bank business operated by JT Savings Bank and the non-performing receivables purchasing/collections business operated by TA Asset Management. In Mongolia, the company has a financing business operated by J Trust Credit NBFI. With respect to JT Savings Bank, the company announced that although it had signed a memorandum of understanding in April 2021 in which it had agreed to sell its entire stake in JT Savings Bank to VI Investment Corporation or to another approved buyer, that it ended up canceling the sale because the two parties had been unable to reach an agreement as to the terms of the sale by the November 30, 2021 deadline set forth in the original memorandum of understanding.

Financial Business in Southeast Asia

Operating revenue: JPY12.0bn (+0.4% YoY; 63.5% of revised full-year company forecast)
Operating loss: JPY3.0bn (versus year-earlier loss of JPY4.3bn; versus loss of JPY4.4bn under revised full-year forecast )

For the nine-month period through Q3 FY12/21, the segment reported operating revenue of JPY12.0bn (-0.4% YoY). While its banking business saw its interest income rise on the growth of its loan portfolio, overall segment revenue finished down owing to a decline in operating loans outstanding at JTO, a decline in securities holdings at the banking business, and smaller gains on collections of receivables.

The segment operating loss of JPY3.0bn reported for the nine-month period was much smaller than the JPY4.4bn loss projected under the company's revised forecast. The company said it expected to make some additional write-offs and write-downs during the course of Q4 but that its financial business in Southeast Asia was still on track to finish in line with its previous projections. At BJI, the company said it is currently looking for strategic partners with which it can form business and capital alliances, and is also looking at troubled financial institutions from which it might acquire receivables or possibility buy one of their businesses. With regard to JTO, the company said its operating environment had markedly deteriorated in the wake of the pandemic and that it is now thinking about taking JTO in a different direction. In contrast, the receivables collection business operated by JTII and TAID sees growing opportunities to expand in the market.

PT Bank JTrust Indonesia (BJI)

As of the end of Q3 FY12/21, BJI reported total loans outstanding of JPY66.3bn, an increase of JPY18.3bn YoY (+38.2% YoY). The gains here reflected concerted efforts by BJI to grow its loan portfolio following the strengthening of risk management procedures that accompanied the reforms in its overall management structure since January 2020. Prior to the changes, 12.9% of BJI's loans were considered nonperforming on a gross basis; of the new loans made since the changes went into effect in January 2020, only 0.1% have ben classified as nonperforming. With loans made since the new risk management procedures were put into place now accounting for roughly 64% of all loans outstanding, BJI has made great strides towards improving the quality of its overall loan portfolio. More precisely, by replacing nonperforming loans with higher quality credits, BJI has been able to bring the nonperforming loan ratio on its entire loan portfolio down to 4.64% on a gross basis and down to 2.87% on a net basis (which takes into account loan loss reserves).

On the deposit side of the business, BJI has been seeing deposit balances continue to rise off the bottom logged in June 2020. By bringing in more small savers and new accounts, the company is looking to bring down its overall cost of funding from deposits and improve its interest income. Evincing the success of these efforts, the company said that its cost of funding from deposits in September 2021 was down to a record-low 4.84%, or roughly half of what it was when BJI first entered the Indonesia banking business in 2015. By depending less on large depositors and focusing its marketing efforts on small savers, BJI has been able to bring its new savings account opening numbers up from around 500 per month between 2015 and 2017 to roughly 1,500 new accounts a month in 2021.

PT JTrust Olympindo Multi Finance (JTO)

As of the end of Q3 FY12/21, JTO reported total loans outstanding of JPY6.7bn, as loan balances continued to dwindle as management purposely cut back on extending new loans and focused instead on its receivables management and collections business, and on strengthening ties with BJI and its more stable farm equipment loan business (which has been unaffected by the pandemic). Along with this strategic reorientation of its business, JTO downsized its branch network and reduced its headcount by roughly 1,000 employees. Along with the downsizing of its loan portfolio, JTO reported that its nonperforming loan ratio had risen to 8.52% on a gross basis and 2.65% on a net basis.

PT JTrust Investments Indonesia (JTII) and PT Turnaround Asset Indonesia (TAID)

As the pandemic expanded, JTII's receivables collections business found it difficult to make timely sales of the properties backing its real estate-secured loans due to the closure of local land agency and registry offices in Indonesia. While collections during the April–June quarter were up 89% YoY, collections during the July–September quarter faced tough YoY comparisons due to a decline in the number of large-scale collections versus the same quarter in 2020. Meanwhile, TAID moved into a new and promising business area as a collector of receivables for the growing fintech companies.

J Trust Royal Bank Plc (JTRB)

Deposit balances at JTRB continued to rise during the first nine months of FY12/21, hitting JPY95.1bn at the end of Q3 FY12/21 for a YoY increase of JPY37.1bn or 64.0%. Aided by the rapid growth in the Cambodian banking industry, which is currently growing at the rate of 10–15% per annum, JTRB has growth its loan book by focusing on business loans while at the same time keeping credit quality high (with only 0.5% on loans behind on payments for more than 90 days) and benefiting from a low cost of funding from deposits (2.6%). JTRS was named by Global Business Outlook as the "Most Customer Centric Bank" in Cambodia for 2021.

Global Business Outlook (London, UK): Global Business Outlook Awards is given to companies all over the world in recognition of their strengths once every year. The award is given to companies of all kinds from startups to large enterprises that aspire to create industrial values through performance and innovation.

Investment

Operating revenue: JPY409mn (-29.7% YoY; 63.3% of revised full-year company forecast)
Operating profit: JPY6.0bn (versus year-earlier loss of JPY1.2bn; 113.7%)

J Trust’s investment business consists mainly of the investment business and investee management support business operated by J Trust Asia. However, much of J Trust Asia’s recent focus has been on collecting the amounts owed to it by Group Lease Holdings Pte. Ltd. (GLH) and its former CEO Mitsuji Konoshita. The operating profit reported for the nine-month period through Q3 FY12/21 reflects the partial payments of damages awarded to J Trust Asia in a Singapore lawsuit against GLH and Mr. Konoshita. Pursuant to the Singapore court’s ruling, J Trust Asia received a partial payment of USD37mn from the defendants on January 11, 2021. This was followed by payments from GLH totaling USD25.5mn received during April and May, USD1.2mn received on July 9, 2021, and another USD10mn received on July19, thus completing the payment of the entire amount owed to J Trust Asia as ordered by the court.

Other businesses

The Other businesses reported Q3 operating revenue of JPY299mn and a segment loss of JPY22mn.

Consolidated results for 1H FY12/21

Overview

Operating revenue: JPY22.3bn (+3.3% YoY; equals 53.1% of revised company forecast for full year)
Operating profit: JPY7.2bn (loss of JPY1.0bn in 1H FY12/20; equals 130.1% of revised company forecast for full year)
Profit*: JPY3.9bn (+781.0% YoY) (equals 194.7% of revised company forecast for full year)
*Profit/loss attributable to owners of parent

In 1H FY12/21, J Trust posted operating revenue of JPY22.3bn (+3.3% YoY), operating profit of JPY7.2bn (loss of JPY1.0bn in 1H FY12/20), and a profit attributable to owners of parent of JPY3.9bn (+781.0% YoY) . Operating profit and profit attributable to owners of parent both are on pace to exceed the company’s full-year earnings forecast. However, considering the uncertainties presented by the COVID-19 pandemic and the ongoing restructuring of the company’s business portfolio, the company decided not to change its full-year forecast.

1H operating revenue increased JPY715mn YoY, breaking down into Financial Business in South Korea and Mongolia +JPY857mn, Financial Business in Japan +JPY79mn, and Other businesses +JPY35mn, offset against Financial Business in Southeast Asia -JPY189mn, and Investment Business -JPY76mn. On the profit side, 1H operating profit was up JPY8.2bn YoY, breaking down into Investment Business +6.2bn, Financial Business in South Korea and Mongolia +JPY833mn, Financial Business in Southeast Asia +JPY810mn, and Financial Business in Japan +JPY193mn. The JPY6.2bn YoY improvement in the Investment Business profits reflects the receipt of partial payments related the settlement of a lawsuit in Singapore (totaling JPY6.6bn; J Trust received a payment of USD 37mn from Group Lease Holdings Pte. Ltd. and Mitsuji Konoshita on January 11, 2021, and additional payments of USD25.5mn from Group Lease Holdings in April–May 2021).

1H pre-tax profit totaled JPY7.6bn, a YoY improvement of JPY8.6bn, which is JPY410mn more than the JPY8.2bn improvement in operating profit. This reflects the net impact from a JPY1.0bn increase in financial income, accompanied by a JPY710mn increase in financial expenses, and the posting of JPY113mn in equity-method investment gains from KeyHolder. Corporate income tax paid increased JPY3.7bn YoY, resulting in profit attributable to owners of parent of JPY3.9bn, a YoY increase of JPY3.5bn. Financial income, financial expenses, and corporate tax and other adjustments are summarized in the table below.

During 1H, the company transferred a part of its holdings in stock options for Nexus Bank. J Trust acquired the stock options when underwriting an issue by Nexus Bank via a third-party allotment on March 27, 2019. While intending to exercise these options and sell the stock under favorable conditions that contribute to increasing shareholder value, J Trust agreed to transfer part of its holdings upon receiving an offer from Otas Co., Ltd.

Financial revenue	Valuation gains on investment securities	Valuation gain on holdings of Nexus Bank common shares	JPY197mn
	Valuation gains on investment securities	Valuation gain on holdings of Sawada Holdings common shares	JPY423mn
	Gain on sale of investment securities	Gain on sale of Nexus Bank common shares	JPY263mn
	Gain on sale of investment securities	Gain on sale of Nexus Bank stock options	JPY189mn
Financial expense	Valuation loss on investment securities	Valuation loss on holdings of Nexus Bank Series A preferred shares	JPY743mn
Income tax expenses	Corporate tax and other adjustments	Tax effect of valuation gain on Sawada Holdings shares	JPY191mn
		Revision of tax effect of change in transfer of JT Savings Bank shares	JPY146mn
		Revision of tax effect of change in transfer of JT Savings Bank shares	JPY695mn
		Tax effect of retained earnings related to transfer of JT Capital shares	JPY727mn
		Tax effect of retained earnings related to transfer of JT Capital shares	JPY809mn

Results by segment

Financial Business in Japan

Operating revenue: JPY4.6bn (+1.7% YoY; 55% of revised full-year company forecast)
Operating profit: JPY2.4bn (+8.6% YoY; 66.1%)

J Trust’s Financial Business in Japan is engaged primarily in the credit guarantee business and the receivables collection business (including Partir Servicer). The company worked to diversity its credit guarantee products, by providing credit guarantees for condominium loans, real estate secured loans, and crowdfunding loans. In 1H FY12/21, the business posted operating revenue of JPY4.6bn (+1.7% YoY) and segment profit of JPY2.4bn (+8.6% YoY).

Commission income from credit guarantees decreased owing to a decline in the outstanding balance of condominium and individual installment loan guarantees. However, collections on purchased receivables proceeded steadily, and interest income on purchased receivables increased. In addition, provision for doubtful accounts declined as a result of a review of future cash flows, resulting in an YoY rise in segment profit. As of end-1H, the balance of loans for which the company has provided guarantees totaled some JPY206.9bn (-2.0% YoY), with JPY196.5bn being secured loans and JPY10.4bn being unsecured loans. The company aims to raise its outstanding balance of loan guarantees to JPY300bn. Reflecting active buying of receivables, its portfolio of purchased receivables expanded 8.0% YoY to JPY16.5bn.

Partir Servicer has actively participated in bidding for loan receivables while many of its competitors have refrained from bidding amid the COVID-19 crisis. As a result, Partir has evidently increased the number of financial institutions with which it does business.

As for loan guarantees originated from the crowdfunding market, the company worked to bring in new guarantee business via subsidiary Nihon Hoshou, which in February 2021 offered products with credit guarantee services on Cool, a crowdfunding service for peer-to-peer lending (loans) provided by Cool Inc. and Cool Services Inc., and on Ooya.com, a crowdfunding site specialized for real estate investment operated by Gro-Bels Co., Ltd. As of July 2021, Nihon Hoshou has formed loan-type crowdfunding alliances with CAMPFIRE, Inc., and three other companies and real estate investment-type crowdfunding alliances with Gro-Bels and two other companies.

Financial Business in South Korea and Mongolia

Operating revenue: JPY9.4bn (+10.0% YoY; 68.8% of revised full-year company forecast)
Operating profit: JPY2.2bn (+61.4% YoY; 81.5%)

In South Korea, the company’s operations include the savings bank business operated by JT Savings Bank, the installment loan and leasing businesses operated by JT Capital, and the non-performing receivables purchasing/collections business operated by TA Asset Management. In Mongolia, the company has a financing business operated by J Trust Credit NBFI. When making its initial forecast for FY12/21, the company originally expected to treat JT Capital as a continuing business but, with a deal to sell JT Capital now expected to close by end-August 2021 (previously June 15, 2021), its revised forecast treats JT Capital as a discontinued business. Meanwhile, the revised forecast (May 13, 2021) treats JT Savings Bank as a continuing business (the initial forecast considered JT Savings Bank as a discontinued business because it was scheduled to be sold during Q1 FY12/21). According to the company, the transfer of JT Savings Bank shares is scheduled to be concluded within three months after the transfer of JT Capital’s shares. Shared Research assumes JT Savings Bank will remain as a continuing business for the entirety of FY12/21.

The Financial Business in South Korea and Mongolia reported 1H operating revenue of JPY9.4bn and a segment profit of JPY2.2bn. The growth in operating revenue was supported by increases in interest income and unrealized gains on securities in the savings bank business, which offset a decline in interest income on operating loans of JT Capital. Loans outstanding at the banking business totaled JPY137.5bn (-50.9% YoY), the sharp decline reflecting the dropout of the loans made by JT Chinae Savings Bank, which is no longer included in consolidated accounts following its sale in Q3 FY12/20. At JT Capital, operating loans outstanding of JPY43.8bn were down 4.1% YoY, reflecting the collection of receivables and loan sales. Reflecting active buying of receivables by TA Asset Management, holdings of purchased receivables jumped 88.3% YoY to JPY1.5bn.

Financial Business in Southeast Asia

Operating revenue: JPY7.8bn (-2.4% YoY; 41.0% of revised full-year company forecast)
Operating loss: JPY2.1bn (versus loss of JPY2.9bn in 1H FY12/20)

The segment reported 1H operating revenue of JPY7.8bn (-2.4% YoY). The banking business saw its interest income rise on the expansion of its loan portfolio. However, overall segment revenue fell owing to a decrease in operating loans at JTO and a decline in securities holdings at the banking business, as well as the absence of revenue booked on sales of securities holdings in 1H FY12/20. As of end-1H, loans outstanding were up 10.6% YoY to JPY58.8bn at BJI in Indonesia and 51.6% to JPY81.8bn at JTRB in Cambodia. BJI aims to improve interest income by expanding its loan portfolio while lowering deposit funding costs by increasing the ratio of small deposit accounts and acquiring new accounts. Since acquiring JTRB, J Trust has sought to shift the Cambodian bank’s core base of depositors from wealthy households to middle-income households. JTRB’s success in winning new deposit accounts has enabled it to expand its outstanding loan balance. However, the lingering impact from the cutback in issuance of new operating loans and the selloff of securities holdings by the segment’s Indonesian units in FY12/20 led to the YoY decline in 1H FY12/21 operating revenue.

JTO saw the outstanding balance of operating loans at its financing businesses contract to JPY1.6bn, a YoY decrease of JPY1.4bn (-46.6%) owing to curbs on new lending during the pandemic. JTO has instead been focusing on strengthening its receivables management and collection business and its tie-up with BJI to increase farm equipment loans, which are not affected by the coronavirus crisis. Meanwhile, JTO has reduced staff numbers by about 1,000 and is downsizing its branch network. Meanwhile, JTII’s receivables collection business continues to be affected by delays in the sale of collateralized real estate owing to the closure of land agency and registry offices in Indonesia. Under such difficult conditions, JTII continued its receivables collection efforts and managed to reduce the balance of purchased receivables outstanding as of end-1H to JPY25.9bn, a YoY decrease of JPY1.8bn (-6.5%). Meanwhile, TAID has launched a new business involving the collection of receivables on behalf of fintech companies.

J Trust’s Financial Business in Southeast Asia managed to reduce its operating loss in 1H, as it posted a loss of JPY2.1bn, down from JPY2.9bn a year earlier. Interest expenses in the segment’s banking business increased during 1H as segment banks implemented various marketing campaigns offering attractive interest rates in an effort to expand their deposit balances and secure liquidity. However, the impact of higher interest expenses was offset by the absence of the previous year’s loss on the sale of securities holdings and a reversal of reserves previously set aside for litigation losses in the wake of favorable developments in a lawsuit in Indonesia.

Investment business

Operating revenue: JPY427mn (-15.1% YoY; 66.1% of revised full-year company forecast)
Operating profit: JPY5.4bn (versus loss of JPY822mn in 1H FY12/20; 101.7%)

J Trust’s investment business consists mainly of the investment business and investee management support business operated by J Trust Asia. However, J Trust Asia’s recent focus has been on collecting debts owed to it by Group Lease Holdings Pte. Ltd. (GLH) and its former CEO Mitsuji Konoshita. The higher 1H operating profit reflects the partial payments of damages awarded to J Trust Asia in a Singapore lawsuit against GLH and Mr. Konoshita. Based on the Singapore court’s ruling, J Trust Asia received a partial payment of USD37mn from the defendants on January 11, 2021, followed by payments from GLH of USD17mn on April 7, USD7.2mn on April 29, and USD1.3mn on May 14. The lawsuit against GLH has been a long and protracted affair but finally appears to be at the place where the company can start collecting the amounts owed.

Other businesses

The Other businesses reported 1H operating revenue of JPY361mn and an operating loss of JPY41mn.

Topics

Establishment of factoring company:

On August 2, 2021, J Trust established Frontier Capital Co., Ltd., to conduct a factoring business. The new subsidiary will leverage J Trust’s expertise in credit screening and receivables collection and contribute to the broadening of the group’s business platform.

Received additional partial payment of settlement awarded in Singapore lawsuit

The company has received two more partial payments related to the settlement of its lawsuit in Singapore—USD1.2mn was received on July 9 and USD10.0mn was received on July 19. The company plans to include these amounts in its 3Q FY12/21 accounts.

Consolidated results for Q1 FY12/21

Overview

Operating revenue: JPY10.9bn (-1.3% YoY; 25.8% of revised full-year company forecast)
Operating profit: JPY4.4bn (versus profit of JPY320mn in Q1 FY12/20; 80.0%)
Profit*: JPY2.8bn (+83.6% YoY; 141.5%)
*Profit/loss attributable to owners of parent

For Q1 FY12/21, the company reported consolidated operating revenue of JPY10.9bn, operating profit of JPY4.4bn, and profit attributable to owners of parent of JPY2.8bn. The JPY4.1bn jump in operating profit largely reflected a JPY4.4bn YoY increase in other income, reflecting the amounts awarded in connection with its lawsuit in Singapore courts plus reversals of amounts previously put into reserves for losses on litigation in the wake of favorable developments surrounding a lawsuit being pursed in Indonesia. Pre-tax profit of JPY6.2bn was up JPY6.0bn versus JPY219mn in Q1 FY12/20, the gains here reflecting additions from valuation gains on holdings of Nexus Bank common stock and Series A preferred shares, gains on the sale of Nexus Bank warrants (reported as “financial income”), and equity in earnings of equity-method affiliate KeyHolder.

Along with its release of Q1 results the company raised its initial outlook for FY12/21, and is now projecting full-year consolidated operating revenue of JPY42.1bn, operating profit of JPY5.5bn, pre-tax profit of JPY8.3bn, and profit attributable to owners of parent of JPY2.0bn. The upward revision to its outlook for operating revenue reflects the addition of JT Savings Bank, which is now being treated as a continuing operation; this will be offset in part by the dropout of JT Capital, which will now be treated as a discontinued operation and excluded from consolidated accounts. On the earnings front, the upward revisions to the operating profit and profit attributable to owners of parent forecasts reflect the addition to “other income” (to be booked in Q2) after prevailing in Singapore courts in lawsuits and being awarded partial settlements of USD17.0mn (roughly JPY1.9bn) and USD7.2mn (about JPY786mn).

The company also noted that both its Financial Business in Japan and Financial Business in Southeast Asia came in ahead of its initial expectations in Q1 but that the above-plan results in these areas were not counted when setting its new forecast.

Breakdown of results by segment

Financial Business in Japan

Operating revenue: JPY2.2bn (-2.8% YoY; 26.3% of revised full-year company forecast)
Oerating profit: JPY1.2bn (+0.9% YoY; 32.2%)

With its main businesses in credit guarantees and receivables collections, the Financial Business in Japan reported Q1 operating revenue of JPY2.2bn (-2.8% YoY) and segment operating profit of JPY1.2bn (+0.9% YoY). The company worked to diversity its credit guarantee products, by providing credit guarantees for condominium loans, real estate secured loans, and crowdfunding loans. Q1 profit growth reflected a combination of a steady stream of income from loan guarantees and additional gains stemming from reductions in provisions for doubtful accounts following a reassessment of projected cash flows from its portfolio of purchased receivables. As of end-Q1, the balance of loans for which the company has provided guarantees totaled some JPY208.2bn (-2.2% YoY), with JPY197.2bn of this being secured loans and JPY11.0bn being unsecured loans. Reflecting active buying of receivables, its portfolio of purchased receivables expanded 3.6% YoY to JPY16.1bn.

Financial Business in South Korea and Mongolia

Operating revenue: JPY4.6bn (+6.2% YoY; 33.9% of revised full-year company forecast)
Operating profit: JPY1.2bn (+55.3% YoY; 43.9%)

In South Korea, the company’s operations include the savings bank business operated by JT Savings Bank, the installment loan and leasing businesses operated by JT Capital, and the non-performing receivables purchasing/collections business operated by TA Asset Management. In Mongolia, the company has a financing business operated by J Trust Credit NBFI. When making its initial forecast for FY12/21, the company originally expected to treat JT Capital as a continuing business but, with a deal to sell JT Capital now expected to close by June 15, 2021, its revised forecast treats JT Capital as a discontinued business. In contrast, the company’s initial forecast for FY12/21 treated JT Savings Bank as a discontinued business (based on expectations that it would be sold sometime during Q1) but under the revised forecast JT Savings Bank is being treated as a continuing business.

For Q1 FY12/21, the Financial Business in South Korea and Mongolia reported operating revenue of JPY4.6bn (+6.2% YoY) and operating profit of JPY1.2bn (+55.3% YoY). As of end-Q1, loans outstanding at its banking business totaled JPY136.3bn (-49.8% YoY), the sharp decline here reflecting the dropout of the loans made by JT Chinae Savings Bank, which is no longer included in consolidated accounts following its sale in Q3 FY12/20. At JT Capital, operating loans outstanding of JPY41.2bn were down 21.2% YoY. Reflecting active buying of receivables by TA Asset Management, holdings of purchased receivables jumped 113.4% YoY to JPY1.5bn.

Explaining growth in operating revenue at the segment, the company said interest income was down as a result of the drop in operating loans outstanding but that was easily offset by rising interest income at its savings bank business and valuation gains on securities holdings. On the earnings front, the strong double-digit rise (+55.4% YoY) in segment operating profit was driven by the margin improvement stemming from cuts in SG&A spending.

Financial Business in Southeast Asia

Operating revenue: JPY3.8bn (-6.9% YoY; 20.2% of revised full-year company forecast)
Operating loss: JPY521mn (versus loss of JPY1.2bn in Q1 FY12/20)

The company’s operations in Indonesia consist mainly of the banking business operated by PT Bank JTrust Indonesia, the receivables collections businesses operated by PT JTrust Investments Indonesia and PT Turnaround Asset Indonesia, and the farm equipment financing and other financing businesses operated by PT JTrust Olympindo Multi Finance. Its operations in Cambodia consist entirely of the banking business operated by J Trust Royal Bank Plc.

In Q1, the Financial Business in Southeast Asia reported operating revenue of JPY3.8bn, down 6.9% YoY. On the plus side, the segment saw interest income rise along with the expansion of its loan portfolio, but this was not enough to offset the drag from the cutbacks in operating loans in FY12/20 and the dropout of revenue booked on sales of securities holdings at this time last year.

The Q1 segment operating loss of JPY521mn represented an improvement over the loss of JPY1.2bn booked in the same quarter the previous year, with its operations in Indonesia coming in basically in line with plan and operations in Cambodia finishing ahead of plan. On the plus side, the segment benefited from the dropout of forex trading losses incurred in the same quarter last year as the Indonesian rupiah fell on foreign currency markets in the wake of the pandemic and reversals of amounts previously put into reserves for losses on litigation in the wake of favorable developments surrounding its lawsuit in Indonesia. These gains were offset in part by increases in interest paid on deposits, the Indonesian and Cambodian banks’ deposit balances having risen in response to their marketing campaign aimed at attracting new depositors by offering attractive interest rates on deposits and other concessions.

As of end-Q1, PT Bank JTrust Indonesia and J Trust Royal Bank Plc. together reported outstanding loans of some JPY138.2bn, representing a YoY increase of 33.5% (or JPY34.7bn). J Trust Royal Bank Plc. accounted for the bulk of the increase (JPY25.7bn), this reflecting the company’s successful efforts to expand the Cambodian bank’s core base of depositors from mainly wealthy households to include more middle-income households following its acquisition of the bank in 2019, with this in turn facilitating additional lending.

The financing businesses operated by PT JTrust Olympindo Multi Finance reported operating loans outstanding of JPY1.8bn, down 42.9% or JPY1.3bn YoY, the sharp drop in loans here reflecting curbs on new lending in the wake of the pandemic.

The receivables collections businesses operated by PT JTrust Investments Indonesia and PT Turnaround Asset Indonesia reported steady collections during the period and continued to grow its portfolio of purchased receivables, increasing its receivables holdings to JPY26.2bn, representing a YoY increase of 6.2% or JPY1.5bn.

Investment business

Operating revenue: JPY188mn (-33.1% YoY; 29.1% of revised full-year company forecast)
Operating profit: JPY3.0bn (versus loss of JPY473mn in Q1 FY12/20; 57.3%)

Consisting largely of the investment business and investee management support business operated by J Trust Asia, the segment reported operating revenue of JPY188mn and operating profit of JPY3.0bn. The outsized gains at the operating profit level were driven by the partial award of damages given to J Trust Asia in a lawsuit brought in Singapore courts, which easily offset the accompanying increase in litigation-related expenses. As before, J Trust Asia’s main focus remained on the collection of amount due from Group Lease PCL, where it is planning to step up efforts to collect while at the same time working to hold down legal expenses. The lawsuit against Group Lease PCL has been a long and protracted affair but finally appears to be at the place where the company can start collecting the amounts owed.

Other businesses

The Other businesses reported Q1 operating revenue of JPY144mn and a segment loss of JPY30mn.

Income statement

Income statement		FY03/17	FY03/18	FY03/19	FY12/19	FY12/20		FY12/21
(JPYmn)		IFRS	IFRS	IFRS	IFRS	IFRS	Adjusted	IFRS
Operating revenue		66,453	74,321	74,935	24,728	32,652	39,387	42,325
	YoY	-	11.8%	0.8%	-	-	-	7.5%
Operating expenses		38,116	47,451	78,253	16,054	17,653	20,787	23,017
SG&A expenses		26,431	26,870	28,488	18,926	19,643	20,898	21,560
	SG&A, % of operating revenue	39.8%	36.2%	38.0%	76.5%	60.2%	53.1%	50.9%
Other revenues		1,254	2,239	366	5,215	602	619	8,731
Other expenses		2,552	222	1,159	93	709	723	1,218
Operating profit		606	4,759	-32,600	-5,130	-4,752	-2,403	5,260
	YoY	-	685.3%	-785.0%	-	-	-	-
	Operating profit margin	0.9%	6.4%	-	-	-	-	12.4%
Financial revenue		282	47	1,612	76	2,052	2,052	3,020
Financial expense		1,320	1,895	110	472	278	268	2,728
Equity in earnings of affiliates		-2	-12	-36	-	-	-	-
Pre-tax profit (loss)		-433	2,898	-31,135	-5,526	-2,978	-619	5,899
	YoY	-	-	-	-	-	-	-
	Pre-tax profit margin	-	3.9%	-	-	-	-	13.9%
Income tax expenses		1,136	1,012	2,753	1,275	7,145	7,765	2,311
Loss on continuing operations		-1,570	1,885	-33,888	-6,802	-10,123	-8,384	3,587
Profit from discontinued operations		504			3,047	4,108	2,369	-2,646
Net income (loss)		-1,065	-731	-36,676	-3,754	-6,014	-6,014	941
	YoY	-	-	-	-	-	-	-
Profit (loss) attributable to owners of parent		-1,270	-731	-36,107	-3,260	-5,342	-5,342	1,123
	YoY	-	-	-	-	-	-	-
	Net margin	-	-	-	-	-	-	2.7%

Source: Shared Research based on company data
Note: Figures that exceed 1,000% YoY, are denoted by “-.”
Note: In FY03/17 IFRS results, figures down to pre-tax profit exclude results for discontinued operations (Adores, Inc).

FY03/09–FY03/14

Operating revenue increased from JPY4.9bn in FY03/09 to JPY61.9bn in FY03/14 and operating profit grew from JPY240mn to JPY13.7bn over the same period.

Up until FY03/13, business expansion was achieved through M&A centering on the Financial Business in Japan, with growth in operating revenue and profit driving consolidated earnings. While many peer companies were struggling financially due to the January 2006 ruling by the Supreme Court allowing borrowers to request the refund of interest payments, the December 2006 enactment of the amended Money Lending Business Act, the June 2010 lowering of the maximum interest rate under the Capital Subscription Law, and the introduction of limits on total volume, J Trust was aggressively pursuing M&A. Specifically, it acquired Station Finance (March 2009), Lopro Corporation (September 2010), KC Card (August 2011), and the consumer financial business of Takefuji Corp. (March 2012), which was undergoing corporate reorganization proceedings, and made these subsidiaries.

In October 2012, J Trust launched a savings bank business in South Korea and established JT Chinae Savings Bank. Owing to initial investment costs, the Financial Business in South Korea registered an operating loss in FY03/13. However, when the Financial Business in Japan saw operating revenue and profit fall in FY03/14, the Financial Business in Korea logged growth in both operating revenue and profit. As a result, consolidated operating profit reached JPY13.7bn in the same year.

FY03/14–FY12/20

In July 2013, J Trust procured funds of JPY97.6bn through a rights offering, which it used to expand its business overseas. While continuing to expand its business in South Korea through the acquisition of savings banks, it entered the Indonesian banking business in November 2014 with the acquisition of PT Bank JTrust Indonesia.

After this time, J Trust suffered repeated losses due to provisioning for doubtful accounts in South Korea and Indonesia. An operating loss was recorded in FY03/15 due to the provisioning for doubtful accounts and the processing of NPLs in South Korea. In FY03/16, despite a swing to profit in South Korea, the operating loss continued owing to the amortization of goodwill from the acquisition of PT Bank JTrust Indonesia and increasing provisions against NPLs. An operating loss was again recorded in FY03/17 (Japanese accounting standards basis) mainly due to provisions against NPLs at PT Bank JTrust Indonesia.

In FY03/18, the Investment Business posted an operating loss as a result of valuation losses, but on a consolidated basis (IFRS), the company turned an operating profit thanks to increased operating revenue at PT Bank JTrust Indonesia and a reduction in the provision for doubtful accounts. Then, in FY03/19, another operating loss of JPY32.6bn was recorded as a result of the processing of NPLs at PT Bank JTrust Indonesia and the provisions booked in the Investment Business. In the irregular nine-month fiscal year ended-December 2019, the company posted operating loss of JP5.1bn.

In FY12/20, the financial business in Southeast Asia continued to post losses. Several one-off factors impacted the loss attributable to owners of the parent of JPY5.3bn. Although the company booked JPY1.9bn in valuation gains on shares of Nexus Bank, it had income tax expenses of JPY6.5bn due to the booking of deferred tax liabilities on Nexus Bank shares. In discontinued operations it booked losses totaling JPY1.4bn due to loss of control of subsidiaries J Trust Card and JT Chinae Savings Bank.

FY12/21 onward

In FY12/21, the company returned to the black after posting an operating loss. The company estimates that, excluding one-time factors from its operating profit of JPY5.3bn in FY12/21, its base profit was approximately JPY1.2bn.

Balance sheet

Balance sheet (JPYmn)	FY03/17	FY03/18	FY03/19	FY12/19	FY12/20	FY12/21
	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
Assets
Cash and deposits	80,666	84,723	87,150	81,913	60,593	74,648
Trade and other receivables	78,416	92,723	106,735	113,942	87,599	44,345
Marketable securities in banking business	30,459	37,159	46,599	52,805	14,176	40,471
Loans in the banking business	311,480	343,400	326,234	370,174	118,159	338,593
Operational investment securities	21,494	3,242	2,855	1,895	505	274
Marketable securities	144	208	1,179	721	24,354	27,139
Other financial assets	38,066	46,300	33,416	40,893	18,451	28,554
Investments accounted for by equity method	168	144	126	118	5,841	6,132
Inventories	6,848	6,937	6,742	7,285	42	1,358
Assets held for sale	4,199	1,807	2,310	1,102	156,515	679
Total tangible assets	5,622	3,028	5,119	9,871	6,032	7,708
Investment property	2,249	610	916	2,309	-	-
Goodwill	32,140	29,578	33,508	35,901	28,290	30,260
Intangible assets	3,459	3,087	3,790	7,461	4,620	4,078
Deferred tax assets	1,476	1,502	2,373	934	824	923
Other assets	2,971	2,505	9,317	4,053	4,454	5,463
Total assets	619,865	656,961	668,377	731,384	530,462	610,631

Liabilities
Trade and other payables	8,110	9,811	14,613	16,137	14,888	14,657
Deposits by banking business	364,462	403,509	437,010	483,402	184,239	437,755
Liabilities directly related to assets held for sale	-	-	-	-	141,109	-
Bonds and loans payable	72,139	78,727	86,002	85,105	67,803	26,939
Other financial liabilities	8,182	5,272	13,383	19,911	9,425	11,837
Income taxes payable	1,205	629	1,215	977	483	1,411
Provisions	2,128	353	1,114	1,214	724	253
Deferred tax liabilities	759	850	1,076	1,865	7,327	8,085
Other liabilities	6,963	7,029	3,233	3,864	2,003	1,746
Total liabilities	463,952	506,184	557,650	612,478	428,004	502,685
Capital stock	53,630	53,638	54,760	54,760	54,760	90
Capital surplus	52,743	52,713	53,844	54,082	54,261	99,088
Treasury stock	-7,685	-7,685	-7,685	-7,685	-7,685	-7,685
Other components of equity	2,091	-1,854	-3,170	-4,219	-7,273	-4,281
Retained earnings	49,504	47,555	6,424	3,040	-2,212	8,459
Equity attributable to owners of parent	150,284	144,366	104,173	99,977	91,599	95,670
Non-controlling interests	5,628	6,409	6,554	18,928	10,858	12,275
Total equity	155,913	150,776	110,727	118,905	102,458	107,945
Total liabilities and equity	619,865	656,961	668,377	731,384	530,462	610,631
Total interest-bearing debt	72,139	78,727	86,002	85,105	67,803	26,939
Net debt	-8,527	-5,996	-1,148	3,192	7,210	-47,709

Source: Shared Research based on company data
Note: FY03/17 IFRS results exclude results for discontinued operations (Adores, Inc.).

Statement of cash flows

Cash flow statement		FY03/17	FY03/18	FY03/19	FY12/19	FY12/20		FY12/21
(JPYmn)		IFRS	IFRS	IFRS	IFRS	IFRS	Adjusted	IFRS
Cash flows from operating activities (1)		-12,413	4,581	18,831	-20,829	6,813	6,813	15,408
	Pre-tax profit (loss)	-433	2,898	-31,135	-357	2,953	-619	5,899
	Pre-tax profit or loss from discontinued operations						3,572	-2,675
	Depreciation	2,636	2,456	1,535	2,767	4,013	4,013	2,791
	Change in trade and other receivables	-10,805	-11,644	497	840	20,618	20,618	-1,227
	Change in deposits in banking business	86,236	49,354	39,554	-13,724	25,583	25,583	89,804
	Change in loans in banking business	-87,500	-42,789	-5,395	-17,559	-48,361	-48,361	-77,316
	Income taxes paid	-1,922	-2,231	-2,332	-2,574	-2,333	-2,333	-1,685
Cash flows from investing activities (2)		-4,468	-7,603	-15,190	15,431	-8,422	-8,422	-10,002
	Purchase of tangible assets and investment property	-1,843	-1,474	-1,941	-1,636	-514	-514	-2,629
	Proceeds from sale of tangible assets and investment property	1,162	270	48	737	303	303	588
	Purchase of in tangible assets	-1,537	-794	-1,983	-2,312	-634	-634	-301
	purchase of marketable securities in banking business	-102,457	-106,170	-105,252	-74,266	-142,954	-142,954	-30,051
	Proceeds from sale of marketable securities in banking business	73,739	97,229	95,565	67,529	142,062	142,062	15,140
	Proceeds from redemption of marketable securities in banking business	24,984	984	5,869	1,331	10,355	10,355	2,403
FCF (1+2)		-16,881	-3,022	3,641	-5,398	-1,609	-1,609	5,406
Cash flows from financing activities		10,612	7,798	-525	18	-8,638	-8,638	-6,129
	Net change in short-term loans payable	-4,635	4,112	-4,929	-770	-2,555	-2,555	-3,502
	Net change in current portion of bonds	14,959	5,915	-5,487	-4,251	-5,868	-5,868	7,164
	Repayment of long-term loans payable	-10,751	-18,938	-26,946	-20,349	-33,583	-33,583	-30,866
	Proceeds from long-term loans payable	26,189	17,850	31,964	23,344	35,678	35,678	23,842
	Redemption of bonds	-7,446	-6,577	-5,956	-6,371	-16,012	-16,012	-9,808
	Proceeds from issuance of bonds	470	7,060	9,540	10,050	15,024	15,024	7,647
	Purchase of treasury shares	-7,279	-	-	-	-	-	-
	Dividends paid	-1,401	-1,235	-1,236	-105	-105	-105	-

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods
Note: FY03/17 IFRS results exclude results for discontinued operations (Adores, Inc.).

Cash flows from operating activities

Cash flows from operating activities are primarily influenced by fluctuations in pre-tax profit or loss, operating and other receivables, and changes in the value of deposits and loans in the banking business.

Cash flows from investing activities

Cash flows from investing activities are heavily influenced by fund flows accompanying acquisitions and business transfers.

Cash flows from financing activities

There is a tendency for cash flows from financing activities to fluctuate in line with changes in interest-bearing debt, share issuance, and dividend payments.

Other information

History

Date	Description
Mar. 2009	Bought 100% of Station Finance (now Nihon Hoshou) from Hankyu Corp.
Sep. 2010	Bought 100% of Lopro Corporation (now Nihon Hoshou).
Aug. 2011	Bought 97.76% of KC Card (formerly Rakuten KC) from Rakuten.
Mar. 2012	Bought and transferred the consumer financial business of Takefuji Corp. (now TFK under corporate rehabilitation) to Lopro Corporation (now Nihon Hoshou) via an absorption-type split.
Apr. 2012	Company bought Next Japan Holdings through a stock swap.
Jun. 2012	Made Adores a consolidated subsidiary.
Jul. 2012	Bought 100% of JT Investment (formerly Neoline Holdings) from NLHD.
Oct. 2012	Obtained a South Korean savings bank business license via Chinae; launched savings bank business with the establishment of Chinae Savings Bank (currently JT Chinae Savings Bank).
Jul. 2013	Procured JPY97.6bn of funds via rights offering (non-commitment/gratis-allotment of listed conversion options).
Oct. 2013	Established JTrust Asia Pte. Ltd. in Singapore as a foothold for advancement into Southeast Asia.
Mar. 2014	Bought 100% of KJI Consumer Finance LLC and HICAPITAL CO., LTD., making them subsidiaries.
Nov. 2014	In Indonesia acquired 99.0% of Indonesian commercial bank PT Bank Mutiara Tbk.’s shares from Indonesia Deposit Insurance Corporation, making it a consolidated subsidiary.
Jan. 2015	Demerged the credit card business of KC Card, which was taken over by KC Card’s Subsidiary KC (currently YJ Card) with all of KC’s shares sold to Yahoo Japan Corporation and SoftBank Payment Service Corp. Also, KC Card’s trading name changed to J Trust Card.
Jan. 2015	In South Korea, purchased all the shares of Standard Chartered Savings Bank Korea Co., Ltd., made it a consolidated subsidiary, and changed trading name to JT Savings Bank.
Mar. 2015	In South Korea, purchased all the shares of Standard Chartered Capital (Korea) Co., Ltd., made it a consolidated subsidiary, and changed trading name to JT Capital.
Jun. 2015	Established PT JTrust Investments Indonesia in Indonesia as a subsidiary of JTrust Asia Pte. Ltd.
Oct. 2017	Transferred the General Entertainment business, part of the Real Estate business, and Other business (money exchange services) of Adores, Inc. to Adores Company Split Preparatory Company through a company split (absorption-type split). At the same time, Adores, Inc. changed its trading name to KeyHolder, Inc., and Adores Company Split Preparatory Company changed its to Adores, Inc.
Mar. 2018	Sold all shares in Adores, Inc. to Wide Leisure, K.K., and subsequently excluded Adores from the scope of consolidation.
May 2018	Purchased all the shares of Capital Continent Investment NBFI (now, J Trust Credit NBFI), which conducts automobile loans, from Japan Pocket Co. Ltd., and entered the Mongolian market.
Oct. 2018	In Indonesia, JTrust Asia Pte. Ltd. acquired shares of PT Olympindo Multi Finance (now, PT JTrust Olympindo Multi Finance) and 60% of new shares via third-party allotment to make PT JTrust Olympindo Multi Finance a consolidated subsidiary.
Aug. 2019	Company completed share purchases of ANZ Royal Bank (Cambodia) Ltd. and made it a consolidated subsidiary.
Nov. 2020	J Trust Card Co., Ltd. and its subsidiary JT Chinae Savings Bank deconsolidated after a share exchange with Nexus Bank Co., Ltd. made J Trust Card a wholly owned subsidiary of Nexus Bank
Aug. 2021	Sold all shares in JT Capital Co., Ltd. and subsequently excluded JT Capital from the scope of consolidation.

Top management

President and chief executive officer

Nobuyoshi Fujisawa

Date of birth: January 17, 1970

Aug. 2007	Representative Director & Chairman, Kazaka Servicer Co., Ltd. (currently Partir Servicer Co., Ltd.)
Jun. 2008	Representative Director & Chairman, J Trust Co., Ltd.; Director, Mass Work Co., Ltd. (currently Gro-bels Co., Ltd.)
Jun. 2010	Director, J Trust Co., Ltd.; Director, Adores, Inc. (currently KeyHolder, Inc.)
Oct. 2010	Director & Supreme Advisor, J Trust Co., Ltd.
May 2011	Representative Director & Chairman, Adores, Inc. (currently KeyHolder, Inc.)
Jun. 2011	President & CEO, J Trust Co., Ltd.
Oct. 2013	Managing Director & CEO, J Trust Asia Pte. Ltd. (current position)
Jan. 2014	Chairman, Chinae Savings Bank Co., Ltd. (currently JT Chinae Savings Bank Co., Ltd.)
May 2014	Chairman, Adores, Inc. (currently KeyHolder, Inc.)
Sep. 2014	Executive Director, LCD Global Investments Ltd. (currently, AF Global Limited)
Mar. 2015	Director & Chairman, JT Capital Co., Ltd. (currently A Capital Co., Ltd.)
Jun. 2015	Representative Director, President & CEO, J Trust Co., Ltd.; President Commissioner, PT JTrust Investments Indonesia;
Jun. 2015	Director, Adores, Inc. (currently KeyHolder, Inc.)
Mar. 2017	Outside Director, Digital Design Co., Ltd. (currently Nexus Bank Co., Ltd.)
Jun. 2019	Chairman, KeyHolder, Inc. (current position)
Mar. 2020	Director, maneo market Inc.
Jun. 2020	Chairman and Director, J