Top Message

To all our stakeholders

Firstly, I would like to thank all our stakeholders for their continued support.

Our Performance in Fiscal 2023

During the fiscal year ended March 31, 2024 (fiscal 2023), the global economy showed signs of recovery as economic activities normalized in the “post-COVID-19” era. However, inflation impacted households and businesses due to rising energy prices and soaring raw material costs, driven by the prolonged Russia-Ukraine situation. In Japan, the shift to a “post-COVID-19” phase, owing to the downgrading of COVID-19 to a Class 5 infectious disease in May 2023, helped revitalize spending by Japanese consumers, and a pickup in inbound spending by foreign visitors to Japan also supported Japan's economic recovery. In financial markets, concerns about economic downturns emerged as central banks in many countries, including those in Europe and the United States, continuously raised policy interest rates. In Japan, the Bank of Japan (BOJ) assessed the virtuous cycle between wages and prices at its Monetary Policy Meeting in March 2024 and judged it came in sight that the price stability target of 2% would be achieved in a sustainable and stable manner. As a result, BOJ decided to terminate the negative interest rate policy that has been in place since 2016 and raise the policy interest rate from its previous level of a negative 0.1% to around 0% to 0.1%.

In fiscal 2023, recognizing that banking services are an important part of the social infrastructure, we have strived to provide safe, secure and convenient banking services while upgrading its internal control systems. Moreover, we have been committed to management with a greater emphasis on improving growth and profitability than ever before, as evidenced by our efforts to increase the accuracy of marketing, enhance convenience through the introduction of new services, and strengthen fund management capabilities. As these strategies proved to be effective, we significantly expanded our business scale. The non-consolidated number of accounts exceeded 15 million in February 2024 and reached 15.23 million as of March 31, 2024. Additionally, the deposit balance on a non-consolidated basis exceeded ¥10 trillion as of December 31, 2023, reaching ¥10,540.2 billion as of March 31, 2024. In terms of assets management, consolidated monetary claims bought amounted to ¥2,550.8 billion, an increase of ¥447.7 billion year on year due to the purchase of trust beneficiary rights backed by credit card receivables of Rakuten Card Co., Ltd. and other assets. Consolidated loans and bills discounted amounted to ¥4,069.5 billion, an increase of ¥288.9 billion year on year, owing to a net increase in the balance of card loans, in addition to steady increases in investment property loans and affiliated loans.

As a result, we posted consolidated ordinary income of ¥137.9 billion (up 14.5% year on year), consolidated ordinary profit of ¥48.3 billion (up 24.8% year on year), and profit attributable to owners of parent of ¥34.4 billion (up 24.3% year on year). Furthermore, as of the end of fiscal 2023, the consolidated capital adequacy ratio remained at a healthy level, amounting to 10.93%. In addition, the non-consolidated expense ratio (ratio of general and administrative expenses to gross operating profit) in fiscal 2023 was 42.5% (improved by 3.2 pts year on year), reflecting improved management efficiency due to business expansion.

Our Business Strategy and Progress

In April 2022, we announced our Medium- to Long-Term Vision. This positions the previous business expansion as the “first growth stage” and outlines strategies and goals for the “second growth stage” to further expand operations and enhance corporate value. We are working towards achieving this vision by focusing on three key strategies: (1) expanding our customer base, (2) earning power enhancement, and (3) capturing growth in the FinTech domain.

For the first goal, expanding our customer base, we are taking advantage of the rapid digital shift caused by the spread of COVID-19 to effectively leverage the Rakuten Ecosystem's robust customer base and further pursue synergies with each business within the Rakuten Group in order to acquire new customers. We have also developed a system that manages everything from development and maintenance to operations internally, ensuring that we can provide safe, secure, and convenient services even as the number of our customers significantly grows, which supports the expansion of our customer base.

The second goal, earning power enhancement, is to leverage the expansion of our customer base to work on strengthening both interest and non-interest income generated from transactions with customers. First, we aim to significantly grow interest income by effectively utilizing the capital obtained from the capital increase during our initial public offering, while expanding investment assets by balancing low-risk and medium-risk assets under appropriate risk control. We are particularly expanding our product lineup to meet the diverse needs arising from the varied lifestyles and life stages of our customers. In light of the diversification of values and living styles following the transition to the era of 100-year lifetimes, we have jointly developed a residual value type mortgage loan (Zan-ka settei-gata jutaku loan) with the Japan Trans-Housing Institute to reduce the burden of mortgage loans on home buyers and at the same time offer them more housing choices adapted to changes in their life stages including relocation in the future. This product is offered to customers through partnerships with sales companies of Asahi Kasei Homes Corp., Misawa Homes Co., Ltd., Panasonic Homes Co., Ltd., Daiwa House Industry Co., Ltd., and Toyota Housing Corporation. Next, we aim to become a “bank as a main account” by incorporating essential financial activities, such as salary deposits and account transfers, into our services, and offering a wide range of services with high convenience, such as foreign currency deposits and transfers, and international remittance, to expand non-interest income. We have especially focused on using customer data to propose services from the bank and Rakuten Group that are of interest to each customer, thereby increasing the frequency of service use and expanding non-interest income. These efforts have been successful, and as of March 2024, the main account ratio (the percentage of accounts used for salary and bonus deposits or account transfers) set as a KPI has grown to 31.5%, indicating a steady increase in customers using the bank as their main account. Additionally, we have newly added domestic stock accumulation orders to the automatic sweep feature of the “Money Bridge” account linkage service with Rakuten Securities, further improving customer convenience. This improvement has been widely used by customers under the new NISA system introduced in January 2024, contributing to the increase in non-interest income.

Furthermore, in the context of earning power enhancement through entry into new business areas, we aim to realize “financial services beyond banking” that cannot be provided by a bank alone. To this end, we have been promoting BaaS (Banking as a Service). In May 2024, in collaboration with East Japan Railway Company (JR East) and View Card Co., Ltd., we launched the “JRE BANK” service. Our BaaS initiative combines the unique assets and expertise of our partners with our highly convenient online banking services, creating new revenue opportunities by offering customer experiences that could not be realized by the bank alone.

For the third goal, capturing growth in the FinTech domain, we focused on responding to the diverse needs of customers in the area of cashless payments, which have been expanding significantly in recent years. For our cashless payment methods, including debit and prepaid cards, we emphasized the benefit of offering 1% cashback in Rakuten Points or prepaid value. Through various promotional campaigns, we successfully expanded the use of cashless payments by helping customers experience their convenience. Additionally, we expanded the number of payment slips that can be paid using the Rakuten Bank Convenience Store Payment Service (Convenience Store Slip Payment by Rakuten Bank App) by enabling electronic payment of local taxes (eL-QR), allowing customers to pay bills easily from home using the Rakuten Bank app. Furthermore, as a service combining Rakuten Group's cashless payment methods with bank accounts, we promoted the increase of customers using Rakuten Pay with direct payment from their Rakuten Bank accounts. We also highlighted the benefits, such as earning Rakuten Points and receiving preferential interest rates when paying Rakuten Card credit card bills via account transfers from a Rakuten Bank account, aiming to expand and capture our customers' cashless payment needs.

Our overseas subsidiary, Rakuten International Commercial Bank Co., Ltd. (hereafter “Rakuten International Commercial Bank”), which began operations in January 2021 as Taiwan's first online bank, has been striving to offer the “safe, secure and the most convenient” banking services in Taiwan by leveraging the internet banking expertise and cutting-edge IT technology that we developed in Japan. Rakuten International Commercial Bank provides highly convenient services through the Rakuten ecosystem in Taiwan (including credit cards, e-commerce, a baseball team, e-books, etc.) and partnerships with local companies. As of the end of March 2024, the number of deposit accounts at Rakuten International Commercial Bank reached 219,000, with total deposits amounting to 22.8 billion New Taiwan dollars (¥108.1 billion equivalent, based on an exchange rate of ¥4.74 per New Taiwan dollar). With the easing of travel restrictions between Japan and Taiwan, travel from Taiwan to Japan has been rapidly recovering. Rakuten International Commercial Bank aims to leverage its strengths as a Japanese bank to offer highly convenient services to Taiwanese customers not only within Taiwan but also during their stays in Japan.

External Evaluation of Our Strategies and Initiatives

Our business strategies and initiatives to provide highly convenient banking services to our customers have been highly praised by external organizations. We have been recognized as a Country Winner for 9 consecutive years in the Global Finance World's Best Consumer Digital Bank Awards hosted by the U.S. financial magazine Global Finance. Additionally, our digital banking services' superiority and commitment to innovation have been globally acknowledged, as demonstrated by our 6 consecutive years of receiving the Best Bank for Digital Solutions award in the 2023 Asiamoney Best Bank Awards for Japan, organized by the Asian financial magazine Asiamoney.

Domestically, we have also received recognition from evaluation agencies. We secured the top spot in the 2023 Internet Bank Main Bank Survey for the number of companies that consider an internet bank as their main bank, according to Tokyo Shoko Research's nationwide corporate database. This achievement highlights the growing presence of internet banks in corporate banking services and reflects the convenience and price competitiveness of our corporate payment services. We believe this serves as evidence of the competitive advantage of our corporate services. Moving forward, we will continue to leverage our strength in in-house system development to create agile services tailored to the needs of our corporate customers, further deepening our relationships with corporate customers and enhancing the competitiveness of our corporate services.

Working Toward the Realization of a Sustainable Society

We are actively advancing various initiatives aimed at realizing a sustainable society, focusing on both environmental and social aspects. On the environmental front, we are leveraging the advantages of our business model, which features reduced greenhouse gas emissions due to the absence of physical branches. We have also intensified efforts to contribute to environmental conservation by promoting paperless procedures for tasks such as account openings. Additionally, we have committed to environmentally conscious management by endorsing the TCFD recommendations, disclosing climate-related information accordingly, and participating in climate change initiatives. Furthermore, as part of our efforts to reduce environmental impact, we achieved the goal of sourcing 100% of the energy consumed in our business operations from renewable energy (RE100) both domestically and internationally in the 2023 calendar year. We also supported society's transition to carbon neutrality through environment-related investments and loans.

On the social front, recognizing our responsibility to contribute to local communities, we utilized our position as an internet bank to support initiatives such as donations to the 2024 Noto Peninsula Earthquake through the Rakuten Group's online donation platform, Rakuten Clutch Special Charity Fund. We also conducted financial education classes for university students. Additionally, we engaged in activities to address regional social issues, such as the increase in marine plastic waste and the shortage of citizen volunteers, by organizing cleanup activities involving our employees and their families. We have also focused on human resource development to encourage the autonomous skill development of our officers and employees. In promoting diversity, we set specific numerical targets, such as achieving a management ratio of at least 35% for women and ensuring that the average tenure for women is at least 75% of that for men. We have reinforced our efforts to meet these goals.
Going forward, we will continue to work with our customers, other stakeholders, and local communities to further expand the scope of our efforts toward the realization of a sustainable society.

Closing Remarks

As a leading FinTech company, we aim to continue to be the “safe, secure, and most convenient bank.” We intend to contribute to all our stakeholders through business expansion, better performance, and the maximization of corporate value. Going forward, we look forward to your continued support and patronage of Rakuten Bank.

Related Information