Growth Strategies（FinTech）

[Cardholders] [Card Transactions] [ＲＯＩＣ]

[稼動カード1枚当たり利益]

Industry-Leading Level of Operating Income per Active Card

・High-value-added business model

23

丸井Ｇ Ａ社 Ｂ社 丸井Ｇ Ａ社 Ｂ社 丸井Ｇ Ａ社 Ｂ社

3.9%

1.1%2.2%

6.36million

MARUIGROUP

Company A

Company B

Company B

Company B

Company A

Company A

MARUIGROUP

MARUIGROUP

26.46 million

26.92 million

¥1,700 billion

MARUI GROUP Company A Company B

* Figures from FY2017, segment based

* Total for card shopping and cash advance transactions

[Operating Income per Active Card]

Revenue

¥23,400

Expenses

¥16,900

Income¥6,500

¥14,300¥13,800

¥500¥10,600

¥8,200

¥2,400

¥4,700 billion

¥4,900 billion

40％

Strength of FinTech : Our Customer Profile

～30s

56％44％

26％ 24％40s～

74％ 76％

【Ratio of revolving and installment payments attribute to installment sales account receivable (including factoring accounts receivable)】

MARUI GROUP Company A

64％25％

＊Figures from FY ended March 2018

MARUI GROUP Whole industry Company Ａ【Distribution of cardholders by age】

・Realizing high earnings through high exposure to the younger generation.

Company B

24

25

[Shop Retail Transactions]

¥302.3bn

Approx. ¥3tr

EPOS Company Ｂ

[Profit Per Card]

EPOS Company Ｂ

¥6,500

¥2,400

[New Cards IssuedPer Y1m Retail Sales]

EPOS Company Ｂ

2.4 People

0.6 People

4x more new cards issuance relative to retail sales 2.7x more profit per cardholder

・Taking our combined strength in “high card issuance ability” x “high profits per card”aiming to achieve top profits in the industry

[New Card Issued]

0.74ｍ

Approx. 2.0ｍ

EPOS Company Ｂ

（Note: Figures are our estimates based on public information）

Industry-Leading Level of Card issuance numbers relative to shop retail transactions

×

26

Strength of FinTech：Credit cost and expertise

・Although the ratio of revolving and installment payments attribute to installment sales accounts receivable is 64%, the ratio of bad debt write-offs is only 1.6%

・Established unique credit system, combining know-how accumulated since foundation and our IT expertise

【Ratio of revolving and installment payments and bad debt write-offsattribute to installment sales account receivable (including factoring accounts receivable)】

MARUIGROUP

CompanyＡ CompanyＢ64％ 40％ 25％

＊Figures from FY ended March, 2018

1.6％ 1.1％2.1％

【Criteria of credit limit】

Age

Occupation

Income

UsageHistory

PaymentHistory

Age

Occupation

Income Usage & payment evaluation

Increasing of credit limit

Ratio ofbad debtwrite-offs

Ratio ofbad debtwrite-offs

Ratio ofbad debtwrite-offs

Oth

er

com

pan

ies

MA

RU

I G

RO

UP

Credit Card Receivables and Ratio of Overdue Debt(More Than 90Days Overdue) in the United States

Source: FEDERAL RESERVE BANK OF NEW YORK「QUARTERLY REPORT ON HOUSEHOLD DEBT AND CREDIT」

（Billions of Dollars）

①LoanIncrease

②DelinquencyIncrease

③LoanControl

④DelinquencyDecrease

①LoanIncrease

②DelinquencyIncrease

27

（％）

■Provision for Bad Debts and Ratio of Bad Debt Write-Offs

Provision for Bad Debts

28

・Increases in provision for bad debts in conjunction with higher operating receivables, but stable ratio of bad debt write-offs of around 1%

(Provision for bad debts)

(Billions of yen)

Ratio of bad debt write-offs

(Operating receivables）

¥299.8 billion

548.0

29

■Selection RationaleMarui manages its Credit Card Services business under a unique business model, merging retailing and credit card operations. This approach, which encompasses both operations, has enabled the creation of a simple, stress-free card application and issuance process. Under its policy to “build creditability together with customers,” Marui Group has developed a strong base of young customers (predominantly in their 20s and 30s), who are more likely than older cardholders to use revolving credit and installment payments.

Awarded Porter Prize 2016

日本 アメリカ 韓国

30

Growth Sustainability of Credit Card Business: Comparison of Payment Methods by Country

Cash

Bank transfers

Prepaid cards, e-money

Credit cards

■Distribution of Payment Methods by Country

* Calculated by MARUI GROUP based on data from the Ministry of Economy, Trade and Industry; Mitsubishi Research Institute, Inc.;and the Japan Consumer Credit Association

・Predominately cash used for payment in Japan, significant room for growth of credit card payments

Checks

Credit cards

Debit cards

Cash

30

Japan United States

South Korea

52％

16％

17％

24％

28％

15％

70％

・Japanese government sets policy target of 40% cashless payment settlement ratio by 2027 to promote FinTech advance

■Cashless Payment Settlement Trends

*Source: Cabinet Office FY2016 National Statistics Annual Report, Future Investment Policy 2017

Shift to Cashless Payments

18％

CAGR

＋６％

3131

12％

40％

CAGR＋７％

08年 09年 10年 11年 12年 13年 14年 15年 16年 17年 18年 19年 20年 21年 22年 23年 24年 25年 26年 27年

・Card shopping transactions seeing 7% GAGR, despite flat householdspending levels. Further increase expected given government’s cashless payment infrastructure installation drive to 2020

■Card Shopping Transactions

50,000Billionsof yen

CAGR

＋7％

32

Householdspending

32

Mid to Long-Term Consumption Outlook and CashlessPayment Trends

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

*Source: Japan Consumer Credit Association “Consumer’s Credit statistics in Japan”

Market Trends by Payment Option

Small stores

Prepaid cards/e-moneyApprox. 1 million payment terminals

Approx.

¥90 trillionApprox. ¥10 trillion

Small sum(Less than ¥5,000)

Large-scale stores(Chain stores)

Approx.

¥60 trillion

■Market Scale by Payment Method (Based on consumer spending excluding housing loans)

Cash

Credit cardsApprox. 10 million payment terminals

Large sum

Source: MARUI GROUP CO., LTD. (Based on National Accounts of Japan, Cabinet Office; materials from Japan Consumer Credit Association; General Survey of Payment Methods, Bank of Japan; General Survey of Electronic Payment Methods 2017–2018, CardWave Co., Ltd.; and other materials)

CashApprox.

¥40 trillion

Area in which smartphone

payments may replace other options

going forward

EPOS PayLaunched in November 2018

Increased use of credit cards through contactless payment

via smartphones

Transaction volumeUp 120% YoY

(April–September 2018)

33

34

Main Business Area（Tokyo / Kanagawa / Saitama）

・Expand e-commerce, service, and contents-related collaboration partner network

・Leverage group’s know-how and human resources to expandcommercial facility collaboration partner network

Nationwide Development of Credit Card Membership

(As of March 31, 2018)

Cardholders: 6,570,000

<Cardholders> (Thousands of people)

FY18% of total share

Age 39 and

Below

Main Business

Area1,910 29％ 24％

Others 1,420 22% ６％

Total 3,330 51% 11％

Age 40 and above 3,240 49% －

Total 6,570 100% －

左 右 FY21 (Forecast)FY16

■Operating Income and ROIC Forecasts

■Balance Sheet Forecasts

More than 4.1%

3.9%

FY21 (Forecast)FY16

FinTech: Balance Sheet and ROIC Forecasts

Operating receivables¥413.9

billion

Equity ratioApprox. 10%

Interest-bearing debt

¥359.3 billion

¥23.1 billion

More than ¥40.0

billion

Interest-bearing debt

¥590.0 billion

Equity ratio10%

Operating receivables¥680.0

billion

Total assets¥460.0 billion

Total assets¥720.0 billion

・Increase operating receivables by ¥260billion by FY2021. ・Target more than 4.1% of ROIC by expansion of service business

which has lower investment costs.

35

業界最高水準の資産効率

36

ＲＯＩＣ（％）

ＰＥＲ（倍）

・Comparison of ROIC and PER among credit card companies

MARUI GROUP

linear approximation curve

Company A

Company B

EC Company CCompany D

Company E

（Note: Figures are our estimates based on public information, Stock price as of November 27, 2018, EPS forecasts for FY2019）

Future Initiatives

Evolution of Credit Card Services Business into FinTech Business

3838

Operating Environment

Shift from accumulation of physical goods to

pursuit of more-fulfilling lifestyles

High cash and cash equivalents

Concern for the future

among youths

Transition to Internet-based

finance

39

Finance × Technology

Financial Services for Everyone

Financial Inclusion

—Technology driven—

- Mission driven -

FinTech

MARUI GROUP’s FinTech

40

MARUI GROUP’s Platform

Number of physical stores

26

Annual number of visiting customers

200 million

Ratio of cardholders under 30

56%

Cardholders

6.57million

Ratio of cardholders registered for Internet

services

81%

41

Offering Financial Services in Our Daily Lives

Encourage

Increase

Pay

Prepare

Conserve Borrow

￥

Lend

￥

Donate

Learn

Save

Platform

42

Financial Inclusion

Wealthy

Youths

Non-Japanese residentsForeign exchange

students

Entry into securities business in FY2019

42

Background: Concerns of Younger Generations and Social Trends

43

Sources: Flow of funds data, Bank of Japan, 2016Progress and Assessment of the Strategic Directions and Priorities 2015–2016, Financial Services Agency, 2016

■ Breakdowns of Private Financial Assets by Type

Financial Services Agency promoting asset formation using ¥900 trillion

worth of cash and deposits

26%15%

29%

12%

23%

31%

59%

52%

14%24%

日本 アメリカ 英国Japan U.S. U.K.

(¥900 trillion)

Cash / deposits

Insurance/ pensions

Stocks / trusts

Other

Address social issues by providing new asset formation services

■ Concerns of workforce members in their 20s

No. 1 Money 59％ No. 2 Work 41％No. 3 Marriage 32％

Source: Dentsu Communication Institute Inc., 2015

■ New Year’s resolutions of people aged 20 in January 2017

No. 1 Saving for the future 41％No. 2 Conserving money 34％No. 3 Healthy habits 30％

Source: Visa Worldwide Japan Co., Ltd.

■ Reason for lack of interest or unwillingness to engage in asset management and lending

No. 1 Perceived difficulty or lack of knowledge 60％

No. 2 Concern for losses 45％No. 3 Lack of monetary leeway 39％

Source: Asset management survey of EPOS cardholders, 2016

Entry into Securities Business

44

■ Services to Be Provided

Who Younger generations and everyone else

WhatPurchases of investment trusts applicable under Tsumitate NISA

How Credit payment via EPOS cards

■ Structure of Earnings

Lifetime value of EPOS cards

Investmenttrust fees + ＝ Group earnings

Japan’s first scheme for purchasing investment trusts with credit

Target 1 million users and ¥1 trillion in balance of assets in 10 years

Commence operations in summer 2018

tsumiki Securities Co., Ltd.

■Applications Received by tsumiki Securities in September and October 2018

(Reference) Ratio of Applicants Aged 20–49

Approx. 30% based on survey by The Investment Trusts Association

Approx. 60% at independent fund management companies

20–29

29％

Distribution of Applicants by Age

30–39

34％

40–49

24％

50 and above

13％

Distribution of Applicants by Investment Experience

No experience

60％

Experienced

32％

Novices

8％

Note: “Novices” refers to customers with less than one year of investment experience.

20–49

87％

(Reference) Ratio of Applicants with No Investment Experience

Approx. 40% at independent fund management companies

・Ratios of applications from younger and first time investor customers much higher than those of existing financial institutions

45

Fund Management Companies Partnered with tsumiki Securities

■Breakdown of Financial Institution Customers by Returns (Announced by Financial Services Agency; based on common, comparable KPIs)

・Fund management companies partnered with tsumiki Securities ranked top three among financial institutions with high ratios of customers enjoying positive returns in ranking announced by Financial Services Agency

Source: MARUI GROUP CO., LTD. (Based on data from Nikkei Inc.)

GainsLosses

-40 -20 0 20 40 60 80 100

MONEX

SBI SECURITIES

Mizuho Bank

SMBC Nikko Securities

NOMURA SECURITIES

Loss of 11%–30% Loss of 0%–10% Breakeven Gain of 0%–10% Gain of 11%–30% Gain of more than 30%

98％

91％

85％

% of customers (%)

46

Commons Asset Management

Rheos Capital Works

Saison Asset Management