ORIX Corporation

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We'd like to now start. Thank you very much for joining us. This is the financial resource briefing for the fiscal year ended March 2026 of Oryx Corporation. I will be the facilitator. I am Uchida, General Manager of Corporate Communications Department.

Let me first introduce the speakers.

Hidetake Takahashi, member of the Board of Directors, representative to Executive Officer, President and CEO. Masataka Yamada, Cinemagine Executive Officer, CFO and CSO. So those two gentlemen will be presenting. In addition, there are four attendees. Mr. Satoru Matsuzaki, the member of the Board of Directors, Deputy President, Executive Officer, COO of Japan and AMAC. Mr. Satoru Suzuki, Senior Managing Executive Officer, COO. of USA in Europe. Shuji Edea, Senior Managing Executive Officer, COO of Infrastructure Business Unit. Kazuki Yamamoto, Operating Officer, Corporate Strategy and Management Unit, Head of Corporate Planning, Investor Relations and Sustainability. So those four. First, I will call upon Mr. Takahashi and Mr. Yamada to present, and then we take questions. We plan to spend about 90 minutes in total. Now, over to you, Mr. Takahashi.

Thank you.

Good afternoon, ladies and gentlemen, and again thank you very much for joining us despite a very busy schedule for our group's financial results briefing. I'm Takahashi, group CEO. For the fiscal year ended March 2026, the uncertainty has become the norm that was a macroeconomic environment. But for us, it was a first year toward realizing our long-term vision, and also an important year of management transition. And we spent 12 months so far, and we have made steady steps forward and made progress toward our goals. And we did the earnings announcement just now, and thanks for your support. we were able to achieve record highs for both net income and market capitalization. A robust organization and management structure are essential in order to steadily execute our growth strategy going forward. To this end, we introduced organizational reform from January 1st this year and implemented a secure system as of 3rd of April. We have recruited Yamada from outside of the company as CFO slash CSO. Additionally, we reviewed guidelines and expanded the investment and financing authority delegated to each business division, enabling faster and accountable decision-making. Furthermore, with the CFO and CRO taking the lead in maintaining strong financial discipline and sophisticated risk management, we aim to take good risks speedily and proactively. to achieve growth at a new level. And that's just for the opening remarks. And I would like to hand over to CFO Yamada, who will explain the results for the fiscally ending March 26 and the guidance for the fiscally ending March 2027. Thank you for the introduction. I'm CFO and CFO, Masataka Yamada. Thank you for this opportunity. And please refer to page two of results presentation or the screen in front of you. These are the points I've had to cover during today's briefing. There are three, as you can see. Number one. FY26 March Results and FY27 March Guidelines and FY26 March In Review and the third point is the Initiative for FY27 March. I would like to discuss the first topic, FY26 March Results and the FY27 March Guidelines and then CEO will follow and explain the second and third points. Please proceed to page 3. These are the slides for the fiscal year ended March 26. Please look at the graph on the left. This shows ROE and net income for four-year. Net income for FY26 March was a 447.3 billion yen exceeding the four-year forecast of 440 billion yen that was revised upward at the first half results that was announced in November last year. This marked the third year in a row that OREC achieved record profits. This represents an increase of 95.6 billion yen or 27% in net income compared to the previous year. ROE was 10.4% at 1.6 percentage points from the prior year. Q4 net income was 57.6 billion yen. We recorded a total impairment of 97.2 billion yen primarily at OXUSA, resulting in a low net income compared to the 118.6 billion yen posted in the third quarter. At OCP in the OXUSA segment, OCP is OX Capital Partners, we are proceeding with a phased withdrawal from the PE business and capital recycling efforts. As a result, we recall a goodwill impairment in the fourth quarter. That's the major factor. Next, please proceed to page four. I would like to explain our spirit of the fiscal year ended March 26th using three categories, finance, operation and investments. The upper table compares segment profits, pre-tax profits and net income for the last two fiscal years. As shown in the second row, pre-tax profits for the fiscal year ending March 2026 were 691.4 billion yen, an increase of 211 billion yen, or 44% compared to the prior fiscal year. Next, please look at the graph at the lower left. Dark blue represents finance, light blue represents operation, and the deep pink bar represents investments. The upper bar graph shows segment profits for the fiscal year ended March 25, and the lower bar graph, fiscal year ended March 26. All three categories for profit growth, while the investments category posted profit growth even excluding 95 billion yen in gains from technical sales and valuation gains. In the finance category, investment income rose sharply in each year's segment, and corporate financial services achieved growth in income. This resulted in an increase of 12.9 billion yen, or 7%, year over year. In operation, while some businesses have recently been affected by geopolitical risks, inbound and related businesses such as hotels, inns and airport concessions, as well as the rent-take automobiles and ships performed strongly in the fiscal year ended March 26. In addition, the sales of some Oryx's stake in Canara Robico following the firm's IPO and gains from the sale of Zclyde contributed to growth, resulting in an increase of 37 billion yen, or 18%, compared to the previous fiscal year. In the investment category, Oryx saw a significant increase in segment profits of 138.1 billion yen, or 82%, compared to the previous fiscal year. This was driven primarily gains from the sales of valuation gains of Greenco, as well as large gains from real estate and earnings from PE investments, including Ososhiba. Breakdown of each show has 10 segments, provided on pages 40 and 41, for your reference later. Please turn to page 5. The bar chart on the left shows results for ROE, settlement profits, and allocated capital for each of the categories for the fiscal year ended March 2026, as well as the changes from the prior fiscal year. The dark blue bubble, the finance category, has allocated capital of 1.7 trillion, with ROE holding steadily at the same level of 8.2% from the prior year. Light blue bubble operation has allocated capital of 1.4 trillion yen, with hourly rising from 13.5% of the price this career to 13.9%. Dark pink bubble investment has allocated capital of 1.6 trillion yen, with hourly significantly improving from 7.4% to 13.6% due to realized gains from the sales of green cross steak and hotel sales. On page 6, we show historical trends of ROE and ROA of each of the three categories. In the operation category, profitability improvement has outpaced asset expansion with ROA improvement an additional 1.0 percentage point over the past five years. In the investment category, ROE and ROA increased by 6.2 percentage point and 3.6 percentage point, respectively. compared to the prior fiscal year. We continue to create value and rotate assets while enhancing efficiency, as mentioned before. Next, please proceed to page 7. For the fiscal year ending March 27, we target net income of about 530 billion yen, an increase of 82.7 billion yen from the prior year. And the target of ROE is 11.7%. Workscore-specific key initiatives will be explained by our CEO Takahashi later on, but we aim to increase profit and also improve ROE by continuing to optimize our portfolio. Regarding shareholder returns, I will touch on these again after presenting breakdown of earnings guidance. Please turn to page 8. I will explain the pre-tax profit guidance for the fiscal year ending March 2027 for each of the three categories. First, please look at the wrapper table. As shown in the second row, expected pre-tax profit for the fiscal year ending March 27, will be 760 billion yen, an increase of 68.6 billion yen, or 10% year-over-year. This will cut the lower left graph. Overall, we expect the finance and operation categories to achieve profit growth, but investments will see a decline. However, excluding the 95 billion yen in gains from the self-banking of the FYE, 26 March, investment segment profits also expected to increase. Next, I would like to explain the trend for each categories. Finance. As announced in April, we have concluded share transfer agreement with Dynex Bank, a consolidated subsidiary of Adara Securities Group, for all shares of Oryx Bank. We plan to record a gain on sales from the transaction of approximately 124.2 billion yen at the pre-tax level. for fiscal year ending March 27. Income profitability from OEX USA is expected to contribute as well. As a result, we expect finance category 7 profit of 308.3 billion yen, an increase of 119.1 billion yen, or 63% compared to the prior year. Within operation, we expect the inbound related business to see lower profits due to the impact of geocritical tensions. Despite this, we expect solid growth in aircraft leasing and US-based Helga Global. And we are guiding operations category segment profits of 240.7 billion yen, an increase of 3.6 billion yen or 2% compared to the fiscal year. Ending March 26. Finally, investment category, in addition to the sale of a domestic PE investment, Sugiko, which was announced in March, we are proceeding with exits from multiple PE deals in the U.S. We also expect profit contributions from Toshiba, which is performing well. As a result, our guidance for the settlement profit is 290 billion yen.

Next, please turn to page 9. The last point that I would like to explain is about the shareholder returns. For the fiscal 26 March, the four-year dividend per share was the record high of 156.1 yen, up 30% year-on-year. Additionally, we fully executed the entire 150 billion yen buyback program and cancelled all shares exceeding 2%. of the total shares outstanding. For the fiscal 27 March, we will maintain the dividend payout ratio of 39%. Thus, the four-year dividend per share will be 187.36 yen based on the projected net income of 530 billion yen. We have set the share buyback program of 250 billion yen up 100 billion yen year-on-year. This was decided after considering cash inflows and capital release resulting from the sale of Oryx Bank, as well as the future profit levels, ROE, and financial soundness. The projected total return ratio, as you can see here, is 85.9%. That concludes my presentation. I would hand it back to Mr. Takahashi, CEO, Group CEO. Thank you, Mr. Yamada. First, I'd like to summarize the previous fiscal year from the perspective of the three key initiatives for realizing our long-term vision. We explained that last year's financial resource briefing. The first strategic initiative is portfolio optimization. We have been reviewing our portfolio considering the growth potential, capital efficiency, and impact on the credit ratings of each business. Major examples are shown on the slide, the sale of our green coal stake and new investment in AM Green comparable bonds, as well as the sale of the ORIX asset management and loan services As mentioned, last month we announced that we would sell Oryx Bank during the fiscal March 27. The second initiative is sophisticated risk management. We have strengthened our management's decision-making platform by both integrating and visualizing risk information. And through this, we have established a system that enables quantitative risk assessment and and agile reflection of this assessment in our management decisions. Starting this year, we have integrated the individual finance deal screening department with the portfolio management department, establishing a system that enables end-to-end risk management. The third initiative is new business creation. Construction on the Osaka IR project commenced in April last year and is progressing smoothly. In October, there is an application for the mice and it's going very smoothly. Through the acquisition of Hugo Global in the United States, we have entered the professional advisory services businesses, including asset valuation primary in the United States. We will also build an asset back financing platform going forward.

Also,

Using the Hugo Global will be also building the asset financing platform. Also, investment in INET and conversion of Nozoe industry into the subsidiary are part of our efforts to create new businesses in strategy investment areas. Through those priority initiatives, we steadily improved ROE, and I am pleased to report that both net income and market cap reached record high levels for the first fiscal March 26. Please turn to the next page. For the fiscal 27 March, we will continue to promote the three key initiatives aimed at realizing our long-term vision, including portfolio optimization, sophisticated risk management, and new business creation. In addition, under the new management structure, we would add a new key initiative, That is the business model transformation. We will achieve this by deepening and evolving our two core business models as set forth in our growth strategy. Alternative investment and operations and business solutions. Let me explain the specific details later on. Now please proceed to the next page. This is Oryx Group's new management structure. In January this year, I, myself, Takashi, assumed the position of CEO, and we organized our firm into five business units and five corporate units. Following this, we introduced the CXO system in April. This organizational reform aims to optimize the allocation of management resources under the CEO and create new businesses. businesses through the inter-unit collaboration. By introducing CXO system, we are expanding the delegation of authority to individual BU to help achieve both faster and more accountable decision-making by business division COOs. CFO, CRO will be responsible for the maintenance of the strong financial discipline and risk management respectively. Each CXO will not only be responsible for their respective areas, but will also serve a role as top management overseeing the entire group alongside the CEO. Today's attendees, Mr. Matsuzaki, Deputy President, and Mr. Suzuki, the senior managing executive officer. There will be the COO of Japan and APAC, as well as COO of USA Europe, and COO of infrastructure business for Mr. Irie. And today, Mr. Otsuka is not present. He is the managing executive officer, and he will be the... in charge of the risk management unit and a group CRO. In Japan, an APAC business unit will develop a wide range of financial businesses from debt to equity in APAC, including Japan. Going forward, we will capture the growth opportunities by expanding the diverse businesses we have cultivated domestically into APAC. USA and Europe is the core of our overseas asset management business. In addition to the public assets centered on Robico and private credit at Oryx USA, we will expand asset classes into other areas. alternative assets and pursue AUM growth through strengthening sales collaboration. Infrastructure business unit will refine its expertise in the development management and operation of real assets such as real estate, energy and aircraft and ships while promoting the shift to asset management to expand the business scale through asset rotation. With this new structure, we believe we have established a management system that is more resilient to environmental changes and capable of making sound decisions on both offensive and defensive fronts. Please turn to the next page. Now let me elaborate on our business model transformation. which has been introduced as a new key initiative. Until now, our alternative investments and operations have primarily been in our alternative assets on the balance sheet, where we can leverage our hands-on asset operation and management capabilities. Going forward, we will continue to build up assets such as real estate and renewable energy development while efficiently utilizing our balance sheet. We would accelerate investment in assets suitable for shifting to an asset manager type model and connect this to medium to long-term AUM expansion. Also, our business solutions model will continue to value touch points with our customers and will expand the services originating in client needs. Through this, we aim to grow our asset under management and fee income. Please refer to the slide as examples of the initiatives of each business unit. Please go to the next page. Next, I would like to discuss our financial and risk management strategies. To steadily execute our growth strategy going forward, we will continue to strengthen financial discipline and risk management. The environment surrounding us is changing daily, including the situation in the Middle East. The resulting energy crisis and highly volatile financial markets and uncertainty has become the norm, as I said earlier. In this climate, it is essential to thoroughly enforce financial discipline and risk management and to enhance resilience. we would not only respond to the changes, but also grow amid the changes. By targetly implementing management focused on the capital efficiency and optimizing capital allocation across the group, we will concentrate management resources in areas where we have a strong competitive edge. We will pursue maximum profitability and sustainable enhancement of the corporate value under any circumstances. Please go to the next page. Finally, let me summarize the core messages today. The previous fiscal year was one of the steady progress towards realizing our long-term vision. As I said at the outset. Additionally, we recently announced the sale of Oryx Bank. Regarding portfolio optimization, we will continue to pursue this strategy without having any sacred areas. Under the new management structure, we will continue to balance growth investments and shareholder returns while aiming to maximize corporate value over the medium to long term. With a focus on improving capital efficiency and profit growth, we will steadily execute each initiative. Finally, on the July 2nd of this year, we plan to hold our first ever Investor Day in London. We continue to value dialogue with our stakeholders and apply it to our management. We appreciate your continued support.

Thank you very much for your attention.

Online participants can also raise your hands, but we would like to take questions from beneath us. If you would like to ask a question at the venue, please raise your hand and the staff member will bring a microphone to you. If you would like to ask a question online, please press the raise the hand button at the bottom of the Zoom screen. And when your name is called, please unmute yourself and ask your question. We would also like to ask you to state your affiliation and the name before the question. The first 30 minutes approximately will be allocated for the press and the question and answer session will be open to investors and analysts after that. Now the question is accepted. Thank you. My name is Sugawa. UK newspaper. I have two questions. Question one. Oryx Bank sales was decided. What are the reasons? What is the background? Can you please remind us of that? And the sales of the bank. And I know that there is a lot of cash coming in from that and other sales. So what is the purpose of this cash? How do you intend to spend this cash in the future? Do you have any plans already? Thank you very much. I would like to respond to this question. The reason to sell the Oryx Bank. There are multiple reasons behind this. The biggest being, well, the Oryx Bank and also We're here at the venue, but there's a very good affinity with the Oryx Bank and also our security group has been really appreciating the Oryx Bank highly. Business-wise, Oryx Bank doesn't really have ordinary deposits. It's basically CDs, but the interest rate is favorable, and the bank is also providing real estate and collateral loans. And actually, the deposit to loan ratio is higher than 10% slightly, which is very unique. But the deposit stickiness is a bit weaker, and therefore, in order to grow the business, interest rate for the term deposit will have to be higher to be more attractive and we have to basically do the investment with loans but of course there is competitiveness as well so it's very difficult to get the margin these days and as far as I know Bionics Bank is going the opposite way in other words they have a relationship with the securities for brokers business And it's relatively easy for them to collect the deposits. But once they get the deposits, they have challenges in terms of how to invest or manage that money. So this combination, I understand that the two entities will be integrated. But as a new bank, we believe that they can aim for further growth, bigger growth. And that is the reason why we decided to sell the bank. Let's move on to the next question. We also do divestments and also investments. When we gain on sale, we're not necessarily thinking about spending money for a specific purpose, but we want to focus on where we are competitive when it comes to investments. And also, if you invest against macro-environment, it doesn't really work. So we need to really consider the macro-economic environment and that identify good areas for investment. To be more specific, according to the older segment, for example, the investments within Japan is something that will still be actively investing into going forward. And lower states, as well as the aircraft, as those real assets, they have a strong resistance against inflation. This is what we believe, and also operational capabilities of Oryx and our craft turnaround capacities would really help us to generate business value on our own. So investment into new assets is another area where we could allocate capital. I hope that answers your question.

Thank you.

Any other questions?

Please raise your hand. Nagahara from Yomiuri Shimbun. Thank you for your presentations. Related question to the first question, I'd like to ask two things. About the numbers, on page 8, in the finance section, March 27, the segment profit is 300 billion yen. Our expense sale is 124 billion upside. So 300 billion yen. So in the finance segment, Is this going to be the highest record? I'd like to clarify that. So that's the first point. And then Nikki's question, I think it's the other side of her question, but the benefits of a sale, you talked about that. But at the same time, as a management decision, in the finance segment continue to hold Oryx Bank. I think that was one way of doing business. So could you talk about the balance? Could you explain that once again?

Yes.

To your first question. but the financing and investment business, we did not have that category in the past 10 or 20 years. So I don't have the precise data in my head, but about 300 billion yen segment profit, it is the record high profit in finance, I believe. That is the forecast. So why don't we maintain it or why don't we keep it? One thing is that the Oryx Bank, compared to other banks in terms of ROA, relatively speaking, was at the higher level. But in the Oryx Group, ROA, relatively speaking, was lower, and in finance sector, the ROA comparison, Oryx Bank was relatively lower. in the Oryx financial sector was relatively low. Therefore, making significant improvement of the ROA based on the banking business is difficult. So in order to improve ROA, we need to increase the leverage. And naturally, it's a regulated business, and also there is a certain limitation to that. So when you look at the overall business portfolio, we wanted to focus more on the ROA, ROE. Then the bank business for us is not a non-core business. That is the major background. Thank you very much.

Any other questions? If you have a question, please raise your hand. Yes, the person in the fifth row

My name is Naoi. I'm an anchor. I have three questions.

Mr. Takahashi, you said that the benefit PE, real estate and aircraft and real assets are the areas that you see opportunities in. But in terms of macroeconomics, which areas are you more wary of? In other words, you talked about uncertainty becoming the norm. So where are you being more careful? And when the interest rate is hiked, what kind of impact will it have on your business? Well, interest rate hike so far, has it been positive for the management of our X group? And if the rate hike accelerates or exceeds a certain threshold, do you need to be more wary of that? And the third point is total payout ratio was 80-some percent in last fiscal year. What is your basic policy for shareholder return? Can you please explain that once again? With regard to the first question, Are there any areas we have cautions about for domestic business? In Kansai, we are operating three airports, and for inbound credit business, we have hotels and inns. We also operate those. And it's very unfortunate that since last autumn, the relationship between Japan and China has weakened. politically, and Kansai International Airport receives about 30% of the flights from China, but out of that 30%, approximately two-thirds have been reduced, the number of flights have been reduced. And there is a three-month lag. in terms of impact or performance. So for the prior fiscal year, we are only accounting for the number of airport up to December last year. So the impact is minimal. But if the flight reduction continues, the impact will be bigger going forward. But there's also a positive factor. We are receiving fewer visitors from China, but we are receiving more visitors from South Korea and Taiwan. So... It is not just a simple reduction of a 30%, like I said, but a certain amount of impact is expected, so we need to be careful. Similarly for hotels, we don't have many hotels that accept group tourists. And only about 10% of the visitors from China, in terms of occupancy, it's fine, but in terms of room rate... Maybe it was too high during some period, but generally the numbers are softening, and therefore revenue from the hotels can be impacted to some extent as well. Now, with regard to overseas, in the United States, fundamental measures have been implemented. We believe that we have already entered the phase of recovery. Private credit, especially SaaS company exposure, in fact, is of concern for many. So if there is money coming from individuals, there are redemptions happening. But in terms of private equity exposure and SaaS-related lending, that's approximately 7% of the total. For the industry, the average is about 20%. So that means that impact for us is very much limited. Having said that, inflation and interest rate reduction, compared to expectations from one to two years ago, inflation pace and also the interest change pace is slowing down. So we have to pay close attention to how... Just one more thing. We do have a portfolio of Chinese business. We need to control the exposure generally. And there are some parts of the portfolio that will have to be turned around. So we will strengthen our structure and continue to provide monitoring over that business. So those are the three points that we believe that we need to be careful about. Now, interest rate sensitivity. Interest rate is being hiked, and if it is slow, mostly in Japan, of course the funding costs will increase, but we can respond to that, and we believe that it will have an overall positive impact. 1% interest rate change. sensitivity is about 1% by segment or by the segment level. So it's limited. However, as you asked, if there is a sudden interest hike, a very fast interest hike, it is possible that we will fail to catch up or there will be a time lag which will result in potential impacts. But at the current pace, as long as the interest hike is happening slowly, we believe that the impacts will be positive for us. And the third question was about dividend, I believe. Yes, return, shareholder return policy. As I mentioned in my presentation, investment for future growth and maintenance of financial soundness and return to shareholders, we need to strike the right balance between the three elements. So we continue to sustain this policy. Over the last three fiscal years or so, we had some gains from temporary sales or depositure, and profit was really going up, and dividend per share has been going up as well. Quite a lot. So DPS growth on a continuous basis is something that we're aiming for. And also at the same time, we'll be focusing on the balance of the three elements. And this is how we decide our dividend policy. I hope that answers your question.

Thank you.

Yes, another person in the fourth row. Kawasaki from Gigi Press. Two questions, please. The Oryx Bank, the gain on sales of it. So 370 billion yen is the price. And for this fiscal year, there is 124.2 billion. So it's a part of that gain. and the remaining will be reflected in the next fiscal year and onwards. Could you explain that? That's my first question. The second is about the Middle East situation. Due to the situation, different industries are being affected. Maybe you have not seen the negative impact for yourself, so the disruption in Middle East. What could be the negative impacts or positive impacts, if there are any? So if you can summarize that. Yes.

I'd like to respond about the bank.

I'd like to refrain from talking about the details, but roughly speaking, the financial net asset of the bank is about 250 billion yen, so 370 billion yen. the sale, the price of sale, the difference between the two would be our gains. So for this fiscal year, we plan to close this. So unless there is a postponement of the closing, it is not likely that we would look at the profit from this transaction across the different fiscal years. So that's my answer to your first question.

As for the Middle East, you're right.

the subsidiaries or affiliates that we have. In Saudi Arabia, we have a leasing company called Yana. In Pakistan, also, the OLP is a leasing and financing company. But in terms of exposure, those are the two companies. So it's about 15 billion yen. So exposure is limited. Also, The potential impact on the businesses, aircraft business, what is – well, we have a high credit level company. So, so far, no major impact is forecasted due to the Middle Eastern situation. But the check is yours. If this current Middle Eastern situation continues, there could be a shortage of the jet fuel. And then, including LCC, it's possible that they will reduce the number of the flights. and then the airline performance would deteriorate. Spirit is another story that used Chapter 11, and it's possible that there could be some airlines whose credit would deteriorate. So we are not too optimistic. So to look at the credit situation and the aircraft situation, we are watching that closely. Another thing is, especially in Asia, Southeast Asia, as you all know, their energy reserve is at low level as a country. So if it lingers in a different sense, the Southeast Asian macroeconomy could be impacted. And if that happens, then the credit quality goes down. direct impact as you correctly said is limited for us but if it lingers further then there could be some indirect impact so in that sense we have to enhance the risk management as I said we'd like to focus on that and we'd like to respond to the situation thank you that's all the questions the answers sorry any other questions

Click and roll on the right-hand side. Thank you. Thank you, business. My name is Umi Kuni. I have two questions. Insurance business positioning within your portfolio. You talked about ROE and also business model transformation. Against that background, how do you position your insurance business? That's my first question. My second question is about the three airports in the Kansai area. What is the significance of this business and what is your outlook of this business going forward? With regard to your first question about my insurance business, insurance, as you may know, is balance sheet heavy. and also a regulated business. And therefore, we need to build a certain amount of capital. It is also a capital intensive business. And we need to use the balance sheet in order to grow the business. And therefore, if you just apply the ROE perspective, then insurance business is a little bit different from the rest of the portfolio. However, there are two things we need to consider. One is If you look at other alternative asset managers, they're doing something similar. Through insurance policies, you gain liabilities. And non-insurance business usually cannot really finance this kind of a long-term debt. And you can do that through insurance. And this is something that we can really use for other assets within the group, including the utilization of reinsurance. So if we can allocate it like that in terms of our financing, we believe that there is good synergy. That's one point. And the second point is that when we obtain a debt and also sell insurance, well, the third category insurance targeted at individuals were advertised on TV, and we were also focusing on online sales as well. But now we live in a world where we have interest rates. So life insurance, death coverage, and also wealthy individual insurance, we have studied this several years ago. Now, Corporate Financial Services of Oryx is one of the best self-agents in Japan. So we believe that there's synergy in terms of obtaining insurance policies as well. There is actually a third point. If you just look at ROE, it's only about 7%, so you may consider that we should be selling this business. However, as you can see from the performance of the prior year, for pre-tax segment profit, we are generating more than 100 billion yen from this segment. And considering the nature of the insurance business, this kind of revenue or profit is very stable. So we do not just apply the ROE perspective. So this is similar to the bank business. Well, in other words, we don't really consider to sell insurance like we did with the bank, just looking at ROE. We have to look at the debt structure of our group as a whole and also asset management structure as well and how to utilize the insurance business within that framework. That's what we consider. Now, with regard to the three airports, there are certain factors that are in our control and out of control. Relationship between Japan and China was already explained earlier. We don't just sit by and watch the situation change or improve. As I said before, we are getting more visitors from South Korea and Taiwan. And Indonesia, Thailand, and other southeastern airlines, we are approaching them, ourselves approaching them, because this is a great opportunity. Traditionally, we were relying on a single market for 30% of our sales or revenue, but this is a great opportunity to change that structure, to reduce the dependency. And now the risks have materialized, We want to make sure that the lesson is learned and the same problem will not be repeated so that we can operate this business over the long term. That's all. Thank you.

Next person in the sixth row. Thank you. Kawase from Nikkei. About China, I'd like to ask a question. Earlier, Mr. Takahashi, in your presentation, you said that the portfolio in China and exposure needs to be controlled and maybe turnaround is necessary in part. And in the distribution of the materials about the greater China, you are saying that you will be controlling your business. So more specifically... the areas that you will not invest in or you will show where are they and how do you control the exposure when you say you'll be more restrictive means that you won't be not really reducing it totally but what are the areas that you are referring to and also the APAC business Asia-Pacific, I mean. So, in APAC, how do you position China? Excluding China, you want to enhance the APAC? Is that the framework of APAC, excluding China? Could you explain that? About China, total US, it's the second largest market, so We are not going to withdraw it completely from China. That's not something that we expect. But at the same time, including the investment of the limited, sorry, the listed companies, the minority investment, I think that the horizon of the investment is becoming longer. So the capital recycling will be promoted so that the assets will be rotated. So that's our investment policy. There are no exceptions. So in comparison to others, the minority investment and the investment period would be longer. So we would need to rotate our assets there. But, for example, in Hong Kong market, compared to two years ago, is recovering quite a bit. So pre-IPO investment in the technology companies is the main investment that we make. So that is relatively short term. And we have experiences. So we'd like to continue working on those investments. So it doesn't mean that we will withdraw or exit our businesses from China. That is not the case. We will look at the individual assets And if it's a longer term, we would rotate the assets. As a whole, we are not going to increase the overall exposure so much. So we want to control the level of exposure as much as we can. And that's the situation in China. So what about APAC? APAC, it's not just one market. It's multiple countries and multiple markets in APAC. So in terms of as a region, it's an APAC region. So Matsuzaki here with us is in charge. And if you look at each country or each market and different cultures and institutions, there are differences. So if we can take advantage of our strengths, then we would like to expand the businesses. So, for example, in Asia Pacific, in the area of the Pacific, Australia, conventionally the auto leasing was the major business, but the U.S. state-related financing, there are opportunities there. So already one or two are being executed. So we would like to continue to form a team to promote this and also India. There could be similar opportunities. So rather than thinking about it as one region, we'd like to look at each country or each market individually and do whatever we can do. Thank you.

Our next question is going to be the last one from the press. My name is Inagaki. Asahi Shimbun newspaper has two questions. First of all, about Oryx Bank. Lending competition and getting more difficult to get the margin. Now, VOJ rate hike. for example, is pushing up the deposit interest rate. And Oryx Bank deposit interest rate, you found it difficult to increase the rate to get more money. Maybe the business model wasn't working very well. So was BOJ rate hike one of the factors behind this, was my first question. Second question is about portfolio optimization. There is no secret area, you said. But... Within your view, Mr. Takahashi, what are the specific challenges and what are the specific focuses? With regard to the first question, I think there are pros and cons, both positive and negative. BOJ's rate hike policy, or the monetary policy, has changed and the now interest rate is positive and the stickiness is weak. We are beginning to find that out. And it is more difficult to get the arbitrage, or the, sorry, the margin. Now, for the finance sector or the bank sector as a whole, it has a positive impact on the sales. Variation of the banks was lower than 1, but now it's beyond 1.0 times. And there was a question about the gain on sales earlier. But basically, we got a positive gain on sales and found a very good partner for this business as well. If PBR was below one times, there was no incentive to probably to sell. Well, maybe not. There was not an incentive to sell by generating a loss, but anyway, we decided to sell, and I think it had both positive and negative factors. And what was your second question? Could you please repeat? About portfolio optimization, you said that you will leave no stone unturned, but what other specific challenges do you see in doing this? We say there is no sacred area, no stone unturned, so there is no sense of challenge. We will be implementing the reform study, logically. And as I said in the summary of the last fiscal year, when we consider capital recycling, it's not just about getting capital gain. We look at ROE and the financial status as a snapshot. So, based on the snapshot, some indices are better or worse, and we also look at whether or not they would improve or further grow in the following several years. So, in that sense, we look at growth capacity, growth potential. And thirdly, we want to look at the impact on rating, rate rating. Because when we acquire something for portfolio, we have to consider the goodwill as well. And as I said, in the China business, minority investment does have an impact on S&P rate, credit rating. So we have to think about that impact as well. As I said before, we will just not look at the numbers. We will also look at the quotative aspects, whether there's synergy within the group. whether it's meaningful for the group to have it. So we will look at all of these aspects in terms of portfolio optimization.

That's all the questions we take from the press. So we'd like to take Tomioka-san of IR will be leading. Thank you very much. So we'd like to take questions from analysts and investors. There are some remote participants, but first of all, we'd like to take questions from the people who are present here. Any questions? Anyone here, the person in the front? Muraki from SMBC NICO. I have two questions. On page 15, you talked about ROE, so I'd like to ask you a question. So 11.7%. as expected for the new fiscal year, so it exceeded your target. So Oryx Bank sale gain and also AGK gain, I think those are included. But in the underlying capability, it's above 11%. Are you feeling that? So that's my first question. Second question is on page 14 on the left-hand side. The capital usage, utilization, what is the current investment environment? And if the situation continues to be the same, the share price being too high, you cannot make investments, is it possible that this number goes down further? So is there such a possibility happening? Thank you. About the ROE. underlying ROE as I explained earlier for this fiscal year Oryx Bank gains on sale and the major sale of others are included and in the previous fiscal year the Toshiba was showing strong so there was a gain in relation to Kyoxya which are also included so In terms of our feeding, in real terms, maybe we are very close to 11%, but we have to work a little bit harder. That's how we feel. So that's the very honest feeding that I can share. As for the capital utilization, Relatively speaking, divestment under the current environment, the selling, I think it's easier but easy to handle than buying. So divestment is leading and so divestment are happening at the relatively high price. So therefore, The collection is proceeding and then the capital utilization comes down and the liquidity position goes up. So that has been the trend. As you correctly said, in terms of the real assets, the real estate and also the aircrafts and also the PE, the valuations are rising. So under those circumstances... The projects that were interested in working with us, there are many of those examples, so how can we increase those projects to be the key? It's not an easy environment to invest in, but unique investment opportunities are the ones that we would like to continue to pursue. Thank you.

I'm Watanabe from Down Security.

Thank you for your presentation. I have two questions. Page 49. Employee capital ratio. Since April, you have exits at the Rinks Bank and Sugiko. Based on the pipeline, do you have the pro forma employee capital ratio? How much is that right now? And page 49 on the left-hand side. Insurance debt. assessment, evaluation. Compared to end of December, the amount of debt is actually bigger. So have you changed the evaluation method? What is the background for this? With regard to import-capital ratio, for 26 March, 86%. And Oryx Bank sales was mentioned before, and also Suricost. This is PE investment, so this is in and out. But anyway, those are not really reflected in these numbers yet. And Oryx Bank itself, if this is included, roughly speaking, 86% input capital ratio at the end of the term will be coming down to about 80% according to the performer calculations. So as I have explained, the investment and the real asset-focused investments will be accelerated. Thank you. But your second question is about evaluation. Method of evaluation has been changed. That is true. And I would like to ask Yamamoto to explain the details of this. Yes, I would like to provide some additional explanation for insurance policies acquisition. Things are progressing smoothly, and this is pushing up the amount of liabilities. And liabilities evaluation, especially for long-term term interest in order to be able to apply this more stably we did something well corporate debt market was quite unstable for a while so we combined multiple indices in order to evaluate it more accurately so this is pushing up the number and in terms of net asset this is basically a negative impact that's all from me thank you

That's very clear. Thank you very much. Thank you very much. The person in the third row. I have two questions. The first is of page 15. The ROE 15% FY35 March. I think you included your enthusiasm there. So a year passed, and I think you have already made a progress. So this feasibility of achieving 15%, is it becoming better? So could you talk about that? And the second question, U.S. business restructuring is progressing. So what is the time frame? that before you see the improvement of the profitability. Thank you. So 15%, how confident are we? I think that's your question. So last fiscal year and this fiscal year, if you look at the numbers, On page 7, there is a comparison to the FY March 25. I think it's increasing and getting close to that level. I think that's the reason why you asked this question. So, frankly speaking, our feeling is that we really have to work very much harder to get to this level. How can I say this? What should we do to reach that level? With us, we have COOs and CSOs. We have a CRO. We have the top management team. We have our very frequent discussion, and we are updating the content. So going through the PDCA and as we take the steady initiatives, I think we can get close to this level. I strongly believe in that. And of course that there could be some temporal improvement of our ERA and also there is a decline sometime, but there is still nine years to go. So we like to make sure that we make the linear growth. And if you look at the three, five years time frame, we'd like to get closer to these targets. So we would continue to execute what we need to do one by one. So about the Oryx USA, there are several, or in March, April, In the area of the private equity portfolio, we made an announcement about the sale. And in addition to those, there are core and non-core. And we are changing, rotating the portfolio. So maybe we have reached the bottom, but in order to get to the normal, profit level I think we would probably need a few more years and the size of the business could shrink but we'd like to make sure that we recover the profitability that is our priority so in charge of the US and Europe the COO Suzuki is here with us so Suzuki is usually in New York but very frequently we have a discussion with him to take necessary initiatives. So we'd like to spend a few more years so that we can normalize the profitability level. So that's very frank views that I share.

Thank you very much.

Any other questions? Third row from the front. Thank you. Takemura Mogastani, MEFHA. I have two questions. My first question is related to the last question. How do you view the future of the United States? What is your outlook? Page 8 shows that finance category profit, 189.2 billion and excluding one-time factors, 175.8 billion so this is uh minus 13.4 billion yen now last fiscal year i'm sorry correction the united states are actually included in fine i think but um anyway that recovery uh gain on sales was about 8 or 7 billion yen last year, so I think there's an absence of this. And also you now have the absence of the profit from the bank. So naturally it should be about minus 20 billion, but actually 13.4 billion. So the difference explains the recovery in the United States. Is that the correct understanding? Can you please also talk about the background? That's my first question. There are multiple factors, and therefore it is very difficult to do an apple-to-apple comparison, but what you said is largely correct. Gain on sales for the servicer and also for Oryx Bank, sales in the first half, that is the assumption. The second half, profit will not be coming in from Oryx Bank. But last fiscal year, we had profit coming in for the full year. contributing for the full year. So a net net for the finance category, we believe that the profit will increase slightly. And as you have mentioned, OXUSA recovery is accounted for. Credit cost allocation was done for OXUSA in the prior fiscal year. This was a big allocation, and the absence of this will lead to recovery, big recovery. There are many positive and negative factors. I cannot explain everything today. But that is basically the picture. Outlook for the United States. This is a very difficult question to answer. In terms of the businesses that we have, downside protection wise we have done everything we could in the last fiscal year already basically so it's just a question of how long will it take to recover for example deal project sales is now ongoing and potential buyers sometimes private equities And private equity also has private debt business. So private equity, private debt within the current US environment, including the major players, are basically struggling. And the PEPDs that are listed are suffering from much lower share prices as well.

Who is it?

So when these problems start to materialize to a greater extent, then a speed of asset recycling will slow down. And therefore we don't have an extremely positive outlook for the United States. But on that we need to take a very close look at what's happening in the United States on a day-to-day basis. Just this weekend, Suzuki has come back from the United States. So I think maybe he has a comment about his own assessment.

I'm in charge of Europe and the US.

My name is Suzuki. Our CEO, Takahashi, has basically given you the overall picture of the United States already. Macroeconomic environment-wise, when you look at the non-bank business, including the fund business, private debt impact. That slows things down. With regard to OXUSA, thankfully, the impact is quite small, as was explained before. But our business partners are impacted, affected by this. So, again, we are exiting some private equity business and also there is a non-core portion compared to when we were planning things last year. Timing of sales and also the amount that we can get from that is something that we have to pay close attention to and we need to follow up closely in terms of recovery of the assets. Now, with regard to new projects, new deals, there are three things that we're considering, largely speaking. One is a company, Hilco. And Hilco can do asset-based leasing, asset-based financing based on their asset evaluation capabilities. And we can turn this into an asset management business. So this is Alternative Asset Management Business. product structure that can be done for the future. And product mix-wise, we also want to focus on real estate. This is, of course, real assets. In the United States, agency-targeted mortgage in real estate has been our focus, but we want to expand further, including multi-family Residents show financing, and also not just financing, but also equity investments. These are the potential areas that we want to get into, and also other areas where we have real estate-related opportunities. Now, asset management and alternative-focused asset management. This is something that we will continue to promote. and NXT is one of the cores. They do direct lending. The market recognition has improved, and the first closing of a new fund, a new fund launch, was also successful. So we want to continue to promote this. But will we see the result of this already within six months? The answer would be no. It will take a little bit longer. We will continue to run this business domestically over the long term. Thank you very much for a very detailed explanation. I have one more question about dividend. Oryx Bank sells expected in the first half. Silico also in the first half. So first half of the dividend is 39% against the profit of the first half. Is that the correct understanding? And also... This year you'll be paying out a lot of dividend. Is this going to be the baseline for the next fiscal year's dividend? With regard to your first question, you understand it's correct. And with regard to your second question, at the board of directors, we are debating this quite a lot and we need some more time to debate this. we thought that this question would be asked. So let me explain about Toshiba. Kioxia share, based on the last shareholding report, sold by several percentage points by March, and equity ratio is already 17.6%, as far as we know. This is what we found out at the end of this year. Now Toshiba uses U.S. accounting standards. So their accounting process, well, they'll be doing that planning school on the 15th of May. We have to wait for that to see how they will do this. But Toshiba may reclassify Kyokusha to marketable securities. This is a possibility. So according to U.S. accounting standards, it will no longer be equity method. It will be market to market, which means that based on the share price of last fiscal year end, it's possible that they want to capture the gain on valuation. So whether Toshiba will sell Kioxia, even if they don't sell Kioxia, if it's reclassified to marketable securities, then the evaluation will be different based on the share price at the end of the term. And whatever Toshiba captures will be captured by us based on the equity method, based on the stake method. And I'm sure as analysts we have already did the calculation, but we have to take that into consideration. And last year's prior dividend, it had been used as a floor, may be questionable when you consider sustainable return policy. So there is still a potential debate there, and we need some more time. And we would like to deliberate this at the board level and decide on the policy direction.

Thank you. Thank you very much. So next I'd like to take a question from the remote participant, J.P. Morgan Security.

Sato-san, go ahead.

Thank you very much for this opportunity. This is Sato speaking. Two questions, please. First, about the U.S., especially the credit business, I'd like to know more about the current situation. I think you referred to it earlier, and the credit creation expenses is included in the supplementary information. It's about 10 billion yen, the lending support, and this, I think, is mostly U.S. You mentioned that the risk is not so big, and so what is your recognition about this credit loss being included here? Could you explain that? Second is about the capital gain. On page 46, this fiscal year capital gains are mentioned. And already, something which was discussed, Bank and Sugiko, 180 billion, I think. So, under... Now, the capital gain in comparison to your plan, the normal level, something that might emerge from now on, I think that the budget for that is quite controlled.

But other sales,

Does that mean that you're not very aggressive about that? So this is about the capital gain plan. Could you explain the capital gain plan a little bit further? Thank you. About the U.S. credit cost.

Okay.

If you go deeper and calculate, I think you will be able to get the numbers. Roughly speaking, about the 24 billion yen credit cost included in the previous fiscal year, the breakdowns include, as we mentioned in the past earnings goal, one thing, as it was mentioned earlier, is the mortgage business for the agencies. We have that business. So with the high interest rate, which is continuing, the borrower's credit quality is coming down. And so among the numbers that we mentioned, the major credit expense is for the real estate mortgage business. Another is the growth capital for the startups, the financing business. So in that portfolio, specific names, the situation is not so great. So we have some reserves for that. So those are the two that is mortgage-related and the gross capital financing. It's the reserve for a specific name. Those two are the major part of this. And, of course, that... We do have a debt business, which is very much diversified. So even at the normal level, a certain level of the reserve becomes necessary, and that would continue to be the case. But when we announced the interim results, we mentioned this. So as much as we can foresee, when we can reserve or have a provision in the first half, we'd like to have a conservative approach to So for this fiscal year, we expect that we can reach to that normalized level. As for the capital gain plan, it just happens that it's not really toward the end of the fiscal year, but at the beginning of the fiscal year, there are some major gains from the sales. It just happened to be happening at that timing. But it doesn't mean that there will be a major time lag. We have to look at the market, and we would like to try to maximize our assets when we consider the timing of the sale. So I wouldn't mention the specific name or specific number, but in the case of real estate and the renewable projects and the private equities, We continue to do the asset rotation and capital recycling. We apply our strategies. So for this fiscal year, only one month and 11 months to go, so we would proceed with the sale from now on, and there will be some proceeds or the gains from those sales booked in eventually. Thank you. One point of clarification. Earlier, U.S. in the United States, what I wanted to ask was that on page 32, especially the credit business line, and for the four-year reserve or provision was mentioned. At the end of the fiscal year, credit line probably was included. So that's the growth capital. This is for the startup lending. That is the debt. So that is where the reserve provision happened. Yes, that's correct. Your understanding is correct. Okay, thank you very much.

Thank you, Mr. Sato. We see two more hands up. No more securities. Sasaki-san, please ask your question. This is Sasaki. No more securities. Thank you. Page 8 of the presentation material. I would like to understand how to read this slide. So for FY27 March, profit is high. And then for 28 March, considering the fall in fiscal year, I think you have big names with latent profits. So until March 28, I expect the profit level to continue to be high or continue to increase. But what about if I 29 March or 2030 March? Is there going to be some ups and downs or do you think the profit growth trend will still continue? What is the management's understanding? That's my question. Last year, green coal gain on sales and also Oryx servicer sales are a little bit smaller. And also for this fiscal year, we have a latent gain for sales for Oryx Bank. But these are one-offs. This is not something that we can book year after year, as you can imagine.

Okay.

In order to maintain the growth in profitability, we believe that there are a lot of value and profit in core business as well. But we have to materialize that. But we don't want to sell things just for that purpose. Real estate, energy, and aircraft, we will be recycling assets. So we buy and sell and buy and sell. We need to continuously do that. So Rather than going up and down year after year, we want to grow recurring capital gains on a massive basis as much as possible, but it depends on the market situation. Sometimes you can sell at a higher price or lower price against expectations. Considering the recent environment, we are seeing some deals which are priced higher than our original expectations. But can we continue this trend into the next fiscal year and the following fiscal year? Well, we have to think about the macroeconomic environment impact. We're not talking about 2035, but we're not just thinking about the next fiscal year, the following fiscal year. We're really focused on executing what we can within this current fiscal year. meaning that we want to capture all the profit opportunities, and also we have a long-term vision into 2035, and there was a question about feasibility of this. We will be focusing both on RRE and profit growth, and we have a mid- to long-term plan that we, as management, focused on what we execute within this current fiscal year in terms of resource and also time. I know that I'm not answering your question directly. I'm sorry. But that is what we're thinking. I understand. Thank you very much.

Thank you. We are getting close to the ending end time. I'd like to take one last question. BOFA, Tsuchino-san. Thank you. Two questions. This year's forecast is investment and equity profits. It's difficult, I'm sure, to try to come up with the expectations. So higher than last year and relatively conservative forecast, I think, is shown. Earlier, you mentioned that there could be investment securities or it's possible that the shares are being sold quite a bit. So in that sense, you are having the conservative view. That's how you got to 530 billion. That's my first question. Should I go one by one? Hello. So to your first question, you're referring to Toshiba?

Yes.

This 550 billion, the assumption that we have is that Toshiba has Kioxia under the equity method and Oryx also have that under the equity method. So we are the LP so how Toshiba will announce their business results, we don't know. But after checking on their business earnings, if the classification changes, then from the equity method to the investment securities, it could change. I'm talking about the Kioxia. So we need to look at how they announce their business results, and once again, based on that, we would like to make the evaluation. I think that there is a sale on the gain on sale of the Keopsia. And based on a certain level of assumption, you made this forecast number. There is a three-month delay to incorporate the equity profit in relation to Toshiba. And as far as we can confirm, during the last fiscal year, there was a sale and a The unit price of the cell is not known, but we base our forecast on the reasonable price, and the parts that were sold are incorporated into the forecast. As for the forecast for this fiscal year, the environment and energy, the impairment, I thought I expected a bigger impairment, but it was not what I expected. That is E24 is 0.1 billion. So this March 27, I think there could be some additional impairment. Is that the case?

As of now, no.

I was the head of the energy and environment in the past, so Tsuchino-san probably thought that this is low. But I was actually... My impression was that this was quite high, so this is regrettable. So we have no plans to incorporate any additional impairment. Just one last point. March 28th, the ROE of 11%. It's a long way in the future, and probably it's up to Toshiba. And I'm sure that it was difficult for you to come up with this number, but those are the very rough numbers. So if no changes from Toshibai, then 11% probably is difficult to achieve. Is that right? Yes. Earlier during the Q&A with mass media there was a similar question and of course it's not an easy number for us to achieve. We need to make further efforts and naturally when we made that plan in the previous fiscal year we said that our target remains the same at 11%, so we continue to make efforts, and it is a number that we, well, it is a capable number. So right now we are May 26th, so in March 28th, there is still two years to go, so I think there are many initiatives that we can take, so we are not changing this. And as our management team who are here today, we will be working hard in coming two years in order to get to this level. Thank you very much. Thank you very much.

And that concludes the earnings call. And before closing, we would like to ask our CEO Takashi to say a few words. Again, thank you very much for joining us today. As I said in the beginning, Last year, we announced our long-term vision and also long-term financial objectives that we want to achieve over time. We're talking about long duration and there are many things that will need to be executed. And 12 months have passed. We have nine years still to go. It's a very long duration. But we just need to focus on execution. We will be implementing action plans one by one for the day in order to achieve our goals. And to that end, the whole management team will work closely together. And we really appreciate your kind support going forward. And I would like to thank you again for joining us today. Thank you. Thank you very much. And that concludes the earnings call. Thank you very much for your participation.