Daiwa Securities Group Inc.

This is Kotari Yoshida from Diva Securities Group, Inc. Thank you very much for taking the time to participate in our conference call today. I will now explain the financial results for the fourth quarter of FY 2025 announced today following the presentation materials available on our website. First, please turn to page four. I will begin with a summary of our consolidated financial results. Percentage changes are in comparison to the third quarter of FY2025. In Q4 FY2025, despite the continued highly volatile market environment, our profit base, primarily driven by asset-based revenues, functioned steadily, allowing us to maintain a high level of consolidated profit. Net operating revenues were 197.8 billion yen, up 1.7%. Ordinary income was 67 billion yen, down 3.6%. And profit attributable to owners of parent was 49.8 billion yen, up 7.3%. Looking at the results by division in the Wealth Management Division, As a result of our focus on total asset consulting, both the contract amount and net inflow for RAP account services reached record highs, and net asset inflows also expanded. In securities asset management and real estate asset management, assets under management grew steadily, continuing to expand our revenue base. Global markets accurately captured customer flows amid market fluctuations. resulting in increased revenues in both equity and FICC. In global investment banking, domestic M&A remained strong. As a result of these factors, the annualized ROE was 11.5%.

The year-end dividend is 35 yen per share.

Combined with the interim dividend of 29 yen, the annual dividend will reach a record high of 64 yen, resulting in a dividend payout ratio of 50.8%. Please turn to page 8. This page shows base profit, our KPI for stable earnings, as outlined in the medium-term management plan. FY 2025, base profit grew steadily to 182.7 billion yen, up 32.9% year-on-year. We have achieved a level that significantly exceeds that $150 billion target set for the final year of the medium-term management plan, doing so in just the second year of the plan. Please turn to page 11. I will now explain the statement of income. Commissions received was 131.2 billion yen, up 2.0%. A breakdown of commission received is provided on page 26. Progress commissions increased significantly to 31.9 billion yen, driven by an increase in customer flow. Please turn to page 12. Selling general and administrative expenses were 138.3 billion yen, plus 4.1%. Personnel expenses increased due to an increase in performance-linked bonuses. Please turn to page 14. This slide shows the annual trends and revenues and SG&A expenses. While performance-linked costs and strategic expenses, such as IT investments, have increased in tandem with business expansion, the increase in fixed costs has been constrained. keeping overall costs at a well-controlled level.

Please turn to page 15.

Total ordinary income from overseas operations was 6.9 billion yen, down 17.6% quarter-on-quarter. By region, Asia and Oceania saw an increase in profit, supported by equity-related revenues driven primarily by Asian equities. On the other hand, the Americans recorded a decrease in profit due to a decline in M&A revenues. Next, I will explain the financial result by segment. Please turn to page 16. First is the Wealth Management Division. Net operating revenues were 81 billion yen plus 5.2%. And ordinary income was 33.1 billion yen plus 12.1%. We believe that the results of our ongoing efforts in the asset management type business have manifested in our sales performance, despite the persistent high volatility in the market environment. By product, equity saw a revenue increase of 1.1 billion yen due to increased trading in Japanese equities. Fixed income revenues also increased by 500 million yen as we accurately captured investment needs. Sales of fund RAP increased significantly, driven by growing demand for long-term diversified investment and portfolio management. In addition to inflation hedging, RAP-related revenues reached a record high of 18 billion yen. Asset-based revenues reached a new record high of 33.4 billion yen, driven by increase in agency fees for investment trusts and RAP-related revenues. The fixed cost coverage ratio based on asset-based revenue in the wealth management division was 120%, and the total cost coverage ratio was 76.5%. Please turn to page 17.

This slide shows the status of sales and distribution amounts by product within our domestic wealth management division. Our RAP account service reached a record high level, with total contract AUM rising to 6.4046 trillion yen. New contract amounted to 386.2 billion, and net inflows came to 276.2 billion yen, both marking all-time highs. Our fund RAP also continues to grow strongly. Its characteristics have been well received by clients in both favorable market conditions and during periods of adjustment. resulting in a significant expansion in asset under contract. In addition, collaboration with external partners such as Japan Post Bank and Eldora Bank has been progressing steadily, contributing further to the growth in the new contracts. Please turn to page 18. This section outlines the progress of our wealth management business model. Cumulative balance-based revenues for fiscal 2025 increased to 123.2 billion yen. Net inflow of assets also remained high, totaling 1.6342 trillion yen. In line with our group's fundamental management policy of maximizing client's asset value, we will continue to provide optimal portfolio proposals based on each client's total assets, while working to build a revenue base which is less susceptible to market fluctuations. Please stand to page 19. Here we show the status of Dyranix Bank. NII net interest income totaled 11.2 billion yen, up 11.2%, and the ordinary profit reached 6.2 billion yen, up 30.2%. The increase in policy rates contributed to an expansion in net interest margins. The promotion of total asset consulting together with initiatives such as competitive deposit interest rates, including a 1.2% one-year yen time deposit for retail customers, proved effective and deposit balance surpassed 5 trillion yen. And now turning to page 20, let me explain the asset management segment, beginning with securities asset management. Net operating revenues were 19.7 billion yen, up 5.9%, and the ordinary income was 11.4 billion yen, up 11.6%. Our asset management publicly offered securities investment trust, AUM, topped 37 trillion yen, giving record high. And then moving on to page 21 for real estate asset management. Net operating revenues were 9 billion yen, down 10.6%, and ordinary income was 9.8 billion, down 5.6%. While revenues and profits declined on a quarterly basis, mainly due to the absence of property, sales gains recorded in the previous quarter, real estate asset management is a business win which the profit growth in line with AUM. AUM at Daiwa real asset asset management surpassed 1.6 trillion yen and we expect stable mid-term growth in line with continued AUM accumulation. Equity method investment gains from 70 holdings contributed to maintaining a high level of profit. On page 22 is alternative asset management. Net operating revenues were negative 2.6 billion yen, and ordinary income was negative 4.8 billion yen. In the renewable energy, we recorded provisions and impairments due to the revaluation of certain portfolio investments. On page 23, lastly, let me explain the global markets and investment banking division. First, global markets, net operating revenues were 51.3 billion yen, up 13.4%. and ordinary income was 17.7 billion yen, up 48.6%. Both equities and FICC performed strongly, resulting in a significant increase in revenues and profits. In equities, trading flows in Japanese stocks increased substantially, particularly among overseas investors, leading to a 6.2% rise in revenues. By offering a diverse range of execution methods, we successfully captured large-scale trading mandates contributing to revenue growth. In FICC, revenues increased 20% driven by strong performance in JJBs and credits. We effectively captured the customer order flows in both domestic and foreign bonds, and reposition management remained in solid, given in a highly volatile market environment. And now turning the page to 24. In global investment banking, net operating revenues were 24.1 billion yen, down 7.4%, and ordinary income was 2.1 billion yen, down 60.5%. But M&A advisory remained strong in Japan, and the revenues increased in Europe within our overseas operations. That concludes the explanation of our financial results for the fourth quarter of fiscal 2025. fiscal 2025 on a four year basis experienced high volatility in stock price and interest rates, but the year itself was quite active overall. And the entire business portfolio had higher stability so that income was stable and the market response capability also improved. We were able to benefit from both of them. As a result, the second year of this midterm plan hit record high in terms of the profits, and the ordinary income was getting the highest in the last 20 years.

Well, towards the end of the midterm plan, we think that we have a very good, strong result. Now, we'd like to move on to the announcement that we have made

about the subsidiary of the Oryx Bank, as we have explained on our website.

I will explain the overview, objectives, and financial impact in accordance with the materials published on our website. Please turn to page two of the document entitled Regarding the Acquisition of Oryx Bank as a Subsidiary. This is a transaction summary. In this transaction, Daiwa Next Bank will make Oryx Bank a wholly owned subsidiary. We also plan a merger of the two banks in the future. The acquisition price is 370 billion yen, and the final acquisition price will be determined after price adjustments stipulated in the share transfer agreement. The acquisition will be funded entirely by our own funds. strategically utilizing the capital buffer we have accumulated to date. Next, the primary objective of this transaction is to continuously expand the stable revenues of the DIO Securities Group and improve ROE and EPS through the strengthening of the Wealth Management Division. By integrating DIO NextBank and OrgsBank, which have different strengths, we aim to enhance our ability to provide solutions for a client's challenges regarding both assets and liabilities, thereby significantly improving the corporate value of both banks. Specifically, we will realize sustainable growth by combining the outstanding lending and trust capabilities cultivated by Oryx Bank with the deposit gathering capabilities backed by our group's solid customer base and sales network. There are three pillars to this strategy. First, deepening the total asset consulting tailored to the life stages of each individual client. Second, establishing a sustainable growth model through a virtuous cycle of deposit and lending expansion. Third, maximizing synergy effects through functional integration by a future merger. I will explain each of these in turn. Please turn to page three. The post-integration bank will have total assets of 9 trillion yen and approximately 400 billion yen in equity capital, evolving into a comprehensive bank, combining advanced lending and trust functions with strong deposit-gathering capabilities. By offering competitive deposit rates backed by Oryx Bank's high investment capabilities, we aim to establish a sustainable gross model through a virtuous cycle of deposit and lending expansion. Regarding the impact on consolidated financial results, there is a potential to improve net interest income as a synergy effect. In addition to the over 1.5 trillion yen of drawable funds from Daiwa Next Bank's current account at the Bank of Japan, we need to accumulate 2 trillion yen in deposits over the next five years as a synergy effect, separate from the standalone deposit growth of both banks, through the provision of competitive deposit rates. We plan to invest this total of 3.5 trillion yen in real estate investment loans and securities-backed loans to improve net interest income, assuming we can secure a 1% interest rate margin. Our estimates indicate a potential improvement of 35 billion yen in net interest income. In addition to these synergy effects, ORIC Bank's standalone performance will be consolidated into our financial results. The bank's average ordinary income over the past five years is approximately 30 billion yen, with a net income of approximately 20 billion yen. On the other hand, we expect to incur amortization expenses for goodwill associated with the acquisition. Next, regarding capital regulatory aspects. We will maintain financial soundness while effectively utilizing our capital buffer. Whilst the implementation of this transaction will lower the consolidated total capital adequacy ratio by five percentage points, it will still exceed 14% on a fully loaded base refinalization basis, securing a certain level of capital buffer. However, to expand our capacity for future gross investment and shareholder returns, we will also consider issuing perpetual subordinated bonds. Please note that we are not considering equity financing.

Now moving on to the slide four. Let me see the strength of Dalwanx Bank. that is a strong deposit gathering capability. In the meanwhile, it has a challenge with the limited lending and the trust functions. Against that, the Eurex Bank has a strong lending and trust function, that's their strength, while their challenge is the deposit gathering capability. So while we are complementing or we are able to complement each other with the strength and the challenge, we think this is an ideal match between the two. And moving on to slide five, I may be repeating myself, but the objective of making them a subsidiary is to strengthen the wealth management division and also a great leap in terms of the stability of the income as a result of that. The stronger wealth management division is not coming from one point. It comes from some pillars, the deepening total asset consulting, virtual cycle of deposit and loan expansion, and accelerating growth through collaboration with the asset management division. Those are going to be the three pillars to enhance the management division and the stability of the income. And then moving on to slide six. We are trying to see the deeper total asset consulting capability for the clients. The assets and liabilities of our customers will change from life stage to life stage. That's the reason why not only the assets but the liabilities all included is quite important to have the total asset consulting capability to optimize our capability of designing the balance sheet of the customers by utilizing the Rx strength, which is the lending and the trust, we are going to be providing the solutions for the pains of the customers depending upon their life stage. And then moving on to the slide seven, we're thinking about accelerating the growth spiral by leveraging the strength of the banks. When we look at those banks alone, the balance is going to be accumulated, but as a result, In addition to the growth of each bank's deposit balance, we aim to expand the deposit by over 2 trillion in the next five years as a synergy effect. The loan asset of the ORECs is quite competitive. So, based upon which, we're going to offer the Daiwa Securities customers a competitive deposit interest so that we're able to acquire the deposit. And then, eventually, that is going to increase the deposit balance. That is going to be a great sparrow. of the growth of the banks overall. And then on slide eight, it shows the changes of the balance sheet structure as a result of the integration of the two. On the asset side, the lending and the securities, and on the liability side, the ordinary deposit and the time deposit are going to be all balancing so that the balance sheet is going to have of good risk diversification. Now explanation is over with that. The details is going to be explained by our CEO, Okino, at the management strategy meeting, which is scheduled to be held next month. By responding flexibly to the variety of needs by the customers, we're going to be capturing the changes in the market environment, and as a leader of the financial and capital market, We're going to pursue sustainable growth. We sincerely appreciate your continued support and thank you very much for your kind attention. With that, we finish our explanation. Now, let us move on to the Q&A session. This earnings call is interpreted simultaneously, so English speakers can also join. For both languages, should you have a question, you may press star key, then 1 on your touchtone phone. To take your question back, after the star key, press 2. For today's Q&A, well, first of all, we open to Japanese speakers and then followed by English. When your name is called, please address your question.

We are now accepting questions.

I would like to introduce the first person, SMBC NICO Securities, Muraki-san, please. Muraki-san, please start your question. So this is Muraki from SMBC Niko Securities. So I have a question related to Oryx Bank's acquisition. The first point relates to slide three. You talked about the synergy and how it supplements with one another. So deposit is 2 trillion yen increase. That is the number you've mentioned already. So 1.05 to 2%, that is the time deposit level. So going forward, do you intend to actually increase this to a competitive level? That is the first question. And also, you would have a loan increase by 3.5 trillion. So you have the real estate loan and the security, secured loans. What is the breakdown in terms of the loan growth? So second part of the question relates to your capital strategy. So this is slide 12 of the material. You have the image here. So this will be over 14%. The capital ratio will come down. But if you look at the future from the current level, the capital level intends to be built. So I don't know if it's 17% or 18%. It's hard to tell from this diagram. So, whilst you're increasing this level, what are some prospects of the share buybacks? What are some of the ideas we should have? In the past, the share buybacks, they conducted even amongst the high-level capital. But now, if the capital is going to be depressed, perhaps it will be less allocated or different allocation to the share buybacks. So, please give us some idea.

Thank you very much for that question.

The first part of the question, so what are the truthfully end of deposit as part of the synergy? So what is the outlook? So related to this point, we are confident that we can acquire. We believe there is a fair chance that we can achieve that number. So within this fiscal term, so after the rate hike, So the Iowa Securities, there has been a 2% of provision in the year. So last year, in terms of the time deposit, so about $650 billion increase in terms of the time deposit. So if we can provide a competitive deposit rate, given the fact that Iowa Securities have a nationwide network and a high level of consulting capabilities, and through our consultants, we should be able to acquire the deposit. So, of course, there's been shift away from savings to investment, but this is not just the deposit into equities, but also we have been providing consulting to their entire asset inclusive of deposit. So, within that process, the larger the pie is, the better chance that we may have for the acquisition of deposits. So, 2 trillion yen is feasible. That is our expectation. Also, about that 3.5 trillion yen of the loan, so real estate loans and also the securities, the back loans, the breakdown of that, we don't have the exact number as we speak. But already, what Oryx Bank is providing, that is the investment use in real estate loan, It is for the one-room mansions for the single-family hold in the metropolitan area. So, the number of banks have been on the decline. But in terms of the number of households, single households in the metropolitan area is expected to rise. Therefore, we do believe there's sufficient demand. In the past several decades, Orixband has built this lending capability. So, in relation to that, it is very possible that we can achieve that 3.5 trillion yen of lending. Also, the second part of your question about the capital, the strategy.

Please wait. Please hold.

So, through this acquisition, so in terms of the consolidated total capital adequacy ratio will be around, will be down by a mid-5% or so. So, right now, it's over 14%. So, that is the level that we're expecting at this moment. So, going forward, how the capital policy may change, that is the incentive there question. But as of this moment, no change, these are our basic policy. So, the dividends, the payout ratio plus 50% or higher and also the default for the annual dividend of 40 yen, we'd like to maintain that. So, through this acquisition, there will be some level of decline in terms of the total capital adequacy ratio. However, we can ensure the financial soundness. And also, by steadily building on the profit, we can continuously keep this financial soundness. Also, in order to ensure flexibility, AT1 bonds issuance is also under explanation. Of course, the actual amount is still under consideration, but again, we'd like to further have a solid capital base. Also, in terms of share buybacks, the question was what are plans going forward? No change in terms of our general stance. So based on the assumption of financial soundness, in light of the different operating environment, gross investment will be considered. But, of course, that is necessary for future shareholders' return. So we definitely like to prioritize on that. So looking at the gross investment and the buyback, we need to strike the right balance. and be agile and flexible. So this particular deal, this is an impact of the profitability of Oryx Bank and also through the realization of the synergy, we can expect to enhance the capital generation within the group as a whole. So ultimately, this would actually lead to increase in the source for shareholders' return. So going forward, the capital allocation, Capital policy is a very important policy. So given the current operating environment, we like to make a comprehensive approach. Thank you very much. Related to the second part of my question, so at this particular timing, you didn't announce the share buybacks. So in terms of the perpetual subordinate bonds utilization, really this is our point. So what is the potential amount? 81 bond issuance, that is. What is the amount they have in mind? And once you announce that, in light of the credit rating, we expect you to conduct share buybacks at that timing. Thank you for that question. In terms of the AT1 bonds, the issuance, so it would be within the part of the consideration, but in terms of concrete details, we will consider those going forward. Also, in terms of the credit rating, so we would like to definitely conduct meticulous communication with the credit rating companies. So we may also incorporate those idea. So based on that, so whether there's a possibility of buybacks, again, we like to take a comprehensive approach in making that decision. So that has been my answer.

Thank you very much. Thank you very much for the question.

The next question is by Morgan Stanley, Sato-san. Sato-san, please go ahead. This is T.P. Morgan, Sato speaking. Can you hear me? Yes, we do hear you. Okay, thank you. Well, I have several questions about the bank. This consolidation, you're going to make them a subsidiary. After that, how should we think about how you're going to be executing it on the material? You're talking about the recurring income of about $30 billion and the nonprofit of about $20 billion. What kind of upside are you expecting from that baseline? I think that, of course, depends on the analyst, but the depreciation or the amortization of the goodwill and also the sourcing cost are probably a part of that needs to be recognized as well. So when you explain that to the market participants, what kind of a level are you going to say to them on the annual contribution? What is going to be the level that you think you're going to be talking in that communication to the market? The second question is about this. by the acquisition of this OREX bank, you still have an external partner. Are there going to be any changes in the relationship with those partners? Like a bank, you are currently accounting for them under equity methods. So your business alliance with them, is it going to be changing because of your acquisition? There might be some changes in terms of like focal points that you are working together with those external partners. And also when it comes to the asset-backed ones, partly you are working together with credit . What are you going to be thinking about those asset-backed securities? Thank you very much for your questions. about the bank, well, as you say, the average of the income is about $30 billion of the ORECs and the profit is about $20 billion. As a data securities group, our capital average is about 1.7 trillion yen, meaning that on a simple calculation, It has the positive impact of pushing up the ROE by 1.2%. The equity finance is not likely to happen. So that's the scenario that we are seeing at this point. But the amortization of the goodwill and assuming the AT1 is going to be issued, which we of course need to examine. But anyway, setting that aside, we think that is a basic simple calculation that we are currently having our basis. And the second question, first of all, we do have the external partnership with Alzora Bank and regarding that partnership, we assume there's no impact. Regarding the integration, it's for strengthening the wealth management business. The total asset consulting business for the retail business, The asset to support from the total asset consulting is going to be stronger. And the trust functions for the wealth in order to work in the wealth management business for the retail market, it's important to have the trust function. Well, organically within the company, we did not really have much capability to grow itself. And by having the external partners, we have provided some instruments. But from now on, we think we'll be able to do that in-house. That's going to be another one big pillar. Regarding the Alzura Bank, our partnership with Alzura Bank, there are some corporates that are listed and private. We have been providing the referral to the Alzura Bank and also the LBO financing, for example. have been provided and have been providing in the past so that the customer trait is quite different in Aozawa Bank. So, we think both can actually stand. And so, for the real estate-backed loans, well, Credit Suisse Zone is a part of the business that we've been engaged with. But the Intertech is jointly operating, operated by Credit Suisse Zone. so they have the asset, the real estate asset backlog. But, of course, the market size is limited so that the capacity is not that big. And just I'm thinking about the capability of being much bigger. I think the issue is coming from the business is going to be having new opportunities for us to grow our pie itself. Does that answer my question? What about the amortization of the goodwill? Any color on that scale? The amortization amount and the cost for the amortization, we're going to be discussing in details more. So at this point of time, there's nothing that we can comment. So please be patient. during the time comes for the closing, we think we'll be able to come to that point. Okay, thank you very much.

Thank you very much, Sato-san. So let us move on to the next question.

Do you obey security? Tsujino-san, please. Tsujino-san, please start your question. As the last point about the goodwill amortization, it could be as long as 20 years. But some say it could be 10 years. So you should have some sort of image in terms of the amortization. And also in terms of decision of the dividend would be so the net profit So would you be using the same sort of net profit regardless of the amortization? So 20 years or 10 years, I don't think that you have no image as to the amortization. If you can give us some color, that would be helpful. That is the first question. Thank you very much for that question. So, of course, we have some image or some ideas. So, the duration that you've mentioned, it will be within the timeframe that you've mentioned. But as of this moment, we're working together with the auditors. So, we would like to refrain from giving you an exact answer. Also, as far as dividends concerned, as you rightly mentioned, no change in terms of the dividend payout ratio. So, 50% or higher of the earnings. So, no change. in terms of the dividend policy. Also, in terms of Oryx Bank, so they have the Townshend Report. So, as of September end, so in terms of the DGAAP, JGAAP, excuse me, the JGAAP earnings, $7.4 billion in ordinary income. Well, it's $10.6 billion. So, it is actually quite lower in comparison to five-year average. So in order to drive this, do we just work towards that 8.6 trillion? I think that is the direction we should aim for. But right now, it's a midterm, sorry, interim times two. Is that the image that we should have in mind for ORECs going forward? The interim number, double that number? First of all, as of September 2025, the interim results for the company, it was an , there were some rebalancing of the securities. So, there were some loss from sales. So, that is why the amount has ended to that one. So, somewhat lower, that is our understanding. So in terms of the underlying capability, then it is closer to five-year average then. Okay, understood. Also, the third point, the third question I have, this is a question related to the results. So FICC has been very favorable. So Q3, there was some growth. In Q4, there was a further growth in FICC. So how sustainable is this? So for the March quarter, how has been the recent performance and how is it trending now as we speak? Thank you very much for that question. So in terms of SICC, amidst this very high level of volatility, we were able to capture the customer flow and we've been able to turn those into profit. So that has been very positive. Also in terms of products, it has been all around. So we have JGBs, and also we have some domestic derivatives and so forth. So within this high-level volatility, we do have high-level activities amongst the customers. So the customer flow, we were able to capture that through the communication with the customers. We can anticipate the customer flow and conduct the positioning. So through these control, that has led to a positive impact of the earnings. So that has been the experience of this past quarter. So for FY2025, in the first part of the year, at the phase of rate increase, I think we have also mentioned there were some difficulties in conducting the position control. But we have addressed these issues, conducted communication with the customers, and also developed customers and also address the diverse needs of the customers. We've been able to have more strengths in the position management. But just because we were able to do that, that doesn't mean that we can sustain this without doing anything because, of course, the market is changing every day. So accordingly, we would like to enhance our capability to capture the customer flow. Also, we'd like to steadily strengthen the position management system. Also, for the fourth quarter, so for the March quarter, that is, FYCC, the revenue image, that is, so January 3, and February is 2, and March is 5. So, in terms of the month of April, so in comparison to the fourth quarter average, Maybe it is somewhat subdued for the month of April, but again, the customer flow continues to be fairly active. Of course, the environment continues to be uncertain, but we would like to have closer communication with the customers, and we are hoping that we can turn it to our better performance.

Thank you very much.

Sujino-san, thank you very much for your questions. Next question is by Nomura Securities, Sasaki-san. This is Sasaki of Nomura Securities. Thank you. One question about the earnings goal results and one about ORIGs. I'd like to talk about the wealth management, the AUM and the first half, was declined and the previous quarter was down, but the asset inflow was making improvement. I would understand that that is because of the drop in the U.S. equity price. For the retail investors, there was some sales for the realization sales. Am I right to understand that? If I'm not, then please correct me. And the second question is about the acquisition of Oryx Bank. Are there any binding contract for like a key man clothes that you are going to be able to retain the key mans or the management people? Are they also be able to get those from the Oryx side? The Oryx side asset is very characteristic is because of the support getting parent company which is Oryx. Is that also something that you have captured or do you think the business is going to be continuing based upon your strengths as a standalone basis? Well, thank you very much for your questions. First of all, about the asset inflow, On the earnings announcement material slide. Just a moment. For the fiscal of 2025, we have had the inflow. So compared to the year before, the inflow amount was about the same I'm sorry, the fourth quarter is my question. The fourth quarter inflow. Okay, the Q4 only. But regarding the AUM, on this quarter the amount has declined. However, the U.S. stock was one reason. and also the fall in the stock price in domestic as well. So the asset inflow, the net inflow has increased as a result. But the asset inflow itself, as I mentioned earlier, has been quite active and quite strong. Well, since 2007, the asset flow size has been really big. Okay. And regarding the acquisition of M&A and the contract, do we have any came and close about the retention of the management people? Regarding the every close of the contract, I should not make any remarks. But after the merger or after the integration, the smooth integration is going to be, of course, the most important. And ORIX and ORIX Bank both. or of course make an effort for the smooth and the continual operation. As a large direction, we of course have had the agreement to come to this agreement or decision so that we shall make an effort to deliver results. Assuming that, for example, the real estate finance, the property sourcing is basically coming from partly a support from Oryx. Am I correct? The support from the Oryx group. Is it also coming? I didn't really understand. Well, from the beginning for the sourcing, the Oryx bank has been acquired by using their own network. So the support from Oryx is, as far as I understand, is limited, if any. Okay, thank you very much. I might come back to your question again. Thank you.

Thank you very much, Sasaki-san.

I would like to move on to the next question. from SBI Securities, Otsuka-san, please. So this is Otsuka from SBI Securities. Can you hear me? Yes, we can hear you. Please go ahead. So one question at a time. So related to the, you've talked about the asset inflow related to the previous question. the cash shins in the past two years that has been the strongest. So if you can actually tell us the reasons behind that. This is page 49, slide 49 about the actual, the cash that is. Thank you very much for that. Oh, 29 that is, 29. So we have the bank deposits as cash, and they may turn into investment trusts and fund wraps. So there are different objectives for that. But roughly speaking, Q4 fund wraps, in order to contract the fund wraps, there are a lot of cash paid in from other banks. So we did see a lot in the past quarter. Also for Jaiwanx Bank, a deposit, So, there was some cash paid in for Daiwa Next Bank's deposit. That was another reason. Also, there has been active transaction of the Japanese equities for the March quarter. So, in order to buy the equities, a lot of people have actually cashed in. On the other end, the share price actually peaked in the month of February. Some may actually sold their holdings. So, actually, they may have withdrawn the cash. So, on a net basis, this is the number that we had. Understood. So, fund wraps then. So, for additional and also new purchases, both have been strengthened? Yes, both. Thank you very much. Second question relates to Oryx Bank. So, this is slide six of the presentation material. So, in terms of the client's life stage, I'd like to understand this accurately. So, with the acquisition of Oryx Bank, the question is where would you like to focus? So, according to slide six of 60s, 70s, 80s, actually the asset exceeds the liabilities. So those who are in excess of assets and those generation or expects excels in the best real estate investment loans. So do you intend to actually provide those to those elderly customers? Or are you actually focusing on more those in 30s and 40s where the liability is larger for assets? We would be focusing on extending credit to them. So for those in 30s to 40s, So they will be the first house, the purchases. So this is different from the investment real estate loans. So this may be an area where it's not necessarily strong. So how do you intend to actually approach the different life stages of the clients? Thank you very much for that question. So according to this slide six on the bottom part about the image of asset and liability balance by generation. So generally speaking, by different VAs. So the younger, you would have more liabilities. So you may have the housing loans or investment loans. So basically, liabilities tend to be higher in comparison to assets. But once you exceed over the age of 60, net assets would start to increase. So for dire securities, the main customers for dire securities are mainly those 60s or above. So as you can tell from this image, so asset on a net basis, it is larger. And so we have been providing different consultation for the management of their assets. So in other words, for those customers in the 40s and 50s, asset formulation type of proposals via NISA, that has been conducted. But of course, the inherent needs of these generation is how they can actually extend and also repay the loans and also for those who wish to actually invest in real estate, we didn't have the facility to actually provide credit towards that end for those in the 40s and 50s. Now for Oryx Bank, the real estate, the back loans, the main customer image is to share with you is in the metropolitan area and So those in the 30s and 40s, a family man working for listed companies. They account for a large proportion of the works bank. So generally speaking, they do have high level of income. And of course, they have their own housing. But at the same time, they are investing in the metropolitan one-room mansions, one-room condos. So that has been the main customers that Oryx Bank has been cultivating. So going forward, what Oryx Banks provide, so they have this apartment loans. That is another part of the loan product offerings. So this is more towards high net worth individuals and also more of the more elderly, the customers. So, we can actually provide these products to the Dharma Securities customers for these apartment loans. Also, from what we have received, the securities from the Dharma Securities customers, we can actually use them. The securities can be backed and use it as part of the business. But of course, we do have, we are connecting that already, but because of the capital regulation and so forth, It has been somewhat restricted. So with the addition of the Oryx Bank, we could expect to see further accumulation of the loans with the securities-backed loans. I couldn't quite understand that point. So you mentioned those in 30s and 40s working for listed companies. And those who already have credit with Oryx Bank, you mentioned that. So already, they are customers of Oryx Bank. So whether Oryx Bank will become a subsidiary of Daiwa Securities, it doesn't really matter, doesn't it, because they're already customers. So is my understanding correct? So if they're going to start the transaction with Daiwa Securities, that is positive, but taking this opportunity, It is not likely. To be honest with you, I cannot actually imagine that they would also start doing business with Daiwa Securities. Actually, we do believe they could be a positive impact. So those who have the real estate loans from Oryx Bank, it is not so large in terms of number in comparison to Daiwa Securities customer space. So the impact could be limited. But in terms of the real estate investment loans, The customer base or customer potential is much larger, not just confined to those who are customers of Orixband. So we also intend to develop new customer base together with Orixband so we can further expand the customer base. Understood. So perhaps at the IR meetings and also at the business strategy meeting, we'd like to continue the discussion. Thank you very much for the questions.

Well, the next is going to be the last questioner, UBS, Nuwa-san. Nuwa-san, please. This is Nuwa of UBS. Can you hear me? Yes. Thank you. Well, regarding the bank, I have two questions. One, I'd like to know the background of the acquisition. Which one has made the first comment and how long did it take? And also, you're talking about the margin of 1%, the interest margin of 1% as a guideline. How realistic that is going to be? According to the new model, 1% of the interest margin seems to be easy to achieve. If that's the case, then that's going to be the image that we should consider as a conservative or should we think about that's a challenging target. That is the question about the bank. The second part of the question is that the U.S. private asset is now going through some turmoil. Any impact on your business or do you have any exposure? and also the response of the retail investors. Are there anything that you can share with us? Thank you very much for your questions. First of all, the background of this M&A. Well, with the Ulrichs as a company, for our group, well, they have been an important business client for a long time. including the management, we have had very good relationships. And there is much complementarity between the two banks. The possibility of working together, we have send it out to the ORIX Bank from our side. In the last few years, because we entered into a world with positive interest rates, as I mentioned earlier, We have a high expectation of the complementarity synergy to deliver. So since last fiscal year, we have made some serious proposals for the two companies, continued discussion, and as a result, we decided to work together as one company. That is the rough background. And talking about the interest margin, well, the Daiwa Next has a deposit to be a J, of course, at 2.75%. But the weighted average of the bank is about 2.1% for the lending. So thinking about the better yield for our companies, that's going to be 1.36%. So if we're going to have the calculation on a test basis at 1%, that was the scenario that we wanted to provide with you. And then moving on to the private credit, our exposure and the impact. First of all, our exposure is the one that we do have an origination that there's nothing for the group as a whole. as an exposure, it's very limited and very much of the indirect exposure. So on the consolidation basis, there's no impact on our margin. And for the retail investors, alternative asset, for alternative asset, The alternative investment is an option for a less liquidity but a higher diversification so that the return profile can improve. So alternative is a very important asset class for us. But liquidity is limited. So when our clients decide to buy, We do have the higher compliance guideline to follow. When there isn't enough assets and also the exposure should be just the one portion of their total assets, especially given the conservation of the low liquidity. Those are the items that needs to be fully explained and then understood by the customers. The credit, the private credit, trust investment, is managed and then consigned to Blackstone. The minimum amount of the investment is 50,000 US dollars. So the subject is the high net worth customers. So recently we do see the mass media coverage. and that is causing some concern for the customers. So, for all the customers who have those exposures, we are following up for all of them, for the DAO asset and for ourselves. We have been very flexible and trying to provide the information that is user-friendly. So, at present, we do see the situation where the cancellation request is mounting or anything. There are some number of people who are considering the cancellation, but it's not that high. So, continuously, we will monitor the situation and then think about the follow-up to our customers. Okay. Thank you very much. Thank you very much for your questions. With that, we want to finish our Q&A session. Again, speaking from dialogue securities group. Well, thank you very much for joining today. For investors and analysts who would like to have the continued communication, so thank you very much for your continued support. If you have any further questions, please send us to IR team. Thank you very much for your attention today. Thank you.