Marui Group Co Ltd Ord

My name is Kato. So I'll talk about the overview of the financial results as well as the outlook for the March end of 2027. So first of all, the consolidated financial results. This is the three points in the financial results digest highlights. EPS has increased by 11% to 158.4 yen. ROE is 11.6%. ROIC is 4%. so three indices have been all achieved its targets in a consolidated profit 13 increase to become 50.2 billion yen this is an increase in five consecutive uh quarters and achieve this target in segment retail 2.3 billion yen increase of the profits fintech 3 billion increase and achieve the targets and also the and also the seven percent increase in 20.5 bm in the Trans profits and the achieve seven by five million yen to achieve it start plan that is so finisher the 11.6 percent in ROIC and work otherwise ROE in the 11.6 percent Exceeding the shareholder equity cost like exceeding the work and also this is the final group and total sales and has a record high uh 5.7 in the increase by the previous quarter 52.2 billion yen in operating profits and also 1.9 billion yen exceeded to become uh 20.5 billion yen so the operating profits count profits are also achieved this status under the 3 billion yen increase due to the non-operating expenses. However, the current profits increased by 7%. Extraordinary profits in accordance with the impairment of equity as well as some of the loss due to the closure of the store. This current profits 7% increase to achieve 28.5 billion yen. So in the fintech profits, this is the revenue process and operating profits. Retail operating profits has increased to become 11.2 billion yen. Fintech operating profits is record high, 47 billion yen. Both segments achieved increased profits. And then also the retail plus the fintech retail plus 2.6 billion yen, fintech plus 6.8 billion yen in total expenses plus 100 million yen, excluding the special factors that is a 9.5 billion yen increase of profits. and also tenant revenue have increased and the increase the expense has increased that is the uh europe achieved the 11.2 billion yen for the the rents and the expenses the that the those proportional events has increased this is the uh transaction volume in the 44 months as increased the previous year and it is a higher level than the tokyo region uh department store in the 111 percent uh compared to the previous year in the tenant revenue uh segments the minus 500 million yen and also the the due to the uh variable rents uh 2.3 billion in increase in the tenant revenue and this is the uh card and the this is the uh uh due to the sales increase of this Area known operating area having decreased declined to four thousand seven hundred civil Due to the assembly withdrawal of our own cell our own thought base and compared 5% increase and now became 70% neck as planned the category has been increasing The next is a fintech situations in the fintech and this is the breakdown of the opposing profits and In this, due to the change of the revolving and installment payments, the 6.8 billion yen increase in Fintech, and then this is the, including the special factors, it is a 3 billion yen increase. The card credit, this is the card and credit card, and in the 10% increase, 1.2%. So this is 1.2 trillion yen. This is a record high. And this is the merchant commission rate. This is the merchant commission rate compared to the, due to the revision of the foreign exchange rate fees, they have increased by 32%. And this is the revolving and installment payments. In March ending, the 473.2 billion yen expanded. And this increase, this is looking at the industry compared to the March, the 1.1 times in 2020 March, but now it is 1.7 times that we have the case compared to the other peers in the industry. This is the commission fee revenue due to the revision of the fees since October has expanded to 69 billion yen, which is a 9.4 billion yen increase. Next is the new memberships. In the 2020 March, the entire new card issuance is still ongoing, but then card supporting the ski has increased and increased by 50,000 to achieve the 870,000 people. members so these are card numbers of membership is the record high 8.3 million yen the city supporting card members are 1.38 million people the platinum and gold card percentage is including that if ratio is 64 percent This is the decline in the repayment of the profit, repayment of the yield and interest. So the 1.5 billion yen has been placed as a provision for the loss of the repayment of that.

This is the total asset with the account receivable increase compared to last year and 87.9 billion increase of 1.1413 trillion yen. Equity ratio compared to last year and less by 2%, so 21.4%. In terms of the capital allocation, the basic cash flow, we had the 2.6 borrowing, 4.5, 1.8 for growth, and then dividend, 21.4, and then the share buyback, 7.7. Also, in terms of the Human resource investment, 9.7. Total investment is 27.7. ESG situation. The main external valuation. METI Nadeshco brand, we were the first nine years in a row. Selection. Other health-related management, we are the first for retail. We are selected for the last nine years consecutively. In terms of the renewable energy, 100%, we have our own solar generation from 27. We will be improving by 97% for this year, and then we're going to have our own generator during the Ukraine crisis. our electricity bill went up by 30 percent 27 march even with the middle east crisis with the tendency included we will be plus 17 percent right so it's half of the ukraine crisis In terms of the outlook for March 27, EPS 4% growth, $16.4 billion, already 11.8% will be higher than previous year. Group total will be 9% increase, $5.9 trillion, and then operating profit 10% increase, $55 billion, then net income will be 4% increase, $29.5 billion. In terms of the ordinary profit, With the interest rate going, we have minus 34, but we have the operating profit, so some 3% increase of the ordinary profit, $44 billion. By segment, this is the operating profit. Retail, 3% increase, $11.5 billion. Decade percent increase, $51 billion. The retail segment operating profit, plus and minuses, tenant income and event will be expanding. In terms of the other utility costs, we have increase of $800 billion. In lessening of the real estate increase, there will be down of 500 billion, so we will have a 300 million yen or so operating profit for fintech. With the expansion, the merchant fees and the installment and repayment fee changes. Actual operating profit will be 3.5 billion. Because of the interest repayment loss that we accounted for last year, there will be 4 billion yen for the operating profit. Per head dividend, DOE 10% we will maintain for March 27. It will increase by 3 yen to 134 yen. We are increasing for the last 15 terms. So that's all from me. Thank you so much. So now we would like to have direction for Suki Business. Our CEO, Mr. Aoi, will present. So this is Aoi. I would like to talk about the business supporting Suki and going forward. We have the vision of the economy that is written by Suki, so we have the business that is supporting Suki. The business that supports Suki through Suki, it's consuming something for somebody and society through Suki is what we want to do the impact to society. We are using our benefit to launch into new businesses and evolve into the new businesses. First, we will do the businesses to support Suki. We, up to now, Retail Fintech, we have the co-creation investment with the Trilology. So we will put Suki in the center. We would evolve all of the three aspects. First, retail. in retail we have events goods cards suki support unit will be the main ones store management operation we have events to support ev and then our own private brand expertise goods will be utilized and our unique feature we will continue to draw more card membership through our services the unit that supports suki we are able to change our way of managing stores as well as opening our policies yokohama where we closed in february we have a unit specializing in suki to reopen yokohama membership 70 percent are coming to the suki events so through this change One-forty-fifth of the area and then one-tenth of the staff, we are able to make sure that we are drawing more membership. So it's much more efficient sales. Especially efficient operation, we have other different types of outlets. In Osaka, after Nanba Maru, we have our second store that is supporting Tsuki. if the operation unit succeeds then we can make the asset of the store efficient so that we will be more of the asset like business next we will talk about fintech up to now gold card was drawing the growth and driving growth by adding a suki support card we can grow in new areas up to now becoming a general card to gold card we are seeing more usage and then people are using their gold card as their main card and they will be more usage so it's a two-stage approach for our royal customer Royal customer is simple for the gold card, but it's very effective. Last 20 years, we have had 19% increase every year, which is a very high growth. March 26, also, in terms of how we traded, 75% increase was from the gold card. As you can see, absolute gold card. On the other hand, Apple's card, we think there is potential that we can draw from. This diagram I would like to use. This is the royal customer outlined by gold card in numbers. The new member, 100, of that 45% of our customers, invitations are sent out for a gold card. Of that, 20% of the customers switch to gold card. And of that, 15% of them may get our main card, so therefore they become a true royal customer. On the other hand, those customers who do not apply to the invitation, or even if they become a gold card, they don't use it as a main card, there are 5% of those, so total 30% of those. So meaning that the loyal customers, 15%, double that, 30% is still left behind. So that's our great potential. Therefore, utilizing the Suki support card mission, we would like to take all of these 30% customers into our loyal customer path. To do so, the core competence, we would like to co-create trust.

For that purpose, we will practice co-creation of the trust, which is a co-competence. The founders expressed the trust is something not given to the customer, but rather trust is to be co-created with the customer. Gold card is relatively closer to the trust that we give to the customer. But the suki supporting card is the co-creating the trust and loyal customer creation will be proceeded. So here the important point is the customers, the self-confidence and self-positive attitude toward oneself in regards to the management of money. Japanese people in general have less knowledge about the finances and their self-confidence is quite low in terms of financial management. Therefore, some customers feel I'm not really good enough to have the gold card, so therefore they would hesitate to switch to the gold card, and they would not use the gold card. That is about 30% of the customers that I just explained. By the city supporting card, for them to become loyal customers, and most specifically until 1970s, since inception in my restore we had the communication with the customers face to face which have done we have done in our stores in application ai technology utilized to be reproduced again such a customer interaction and based on that to support the customers self-confidence by providing the appropriate feedback at the appropriate timing This communication with customers, that is the trust, is something that is not just given, but also the customer themselves would grow that confidence and to gain the trust. So that they, as a result of the one's trust to be grown and courage to be grown, each customer, they would eventually become a loyal customer. And that is a business to be supported. so the city supporting card the co-creation of the trust in the volume of the 1.5 to 2 trillion yen will be the increase of the revenue and also in the invitation standard is not reached in those are 55 percent those are the other companies gray card are used as a main card but then by recommending 50 supporting card i will promote the switching and churning to our main to the main card to become use hours So in the pet card, 10% of the members are Epos Gold card, switch from Epos Gold card. So among new members, the other company's main card, there are certain numbers of customers who have switched from other company's main card to our card. And those city supporting card. Other than just the status that you can buy paying money, but also represented in the love for their pets. This is the priceless suki, or like, or love, and is valued as very important for the customer. So through this card, supporting suki, or their individual interest, that has been those 55% of the customers, Now, recommending them to switch to our cards, for them to become our loyal customers. In 2031, 15% of the customers will become loyal customers by 2031, so therefore the transaction volume should reach an increase of 300 billion yen to 500 billion yen. By March ending in 2031, the main card ratio will increase from 23% to 35%. So the group's transaction volume to reach 10 trillion yen is our target. This is a fusion of retail and fintech. and now the card membership to be collected and the loyal customers will be combining retail and fintech so that we can support the long-lasting customer journey not just the event for to get our members but also the city supporting card we provide the expense experiences This is linked with the lifestyle application. The event can be reserved, and this is a service for the members, and this is implemented. Then, the customers like a Suki-based event announcement, as well as the preferred reservation and invitation can be used at their benefits. These goods are sold in charge of the details. The goods provided for the members are differently resourced from the person in charge but now we're going to merge the two by having the more unique own goods as well as the through the sales is also monetize our sales and also to the original benefits provided to our card card members as well and to other as a cost as our cost So the retail and card will be combined to be used. Initial cost will be hedged by the revenues in retail. And also the initial red ink can be recovered to achieve the, over the lifetime, achieving the business model and the profits. And so the need and sales and fintech to be fused together so that we can achieve this effect by the joint cost sharing. so that we can increase our profit ratio. Start-up collaboration to be increased in co-creation has been reduced in the recent years due to the review on collaboration policy. But in the future, from now on, we'll be supporting the business, supporting the Suki, and also conversion, IP and contents, those non-tangible assets investments will be done to promote further collaboration. Next is the DX strategy, Digital Transformation Strategy, supporting Suki. It's a communication, a more tailored, personalized communication to promote the creation of the trust and also data to be utilized and AI to be utilized and to build and achieve marketing. Events and goods are linked. The online and offline experiences can be combined together through the suki or likes to support each individual happiness. So this strategy is a professional resources in the DX area. We didn't have much of a tech image before in Mare Group, but now we have the thanks to the efforts by Mr. Tsuchiya, our CDXO, former Goodpatch, uh the good former money group a good patch president and from april tokyo university yusaka matsuo research x uh coming from that a research lab uh ai and mrs uh executive chief technology officer and good patch also a joint venture mutual ux design uh special software development internal can be internally done in a Marui unit, product development specialist, as well as key supporting unit, data utilization experts as well. And the GX strategy will be further promoted by supporting the team. So this is for the co-creation, as well as also how we should work in the future, business development to be made. and most physically 20 since 2024 employees own likes and city can be developed into business development and city supporting business concours has been done 240 employees in the past two years have applied in 120 152 plans and they are like in the museums and art museums will be museum card and support animal card has been commercialized we have been expanding the participants to outside or to the public from 2026 a broader idea has been collected first try but out of 170 applications about 130 of them are from outside

They break down other companies and overseas people, university graduate students and long-term intern people. The topic was space, wajima, lacquer, and philosophy. This is the day of the contest. Various types of suki is presented and support from the audience. It was very much a big hype. Through this phase of co-create, battery group strength and the suki of individuals can be merged together to have very diversified suki. For this business, we will have various employment, as well as midterm hire, as well as contracts, as well as long-term internship. We will have a work style based on project. In that case, company will not be a box where they will split the external and internal. It will be a more free place where people can come and go as well as utilizing their expertise. Using this co-create place, we would like to create a way of working so that we can get excellent talent from around the globe so that we can evolve into a company that supports Sookie. So the new structure for our board, For the last 12 years, external director Okajima-san is going to be retiring this year. And then the new external director, Mitarai-san is from the Makisei and Company, as well as has been a fellow for the Kingdom. of Bhutan and right now is the president for the Ksenuma Nippin. So a management that has both impact and profit at its core. So also our director is changing. Kato and Kojima are retiring and the new candidate for the director is the senior managing executive officer. It was president AIDA, and also the senior manager, corporate planning, and also we have a director that we will increase from good patch president. The CDXO senior officer, it's Jia, will be recommended. In the June general meeting of shareholders needs to approve these new members. We would like to expand as well as make sure we can have a switch of generations for March 2031. We will make sure we all achieve our target. So that's all I have for you. Thank you. Thank you for your time. Let's move on to Q&A. So the first question. sbi oscar san please this is oscar from sbi do you hear me yes thank you two questions to mr oi so one by one is that okay yes that's fine first question today you talked about In terms of that trust, page 56. After 56, you have mentioned some of these engagements, which is very interesting for me. So you want to elaborate on this for 56? Of course, as you mentioned, especially financial service in terms of credit is providing for. So the financial institutions normally think in that approach. In terms of co-create idea, it's a differentiator for you, I'm sure. The question is, for the differentiation, how would you like to bring it into more solid? For instance, as you said, Suki support? Suki support card, then that will be something that you can benefit. Like you commented, the 30% of the people who are still not necessarily have no Suki support card or no plan that they can relate to the digital communication that you will be using as a tool. Not necessarily you are not able to hook these audience, and they may not feel the attraction to what you are providing. So strategy going forward, if you could be. That's first question. So one by one, thank you. Thank you for the question. in terms of trust co-creation to be more specific and how to make it more possible if i make it very short last before from starting of our business nine late 1970s we said especially 1960s or 70s It's hard to imagine from today, at the very top of the floor of our store, we had a payment counter. Every month, customers would come to make their payment to us. And our employees, face-to-face, would receive that payment for the repayment. And actually, there is a lot of dialogue going on. For instance, every time when they make payment, we say thank you. And there's a conversation. For instance, after they finish their 10-time payment, this is, you're done with 10-time, not just saying thank you and expressing appreciation, we say, this is just a token of our appreciation. We will give them a gift. We used to. Then, those customers still treasure those gifts today. It's putting our appreciation into the gift from the customer. Limited income, whether they were able to pay the whole ten times, they are so relieved that they were able to pay up all the installments. and to be thanked for that. Having it in the form of a gift, it means that they were able to build up their credit, their trust, so it's the psychological benefit that they can be positive about what they've done later. we analyze so those customers there's quite a lot who are happy with themselves our trust co-creation credit cards business customers we want to be very sympathetic to how they feel these are the expertise we have in our company unfortunately in terms of the storefront communication going away but our idea our communication with customer is getting less so we want to revive that kind of relationship is what i explained to you For instance, today, lifestyle app. We have to engage with customer or communicate with customer. Every month, the closing date. What kind of communication today? We will close soon. Are you okay? If you want to do a change to the revolving type of payment you can tell us when and we can change it to a lesser amount and then make it in a new revolving but the new payment date we don't have any comment but just if they are late to pay there's a telephone or there's a short mail sent and we ask them you need to pay us soon for instance we want to put our Mine's in the shoes of the customer. We should say thank you on the day they made the payment for the installments. We start there. If it's a 10-time payment, it's an installment, then we say this is done. You completed. So this is just our appreciation. So if you don't mind, we can give them a ski target gift, like a little gift. animal stuffed animal or digital something is the way so that we can recreate what was there in our history sorry i'm getting long-winded but how we can make this possible based on our history the expertise this is our core competence actually others cannot copy our only unique capability is how we appreciate this customer psychological we are able to sympathize with this kind of method this inevitably is going to be the source of how we can deploy and what we said the top tier dx talent. DXUX to recreate. We need dedicated professionals. Fortunately, we have some very capable people here who are working together with us so together with these people our staff are working with these talented people professionals to create the experience that other companies are not able to match so this is a new business that we work together with our customers is the differentiation that we're looking for

the financial money lending agreement contract was made, and then, however, the customer received, being told the thank you, and by being able to do that, that is a very good factor to involve further communication. And if you have some data, I will let you know as well. More specifically, in the current city supporting business, what is the progress or any impact, effect that you are able to achieve from that business? from Mr. Aoi's viewpoint, are there any favorable results? For example, employees also, there are many situations where the employees themselves will be encouraged from that. Are there any positive achievements and positive aspects that you are able to achieve? In addition, what are the negative or somewhat not achieving expected results from the Suzuki supporting business in terms of positive things as you just mentioned who is this Suki or likes to be the good trigger the employees who about 65% very high percentage and now that percentage is increasing and in addition to that i'm very pleased with the fact that city supporting business concours was held this march and for the first time we have also opened it to outside the company as well about 100 140 close to 140 ideas occurs to 130 ideas come from outside the company So these ideas were proposed, very good proposals were given, or very passionate proposals were given to us from outside the company. So those who have received, we want to commercialize and to put that into business as well. So these ideas can be collected from outside and can be used in an event and goods and cards. by Marui and combining with the existing business and city supporting business can be started one after another. That is what we are actually happening. That was a thing we have thought about even though we just started, but it is now seem to provide a better result. And on the other hand, what is somewhat negative or not achieving yet was, as your second question, the Suki Supporting Card to create that trust Those who can, the experts who can support this are participating the Suki Supporting Card and business but then now we have the members are now there players are now there but then we further need to implement this and to realize such business i think there's still some room for growth and there's still some conceptual stage we will need to make more efforts in this area to further make it grow that's all thank you thank you very much uh thank you very much for answering my question thank you very much for your good question thank you

Thank you very much. We'd like to go into the next question. From Mizuho, security, Sakai-san, please. So, this is Sakai-san from Mizuho. Thank you very much for a very easy to understand presentation. Two questions. Number one, same with the first question, the Suki support card, how to expand that. You previously told us your card. your operating cost is very low, even that is very difficult for other peers to copy. One possibility, this sort of suki support card, having this, it's not communicated properly But people don't know the content very well. They're very vague. It's very, very difficult for them to use that card. Or people who are non-users, you want to expand it to non-users, you need to have more recognition, awareness. One of them is the Umeda, the new store that you are opening in Umeda and Osaka. So that you're more positive about your own self, kind of. Those Message you need to expand it to people who don't know you or how would you like to go about expanding this? It's number one. Thank you Thank you for the question yes Suki support card is very compared to before has great opportunity The opportunity lies in large way to improve awareness for many people to understand what we did before. Until we communicated, people didn't understand us. But, for instance, the key support card, the original source, before we had the engagement, the anime business that we used to be working, anime events, we would work together with in the card those sorts of credit cards working with anime from 10 years back we have been doing through that operation we understood those anime contents fans normally in social media x every day they have frequent communications within the community So within the community, we would send a message to these communities. Then that becomes a big hype within the community. It gets transmitted by them also, by the community. So communicating to the fan community, the speed, the scope, compared to before, it's easier for us to get in touch with this group using social media already the fan community is already established we can notify them so the fans actually can communicate to their peers is how we are able to communicate so using suki as the core we are getting a big benefit advantage to this of course we will continue to communicate and introduce people to these sorts of cards aggressively but um on the other hand the cost and without us putting too much effort the fans themselves are able to So that structure already exists for us, so that is our businesses that we are very appreciative of in the nature of it.

thank you and that is why the business conco that is also open to the public that is very good including those aspects those ideas can be collected more broadly from the audience and so that you can increase and you can grow the community and then this will be naturally expanding from those efforts is that correct yes that is correct that is what we are thinking yes thank you my second question in the new organization you mentioned could you please let me know your the very new members are also wonderful so that you also including the young employees and as well as the external directors compared to before I think you have the younger generation working more and those who are knowledgeable in the business has been the new members of the board of director meeting and how do you want to evolve your board of director meeting that is my second question thank you for your question Okajima-san has been working for a long time to increase our corporate value, company value. Okajima-san had joined 12 years ago. At that time the share price was 1,000 yen. Now the equity price is three times more, 3,000 yen level today. After 12 years of his assignment, now he is retiring from that position, and the successor is Mitarai-san, The Mitarai-san also has been introduced from Okajima-san. And Mitarai-san, they have worked in Matinze and company before. Both of them have worked in the company before. And Mitarai-san, and also in the Great East Japan earthquake, Mitarai-san was the Bhutan Royal Government Prime Minister Fellow. and then now and then she is the uh for doing the social business quite successful uh called meeting so this is a social enterprise she's been working so now she's joining us as external representative director so that is a director so that we can increase our corporate value so in case our internal director we have increasing internal directors this is uh they're from good patch a representative director mr tsujiya he is already a executive officer cdxo and digital transformation officer and mr tsujiya has been the non-permanent officer but now thinking about the future directors within the board we do need a person knowledgeable about digital and technology so that is what we felt we need such an individual talent so that is why as we have discussed internally in a board meeting and we decided to invite uh this timing that we want to ask uh mr chia to become the our internal director at this time the other person is currently the president of epos card mr ida he is the managing executive officer and cdo and he had worked in the corporate planning as well as in he had worked in the putting the new stores in hakata And he was also the founding member of that store. So both in the credit card as well as the retail. So Mr. Ida is very knowledgeable about business. So he has done the operation of the company as well as for the business. So as Mr. Ida, we like to ask Ida-san to become the internal director and miss endo she would be the youngest but she is the ir in charge of the ir and also she's a corporate planning director so fp and a and she's very knowledgeable about figures and numbers and also she's very not experienced and knowledgeable in the business management area as well Mr. Kato is the CFO, but Ms. Endo is a future potential human resource to succeed Mr. Kato in the future. So, Mitarai-san, Endo-san are females. So, with these two individuals, the average age of the board of directors members would become younger. research and this toward the end the 2030 uh we will be trying to get more younger members included in our business management as well as the board of director meeting members and that is what we are trying to do thank you thank you for your answer thank you thank you very much next question please

Kanemori-san, please. Do you hear me? Yes, we hear you fine. Kato-san, fintech business. I need to confirm. So that's the reason for my question. Up to now, in the material, you used to put in terms of the loss and then changes in the fee commission impact. Usually you would put it into the material. I was not able to find it myself. In terms of 26 March, the original Q3. At the end of the day, the actual, what is the situation I would like to know. And 27 March, for the first part, the positive of the fee change, commission change. The original plan, raising the fee, the operating profit, benefit, 26 March, $4.8 billion. 27 March, $12 billion would be the number. 26 March, it's going to be a plus $7 billion. However, In terms of you have a lot of the depreciation by quarter, you are trying to fatten out. In terms of the plan, 27 March, the number outlook, how do you have the plan laid out? Yes. So I would like to respond to that first, the 26 March plan. results up to now in terms of installment change fee 4.8 billion they assumed that transaction is not going to change to went by 0.2 so it's 5 billion instead of 4.8 27 march what we said No change in the numbers. It will be all benefit of the fee. We won't do this in this fiscal year, but going forward, all the expense costs structurally will be readdressed. So annually, in terms of the credit liquidation, we want to make it negative, so Asset securitization, we want to make it negative for the quarter. We want to make sure it doesn't go up and down too much. That's a specific area that we want to be more specific about. By quarter, this chart I used to receive. You're not going to make that available. Previously, when we closed for the Q1, This year also, after Q1, we should be able to give you a better plan, outline that we can share. Okay, I understand. Another confirmation is the year that closed. Q3, cumulative performance. It was an upside. With Sintec? Yes. However, Q4... The upside is getting more extra. Strategic cost is going to be put into Q4, I believe. In reality, value, how much did you account for here? Also, 27 March, the strategic cost expense. what's your direction, please comment to the extent that you can comment today. Strategic expense, we wanted to use, but as we said, interest repayment that we had account for was more than expected. So as a result, we couldn't build on it. Therefore, rather than We didn't want to, we accounted for some of the loss, so we put 1.5 for the interest repayment. So we were able to, for this year, the revolving changes in the fees for digitalization. For the app development cost, we want to account for more so that we don't have any bad debt. So therefore, we want to have a database build up. We want to spend more. That's what we wanted to do. So we wanted to lessen ourselves with the bad debt.

Thank you very much. Now I would like to invite the next question from Diver Securities. Shigeoka-san, please. My name is Shigeoka from Daiwa Securities. Thank you for explanation. I have three questions. First question is on the FinTech, also relates to the FinTech issue. You mentioned about the expense increase in FinTech. In the slide of the factors of increase, 16.1 billion yen expense has increased compared to the previous year. uh that the that is the uh some of the factor for the reduced profits compared to the last year's situation the sales linked the point expense uh portion seem to be quite large what do you think sales promotion expense are you trying to increase you may be increasing the sales from sales promotion expenses i'd like to know the background Thank you for your question. For the March ending 2026, we have the points. That is the, we have provided, the service has been reduced from the previous year, so therefore not that much difference in the last year. and however this year this go back to the usual situation this is the expense increase the march uh 2026 is actually smaller in a sales promotion expense as i mentioned before the future application enhancement and data to build more databases we would need more expenses for the future investment that is why we are we have increased expenses and what about the system expense is also 700 million yen increase is that also that that is related to that that that is the for the renewal of the servers we plan to do i see understand thank you my second question is the loyal customer about royal customers for the gold card to be promoted That you understand that you're promoting the gold custard and city supporting cards It's been added as well, you know, which one do you? focus on the two Because the custom is that the customer is going to choose as a main card The at the gold card. It is not a both of the gold card and city supporting card and is there when there's a customer change from suki supporting cards to switching to gold card the the card face would become change as well what do you think i let me answer that question so for the gold card and suki supporting card those two In the past, we only had gold, but now we have the new card, the Suki supporting card is newer. And we have done discussion, how do we support, how do we support these two cards? But the difference from the gold card, they can become loyal customer. That is the difference from the gold card. That, for example, of course, there's some contrasting idea, concept would be Suki gold card, but we don't have that now. that idea and so that i i do remember the numbers in those table those who have not been able to get them as our loyal customers because they feel more anxious and they have less self-confidence so but now these cards can also address those type of individuals to become a loyal customers So as today, gold card plus alpha is this Tsuki supporting cards. So this is like two wheels of a vehicle that promotes more and more numbers of the Royal customers. So in case of Royal card, the number has to be changed due to the guidelines and rules. But the Tsuki gold card, they can use the same number in the card. and so that improvement is also can be done in the suki supporting card so that you can co-create the trust together we provide the benefits as well as experiences for the suki supporting card members and the bonus points for the gold card and the lounge use at the airport for the gold card So that's the difference from such a general one like a gold card benefits. That is the suki supporting card has the unique benefits and rewards and benefits. We made our own, Māori's own unique rewards and benefits for suki supporting cards. So this can further also link to the retail sales and combined with the great cards.

so in that sense uh profit ratio margin can be further increased to achieve more loyal customers that is a future stance thank you very much so not everybody got part suki support card hopefully they become main card with what how you want to drive them yes the The 10% people who receive gold card are very happy, and they would use it as their main card. People are very happy. I've met with many, many people who said so, but some of them feel that gold card is too much for them. So both customers, the 20% are happy, but then we want both of them also to be happy. Thank you very much. Number three. In terms of the share buyback and your material, after 26, for the capital appropriate, $30 billion, the timing you didn't say, after 26, was what was written. No change in your idea. If there's any update, please. so i should answer that idea has not changed in terms of the capital allocation 31 march if we can build on the profit and then the retail capital would be too large so 30 billion or so we want to do share buyback was the plan but however Retail, fintech, only when the profit rises, we will have too much capital. As of today, not yet. So in the midterm plan, second, latter half of the midterm plan, we would do it. So then itself, no change in the direction. Thank you very much. That's all from me. Thank you very much. It's already past our time.

so we'll have two more questions so smbc nico securities kanamori-san please my name is kanamori from nico securities i just want to focus on two questions first question in this performance results in this quarter fintech kpi fourth quarter or rather three-year results is also included but per capita the the loan balance one suddenly and decline on loan balance and also revolving and from the second quarter year over year it is there's a declining trend on year on year year and the fourth quarter and the uh revolving payments and compared to the first and second quarter in that was the in the first and second quarter there was a double digit number in the fourth quarter that was the reduced to 6.7 percent that is the some of the concern i have for the fintech business surrounding environment if there's anything that is uh that is my first question here on the pin tech business let me answer your question in the fourth quarter the installment and revolving payments in a macro factor that is due to the macro factors in december the the has been expanding from december and also the deduction of the government as we started from the fourth quarter. Similar situation is happening in other companies as well. So from the first quarter, there's some declining trend, but that is just slightly, so that we will not worry about it so much. My second question in this In the flowchart, fintech part, Kiyoka-san has asked, and maybe did not mention, the guarantee, 1.3 billion yen for the rent guarantee. What is the background of that reduced profits of 1.3 billion yen? And also debt is the 1 billion yen profit declining, and this will be reduced in future. i think you are also looking at the amortization of that so the sales proceeds can you divide them into the sales profits the sales proceeds and also between the difference or gaps between the current profits versus the operating profits the 11 point has expanded the profit expanding in the 3.4 billion yen and this red ink has been expanding in the profits is it due to the payment of the interest rate or I like to know your plan and ideas again so let me answer your first half with a question he just mentioned for the guarantee of the rent the this is the non-proportional to the uh volume of transaction this is the uh this is for the revenues this is the this is a part of the most of the uh service revenue of the this one billion yen profit should be generated because of that for the uh liquidation of the debt uh a lot of the credits and that is the routine amortization amortization of the credit will be continued then also sales proceeds is the also should happening the minus one billion yen that level that we can control so the operating profit is 3.5 billion yen so they can we like we can reduce this liquidation uh portion of that which i will explain more in detail in the first quarter explanation and in the you also mentioned about the current profits is minus 3.4 billion yen that is impacted from the interest rate impact mostly coming from the interest rate i understand the answer thank you very much thank you very much there will be one more question

Nomura Securities, Kaku-san, please. This is Kaku from Nomura Securities. Thank you for your time. Since you don't have time, I have two questions. The credit securitization, the level change, interest hike, how is that going to impact How would that impact your profit? Minus $1 billion year-on-year, you said, is what you said, in terms of the liquidation of receivables. $2.7 billion. So $10 billion for this year, mid-$10 billion after fiscal year. if you're going to reduce the leverage idea if you have any in terms of liquidation with the interest environment the housing loan liquidation you would stop you are doing a lot of the repo where You are talking about the revolving. So if you can talk about that, please. So I would like to answer that. So first of all, the initial liquidity interest going up. The interest for lending we are raising, so it's not an issue. Going forward, what do we do? In terms of the interest hike annually, $12 billion we have benefit from. Last year and this year, interest hike $7.7 billion impact. So we have another $3 to $4 billion to go. So we will hedge to do the liquidation as a result of that. The total loss, we do not want to impact. That's what we think. Did that answer the question? Thank you very much. Next question about Suki and premium card. This is my question. Increase of this card and the breakdown. Unit price going up. Could impact your financial numbers? Do you have anything that you foresee? Fourth year after membership, fee jumps up high. 23 March, Tsukiji-centric card is increasing for you. Going forward, the financial numbers, how will it be impacted? So if you have any idea. Yes, I'll answer that. First, from membership. Second, third year, the unit price goes up. So as I said before, this year, 870,000 people, so 50,000 increased. This year, we will challenge the same level. So industrial grill, new membership is lessening. We are able to grow the membership so we can do a good job. And so key support card and gold platinum. With the new membership, naturally the golden higher will go up. The Miyazaki card, the unit price is higher. They are young people, so they are using the installation revolving. And after next year, the installation revolving will continue to build up, we think, from next year onwards. Thank you very much. Thank you very much. We'd like to close the Q&A. 26 March, we would like to close the presentation for this fiscal year.