Sbi Holdings Inc Ord

Thank you very much for joining us today for the presentation of the first six months of the year, despite your tight schedule. 40 to 50 people are also participating on the internet, and so about 100 people are attending this presentation. Without further ado, we have 145 pages, so we'd like to start the presentation right away. skipping some pages. First, some numbers. As you already know, the revenue, $228.165 billion, or up 18.7%. And the pre-tax profit, $54.512 billion, up 13.5%. As to these numbers, they are record highs. The profit for the period, $38.164 billion, up 8.8%. The profit attributable to owners of the company, 33,104,000,000, up 18.7%. And annualized ROE is 13.6% for the first half. And we will see what will happen in the second half. And if the trend continues, the ROE will also hit the record high for the year. SBI Holdings, Nomura, and Daiwa Comparison. We are on the IFAS basis, Nomura, U.S. GAAP, and Daiwa, J-GAAP basis. so different accounting principles. But for example, for Daiwa, on the consolidated numbers, some bank and the asset management are included. And in our case, the SBI holdings and Daiwa, the home office, the holdings and Nomura, the holdings will be Apple and Apple comparison. So only the numbers from Nomura are available here. But as you can see, it seems that Tietanumura is doing a good job. For the first half, ROE 14.0% in the first half. So they are doing well. Not so much domestically, but probably well overseas. And Daiwa is going to make an announcement tomorrow, October 29th. Next page, buy segment, financial services business. Doing very well. Both revenue and pre-tax profit hit record highs. Revenue, 144 billion 82 million yen, up 27.9%. And the pre-tax profit for financial services, 40 billion 319 million, also record high. This is up 53.9%. Asset management business, record high for the revenue but for the pre-tax profit. It went down a little bit because of the big unlisted companies. Actually, three unlisted companies contributed greatly. in the previous year. This negative number doesn't mean that the asset management business is doing poorly. That doesn't mean that biotechnology-related business, their rate number has been reduced greatly. Next page, about dividend. Interim dividend, the same 20 yen as last year's interim. And if the second half is good, then we would like to increase the dividend. We will see to make judgment. Buy segment, more details. Our securities business, as you already know, The operating revenue, the record hit high at 74 billion, 13 million, up 27.9%. Net operating revenue, 68 billion, 858 million yen, up 32.5%. Operating income, 27 billion, 237 million, up 50.7%. And ordinary income, $27,316 million, up 49.3%. Profit attributable to owners of the company, $18,988 million, up 61.8%. Here we are looking at average daily individual brokerage trading value. Compared to fiscal year 2019, if you look at the right-hand side, fiscal year 2020 first half was better. It's up 52.4%. And among this, actually, our trading value increased more by 73.5%. And commissions increased by 61.7%. One of the reasons is good performance of foreign stocks. There was a very good factor that I'm going to touch upon later on. SBI security is overwhelming position. There is a comparison here, and as you can see, SBI is dominant, both for the number of accounts, deposit assets, operating income, and the share. We are dominant here. In 1999, we started in the same way, using the same systems, but the performance is now so different. Bank-related business is doing very well. And so this is the 7.6% increase for the equity earnings. from the other equity method companies. And this is for the other JGAP basis since the inception of SBI submission at the bank. It continued to increase ordinary income, but because of the BOJ's negative interest rate policy, it's down a little bit, but already recovered from it and from the other fiscal year, the other 2017. And in the second quarter, fiscal year 2020, the numbers will surpass the previous year, the same period, because the announcement will come on November the 12th. So please wait for that date. The number of accounts and the... Internet banks comparison, the deposit is increasing. As of the end of November, it was 5,743 billion, but now it increased to 5,841 billion and with 4.2 million accounts. And on the monthly basis, the number of accounts and the deposits are increasing as to the insurance business. The ordinary income up 25.9% and ordinary profit up 122.8% at 184 million yen. And the profit attributable to parent of the company up 247% at 773 million. And these are the bullet numbers. The more detailed numbers will be available later on. And the SBI insurance group has been buying the SSI entities. And on average basis, CAGR from March 2015 to September 2020, 16.4% increase. Compared to our standards, it's not really a high number. But if it increases too much, that will be translated into expenses. So the profit-wise, it will not be that good. So this level of CAGR increase is good for insurance business. Asset management business, the revenue up by 8.2%. Some negative elements. Here, profit before income tax expense, 24.8 billion yen. Please look at asterisk number one. Accumulated impairment losses to reflect the declining occupancy rate in the aircraft leasing business, about 4 billion yen of the impairment losses. But if you look at SBI Savings Bank in South Korea, 13.9 billion yen, up 65.5%. and profits from the change in fair value and profit on sales of investment securities. They did very well for listed securities, but the profit is not so big for the unlisted securities in the first half. As to IPO for the full year basis, it was very good. And we expect that there will be over 25 companies. There are good names included. The fintech companies or bio companies of good caliber to be listed. As to SBI Savings Bank, when we purchased it in 2013, there were some criticisms. It's true, back then, 51.6% NPL ratio was there. But now it went down to 1.8%. And the performing asset is increasing. which stands at 972.8 billion yen, or exceeding 10 trillion won. To revitalize the bank, I think, is very easy. It was a success for the Korean bank. So it is also certain for Japanese banks because our group can utilize all kinds of capabilities to give support to Japanese banks. Even Russian bank is very likely to go into the black. So banks... Even those banks on the verge of bankruptcy, they can be recovered. We used about 130 billion yen or so to make this bank recover, and they made a very quick recovery. And following SBI securities, this entity is a cash cow. The SBI Sames Bank will surpass full-year results of the previous year in the first nine months. and the Morning Star Japan celebrating the 20th anniversary of its listing. Thanks to you. They transitioned to the first section of the Tokyo Stock Exchange from just stock listing. Both net sales and ordinary income are increasing. I'd like to pay special attention to the following for Morningstar Japan. That is corporate defined contribution plan or DC plan, both for corporate and individual DC plan. Especially we would like to increase corporate DC. going forward in coordination with other strategies. And here we have e-advisor DC promotion department. And now we have more than 7.5 million DC subscribers of corporate plan as of the end of July. And when it comes to pension, it is very important. Why corporate nation or individual pension is important? Well, because... We had started a new company even before the involved in pension business. Close to 1,900 trillion yen of the individual assets and 54% of which is deposit, which is not good for the investment or the asset accumulation. So we need some incentives given by the government so that this huge amount of money will go into investment. The International Financial Centre, if we're going to make it, these investment activities should be part of the centre of it. Not many countries have such a huge source of money, and there will be lots of money managers coming into this market. When I was working at Nomura, The oil price went fourfold back then, and all the money went into the Middle East. Every three months or so, Saudi Arabia Monetary Agency or the Ministry of Finance, Bahrain and the rest of the area, I went to that area very often. And there is the place called the cheap side at the London city. and we encourage them to invest in Japanese vehicles, like stock and bonds, and we can create a similar situation again. So the SB Group's assets under management, including private equity, exceeded 3.6 trillion yen in one to two years, I personally think, more recently, to increase it to... 5 trillion yen and to 10 trillion yen in five years. The regional banks and their investment is mainly for the JGB or the municipal bonds. But they will be redeemed and no regional bank will buy the JGB again. 80 trillion yen or so is invested there and about the more than 30 trillion or so is invested in JGB or municipal bonds and we would like to utilize more effectively. about 15 trillion yen will be redeemed. 15 trillion yen worth of JGB and the municipal bonds will be redeemed in three years or so. And we'd like to grasp such data money sources as early as possible. And Mr. Sakura and his team is making efforts in that area.

So for the biotechnology-related business, at bad times for Cork Pharmaceuticals, Every fiscal year, every period, about 10 billion of losses were being recorded. However, in the first half, it is now minus 1.1 billion, 854 million. So, AKI has entered phase three, which is for nephrosis. So, the conclusion is going to be reached fairly soon. And if it's successful, it will be a tremendous value. And if not, we plan to sell it off. For biotech, we do have a rich pipeline. And with Kirin Kyowa Hako, with entities and such, we have been delivering the And for ALA-related, it has been steadily progressing. So it's just quirk, which is the problem. Once we pull out of it, we believe we will be on a good track. And also, due to COVID-19, The clinical trials for Cork's acute kidney injury prophylaxis has been somewhat delayed. However, blood sampling after 90 days and the follow-up observation has been completed as of September the 21st. So now it's just doing the data cleaning for clinical trial database DBL. And then by the end of March of this fiscal year, we will be able to reach a conclusion and we'll be able to sort things out. So that's where we are with this. For Ella, for cisplatin nephropathy protection, phase 2 was completed in September. We'll now enter phase 3. For mitochondrial diseases, phase 3 is underway, and it's scheduled to be completed in April 2021. At Oxford University Hospital and First Patient Inn, it's expected to be completed by early November. So for Phase 2, it will also be held at Leicester, Birmingham, and Cambridge University Hospitals as well. For brain tumors, Phase 2. For PDT. Photodynamic therapy. It's the therapy part. So if you have a brain tumor... that is in a solid state where it's so large, three centimeters wide, it's hard to conduct the surgery. By utilizing Ella, you could use PDT. And if you are administered with Ella, the ingredients will be gathered in the tumor's part. And when you shed light on it, you'll be able to treat the tumor. So that's basically the theory. activated oxygen may be generated. With regards to the mechanism, they are currently working on it. However, they are working on the preparation for phase two. For breast tumors, phase three is under preparation. It is being conducted by a Canadian company. Photonamic, a wholly-owned subsidiary in Germany, has entered a partnership with a Canadian company, and they will be preparing for phase three. So this is a PDD, photodynamic diagnostic agent, for Allopromo. They have various types of foods with functional claims. Improving quality of sleep with alloplasmic memory or cognitive improvement functions with SBI, ICHOHA, Ginkgo, Bilboa. And also improvement in exercise capacity with alloplasmic carotid active as well as functions to improve high levels of fasting blood glucose levels and postprandial glucose levels. And currently, these products are under sale, but under development are products to reduce cholesterol and blood pressure by utilizing germinated rice. And also, we are currently developing some ALA food products that improves depression and mood together with the University of Hawaii. And we are also working with Hiroshima University for recovery of fatigue. And also with Hiroshima University, we are working to increase metabolism while suppressing sugar absorption, not only with aloe, but also with celosia, derived celosinol. We're also working on male menopause improvement. Men actually have menopause. I haven't, but we're working on that. And also within fiscal year 2020, we will be working on the fatigue reduction after exercising. But in any case, we will have a wider product lineup in place. So we believe that this part of the business will grow steadily as well. Drugstores carrying these products have grown to 17,396. For the major drugstore chains, they have started to carry ALA products as well. So the group's competitive advantage became clear in the COVID-19 crisis. That's how I feel. First of all, The group's online utilization, which was in place since its inception, led to a further increase in customers and in revenues in the wake of the COVID-19 crisis. So, looking at the number of brokerage accounts, in February 2020, we have exceeded 5 million and surpassed Nomura. And as of March, we completely surpassed them. And currently, we are close to 6 million accounts now. As of today, we may have already reached 6 million accounts. Every year, we're growing by 10.6% from here. So we are overwhelmingly number one right now in the industry. So at Nomura, the growth rate is 1.5 when you look at Kager. For SMBC Nikko, we have been seeing an increase because they merged with France Securities. And for Nisa Accounts, Finally, we have surpassed Nomura. We are number one in the industry now. For Nisa accounts, the customers who open up accounts, 69.2% of them are new, out of which 69.7% are beginners of investments. So these are the new customers we are getting. For junior Nisa accounts, we currently have 98,000. which is approximately 30% of the entire securities industry's junior NISA accounts. That is the share we have acquired. We have completely made the fees free, and we have been seeing a buildup of accounts. And March 16 until 2020 September, CAGR has been 53.1%. And when you look at the cumulative number of SBI benefit system subscribers for D.C., it has been growing, the individual type. And also, the balance of the Zemes Trust for 401k individual type distributed by SBI Securities. has grown, and the CAGR from 2016 March to 2020 September has been 51.3 percent. There aren't that many products that grow at this rate, at 50 percent, but we are seeing this growth at our company. So, with regards to the cumulative number of individual D.C.-planned customers, we have been industry leader. It used to be Tokyo Marine, but we surpassed them in October 2018, and we have been widening the gap ever since. So for SBI securities, looking at our productivity, it is far higher than that of Nomura and Daiwa when you look at this chart. When you look at productivity, it is the operating revenue and operating income per employee that we are comparing here. So when you look at operating income, because we're using online, the number of employees that are allocated is less. That's why it is higher per person. And for profits as well, this is 45 million per employee, but for Nomura, it's only 5 million per person. So this is very important. I don't know how you will look at this, but when you think about the future, productivity per employee is key. Some companies carry a lot of people, and they are trying to reduce the number of headcount. So everybody is working from home these days, and they're working remotely. Some people are trying to reduce the personnel cost by having their people work remotely. So for SBI, Sumishi NetBank is expanding its business base faster than its competitors. September 2007 was when it was established, and it was able to reach the dominant number one position over a short period of time. Mortgage volume is growing rapidly as well. As of June 20th, the cumulative total of housing loans balance exceeded $6 trillion. And when you look at it per employee, once again, SBI, Simishin Net Bank, when compared with other megabanks and compare ordinary income and ordinary profit here, This is what's interesting with the bank. We have the highest productivity, and there are differences amongst the mega banks as well. Sumitomo Mitsui Bank is 29 million, as you can see here. And for MUFG Bank, we thought they would be a little bit higher per employee, but they were at 14 million, actually. For the insurance business, It has also displayed its strength amid COVID-19. This is interesting. As of March 2021, Q1, direct premiums written. When you look at the year-over-year change, ours increased by 22.1%. So this is SBI insurance. For SBI life insurance, the change on a year-over-year basis was 35.2% up. Other players are down. So amid COVID-19, customers are migrating or shifting. Or when you look at efficiency of the companies and net expenses, which are labor costs, advertising costs, and et cetera, in our case, we are at 17.7% at SBI insurance. Other players are at around 30%. For life insurance, premium income per employee, we are far higher than others, as you can see, for SBI life insurance. By looking at these KPIs... you're able to see whether you are able to manage your company in a productive manner. And I think this will determine the order of the ranks of your company in the future. So strategies to further strengthen competitive advantages during the COVID-19 crisis. We think we're doing well so far. However, we are trying to do it even better. And how are we going to do that? First of all, for the securities-related business, proactively, we will engage in M&A activities to further strengthen overall capabilities for fees. We have been saying that we will continue to reduce them. So, we would like to leverage our comprehensive capabilities even more. In a diverse business, we need to generate our revenues. So, first of all, We used to be growing through organic growth mainly, but we would like to be more active in M&Es. We would like to strengthen competitiveness through synergistic effects with existing businesses and cross-evolution, and we would like to expand economies of scale. And also, we would like to go through stepping stones towards global expansion with a focus on the future. Global will be a key word going forward. Everything is going to be about going global. So for new businesses in the future, I will question whether that can be globalized. How can we globalize the business, especially for virtual currencies or crypto assets? In that kind of business domain, this is the way I think. And for M&As, we will expand business foundation through M&A activities through the new securities and new bank initiatives. And M&A activities will basically be carried out by SBI Holdings or an intermediate holding company. For example, we have, if we acquired shares for B2C2 or Lifestyle Securities, and also we invested into Hifumi. So these are some examples. So for Lifestyle Securities, it is very unique. Around the trader segment, it is being highly supported. So for margin trading, the fees are waived, and that is how we have been able to expand the customer base. So acquiring this entity was very important for us, and that's why we made the decision. And as of September of 2020, the number of accounts is 190,000 accounts, and AUM is $276 billion. So the SPI group covers a broad range of customers from the high-end segment to traders and the future asset formation segment. We would like to offer various types of services to various types of segments perfectly. So that is how we would like to be organized. And in fact, so this is SPI securities share of individual stock trading. When you look at SPI securities alone, we have been able to increase our share to 40.3% from 35.3% when you look at share of individual stock trading value. and also of which share of individual margin trading value was 41.5% from 35.4%. And on top of that, Livestore has contributed by 3% as well as 3.8%. And we are striving to reach 50%. Also for the cryptocurrency business, globally, whether it be Bitcoin or XRP, this is something that is global. So all the systems need to be global. All the ecosystems need to be made in a global manner. And to that end, we acquired B2C2 from the UK. They are a crypto asset market maker company. We announced that we're going to acquire 30%. But finally, the Financial Services Agency of the UK has gave us the approval to acquire 90% of their shares. So this entity will be consolidated. And from Z Holdings, we acquired Taotao. This is a small issue, but also we endeavor to further increase trading revenue by expanding the customer base and leveraging the strengths of both companies. So going forward, if there are opportunities that are good, we would like to go after them.

So we will buy them globally. So this is Hifumi and Mr. Fujino. is a great portfolio manager. I have met him several times and talked to him, and that's my impression of him. AUM is 160 billion yen. Because the performance is so good, You know, they're gathering a lot of money and their AM is increasing. So this is expanding the customer base through alliance with companies in different industries and continuing to further growth. So we will be forming alliances, SMBC or Takashimaya. And in banking business, we're collaborating with Japan Airlines. And I will talk about this later, but Yamada Holdings, Hikari Tsushin, Asahi Kase Insurance, we're working with motorcycle manufacturer Escrit. So these are all, you know, positive steps for us to realize our new securities initiative. And, in fact, we're moving ahead. We're making progress on this. The scope of free transaction fees at SBA securities is actually increasing. For example, you can see this pressure trading for large-scale margin trading have been changed. And also we have, as of October 1, 2020, this is the new zero commissions for both cash and margin trading. And we... Now, as of November 2nd, we'll be offering fee-free domestic ETFs that offer no free transactions. We will have four brands. So this is altogether 113 ETFs that we will be handling both cash and margin trading, which is the largest number in the industry. I have been saying this before, but you can see that we're making great progress here. And we will realize NEO security initiatives in three stages. So that in order to achieve this third step, SBI Securities is endeavoring to reduce the contribution of commissions to operating income to become less than 5%. Now, as overseas foreign equity, we can just simply increase our transaction. And also in SBI Securities, how much can we earn from cryptocurrency? Basically, they're in a position where they can offset it with other businesses. And this is true with any other business, but we think that whoever wins the share takes the greatest share wins, especially in the Internet world, winner takes it all. So it's really about how much share can we capture. I think it all comes down to that. And the customer base is important. With this backdrop of very large customer base, you can actually improve your quality. And because you're able to improve quality, you'll be able to increase your customers. So basically, this is the principle that works in place. And so it's a virtuous cycle that allows us to continue to expand our business and grow. This is the current initiatives to realize neo-securities initiatives. There's six I have listed here. So we just started off with a brokerage business as an online security business. In 2003, 71% comprised the commissions. And you can see that this ratio has been decreasing. In fact, this first half has increased slightly to 29.3, but you can see it's a nice decline. And online brokerage commissions for domestic stocks accounted for 19.3% of all brokerage commissions. So you can see a steady decrease, and we want to decrease to 5%. And we will continue to reduce fees as we monitor the situation closely. And you will wonder why we can do this without suffering our performance. But the key here is that we will keep maintaining our performance, you know, our financial results. In fact, we have demonstrated that already, right? So, for example, we are increasing our wholesale business, and we have been number one, basically, in IPO underwriting participation rate for the last few years. The number of companies that went public in that particular, so, for example, 27 in here, you can see that we are either underwriter here in 24 cases. And many of these companies may be small today, but they will continue to grow. So we will continue to keep this relationship as a lead manager so that we can increase our wholesale business, not only just for primary, but also in secondary underwriting as well. And that's the significance here. And you can see our track record. So, for example, regional power companies are issuing corporate bonds and they're asking us to do it. And M&A, we need to continue to strengthen this. This is an important business in wholesale. So we have, you know, M&A always comes with financing. So this is a very big deal. So we are basically striving very hard to increase this business here. And let's say that number of advisory contracts increased over three times if the number of cases in first half of 2018 was one. And thanks to regional financial institutions' support, SBI's financial institutions sales department has been really increasing significantly. So, for example, transaction volume of first half 2019 is one. Then the equity trading has increased 1.9. Investment trust has increased to 5.7 times. So you can see expansion in this department as well. We have been able to do foreign bonds as well. This is the investment trust balance of how it's rapidly increasing. You can see that big upstart surge. And we have achieved record high on a quarterly balance. And Robert Advisor, this is Wealth Navi. This is 64.1 billion just in AUM for a securities business. And if you actually combine the customer base with SBI NetBank, then it's actually 95.4 billion yen. And this is a business where we can get a lot of management fees, stable revenues, and also trading revenue. you can see that there's a significant increase, not in just FX-related revenue, but revenue from crypto assets. This is a 64.9% increase year-on-year. And with regards to foreign exchange and cryptocurrency, crypto assets. In various measures, we have been able to do different businesses. We have done CMD, B2C, we have done collaborative marketing, we have started funds for crypto assets. This will be done between 2022 and And you can see that co-managed branches with regional financial institutions have rapidly increased in terms of their accounts and AUM. Let's say there are six regional banks, and it's like we take four. So, excuse me, if the regional banks take 60%, then we take 40%. That's the structure. So... In total, customer deposit assets increased by 90 times as compared to October 2017. That's the new business. You can see that that's a track record for September 2020, 90 times. And we established a total of 16 branches with 12 banks to operate joint operations, starting with Tsukuba. And you can see many others wanting to join forces with us. And if you look at the customer deposit assets and their attributes, they do many structured bonds, very popular with the regional, rural, high net worth customers. And you can see attributions. You can see this nice breakdown. In 2020, October 2nd, we will be launching second branch with Sendai Bank. And in addition to that, aside from three regional financial institutions that are planning to open a second branch, a regional financial institution is nearly planning to launch another co-managed branch. With regards to IFA business, IFA stands for Independent Financial Advisor. It seems as though this is a pure play, a rakuten, that's how it's written, but actually we are overwhelming number one. If you look at the trend in SBI Securities, IFA Business, say you am locked in is 0.6 trillion. You can see we're 1.7 trillion. That's how different the gap is. You know, we never really announced it because there's many other things we wanted to announce, but that's it. But because it's perceived as Rakuten's main business, IFA is their dedicated business, their strength, I want to make sure that we're actually number one. So SBI securities foreign stock trading volume. Again, this is an area we want to continue to strengthen, whether it could be Biden or Mr. Trump that will win this election. Some people say it's Biden. Some people say there's great fans of equity trading who are Trump's fan. So we don't know how it will turn out. But in any case. I think transaction will be very active. And I think as long as there's transactions, that's good for us. So Amadei, you can see these are the areas we want to continue to work in. And this is the Neobank Initiative. Again, this is our collaboration with the Yamada Holdings. Yamada has large customer base with over 12,000 physical stores in Japan and abroad and approximately 60 million members. And we will be able to provide banking service, online banking service to Yamada. So this is a great strength for Yamada and for us as well. It's positive for us. So this is a sort of alliance that we want to be very thorough and be active. And we will be able to increase the corporate value of both companies and improve the convenience of the society. And net move, security has become increasingly important. We have implemented Smart Authentication Neo in July. It's receiving high regards. So I think that Netmove was a very good company. It's been a great success.