Sbi Holdings Inc Ord

Thank you very much for joining us today. Despite your tight schedule I understand that in addition to the audience in place there are about 130 30, the participants on the online. Despite the COVID-19, the pandemic, thank you very much for joining us today. And thank you very much for your support to our business. Without further ado, I would like to move on to the presentation of the financial results of the first nine months. As you can see, the 362,218,000,000 yen is the revenue, up 27%. Profit before income tax expense, 93,738,000,000 yen, up 44.8%. Profit for the period, 69,225,000,000. Profit attribute to owners of the company is 60,810,000,000. They are up 52.2% and 62.3% respectively. All of these numbers are record high. And the annualized ROE for the first nine months is 16.2%, again, record high. So this is the comparison with major face-to-face securities companies. SBI Holdings here using IFAS at 93,738,000,000 yen. This is the pre-tax income and ROE of 16.2%. And Nomura is going to make an announcement on February the 3rd. And Daiwa on a JGAB basis, 83,390,000,000 yen up 26.8%. ROE is 6.2%. And SMBC Nikko Securities. 77,880,000,000 yen or 108.5% with ROE of 8.3%. The SMBC Nikko Securities, the pre-tax profit... is 77,881,000,000 yen. So this is upper-to-upper comparison. The 21 years have passed since the establishment of our group, and we have finally reached this level of the profit. The question is whether the profit level is sustainable, is continuously growing or not. That's important. To know about that, let us look at the segment-wise numbers. The financial services business is growing significantly with 61.2% increase with 61,892,000,000 yen for pre-tax income. Asset management business, almost the same year on year, but still they are maintaining very high level. Biotechnology, healthcare and medical informatics business, still running in the red, but reducing the red numbers significantly. Here, the shareholder benefits, as you can see here, XRP and using other first products from which you can make your choice. So the more than 10 units or more, or more than one product. hundred shares or one unit or more. There's a difference here. And now factors behind the positive earnings and the measures taken to realize sustainable growth, starting with financial services business. So here again, For each line, from the revenue to all kinds of incomes, record highs. For all of them, especially for profit attributable to owners of the company, increased as much as 107.1%. This is on the JGAP basis. And as to the number of accounts... We are making double-digit increase at 11% from the end of the year ending in March 2009 and December 2020. The compound annual growth, 11%, and Nomura is at 1.5%, and that gap will be widened. Only in seven months after achieving 5 million, we achieved the 6 million number of accounts in November 2020. And already in December last year, we reached 6.3 million or 6.39 million. Let us look at the share. It's a very striking share. And for the sales of individual stock trading value, we have the share of 43.1%. And for the sales of individual margin trading value, SBI share is 45.2%. So it is increasing significantly. So on that backdrop, we will continue to be aggressive. we will not be satisfied with the current status. We will press forward with our measures. And among our measures, I would like to focus on the near securities or near securitization. So how are we going to realize that? In the U.S., Robin Hood said, has built a strong base of customers. Charles Schwab, the E-Trade, the Amelie Trade, they are making the situation where the deregulation happens. And sooner or later, it will happen in Japan as well. And if that's the mainstream of the era... We'd like to be the first to achieve it. And that is the only way to be the winner in the competition. That's my belief. So towards that goal, we are making utmost efforts. And we are making very steady growth or progress diversifying the sources of revenue. And when it comes to the domestic share, we are decreasing the dependence on the Japan stock. And for that, we have been engaged in some M&A activities. And we have achieved the numbers that we have just seen and the regulation of the commissions. And 500,000 number of accounts was achieved with the new mobile securities. And with that entity, we would like to deregulate the other commissions. And as to the wholesale business, we are focusing also on the upgrading. of the business and also the robo-advisor services or stock type business have been expanding and also the IFA, the independent financial advisor to grasp needs of face-to-face transactions has been upgraded and the commission, the revenue other than the online is on the increase as well. And I'm going to explain about all that. First, the diversification of revenue resources has lessened the dependence on domestic stock brokerage commission income from online trading. Our target was below 5%. And as of the third quarter, it went down to 17.7%. The third quarter was very good. The market was very good. And with a good market, of course, the commission increases, brokerage commission increases. And it's very natural to expect that the competition of commission in revenue increases. But as you can see here, it is declining to 14.9%. And the other in fiscal year 2020, the 21.4%. And then coming down to 14.9%. And that's the rate commission composition. And the targeting at 5%. doesn't mean that we would never make the commission zero before reaching 5%. Once we made a decision that we don't need to be concerned about this type of commission, then we might make the commission zero before we reach 5%. Now, the common stock trading, online trading, and other tradings, we have been diversifying the revenue sources. So this is SBI liquidity market, FX. Market was now with the SBI securities and SBI, the VC trade and SBI FX trade. have become subsidized. SBIBC trade is for the crypto asset. And the $36,593,000,000 is the total for the first nine months until the end of the first nine months of the year. and toward the end of the fiscal year, it will continue to increase. So the important message here is that we are seeing a very steady increase in making a decision whether the commission should be zero or not. We have to look at the trend of the numbers. Now FX, the business, SBI Liquidity Market and SBI FX Trade, they are the simple aggregate of the pre-tax of the other entities, 7,603,000,000 or up 78.4%. And that's for FX business, for crypto asset exchange business, 6,695,000,000 yen or up 83%. So we are We have been diversifying the revenue of sources, and those sources are growing. SBI liquidity market for FX trading. And we have 31 banks in this trading for the SBI liquidity market. And we can provide very competitive rates. and the financial institutions. For example, five, as many as five financial institutions from Korea are trading with us. And as to the number of accounts for FX trading, the 1.452 million and the deposit assets 284.7 billion yen. And this acquisition of B2C2, I'm very happy with this acquisition. We would like to, well, we have been increasing our stake. And in December 2020, we acquired 90% of the stake in the company. So B2C2 was good. I mean, it was good for B2C2 and it was good for us. It is a good example of win-win. The B2C2's monthly average transaction volume increased 6.5 times since 2019. And B2C2 develops business globally, including in the US, Europe, and Asia. So we aim at being a real global player. And for that purpose, B2C2 has become a very important component. To be honest with you, at the beginning, I was not sure I was worried a little bit. At the beginning, I had a rather negative thought about it. That's why we increased only gradually the stake in the entity. But now I'm very confident. I'm confident to say that it was a good buy. Now for B2C2, the operator, the crypto asset, the trading services, and we are going to start the CFT as well. and also the Crypt Asset Lending Service. Crypt asset-related businesses will continue to increase. We started from brokerage business. Therefore, as a comprehensive securities entity, we need to think about expanding the wholesale business. Fortunately, the SBI investment, 100% subsidiary of the group, exists for us. It's a venture capital. So investing in venture capital, And of course, those companies want to do IPO someday. And of course, when that happens, we expect them to use SBI securities for their IPOs. And with continuous monitoring, we know those companies very well. So we have a very good relationship with the companies that we invest. And so it's likely that we become always the lead manager. So starting with IPO, and then PO follows, and equity followed by bond transactions. So business wisdom is diversified as well. Underwriting business, has also been reached to a good level. And now we have the entity in Singapore and Hong Kong established. And M&A advisory business, which is closely related to the IPOs, and we have established financial institutional sales department as well. And so we have been building these elements. And here we have the period from April 2020 to December 2020. And 66 companies were listed during this period, among which SBI has been engaged in 61 of them. And we are actually the lead companies for 11 companies IPO'd. And for the POs, we had 13 POs underwriting the business, which is the increase of 2.9 times. And as the corporate bond underwriting business, including the utility bonds and the public bonds, they are also increasing. As to the Financial Institutional Sales Department, We have been working on regional revitalization, building relationships with the regional financial institutions, and building business as well. We had a broker business with 436 companies from July 2016 to December 2020, and the equity trading increased by 8%. It was 2.2 when the transaction volume for nine months fiscal year 2019 being the one. And investment trusts, 2.4, the transaction volume for nine months fiscal year 2019 being one. Some people say that what is the gap? benefit for doing business with the regional banks the reporters and the analysts some of them make such comments I have a very clear picture But it would be most convincing to show that picture to others and that my picture is being realized. And those who think that it is not expected, some reporters, some analysts did not expect it.

So if we are to benchmark in fiscal year 2018 Q3 as one, this fiscal year in Q3, the M&A advisory business went up by 3.1 times. We only have a little bit over 10 people, but we have increased headcount. When there's good companies available and we think that we can go ahead to acquire them, we are looking for opportunities both domestically and abroad to We believe this is an area that we can address, and it's an area I addressed during the Nomura Securities times that I served. So this is a great business for us. For SBI Securities. Thanks to NISA, we have been able to accumulate investment amounts. And also, the investment trust balance at the end of the quarter has been growing quite substantially as well. Also, for robo-advisors that generate stock commission, Wealthnavi went to market. But out of their total AUM, approximately 31% is accounted for by our SBI Securities as well as SBI Sumishi NetBank. That totaled $73.8 billion. So it's proof of how large our sales capabilities are. For IFA... the business. Like I mentioned earlier, we are focusing on this area too. And for Q3, compared to last year's Q3, we've been able to grow by 2.2 times. And for AUM, according to some reports, we were at 1.7 trillion compared to Rakuten's 0.6 trillion as of September. And foreign stocks have been booming and growing lately. DriveWealth is a company in the U.S., and we've invested in it. And by utilizing this entity, we would like to address the mobile arena as well. Of course, IT system issues are what we are currently working on, but it is a good company indeed. So we would like to implement this as soon as possible so that for foreign stocks, we can promote it even more. Furthermore, for property, the brokerage business for real estate, last year in October, we acquired a 35% stake in Ascot, and we turned it into an equity method affiliate. With this stake, we are now in the property business, and it has been a good foothold for us. So finance and real estate. From the customer's point of view, for those customers who receive financial services such as buying stocks or buying bonds, high net worth customers definitely own property as well. They buy real estate. To that end, we believe that this business can generate synergies. So for money managers in the U.S. when you visit them, Cash management, equity, bonds, as well as real estate are areas that they cover. So having all of these available for the first time, you are able to engage in true money management, engage in true asset management, that is. So as the first phase of our alliance, we have sold a real estate fund. SBI Securities and Money Plaza will be the main sellers of this fund. And for Japan Next, last year on October 1st, the TSC went down and Japan Next gained attention once again as an alternative market You never know when the TSC is going to go down again. And daily trading worth three trillion yen is going to be wiped out. And that is not an excuse. That should not happen. And we are trying to strive to become a global financial market if that's the case. The market should not fail or go down. So that's why we've been gaining attention in Japan Next and in various places. I have been talking about it. I've been talking to LDP members and their financial commissions and so forth. And we're going towards the direction of having Japan Next as an alternative market and legally. The 10% of TSE or one stock, if it exceeds 20%, it needs to turn into an exchange. There's all these rules that are nonsense, that are baseless. I don't know how they came up with these numbers. That's what's happening now. And this hasn't changed. I hope this can change as soon as possible. And that's why I'm taking action. By doing this, what's going to happen is institutional investors, although the system needs to change, the trading cost will come down substantially. Institutional investors, they are interested with money from the general public. So the performance of the general public will become better through institutional investors and from the broker's side. trading costs will become far cheaper. According to the estimate by Japan Next, SBI securities, by utilizing PTS compared to TSC, the trading costs can be reduced by 90%. And this can be returned back to investors. That is our way of thinking. So it needs to be investor-centric or customer-centric, and that's what we need to do. So this kind of mindset will enable investors to come with you. And from the fiduciary duty point of view as well, in the U.S., for example, there are several markets. And the most beneficial markets trade execution needs to take place, or else they will ask you, what are you doing? So you need to enable best execution. And that kind of legal as well as system-based transformation needs to happen. And if this does happen, we will be able to contribute to the new securities initiative. So for the customer base, we are trying to thoroughly expand the customer base and we are gaining good share. But we think that it is still insufficient. Like I mentioned earlier, our target is 50% market share. So in order to do that, we established SBI Neo Mobile Securities as well as Neo Trade Securities. And for each of the entities in their own territory or domain, they will have relevant customers. For example, in the case of SBI Neomobile Securities, their customer base will be first-time investors and relatively young people. And they will enable a service that will allow them to join their services easily. And the opposite of that is SBI Neotrade Securities that target day traders or people who do trades regularly. on a daily basis. Those are the target customers they're going after. So from the trader segment to the high-end segment, we basically would like to have a mechanism that covers a broad range of customers. So for Neo Mobile Securities, the other day in January, we accomplished half a million accounts, and we have continued to see steady growth. For Neomobile Securities and the customer base, 51% of the customers are in their 20s and 30s, and this is what we have originally targeted. And Sumitomo Mitsui Financial Group has decided to engage in a capital alliance with SBI Neomobile Securities. For NISAP. For brokers, this is the most important strategic product going forward. We have been able to surpass Nomura with regards to accounts, and we boast the highest level of accounts in the industry. When you look at the attributes of our customers, 70% of new customers are beginner investors. They account for 70% of our customer base. And for Junior NISA, out of total accounts, we have acquired 30% of them. And also for IDECO. And from May the 19th, 2017, we have made administrative fees that are completely free of charge. And as of the end of November 2020, which is last year, we have reached 411,000 accounts. So for Q3, we have reached 466,000 accounts. As of December fiscal 2020, Compared to March 2016, CAGR has been 47.2%. So the customers feel a need in this market, and we believe that this will continue to grow even more in the future. So with IDECO, For individual defined contribution plans, the cumulative number of customers is the highest in the industry for us. For Money Plaza, with regional banks, we co-manage shops And this has been extremely successful and it has continued to grow. So we have 16 co-managed shops with 12 banks. For Shimizu, Jikuhou, and Mie, they will have second stores because they tried out one and it turned out to be successful. So that is why they would like to open a second one. So for the co-managed shops, total assets under management has reached 65 billion yen. In order to swiftly achieve the NEO Securities Initiative, as well as to expand the customer base, we will continue to actively utilize M&A as a tool. So for Rios, Capital Works, Taotao, SBI, NEO Trade Securities, which used to be called Lifestar, and B2C2, these are the acquisitions we made. And for FX, cryptocurrency, M&A, and crypto asset market makers, I have continued to mention that we would like to go after these types of companies, and we have made those acquisitions, and they have contributed to our performance now. With regards to the banking-related business, SBI Holdings Equity Method earnings of SBI Summary Net Bank based on IFRS for nine months, fiscal 2020, was $5,540,000,000. And the JGAAP announcement for financial results is scheduled for February the 5th, by the way. Here are the changes in SBI Sumishi NetBank's ordinary income after start of operations. So this is where we are as for March 2020. It was at 1, 2, 6, 3, 4 as of the third quarter. And we are going to exceed this level substantially. And we believe that we're going to exceed 20 billion in the end. For the bank, here, due to negative rates by the BOJ, it was hit hard in performance. However, now we have been seeing this upward trend once again, and it has been ongoing. So for the number of accounts as of end of December... it has been $4.32 million. And for deposits, the balance has been $6,107,000,000. And as of January 27th, 4.37 billion accounts, and the deposits balance now stands at $6,222,000,000. So it easily can increase by $100 billion. That's where we are right now. We started off in 2007 for the bank, and then we are now at this level. Looking at this slide, we compare against regional banks. And this is ranked in the order of deposits. And it ranks Bank of Yokohama first, followed by Chiba Bank. Bank of Yokohama and Chiba Bank has more than 100 years of history. So they are leaders in the regional bank industry. We started off our business in 2007, but we are already number 17. We saw an increase of $715.4 billion in deposits. So this is what we're comparing against. It's only about the Bank of Yokohama that has been able to increase their deposits by $700 billion. So if we're able to continue to grow at this rate, we could probably be in the top 10 in three years' time, or we might be able to accomplish this even faster. So in a mere 13 years, the deposits grew to $6.1 trillion. We look at the growth factors and strategies to achieve sustainable growth in the future. So I think group synergies, pursuing them, are important. Or in other words, having a corporate ecosystem and engaging in mutual evolution so that substantial growth can be achieved. That is a policy I set forth when we established this entity, and we have been able to realize what I said. Also, when you think about the banking industry in the future, it's about... turning into a NIO bank. So NIO bank. Some people may have heard this before, some may not, but I would like to elaborate later on. So synergies with SBI securities, if this weren't in place, Asumishi NetBank probably wouldn't have grown this far. Because we have SBI securities, and because we have created a mechanism like hybrid accounts, The bank account and the securities company account, you can go back and forth. And that is why we've been able to accumulate the amount of deposits made. This was a large factor in growing the business. Furthermore, housing loans played a part as well. Mr. Maruyama is well-versed in housing loans. Started off with SBI mortgage and then changed to Aruhi and then we sold it off. But we decided to engage in housing loans in a full-fledged manner at the bank, and we have been able to grow well. But the current Aruhi was sold off then after. So currently, the bank continues to grow. The amount of housing loans originated has reached more than $6 trillion as of last year, June 26th. And when you look at the balance... $4,755,000,000 is what we have achieved. And when we started to handle housing loans in September 2007... And in January 2012, we started a banking agency business for Sumitomo Mitsui Trust Bank and offered internet-exclusive housing loans. So housing loans are long-term, so the balance between short-term and long-term will collapse, and it won't be sustained. So we decided to switch over to a fee business. The loans are originated elsewhere, and we received the fees in return from Sumitomo Mitsui Trust Bank. Then after... we launched Mr. Housing Loan Real, which is a banking agency specialized product. And also, we started to offer long-term fixed interest rate loans as well. So for the banking agency specialized products, Mr. Housing Loan Real, when Mr. Kawashima was the vice president of the banking business, this started to be offered, and it was vigorously expanded. So in this way, the size of the housing loan business, I told Mr. Maruyama that they should continue to expand their acquisitions.

So what is Neobank Initiatives? So it's about customizing business services of partner companies. Also have access to ancillary banking functions from SBI, SMEC, NetBank. So SBI, SMEC, NetBank works with partner companies to create a framework by which services can be used both smoothly and comfortably. So that's the concept. of Neobank initiatives. So, for example, we have GEL and Neobank. I'm not going to explain this because I have explained this a number of times in the past, but we collaborate the Yamada Holdings. It will start from spring 2021, Hikari Tsushin Group, CCC Group, ePark Group, And partner with regional financial institutions. So we are promoting this one after another. And also we will accelerate the expansion of customer base in local regions through cooperation with regional financial institutions. I always talk about open alliance. And regional revitalization strategy is open alliance. We, regional financial institutions, form an alliance to build a win-win relationship. And in different areas we are able to expand our customer base. Let's look at the insurance business side. So the actual fixed number will be February 10th, but we have seen that we have increased by 27.3% year-on-year in ordinary revenue, ordinary profit, 89.7% increase, and profit attributable to parent is 63.7% increase year-on-year to 782 million yen. We are very proactive with MND, especially in SSI, small amount and short-term insurance. And that's where we're focusing our resources on. So it's not just about acquiring and including them in our group. So they have formed a growth track, but this will be stepped up so that their growth rate will accelerate. So after M&A, they will continue to grow. So that's the situation today. So we will continue to be proactive in M&A's So it says active use of M&A has contributed greatly to growth of SBI insurance group. Our growth rate starting from 2012 to 2019, we have the annualized basis is 16.4%. Life net insurance is 13.2%, but they're still at this level. Rakuten is actually decreasing. That's the situation. So we are acquiring SSIs, and we are exercising synergy with non-life and life insurance. So these are now starting to function really well. Also, in this area of insurance, we are implementing technology after another. In particular, blockchain technology is has been implemented in our group. And each company is making efforts to implement it as quickly as possible. So, for example, our partner, R3, has a blockchain technology called Corda, and this will be utilized in different businesses. So, for example, here, We have decided to use Corda platform for agent insurance solicitor management platform system for SBI Nihon SSI. We will use Corda to build this blockchain platform and we'll be able to improve efficiency and standardization. If we can standardize it, we can actually roll this out to other companies as well. So we can actually sell and market these technology products. We will proactively promote alliances with various companies to further expand our customer base. So SBI Insurance has decided to work with 58 companies, of which 23 are financial institutions. So these 58 companies are actually adopting SBI insurance products and applying to sell them shortly. With regards to SBI life insurance, 26 regional financial institutions, of which 11 are regional banks, have decided to adopt or start sales SBI life insurance products. And it's not just regional financial institutions. Each of these SSIs are aligning with these different companies and increase their customer base significantly. And business area, other than the three main businesses of the financial services, which contribute to the consolidated results of the group. For example, we have SBI, FinTech Solutions. They're listed on cost stack. I thought it was COSPI, but maybe it was cost stack. COSPI was the other one. So our group companies are all here. So this is like NASDAQ. Basically, these are listed on cost stock in Korea like this. And the performance is growing steadily. And SBI Remit, which is a theory of SBI FinTech solutions, They have been using MoneyGram network, and they have now utilized the DLT of U.S. Ripple so that they can have this overwhelming competitive edge. They're already using this in Vietnam, and they have plans to use in Bangladesh, Cambodia. So they have different plans. And if you look at the total transaction and amount of remittance, in particular, I want to highlight the fact that our market share is increasing every year. This is extremely important. They are providing remittance service of GCash, a mobile money service operated by GXI in the Philippines. With regards to asset management business, as I have said earlier, in terms of pre-tax level, it's unchanged, but sales have grown by more than 20%. And you can see that SBI Savings Bank have generated more than $20 billion. So they are contributing significantly. That's plus 67.6%. When we acquired the company in 2013, it was almost bankrupt. And some people said, why do we buy such a company? Much of the media have criticized us. And I thought, wait, just wait and see. So now you can see that it has come to this level. In terms of profit loss from the change in fair value and profit loss on sales and investment securities, you can see that many of the unlisted securities are now listed. So that is why we have basically very little in unlisted securities and much in listed securities. With regards to our PE business... The investments that we have been focusing on, for example, Infantech, are now in the timing in which they go do an IPO. And in fact, the value when they go public compared to when we invested initially has been very high. So they have good valuations. So you have companies like Kako, Kokopelli, Kaizen Platform, Wealth Navi. They have all successfully done IPO. Because we're also investment, we are now managers or we're lead managers. Both SBI Securities and SBI itself have been making money on this. And, in fact, I want to emphasize the fact that PE business is not just short-term, just this year, because you may wonder that. But even after 2021, we're expecting to see many IPOs. So, for example, in FinTech... We have investment of 78 billion into 171 companies collectively from the two funds. And we have co-investment with SBI Holdings of a total of 117.5 billion yen. But you can see this outcome. And we had SBI, AI, and blockchain fund, approximately 52.5 billion, which we invested, and co-investment from the holdings of 39.5 billion yen. So in that sense, the parent, is able to generate a lot of money from this when it goes public. So as you can see, in 2021, January and March is zero, but April, June, we expect one. But between January and March, there were two that didn't exit through M&A. And between July and August, expect three. October, December, 10th. In 2022, total 44, 23 total 47 will do an IPO. That's our assumption. So for the time being, this will continue to bear fruit. And it's not just for the time being. We need to continue this forward. fund such as 4 plus 5 fund and the business accession fund and expand investment in industries preparing for the future. So we will continue to launch this