Sbi Holdings Inc Ord

Thank you very much for joining us today at this spare holdings earnings announcement. Today, we have participants on site and those remotely attending this meeting, the total of about 160 attending this meeting. So we would like to take two hours or so to explain about the results. As to the numbers which have been already announced, the revenue, 763,618,000,000 yen or up 41.1% year on year. And the pre-tax, the profit, 412,724,000,000, up 194%. And profit for the period, 355,724,000,000, or up 264.8%. Profit attributable to owners of the company, 366,854,000,000, or up 352.4%. ROE, 49.4%. So, ear on ear, up 33.4 points. The order numbers are record highs. and we renewed the numbers record high in the previous year. So two consecutive years, we renewed record highs. And, of course, these numbers on the consolidation using or reflecting Shinsei Bank's numbers and some of the gain on negative goodwill and the periodic profit from January to March 2022 are reflected. And the full-year profit It's going to be incorporated from the year to end in March 2023. This is the comparison with Nomura Holdings, Dawa Holdings and SMBC and Eco Securities. Apple to Apple comparison for three years. Other companies are struggling year on year. They decreased the numbers. Only SBA Holdings recorded positive growth. So the negative, the goodwill, and again on negative goodwill, or January 2 March, the profits of Shinsei Bank, excluding all that, what were our results? And this page shows that the revenue up 29.1%, 698,685,000,000 yen, pre-tax income exceeding the 200,000,000,000 yen. So even without Shinsei, that it was over 200 billion yen, up 42.6%. Very good growth. And the profit for the period, up 52.3%, 148,516,000,000 yen. Profit attributable to owners of the company exceeding 130 billion yen and ROE 20.8%. With or without Shinsei Bank, our results were pretty good. fiscal year 27, 28, 29, 20 and 21, pre-tax income. And for the FY 2019, there's the shock of the COVID and we had some dip, as other companies did. But from there, we made a very strong growth. The profit level has been increasing over the five years. And then the Shinsei Bank's numbers were added. That's significant. That's what the FY 2021. Under such circumstances, reflecting our good results, we were upgraded by one notch. Single A-minus for SBI Holdings, SBI Securities, Single A. And the SBI Savings Bank in Korea was upgraded to Single A from Single A-minus. And that means that our funding cost will go down further. Even when the interest rate goes up, we will not have such impact for our funding activities. So that is for fiscal year, which has ended. What about this new fiscal year? What is our business outlook? Why we have this business outlook for this single year? for FY 2022. Because we are at the changing time in the U.S., interest rate is coming up, and Europe is following. And only in Japan, the interest rate is not raised yet. But weak yen continues. That will give damage on the whole economy. So it's just a question of time that the Japan interest rate will start to go up as well. So such changes in the interest rate market and Russia's invasion of Ukraine... the global economy is changing or shifting from globalism to more divided, not necessarily block economy, but more divided. And of course, when it comes to trade, that will be bad news, bad impact. And in China, The COVID-19 situation, Omicron, seems to be spreading, and the Chinese government is taking a zero-corona strategy, and that will have significant impact on its economy. So such extraordinary factors exist for the year to end in March 2023. So we should be flexible in our business strategies. What kind of business strategies do we have to take? Basically, sustainable and stable growth should be in our minds. And we should be more focused on that under current circumstances. And for fiscal year 2022 is the current focus on this page. And what about fiscal year 2023 for the year ending in March 2024? The situation might change when the economy slows down globally. And there is a possibility, I think, that the interest hike will stop and that will change the business operating environment. So these four things listed here will be the central part of our thinking. So strength and profitability through allocating business resources to banking and non-banking segments in anticipation of rising interest rates. Two, powerfully promote diversification of products and business areas and M&A strategy in order to realize new securities initiatives as early as possible. Number three, further accelerate overseas business development to utilize arbitrage based on differences in economic development stages. Number four, reevaluation of business segment imbue problems with the current segment and future business development. These four things have been decided. And naturally, when the interest rate goes up, the equity market is on the downward trend. So there's a shift from equity to debt and loan. If we stick too much to the equity for too long, but there are so many unicorns now, lots of profit was generated. It just happened. You might have happened to invest in these entities, but the other such age is gone. We need to have a clear understanding of shift happening. And Dow Jones... is coming down when the FRB started to raise interest rates and the Nikkei that is falling down, coming down as well. So what about strengths and profitability through allocating business resources to banking and non-banking segments in anticipation of rising interest rates? So expanding the weight of debt business anticipation of a shift away from a zero interest rate policy in the future. For example, this is first-tier regional banks. Interest rate goes up. Then this red part or brown part is interest rate. And then the net operating profit of the regional bank goes up, of course. It does. When the interest rate goes down, the operating profit goes down. And this is for regional banks. What about second-tier regional banks? The trend is more extreme. Probably in June and July, the 0.5 percent rate hikes could happen again, respectively, in two consecutive months. And in Europe, the ECB president said that the interest rate could be hiked in July. So, Mr. Kuruda is insisting that the rates will not be raised in Japan, but his term will come to its end in the near future, and the rates will also be raised in Japan as well. So, why a banking and non-banking business? Why are they promising going forward? We are anticipating this shift and our next move. The indicator, the total asset, 22 trillion yen. for SBI Group, both at home and abroad. Twenty-four billion for Concordia and Mabuki, 24.1 trillion. So, based on that, silently but leading the way, we have had anticipation. And those accumulated assets Of course, Shinsei Bank, when we look at Shinsei Bank, from January to March period, that's a responsibility of the previous management. And we will make some adjustments. We did make some adjustments. And from now on, we are coming into the stage where we generate profits. SBI Savings Bank... Pre-tax income, 38.9 billion yen. And we have almost 100% stake in this entity in Korea. In Cambodia and Vietnam, that's an extreme case. 32.1 billion last year. And for this year, probably close to the 45 billion or more than that. Pre-tax profit will be generated. And when we look at dividend to be received, about 15 billion yen of dividend will be received. So the future focus of equity market is not the point anymore. Predictable with a certain probability that we can predict the level of profit and dividend that we receive. When it comes to management, you need to see ahead, look ahead and take necessary actions. So based on an anticipation, we made moves. And some people said, why do you have to make investments in regional banks? Well, but the living in the negative interest rate environment, and it is in that environment that we invested in those regional banks. So it was rather cheap. And it's very likely that those entities will improve their performance. SBI Savings Bank in Korea. in buying this bank in 2013. Delinquency rate was 51.6%. I was criticized so much when I decided to buy this bank. It's stupid, they said. But in my opinion, it was a good timing to buy this bank. Why? But look at the lending rates, 13.41% of the savings banks. It used to be like 20%. And the commercial bank, 3.98%, about 4%. So the delinquency rate continued to come down now to 1.38%. And the performing loans increase. So, of course, there are profits. So since this acquisition, revenue and profit continued to increase, and we enjoyed that trend. And this is the bank in Vietnam. Because of the legal constraints, we wanted to buy more, but it should be less than 20% by foreign investors. So our stake is 19.9%. Already, the more than 200 billion yen valuation listed in Ho Chi Minh exchange. And their performance is getting improved. So in Southeast Asia, I want to buy more assets, non-bank and banking assets. If there are good deals, we will be interested. To be prepared for the next move, you buy when the price is inexpensive and develop the entity into profitable ones. That's my basic understanding. I mean, it's my basic thinking. So Shisei Bank had a very good purchase. It's a rare case of good purchase. The largest non-bank in New Zealand, UDC Finance Limited, this is a very good company. Auto loan, retail, and corporate, the asset-backed financing. And they have been increasing the profits significantly. Now Shinsaibank is part of our group, and we need to have more M&As of this type. 50 billion becoming 70 billion. If we stay on that level, it will be difficult to pay back 300 billion yen. So we need to think... big. And if you cannot buy it on your own, you can cooperate with some other entity to buy it together. For example, in Australia, it's a good company. Our investment ratio is only in 10% latitude, bought by Shinsei, or MB Shinsei Finance in Vietnam. 49% of investment ratio And in Cambodia, it's going to establish a new bank. And so the investment in such entity is important to make profits. To achieve sustainable growth of the SBI group, thoroughly utilize the Shinsui Bank Group's customer-based banking and non-banking functions. So when I talked to you how to improve Shinsei Bank. That is the main focus. But from now on, it's about SBI Group as a whole, how to utilize Shinsei Bank's management resources or assets to make the whole group better. And that will ultimately improve Shinsei Bank as well. That is the perspective that we need. And that should be well understood by the executives of Shunsei Bank. And by improving the group itself, the other group entities can be improved. And for that, various assets like Atlas, Rake and their customers should be well understood. What is the good matching with SBI Group's other assets and how to create the organic integration. And as to regional revitalization strategy, it's coming into the second act. And the functions of banking and non-banking of Shinsei Bank will be fully leveraged for this second act. when we bought the Shinsei Bank. Since then, when we look at SBA Group and Shinsei Bank Group, it is a very strong complementary factor. And so if we successfully integrate the two organically, then we can create something very good. Next. And we are going to do that, exactly. So, review Shinsei.

So, we have been looking into the customer attributes of Shinsei Group, and we have been looking into what kind of customers they have. We need to do a thorough research on this. Or else we won't be able to match the banking assets well. So for the customer base, they already have 8.587 million. Especially what's attractive to us is Aplos. Lake. Of course, Shinsei Bank itself. We need to dig deeper to see how we can match up their business with ours. We would like to utilize thoroughly big data in our group. We have been using big data already. In order to increase the number of customers, how can what areas of the business should we integrate in a stronger way? We need to look at what kind of customers are attached to certain businesses. We need to follow this by big data so that we can run a scientific analysis. It shouldn't be done by intuition. For example, this is an example of Atlas. They entered a partnership with Flyer the other day. And for the first time in Japan, they report users with Bitcoins based on the amount they spend. So they started offering the BitFlyer credit card under the partnership. And the number of applications surpassed 10,000 in just three days since the survey was launched. Of course, after a month, the situation may have changed, but in three days. they were able to reach 10,000. This means that there is a potential that there is strong demand out there. Of course, the crypto asset market, is it strong? Is it weak? Is it about to weaken? It is affected by these trends. However, whether there's good attraction at the beginning, from my point of view, is extremely important. And we do a lot of cryptoasset businesses, too. So how can we work with Ripple? We have a special relationship with them. Ripple's cryptoassets, cryptocurrencies, how can we connect that with this? A special partnership may be possible. Many things can be considered. So, SBI Securities and Shinsaibank began preparations for full partnership in financial products intermediary businesses. Various services will be made possible through this. And SBI Securities have real estate-related financial instruments and wrap products, and we will be able to sell these products to Shinsaibank customers as well. and we will have them make efforts to sell these products as well. SBI Securities will also become a bank agent, and the bank and the securities company will be seamlessly connected so that we can aim for a higher customer basis and deposit volume. SBI, Sumishin Net Bank, has been working on this from the past because we have different customer bases. And we can apply this between SBI Securities and Shinsei Bank, too. So, Act 2 of the regional revitalization strategy, I have been communicating to my people to thoroughly promote the triangle strategy. So, what is this? It is basically And we have our functions, and Shinsei has their functions, and the regional financial institutions has their functions. So we will form a trinity and thoroughly have each entity and each business grow. That's what we're striving to do. For example, in the area of structured finance, this is an area where Shinsei is said to have strengthened. And in reality, it seems that they do have strength in this area. And the scope of their business, it has been growing, which is rare for Shinsei. And furthermore, Social trends are serving as a tailwind, meaning solar power generation, biomass, or wind power generation, renewable energies, alternative energy, and various verticals. Since they structure finance, expertise can be applied for organizing syndicated loans and what we're trying to do. related to real estate projects, project finance would also be in an area where this can be applied. However, they don't have the sales power. They are weak, which we have. We also have a good customer base. We have predominantly a greater customer base. And also, the regional financial institutions, too, in each of their regions have an abundant amount of customers. And also, at times, as an institutional investor, they can also invest into certain products. So next is BankIt. This, at Applus, it was an app that was developed at Applus. And it's actually good. However, it wasn't being integrated in its use with the bank. So it's a wallet, basically. It doesn't include a bank function. But what we're trying to do is expand the regional banking gap. If you're at that function and use this app as a regional financial institution, it would be a very good function. They will be able to obtain that strong tool. So if you use something good in a good way, it's great, because they had the tool, but it wasn't integrated with the bank. And it makes sense for the first time when it's integrated with a banking function, but they were not able to do that. So next is the leasing business. For this area, it has grown into a sizable business, and it has been growing, which is Shoah Leasing. On a SBI group-wide basis, as well as with partnering with regional financial institutions, we believe there's more business opportunity to grow the business. So we need to ensure that the information becomes visible and available. And we have been able to build various pieces of information from the past that we can leverage going forward. Strategic Capital and Business Alliance partnered banks. Qualitative transformation is progressing. And by increasing their corporate value, it's expected to contribute to SBI Group's performance. So investment management, there's a lot of ludicrous articles about who is making a loss. I think those articles are nonsense. They were written by an amateur. What's more important needs to be noted. Investment yields used to be 0.24% in the past. But now the investment yields are up to and improved to 0.96% by changing the portfolio. When rates are up, There may be some losses, this part, but it's not going to go away. So what is the actual issue is the question. Steady income gain was low in the past. That is why the net interest income was negative. Our core profit was negative, and that's why some businesses went bankrupt. So with Asakura-san, we were talking about core net income that needs to improve. And that's the kind of portfolio that it needs to change to. So this is bank A through B. These are banks in which we have a stake of over 15 percent. The ratio of distribution is the core business profit, the income gain ratio, so to say. It's 35.2, 67.4, 75.8, and so forth. If they didn't have this, core business profit would be in the red. So if it falls into the red, the FSA will give out a business improvement order So this was the prime issue, especially amongst Tier 2 regional banks. If you left that alone, there was a potential that they were going to go bankrupt. So by making an improvement on this issue, regional banks, we would like to enable them to focus on their core business. That is important. our investment strategy at the SBI Group and the contributions we're making to the regional banks. So based off that understanding, a lot of funds have been attracted and a lot of banks wanted to open joint shops, co-managed shops with us. And we saw the number of those types of banks increase in number. Now we have 14 banks that co-manage 23 shops with us. Assets on their management has been increasing, but you can see that the earnings have not been dropping off as much. Shimane Bank, core business income, there was one-off profits included in fiscal 21 that was accounted for. In September 2019, we invested. So this is where their profits used to be. Then it made a huge improvement. And Fukushima Bank, Chikuho Bank, as well as Shimizu Bank, compared to when we made the investment, you could see that their core net business income improved substantially. So this is our rule, and this was our aim. But there is nonsense newspaper articles writing up something that is ludicrous. I think they need to do more studying. The journalists, if you wrote an article in the Wall Street Journal, someone would sue you and your career would be over. Fendai, Tsukuba, Doa Bank, Toa Bank, for most of them, core net business income has been improving and qualitative transformation has been progressing. So secondly, the move to new securities, we would like to ensure that we realize this. This is basically to eliminate trading fees for domestic stock transactions and other various fees that are currently incurred by investors. Right now, You can see it has gone down to 13.2% SBI securities revenue. The commission dependence has been falling to this level for domestic stockbrokers commission. It used to be 71.1% for commissions. This is on a quarterly basis. Now it's as low as 12%. And during this period of time, you could see that the average daily individual stock brokerage value has been increasing. SPS Securities will diversify its products and business fields by utilizing M&A to realize NEO Securities initiative at an earlier point in time.

So, target areas for M&As. I have referred to it a number of times on these occasions like this. FX, digital asset, M&A, asset management companies. So, we have invested in these companies. Today, you saw a press release on Okasan Asset Management. Furthermore, with regards to open alliance, so in particular, we both really implement mutual fund savings by credit card. We will work with Sumitomo Mitsui Card, Tokyo Card, Takashima Card, Aplus under consideration as well. And the effect of the line sync with Sumida Momiji card was quite effective, was quite strong. It actually exceeded 10 billion yen already. So this is a win-win situation. It was an alliance that benefited both sides. And the number of accounts has reached 260,000, an investment trust. And with, if you look at the year, excuse me, the investment trust balance at the end of the quarter, while the market is falling, you can see that the balance is actually increasing. It's 5.5718 trillion yen. If you look at investment trust fees, compared to FY 2020, 2021, we have increased by 42.1%. SBI wrap is also widely accepted by aligning with folio holdings. Within just 15 business days since the service launch, the asset under management exceeded 5 billion. SBI wrap, if you look at the number of applications, amount of applications we have accepted, please look at the trend. This is as of May 23rd, it's already 8.3 billion yen. Real estate finance, we are entering into the businesses here. SBI Money Plaza, they have been since the sales of real estate small-lot beneficiary interests up until now. So they have started this on a full-scale basis since 2020, and they have sold $7.775 billion in seven projects altogether. structured bond. I said you should stop structured bond. We should just lock it in. And when you become a professional like us, when you look at the circumstances, you can tell right away it's too risky. And I said we need to eliminate any possibility of causing trouble to the customers, which means that you need to act early Just because you make money, you don't take that risk. So then is it all right to lose profit? Well, no. So I just say replace your product portfolio. And that's where it has led to real estate, small-lot beneficiary interest in real estate. And also, we are endeavoring to increase the AUM and expand business in real estate funds such as private REITs. So, we work with different real estate finance companies. We have invested, acquired the shares. So, they make good products. And we want to sell that to the customers. We have been truly increasing, enhancing corporate business as well. We are now about 95 percent in IPO underwriting. And if you look at the number of us taking lead managers, and this is not just on the primary issuance, but also in secondary as well. And also, at Shinsei, there's a company called Shinsei Investment, so we together, Shinsei Corporate Investment and SBI Investment worked together to increase the number of IPOs that we handle. And also, without us financing the equity, we say, why don't you just borrow from the loans to those companies that are just about to go IPO? And they're just about to go IPO, so that's a great way to capture that opportunity. I wouldn't say 100 percent, but it's very close to that. So you lend money to those companies that are about to go IPOs, and profitability is good, and it's safe, less risk. Those are what we need to target. Corporate venture capital, we have spent 105 billion yen in total commitment amount. I said this earlier, we are industry top at 97.5%. And if you look at, there's 120 companies of all public companies between April 2021 to March 22. And we have 97.5% of them we have been working as underwriters. And there were actually 20 companies we have worked as a lead manager, which is record high. Even for PO, that's secondary, we had underwrote 25 companies. and POS, corporate bond underwriting as well. We have underwrote 43 corporate bonds in FY 2022. And recently, we have new public bonds. We have utility bonds. They have invited us to be the underwriters. And then we have FX business and crypto asset trading business. We have been starting them. That is why we have been able to see a nice growth of trading revenue like this. Furthermore, so up until now, we have been targeting retail customers to do foreign exchange services. From now on, we will also target corporate customers like institutional investors, business corporations, financial institutions, and high net worth asset management companies. And we are now offering OTC trading or currency-related derivatives. So this is new products, new markets that we want to pioneer. So if you look at foreign stock trading, if 2018 is 1.0, then it's, if 2021 is 6.3. So, and the trading value has now increased by 6.6 times. Trading volume has increased by 6.6 times. And you can see the significant number of accounts with the realization of EEO securities initiatives. But we should be able to handle about 11 million. So we should be okay until 11 million accounts. I hope that we can handle up to 15 million for sure by the end of this year. And so. And we want to achieve 30 million accounts, including M&A's in the future. And I think we can use a different system to deal with this. We need to adopt a system that is highly safe and has sufficient capacity and capability so that we can process many transactions without causing trouble. Our customers' number of accounts is growing by 12.3% per annum. If you look at compound annual gross CAGR between March 2009 to end of March 2022, Nomura is only 1.4, and we are 12.3. So you can see that we have been growing quite rapidly. Now, this is the acceleration of overseas business development in order to utilize arbitrage. So if you look at the Asian countries, ASEAN countries, economic growth and market potential, So if you look at the productivity increase, the larger the population, then the economic growth can be expected as well. So in a country like this, Japan, where we see declining population, unless you improve the population, productivity, you will not be able to achieve greater economic growth. And also, if you look at the southern regions, you see that GDP per capita is also increasing as well. And this is an area we need to continue to advance. In Cambodia, there's a bank called Liho Bank. We have acquired a medium-sized micro-fonds company and made it into a commercial bank. 70%, this is growing quite rapidly. It went profitable right away. We also have investments into online broker in Thailand. So in principle, primarily in ASEAN, And we have AUM of 20.5 percent. Japan is 43.3. So we want to invest in high-growth economies. It's really about how much you invest in there and how much business you carry out. You don't really need to go and invest in areas of low growth. So low-growth economy to high-growth economy, that's where the transition needs to take place. So it's the other way around from how water flows. So, we can consider different types of arbitrage. So, for example, we can issue privately placed bonds by SBI Legal Bank. And, you know, it's a U.S.-denominated bond, one year, 1.1, 4.1 percent yield. So, this is sort of the business that we can run. Or SBI Royal Securities, again, this is located in Cambodia. So, among the Japanese brokers, We are the only Japanese broker who has a license to underwrite in Cambodia. And again, we will be the lead underwriter for Cambodia's first listed bond issuance. And we can bring this to Japanese regional institutions, and we can monitor this company. And we know that this is government contracts, so this is stable. So we can say that we can give high-yield issuance. So this is business segment change, considering issues with the current segmentation and future business development.