Sbi Holdings Inc Ord

Let me present the results of the first quarter. Please allow me to take off my mask. My name is Katsuchi. I'm in charge of finance and accounting at SBI Holdings. From this quarter, I will present mainly financial results for the first quarter and the third quarter. And as to interim results and full-year results presentation, Mr. Kitao will explain about them, including strategic aspects. I'm going to use the first 30 minutes or so to present the results, followed by Q&A. This is my first time to present our results, so please bear with me. Let's start with the other first quarter consolidated results. The revenue plus 68.9% or the 232,150,000,000 yen or the pre-tax profit down 28.8%, 23,522,000,000 and the profit for the period down 49.7%, 16,669,000,000 yen. Profit attributable to owners of the company And the miners, 2,360 million yen. So revenue-wise, it increased significantly. And this is because of Shinsei Bank becoming a subsidiary. And we hit record high. As to profit, it decreased significantly. And there are two reasons which are marked in the red. One of them is TP Bank. We have about 20% stake in TP Bank. And because of their stock price decline, we booked fair value losses of about 24 billion yen. Another reason is that the crypto asset business, we suspended the mining business in Russia and the crypto asset prices went down significantly. And also B2C2, other companies, business partners, they went under. And because of that, B2C2 incurred losses and the impact was about minus 9.7 billion yen. and as to profit attributable to owners of the company was minus 2.4 billion yen. The entities in which we have a big stake incurred losses, and that is the main reason behind this negative number. So TP Bank incurred losses. We invested directly, and also the Crypt Asset Business subsidiary. We have a large stake, so that big impact on the parent company's results. And now the comparison with the major securities companies in terms of pre-tax profit, I think that we are doing rather well, better than other companies in the current market conditions. And from the first quarter of FY 2022, we changed business segments. as we announced when we reported the last year's results. And we used to have three segments, and now we have two major areas, financial and non-financial. And the financial area has four different business segments.

The main purpose is to improve the transparency. And as a result, we are looking at the segment-wise results.

The financial services business revenue increased due to the Shinsui Bank becoming our subsidiary. And as to investment business, compared to last year, both revenue and profit increased. The TP Bank's 24 billion yen losses are included here. As to crypto asset business, as you can see in the big red numbers, Next, a business overview of core businesses. financial services business, and securities business, major constituent companies, SBI Securities, SBI Liquidity Market, and others. SBI Securities, the core entity, the consolidated results on a J-GAP basis, as you can see, those are the results. The equity market was unstable. So the revenue impact about the down 5% and the profit a little bit more than 10% negative impact. Now let's compare with the other major securities companies for operating income. including those companies which are not listed here. All of them struggled in the first quarter. Still, SBI Securities did relatively well. And this 12,161,000,000 yen of SBI Securities was the best number among those securities firms. And as to SBI Securities, the year-on-year comparison. So revenue decreased, but we could diversify the sources of the revenue that we had been working on. Rather than being too dependent on the brokerage commissions, we diversified the sources of the revenue which has been achieved. And as to the number of accounts, During the three months, there was a big increase to 8,829,000 accounts. And this is the retail market share. It was for the export and the margin trading.

Year-on-year basis, we could increase our shares.

On the other hand, although the trading value increased, we worked on decreasing commissions for the annual securities initiative, so commissions slightly decreased toward the end of the documents. You will see the online commissions was reduced to 12.6%. Online commission dependency decreased to 12.6%. And this is open interest credit and financial revenue. Financial revenue decreased slightly, still at a very high level. And this is one of the examples of the diversified revenue sources. And this is the balance of investment trust. The equity market was softened. But as to the investment trust balance at the end of the quarter, increased slightly, achieved a record high on a quarterly balance. And the investment trust fees increased. year, increased by 15.8%, becoming a very stable source of revenue.

In June last year, we allied with SMFG.

And more specifically, it is alliance with Sumitomo Mitsui Card. And one year has passed since the launch of this service. And the total amount of accumulated funds through the service reached 11.1 billion yen, and the number of accounts exceeded 300,000 accounts. So it is growing very steadily. And the point usage level is high, showing that this service is very well accepted by the customers.

So I talked about domestic stock earlier, but for foreign stock, we continue to see brisk growth. This is part of our diversification of earnings, and also for Q1, trading value as well as revenue both increased, and we were able to record record highs. Next is the real estate finance business, which is continuing to grow. So whether it be the organization, farm formation, Shinsei Ginko is now part of the group. Therefore, revenue... we believe we have been able to capture more growth opportunities. And regarding the IPO market, it has been soft, but SPI securities, the involvement rate continues to be at high levels. For the first quarter, we were at 100%, meaning that SPI securities was involved in all of the deals available. Compared to the number two company here, there is a great difference in our involvement rate. And we have also been doing corporate bond underwriting businesses in order to diversify our revenue base. So this has been contributing. So for the stock market and the crypto asset market, because the market deteriorated, we were negatively hit by those trends. However, in the first quarter, we also saw a rapid progression of the depreciation of the yen. For SPI's FX business, this was a tailwind, in fact. So for liquidity market and its operating revenue, at the end of the quarter, compared to the previous year, It went up by 1.5 times, reaching 6,858,000,000 yen. And then when you look at the next page, regarding the number of accounts, as well as the ranking of deposits in the industry, we have continued to maintain the top position. we have been able to capture opportunities that are available out there without missing them. Now, looking outside of Japan, for Thailand as well as in Cambodia, we have security subsidiaries. For Thailand last year, for 21 March, it already turned positive for the full year, but we continue to maintain being profitable. As for Cambodia, it is Japanese-affiliated, but it is positioned as a leading firm in the industry and is regarded highly. And we have been profitable in this business as well. So it's not only in Japan, but also overseas, where we are trying to diversify our revenue base. So for PTS, we have been focusing on this area as well. Japan Next Securities, it is the second largest trade execution market in Japan. And on October the 5th last year, we were able to reach a record high in trading value of $434.8 billion. So we have been able to well establish ourselves. And in April 2021... With Sumitomo Mitsui Financial Group, Osaka Digital Exchange was established jointly, and from June, it has started to handle and carry listed stocks and started operations as a PTS. So trading value exceeded $40 billion. Although the size is small, we have been seeing good growth come through. So that was basically about one of our core businesses of the financial services business, which was the securities business. The second pillar is the banking business, as you can see here. So the major constituent companies were the Shinsei Bank Group, SBI Submachine Net Bank, as well as overseas banks, including SBI Savings Bank. So first, regarding Shinsei Bank, which is here, on July 29, J-GAP results were announced by Shinsei GAP, which is summarized on this slide. So Latitude Group, they have a stake in this entity, and the stock prices as of end of June plunged. Therefore, on a J-GAP basis, 16.5 billion worth of impairment losses were recorded. and profits were loss-making, were turned to the red. However, if the impairments were not to happen, whether it be business profit or profit-be-profits, the progress that has been made on the performance has been quite steady. And Latitude, which was a reason for the losses and its stock prices now, ever since July, it has been exceeding and remained above the impairment line. So it doesn't mean that the $16.5 billion in impairment losses is locked in. And regarding the retail accounts and deposits in Shenzhen Bank and its trends, up until now, the number of retail accounts Thank you very much. We are working on various types of tie-ups through financial instruments intermediaries and bank agency businesses. So the examples of services provided is here, simultaneous account opening and suite account linkages and so forth. Basically, convenient services will be provided to the customer so as to expand the customer base. These are initiatives that are underway. Apart from that, for example, for SBI investment, which is one of the core subsidiaries. For those companies that it invests into, Shinsaibank can extend debt financing or venture debt. And the first deal was concluded the other day. Also, there are some tie-ups happening with MoneyWaza. And during this month, the first branch is scheduled to be established within the Shinsaibank branch. And also, structured finance and project finance projects where Shisei Bank has strengths, collaborations are underway. Also, for Atlas and SBI Auto Support, there's partnerships happening here, and also between SBI Remit, which is a company that's engaged in international money transfer, It only is able to do up to 1 million yen. And for those customers who want to remit more than 1 million, we'll be able to refer them to Shinsei Bank going forward. So these initiatives are underway too. For leasing, in the same way, partnerships are underway. So in various ways with Shinsei Bank and SBI, a variety of cooperation is underway. So on the next page, here's the second bank, which is SBI Sumishi NetBank and its financial results. On an IFRS basis, due to the higher rates, due to the bonds held, the valuations went down. Therefore, this is an accounting factor, but profits went down year over year substantially. So the income for this quarter was $440 million. However, on a JGAP basis, the impact is not present here. So on a JGAP basis, which is already disclosed, lending went up steadily. And as a business, it is doing well on performance. So whether it be ordinary revenue or ordinary profit on a JGAP basis, we have been seeing higher levels year over year. And here is the number of accounts in balance of deposits or the customer base. And for Q1, we continue to see good growth for both items. And here's the third bank, which is SBI Savings Bank. It doesn't carry any bonds, but due to the deterioration of the stock market, there was a decrease in price of securities held. So on an IFRS as well as a CAGAC basis, their performance went down year over year and profits decreased. However, for credit provisioning, proactive credit provision was done. Therefore, interest income has increased steadily. So this is a chart that we always share with you. We have continued to see more of performing loans and performing assets and delinquency rates continue to be low. So we hope to maintain the current level going forward as well.

For other financial institutions in Korea, Russia and Cambodia, we have subsidiaries operating in banking business. In Russia, given the environment of the market and local conditions, we have continued to focus on the prudent management of the business. For Cambodian Bank, in the last fiscal year, It turned into the black ink. And in this fiscal year, it is accumulating the assets. Now we have seen the profitable business in the first half. For the full year, we expect that bank to continue to be in the black ink. Next, insurance business. The major companies are insurance group and under which there are several subsidiaries. Next. And this is already publicly announced based upon the JGAP and ordinary revenue and profit, which are both increasing steadily. The performance has quite strong. And in terms of the number of enforced contracts, which has continued to grow steadily. The expected full year of the CAGR is 13.9%. The next business segment, asset management business, is here. And Morningstar in Japan, Underwood SBI Asset Management, and Rios Capital Works. These three are the major constituent companies in the asset management business. Given the stock and bond markets deterioration, there have been slight decline in profit in this business segment. But when it comes to the profitability revenue, we believe that performance has been quite stable. As you are aware, SBI and asset management group... There used to be three companies, SBI Asset Management, SBI Bond Investment Management, SBI Regional Revitalization Asset Management. These three companies are merged together, integrated together in order to establish the new SBI Asset Management. This took place on the 1st of August. Given this, back office management resources will be integrated in order to increase the efficiency of operations and profitability strengthening. And inclusive of these companies and businesses, SBI Asset Management Group has steadily increased its AUM and 3.8 trillion yen was achieved as of the end of June. and the private equity and investment trust altogether AUM exceeds the 6.0 trillion yen. We wanted to increase further and going forward August and asset management once procedures for making it a subsidiary, and then 1.3 trillion yen will be added, and the managing of the Shisei Bank's own accounts are ongoing, and then 10 trillion yen as AOM, as the long-term management target, is within our forecast. And the third investment business includes private equity business and SBI leasing service. These are the two major constituent companies. Because of the change in the fair value and also the sales of investment securities, there were profit and loss changes. Compared to the last year, 3.6 billion yen was recorded last year, but this year 6. 9.4 billion yen has been recorded. As you can see, in two listed shares, there were – in unlisted companies, there were quite a great contribution in terms of profit. But when it comes to the listed shares, last year, 7.4 billion yen negative number was recorded. And during this quarter – 15.1 billion yen negative number was recorded, so this has given the negative impact on the overall business. As I said, TP Bank in Vietnam, because of the decline of the share price of this TP Bank, and therefore write-down of about 24 billion yen had to be recorded in Vietnam market since the beginning of the year, over 20% decline was recorded in the stock market. And TP Bank, as you can see in this diagram, the loan balance or profit before income tax expense. As you see in these trends, there are no particular concerns regarding the performance. However, given the overall decline in the stock market, this has dragged down the performance of this bank. As you can see on the right-hand side, the market cap of TP Bank has significantly dropped during the first quarter. On the other hand, since the beginning of July, the market bottomed up, bottomed out. That's what we have observed in the months of July onward. Investment business, IPOs, the number of exits. Last fiscal year, there were 22 exits. For this fiscal year, as the full year forecast, we are expecting to see 40 exits. By the end of July, already eight companies have achieved IPO or M&A, all of which were actually IPO. Therefore, we believe that we have kept a good pace given the poor market conditions, but I think that the performance or trend in the exits has been quite well. And this is what we have already shown. Although from a different perspective, private equity and investment trust and the balance of which have been observed from a different perspective, we do not have a year-on-year comparison, but fintech service and blockchain and digital assets, and these are areas we are continuing to focus in order to increase the balance. This is the fourth business segment. This is the crypto asset business. Main constituent companies include VC Trade, B2C2, Bitpoint Japan after July 1st, and crypto asset mining businesses are included. Regarding the number, about 9.6 billion yen negative number was recorded in the profit before income tax expense. And during the first quarter, crypto assets variation significantly declined. Therefore, there was a significant loss of variation. And given the sharp fall in the value of the market and the crypto asset hedge funds went bankrupt, I believe that everyone is aware of this news given this market conditions. And there were some subsidiaries with exposure to such risk. Therefore, there was a negative impact of that. And there were such extraordinary temporary factors of 7.2 billion yen, therefore accounting for the majority of the 9.7 billion yen negative number. In Russia, there is a business conducting the mining business in Russia. And during the first quarter, we already stopped this mining business. We are selling the equipment as well as we are moving, taking measures to withdraw from this business in Russia. B2C2, although it carried loss, however, considering the daily trading volume and the number of customers, we believe that the performance of this company has been quite moving steadily. And the next one is SVIVC trade. The services need to be expanded further, but in terms of the number of customers, which we have seen the increase, And the number of currencies we have been dealing with, although we have limited only the major currencies to be dealt with, but in addition to that, currently the number of crypto assets handled is now 12. And through campaigns, we are trying to increase the number of customers. For Bitcoin Japan, which is a quite unique company as well, we decided to acquire the majority stake in this company from July 1st. Therefore, We believe that this company starts to contribute to the entire company's business performance from the second quarter onward and with the unique business. And it has quite the onward-looking, future-looking or consultancy. And through B2C2, liquidity can be provided. And then we are able to provide favorable conditions by bit point to customers so this is what we would like to continue to be proactive in promoting the last one non-financial business major constituent businesses include the former biotechnology company and the other businesses that are at the stage of investment for the future so all the other businesses are combined in this segment for both revenue and a profit we have been able to grow slightly over the previous year. And there are some topics to be provided. First, SBI biotech. Now, this company continued to make a profit with a milestone revenue. And during this quarter, $5 related business could be profitable as well. although it was negative in the last fiscal year. Last three, SBI Africa, which operates the used cars export, which was established a little over a year ago, and a young management team is running this business. Although the size of this business is small, but the profitability is growing, and the profit before the income tax expense, which is growing. So we believe that this interesting business will start to contribute to the profitability as well. in the future. And other pages are the reference materials. So therefore, this concludes my presentation. Regarding the presentation and the materials, if you have any questions, we'd like to receive some now.