Sbi Holdings Inc Ord

Let us begin. Please allow me to take off my mask. Thank you very much for joining us today in the venue and online for this meeting presenting the results of a spare holdings for the nine months of the fiscal year ending March 2023. My name is Katsuchi, in charge of financial and accounting. The presentation will last for about 30 minutes, followed by a Q&A session. starting with the other consolidated results over the nine months until the end of the third quarter. And we are going to round up some of the other figures. The revenue, 685 billion yen, or 30% up year-on-year. And the pre-tax profit, 48.1 billion yen, minus 86.9% year-on-year. Quarterly profit, 36 billion yen. minus 89.4% year-on-year, profit attributable to owners of the company, 8 billion yen, and minus 97.8%. Last year, when the Shinsei Bank was consolidated, there was negative goodwill, which was close to 200 billion yen, at quite a big impact. Without that one-off element, the results would be those numbers in parentheses. First, the consolidated results as to the other revenue. The financial services earnings grew significantly, so the all-in-all 30% plus. As to financial services business, because of the negative goodwill, down 58.4% at 113.6 billion yen. This negative goodwill with the other consolidation of the Shisei Bank and without that impact, up 46.1% year on year. That's the result of the profit for financial services business. The other negative... Factors as follows. First, negative goodwill. And another thing is in the investment business. In some names, there was some variation losses, especially the TP Bank listed in Vietnam. and some other overseas listed names, there were some devaluation losses of about 46 billion yen. And in December, the BOJ changed its policy partially, and the yen appreciated increased. And because of that, about 15.7 billion yen affects losses incurred for the overseas private names. In the yen basis, there was losses, not so much for the other original local currencies. And as to the crypt assets. The mining business, about 9 billion yen losses. And the B2C2, because of the hedge funds or the business partners, some of them went under. And because of that, 17.3 billion yen losses. And the profit attributable to owners of the pyramid, down 97.8%, 8 billion yen. Those names incurring losses, because we had direct investment in them, so the impact was rather big. And this is performance by segment. Financial services business. With a negative, the goodwill, minus 58.4%, but without it, plus 46.1%. And the asset management business, revenue increased, but profit decreased. The investment business. Both revenue and profit decreased. And the crypto asset business, there's some decrease in the profit. As to investment business, fair value decline was significant and there was no cost there. So minus 2.6 billion yen was hit for the revenue itself. And as to investment business, 33.2 billion yen minus for profit before income tax expense. But at around the same time last year, about 100 billion yen of profit existed. So it's not the collapse of portfolio, but partly it is the reaction from the previous years. As to crypto asset business, as I mentioned earlier, the stagnant market and the bankruptcies of exchanges, resulted in minus 17.3 billion yen. And this is the quarterly segment-wise results. The financial services business and asset management business, first, second, and the third quarter, the revenue increased. While the investment business and crypto asset business, struggling, fractured greatly. The pre-tax income, as you can see, for financial services business and asset management business, it has been good. And for investment business, crypto asset business, there were fluctuations and struggling. On a consolidated-based result, before talking about consolidated results, let me talk about the current status, present status, factors contributing to full-year results. There were two of them, first of all. January 27th, the Morningstar disclosed this information. Morningstar has decided to return the brand Morningstar to U.S. Morningstar Inc. And we are going to receive about 80 billion yen in this fiscal year from Morningstar Inc. There is no additional cost for the return, so the $8 billion itself will be the gain. And the second factor is TP Bank fluctuating greatly, and we are going to make it an equity method company. The stake of 19.9% was increased to 20%, up by 0.1%. In the fourth quarter and onwards, TP Bank will be an equity method company incorporated into the financial business segment. So the timing, raising 20%. At that point, 4.7 million yen of gains will be booked and fixed, and so the fluctuation factors will be alleviated to produce in a very steady manner. Second, the current status factor. The dividends from subsidiaries... It is a rather considerable amount, and I'd like to explain about that. SBI, SBC Net Bank, SBI Savings Bank, TP Bank, Morningstar Japan, SBI Insurance Group, about 10 years have passed since the inception of the investment in those entities. and we receive a considerable amount of dividends from those entities. As to this table, as to SBI's mission at the bank, 30 billion yen in total of the benefit, actually the dividend was paid, and SBI has 50% of it, so the 15 billion yen that is received. SBI Shinsei Bank, and Aduhi that we acquired recently. We also expect dividends paid by those entities as well. In addition, IPO of subsidiaries, currently Leos Capital Works and SBI's MachineNet Bank, they filed for the listing at GDSE last year, and SBI Biotech and SBI Alaplomo are preparing for the listing. So it depends on markets, but once they are the public companies, then there will be some capital gains expected, some recovery of the investment. Last year and over the last two years, M&A results. And we are going to remain aggressive for M&As. The recovery of invested money and also the money coming from outside will be combined for aggressive M&A activities. The shareholder returns and its basic policy. It remains unchanged. The total amount will be approximately 30% of pre-tax dollar profit in the financial services business. Year-end dividend is yet to be decided, but the financial services business is going very well. As to shareholder benefits, we will continue to implement them. You can choose ALA or XRP. Business overview of core businesses, starting with financial services business. Revenue increased and profit decreased. Without the one element of the negative goodwill, the plus 46 point, the 1% that is for the profit, and the securities business, there are two things. First, SBI securities results and the NEO securities initiative. SBI securities consolidated results I'm not going to read numbers. Please look at those numbers. Some increase in revenue and profit decreased. That is for J-GAP basis. Some comparison with other major securities companies. year-on-year basis compared to major securities firms, operating income and profit attributable to owners of the company, SBI Securities, are number one. And other securities firms are decreasing their profit by two digits, double digits, but the decline is limited.

Next, we compare here against online securities and second-tier and mid-tier securities. And the same trend can be applied. Other companies are struggling, whilst we are doing well. Here, we show SBI Securities' breakdown of consolidated operating revenue. We use this as a way of measuring diversification, and on an ongoing basis, the breakdown is well-balanced. That is the way we view it. And for online... stock trading and our dependence, it has went down even more. When it comes to online domestic stock transactions, it went down to 11.7%. And we believe the NIO securities initiatives are working well. As for our market share... For individual stock trading and individual margin trading, we have been able to maintain 45% or more. And for the number of accounts, we have the most in the industry at 9.5 million plus. And ever since COVID, especially, growth of the number of accounts has been accelerating. For new securities initiative, we expect our accounts to increase even more. And also for Nisa, on an ongoing basis, the number of accounts are growing. Other companies are stagnant, but SBI Securities still sees growth. And for new customers, as well as beginner investors, the proportion is very high at 74%. So you could see we are attracting more. So with this as an entry point, we would like to expand our customer base so that it will lead to future business opportunities. That is our stance. For IDECO, once again, the number of customers on a cumulative basis is top in the industry and diversification of our revenue base. One of them is we're showing here foreign stock trading value and revenue. It has recorded record highs, whether it be trading value or high levels of revenue as well. And we also began offering a substitute security service on top of U.S. dollars. And by starting this service, we are striving to increase our services. We hope this will turn into another earning source going forward. So for the FX business, trading revenue has been growing because of the strengthening of the FX business. For trading revenue, for crypto assets, it has been gone due to the reorganization of the group, but FX-related revenue as well as foreign currency bond-related revenue has been growing, so numbers continue to be good. So for FX-related businesses, The dollar market, since April last year until October last year, the yen depreciated substantially. And then from December onwards, the yen strengthened. So volatility became extremely high. We were impacted by that, and SBI liquidity market was able to see operating revenue reach record highs. And FX trade, which is under the umbrella, it also did well. And looking at this comparison chart, whether it be size or growth relative to other companies, we have been showing overwhelming strength in our business. Here we show investment trust balance. The stock market has been relatively weak, but when it comes to investment trust balance, we were able to reach record highs, which is shown on the left-hand side. On the right-hand side, we show the trends of investment trust fees. Basically, SBI Securities saw a steady investment trust fee growth because of higher investment trust balance. And this page shows our alliance with Sumitomo Mitsui Card, which is a trust accumulation service. And we also saw the transfer AUM for SBI Rep for accumulated funds. We started this a year and a half ago. After one and a half years, as of January... We have seen the funds exceed $16 billion, and the number of accounts have exceeded 450,000 accounts. And for SBI RAP, it's only seven months since we were able to start the service, but we have been seeing it exceed $20 billion in assets under management already. Regarding the tie-up with Sumitomo Mitsui Financial Group, last year in July, we received an investment from them. and SMBFG became a shareholder. But for personal digital services, we have been strengthening the services we offer. Specifically, with SMBC and SMCC, they offer an online securities function called Olive, and SBI Securities will be offering the online securities function. And we will provide highly convenient securities-related services for SMBC and SMCC apps. And going forward in five years, we would like to reach 2 million accounts in three years. We would like to reach set card savings of 50 billion yen in three years. And we would like to strengthen our alliance in doing so. Here we show our wholesale business. For POs and corporate bond underwriting, we have been seeing steady expansion. From April until December last year, there were 76 listings. Except for one, we were able to be involved in 75 of them. And also for underwriting, we were able to see 11 companies as lead managers. Here, in diversifying our earnings base, this is something new that we're doing, which is to strengthen the real estate finance business. On January the 31st, we announced a capital and business alliance with Creel, which is a company with strengths in asset management focused on real estate investment. It's a crowdfunding business, and we acquired approximately 20%.

And by doing so, we can expect a very good effect. The development and origination and sales of real estate will be provided as services at one stop. New Securities Initiative and one of the initiatives that we are taking It is not only about the revenue sources diversification, but the very strong systems is needed. That's why we went into the capital business agreement with Simplex Holdings. We are going to set up joint venture with them. An outline of that entity. is to develop and operate systems for SBI Group, including SBI Securities. We already have business relationship with Simplex and SBI's customer base that is expected to expand furthermore. And Simplex, the very trustworthy partner, we decided to go live with them. Financial services business, banking business. First, there are three banks. The first one, SBI Shinsui Bank, and its results. Today, SBI Shinsui Bank is announcing its results, and this is on JGAP basis. Each department is doing well, especially wholesale business expanded, increased greatly, so both revenue and profit increased. And The profit attributable to owners of the company is 40.4 billion, exceeding 35 billion yen per year forecast for FY22. And the contribution to IFAS basis by SBI Shinsei, 44.7 billion yen is the other contribution. So not only on Jacob basis, but on IFAS basis, SBI Shinsei Bank is playing a very important role. This is its customer basis, the number of retail accounts and the deposit amount. Up until becoming a member, number of accounts was on the decline. But once they become a member of the group, it hit the bottom and it's now increasing. And as to the amount of deposit after the consolidation, it increased by more than 3.3 trillion, reaching 9.7 trillion yen as of the end of December. Collaboration between SBI Group and SBI Shinsei Bank is progressing. One example is SBI Rub. In October, we launched the service, and as of the end of December, 3.3 billion yen of the deal value. With SBI Money Plaza, after Ikebukuro and Umeda, the Ginza branch started its operation on February 1, 2023. reinforcing the services for high net worth customers. In the wholesale area and the collaboration there, The wholesale itself has a big momentum at SBI Shinsei, and the collaboration with SBI Group is also progressing, and we are looking at very good results as well. The loans originated, the SBI Shinsei Bank amounted to 270 billion yen at sales to other financial institutions, that is the nine-month cumulative basis, and the 99.3 billion yen with 43 deals associated This is to offer the loan, the services. And Aruhi, that we acquired in November last year, they are also collaborating with the bank. The flat 35 is the major product, but the long-term interest rate is on the rise, so they are facing some tough situation. But in 42 prefectures, they have 140 shops, so they have a very strong sales channel. The SBI Shinsei Bank Group, they have very competitive products, but the sales channel is limited. So by collaborating with AHI, we expect a good cycle, good synergy. Next, SBI's Mission Net Bank. This is on JGAB basis. the housing loan business increased, lending increased, ordinary revenue, ordinary profit increased. As I mentioned earlier, We optimise the capital level and at the same time we would like to improve ROE. That's why in January we had the dividend of 30 billion yen and SBI received 50% of it. And SBI, the Sumishin Net Bank, an alpha-spaced result. Because of the interest rate situation, fair values are on the decline. So year-on-year basis, down 73.1% to 1,690 million yen. And the major driver there is as follows. Because of the change in fair value, We are currently considering and discussing with SBS Mission NetBank and the other audit company to come up with measures to deal with the impact of the fair value changes. And their number of accounts and deposits are increasing. Their housing loan is increasing steadily. and now exceeding 8.5 trillion yen of cumulative housing loans. Thirdly, SBI's savings bank. On the IFAS basis and on the KGAP basis, the profit decreased. There are two reasons. In Korea, last year, the central bank in South Korea increased its interest rate, pushing down the interest margin. And also in that circumstances, the interest rate burden on the other borrower increased, delinquencies increased, and the value of collateralized real estate went down, and the loan write-offs increased, pushing down profit. But there's some good news as well. With the fiscal year 2022, the cumulative losses in the past were written off and the other profits are being accumulated to pay out 9.9 billion yen of dividend. So exactly 10 years have passed since the savings bank in Korea became the member of the group. Not only profit, but also on the investment basis, they are on the other different transition states.

So here are some KPIs for a savings bank. So for assets, it is on an increasing trend. However, at the end of the year, we had been slightly conservative in our lending attitude. So because of the breaks we stepped on, the balance went down slightly. Delinquency rates are slightly up. It used to be 1.44% as of September, but in December it was at 2%. However, compared to the past, it is sufficiently at a controllable level. That is our view. Next is the third financial services business, which is the insurance business. For this business, here is the consolidated performance of the insurance group. In two days, on the 9th, results are going to be announced. So today it's a flash report, but both ordinary revenue and ordinary profit went up. So both items went up. As for enforced contracts, we've been seeing a steady increase. The next segment is the asset management business. For this business, we saw an increase in revenue, but due to bonds as well as the deterioration in the stock market, we saw a decline in income. As I mentioned at the beginning, for Morningstar Japan, because of the brand return, we are expecting to recognize approximately 8 billion in profits as of Q4. And the name of the company is going to change its name to SBI Global Asset Management. And in conjunction with the return of the brand, we're not going to transfer the business. It's just going to be a return of the brand, meaning we're not going to be able to no longer use the name Morningstar. And in return, we'll be receiving 8 billion yen. Currently, for the valuation business, the current financial services business, including investment trust evaluation, it will continue as wealth advisors, and also Shinsei Investment Management plans to dissolve through an absorption-type merger with SBI Asset Management as the surviving company. So we will be converting our resources so that we can reduce excess costs. So for assets under management, we continue to see a steady increase. Shinsei Investment Management has been added. That's one reason why. But overall, the AUM has now reached 4.5 trillion. So for the PE and Okasan Asset Management and Rios Capital, the other businesses, if you add them all together, group assets under management has now exceeded 7.5 trillion yen. And for the AUM of 7.5 trillion, we would like to exceed 10 trillion by fiscal 2024. That is our target, which is unchanged. Next is the investment business. For this business, like I mentioned at the beginning, it is minus 33.2 billion yen because of the changes in fair value in profit and loss. 46 billion minus due to TP Bank and others and 15.7 billion due to FX. So at the revenue level, it was down by 2.6 billion and PBT was also down as well. For TP Bank, the market in Vietnam... It went down by more than 20% from the beginning of the year. But when you look at the performance of TP Bank, as you can see on the right-hand side, revenue and profits both have been going up. So it's not bad. It's actually doing well. However, the market tends to weigh on stock prices, and therefore stock prices were weak. And we used to own 19.9% in TP Bank, but we raised it to 20% so that we could treat it as an equity method affiliate. And also, for the first time, dividends will be paid. So it's not just profit contribution, but it will be able to contribute from a funding point of view as well. That is our expectation. For the number of IPOs and M&As last year, it was 22 companies. And for this fiscal year, although we are in a weak market, we are expecting 25 companies to either go through IPOs or M&A. So for the CVC fund, on a cumulative basis, $133 billion is the commitment amount. And fund number two, has been established as well, and we continue to see steady growth. For a crypto asset business, for this business, once again, for Q1 and Q3, due to bankruptcies of our counterparties, BTC2 recorded a loss of $5 billion as of the third quarter. And for the mining business, Because of sluggish crypto asset prices, loss of 9 billion was recognized. And also, we have completed the withdrawal from the mining business in Russia. And for B2C2 and current trends, we are seeing an improving trend. And we're not sure whether this trend is going to continue from Q4 onwards. That is hard to assume. And this is about the business. It's not just major currencies, but also minor currencies as well. SBI, VC trade, and Bitcoin has been increasing what they carry. And for the non-financial business, which is the last segment, last fiscal year, it was minus 8.7 billion. Due to some extraordinary factors, the losses were great. But this fiscal year rather reflects our underlying business. And for the bio-related business, we have SBI Biotech, first of all. And cumulative basis in Q3, we recognized a loss. However, R&D has been progressing steadily. And for 5A related business, in COVID-19, Sales expansion has run its course, but we continue to see it operating in the black. And with that, in our promo, we will continue to prepare for an IPO. Final slide is example of business for the Web3 era. SBI traceability is an entity that uses the blockchain platform and whether it be products, It is a company that engages in traceability and lately Japanese sake to determine whether they are authentic or not. There are needs for technology. Therefore, at famous breweries, they have decided to implement this technology. So we would like to put importance on old and new business opportunities and work hard on a group-wide basis. That concludes my explanation. Thank you very much.