Sbi Holdings Inc Ord

First of all, thank you very much for joining us despite your tight schedule and very hot weather. Thank you very much for joining us. This is Kazuchi, the company CFO. I would like to take about 30 minutes to talk about numbers and recent topics, followed by Q&A. Let me begin. First, consolidated results. As you can see here, I'd like to read the rounded numbers. The revenue, 302 billion yen. And the pre-tax income, 43 billion. Profit for the period, 32 billion. And profitable to owners of the company, 24 billion yen. and the revenue and the pre-tax profit was record high as first quarter. And on a year-on-year basis, it was a significant increase. As to the revenue, we could be a little bit short of 1 trillion in sales at last year, but as one quarter, we exceeded 300 billion, so it was a very good start. And as to profit attributable to owners of the company last year, TP Bank, the valuation losses, and the other crypt asset business incurred losses. But in this first quarter, it was a big positive profit, ROE 9.08%. This is annualized number, and that's a little bit short of 10%, but we are very close to our target. Now, the comparison with major securities groups. The pre-tax income, SBI, is number two, following Nomura. And for the other profit attributable to owners of the company, we are number two, following Mizuho. The market was good, so every securities group did a good quarter. And you might be thinking that the SBI's recovery was not so sufficient, but the same period last year, the market was so hard, and we did very well still last year. And this year, the market is good, and so we could grow our results very steadily. As to the quarterly income, after the other tax, Mizuho's number is greater than the pre-tax. So this is not exactly upper-to-upper comparison. So Nomura and Daiwa are the ones that we can compare more upper-to-upper way. So the FY21, 22, and the first quarter, FY23. As you can see, The three companies at the profit level, in terms of profit level, those three companies are competing with each other. Now, this is the performance buy segment. The financial services business, this is mainly securities business, both revenue and profit increased. Also, the estates related business and the equity method company, TP Bank's business contributed to the earnings growth. Asset management business and investment business. As to these two businesses, both revenue and profit increased. Crypto asset business. As to you. The market aggravated and some of the business partners went under, so 9.7 billion yen in negative. But for this year, the market is better and the more focus on risk management produced about 500 million yen positive profit as a result. The new segment started. Since then, the record highs were achieved in many items. Now, business overview of each business segment. Financial services business, and the core there is the securities business. And here we have 51 billion yen of the operating revenue, 18.3 billion yen OP profit, NSVI Securities with the NEO Securities Initiative. the very steady progress to the start in the first half of FY2023. And this is the SBI securities. I do not read those numbers, but the operating revenue and the other four, the income revenue numbers, we recorded new highs. And here we have major brokerage companies up or to up for comparison. As Mike mentioned earlier, Nomura, SBR, and Daiwa. And then a bit with distance, there are other securities firms, but the top three remain the same. The most important KPI customer basis, and this is the graph. The number of accounts continues to grow reaching 10 million. And with NEO Securities Initiative, the number of accounts is expected to grow further. But NISA, so the regime is going to be improved, and with that tailwind, we are already increasing this business, and it is very likely that we will increase it and grow it further. It is a very effective tool to acquire new customers and we will remain focused. The same for IDECO. The number of enrollees is increasing, and the balance of investment trust is also increasing. The number of enrollees as of the end of April, exceeding 1 million. The individual type defined contribution, and we achieved or exceeded 800,000 as of the end of April. So here we are growing as well. Now, SBI securities... the structure of revenue. So there are zero commissions. We are going to start it during the first half of this year. And at the same time, we have to diversify our earnings. In the first quarter, SBA Securities increased both revenue and profit. Business expanded with diversification. That is our understanding. Last year, the same period, the market was not so good, so it was a tough condition. But we struck a good balance, and now the diversification has further improved. So in terms of diversification, we are becoming more steady. And online... The equity at the trading commissions, about 6.4 billion or 12.5%. So the numbers are low. So from this slide on, the sales structure and the breakdown. At the first, the domestic stock brokerage trading at the valley increased with the good market and the commissions along with that increased.

So this is Money Plaza, SBI Shinsei, and regional financial institutions and the trend in how we have been doing in terms of co-managed stores. You can see we have seen significant growth both in asset under management and number of accounts. There are four co-operated stores with SBI. But you can see that we have exceeded more than $100 billion in balance. So we are diversifying our revenue sources here. And this is not just shares. We're looking at also individual stock options offerings, which started from September. These are alternative investment methods. This will also contribute to diversified revenue. This is open interest credit balance and financial revenue. The market was good, which resulted in a high level of open interest credit balance, and financial revenue also remains at a high level in line with the credit balance. Again, this contributes to diversification of revenue. This is trading income. We have FX revenue and we have others, for example, revenue through foreign currency bonds. These are the two main pillars. You can see how it has trended over the five years. And again, this has been trending at a very high level. With regards to FX-related business, in Q1 this year, we have seen a significant progression in weaker yen, more than 10 yen in just one quarter. As a tailwind, with regards to FX-related business, it has done quite well. For one quarter, it has recorded a record high operating revenue of 8.747 billion yen. And this slide compares with FX specialized companies. You can see how it has trended in terms of OTC, FX revenues. Each company is growing, but SBA liquidity market is at the top. In terms of accounts, and this is the customer margin deposits. Again, you can see that we are at the top level in both of these indicators. And this is the balance of investment trusts. Market was good. Thanks to that, we have seen a significant increase in balance, again, record high quarterly balance. With regards to investment trust fees, in line with the balance of the investment trust, we have seen an increase of plus 15.1% year-on-year to 2.271 billion yen. And this is accumulation of investment trust again. This is MFG. These are our alliance partners. And through their partnership, we are promoting accumulation through credit cards, and this has been growing steadily. This is 89.1 billion yen on a monthly basis. You can see that this is how it has been trending. So, again, it's increasing. And this is on the right-hand side, you can see number of accounts in AUMBC for SBI rep. We have been capturing the needs of the customers well, which has allowed us to grow. This is wholesale. SBI Securities has always had a very high percentage of IPO underwriting share. Again, this underwriting share continues to remain high. IPO, there were 27 in Q1, so SBI has been involved in 26 of them in terms of underwriting. Who are the players? You can see the top five, SBI, Mazi, Monix, Rakuten, SMBC, Nikko. These are the online players. If you compare this with the data from just a few years back, and we have the similar slide, but you can see it has changed quite significantly. This is the banking business, which is the second of the financial service business. We have three entities, but I want to start with Shinsei Bank. Group. And today, Shinsei Bank has announced their day gap result, and this is a summary of what they will be announcing today. As you can see, increasing revenue and profit by a significant margin. And the reason behind that is that And you can see that from the bank's financial results as well. But they have been able to increase their interest margin, and also they have been able to increase their dividend income. Their retail business have improved. Those are the reasons why they have been able to increase their operating revenue. In last Q1, FY 2022, this profit before taxes and profit attributable to the owners of the company was negative because there was an impairments loss that was recorded on Latitude Group, which is an Australian company. But those were sort of the Q1 extraordinary items. But if you look at the parentheses, 1QFI 2022, so these are the numbers if we were to exclude those impairment losses. But even then, even compared to that, without those special items, you can see that they have outperformed the previous year. Now, what about IFRS numbers? At the bottom, you can see that pre-tax, this is approximately $5.7 billion. $5.7 billion. This is about $9 billion difference between the JGAP. And there are multiple reasons behind that. So, for example, this includes one of them would be, for example... fair value of marketable securities. Again, this has an impact. So J-CAP, OCI, this is not a loss. But in IFRS, because it's reflected on PL, it will be booked as losses. Now, in the J-CAP, this is a profit. But in IFRS, this OCI is considered as a loss. So this would be one item. And in terms of the upfront fee for the loans, We mentioned earlier that the corporate loans are growing. So when there's a loan, you receive upfront fees. That's a custom in J-GAP. This will be booked as a revenue on an off basis, but you have to do a pro rata on IFRS basis. So this is the gap, and those are some of the reasons why there's a gap. Those are the two representative factors, but, of course, there are many other factors that affect this difference here. But it just so happened in the Q1 there were multiple reasons for this gap between J-GAP and IFRS. So each year you will see – it doesn't mean that there will be less profit on IFRS compared to J-GAP. It could be, as in the past, seen the other way around where there were greater profit in IFRS than J-GAP. So it depends. So if you look at it on a four-year basis, we do not believe that there will be too much difference between IFRS and J-GAP. For example, if you look at the financial results from the previous year, there wasn't that much of a difference. Now, this is number of accounts and deposits at S&P, I should say, bank. So it underpins the aggressive operating assets. And so, again, in terms of number of accounts and number of deposits, you can see that it has been growing since they have become SBI. And that's for the total amount of deposits. They have become part of the SBI group. They have been growing. But for the number of accounts, they had slightly decreased before they became part of the group. But now they're growing once again. And as for collaboration with SBI Securities, these are what we have done. I will not read each one of them, but in terms of retail business, the second from the top. For accounts opened at SBI Shinsei Bank at the same time as opening one as SBA Securities, approximately 3,000 applications within one month since the start of the service has been realized. So you can see great synergies already being realized here in terms of corporate business. So if you look at the second bullet point from below, so regional bank participating in loan deals arranged by SBI Shinsei Bank, So we have already worked with 33 banks, an amount of $104.5 billion in distribution track records. So you can see that we have been able to build a track record here. In the bottom, we have debt finance and capital loans, SBI investment investees. So again, we are beginning to see substantial results here. So we're now beginning to generate a lot of synergies here. So we have been able to realize a win-win relationship.

The second... ...SBI Solution Netpunk. On the left-hand side, the JGAP basis, the mortgage business continues to grow. So we're on year plus 10.2%, about 8 billion yen of ordinary profit. And on the IFOS basis, on the right-hand side, last year, interest rate went up. And because of that, there was the valuation, the losses increased. So the last year was abnormal. Compared to the previous year, the increase here is more than 300%. This bank IPO-ed at the end of March, and equity ratio changed. It was 50-50 between this machine and SBI, but now it is 34.19%. Still, it is making close to 2 billion yen profit contribution. And this is the bank's balance of deposits and number of accounts since the inception. So it continues to grow, and 6.35 million, and about 8 trillion yen of the other deposit. And the third one is SBI Savings Bank in South Korea. On the IFRS basis, year-on-year basis, the significant decrease year on year. The reason is as follows. The spread decreased and also the reserve increased. Last year, interest rate went up significantly in Korea. The funding cost became a big burden. And so the delinquency happened, so the reserve had to be increased. But more recently, macro data increased and the real estate, the price and the decrease that is now modest. And also by vintage, the loan performance, the comparison shows that the current performance is not so bad. So we are seeing some sign of improvement. And currently the spread, the compression, is now getting smaller. Maybe it is hitting the bottom. So from the second half of the year, we can expect improvement of the results. As to the rating, they are very stable. That's the outlook. And the changes indicated since becoming a subsidiary and as to the loan operation is conducted very carefully. So from September, the three consecutive quarters, total asset continues to decrease. As to delinquency, it's up, it's now 4.1%. And now there is a limit on the sale of the delinquency loans. So we cannot decrease such loans as we want. We are not optimistic nor pessimistic because we are seeing some good results. We'd like to continue to watch carefully. Loan operation should be carefully operated. And this is the SBA insurance group, and these are preliminary numbers. On August 9th, there will be final numbers. And here, ordinary revenue, ordinary profit, profit attributable to owners of the company. They are all increasing in a very steady manner. The number of contracts, as you can see, every time we make a presentation, it is growing very steadily. It is growing steadily. Now, asset management, the business, the results. In November last year, SBI Okasan Asset Management contributed, and year-on-year, both revenue and profit increased. SBI Global Asset Management Group is increasing the AUM very steadily, close to 5 trillion yen. It continues to grow. Including that, SBI Group's AUM, as of the end of June, about 8.4 trillion yen. The breakdown is as follows. About 5 trillion for the SBI Global Asset Management and SBI Okasan, Deus Capital, SBI Global, and private equities. Together, about 8.4 trillion yen. We have agreed with Mung Group, based in the UK, to form a joint venture to manage alternative investments. So going forward, we'd like to provide new opportunities of investment that end easily. And with that intent, we started this discussion. And agreement with Man included, we are going to increase the current 8.4 trillion yen to 20 trillion yen over five years. We'd like to exceed 20 trillion yen level within FY2027 So that is the current plan, including the various lines of products. And now investment, the business, the private equity and SBI leasing, both revenue and profit increased year on year. And this is the profit from the change in fair value and on sales of investment business. At the same time of last year, there were some private numbers. Private names were good, but more than 50 billion yen, the losses were incurred. As you can see in the text, the TV bank listed in Vietnam about 24 billion yen of fair value losses incurred. And because of that, though, we incurred a big negative number. But from February this year, the 20% equity stake was obtained, and so now they are equity method company. So in the future, we will not be impacted by the change in the share prices of the entity. And both the listed and unlisted, the names I expected, were contributing to the increased revenue and profit. And this is IPO NMAS. The age in total and for the full year basis, it is 38. So we are making good progress. And this is asset under management, about 730 billion yen of asset.

Crypto asset business. Last year, at the same time of the year, we have seen deterioration of the market, and we have seen bankruptcy of some of our business partners, and we had minus $9.7 billion in losses. Based on that, we have been very thorough on our risk management, and we have been very control-oriented. controlled our risk and because we have also seen recovery in the market and we have been able to record a profit of 500 million yen which is not a large amount but we have turned around so as you can see in the red ink if you look at the deposit net income for the most recent result only Bitcoin Japan was the only major crypto asset exchanges in Japan that was positive in net income. at that time, but we have now been positive again as well. Now, this is the customer base for crypto asset business. If we look at two years ago, compared to that, we have grown by five times. And we invest in VC trade and Bitcoin in Japan, and we have the licenses through two entities like this. So if you add them together, we are number five in the industry. And VC Trade and Bitpoint is diversifying its services and crypto assets. And you can see the lineup is becoming full with more assets being handled. This is the staking service of the two that are offering. We're putting a lot of emphasis here. Again, balance is now also growing very significantly. So this is the last segment, non-financial business. So this is bio Web 3.0. In Q1, this was minus 445 million yen. So this is bio-related and healthcare performance. If you look at Five Ala related business, Q1 was $266 million, but this quarter is $788 million. So again, we have been able to increase our profit quite significantly. SBA Ala Promo, this is actually negative, but we have some upfront investment for IPA-related expenses. And SBI Biotech. They are aiming to be listed in 2024 and 2025, respectively. So this is the situation of each of the segments. And the slides following that is starting from April 1 to today. These are sort of the key topic summary of each of the businesses during that period. So number one, this is the second tender offer for SBI Shinsaibank. At the end of June, anti-UOB itself has been completed, and the shareholding has increased from 50.04% to 53.74% at that time. And we will now enter into the process for them to be delisted. This is the timeline until the squeeze-out completion. So SBI Shinsei Bank Secretary-General Shareholders' Meeting will be held on September 1, 2023. And this shareholders' meeting will vote on the squeeze-out. And we have SBI, DIC, and RCC. We have already agreed beforehand that we will approve the squeeze-out. So we believe that this will progress without any issues. So after the extraordinary shareholders' meeting on September 28th, they will be delisted. And then as for the purchase of the fractional shares, it will be down at the same price. This will be 2,800 yen per share. And when we do a share, excuse me, squeeze out, DIC has a little less than 7 billion shares. We will purchase their shares, and that will be 9.3 billion yen approximately. But this will be treated as a repayment of public funds. So they have about 350 billion yen in public funds remaining. But we will be paying back some of the public funds, and that will be about 330 billion. And so we will be able to enhance the synergies between Especialist Bank and SPI Bank. and we will also be able to promote regional revitalization more aggressively. So at the end, we will be able to repay the public funds at the appropriate timing, and I hope that we will be able to resume the discussion with the related parties at the appropriate time. Now, this is SBI Money Plaza and Shenzhen Bank's joint branch operation. They have just began and opened the fourth joint branch operation in Oklahoma. And just within one year of the start, they have already achieved 100 billion yen in AUM. So it's very steady. Now, this is basically expanding the product line. in anticipation for the launch of new NISA. We have BlackRock, Vanguard and Invesco. We are tying up with these global asset managers so that we can contribute from savings to investment. And this is a different lineup. So you can see that each of these group companies are offering different types of products, and it's been adopted as part of NISA. And just by combining this, it will become diversified and low-cost portfolio. So again, this will be I think very sought after by the retail investors with great needs for that. This is a new initiative. This is a joint establishment of venture fund with National Technology Group of Saudi Arabia. We're looking at jointly establishing a venture fund. We have entered into an MOU on July 18th. Now, this is on the court case, Ripple case. We have been waiting for two and a half years for the result, the ruling to come out. But on July 28th, we have finally seen the ruling by the U.S. District Court ruling. Excuse me, July 13. And the biggest point was whether XRP is security or not. And the court ruled that XRP, so the retail investors, is not a security. Therefore, this will be very beneficial for the investors. crypto asset business. And we have seen XRP prices and trading volume increase significantly. And as you can see, Coinbase cracking and Bitstamp They have been pending on the trading of XRP, but they quickly relisted XRP after the ruling. And this also helped with the prices. And as for the corporate value of the unlisted Ripple Labs, this is actually basically good news. So this will be positive and you can expect to increase substantially. This is the last slide. So this is a semiconductor project and a joint business with PSMC, the Taiwanese foundry, and establishing JSMC in Japan. So we are looking at 25 candidate sites. And by August, we will start local inspections of these candidate sites. We have already started discussions with local Miss facilities and related parties. So this is yet to be realized very soon. So that is all from me. I think I have spoken about 30 minutes. I would like to take questions from this point on.