Sbi Holdings Inc Ord

Thank you very much for attending today despite your very busy schedule. Thank you very much for your attendance today. Second quarter of the year. So now, usually I ask Mr. Katsuchi to talk about the first quarter and the third quarter of the year. But today, I'm going to speak about the financial results for this year because second half of this year, I believe, is going to be a major turning point. So what is meant by the major turning point? What is the idea behind that? And in the second half, when turning point is expected to be materialized, what are we going to do? What do we plan to do? So that's what I'd like to explain today. As for the numbers and the results, if we only talk about the results of the past business activities, well, probably you, the analysts and the professionals can understand the numbers. So I will go quickly for some part of my presentation. So the consolidated financial results for the first half. So the revenue increased by 28.3 percent, increased up to 574.8 billion yen. So that means on a full-year basis, the 1 trillion yen revenue is we hope to achieve. Most likely, we will be able to achieve 1 trillion on a full-year basis. That's how I see it. And also, the profit before income tax expenses, 70.2 billion yen. 31% increase year-on-year. And also, the aid profit and the aid attributable to the owner of the company was 37.1 billion. And this is the apple-to-apple comparison with peers. Well, it is not a question of whether you lose or win, but the Daiwa security was bigger than ours, looking at this. So now, 64 years, or nearly 65 years since the foundation, we came to this stage. Other companies have a history of more than 100 years, but this is the current status. Comparison. And it is a question of time. And this may change quite immediately, and that is expected to happen in the second half of this year onward. And the financial services, they are... So they are record high. Financial services, 70,875,000,000 yen, which is a record high. And also the asset management, 2,151,000,000. And crypto asset business turned profitable, positive. And next generation business. So we used to call this non-financial services, but we renamed this business as next gen business. And you look at the number. And as for the dividend, the So excluding the other special factors, like the total return of shareholders and also combination of dividend and the share buyback, the total return that we consider, and the dividend is 30 yen for the interim period. And the financial services, the revenue increased by 28%. And also the profit before tax increased by 0.9% year-on-year. And in all these areas, as you see, SBI securities performance like this, the record high for all these items. And I talked about the turning point because starting from October, we will introduce the zero revolution, commission-free trading will be realized starting from October this year. So this is the Apple comparison of the peers. And this looks like this in comparison. So we are number three right now. And it is the time will also tell you how this is going to change. And the FX and the SBI liquidity market record high operating revenue of 16,188,000. Comparison with other players, the second largest is GMO Financial Holdings, and this is a comparison. And the overseas securities companies, They are security companies, so they are influenced by the market situation, and they are keeping the profitability. In case of Cambodia, for the profit before income tax expense, the result was higher than that of last year, year-on-year. Now, looking at the banking business, SBI, Shinsei Bank Group, is the first point I'd like to mention. Yesterday, they made a financial result announcement. So the 29.6% increase in the ordinary business profit, 53.8 billion yen, and also profit before income tax expense, the 30.9 billion yen. According to the IFRS, it is 19.9 billion yen for the profit before income tax expense. SBI Sumishin Netbank, On the 29th of March, they were listed on the Tokyo Stock Exchange standard market. And the 50% holding has been reduced down to 34.19%. But it is on the equity method affiliate right now. So in terms of that equity method earnings, it increased by 24.2%. It is now 1.625 billion yen. And this shows the number of accounts and the balance of deposits since the commencement of the SBI Sumishin Net Bank. And the 6.57 million accounts we opened at the end of September and deposit, it grew up to 8,639 billion yen. So it has been increasing constantly. Now in Korea, SBI Savings Bank, Well, the Korean economy right now is quite volatile. It is a volatile economy. And I do not forget about the experience back in Asian financial crisis. And the bank lending rate went up to 30% at that point, at that time. so the it is on the market affected by the external factors particularly the other negative impact influences the korean market quite significantly it is because of the size of the market but the It tends to turn negative from time to time, but the recovery comes very quickly as well. So at the time of the recovery, at the time of the turning point, I believe that it will come in the second half of this year. But the equity ratio is improved. capital adequacy ratio improved from 13.4% to 14.5%, and the rating given to this bank is A, stable. So business itself is proceeding smoothly, but the environment was not so favorable. And as for other foreign banks,

The Russian bank is now the profitable. And in Cambodia, the SBI default bank, some decrease in profit, but still the profitable. TP Bank in Vietnam, some decrease in profit. But each one of these banks are expanding their business very steadily. Moving on to insurance business. Ordinary revenue up 9.6%. Ordinary profit up 16.8% with 4,851 million yen. Very steady growth is observed. The number of in-force policies at the Kega basis, 14.1%. It is growing very steadily. Asset management business. As I mentioned earlier, 3,151 million yen of pre-tax income, up 59.8%. As to asset management business, it is the combination of organic growth and M&A growth. That is the plan. So in a very steady manner, it is growing steadily. The cash is really abundant. There is a process of sale of Morningstar brand exist. So if there is any good target, Sakura-san is always ready to buy Leo's Capital. Now, it is SBI Rails Hifumi Company Limited. That is a name from April 2024. SBI Global Asset Management exceeded 5 trillion mark with 5,073.6 billion yen and the 2,350 billion yen of the institutional investors, AUM. In total basis, In SBI Group AUM, 8.5 trillion yen. And we would like to make it to 10 trillion or 20 trillion. And we are moving toward that, moving on to investment business. The revenue up 89.8% with 56 billion yen and pre-tax profit up 117.2% with 10 billion 411 million yen. The environment of funding for venture capital is very tough, but still they did very well. So the changes in the fair value, as you can see, increase of 126.9%. Here it says listed securities, unlisted securities. For listed securities, now it's profitable, and unlisted securities, the growth is negative. So only 10.5 billion yen in the first half of the year. The M&A and IPO, 22 of them are exited. So the same level as the fiscal year 2022. And the 7,695.5 billion yen investment trust. The crypto asset business year-to-year basis. This B2C2 market maker or the SBA crypto mining. The sum the partners went under and we incurred some losses. And there is a big negative number here because of that. But for this fiscal year, relativity is stable development in the crypto asset industry. So we are enjoying profit. Next-gen business, the pre-tax income was negative for the first half. For example, it's the pharmaceuticals in their area. But the deficit decreased. But for example, the other promo, there's some IPO-related cost incurred. And because of that, results were slightly worse. But it is still, the business itself is profitable. Here, this is what I'm talking about, SBI Pharmaceuticals and SBI Alapromo, as I mentioned earlier, some costing card. So, from this page... the second half of this year, both for major macro and the same macroeconomic, we will see turning points. And we start in our minds. We are already making preparation with respect to how to manage our business. For example, of course, the monetary policy will make a shift both at home and abroad, as you know already. And for securities business, zero revolution. So in October, what's the result of zero revolution? Well, for the month of October, on a year-on-year basis, bitter, slightly bitter than the same period of last year. So we are going to make what we have made initiatives and that effort will pay off from here. So maybe the 20 billion yen or so reduction will come from the Zero Revolution Initiative. Some analysts said that. I totally disagree with them. And for the whole group, there are some positive impacts for the group with ecosystem of corporate management. And also, the Japanese government is trying to make a shift from savings to investment. And at that timing that we launched this initiative of Zero Revolution, and we will enjoy tailwind. And as to the coming of full-fledged digital world, because we believe in that, and in this area, we are making very aggressive investment in a sense. it will bring a big change in the second half of this year. And also, there are big changes in the business environment, including volatility in the financial market. To be ready for that, we are going to make a new business portfolio, which includes semiconductor business. We made investment in Minavi. So, for example, a partnership with Mainabi is part of this picture. And we see the incoming cash flow increasing in Middle East, like Abu Dhabi, and we are going to thoroughly increase the relationship with such area. In the past, We started in 2005 focusing on the China. We still have seven operation basis in China. We started various businesses in China. Then we moved on to Southeast Asia. There's a shift of the management resources to that area. And Southeast Asia will continue to be part of our business, but this semiconductor business coming around, we will particularly focus more on Middle East. After the second oil shock, We talked with the Saudi Arabia Monetary Agency or the agency in Kuwait or in Abu Dhabi or UAE. Every three months, I visited that area. And there was a halt of such a visit for a while, but I have to visit the Arab countries again. in Riyadh in Saudi Arabia. We are going to start our operation basis. What kind of business would that be? And this business in the Middle East, what kind of positive results to be brought to our business? Because in the Middle East, the largest inflow of the money and the money should be used. When I was with Nomura, the money coming into Middle East was diverged into the rest of the world. And here we will be using different perspectives to work on Middle East again. More specifically, so the macro economy environment the monetary policy will come to its big turning point. So the U.S. policy rate, 5.5%. In a very short period of time, it comes up to 5.5% level, but still its economy is solid in terms of GDP at least. So the 10-year... bond yield. It was stable for a while, but now here it started to come up. Obviously, significant rise. This means, based on my experience, the change of policy. Ten-year bond rate is moving. That's meaningful. And in Japan, Yield curve control, yes, was present and some changes because of that. And with Mr. Ueda, the major changes in the policy are not happening yet. But the rest of the world is changing. And if you do not change, the yen will continue to weaken. Some people might say, what's wrong about it? But that means that the real wage will not go up. The government was very focused on wage increase, raise it by 3%, for example. It is down by 2.4%. And because of the weaker yen, the material cost is rising, so it's impossible to expect wage increase under such circumstances. The tightening policy in Western countries, what is the impact on FX market? It's not only the U.S., but also Europe. has been tightening their monetary policy. So the rate gap with Japan has widened, and dollar-yen, the euro-yen, in those pairs, yen continues to weaken. The volatility goes up because of that, and our business welcomes it. But for the general economy, that's a big negative. In the U.S., Mr. Powell, after the FOMC meeting, they said that the financial situation tightened significantly in recent months, driven by higher longer term bond yields, among other factors. That's what he said. Significantly tightened, he said. So that gives the impression that they will not raise rates anymore. But he is prepared to raise it again if necessary. But when you look at the long-term rate and employment rate, maybe they will not raise any more. From 1974, every day I have been looking at the markets all over the world so I can use my instinct. Certainly, they will not. I would say that they will not raise rates anymore. Almost certainly. In the past, at the Fuji Bank, working on SoftBank, with Asakura-san, I was doing the FX dealings. with profit of 6 billion yen in the first half and second half. And I did not incur any losses. And the Fuji dealer asked me, how are you doing it? I mean, they asked the question to Asakura-san. But even at night... I called Sakura-san, for example, even midnight. But we have not made any failures back then. So anything you bet on your life, and as a result, you can brush up your instinct. If you stay relaxed, you will never have instinct. Now, in Japan... a positive response to the realization of its 2% price target. Mr. Ueda, anyone knows that it is over 2% already? But he says that the certainty is not sufficient. So he avoided mentioning a specific timing for the normalization of monetary policy. He does not make any clear-cut comments. Many academics, scholars are like that. As we said during the meeting, Takenaga-san, outside director, disagreed. I mean, appointed by Mr. Koizumi, Japanese financial system was in bad shape, and he did a very good job. And Mr. Takahashi, as he wrote in his personal history of Nikkei newspaper, saying that Tieta Takenasa did a very good job in the near future. Japan and Western countries, their monetary policies will change. So what is the impact of the monetary policy on the real economy? As I mentioned earlier, when you look at the U.S. job numbers, so now they are aware that the labor market was too overheated. And GDP? is very strong, 4.9% for Q3. That could be misleading when you look at credit card results in the US. It seems risky, I think, in the office space since the COVID. People do not go to office anymore. And today, 33% people are here but the total attendance is 116 so the rest is online on the internet that's fine that's convenient you can save time but you should be careful the real economy is different and that's why we work went under the U.S.-Germany real GDP. Germany, the economy is so weak, and of course, U.K. economy is weak. As you can see here, the CPI year-on-year basis coming down for both countries. So each country, the U.S. and the European governments will change their policies. And this is the example of Japan, the real wage, minus 2.4 percent. This is the result. So that explains why Mr. Kishida is not very popular. And distribution of money will recover the support rating. And the finance minister says that the other people are not using it. That's really lackable. Well, then, we should not go down that path. So what should we do? This is what I am giving very serious thought to.

Thoroughly promote measures to strengthen both fund raising and investment in order to increase the profitability of the banking business after the change in monetary policy. Thoroughly promote is what we are doing right now. SBI, Shenzhen Bank Group of Business, the possible impact of rising interest rate to its business and the various initiatives being promoted in response. SBI, Semi-Shin Net Banks, what's happening individually in specific terms because the situation differs for each one of them. So how we do it in a response has to be different. And also, the regional financial institutions which we have a stake in for this too. What is the best way? that direction, especially those that we are investing a lot. We need to make detailed guidance to them. And SBI Savings Bank, as I have said before, this is the time we'll solve it. The recovery will be very quick. First of all, SBI Shinsaibank. Basically, the bank business for short and long-term interest rate either increase is going to bring about the widening of spreads. So for the banking business, it's a positive factor. And also, corporate loans, housing loans, unsecured loans, leasing and shopping credit, each one of them, we need to look at in very detailed manner and also implement detailed ways of doing things. Because the market business, expecting a positive revenue effect from higher yields on reinvestment. At the same time, this is important, projecting expanded valuation losses on fixed income domestic bonds held and higher costs for funds procured from the market. That means the deposit interest rate is going to, of course, increase. So we need to be paying attention to this and at the same time expand the spread. the market risk, we need to thoroughly keep an eye on it and act. So compared to the past management actions, it needs to be more in a granular manner. We need to, our management needs to do that thoroughly. anticipate the increase of the interest rate. And from a long time ago, from the Kudu administration, the number of counts was on a declining trend, and also the total deposit and balance was not increasing. That was Kudo's management structure. Then it became to Kawashima management structure. Then the number of accounts increased, and also the total deposit amount has risen rapidly as well. How are we going to link this with further widening the spread? That is important. And also, SBI Shinsei Bank, at this time, the collaboration of bank and securities, that has very much of a large positive effect. It was proven, and we will be thoroughly working on it. And what happened because of that in 2022 October? Shinsei Bank and the simultaneous SBI Shinsei Bank, the simultaneous opening of accounts with SBI Securities has accelerated growth in deposit accounts. That is the blue line that is showing the growth or increase of the accounts. You can see it had a rapid increase. And the new customers, including 60 percent or so coming over from SBI Securities, and the average age were 39.8. The former Shinsei Bank had customers that are in a higher age group, but now the SBI Shinsei Bank are in the younger generation that are going to become even more active moving forward, and they're going to become the core customers. And when their parents' age And when they go into the phase or stage of receiving inheritance, these are the people who will be receiving those inheritance. So with this strategy, we're able to achieve that. And so increase the deposit rates and also No waiving all ATM fees at convenience stores. We are implementing various measures and foreign currency deposit withdrawal function between banks and security companies scheduled for release in November. So a future of increased linkage with SBI securities is SBI Shenzhen Bank's most important initiative, is what we think. And SBI Money Plaza, there are four co-managed stores. And... The amount of AUM at the joint branches have steadily expanded, increasing by approximately 120 billion in just over a year since it started, and that requires a lot of effort. And also, SBI, Shinsei Bank's various initiatives, in order to implement that, we need to increase the management flexibility. The voting rates is a 62.5%. Murakami-san's place has joined and will remain. Therefore, it will become that way. Before he made the decision, he has visited me several times, and we had several discussions with Mr. Murakami. And I said that you are very welcomed. If you join us, you can utilize your know-how and experience. And with him, we are going to be a cooperation, meaning that we will be sharing the benefits. And so it's good for the bank. is going to be good for him as well. So I welcome that. And what was even more welcoming was that 56 billion yen money, he will let it stay untouched. And this 56 billion yen, because it's untouched or will be untouched, when my decision became firm, I immediately instructed to increase investment amount to semiconductors from 50 billion to 100 billion, said let's have an abundant capital base. And because of Mr. Murakami, we were able to do such thing. So it was quite welcoming. That is my stance. But instead, because he has joined, I have asked him for various wisdom to be provided. He was in METI and then he wanted to work for people and that has not disappeared now is what I think. That is why suddenly joined and people say, Mr. Kitao, it must be puzzling. Well, there was one reporter who asked me that question, but I'm not puzzled at all or problemed at all. This is something that I have been saying from the very start. SBI Shinsaibank, the achievements as a platformer is steadily materializing within the relationship with the regional banks. They are generating various new businesses. SBI submission net banks main products is on variable rate mortgage products, which are expected to be positively affected by rising interest rates. Mr. Maruyama, the policy interest rate is 0.25% when it becomes 0.25%. We assumed no decline in demand or increase in defaults. APS is estimated to rise 30% under certain assumptions. And we believe that that will actually happen at a high possibility because here it's most of individual accounts. At the regional financial institutions in which SBI Group has a stake, share prices have risen in line with expectations of increased profits from lending and market operations, among other factors, as they promote measures in anticipation of rising interest rates through collaboration with SBI Group. Based on my experience from 2005 April to 2000 March, and if you look at the five-year JGB yield, And the correlation coefficient is 0.80. If the interest rate increase, then the domestic bank share index increases as well. And from April to October, the correlation coefficient has increased even more to 0.92. Therefore, why did it become this way? We need to think about this in this case. When I look at such a thing, I always think, why? Is it this way? And I look into it. The variable lending ratio of regional financial institutions, including loans with a remaining maturity of a year or less, has reached 63%. Expected increase in interest income from funds as interest rate rise in case where the interest rate tracking rate on deposit is low. and this, a variable lending ratio of 63 percent. This is good. The interest rate increasing, and if this remains fixed, the interest rate increasing benefit cannot be enjoyed if that is the case. So these are the partners, business alliances partners with SBI Group's capital. It's listed up here. And our investment, and where we have a high shareholding ratio, like Shimane Bank, 33.7%. Voting rights-based shareholding ratio, 33.7%. Why not next? It's a 0.19, and right now it's 0.43. For Fukushima Bank, our shareholding ratio is 17.9. When announced with 0.20, now it's 0.30. Chikuho Bank, we only have 2.9% of shareholding. And Shimizu Bank, 2.4%. There's no consultation of, oh, our business performance is going to be such and so to us. Those type of banks, there's no way we can give them proactive advice or do something proactively. That is why the PBR has gone down. And relatively speaking, Toa Bank is about the same because 1.0, so 0.22, 0.23, and Jimoto Holdings is 0.36, became 0.60, and we have 17 percent of shareholding ratio. And Tsukuba Bank, voting rights based on shareholding ratio is 0.7 percent. But even though the holding ratio is small, The stock price is increasing, and various is a consultant on various basis, and we also actively provide them advice. And they actually implement that, and that is why their PBR is experiencing this much. Taiko, in that sense, is quite strong. 2.8 percent is our shareholding ratio. However, you can see that the PBR is increasing. If you look at the numbers, they will tell you the whole story. This as well, July 28th, BOJ decided to make the operation of its yield curve control policy more flexible at the monetary policy meeting. And of course, because of that, the share price will increase. So everybody is experiencing an increase in their share price, as you can see here. Basically, the regional banks' share price will increase, especially for the banks. The banks, we have a close relationship, and where they have deposits, they experience an increase. And like Shimane Bank, two banks that will implement our advice, all of them, and they have Shimaho. The deposit balance has reached 40 billion yen. And the President of the Bank Having this much of increase in the deposit balance never has happened. And universally, new graduates have joined us, so many. And the president of the bank was saying, because of you, SBI, we were able to change this much. And we have been telling them, no, it's because of your efforts that you have changed this much. This 40 billion yen is because shimaho using our data and using our methodology and look at all the other banks they're saying oh we have done this we have utilized that and how much of them are succeeding and also Neto Kirayaka Sakuranbo branch, they have already surpassed 10 billion in only two months. Next, finally, heading towards the next generation banking system, the core system is starting to build up. 2024, the first phase, Fukushima Bank will implement this. And with this, the system cost the annual utilizing a model system cost burden will be leveled. And once every 10 years with the update, they have to spend $10 billion or so, and they had a large amount of expense. And I felt that we need to change that. And regarding regional banks, I thought that this is a system we need to change for regional banks. And also, the operating efficiency was too low. And there's an analyst who is saying that our operating system is not going well or failed. There's a foolish analyst saying that. But I think the situation is moving towards the sound situation. What do you think, Asakura-san? conducting the asset management and operation of that. It's not an easy thing that just because the regional bank has a portfolio manager. And there's a JGB. And also the foreign bonds. You hear that they have failed. And because it's for FX, it has to be hedged, but that has not been done. And of course, that's why It fails. So everything is behind the times from my perspective. The launch of the SBI comma ATM service will start at the Sendai Bank and Kirayaka Bank start its operation. And towards March of 2024, all ATMs will be replaced in turnover. Cost savings from the introduction of the system are expected to be around $800. million yen over 10 years in total. Why do you have to change your bank book if you change your bank? Because the bank account changes. Why don't we have a common bank book? Why do banks spend money on such and such? And I kept saying that, and it's changing. And also, savings bank, as I said before, South Korea increased rapidly their interest rate, and in January, from 1.25 to 1.32 – excuse me, 3.25 to 3.5, and then the situation changed at that point. And us, in 2013, when we acquired this, the delinquency rate was 56 percent and – 51.6 percent, and it has improved 4.8 percent. When we got involved, the delinquency rate was improved. And because of that, their performance has went up at 4 billion, and it's recovering. And we are seeing signs of improvement in the Korean economy. The property price, even though it's slightly, has turned to an increase. And also, the property market continue to fill, but it is starting to slightly increase. And insurance business, both the SBI life insurance and SBI insurance, they need to have investment policies that anticipate a future phase of rising interest rate. The assets under management of Yen bonds and alternative assets at the end of first half of 2023 increased by 22 percent from the end of FY 2022. And so they need to make the interest rate a variable interest rate. If you make it a fixed, they'll get impact negatively. And the investment income and expenditure are showing results with yen bonds and private refunds increasing approximately 1.4 times and 1.9 times respectively year on year. Look at the dividend yield. We are having this much dividend yield. We have many of those. and also the private offering fund 1.9 times. I've been tracing the case of big motor all the way and the agency type nine life insurance business in such way cannot continue operation. The domestic market is a saturated and how increase the profitability and sales within the saturated domestic market, I felt that it ends up like that, watching TV. But in our case, basically, we don't have such a situation. And also, the online direct sales cost is low and is safe. And what we need to do is to go grasp the major players' share. If that is so, the market is not going to saturate. The major players, they say the market is going to saturate, so they're going to expand their business to Southeast Asia, go to Dubai, go to U.S. There are cases that have succeeded. There are cases that have failed. There are cases that they have been impacted by effects. Various cases exist. customer-centric principles, that's all. Focusing on developing products that capture changes in investment environments such as interest rate in the asset management business. This centric character in Japanese, it is saying that you show with your own thoughts. Our strong feelings are incorporated. That's why we're using this Chinese character. Each Chinese character used in Japanese has a meaning. Plan to launch and manage a new JGB investment fund in a anticipation of changes in the interest rate environment in Japan. Establish joint venture with the leading overseas asset management companies to provide alternative investment products.