Sbi Holdings Inc Ord

Thank you very much for joining us today for this briefing on SBI Holdings consolidated performance for nine months, FY2023. For the interim results and the year-end results, the Kitao explains about them, and this is the third quarter, so please bear with me. Starting with the consolidated performance, I'd like to read those numbers in the unit of billions. Revenue 160, the 4.7 billion. Profit before income tax expense, 100.1 billion. In the period for the period, 70.1 billion. Profit attributable to owners of the company, 59.6 billion yen. So both revenue and profit increased year on year for the revenue. It is record high. So the 1 trillion yen, that is our target for the one year, and it is almost certain that we will achieve it. Since Shinsei has become the member of the group, it is always at least 200 billion, that is the quarterly number, and also the recently share prices are coming up. and one trade union is also observed for the market cap. The same time last year, the net profit was rather small. And this is because of TP Bank listed in Vietnam. And their share price went down, and there was the fair value losses. And in the crypt asset, the business, the losses were large. So because of these two factors, the profit that we would want to own as a company was low. the same period last year but this year we do not have such factors so net profit increased by six hundred percent almost seven times year on year so this is actually the uh the more natural figure for us now performance by segment financial services business The record high asset management business, both revenue and profit before tax, record highs. And for financial services business, revenue was record high. It's very stable. For investment business, crypto asset business incurred large losses last year, but showing steady recovery. And the next-gen business continues to be in the red, but this is because of advanced investment. So, all in all, it is within our tolerance. Performance of the SBAI groups, major listed companies, The SBI Holdings is based on IFAS and the other company entities, the JGAP, but both of them good results. The one exception is SBI Aruhi, impacted by the rates and struggling with the sales of flat 35, so both revenue and profit decreased. But for SBI Alhi, the product lineup and operating structure being stronger, they are aiming at recovery in earnings going forward. Dividend forecast. In the interim dividend, 30 yen was already paid. And as to financial services, the business based on their numbers, 120 yen is expected for the year-end dividend. And SBI is going to commemorate 25th anniversary since the foundation. And that will add 10 more. So the 130 yen for the year-end and for the annual basis, 160 yen. That is the forecast. And dividend per share development, as you can see, it is increasing year on year. And this is shareholder benefits. XLP and other related other products are used as benefits. Business overview of each core business, starting with financial service business. The revenue increased and the slight decrease in the other profit. But last year, there were some factors. So Alberto, the shares were sold, and 5.1 billion in gain was included last year. And considering the impact of these factors, profit actually increased slightly. financial services business, the core business is the securities business, SBI securities, operating revenue and net operating revenue, operating profit, ordinary profit. In almost all the items, record high numbers were recorded. Profit attributable to owners of the company, it is not record high. But in December 2020, in the third quarter, 37 billion yen. And we did not reach 37 billion yen, but it's very close to it. So the net profit was also very good. Here, the comparison with major brokerage firms. That is this table. Nomura Securities, Daiwa Securities, and SBR Securities is ranked number three. The top three names remain unchanged, and the ranking changes among those three. Online companies or large offline companies, such classification is becoming more and more meaningless. The banking business, second pillar, SBI Shinsui Bank. The cumulative basis, these are the numbers. The gross operating profit, 198.6 billion. Ordinary business profit, 75.8 billion. The record high during the past 10 years. Pre-tax profit, 44.9 billion, a slight decrease. Profit attributable to owners of the company, slight decrease, near 38.3 billion yen. the annual target is 45 billion yen. So as far as progress is concerned, it is 85%. So we are making progress at a very good pace. On the IFAS basis, it will be 31 billion yen. That is the profit before income tax. Again, a very stable contribution to the profit. Since the bank joined the group, So it was in December 2021, they became a member of the SBI group in the 22 and 23, 62.5 billion, 75.8 billion, respectively. The other cumulative numbers of net business income comparison. and a big improvement is observed. As to the customer basis, the same trend. Before they joined the group, there was a downward trend, but after becoming the member, it is increasing, both for total amount of deposits and number of accounts. Since POB, then Shinsaibank and the SPI group said that there was a strong synergy And this is the creation of synergies, both in amount and the number of accounts that they are increasing, debt finance and the loan balance, as we claimed that we have been increasing the numbers based on the synergies. Moving on to SBI, Semi-Sheet Net Bank. On the left-hand side, we have already disclosed ordinary profit on JGAP basis, up 15% to 25.1 billion yen, ordinary profit, and that's the contribution on IFAS basis. The same period last year, it was before the listing, so it was between the 50-50 period, ownership and back then it was about 1.7 billion yen that is the contribution and now our stake is 34.19 other percent and we are still getting the 3.5 billion or 3.6 billion yen of the earnings from this investment And this is the customer basis of the debt bank. The number of accounts and the deposits in both terms, it is increasing trend.

And the main product for Simishi Net Bank is mortgage loans. NSBI, Shinsei, SBI, Aruhi. When you look at the total number or amount of mortgage loans extended, you could see the data on this graph. SPI Group new mortgage loan market share is about 10 percent of total, or 2.1 trillion yen. We exceed the level of mega banks for mortgage loans. We have been showing a considerable amount of presence already to that end. We would like to continue to increase our share as well as the size we account for in the pie. The third bank is SBI Savings Bank in South Korea. So KGAP and IFRS results are shown here. KGAP is closed in December, so it's up until the fourth quarter. And for IFRS-based, it's up until the third quarter, until end of December. So for KGAP Q3, there was a specific factor. The criteria for allowance for doubtful receivables was revised, so it includes gains on allowance reversals. For IFRS, there are no special factors So the second quarter compared to the first quarter, third and fourth quarters compared to the second and third quarters are seeing greater numbers. So the absolute amount of profits compared to last year still is down, and it's quite considerable. However, the trend is on a recovery trend. So for the capital adequacy ratio, it reached a record high of 15.5%. So we are not feeling any soundness issues. Net assets as well as the performing loan balance as well as delinquency rates are shown here as we always share. So trend-wise, we still are seeing a situation where balance is not growing. It's rather declining. However, for the delinquency rate, we believe the upward trend has subsided significantly. So with this, we believe that we have started to enter a recovery trend. Next is the third part of the financial services business, which is the insurance business. So this has already been disclosed for the SPI insurance group's performance. So whether it be ordinary income or profit, for the nine months leading up to Q3, we were able to record record highs. The customer base In the case of the insurance business, we look at the total number of enforced contracts as a KPI. This has been growing steadily as well. CAGR is at 13.9 percent. Next is the second segment, which is the asset management business. So for this segment, two years ago in November, Okasan Asset Management became a member of our group. Therefore, year over year, we saw increases in revenue as well as in profits. For SBI Global Asset Management, which is a core part of this business, the performance already has been disclosed. And on a JGAP basis, we were able to recognize record highs for all of the profit items as well as net sales due to the significant increase of AUMs. For SBI Asset Management, they established new funds, and they are extremely popular. AUM has been growing substantially. There are two that are mentioned here. First one is SBI, Japan High Dividend Equity Type. Settlement happens quarterly, and the lowest trust fee is proposed. And we have been exceeding 41 billion yen as of February the 6th. And the next one is the India Equity Index Fund, where the trust fees are kept extremely low, And as of the February 6th, the AUM was at 32.8 billion. So assets under management for SBI Global Asset Management Group has now reached 5.1 trillion yen. So we are continuing to see a steady growth. And on a year-over-year basis, AUM has went up by 15 percent. So against the 5.1 trillion, Okasan, Rios, private equity, if you add all of these together, we are at 8,666.5 billion yen. So AUM has been growing substantially here. So as already explained or announced, going forward in Japan, the trend from savings to investment is likely to pick up. Therefore, the SBI Group has decided to partner with major asset managers, namely the Mann Group as well as KKR, in order to promote alternative assets and strategies. We have plans to apply for registration as an investment management business. As soon as we're finished with this, we would like to roll out the business as soon as possible. We're currently at 8.7 trillion AUM. But by 2027, or in the year ending March 28, we would like to exceed $20 trillion. This policy has not changed. Next is the investment business. For this business, there's two constituents, which is the private equity business and the other is the listed SBI leasing services. In the same period last year, as I mentioned at the beginning, We had TP Bank in Vietnam. We had to write down valuation losses, and that was quite big. So revenue was also in the negative, which was extraordinary, and profits before income tax expense was negative as well. But we don't have these one-off factors this year, so revenue grew substantially, and so did profit before income tax expense. That turned positive. So regarding changes in fair value for the investment business, because we had the Vietnam valuation losses last year, which is gone this year, the change has been positive of $2 billion and $539 million. But for the listed names, because rates remain high overseas, the venture companies have been challenged with financing. So this environment is continuing. The market itself is not that bad, but some securities are performing well, but the rest are not able to benefit, which is the reason why we're seeing these results. So with that in place, when you look at our results around IPOs and M&As, the number is likely to be the same as last year. That's our prospect for this fiscal year. And when you look at our group's assets under management, we are at 767.5 billion yen for private equity, et cetera. Internet, fintech, and digital assets are areas of our focus. And there's a new fund around the digital space, which would invest into advanced services and products. It is in the size of 100 billion yen currently. 70% of the applications have already been received, and we have been receiving commitments from investors. So by leveraging this fund, we would like to invest into promising companies going forward as well. And also, it's not just in Japan, but globally. We would like to roll out our investment business overseas as well. I'm not going to go through the entire list, but We are employing a business alliance with a state-owned Saudi Aramco of Saudi Arabia, for example. And skipping one and going to the third one, for your standard chartered, it is a global British financial giant. And we have decided to collaborate in the investment field. And also, in Africa, in the global south, it is said to be the last frontier but there is a UK investment house, which is long established and invests into Africa. We have entered a strategic capital alliance agreement with them. And it's not just the developed countries, but in these frontier regions too, we would like to be proactive in engaging in investment activities. So for SBI leasing services, Here are JGAP numbers, which already have been disclosed. So we've been seeing a significant rise in both revenue and operating income. And stock prices have reversed as well because of this performance. And on IFRS basis, it is contributing to earnings as well. Cryptoasset business, the fourth segment.

Last year... It was a big negative number, minus 17.3 billion yen. The bill of finance, three hours capital, FTX. As you know, as you have already heard, those entities went under. And we had some exposure to those entities. So we incurred big losses. That is the nine-month cumulative numbers last year. But this year, reflecting on these risks, we have contained risks in operating crypto asset business. In addition, the market has significantly improved. As written here, As to spot ETF, there's expectation for the approval. And so both amount and size increased greatly in about 2 billion yen of cumulative profit. This is customer basis. For the group, crypto asset business, exchange business, it is also increasing greatly. the VC trade, Bitcoin to Japan, providing staking services, which is growing very steadily. And there are needs among the customers, and we'd like to continue to offer such products. Last segment, next-gen business segment. Compared to last year, the deficits increased significantly. The major constituents, the biotechnology-related and the Web3-related new businesses. As the biotechnology-related business, as you can see on this table, basically the rate numbers have been reduced significantly. So a sub-segment year-on-year basis. Bread number is now smaller. SBI Adapromo, in 2025, it is scheduled to be IPO'd and continuing its preparation. Web3-related business. The advance investment is progressing SBI NFT or SBI digital asset holdings. Those entities are involved in the very progressed operations, creating seeds for future businesses. This is the last slide. The semiconductor business. On October 31st, there was press release and the things are moving on as was announced. More specifically, GSMC, our partner, and the other construction workers for the foundries. We are now discussing specific construction plan and the cost involved. We are finalizing a plan. And on a potential basis, we are beginning to approach customers. But at this moment, we are in line with the plan for this operation. So much for the financial results and some thoughts. Maybe I should have said that at the beginning. Today, we have a second part. and this portion is about the effect of zero revolution. We have received many questions from you, so... Today, I would like to... Well, we have developed reference materials for Zero Revolution as well. So there are three layers here. First, SBA Securities directly benefits from Zero Revolution. And the second is for securities-related business. And thirdly, benefits for non-securities business. And I'd like to explain about each of these three. starting with direct benefit for securities business. So this is a very familiar page. The SBI Group's customer base is expanding at an accelerated pace driven by a zero revolution and expansion of NISA. The day before yesterday, on Monday, The number of accounts exceeded 12 million. As you can see, it is growing very steadily, and the line is getting steeper. And this is due to zero revolution and expanded and improved NISA program. So 1 million accounts, how many months did it take for 1 million? So from 8 million to 9 million, it took about 8 months, and to 10 million accounts, about 7 months and 6 months, and from 11 million to 12 million, only 4 months. So it seems, it is an evidence that there are very high needs, especially from retail customers. And this is the number of new accounts. On the left-hand side, we have the number of new accounts opened. Second quarter and third quarter, 598,000, 623,000. So on a quarterly basis, they are all record highs. In January, 280,000. So another record high. In three months, 600,000. So the other 200,000 is for one month's figure, but actually we achieved 280,000 in January, showing a very high interest. And for number of margin accounts opened, we are seeing same trend. And the number of accounts application is increasing very rapidly. Next, transfers from our peers. In transfers and out transfers are shown here as indication. Up until 2022, there's not much difference between in-transfers and out-transfers. But right before the announcement of the zero revolution, based on expectation for the launch, the in-transfers increased. And that trend continues. More recently, 25.1 in-transfers and 3.5 out-transfers. So in-transfers are dominant. So based on that, what is the market share of SBI? This is another familiar page. So after hitting 45%, it was rather difficult to exceed 50% mark. But after the announcement of zero revolution, both for individual stock and the margin trading, 50% was exceeded for individual stock, 51.6% record high, and for margin trading, 53.8% record high. NSBR Securities for NISA. the very strong focus, the number of accounts, we are aiming at number one. So in September last year, part two of the zero revolution was announced, and this is no commission for individual U.S. stocks and overseas ETFs in UNISA. That is part two. This is to satisfy customers' needs. And the number of accounts is actually growing very rapidly. More recently, the steeper the line is, as you can see on this graph. We will continue to offer products and services which satisfy the needs of the customers, and we'd like to aim at number one in the number of accounts as well. And this is number of newly opened NISA accounts. Because of seasonal reasons, there was a drop in the first quarter, but the second quarter and third quarter, big increase was shown. And the transfers from the peers was increased 789.4%, a huge increase. Those who already have the securities accounts are now changing, shifting to SBI's. For October, December period, the 48.9% came from Rakuten Securities, almost half. So among online companies, the trend is toward SBI. This is about IDECO. We have been engaged in this business for a long time, and the number of enrollees is increasing very steadily. On the right-hand side, balance of investment trust for 401k distributed by SBI Securities. It is showing steady increase. And this is cumulative number of the customers. The SBI securities has been number one for a while, and the gap is widening. So what is the result of SBI securities? At the end of the third quarter, comparison between the same period last year and this year, 19.9% year-on-year increase. The green part at the bottom, and this is the online brokerage of domestic stocks subject to the zero revolution. First quarter and second quarter, that part existed. So for the first, third quarter, we are still looking at the green part. What about on a quarterly basis? $4.8 billion or $6.4 billion. Those are the numbers in the green. But for October-December period, green part is gone. And the question is whether revenue went down because of that. The answer is no. Actually, in a near basis, plus 8.5%. And compared to the previous quarter, it is only 2% decrease. so the financial revenues, trading revenues, and IPO-related commissions, and the other stock, the commission, which is not the online, for example, overseas-related. So including all that, our result was positive. Actually, one portion of revenue source is gone, but striking a good balance, we are maintaining good composition. The breakdown, major breakdown, the open interest credit balance, there's some seasonal reason, so the third quarter usually drops, but still remains high as a level. And along with that, trend of financial revenue up 29.2%, or 15,162,000,000 yen is the result. So this is the result of the diversification and stabilization of earnings source.