Sbi Holdings Inc Ord

Despite your tight schedule, thank you very much for this big turnout. And the website, about 90 people are participating online. Well, it is going to be a long meeting, two hours or so. So please give up. Please do not give up on us and stay with us to the end. Now, FY 2023 results announcement as to numbers already announced. So I'm not going into details. The revenue under 1.2 trillion yen. So it exceeded the 1 trillion yen mark for, this is the, I think, very first time as a full year. And then up 26.5%, pre-tax income 141 billion, up 38.6%, the net profit 113 billion. $1,616,000,000, up 58.5%. And the profit attributable to owners of the company, $87,243,000,000, up 146.1%. ROE went down when we acquired Shinsei Bank, but now ROE is recovering, and we are targeting at 10%, and it's just a question of time that we will reach that level. This is the comparison with the major competitors. Please look at them later. This is by segment. So for each segment, for all the other segments, revenue hit the record high as to dividend. As we said before, 160 yen full year basis, including the 25th anniversary on July the 8th. And for that, we have 10 yen, and including that, full year basis is 160 yen, or take total payout ratio of 50.6%. So basically, dividend payout and the share buyback, that combination is the total shareholder return ratio. And for the time being, we are going to set around 30%, excluding the special factors such as sales gains or selling the subsidiary in the financial services business. For this time, dividend payout, 29%, around 29%, or... around 30%, an appropriate level, I would say. And the shareholders' benefits, there are no major changes here. Our products and crypto asset XRP, these are the choices that you can make. And as to the shareholders' composition, And we have a very high foreign investors ratio. And after the COVID, in Nagoya and Osaka, we had information meetings in those locations. to increase retail investors, retail shareholders. And 26.0, that is individuals, and 33.9, that is the overseas foreign, and the domestic financial institutions, 23.1, and the 10.3 for domestic business, the corporations. So it is very well balanced out. and more than 240,000 shareholders, and as to the shareholders who hold one unit or more is 172,761. Business overview of each core business, starting with financial services business. It is going very well. I myself, in the context of the Zero Revolution, the security is the business, what will happen to them, and what will happen to the financial services, the business, and that is the most interesting part for myself. And the result is as we have expected. So, for... The securities business is just fine. The SBA securities can continue as they are doing. And now our focus is now moving on to the semiconductor business as well and also the banking business. It is our cause to pay back 330 billion yen or so to the government. And by paying it down, that will put us on the jumping board to the next phase. So that is a must for us. And of course... the new development of the new products, financial products. That's one example of other factors. But my biggest interest is here. So let us look at the results for the SBI securities. Even after the Zero Revolution, both revenue and profit hit the record high. Of course, in the first half of the year, There was no zero revolution, and the impact of that revolution is from the second half of the year. And only in the second half alone, 15.8 billion yen or so lost the profit. The revenue, the profit, evaporating revenue, there's almost no change in the fixed cost, so the levels are similar. And this is for the banking segment. For our bank entities, they are doing very well. SBI Shisei Bank targeting at 70 billion yen, and they are moving ahead. and we could feel assured with their performance. And as to other banks, SBA Savings Bank in Korea alone is halving the profit. But they already hit the bottom. The worst period is already gone, and they are going to be better. real estate and the construction or developer business. I'm saying that we should not extend loans into these sectors, but the SBI Savings Bank absolutely wanted to lend loans, some loans to those sectors, and that turned out very bad. and my hunch and the other situation in Korea, because when we bought the entity, the delinquency was 51%. And we did some analysis why they came up with such a situation. And I know what happened back then. And so I told them what they should not do in the current economy in Korea. But they did it anyway, to some extent. But the impact there was not so significant still compared to The SBI Savings Bank loan, so the halving of the other profit. And the SBI Bank and the TP, turning the black. And the TP Bank, and it says the 10 or the million. And here, this is Savings Bank. The NPL ratio, so as I mentioned earlier, 51.6% is the delinquency ratio. They were on the verge of going under, and we invested 130 billion yen, and people said, why such investment? But they turned around in contributing to the overall profit. And now delinquency is at 5.6%. and it is steady on that level. The Korean economy has already hit the bottom. We can say that, I think. And so this bank's profitability will be better. Moving on to insurance business growing very steadily. All the items hit the record highs. And the number of the enforced policies is increasing steadily. So its stock business is expanding. It is very well balanced, and we are going to grow the business so that they are going to be the very steady sources of... profit. Asset management business, finally, Japan as a whole is moving toward enhancing asset management business. The government is encouraging it, and IDECO and the new NISA are the examples of such focus. And one after another, we are taking various measures, and the revenue increased by 5.3% pre-tax income has declined. Well, this is because of the one-off factor, the 8 billion yen proceeds of returning Morningstar brand in the previous year. And compared to that, the number looked much smaller. And the SBI Global Asset Management, both net sales and ordinary income, hit record highs. And So two days ago, actually, our AUM exceeded the 6 trillion yen mark. So it's an extraordinary speed that the business is growing. This is the SBA Rails Hifumi and SBA Okasan Asset Management. As to Okasan, we acquired it, and the revenue and the income Increasing. So this is an evidence that we can make changes. How? Well, it depends. We look at the symptoms and we need to give the good medication so that they can recover without any of the effects. So what we need to do is that we apply measures which suit each entity.

So group asset management is now at $9.8 trillion. So I think it's a matter of time before we achieve $10 trillion. For the investment business, this business is loss-making at the profit before income tax level. It has been recovering substantially, but SBI leasing 4.4 billion positive is a result for the company on a standalone basis. However, due to currency losses, it is 7.9 billion yen. And this is accounted for. So the way they hedge drastically, I have asked them to review the process, or else I am in a position to sell off the business if it doesn't recover. But I haven't overseen the leasing business in detail up until now, but I have spoken to Takamura-san today, and I have asked them to scrutinize the business so that performance can improve. Because all of this is FX losses, and we do procure aircrafts from overseas. And, of course, they cannot be sold right away. And if currency rates fluctuate along the way, it is likely to lead to losses. Of course, sometimes it can lead to gains. But I do not like these businesses with such volatility. I think what needs to be hedged needs to be hedged. However, if it can be predicted, you don't have to hedge. However, these kinds of businesses need to be hedged because you don't know when you can sell them off. If it can be sold off in three months' time or two months' time, then there are ways to hedge. If it's unpredictable for the next 12 months or if you're not able to sell going forward, it's a different world. So it's a challenging business from that standpoint. Other than that, of investment businesses going well. So for March 25 and the number of IPO and MNAs, currently we are accounting for 45. First, I was told 51. So I asked my people to scrutinize the deals one more time. And then they said, no, we're fine, we're fine, Kitao-san. The executive vice president in charge replied to me. So I believed in that. But we cut it down from 51 to 45. Now, of course, the environment regarding IPOs and the investees and its quality. We have been investing into quality companies, and the investees appears to be reaching the value that we have anticipated initially. So for March 25, we are looking forward to what may come through. So private equity total is at $801.8 billion. So we are in name as well as in value. the biggest private equity capital company in Japan right now. So when you look at this, leasing services, $494.4 billion is the ordinary income, but this is accounting for the losses, and this is something we need to change as practice for the crypto asset business. For March 23, there were bankruptcies. And having sufficient collateral in place was not a practice that was in place. So we worked on it. And if it didn't go past me, I said no to the opportunities. And we were very conservative in our approach. And now the Bitcoin ETF has been approved. And Bitcoin prices reached all-time highs. So we're in a good condition right now. And even more, B2C2 that we own for crypto assets, they are a market maker, and they are the world's greatest. So with trading volume increasing, we should be increasingly profitable. For example, the... crypto asset business of SBI's group. For Q1, Q2, Q3, and Q4, you could see that you saw a surge in the business in Q4 at 6.386 billion yen. So Bitcoin prices exceeded 10 million for the first time. When you look at the Monix Group's crypto asset business, like Coincheck and so forth, Q1, Q2 were loss-making. And in Q3, finally, they turned positive. And for Q4, they increased performance, but it's still at $2.8 billion. We are far profitable compared to them. B2C2 is one of the largest crypto asset market makers and it has been able to increase its revenue substantially. So this is revenue on a quarterly basis. The reason why is because major crypto asset exchanges, Bitcoin transaction volume has been increasing. That makes this business profitable. So regarding the future, one catalyst may be Ripple and SEC litigation case and its outcome. The conclusion may be drawn at the end of June this year, meaning how much penalties are going to be paid. I don't think they're going to be able to avoid penalties, especially for the corporate side. And the retail side is winning, and that's why the issues became complicated. However, If the retail side or individual side wins, Ripple will probably say, was talking about all these things out loud. So I think that made the SEC angry. So that's the issue at stake. But this may turn out to be a catalyst. Also, for the ETFs. There may be institutional investors. There has been an increase of institutional investors that have started to enter this space. And we will partner with an entity and set up a joint venture with a company that is setting up an ETF that incorporates crypto assets. It's a U.S. company, and hopefully that will lead to good results, but basically, The backbone of virtual currencies is the blockchain. So for blockchain technology, I believe it still has tremendous potential for the financial business. Of course, in various ways, it will probably be incorporated into society as well in various ways. For SBI traceability, for example, by using blockchain technology, you're able to tell whether something is authentic or not. You're able to trace it. And with Japanese sake, this technology has been adopted. So for the next generation business, this is about bio and other parts of the business. This is loss-making as well. However, it's not a big thing for SBI, Arapromo, Because we are preparing for listing, there are costs associated to that, and we're planning to go to market by 2025, and also raw materials. Our supplier has been asking for help, and because of that, because of the prices are high, Not only have the suppliers come to us, but during the pandemic, people have started to say that ALA works. And it actually does work. It is able to suppress the pandemic. I believe in that. And there were some multiple numbers of papers that state so. So prices of raw materials went up back then. However, the prices have come up too much, so I've asked my people to sort things out. For example, it says extraordinary losses of $1.8 billion was recognized. So those are the things we have done as part of our review. The next part is SBI Group's dramatic growth will be achieved through business operations that maximize the organization advantages of its business ecosystem. The business ecosystem. having the financial business based off this notion, I think, was a great success. So thinking of having an ecosystem was extremely fresh back then, and I was able to quickly incorporate this concept into our business. The reason why it wasn't accepted that much before was because of the conglomerate discount. People were talking a lot about that, and back in the 60s in the U.S., acquiring many companies, raising EPS. And by raising EPS, that will lead to higher corporate value. That was the mentality. But then in the 1980s, this mentality actually demised. And that is why people started to talk about a conglomerate discount. But I said no to that. If it's the same category of finance synergies, should be generated by creating a mechanism, and it should be positive, not a discount. With that conviction in mind, I create an ecosystem in this business. So for the semiconductors business as well, we would like to manage it in the same way under the same concept. So for semi-related companies, the other day I traveled to South Korea And I met with the president of several semiconductor companies. I had dinner with them. And in South Korea, there's Samsung, obviously, and Hynix as well. So there's many companies associated in the semis industry. There's a lot of young companies with great technology as well. And we are making investments into them and similar in Japan. But we basically would like to have this practice on a global basis. So going back, positive effects of Zero Revolution by SBI Securities is what I would like to speak about. In the second half, there was lost profits of $15.8 billion, and how were we able to offset the lost profit? We basically needed to prepare. It's not something that you suddenly state and do. So I declared this from 2019. I was saying that we'll do the Zero Revolution from back then. And then four years' time, we were going to do the Zero Revolution, is what I was saying. So it was the timing when it coincided with the start of the new NISA program. So we wanted that to be a good opportunity to start this initiative. So we did it. But what if we weren't able to offset the $15.8 billion worth of lost profit? I considered various options. However, I was sure that we will be able to offset that amount. Lowering prices, starting off with SBI E-Trade, SBI Securities. We wanted to do thorough price destruction. So we wanted to pursue quantity more than quality first, meaning the number of customers. Then, because there is a variety of customers, you need to have a wide assortment of products available. And because there is a diversity of customers, you need to ensure that you have good compliance in place. And because you have more customers, you need to reinforce your IT system. So in various ways, you are able to make quality improvements. So this is the rule of Hegel. So we wanted to incorporate that. It's not just Hegel. Mao Zedong as well, he also has a phrase that is under the same notion. So I strongly believe in that. Therefore, if you do the zero revolution, I believe that we will definitely see the number of customers rise and in our ecosystem, we will have a ripple effect, and that overall, we should be able to generate a big positive. I strongly believed in this, and no matter who opposed, I decided to go ahead with this initiative. So that's what we've been doing. So here says $15.8 billion, and a rough estimate of how this was derived. So $15.8 billion is... If this wasn't in place, what would have happened? So operating revenue would have increased by 25%, and operating income would have increased by 36%. If we didn't do this program, it should have been $84,518,000,000, or even it should have been higher than that. And then when you do like-for-like comparison, when you compare against Nomura, Taiwan, and so forth, if you add 18.5 billion, we actually exceed Taiwan's securities. So on an underlying basis, we are already at that level, for sure. So if overseas goes well, some other parts of the business doesn't go well, that was the case for Nomura. For Taiwan, they're quite stable. in their performance. But what's important here is the number of customers. In our case, we have been able to see a steady increase of customers. So we were able to achieve increased revenue. It was up by 16.2 percent. And what increased? When you look at the details, you'll be able to see here what increased. So this is when we announced the zero revolution right here. So October, November, December, January through March, I was really interested in the March quarter in particular because in the December quarter, we didn't know what was likely to happen because we just started it. But when you look at the March quarter, you're able to tell the outcome. So what we were able to tell in the March quarter was, first, revenue. It was $51,664,000,000. When you look at the past tracker record, starting from the fourth quarter of 2023, March, this is the highest ever revenue. So whether revenue increases or not was my utmost interest, and we were able to increase revenue. So what was the factor behind this increase? It was financial revenues. we were able to achieve $18,798,000,000, which was unprecedented, and also trading revenues. It stayed firm. For trading revenue, for the third and fourth quarters of March 24, when you look at the total of the two, we were able to see a boost in trading revenues. So we should look at both. And for other commissions, especially for investment trusts, what's happening there was what we focused on. And Tsuchihongo, we partnered with them in order to reinforce M&As. And what happened to advisory fees is another area we looked at. And for the $823 million at the very bottom, in Q3, it was $638 million. This is for foreign stocks, commissions, and so forth. And if we didn't do the zero revolution, it should have been as high as that that you see on the left. So now you could see the breakdown of what contributed. And for margin trading and open interest credit balance and financial revenue, actually, it achieved record highs. So in the fourth quarter, it grew by 41.9% year on year. And also, for financial revenues, it grew by 39 percent. And also, investment trust balance, both recorded record highs. And for the fees, it grew by 40.2 percent year on year. So, the needs for Tsumitate Nisa in the trend from savings to investment, it has been expanding. And as of May the 9th, it has exceeded 211.1 billion yen. And in March 25, we believe on an annual basis, the buildup will exceed 2.5 trillion yen. For SBI RAP, the discretionary service, AUM is 97.8 billion and 120,000 in application. For foreign stocks, it also reached a record high on a revenue basis. It is close to two times For trading value of foreign stocks or U.S. stocks, it has increased and reached record highs. Also, for future and options and individual stock options, individual stock options can be a hedge, but it hasn't really penetrated the Japanese market. Actually, it's really high and popular in South Korea. It may be actually the biggest market for options. That's how much it has grown. So this is something I really want to grow. So I have been telling my security people to really work on this or else they're going to be fired. There's still more opportunity for growth. Futures and options are likely to grow steadily as well. So trading revenue, which is FX revenue and foreign bond sales, We are seeing record highs here. It went up by 9.2% year on year.

This is the sales of foreign currency bonds. Again, there's volatility because of effects, but you can see there's a nice steady growth. And further increase revenue by acquiring new customer segment and offering new products and services. As we implemented Zero Revolution, there's one number that is quite interesting. I found it to be interesting. So, larger customers with over 100 million yen in assets under management grew 90% in the year before and after the Zero Revolution. And those with over 500 million yen in the same period grew by 75%. So, the image is that You know, people think that people who use online brokers are only investing a small amount. The fact is very different from that. It's actually high net worth. that are entering into this online brokerage where there's zero finchance. Even if you look at, for open interest credit balance in a margin transaction, you see the ratio for large lot trades increasing. Even in domestic stocks, spot and margin, alter large lot above 30 billion to medium lot, 0.1 billion trades, have increased greatly around the zero revolution. And now this trade accounts for approximately 75 percent of the monthly execution value for domestic stock trades. So Nomura and Daiwa Securities, you know, they try to sell the RAP accounts and wealth management. But it is us that's actually increasing the number of customers in reality. So we have actually established wealth management business department, and we are operating in an integrated manner from sales to operational management for corporate and affluent customers. Just the other day, I was speaking with the president of one foundation, and he said, Kitao-san, your company is just incredible. Let me hear your story. We have, you know, because of the relationships in the past, we have been using this one particular brokerage firm, but we're planning to change it. That's what he said. And if that changes, then I think the environment will change quite significantly in Japan, whether it be religious corporations or school institutions. corporations, we need to thoroughly capture them. And I have just made that instruction. And we are actually growing IFA business steadily as well. If you look at the number of new accounts open for Q4 2023, it was record high. And we are strengthening the consistent IPO underwriting system by utilizing functions within group. The venture debt needs to be expanded. And we need to combine the bank and the securities, because we're able to engage in new business. We have SBI Investment, and we have nearly more than 1,200 investees, the portfolio companies in SBI Investment. And SBI Securities have undertaken 132 IPOs. This is an incredible number. So if you look at the underwriting share, Looking from April 23 to March 2024, there's 99 companies that were listed during this period. We're underwriting share is 90.9%. So we're either a lead underwriter or sub or co-underwriters, but you can see 90.9% is an overwhelming share. SBI Securities underwrote 21 companies, a lead manager, which is record high during this period. It's not just IPOs. We have also done POs, and we're growing our business. We underwrote 19 POs year-to-date, and we have also underwrote corporate bonds, for example, for Tokyo Electric Bar Company. Many are asking us to underwrite, and we have actually underwrote 45 corporate bonds recently. So without our power, our strength, you know, there are products that are difficult to sell. So we have the sales capabilities which exceed others. And this is quite significant. And the fact that Nomura Securities is really losing the glory of the past is because they're losing out on their sales capabilities. So maybe they're not really reducing the number of customers, but they're certainly not increasing. And of course, the customers are aging. And that's the issue. This is the M&A business targeting SMBs. You know, of course, if we did M&A business with the larger companies, it's much more efficient. When I was in Nomura, I was engaged in a lot of M&A business. Of course, the efficiency is good. It's the same amount of work, and yet the fees are completely different. But of course, there's a lot of needs among the SMBs as well, including business succession. And these are diversifying. And trying to meet all of these even smaller needs and diversified needs is important for the economy of Japan. So we are trying to leverage the strength of Hongo Tsuji Amadei Now, we have SBI Cross. It's a spot trading matching service for domestic stocks. So, we want to provide customers with much more beneficial execution abilities. We have the PTES, and then we've got JMark, ExMarket, and we have now established a dark pool called SBI Cross. And we're able to reduce the transaction cost We want to create a world where there's no need for back office anymore. So zero evolution has positive effects, which is rippling through the financial ecosystem in terms of expanded customer base, increased market share. So this is SBI Group's customer base, which is expanding at a rapid pace. If you look at just the CAGR, 12,452 accounts. In fact, we have exceeded 1,300 today. And the CAGR is 13.5%. And from the end of March 2009 to end of March 2023. And Nomura is 1.4. So that means that they have hardly increased. SMBC NICO is 3.2 because they had an acquisition, the group company's integrators, so that's why it's higher. And this is really important, the fact that the SBI group's number of securities accounts are increasing at an accelerated pace. So it took eight months to go from 8 million to 9 million, from 9 million to 10 million. It was six months. And from And then 10 million to 11 million is seven months. And then 11 million to 12 million is four months. So that is why one media came and interviewed me and said, you know, how long do you think it will take to reach 20 million? And I told him, this is how fast we are growing. The number of new accounts opened is one step higher after the Zero Revolution. Now it's 766,000, which is record high. And during this time, it's not just an announcement of Zero Revolution on August 31st, 2023, but we have also launched Part 2, and then we also launched Part 3 in September 2022, and then November 30, respectively. And finally, we have come to this level. SBI Group's share of trading value has increased rapidly from the start of zero revolution. So we started in September 30, 2023. And if you look at the trend in share of individual stock trading value, it's 52.1. And if you look at of which trend in share of individual margin trading value, it's 55.2. So it's not just about number of shares increasing, but we're also expanding our market share. And there are various alliances that we have formed. We have formed alliance with the financial institutions, regional banks, and also Shinsei Bank, SBI, Sumishi Net Bank. There are alliances there. So we have rolled out different types of alliances. But since the announcement and started the Zero Revolution, you can see that In these different forms of alliances, the fact is manifested. Same with the alliance with SMBC group as well. So in March 2024, we have achieved plus 15% month-on-month. And with Olive, We are actually increasing very steadily the accounts that are brokered by SMBC. It's approximately 180,000 now, and month accumulated amount through SMBC is approximately 73.3 billion yen. So the mega banks card, especially SMBC's card, When someone comes into a company as a new worker or new recruit, they all issue cards. They all write up cards. So that's why we have this multi-card strategy. I always tell them that we need to be through the multi-strategy, whether it be cards. So, for example, we have Sumitomo Mitsui card, Takashimaya card, Tokyo card, Aplas UCS card, Jafar card, and Oracle card. You know, SBI securities allows accumulation type of fund investment with all of these total of seven credit cards. It's much better than one card. And here is we talk about Rakuten's ecosystem. It's quite a bit of a financial ecosystem, but you can see that we have adopted multi-point strategy. And there's an integration of V-Point and T-Point on 24th of April. And then PONTA is joining forces. And you have all of these other different points. And we are now establishing a multipoint ecosystem. And SBA Securities seeks to the top position in number of NISA accounts with Zero Revolution Part 2. And I have been saying this persistently. in the exit committee. I heard that we are behind Rakuten, so we instructed them to implement strategies against Rakuten. And they were giving me all these silly strategies, so I have added pressure to them. And they have finally come up with different measures to deal with Rakuten. But the real winning point is to actually increase the overall number. And it's really a matter of time. So, Nomura and Daiwa, this is their situation. Nomura newly opened NISA accounts, and NISA account transfers from other security companies are rising as well. Year-on-year, it's plus 161.1%. This is above 800,000. And this is quarterly trend of the number of NISA account transfers from other security companies. So by the end of the year, there was quite an increase, and then there's a big fall as a result of that. But you can see that on a year-on-year basis, it's plus 188.7%. Even in January-March period, it's 24.3%. So a quarter has actually transferred to our account. And this is very clear. Rakuten only published information like this on a quarterly basis, so we tracked it. So you can see January, June 2022, we were behind. We always look at it on entirety, so we don't really, you know, we're paying attention to the details of NISA accounts, for example. But I've been saying that this is a strategically important product for us, NISA accounts are, as well as IDECO accounts. My voltage really went up. was the start of new NISA, I said, you know, we need to thoroughly work on this. And we were able to exceed Rakuten in July, and we exceeded Sukhnikva in January, in June, and they worked hard to catch up. And you can see July and December. They came very close. But then again, in January and March 2024, we were quite a bit ahead of them. Maybe they ran out of bullets. I'm sure they did their best. But we started early on building a system structure that can withstand the expected increase in the customer base. Systems are the most important in order to implement a strategy like this. SBI Simplex Solutions has been established. It was February 28th, 2023. Approximately 600 IT engineers operate as a group of practical IT engineers. Furthermore, we are migrating to AWS cloud. It has to be cloud going forward. Why cloud? Why did not Japan implement cloud earlier? Banks, core bank system, what we're developing right now is all based on cloud. We're using AWS. We can really benefit from agility and resilience if we go cloud. We will be absolutely stronger. We can see transaction stability. And there are fees, costs associated with it, but this is for the customers. We don't want to be thrifty if it benefits the customers. So expansion of SBA securities customer base contributes to the SBA group as a whole. And I've been saying this persistently. Before we started, I said this will be the picture. This is our ecosystem, and we want to add positive impact on all the companies in our ecosystem.