Sbi Holdings Inc Ord

Thank you very much for gathering despite your busy schedules, and thank you for many of you to participate online as well. It is the first quarter results explanation, so on behalf of DAO, I will be providing the explanation. So without further ado, I would like to start. This is the consolidated performance. Revenue, 330 billion. Profit before income tax expenses, 51 billion yen. Profit for the period, 38 billion yen. Out of that, profit attributable to owners of the company is 21 billion yen. Therefore, revenue, profit before income tax expense, and profit for the period, each one of them for the first quarter has resulted in a record high. Profit attributable for owners of the company year-on-year basis is showing a negative number. However, regarding this, this was a temporary factor or due to temporary market situation changes impacted this number. Therefore, in a full year basis, we believe that this is not a problem. Regarding the details, I would like to explain using the following page. Our company... The calculation of the total shareholder's return is using the profit before income tax expenses of the financial businesses. Therefore, we consider this profit before income taxes expenses index to be one of the important indicators for making management decisions. And compared on an year-on-year basis, profit before income tax expenses was 20.3% year-on-year increase, up to 51.7 billion yen. main factors is financial service business led by the SBI Shenzhe Bank Group's corporate business expanded and an extraordinary profit from the liquidation of subsidiary the numbers were strong and as you know from the second half of last fiscal year we have been executing the zero revolution and there was a Unusual income regarding that, but the securities business is performing strongly, and therefore in the first quarter, the profit before income tax expenses was a record high. And the negative number year-on-year basis, profit attributable to owners of the company, there are several factors behind this. And as for the temporary factors, last fiscal year, Sumishin SBI Net Bank IPO'd and sold part of their shares, and the gain from that was 1.5 billion yen, which fell of this fiscal year. In addition to that, this fiscal year, Gumi, which was the equity method affiliate, has recorded an external loss, and we had to take that in. Therefore, it was 1 billion at Gumi. and at the other equity method affiliates, similar situations occurred. That is why we have experienced a negative this time. In addition to that, our company applies IFRS, and due to that, it is impacted by the market price. And last fiscal year was 5.2 billion yen, the fair value of direct investment listed tax. But there was a general holdings of 2 billion yen. as a fair value loss. And this is the direct investment. So that negative figure is down to the profit attributable owners of the company. And as for the foreign currency denominated exposure, right now we have the hedging. However, having said that, the first quarter, there was the rapid and weakening. And the hedge position regarding this... the parent company is leading that. Therefore, that loss has been reflected in the profit attribute to owners of the company. And as for the foreign currency denominated investment securities, and as for the loss and gains of the foreign exchange, there is a part that is held by the external fund, and that is recorded as a non-controlling interest. Therefore, for the profit before the Income tax expenses is impacted, but when it comes to the profit attributed to owners of the company, it shows an impact. However, once the end strengthens, we believe that this is going to be showing a different number. And this is repeating myself. We are applying IFRS in a short-term basis. The market situation's impact, especially we have the market cap value And due to the temporary factors, it shows a large change. But if we look at the short term, it is starting to calm down. So for us, we are putting importance on the full-year growth. And this is the point that we would like you to understand. This is by segment of performance. Financial service business, asset management business, crypto asset business at each segment, the revenue and profit before income expenses of both for the first quarter has recorded a record high. And as for the investment business, as I've explained, the listed companies are negative figure. This term, it is a minus 4.6 billion. And as for the next generation business, I have explained Gumi just before, and the investment that we're making for the next generation business due to temporary factors, it is showing a negative 5.4 billion. And from now onwards... In the last result announcement explanations, Kitao mentioned that we are reorganizing the business portfolio. And we are showing you several progresses. And I'm hoping that I can share with you each one of them. First of all is the bank business portfolio. is promoting thoroughly reinforcing its profitability through allocating business resources. And this week, 0.25, the rate has increased. And ahead of this, we have been implementing our initiatives. And we are seeing the effect of that now. SBI Securities is under our groups. So there's a strong image that we conduct securities business. However, in fact, within the financial service businesses, if we look at the ratio of this business, if you look at the far right, you will know the banking business, it is 62%. That is the situation that we are reaching now. And the policy interest rate was increased. And what is the situation going to be is the question that I assume that you'll be asked, so we have created this slide. First of all, regarding Shinsei Bank, there's positive and negative factors, but in a full year, it's about $2.1 billion increase in profit is what we're assuming. On the other hand, for the net banking business, Within the housing loan, the majority is the variable rates. And for asset management, the majority is variable rate. So if you look at the overall picture, it's about a 13 billion yen increase in profit that we expect. Shinsei Bank's first quarter J-CAP results are shown here. Net profit was 31.9 billion yen, which is 143% year-on-year. Starting with Aplus, the corporate business has grown and derivative of related revenue has increased as well and extra earning profit due to the liquidation of subsidiary. The result of this, the net profit was 31.9 billion yen. Furthermore, IFRS, making the bank into IFRS-applied business, there are various impacts. Currently, JGAP was $36.4 billion, and IFRS was $34.8 billion, so there's not much of a situation where there's not much of a difference. And this is the Shinsei Bank's retail accounts and total deposits. It's been about two years since it became our subsidiary company. And as for the deposit amount, it's about slightly under twice of the amount, which is slightly under $11.7 trillion. And this is showing the Shenzhen Bank's operating assets, and we have implemented various initiatives. In two years, they have increased about... and it has reached 12.3 trillion yen. And furthermore, as a different initiative, We have partially acquired NEC Capital Solution Limited, and we have entered the basic agreement on business alliance. We have the voting rights of 33.32%, and therefore it has become the equity method affiliate. And as a result of this, NAC Capital Solutions revenue, we will be able to intake it, and we will have the synergy of Showa Leasing, and it will be a comprehensive complement to each other's business. And SBI Shinsaibank and SBI Money Plaza's co-managed stores. We have been increasing the co-managed stores from August of 2022, and we have expanded to 22 of them. The AUM has exceeded 300 billion, and the majority of the customers are in the wealthy segment. Next is SBI's machine net bank performance. Regarding JGAP, ordinary business of profit, year-on-year basis, plus 13.3, which is 9 billion yen. And it is steadily performing. And IFRS, we have 31.9% interest, and we had the intake of that part. And IFRS, we have converted to IFRS. For example, the upfront fee was deferred in this fiscal year. The apart JGB and others, due to the rise in interest rate, that was market valued and it was impacted by the decline in valuation. And that is why it has resulted in 1.1 billion yen. SBI NetBanks, this is showing deposits and the number of accounts since the start of this business. We have gradually increased it. And recently, it is at the level same as the top players in the regional banks. And in 16 years, we were able to achieve this result. And this is South Korea's SBI Savings Bank.

If you look at the IFRS number, So IFRS, year-on-year, the change is plus 144%. It's 4.297 billion. If you look at the South Korean economy, the business conditions sentiment continues to remain weak. And other savings banks have real estate project finance, which they are struggling with. But with our SBI savings bank, we have been containing real estate project financing. Therefore, as a result, we are seeing an upside on our earnings. And also, if you look at our delinquency rate of our receivables, at the end of March, was 5.6%, but now it has improved to 5.4%. So when we actually made it a subsidiary, it was 51.6% in delinquency rate, but we have been lowering that level gradually like this, and we continue to keep this delinquency rate low. And even if our peers are struggling, we continue to remain at the very low level. So if we see the economy of South Korea turn around, then we can expect greater profitability here. This is a situation on the next generation account system. So from July 16th, 2024, we have begun to see operation at the Fukushima Bank. It has been designed and built on AWS to achieve high scalability. What's noticeable here is that in all accounting programs where there's great burden, especially when there's a migration switchover, there's a large upfront cost and there's depreciation cost following that. But because we're using a silent partnership scheme, we are using an annual fee model, which changed the cost from fixed costs to a variable cost structure. And at this point in time, leveraging our know-how from the operation, we will be implementing this at Shimane Bank, so we will be able to support the smooth implementation of the system. Next is on our securities business. Through this initiative called Zero Revolution in Securities Business, which we have actually carried out. Of course, there was a substantial amount of lost revenue, but we have overcome this and have actually achieved increasing revenue and profit in Q1. In all items, you can see we have record high. Since four years ago, we have tried to diversify our revenue sources, and this is an outcome, a result of that. If you compare with ourselves, with the peers, this is what it looks like. If you look at the operating profit, you can see that we're maintaining a very high level. Meanwhile, online securities, if we compare ourselves with them, many of the online brokers are negative. However, we have been positive, and you can see that we have actually gained profit. So according to our calculation this time, because the stock market is quite active, if you go to the conventional calculation, in just one quarter, there will be $1.1 billion in lost profit. $9.1 billion, excuse me. Now, this is a comparison of the revenue structure. This is the fees where we have basically lost, and it's nearly zero, where it's light blue. But if you look at the financial revenues and trading revenues, we have substantial increase in which we have offset this losses on the online brokerage from the domestic stocks. And therefore, we have seen 11.2% increase year on year, and it's 56.7 billion yen. In particular, the financial revenues, we've been able to generate 20 billion. I think this is a major point. This is a quarterly trend. The left two, this is before Zero Revolution, and the three on the right-hand side is after Zero Revolution. So we have been preparing from zero, revolution, and you can see that bear fruit. And year on year, we have now booked plus 11.2% increase. Earlier, I mentioned briefly about margin trading, open interest credit balance, and financial revenue. This is 2 trillion yen exceeded that 2 trillion. This is 42.5% year on year. This is expected to continue to increase. This is trading revenue. Sales of foreign bond continue to make a significant contribution. And the FX market has quite a bit of a volatility. But even then, FX revenue is increasing. And in fact, we have actually recorded a record high in foreign bonds. This is the investment trust. You can see stable stock revenue from investment trust business. Again, we are recording record high. Since NISA started, within just six months, we have been able to increase our balance to 1.5 times. As a result, investment trust fees... we can see we continue to record a very high level of fees. In investment trusts in particular, there's an impact from accumulation type of investment trusts as of July 22nd. On a monthly basis, we have exceeded 230 billion. On an annual basis, this is 7 trillion yen. It's 2.7 trillion yen. So we can expect to see increase in investment trust fees even going forward. With regards to SBI RAP, this is robot advisor. Since the start of the service, AUM has now is approximately 115 billion yen. What's interesting is that SBI and Shenzhen Bank's branches, face-to-face branches, they started handling this. And this has actually exceeded 50 billion in AUM just within a year and nine months. With regards to SBI securities, they're strengthening wholesale business as well. You can see IPO underwriting. We are continuing to maintain number one position in terms of share. Also, PO underwriting business is strong. Just in just one quarter, we have underwritten two POs, one of which was lead manager. And with regards to corporate bond underwriting, you can see we're growing very steadily. We wrote 11 corporate bonds in this Q1. Now, with regards to the M&A business targeting SMEs, we have been strengthening this. We have established a joint venture with Tsuchihongo M&A Solutions, and you can see that we're also increasing this business as well. With regards to the revenue from foreign stocks, U.S. trading volume continues to be strong. We're continuing to see growth. With regards to margin trading, we can see it's record high. It's 700 billion. We're very close to 700 billion. In terms of revenue from foreign stocks, if you're trying to quantify this, in 2023 Q1, compared to that, we have actually grown by 1.7 times. Again, Zero Revolution Part 3, this is elimination of real-time foreign exchange fees, and this has really boosted the number of customers. With regards to the futures options and individual stock option, with regards to futures options trading, since zero revolution, we continue to see nice increase. With regards to individual stock options trading, we continue to see, if you quantify this compared to 2023, You can see we have grown by 3.5 times in Q1 2024. Going forward through zero revolution, the customers that we have acquired as a result of that, we will offer diverse products. And therefore, as a result of that, we can see the individual stock options trading to become very interesting and we're trying to strengthen this business.

This is a situation of SBI cross for this one. We're preparing it to become dark pool and TSE, PTS, and others, including this dark pool. And towards the customers who have four markets plus SBI cross, they'll be able to order and execute from the best one out of the four. Therefore, from the customer's perspective, with a favorable price, they'll be able to execute. And for us as well, Depending on the trading amount, we are paying the commission to TSC, but we are able to lower that fee as well. And this high revenue of over $9 billion in the first quarter, why we're able to do that is because we have been expanding our customer base. We have announced zero commission fee. And from that time, the number of accounts have been rapidly increased. And as of July 16th, it has surpassed 13 million accounts. This is the share of trading value plus margin and spot. Both has hit the record high. Both of them has exceeded 50%, especially for the margin trading. It is close to 60%. As for the NISA accounts, currently... We are strongly trying to chase up to Raktan, and on a daily basis, we are rapidly increasing the number of counts. NISA purchase amount. After the new NISA has commenced, it is increasing significantly. Before NISA commenced, it was $601 billion, and now it is $2.6 billion. 2.6 trillion. And this is the positive impact of UNISA and Zero Revolution. In addition to that, IDECO, we are looking at it as a strategic product. SBI Group, from 2001, this 401k's possibility is what we have seen as the future potential. And we have established this project. SBI benefit system and been responding to this situation. And from there, it has rapidly grown, and the KGAR is 32.4%. And the number of subscribers, individual and corporate, together, has reached 1,000. 1.226 million. And as for IDECO, it's the largest in industry. It's 970,000 and is maintaining the top position. And as for FX already, the customer base that we have acquired through Zero Revolution, we are seeing an inflow from that. In SBI, FX business, the number of accounts is increasing significantly. The number of accounts in AUM is positioned to be the top player in industry, 2.3 in the number of accounts. And as for AUM, its customer margin deposit is $400 billion. And next is turning asset management into a new pillar of revenue. As for the SBI Global Asset Management JGAAP consolidated results, as shown, in all line of loss and profit, it has hit a record high. SBI Global Asset Management's group asset under management is increasing, and it is approximately increased to 6.5 trillion yen And for others, the management companies belonging to this segment, Reo's Hifumi, Okasan Asset Management, both are experiencing an increase in both revenue and profit. For Okasan Asset Management, once it became a subsidiary company, we had a strict cost control, and they have shown a significant increase in profit. And SBI Group's asset under management overall in total has surpassed 10 trillion yen. And this is a stable revenue, and it is contributing to our financial performance. In addition, towards our customers, we would like to provide diverse products and respond to various needs. Therefore, under this way of thinking, we have a business alliance with overseas asset management companies, and one of them is Franklin Templeton, which is a leading asset management firm. Regarding the digital asset management, we will be developing products together with them. They are already managing the Bitcoin ETF and also has been receiving the approval. And in the future, not just for crypto asset, but for security token, for the other digital assets, we will be developing products as well. Next is the alliance with Man Group. This is a multi-strategy fund, and we have already offered, start offering this. Usually, in this type of funds, there's a large amount of fixed fee and performance-based fee that is taken. However, for us, we are customer-centric. Therefore, there's no performance-based fee, and for the fixed fee, we have realized it being under 1%. As for both fees and commissions... And we also have some alliance and alternative investment products of private equity. And we will be developing new products for the asset management business. And through these initiatives and by fiscal year 2027, We are endeavoring to achieve an AUM surpassing 20 trillion yen of diversifying products, and that is why we're focusing on the development of products. If we're able to achieve this, we'll be able to secure stable stock revenue. Next is strengthening efforts in general asset area and in creating new financial products.

This is number of customers in crypto assets. We are already seeing the effect of zero revolution. And this is plus 10% Q1Q increase. So SBI VC Trade and Bitpoint achieved customer balance of 100 billion yen respectively. So that's the situation. Also, in order to meet the needs of the customers, we are handling a variety of crypto assets. There are a lineup of cryptocurrencies that only we handle in Japan. In addition to that, we offer staking services. This is very similar to investment trusts. Customers have paid a certain amount of interest equivalent compensation and they will be entrusting their crypto assets to us. And with an active crypto asset market, we're beginning to see increasing balance. We're seeing increasing large customers transferring to us. So the contribution to the revenue is increasing gradually as well. This is security token. At Osaka Digital Exchange, they are developing new products. There are three real estate SDs which are already listed, and the market cap is approximately 10 billion yen. Also, going forward, they will look into corporate bond type of SD, and we're discussing this with different experts from the industry so that we can develop this product going forward. This is Dojima. They have already been handling precious metals. But from June, we have been given permission from the Ministry of Forestry and Fisheries. And we have been able to establish and list rice index market. We basically make an index of more than 100 varieties of rice nationwide. And going forward, there's a joint venture that we have a partnership with, and we will list emissions credits, related products in the future, or within the prospect of linkages to the Carbon EX and the group's carbon credit and emissions credit exchanges. So our overseas business. We are particularly focused in Southeast Asia, where there's a great contribution from population bonus in Cambodia and Vietnam. And we have banking and security business, which we have made into subsidiaries. Leehor, this is a Cambodian bank. This is a company that was given a birth as a result of partnering with a major collaborator in Cambodia. In the first half, we have already seen a profit before tax of $963 million in the first half, and we're now expecting this to continue to increase. TP Bank, this is a bank in Vietnam. We have 20% ownership. We actually acquired an additional ownership of 20% and made it an equity method affiliate in February 2023 last year. It's a TP bank. They have generated 21.3 billion in the first half. And in the first half, we have 7.9 billion contribution to the financial services business as part of equity method. Others, the size is not so substantial yet, but we have businesses in Thailand and Cambodia as well. Moving to Russia. Despite this current situation in Russia, we have downsized and we have been managing the operations very cautiously. Meanwhile, we have been able to meet... maintain their role as a local financial infrastructure, mainly for the Japanese companies as a result of their need. And because of the increase of the policy interest rates in Russia, they have recorded a pre-tax profit of 2.206 billion this year in the first half. Below that is Cambodia. This is Liho Partnership again. We have established an insurance company with Liho Group. So again, this is an insurance business in a country where we can expect population growth, therefore business growth in the future as well. UDC Finance is a subsidiary of Shinsei Bank. It's the largest non-bank in New Zealand. We also have a bank in Vietnam. This is MB Shinsei Finance. It's a military commercial joint stock bank, which was established in Vietnam. Again, this is a non-bank, but we continue to hold them. Others, we have formed a business alliance with Shin Nippon Biomedical Laboratories, SNBL group, and we have decided to establish a business incubation in Washington state. And the two groups will also agree to establish a fund in the United States as well. Moving on to semiconductor business. So along with Shimizu Construction, we have started designing and we are trying to calculate the cost. The semiconductor business for us is not just growing as a semiconductor business, but this is revitalization of the regional community in Japan as well as manufacturing itself. So we're not so concerned about our investment ratio, but we want to solicit investment widely from like-minded companies. So, for example, manufacturers of materials or semiconductor manufacturers, trading firms, or even semiconductor users or financial institutions. We want to jointly and in solidarity rebuild the Japanese manufacturing industry. In July this year, so that was July 19th, we held a special seminar for regional financial institutions on the semiconductor fund-raising business, and there were 108 financial institutions participating across Japan. And we also did a site visit of where the Foundry is expected to be built. And we had special seminars. And there were 14 huts of the regional financial institutions. And after the seminar, we took a survey. And as a result, you can see that it has been received quite well. And individual feedback we have received indicated that they are very interested in this laundry business. Also, on the 19th of November, we are planning to hold a seminar for the corporates as well so that we can accelerate partnership with financial and business corporations, including local companies. In addition to this, this is not just a semiconductor business standalone, but... We will collaborate with other financial institutions' business of the group so that we can work closely with the customers and we can that way enhance our financial institutions' business as well. So this is other main businesses. SBI Insurance Group. This is accounted on a JGAP basis. Ordinary revenue year-on-year was plus 10.8%. This was $30.9 billion ordinary profit, and also profit attributable to owners of the company was actually negative year-on-year, $3.7 and $2 billion respectively. But in the life insurance business in the previous year, We changed the seeding ratio, and there was a reversal to the policy reserve, which actually we booked as a one-off item of $1.7 billion. So without this one-off factor, the business is actually growing and booking profits steadily. And this is policies enforced. You can see on a CAGR basis, it's 14.6%. You see steady growth. This is investment business. So in some of the listed securities, we have booked valuation losses, but for unlisted securities, we have been able to secure profit, especially in the listed securities. In some of the securities... We were holding onto them since they were unlisted and they went public. And usually the valuation went up, but then the share prices fell. And as a result, we had to book valuation losses. So that's the picture I think you can see from here. This is IPOs and M&As of the investees. Prospects is 36%. And we're expecting to see multiple companies going public. So that is all from me on the explanations. Thank you.