Sbi Holdings Inc Ord

Thank you very much for joining us today despite your tight schedule. And there's a big turnout online. Thank you very much for that. This time we are going to present the first nine months, the results. And on behalf of Mr. Kitao, let me begin. So consolidated performance revenue. 1 trillion 13.3 billion yen and the profitable income before tax, 179 billion 378 million profit for the period, 129 billion 790 million in profit attributable to owners of the company. ¥101 billion, ¥157 million, so it's over ¥100 billion, and currently annualized LOE is over 10%, more precisely, 10.3%. This is the pre-tax income comparison with major securities groups. We are overachieving the Daiwa Securities Group, and following Nomura Holdings. Next, by segment, as to revenue, financial services business, asset management business, and crypto asset business hit the record high for pre-tax income. The record highs were recorded by asset management business and crypto asset business after the U.S. presidential election. The crypto asset market was very robust. Year-on-year, nine times the pre-tax income was 18.1 billion yen. I'm going to give more details later on. This is shareholders' benefits, XRP, and the other selection is provided to the shareholders. In the past, we used the XRP for the five, the benefits, the payouts. And if we had kept those XRPs, the 50 yen is the... weighted average unit price, and currently it stands at 354.6, namely approximately seven times. So those people who chose the XRP now have 100 yen or so out of value. So if they kept it, the value is now 3.5 times. The financial services business 867 billion yen, record high revenue. And the pre-tax income is about 170 billion yen. They're very good performers. Major factors are banking business, about 100 billion yen. Year-on-year basis up 88.8%. For securities business, zero revolution. The other lost income, there was some lost income, but that was overcome with the 61 billion yen on up 19.6%. First banking business, SBI Shinsaibank consolidated performance on the JGAB basis. As the ordinary business profit, already in the third quarter, 100 billion yen mark was exceeded. In the previous year, for the first time, 13 years, 100 billion yen was exceeded. And this year, we achieved it in the third quarter. Of course, there was some one-off profit. Even with that, the group synergy helped considerably to improve SBA Shinsa's performance. As to IFR spaces, Pre-tax income is 76.7 billion yen or 147% up year on year. SCBI says the amount of deposits and number of accounts, retail accounts, 6.5 trillion yen is the number before joining the group. In about three years, it increased to 13.6 trillion yen, more than doubled. And the number of accounts, 3.74 million. So it is increasing very smoothly. This is operating asset balance. before joining the group, 8.2 trillion yen. And from there, good synergy that was leveraged to reach 13.5 trillion yen. Next, SBI submission at the bank situation. Ordinary profit on a JGAB basis, up 6.5% year-on-year at 26.7 billion. And as the Alpha's basis, Current liquidity ratio is 34.21%, so 4.4 billion yen. SBS Mission Network Bank's deposits and number of accounts since the opening, both of them have been increasing steadily. Debit months exceeded 10 trillion yen mark and the number of accounts will soon reach 8 million. Especially, most recently, the increase that is significant. SBI Savings Bank in Korea. compared to other savings banks which are struggling from investment in real estate. SBI Savings Bank discontinued their investment in real estate, so already they are showing some sign of recovery. They have come to the end, more or less, the aggravation of loan credits. They have 0.6 billion yen or up 25.1% year on year on the IFAS basis. As to delinquency, 4.97%. This is the lowest in the industry. So the aggravation of the credits have come to its end. The policy rate has been raised very recently, and the impact coming from that is shown here. Of course, it depends on how to calculate. It's somewhat different, but the 2.8 billion yen impact for the SBI Shinseng Bank for FY2024 and for SBI Shinseng Bank annual impact, full-year impact, with 0.25% increase in policy rate. is about 14 billion yen. And this bank is doing mortgage business, so after the policy rate is raised, there is some time lag for them to raise their own rate. And with that time lag included, we calculate it on a full year basis. Next, securities business. SBI security has consolidated results on the J-gap for all the profits hit the record highs, especially for the second quarter policy reserve provisioning. accounted 2.6 billion yen of extraordinary losses, and even with that, they hit the record high. And the 28.5 billion yen or so of the lost earnings coming from zero revolution, but we have overcome the lost earnings by diversifying sources of earnings. So on your basis, we increased our revenue. And previous fiscal year that it included the after the zero revolution implementation and even after that, we are increasing revenue. So after the start of the revolution, the trend of quarterly revenue already after the revolution. On the left-hand side, the light blue portion, which is very, very thin, this is the piece that we lost because of the Zero Revolution. And after the launch of Zero Revolution, We have been diversifying revenue sources, increasing, for example, our financial and trading revenue, especially for financial revenue, the open interest credit balance. In August last year, the equity market crashed, and temporarily it went down, but currently we are seeing recovery. Currently, ¥1,921.4 billion or plus 25% year-on-year. In terms of financial revenue, in the second quarter, the bar was highest. This is after the crash in August on the three-year average balance basis. It turned out to be the highest. And October, November, December, there was the downward trend, so the revenue temporally declined. But we are seeing recovery. And we can expect this to be good revenue sources again. And this is commission income from foreign stocks tradings. Recently, AI-related names, for example, NVIDIA or Tesla by Elon Musk, the trading of these names is increasing rapidly. And it has spot the trading up 80% year-on-year for margin trading year-on-year basis 3.6 times. So significant increase is observed. And along with that, commission income is increasing, actually hitting the record high. The trading revenue situation... This is for the first nine months of the year. At this time, the record high was hit. Foreign bonds and FX-related income are on the increase. Also, investment trust balance. And the investment trust fees, stock revenue, they hit record high, 17 trillion yen record high. For the investment trust fees, now come to very close to 4 billion yen record high.

So next is about investment trust sales, which is shown on a quarterly basis. For Q3... We were at 1.8 trillion yen in trust sales, which is far higher than other companies. Especially for the month of January, we recorded record highs, which is close to 1 trillion yen for investment trust sales. And going forward, we expect the balance is expected to further increase. For the investment trust savings account settings, as of end of December, we were at $260.1 billion, or close to $3 trillion on an annualized basis that is expected. So going forward, on an annual basis, we expect growth to be increasing by $3 trillion. Therefore, we believe the fee income will also increase. And for savings, this is not likely to decline regardless of changes in market. That was what we saw back in August last year. So next is the IPO underwriting ratio. Our share was at 90%, which is leading the industry. So due to the zero revolution, here is how our customer base is. In 2019, June, we announced that fees are going to become free of charge. Then after, the number of accounts significantly increased, and we are currently at 13.66 million accounts. For share of individual trading value, regarding this part, both have been exceeding 50%. For individual stock trading value, we are currently at 56.3%. And for individual margin trading value, we are already close to 60%. So if you also include institutional investors on top of individual investors, the share trading value is shown here. The top is at 20%, and after the zero revolution, in the case of our company, our share has been rising, and now we are at 15%. And regarding the balance, we have been seeing an increase which is at 46.7 trillion of asset under custody, which has went up by 40% year over year. For FX trading accounts, the customer base increased through the zero revolution, and this has been contributing to FX trading accounts as well. For the five FX trading-related companies, we are by far the leading company. So next is about the insurance business. For the insurance groups that are listed, this is a preliminary result, but we have been seeing higher ordinary income and higher ordinary profit, and profits have been up steadily. For enforced contracts, CAGR is close to, on average, 15%. Next is about the asset management business. Both revenue and profit before income tax expenses have reached record highs for profits. It was $4.3 billion up by 25.8% year-over-year. For SBI global asset management, this is a listed entity. On a JGAP basis, at all levels, we were able to reach record highs. revenue went up 13 periods in a row, and for ordinary profit growth, it was 16 consecutive periods in a row that we were able to increase. Other than that, For Ryosei Fumi and Okasan Asset Management, that are group companies, both entities performed well and continued their risk performance. For Okasan Asset Management, after they joined the group, we have been implementing measures, and for profit, it was $973 million, up by 160.2% year-over-year, which was quite substantial. For AUM for the group, we are approaching 11 trillion yen. So stock income is important. So we are striving for 20 trillion by the end of fiscal 27. So total net asset value rank, we have joined the top 10 on a group-wide basis as a group. For the investment business, for Q1, Q2, negative trends continued, losses continued. But for the third quarter, due to several names, we were able to see valuation gains. Of course, there are many names that we carry, so some of them generate losses. But valuation gains exceeded losses, and we were at $17.2 billion. for profit before income tax expense. And for profit and loss from the change in fair value and profit loss on a sale of investment securities, we were at $20.9 billion. For M&A, last fiscal year, the number was 21, but prospects for 24 is 24. And we have been able to realize 18 companies for IPO and M&As during this fiscal year. Often we are asked a question about Ripple, From our point of view, we are – we own approximately 9 percent based on actual holdings as the largest external shareholder. And they were established in 2012 September. In several years' time, the SBI Group invested in Ripple. And around the same timing, we established SBI Ripple Asia for international remittance businesses. And SBI started providing Japan's first international remittance service using XRP. And the sales started for a USD-linked stablecoin as well this year. And for XRP, in the last three months, prices have been going up and down. There are many people who have a misunderstanding about XRP, so I would like to explain. The maximum supply is 100 billion XRP, out of which the green part or the light green part, this is the XRP that is circulated, which is about 60% of the total or close to 60%. So when people talk about market capitalization, this is the part they're talking about. On the other hand, The current Ripple's holdings are the bottom part. The direct holdings, which is spot, and the escrow part, which is there's a limit to selling. So that part is 40% of the total. And for SPI group, we don't own XRP. We own the shares of the Ripple's. So So regarding share evaluations of Ripple, if someone were to do a substantial trade or if there were to be an IPO and the shares were to be repriced, And that reflects the value of XRP that will be reflected on us. However, unless that happens, it will be hard for us to change the valuations of Ripple. This is AUM of the SBI Group. It's $824.4 billion. for private equity. Next is crypto assets. In light of the presidential elections in the U.S., the crypto asset market globally picked up in light of these trends. For revenue and profit before income, we were able to reach record highs. And for profits, it was nine times more year over year at $18.1 billion. And for our crypto asset business, if you look at the graph at the bottom and the line, this represents the quarterly revenues from the SBI Group's crypto asset business. And for the bar chart, this is the quarterly BTC Bitcoin trading volumes on the world's leading crypto asset exchanges. So you could see that it moves in conjunction with one another. B2C2, which is the biggest liquidity provider, we have ownership. And so with the more trading volume for crypto assets globally, we believe our earnings will also pick up. Here is the next-gen business. It was $10.9 billion negative for profit before income tax expenses. For the first two quarters, one-off losses, and for this segment, we own equity-accounted companies that went through an impairment loss. And due to this impact, we saw huge losses for the first two quarters. But in the third quarter, the losses contracted. On the other hand, we are still making advanced investments into the digital asset area. SPI Allopromo also belongs to this segment, and we are currently preparing, striving to bring this company to market in fiscal 25. So next, I'd like to talk about SBI Shinsei Bank. I'd like to talk about putting an end to the issue of repayment of public funds, which is SBI Group's position as a great cause. So SBI Shinsei Bank's ordinary business profit after they've joined the group has significantly improved because the ecosystem was leveraged to its maximum. we were able to exceed $100 billion as of the third quarter in nine months, although it was $100 billion for one year, last fiscal year. And for the midterm plan...

And the targets for the whole year for 2024 was ¥74.6 billion. And in nine months, we achieved ¥70 billion. And they joined the group with ¥20 billion or so. And so it's likely that they will hit four times the level of the profit. So this is the ownership situation. As released at the end of last year, currently SBA Group and the government, the organizations, two of them, so the 7% is the group's stake ratio. And based on that, we are working on repaying the public money. Partly, when they squeezed out the process last year, about 19.3 billion yen was paid, repaid, and currently we have 330 billion yen left. So the 100 billion yen that is going to be repaid upon the approval from the government, and that will happen within this fiscal year, and that is our target. and the resources that the SBI is going to use, the 50 billion yen, and the remaining 50 billion yen will be paid by SBI Holdings, and that will leave 230 billion yen left. And for that... Currently, we are working on the definitive repayment scheme, and on that, we'd like to come into agreement with the government as soon as possible. Originally, it is by June this year, but as early as possible, we'd like to agree with the government. And going forward, once the path of repayment becomes clear, then we are going to start preparation for reviewing the relisting of SBI Shinsei Bank. So now I would like to talk about our strategies going forward. In various areas, we achieved dramatic growth of the group by causing creative destruction in various areas. The shunpetas, the four types of competition, well, shunpetas, the creative destruction, and based on the other four types of competition, that are important in capitalism is the basis of the thought. And in September 23, we started the Zero Revolution. That is our very starting point. Before that, it took 82,500 yen for 10 million yen of the contract money. That is the fixed fee level. So it was really a creative distraction to cause the structural changes of the industry itself. As a result, for the customers... For some customers, investment had a rather high hurdle, but with the zero yen, the Commission lowered that hurdle and, of course, combined with the start of the new NISA program. In addition, there are some new products. SBI WRAP. The Folio, the group company, delivers the full wrap. We use that. And that is the automatic management system platform service. And after the service is launched, the 230 billion yen has already been reached with 150,000 account numbers. And the other asset under custody reached 57.4 billion. And if we look at the year 2014 through the comparison, the current level is about three times. And April the 6th of 2020, therefore, still in that comparison, the actual number is doubled. SBI Lab Part 3. With our asset management, we are doing this. It is LevRap. Has already been launched. So it is leveraged investment trust. Looking at market conditions, automatically leverage is adjusted. That is the Labour Navi course. And based on the risk appetite of the customer, you can choose the Labour Choice course. Also, recently... The equity index trading is becoming more common, so the commodity and equity index and the crypto assets in the OTC basis, CFD, is being prepared. SBI is a U.S. high-dividend equity fund run by SBI Asset Management and sold exclusively by SBI Securities. It exceeded 100 billion yen only in 20 other business days, and currently trust fee is 0.1238% per year, and it is growing rapidly. Other than that, the Mung Group, With Man Group, SBI Man Liquid Trend Fund is provided. And here, the commission is less than 1%, the lowest in the industry, and already 17.8 billion yen, exceeding 17 billion yen mark in short period. And with KKR, private debt, it is being more of the focus in the mass media report. And we have already started to offer this vehicle to domestic institutional investors with 12% annualized return. And we are currently reviewing to deliver the same product to retail customers. And in the U.S., the crypto asset ETF is already launched. In Japan, there's a possibility. to do the same. And for that, we are lying with Franklin Templeton. Once this product becomes available, we are now preparing our own product. So with various partners, we have been working to deliver products that satisfy the needs of different customers. There are many other investors who just started investment with NISA. And we are, day in, day out, we are developing various other products for different types of customers. Especially for those who are inexperienced in investment, the hurdle is high. And SBI Securities has set up the Financial Education Promotion Office and at customers' requests, we provide seminars at the government offices or the private organizations. Through January 31st, 2025, we held a total of more than 1,000 seminars. And we'd like to approach potential SBI securities clients through financial education. And a wealth advisor, another group, another player. And here, collaborating with various organizations. We provide information. Last year, we had 11 fairs with 85 sponsoring companies and with more than 3,200 visitors. Next, new technology. From new technology aspect, I'd like to make some comments. So, financial ecosystem. that we have been providing services for the securities the banking and insurance and going forward digital space is going to be more important so currently we are now focused more on building a digital space ecosystem this is trade the exchange or a bit point on the market maker on the other side of the coin and the project issuers , custody and others. In different aspects like these, we would like to provide different products and functions. in particular, Web3 and the crypto asset. The Trump administration is very favorable attitude, is having a very favorable attitude toward these things. And he has already signed an executive order titled, Strengthening American Leadership in Digital Financial Technology. And we are very interested in whether such data policy is going to be put in practice. For example, the president's working group on digital assets markets was established or evaluate the possibility of creating a national stockpile of digital assets. And very importantly, Mr. Gensler, the chair of the U.S. Securities and Exchanges Commission that exited, resigned. He was rather hostile approach to crypto assets. And now Mr. Atkinson is very likely to be the next chair. And CBDC, Central Bank Digital Currencies, it was prohibited to promote dollar-backed stablecoins. I'm going to explain about dollar-backed stablecoins later, and this is going to be very important going forward. On the back of Mr. Trump's policy, there is an impact in terms of the number of accounts in all over Japan, which is exceeding 10 million marks. for crypto asset and RBC trade and Bitcoin and their number of accounts as of the end of December at 1.1 million or the increase up 15.3% on a quarter-on-quarter basis. And 600 billion yen was exceeded in terms of assets under custody. as of January 1st. Going forward, as stock revenue services, we can count on the staking service. As you can see in this graph, In the crypto asset market, which is being very robust, and with increasing large lot transfers, it is improving, and the SCB IBC trade is taking revenue, is also growing very rapidly. And as to the volume of the crypto assets that we treat, DMM, Bitcoin, the transfer of accounts and assets will be explained later. And we thought 14 names will be added to satisfy the needs of the customers.

And this year, as we made a release on, as of March the 8th, from DMM Bitcoin, we will be transferring the accounts as well as the assets under custody. There's about half a million accounts or 100 billion in assets under custody. If it increases up until March, even more, we believe the number of accounts will increase up to about 1.7 million in total. The largest crypto asset market maker, B2C2, because of the global trading volume increase, their revenue has been increasing. Looking at the lines, This is quarterly revenues for B2C2. And the bar graph is the major global crypto asset exchanges trading volumes for Bitcoin USD on a quarterly basis. So we believe that if the crypto asset industry picks up even more, we should see higher revenues going forward as well. Well, with Circle in the U.S., we are working together on U.S. dealings, stable coins. Currently, preparation are in the final stages. Within the fiscal year, we are working with the regulators and Circle so that we can issue it for the first time in Japan. SPIVC trade? is applying for a license for electronic payment instruments service provider. So once we acquire the license, we would like to start our operations. And our company, in order to handle USDC, when it comes to the licenses, whether it be the bank, trust bank, or crypto asset exchanges, we have all of these entities within our group. Therefore, we are in a condition where we can be Japan's first company to handle USDC. And the other day, we made a press release around Solaris in Europe, and we have decided to turn it into a subsidiary. Going forward, we are waiting for regulator approval from the existing we will be buying out the shares and we will be making investments together. And at most, our ownership is likely to be 86.7%. And Solaris was established in 2015. And banking as a service is what they've been doing. So they are one of the major banks nowadays in Europe. And together with ADAC, They are working on a credit card program, and they have started to generate earnings from this business. We also invest into Boris Stuttgart Group. And through the subsidiary, we are supporting the expansion of Solaris customer base and increasing corporate value through utilizing the SBI group network in Europe. So in the case of digital asset, the concept of country borders is disappearing. So in various countries around the world, we are making investments into these entities. For example, ODX, which is Japan's first PTS to handle ST, and in Switzerland, with a sixth group in Singapore, We established AsiaNext, a digital asset exchange for institutional investors and also for Singapore. SEI Digital Market is another company. And together with Siam Bank in Thailand, we have set up this entity. And we offer tokenized products such as bonds, real estate, and real assets, which has just started. Also in Switzerland, the first digital asset bank in the world. Signum is an entity we have invested into. So through these efforts in the digital asset area, we would like to promote the business on a global scale. For new markets, next I'd like to talk about new markets. One focus area is IDECO and company type DC. In December 2024, the fiscal 25 tax reform was set forth, which is expected to further expand IDECO as a program and the contribution limit. we are expecting further growth and progress around IDECO. So this is one estimate we did. If you were to contribute for 20 years 50,000 yen with NISA, the right-hand side shows IDECO on the other hand, and let's say you contribute 50,000 yen on a monthly basis for 20 years. Looking at the difference, Because there's favorable tax treatment for IDECO, it creates the difference. And for IDECO, withdrawing, you are not able to withdraw money when you need it. So from that point of view, we believe combining NISA and IDECO together is desirable. So... SBI Benefit Systems covers the IDECO and corporate type DC business and we were anticipating this kind of situation and we've started to focus on this business since 2001 when we established this company and in 2017 we made the IDECO administrative fees completely free of charge and Due to these efforts, CAGR, or the number of subscribers, went up by 31.1% CAGR, and now the number of subscribers is at 1.3 million. And the balance for investment trusts has also went up substantially. For individual DC and the number of customers, we are currently at the top of the industry, exceeding 1 million. Also, security companies, banks, we have been partnering with them to increase this business. But now, here, we have been collaborating with Okinawa Prefecture's Mutual Aid Association for agricultural forestry and fisheries. So we are approaching new entities so that we can contribute to asset formation for a wider range of customers. So next I'd like to talk about the harmful effects caused by the TSC's concentration. We have two PTSs in our group. And of course, there are other PTSs in Japan, but many are not connected with the brokerage firms. If that's the case, executing trades with the most favorable conditions, if that is actually being realized, is a question mark. And also, when you think about resilience of security markets, in October 2020, there was a major failure at the TSC, a system failure. If PTS utilization was the norm, this failure could have been averted, meaning we could have averted a complete market shutdown. Going forward, in anticipation of deregulation, we would like to focus on acquiring trading flows through our group's PTS. Especially if there's deregulation for auction-based transactions, we would like to reinforce that part so that we can acquire the flow within our group. Also, in the U.S., payment order flow is a general practice, so we would like to lobby for its introduction in Japan. In the U.S., In order to eliminate the PFOF's uncertainty and unfairness, the system has been deployed, developed to realize best execution and pricing improvement. So we will lobby so that this can also happen in Japan. Earlier, I touched upon this topic, but in the U.S., crypto asset ETFs are already allowed. So together with companies in the industry, we have come up with a published proposal especially for the very bottom, which not applies just for ETFs but for crypto assets overall. We are asking for separate taxation by declaration because right now a considerable amount of taxes are being imposed on the individual. So this is something we would like to change. Also, for crypto asset ETFs, in anticipation of deregulation in the future, we have started to consider what kind of opportunities are out there. So next is about the art auction area for high net worth ETFs. customers or people. They are talking about art and we originally had an entity called SPI Art Auction that mainly focuses on contemporary art. It handles a wide range of contemporary artworks. And recently we acquired 20% of Mainavi, a Merida equity-accounted company. And they have a company called Mainichi Auction. It was founded in 1973. And from 1989, they started public auctions. So they are a well-established company. We have concluded an agreement to establish a joint holding company. We would like to develop new markets by capturing the diversifying tastes of various generations and their interest in artworks as asset formation and develop new markets. The final topic I would like to cover is about utilizing social media or internet media to create an ecosystem that conversions media IT and finance. So first is about the rise of internet media such as social networking services. Looking at the very bottom, this is for the condition of all generations. online or Internet has already exceeded television when it comes to average media usage time. And even for the high age bracket, more than we thought, they have adopted the Internet. We have been looking at various pieces of data. People in their 50s and 60s also watch a considerable amount of YouTube, and apparently they use social media. according to recent data. On top of that, recent elections, whether it be the U.S. presidential election or the elections that happened in Hyogo Prefecture, the candidate that embraces social media or SNS strategies have been able to win the election. For example, Mr. Trump has been appearing in 20 podcasts Also, for the Hyogo Prefecture group, notarial elections, according to an NHK exit poll, asking the question about what people refer to, 30 percent of the respondents said SNS or video sites, which exceeded 24 percent of respondents who said newspapers or TV. So when you consider these circumstances, we think we have to put emphasis on SNS strategy Of course, our respective companies have been communicating through social media by a certain degree already. However, we should have a unified approach as a group is what we're thinking so that we could have better proficiency. Therefore, we have set a specialized team focused on SNS comprised primarily of young talents, who have a high proficiency in social media platforms. On top of that, for the financial IT area, we have strength, but we would like to converge with media so that we could evolve even more. In recent news, for example, around Mr. Trump or Elon Musk, they're talking about eggs and Trump media, and they were talking about convergence. of finance. So that is what we would like to also strive to do so that we can reinforce the strength of our group. That is all for me. Thank you.