SBI Holdings Inc

TSE:8473

Earnings Call Transcript 2022-Q1

[Yoshitaka Kitao, executive]

Please allow me to stay seated and to take off my mask when I speak. So here in this venue, about 20 people are present, and a total of about 100 people are participating this session on the Internet. Thank you very much for your continued support. Now without further ado, let me walk you through the results of the first quarter.

We have 166 pages. It will be the longest presentation, and I'd like to go as fast as I can. So the first quarter FY 2021 consolidated financial results and the feasibility of the new medium-term vision based on it.

On April 28, we announced the 3 to 5 years new mid-term vision of the group. And during these 3 years and 5 years, that we would like to achieve the JPY 300 billion as consolidated pretax profit. And we are going to setup the new businesses in such a way that, that will contribute to about 20% of consolidated pretax profit, new business, meaning the business utilizing the new technology such as data assets and blockchain and any business which joined the group through M&A since April 2018. And in addition to the organic growth, we will conduct M&As and with ROE maintaining 10% level. That's the message in April. And we are committed to achieving this goal.

Now we are enjoying the Olympic Games, and they have strong commitment to get a medal, the gold medal. So I have a strong will to achieve this goal, to challenge this goal. So in that context, the first quarter of FY 2021: revenue, JPY 137.474 billion or up 23.7%; pretax profit, the JPY 33.029 billion, up 19%; profit for the period, JPY 33.106 billion or up 63.3%; and profit attributable to owners of the company, JPY 28.958 billion or up 77.8%. And according to the calculation, the analyzed ROE based on first quarter is 19%.

So setting aside the outline, let us go through this page. This is the comparison with the major face-to-face securities companies. The SBI Holdings, up 19% and the Daiwa Securities with [ JPY 35.176 billion ] or 45.5%. But probably, as to the net profit, we overcome the Daiwa; and SMBC Nikko Securities, the numbers are here; and Nomura is going to announce tomorrow. In the case of Nomura, because [indiscernible] did investment earlier, which has been offset by the sale on the stocks. That will also be reflected in their results.

So what is the purpose of the other -- the trading? Well, each entity has done what they have to do, and this is the result. By segment, Financial Services business, both revenue and the pretax profit were record high. Asset Management business: for the revenue, record high; for the pretax profit, JPY 15.712 billion or up 31%.

This here, I'm going to talk about details. The Shinsei Bank, the shares, about 20% at our stake, a little bit less than 20%. And their price went down, and we incurred some losses and it did JPY 14.2 billion. And so that will be added the -- well, without that JPY 14.2 billion loss, the number would be much better. Biotechnology, Healthcare & Medical Informatics Business, the deficit has been reducing, and the revenue is now record high.

As to the new mid-term vision. And if we attribute on the third year, their CAGR should be 28.8% for the first -- third quarter. And if it's achieved on the fifth year, then it will be the 16.4%. And when we look at the actual -- the number for the first quarter, it went up by 19%. That is the CAGR for the first quarter. So exceeding the number 4, the fifth's year assumed, the number. And as to the second quarter 2021, the Asset Management business has the stocks that are expected record valuation gains in FVTPL, there's possibility passing the first quarter results significantly. We are already seeing it in July. So probably, we are going to achieve the better results than those of the first quarter in the second quarter.

And this -- the new mid-term vision, medium-term vision, so the full year for the FY 2021, the CAGR of 16.4% to 28.8% on the full year that will be exceeded, unless something unexpected that happens. For one thing, the pandemic situation, the Prime Minister is saying that the other -- inoculation that can be achieved by the end of the November, and 60% to 70% of the Japanese people will be inoculated. So at least the people will not be seriously ill. So rather than looking at the number of infected people, we need to look more carefully the people to be seriously ill or the number of test rather than driving people to be afraid of this pandemic. That will only slow down the economy. So we should be engaged more in economic activities.

So we think that the market will not be so bad, especially compared to Western markets, the Japanese market is behind the Western markets because of the delayed vaccination. So then the Japanese economy can make a good recovery later on. And as to Asset Management business, second quarter and beyond, more IPOs of investee stocks are scheduled, mainly FinTech funds, A&B fund, will be appealed. So we will go into the period of recovery of investment. So I'm looking forward to it.

And as to Quark, which has been in the red, that will be the sort of -- so we will not incur losses from Quark Pharmaceuticals. That said, as to the other part of the Biotechnology, Healthcare & Medical Informatics Business, we will have more the positive news.

And also, as to future M&As, we are reviewing some potential targets of these activities. So future M&A strategy is expected to secure new revenue sources as well. So we have this very positive view for the fiscal year 2021.

As I mentioned earlier, compared to New York Dow or NASDAQ, Nikkei average is so slow (sic) [ low ], not rising so much. And the PER basis, as of June 30, 2021, Nikkei average and the PER, as you can see, 25.53 and 19.83, while the U.S. and NASDAQ and FT100, compared to these other markets, the Japanese market is under evaluated. And this is only because of the delayed vaccination, we believe.

Now the change -- and as to the individual brokerage trading value, the April-June is not so big -- it's not so good. The January and March was good, but some decline in the April to June, but not so different from 1 year ago. And as to amount of over-the-counter FX trading, as you can see, compared to 1 year ago, some decline maybe, but -- so this is the other -- environment of April to June. And once things turn around better way and the positive impact on our results as well.

Securities-related business, their performance has been strong. The free trade, the commission 0. The new entrants from overseas. And Neo-securities initiative, our definition is to eliminate trading fees for domestic stock transactions and some other fees that are currently incurred by investors. So the question is when we are going to do that? And there are 6 key indicators that we are going to use to make that decision as to the timing.

So the first quarter, SBI Securities: the operating revenue, up 14.3%; the operating income, up 8.3%; ordinary income, up 8.3%; the net profit, up 3.7%. It is not extremely good, but not so bad either. It is showing steady growth.

So as to the 6 key indicators or KPIs, our focus is on the share of individual stock trading value, which continues to be very high at 43.6%. And as to deposit assets and of course, the margin share is much higher than that. And the JPY 20.5 trillion for deposit assets followed by Rakuten, Matsui and au Kabucom. And these 3 entities, altogether, will still be smaller than SBI's numbers.

Operating income, these are the important, the KPIs, the Monex, JPY 1.9 billion of profit for the securities side, the -- the Coincheck performance. But -- well, these are the results of Monex as you can see at the bottom. And in addition, we have trading revenue ratio to total revenue is another KPI and the stock trading commissions without online trading ratio to total revenue and quantitative tolerance and stability of the system within this fiscal year that we are going to be able to handle transactions. I mean 11 million accounts by the end of this fiscal year. So when the commission being 0, the quantitative impact will overcome the systems capability. So we need to have the tolerance and stability of the system, the better.

So the 6 key indicators, we are going to look at these KPIs to make a decision on when we are going to make commissions 0. And if we don't do that, then there will be some player coming from overseas markets. Look at Robinhood. There's a possibility of them being in this market. But that said, I don't think that they can survive in this market because we will be their competitors. And they will not be successful in the Japanese market. Again, wrapping up 6 indicators, share of individual stock trading value and the establishment of a system to meet diverse customer needs. The younger people or the day traders and other frequent traders and our group entities have been making efforts to handle their needs. And deposit assets will grow even more. And as to profitability, not only the individual trading, but the wholesale business is in our perspective to expand it and the trading revenue ratio to total revenue.

From 2008, we have been working on the FX business is strengthening and the crypto asset business, which will be strengthened even more stock trading commissions without online trading, foreign stocks, IFA business or the real estate financial field, where we conducted some deal, M&As to explore untapped market -- customer basis. And we are going to decide on timing of realization of neo-securities initiative. Looking at these indicators.

Now this is the alliance between SBI and SMBC Group, which is going very well. Sumitomo Mitsui Card and some services and -- have been offered and will be offered. And as to Neo-Moba, SMBC owns 20% of SBI NEOMOBILE SECURITIES and the other seamless services, including automatic fund transfers with SMBC. And as to SBI Neotrade Securities, this is mainly for traders and very strong enthusiasm from the traders. It is almost 0 commissions. The number of accounts was 210,000; and customer deposit, JPY 311 billion. So we would like to increase the stock business. This means that the open interest and the net financial revenue are very closely linked. So we are going to increase the stock of the business and the investment trust is part of it. And this is the balanced regular contribution investment trusts, the month-end basis. The upper limit is shown here, JPY 43.291 billion. And on the right-hand side, investment trust balance, the JPY 4.134 trillion, the record high. And this is the investment trust savings service using the credit card, cooperating with Sumitomo Mitsui Card. And only in the 2 weeks from June 30, we achieved 6% of the total amount set aside, and I have a very high expectation, and up to 3% points that is given in the campaign.

And this is the wholesale business reinforcement. And we have finally reached 100% of the underwriting shares and, of course, industry-leading figure. And from April to June, the total of 33 companies were listed, and we underwrote all of these 33 companies, some of them as lead managers. Actually, we lead managed the 6 companies and did this one in June as well -- I mean July as well.

And as to POs, the first quarter of the 2020 was so weak. And after that, the first quarter, fiscal year 2021, so that increase of 206x. And as the corporate bond, we underwrote 7 corporate bonds in total, including that of SoftBank. So as to the financial, the corporation business, we will increase the business -- we have been increasing business with financial institutions. And our next target is the financial corporations, and we will be aggressive in this area. And for that M&A advisory, the section should be stronger. And we are going to multifaceted, the proposals, to those -- the entities and also cooperating with regional FIs, and we are going to increase the number of corporate clients. And in each region, the banks are dealing with high net worth individuals as well as the corporations, local corporations. So we would like to provide our own financial products to such market. And that will be a benefit for our allied, the regional financial institutions.

So this is SBI SECURITIES trading revenue trend. FX-related revenue or the crypto-asset related to revenue, the first quarter of FY 2021 did not increase so much. And compared to 1 year ago, there is some decrease in the crypto asset, but the other assets, including the foreign currency denominated bonds offset. So as a result, first quarter FY 2021, in total, the -- topped the results of the previous year.

So in terms of the Real Estate Finance business field, we're going to come out with a lot of products. And this June -- so we have concluded a share transfer agreement, Tozai Asset Management Co., which manages and operates real estate assets in behind -- by the end of September, we were planning to acquire 55.91% of total shares. And through these type of activities, we would like to set up the private funds like the real estate funds. We would like to proactively expand the business in those areas.

In terms of SBI SECURITIES, you can see that the foreign stock trading volume has rapidly increased. So in terms of -- compared to the first quarter FY 2019, in terms of foreign stock trading volume, it has expanded by 6x. So the profitability has expanded by 5.5x. So you can see that this area has grown.

In terms of IFA business, independent financial advisers, that stands for independent financial advisers, we have been strengthening our relationship with IFAs in terms of the revenues from -- compared to FY 2020, this first quarter increased by 1.5x. In terms of AUM, it is JPY 2.1 trillion. So in this past year, it has grown by 42.2%.

Going to the SBI MONEY PLAZA, and this is the co-managed shops with the regional financial institutions. This is going very well. So in terms of the co-managed shops, we have 21 shops with 14 banks. In August, there's going to be 1 shop added. So that means 14 banks and 22 shops, it will be the number. And for the co-managed shops, the AUM is JPY 98.5 billion. So it will be closing to JPY 100 billion.

In terms of the banking business, so as it -- we started as a challenger bank. And from the mid-term under a new concept, we have come out with a Neo-bank concept. So the definitions are written here. So a bank, whether we have a license for a bank or not having a banking license. So the functions are used by the partners. We will support them, and we will expand the customer base and provide various services through this partner. That is the definition. So as a challenger bank, we have been able to see a very high growth. So IFRS-based earnings, it's JPY 2.838 billion, so up 40.3% year-over-year. So this is a 50-50 joint venture. So you can see that IFRS, this equity earnings is under the IFRS basis.

So under J-GAAP, under the Japanese Accounting Standard, looking at that perspective, so we started from September 2007, we've been able to be profitable in a single year, and we continue to grow. And in February 2016, the BoJ started a negative interest rate policy and went down a bit. But after that, we have started to recover immediately, and we have exceeded the past peak, and we have over JPY 20 billion by now.

Going to the Sumishin Net Bank. The deposit balance is JPY 6.4 trillion. We are the #1, and outstanding loans is JPY 4.6 trillion. Compared to Rakuten, what is the difference? The deposits and outstanding loans, so we are actually a little bit more than this, but this number. So Rakuten is JPY 1.9 trillion in outstanding loans.

You can see that the deposit loan ratio is low. So that is the biggest difference. So this is rank from Yokohama -- Bank of Yokohama, we come in #17 in terms of the deposits, JPY 6.448 trillion. So this is the end of March number. So out of the 74 banks, we are 17. So we have been getting a higher ranking. So in terms of the loans, we want to do the mortgage loans, housing loans. So we haven't given loans to the businesses entities. So we're focusing on housing loans. So in terms of the housing loans, it exceeded JPY 6.5 trillion as of the 12th of February this year.

On the other hand, if you look at our Neo-bank concept, what is -- how is this proceeding? We started from Dow [ in 2022 ] CCC Group, EPARK Group and Yamada Holdings, we have been increasing the number of partners. And at the same time, we have been aspiring to become platform for the neo-bank through alliances. For the Dow mileage, it has been proceeding and advancing, so Dow housing loan has started.

And going to T-Point. For the T-Point members, this is a T Net Bank (sic) [ T NEOBANK ], bank service for the team members. So the CCC Group's T-MONEY, the T-Point. So there are 70 million T-members who use the service, meaning that once this starts in earnest, it will be a major contributor to our business.

And Yamada Holdings. Again, so there are 60 million of YAMADA Group customers. Again, this will be a substantial potential for us. And with the smartphone, you can complete all your banking transactions. And in terms of the account -- opening account at bare minimal, it will only take 3 minutes, Yamada points will be accumulated. So this is what we are saying.

So from our point of view, this is a very promising partner. Going to the insurance-related businesses. So in terms of the premium returns of the group, it has been growing in terms of the profit level. In terms of ordinary profit, it has gone up by 33%. Profit attributable to parent of the company has gone up by 25.4% at JPY 1.334 billion. Still small, but the growth is important and the CAGR basis is 15.5% growth.

I think compared to other insurance companies, I think we have an overwhelming growth rate compared to the major players because we started small, they will say that the growth rate is high is kind of natural. But we have been -- we will be maintaining this level of growth and then overcome them. I think that's the important point.

So please look at this. This is when we started and back then. And then in terms of the short-term small amount insurances, we have acquired those type of companies, and we have been increasing the premium income steadily. So from the end of March in 2018 to end of March 2021, the CAGR has been 12.7%.

Rakuten. Look at Rakuten. So it's been going down. It's minus 8.9%. So March in 2021, they have been in the red, LIFENET Insurance. The growth is 17.5%, but they have been constantly generating losses. So they had not been established as a business.

So we will be focusing on strengthening profitability through measures to expand the business mix and promote initiatives to improve the business efficiency and active promotional M&A, specifically looks as both focusing on the small amount and short-term insurance. We have acquired 5. In terms of these areas, we'll continue for M&A.

And when we acquire these companies compared to when they belong to a group and after they came to a group, we can see that the growth rate is different substantially. So it has been about 20% year-over-year. But when they enter a group in FY 2020, they had grown by about 40%. So you can see the growth rate has accelerated for PRISM SSI. So it has been the growth rate about 10%. Once they joined our group, they saw a growth rate of 20%.

So the differentiation through further strengthening of synergies within and outside the group and new mechanisms. So when we set up this group, so the business ecosystem was the organization that we seek, thought that was optimal when in this era of Internet, and this will be a more advantage for us. So that is the reason why we have set up this organization in this manner.

For instance, SBI Insurance, if you look at their situation, about 40% -- more than 40% is fire insurance application, and that is coming from SBI Sumishin Net Bank. Or if you look at SBI Life Insurance, this group credit life insurance that is attached to the housing loans at SBI Sumishin Net Bank because they are accelerating this business, that drives our SBI Life Insurance sales.

And if you look at the non-life business, so InsWeb, this is a comparison side, and about 59.9% of contracts comes from these comparisons with InsWeb or we have various agency websites within the group, and there are about 90% of the contracts from the agency -- it comes from agency website. It means our synergy is being leveraged. It's not just within the group, but we are rapidly forming alliances and expanding. We have open alliance strategy, which we implement on a group-wide basis. So each of these companies work with different companies, and they build and expand customer bases and businesses.

And SBI Insurance -- Life Insurance, I think this is quite an interesting initiative. So they have first -- Japan's first joint scheme of credit life insurance -- group credit life insurance for financial institutions. And so SBI Life Insurance is one of the founders of Zenkoku Danshin Suishin Kyokai, which is General Incorporated Association established jointly by Shimane Bank and SBI Life Insurance. So we started this in January 1, 2021, and 2 other banks, Fukushima and the Sendai Bank have also participated. Now we have 3 additional regional banks. So we have altogether 6 regional banks, and 13 shinkin banks and 8 credit unions have joined all together. So now the total number of membership is now 27. So it is extremely efficient in terms of business operations, especially for those members.

InsurTech, even in, I think, nonlife insurance business, which is SBI Insurance, they have working very hard on this. We haven't invested in this U.S. company called DataRobot. They have an office in Japan as well. So we formed an alliance with DataRobot to see how much we can improve on inbound call center rate or recommendations insurance products or automating contract administration or detecting fraudulent billing to do so automatically. And in fact, we have formed an alliance with ALBERT Inc. We actually invested in this company as well. So in this way, our business in every single aspect implements new technology and realize efficiency and improve customer satisfaction. Same thing as you can read here.

With regards to asset management business. It might be quicker if you look at the slide, so you can see that our revenue has increased by plus 20% year-on-year, 31% increase in profit before income tax expense, SBI SAVINGS BANK from Korea is plus 79.6%. And if you look at profit/loss from the changes in fair value and profit/loss on sales and investment securities is minus 70.3%. Now like I said earlier, among the public names, they were JPY 8.4 billion, that was negative. And we have Shinsei Bank here in valuation loss of minus JPY 14.2 billion by Shinsei Bank. So this is included in here as well. So we have about 20% or so in equity, which poses us risk. But again, you can also realize large returns.

So risk and return is a trade-off. So for example, BoJ, the monetary policy changes. So everything will turn around with the changing monetary policy. And in fact, if you look at the asset multiples, what about it? Basically, these are the names. It's worth holding on to. They often ask us what do you plan to do? And I always say this is pure investment. Furthermore, this is net income of SBI SAVINGS BANK. So this year's net income has exceeded KRW 100 billion in Q2 for the first time on a quarterly basis. So it's now -- so the currency -- the currency depends on foreign exchange rates, it's about 1x -- it's about KRW 193.6 billion.

So this is probably the next largest earners of our business next to SBI Securities. Now Morningstar, again, the asset business is doing really well. And with regards to asset management business, we have, for example, private equity business here. As I said earlier, we have FinTech fund established in December 2015 with JPY 30 billion. Our investment ratio is about 20%. Normally, our equity stake is about 20% in general. We have AI&Blockchain Fund established January 2018, it was JPY 60 billion. SBI 4+5 Fund, Society 5.0 and Industry 4.0, it's a combination of that. So this was established in April 2020. So we launched these funds one after another. So everything that we have launched in early stage is now in a payback period, we're able to gain earnings and are profitable. And so we continue to establish new funds.

So once we get the payback and the performance is good, then we are able to pay back the -- or give the returns to regional banks and operating companies that have invested in these companies, and they are more interested in investing furthermore. So they make a lot of money from this. So it becomes easier and easier to raise funds for these new funds.

So now we have established 5 companies that were taken public under IPO, one company subject to M&A. So altogether 6. In Q2 onwards, we have 9, 17, 7. You can see that in Q2, Q3, Q4. So that's what's expected. So altogether for full year in 2021 will be 39. Now in previous year, it was 22. so you can see that this is changing rapidly. And even after that period, we have many -- much expectations. We're expecting 35 between April and December 2022; 45, 2023 and; 36 from '24. So we will continue to see good return and payback on investment, and we will continue to build new funds, establish new funds. So we're in that process already.

This is on SPAC. This is growing quite rapidly in U.S. I think peak was in March, it fell in April, May. But then again, we begin to see increased around June. I don't think this will decrease so quickly.

Wherever we are investing SoFi. So for example, this is student loans, personal loans, housing loan service as of July 23. July, it's USD 12.6 billion (sic) [ USD 12.3 billion ] in valuation estimate, and it went public on June 1, 2021. So this is their valuation. So we're investing as well. So we have now been able to secure a large amount of profit already. And we can secure even more -- bigger profit, which is eToro. This has already been announced in various places. So it will go listed in 2021 September. We're looking at the valuation estimate of USD 10.4 billion, and we have a substantial percentage in this.

So we have venture funds that I have just described earlier, but we also have corporate venture capital fund, CVC fund. I would say we are probably the largest in Japan at JPY 100 billion. And you can see list here. And there's maybe 1 or 2 that asked not to be disclosed. So we have -- this is just a part of the example of the companies we work with. And you can see that we have continued to build up and now we have reached JPY 100 billion.

In addition to that, we have established a joint fund to support local business. So this is a collaboration again with regional banks. And it was Towa Bank and Tsukuba Bank have announced this together with us to establish this capital fund. So in 3 years, the government was -- suspended subsidies and interest. And we are investing in venture companies. So we have to look at how we monitor those companies and bring -- how to help them grow. And we have a built-in expertise on this, which we can offer to these partners as well. So we are able to monitor them. And that is why we have decided to establish this capital fund together.

Now Tsukuba Bank, for example, Tsukuba is a very interesting city. Tsukuba University is located in Tsukuba area, and you can see there are #4 among the number of venture companies that was borne out of university in terms of ranking. So this is the largest concentration in commercial season in Japan. And so we will, through this fund support these start-ups and venture companies that from the universities, and this will lead to business. And of course, this will help develop the local economy as well. So this is the reason why we have decided to establish this fund. -- business succession fund, accumulative, we're planning to achieve JPY 100 billion. So we have now #1 fund for business succession, and we have 2. So #1 fund was an investment made in TOKUSHIMA KYOWA, which operates dispensing pharmacy. And today, we have completed 7 acquisitions.

Now if they were left alone, there will be no business succession and there was a possibility that they will have to liquidate their business. So we have brought these 7 together so that they can increase the sales. So rather than to focus just on one, it was better to be more collective so that they can increase the probability of success as business -- So this is the way you need to think in terms of business succession. Same thing with large rice wholesaler. SHINMEI HOLDINGS is the largest rice wholesale. And the fund undertook its first investment to rise wholesale leader, HAMAMATSU BEIKOKU. And of course, this is also related to what will happen to the permanent listing of Dojima Exchange. But the media reported so everything has been decided. But I don't think it's -- that issue has not been completely decided yet. It's not finalized. Even if it's undecided, then Dojima will exit from doing any rice wholesale business. So in yesterday's Board meeting, we have decided that about Dojima. And today, I believe they will hold a press meeting. Mr. Nakatsuka, I believe, we'll do a press meeting on this.

So with regards to this case, I would say 90% of people were fixed on this, and they said they will not be opposed to it. And so we have the -- started to go with the permanent listing, but then there was 1 member of parliament began to say that I will put my life -- political life at stake to oppose this. And for some reason, there was surmising by the government ministry so they had went undecided. So I wonder how long these parliamentary members continue to do things like this. They think that it's more effective to win the election. They really need to do is bring in measures to innovate agriculture.

If they think about it, it's easy to think what they can -- what they need to do to win this election in that sense. I will not mention the name, but there was one nonsense parliamentary member who opposed it. So these are sort of -- I think agriculture is probably the worst. He said the parliamentary members are very linked to these agricultural policymaking. And I think this is an area that really needs reform. They need to really drastically reform agriculture land act. I have been saying this because this is an outdated law that was implemented post war. The same thing with the fisheries rights as well. So all of these things need to be changed. This will lead to modernization of Japan in a true sense. So modernization of politics. I think we need to cut off several ties with these members of parliaments who are connected to particular ministries and policies. I'm not saying this on behalf of the company, this is just my personal opinion. But I think I'm always for free and open policies. It's not just one area or region that should be open and free. I think it should be the entire nation that should be open and free market. And I am a big model of that.

I'm sorry, I side tracked so I'm going to move on. This is overseas financial service business. Like I said before, SBI SAVINGS BANK, their overall delinquency rate was 51.6% in overall loans, and this is 2013. Everyone in the media have really criticized about this shopping as a bad shopping. But now the delinquency rate is 1.6%. And I would say, following SBI SECURITIES, they bring us more stable profit. So they have transformed like this. And I think this is possible in regional banks as well. The same picture can be realized, it can be realized with the regional banks. What they need to support, but what's most important is that what we have sought out for this Korean SBI SAVINGS BANK is for them to change their mindset. I believe that in order to -- that's the greatest weapon to realize this transformation. Regional banks, all the management and employees, they need to change their mindset. And they need to once again remember, recall that glory that was lost and restore that, they need to be determined.

I'm listening to all the gold metal list who have played in Olympics. And I was quite touched and impressed. And I thought -- and looked at these young people, and I was very hopeful about Japan's future. I thought Japan has a lot of future as well. And I think the same thing with regional banks, they have potential as well. We invest and they can leverage our resources. Mr. Morita is working his utmost to realize this. But that's how they will be able to transform. And that's like one light shining over the dark area and it lights up the entire market.

So this is what you have to do in Japan as well. And this is how the regional banks in Japan will change, like Cider Bank in Korea, and they are contributing to the expansion of customer base. They quickly implemented technology and built customer base. They have changed the old ways of doing business before. This is something that have demanded strongly and they transform themselves. Vietnam, FPT Securities, we have an investment ratio of 20%. This is growing rapidly as well.

Between January and June 2021, this [ JPY 20.7 billion ]. This is full year member over here. And also TP Bank -- I'm sorry, between January and June 2021, was [ 2,065 ]. So -- and now the market cap is JPY 180.2 billion for TP Bank. This is a bank we have invested early on. And Vietnam is one of the economies in Southeast Asia that is -- probably will grow most quickly. Young population because of China's situation, there will be changes in supply chain management and many of the production bases in supply chain will be shifted to Southeast Asia. And Mr. Binh, the Chairman of FTP, and I are almost like brothers. And he is the Chairman of Agriculture Association of Vietnam (sic) [ Vietnam Digital Agriculture Association ]. And Vietnam is #2 producer of cacao next to Brazil. And there's another company that he runs and he said, that can be gone public in Japan, and he asked me what about rice. So he has ideas one after another, and I will be meeting with one of the top officials of Agriculture Ministry in Vietnam. So Japan is obviously is behind, then I will go to these other countries that is -- and that will -- and the end result will be positive for Japan. Here is a Russian bank we acquired and it's now revitalized and is now profitable. And you can see that between April and June has grown like this.

Thai and Cambodia, this is Cambodian Bank. So we had acquired a medium-sized microfinance company and transformed it into a commercial bank. And they had written off all the losses and became profitable. But quite quickly, this is online securities in Thailand. And you can see that it is now generating a lot of profit. This is asset management business. I think that asset management whether it be asset managers or security companies. I think this is an area is where Japan is most attractive in terms of market because there's an enormous amount of personal financial assets valued at JPY 1,946 trillion, and 54% of that personal financial assets among that and 20% is cash and deposits. So BoJ, even though it's negative interest rates, there's about 20% of that cash and deposits, the personal financial assets can be transferred to pension funds, then if we build the system, can design this incentive to move those funds from cash and deposits, and we will be able to attract money managers from all over the world. I have been saying this from on and off, both to the government and also the parliamentary members. And there is a tremendous opportunity to expand the investment management contracts.

As of the end of February 2021, JPY 127.6 trillion, among which outstanding balance of low-yielding yen bond is JPY 85 trillion, which will never improve your performance. And also JPY 15 trillion or about 40% of the JGBs and local bonds that will be redeemed by around 2022. So what should we do and the regional FIs do not have people to deal with this transition. And that's why outsourcing to us will help them. SBI Asset Management Group that is the entrusted with asset management of 95 regional financial institutions, 54 the regional banks of 95. And it's not only the yen bonds, but the U.S. municipal bonds, Canadian provincial bonds, Australian provincial bonds are the competition of the investment and alternatives as well to improve performance, and [indiscernible] and his team are doing that already.

The PIMCO, our joint venture partner, SBI Bond Investment Management. And another entity, SBI Regional Revitalization Asset Management, the co-invested by 39 regional financial institutions. These 2 entities together exceeded JPY 2 trillion of total AUM. Among which, the 34% are from the banks with the capital and business alliances and the rest is 66%. So again, there is the small -- the beacon or small light which can help the whole picture. The SBI Asset Management Group, the following is Sumitomo and Invesco and BlackRock. We are ranked #4. The -- #4 in terms of cumulative inflows of privately placed investment trusts. And why are we doing so well? For example, let us look at SBI V S&P 500 Index Fund co-founded with Vanguard Inc. JPY 271.1 billion is the net assets, with trust fee ratio of 0.0938% as of July 26 compared to Rakuten and other entities, the fee ratio, it's so low.

The performance of the investment trust depends significantly on how low you can set the fee ratio. And here, SBI Asset Management Group's AUM both in public and private placements, JPY 3.2 trillion is the balance of the investment assets. With private equity, the SBI Group as a whole, the JPY 4.8 trillion. And in 2 to 3 years, we'd like to reach JPY 10 trillion. And we are already halfway to that goal. Many people are doubting if we can achieve that goal, but we are already halfway to that goal of JPY 10 trillion. Leveraging our -- the wheel and the know-how and effort, we will make it.

We have been accumulating the performance in this financial world and our poster, positive poster. It's like DNA, shared among all the executives of the group. So I know that we will make that happen. Biotechnology, Healthcare & Medical Informatics business. As I mentioned earlier, the loss here will be 0 as to Quark Pharmaceuticals and the SBI Pharmaceuticals will be in the black for the full year. And we have been saying that we should not branch out too many other areas. So the R&D cost will be forecast. And then the German -- the guy that is the actual the CEO of the entity, and he is doing a very good work, very good job. And I think that the -- there are 311 companies, and I cannot see them all. So I depend on each, the leader. And SBI ALApromo is growing. And photonamic, we will be in the black for the full year, although some other losses in June, April to June. And the Medical Data Vision, JPY 64 million already. So this section -- this business section will turn around. SBI ALApromo, their sales grew 1.9x and the pretax profit grew 8.1x, and the SBI ALApromo products containing 5-ALA. Recently, we are seeing lots of the noncertified the products on the Internet. That's why we are now using this mark, ALAPLUS + mark, to give authenticity to our product. And we have the patent of 5-ALA, the phosphate, that we are manufacturing and sell under the exclusive license for the substance. The accelerated development of new business, such as research and products for the "with COVID-19" era. So ALA, I suppose, with the other functional claims. There are lots of papers and about the effectiveness of the 5-ALA, the phosphate, for the other corona patients.

And that is the officially carried on The Open COVID Journal on July 16. And also the [indiscernible] new government is also in the picture. The Royal -- the research and institute and university is also studying to alleviate the suffering of the corona patients and they are collecting lots of data in that context.

And so the -- with corona, the virus, the people are becoming more conscious of their health. And we are going to increase the number of products using a 5-ALA. And there are many people who are depressed because of the pandemic. That's why we have launched ALAPLUS Mental Care actually on the July 6 and as to ALAPLUS 5-ALA20, that is going to be released on August 02.

This July that shows 1.3x increase in the monthly sales compared to 1 year ago. And the ALA -- 5-ALA is very effective to suppress the sugar absorption. But here, in the autumn of 2021, we are going to launch ALA PLUS Toh Down ALACIA. And this product uses the Salacia-derived salacinol. It's the native tree in Sri Lanka. And you use this -- the wood to make a cup. And when you read water using that cup, that the mix you -- are the more healthy. And also as to recovery from fatigue, another product, which is ALA PLUS Gold Hirokan Keigen, to be launched in Spring 2022 and for menopause, that we have conducted clinical trials with Juntendo University and as the fatigue reduction after exercising. The same collaboration with Juntendo University that we are planning to notify these products.

And for the sake of investment, though we continue the investment activities. One example is CureApp. It is for the medical application and diagnosis and treatment and medical devices. And the prevention, diagnosis, treatment and we have been investing in those entities in these areas as well as long-term care and the other the products to alleviate the diseases coming from the lifestyles and health promotion, digitized medical information. And we have been investing in each one of these -- the medical health areas.

And in this context, we wanted to add Medical Informatics Business, that's why we acquired Medical Data Vision, the MDV, our stake is 20.69% and development of new products and services, promotional business that contribute to the revitalization of local economies and strengthening cooperation with SBI subsidiaries and companies invested by the SBI Group in this area. So the factoring for the other medical entities because MDV has the biggest database in this area.

And also the health account, it's just the question of time that we are going to make this new service, the viable and with regional banks, for example, deferred payment service for medical expense or the medical insurance or apps for health care management or nurse call when you have some concern about your health, and you can talk with a nurse. All of these things are on the health account in different regions.

As to the MEDIPAL Holdings, which is largest pharmaceutical wholesaler, and we have business alliance with them. MEDIPAL Holdings, they invest in JPY 10 billion in CVC. And the MEDIPAL Innovation Investment Partnership was established in March 2021. And they have a good eye for promising area. We have a good eye both at home and abroad. And so we can combine their capability with others. And we can utilize the pharmaceutical distribution networks of investee companies at sales channels. So it's a strategic alliance with them.

Now digital assets-related businesses. We have been focused in this area for some time. The world best digital asset-related business. That's our goal. And we have been making lots of efforts. Starting with crypto asset-related business for fiscal year 2021, the JPY 4.57 billion or the plus 56.3%. That is for the crypto asset-related business. We do not increase the spread only because we think it's a promising business.

We would like to use -- narrow the spread as much as possible. And the cryptocurrency is not an exception. So steadily and in a very shrewed manner, we are going to exercise our strategies. Strategically speaking, this B2C2 acquisition has been very effective. B2C2 is the world's largest crypto asset market maker. So they are in alliance with us. And they can utilize their know-how for the FX trading as well.

And on our side, for the crypto asset technology like the [ Quarks ] and other technology or systems can be utilized for our FX business or for our crypto asset business. So I'm very happy to have this business relationship with this B2C2. We have 90% stake. From July 1, 2021, we started opening and trading of corporate accounts for crypto asset CFDs. And we will expand the product lineup related to crypto assets, developed crypto-asset derivative products, options, et cetera. As to this development of options, for the institutional investors to attract them, we have been encouraging Takamura San to do it as early as possible because that would allow individual investors to hedge their risks and we can differentiate ourselves from other players.

When I was with Nomura, the corporate section. And I could produce tremendous amount of profit because of the options and back from the U.K., and I led the corporate section and Mr. [ Tani ], the then President called on me. And the -- I said that I would like to do more of derivatives, and this president said, yes, that's good. And he had a very good wide range, the know-how and a good eye for the other promising business.

And [ Kashima san ] has been working so hard in that the corporate area. So the Section 3 of the other corporate department at Nomura became the strongest section, both in terms of the revenue and profit. So derivatives is something that I hold very dear to. So it's a very -- the important thing, whether we can do it or not. That said, derivatives requires expertise. You should not have a half-baked strategy. You have to go through your professional approaches. That's what we are going to do and provide liquidity to domestic/overseas crypto asset exchanges, securities companies, investment management companies because B2C2 is the world's largest market maker, that's the best partner for us. So we can expand the expertise of B2C2 to other field, as I mentioned earlier.

And the SBI VC Trade, the VC Trade Pro Exchange, the JPY 500 billion is the criteria for me to start the other business. For the Bitcoin and Litecoin was the start, there is always a risk. So the minimum of JPY 500 billion. And of course, this -- the project has cleared that criteria as well. And as to stable coin -- save a coin, I'm very prudent for that. Why? Well, once the central bank digital currency is in place, there will be no chances there. So I will not branch out to that area. It's not -- profitable or not, that's not the question. We need to think about future risks whether it will benefit our customers or not. That's my criteria to make decisions. Some people say that this will be very profitable. Why do you not want to do that? I do not give explanation to such comments. You need to think by yourself. If not, you do not deserve being the head of a group entity, for example.

TaoTao, we registered for the Type 1 financial instrument business on May 10, 2021, considering the offer of industry-first product to meet customer needs.

About SBI Crypto, it was very costly. But as to the mining of Bitcoin, the mining uses lots of energy and in this trend of clean energy, the CO2 emission reduction, this mining Bitcoin is negative because it consumes lots of electricity. It will be a very big problem in the near future. So whatever the cost is, 90% of the electricity or power consumption should be renewable energy. And of course, the Bitcoin price went down, so there are some appraisal losses, but that's okay.

Now our mining activity uses clean energy. 90% of the power is clean energy. Now next generation of the products and services. And first, I'd like to talk about the concept that I have created. 1999, when I started this SBI business, it was FinTech 1.0. In other words, all the business on the Internet, and that is the idea of FinTech 1.0. WWW web was indispensable to do that. And on the web, information is exchanged globally. That's the concept that I started with.

And in a while, the financial ecosystem was established. And then the AI, big chain, IoT, robotics, various elemental technologies were developed and enhanced. And when that happened, I wanted to incorporate them into our dead ecosystem. And that is FinTech 1.5, followed by FinTech 2.0.

And here, the blockchain is the core technology. And of course, DLT is extremely important as a concept. And existing elemental technology, we will be even more enhanced and combined with the blockchain, it will further develop. Now we are talking about exchange of values vis-a-vis exchange of information. So that is the FinTech 2.0 concept that I have introduced. So now we are in FinTech 1.5, and then FinTech 2.0 will come around.

More specifically, it is DLT Smart Contract, International, Digital Exchange, Decentralized Finance, Security Token Offering, Non-Fungible Token, Digital Asset bank and Central Bank Digital Currency. These things should be well -- organically nicely incorporated into the ecosystem to create a new financial ecosystem. And 60% of my mind is focused on that.

Now the new financial products and services at a glance, security token offering between 2017 and 2019, at least 123 projects were established from 2020 to 2025, the CAGR will be 56.9%. DeFi or Decentralized Finance, this financial service provided through a program that runs on the blockchain automatically and the low cost, high transparency, scalability, equality, the other characteristics and the total value locked on the blockchain or TVL is more than $50 billion. Maybe more than that, it is underestimated maybe.

Moving on to Non-Fungible Token, the more you study it, the more interested it becomes. So NFT is a token that proves the uniqueness, authenticity, but it's the artifact, game, using blockchain, DLT. And then CBDC, Central Bank Digital Currency. As of 2020, 86% of 65 central banks have conducted some kind of research and study and 14% are already at the pilot project stage. This is the reality. There's no time to be delayed.

The FSA should also study these areas, I have been -- I have asked that to the new Commissioner of the FSA. The -- we have the research basis that it used to be the university and the -- or the graduate school, which could be transformed into the private company. So the academism and the actual business and some other legal aspects, regulation change maybe. All of these ideal aspects that should be put together to create the financial market, which can compete with other markets globally.

Now security token. So as you can see, so this is -- this is a very traditional one. This is centralized and then gradually goes to decentralized scheme. So the security token is still have to be certified and then centralized. It's a consortium. And if you go to DeFi, it's noncertified. It's a public verifier and the operators are multiple and is distributed. So there are various schemes. And crypto assets, Bitcoin that is. Again, this is the public decentralized, distributed and this is a kind of representative player.

So you can see there are new financial areas and definitions are being generated. So in terms of security tokens. It used to be called ICO, Initial Coin Offering. Well, there was Initial Coin Offering. So I thought this was fraud. So it has become fraud of the world. So there was this sense of concern and Japan was one of the forerunners to set up a legal system for STO.

For the October 2019, the Japan STO Association has been established. And from May, the Amendment of the Payment Services Act and the Financial Instruments and Exchange Act was enacted. In April 2020, the FSA certified the Japan STO Association, Well, I am the President there, as a self-regulatory organization. So through this, you can see that as the system is already going ahead. And we are now doing some pilot activity so that this can really be commercialized on us. So this is case one. This is third-party allocation of new shares for SBI e-Sports via an STO that has been conducted on October 30, 2020.

So this was the first ever case in Japan. So the issuance of security tokens are full compliance with the Financial Instruments and Exchange Act with securities appearing on tokens. So SBI was -- see this. And BOOSTRY, this was service by Nomura Group, and we have a competitive stake in BOOSTRY. So individually, we could have conducted this, but I think having a partnership and building a market, I think that it has been a necessity that has been my decision.

So that is the reason why, well, I decided that I should put 20% stake in BOOSTRY. But as the top runner of the industry, Nomura handling this type of services. I think that's very important.

Number 2 is the SBI SECURITIES conducts the first public offering of asset-backed ST in Japan. So this is the first ever case with the general investors. So this is based on ibet for Fin -- excuse me, ibet for Fin led by BOOSTRY, et cetera. So SBI Securities announced this first security token offering, STO, for general investors. So this is the 4 companies: SBI SECURITIES, SMBC Nikko Securities, Nomura Securities and BOOSTRY started ibet for Fin blockchain consortium in June 2021, I thought whether then just relying on 1 company, it's important to have this consortium.

So we want to become a decentralized financial platform. And case 3, again, this is with the Mitsubishi UFJ Trust and Banking, KENEDIX and NOMURA SECURITIES in collaboration with these companies. So this is a public offering of asset-backed STs. So Mitsubishi UFJ Trust and Banking Progmat, where you're going to -- this platform has been provided by Mitsubishi UFJ Trust and Banking. And this is one of the major things that are happening for commercialization.

So for issuer and investor and regulator, so we want them to acknowledge that there is huge benefits of this. I think this is the right timing. So for the issuer, this will be not as burdensome as IPO in terms of fundraising. And unlike stocks, the external financing can be considered without relinquishing control of management from the investors. So they will be able to get a nonmonetary returns. So unprecedented investable products will be accessible.

From the regulators, so this will be compliant with law and regulations in terms of the information disclosure. It means that new markets will be made and new services will be handled. I think -- so they said this is a great thing. So basically, Japan as a whole should be focused on this. And I think this is a social contribution that we are engaging in. And going into the -- in terms of the distribution, the secondary market is what I want to focus on. So globally, there are a lot of movements here. So there are -- in Singapore, we are going to set up a digital asset exchange with the company from Switzerland, SIX Digital Exchange. We want to start in 2022. And so this will start from Singapore first. And with Boerse Stuttgart, #2 stock exchange group in Germany. So they have a digital exchange. We will be -- have invested 10%.

And in terms of the crypto asset custodian business or there's the company that handles that. And we are going to plan to invest in this investment company of the Boerse Stuttgart Group. So the international brokerage or the custodian business, it means that we'll be able to create an actual demand for digital assets worldwide. So this global development.

So we have a SBI Digital Asset Holdings. We have started this new holdings. So exchange, distribution in Europe and Singapore and systems. So this will be a global endeavor. And by handling these products, we can offer -- we have to offer a full security. And so what gives us this technology. These are venture companies that give us this technology. So we had to have a good eye and all the companies should be able to have a good eye for these type of investments and introduce new technologies and distribute those investments.

And so we will invest, introduce and then distribute all these technologies. So that is what we're trying to do. And ultimately, we want to create the world's largest global corridors. Japan taking the leadership and creating this type of endeavor. So in any conference I go, I proactively discuss matters with overseas counterparts, and I persuade them. By doing so, I have been setting up a lot of joint ventures and has been successful in that.

In this area, I am committed to following through my initiatives. The partners, we have good partners already, and we have these partners already. So Non-Fungible Tokens, NFT. So within the group, we have an SBI part auction, an auction site. So whether this will be connected to NFT. When we set up this auction company, I didn't think that was possible because I was very, very interested in art. Because of this interest, I set up an auction house. Another is that the affluent people will purchase artworks. They always do. The Chinese affluent people, wealthy people.

So they will get a lot of proceeds through these auctions, and they will have these glamorous mansions and then they have collected these Western and Chinese antiques. So this is like the Wild Wild West in the United States. So people immigrate from United -- Europe and to the U.S. and the people who are successful in U.S., they bought up all the European antiques. And then they display this and this very gorgeous mansions when they built it in the United States. So these wealthy people, they will always purchase and be interested in artwork. That was what I was thinking.

So I have been very interested in art in the past in London, in New York, most of the colleagues will go to golf, but I will go to antique shops and go to auction houses with my wife that is. So through these experiences, what I found out was that these artworks, the wealthy people are, well, almost always purchase artwork. So that's a fact all over the world. So I said of this art auction, but they are going to be engaged in the Non-Fungible, NFTs. So this is a good positive cycle.

We have partnered with Startbahn. So we will issue blockchain certificate to those who have made successful bids. So since April 2019 -- introduction April 2019, the number of users, 250; number of certificates issued, exceeded 500. The Startrail, the blockchain Startrail, we will utilize this and then accelerate this activity. And I have to -- what I have to do is that is to create the NFT marketplace, the secondary market. So not having the certificate is enough. You have to sell it somewhere, for instance, for inheritance issues. You have to connect this in this manner or else things won't work. This Startrail -- excuse me, Startbahn, a company, the CEO is a very bright person, I discuss matters with the CEO. I think we have to try to extend this business furthermore. But I'm very sure that I can partner with Startbahn through these discussions. And not only artwork, there's media, game, virtual space, real asset-linked product all of these things can be -- will be leveraging Non-Fungible Tokens.

So in 2021, you can see that the market of NFT is expanded rapidly. According to a research institution in U.S. in first quarter 2021, it surged 17x compared to the first quarter 2020 and surpassed $1.2 billion. Of course, the various issues have risen. So how are you going to ensure the authenticity? Or how are you going to confirm the continuity with existing rules for copyright and ownership transfer? And you have to have established a legal issue here and establishing a reliable secondary -- use in secondary distribution market environment will have to be done. So how are the tax regulation is going to be?

So the legal tax regulation issues with the FSA in various aspects, I will discuss and we want to go forward. But we are not going to jump on to this. The rules should be established first. and we'll have to have a condition that the investors will not be inconvenience and then you'll do business. If that environment is not available, you can only have [ mount box ] and Coincheck. You'll go down that road.

So we are different from the pack. We have been focusing on the traditional financial businesses. And we will clear all the certifications and requirements. And with the new areas, we will challenge with the cutting-edge technology. That's our characteristics as a group.

Then going into the Decentralized Finance, DeFi. So within the group, we have a lot of companies are preparing to establish a DeFi ecosystem and we have already been engaging in this.

So the group investee companies, partner companies as well are part of the ecosystems. So within the SBI Group DeFi project, so it means that the apps can easily use for the smartphones as a model, we already have a model. We want to brush it up within the product team. So we are under development. And with this -- so I think it's very important that we have these kind of -- what is from the academia point of view? How does this FSA think? So we have to verify that -- those aspects and then create new products in new markets.

And the regulators and the BoJ are also keeping close eye on the future DeFi. And for instance, the FSA has a fintech innovation hub, they have published the activity report on the July 2021. And the FSA newly established the working group on dealing with digital decentralized finance.

Going into the Central Bank Digital Currency ahead, already talked in detail about this already. But the digital time is one in China in 2014, they started this research in 2017, they started official development.

In 2021 June, about 14 provinces and 28 cities in China, well, their provinces and cities in China, they have a massive population. So number of settlement is already more than 17.7 million (sic) [ 70.8 million ]. So the total amount of settlement is already CNY 34.5 billion. And what stands out is that they are -- have this general use CBDC, general purpose CBDC.

Well, normally, people go for wholesale CBDC, but for the F E-CNY, they target both individuals and enterprises. So China, apparently, they want to -- from this dollar-oriented financial system from Bretton Woods system, they want to move away from that. So the key factor will be this that you're seeing. So they will be using it for trade gradually. And this as if this is used as the currency for trade, relatively speaking, the positions of the dollar will be diminished.

So the U.S. and Europe are -- they will have to seriously look at the situation or they'll suffer. So General Powell told the hearing on the U.S. House Business the Financial Services Committee (sic) [ House Financial Services Committee ] on July 14 that report under this is expected to be released around the beginning of September. I'm looking forward to this report.

And for the Eurozone, things are moving forward. The Japanese government, so in terms of first phase of PoC, we began on April 5 of this year compared to the speed that's happening in the world, BoJ seems to be a bit slow. So the Japan's first Crypto Asset Fund Anonymous Association, we're going to start this plan to begin this in fall 2021, with only using crypto asset. So this will be Anonymous Association Fund. Well, we want this to be a public fund, but the FSA says that, that will not do. So I say does private will be okay? No, they said.

So now we decided that discussed and decided to be an Anonymous Association. So I think for the ETF, I think in the U.S., it is a matter of time. So the ETF will be approved. So I think that's the trend in the world. So we want to come out with this and accumulate know-how. Mr. Asakura's division is doing this. By doing this, we want to accumulate the know-how. And this -- and our capital asset of crypto currency business will be closely linked. So SBI SECURITIES and SBI VC Trade, SBI Asset Management. These will be a trinity, so to speak. And we will dominate this area.

So the SBI Financial and Economic Institute. I talked about that.

So we have this academia as institution. And I have set this up on the 1st of April, and we have invited with Masayoshi Son, former member of the Bank of Japan's Policy Board and as a Director, and I will be a normal director. Because if I lead these type of things, people will say that, Mr. Kitao is just leading this as he pleases. But this will -- we want to accumulate the know-how -- accumulate know-how to do business. You want to offer that to this academia and by exchanging opinions with FSA.

So we want to hire a lot of excellent outstanding people. And we want to have a certain number of researchers. And we're focusing on those 4 themes. So I think this is a wholly -- a new concept in terms of what a research institute is going to do.

And next, so R3, which we have a partnership and Ripple. Well, in terms of R3, the supply chain management and various other areas, they will have a DLT that will contribute to the business efficiency, distributed ledger technology, and they will focus on that.

So luckily, this R3, the U.S. company has set up a joint venture, and we are the largest outside shareholder. So Ripple. So we have the largest -- we are largest outside shareholder with 8.76% of investment. And Ripple, we have 60% of Ripple Asia and we have 40% in the U.S. So in terms of international remittance, using XRP, we are going to switch to XRP, a crypto asset that is.

In terms of fund management, in terms of the security and in terms of the cryptocurrency distribution business, and in terms of the global development, everything would be combined. So this is how we go forward with the business. And I thoroughly thought of this way of doing business. And we're going to do it in the same way. For R3, so we have 51% of joint venture. It was -- started with 64%. But SMBC, they wanted to do this on trade finance business. So they put in 14%. SMBC both companies made sacrifice and SMBC has 14%. So this R3 Corda. So they already have more than 300 financing solutions. So in many ways, they will be utilized in quarter, what's promising is trade, supply chain management and Marco Polo.

This is where SMBC is putting a lot of efforts in and CONTOUR, which is LC transactions. So against HSBC, Standard Chartered Bank, Citi are involved. And also, we have manufacturing and traceability. We have capital markets. So all around the world, big players are now entering this business using Corda. We also, as a group, like I said before, as much as possible, we will quickly create this world of 2.0. So we will implement this one after another, whether liquidity market or SSI or SBI Traceability. We have established a company called SBI Traceability or we have BYFIN which is SBI Group's local subsidiary in Hong Kong.

Furthermore, we will utilize Corda to issue digital currency in multiple regions in partnership with the regional banks and local entities. So we have track record. Today, there are 5 projects, which is scheduled to be announced. So this is an information platform called the Machi no Wa and Machi no En. So Machi no Wa is established by 3 companies, but this is not just Kyushu. It's Kyushu because Kyushu Electric Power is part of it, but it's actually rolled out in different regions.

So it's ready to be rolled out. And ultimately, where I really want to emphasize is at Kansai -- Osaka-Kansai World Exposition. We would like to proposed use of Corda and digital currency. In the previous Expo and also even outside of Expo, when there was a questionnaire that was done on the foreign visitors to Japan, 1 out of every 6 foreign visitors said that there's lack of places to exchange money in Japan. So we'll change this all around. So we will use Ripple to send money, to do international [ repentance ] and then we will use Corda to convert that into local currency. And Japan Association for 2025 World Exposition will be the issuer of the digital currency.

And so without having to exchange money, they can free the users. So this is something that we definitely want to do. And also, even at Toyota Tsusho, they are starting called electric contract service called TBLOCK SIGN which is also using Corda. And also DLT from Ripple in U.S. So more than 300 finance institutions have been participating in RippleNet. I would say 90% of the business is outside of U.S. Even when I was a director, I have been saying that it's split into 2, to U.S. and non-U.S. So even if you lose on our litigation on this side, it will be just limited to that. And we can continue to do the business as usual on this side. So I've been saying this from before. So we'll see what happens. They think that they can win this litigation, this battle.

We're yet to see what will happen. But in any case, we will -- simply because this is legalized in Japan, we will roll this out in other countries that are legalized. So we will continue to expand business using SRP. Same thing with Money Tap. There are 38 regional banks that are investing in Money Tap already. U.S. Ripple also holds 33%. They're the largest external shareholders. And again, P2P remittance will continue. And P2B will also become possible using Money Tap or prepaid charging service providers like PayPay, they can go through this and expand this. A number of banks that will be connected will reach 20 by the end of this year. And once we reach 20 banks, we can expect to see an expansion of economic effect, and I think this will have a big leapfrog growth.

SBI Remit. This is -- companies both in Vietnam and Cambodia. Again, we are using Ripple due to international remittance with these 2 companies. So something like this will be increased more and more. And we just recently announced this and I actually helped increase the price of Ripple, but SBI Remit deploys transfers, international money transfer service using crypto assets. So this will be used to do international remittance from Japan to Philippines. So this is a new service using Ripple's payment infrastructure and digital asset, XRP.

By utilizing such technology, the credit risk and cost will be reduced significantly. This is the overwhelming competitiveness. Remit will become overwhelming #1 in international remittance. And not only in Japan, but they could become a global player as well. In addition to that, there's -- I'm making them make [ SBR Optica ] to do a used car business, and I'm planning to use Ripple for transmission or remittance of the money here. And I'm planning to invest in a bank over there. I'm looking at some candidates. I think it was Uganda Bank, which I made an investment before.

And we made money, so I sold it. Because there's a lot of political uncertainties, and I felt some risk in that country. So I exited quite early, divested early. But I would like to buy a bank something like that or maybe establish something like that. Maybe in Africa, we can establish digital bank.

So for example, former colony countries, it could be U.K. or French colony, but we can work together with the local financial institutions and establish business there. The other day, someone from France came and he said that Mr. Kitao, please do more business with French companies. This now from French Embassy came and said that. So what I have in mind is that we should be working with former colonies, African financial institutions of former colonies, I would like to collaborate with them. And eventually, when we can see actual business increasing on this side, we can do all the remittance of money using this. That's what I wanted to do.

So next-generation financial products, services, again, in various areas like CBDC or even Ripple. They have XRP ledger they have smart contract function or CBCD and XRP, they are not competitors, but they are complementary to each other. So again, we are trying to enter into new domain one after another. And we work with companies like this because they develop good technology, and we would utilize that.

So proactively utilizing M&A to further expand business space. Just the other day, we have issued corporate bond, straight corporate bond of JPY 80 billion, MTN bonds of JPY 30 billion. So altogether, JPY 120 billion (sic) [ JPY 110 billion ]. So this is -- have the funds for us to make future growth. And these are the targets that I have mentioned before in the past.

Earlier, at the beginning, I said our mid-term through a 3- to 5-year vision. In order to materialize that, we will engage in various M&A activities, and we will do that in addition to our organic growth so that we can achieve that number that we have laid out.

So this is your first to attract international financial cooperation with local governments and various other stakeholders. So attracting international financial center. This is not -- I think we can't just stick with Tokyo. I think we have talked about this before. It never has been successful. Why? Because we need new global financial market, we need new global financial product, we need new technology to be used proactively. Without these 3, we will not be able to establish International Financial Center in Japan.

And I said that. So I want to bring about these 3 elements. That is why I have worked with SMBC and Osaka Digital Exchange. This is the equity process fee and we have Dojima will be the comprehensive exchange. So we will run this as well. Now this is now a stockholding company now. As you can see, percentage by voting rights, we have about 49%. Japannext Securities is 19.42%, but we have taken Japannext. And SBI Holdings again, we have direct holding as well, 14.57%. We will implement different measures in order to improve the performance. And there are market makers who want to join this party and overseas financial institutions that's interested in participating as well.

But one of the bottlenecks is that we have to reduce our share. And also the Osaka Digital Exchange more so than Dojima there's great interest from overseas as well. But like I said before, whether domestic players will join or not. If not, if they are, then I would like to prioritize domestic financial institutions. So that's how we have decided with SMBC.

So the time line has been decided. We will be sure we implement this. So now again, for Dojima Exchange, we have applied for permanent listing of rice futures on July 16. And on the 7th of August, there will be a conclusion that will be drawn. This is what I had just said earlier. And in addition to these 2, there's 1 more weapon that I want to mention, which is the API Mart.

This is linking domestic and foreign fintech companies with domestic and foreign financial institutions, of course, there's others. So we will create this to attract international financial centers. So what is this? So we will establish Osaka fintech center. We need to have an industry cluster in Osaka. Otherwise, we will not be able to revitalize Osaka. We can -- otherwise Osaka will continue to deteriorate and sink downward. So we need to do this with fintech. There's 171 companies, we have already implemented JPY 170 billion in these fintech companies. And maybe we -- I would say we're the greatest investor -- the largest investor.

So we will be attracting people to Osaka. And that weapon at that time when we plan to do this is the API Mart. This is application interface. This is API, as we always talk about not just financial institutions, but we need to have users of API-based fintech functions on 1 side, and we want to have domestic and overseas fintech function providers. So it will allow the merging of these 2.

So once those who are in and out Japan, can match the right partner. So whether it's in English or Japanese, it's like a comparative site or it's like a search engine or it has kind of a dual function of that. So we have established a project team and this has started moving. And I said, you need to create this no matter what. This is my third pillar in Osaka.

On the third, I'm planning to go to Osaka. And Osaka headquarters is now opened in Nakanoshima Sumitomo building, and I have my office there as well. And I will be traveling to Osaka very often. Along with that, on the third, I will be meeting with the Governor and Mayor. We will do a signing ceremony together. So we will document our alliance, and we will sign that. So we have that signing ceremony with Governor and Mayor. And SBI's future business activity guidelines with COVID-19 era.

So with the penetration of vaccination, even if you look at the major countries, economic activities are resuming. The problem is the number of fatalities and people who are having severity. And it's not has to do with infections. I think even influenza flus should be announced -- Why is it -- we have people dying every day who have been vaccinated above 65 years old. So whether it's 5,000 or whether it's 3,500 or with 4,000, people who are above 65, the number of debt will not increase that much.

I mean this is becoming like a common sense of the world. And I think it's only Japan that's doing this as a -- not a common sense. And this is media and also the opposition party. And also with regards to U.S. fear cautioning about early rate hikes, seeing accelerated inflation in the U.S. and accompanying the Fed rate hike opposition is a temporary factor.

And also Japan's market recovery, driving due to delay in vaccination. Why was Japan lagging? It's not because of Mr. Suga in his administration, it's because of the Japanese legal system. It's a system run by MHLW. We need to quickly change this, but they were not able to do so. So maybe in that sense, maybe it was government's fault.

They have this group of experts. Every time they have to consult and from my point of view, I'm wondering what their expertise is in. They're not really an expert in anything it seems to me. But because of these reasons, there was a significant delay in vaccination. So if the delay in approval -- if there's a delay in approval, then there's delay in vaccination. So now they want to do this properly and quickly. So we have the rapid progress with 37.4% of the population vaccinated first time and 26.3% for the second time. So we see a rapid progress.

Mr. Conor, I think he has lagged a little bit. But I think a quick vaccination will prevent people becoming severe. And even if you have been vaccinated, of course, you can be infected. But the important thing is that you don't die from that. Look at the flu, people, even if you vaccinated for flu, you sometimes catch flu every year, and you don't die from it, right?

I don't catch -- I don't vaccination for flu, and I don't catch flu. But people who get vaccinated, still get flus. So the greatest mistake is that they had designated as a designated infectious disease. And according to categorization of designated infectious disease, you have to be segregated and you have to be quarantined in a hospital. That's why the hospital is overflowed -- flooded. So maybe you need to have people at home. And also with -- and also the health care centers, they say -- they do the vaccination and also the PCR testing, but I think should be done at the local clinic. Because everyone has their family doctors. It should be done there. And Mr. [ Hangzhou ], said that even if you create a vaccine like this, there will be a variant one after another, it's true.

I see variant one after another. And the efficacy of vaccination will deteriorates. So maybe we need to have a booster to have a third shot. But is the fact that it does have a certain efficacy to a certain extent. So what we need to do in the meantime is that we need to develop treatment drug. We are implementing or executing SOE, state of emergency call.

All this time, there's no effect. I don't -- there's not much effect. I think it's great that there's Olympics at this time because people can stay at home and watch TV, they don't go outside. So that may be the best effect of Olympics. So people are sitting at home watching TV. And if you watch Olympics, you're touched. If you're Japanese, they fight to win this medal. It could be gold or it could be any other color, but I think it's great. And it's so touching impressive to see athletes compete for that.

And there are people who criticize but I think it's great. I think it's good to see things like that. So it's good that we had Olympics. So in principle, we can see economic activity resuming and recovery. And once it recovers, we can see savings rates increase because there's -- people did not have that money to spend, and the government kept giving subsidies and benefits, and so they kept spending money. So once they cannot give cover, they will begin to use that. So once the consumption increases, then there will be more investment. So this is the virtuous cycle, which will continue, I hope, in the next 2 or 3 years.

In Japan, like I said before, we're behind. We're lagging. So our business activity guidelines going forward is that we will, first of all, have our employees vaccinated. We had 12,000 employees or so starting from June 21 being inoculated. And I think most of them will complete the second round. So we have come to the state where the second inoculation is almost complete. And what we plan to do is to do tests. We will use our hospitals to truly implement test.

I'm so glad we built a hospital. So those group employees who have completed the second inoculation after 2 weeks, they will go through antibody test to see whether they have been able to build antibody or not. If you don't have an antibody, we will tell you, you have an antibody, so please be careful. And please go get antibody test every so often. So that's what I plan to do.

And of course, vaccination, this is for people who -- it's voluntary basis. If you're opposed to it, that's fine, that's your choice. Why? Because every time there's a variant, that person will be infected unless he or she has strong immunity. So -- but if you get infected, it has the same effect as vaccination. So maybe you had one infection and you can have vaccination and then that would give you a really powerful immunity.

So because there's a lot of young people, and it doesn't get severe for them. So we don't need to control it. We don't have to make it mandatory. But if you are to over a certain age, we see people in the 50s getting a severe case of COVID because of Delta. Because Delta variant causes your lung to be completely white very rapidly, and you have to switch to artificial ventilator, or oxygenator. So it's easy to get severe quickly.

And what's important is that you need to do timely and appropriate PCR test in appropriate time and appropriate manner and identify infected person with those who are not. These are the things that we need to carry out in principle in order to carry out our business activity aggressively.

So that's the end of my talk. Thank you very much for your kind attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]