SBI Holdings Inc

TSE:8473

Earnings Call Transcript 2022-Q2

[Yoshitaka Kitao, executive]

So this is the announcement of the results of the second quarter. Here, we have 50 people in the venue, and 130 to 140 people are on the Internet listening to us. Today, we have about 180 pages of the materials. So without further ado, let me start the presentation.

So the consolidated financial results of the first half. So April 28, 2021, we came up with the new medium-term vision for 3 to 5 years. We announced this vision on April 28. In 3 to 5 years, we think that the fully fledged new digital age will start, and we think that we are living in a traditional period right now. And in this transitional period, during this period, we would like to achieve more than JPY 300 billion consolidated profit. Also, the total amount of profit before income tax expense for new business accounts for approximately 20% of consolidated profit before tax. Definition of new business: any business that utilizes innovative technologies such as digital assets or blockchain and also any businesses that have become part of the group through M&A since April 2018. So all in all, about 20% more or less. It's just a yardstick number. As to ROE, 10% or more. We would like to sustain that level of ROE.

So in the first half, here are consolidated results. Sales revenue, JPY 334.283 billion or up 46.5%. Pretax profit, JPY 109.276 billion or 100.5% up. Profit for the period, JPY 88.938 billion or up 133%. Profit attributable to owners of the company JPY 76.765 billion or up 131.9%. As to the annualized ROE of the first half is 24.6%. It's a historical high. And the average ROE of securities and commodity futures, listed on TSE first section, is about 8% or the 4.1% for the banking industry. So this means that our ROE number is quite high compared to those averages.

So as to M&As, during this first half, we did lots of M&A and that contributed to the expansion of our business in various areas, in the state-of-the-art areas, as I mentioned earlier or any other businesses with high potential of contribution to the whole group with significant synergy. Such companies have been acquired. The equity method companies, FVTPL, there are certain types. And we have been expanding this business, helped by those acquired companies, and we will continue very aggressive M&A activities. Other than that, in the short-term, small amount insurance area, we also did acquire some companies. Although it is not mentioned on this page, I will touch upon that later.

So the consolidated results. This is the profit attributable to owners of the company, JPY 76.765 billion in Daiwa Securities. And there was a Nikko article this morning and they booked JPY 50.203 billion, up 53%. Ours was up 131.9%. With the previous year, we already exceeded their results. And Nomura and others, compared to them, we are doing better. And this is for your reference, trends in the consolidated results of SBI Holdings and Shinsei Bank. The blue is SBI Holdings. There was some drop in FY '20, but already in the first half of FY 2021, we reached almost the yearly level of the previous year.

And as to the Shinsei Bank, the JPY 52.3 billion, JPY 45.5 billion, JPY 45.1 billion, JPY 38.8 billion, so the declining trend. And as to ROE, SBI Holdings, 11.9%, 8.3%, 16% and 24.6%. While Shinsei Bank booked 6%, 5.1%, 4.9% and 4.2%. Now by segment, basically both revenue and the other profit for Financial Services business, Asset Management businesses the record highs. As to Biotechnology, Health Care and Medical Informatics business booked record high revenue. It's still the JPY 4,545 million, so it's still small, but it was record high. As to dividend, with the backdrop of good results, the JPY 30 for -- as of the end of the half of the year. And in FY 2020, it was JPY 20.

And now the business overview of core business and securities business. Our state individual brokerage trading value year-on-year basis, April through the end of September, increased by 10.8%. So it's not so bad. And our operating revenue also increased by 10.8% with JPY 83.27 billion, and this is on J-GAAP basis of the first half. And as to net operating revenue, JPY 77.253 billion, and operating income JPY 27.584 billion, up 1.3%. Ordinary income, JPY 27.684 billion, up 1.3%. Profit attributable to owners of the company, some decline, almost leveled with JPY 18.684 billion. So this is the comparison with other major online securities companies. Already Rakuten, Matsui and au Kabucom made announcements and Monex is scheduled to make an announcement tomorrow or even delayed by one day. So not 28, but 29th now.

Please look at this table. Overwhelmingly, the profit level is changing. We all started, but at the same time using similar systems and online tradings are the main businesses for all of us, all of these entities. But there was a big difference now among these entities. I have said repeatedly about Neo-securities initiatives. So the eliminated trading fees for domestic stock transactions and other various fees that are currently incurred by investors, that is what we call Neo-Securities initiative. And through that initiative, what will happen? So I think that the number of accounts will increase to 30 million or so. 7.7 million is the current number of accounts, and I expect it to increase to 30 million. It's a big increase. And that is my hypothesis, one of the hypothesis. And also, the number of accounts will increase significantly by eliminating trading fees for online domestic stock transactions. And also, even if brokerage commission declined, the other increase in the customers and diversification of revenue sources will compensate for it.

And thirdly, closing the number of accounts will lead to business expansion for various companies in the entire SBI Group ecosystem. So the customers here will go to insurance and also the other banking site services as well, so that they will become the customers of the SBI Group ecosystem. Once these customers get related to us, 32 million -- more than 32 million customers we have. So 7.7 million becoming 30 million, what will happen when that increase actually happens? That's what I'm thinking. I always verify my hypothesis. What kind of verification? I will show you.

So people age 20 or under in the number of new accounts at SBI SECURITIES, of this age bracket, increased 88.6% year-on-year. Why 88.6%? That's a large increase. For the whole group, it's 29.5%, and the increase of the younger age bracket was 88.8%. And people aged 26 or above increased 62.7%. And for the younger people, the fees are actually practically 0. And 7.7 million to 30 million accounts, that hypothesis, that is back by the number of customers and the fee levels, and we are checking that.

So what have we been doing? From September 2020, we eliminated certain commissions as shown here. Roughly speaking, with these initiatives, how much commissions were reduced? It's about JPY 2.7 billion or the JPY 2.6 billion -- JPY 2.78 billion. And with -- this is the result. The sales or revenue did not decrease. It's true. Brokerage commission decreased. However, that was covered by other sources of revenue. So diversification of revenue sources is working in a very positive way. So for example, for securities business, when the commission is 0 on the online and buying the stocks, and then he wants to do the margin trading as well, and that will come with some commission. So by changing the content portfolio, that we can increase our revenue. Without such increase, this -- the JPY 19.612 billion, we would have produced JPY 22.3 billion or up 2.8% contribution.

So the multiple number of sources of the profit more than offset brokerage commission decrease, for example, underwriting offering commissions, sales commissions, up 159.3% year-on-year. Financial revenues and the margin trading expanded rapidly as open interest reached record high. Other commission received at investment trust, for example, increased up 58.3% year-on-year. And the stock trading commissions other than online trading, up 13.8% year-on-year, so forth. So in a very steady manner, we are utilizing other sources of income, and we are covering the decrease in the brokerage commissions. The third hypothesis and its verification, newly registered customers through measures that eliminated certain trading commissions use various services of the SBI Group. Numerically, we had not checked in details, but I could tell that we are right because our ecosystem is divided that way.

So all of the 3 hypothesis have been verified, have been justified. We can continue these hypothesis. One concern that I have is systems. 11 million will be covered by the current systems, but I want the systems to -- that there is capable of covering 30 million accounts. So because I do not want to see our systems to explode, that will be a big problem. So once we become very confident in our systems, maybe in one year or so, I think we can have systems that strong enough, 12 months to 18 months. The other -- we would like to work more on the elimination of the commissions, and we'd like to work on the new securities initiatives, expand product services, strengthening the recurring revenue business, strengthening the wholesale business, expand trading revenue and the stock-trading commissions other than online trading. These 5 measures, we will work on them and others for the coming 12 to 18 months. Here, we have expansion of products and services to provide diverse trading opportunities. I will not go into details. Please read them if you are interested.

And for the shared point side, this is what I call open alliances with various players, including T Points, and newly, we have Ponta-Point. The number of users here is more than 100 million and V-Point, with the SMBC, is about 47.5 million Sumitomo Mitsui card members, and the number of members is increasing. And this V-Point can be converted to other points as well. That's one of the merits. So we are promoting these 3-point systems aggressively, but we need to be aware that the points are costs. So we have to look closely how much cost. For example, Rakuten has locked in the economic zone. They are using points to expand that zone.

So what is the profit that they are getting? I'd like to talk about that later as well. The recurring -- the revenue-type business that is to increase -- to predict the business or to increase financial revenue. And as to the accumulation of the points to buy the investment trusts, for example. Currently, the balance of that kind of trading is increasing. And as to -- we have made a FOLIO, the subsidiary, which is specialized in themed the investment and wrap the management. And we are going to start the SBI Wrap, a fund wrap, from March 2022. And this is the other connection of the different services and different other functions to increase by the customers.

And as to wholesale business, for the first half of the year, there were 60 listed companies, and our underwriting share is 100%. We are either the underwriter or the lead managers. Actually, in 9 companies we were involved as lead managers, not only for IPO but we are also focusing on PO underwriting. The number of underwriting cases in the first half of 2021 increased 3x year-on-year, and the corporate bond underwriting business is also increasing. 23 corporate bonds underwritten in the first half and also the public bonds, including electric power bonds. They invite us nowadays to be part of such underwriting without us making approach because of the other powerful sales capability of us.

The MONEY PLAZA that is penetrating into regional banks and more and jointly managed the stores with 14 banks at 22 other locations, and that is also boosting our brand name, thus to expand our business. Now the trading of the business, effects and the digital asset-related business, up 28.8%, up 1.5%, respectively. The VC Trade, TaoTao, the B2C2 rather simply summed up for digital asset-related business. The initiatives to strengthen the digital asset business, expanding the line of digital assets, the VC Trade and Pro newly joined are Polkadot and Chainlink. And also for the VC Trade, sales counter, in addition to these 2 currencies, we also listed Bitcoin Cash and Litecoin.

So JPY 500 billion as the market cap. I have been saying that I would do whatever it's out there. That's not our intention. If we start with the small market cap and if somebody takes 51% of the stake from you, what we should do? So we would like to keep them with the minimum of JPY 500 billion of the market cap. And in December, VC Trade and TaoTao will merge to produce SBI VC Trade. It will go into the Type 1 financial instrument's business and virtual currency exchange service provider. The newly born SBI VC Trade, we will have these 2 licenses, and we are going to live these many different services, and we have almost completed our preparation for that. And as to foreign stock trading value, so with the forwarding stock trading value index for first half of fiscal year 2018 being one, first half of FY 2021 number increased to 5.3%. So the U.S. stocks is in the center.

And also, we would like to meet the need face-to-face customer transactions, especially in the ISA business. And so we have been taking measures to reinforce this business. At SBI SECURITIES, revenue grew 1.3x year-over-year. It increased by 30%. Also, for SBI SECURITIES, looking at the AUM trend for the ISA business, it reached JPY 2.1 trillion. So overwhelmingly, in the ISA business, we have became #1 as well. Also, for MONEY PLAZA, I mentioned 14 stores with 22 locations. AUM, as of July, exceeded JPY 100 billion. It is currently at JPY 113.8 billion. And for new face-to-face salespeople who are competent, we have been hiring them, training them, and at the co-managed shops, we have been allocating them.

Fortunately, at SMBC Nikko Securities, they have been allocating their people at 18 of the shops. So this partnership, from a personnel point of view, has been helping the growth of the number of shops. We would like to also expand business into the real estate finance business. So we have acquired 35% of Ascot Corp. and also acquired about 56% of total shares of Tozai Asset Management Company. We would like to do private placement reads. And also, we are engaging in selling real estate small lot trust beneficiary interest funds through MONEY PLAZA. So we are basically diversifying to engage in new business opportunities.

For the banking-related business, for this business, as already announced on October 8, we have applied to be listed on the TSE. After listing, we will operate its business with independence and strive for further growth at SBI Sumishin Net Bank. So the meetings that I am engaged in, as of December, they will be concluded. Then after, the bank independently will be formulating its strategies. And for the customers they are going to have independence in the management of their operations. Of course, we will be the parent company. And if asked, we would like to do whatever we can with Sumitomo Mitsui Trust Bank. And if it's a win-win outcome, we will work together.

Having a relationship with a public company, this is what is supposed to happen, especially when it's a bank because the FSA is extremely strict about these things. And to that end, back in 2007, we established this bank, and to date, we have continued to develop and grow this company so that we could now list the company. So it's 50%. Therefore, the equity and earnings grew by 11.1% year-over-year and reached JPY 4.461 billion. So we started operations in fiscal year 2007. We achieved a full year profit in fiscal year 2009. Then after, we have been continuing to grow the business. And then the BOJ started its negative interest rate policy and profits fell at that point in time. But then after, we continued to grow income. And in fiscal year, March 2021, we were able to grow ordinary income to exceed JPY 20 billion. So we have already exceeded last year's Q2 numbers. So we should be around here for this fiscal year. We achieved full year profit on a full year basis in the past, and then after we basically steadily increased ordinary income apart from external impact. So this is the outcome of how we have managed our bank.

So since opening, here is a trend of number of accounts and balance of deposits. Now the number of accounts has reached approximately 5 million. And for deposits, as of October 26, it has reached JPY 6,659.1 billion. So even when [ nerved ] by the BOJ was introduced, apart from that year, we have been seeing constant growth in a linear way. So Yokohama -- Bank of Yokohama and Chiba Bank are the top 2 when it comes to the amount of deposits. We are here. As of end of March 21, we were #17. Actually, Shinsei Bank was #18. So JPY 6,293.9 billion, if you add it with Shinsei Bank's amount and compared to Bank of Yokohama and Chiba Bank, we come in third. We will be in the top 3 from a deposits point of view. For Sumishin SBI Net Bank, (sic) [ SBI Sumishin Net Bank ] the deposits exceeded JPY 6 trillion. It was at JPY 6,628.4 billion at SBI Sumishin Net Bank as of September. So this is the growth we've been seeing from March last fiscal year until September this fiscal year. So we are seeing steady growth. So this compares to deposit balances between SBI Sumishin Net Bank and Shinsei Bank.

Like I mentioned earlier, from a ranking point of view, initially, in March 2020, we were ranking below Shinsei. And in September 2020, we were also below Shinsei. However, as of end of March '21, we exceeded. And we are probably going to exceed once again against Shinsei. So we're growing by 11%, 10%, 16% as well as 15%, which is the most important factor. However, foreign exchange say, the growth rates are only at 6.4%, 8.8% and so forth.

Now for the sustainable growth of SBI Sumishin Net Bank, initiatives of focus will be, one, the mortgage business. It doesn't engage in loans to corporates. Therefore, what they're doing is collecting deposits. They collect profits and they manage it and generate spreads that turn into the income for the bank. They're putting emphasis on the mortgage loan business so that they could generate spreads. Of course, through investments, they are generating spreads from the securities-related initiatives, too. So when you look at the balance of mortgage loans, starting from 2008, it has continued to grow. As of 2021 end of September, it has reached JPY 5,231.3 billion. The cumulative total of housing loans exceeded, as of August 6, JPY 7 trillion. And just for your reference, for Shinsei Bank, from 2008 until to date, the loan balance is only hovered around the JPY 1 trillion mark. Moreover, for our company, we would like to expand our customer base and enhance our profitability. And we have implemented new initiatives for that purpose, which is the Neo Bank initiatives.

Finally, at this point in time, on a monthly basis, when it comes to account openings. If you are benchmarking against April, as of September, it went up to 33.4. We have now JAL NEOBANK as well as T NEOBANK, which is a partnership with T Money, which is a T Point operator and Yamada NEOBANK with a partnership with Yamada Finance Service Company. Furthermore, with the Ouchi Health Group -- or the Open House Group, excuse me, in linkage with OuchiLink, we have started OuchiBank. By engaging in these initiatives, we will be able to have a diverse range of earning sources. So it's basically our bank functions. In this case, we provide it to Open House for their youth. So they will make -- take advantage of our banking services in various ways, whether it be foreign denominated currency deposits or loan products or something related to houses, paying utilities or internet fees, they may take advantage of all the services we offer basically.

And for the insurance-related business, which is the SBI Insurance Group, on November 10, we will be announcing their results. On a J-GAAP basis, the final numbers are going to be announced on November 10, and these are preliminary numbers. For ordinary revenue, we expect 7.8% growth and 51.4% ordinary profit growth. And profit attributable to the parent of the company has grown by 49.3%. In all of the items, the business is doing very well. For the Insurance group, total number of in-force contracts, comparing March 2016 to September 2021, CAGR has been 15.8%. People say that insurance is a saturated market, so it shouldn't be growing as much.

However, in the case of our company, we have been able to record such CAGR, meaning that we're going after market share. When you look at the results of the questionnaire that the insurance company conducted during COVID-19, people had a tendency to review their insurance policies so that they could take out a cheaper insurance policies. It seems that many people are considered and a lot of people took action. And I was surprised to see the results of the questionnaire. So increasingly, this will be a tailwind for our business. So I touched upon this earlier, but basically, it's not just organic growth that we're pursuing but M&A is also an important part of our strategy to reach JPY 300 billion. So this is something we will continue to work on.

So one of the pillars of the business is non-Life Insurance and Life Insurance as well as a small amount, short-term insurance. For SSI, there are now 5 SSI companies that were incorporated into our group. We will like to continue to pursue M&A opportunities. For all of the companies in our group, customer satisfaction is one of the most important factors we focus on. If satisfaction goes down at one of our entities. I will personally go to the Head of Operations of that entity and ask why customer satisfaction has been deteriorating. I will make a phone call because I put a lot of importance on it. For each of the companies, it is a key indicator that represents your performance. So we are mostly first or second place, as you can see here. Also, when you look at the total amount of SSI insurance income, when you look at our performance in 2017, '18, '19 and '20, we finally in 2020, have been able to exceed Zenkankyo Group and Tokyo Marine Group, and we are now #1 in the industry. We would like to continue to be so.

So for all of our group companies, we are striving to improve operating efficiency and engage in incentives to expand the customer base. This constantly needs to be on our minds, what kind of scheme should we put together to expand our customer base. And furthermore, under such schemes, will all the participants be happy? We need to create a scheme that will satisfy everyone. And for management efficiency, on the other side of the equation, we will ensure that we will continue to incorporate new technology. We will -- we make investments around the world because we want advanced technology and incorporate that into our company. That's why we're making the investments; and where possible, we will continue to implement them, and we will continue to transform ourselves. So this is self transformation and self evolution. We need to be like that as a person, and we need to be like that as an organization. If you're not able to do this, you will continue to subside.

So linking SBI Nihon SSI's insurance application system with a real estate company's application management system is what we're trying to work on so that we can expand, enhance customer convenience and also improve operational efficiency and expand the customer base. This is what we're trying to do. And also, we would like to further improve operational efficiency and customer convenience by promoting InsurTech. So for SBI Insurance, they did a major renewal of "Kashatto Speed Quote. So for the non-Life insurance, premium quotations, the necessary information can be automatically read and quotation can be displayed. At Life Insurance, it can completely automate reinsurance of Life Insurance premium deduction certificates or by using Alexa of Amazon, they launched new service to estimate insurance premiums. So in this way, we are incorporating technology to make our services even more convenient for our customers.

Next is the Asset Management business. So for this business, most of the items are record high. So revenue increased by 84.8%. Profit before income tax expenses grew by 221.1%. For SBI SAVINGS BANK grew by 32.3% at JPY 18.4 billion. And also, the profit loss from the change in fair value and profit and loss on sales of investment securities, this grew substantially by 248.1% to JPY 53.6 billion. In the initial phases, I was attentive to JAFCO's numbers. I forgot for a while, but now when you look at your numbers, the numbers are so different from ours.

So I talked about profit loss from the change in fair value and profit loss on sales of investment securities. If you look at the details, it can be separated into listed and nonlisted securities. For listed securities, it was negative. The reason for the negative numbers is because of Shinsei Bank. We own about 20% of their shares, and it includes a valuation loss that is recorded -- that will be recorded at the end of the year. So at Q1, there was a valuation loss of minus JPY 14.2 billion. For Q2, we are currently in the process of a TOV. So according to IFRS, we evaluate based on the previous day's closing price to the day the takeover bid was decided. So the loss was about JPY 200 million minus instead.

As you can see under number three, the reason for the valuation gains for the unlisted securities is because of Lancium in the U.S., which I will explain later as well as Drivewealth, also based in the United States, which is an investment-related company. These 2 companies as well as -- this was a valuation gain. And also, we were able to record a gain on the sale of Paidy because PayPal acquired it for JPY 300 billion, and we were a major shareholder.

Of course, there were some unlisted stocks whose businesses have not progressed as expected. So there were some businesses that didn't performed well because of the pandemic, and they needed to go through another round of funding and so forth. So we took valuation losses worth about JPY 14 billion. Of course, I hope this starts to settle down as we have ended wave 5 of the pandemic. But in the winter timeframe, there is cyclicality. We might see another peak after a trough. So that's based on our past experience. Same thing applies for the flu. So if wave 6 comes, we're not sure what's going to happen, but as management of the company, we need to be accounting for that as well.

But this time around, I think the situation is going to be somewhat different because of vaccinations. The vaccination rate is already at 70% and probably, the boosters will start from January next year. When we're in that kind of situation, I think we will be able to get infections under control, and we will get herd immunity once we exceed 70% in the vaccination rate. And some people were saying that for -- when cells increase and expand, they expand in a wrong way and the proliferation starts to change. So delta was really strong, but people are saying it's self-destructing and has become weaker. So that's the self-destruction theory, like an apoptosis phenomenon. There are some experts around the world that are saying so. But any case, former Prime Minister Suga said, vaccinations are critical. And it turned out that it's been justified. And thanks to him, we were able to conduct vaccinations in a speedy manner, and now 70% of the nation are vaccinated, which is worth noting.

So next for the Private Equity business. In March 2022, we expect 34 to go to market and 12 for the half year, realized an IPO or an M&A. So for these 12 companies last year, there were 12 for the full year. So now it's 12 for 6 months this fiscal year, and there's still 22 companies to go in the second half of the year because we created a JPY 30 billion fintech fund in December 2015 and an AI and blockchain fund in January 2018 worth JPY 60 billion. Then after, in 2020 April, we created a JPY 10 billion fund, which was the greatest size ever in Japan. The investees are starting to go to market, and now we're entering a harvesting phase.

So in fact, it is the financial service business. So asset management business, these are 2 wheels, which -- of a car, of a vehicle, which contribute significantly to the profit, and in fact, this profitability is sustainable. So I think that's what it can be said. And also with regards to overseas Financial Service business, if you look at SBI SAVINGS BANK in Korea, in comparison with the first 3 quarters of the previous year, it's plus 51%. In yuan basis, it's KRW 293.1 billion. In JPY 10 -- it's not JPY 10, but it's about JPY 29.3 billion. So according to the Korean ratings agency, it's now positive. So just one more step and they will be able to pay out dividend, hopefully, from next fiscal year. So this bank was just about the class. And then we came in 2013 and spent about JPY 130 billion to buy this company, and we were severely criticized, but look at the result.

In just a short period of time -- so in 2015, we were already full year net profit, and we have been recording record high each year until today. And in 2020 December, look at this, just for your reference, look at Shinsei Bank's performance. So SBI SAVINGS BANK is just a nonconsolidated basis. So we are now comparing Shinsei on a nonconsolidated basis as well, but in 2014 fiscal year, they were of JPY 45.7 billion net income. And you can see, they have been declining year-over-year. I might wonder how could they continue to decline like this? What could they do wrong? As I have been explaining from before, in our SBI Group, there's no companies like that. The bank and the companies that we invest in, which we have acquired and invested in, I would say, almost all of them, the performances improve.

Why would they not improve, and what happens if they underperform? So for example, maybe a group of young workers at Shinsei Bank and maybe ex-directors of the bank send me letters and they say, please buy the company, acquire the company, restore their past glory, change or transform the bank, please. They have -- the only company they have not paid down the public injections that they have received JPY 350 billion for 20 years -- and the management -- the fact that they are still getting paid bonuses, and of course, they have to receive compensation, but it's quite unbelievable to me that they're getting Director's compensation and bonuses. And if you worked for a company like this, how could employees continue to be hopeful to have aspirations?

The fact that the company workforce continues to grow, the group company that you work for is contributing to the parent profit. Those things become motivation or it becomes your pride, and it becomes your confidence, especially for the Directors and Executive Officers. So how -- what is this company, which you cannot be proud of. Why is it? Because they don't have a clear vision and corporate philosophy. That's a mission. So companies that lack things like that turn out to be -- see the underperformance. So this is my impression looking from the outside.

We invested in Vietnam, TPBank. In 2018, they went public and now they are about JPY 220 billion. We have 19.9%. FTP Securities broker dealer, we have 19.9% in stake. Now their market cap is above JPY 40 billion. So as the country continues to experience high growth, financial business will also grow. Same thing with Japan, right? In high economic growth, it was the financial industries that grow first and then was followed by manufacturing sector or transport sector. That's the structure. So this is -- it's the financial institutions. It's the financial sector that really takes off in high-growth market. Now this is the asset management business.

Morningstar, Japan's Asset Management business has been growing very steadily as well. This is because of the expansion in investment contracts from regional financial institutions, very large contributions from there. So how much exactly are they trusting us? Actually, the balance of AUM among -- of the 2 companies SBI Bond Investment Management and Regional Revitalization Asset Management, together, they have surpassed JPY 2 trillion, about JPY 2.2 trillion exactly. And it's not just the 8 banks with capital business alliances with SBIH. Actually, they only comprise 35% of JPY 2 trillion. 65% are banks without any sort of capital or business alliances. So 65% entrust us.

And SBI Asset Management group, including that JPY 2 trillion, if you add everything else, the balance of investment assets exceeded JPY 3.3 trillion. That's the amount of asset under management. And in addition to that, in the Asset Management business, we have a core important business, which is Private Equity business. This is investing in nonpublic-listed companies. So I said earlier, we have 12 this year and 22 is the last year's full year. We have a great expectation for is JPY 100 billion fund, the largest in Japan, which is SBI 4+5 fund. And these are the investments in Society 5.0 and Industry 4.0. It's wide range. It's -- so the investment areas include different sectors. And with regards to SAGs, we have been investing around the world at a very early stage, and we invest in environment as well. A lot of focus here.

Earlier, I said that there is a foreign company which we sold, and we have had realized gains, and we also had some gains on sales, and Lancium is one of them. And what does it do? U.S. -- western part of the U.S. is very much good for building wind power plants. And what they do is, they purchase electricity from wind farms at very low cost. It's a clean energy, and they use it for hosting services, cryptocurrency, mining or AI computing at universities. So that's how it's done. So they often say that mining consumes a lot of energy, but this is using clean energy. So whatever that's used to use coal energy, it's converting to clean energy, and 90% of the energy that's used is carbon neutral. Many of them are wind power energies. And through this -- so we invest in companies like this.

Also, even in Japan, there's a company called WIND-SMILE. It's a wind power, solar power, biomass, geothermal investment. And we employ specialists from 12 different countries. It's quite advanced, somewhat unusual in Japan. They go from development to different types of power sources and they go from installation to maintenance. And also ERI, Eco Research Institute, it's a system that develops recycled municipal waste. So these are ordinary in general municipal waste, and they produce a biomass energy from that. So what they do is, they produce biomass-derived fuel from municipal waste through pyrolysis of waste material and plastic together by installing the system in local government clean centers. It's expected to reduce waste disposal costs. So Hamamatsu City has already said that they want to implement the system. I went and visited the Chiba plant as well. These are the things that we want to invest in proactively, and this will become our core. And as part of the projects with regional vitalization partners and with the services, they will continue to expand business.

And also SBI Energy, our subsidiary, they were doing farming-type solar power generation. So in other words, while they're farming -- they're always farming like crops, soy and wheat and they farm. And at the same time -- so they manage farms, but they also supply energy. They generate and supply energy. It's quite profitable. And we are actively investing in emerging countries through funds with leading local partners around the world. So these are essentially venture funds with both private and public funds and invest around the world. And we have information coming in from around the world, and this is a new fund, new PE business in digital area. This is the area we really are putting a lot of focuses on.

So for example, we're working with Sygnum. This is the world's first digital asset bank licensed by Swiss authority. And Azimut is an Italian research management company. So we decided to establish a joint venture fund. And we will be investing in different digital asset-related companies around World Bank in Europe and also in African continent. So I have traveled to more than 100 countries around the world, but Africa is one continent that I have not been able to visit, unfortunately.

Now of course, I have been to MENA like Morocco and Tunisia. I had been to northern part of Africa, but the rest of Africa, I have not been able to visit. But this is the continent with potential, and so we have to start right away. We have -- we must start now. So we have decided to partner with Verod-Kepple Africa Partners for investment in Africa.

So I have been talking about investment business so far, but now with regards to financial services business, I would say, in Southeast Asia, we have joint ventures in most of their missions in Southeast Asia and many of them are already profitable. Already, they have been recording profit record high, basically achieving each year. So everywhere you look, they're growing. This is what I've been saying from before. In high-growth rate areas or in the countries where they are in the high-growth period, it's the financial services that's really growing because the backdrop is that the banking business, the financial institutions, will also become profitable on the backdrop of that.

So the challenge here is to invest early so that you can keep the cost down, and we have started early as well, SAVINGS BANK. Now the nonperforming rate is 1.51%. They used to be 51.6% in delinquency rate. This is when we purchased the company. Now does the management of this company was no good? He was a full banking business. In principle, should not go bankrupt. The law -- the banking -- they're protected by banking laws, and they're gathering money from small companies. And so they can't go bankrupt, so they can't fail. And that is why the country, the government will inject public funds, for example. I think that the government of Japan, BOJ, as well have been too easy. Maybe it's good, temporary. Maybe they had to help out the local entities, companies. But banks, they lend money, and they take interest. They charge interest. That's how they run their business.

So the fact that they borrow money and can't pay back, that's not possible. That can't be the case. Maybe 1, 2, 3 years, they can be patient. Maybe maximum 5 years, they can be patient. But if you -- they can't pay back decades, 10 years, 20 years. How could it be a bank? It's not possible. We are -- what we think what we're doing is justice. One reason is because they're not paying back the money they borrowed. People say that the government will only buy back JPY 7,000 per share. They say, no way, how could that be the case? That's not possible to pay back. No, I completely refuse to reject that. Because what happens is, those who borrow money under pandemic will never pay back.

Even in the capital alliance investees of SBI, I always say that you have to put utmost effort into paying bad public funds. It's taxpayers' money. Of course, you have to pay back. And I say to each President of the banks, and I say this very stringently, right? Mr. Morita, do you agree with me? They come and visit me every time. And every time I see them, I say, please pay back the public funds as quickly as possible. And if you borrow it again, you have to pay back once. You can't reborrow or refinance. I think it's problematic to refinance unless you pay it back once. Of course, we will assist you as much as we can. That's what I tell the presidents.

Of course, we will assist you as much as we can. That's what I told the president. That's how, in one sense, they are saying banking business is different. [ TOV ] or the hostile takeover is not possible in banking industry. But to start off what is hostile or friendly? I think it's nonsense to use hostile or friendly. What is hostile or not, it should not be determined by the management. It's the shareholders, that determine whether this is hostile or not.

So as a new word. I want to say constructive [ TOV ]. So it's outdated to say hostile. If you're here with the newspaper company, if you're representing newspapers, media, don't use those word anymore in this capitalism. If you want to revitalize this capitalism market, and as a method of making this country wealthier and prosper, we have to let those nonsense stupid management exit. You have to get them out of this, drag them out. So they talk about poison pill, fine, go ahead and do it.

Let's say they will pay more than JPY 2,000. We're seeing JPY 2,000 maximum. And I already think I'm paying enough premium, and I don't plan to increase any more than that. If there's a white knight who wants to buy higher than that, I'd say, fine. I said, we will give it with you, wrapped with ribbons. But like I said earlier, but for justice sake, I think I have to show 1 example, the model.

And in the Q1 financial results, I was asked, why do you find Shinsei attractive, you want to buy the company. And as you saw in your reference, there's nothing charming about the company, that's attractive about the company that makes you want to buy it. And my answer is valuation. That's 1 reason. The other is because we think we can transform the company, the bank, I should say. And I am confident that we can transform the Shinsei. That's what I said.

So Russian Bank, this was about to collapse and we acquired it. And we have 90.74%. And they have become profitable for the full year for, well I guess, only half year still. But in first half of 2021, they have already achieved profitability. And you can see the gross profit, and they can achieve net profit. And you can see the loan balance increasing as well.

Unfortunately, the signing of U.S. -- I'm sorry, Japan-Russia peace treaty seems far away. But putting that aside, we're a private sector. So I believe that we should be maintaining relationship with Russia. That's my judgment.

Of course, hopefully, this will be positive to political development. And of course, the Abe administration back at the time was pushing for business relations between Japan and Russia. So we decided that we've also bail out Russian bank. Hopefully, that will lead to the friendly relations between Japan and Russia. So in that sense, RDIF, which is an equivalent JBIC of Japan and also Japan JBIC IG partners itself has invested.

So the Cambodian Bank that we acquired, a medium size micro finance company in Combodia, and they obtained a full banking license immediately, and they became profitable right away, and we can further grow them. Now we started online broker dealer in Thailand. Compared to March 2019 -- 2020, excuse me, I think we should double this year.

Now Africa, the last growth front here, already new interesting businesses have started. SBI Africa, this is a company we established an SBI Motor in Japan. It's a cross-border EC site low-cost sales.

And in Kenya and Nairobi, we have an office called SBI Motor Japan. One problem with the business in Africa is remittance. If we deliver products, are we able to actually receive money promptly? As a consideration for the product we deliver, can we receive that money back. I think that's the greatest concern we have with the business in Africa. And I'm looking at able to use Ripple's XRP to do the payment. Because the bank in Africa, we don't know what happens if there's a coup d'etat, for example. There's a lot of unimaginable things that could happen. So we have cautious.

Furthermore, Gulliver is a Japanese used car broker. And we used company. And we are now working with FMG, which provide vehicles using micro finance. So for example, in Tanzania, Uber driver doesn't have any money, doesn't have an account, he's not able to borrow money. But if he can lease a car, then he can earn money. So what we do is we lease the vehicle to the driver, and he pays back on a weekly basis.

Asset management business. I think asset management business is quite promising. As I said that you exceeded JPY 5 trillion. We want to be JPY 10 trillion as quickly as possible. I've been instructing to my junior, and they say that they can't do that. And the reason is the sophistication, diversification on securities management at the regional financial institutions, and there's a demand to outsource that.

There's about JPY 132 trillion in the balance of managing securities, the regional financial institutions. Among with yen bonds is JPY 83.9 trillion, which means that when you say JPY 83.9 trillion -- nearly 64% is yen bonds. And on top of that, by 2022, about 40%, so that's about JPY 15 trillion of government bonds and local bonds held by regional financial decisions will be redeemed, which means that each year, profitability will decline.

Meanwhile, regional banks lack resources, that is scalable to deal with global asset allocation. And if you look at deposit loan gap, so JPY 116 trillion at regional banks, credit unions JPY 81 trillion. So together, it's JPY 200 trillion in deposit loan gap.

If you look at this, this is a our potential market. In fact, if you look at the yield, if you look at lending margin is 1.85. This is exceeding the yield on -- I'm sorry, the yield on securities is 1.18. This is above the lending margin. So it's better to manage it on securities. But this is looking on the trend, it's all declining, and that's the key.

That is why we need to continue to entrust, fund the regional financial institutions. So today, among 99 regional financial institutions, 58.6%. So 58 financial institutions are entrusting to us. 58, not 8 capital business, partnership, whether we have that partnership or not, so we heard that.

So this JPY 5 trillion on the balance is set to increase to JPY 10 trillion by the end of March 2026. And the full on 20 years, I have acted and realized on my words, it's different from a certain bank. And we expected, the profit that we -- that fund our business.

And now I'd like to move on to Biotechnology, Healthcare and Medical Informatics business. So the focus -- this is going to be the last year, fiscal year. So it will not be -- there will be no big loss-making the other companies. We will think about IPOs for SBI Biotech as well and also 5-ALA related business companies. The potential IPO is always around there, even without the positive profit. So it's becoming more visible about this business.

And early profitability and sustainable contribution expected. And as to the SBI ALApromo increased revenue of 1.56x and the pretax profit of 1.2x. And the number of the domestic stores, including WELCIA, TSURUHA, NoMatsumoto, 17,710. And new -- the product with the functional claims. We have the ALAPLUS Mental Care, ALAPLUS 5-ALA20. And also SBI BEST NMN. NMN stands for the nicotinamide mononucleotide, and this is the working the energy metabolism of the mitochondria and longevity genes.

The Washington University, I think it was Dr. Imai who has been studying this area, and been writing in many papers. So this NMN will be combined with 5ALA going forward. And this product is with NMN only.

As to the Toh Down ALACIA, we have Toh Down related products already. But now we have the ALA PLUS Toh Down ALACIA using salacinol that it is made of trees in Sri Lanka, for example. And it was discovered by a Japanese person. And they made the cups and so on using this the wood in old days. And it is good to avoid the diabetes for example.

So this ALACIA that is used for the new product, it has already been approved by the consumer affairs agency. ALA PLUS Gold Hirokan Keigen, also the -- of the 7 other products, that with claims of functional claims. And also, we have male menopause improvement related products of fatigue reduction after exercising to be filed.

And here we have other Phase II, the projects 2 and the preclinical 2 and Phase I [indiscernible]. This is for solid cancers, the licensing patent of current biosciences Dr. Alai related to the Tokyo University. Although I started the SBI Biotech as a risk operation from Dr. Alai.

And so autoimmune disease is the center of the other project. Allergy is 1 example. The rheumatism is another example. And so [indiscernible] and other anticancer diseases exist this area of diseases, and we need to strike a good balance.

Now medical informatics. I now know very well that the medical data is missing. We need to analyze medical data so that we can make decisions based on medical data. But in Japan, that part is missing. So this company, Medical Data Vision is a great company. And we purchased part of the stake a long time ago, and we sold it and then bought it back again from Fuji Film, it's worth doing that.

So as personal health record, or PHR of each individual is very important. It shows the person's, the medical record and what kind of reaction to what kind of the medication, such personal record that is contained in Karteco, which is PHR service, 30,000 people are already using it. But when you get older, you don't remember all the diseases that you have had or had in the past.

So for example, in this COVID era, when you have some existing diseases, you will get seriously impacted. So what kind of the disease will be the -- will produce the serious impact. And there is no data to show that in Japan. So the 33 -- 37.42 million patients worth medical data is held there. And the share is 45% among all the high-performance hospitals using the DPC system.

So I got interested in the took some share, invested in this the Medical Data Vision. And we would like to start the factoring service for medical institutions utilizing MDV's network and combining that with SBI FinTech Solutions financial expertise.

And as to health account, I talked with some of the policymakers of the LDP. And I talked with some banks as well to start this other project. I argued that the -- well, yes, we have the nursing care, the insurance, but it would not last forever, thinking about the current demographics this country.

So how are we going to maintain the international health insurance? Well, we need the self assistance, the mutual assistance, public assistance as [ Mr. Suga ] said. So we need to have some medical insurance on our own. And the deferred payment service is also important.

Using this health account, that is also possible. You don't need to line up in front of the reception counter at the hospital. And it will also free up some time for the hospital admin because they don't need to work for the recovery or collection of the receivables. And the medical insurance is also managed by this health account.

Well, for this, we have a patent. And in Gifu, the Ogaki Kyoritsu Bank, takes the lead to do this the project, and that will be a big help for everyone. It's been the group's overall.

I design overall strategy and then that is [ voted ] that becomes the basis the specific strategies of different businesses. And we achieve -- we try to achieve our goals on the same vector. And this time, new overall strategy is expanding the customer base and creating a business foundation targeting corporate business customers. So this is the background and the purpose, let me read.

Since its establishment, the group has been providing financial services mainly to individual customers using the Internet as its main channel. With the promotion of the neo-securities initiative at SBI Securities and initial public offering of SBI Sumishin Net Bank, the core bank of the SBI Group. It's necessary to develop a new banking strategy that includes corporate customers and to further strengthen the corporate ecosystem.

Relationships with regional financial institutions, which were the first in the regional revitalization project have been strengthened beyond expectations and have dramatically expanded our business field and the customer base. And in the future, the SBI Group will work together with regional financial institutions to revitalize the regional industrial foundation through measures such as providing support to regional companies through investment in supply chain finance, providing technology such as digital transformation and supply chain management and helping regional companies expand their sales channels nationwide. SBI Group companies have big relations with large, medium and small-sized businesses through their individual business activities.

And now we are going to provide various products and services, including in nonfinancial services and [ communize ] group customers by creating big data based on the information of business and corporations. In particular, develop variety new businesses centered on the decision of high-level technologies of venture companies, which is the SBI Group with past relationships.

So this is the big strategy going forward and the group companies will come up with their own strategies. And I'm going to monitor all of these the specific strategies, including progress, which companies are doing well, which companies are not doing so well and why.

Everything should be done that way to make progress. If you just get together and if you do not make any decisions and if you do not act on your decisions, that will make a poorly managed company. I'm 70 years old, almost everything in my mind -- is in my mind. And more than anyone, I'm enthusiastic, and I'm thinking very enthusiastically, any business executive, or owner should be that way.

Accomplishments and outlook of cooperation with financial businesses centered on regional financial institutions. So we have been working on sophistication and securities operations, adoption and fintech, creation of new revenue streams, the -- in cooperation with SBI Group for regional FIs, for example. And as the revamp of the core system, this is the main theme going forward.

Core system and all kinds of currency systems should be at a reasonable level. And the fixed cost should be changed to variable costs. I have been saying this for a long time, and it's time to realize it. It's a project, which is already running. And for the to work with regional banks to support the local economy and their customers, the development of cloud products, thematic business meetings, we have been holding many meetings, and creating a place for local people together.

I cannot make a public announcement about this one, but we are in construction at a certain location. It's not a park, but we are going to construct, build something to attract the people. And the consultation on new business expansion business succession. Here is corporation with financial institutions that the SBI Group has promoted, for example, SBI Securities, a total of 45 regional financial institutions are aligned with us. And in November, the other new -- the intermediary, the system will start.

And so this new type of intermediary at the scheme should be aggressively utilized. MONEY PLAZA , the 40 regional FI and 22 shops. The numbers are on the increase. The SBI Life, 59 regional financial institutions are selling their products, SBI Insurance, SBI Neo Financial Services, SBI Business Solutions and Morningstar, it's public application that is a must the regional FIs.

When it comes to fiduciary duty, there are only a unlimited number of the small products and the alliance with the securities you sell those small products. That's not the way to do business anymore. And so the [ fiduciar ] duty is about providing data and explain about the choices.

And it's -- actually, it is a third party, Morningstar, which is making it happen. That's why we have 147 the regional institutions. And the via the Money Tap, 38 the institutions and 7 banks within this year increase to 20. And the SBI Regional Revitalization Asset Management extended to 39, and AUM exceeded JPY 948.2 billion. So SBI Remit services already provided to 7 banks.

And SBI Smile that is about the real estate leaseback of the business. The consumers can continue to live in a house until their death. And then SBI Sumishin Net Bank, 5 regional financial institutions have already decided to adapt and offer those services related to the other mortgage and so on.

And here, we have the comparison of core net business income among the regional banks. Shimane Bank, we had invested in September 2019. And this is the result of the FY 2019. And in the case of Shimane Bank, since FY 2020, JPY 151 million. And FY 2021, they said JPY 101 million. But today, they upwardly revised the number to JPY 360 million of the ordinary profit.

That is the revision of the forecast for the first half, and we have Fukushima Bank, Chikuho Bank, and as the Shimizu Bank. They also did the upward revision of the forecast for the first half to JPY 3,100 million, JPY 3.1 billion, JPY 3.1 billion from JPY 1.1 billion.

And here is Towa Bank, Sendai Bank, they did not change their forecast. But they probably -- once the revision is up, then you can refer to Nikkei newspaper. The first -- the front page of the -- I mean the 1 page ad that will announce any revision of such other forecast. So the only way to make progress is the transformation of the quality.

In Japan, over banking situation is another fact that the wealth -- is part of it -- that will be wiped out, if you do not do anything, whether it is financial and regional financial institution or any financial institution. Now measures to be promoted, provided the TOB for Shinsei Bank, that is successful. These are just examples.

We have already explained about this in the long text after the announcement of the TOB. So it's already public information. SBI Security and Shinsei Bank, simultaneous opening of bank accounts and securities accounts or deposit linkage. And the retail business will significantly increase because the retail business is not doing very well. It's shrinking rather at Shinsei.

And the small amount finance. Shinsei said that it's their strengths. But once we do something, their small amount finance can be stronger, even further. The mutual supply of products for young customers, increasing the customer base by mutually attracting younger customers, creates revenue opportunities in the future life events of our customers and contributes to longer-term profitability.

And the accumulation of data from both companies through cross-selling will increase the accuracy of credit decisions marketing contributing to cost reduction.

What about structured finance? And recently, I don't know, I'm not sure how much expertise they have for structured finance because the experts in this area have left the bank, the probably young, the high-quality people who wrote to me, they inviting me to buy the bank, but some of them already left.

In the past, they were strong in structured finance. But if they still have good capability, then the regional or the business alliance with the regional FIs is much deeper and stronger. And the market sales and treasury. There are 31 counterparties. That is the case of SBI Liquidity Market that allows them -- into a very competitive rate. It's different from Shinsei Bank's operation on a small scale, but we can provide some of the other work to compare the 2 operations.

Now the group provide promotion of business strategy to further strengthen the corporate ecosystem. So the -- we will focus on the other business cooperation, the strategy going forward coming 12 to 18 months. And that will be 1 of the 2 wheels.

So with the new initiatives, the commission being 0 on the Internet transactions, and we can still make lots of profit as a group and the SBI Securities are continuing to be of will be continuing to be profitable. as I talked about the hypothesis and the verification earlier. Expansion of business for corporate customers with partner regional financial institutions.

So only with the other regional financial institutions that we ally with according to the Tokyo Shoko Research. 26,824 companies are the combined customer bases. This is the next highest figure after the 3 megabanks and RESONA Bank

And we are going -- we would like to increase the number of the customer base, expanding the business, and that will be good for the regional banks as well as for us.

For example, digital transformation support from us to them, with the Machi no Wa ad service provider. The achievements of regional currency premium coupons, the other projects, and that is the deploy by many different entities. Honestly, called the related system will be utilized nationwide so that the chamber and commerce industries and others will be involved and more. For example, I'm thinking to use it for the other global expo.

Also, another example of DX or digital transformation is there is a company called Japan High Soft in Shimane Prefecture, a cloud-based attendance management solution. We're talking about jointly developing it. It's a company that has really good technology. So in this way, we are engaging in this partnership, and we would like to expand the sales distribution nationwide. Make a benefit for High Soft as well as for Shimane Bank, as well as for us and for the companies that implement the system.

Realization of is SBI DX Database is what we like to also do. We have started to prepare. For the regional -- we would like to share it with the regional financial institutions, so that SMEs as well as retail stores can take advantage of this database. We can help accelerate our digital transformation and contribute to the revitalization of a local economy. As the local business accelerate the DX business matching.

We have capital tied up with Linkers. They have this interesting system. It's able to do matching and offer it to financial institutions. They have matching expertise, meaning matching something with something. Financial institution customers can be better registered here, can be linked together and be matched up.

By doing so, distribution channels can be expanded substantially or that given company. The technology base can be enriched. So various things could happen. This will be a positive for regional financial institutions as well.

Another thing is to promote matching support for universities. For university launch ventures by using Linkers and Astamuse, attributed which is a talent matching company. They possess the database of new businesses and technologies and products and investment information in 80 countries around the world. So they have data around researchers and so forth. We would like to apply this for university launch ventures. Of course, we can apply to other entities, too, and we'll be doing this together with Linkers.

This is about our joint fund. We already have a TOWA SBI Customer Support Fund that we have started. And with Tsukuba Bank, we have been doing it as well. Tsukuba SBI Regional Revitalization Fund was established already, and a company called WARPSPACE Inc. has been invested into. This is a venture company that is seeking to realize the world's first inter-sattelite optical communication network service for low earth orbit satellites. This is a Tsukuba University launched venture company.

Not just for companies, but the country is moving towards this direction. And these kind of things are to be required in the future. As long as we are patent protected, I think interesting developments can be expected.

In the bio space, too, under the Tsukuba SBI Regional Development Fund that was established in July 2021, there is a planned investment into a company called Veneno Technologies. It uses unique technologies to do drug discovery and promote the development of pharmaceuticals that were traditionally difficult to develop.

I touched upon the Osaka-Kansai Expo earlier. But together with Bio-Sight capital, we made an announcement on October 27, that but for bio-related affairs in Japan, designing the future society for our lives is going to be the theme of the expo. So it places a lot of import on the bio arena.

So I'm saying 2 things about this. In the pavilion, collecting all the investees of SBI Investment can be set up. Our investees will probably like that idea and it will be good advertisement for them as well, good marketing for them. And also various types of start-ups can be set up together, and it might be a good opportunity for people to identify new investment opportunities. And we are striving to create an International Finance Sales center in Osaka so we could set up an ecosystem.

So for the SBI Regional Business Succession Fund, the first of the series was at JPY 10.9 billion, and we have closed as of June 30. We will have 1 and #2, and we would like to reach JPY 100 billion.

There are 9 or 10 companies in Fund #1, out of which 8 are dispensing pharmacies. They are situated in various parts of Japan, but there maybe family owned or maybe small on scale. If they are left alone, they will go out of business. So what we're trying to do is we are acquiring these entities and integrating them into one. So we -- to date, we have made 8 acquisitions, out of which 3 have been exited from.

And also in the rice space, the largest rice wholesaler, Shinmei Holdings. It was a customer of Shimizu Bank, Hamamatsu Beikoku, a client of Shimizu Bank, referred as to Shinmei Holdings, and that is why we made the investment. So we would like to collect all types of companies in this space under Shinmei Holdings, instead of just buying the companies one by one.

We would like to reorganize the companies, grow its sales and to exit from these deals, such as renovating and then bringing it over to Shinmei or making some changes in the pharmaceutical dispensary space. There's one more space I would like to become involved in, but it's a secret I'm not able to mention that right now.

Also in Nagano Prefecture, there is a bedding manufacturer in which we made an investment, but we have already exited from it. So we have been swiftly exiting from some deals. So even if we set up a JPY 10 billion fund, we are currently in a situation where we don't have to set up Fund #2. But it will come to a tentative close, which means that we will need to set up our Fund #2.

Strengthening cooperation with corporations in each business area of the SBI Group is the next topic. For venture capital, the number of investee companies are 1,023 at this moment, of which 177 of them exited through an IPO or through an M&A.

So we have a deep relationship with various types of entities. So for investee startups, it's a matter of how we leverage them and even more. There are many companies that are starting CVC funds. Currently, there are 15 companies at a commitment of JPY 100 billion. And now it's JPY 105 billion because KDDI was newly added. They have decided to establish a KDDI Green Partners Fund, in addressing climate change areas.

They are highly interested and many companies are moving towards that direction. So CVC funds are starting to address this type of areas. So currently, the commitment amount is JPY 105 billion.

And also through the underwriting business, SBI Securities is striving to strengthen relationships with business corporations. It's not just IPO underwriting, but we would like to address the secondary market and also M&A opportunities. These types of businesses are what we would like to expand.

Strengthen M&A advisory, benchmarking against first half of 2018 fiscal year, we are 12.7x larger or greater right now when it comes to revenue. So for this space, another company actually bought an entity that we wanted to acquire. So this opportunity is gone, but also internationally speaking, we are extremely interested. So if any investment bankers are listening to this, I would appreciate your information for M&A boutique firms, that is of my interest right now.

So now it's about shared points programs. We're going to be working on that as well as neo bank initiatives as well as in the securities business. There is a Takashimaya card, and you are able to do investment [ trust ] savings. So we have been working on various initiatives. And together with business corporations, we would like to continue to partner with them to develop this business.

For the neo bank initiative, we are seeing more initiatives happening. The number has been increasing when it comes to partner companies I'm sure they are likely to increase even further.

In the banking sector, we would like to aggressively promote initiatives further strengthening the links with corporate customers, such as business matching, as well as supply or technological expertise and so forth.

For insurance group companies, they have connections with various companies, too. For example, SBI Resta SSI, they have a relationship with electric service companies as well as building material sales companies for earthquake insurance. So for Resta, they're in the earthquake liability insurance business. That's why they have a relationship with these types of corporations.

They also have SSI for pet insurance as well. So they have connections with various types of business corporations, which we will like to expand. So through the integration analysis of corporate client information, we'd like to promote the conversion of corporate clients into common customers. This is all about big data.

For financial services, we have been building a database from an early stage, and we have been able to do some interesting analysis to date. And that is why SBI Group has been able to grow substantially. For example, [indiscernible], which we have a capital relationship with. In many ways, they have been developing data scientists and the number of data scientists is the greatest in Japan, apparently.

When it comes to data scientists, in the future, I'm sure they are going to be -- it's going to be an area that's going -- people are going to be paying a lot of attention to. Compared to the U.S., the number of data scientists are far greater in the U.S. compared to Japan. There's quite a lot in India, I believe.

But Japan, at Shiga University, I believe, they first started to say that they're going to develop data scientist by setting up a department. I'm sure there is now 4 or 5 universities. But in any case, universities are belated in Japan. But in the U.S., universities are quick to react.

So the universities are trying to increase the number of students. That's what's happening in the U.S. So I believe in Japan, universities need to have that kind of mentality and try to strategize how to grow the number of students. Example of initiatives to promote for business corporations is the POB offer for Shinsei Bank succeeds. This is about Business Corporation.

I talked about retail as well as financial institutions earlier. They have shown a release. So towards our partners, their lease business can be developed. That's what we expect or cooperation of principal transaction space. They are saying that we would like to become stronger in principal transactions amongst SMEs. Meaning investment banking-like operations as well as investing into start-ups as well as supporting buyouts. But compared to the scale of our business, it's very small.

In the case of our company, when you think about it, in SBI Investment in March '21, we sourced 2,350 companies. We conducted due diligence amongst 415 companies and we made an investment into 78 companies. So a buildup of these efforts led to the strength on a group-wide basis. It's not about just setting up this department, and we're doing everything in that full department. That doesn't make sense.

SBI Group's progress towards establishing the business and the digital asset field is the next topic. So NFTs, or a non-fungible token is the first area. We will be entering this space in a full-fledged manner. Just looking at Q3, it's $1.1 trillion on a worldwide basis for the market. It is growing larger day by day. It is basically a non-fungible token, which is unique and one of a kind. That's what it guarantees.

In the areas of art as well as game items and ticketing, people are saying that NFTs are suitable. For our company, we would like to commercialize the NFTs and we're already at that stage. In September this year, Japan's first integrated NFT trading platform business. Smartapp became a consolidated subsidiary of SBI Group, and we changed its name to SBI NFT.

For Ethereum, we focus on the NFT marketplace business that supports public chains, Ethereum. We aim to become a global leader in the distribution market available NFTs such as domestic and overseas art and entertainment and ticket. Also, we have a company called SBI Art Auction. It's basically a company that engages in art auctions.

So we can issue blockchain certificate, Cert to those who have made successful bids for artworks. In partnership with Startbahn. And in addition, we are able to record and browse information about works and artists online and use history and information and distribution channels after secondary distribution.

The first in Japan NFT sale is scheduled to be held on October 30. For digital art, because it's digital, it can't be easily copied. That is the uniqueness or characteristic of digital art. In order to assure that it is unique and one of a kind, we are able to do so through an NFT. So we are able to have a digital art business because we do it with NFT. So I'm really looking forward to what kind of process it can get.

Next is security token. We have led the way to establish a self-regulatory organization. And then the Amendment of Payment Services Act was passed in October as well as last year as well as April this year as well as in July this year, various types of ICOs is over these days. Now the days of the STO is going to start.

So now we are at the conceptual stage, and we are trying to verify. We're running a proof-of-concept test and we have been running those tests through security as well as bonds. And now we are trying to do asset-backed security tokens in the area of -- with assets being property.

So the first up is eSports. So the capital raised through digital shares. Next is first STO in Japan. This is for retail investors in. So Nikko, Nomura, SMBC Nikko Securities, Nomura Securities, BOOSTRY will be utilized to do ibet for Fin. So this is a distributed finance platform. And then we will do asset-backed ST with Nomura Securities, Mitsubishi UFJ. We use Progmat offered by MUFJ Trust. And we are also using ours as well.

So Progmat, the custodian is MUFJ Trust. It's a very solid system. It's not saying the other is inferior because we invest in it. Now this is STO expected to benefit all stakeholders, including insurers, investors and regulators expect to grow very rapidly. And also SBI's Group needs to build various infrastructures with digital assets in Japan and overseas. So we have ODX. So this is a profit exchange, which we plan to operate.

Preparation is underway, [ slow ] progress. These are such shareholders holding, we have 70%, SM Financial Group is 20%, Nomura, 5%. Daiwa Securities, 5%. We're getting a lot of interest from overseas. All of them are very well-known financial institutions.

Now this is ST Research Consortium. The research has started in various places. Mitsubishi UFJ Trust Banking Corporation hosted with 62-member companies. However, secondary distribution will be done by our ODX.

Also overseas. Abroad, we, together with 6 to do SBI Digital Market. So this is like a broker-dealer in Singapore. And we also -- we will establish Asia Digital Exchange. This is a Singapore-based digital exchange. If the Japanese government decides to permit this, then we will build things like this in Osaka one after another. And this is end-to-end global ecosystem. So we are looking at including custody, global custody.

And with regards to SBI digital markets, this is providing securities features for security tokens. So basically, everything will be included in here. Again, we have invested in Boerse Stuttgart in Germany, and we're able to do a custody. As well, they are also investing in blocknox and we plan to invest there as well. So we're looking at the world's largest global corridors.

Digital equals global. So it's not just about how it is in Japan. This is a very narrow-minded thinking. As long as we are just focused in Japan, we will never grow. I am thinking everything from global perspective.

So this is Digital Asset Fund. I've been saying this about establishments from long before. But it's going to be a unique method that we will be using, sending partnership to do digital asset fund. Meanwhile, SEC approves Bitcoin Futures ETF. So Bitcoin is expected to rise furthermore.

And they were saying worries about China because of the regulation. But all of a sudden, with this news with SEC, it jumped up again. And this is because of institutional investors as well. But I've been saying there's going to be a very big age of cryptocurrency.

So virtual currencies will make a big huge leap forward that I've been saying with this. And this is what I was saying. But you know what, it's moving and it's really trending along a high level you should have bought when it was cheap.

Now price of XRP has risen significantly since it has been given a shareholders' benefit. So in 2020, March end, so if you were given that benefit in 2020 in March and you sold it in October 25, you would have been -- it's 125 times, so it's actually a growth of 6x, 5.7x.

So DeFi, the ecosystem will be built one after another. We have about project team, maybe 10 to 30 people increase in employees we have developed smartphone apps as well.

So it's all a matter of FSA. If we are slow and that does then, as you can see at the end of June in 2021, that has grown to INR 27.7 trillion, nearly JPY 28 trillion in terms of total value locked. So the Bank of Japan Payment and Settlement Systems Department discloses a review on potential benefit, regulatory issues, and risks to DeFi. This is April 2021. This is too late. So whether it's us or FSA, it's July.

We could not wait. So we have established our own SBI Institute for Monetary Economic Studies. We have invited in this Takako Masai, who is the former adviser to BOJ's Policy Board. She's now a representative director, she is gathering all the experts so that we can do policy recommendations.

XRP international remittance, again, this will be used in different areas, and we have started on an on-demand basis and entry into eSports-related business, again, this is quite interesting, I think. They are in 4 business areas, titles, we have signed contract with 13 players, and I know that this will continue to grow up with the -- everyone is serious.

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