SBI Holdings Inc

TSE:8473

Earnings Call Transcript 2021-Q3

[Yoshitaka Kitao, executive]

Thank you very much for joining us today despite your tight schedule. I understand that in addition to the audience in place, there are about 130, the participants on the online despite the COVID-19, the pandemic. Thank you very much for joining us today, and thank you very much for your support to our business. Without further ado, I would like to move on to the presentation of the financial results of the first 9 months.

As you can see, the JPY 362.218 billion is the revenue, up 27%; profit before income tax expense, JPY 93.738 billion, up 44.8%. Profit for the period, JPY 69.225 billion; and profit attributable to owners of the company, that is JPY 60.810 billion, up 52.2% and 62.3%, respectively. And all of these numbers are record high. And the annualized ROE for the first 9 months is 16.2%, again, record high.

So this is the comparison with major, the face-to-face securities companies. SBI Holdings here, using IFRS, the JPY 93.738 billion. This is the pretax income and ROE of 16.2%. And Nomura is going to make an announcement on February 3; and Daiwa, on a J-GAAP basis, JPY 82.319 billion, up 26.8%. ROE is 6.2%. And SMBC Nikko Securities, JPY 77.880 billion (sic) [ JPY 77.881 billion ] or 108.5% with ROE of 8.3%. The SMBC Nikko Securities, the pretax profit is the JPY 77.881 billion. So this is apple-to-apple comparison.

The 21 years have passed since the establishment of our group. And we have finally reached this level of the profit. The question is whether this -- the profit level is sustainable, is continuously growing or not. That's important. To know about that, let us look at the segment-wise numbers.

The Financial Services Business is growing significantly with 61.2% increase, with JPY 61.892 billion for pretax income. Asset Management Business, almost the same year-on-year; but still, they are maintaining very high level. Biotechnology, Healthcare & Medical Informatics Business still running in the red but reducing the red numbers significantly.

Here, the shareholder benefits. As you can see here, XRP and using ALA PLUS products from which you can make your choice. So the more than 10 units or more, or more than 100 shares or 1 unit or more, there's a difference here.

And now factors behind the positive earnings and the measures taken to realize sustainable growth. Starting with Financial Services Business. So here, again, for each line from the revenue to all kinds of incomes, record highs for all of them, especially for profit attributable to owners of the company increased as much as 107.1%. This is on the J-GAAP basis.

And as to the number of accounts, we are making double-digit increase at 11%. From the end of the year ending in March 2009 and the December 2020, the compound annual growth, 11%; and Nomura is at 1.5%. And that gap will be widened only in 7 months after achieving 5 million that we achieved the 6 million number of accounts in November 2020. And already in December last year, we reached 6.3 million or 6.39 million.

Let us look at the share. It's a very striking shares and the -- for the sales of individual stock trading value, we have the share of 43.1%. And for the sales of individual margin trading value, SBI share is 45.2%. So it is increasing significantly.

So on that backdrop, we will continue to be aggressive. We will not be satisfied with the current status, that we will press forward with our measures. And among our measures, I would like to focus on the Neo-securities or Neo-securitization. So how are we going to realize that?

In the U.S., Robinhood has built a stong base of customer. Charles Schwab, the E*TRADE, the Ameritrade, they are making the situation where the other deregulation happens. And sooner or later, it will happen in Japan as well. And if that's the mainstream of the era, we'd like to be the first to achieve it. And that is the only way to be the winner in the competition. That's my belief.

So towards that goal, we are making utmost efforts. And we are making very steady growth or progress diversifying the other sources of revenue. And when it comes to the domestic share that we are decreasing the dependence on the -- decreasing the dependence on the Japan stock. And for that, we have been engaged in some M&A activities. And we are -- we have achieved the numbers that we have just -- [ the same ] and the deregulation of the other commissions. And 500,000 number of accounts was achieved with the NeoMobile Securities. And with that entity, we would like to deregulate the other commissions.

And as to the wholesale business, we are focusing also on the upgrading of the business and also the robo-advisor services or stock-type business have been expanding. And also, the IFA, the independent financial adviser, to grasp needs of face-to-face transactions has been upgraded. And the commission, the revenue other than the other online is on the increase as well.

And I'm going to explain about all that. First, the diversification of revenue resources has lessened the dependence on domestic stock brokerage commission income from online trading. Our target was below 5%. And as of the third quarter, it went down to 17.7%. The third quarter was very good. The market was very good. And with a good market, of course, the commission increases, brokerage commission increases. And it's very natural to expect that the [ composition ] of commission in the revenue increases. But as you can see here, it is declining to 14.9%; and the -- in fiscal year 2020, the 21.4%; and then coming down to 14.9%, and that's the rate [ composition ]. And targeting at 5% doesn't mean that the other -- we would never make the commission 0 before reaching 5%. The -- once we made a decision that we don't need to be concerned about this type of commission, then we might make the commission 0 before we reach 5%.

Now the common stock trading, online trading and other tradings, we have been diversifying the revenue sources. So this is the SBI Liquidity Market. FX market was now with SBI SECURITIES, and SBI VC Trade and SBI FXTRADE have been the -- have become subsidized. SBI VC Trade is for the crypto-asset. And the JPY 36.593 billion is the total for the first 9 months until the end of the first 9 months of the year. To the end of the fiscal year, it will continue to increase. So important message here is that we are seeing a very steady increase, making a decision whether the commission should be 0 or not, and we have to look at the other trend of the numbers.

Now FX, the business, SBI Liquidity Market and SBI FXTRADE, the simple -- the aggregate of the pretax of the other entities, JPY 7.603 billion or up 78.4%. And as for FX business for crypto-asset exchange business, JPY 6.695 billion or up 83%. So we have been diversifying the revenue of sources, and those sources are growing.

SBI Liquidity Market for FX trading. And this, we are -- we have 31, the banks in the trading for the SBI Liquidity Market. And we can provide very competitive rates. And the financial institutions, for example, 5, as many as 5 other financial institutions from Korea are trading with us. And as to the number of accounts for FX trading, the 1.452 million; and the deposit assets, JPY 284.7 billion.

And this acquisition of B2C2, I'm very happy with this acquisition. We would like to -- well, we have been increasing our stake; and in December 2020, we acquired 90% of the stake in the company. So B2C2 was good. Yes, I mean, it was good for B2C2, and it was good for us. It is a good example of win-win. The B2C2's monthly average transaction volume increased 6.5x since 2019. And B2C2 develops business globally, including in the U.S., Europe and Asia. So we aim at being a real global player. And for that purpose, that B2C2 has become a very important component.

To be honest with you, at the beginning, I was not sure. I was not sure if we could operate this entity because it is a very global entity and very high level. Because when it comes to market making, you need experts. If you're not expert, it's difficult to operate market-making business. So I was worried a little bit. At the beginning, I had a rather negative thought about it. That's why we increased only gradually the stake in the entity. But now I'm very confident. I'm confident say that it was a good buy.

Now for B2C2, the operator of the crypto-asset are the trading services, and we are going to start the CFT as well -- well, CFT -- CFD, rather, and also the crypto-asset lending service. Crypto-asset related businesses will continue to increase.

Now we started from brokerage business. Therefore, as a comprehensive securities entity, we need to think about expand the wholesale business. Fortunately, the SBI Investment, 100% subsidiary of the group, exists for us. It's a venture capital, so investing in venture companies. And of course, those companies want to do IPO someday. And of course, when that happens, we expect them to use SBI SECURITIES for the full year IPOs. And with continuous monitoring, we know those companies very well. So we have a very good relationship with those -- the companies that we invest. And so it's [ relatively ] that we become always the lead manager; so starting with IPO, and then PO follows and this equity followed by bond transactions. So business with them is diversified as well.

Underwriting business has also been -- reached a good level, and we have the entity in Singapore and Hong Kong established; and M&A advisory business, which is currently related to the IPOs. And we have established financial institutional sales department as well. And so we have been building these -- the elements.

And here, we have the period from April 2020 to December 2020. And 66 companies were listed during this period, among which SBI has been engaged in 61 of them. And we are actually the lead companies for 11 companies IPO-ed. And for the POs, we had 13 PO underwriting business, which is the increase of 2.9x. And as to corporate bond underwriting business, including the utility bonds and the public bonds, they are also increasing.

As to the Financial Institutional Sales Department, we have been working on regional revitalization, building relationships with the other regional financial institutions and building business as well. And the -- from -- we had a brokerage business with 436 companies from July 2016 to the December 2020. And the equity trading increased by 2.2 -- was 2.2 when the transaction volume for 9 months fiscal year 2019 being the 1; and investment trusts, 2.4, the transaction volume for 9 months fiscal year 2019 being 1.

Some people say that, what is the benefit for business with the regional banks? The reporters and the analysts, some of them make the such comments. I have a very clear picture, but they would be most convincing to show that picture to others and that my picture is being realized. And those who think that it is not expected, there's some reported -- some analysts did not expect it.

So for -- if we are to benchmark in fiscal year 2018 Q3 as 1, this fiscal year in Q3, the M&A advisory business went up by 3.1x. We only have a little bit over 10 people, but we have increased headcount. When there's good companies available, and we think that we can go ahead with -- to acquire them, we are looking for opportunities both domestically and abroad. We believe this is an area that we can address, and it's an area I addressed during the Nomura Securities times that I served. So this is a great business for us.

For SBI SECURITIES, thanks to NISA, we have been able to accumulate investment amounts. And also, the investment trust balance as of the end of the quarter has been growing quite substantially as well.

Also, for robo-advisors that generate stock commission, WealthNavi went to market. But out of their total AUM, approximately 31% is accounted for by our SBI SECURITIES as well as SBI Sumishin Net Bank. That totaled JPY 73.8 billion. So it's proof of how large our sales capabilities are.

For IFA, the business, like I mentioned earlier, we are focusing on this area, too. And for Q3, compared to last year's Q3, we've been able to grow by 2.2x. And for AUM, according to some reports, we were at JPY 1.7 trillion compared to Rakuten's JPY 0.6 trillion as of September.

And foreign stocks have been booming and growing lately. DriveWealth is a company in the U.S., and we've invested in it. And by utilizing this entity, we would like to address the mobile arena as well. Of course, IT system issues are what we are currently working on, but it is a good company indeed. So we would like to implement this as soon as possible so that for foreign stocks, we can promote it even more.

Furthermore, for property, the brokerage business for real estate, last year in October, we acquired a 35% stake in Ascot, and we turned it into an equity method affiliate. With this stake, we are now in the property business, and it has been a good foothold for us.

So finance and real estate. From the customer's point of view, for those customers who receive financial services such buying stocks or buying bonds, high net worth customers definitely own property as well. They buy real estate. To that end, we believe that this business can generate synergies. So for money managers in the U.S., when you visit them, cash management, equity, bonds as well as real estate are areas that they cover. So having all of these available for the first time, you are able to engage in true money management -- engage in true asset management, that is. So as the first phase of our alliance, we have sold a real estate fund. SBI SECURITIES and MONEY PLAZA will be the main sellers of this fund.

And for Japannext, last year on October 1, the TSE went down, and Japannext gained attention once again. As an alternative market, you never know when the TSE is going to go down again. And daily trading worth JPY 3 trillion is going to be wiped out, and that is not an excuse. That should not happen. And we are trying to strive to become a global financial market. If that's the case, the market should not fail or go down. So that's why we've been gaining attention in Japannext and in various places.

I have been talking about it. I've been talking to LDP members and their financial commissions and so forth, and we are going towards the direction of having Japannext as an alternative market. And legally, the 10% of TSE were 1 stock. If it exceeds 20%, it needs to turn into an exchange. There's all these rules that are nonsense, that are baseless. I don't know how they came up with these numbers. That's what's happening now, and this hasn't changed. I hope this can change as soon as possible. And that's why I'm taking action.

By doing this, what's going to happen is institutional investors -- although the system needs to change, the trading cost will come down substantially. Institutional investors, they are interested with money from the general public. So the performance of the general public will become better through institutional investors. And for the broker side, trading cost will become far cheaper.

According to the estimate by Japannext, SBI SECURITIES, by utilizing PTS compared to TSE, the trading costs can be reduced by 90%, and this can be returned back to investors. That is our way of thinking. So it needs to be investor-centric or customer-centric, and that's what we need to do. So this kind of mindset will enable investors to come with you.

And from the fiduciary duty point of view as well, in the U.S., for example, there are several markets. And the most beneficial trade execution needs to take place, or else, they will ask you what are you doing. So you need to enable best execution, and that kind of legal as well as system-based transformation needs to happen. And if this does happen, we will be able to contribute to the Neo-securities initiative.

So for the customer base, we are trying to thoroughly expand the customer base, and we are gaining good share, but we think that it is still insufficient. Like I mentioned earlier, our target is 50% market share. So in order to do that, we established SBI NeoMobile Securities as well as Neotrade Securities. And for each of the entities, in their own territory or domain, they will have relevant customers. For example, in the case of SBI NeoMobile Securities, their customer base will be first-time investors and relatively young people. And they will enable a service that will allow them to join their services easily. And the opposite of that is SBI Neotrade Securities that target day traders or people who do trades on a daily basis. Those are the target customers they are going after. So from the trader segment to the high-end segment, we basically would like to have a mechanism that covers a broad range of customers.

So for NeoMobile Securities, the other day in January, we accomplished 0.5 million accounts, and we have continued to see steady growth. For NeoMobile Securities and the customer base, they are -- 51% of the customers are in their 20s and 30s, and this is what we have originally targeted. And Sumitomo Mitsui Financial Group has decided to engage in a capital alliance with SBI NeoMobile Securities.

For NISA and iDeCo, for brokers, this is the most important strategic products going forward. And in NISA, we have been able to surpass Nomura with regards to accounts. And we boast the highest level of accounts in the industry. When you look at the attributes of our customers, 70%, 7-0 percent, of new customers are beginner investors. They account for 70% of our customer base. And for Junior NISA, out of total accounts, we have acquired 30% of them.

And also for iDeCo and from May 19, 2017, we have made administrative fees that are completely free of charge. And as of the end of November 2020, which is last year, we have reached 411,000 accounts. So for Q3, we have reached 466,000 accounts. So as of December fiscal 2020 compared to 2015, the CAGR -- in compared to March 2016, CAGR has been 47.2%. So the customers feel a need in this market, and we believe that this will continue to grow even more in the future. So with iDeCo or individual defined contribution plans, the cumulative number of customers is the highest in the industry for us.

For MONEY PLAZA, with regional banks, we co-managed shops, and this has been extremely successful, and it has continued to grow. So we have 16 co-managed shops with 12 banks. For Shimizu, Chikuho and Mie, they will have second stores. Because they tried out one, and it turned out to be successful, so that is why they would like to open the second one. So for the co-managed shops, total assets under management has reached JPY 65 billion.

For -- in order to swiftly achieve the Neo-securities initiative as well as expand the customer base, we will continue to actively utilize M&A as a tool. So for Rheos Capital Works; TaoTao; SBI Neotrade Securities, which used to be called livestar; and B2C2, these are the acquisitions we made. And for FX, cryptocurrency, M&A companies and crypto-asset market makers, I have continued to mention that we would like to go after these types of companies. And we have made those acquisitions, and it -- they have contributed to our performance now.

With regards to the banking-related business, SBI Holdings equity method earnings of SBI Sumishin Net Bank based on IFRS for 9 months fiscal 2020 was JPY 5.540 billion. And the J-GAAP announcement for financial results is scheduled for February 5, by the way.

Where -- here are the changes in SBI Sumishin Net Bank's ordinary income after start of operations. So this is where we are as for March 2020. It was at JPY 12.634 billion as of the third quarter, and we are going to exceed this level substantially. And we believe that we're going to exceed JPY 20 billion in the end.

For the bank, here, due to negative rates by the BOJ, it was hit hard in performance. However, now we have been seeing this upward trend once again, and it has been ongoing. So for the number of accounts as of end of December, it has been 4.32 million; and for deposits, the balance has been JPY 6.107 trillion. And as of January 27, 4.37 million accounts, and the deposits balance now stands at JPY 6.222 trillion. So it easily can increase by JPY 100 billion. That's where we are right now. We started off in 2007 for the bank, and then we are now at this level.

Looking at this slide, we compare against the regional banks, and this is ranked in the order of deposits. And it ranks Bank of Yokohama first, followed by Chiba Bank. Bank of Yokohama and Chiba Bank has more than 100 years of history. So they are leaders in the regional bank industry. We started off our business in 2007, but we are already #17. We saw an increase of JPY 715.4 billion in deposits. So this is what we're comparing against. It's only about the Bank of Yokohama that has been able to increase their deposits by JPY 700 billion. So if we're able to continue to grow at this rate, we could probably be in the top 10 in 3 years' time, or we might be able to accomplish this even faster.

So in a mere 13 years, the deposits grew to JPY 6.1 trillion. We look at the growth factors and strategies to achieve sustainable growth in the future. So I think group synergies, pursuing them are important, or in other words, having a corporate ecosystem and engaging in mutual evolution so that substantial growth can be achieved. That is the policy I set forth when we established this entity, and we have been able to realize what I said. Also, when you think about the banking in the future, it's about turning into a Neo-bank. So Neo-bank, some people may have heard this before, some may not, but I would like to elaborate later on.

So synergies with SBI SECURITIES, if this weren't in place, Sumishin Net Bank probably wouldn't have grown this far. Because we have SBI SECURITIES and because we have created a mechanism like hybrid accounts, the bank account and the securities company account can -- you can go back and forth. And that is why we've been able to accumulate the amount of deposits made. This was a large factor in growing the business.

Furthermore, housing loans played a part as well. Mr. Maruyama is well versed in housing loans. Started off with SBI Mortgage and then changed to ARUHI, and then we sold it off. But we decided to engage in housing loans in a full-fledged manner at the bank. And we have been able to grow well. But the current ARUHI was sold off then after.

So currently, the bank continues to grow. The amount of housing loans originated has reached more than JPY 6 trillion as of last year, June 26. And when you look at the balance, JPY 4.755 trillion is what we have achieved. And when we started to handle housing loans in September 2007; and in January 2012, we started the banking agency business for Sumitomo Mitsui Trust Bank and offered Internet-exclusive housing loans.

So housing loans are long term. So the balance between short term and long term will collapse, and it won't be sustained, so we decided to switch over to a fee business. The loans are originated elsewhere, and we received the fees in return from Sumitomo Mitsui Trust Bank. Then after, we launched Mr. Housing Loan Real, which is a banking agency specialized product. And also, we started to offer long-term fixed interest rate loans as well. So for the banking agency specialized products, Mr. Housing Loan Real, when Mr. Kawashima was the Vice President of the Banking business, this started to be offered, and it was vigorously expanded. So in this way, the size of the housing loan business, we will -- I told them that -- I told Mr. Maruyama that this will continue to expand through acquisitions.

So what is Neo-bank initiatives? So it's about customers using business services of partner companies also have access to ancillary banking functions from SBI Sumishin Net Bank. So SBI Sumishin Net Bank works with partner companies to create a framework by which services can be used both smoothly and comfortably. So that's the concept of Neo-bank initiatives. So for example, we have JAL NEOBANK. I'm not going to explain this because I have explained this a number of times in the past. But we collaborate with the Yamada Holdings, it will start from spring 2021; Hikari Tsushin Group; CCC Group; EPARK Group; and partner with regional financial institutions. So we are promoting this one after another.

And also, we will accelerate the expansion of customer base in local regions through cooperation with regional financial institutions. I always talk about open alliance, and regional revitalization strategy is open alliance. We, regional financial institutions, form an alliance to build a win-win relationship. And in different areas, we are able to expand our customer base.

Let's look at the insurance business side. So the actual fixed number will be February 10, but we have seen that we have increased by 27.3% year-on-year; and ordinary revenue, ordinary profit, 89.7% increase. And profit attributable to parent is 603.7% increase year-on-year to JPY 782 million.

We are very proactive with M&A, especially in SSI, small amount and short-term insurance, and that's where we're focusing our resources on. So it's not just about acquiring and including them in our group. So they have formed a growth track, but this will be stepped up so that their growth rate will accelerate. So after M&A, they will continue to grow. So that's the situation today.

So we will continue to be proactive in M&As. So since active use of M&A has contributed greatly to growth of SBI Insurance Group, our growth rate, starting from 2012 to 2019, we have -- the annualized basis is 16.4%. LIFENET Insurance is 13.2%, but they're still at this level. Rakuten is actually decreasing. That's the situation.

So we are acquiring SSIs, and we are exercising synergy with nonlife and life insurance. So these are now starting to function really well. Also, in this area of insurance, we are implementing technology after another. In particular, blockchain technology has been implemented in our group. And each company is making efforts to implement it as quickly as possible. So for example, our partner R3 has a blockchain technology called Corda, and this will be utilized in different businesses. So for example, here, we have decided to use Corda platform for agent and insurance solicitor management platform system for SBI Nihon SSI. We will use Corda to build this blockchain platform, and we'll be able to improve efficiency and standardization if. We can standardize it, we can actually roll this out to other companies as well. So we can actually sell and market these technology products.

We will proactively promote alliances with various companies to further expand our customer base. So SBI Insurance has decided to work with 58 companies, of which 23 are financial institutions. So these 58 companies are actually adopting SBI insurance products and are trying to sell them shortly.

With regards to SBI Life Insurance, 26 regional financial institutions, of which 11 are regional banks, have decided to adopt or start sales SBI Life Insurance products. And it's not just regional and financial institutions. Each of these SSIs are aligned with these different companies and increase their customer base.

And business area other than the 3 main businesses of the financial services, which contribute to the consolidated results of the group. For example, we have SBI FinTech Solutions. They're listed on KOSDAQ. I thought it was KOSPI, but maybe it was KOSDAQ. KOSPI was the other one. So our group companies are all here. So this is like Nasdaq. We -- basically, these are listed on KOSDAQ in Korea like this. And the performance is growing steadily.

And SBI Remit, which is a subsidiary of SBI FinTech Solutions, they have been using MoneyGram network. And they have now utilized the DLT of U.S. Ripple so that they can have this overwhelming competitive edge. They are already using this in Vietnam, and they have plans to use in Bangladesh, Cambodia. So they have different plans. And if you look at the total transaction and amount of remittance, in particular, I want to highlight the fact that our market share is increasing every year. This is extremely important. And also, they are providing remittance service for GCash, a mobile money service operated by GXI in the Philippines.

With regards to Asset Management Business, as I have said earlier, in terms of pretax level, it's unchanged, but sales have grown by more than 20%. And you can see that SBI SAVINGS BANK have generated more than JPY 20 billion, so they are contributing significantly. That's plus 67.6%. When we acquired the company in 2013, it was almost bankrupt, and some people said why do we buy such a company. Much of the media have criticized us, and I thought, wait -- just wait and see. So now you can see that it has come to this level.

In terms of profit loss from the change in fair value and profit loss on sales of investment securities, you can see that many of the unlisted securities are now listed. So that is why we have basically very little in unlisted securities and much in listed securities.

With regards to our PE business, the investments that we have been focusing on, for example, in FinTech, now in the timing in which they go do an IPO. And in fact, the value when they go public compared to when we invested initially has been very high, so they have good valuations. So you have companies like Cacco, KOKOPELLI, Kaizen Platform, WealthNavi, they have all successfully done IPO.

Because we're also investment, we are now managers or we're lead managers. Both SBI SECURITIES and SBI itself have been making money on this. And in fact, I want to emphasize the fact that PE business is not just short term just this year because you may wonder that. But even after 2021, we're expecting to see many IPOs. So for example, in FinTech, we have investment of JPY 78 billion into 171 companies collectively from the 2 funds; and we have co-investment with SBI Holdings of a total of JPY 117.5 billion. But you can see this outcome. And we had SBI AI&Blockchain Fund, approximately JPY 52.5 billion which we invested, and co-investment from the holdings of JPY 39.5 billion. So in that sense, the parent is able to generate a lot of money from this when it goes public.

So as you can see, in 2021 January, March is 0; by April, June, we expect 1. But between January and March, there were 2 that we did an exit through M&A. And between July and August, expect 3; October, December, 10. In 2022, total of 44; '23, total of 47, we'll do an IPO. That's our assumption. So for the time being, this will continue to bear fruit.

And it's not just for the time being. We need to continue this forward and promote the establishment of successor funds, such as 4+5 Fund and the business succession fund, and expand the investment in industries preparing for the future. So we will continue to launch this.

So in 1999, during the time of establishment, the venture capital was considered as one of the other pillars, and so we continued to make investments. And in 1999, Internet bubble burst in the U.S., and the market went down. And before that happened, we had sold everything. [ Mr. Sung ] did not understand it. The Goldman Sachs and JPMorgan are saying that the valuation will continue to go up. Well, but that was not my idea, so I sold everything. And then Internet bubble burst came.

Comparing Japanese and the U.S. market, back then, when it comes to Internet, we did not have good Internet companies. I feel that Japan was 5 years behind the U.S. Back then at every month, I went to the U.S. for 1 week, and I invited other venture companies to my suite room at the hotel to talk, to make investment decisions. The JPY 150.5 billion was financed in Japan, and we started INTERNET TECHNOLOGY FUND. And we went even deeper in this world, and so we started the Internet-related financial entities.

And then FinTech came, the financial technology advancement. And as to such technology, the -- first, we seek investee companies to expand our business and the investment -- through investment and the business expansion. And for the time being, the biggest focus is blockchain and AI. And that's why we established the fund for that with JPY 60 billion. And 4+5 Fund, it's for Society 5.0, including SDGs. It's very important. Energy is also included; ESG as well. And for the Industry 4.0, in the other manufacturing field is changing through AI, blockchain. And big data will be utilized more and more. The communication technology, it's not just 5G. It will go into 6G as well.

So we invested JPY 100 billion. Well, we -- our plan is to establish 4+5 Fund with JPY 100 billion. We have already collected the JPY 70 billion, JPY 80 billion. And the JPY 868.7 billion is the total committed amount. And we continue to accumulate committed amount, and now we are the other biggest in Japan; and as to Industry 4.0, as shown here, and Society 5.0 as well on this slide.

Now CVC Fund. Many companies are thinking how to renovate their technology because their R&D is not good enough. So there should be venture capitals. And we need to incorporate technology, completely new technology. And corporate venture capital, that is now the trend. And now we have commitment amount of JPY 77 billion, and we would like to make it to JPY 100 billion within fiscal year 2021.

And investment in emerging countries will continue to benefit from post-IPO high growth. For example, in Vietnam, we invested in TP Bank, and the 19.9% stake was the limit. So we invested up to the maximum. The financial institutions in emerging countries are growing very steadily. In Japan, 1950s and '60s when the economy was growing so fast, the financial institution accounted for a large chunk of market cap, so it starts always with FIs. And that's why we invest in the entities like TP Bank.

And as of February 1, this stock will be included in VN30. This is the main index of the top 30 selected by Ho Chi Minh Stock Exchange based on market capitalization, liquidity and so on. So this is something that we can look for forward to. And their business is going very smoothly as well.

SBI SAVINGS BANK, as I mentioned earlier, even with the pandemic, it is the other growing so fast. So KRW 258.3 billion or up 37.2%, and they rate it as A-. It was on the verge of the collapse with 51.6% of delinquency. So people wondered why I wanted to invest in this entity. Without JPY 130 billion investment from us, it would go under because the government should have invested KRW 500 billion. So now the delinquency went down to 1.6% and with KRW 11 trillion of assets, actually exceeding KRW 11 trillion. And the balance of performance -- performing loans is approximately JPY 870.9 billion.

And now in the Russia, the entity business in Russia is likely to the turnaround. The same story, on the verge of the collapse, we invested, and the transformation happened. And finally, Japan -- from Japan JV and Russian government-related investment fund, they co-invested in a certain fund, and then this fund invested in them, with a good track record that there was an appetite for the investment.

And this SBI SAVINGS BANK in Korea compared to other players, that they are dominant. There's only one Japanese person, the accounting expert, that are working there in Korea, and rest is left to the Korean management. Mr. Kawashima is the Chairman, so that he attend the Board meeting from time to time. But basically, the management of this entity is left to Korean people.

The operating overseas is not something that you can do. I mean, the -- in Russia, we have the top head Russian person, but we have a very good Japanese, the talent, the -- from Tokyo Bank to the Mitsubishi that he accumulated his career. And Mr. Hatao, the very international person, that he is leading the Russian entity, but only 4 or 5 Japanese people there.

So we need to grow the digital transformation-related entities. So here, we are talking about Cider Bank, the -- for mobile financial service, it's growing steadily. And in Korea, we would like to establish the financial ecosystem. That's why we are going to build an entity called SBI Capital. It's a tentative name. And we have SBI SAVINGS BANK and SBI Investment Korea being the 2 wheels of the operation to establish a financial holding company in the future.

As to Asset Management Business, it's a very important business area. The Morningstar did record high numbers listed here, when we start being at the core,of asset management, providing product investment tools and investment products to various entities.

As to iDeCo, for example, that we provide investment advisory service apps. As to investment advisory, it's not only about iDeCo or kinds of investment trust. And Morningstar, I would say, is #1 in this area among regional financial institutions. 73 FIs among 100, the regional FIs, are using Morningstar's apps, which they use to sell their investment trust business to their clients. Now the focus here is the size expansion of Asset Management. SBI, Vanguard, the Yukidaruma, they are all growing. And small and mid-cap stocks related business is also increasing its assets.

The SBI Asset Management Group's inflows of privately placed investment trust exceeded JPY 900 billion and JPY 905.5 billion for the period from January through December 2020. It's where Asset Management Group is ranked #3 following JPMorgan and PIMCO. The large Japanese entities or even BlackRock or Invesco are having smaller inflows.

The securities operation for regional financial institutions is very, very important, especially 40% of the government bonds and local bonds or JPY 15 trillion that will be redeemed by around 2022, and that is giving a lot of headache to regional banks.

I learned something from a certain person, and I have formed a wonderful idea, and I'm going to work on that idea. And this is an idea how to absorb this -- the redemption. And ETF is being bought significantly by the Bank of Japan. And what is their exit strategy? Japan, they will not survive without the accommodative policy. That's okay. But you have to think about the exit and buying ETF. The 0 interest rate is understandable, but how are you going to wind down ETF?

Well, the JPY 10 trillion profit for the Bank of Japan, but how are you going to sell ETF? And is it justifiable for the Bank of Japan to make such a big profit? Those things should be well considered, and the government has talent to think about these things, or at the BOJ, they need such talent. We know what to do.

SBI Asset Management Group's AUM exceeding JPY 1.7 trillion, AUM from several regional financial institutions. And the SBI Bond Investment Management cofounded with PIMCO and SBI Regional Revitalization Asset Management has JPY 730 billion. And here, we have the other 6 banks with capital and business alliances with SBI Holdings, it will soon be 7. And they represent 28% of the breakdown of AUM at SBI AM Group. And there are such strong appeals from regional banks to Mr. Asakura, for example, and to other personnel for the asset management.

So diversifying and sophisticating the asset management, you need risk of -- or the analysis. And the MILIZE is the company writing an alliance, and this is between the MILIZE and the Morningstar Japan. And here we have the SBI Group's AUM, including private equity, stands at JPY 4 trillion and JPY 5 trillion within 1 year rather than 2 years and JPY 10 trillion within 5 years. And that's our target, and that's what I expect Asakura-san to achieve. I'm not placing order on him, but I expect him to do that.

Now about SBI Energy that Mr. Suga said that they will focus on green carbon neutral. He made an announcement for carbon neutrality, and so it was a good thing that we have SBI Energy because now we have some -- we could engage in that -- the government's efforts.

Mr. Nakatsuka, there is a deep -- Nakatsuka-san is the President, who was working for the government and the financial affairs in different financial affairs area. So the solar power or the geothermal or the hydropower, all kinds of the new energy sources are being used. And the hydrogen and the fuel batteries will be the future focus in Kansai area to revitalize the Kansai area, to revitalize it, and this is concept of international city, the initiative.

And in the Chubu area, the -- operating with the Chubu -- the utility company, we'd like to establish this -- the sustainable society there, the ecosystem there. And fortunately, we have found personnel in the group that full studied hydrogen, and he wrote a report about hydrogen, and it was really good report. So I feel very fortunate to have such a personnel in the existing -- the employees of the group, and we would like to work on that.

So for Bio, Healthcare and Informatics. For Bio, Healthcare and Medical Informatics, Quark has been weighing on performance. There were 3 Phase IIIs. And until Phase IIb, it was good, but Phase III didn't work out well. And also, for the second product, Phase III wasn't successful. So we were expecting the third product to make it, but we are not -- we don't have any more high expectations because we were betrayed twice. So it is already taken out on a consolidated basis, and we'll be able to see what kind of results come through at the end of February. Once this is over, we will start to see the minus contribution go away. So that is good.

So for Biotech, we are not going to do any more drug discovery by themselves. So at an early stage of our research seats, the drug discovery is going to be done by another party outside. And this has been working out well.

For 5-ALA-related businesses, they have been trending steadily. But SBI Pharma shouldn't do that many things. If you continue to hire researchers, they start to become enthusiastic about researching many fields. And I'm skeptical about that. And more lately, personally, I don't have time to be involved in this area. So Mr. Kosciessa, German, has been engaged in the business and taking leadership.

So for Biotech, Viela Bio, Kyowa Kirin, ASAHI KASEI PHARMA and Carna Biosciences, the other entities are in charge of our pipeline. So if this turns out to be successful, we'll be able to get milestone payments.

For 5-ALA, Pharmaceuticals, pipeline projects address mitochondrial disease. Phase III is underway. And if it turns to be successful, so we have the first time that there will be a treatment for mitochondrial disease, which is a genetic disease. And also for cardiac ischemia-reperfusion injury, hospital and the U.K. due to COVID-19 has been on a standstill. So Phase II is currently at a standstill as well.

And also, for the subsidiary in Germany, photonamic that addresses brain tumors with iPDT, it's under preparation for Phase II; for Canada breast tumors, under preparation for Phase III. And for U.S. NXDC that addresses melanoma, this is a PDD agent used for diagnostics. It's an interoperative diagnostic use for brain tumors. It's similar in nature. So this is one thing I'm paying attention to.

So COVID-19 and the relationship with 5-ALA. Dr. Kita from Nagasaki University issued a paper, and also a new paper, a case report in infection diseases is being posted. And it was in the open science framework, which is a pre-peer review page. And I'm paying attention to this because in Bahrain, the Royal College of Surgeons in Ireland-Bahrain, RCSI Bahrain, and Bahrain Defense Force Hospital, Royal Medical Services, together with NIH in the U.S., has decided to do clinical tests to monitor what happens. So if this is successful, papers will come out, and it has the potential of gaining more attention. So Dr. Kita makes a lot of announcements.

So ALAPlus GOLD EX, which contains a high dose of 5-ALA, and for COVID-19, you need a high dose. And you could see that sales has grown by 14x when you compare December 2020 results against our forecast for January. And also for Tou (Sugar) Down Rich that reduces your blood sugar levels as well as Fukai Nemuri that deepens your sleep, all of the products have been growing. And our skin care series has increased as well, which is really good.

And also, 2 new notifications for foods with functional claims have been accepted. One is Hatsugagenmai no Sokojikara, which is the fundamental capability of germinated rice. When I don't meet any visitors, I try to eat rice balls that are made out of germinated rice that includes this. And this is very special as a germinated rice, and it's the most nutritious. And the power of ALA is exerted the most. And the dose of GABA is the highest in this kind of product. And it contains ingredients that lowers triglycerides as well as cholesterol as well as -- in the blood.

And for ALAPlus Tou (Sugar) Down ALACIA, it's a combination of salacinol and ALA to salacinol. In Sri Lanka as well as in India, there is a tree that produces this ingredient, salacinol. And the Royals and Sri Lanka will have cuts full of water, and the cuts are made out of salacinol. And if you drink water out of these cuts, your blood glucose levels will be steady. That is a ritual, and it has been succeeded over the years.

And when you analyze the ingredients of the tree, they discovered salacinol, and it was a researcher from Japan that discovered this in the area of urinology, actually. And also, in Hawaii, we are working with the University of Hawaii with the improvement of depression and mood, and it's expected to be accepted in the spring. And recovery from fatigue as well as male menopause improvement, it is being -- clinical trials are done in collaboration with Juntendo University. And also another product concept is fatigue reduction after exercising and clinical trials in collaboration with Juntendo University.

And they also have ALA Research Institute at Keio, and they are also doing some research. And Keio University is working on this research, which is for fatty liver. And also when you grow older, your muscles deteriorate. And we are saying that by applying ALA, this process can be delayed. So this kind of research is also being conducted as well. So we wrote a book on ALA lately, and the doctors have been pitching in. So I hope you read the book.

And in light of COVID-19, I truly felt that Japan was behind when it comes to governmental administrative matters and its digitalization as well as digitalization of medical arena. It is absolutely observed. All types of statistics might be gathered. And when you think about the people who can develop serious symptoms, they're saying people who have existing disease may develop into serious symptoms. But what is exactly the disease? Is it type 2 diabetes? Is it something else? That is something that's not available. So -- however, a company called Medical Data Vision that we have taken now are able to analyze this kind of information, and that is the result that they have derived.

And also blood type analysis as well as serious symptoms development as well as infection rates is something that is being done globally. They're saying that type O is strong against COVID-19 and Type A is prone to COVID-19 apparently, according to the analysis that is being conducted.

So this is the data what I believe needs to be gathered and analyzed so that it can lead to drug discovery. And that is -- because I want to do this, that is why I'm engaging in this. We're good at digitalization. And for these areas, we are also well versed. And for remote diagnosis, we have been investing into various entities for those companies that may list faster than the others, and there are -- we have an investment in an Indian company that is also under this arena as well. So we have been investing into global companies, and we would like to gather wisdom from all these global companies.

And for health accounts, this is part of regional revitalization. We believe that we can become closer with the regional financial institutions and being involved with the local people.

For -- there's economic magazine. And I pitched in to an article, which is likely to come out next month, with the [indiscernible], the 3 types of assistance, which is self-help assistance, the mutual assistant, which is also referred to by Prime Minister Suga is what I talked about. And we have national medical insurance that covers everyone in Japan. But the demographics in Japan are going to change, and young people are going to need to support a tremendous amount of old people that is not sustainable.

And financially, we will also start to face bankruptcy if this continues to be the case, which means that we need to promote self-help. So expenses related to one medical -- one's own medical and nursing care expenses should be reserved. So once people retire and start to receive pensions, maybe the son or the daughter can succeed that account.

And for mutual assistance, it's about taking over part of the current universal health insurance coverage and create a good insurance product that fits this purpose and try to have a mutual assistance type of medical or nursing insurance product. And accounts can be set up at regional financial institutions.

In the area of public assistance, efforts should be made to realize health account balance inheritance deduction. I have been talking with and made presentations to the lawmakers at the LDP. So it's really easy to adjust the tax rates when it comes to inheritance taxes the most.

So under this concept, we would like to make these initiatives work. And this is an idea derived from a JV -- venture company, a company called JMB. We have been making investments into this entity. And there is a President called Mr. Takiguchi. He is a doctor, but he is also a financial expert and professional. Of course, he's a professional in the medical arena, but we have a 50-50 JV, and we established MEXT, Medical Expenses Technologies.

And we will also -- we also have a 100% wholly owned subsidiary called MFT, which is a deferred medical expense payment business. So under this entity, we would like to promote the health account initiative. With the health account initiative, everything is covered with patents. So one region, one regional bank is with which we would like to promote this initiative. Once it starts to become well established, if others want to join, we will be open to them.

Until the system becomes firmly established, we would like to be exclusive. And I'm sure there are a lot of regional financial institutions who wants to do this. For example, Ogaki has been saying that they would like to do this, Ogaki Kyoritsu Bank.

And there's a lot of problems around COVID-19 hospitals and patients right now. So there has been a delay, but -- basically, people go to the hospital to be diagnosed, but if they have a health account at a regional financial institution, they could accumulate reserves. And at the medical institution, advancement payments will be made through this mechanism, and then the advanced payments will be recovered. All you have to do is leave it to the health account. That's the way we are thinking about promoting those. The group's efforts to realize regional revitalization promoted through alliances with diverse companies is the next part.

From here on, what I've been talking about is something we would like to make even richer. That is how we position this year. Kitao-san, you said that you were going to limit it to 10 regional banks. What are you going to do? Yes. We would like to go up to 10 banks, but we're not in a rush. Reason being if we say 10, should we do it swiftly? Or should we go the other way? We need to be selective. We need to look at various aspects. And this takes time. So we're not in a rush.

And as we design various types of systems, we need to have an overall perspective on what we're doing. But we will first ensure that the banks we work with go through a V-shaped recovery so that everybody looking at us will think, the banks have made a quality improvement because of SBI, and we want others to feel the same way that they would like to go through this process. So there is one single light that has been ignited that is going to be followed by others, and that is how we would like to do the quality improvement. New things are not generated that easily.

Next, with regards to the line strategy between SBI Group and regional financial institutions based on medium to long-term perspective, we have been working a lot on the first stage. So for the second stage, it's about from regional to nationwide. We will be using the Internet so that they can go nationwide from one single regional institution to being a nationwide institution.

Of course, inside their regions, they have established relationships and they have expertise around relationship management and they have connections with their customers, which they can continue to have. However, if regional areas or economies slow down, they'll need to think about how to become flexible in a different way.

And then after, the next stage is to become worldwide from being nationwide. That's the third stage.

Alliances between SBI Group and regional financial institutions is the next part. You probably are bored about seeing this already. But when you look at our numbers, it's steadily increasing, which is important for everything. The numbers are rising.

Now SBI Group's initiatives to revitalize regional economies, jointly promoting with various business partners. With Towa Bank, we have decided to set up a joint fund. This is something new. In light of COVID-19, the FSA has been asking banks to lend more. So for 3 years, there will be subsidies for REITs from banks, from the government.

But what happens then after when it expires? This is something that needs to be thought about from here on. That is my way of thinking. So this kind of fund is anticipating what's likely to happen in 3 years' time. Technology will be instilled and expertise will be offered. And not just into financial institutions, in local cities, where the SMEs, medium-tier companies, we would like to offer our expertise to them as well.

For startups, we have been working on their development and we have a sufficient amount of expertise that has been accumulated over the years. In this regard, we would like to support local companies as well. So we formed a capital business alliance with Keystone Partners, and we acquired 33.4% from -- in this regard as well.

So in the area of loans, corporate loans, we not only want to provide equity but corporate loans as well. And Keystone Partners have a wealth of expertise in this area. So we would like to work together so as to support SMEs and medium-tier companies in local areas. And also for business succession, this is an important challenge as well.

With TRANBI, by having a partnership, we have a matching site. But this is a very critical situation right now. So we will set up a fund. We will acquire the entities. And the fund size is currently JPY 10 billion, and we gathered JPY 10.9 billion. And last year, June 30, it started. So once Fund I is over, we will go on to Fund II, and we will strive to reach JPY 100 billion in the end. So by raising these funds, we will address the problem of business succession.

So first of all, dispensary pharmacy businesses is what we looked at so that we can go nationwide. And all of these types of companies are medium-sized or small to medium-sized enterprises. So we would like to grow them. And the rice wholesaler, Shinmei, is another example. We would like to strengthen the business, and that's why we invested.

And we want to invest into projects that will have a ripple effect in a nationwide manner. Other than that, for regional revitalization, we have been engaging in a diverse range of initiatives. And for digital shift, engaging in qualitative transformation of regional finance institutions through a digital shift.

For MoneyTap, we believe this is going to become increasingly important. 38 companies already have invested into it, and Ripple from the U.S. has been sending over executives and their stake is 33%. That's what they asked for. It's not 1/3. It's 33%.

So when you look at the current circumstances, there are 3 banks that are currently connected and is P2P remittances between individuals. So B2C will become available in the future. And for prepaid charger operators, we'll be able to cover them as well. And their safety levels will increase as well, and we'll be able to handle QR payments, too. And corporate remittances, small amount collections can be handled in the future, too.

And there are 3 more banks that are expected to be connected. And by the end of the year, we would like to increase the number of connected banks to 20, and we already have gained visibility. The more we have, it will have external economic impact. So it is an Internet business. So aside from PayPay, there's LINE Pay and Kyash. These are the prepaid charging service providers and the benefits for both banks and these providers. So basically, this is good for bio seller and society.

Now this is SBI NEO FINANCIAL SERVICES. White-label banking was developed by Shimane. And in the past, Shimane, its bank would never make something like this, the [ Shimane ] app.

So we offer on our white-label banking apps. And then depending on the API compatibility, functions can be expanded by utilizing various fintech services and structure -- building a cloud-based accounting system. This is something that we are now ready to enter a full-scale generation banking system. We are finally able to utilize AWS private cloud with SBI financial cloud, and Future Architect has a lot of experience in this banking accounting system. So we will utilize that as well. We have a good compatibility with Future Architect, and we have decided that all the functions are necessary for this platform. So we would like to develop this as quickly as possible.

So at the time of renewal, there's 10 right now who want to renew it, so they will be utilizing this service. And this will be changed to annual fee model. And with this, we will be able to improve profitability significantly. So this is operational and there's a system cost. If we have this, it doesn't matter if the interest rate is negative, if you can run this well. And like I said earlier, if this doesn't work regional, then we can do this nationwide. We will back up everything. I always say that public interest will always lead to profit.

I think you can really understand that, well, why have we been able to grow like this, our business results like this? We say 0 commissions. We have another source of profit that will offset that 0 commissions, but we want to maximize the benefit for the investors, and that's the public interest, which we want to deliver. Then that would lead to enormous amount of accounts. And as a result, this will lead to better earnings. Among the online brokers, we have the lowest fees, and as a result, we have an overwhelming great number of accounts.

And with regards to the regional revitalization partners, which was co-established with several partners, we're beginning the 2 function offering companies in this pandemic. We have this declaration of state of emergency. And because of this, sales activities have been constrained because we're not able to travel. They don't want people from Tokyo coming in, and that's quite troublesome for us, but it's inevitable.

First and foremost, we need to protect the life of the people of this country. So that's number one. Economy is number two. If you can defend the life, then the economy will realize V-shaped recovery. It's unlike a war where our production capabilities have been distracted. It's not that demand has been lost completely. Now there will always be other demands. And of course, in light of the situation, we need -- we'll see new ways of thinking. Well, I used to run a restaurant, but I have now decided to do takeouts. And I will be delivering bento box lunches. And I will do Uber Eats, for example, or this is remote work. You will need PCs.

So in that way, because securities at homes are not at its best, maybe there will be softwares that would enhance that. So if it shifts to one side, there's always necessities in demand on the other side, and we will commercialize all of those needs. So if the vaccine is developed and penetrated, that would be the best. If that works, that would be the best.

Now RNA vaccine -- by the way, RNA -- because viruses mutate very easily even if there's variants arising one after another, there's a challenge of one type of RNA vaccine being able to beat these variants. But now we think that U.K. type still can be defeated by the current vaccine. We need to really defeat it. I think there's like 53 in Japan who have been affected by this U.K. type.

If we had shut the doors earlier, unless you send it to the infection center and have been diagnosed, you will not know if it's U.K. type or not, it's a mutant or not. So the fact that we have been able to find 53, at least, I think because there -- if you look at how it's spreading quickly in U.K., in U.S. and Mexico and Germany, you can see that that's a variant. And then they have Brazil type or you have South America type. It's one after another, or African type.

How long could RNA vaccine work against these new variants? I hope that the wisdom of the human kind will come up with countermeasures. And now this functional company, we will invest, and they will start to engage in investment activities. And I myself is the President of Regional Revitalization Services. Mr. Kawashima will be serving as the President of SBI Regional Revitalization Investment and Loan. And we have large projects like smart city, international financial city, or like the hydrogen -- for example, building hydrogen ecosystem that I have talked about earlier. I hope we can do this in one way or another, and we will align with different partners who will work on other components. They'll be helping out. That's my expectation.

With regards to international financial center, Tokyo and Osaka and Kobe did not need to be enemies. Tokyo should just aim to become the nation's capital. What we are saying here is that become an alternative market for Hong Kong to become a cross-border hub type of a financial center. It connects a hub for transactions between domestic and overseas or between overseas. Singapore is doing that already. That's what Hong Kong used to do. Why is that Japan, where we have more than JPY 1,900 trillion in personnel savings are not able to do this, to build a cross-border financial center? In the past, maybe there were 4 occasions which the discussion really peaked, but we have never been able to realize it. Why is it?

What we need to think about today is that if you look at the -- taking away that position away from Hong Kong as a financial -- international financial city and we can increase our business, especially focusing on the Southeast Asia, those are the things that we need to think about.

So for example, in the U.K., there's London, but there's also Edinburgh for investment trust. In U.S., there's Boston, and there's San Francisco, Chicago. Even in Switzerland, you had Zurich is functioning as a cross-border hub. Why is it that Japan we only can have one city? That's totally incomprehensible to me.

And we have all this congestion, traffic jam, there's air pollution and COVID, overwhelming number of infections in Tokyo, that's the case with all capitals of the world. If you look at London or New York, they're not necessarily the capital, but -- so we need to build industry cluster. Every regional city you go to, you hear about how they're losing their industry, how companies are closing. Only Tokyo is -- there's concentration of industries in Tokyo.

But I think Germany is fast. I have visited all these big cities, Frankfurt and all these -- and other regional cities. And every city has a very large airport and has a significant industry. Now if you come to Tokyo, what happens is earthquake hits Tokyo directly, Tokyo will be in a destructive state. I keep wondering if people are thinking about that.

Historically, Osaka is a great place. I mean if you can look at the geographic specialties, compared to Tokyo, Osaka or Kansai International Airport ranks first in terms of the number of people visiting Japan from the Asian region. It's much closer to Southeast Asia, closer than Tokyo. If you look at the regional characteristics, if you look at the residential land price compared to Tokyo, it's only about 40% in the Kansai region.

And also, tourism attractions represented by Kyoto, which the foreigners are delighted by, that's also located there. Food culture, Osaka and Kyoto is perhaps more sophisticated than Tokyo. And of course, there are restaurants originally from Osaka and Kyoto that are opening restaurants in Tokyo. But whether it's Kyoto food or cuisine, it's originally from Kyoto.

And also, smart city concept. Tokyo is planning to do a strategic zone. How could Tokyo do that? No matter how the world says, society says, in 2021, we will serve Osaka Digital Exchange. April, Osaka Dojima Exchange becomes joint stock companies. Spring '22, Osaka Digital Exchange begins handling stocks. '23, ODE, Osaka Digital Exchange, begins handling security tokens. In 2025, Osaka Dojima Exchange becomes a comprehensive exchange.

We will be focusing on expo using cryptocurrency assets. Money can go back and forth, in and out of Japan. Osaka, Singapore, Switzerland, Germany, London, they will be linked as corridor. That's my vision, and I will be sure that we do that.

And if you look at Singapore, it's a fintech center. How much they spent. Look at the tens of billions of yen that we have spent. But we have spent more than JPY 100 billion. And we will continue to invest, and we will invite and attract fintechs from all over more and more. In first stage, Dojima. They will become a joint stock company. We did that already. And then we will establish spot trading exchange.

And step three, they will become a holdings company. So they will become Dojima Exchange Holdings. And step four, we've also built a clearing house mechanism. And of course, they will do futures exchange as well and different diversified products, including financial products. It will be offered globally. The service will be offered globally. And you have different financial commodities. You have agricultural products, weather derivatives, index futures.

With regards to digital exchange, as you saw in the newspaper this morning, we will partner with SMBC Group. We have 60% stake, and they will invest 40%. And we have them trade common shares and security tokens. It will be a primary market for that -- it's a secondary market for that, correction.

And we will establish SBI PTS Holdings. And we will both have Japannext, which we will take 49% stake, and we will also invest Osaka Digital Exchange. Now there are about 4 overseas players who are interested, so -- and maybe we will begin to divest eventually. But I think we want to be -- have larger stake in the beginning because if we have foreign players, it gets a little more complicated. It takes time -- more time. But they have great opinion, so we want to get that benefit as well.

This is what I said earlier. I think ST, security token, is extremely attractive. Basically, it's considered to be marketable securities issuing -- issued by blockchain, but it can be used in real estate and corporate bonds. In fact, in real estate, there's about 4 inquiries on real estate. It can be applied to corporate bonds, in the future to stocks or art works, games and other IPs. This will be commoditized using blockchain. And they will be able to minimize the issuance and distribution costs. And in this field, Japan can make the best in the world. And fortunately, Japan has been early in working on this.

In terms of XRP, in United States, one day before stepping down, they were doing XRP security. SEC did it. But Japan was completely irrelevant of what America was doing, it was considered to be a coin. And that's the case here. We're not conscientious of what the U.S. is doing.

B2C2. I guess if that happens in the U.S., we will let it rest for a while, but -- or close for a while. But otherwise, it will do as it has been mandated to do. And MoneyTap, we will continue to increase the business, run it as well. They will continue to use them, so we will diversify financing means.

And I think you can see something that's epoch-making. If you look at -- in the past history, something that was innovative for epoch-making, it was convertible bond. This was considered to be epoch-making. It was a mix of equity and bond. Or in the financial market, they had a deposit certificate. So it became like a note. And this had really grown as well. But it's -- this initiative, incomparable to that.

This is an area that can't be compared. It's -- that's how big it is. So we don't want to have a fraudulent conduct like what we have seen with ICO. If we let it lose like that, it will -- I don't want that to happen. So as soon as STO becomes legal, then we will establish self-regulatory organization. And fortunately, 12 companies have already expressed interest in joining. And there's 45 companies who are supporting members. So regular members, 12 security companies and there are 45 companies supporting members to support this STO initiative. So there's 57 companies have joined the self-regulatory organization as of January 2021.

So we will, first of all, establish the secondary market where they will be distributed. So after the amended Financial Instruments and Exchange Law becomes effective, May 1 -- became effective on May 1, 2020, we began the first security token business. And as an example, for example, we did the third-party allocation of new shares by SBI eSports using STO.

And this platform called BOOSTRY, which was developed by Nomura Group, we were thinking we will develop this on our own because we're investing in [ this decision ], and it was possible to use their technology. But at this stage, there wasn't any point in competing. So I said, okay, we'll take 10% stake in BOOSTRY. I said 15% initially, but Mr. Nagai was only willing to give 10% away. But I said, okay, I'll take that. This is for Japan. This is for the modernization of Japanese financial market. So I said 10% is good.

And this security token will be offered to retail investors as well. It's a safe product, which will be offered to them. And as long as it's digital, it must be global. That's my thinking. So Osaka Digital Exchange will endeavor to be next-generation, global and digital exchange. Those are the 3 keywords.

Boerse Stuttgart Group operates Germany's second largest stock exchange. They have built digital exchange. We went ahead and invested in it right away. And SIX Group in Singapore, we have agreed to establish a joint venture in this area as well. And we have Switzerland, London, it will be connected and we will establish a global corridor. That's my vision. And we will attract fintech venture companies from around the world and utilize their cutting-edge technologies.

In Osaka and Kobe, we will establish fintech financial center. Now this is my personal vision still. But that location, Dojima, Nakatsuka said that this is a really good location because this is [ NEC's ]. Nakatsuka said that -- Mr. Nakatsuka said that, excuse me. Dojima Building can be rebuilt. But we can do -- it's an old building, historical building, so what we could do is what we do out in Tokyo, kind of keep that exterior but change the inside. So Nomura was kind of doing that before, too.

So basically, they leveraged the external architecture, but they build a completely new -- brand-new building inside. So we can do that, and maybe we can establish our headquarters there, in other words. So we can have, for example, headquarters for Osaka Digital Exchange. And those people who do not need to be in Tokyo, we can relocate them to Osaka. That will be a reduction in costs.

Even in COVID, that will be better safety-wise. I'm from Kobe. Why is it foreigners built so many Western-style houses and buildings in Kobe, where it was colonized by the West, it's always like that? But they build on a hill with a great view of the ocean, and they build this very nice Western-style mansions in itself, cater towards Westerners and their taste.

And I've kind of seen the similar scene in Nagasaki, too. This is more favored by the Westerners. Kyushu, too. I don't know Kyushu if it's too close, it's good or bad, but they are very close to Korea and China. If you think about Dazaifu, that's where all the cultures began to inflow into Japan. So we can have places like -- we can have several locations in Kyushu.

So for example, Kyushu, the business community can establish a team in Fukuoka and build a cluster. They can have each of its own structures. And we have JPY 1,900 trillion in personnel savings. And if we want that to be transformed -- if we can utilize that -- if we want to utilize that, then we need to build an attractive financial center.

My focus is on next generation and digital, a financial center that fully utilizes blockchain. That's what I want to build. We are attracting fintech venture companies through SBI Group's abundant investment track record. What's circled in red is all gone public.

R3 and Corda DLT, smart contract technologies can be attached to it, to blockchain and DLT, and we are the largest outside shareholder. We have a joint venture, same thing with Ripple.

So it's 6:00 almost, 5 minutes to 6:00. So I think I want to end my talk here. I can take several questions, so please do not hesitate.

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