Daiwa Securities Group Inc

TSE:8601

Earnings Call Analysis

Daiwa Securities Q1 FY24 Earnings Decline Amid Strategic Adjustments

Daiwa Securities reported a decline in Q1 FY24 with net operating revenues at JPY 149.1 billion, down 9.4%, and net income dropping 39.4% to JPY 23.9 billion. Wealth Management saw lower revenues but increased wrap services, while Asset Management hit record revenues. Declines in Global Markets and Investment Banking were notable, with overseas operations' ordinary income down 50.5%. Despite these setbacks, the company is optimistic about its medium-term management plan and emphasizes maximizing customer asset value.

Introduction

During the first quarter earnings call for FY 2024, Daiwa Securities Group provided a comprehensive overview of its financial performance and strategic direction. The key figures presented a mixed scenario with some areas of growth and others facing challenges.

Financial Overview

Net operating revenues for Q1 were JPY 149.1 billion, a decline of 9.4% from the previous quarter. Ordinary income also fell significantly by 33.5% to JPY 37.7 billion. The profit attributable to owners of the parent company dropped by 39.4% to JPY 23.9 billion, while the return on equity (ROE) was 6.3% on an annualized basis.

Wealth Management Division

Despite the overall decline in revenues, the Wealth Management Division saw positive developments. The division achieved a record high in wrap account service contracts on a quarterly basis, and asset-based revenues continued to rise, reaching a record high. The net operating revenues for the division were JPY 62.6 billion, down 2.3%, and ordinary income was JPY 20.4 billion, down 8.6%.

Asset Management Division

The Asset Management Division experienced mixed outcomes. Securities Asset Management achieved record high assets under management (AUM) and increased both revenues and profits. In contrast, Real Estate Asset Management and Alternative Asset Management saw a decline in profits. Net operating revenues for Securities Asset Management were JPY 13.5 billion, up 6.3%, and ordinary income was JPY 6.6 billion, up 9.6%. Real Estate Asset Management's net operating revenues were JPY 7 billion, up 3.2%, but ordinary income fell by 53.6% due to one-time expenses. Alternative Asset Management's net operating revenues were JPY 3 billion, down 61.8%, with ordinary income dropping by 87.3%.

Global Markets and Investment Banking Division

This division faced notable challenges. Global Markets experienced a decline in revenues and equities, primarily due to reduced activity from individual investors. The division's net revenues were JPY 36.2 billion, down 13.3%, and ordinary income was JPY 6.9 billion, down 48.6%. The Investment Banking sector saw a decline in M&A-related revenues. Net operating revenues were JPY 14.8 billion, down 26.2%, and ordinary income turned negative at JPY 2 billion.

Overseas Operations

Overseas operations saw a mixed performance. Ordinary income for these operations totaled JPY 2.2 billion, a decline of 50.5% quarter-on-quarter. The Americas region reported a decline in profits due to decreased FICC customer flows, Asia and Oceania showed strong performance driven by Wealth Management, while Europe experienced a decrease in M&A revenue.

Strategic Initiatives and Medium-Term Management Plan

The company emphasized the new medium-term management plan aimed at maximizing customer asset value. Key sources of base income include assets under custody in the Wealth Management and Asset Management divisions. The company highlighted a significant increase in base income of around 20% year-on-year, indicating progress toward this vision. Furthermore, Daiwa Securities Group plans to focus on understanding customer needs deeply and providing optimized solutions across various asset classes.

Future Outlook

In July, the company reported a strong start, with higher sales of fund wrap and investment trusts compared to Q1. Equity income also recovered to levels exceeding the previous fiscal year’s average. For the Global Markets Division, equity income was up by more than 10% compared to the last fiscal year's average, and FICC trends were positive. The Investment Banking sector expects income from multiple large mandates of ECM. The company is committed to continuing its strategy regardless of market conditions and aims to increase base income and stabilize financial performance by maximizing customer asset value.

Conclusion

Despite some quarterly setbacks, Daiwa Securities Group is making substantial progress in its medium-term management plan. The company’s efforts to maximize customer asset value, increase base income, and stabilize performance seem to be on track. Investors should monitor the upcoming quarters closely to assess the continued implementation of these strategies and their impact on overall financial performance.

Earnings Call Transcript 2025-Q1

[Motoi Mishiba, executive]

[Interpreted] Dear investors, thank you for waiting. Thank you for taking time out of your busy schedule today to participate in the telephone conference for the first quarter of fiscal year 2024 earnings results of Daiwa Securities Group. At this time, we will now like to begin the conference call.

Kotaro Yoshida, Executive Managing Director and CFO of Daiwa Securities Group, is here with us. I am Motoi Mishiba, General Manager of Investor Relations Office, and I will be facilitating the entire meeting.

First, CFO, Yoshida will explain the contents of the earnings results for the first quarter of FY 2024. We will take your questions after the presentation. Today's meeting will be open to general investors via the Internet.

We will now begin our explanation.

[Kotaro Yoshida, executive]

[Interpreted] I am Kotaro Yoshida from Daiwa Securities Group. Thank you for taking time out of your busy schedule today to attend our telephone conference.

I will now explain the financial results for Q1 of FY 2024 announced today in accordance with the explanatory materials posted on our website.

Please turn to Page 4. First, I will explain the summary of consolidated financial results. Percentage figures represent changes from Q4 of FY 2023. Net operating revenues for Q1 was JPY 149.1 billion, down 9.4%. Ordinary income was JPY 37.7 billion, dropped by 33.5%.

In the Wealth Management Division, despite lower revenues and profits, the wrap account service contracts reached a record high on a quarterly basis. Net purchases net inflow of investment trusts also remained high, with asset-based revenues steadily increasing to a record high.

In the Asset Management Division, Securities Asset Management achieved a record high AUM and increased revenues and profits, while Real Estate Asset Management and Alternative Asset Management saw a decline in profits.

In the Global Markets and Investment Banking Division, Global Markets saw a decline in revenues and equities due to the significant impact of lower activity from individual investors. Global Investment Banking saw a decline from the previous quarter when M&A-related revenues were high.

Profit attributable to owners of the parent company was JPY 23.9 billion or down 39.4%. ROE was 6.3% on an annualized basis.

Please turn to Page 10. I will now explain the income statement. Commissions received amounted to JPY 93.4 billion, down 10%. The breakdown of commissions received is on Page 23. Brokerage commissions were JPY 23.1 billion, down 21.2% due to a decrease in stock transactions. Underwriting and secondary offering commissions were JPY 8.4 billion or down 1.1%. Distribution commissions were JPY 6.5 billion. M&A-related commissions were JPY 8.5 billion, down 35.5%. Net trading income was up by 2.2% due to an increase in FICC revenue.

Please turn to Page 11. I will now explain the status of SG&A. SG&A were JPY 114 billion or down by 3%. In trading-related expenses, fee commissions rose in line with the increase in transactions. Personnel expenses increased in salaries due to wage hike, while bonuses linked to business performance decreased, mainly in overseas.

Please turn to Page 13. Next, I will explain the ordinary income of the overseas operations. Ordinary income for the overseas operations totaled JPY 2.2 billion or down 50.5% Q-on-Q. In Europe, M&A revenue decreased Q-on-Q from the previous high level and expenses also declined, but the overall P/L worsened. Asia and Oceania secured a high level of profit, with contributions from the Wealth Management business and equity method income from SSI Securities and others. Americas saw profit decline. FICC's customer flows decreased due to lower interest rate volatility.

I will now continue with the results by division. Please turn to Page 14. First, I'll explain the income and expenses of the Wealth Management Division. From this fiscal year, the former Retail Division has been combined with Daiwa Next Bank, Daiwa Connect Securities and Fintertech. Net operating revenues were JPY 62.6 billion, down 2.3%, and ordinary income was JPY 20.4 billion, down 8.6%.

Equity revenues were lower Q-on-Q due to lower trading value in Japanese equities. Fixed income revenues increased due to large size bond sales. Wrap-related revenues were also higher due to an increase in contract AUM of wrap accounts. Asset-based revenues amounted to JPY 27.2 billion and accounted for 48.9% of the Wealth Management Division's net operating revenues. The fixed cost coverage ratio to Wealth Management Division was 106.4%. Total cost coverage ratio was 71.4%.

Please turn to Page 15. This page is for the domestic Wealth Management Division and its status of sales and distribution as well as the topics of this particular quarter. In wrap account services, contract amount was JPY 261.1 billion, with a net inflow of JPY 173.2 billion. In equity investment trusts, sales of a wide range of investment trusts, including Indian stock funds and U.S. stock funds, expanded as a result of proposals tailored to customers' needs. The lower left-hand side of the slide shows the sales and distribution and net increase ratio of wrap account services and stock investment trust. The net increase ratio was 38%.

Please turn to Page 16. I would like to talk about the Asset Management business. Starting with the Securities Asset Management, net operating revenues were JPY 13.5 billion, up 6.3%. Ordinary income was JPY 6.6 billion, up 9.6%. Driven by the increase in the average AUM during the quarter of Daiwa Asset Management, both net operating revenues and ordinary income were record highs on a quarterly basis in the Securities Asset Management.

Please turn to Page 18. Next, Real Estate Asset Management. Net operating revenues were JPY 7 billion, up 3.2% and ordinary income was JPY 3.8 billion, down 53.6%. AUM of Daiwa Real Asset Management was up, driven by property acquisitions by Daiwa Office Investment Corporation. However, ordinary income went down due to onetime expenses at Daiwa Securities Realty and decline in equity method investment profit from Samty.

Please turn to Page 19. Let me explain the Alternative Asset Management. Net operating revenues were JPY 3 billion, down 61.8%. Ordinary income was JPY 0.7 billion, down 87.3%. While the monetary claims investment by Daiwa PI Partners contributed to earnings, net operating revenue and ordinary income decreased due to the decline in capital gains related to energy and infrastructure at Daiwa Energy & Infrastructure.

Please turn to Page 20. Lastly, I will explain Global Markets and Investment Banking divisions. Starting off with Global Markets. Net revenues were JPY 36.2 billion, down 13.3%. Ordinary income was JPY 6.9 billion, down 48.6%. With regards to equity, revenue declined due to a slowdown of retail investor activities and absence of large deals, although the institutional investor flow stayed at a high level. FICC revenues increased. Domestic JGB and credit revenues were up on the back of rise in interest rates. Overseas revenues were down due to a decline in customer flows for treasuries.

Please turn to Page 21. Let me next explain the Global Investment Banking. Net operating revenues were JPY 14.8 billion, down 26.2% and ordinary income was a loss of JPY 2 billion. With regards to debt underwriting, income increased driven by large-sized deals. M&A income was down due to a decline in income overseas from the high level last quarter, although expenses were low as well in spite of good domestic M&A performance.

This concludes my explanation of the results in the first quarter of FY 2024.

In this first quarter, we were off to a good start as the first quarter of the new medium-term management firm. The base income, which is comprised of ordinary income from the Wealth Management Division, Securities and the Real Estate Asset Management divisions was JPY 31 billion, which was up by around 20% year-on-year.

By deeply understanding customers' needs and challenges and providing the best and optimized solutions, it is our mission to contribute to the asset value. Therefore, the basic policy in the new medium-term management plan was set as maximizing customer asset value so that we strive to achieve this mission as a whole group.

Main sources for base income are asset under custody of Wealth Management and AUM in our Asset Management Division. In other words, they're the testament of their trust in us and positioned as the KPI to measure the progress of our policy, maximization of customer asset value. This income also shows the strength of our financial performance.

Although group performance still can vary depending on the flow income, by accumulating base income, we can improve the stability of our performance and base level of earnings. Over the past 1 year, base income grew a lot. I feel good that this first quarter was the quarter when we made the progress towards the vision we'd like to achieve.

Now to comment on July, our group made a strong start. In the Wealth Management Division, the pace of sales of fund wrap and investment trusts were higher than Q1, a quarter when sales were strong. Equity income has recovered to the level higher than the average of the last fiscal year.

In the Global Markets Division, equity income was higher by more than 10% compared to the average of the last fiscal year, and FICC is trending above Q1 when income recovered.

In the Investment Banking, we expect income from multiple large mandates of ECM. Now is the time when we work closely with customers for their needs and challenges, and maximizing customers' assets value is required more than ever by providing solutions.

Yesterday, BOJ decided to change their monetary policy, which indicates normalization of the market functions and the interest rate decision is now handed over from BOJ to the market in the full-fledged way. This also means responsibility of our group, the market leader, is going to be even greater.

In whatever market environment, what we should do is the same. We are going to do what we should do and perform our responsibility, thus accumulate customers' trust in us, take care of customers' assets, increase base income, establish the stable income structure, which is less affected by the external factors and realize maximization of customer asset value. We are going to work as one towards normalization of market functions, which has just started in full swing.

I ask for your continued support to us. Thank you so much.

[Motoi Mishiba, executive]

[Interpreted] This completes the presentation. Now we'd like to move on to the Q&A session. [Operator Instructions] Today, we are going to receive questions in Japanese first, followed by questions in English. [Operator Instructions]

Now the line is open for your questions. The first question comes from SMBC Nikko Muraki-san, please.

[Masao Muraki, analyst]

[Interpreted] This is Muraki from SMBC Nikko. I have two questions. First of all, in terms of the Investment Banking Division. So my first question related to IB. So in Page 21, the commissions from M&A has been dropping. So the deficit has been on the rise, about JPY 2 billion of deficit. If you were to have M&A division of Europe and also Americas, how much would account for those within that?

Also, you mentioned you've completed the personnel reshufflement. So going forward, if you can give us some idea when you can turn the business around into black? So that is my first question.

The second question relates to the previous Investment Division. This is Page 19. So the new Alternative AM Division. So there hasn't been much of a contribution in terms of the revenue. But how do you see the pipeline for the revenue contribution for the full year?

Perhaps we shouldn't link this overly, but what about with Aozoro Bank with the investment into Aozoro Bank? So the negative goodwill, I do believe you will be posting those in Q2. So for those type of fiscal year, would you be able to make an adjustment in terms of the gains from the investment?

[Kotaro Yoshida, executive]

[Interpreted] Thank you very much for that question. First question relates to the Investment Banking, M&A, the business. So within the deficit, a large proportion comes from Europe and Americas. So about JPY 3 billion or more, that is the amount. So in terms of the -- so we have been able to secure a black number overall.

So we have been conducting reshufflement of the personnel. We have booked up-front expenses. There was not enough contracts to offset the cost increase for this particular quarter. But in terms of the pipeline, both for Europe and Americas, in terms of number of deals and also amount, we are expecting 10%, if not 20% increase.

Of course, there's uncertainty in terms of the interest rate in U.S. Of course, that is somewhat decelerated recently. But of course, there's still uncertainty in terms of the economic situation in Europe.

For PE related, the deals, we are seeing some delay in terms of the finalization of the deals. So for Q2, Q3, Q4 on the domestic front, we do expect to have a closing of these deals. So we do believe the actual P/L will turn into positive as we progress into the year.

But of course, in any case, this relates to M&A. So there are different situations with different stakeholders. So of course, Daiwa cannot be the only factor to make the decision. But of course, we would like to monitor the situation closely.

And the second part of the question related to investment. The pipeline for this year, so Daiwa PI Partners and Daiwa Energy Infrastructure, both of those companies, we are expecting some solid contribution. So last year in Q4, the exits were very much concentrated in Q4. So there were some reaction in the downturn for Q1 of this year, but we do expect the pipelines to pan out towards the end of the year.

Also the third part related to the negative goodwill. So those are independent. Of course, there are different situation related to different stakeholders and the investees, the entities as well. So in terms of the negative goodwill, we are still finalizing the number because we don't have the finalized number. We are talking to auditors and so forth. So once it is finalized, we will definitely like to share those with you. That is all for me.

[Masao Muraki, analyst]

[Interpreted] About the final point. So last year in Q4, so with the transition into the new midterm plan, so you have extraordinary loss from different factors. So this year onwards, do you expect to post those expenses as well? So I think 3 months ago, you mentioned you're not expecting any [ positive ] extraordinary expenses, but do you expect to have those sort of extraordinary the areas that you may address so in hopes of improving the performance in the future?

[Kotaro Yoshida, executive]

[Interpreted] As of this moment, nothing has been finalized or decided. But if there is a need for such, we will explore the possibility. For instance, [ whether it's ] intangible asset or the fixed asset that we have developed and if there is a possibility for impairment, that may be a possibility. But as we speak at this moment, nothing is planned.

[Motoi Mishiba, executive]

[Interpreted] Mr. Muraki, thank you so much for your questions. Next questions are from Nomura Securities, Sasaki-san?

[Daisuke Sasaki, analyst]

[Interpreted] Sasaki from Nomura Securities. Two questions. First, in your presentation, you talked about progress towards the medium-term management plan, which you said very steady and good progress.

But JPY 240 billion ordinary profit, ROE of 10% was low compared to those targets in the midterm plan. I get the impression that you are slightly behind. But when you look at the progress, where do you see the strong confidence in achieving targets in the medium-term management plan? That's my first question.

Second, right now, exchange rate, stock markets are shifting. But do you see any behavior changes in customers purchasing fund wrap products from you? To the extent you can, would you please disclose the potential behavioral change of your customers?

[Kotaro Yoshida, executive]

[Interpreted] To your first question, our progress over the Q1 towards the target in the new medium-term management plan, I said progress is good. But as I said in the presentation, basic policy is to maximize customers' asset value.

In particular, in the Wealth Management division, that is our target. We have to deeply understand the customers by conducting interviews, analyze their needs and propose optimum solution, and not only for the investment, but also real estate, insurance. So including those other assets, we give consultations to our customers. Based upon that, I would like to promote Wealth Management business.

And in the Asset Management Division, Securities AM, such as investment trusts, real estate asset management, we'd like to increase AUM customer of assets under custody. In other words, this shows the trust of customers in us.

So that's why we'd like to expand AUC as the KPI, which is the total of the ordinary income of those 3 subdivisions. Per year, 22%, it increased by around 22% per year. So based upon this basic policy, I think we made a good progress in Q1.

Of course, looking at the overall profit in the Global Markets Investment Banking, looking at 3 months only, then the results may be not so strong because we could not really address large mandates. But in the medium term, I think we made a good one step forward.

In Q1, especially Investment Trust, fund wrap, the amount of contracts and also sales, net increase compared to Q3, Q4, which grew quite strongly, but even compared to those quarters, net increase was even higher. So I think that's something that we can be proud of.

To your second question, any behavior changes of customers purchasing fund wrap products? In July, sales were very strong, even better. In April, May, June, July sales were even better than those months.

And any change in customers' behaviors? No, I do not see a major change in customer behaviors. But when we do the consultation to our customers for the assets, proposals for investment products, not only the trading of securities, but we try to give consultations for the comprehensive assets proposals. And every year in July, the land value [indiscernible] is disclosed. And that's the timing when we create the booster distributed to them, letting them know the valuation and upgrade the value of their real estate so that we can be helpful of their investment or asset management for the future.

So appraisal value of the real estate is one of the components in our consultation. So we receive requests from customers for those types of consultation. As a result, they buy investment trust or they buy fund wrap driven by this consultation. So fund wrap contracts are quite large in size per person. So in our plan, the average contract value per customer has been increasing. That is one trend, if I have to point any shift in the trend.

And the second, working with Japan Post Bank and working with Shikoku Bank, we have a partnership distributing products, and we are supporting them. And fund wrap of JP Bank, progress of sales is very good. And this trend from savings to investment, backed by this trend, JP Bank customers are quite large in terms of the number of accounts in Japan. And relatively speaking, this is conservative money, I should say. So this conservative money is gradually coming to fund wrap towards the investment, which is good for the whole of Japan.

This shows that our Japanese financial assets are finally shifting from deposits to investments. And this is becoming a good opportunity for them to start thinking about the investment or asset management for the future. So that's what's happening at the moment. Starting from the second half of last year, I think that's the recent trend. Did I answer your question?

[Daisuke Sasaki, analyst]

[Interpreted] Just one follow-up question. Page 26, asset inflow. In Q1, retail inflow was very strong in Q1. And is this what you have just mentioned? And this inflow of JPY 170 billion, which is quite high. But is this backed by sales of investment trust or fund wrap products? Is this supported by those strong sales? So this is just a follow-up question.

[Kotaro Yoshida, executive]

[Interpreted] Well, drivers for this increase, it's really difficult for us to analyze directly for specific drivers. But we have new customers, and when they have -- entrust us with money for the first time, then they first put their money in the time deposit of Daiwa Next Bank or buy corporate bonds, or buy fund wrap. In many cases, on launch, those new customers purchase those products.

Because our target is to maximize asset value over customers, and we'd like to increase assets under custody from our customers. So for example, time deposit interest. We have run the campaign of the interest rate that we give on the time deposit of Daiwa Next Bank. And also, in the fixed income, there was a large deal of SoftBank issuing corporate bond, which was quite positive in Q1. So we are going to do our best so that we can sustain this trend. This completes my answer.

[Motoi Mishiba, executive]

[Interpreted] Thank you very much, Sasaki-san. Next question is from Citigroup Securities. Niwa-san, please?

[Koichi Niwa, analyst]

[Interpreted] This is Niwa from Citigroup. I have a question related to Wealth Management, especially for equities. So in the flow area, so in Page 14, I'm looking at Page 14, it seems as if the general level is somewhat weakening. Is it because of market-related factors? Or is it because of individual customers factor? Or are there any other reasons? I would like to hear more about this.

Also in Page 24, in terms of the actual balance, so within the asset under the custody, we've seen decline in the equities, which is quite rare. So what has exactly happened? So I do believe perhaps they're turning to more of online securities. That is my guess. So are we seeing any sort of a structural change or not? So that is part of the first question.

And also, the second question, just related to the first part of my question, the market itself is moving quite rapidly. Are you seeing any changes in terms of the initiatives? If you can give us the voice from the actual field, that would be helpful.

[Kotaro Yoshida, executive]

[Interpreted] Thank you very much for that question. To Page 14, related to the first part of your question, so the equity flow seems to be somewhat weakening for the Wealth Management. That was your question. So internally, we are not seeing any severe decline. In fact, especially for months in April and May, it was trending, some activities were sluggish in those 2 months. So that is a decline by 20% or so. But we do not perceive this as a significant decline though.

In fact, recently, in the month of July, we are seeing the return of the activities. So it is pretty much within the range of our expectation. So if your impression is somewhat weak in terms of the equities, so Q1, we had a large-sized public offerings or TOB events were absent in Q1. So there was a less chance of equities being transacted -- instigated by those events. There was a lack of those in Q1. But as we engage in more of a wealth management type of business, we'd like to increase the asset base revenue. So this is in line with our expectation.

Also for Page 24, in terms of the asset under custody, we do not believe there's any special factors to this. So Nikkei average, Q4 of last year was quite high, and we have been going through some adjustment phase and some decline in the mark-to-market price. So we do believe that is one of the reasons. We're not seeing any sort of a churning into online securities either. But of course, we would like to keep a close eye on this to conduct the analysis.

Also any sort of changes we're seeing with the market change? So since yesterday to today, we do not perceive a major change within the market. But of course, if there is any modulation, so the customers may feel somewhat concerned. So we have to make sure that we provide the care to the customers and that's what we're trying to do in terms of our sales.

And also related to fund wraps, after the contract is forced, we do conduct the care on a regular basis. For equities and likewise, for fixed income and investment trusts, we like to make sure we conduct the follow-up in a meticulous manner. So in terms of the voice from the field, there was a decline in the Nikkei average. We may see some follow-suit sales. So perhaps we would see it more of a return of the dynamic feature within the market. So we do perceive this as a rather positive phenomenon.

[Motoi Mishiba, executive]

[Interpreted] Mr. Niwa, thank you so much for your question. [Operator Instructions] Next questions are from [ Mr. Wan ] from Bloomberg.

[Unknown Analyst]

[Interpreted] [ Wan] from Bloomberg Intelligence. I have two questions. One, sorry, to stick to this, but in the Wealth Management, the asset income sustainability, how do you assess the sustainability of the inflow? You said in your presentation that fund wrap sales are strong, expected to grow from the royalty individuals. But for the sustainability, the fund wrap online, that savings type product, do you think you can increase sustainably by introducing fund wrap online savings type, for example? And you may have mentioned in the presentation, but would you please give me more color on the drivers of the increase?

And the second question, negative goodwill, once again, so one-off profit or cash gain. How should I understand the funds available for the first half dividends? Would you please explain your thinking on what can be used as funds available for dividends for the first half?

[Kotaro Yoshida, executive]

[Interpreted] Thank you so much for your questions. To your first question, the sustainability of the inflow of the assets in the Wealth Management division, as we mentioned, savings type, like time diversification type is quite effective as an investment method, very effective. So same goes for NISA, but investment in the savings type accumulation is something that we will comment to customers.

And when you say savings, then for working [ force ] population, JPY 10,000 and JPY 20,000 and JPY 50,000, you may think that's the size of the investment for the savings type, but corporations or high net worth individuals, they accumulate millions of yen. And high net worth individuals, for example, if they have JPY 100 million, rather than buying JPY 100 million or otherwise, but they would diversify over time by multiple lots, in some cases. So there are different ways of investing.

So that's how we are proposing to our customers. Our salespeople are trying to propose varieties of reinvestment methods to our customers. So that's how we would like to sustain the increase. But to achieve the sustainability, what we need is to attain the credibility from customers on a continuous basis.

So I'm sure customers can deal with many banks and security companies. So I hope we can be the company whom they choose us among different financial institutions available to them.

To your second question, dividend payout. On a consolidated basis, 50% of net income or more. Every half, that's our dividend policy. For each half, which is the same policy from before. So we'd like to continue that dividend payout policy for this fiscal year onward. And because we have onetime gains, we don't have the policy to change that dividend payout ratio. In the past, we have not revised dividend payout even though we had one-time gains. So this is the base dividend policy in the medium term or long term.

[Motoi Mishiba, executive]

[Interpreted] Thank you very much, [ Wan-san ]. [Operator Instructions] So there are no more questions. With that, we would like to conclude the Q&A session. Thank you very much. Thank you very much for staying with us until the very end.

[Kotaro Yoshida, executive]

[Interpreted] So this is Yoshida. Thank you all for participating with us until the very end. So the BOJ monetary policy direction has been set. So we are definitely moving into life with interest rate. So regardless of the different market condition, we would strive to maximize the asset value of the customers as the bearer of the financial market. So group -- for the entire group, we would like to move forward in hopes of achieving our target. We'd like to ask for your continued support. Thank you all for your time today.

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