Q1 2018 SBI Holdings Inc Earnings Presentation

Jul 27, 2017 AM JST
8473.T - SBI Holdings Inc
Q1 2018 SBI Holdings Inc Earnings Presentation
Jul 27, 2017 / NTS GMT 

==============================
Corporate Participants
==============================
   *  Yoshitaka Kitao
      SBI Holdings, Inc. - Executive Chairman, CEO and President

==============================
Presentation
------------------------------
 Yoshitaka Kitao,  SBI Holdings, Inc. - Executive Chairman, CEO and President   [1]
------------------------------
 Without further ado, I would like to present the results of the first quarter of this current year 2017.

 First, the consolidated results. The 3 months FY 2017, the revenue increased 7.7% year-on-year to JPY 68,917 million. Pretax profit increased by 48.56% year-on-year to be JPY 14,750 million. And profit attributable to owners of the company was JPY 12,006 million, up 55.5% year-on-year, achieving increase both in revenue and profit.

 By segment. Big contribution came from Financial Services Business, where revenue increased by 20% to JPY 50,423 million.

 Asset Management Business, down 16.4%. Year-on-year in the same period 2016, the revenue from NARUMIYA children clothes was included of about JPY 5 billion of the revenue. The profit was not so big. And so there was a buyout, and we sold the NARUMIYA business. So without it, the Asset Management Business could have also increased the revenue.

 And the Biotechnology-related Business, up 111.5%, JPY 625 million.

 On IFRS basis, other pretax profit: Financial Services Business, up 7.5% to JPY 14,238 million; Asset Management Business, up 75.2% to JPY 5,520 million; Biotechnology-related Business, still in the red. This decreased greatly by JPY 689 million to the minus JPY 2,841 million.

 So the SBI -- when it comes to SBI, the strongest color is the SECURITIES and -- because the SBI SECURITIES had big weight in revenue and profit. And in FY 2006, on a J-GAAP basis, the ordinary income of SBI SECURITIES and the financial of that business, the profit, it's shown here, the JPY 24,571 million FY 2006, which is 90.5% of the Financial Services Business of the group. But that weight is coming down. That said, the ordinary income of SBI SECURITIES also continues to increase. Still, the weight is decreasing. This the first quarter for the 2017 fiscal year. In any case, the weight or proportion has been declining.

 The -- in fiscal year 2015, SBI Insurance achieved full year profitability. And in fiscal year 2016, with the exception of subsidiaries that were established within the past 2 years, all of the companies have achieved profitability. So the SBI SECURITIES was not the only strong at the company, we are a more balanced comprehensive financial group, and the SBI SECURITIES have been diversifying the revenue income sources for over 10 years, so that we are more resilient against adverse market conditions, and that tendency that will increase, will be stronger.



 The overview of each segment and presently focused initiatives, starting with securities-related business. Just briefly, SBI SECURITIES, the first quarter, the results overview. So the market condition was relatively good. Comparing the year-on-year basis, the average daily individual brokerage trading value increased by 11.2%. In April, we struggled. But in May and in June, the average daily individual brokerage trading value steadily increased.

 And SBI SECURITIES, the opening -- operating revenue, up 13.6% to JPY 25,358 million. And the operating income on a J-GAAP basis, up 4% to JPY 10,631 million. And ordinary income, JPY 10,665 million, up 3.8%. And profit attributable to owners of the company, only this one was down. But when you look at the first quarter of FY 2016, there was a reversal of reserve for financial products transaction liabilities of about -- close to JPY 2.1 billion was recorded. So without it, we actually saw increase in this first quarter fiscal year 2017. And we hit the record high, both for operating revenue, net operating revenue, operating income and ordinary income.

 The operating revenue structure, which is being diversified, and the brokerage commission, the JPY 7,785 million, the weight is coming down. And the financial revenues, up 29.4%. The margin transaction open balance continues to be at a very high level. So when the market is good, the financial revenues increase greatly.

 And one of our focuses is the corporate business, especially underwriting of PO/IPO, up 31.4% year-on-year. So we are looking at the strong results from our focused efforts of the corporate wholesale business. And as to investment trust, quarterly investment balance, that was at a historical high. And the investment trust fees are increasing also, up 50% year-on-year.

 That said, FX-related trading gains and losses almost -- the FX-related gains were down because of volatility in -- well, during the first half, volatility was smaller. Because of Brexit, because of President Trump, because of those big events, FX market moves greatly. And under such circumstances, with that volatility, our chances to get gains and the transaction increased, but that didn't happen, unfortunately. Maybe I should not say unfortunately, because the market will be better off without it.

 This is the comparison with other companies. Other online securities competition was over. At the beginning of 2015, I made that declaration. And -- but we still have this table in the presentation. But it's just for your reference.

 So SBI, up 4%; and Rakuten, down 12.3%; Matsui, down 1.6%; kabu.com, down 40.6%. And Monex will make an announcement on the 28th of July. With Daiwa's result, it was 23.5% down during the past 3 months. They could not make profit by dealing bonds in overseas markets, and that's the difference. And the U.S. equity market was good, and overseas as well, that we could make good profit. SMBC Nikko, I think, is the case of the overseas -- the equity business. And Nomura is going to make an announcement on the 28th.

 And this is the other listing. So fiscal year 2006, we were ranked #10. And fiscal year 2016, 10 years on, we were ranked #6. And in the first quarter of fiscal year 2017, where the other, some companies will make announcement in the future, but so far, we are ranked #1, following Daiwa and SMBC Nikko. And it all depends on the announcements of other companies.

 Highlights of the securities-related business. As I mentioned earlier, we are focused greatly on wholesale corporate business. That is the biggest issue -- or focus for the securities business, especially, IPO.

 Underwriting of IPO to get lead underwriter position. So during the 3 months from April 2017, June 2017, 12 companies were listed during the period. Among these 12, SBI participated as one of the underwriters for 11 companies or underwriting share of 91.7%. And in the lead table, we are ranked [#1]. The other fiscal year, the 2014, 2015 and 2016, we are ranked #5, and lead underwriting ratio is 14.9%. So either we have been accumulating experience as lead underwriter in this -- the fiscal year. We underwrote about JPY 18 billion of newly issued bonds.

 So this, the corporate business, wholesale business, in promoting it, the one of the pillar is financial institutional sales department to increase the financial -- the corporation business. And we established this sales department in July 2016. And so far, we distributed structured bonds and investment trusts to 111 financial institutions. The structured securities are now internalized. In the past, we were just selling the products developed by other companies. So we were like the cormorant, the bird fishing, the fishing using the birds. But now we are making our own products. And we sold JPY 13 billion of the structured vehicles. We stopped that operation for a while, so that amount is not that big. But we should not discontinue what we have been doing so that we can provide good-yield products. When it comes to the financial -- the corporation business, we need to bring good products to the customers who have to buy good products. And that's the work for the financial institution-related department. So we would like to increase the new corporate customers, including insurance companies and regional financial institutions. For example, the utility bonds, and now we are also participating in that area as well.

 And we have the great selling power. So we -- they should let us participate in the area, such as utility bonds. But because of some ignorance of some people, that didn't happen for the long time. And the percentage of the lead manager ratio for Japan Post was a source of my -- the complaints and criticism, and there are many old securities companies. I complained, saying that how much tax that we have been paying compared to the other securities firms and that we are more diversified locally compared to other securities firms. And I took up the interview of Financial Times. And finally, the Ministry of Finance came to me, saying that they would like to listen to me in detail and there's the section of the Treasury in the ministry. And Takamura-san and myself explained about our current status, and the ministry, the people said that they hadn't known it. So there are some changes only when you assert yourself.

 SBI SECURITIES provides financial instruments intermediary services to regional financial institutions to capture asset formation needs of regional customers. This is one of the other pillars of the strategy, namely how to strengthen the regional banks, regional financial institutions and that would also lead to contribute to the regional revitalization. In that context, for example, we started to provide financial instruments intermediary services with The Shimizu Bank in March 2017. And in July 2017, we started the same with The Ehime Bank. Also, more than 10 regional banks are showing interest. And we are going to continue to focus on the development of regional customers.

 And going forward, we would like to associate regional financial institutions so that we can increase financial -- the corporate business, SBI Japannext.

 Now the ban on margin trading of stocks on the PTS was already lifted. But still, it is taking time on the practical basis. The Japan Securities Dealers Association published a report on the Working Group on PTS Margin Trading, and they announced on the framework for the issues set out on the report of the Market Working Group of the Financial System Council. We need to work faster. If not, the modernization of the Japanese market is going to be delayed. And once PTS margin trading becomes available, then it will increase the transaction, and that would reduce the trading cost, which is good for the investors, which is good for the institutional investors and the securities firms. And the TSE, PTS, the competition will certainly bring about good results, and that is exactly what democracy is all about. We should not impede the sound and healthy competition in the marketplace.

 And now, JGB. Also, we are aiming at JGB PTS trading. Currently, such trading is very limited. And the selling and the buying have been matched on an individual basis, but the (inaudible) market, that we can trade the JGBs. And on April 5, we obtained approval from the authorities. And from September, we can do it on PTS, and that will also increase or deepen the relationship with us and the financial institutions.

 NISA. NISA and iDeCo, of course, are the products -- strategic products of the Japanese government to help the asset formation of the Japanese people. And for us securities firms, they are strategic products. The count of NISA accounts at SBI exceeded 1 million. When it comes to the NISA account, we exceeded Daiwa's position. And also -- and the result is that we are just following Nomura, and we beat all the other players in terms of the number of NISA accounts. And new investors are now opening NISA accounts with SBI.

 And the monthly total of investment trust selling amount is increasing greatly. And SBI SECURITIES amount reached JPY 6.5 billion in June 2017. And from anyone who is familiar with the securities industry would groan, saying that, that is a very hard goal to achieve, but we have reached it.

 And as to iDeCo, the individual defined contribution, which is another strategic product. And when it -- SBI SECURITIES iDeCo administration is completely free of charge from May 19, 2017. And with that, the number of customers and applications increased by about 60% only in 1 week after the waiver of the fees.

 That said, as to iDeCo, we need to convey the message in an easy-to-understand way, because there are many people who are not experienced in investment. And it's like that you take someone who doesn't know how to swim into the middle of the sea. That's what the government did about this iDeCo. So we need to make those new people understand and what kind of portfolio that should be there for those new people. And also for women, we have established iDeCo online, a site dedicated to individual defined contribution pension. It's not only for women, of course, the men can refer to it. But in particular, women do not tend to have a great deal of financial information, so this is mainly for women.

 Also, we use robo-adviser. So when you do not select your own products, for those new investors, we have provided -- promoted robo-adviser services. And also, 80% of the new accounts said that they would like to use things like robo-adviser. So we are going to promote the usage so that they can experience the investment and asset management. And once you have, you experience success, then they will continue to trade with us, to have business with us, as an investor.

 Over the past 5 months or less than 6 months, this WealthNavi, robo-adviser, the customer assets is JPY 10.80 billion or 19,000 applications were received.

 And from July 26, the Money Design, THEO+, started as well, and it is likely to increase greatly as well. And already, 26 and 27, for these 2 days, I could say that it is very promising. The market is going to be much bigger.

 When it comes to venture company, we -- they -- since we give the routes to the other customers, venture companies prosper. And for those venture companies to monetize, we need to give support to them. And of course, we invest in those venture companies. And for those investee companies, we would like to develop them so that they can monetize their business. And we would like to do that within our group, and that is our basic recipe.

 As to blockchain, for the coming 20 years, along with AI, blockchain, we will be the most focused to technological transformation. When it comes to the securities tradings, we will be more effective and efficient using blockchain, and it will be safer. So there will be replacement going on, and we are doing demonstration tests and in-house developments.

 Next is the banking-related business. The results actually are going to come out on the 28th of July. Therefore, I'm not allowed to talk about numbers today, unfortunately. But they will be announced on the 28th, tomorrow.

 But I can give you a trend, which is pretty much broadly in line. We are still at the top when it comes to deposit amount as well the balance of loans. And also, for income, we are able to generate a certain degree of profitability.

 So this table includes regional banks and new entrant banks. And we show the ranking, starting off with the banking -- Bank of Yokohama. SBI Sumishin Net Bank. In Japanese, Sumishin comes first. And in English SBI comes first. And we are, indeed, 28th in rank. JPY 4,188,000,000,000 is the amount of deposits we have.

 Suruga Bank, amongst regional banks, has the highest PBR. They are at 3.9 trillion. So we are now at that level. From the father's generation of Mr. Okano, Suruga Bank has been founded, and they have reached this level of deposits. We were able to reach this level over a short period of time, starting the business from 2007. So what's going to happen in 10 years' time? I'm looking very much forward to its future. From other regional banks, I'm sure we will come across as a threat.

 So for the banking-related business, here are the highlights. So what I reiterate is from FinTech 1.0, I'm talking about, to my people, to transition to 1.5, and then to quickly create the world of FinTech 2.0. Where 1.0, it was about online-based services, and we have the World Wide Web on top. And then after, a number of applications can be utilized. That was FinTech 1.0.

 And we created our corporate ecosystem for the financial business. For banking, securities and insurance services, we are now able to create -- provide a number of services through this ecosystem.

 And now in 1.5, there's new technologies available, and I'm telling my people to quickly implement those technologies, such as robotics or AI or big data or Internet of Things. There's a number of technologies available, also, including blockchain. So I'm telling my people to implement all of these things as soon as possible, and this will continue to be our highlight. And if there's a drag on our business, from the past, I'm also telling my people to fix that problem as soon as possible and to be flexible in thinking about the countermeasures to address the problems.

 Furthermore, as a result, I talked about WealthNavi, Money Design and the robo-adviser services we are providing. We would like to do this in our banking business as well. Of course, it's going to be less than the securities business, and we started this 1 month later. But currently, WealthNavi is JPY 2.9 billion. With regards to customer assets, it has exceeded JPY 2.9 billion. And we will engage in Money Design services going forward. And with regards to something new, we have started to provide automatic savings services and automatic accumulation services, where people can accumulate their spare change. So we don't have a piggy bank these days, but customers are able to automatically save their money.

 So finbee is from NestEgg, and we have a partnership with them, and we are offering the service through this partnership. And also, WealthNavi's Mametasu is another service we're providing. So spare change can turn into investments, and the accumulation of spare change can turn into a huge amount of money. So we're basically trying to promote automatic investments with our customers.

 Next is lending. Up until now, when it came to corporate lending, we didn't really engage in the business. This can be -- this is not going to be the biggest profit source. However, it can turn into the biggest profit source, but it can also turn into a risk. Therefore, we weren't into the -- in the business before, and we were doing management of marketable securities or we were doing housing loans or offering other lending opportunities. However, when it comes to a bank, corporate loans is a business that we should be engaged in. And I think we are financially stronger than before. So cautiously, we would like to promote this business.

 We have researched into how we should proceed with the business, and that is why we have decided to do business loans services that is based off accounting information so that we can address funding needs of credit card merchants and cloud accounting service users. And as much as possible, we would like to reduce the bad loan risk. More and more, we would like to promote this business.

 So here is the card business. We are still in the red for this business, so we would like to turn it profitable. For the credit card business, the biggest bottleneck is, I think, the system.

 We were tying up with a Singaporean company. And technology-wise, they are high in quality, however, the maintenance cost was too high. By reducing this substantially, we believe that we can gain visibility in turning the business profitable. So how are we going to do that? So this is a new card called Miraino Card, and it's going to be based off the JCB card brand. It's not just going to be JCB, however. We would like to swiftly also have a card brand that is MasterCard, and we would like to work promptly about that. But initially, we will have a partnership with JCB.

 And for the other areas of the business, we weren't able to provide QUICPay before due to the absence of IC chips. And also, with regards to the point return ratio, we have decided to have a consistent 1% instead of being cheap at 0.5% to 1% and having a range. So in the future, we would like to announce the mechanisms that are going to be introduced.

 So next is insurance-related business. For the overall insurance business, SBI Insurance group is a holding company that started operations in March 2017, which consolidates the 6 group insurance companies. And on a simply integrated basis, where March 2018 Q1, the profit before tax was JPY 1,381,000,000. In Q1 last fiscal year, it was JPY 920 million. So in one year, profit before income tax went up by 50.1%.

 So I'll talk about going to market or doing an IPO later on, but this is what we are considering. Also, with regards to number of contracts in insurance business, it went up by 61.4% year-on-year comparing March '16 with March '17. And furthermore, as of end of June 2017, meaning the months of April, May and June, for the 1st quarter of March '18, we were able to reach 1.656 million in the number of contracts in the insurance business. This is because we acquired Nihon SSI, which had a positive contribution.

 On the non-life insurance side, it grew by 50% year-on-year. And I'm not satisfied, and I was actually yelling at my people earlier today that they need to do more. The loss ratio was 67.2%, which increased from 63.6%. So the combined ratio went up as well, due to payments related to major accidents. I wasn't angry about that, however. Those things happen. So that's fine.

 So with regards to auto insurance premiums among direct insurance companies, it was 7%. And that's what I was angry about.

 And as for customer satisfaction, because we raised our premiums, customer satisfaction went down. Our business is all about customer satisfaction. That should be our priority. Then we should think about P&L issues and profitability issues, but we need to solve the problems by putting priority on customer satisfaction first. Let's say we raised premiums. We deteriorated the conditions for the consumers. If we were to generate more profit, that wouldn't mean anything. That's what I'm always saying. We always have to be customer-centric in a steadfast manner, and that is our company's principle. So we shouldn't go against that. I've never said to my people that they should generate more profits by undermining customer satisfaction. And even if they did that, I am not going to regard them highly.

 So for SBI Life Insurance, Q1 results, due to some reasons, the preliminary ordinary loss was minus JPY 53 million. But for the full year, our plans are to definitely turn it positive.

 For the group credit life insurance, because the sales started, costs increased. So that is fine. However, on a full year basis, we are expecting to turn positive. We are expecting full year profitability, and we are working hard for that.

 And with regards to annualized premium, when you compare -- the comparison of financial results for fiscal year 2016 is shown here. And annualized premium for SBI Life Insurance was JPY 7,799,000,000, and ordinary profit and loss was JPY 1,625,000,000. LIFENET Insurance annualized premium is as shown, but the ordinary profit and loss was negative. And AXA Direct Life Insurance is not doing well either. So group credit life insurance started in sales for us.

 And within our group, we have a bank. We have an online bank that is putting a lot of emphasis on housing loans. Therefore, as a matter of course, it connects to our Life Insurance business as well. We are still interested in acquiring good SSI companies. We're currently considering -- we were considering acquiring a pet SSI, but we decided to do it on a stand-alone basis internally. And we are currently applying for approval. And if so, we would like to engage in the business. We're doing earthquake indemnity insurance, death insurance, medical insurance. And we are considering doing pet insurance as well as home content insurance, renovation or reform insurance as well as vehicle insurance and building cost insurance, being covered by Nihon SSI. So we have a number of domains that we cover, and we've been widening our offering.

 So the total premium income for fiscal year 2016 was JPY 8,099,000,000. And you could see that it substantially went up by approximately 3x.

 Including our group, when you look at the 3 major SSI groups, the other groups companies would be Zenkankyo Group, that is engaged in (inaudible). And they were at JPY 12,943,000,000 with regards to premium income. And Tokio Marine was at JPY 8,658,000,000. We are -- target is to surpass Tokio Marine Group.

 Next is the highlights of insurance-related business. So once again, for this business, the new product, which is the group credit insurance as well as fire insurance on the non-life side, is something that we would like to grow by using our company's ecosystem. Moreover, we are trying to sell into financial institutions, and we would like to sell into life insurance companies and non-life insurance companies and also connect more with regional banks. We would like them to sell our products on our behalf.

 But fiduciary duty is a focus as well, because life insurance and non-life insurance products have a high margin. And if we're going to sell that at banks on an OTC basis, authorities are starting to say that this may not be customer centric, and it may be undermining fiduciary duties. So if we have something that's proper and if we are able to promote that over the counter and to do it under a robust protocol in a systematic manner, I think that would be appropriate, and that's the kind of system we would like to develop.

 Also, for insurance, we are thinking about how we can personalize insurance for those who don't have any illnesses and for people who tend to become ill frequently. Of course, we don't know about their life span. The same premium for 2 different types of people is strange. So that is why personalized insurance is something that I've been thinking about and have been talking about from day 1.

 And also, for non-life, for automobile insurance, how frequent do people use automobiles? What kind of routes do they drive through? What is their driving distance? Can't we decide auto premiums based on those kinds of conditions? So that also leads to personalized insurance. So that's what we would like to transition to.

 And also, for fire insurance, can't we offer customization and also offer unique discounts matched to lifestyles, such as non-smoker discounts and all-electric housing are available. We're working together with SBI Sumishin Net Bank. We are generating synergies.

 And for group credit life insurance, I talked about this earlier. Group credit disability income insurance is something we would like to do. Including new contracts for group credit life insurance, we are expecting premiums of approximately JPY 2 billion for this fiscal year. So we would like to grow it substantially.

 For life insurance, we would like to personalize our offerings even more. So there is a healthtech venture company specializing in prevention, health care and technology called FiNC. So we are partnering with this company so that we can acquire as much information as possible. And based off that information, we are trying to design certain services regarding insurance products.

 For the Asset Management Business, I talked about this earlier. Numbers-wise, revenue went down due to NARUMIYA. For profit before income tax expenses, it was up to JPY 5.5 billion, and SBI Savings Bank contributed substantially at JPY 3.9 billion. And also, for P&L, from the change in fair value and profit and loss on sales of investment securities, it was negative last year, but this time it was positive.

 So here are the highlights. So compared to last fiscal year, for this quarter, we expect 10 more IPO or M&A deals. On July 20 -- as of July 20, 3 companies IPO-ed or went through an M&A, and we exited from the investments.

 So the FinTech investee companies are something we are looking towards. It's a JPY 30 billion fund, and JPY 17 billion from the FinTech Fund has been invested already into 52 companies. So about 1/2 of the fund has been invested. Of course, some of the funds will be provided in the second or third round, so we probably won't be utilizing the entire amount of money we have at hand. We will save it for the future. But during this fiscal year, we believe this fund will -- the FinTech Fund will come into an end. I think we will be completing our investments. And we will go to market, and we are planning the IPOs as shown here. And also, from SBI Holdings, we are providing JPY 11 billion. So the fund and company combined, we have about JPY 28 billion invested. We believe we are #1 in the world on a global basis. We believe we are quite aggressive making investments into this field. And ranking-wise, I'll introduce it later, but we are #1 in this field, which is a U.S. ranking company.

 Even in overseas, we will continue to accelerate investments in growth areas. For example, FinLeap, this is German FinTech specialized fund. And we are establishing venture companies. And in terms of insurance comparison, a company we are looking at, Clark. So the way they think about the business, the way they build business, we -- since we bought a company called photonamic in Germany, we have been looking at German companies quite closely. And we think this is quite amazing. So for even all these different companies, I think Germans really stand out.

 Japan is not so unique, it's really not known for uniqueness in -- but it's actually a country that has brought in uniqueness from other countries and tried to build it on its own. But Germans are quite different in that sense. So Industrial Revolution has allowed Germans to become quite involved. And in terms of nuclear power, once they decided that they will no longer depend on nuclear power, they stopped completely. And they thought about what they can do instead, and they looked at the alternatives. And they focused on clean energy, and they reduced cost. And even though power costs have increased, electric companies have implemented various measures to overcome that challenge.

 Singapore. We work with Dutch FMO fund. It's actually a government-related fund. We collaborate with FMO to do this investment in Singapore. It's called Instarem. I'm almost biting my tongue, but they're offering international online money transfer service. So Singapore is quite advanced.

 We want to get Ripple involved in various ways. But Korea, the reason why we made advances is because Ripple's market transaction is #1, and actually, Korea is #1. And so that is why we're implementing different measures. But Singapore, because the government is quite proactive, we would like to make sure we have initiative in Singapore as well.

 In terms of biotechnology, it just so happens that our Israeli partner and SBI have created a fund together, and we will be investing in new funds, new companies. Israel has a lot of connections around the world. I think they really stand out, alongside with the Germans. For example, there's a lot of professors, many of them are Jewish, and there's a great percentage of Jewish professors winning and obtaining patents. That's how Israelis are really excellent. And starting from the ages of Nebuchadnezzar all the way until -- in the recent history, because they can't just carry the gold around, they have developed finance. And they have -- are beginning to develop -- they have developed excellent talents, and they are very strong in biotech.

 So in FY 2017, we will finish investments from the FinTech Fund and establish its successor fund called SBI AI & Blockchain Fund. Short name will be SBI A&B Fund. So we believe that going forward, AI and blockchain will be in finance sector -- will expand to not only the financial sector but into government and other commercial sectors.

 Of course, we will continue to invest in expanding financial fields because this will be our main focus. But like I said earlier, we have received a world-class top ranking for investments in blockchain field. You can see SBI Investment, we're #1. We are ranked by CB Insights. And it says in the category of blockchain, most active corporate investors, so this is May. And then following us is Google Ventures and Overstock.com and Goldman Sachs. You can see JPMorgan Chase is sixth. So we compare ourselves with these big players around the world, and we are almost overpassing them.

 So we have track record in field of AI as well. You can see we have made quite a significant amount of investments. Now if you look at the AI market size in Japan, by 2030, they say it will expand to approximately JPY 2 trillion. For example, in automated driving, in transport distribution, automation, advanced technologies in manufacturing or even in call centers, everything will become into chatbots.

 Medical and health care. In this field, AI will be used more and more. Even in diagnostics, you will input all the disease data of the past and make decisions. And AI will be able to do that. Meanwhile, you say my expertise is in ophthalmology or dermatology, I'm a neurologist. I don't know about other diseases or other therapeutic areas. Which of the 2 will be more accurate in terms of diagnosis? Our body is systematic. All the organs in our body are together, and it's complete. And if there's any disease anywhere, then you can begin to see symptoms. That's why in Chinese medicine, in Eastern medicine, you look at the color of your eyes, your skin, the color of your tongue, the situation of your tongue, and you, of course, look at your pulse, the strength and the weakness of the pulse and the frequency. And with that, you will be able to draw a conclusion. And of course, the patient will appeal on it as well. But all of this is in AI. So of course, AI is maybe 100x better in terms of diagnosis.

 Now the other day, Professor Kudo from Showa Medical University, he's an authority in colorectal cancer screening, he's a very well-known doctor around the world. And he was talking about depressed colorectal cancer. When you become infected by colorectal cancer, there's an infiltration, there's a dent. So even if you remove all the polyps, it doesn't really matter. You won't become cancerous. It's the ones that are infiltrated that is cancerous. So you attach a magnifier to the endoscope, Olympus, you can actually see that. So they -- he collaborated with Olympus in endoscopy. And you apply saline solution, and you will be able to identify that. So that's a sort of technology he and the company has, and they are #1 in the world. And if this professor can put the past 20,000 to 30,000 data in AI, then he will not need to do any biopsy. He will just look at the image and will be able to say, "This is cancer." He can diagnose that. So that's the way we want to make it.

 NEC and National Cancer Center have worked together to develop real-time diagnosis support system. So Dr. Kuroda is actually also working with Nagoya University, and I think another software manufacturer, to work on a similar system. Da Vinci is probably in terms of prostrate cancer (sic) [prostate cancer] is probably superior than probably human diagnosis. Robot is most essential.

 Now chatbot. In recent days, Facebook, Apple, Google, they all focus on chatbot. Line and SBI are collaborating to do chatbot initiatives as well, but they have some very interesting initiatives here. So in the world of chatbot, you will -- may no longer need Google for searches or Yahoo! will never be able to catch up. So maybe you will no longer need a concept called portal. Blockchain market is expected to expand by eightfold. It will continue to increase.

 If you look at this projection from Statista, you can see that it will -- blockchain will be utilized in all sorts of fields: Medical, judicial, real estate, retail, administration. FDA has just announced that they are doing research using IBM Watson. For example, in real estate, they say that Bitflyer and Sekisui House will do an information management of tenant contract using blockchain. In administration, government of Dubai will use public document management. Estonian government will do e-Residency. And Japan is also proactive on this.

 Now in terms of Biotechnology-related Business. If you look at it on the overall basis, of course, SBI Biotech, in the first quarter last year, because there's a license out, they performed well. And this year, it's negative because there's not that sort of licensing out. But I think on an overall basis, everything is going very nicely, steadily. SBI ALApromo, photonamic; photonamic is profitable.

 Basically, you can see the reductions in negatives. You can see, for example, 5-ALA-related business has been -- the margin decrease has minimized from minus JPY 474 million to minus JPY 152 million. So you can see that overall, our losses have reduced. Maybe in 1 or 2 years' time, I think we should be profitable. I think we just need to endure for another 1 or 2 years, then we should be able to make that big leap and jump.

 Now highlight. Major highlight this time is that FDA has approved a diagnostics, which was not approved in the United States before. But now it is, we will be able to penetrate the U.S. market. U.S., Europe, we have 100% subsidiary called photonamic in Europe, which is already selling in more than 25 countries.

 Japan, we are already distributing under the name called ALAGLIO. And we are expanding indications from brain tumor to gastric cancer, and we are now licensing out to Chugai. And we are in preparation for Phase III. This will be carried out by a group of universities in Kansai, including Handai. It's an IIT actually.

 And in terms of ALA-related products, we have health foods, cosmetics, feeds, fertilizers, which will all contain 5-ALA. And Neopharma and SBI ALA Hong Kong will be forming an SBI Neopharma FZ LLC. It's established in Dubai. It's a 49% to 51% investment ratio. So it's a joint venture in Dubai. Through this company, we will be marketing health foods, feeds and fertilizers around the world.

 And by the way, this company called Neopharma, they have production bases for generic drugs in Bangladesh, Egypt, Brazil, Japan and Russia. They work with big pharmas like -- much like Novartis, Pfizer, Eli Lilly, they have production in-house. They have sales distribution channels. So we will be utilizing their channels to market our health foods as well.

 Of course, even with regards to the health foods, we will need to acquire licenses. And of course, there's elements of that in cosmetics, feeds and fertilizers as well. This company called Neopharma will sell our health food in Middle East. They will be selling 25 milligram. Right now, it's 10 milligram, but they will be selling a larger size. In the Middle East, I would say maybe 30% to -- 15% of the population is diabetics or has potential diabetics, maybe more -- even more in a percentage if you include the potential. And as you saw in the commercial, we call this Tou Down, so we have this new functional claimed food as well -- product as well. So we will be selling this in market -- in Middle East as well.

 And in Abu Dhabi, there's the largest private hospital where there's more than 4 million patients that visit this hospital per year. And this group actually has this hospital under their auspices. So we would like to add prescription to it.

 One thing that's good about it is Middle East, they don't have insurance. Basically, it's all medical insurance because it's all free. So compared to the most modern diabetic drugs, which is cheaper, I guess more important is efficacy. But for example, maybe they can use it as a prevention. If you want to use it as a prevention, our product would be much more useful. If they continue to consume more of our products as health food, then they would be able to reduce the occurrence rate of diabetics -- diabetes.

 Now in terms of Japan, the number of domestic stores that offer health foods containing ALA are increasing steadily at the end of June 2017. So these are number of stores that offer our products, has hit 14,257 stores. I would say all the major leading drugstores now are selling our products.

 And in terms of ALAplus Tou Down, you can see that the sales have increased by plus 53.8%. Even in fact, ALAplus Meno. Stop, this is for women. There's menopause and different changes that women go through as they age, that we have manufactured this product that will help women, called Meno. Stop. And ALAplus Body Shape, it's quite self-explanatory. L-Carnitine, lipoic acid or salacia, these are substances that contain the absorption of glucose in your body, in your intestine. And it's -- product includes that.

 And I was -- there are approximately 1,000 foods with function claims, which -- received this claim by the Consumer Affairs, and there's ranking in terms of sales. And according to H&B Retail, which was just published in July, ALAplus Tou (Sugar) Down, its 30 capsules, was ranked eighth; and 10 capsules was ranked 23 in sales in May 2017. This is ranking in -- for 15 consecutive months, since March 2016. Many people are basically saying that it's good for your body if you drink it. I think this is indication of that.

 And in terms of the foods with function claims, you can see that we have been launching one after one from May of 2017, 2018, 2019, all coming from recovery from fatigue, improvement in sports training, male menopause improvement. And this is all based on scientific data, not just single, but it's from multiple scientific data. And everything contains ALA.

 In our case, we are not launching anything that's completely a different from our main business, unlike some of the others. This is one of the reasons why I jumped at this opportunity, because we are able to get involved in almost all possibilities of diseases. That's why this is the source of organisms in the world. And it's not just that we have food, cosmetics, feed, fertilizers. You can basically be used in almost everything. So that is why I jumped at this opportunity.

 Now in terms of medium- and long-term initiatives to realize sustained growth. So first of all, in terms of promoting the utilization of distributed ledger technology, which is the core technology of FinTech 2.0, so this is part of our expansion of a new business that adopts FinTech-related technology in various fields in the group's various business domains to establish a new FinTech ecosystem, FinTech 2.0.

 So first of all, what we will do is we will fully utilize the technology of Ripple, a capital and business partner of the SBI Group, in order to improve the efficiency of the domestic and cross-border remittance. We are now investing in Ripple at 11.05%. If you actually compare this -- XRP with Bitcoin, you can see that in terms of time to settlement, transaction per second, it's quite -- and average transaction cost, it's -- XRP is much superior. For example, time to settlement is 1/900 compared to Bitcoin. And you can see that transaction per second is 255x. Average transaction cost is absolutely cheaper. It's only 1 out of 1,600. So I believe that virtual currency, which could be a global platform, I believe, XRP is quite beneficial. Now even if you don't use XRP, there's Interledger Protocol, still reduce cost and improve efficiency.

 So we are now working with Ripple. And to -- and we have just established June -- excuse me, May 2016, SBI Ripple Asia. And in October, we have launched Japan Bank Consortium with Japanese financial institutions in 2016. We have done central domestic and foreign payments, reducing operation costs, reducing payment infrastructure costs, reducing smart payments costs, settlement on a real-time basis, 24 hours a day, reducing customers' commission fees. And we have now 61 financial institutions that are participating in this consortium. All 3 megas, they are part of this consumption now. We have JAPAN POST, Norinchukin, Shinkin Chukin, Shoko Chukin. These banks have also joined SMBC, Mitsubishi UFJ. They are part of this consortium, as Nomura Trust as well. So with 61 banks, this occupies 80% of the total assets of Japan. So once they begin to utilize this system, Zengin-net will no longer exist. And once we see this sort of move around the world, then I think SWIFT would cease to exist as well.

 We are not only using XRP or protocols of Ripple, but we are newly creating RC Cloud using Ripple's solutions. And we are allowing many people to be able to utilize RC Cloud to do money transactions or money transfers. And we are doing proof of concepts right now between -- although autumn to winter, we will begin the cross-border transactions. And hopefully, within FY 2017, March, we will be able to do domestic money transactions as well.

 If you use RP -- Ripple alone, you will be able to reduce the cost by minus 33%. But if you use XRP, you'll be able to reduce the cost by minus 60%. This is the case in United States. Japan, because it's much more expensive, you can achieve much greater cost reductions. SBI Remit, they are already working with Thailand, Siam Commercial Bank to -- utilizing solution from Ripple to do the first remittance service in Asia. And the Bank of England conducted a joint proof of concept, utilizing Ripple's Interledger Protocol and that they gave a very high evaluation. And this is going to be one of the other global standards.

 And this is another -- the big news, where FRB has announced the results of the past 2-year activity of Faster Payments Task Force. And they said that Ripple's ability is going to underpin the next generation of cross-border payments. So this -- the international payment involves considerable amount of money and which would be the other potential of the market.

 In my mind, creating a new financial market of virtual currencies occupies the big space. XRP and Ledger and ILP for XRP Ledger, anyone can participate in the network. So it's so-called public, including Bitcoin, Ethereum, while ILP is a permission protocol. So the members of consortium or private members are there, and Ripple has both.

 And currently, Ripple is beginning to provide hybrid type technology. In Japan, it's ILP without using blockchain. But when it comes to overseas, XRP is also available. And of course, in Japan, it will be available.

 I think, I guess, that Ripple will go for hybrid for the time being, and the other financial institutions in Country A or those in Country B, mainly large financial institutions, will serve as hub, reaching the smaller-sized institutions.

 So between hubs and financial institutions, ILP will also connect them as well. And of course, XRP could be part of the picture as well.

 The key currency is the U.S. dollar. So the U.S. can print the currencies as much as they want to, to buy things.

 So the U.S. is in a very good position because the dollar is the key currency. But if you print too much bills -- too many bills, we will lose trust in the dollar. So the printing of the tender bills, that should be in accordance with the international trading volume. And that should be the ideal picture. What about Ripple? They already have 100 billion. What about Bitcoin? Who owns it? That is for those who are doing mining. They own, if you like, Bitcoin. But Ripple already issued 100 billion, and 55% is in escrow and managed by Ripple, and 6% or so is in the market and controlling it very nicely.

 Ripple's XRP price, it reached $0.394. Compared to the beginning of the year, it's an increase of 6,012% increase as at the end of June. Compared to -- on a quarter-on-quarter basis, it is increase of 1,159%. Year-to-date growth is 3,977%. There's no other financial product which showed such growth. So you can't help being excited. XRP use case, the most compelling market evolution in the second market (sic) [quarter] was the growth in volume, and especially that of fiat volumes.

 What does it mean?

 So exchanging XRP dollar with other currencies will increase. Why? Because now they can be used reflecting the reality in the market. Now you can buy Bitcoin, but they have a very small amount.

 Going forward, on a global basis, it is international payment which is the biggest chunk. 55 billion XRP is in the escrow account of Ripple.

 And 6.7 billion is held by Ripple. And this is the market, 38.3 billion. And Ripple owns about 61%, as of July 25, $0.178. Based on that, it amounts to JPY 1.2 trillion in value.

 We have about 11% or so. That would amount to JPY 136 billion unrealized gains -- or value, rather. And CNBC, the U.S. broadcasting, said Ripple owns about 61%. If that were factored into the company's valuation, Ripple would be worth more than all but 4 U.S. startups: Uber, Airbnb, Palantir and WeWork.

 They are already at the starting line, but already they are this big. XRP volumes expanded due to easier access to XRP. And we also are on the starting line with SBI Virtual Currencies starting up. Of course, the way we did with XRP as well, we are one of the biggest shareholders, and we are urging Ripple to treat us in somewhat favorable manner based on our contribution to Ripple. There was the split fuss of Bitcoin, Segregated Witness or SegWit. The implementing SegWit in July 23 through soft fork, but it would not work. Whether it's soft fork, hard fork, but there are 4 plans presented right now. So this is the size, and soft fork, that is the change in the block size. There is a possibility that Bitcoin mining hardware works less efficiently or it is not backwards compatible with previous versions, so that is SegWit.

 Two, here, increase the block size and its transaction capacity per block. And the Bitcoin mining hardware first works efficiently. That is hard fork. And a soft fork is there is a possibility that Bitcoin mining hardware works less efficiently. And that is Plan A, and Plan B. And Plan C, makes each block, each page larger, to more transactions fit in each block, but it is not backwards compatible with previous versions of Bitcoin. So it will be completely different. And the new one is altocoin. It is also called Bitcoin Cash. It is currently 1-megabyte, but it would be raised to 8-megabyte, hard fork. If it happens, it will be on August 1, we will see what will happen eventually.

 When it comes to the virtual currency, we are going to commence its business upon registration, and we are waiting for the registration. It is not only about virtual currency but also regional tokens, group coins in production for our future and not only in Japan but on a global basis. We are going to establish SBI MAX, basically in Asia, we work with global customers for transactions. And we would like to establish the world's #1 market. Now next one is the strengthening alliance with R3. Now this consortium, led by R3, currently has the participation of more than 80 of the world's major financial institutions to be the global standard. And now we are the largest outside shareholder, sending the executives as well. And the SBI people are participating in some of the activities with them. Now next one is API economy. We are also making progress here in May. The Financial FSA said that it is an obligation for the banks and the credit banks to make effort to open API. And we have been doing it actually, since December 2016. And as to WealthNavi, we have JPY 13.8 billion of the customer asset, and we have the Morningstar activity, the 17 companies have robo-advisor tools of Morningstar. And Morningstar also started to provide the news. And the Liquidity Market is also using chatrobo with -- in collaboration with Microsoft Japan. I'm sorry, it is chatbot, that was deep learning.

 And in Korea, SBI Savings Bank is going well. We think it's going to be even better in the future, if this goes well. We invest into DAYLI Financial Group. We have a partnership with them, and we're trying to prevent bad debt as much as possible.

 We have developed a new screening model based on FinTech technology. And based off this, credit provision has increased by KRW 2 billion, and 0 delinquencies. So this is something we would like to continue to implement into our banking business. And for regional financial institutions, we would like to change them greatly. So making the size larger by integrating Bank A and Bank B may not be possible going forward due to the October announced implementation of business integration by Fukuoka Financial Group and The Eighteenth Bank has been rejected by the authorities.

 For regional financial institutions, in order to breathe its corporate value over the short term, their profitability is being sacrificed due to negative interest rate policies. Over the medium term, it will be hard to implement FinTech on a stand-alone basis. Over the long term, their economic zone is shrinking more and more due to a declining population and aging society. So what should they do? So we, our group, can provide solutions. First of all, for regional financial institutions, we can raise their asset management capabilities, or else, the local residents will not become richer.

 So for the asset management capabilities, it needs to be increased. And fiduciary duty, this -- that is customer-centric, needs to be provided to the local residents. And if they do that, income of the local people can increase, and product production can increase, and products can be consumed, and CapEx will increase and regional industries can be revitalized. And industries, we can offer online capabilities, and e-commerce platforms can be built with initial cost of 0. By doing that, regional economies can be stimulated, and that can create new capital demand and raise the profitability of institutions. And we would like to support that in a full-fledged manner. So first thing is to create SBI Regional Bank Value Creation Fund, which is JPY 100 billion in size, and to contribute to the elimination of cross-shareholdings and improvement in corporate governance.

 So cross-shareholdings between regional banks is meaningless because the share prices are going down. What does this mean? They should unwind this as soon as possible so that their equity can be used in an efficient and effective way.

 They should incorporate FinTech even more. So that's what we're talking about here.

 So raising capital by cash or in kind for a new fund from financial institutions, including major city banks, is what we are planning, to increase corporate value through the provision of FinTech support by the SBI Group.

 So regional banks will be extended with our support.

 So when you look at the situation around regional financial institutions right now, they're not doing great. Among 105 total regional banks, currently only 65 pure-play online branches are provided, but with limited financial products offered. For Bank A, it's only 108 types of investment trusts. With this, at their counter, they will not able to sell investment trusts that are customer-centric.

 In the year 2000, we opened Suruga Bank SoftBank branch, and over a short period of time, in 1 year and 3 months, we achieved profitability on a monthly basis. And in 2 years, we achieved full year profitability.

 And we continue to stay profitable.

 And then, total number of deposits reached JPY 20.5 billion, and we became the #1 branch amongst Suruga Bank branches. So this is what we would like to provide to other regional banks.

 Out of the 105 regional banks, 22 have a securities subsidiary. So they could work together with SBI SECURITIES in engaging in intermediary businesses. That's what we're offering, so that our products can be incorporated. Or MONEY PLAZA branch, maybe the banks like what we have with SoftBank branch, we could create something similar. Or SBI MONEY PLAZA, which is a face-to-face channel, their banks can use it as a branch and create a joint venture branch and try to collect hometown deposits and hometown loans for people who went out of the town, can come back and open up an account or borrow a loan from the bank. So this is what we are planning and our intent. We would like to have a full lineup of products.

 And we have an alliance with Shimizu Bank and Ehime Bank. Same thing for insurance products. Our insurance companies, they can become an agent for our insurance products in order to address diversified customer needs.

 Just selling products with high spreads will undermine our fiduciary duty, and also good products needs to be recommended to customers. The way to do this, consulting service IT systems can be provided by SBI to the local financial institutions. By doing so, customer-centric sales can happen at the counter for insurance products as well. For Asset Management, too, for those who don't have the capability, we will be able to fully support them. For example, we have SBI Bond Investment Management that we established in April 2016, and we are now at JPY 100 billion after 1 year, which is asset manager -- management, and PIMCO even was surprised that we have been able to generate these results.

 And SBI Regional Bank Value Creation Fund is a new fund that we would like to create. And through this, with regional banks that we have a capital tie-up with, we'd like to offer support and incorporate FinTech technology by our investee companies. Share price is going up, it will be a benefit for us. And for the regional banks, it will be a positive for them, with better profitability.

 For IT implementation, it's going to take money. Then they could send -- sell off their cross-shareholding, so that they could invest into new technology. And we can keep the initial cost as low as possible by creating a package product, and we could recommend that package product to them. So FinTech Incubation is a company that we create together with IBM Japan. They could take advantage of this entity. Our investee startup company technology can all be included, and all the technology is used by us and the safety has been confirmed by us already, and together with IBM, we'll be offering it.

 30% of first-tier banks are using IBM as the primary vendor. So this is an area we're trying to collaborate with IBM with. And while we're making the investment in venture companies, we will be pitching to regional banks if they're interested in making direct investments as well. But in return, we would like them to adopt FinTech technology as well, because then, the technology can be monetized, and that will be positive for the venture companies.

 And currently, there's a 5% investment rule, and it has become flexible now with the revision. So regional banks will now be able to invest into FinTech companies. So we would like to recommend that they do more and more, and also overseas, we have a wealth of expertise.

 So for example, Tianan Property is a company that we're able to generate a gain on in the past. It's a P&C company from China, which is in the top 10. And we invested approximately JPY 4.6 billion in June, 2011. And we have 5.74% of investment holdings, and we were able to generate JPY 2.3 billion by selling approximately 20% of the shares held. So that's how profitable it was.

 E*TRADE Korea, we did a capital increase, but we have invested altogether JPY 4.3 billion. Investment return was 4.58x, and it was a public company. Kyobo Life Insurance, only in 7 months, our return was 1.18x. Cambodia, Phnom Penh Commercial Bank, which is established in Cambodia, the return was 2.5x.

 All the companies that we built by getting deeply involved in the management have grown. So in some cases, we have encouraged the regional banks to work together and invest together. We are able to discern. So for example, it's a Russian company called YAR Bank. We are now planning to make this company 100% subsidiary, and all the procedures will be completed in August, what we have decided to do so.

 And it's because we have all that technology that I have explained. And we can bring it to Russia, and the relationship between Japan and Russia, even though we do not see much advancement in the territorial issues, I think it should be -- could contribute to slight improvements. So since Trump, I thought maybe the relationship between Russia will change, but it seems as though it's become more complicated than before. And security companies, they are really everywhere. Korea, SBI Savings Bank. In FY 2016, December, JPY 74 billion (sic) [KRW 74 billion]. So if you actually calculate by 10 yen, but that's the amount of profit they're able to generate. Vietnam, TPBank, we have 19.9%. You can see that steady growth of profit. Russia, as I have mentioned already. And among that JPY 14.8 billion (sic) [JPY 1.48 billion] in capital stock, I think we can just convert that right away.

 Cambodia, SBI Royal Securities. They're working very hard, and we have been able to break even almost immediately. And there are 5 companies that have IPO, but among 2 were actually served by SBI Royal Securities as lead manager. BNI SEKURITAS is an Indonesian company. We invested 25%. It's slightly unstable, even though it's not negative. Bank Negara is their parent company, but it seems they're quite a bit affected by their decision. Vietnam, FPT Securities, we have 20%. We know this is steadily growing. SBI Thai Online Securities, we are planning to do this only by ourselves. So we will be increasing our investment stake to 100%. This market, we have our know-how, so -- and we need to work by ourselves, because if we work with and partner with them, it will take too much time, and it'd get too complex. So we want to be just on our own. Sri Lanka, we like this company, First Guardian Entities Securities (sic) [First Guardian Equities Securities]. We invested 40%. And there's another security company which we want to invest in. It's a primary dealer, actually. And then, e-commerce, Sendo, it's a Vietnam company. Tokopedia, this is Indonesia. We believe that these 2 companies will grow quite a bit. And if you match this with finance, especially micro finance, they can actually create on their own or maybe invest in micro finance or other finance companies. And I'm going to go through this very quickly. SBI FinTech Solutions, we are now consolidating all our FinTech companies, and change the company, move the company to a KOSDAQ-listed -- it's called SBI -- it was called SBI AXES, we change the name, company name. It was a list company that's listed in KOSDAQ, but we are not planning to change the value.

 This is called FinTech Solutions. It's a #1 virtual currency, FinTech, blockchain company in Korea, Coinplug. And they have created SBI Cosmoney together with them so that we can work on virtual currency and international money transfer and enter into their market.

 Now SBI FinTech Solutions, you can see that the share prices have gone up significantly. And it went down slightly, but we will see how the results, the share prices will perform after the August 3 announcement. This is the insurance holding company. We will be doing an IPO. Mizuho Securities is the lead manager. And we have about 100% here. So maybe 20% or so will be divested and given -- transferred to a strategic partner, in which we are in discussions right now. Asset Management Business, company is a hard company to understand. So what we did is, let's just split off Asset Management Business, and that is why we will be making SBI Capital Management do an IPO. There's SBI Investment, which actually invests in private equities. And there's GP of overseas funds, which operate and manage overseas venture capital funds. And we have overseas financial institutions, so there's quite various subsidiaries. We will put them together and do an IPO. And that doesn't have to be in Japan. We will look at the best market to do an IPO.

 Biotech. Tomorrow morning, 9:00, there will be an official announcement on a very important news. Just to briefly explain what it is. QPI-1002 in the field of AKI, the Phase II clinical trials have been completed. The result has been very positive. So Novartis, our licensed-out partner, we are in process of commercial negotiations. So along with Novartis, we will have develop -- we are developing DGF, this is for kidney transplantation. If this goes well, then we will receive the milestone payment of USD 670 million. It's already in Phase III, so it's a matter of time. And AKI is Phase II, we have been very successful. So tomorrow morning, 8 a.m., in New York, it will be slightly earlier than that. It will be the same time in Japan and New York, say, 9:00, but it will be 10:00 in Japan if we did exactly at the same time.

 Quark IPO, AKI, this is acute kidney injury. So Phase II of AKI has been completed successfully, and it will now enter into Phase III stage.

 So now we have 3 products at Phase III stage, which means that we can actually go public on NASDAQ market at a very good valuation, and we are also looking at this. SBI Hong Kong, we are planning to change the name, SBI ALA Hong Kong. We're thinking about doing an IPO for that as well. We're in the process of filing.

 So SBI's new vision. In the management strategy explanation meeting, I have given you the summary of our 5 years. In that, I said that in the past, the vision which we have developed in May 2013, we have achieved everything. So we have now built new vision. So what is our new vision? So within the next 2 to 5 years, Financial Services, Asset Management and Biotechnology-related businesses will all become 6:3:1 ratio in 3 years and 6:2:2 ratio in 5 years. This is on a PBT basis. And we will achieve consolidated profit before tax over JPY 100 billion, next 2 years, achieve capital efficiency and stably realize ROE over 10% and annual dividend will be at the level of JPY 100 per share. And we will endeavor to double the market cap. That is presently around JPY 330 billion, so maybe -- it's a little higher now. So maybe it's about JPY 350 billion, but this will become double by actualizing its intrinsic corporate value. So our financial is 700, 800. So because they only have life insurance, so Sony financial -- corporate value was that size, so there's no way that we will not be able to catch up with that.

 So basically, that is all I have for today. Thank you very much for your kind attention. And if you have questions, I would like to open the floor for your questions.




------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the 
Transcript has been published in near real-time by an experienced 
professional transcriber.  While the Preliminary Transcript is highly 
accurate, it has not been edited to ensure the entire transcription 
represents a verbatim report of the call.

EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional 
editors have listened to the event a second time to confirm that the 
content of the call has been transcribed accurately and in full.

------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other 
information on this web site without obligation to notify any person of 
such changes.

In the conference calls upon which Event Transcripts are based, companies 
may make projections or other forward-looking statements regarding a variety 
of items. Such forward-looking statements are based upon current 
expectations and involve risks and uncertainties. Actual results may differ 
materially from those stated in any forward-looking statement based on a 
number of important factors and risks, which are more specifically 
identified in the companies' most recent SEC filings. Although the companies 
may indicate and believe that the assumptions underlying the forward-looking 
statements are reasonable, any of the assumptions could prove inaccurate or 
incorrect and, therefore, there can be no assurance that the results 
contemplated in the forward-looking statements will be realized.

THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2018 Thomson Reuters. All Rights Reserved.
------------------------------