SBI Holdings, Inc. (SBHGF) Q2 2026 Earnings Call Prepared Remarks Transcript

2025-10-31 19:26:23 ET

SBI Holdings, Inc. (SBHGF) Q2 2026 Earnings Call October 30, 2025 9:30 PM EDT

Company Participants

Yoshitaka Kitao - Chairman of the Board, President & CEO

Presentation

Yoshitaka Kitao
Chairman of the Board, President & CEO ...

Please allow me to speak while seated. From around the 6:00, 70-millimeter rain is expected. But thank you very much for this big turnout. And also, there are many participants on the online as well. Without further ado, we have 143 pages. So we are going to skip some pages, the pages of numbers. You can refer to them in detail later.

So the consolidated performance overview. The revenue and each profit line, all of them hit record highs, especially the pretax income, it was up 168.9% and also profit attributable to owners of the company, up to 170.7%. So we showed very strong growth. At the same time, in terms of ROE, annualized ROE stands at 22.5%, quite high ROE. And now this is the comparison with major securities groups. Nomura already announced earnings and Daiwa is going to make an announcement on November 4. So this is the first half on the left-hand side, SMBC Nikko and Mitsubishi UFJ Securities Holdings, the numbers are shown here.

By segment, as to crypto -- except crypto-asset business, numbers all hit record highs. The reasons that will be detailed later on. SBI Crypto, mining company, was taken over, if you like. In other words, there was an unauthorized outflow of JPY 2.5 billion. So -- but it did not provide any inconveniences to the other customers that we were going to liquidate the business anyway. And the profit was not so big and the staff number was very low. But this unauthorized outflow of assets happened. They were operating in old systems. So the monitoring and supervision was not good enough. The previous management was gone, we were going to liquidate the business. As to the share interim dividend, if the performance is good, then the dividend will be increased or vice versa. So for the end of second quarter, JPY 40.

Business overview of each business segment, Financial Services Business, both revenue and the pretax profit grew by around 13%. The numbers are record highs. The banking business, its weight is dominant in our case with JPY 73,596 billion, so up 17.1%. Securities business, JPY 34,092 billion, even with 0 fees. Here, it says negative number, but without. With the -- we booked JPY 5 billion in losses related to compensation of fraudulent transactions. So that impacted. As the insurance business, we don't need to worry about this business anymore because year-on-year, we can expect the steady growth.

Banking business. It's not only about SBI Shinsei, we have SBI ARUHI, SBI SAVINGS in South Korea, and Solaris in Germany, Credit Bank included and also other overseas banks. As you can see later on, we have invested a lot in banking business. The market, for example, U.S. market is doing very well, but that doesn't guarantee the steady growth next year. It's a question mark, I think. So the banking business, maybe we should focus on banking business. It might be better. In Japan, Ueda-san is kind of struggling, but in the process of normalization, or the process of normalization is absolutely necessary. Interest rate is going to go up. In the U.S., rates will come down at a very slow pace, I should say. But now it is coming down finally.

So globally, the macro economies are watched very closely to amend the business portfolio quickly. That's very important. So for the banking business, -- so we have the net profit attributable to owners of the company, JPY 69.3 billion due to increase in operating assets, mortgage and loan-related fees and gains on sales of securities. So it's up 56% on an IFRS basis, up 33% at JPY 64.4 billion. Retail accounts exceeding the JPY 4 million as of the end of September and the deposit amount, JPY 16.3 trillion, also showing a steady growth.

The operating assets at a similar amount, JPY 16.1 trillion, and the breakdown is shown here. So in December 2021, they joined the SBI Group, Shinsei Bank joined the SBI Group. And nobody imagined that it will be JPY 16 trillion level, but their assets doubled. Now the securities business is not only about SBI SECURITIES, but also 0 securities fees with that concept. We have been diversifying the contents of our business. So we have various constituent companies listed here. For the SBI SECURITIES for each item, numbers are record highs. So number one, number two at the bottom, the record non-operating income of about JPY 2.7 billion related to real estate silent partnership in the first quarter and recorded about a loss of JPY 5 billion as compensation related to unauthorized access and about JPY 3 billion for provision of reserve for financial instrument transaction liabilities.

The ZERO Revolution, we are expanding very steadily our revenue. Even after Zero Revolution, especially financial revenues are now accounting for big weight. The number of securities accounts 14,752,000 as of the end of September, compound annual growth rate, 13.3%. So very steady growth from the March 2009 to March 2025 and towards September, further growth. Nomura with the 5,998,000 accounts. And Yahoo! or PayPay included shown here and 200,000 to 300,000 additional accounts, if I remember correctly.

Here, this is the trend in share of individual stock trading value. SBI is showing a dominant level with 57.9%. And also for the trend in individual margin trading value, 60.8% for SBI and the insurance, both life and non-life and a small amount in short-term period and LY HOUR Cambodian companies are included in this area. Basically, we don't need to be worried about the insurance business. We have bigger customer bases. This is the insurance business. With the insurance business, we struggled. That's why we started with the securities and then banking. And then finally, insurance business.

So the other sales, the increase is translated into cost because of policy reserves. That's why insurance business is hard at the beginning. But when you reach a certain extent, unless there's a big natural disaster, it will grow very steadily. There are very detailed rules about earthquakes and so on. And if there are more insurable events, there could be the negative results. But basically, we believe that the trend will be positive going forward. The number of in-force contracts from March 2016 to September 2025 CAGR, 15.6%.

Asset Management business, up 9.2% and up 7.8%, both for revenue and pretax income. And global asset management consolidated basis, as you can see, numbers are record highs and quite good growth. So for the first half period, 14th consecutive period revenue increase. And for ordinary profit is for 16th consecutive period. And the profit attributable to owners of the company increased to 16th consecutive period. Asakura-san did a very good work and also the 7th consecutive period increase for interim dividends. It's very hard to do this continuously.

The other asset AUM, the JPY 20 trillion toward 2027, that's our target that we declared. And for that, in the group, we have reorganized our group. And this is SBI Group's AUM, is over JPY 12 trillion. And within 2027 fiscal year, we target at JPY 20 trillion. The PE investment business, private equity investment business, the public, the investment, and we should be always on alert for public investment as well. So we have public and private.

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