Investor Update

May 20, 2021

Slides

Thank you so much for joining us for the management strategy presentation meeting for Daiwa Securities Group Inc. My name is Nakata, President and CEO. Today, I am mainly going to explain about our medium term management plan, Passion for the Best 2023, which started in April this year. Please turn to Page 4. Let me begin with a recap of what we have achieved in the previous medium term management plan. In the previous midterm plan period, it turned out that the market has rallied quite strongly, but I summarized that these 3 years were the 3 years when we had very significant volatility of the business environment. In particular, in the last fiscal year, due to the pandemic of COVID-nineteen, we have seen the crossroad big crossroad for our business model. In the last medium term management time period, we have 3 KPIs: customer oriented KPI, performance KPI and financial KPI. The most critical KPI, which was customer oriented KPI, for that, we have introduced a diverse version of NPS to improve the customer satisfaction quite significantly. We have taken time and thoroughly worked on the mindset reform of the salespeople and trying to create the public culture. NPS score for 2020 has been on the increasing trend very steadily, even excluding the tailwind from the strong market. We have thoroughly worked on the client first mindset. As a result, I think we have been able to generate very good profits so far. Assets under custody reached 75,300,000,000,000 yen, which we could not reach our target of 80,000,000,000,000 yen, but asset inflow was 9,100,000,000,000 yen, which was higher than our assumption. Financial KPI, which is consolidated total capital ratio, has been kept at very strong levels. With regards to the performance KPI, we could not achieve our target, but we have been able to promote our business, which is fit for the business environment that has changed significantly due to COVID-nineteen. We have achieved very good results from cost reduction, and we have hit the bottom in the Q1 of the last fiscal year. After hitting the bottom in Q1 last year, we have been able to recover. On the full year basis, we were able to achieve increases both in terms of the net sales and profit year on year. We have been able to lay out stepping stones, many stepping stones for the future growth. I'm going to go to the details later on, but we have been able to establish the sales structure and the system to establish the wealth management business model, and we have identified focus areas under hybrid strategy, and we have made a good progress on cost reactions. Please go to Page 5. Based upon the group's business environment, we have identified issues and opportunities. We have been working on income structure reforms and responding to customer needs and responding to the regulatory and competitive environment changes. In addition, we have seen the new changes both about by the pandemic, and SDGs and ESTs have been added as actions. And these actions will be summarized into 5 focus areas, which are 100 years of life, innovation, green and social, diversity and inclusion and foundation of sustainable management. Please turn to Page 6. We categorized those 3 focus areas that I have mentioned earlier as the focus areas for our vision for 2,030. And the initial three years are going to be very important under our new medium term management plan, Passion for the Best 2023, to realize our vision. Please turn to Page 7. This shows the slogan and the basic policy for the new medium term management plan. Quality number 1 and hybrid strategy is basic strategies will continue, and we are going to reinforce those strategies furthermore. In addition, the importance of the promotion of DX is increasing. Therefore, we have added the 3rd pillar, which is the best mix of digital and real. These three policies will be the basic policies, and we'd like to be near our customers under the slogan of the best partner for co creating the future, be with you. That's going to be the slogan for the new midterm plan. And we are going to work on sustainability initiatives such as SDGs and ESG, and we are going to further reinforce the corporate strategy as a supporting base for those strategies. Please go to Page 8. This shows the financial targets. We have finance and a non financial KPIs with attention to the enhancement of the corporate value in a sustainable manner. In terms of the financial KPI, in terms of the performance KPI, we have ROE of 10% or more and ordinary income of JPY 200,000,000,000 or more. Of course, these KPIs are impacted heavily by the market environment. But through the transformation of the business model and through the expansion of our business model through our hybrid strategy, we'd like to solidify and establish the income base that is not easily affected by the market. With regards to the Wealth Management business model and hybrid strategy, we have added new KPIs. Asset based revenue ratio 50% or more in the Retail division and hybrid related ordinary income of JPY 50,000,000,000 or more and hybrid related income ratio, 25% or more. In terms of the non financial KPIs, we are going to work on the digital IT development, human resource development and female engagement. And we have added those human resource related KPIs, which are indispensable to establish the sustainable management base. Please turn to Page 9. This page shows the ordinary income target for 2023, which is 200,000,000,000 yen broken down by segment. In the Retail division, we aim at achieving more than 40,000,000,000 yen. On a quarterly basis, this assumption is roughly 10,000,000,000 yen each in each quarter. But by expanding the asset based revenue, we think our revenue quality will be more stable. The Q4 of 2020 was already 11,300,000,000 yen that we achieved. So considering that, this target is very conservative. I think there is a significant room for us to achieve more. In the Wholesale division, specifically with the global markets, we are going to reinforce foreign equities business and the business for the metal corporations. With regards to the Global Investment Banking, we are going to further strengthen IPO business and M and A business to expand our profit opportunities. In addition, suppose the expansion of the group revenue is a hybrid business. Please look at the left hand side. This shows the breakdown of the revenue growth. If you look at the green portion, this shows the impact from the profit growth coming from Real Estate Asset Management and Daiwa Energy and Infrastructure as well as Daiwa Next Bank. With regards to the real estate management, we are going to expand AUM. With regards to the Daiwa Energy and Infrastructure, we are going to obtain the capital gain through the external capital inflow through funds and expansion of AUM. Thus that, we are going to steadily increase the revenue. As you can see on this page, we are not going to rely on certain divisions, but rather, across the board, we are going to increase our revenue overall and achieve high level of ROE. Please turn to Page 10. The revenue coming from the hybrids business has been increasing steadily. In 2020, we have achieved 25,000,000,000 yen, which shows an increase of 10,000,000,000 yen from 15,000,000,000 yen that we achieved in 2018. For 2023, we are planning to achieve more than 50,000,000,000 yen coming from hybrid business. Hybrid income ratio of the total consolidated ordinary income was 21% in 2020, but we are assuming that to increase to 25%, roughly speaking, in 2023. Please turn to Page 11. Through the income structure reform that we have been working on since May 2019, by 2020, we have realized cost reductions roughly of about 18,000,000,000 yen. In the future, by the end of 2023, we are aiming at additional cost reduction of about 12,000,000,000 yen On the other hand, we are actively investing in IT technologies, aiming at enhancing the convenience of customers and improvement of our business processes. So IT related expense is on the increasing trend. In the last medium term management plan, we have established the office infrastructure of the next generation aiming at location free. But in the new medium term management plan, we are going to further promote digitalization, centralizing around the front office systems. Those investments will definitely contribute positively to the top line growth as well as future cost reductions. So we plan to continue those investments actively. With regards to the DX promotion, we have made very good progress on the paperless operation for the contracts and the vouchers and documents, and we don't need to do those administrative works in the branches anymore. So we are consolidating the middle and the back office functions of the branches. Up until now, of the total 1600 personnel in the middle and the back office of the branches, we have shifted about 800 people to the front office or group companies. With regards to the human resource shift aiming at the front business reinforcement based upon the income structure reform, we are planning to shift total 1100 people from the middle and back office of the branches, but we have already completed 80% of that target by April this year. More than half of the people to be shifted will be shifted to the fund business. So this will contribute positively to the income expansion. And if I look at the total group, then we can control and reduce the number of hiring of temp staffs and people from outside. This will lead to the cost reduction. Please turn to Page 13. This page shows the progress that each business line has made and future actions, starting with the Retail division. Before explaining our strategy, let me explain the revenue trend of the Retail business in the United States and the structure change in the Retail business in the United States. If you look at the left on the slide, you show the trend of the composition of revenues of the Retail division of the Morgan Stanley in the United States and the Charles Schwab Wealth Management division over the past 10 years. If you look at the revenue trend of Moruga Stande, it increased by 2x over 10 years, reaching $17,700,000,000 Their net income has increased by 10x, reaching $3,700,000,000 Our company has been continuing to reinforce Wealth Management Business. As a result, asset based revenue represents about 80% recently. If you look at the right hand side on the slide, this shows a trend of the revenue of Charles Schwab where you have the strong image of them being an online security company, in fact, the driver for the growth of the revenue has been the face to face offline asset management business. The revenue of the Charles Schwab has increased by 2.5x over the past 10 years, reaching $10,600,000,000 Net income increased by 5x, reaching $3,700,000,000 But if you look at the brokerage fee, it has declined from 24% 10 years ago to 6% in 2019. On the other hand, their net interest income has been increasing because of the expansion of the revenue coming from the off line Wealth Management and the Bank Business. According to the founder, Mr. Charles Schwab, as a reason why he focused on expanding the off line service, he mentioned that probably investors who can make their own judgment and are well versed in the investment represent only 5% of the market, remaining 95% of the investors need various helps at various levels. That's the place where financial consultants can play a role. Also, he mentioned as a reason why he focused on expanding the wealth management business, he mentioned our customers have increased their assets with Charles Schwab. But after building their assets, there are no services that we were able to offer to them. So those customers who have finished building the assets leave Charles Schwab. So he wanted to stop that trend. That's why he started to expand the Wealth Management business. In Japan, this trend from the savings to asset building will be the mainstream trend. So regardless online and off line, there is a significant room for us to increase the securities business. Furthermore, in Japan, majority of the financial assets is held by elderly wealthy people, so they have longevity risk. So they are heightening the needs towards securing funds after the retirement. We feel strong needs available in Japan towards solution business such as asset building business, inheritance, business succession, real estate transaction. So there's a significant potential. We have the strength in this area where we have the strong face to face consulting capabilities. Please go to Page 14. In the last medium term management plan, 3 years ago, we have launched a diverse version of NPS in all branches. Through those initiatives, we have established the business model to pursue customers' best interest and mindset of salespeople. In this period, we have been able to establish good system where we can monitor the quality of customers' services and our mindset of customers first. In the new midterm plan period, we are going to accelerate the business model evolvement to pursue the best interest and the best profit for customers so that company can achieve growth sustainably in the future. The specific initiatives to achieve that are explained in more details on the next page onward. But roughly speaking, there are 4 big things: 1st, expand the customer base through utilization of DX and our sales office strategy number 2, expand asset based revenues and stock based assets such as Investment Trust, Fund Wrap and foreign currency denominated deposit. Number 3, expand customer assets and transactions from total investment approach through the comprehensive asset management consultant and by providing high level of solutions. Number 4, expand customer contracts through external connections. Please go to Page 15. Transforming to the Wealth Management business model cannot be achieved for a short period of time. The moral transformation takes development and the designing of the goal based approach tools, And we have to develop products and services and the related systems towards the asset based revenue, and we have to develop people. And those initiatives consume time, but they are indispensable. Furthermore, we pursue the best interest of the customers. So we have to have this strong spirit of salespeople. Otherwise, we cannot realize a true wealth management business model. I was appointed as President in April 2017. Back then, the company was working on the business transformation to customer first by introducing NPS and changed from the bottom up sales approach by abolishing the sales target by product. Back in 2019, we have abolished revenue target, and we have decided to measure our progress based upon the proposals and products in accordance with the needs of our customers. I feel good about the results that we have achieved so far by executing these long term strategies. Please turn to Page 16. To provide the optimum solutions for customers, utilization of the wealth management planning tool will be very powerful. There is this analysis tool called Wealth Bench made by MSCI, which is heavily used by strong private banks and overseas institutional investors. And we have customized this tool for Japan, and we are the only company and the first company introducing this tool for the first time for the retail investors in Japan. And using this tool, investors can see the investment return efficiently or efficiency of the investment of the total financial assets, including assets that they have with other companies. So this is very convincing, and this service has been highly evaluated by our customers. By promoting this asset planning tool, the portfolio type of investment will be penetrated among customers. So I think this will accelerate the shift towards Wealth Management Business Model. After launching the store in August last year, in total, by the end of March 2021, we have analyzed about 10,000,000,000,000 yen assets and as much as JPY 180,000,000,000 asset inflow happened, of which 60% came from corporate clients. In 2020, the number of customers captured through corporate clients' referrals increased by as much as 40% from 2019. Please turn to Page 17. With regards to the initiative in the Solutions business, about half of the assets of high net worth individuals is in real estate and family stocks. So we are going to reinforce the total asset approach, providing solutions in those areas. We have asset consultants. We have inheritance consultants. So we are going to utilize those in house consultants, providing high level of solutions in areas of business succession, real estate and inheritance related needs, utilizing resources inside and outside of the company that cannot be copied by other companies. The solution related business revenue was 5,500,000,000 yen in the last fiscal year. We are targeting at doubling that or more by 2023. As a topic, in April, we have established Daiwa Securities Realty because there are heightening needs for us real estate investments among retail individuals. So for the retail customers, we are going to start selling the new real estate related investment products. Please turn to Page 18. The consulting through the total asset approach has contributed positively to the increase of the NPS score. Direct version of NPS was introduced in all branches in 2018, and we have nurtured the new corporate culture, and this contributed to the sustainable increase or improvement of NPS. And we have established the good system where we increased the sales quality, listening to the voices of customers and improvement of our products and services. And sales branches and sales offices worked as 1 by repeating the PDCA cycle. After the introduction of NPS system, the score has been increasing according to the survey that we conducted on customers. And a series of operations in this area have been working, increasing the NPS score from around January 2020. If you look at the right hand side at the top, you see the strong correlation between the business result and NPS score. When 10% of the customers becomes from critics to passives or from passives to promoters of the total over 3 years, there's positive impact on the revenue increase from around 9,000,000,000 yen to 18,000,000,000 yen according to the analysis. So in the new medium term management plan, we are going to position the NPS as the important monitoring KPI. Furthermore, if you look at numbers, you see that we've been making steady improvements of our business centered on customers first. If you look at the right hand side at the top, the average holding period of the investment trust has become longer to around 3.7 years. And if you look at the frequency of the transaction, looking at the balance of foreign equities and transaction total amount, the frequency has declined to about 1 per year or less. And the ratio of the referrals from the existing customers of the total new account openings has increased to about 45%. Please turn to Page 19. We are going to continue the policy of expanding sales offices and improve the efficiency of the existing branches. We are going to increase the number of sales offices to about 75 in the future. Although it's not written here, the number of people belonging to sales offices represent about 8.5% of all branches as of the end of March, but they represent 17% of the total of the new customer acquisitions, which means they contribute positively to the expansion of the customer base of the company. We are also expecting the benefits from cost reductions through the improvement of the efficiency of branches. By the end of 2020, on the cumulative basis, we reduced by about 1,800,000,000 yen in the future by transferring the location of the branches from the 1st floor to the 2nd or higher floors and consolidating middle and back office functions of the branches. By the end of 2023, we expect cost reduction to increase to about JPY 5,000,000,000. We are going to restructure mass marketing system, and we are going to target at customers with whom we don't have any salesperson. We are going to provide them with the necessary information and services at the necessary timing and improve the efficiency of our sales and marketing activities and activate the transactions from those customers. Specifically speaking, thoroughly, we are going to do the targeted marketing to those customers. We are going to identify the needs by approaching to them via mail. In particular, we are going to identify solution needs and customers who have consultation needs for their investment, and we have the contact center responding to those needs. We are going to have web based interviews as well. Through the digital tool, we are going to reinforce our approaches to them, and we are going to best utilize our contact center in each branch, and we are going to work with the real channel. And by exercising mass marketing, we are planning to expand the customer base and efficiency of the improvement. We have officers and employees of listed companies as our customers through the Officer Shareholders Associations and Employee Shareholding Associations. So we are going to introduce the web based integrated management service where they can manage their investment centrally on the web, on the smartphone for their restricted stocks and stock options, starting from this year. Please turn to Page 20. Through the business model transformation, through the Wealth Management business model, we are expanding our asset based revenues such as Investment Trust, wrap account service, foreign currency denominated deposit. The ratio of the balance based revenue is currently 37%, but we are aiming at increasing that ratio to 50% by the Q4 of 2023. As an assumption, we are assuming the asset balance increase by the end of 2023, such as asset based fee plan balance, JPY 1,500,000,000,000 wrap account service balance, JPY 3,400,000,000,000 foreign currency denominated deposit balance, JPY 1,000,000,000,000. Furthermore, in 2022 onwards, we are planning to introduce the new AUM based fee model. This model is a model where we receive fees for the services that we provide by providing the portfolio the investors can invest in the diversified way in various asset classes such as equities and bonds, and we give advice and asset management from which we receive fees. Since the advice that we do based upon the investment strategy requires the high quality of the advice, we are planning to establish the new function, which is going to be responsible for making and defining investment strategies. Please turn to Page 21. One of the pillars of expanding the asset based revenue is the asset based fee plan. As of the end of April, the balance has steadily increased to JPY 215,100,000,000. When we analyzed the users of this asset based fee plan, about 57% of the total of the customers are comprised of people who are the corporate managers and corporate clients 41% people who did not have investment trust with Daiwa Securities before 79% are people who purchased asset based fee plan using financial sources other than by selling existing investment trust with Daiwa Securities, meaning we've been able to capture the new customers. We receive fees depending upon the holding period. Therefore, it's important for us to take a good care of our customers by providing information even after the purchase. And this is a plan where they can feel the good value for money for the first time by doing the transactions because there is no upfront fee, which is the fee structure that they cannot find in any other security firms. So far, feedback has been very positive, especially they don't have any upfront fee at the purchase, but they pay AUM based fee later, and this structure has been well received. And customers who have relatively high transaction frequency of Equities and Investment Trust, we receive very high evaluation because they don't have to pay additional fees. They can do the rebalance flexibly depending upon the market situation. Over the short 6 months after the launch of this service, the balance has increased to about 200,000,000,000 yen. This is about the pace of 430,000,000,000 yen on the annual basis. So we think the balance target of 1,500,000,000,000 yen in the new medium term management plan is highly achievable. On the average, if we can increase the balance to 1,500,000,000,000 yen based fee will be about 12,000,000,000 yen per year. By introducing this asset based fee plan where the minimum investment is 10,000,000 yen, we can expand the solution variations and the amount of the solution has been increasing and the number of solutions has been increasing. As a result, sales amount has been increasing in addition to traditional investments trust where we charge the traditional fees. In addition, we are already making sure that we select names of investment trust selectively to fit customers' needs. The ratio of the top 10 names of the total sales amount has been declining, decreasing. Please turn to Page 22. This page shows our partnership with external companies and open architecture strategy. We would like to partner with external companies who have strong customer base and unique know hows and knowledge. We would like to generate and increase profit and share the profit and revenue. We think this is a strategy that fits the trend now. We have the collaboration with Japan Post Group and JP Bank, and we are planning to start discretionary investment services at the beginning of 2022. And with regards to the alliance with Shinkin Central Bank, we are planning to support for financial product brokerage services for multiple number of Shinkin Banks. And we are currently planning to provide various services and products. And we have the capital alliance, capital partnership with Kure Saison, who has many card members. And this alliance or partnership is for long term, not 3 to 5 years, but this alliance is for 20 10 years 20 years down the road. With regards to the initiative with Credit Suisse on, we have the joint venture company called Pintotec, and we have started digital asset backed loans last year. And in April this year, we have been preparing to launch real estate backed loans, where we provide loans for customers and people who purchase real estate for the investment purpose. We are planning to actively pursue opportunities with alliance with companies who have strong customer base. Please go to Page 23. Wholesale division, starting with global markets. On the back of the strong stock market and supported by QE in the whole world, last year, net operating revenues and ordinary income achieved the record high levels. The characteristics of the global market of the company are that 70% to 80% of the revenue is coming from the domestic market and the customer flow based revenue. That's the main revenue source. Our policy is not to do the business that uses the balance sheet. Large balance sheet, value at risk of the total group on the consolidated basis is limited to 1,200,000,000 yen On the right hand side, we are showing the retail division support function to expand the foreign equity stock balance, which is the focused area. In Japan, of the total individual financial assets, the percentage of the foreign currency denominated assets were was only 2.7% as of the end of December last year. There's a significant room for the increase of the international diversification. So we'd like to provide customers with diversified investment opportunities. By the end of 2,030, of the total equity AUM in the Retail division, we would like to increase the ratio of foreign equities in AUM to 10%. The focused area of FICC, we would like to focus on businesses for the Metal Corporation's derivatives because there is a significant room for growth. We are going to develop people who know about the market in this area very well to expand the transactions in this area. Please go to Page 24, Global Investment Banking. If you look at the legal table for PO and IPO, we've been protecting the 2nd position. In the last previous management plan, we had a target to achieve 3 or above steadily. We've been overachieving this target. In particular, with regards to IPOs, we are seeing good results coming from the initiatives that we've been taking from the past. We have the strong IPO platform where we can steadily and structurally maintain high competitive advantage. Looking at the pipeline at the moment, we've been doing very well, and we'd like to expand and accumulate more mandates down the road. Please go to Page 25. The top line from the M and A has been increasing steadily. In 2020, amid the COVID-nineteen, we achieved 26,700,000,000 yen In comparison against competitors, the revenue in M and A was about 40% a few years ago. But last year, it increased to 71% last year. 3 years ago since 3 years ago, we've been focusing on the mid cap deals, and we've been acquiring a mid cap M and A House to solidify the base. Looking at the fee table of the M and A business globally, 3,500,000,000,000 yen. Out of that, more than 50% is comprised of mid cap deals, and players are many, and competition is very intensified. So we don't need to compete in this large cap field. So in the area of the mid cap, we'd like to be the top in the world. So we've been increasing the team. We have invested 50% in the company called Green Giraffe, where they have the top class position in the renewable energy area and advisory ranking globally. Including them, we have about 500 people in Japan and abroad. Among advisory companies in the mid cap area, we are the only company who has this strong global network. Therefore, in this area, we have the strong competitive advantage. So we are planning to expand the revenue in this area. Please go to Page 26. Next, Asset Management Division. From this fiscal year, Asset Management Division is going to have 2 separate disclosures: Securities AM and Real Asset AM. In the process of heightening knees towards individuals' asset building, the knees are diversified more than before. So in the securities asset management, it's important for us to expand the AUM assets by providing services and products that are highly value added to pursue investors' interests. In the future, as a big trend in the industry, there's cost consciousness. So the existence and the presence of ETF will be even higher than before. In Japan, ETF is mainly linked to the stock market, but what's growing in the United States is a theme based ETF. So we have this mission to provide unique products in this area. So we established Global X Japan in September 2019. Recently, we have listed ETF, which is related to ESG, which is a theme based investment, such as governance theme or creentech theme. So continuously, we'd like to continue to provide services that match investors' needs. Please go to Page 27. It's been 10 years or more than 10 years since we entered into the Real Asset Management business. The balance, AUM, has grown to 1,200,000,000,000 yen, and ordinary income of 2020 has been the record high level, which was 16,800,000,000 yen And we have consolidated Daiwa Office Investment Corp. Recently. Starting from this fiscal year, we are going to account for 100% of their income in our consolidated ordinary income. In the future, towards the expansion of the revenues stably, we are planning to increase AUM. In the medium term management time period, we are aiming at achieving AUM of 1,500,000,000,000 yen and ordinary income of 26,000,000,000 yen. We have the asset management company called Daiwa Real Estate Asset Management. Twothree of the employees working in this company are real estate professionals. So we have the strong and high level of know how and network relating to property sourcing and tenant leasing. And we have the strength as an independent company in this space. We have strong sourcing capabilities based on all round marketing, and we'd like to combine that with warehousing functions. As a result, in the medium- to long term, we'd like to expand AUM and income steadily. Please go to Page 28. In 2012, we have started investments in assets such as solar panel power generation. And we've been recruiting people in this area actively from outside. Twothree of the employees working in the Daiwa Energy and Infrastructure come originally from trading house, municipalities, government, energy related corporations. They are the professional people in this area. We have accumulated know how through the investment experience for a long time. So we have accumulated know how and network. In terms of the renewable energy and infrastructure investments. In addition, our biggest strength is the fact that we can utilize the sales network of Daiwa Securities. In the future, we are going to expand investments in solar power generation and infrastructure assets where we can expect stable income gain, and we are going to invite outside capital. Our AUM target in the medium to long term is JPY 300,000,000,000. Yield from investment differs in each project, but on the average of the total asset in this area, we aim at and assume IRR of 5% or more and ROE 10% or higher. This business is linked to the AUM, and revenue is expected depending upon the AUM size. So we are working on expansion of the balance while managing risk stringently, and we would like to invite capital from outside via fund. We would like to obtain capital gain, and we are proceeding with the capital recycling model. Zaira Energy and Infrastructure target for ordinary profit for 2023 is 15,000,000,000 yen. In addition to the profit growth in accordance with the assets under management growth, we have the investment in Akira Capital, which is a European Investment Management Company, and we expect profit contribution from this company in the renewable energy area. Please go to Page 29. This shows the ordinary income trend of our international business. We have the competitive advantage, So we'd like to be selective in businesses where we have the competitive advantage, risk management and cost reductions. As a result, we've been profitable for 5 consecutive years, and we achieved a record high ordinary income in 2020, which was 21,800,000,000 yen We have the Wealth Management business in Singapore using M and A Network, and we made a very good progress in various business lines. And regions and business lines supplement to each other cross functionally, and we have succeeded in stabilizing the revenue globally, and we have been increasing our response to changing environment. The presence of the international business in the whole group has been increasing. In 2020, both of the revenue and profit, they represent about 20% now of the whole group. In 2023, we would like to increase the income level furthermore, and we position the Americas as the growth pillar in the future. And U. S. Equities business is our strength. We have analysts, and we are trying to expand the analyst coverage in U. S. Equities. In the Retail division, we are going to expect more contribution from foreign currency Equities balance and contribution from FICC, in particular, MBS Business. Next, let me go over the financial and capital strategy. Please go to Page 31. This slide shows our financial and capital strategy. On the back of the strong financial base, we are going to work on the efficient capital management, growth investment contributing to the enhancement of corporate value and active shareholders' return. With regard to the shareholders' return, we are going to reflect the consolidated business result. We plan to pay out dividend payers ratio of 50% or more every half. That's our policy. On the other hand, to increase ROE sustainably, it's important for us to invest in growth areas. So we are going to optimize the business portfolio by paying attention to the capital efficiency, and we are going to work on risk management strategy by sophisticating our risk management capabilities. Please go to Page 32. This shows the situation and the status of the shareholders' return. Half year dividend, 25 yen per share is a record high level on the half basis and annual basis dividend, 36 yen per share is a record high level as well. The total shareholders payout ratio has no specific criteria or policy. But with regard to the share buyback, we'd like to comprehensively judge depending upon the regulation, business result and the pipeline for future growth investments and the soundness of the financial indicators. There's no change to this policy. In the last fiscal year, we needed to see legislation due to the COVID-nineteen, the potential impact on the business. But looking back, we now judge that we have very strong capabilities responding to the changes of the environment. So we decided to set the program of the buyback totaling about 30,000,000,000 yen. This share buyback program is positioned as additional shareholders' return for 2020. Please turn to Page 33. As indicated on the left hand side of the slide, we have made many investments for growth for the future while minimizing the risks and by selectively choosing investment programs. On the right hand side, we are showing the hybrid ordinary income trends, assuming we execute investments planned in the current medium term management plan, including the ones that we have already made. In the previous medium term management plan, we have made about 100,000,000,000 yen per year investments for growth. The time horizon when we can recoup the profit from the investment differs depending upon the investment. But in the future, we expect the profits to increase, thanks to the J curve effect. The investment amount in the new medium term management plan is assumed to be JPY 50,000,000,000 per year. We invest mainly in areas such as energy and infrastructure. We will estate asset management where we can assume stable income. Please go to Page 36. Then we expand initiatives in the sustainability area. We have 2,030 vision, and 2,030 is a time horizon for SDGs. So towards 2,030, this shows what we'd like to become and principle of act for managers and employees of Biosecurities Group. When we made this Vision 2,030, we have taken about 1 year. We have repeatedly discussed across the board in various group companies, not only in Japan, but we have talked with young people, people and employees and managers from abroad, including external directors. And we have collected various opinions from many people. We have digital technologies innovation that we are working on, responding to COVID-nineteen. The business environment is changing very rapidly. Therefore, we have considered and debated what we should do to become the company that is needed by the society and customers and created this vision for the future. We have this keyword from the savings to SDGs as an institution in the financial industry, and we are going to work on realization of SDGs by capital recycling scheme. Amid the COVID-nineteen environment, the social issues in the whole world are becoming more serious. The meaning of the STG-seventeen goals and 169 targets has become much more important than before. Please go to Page 38. Let me talk about human resource, which supports the sustainable business management. Our HR strategy of the group is very advanced in the industry, but we are going to further evolve the people development of our employees and career development, development of professionals and promotion of motivation and engagement of our employees and productivity improvement. In the future, digitalization will accelerate. So we need digital IT people and professionals who have even higher level of skills. So in addition to developing people internally, we have set the number of digital IT professionals as non financial KPI. We have to have high level of IT skills as a matter of course, but we need professionals who have professional knowledge in the business. So we need those people in the front office, and it's important for us to utilize data smoothly in each business area. We are going to create the environment where each every one of the employee can demonstrate their skills by challenging their businesses and maximizing their values. With COVID-nineteen, the world is changing dramatically, although we cannot see the end of the pandemic yet at this point. But now is a time when we have the strong stock market and business environment improvement. Now is a time when we have to transform ourselves broadly while maintaining the high level of income. Our strategy is a strategy with a balance between what we need to do in the short term and what we need to address in the long term with a view towards the future. In other words, the strategy that we should take is a strategy where we secure the customer based flow income, steadily accumulate stock based income assets, actively expand hybrid business so that we can create even stronger income business model that is not impacted easily by the market. We have laid out many stepping stones so far, and those actions that we have been taking are generating steady results so far. I am convinced more than before that we are heading into the right direction. We are going to do our best as a whole group, as one team so that we can show you the new Daiwa Securities Group that is step up to the next level. This completes my explanation. Thank you so much.