We will maintain the current investees and if there are additional inquiries, maybe we will pursue opportunities to sell more actively. Now, for each quarter, we are reviewing the assets of course on a regular basis, but policy of holding these assets and also future business policy will have to be looked at so that we can make the correct judgment there. And in the business plan, within the strategy for Greater China, we will be discussing this and the result of discussion will impact what we do but anyway, we are trying to formulate the policy right now. So, that’s about the Asia and China, I hope that answer your question
Koki Sato: That was very clear. Thank you very much.
Operator: Thank you for the question. Nomura Securities’ Mr. Sasaki, over to you.
Futoshi Sasaki: I am Sasaki from Nomura Securities. I have one question. The third quarter results, the earnings results, I have a question about. So 101.4 billion yen, it is pretty sharp, but the way this increase of the profit comes from, if you could explain on a year-over-year or quarter-on-quarter basis, especially the increase on the base profit if you could be so kind enough to give us a further details. As to the numbers, the base profit roughly about 100 billion and you may have a further room to improve this further. And also, you in fact explained to us that there are a number of PE that you may perhaps be able to exit and thereby generate investment gains. So segment the profit of 30 billion yen or so, would this be maintained in the coming year, which means that the 100 billion yen is achievable. So, if you could be so kind enough to explain this, thank you.
Kazuki Yamamoto: So, first of all, so relatively speaking, the first quarter is the first full quarter, what is driving the quarterly, so it is the corporate finance and also the leasing and insurance, so, in a steady manner. In the third quarter what has improved more, so in the PE investment, the new investments such as the HC and also Toshiba mezzanine loan extension, in fact, has contributed to the base profit generation or increase in the base profit and also environmental and energy in the third quarter, so we did manage to generate some positive results. And in the third quarter, and the fourth quarter, especially in the overseas location, things were slowing down — sorry in the first and the second quarter. However, we felt that things had — summer started to show some signs of a bottoming out, so at least bottoming.
So this is why there has been some improvement in the third quarter. So these have contributed to 101.4 billion out of which 10 billion is improvement in domestic market, 5 billion in the overseas businesses, so I think that’s a rough split. It is not a detailed number as such, but this is my understanding. And as for the fourth quarter, unfortunately, especially in the renewable energy related there is a seasonal factor, especially during winter the solar power and also Greenko in India, there will be a seasonal negative factor that we would have to experience. So this is why in the fourth quarter — so whether it would go — exceed 101.4 billion, so after this seasonal factor being incorporated, we — in any case, we want to of course achieve what we aspire to achieve but still these are some of the negative factors that we have to foresee.
Well in that case, in the third quarter 101.4 billion the base profit was generated and of course there will be some seasonal factor that you will be experiencing in the fourth quarter, which means that there will be a decline in the profit. But the HC and Toshiba mezzanine loan profit generation may perhaps contribute to the full year result in the next year and if the overseas businesses starts to kind of bottom out then the Orix Bank’s spread may perhaps improve as well.
Futoshi Sasaki: So do you think that we can remain to be optimistic and if that is true, I don’t know, but on a quarterly basis, you’ll be able to generate 100 billion yen worth of base profit and 130 billion yen, which means that you may be able to achieve this 400 billion yen for the full year. Do you think it is too early for you to conclude your profit generation to 400 billion yen to that extent already?
Kazuki Yamamoto: Well, you know, this is something that we are already kind of communicating to each and every headquarters, but of course, they will have to work on the bottom up in arriving at those numbers by different divisions and sectors and segments. So this is why in this policy and direction of ours, we should not of course miss out on the timing, the opportunity. And also with the base profit, we hope to achieve 100 billion yen or even more every quarter, and top it up with the investment gains, so that we be able to achieve 100 — well, 400 billion yen for the whole year. So, although it was a planned number, but we are exerting much of the effort in achieving this goal of ours, so if you could understand.
Futoshi Sasaki: Thank you very much. Well, I’m very sorry for this, but I just want to follow up, you know, there was a question by Daiwa Securities, there is one clarification that I require. So, payout ratio 33%, so are there any kind of headwinds to this 33% of payout ratio, with regard to the shareholder return, you want to broaden the shareholder space. And so you are considering to make some changes in the shareholders return in order to broaden the shareholder base?
Kazuki Yamamoto: So payout ratio 33%, we’re not thinking about the direction in lowering this payout ratio for sure, because you know, referring to the payout ratio of many of the listed companies and other financial companies and also trade companies, we have been studying those peers, as examples, and also we have dropped this benefit that are provided to the shareholders. So, therefore, I would like to maintain the payout ratio at the current level, and we would think about the possibility to even increasing this or heightening it.
Futoshi Sasaki: So, you would be considering that otherwise, the shareholders would not be interested in investing in your shares.
Kazuki Yamamoto: Exactly, so, which means of course we will have to — it will be indispensable, it will be quite necessary for us to increase the profit so that EPS can be grown. And so a couple of words, in other words, the profit growth, and at the time when Daiwa Securities had asked the question, so the efficient capital management and all this coupled with, of course, growing our profit, and so, therefore, achieving our ROE as well as achieving PBR of more than one time.
Futoshi Sasaki: Thank you very much for that. I’m sorry that I have added some questions. Thank you.
Operator: Thank you. SBI Securities’ Otsuka, please ask your question.
Wataru Otsuka: Yes. I hope you can hear me.
Kazuki Yamamoto: Yes, we can hear you.
Wataru Otsuka: I’m looking at page nine and on the far right full year target is shown and there’s 800 for maintenance and for insurance there’s some other number, 52 billion for real estate. If this is going to be higher than this, would you be making some adjustments or updates in the third quarter? Maybe if you do that, that would be easier for people like us from outside to understand. So my question is, at the Board meeting level, have you discussed this? Are you discussing this? Please let me know. And based on that discussion, was this disclosure authorized or was it not discussed at all at the BOD? That’s my question. Thank you.
Kazuki Yamamoto: Thank you very much. On page nine, we have the full year target and this has not been changed from the beginning of the term. As the item is reported to BOD and discussed, we always use the latest forecast to assess the probability of achievement of the plan and the business overview. When it comes to disclosure, according to the 10 segments, or the four categories, if we try to show the latest forecast, the assumptions may be different, and it will be very confusing as to what we’re aiming for. So, as far as the disclosure goes, we are still using the same number as we did in the beginning of the year. We explained that there is maybe a bit of a long way to go, but on the ground, we are trying to control the risk, but also trying to expand the profit as well.
So, in terms of business, control the business direction, the overall target has not really changed. And wherever we see more likelihood of success, we will — we are trying to increase the amount of profit coming from that segment, and the management and the people in the ground are communicating with each other in that manner. We will continue to disclose the target as we have done so far.
Wataru Otsuka: I’m sorry, I’m confused. You didn’t change it. But from the outside perspective, this is very difficult to understand. There is no visibility into the achievability of these targets, if you don’t update them.
Kazuki Yamamoto: I understand that we do see some upside or downside to these numbers and we can communicate those upsides and downsides. But for particular segment, if we inform you of the latest updates, it would be misleading, that’s our understanding, but we will try to provide as much color as possible for our communication.
Wataru Otsuka: While this is my opinion, but the maybe you can provide a range or write something in the document so that we can understand it better.
Kazuki Yamamoto: I see your point and we will discuss what can be done. So maybe rather than talking about segment, we’re talking about full buckets here, and especially in the third quarter, as we get closer to the end of the year, maybe there are more information that we can share with you somehow, so we will try to discuss the possibility of doing that.
Wataru Otsuka: Thank you.
Operator: Thank you for the question. So from Bank of America, Yaginuma san please.
Yuki Yaginuma: Yes, I am Yaginuma. Can you hear my voice okay?
Kazuki Yamamoto: Yes, we can.
