IX

It's time to start the meeting. Thank you for joining this conference of ORIX Corporation for first quarter consolidated financial results for the three-month period ended June 30th, 2026. I'll be the master of the ceremony. My name's Tomioka with IR. Thank you. The attendees at this conference are Masataka Yamada, Senior Managing Executive Officer, Chief Financial Officer, and Chief Strategy Officer, and Kazuki Yamamoto, Operating Officer responsible for investor relations. Both Yamada and Yamamoto will provide you with explanation, which will be followed by Q&A. The whole meeting should last approximately one hour. Now we would like to hand over to Yamada-san.

Thank you very much for taking time out of your busy schedule to attend the ORIX Group financial results briefing today. I am Masa Yamada, ORIX Group CFO and CSO. Without further ado, I'd like to explain the financial results for the first quarter of FY 2027. First, please turn to page two of the presentation deck. The points we would like to convey at today's briefings are the following three points. Net income is the first. Stronger core earnings power and robust capital recycling, and the third, first half earnings forecast and dividend policy. I will explain the first and the third points, and then Operating Officer Yamamoto, who oversees IR, will explain the second point. The first point is net income. Net income for the first quarter was JPY 280.8 billion, an increase of JPY 173.5 billion year-over-year, marking the highest quarterly profit on record.

Progress against the full-year net income forecast of JPY 530 billion was 53%. Gains related to the sales and valuation gains on Kioxia shares held by Toshiba, one of our investees, contributed significantly. The second point is ORIX stronger core earnings power and robust capital recycling. Regarding our core earnings power in first quarter of this fiscal year, ORIX Europe expanded its AUM to record high levels, primarily through Robeco. Market appreciation was the main driver of the increase, and ORIX Europe also steadily acquired new money. As a result, asset management fees increased significantly. Additionally, the transportation equipment business benefited from favorable market conditions, and all three business lines, Aircraft, Avolon, and Ships, achieved year-by-year profit increases.

Next, regarding capital recycling, we proceeded with the exit as planned for domestic PE investee, SUGIKO, as well as multiple PE investments at ORIX USA, including Peak Utility and Network Connex. Regarding ORIX Bank, the transfer of all shares to Daiwa Securities Group was completed on August 3rd. Additionally, as announced on the same day, we have signed a share transfer agreement for the 100% acquisition over AerFin, a major aircraft parts out company. We are steady advancing capital recycling while maintaining a balance between investments and divestments. The third point is our first-half earnings forecast and dividend policy.

We have calculated our first-half net income forecast at JPY 840 billion. Of this, JPY 300 billion is categorized as adjusted profit and JPY 540 billion, which is non-cash profit, is categorized as Kioxia sale and valuation gains. We have changed our policy to use adjusted profits as the source of dividends. The full year net income forecast of JPY 530 billion remains unchanged. Details will be explained on the following pages. Please turn to page three. I will explain our first-half net income forecast for FY 2027. Our net income is significantly affected by fluctuation in the price of Kioxia shares held by Toshiba. This page shows the results of a calculation of the first-half net income forecast based on Kioxia share price at the end of June.

The blue bar graph on the furthest left represents the full-year net income forecast of JPY 530 billion we announced on May 11th, calculated based on the assumption that Toshiba would continue to account for Kioxia related gains and losses as equity method earnings. The box immediately to the right briefly explains our announcement of May 21st, which was the result of calculating the impact on our first quarter results following our revised assumptions, namely Toshiba's change to market valuation of Kioxia shares in its full year results for FY 2026. Next, the gray and red bar graph, second from the right, shows the first quarter net income of JPY 280.8 billion mentioned on the previous page, broken down into JPY 121.7 billion of Kioxia sale and valuation gains in gray and JPY 159.1 billion of adjusted profits in red.

This Kioxia sale and valuation gains of JPY 121.7 billion is based on the valuation gains recorded by Toshiba using Kioxia's share price at the end of March, which was JPY 19,080, as shown at the bottom of this page. Finally, the bar graph on the far right shows our first-half net income forecast, which was also calculated based on Kioxia's share price at the end of June, which was JPY 89,680. Sorry to repeat myself, the first-half net income forecast is JPY 840 billion, which includes, one, Kioxia sale and valuation gains, gray, of JPY 540 billion, and adjusted profits in red of JPY 300 billion.

Next, please turn to page four. The reason we kept the full year net income forecast unchanged at JPY 530 billion is that it is difficult to predict the impact of Kioxia sales and valuation gains on our full year net income. For every JPY 10,000 change in Kioxia share price, our after-tax Kioxia sale and valuation gains fluctuates by JPY 57 billion. This is calculated based on Toshiba's holdings of Kioxia shares. As of the end of June, Kioxia's share price was JPY 89,680 at the end of June, and the closing price yesterday, August 5th, was JPY 54,300. Depending on Kioxia's share price at the end of September, we may record Kioxia sale and valuation losses in the third quarter.

Now, with the improvement in core earnings power as a backstop, we plan to steadily grow adjusted profits in the second half as well. Now, next. please turn to page five. This page explains the change in dividend policy for 2017 fiscal period. In the center of the page, we have, again, given a definition of Kioxia sale and valuation gains. This refers specifically to the portion of Toshiba-related investment gains and losses related to the sales and valuation gains on Kioxia shares after tax. Under our revised dividend policy, we will define adjusted profits as the portion of accounting net income excluding Kioxia sale and valuation gains and use this as a source of dividends.

There is no change to our approach of policy of paying either net 39% of payout ratio or the previous year's dividend of JPY 156.10, whichever is higher. Based on the first half adjusted profits forecast of JPY 300 billion and calculated under the revised dividend policy, the interim DPS for this fiscal year will be JPY 107.27. This concludes my presentation. Operating Officer Kazuki Yamamoto will provide some additional commentary.

I'm Kazuki Yamamoto with Corporate Planning, IR, and Sustainability. I will use page six and seven to talk about Japan and APAC, infrastructure, U.S. and Europe, and insurance. For those new segments, I would like to talk about the pre-tax profits and assets year-over-year, also comparison against the end of a prior fiscal year. Infrastructure performed well with higher profit, excluding large gains on sales recorded in Q1 of the previous fiscal year. Profits increased year-on-year in three segments excluding Infrastructure. Assets increased versus end of a prior fiscal year at ORIX USA in U.S.A. and Europe segment and expanded leading executions due to expanded lending executions, there's no significant changes in the other three segments. I would like to use some supplementary material to explain. Please turn to page 13.

Profit for Japan and APAC was JPY 289.8 billion, an increase of JPY 237.6 billion year-over-year, in addition to gains of approximately JPY 62.3 billion from sales of SUGIKO, a domestic PE investee. The auto business expanded new lease origination, that contributed. Excluding the JPY 179.8 billion from Kioxia sale and valuation gains, segment profit was JPY 110 billion, an increase of JPY 52.2 billion. Increase of JPY 57.8 billion year-over-year compared to the JPY 52.2 billion. Asset increased slightly because of a new execution and the equity investment increase, Toshiba and Asia-Pacific FX. Balance was slightly declining in Greater China. Please refer to page 15 for the list of PE investees exits and the new items, also for breakdown of APAC and Greater China, please refer to page 16. APAC and Japan accounts for 33% of the total segment asset.

Please turn to page 17. Infrastructure segment. Segment profit was JPY 43.3 billion, a decrease of JPY 25.1 billion year-over-year. If we exclude the absence of the sales on gain from the prior year, it's actually an increase. Avolon and Ships business benefited from favorable market conditions and achieved growth in both gains and the sale of Aircraft lease revenues. We will try to close the deal by FY 2026. For energy, there's been problem with the outward regulation or restriction in renewable energy, the profit was down, concession, including Kansai International Airport, actually declined in profit year-over-year. The details are shown on page 18 for your reference later.

Segment assets. While strong performance at Avolon and continued investment in Ships boosted assets, this was offset by Aircraft sales and exit from logistics center and real estate, it was down slightly year-over-year. Moving on to page 22, U.S.A. and Europe. Segment profit was JPY 63 billion, an increase of JPY 52.4 billion year-over-year. ORIX USA recorded fair value gains from PE investments and Robeco and others overseen by ORIX Europe significantly expanded AUM and grew fee income. As for segment assets, NXT Capital loan asset-based lending continued and this pushed up the numbers. As for ORIX USA, please refer to page 23 for LOB profit and asset breakdown for your reference.

Moving on to page 25, Insurance segment. This was mostly ORIX Life, but segment profit was up JPY 3.9 billion at JPY 28 billion. Led by strong earnings from yen-denominated whole life insurance product newly launched in the previous year, and also we acquired high-value contracts for corporate high-net-worth clients, resulting in increased insurance profit. Investment profit was also strong. Assets increased slightly as investment assets grew on the back of expanded premium income. Please return to page six. For the four segments, based on their performance in the first quarter, as you can see at the bottom segment profit basis, this was 133.73%, for pre-tax profit, 161%, and net income 162%. Compared to the prior year, the profit was up in each of these lines.

The progress is at 53% against the full-year forecast. Moving on to page seven. At the end of the line, you can see the segment asset in total. JPY 14.4261 trillion, up JPY 190.9 billion year-over-year. The total assets was JPY 18.257 trillion, including JPY 3.262 trillion for assets from discontinued operations. Please turn to page eight. This page shows the relationship between the business lines, comparing the four new segments and the three categories, Finance, operations, and investments that we have been using. To clarify the understanding based on this, please turn to page nine. This is the full-year outlook and also the pre-tax profit and progress year-over-year for the three conventional categories.

Q1 profit for finance was JPY 45.2 billion, an increase of JPY 6.6 billion year-over-year, with achievement of 27% against the full-year plan. The main driver of the profit was increase of insurance. Please note that both the full-year forecast and the Q1 results do not include profits from ORIX Bank because this is going to be classified as discontinued operation in Q2. Q1 profit for operation was JPY 55.4 billion, a decrease of JPY 8 billion year-over-year because of the absence of the gain on sales of the prior year.

ORIX and Robeco fees are strong and also domestically, ORIX Auto has been continuing its strength, therefore the progress was 23%. Last but not least, Q1 profit for investment was JPY 323.5 billion. This includes Kioxia. The overall progress was 112% exceeding the original plan. If we exclude Kioxia sales and valuation gains, the profit was JPY 143.7 billion. In this case, an increase would be JPY 90.4 billion year-over-year and a 50% progress. The dotted line in the middle is representing what I've just explained. Moving on to page 10. Capital recycling for this year. Capital gain recorded was JPY 115.7 billion. Cash inflows from capital recruitment was approximately JPY 300 billion. The EU unit and ORIX USA exited PE investees and made a steady progress.

Additionally, we sold logistics facilities and multiple Aircrafts. Cash outflows was approximately JPY 80 billion. In addition to the PE investment in Nihon Information Industry Corp as first deal for the joint venture established with the Qatar Investment Authority, we have been investing in developer-owned businesses in logistics, Aircraft, and Ships. Cash in was much higher than cash out, but based on the current state of the pipeline, we will continue the capital recycling and optimize the portfolio. The full-year outlook remains unchanged from the forecast announced in May, as you can see to the right. AerFin acquisition has been already announced and JPY 80 billion new investment actually includes this.

Share transfer of ORIX Bank and equity transfer of Network Connecx a PE investee from ORIX USA, have already been completed in Q2 and already reflected. As for other new investments, main areas continue to be domestic real estate, PE investments, Aircraft and Osaka IR. AerFin, a major aircraft parts company through ORIX Aviation. With AerFin joining the group, we aim to expand our business foundation across the entire Aircraft value chain, from Aircraft leasing to post-retirement parts utilization and enhanced asset management services. Capital gains amount mentioned earlier does not include profits and losses recognized from equity method investees such as Toshiba. Please turn to page 11, shareholder returns.

As Yamada has explained, interim dividend based on the adjusted profit is set at JPY 107.27 per share. For the full year forecast, as Yamada explained, net income forecast is maintained at JPY 130 billion, and therefore the full year dividend forecast is steady at JPY 187.36 based on changed dividend policy and also based on the pipeline profit and investment recouping, we will continue to earn the excess capital, and this stance has not really changed. As for share buyback, against the total amount, which was announced at JPY 250 billion in May, at the end of July, we have purchased JPY 78.4 billion, progress of 31%. For this fiscal year, full year payout ratio, including the dividends and share buyback, is maintained at 85.9% as disclosed in May. That's all from me. Thank you.

Thank you very much. We are now ready for the Q&A session. If you wish to ask a question, please press the raise hand button at the bottom of the Zoom screen. When you name is called, please unmute yourself and start aking questions. In terms of the question, please refrain from asking more than one question. We have from JPMorgan. Sato-san, over to you.

Thank you very much for your presentation. This is Sato from JPMorgan. Just one question. This is to do with Kioxia sales and valuation gain on page three. I know that there is an explanation on this page, but in accordance with this page, to begin with. To the original plan, any additional profit is to be JPY 70 billion, I suppose. From the adjusted profit, JPY 171 billion is to be adjusted.

What was incorporated in the original plan was JPY 50 billion of an adjusted profit. This is the target for the adjustment, I suppose. Based on this presumption, all those that are going to be excluded for the full year, would you be able to get that back by the time of the end of the year? Would you be able to beat the JPY 530 billion, your original expectation for the full year? Also ROE, I'm sure, is proved to be important as well. With regard to ROE of 11%, I suppose the adjustment is required for this ROE as well. Especially for the denominator part. Just like the policy that you have announced this time, the Kioxia sales valuation gain or loss, can I take it that you're going to be making a similar adjustment to the ROE as well?

Thank you very much for asking the question. Thank you for pointing out all that you have shared. JPY 520 billion, to be precise, on page four. You can refer to the chart, and it is pretty complex. JPY 530 billion, you can see it is slightly short of this amount. As for this, on a continued basis in the second half, there is a certain pipeline that where we have a great expectation for. I'm sure we'll be able to make up for the shortcomings through those pipeline in the second half, but we have not reached to the extent whereby we'll be able to incorporate these expectations yet at this point in time.

As for ROE as well, as you have pointed out, whether it is going to be an adjustment for the denominator or are we going to be adjusting both the numerator as well as the denominator, or would it be based on a new idea for ROE or ROE itself, the target may have to be changed, is currently being discussed actively internally. Once we know the clear direction, for sure we would update on the latest understanding and thinking to the investment community as soon as possible.

Thank you very much. Understood. Thank you.

Thank you. Next, Atsuro-san, Morgan Stanley. Please ask your question.

Thank you. This is Takemura, Morgan Stanley, MFJ. I have a question about Q2 progress and also outlook. Excluding the impact of Kioxia in Q1, you landed at JPY 159.1, billion for the first half, you are aiming for JPY 300 billion. In the second quarter, you are planning for JPY 140 billion of profit, I presume. ORIX Bank gain on sales is more than JPY 120 billion pre-tax. If we take that out, then a profit for the second quarter is only just over JPY 50 billion. Are there any downside risks that you're assuming for Q2, or are you just being conservative and you're planning to exceed the plan? How do you see the progress of the first half of the fiscal year? Please share your thoughts.

As you have pointed out, for Q2, ORIX Bank, the post-tax profit is included, your calculation is correct.

With regard to the remainder or the balance, there are two things. As you said, one, we're being a little bit more conservative, the other is there could be some one-off factors. Based on multiple factors, we have decided on this number, we cannot really break it down for you. Please understand that there are two aspects, both aspects.

Understand. Thank you. If that is the case, 25% or less progress in terms of operations, you are assessing that the progress is solid.

Right. Recurring revenue has been moving quite steadily. Yes, that's our assessment.

Understand. Thank you.

Thank you for the question. The next person is from SMBC Nikko. Muraki-san, over to you.

This is Muraki from SMBC Nikko. If I could ask question about page three in addition to what has been asked already. First of all, it suggested the profit, the upside as well as the downside. I know that there has been some discussion about this topic. Within this item, I know that there's non-cash portion. What you will be receiving from Toshiba, about JPY 51 billion or so, in the second quarter, this red part, is it going to be included in JPY 300 billion? May I take it? If there was to be a downside risk in Greater China, I know that you have posted some losses from the Greater China region. Are there any other impairment that you may have included?

Well, you see, we have applied the equity method accounting. Even if there was to be any distribution, it doesn't hit our P&L. It will be an adjustment on the balance sheet rather. Therefore, with regard to this amount, it is not from the P&L perspective, but rather the investment in the future as well as its return, and also the capital structure and also at the same time, the ROE in mind towards the end of this fiscal period. How to treat this is what we need to decide for ourselves. With regard to this valuation loss in Greater China, there are numbers of public equity that we hold, more than a certain amount during a certain period, and if it has gone below our threshold, we would be accounted to be the impairment or valuation losses.

There has been some of this that was applicable. I see. Which means that for the quarter from Toshiba, the cash portion that you have received, so Kioxia sale valuation, it is included in this portion. For the full year, it may be the case that you're not going to be including in that sales or valuation of Kioxia, but rather it will be incorporated in the adjusted profit rather than a P&L from the perspective of the fund itself. In other words, we will take on a comprehensive approach and how to treat this. To not to incorporate this into the formula, we may perhaps think about the shareholders' return from a different angle or different way of thinking. That's what it is. Thank you.

Thank you very much. Daiwa Securities, Watanabe-san, please ask your question.

Yes, this is Watanabe, Daiwa Securities. I have a question about AerFin and the impact on your capital and also contribution to profit and what kind of synergy you would expect from this deal. Impact on capital or equity. Goodwill and also intangible asset depreciation and non-depreciation. We have to separate those, but the purchase price versus the book price. We cannot disclose this information. There's going to be a number that will explain the difference between the two.

In terms of profit contribution, there is a public disclosure on the U.K. side. Contribution is expected in line with the number that's been disclosed in U.K. Depreciation of intangible asset will have to take place as well. That will have a slight negative impact. As for synergy, temporarily, we will be expanding value chain and completing the value chain. That is the context of this acquisition. There are also additional synergies that we would expect complimentary relationship in terms of customer base. In our Aircraft lease business, we have customer base. AerFin has their own customer base, and some of them are not overlapped, which means that we would be able to make referrals of customers to each other. That's another part of synergy that we expect. Thank you.

In terms of profit contribution, is it going to be about JPY 10 billion segment profit contribution at ORIX? Would that be in line with your expectation?

Well, additional contribution will be in line with the profit disclosed by the other company, the target company. But as Yamada has mentioned, from lease acquisition parts out, we will be able to compound these benefits, which means that we can push up the revenue for the whole life cycle. Watanabe-san, as you have rightly mentioned, over the long term, it would have a bigger contribution to the profit growth. That is our expectation. That's very clear. Thank you.

Thank you very much. It's Tsujino-san from Bank of America Securities.

Thank you very much for this opportunity. The P&L from the Europe and America, USA and Europe especially, JPY 59.6 billion worth of securities sales and valuation.This is a PE investment in the second quarter. Acquisition was completed in the second quarter than the first quarter, I think. This is JPY 59.6 billion, but U.S. only has JPY 42 billion, which means that without this, USA is still in deficit. It's making losses. What is the current status? Can you please explain?

Yes, I would like to check the numbers first. This is Yamamoto speaking. The slide that you can see is pre-tax profit breakdown and ORIX USA Q1 2027 JPY 12.9 billion and ORIX Europe at JPY 20 billion or so. And out of these, ORIX USA private equity valuation contributed, which was a positive contribution this time. But for some of the businesses, profit and loss being balanced, and we could make some improvements as well. I think that would be the explanation of the status. In Q1 for Hilco, the number is still negative, as you can see. From PMI, we have seen some neutral market status, and we are trying to grow stably. Please give us some more time to show you the benefit of the acquisition.

At the global IR conference, COO Suzuki has provided explanation. Last year or one of factors, we had some negative factors, but in order to recover from that, we know exactly what to do. We have clear strategy, we will be implementing those strategies in ORIX USA. Please give us some more time before that is reflecting the actual performance.

I would like to add, as for Hilco, in the prior quarter, it was immediately after closing and therefore there were some expenses related to the acquisition. But that expense does not exist in the current quarter any longer. As Yamamoto has explained, Hilco business portfolio, if you look at the whole portfolio, we have business line with stable sales and profit, and also a part of the portfolio, which is a little bit countercyclical. In the United States, as you may know, there is a Goldilocks situation. It's not going up or down. It's in the lull. That's the situation in the last couple of quarters for Hilco. Considering the nature of this business, rather than looking at the performance of each quarter, we should give it a longer term perspective, six months, perhaps 12 months. We believe that we need to give that kind of long term perspective.

Looking at this PE JPY 268 million. Then again from sales of our securities, JPY 59.6 billion. This includes things that are not related to PE, is my understanding. I don't think these actually belong to Europe. I'm guessing that this relates to other U.S. businesses. Because of the expenditure expenses, in the end, you end up with the numbers in the navy and the gray on this page. Is that the correct understanding?

On growth basis by segment, we have disclosure JPY 59.6 billion. Majority of this is attributable to the United States. This is just one side of the revenue. Sales of marketable securities and also dividends and interest paid and received, those elements are also included as well. Funding side payment cost, for example, will have to be looked at in balance of this. U.S. credit business alone, NXT Capital, for example, or Signal Peak, and also structured credit trading. With regards to these, the environment is relatively positive, and some of the stronger numbers that you can see include bond and also trading environment. The environment is not necessarily bad.

I understand. Thank you.

Thank you very much. Moving on to the next question, Sakamaki-san, Mizuho Securities.

Yes, this is Sakamaki, Mizuho. I have a question about Europe. AUM is growing, I can see. More than that, compared to the Q4, I think there's a huge growth on Q&Q. Are there any temporary factors, such as performance fee, or do you think this level of a profit is more or less standard?

Yes, this is Yamamoto. I would like to explain. As you said, for Robeco, market appreciation has contributed. If appreciation does not continue, we expect some deceleration. Somebody else mentioned that our Q2 forecast is conservative. This is because we don't expect the market to appreciate further. We believe that this quarter was a little bit better than usual. This is not necessarily entirely one-off, not necessarily a success fee, including net new money inflow. Robeco gets mandates from the investors, and they have been strengthening their marketing activities, which are producing results. Yes, Q1 was quite strong. Q2 and beyond, we don't expect a huge decline because of the first quarter growth.

Compared to other asset managers, looking at Robeco on a quarter-to-quarter basis, we see constant new money coming in. We do not expect a huge duration because some portion of this can be sustained or supported by new money coming in. I think that's going to make a big contribution going forward.

That was very informative. Thank you very much.

Thank you for the question. The next person is from Nomura Securities. Sasaki-san, please.

I am Sasaki from Nomura Securities. Thank you for the opportunity. With regard to this adjustment profit, especially the outlook, I know that you have been providing various different explanation. If you were to perhaps view this from the management perspective, would you make a judgment that it is going for the better or the worse?

Well, I know that it's difficult to understand. We think that we'll be able to grow this adjusted profit in the second half as well.

Okay. As much as possible, if you could explain. This Kioxia related matters, especially in light of dividend, I know that you have excluded from the shareholders return. Inclusive of Kioxia, Toshiba's valuation enhancement. The payout to shareholders, how could that happen? The profit that you'll be generating, do you think that this would be kind of contributed to the shareholders?

As of now, as you have understood, the valuation profit or loss, or even if it was to be a gain on sales, it will be remaining at Toshiba. Therefore, there will be no kind of payment being made to us on a cash basis. From Toshiba, as a result of the sales, if there was to be a return, and if we are in receipt of the cash, some part of it will be made use of as a source of payout to our shareholders, and especially if it is a capital gain. We would use part of what we will be receiving for the shareholders' return. This is something which is not under our full control. This is why I'm terribly sorry, but our explanation remains to be pretty ambiguous.

Okay, understood. If this is the case, if you were to sell Toshiba's shares, if you were to sell Toshiba's sales, would it be included in this payout?

Anything that is non-cash. Because there is such a fluctuation. Even today, it's adjusted. This is the policy.

Thank you very much. That's very clear.

Thank you. UBS Securities, Niwa-san, please ask your question.

Yes, this is Niwa, UBS Securities. I have a question about new investments. I am looking at page 10. Probability of achievement for the annual plan, including FM, JPY 200 billion quarter. Maybe this is in line, but it also looks like it is a slow start. The market is quite strong. Perhaps you are struggling with the generation or you are waiting for the market to change. Can you please give some color to this?

We have a pretty rich pipeline. As you have said, valuation range is quite high in some of the sectors. Therefore, we will be, of course, continuously active. We also need to implement financial discipline at the same time. Rather than hurrying to make the investments and focusing on the amount that we are investing on a quarter-by-quarter basis, we really want to focus on doing something that is effective. We are being selective when we make investment decisions right now. I do not think it is right to consider that the pipeline is weak.

I see. Thank you.

I would like to add some comments. JPY 300 billion coming in. For this particular quarter, we are recouping less than investment, but this is according to our plan. If we do more exits toward the end of the fiscal year, that would be problematic for the stability of the performance. SUGIKO was sold and also ORIX Bank closing is second quarter. We will be reinvesting the profit coming, proceeds coming from that, which means that within one single year, it looks like the new investments are being delayed. It just looks like that. For the flow that we have the visibility, like Osaka IR, time lag is not a problem.

Real estate and Aircraft investment and Osaka-IR related investments. As Yamada-san mentioned, we also have a PE investment market situation. Because of those, there is a trend or tendency that more of them will happen toward the end of the fiscal year, but this is within our expectation. JPY 800 billion. Well, if we tell everyone that we can spend as much as they want quickly, they would spend everything at once. The investment committee is being very selective. Under the leadership of Takahashi, we have started discussing all the potential investments pretty deeply from the beginning. We have very strong pipeline, rich pipeline. We need to be clever in buying them at advantageous prices. We are looking forward to showing you the outcome of these efforts.

Can you give us some color, please? JPY 800 billion for this year. Domestic versus overseas, how do you think it will finish?

Well, mostly IR. Well, because of IR, there is more focus on Japan.

Do you have any items that are within scope for the domestic market, and can they give an impact in this fiscal year?

Well, IR day in London, we provided more of a long-term perspective at that meeting in regard to private asset context. For this fiscal year, it is not so much about private asset, but real estate and also PE investments within the existing business. As a result, investment amount in Japan will have a higher percentage. Well, in IR day, I think we were talking about a different asset class, that is expectation over the mid to long term.

I understand it better now. Thank you.

The floor is open for questions. If you have a question, please click the Raise the Hand button, which can be found at the bottom of the screen. If there are no further questions, we would like to close the Q&A session. We would like to receive closing remarks from Yamada-san.

Thank you very much for joining us today, and we received various questions, including Kioxia's volatility. I understand that this fiscal visibility is somewhat weaker, but we will look at the changes, and we will do our best to update you on a timely basis and stay in communication with all of you. Thank you very much for your support, for your continued support.

That concludes the Q1 earnings call. Thank you very much for staying until the end of this call.

Thank you for waiting. We're ready to now start. Thank you very much for joining us. This is the financial results briefing for the fiscal year ended March 2026 of ORIX Corporation. I will be the facilitator. I am Uchida, General Manager of Corporate Communications Department. Let me first introduce the speakers. Hidetake Takahashi, Member of the Board of Directors, Representative Executive Officer, President, and Chief Executive Officer. Masataka Yamada, Senior Managing Executive Officer, Chief Financial Officer, and Chief Strategy Officer. Those two gentlemen will be presenting. In addition, there are four attendees.

Mr. Satoru Matsuzaki, Member of the Board of Directors, Deputy President, Executive Officer, Chief Operating Officer of Japan and APAC. Yoshiteru Suzuki, Senior Managing Executive Officer, Chief Operating Officer of USA and Europe. Shuji Irie, Senior Managing Executive Officer, Chief Operating Officer of Infrastructure Business Unit. Kazuki Yamamoto, Operating Officer, Corporate Strategy and Management Unit, Head of Corporate Planning, Investor Relations, and Sustainability. Those four people will be joining. First, I will call upon Mr. Takahashi and Mr. Yamada to present, and then we take questions. We plan to spend about 90-minutes in total. Now over to you, Mr. Takahashi.

Good afternoon ladies and gentlemen? Thank you very much for joining us despite a very busy schedule for our group's financial results briefing. I'm Takahashi, Group Chief Executive Officer. For the fiscal year ended March 2026, the uncertainty has become the norm. That was a macroeconomic environment. For us, it was the first year toward realizing our long-term vision and also an important year of management transition. We spent 12 months so far, and we have made steady steps forward and made progress toward our goals. We did the earnings announcement just now, and thanks for your support. We were able to achieve record highs for both net income and market capitalization. A robust organization and management structure are essential in order to steadily execute our growth strategy going forward.

To this end, we introduced organizational reform from January 1 this year and implemented a six-role system as of April 1. We have recruited Yamada from outside of the company as Chief Financial Officer/Chief Strategy Officer. Additionally, we reviewed guidelines and expanded the investment and financing authority delegated to each business division, enabling faster and accountable decision-making. Furthermore, with the Chief Financial Officer and Chief Risk Officer taking the lead in maintaining strong financial discipline and sophisticated risk management, we aim to take good risks speedily and proactively to achieve growth at a new level. That's just for the opening remarks. I would like to hand over to our Chief Financial Officer, Yamada, who will explain the results for the fiscal year ending March 2026 and guidance for the fiscal year ending March 2027.

Thank you for the introduction. I'm Chief Financial Officer and Chief Strategy Officer, Masataka Yamada. Thank you for this opportunity. Please refer to page two of results presentation or the screen in front of you. These are the points I would like to cover during today's briefing. There are three, as you can see. Number one, FY 2026 March results and FY 2027 March guidelines, and the FY 2026 March in review. The third point is key initiative for FY 2027 March. I would like to discuss the first topic, FY 2026 March results and the 2027 March guidance, and then Chief Executive Officer will follow and explain the second and third points. Please proceed to page three. These are the slides for the fiscal year ended March 26. Please look at the graph on the left. This shows ROE and net income for full year.

Net income for FY 2026 March was JPY 447.3 billion, exceeding the full year forecast of JPY 440 billion. That was revised upward at the first half results that was announced in November last year. This marks the third year in a row that ORIX achieved record profits. This represents an increase of JPY 95.6 billion or 27% in net income compared to the previous year. ROE was 10.4%, up 1.6 percentage points from the prior year. Q4 net income was JPY 57.6 billion.

We recorded a total impairments of an JPY 97.2 billion, primarily at ORIX USA, resulting in a low net income compared to the JPY 118.6 billion posted in the third quarter. At OCP in the ORIX USA segment, OCP is ORIX Capital Partners. We are proceeding with our phased withdrawal from the PE business and capital recycling efforts. As a result, we recorded goodwill impairment in the fourth quarter. That's the major factor. Next, please, proceed to page four. I would like to explain ORIX pre-tax profits for the fiscal year ending March 2026 using three categories: finance, operation, and investments. The upper table compares segment profits, pre-tax profits, and net income for the last two fiscal years.

As shown in the second row, pre-tax profits for the fiscal year ending March 2026 were JPY 691.4 billion, an increase of JPY 211 billion or 44% compared to the prior fiscal year. Next, please look at the graph at the lower left. Dark blue represents finance, light blue represents operation, and the deep pink bar represents investments. The upper bar graph shows segment profits for the fiscal year ended March 2025, and the lower bar graph, fiscal year ended March 2026. All three categories saw profit growth, while the investments category posted profit growth even excluding JPY 95 billion in gains from the Greenko sales and valuation gains. In the finance category, invest income rose sharply in insurance segment and corporate financial services achieved growth in fee income.

This resulted in an increase of JPY 12.9 billion or 7% year-over-year. In operation, while some businesses have recently been affected by geopolitical risks, inbound-related businesses such as hotels, inns, and airport concessions, as well as rental automobiles and ships, performed strongly in the fiscal year ended March 2026. In addition, the sales of some ORIX stake in Canara Robeco following the firm's IPO and gains from the sale of ZGlide Suspension contributed to growth, resulting in an increase of JPY 37 billion or 18% compared to the previous fiscal year. In the investment category, ORIX saw a significant increase in segment profits of JPY 138.1 billion or 82% compared to the previous fiscal year.

This was driven primarily gains from the sale of valuation gains of Greenko, as well as large gains from real estate and earnings of from PE investments, including Toshiba. Breakdown of each of the 10 segments are provided on pages 40 and 41 for your reference later. Please turn to page five. The bar chart on the left shows results for ROE, segment profits, and allocated capital for each of the three categories for the fiscal year ended March 2026, as well as the changes from the prior fiscal year. The dark blue bubble, the finance category, has allocated capital of JPY 1.7 trillion, with ROE holding steadily at the same level of 8.2% from the prior year.

Light blue bubble, operation, has allocated capital of JPY 1.4 trillion, with ROE rising from 13.5% of the prior fiscal year to 13.9%. Dark pink bubble, investment, has allocated capital of JPY 1.6 trillion, with ROE significantly improving from 7.4% to 13.6% due to realized gains from the sales of Greenko stake and hotel sales. On page six, we show historical trends of ROE and ROA of each of the three categories. In the operation category, profitability improvement has outpaced asset expansion with ROA improvement an additional 1.0 percentage point over the past five years. In the investments category, ROE and ROA increased by 6.2 percentage point and 3.6 percentage point, respectively, compared to the prior fiscal year.

We continue to create value and rotate assets while enhancing efficiency, as mentioned before. Next, please proceed to page seven. For the fiscal year ending March 2027, we target net income of JPY 530 billion, an increase of JPY 82.7 billion from the prior year. The target of ROE is 11.7%. ORIX Group specific key initiatives will be explained by our Chief Executive Officer Takahashi later on. We aim to increase profit and also improve ROE by continuing to optimize our portfolio. Regarding shareholder returns, I will touch on this again after presenting breakdown of our earnings guidance. Please turn to page eight. I'll explain the pre-tax profit guidance for the fiscal year ending March 2027 for each of the three categories. First, please look at the upper table.

As shown in the second row, expected pre-tax profit for the fiscal year ending March 2027 will be JPY 760 billion, an increase of JPY 68.6 billion or 10% year-over-year. Please look at the lower left graph. Overall, we expect the finance and operation categories to achieve profit growth. Investments will see a decline. Excluding the JPY 95 billion in gains from the sales of Greenko realizing, FY 2026 March investment segment profits also expected to increase.

Next, I would like to explain the trend for each categories. Finance. As announced in April, we have concluded share transfer agreement with Daiwa Next Bank, a consolidated subsidiary of a Daiwa Securities Group for all shares of ORIX Bank. We plan to record a gain on sale from the transaction of approximately JPY 124.2 billion at the pre-tax level for fiscal year ending March 2027. Profitability from ORIX USA is expected to contribute as well.

As a result, we expect finance category segment profit of JPY 308.3 billion, an increase of JPY 119.1 billion or 63% compared to the prior year. Within operation, we expect the inbound related business to see lower profits due to the impact of geopolitical tensions. Despite this, we expect solid growth in aircraft leasing and the U.S. Based Hilco Global. We are guiding operations category segment profit of JPY 240.7 billion, an increase of JPY 3.6 billion or 2% compared to the fiscal year ending March 2026. Finally, investment category. In addition to the sale of our domestic PE investment, SUGIKO, which was announced in March, we are proceeding with exits from multiple PE deals in the U.S.

We also expect profit contributions from Toshiba, which is performing well. As a result, our guidance for the segment profit is JPY 290 billion. Please turn to page nine. Last point that I would like to explain is about the shareholder returns. For the fiscal 2026 March, the full year dividend per share was the record high of JPY 156.1, up 30% year-on-year. Additionally, we fully executed the entire JPY 150 billion buyback program and canceled all shares exceeding 2% of the total shares outstanding. For the fiscal 2027 March, we will maintain the dividend payout ratio of 39%. Thus, at the full year dividend per share will be JPY 187.36, based on the projected net income of JPY 530 billion. We have set the share buyback program of JPY 250 billion, up JPY 100 billion year-on-year.

This was decided after considering cash inflows and capital release resulting from the sale of ORIX Bank, as well as the future profit levels, ROE, and financial soundness. The projected total return ratio, as you can see here, is 85.9%. That concludes my presentation. I would hand it back to Mr. Takahashi, Group Chief Executive Officer.

Thank you, Mr. Yamada. First, I'd like to summarize the previous fiscal year from the perspective of the three key initiatives for realizing our long-term vision. We explained at last year's financial results briefing. The first strategic initiative is portfolio optimization. We have been reviewing our portfolio considering the growth potential, capital efficiency, and impact on the credit ratings of each business. Major examples are shown on the slide. The sale of our Greenko stake and new investment in AM Green convertible bonds, as well as the sale of the ORIX Asset Management and Loan Services. As mentioned last month, we announced that we would sell ORIX Bank during the fiscal March 2027. The second initiative is sophisticated risk management. We have strengthened our management's decision-making platform by both integrating and visualizing risk information.

Through this, we have established a system that enables quantitative risk assessment and agile reflection of this assessment in our management decisions. Starting this year, we have integrated the individual finance deal screening department with the portfolio management department, establishing a system that enables end-to-end risk management. The third initiative is new business creation. Construction on the Osaka IR project commenced in April last year and is progressing smoothly. In October, there was an application for the MICE, and it's going very smoothly. Through the acquisition of Hilco Global in the U.S., we have entered the professional advisory services businesses, including asset valuation, primarily in the U.S. We'll also build an asset-backed financing platform going forward. Also, using the Hilco Global, we'll be also building the asset-backed financing platform.

Investment in I-NET and conversion of NOZOE INDUSTRY into the subsidiary are part of our efforts to create new businesses in strategic investment areas. Through those priority initiatives, we steadily improved ROE, and I am pleased to report that both net income and market cap reached the record high levels for the first fiscal March 26th. Please turn to next page. For the fiscal 27 March, we will continue to promote the three key initiatives aimed at realizing our long-term vision, including portfolio optimization, sophisticated risk management, and new business creation. In addition, under the new management structure, we would add a new key initiative that is the business model transformation. We will achieve this by deepening and evolving our two core business models as set forth in our group strategy, alternative investment and operations and business solutions. Let me explain the specific details later on.

Now please proceed to the next page. This is ORIX Group's new management structure. In January this year, I myself, Hidetake Takahashi, assumed the position of Chief Executive Officer, and reorganized our firm into five business units and five corporate units. Following this, we introduced a CXO system in April. This organizational reform aims to optimize the allocation of management resources under the Chief Executive Officer and create new businesses through the inter-unit collaboration. By introducing CXO system, we are expanding the delegation of authority to individual BU to help achieve both faster and more accountable decision-making by business division Chief Operating Officers.

Our Chief Financial Officer, Chief Risk Officer will be responsible for the maintenance of the strong financial discipline and risk management respectively. Each CXO will not only be responsible for their respective areas, but will also serve a role as top management overseeing the entire group alongside the Chief Executive Officer.

Today's attendees, Mr. Matsuzaki, Deputy President, and Mr. Suzuki, the Senior Managing Executive Officer, they will be the Chief Operating Officer of Japan & APAC Business Unit, as well as Chief Operating Officer of USA & Europe Business Unit, and a Chief Operating Officer of Infrastructure Business Unit for Mr. Irie. Today, Mr. Otsuka is not present. He is the Managing Executive Officer and he will be in charge of the risk management unit and group Chief Risk Officer. In Japan & APAC Business Unit, we develop wide range of financial businesses from debt to equity in APAC, including Japan. Going forward, we will capture the growth opportunities by expanding the diverse businesses we have cultivated domestically into APAC. USA & Europe is the core of our overseas asset management business.

In addition to the public assets centered on Robeco and private credit at ORIX USA, we will expand asset classes into other alternative assets and pursue AUM growth through strengthening sales collaboration. Infrastructure Business Unit will refine its expertise in the development, management, and operation of real assets such as real estate, energy, and aircraft and ships, while promoting the shift to asset management to expand the business scale through asset rotation. With this new structure, we believe we have established a management system that is more resilient to environmental changes and capable of making sound decision on both offensive and defensive fronts. Please turn to the next page. Let me elaborate on our business model transformation, which has been introduced as a new key initiative.

Until now, our alternative investments and operations have primarily been in our alternative assets on the balance sheet, where we can leverage our hands-on asset operation and management capabilities. Going forward, we will continue to build up assets such as real estate and renewable energy development while efficiently utilizing our balance sheet. We would accelerate the investment in assets suitable for shifting to an asset management, asset manager type model and connect this to medium to long-term AUM expansion. Our business solutions model will continue to value touch points with our customers and will expand the services originating in client needs. Through this, we aim to grow our asset under management and fee income. Please refer to the slide as examples of the initiatives of each business unit. Please go to the next page. I would like to discuss our financial and risk management strategies.

To steadily execute our growth strategy going forward, we will continue to strengthen financial discipline and risk management. The environment surrounding us is changing daily, including the situation in the Middle East, the resulting energy crisis and the highly volatile financial markets, and uncertainty has become the norm. As I said earlier.

In this climate, it is essential to thoroughly enforce financial discipline and risk management and to enhance resilience. We would not only respond to the changes, but also grow amid the changes. By targetedly implementing management focused on the capital efficiency and optimizing capital allocation across the group, we will concentrate management resources in areas where we have a strong competitive edge. We will pursue maximum profitability and sustainable enhancement of the corporate value under any circumstances. Please go to the next page. Finally, let me summarize the core messages today. Additionally, the previous fiscal year was one of the steady progress towards realizing our long-term vision, as I said at the outset. We recently announced the sale of ORIX Bank. Regarding portfolio optimization, we will continue to pursue this strategy without having any sacred areas.

Under the new management structure, we will continue to balance growth investments and shareholder returns while aiming to maximize corporate value over the medium to long term. With a focus on improving capital efficiency and profit growth, we will steadily execute each initiative. Finally, on the July second of this year, we plan to hold our first ever investor day in London. We continue to value dialogue with our stakeholders and apply it to our management. We appreciate your continued support. Thank you very much for your attention.

Now we would like to open the floor for questions. Online participants can also raise your hands, but we would like to take questions from venue first. If you would like to ask a question at the venue, please raise your hand and staff member will bring a microphone to you. If you would like to ask a question online, please press the Raise the Hand button at the bottom of the Zoom screen. When your name is called, please unmute yourself and ask your question. We would also like to ask you to state your affiliation and the name before the question. The first 30-minutes approximately will be allocated for the press. The question-and-answer session will be open to investors and analysts after that. Now the question is accepted.

Thank you. My name is Sugawa, Nikkei Newspaper. I have two questions. Question one, ORIX Bank sale was decided. What are the reasons? What is the background? Can you please remind us of that? The sales of the bank, I know that there's a lot of cash coming in from that and other sales. What is the purpose of this cash? How do you intend to spend this cash in the future? Do you have any plans already?

Thank you very much. I would like to respond to this question. The reason to sell the ORIX Bank, there were multiple reasons behind this. The biggest being, well, Daiwa Next Bank and also we're here at the venue, but, there's a very good affinity with ORIX Bank and also Daiwa Securities Group has been really appreciating the ORIX Bank highly. Business-wise, ORIX Bank doesn't really have ordinary deposits. It's basically CDs, but the interest rate is favorable, and the bank is also providing real estate collateral loans. Actually the deposit to loan ratio is higher than 10% slightly, which is very unique.

The deposit stickiness is a little bit weaker, and therefore, in order to grow the business, the interest rate for the term deposit will have to be higher to be more attractive. We have to basically do the investment with loans. Of course, there is competitiveness as well. It's very difficult to get the margin these days. As far as I know, Daiwa Next Bank is going the opposite way. In other words, they have a relationship with the securities brokers business, and it's relatively easy for them to collect the deposits. Once they get the deposits, they had challenges in terms of how to invest or manage that money. This combination, I understand that the two entities will be integrated.

As a new bank, we believe that they can aim for further growth, bigger growth, and that is the reason why we decided to sell the bank. With regard to your next question, we also do divestments and also investments. When we gain on sale, we're not necessarily thinking about spending money for a specific purpose. We want to focus on where we are competitive when it comes to investments. If you invest against macro environment, it doesn't really work. We need to really consider the macro economic environment and identify good areas for investment. To be more specific, according to the older segment, for example, PE investments within Japan is something that we'll still be actively investing into going forward. Real estate as well as aircrafts. Those real assets, they have a strong resistance against inflation.

This is what we believe. Operational capabilities of ORIX and Wocarats turnaround capacities would really help us to generate business value on our own. Investment into real assets is another area where we could allocate capital. I hope that answers your question.

Thank you. Any other questions? Please raise your hand.

Nakahara from Yomiuri Shimbun. Thank you for your presentations. Related question to the first question. I would like to ask two things. About the numbers on page eight, in the finance section, March 27th, the segment profit JPY 300 billion. ORIX Bank sale is JPY 124 billion upside. JPY 300 billion. In the finance segment, is this going to be the highest record? I'd like to clarify that. That's the first point. Nikkei's question, I think is the other side of her question. The benefits of a sale, you talked about that. At the same time, as a management decision in the finance segment, continue to hold ORIX Bank. I think that was one way of doing business. Could you talk about the balance? Could you explain that once again?

Yes. To your first question about the financing and investment business, we did not have that category in the past 10 or 20 years. I don't have the precise data in my head. About the JPY 300 billion segment profit, it is the record high profit in finance, I believe. That is a forecast. Why don't we maintain it, or why don't we keep it? One thing is that the ORIX Bank, compared to other banks in terms of ROA, relatively speaking, was at the higher level. In the ORIX Group, ROA, relatively speaking, was lower. In finance sector, the ROA comparison, in the ORIX financial, finance sector was relatively low. Therefore, making significant improvement of the ROA based on the banking business is difficult.

In order to improve ROA, we need to increase the leverage. Naturally, it's a regulated business, and also there is a certain limitation to that. When you look at the overall business portfolio, we wanted to focus more on the ROA, ROE. The bank business for us is not a non-core business. That is the major background.

Thank you very much.

Any other questions? If you have a question, please raise your hand. Yes, the person in the fifth row.

The Nikko SMBC. My name is Nawi. I am an anchor. I have three questions. Mr. Takahashi, you said that domestic PE, real estate, and aircrafts and real assets are the areas that you see opportunities in. In terms of macroeconomics, which areas are you more wary of? In other words, you talked about uncertainty becoming the norm. Where are you being more careful? When the interest rate is hiked, what kind of impact will it have on your business? Interest rate hike so far, has it been positive for the management of ORIX Group? If the rate hike accelerates or exceeds a certain threshold, do you need to be more wary of that? The third point is, total payout ratio was 80 some percent in last fiscal year. What is your basic policy for shareholder return? Can you please explain that once again?

With regard to the first question, are there any areas that we have cautions about? For domestic business, in Kansai we are operating three airports. For inbound related business, we have hotels and inns. We also operate those.

It's very unfortunate that since last autumn, relationship between Japan and China has weakened politically. Kansai International Airport receives about the 30% of the flights from China. Out of that 30%, approximately 2/3 have been reduced. The number of flights have been reduced. There is a three-month lag in terms of impact or performance. For the prior fiscal year, we are only accounting for the number of Kansai Airport up to December last year. The impact is minimal. If the flight reduction continues, the impact will be bigger going forward. There's also a positive factor. We are receiving a few visitors from China, but we are receiving more visitors from South Korea and Taiwan.

It is not just a simple reduction of a 2/3 of the 30%, like I said, but a certain amount of impact is expected, so we need to be careful. Similarly for hotels, we don't have many hotels that accept group tourists. Only about 10% of the visitors from China in terms of occupancy, it's fine, but in terms of room rate, maybe it was too high during some period. Generally, the numbers are softening, and therefore, revenue from the hotels can be impacted to some extent as well. With regard to overseas, in the U.S., fundamental measures have been implemented. We believe that we have already entered the phase of recovery. Private credit, especially SaaS company exposure, impact is of concern for many.

If there is money coming in from the individuals, there are redemptions happening. In terms of a private equity exposure and SaaS related lending, that's approximately 7%. 7% of the total. For the industry, the average is about 20%. That means that the impact for us is very much limited. Having said that, inflation and interest rate reduction, compared to expectation from one to two years ago, inflation pace and also the interest change pace is slowing down. We have to pay close attention to how this will impact us in the future. Just one more thing. With regard to portfolio of Chinese business, we need to control the exposure generally. There are some parts of portfolio that will have to be turned around.

We will strengthen our structure and continue to provide monitoring over that business. Those are the three points that we believe that we need to be careful about. Now, interest rate sensitivity. Interest rate is being hiked, and if it is slow, mostly in Japan, of course, the funding cost will increase. We can respond to that, and we believe that it will have an overall positive impact. 1% interest rate change sensitivity is about 1% by segment or at the segment level, it's limited. However, as you asked, if there is a sudden interest hike, a very fast interest hike, it is possible that we will fail to catch up or there will be a time lag which will result in potential impact.

At the current pace, as long as the interest hike is happening slowly, we believe that the impact will be positive for us. The third question was about dividend, I believe. Yes, shareholder return policy. As I mentioned in my presentation, investment for future growth and the maintenance of financial soundness and return to shareholders, we need to strike the right balance between the three elements. We continue to sustain this policy. Over the last three fiscal years or so, we had some gains from temporary sales or divestiture, and the profit was really going up, and dividend per share has been going up as well quite a lot. DPS growth on a continuous basis is something that we're aiming for, and also at the same time, we'll be focusing on the balance of the three elements.

This is how we decide our dividend policy. I hope that answers your question.

Yes.

Another person in the fourth row.

Kawasaki from Jiji Press. Two questions, please. About the ORIX Bank, the gain on sales of it. JPY 370 billion is the price. For this fiscal year, there is JPY 124.2 billion. It's a part of that gain, and the remaining will be reflected in the next fiscal year and onwards. Could you explain that? That's my first question. The second is that about the Middle East situation. Due to the situation, different industries are being affected. Maybe you have not seen the negative impact for yourself. The disruption in Middle East What could be the negative impacts or positive impacts, if there are any? If you can summarize that?

Yes. I'd like to respond. About the bank, I would like to refrain from talking about the details, but roughly speaking, the financial net asset of the bank is about JPY 250 billion. JPY 370 billion, the sale, the price of sale, the difference between the two will be our gains. For this fiscal year, we plan to close this. If unless there is a postponement of the closing, it is not likely that we would book the profit from this transaction across at a different fiscal year. That's my answer to your first question. As about the Middle East, you're right. The subsidiaries or affiliates that we have in Saudi Arabia, we have a leasing company called Yanal.

In Pakistan, the OLP is a leasing and financing company. In terms of exposure, those are the two companies. It's about JPY 15 billion. Exposure is limited. The potential impact on the businesses, aircraft business, we have a high credit level, the company. So far, no major impact is forecasted due to the Middle Eastern situation. The jet fuel, if this current Middle Eastern situation continues, there could be a short shortage of the jet fuel. Including LCC, it's possible that they will reduce the number of the flights. The airline performance will deteriorate.

Spirit is another story that used Chapter 11, and it's possible that there could be some airlines whose credit would deteriorate. We are not too optimistic. We'd like to look at the credit situation and aircraft situation. We are watching that closely. Another thing is, especially in Asia, Southeast Asia, as you all know, their energy reserve is at low level as countries. If it lingers in a different senses, the Southeast Asian macro economy could be impacted. If that happens, then the credit quality goes down. Direct impact, as you correctly said, is limited for us. If it lingers further, then there could be some indirect impact.

In that sense, we have to enhance the risk management, as I said. We'd like to focus on that, and we would like to respond to the situation. Thank you. That's all the questions. The answers, sorry.

Any other questions? Second row on the right-hand side.

Thank you. Nikkei Business. My name is Umekuni. I have two questions. Insurance business positioning within your portfolio. You talked about ROE and also business model transformation. Against that background, how do you position your insurance business? That's my first question. My second question is about the three airports in the Kansai area. What is the significance of this business, and what is your outlook of this business going forward?

With regard to your first question about our insurance business, insurance, as you may know, is balance sheet heavy and also a regulated business. Therefore, we need to build a certain amount of capital. It is also a capital-intensive business, and we need to use the balance sheet in order to grow the business. Therefore, if you just apply the ROE perspective, then insurance business is a little bit different from the rest of the portfolio. However, there are two things we need to consider. One is if you look at other alternative asset managers, they're doing something similar. Through insurance policies, you gain liabilities. Non-insurance business usually cannot really finance this kind of long-term debt. You can do that through insurance.

This is something that we can really use for other assets within the group, including the utilization of the reinsurance. If we can allocate it like that in terms of financing, we believe that there is good synergy. That's one point. The second point is that when we obtain a debt and also sell insurance, well, the third category insurance targeted at individuals were advertised on TV, and we were also focusing on online sales as well. Now we live in a world where we have interest rates. Life insurance, death coverage, and also wealthy individual insurance. We have started this several years ago. Now, corporate financial services in of ORIX is one of the best sales agents in Japan.

We believe that there's synergy in terms of obtaining insurance policies as well. There is actually a third point. If you just look at ROE, it's only about 7%, so you may consider that we should be selling this business. However, as you could see from the performance of the prior year, for pre-tax segment profit, we are generating more than JPY 100 billion from this segment. Considering the nature of the insurance business, this kind of a revenue or profit is very stable. We do not just apply the ROE perspective. This is similar to the bank business. Well, in other words, we don't really consider to sell insurance, like we did with the bank, just looking at ROE.

We have to look at the debt structure of ORIX Group as a whole, and also asset management structure as well, and how to utilize insurance business within that framework. That's what we consider. Now, with regard to the three airports, there are certain factors that are in our control and out of control. Relationship between Japan and China was already explained earlier. We don't just sit by and watch the situation change or improve. As I said before, we are getting more visitors from South Korea and Taiwan, and Indonesia, Thailand, and other southeastern airlines. We are approaching them. Our sales team is approaching them because this is a great opportunity. Traditionally, we were relying on a single market for 30% of our sales or revenue, but this is a great opportunity to change that structure to reduce the dependency.

Now the risks have materialized. We want to make sure that the lesson is learned and same problem will not be repeated so that we can operate this business over the long term. That's all. Thank you.

Yes, the person in the sixth row.

Thank you. Kawase from The Nikkei. About China, I'd like to ask a question. Earlier, Mr. Takahashi, in your presentation, you said that the portfolio in China and exposure needs to be controlled, and maybe turnaround is necessary in part. In the distribution, it is the materials about the Greater China, you are saying that you will be controlling your business. More specifically, the areas that you were not investing or you will withdraw, where are they and how do you control the exposure? When you say you'll be more restrictive, it means that you won't be not really reducing it totally, but what are the areas that you are referring to? The APAC business, Asia Pacific, I mean. In APAC, how do you position China? The excluding China, you want to enhance the APAC. Is that the framework of APAC excluding China? Could you explain that?

Well, about China, following U.S., it's the second-largest market. We are not going to withdraw it completely from China. That's not something that we expect. At the same time, including the investment of the listed companies, the minority investment, I think that the horizon of the investment is becoming longer. The capital recycling will be promoted so that the assets will be rotated. That's our investment policy. There are no exceptions. In comparison to others, the minority investment and the investment period will be longer. We would need to rotate our assets there. For example, in Hong Kong market, compared to two years ago, is recovering quite a bit. Pre-IPO investment in the technology companies is the main investment that we make. That is relatively short term.

We have experiences, so we'd like to continue working on those investments. It doesn't mean that we will withdraw or exit our businesses from China. That is not the case. We will look at the individual assets, and if it's longer term, we would rotate the assets. As a whole, we are not going to increase the overall exposure so much. We want to control the level of exposure as much as we can. That's the situation in China. What about APAC? APAC, it's not just one market. It's multiple countries and multiple markets in APAC. In terms of or as a region, it's a APAC region, Matsuzaki here with us is in charge.

If you look at, each country or each market. Different cultures and institutions, there are differences. If we can take advantage of our strength, then we would like to expand the businesses. For example, in Asia Pacific, in the area of the Pacific, Australia, conventionally the auto leasing was the major business. The real estate related financing, there are opportunities there. Already one or two are being executed. We would like to continue to form a team to promote this. Also India, there could be similar opportunities. Rather than thinking about it as one region, we like to look at each country or each market individually and do whatever we can do. Thank you.

Next question is going to be the last one from the press.

My name's Inagaki, Asahi Shimbun newspaper. I have two questions. First of all, about ORIX Bank. Lending competition and getting more difficult to get the margin. BOJ rate hike, for example, is pushing up the deposit interest rate. The ORIX Bank deposit interest rate, you found it difficult to increase the rate to get more money. Maybe the business model wasn't working very well. Was BOJ rate hike one of the factors behind this? That's my first question. Second question is about portfolio optimization. There is no sacred area, you said. Within your view, Mr. Takahashi, what are the specific challenges and what are the specific focuses?

With regard to the first question, I think there are pros and cons, both positive and negative. BOJ's rate hike policy or the monetary policy has changed, and the now interest rate is positive and the stickiness is weak. We are beginning to find that out. It is more difficult to get the arbitrage or the margin. Now, for the finance sector or the bank sector as a whole, it has a positive impact on the sales. Valuation of the banks was lower than one, but now it's beyond 1.0x. There was a question about the gain on sales earlier. Basically, we got a positive gain on sales and found a very good partner for this business as well. If PBR was below 1x, there was no incentive to probably to sell.

Well, maybe not. There was not an incentive to sell by generating a loss. Anyway, we decided the sales, and I think it had both positive and negative factors. What was your second question? Could you please repeat?

About portfolio optimization. You said you will leave no stone unturned. What are the specific challenges you see in doing this?

We say there is no sacred area, no stone unturned, so there is no sense of challenge. We will be implementing the reform steadily, logically. As I said in the summary of the last fiscal year, when we consider capital recycling, it's not just about getting capital gain. We look at ROE and the financial status as a snapshot. Based on the snapshot, some indices are better or worse, and we also look at whether or not they would improve or further grow in following several years. In that sense, we look at growth capacity, growth potential. Thirdly, we want to look at the impact on rating, credit rating, because when we acquire something for portfolio, we have to consider the goodwill as well.

As I said, in the China business, minority investment does have an impact on S&P credit rating, so we have to think about that impact as well. As I said before, we will just not look at the numbers. We will also look at the qualitative aspects, whether there's synergy within the group, whether it's meaningful for the group to have it. We will look at all of these aspects in terms of portfolio optimization.

That's all the questions we take from the press. We would like to take Now, Tomioka-san of IR will be leading. Thank you very much. We would like to take questions from analysts and investors. There are some remote participants, but first of all, we would like to take questions from the people who are present here. Any questions? Anyone here? The person in the front.

Muraki from SMBC Nikko. I have two questions. On page 15, you talked about the ROE, so I would like to ask you a question, 11.7% Is expected for the new fiscal year, so you exceeded your target. ORIX Bank sale gain and also HEXEL gain, I think those are included. In the underlying capability, it's above 11%. Are you feeling that? That's my first question. Second question is on page 14 on the left-hand side. The capital usage, utilization, what is the current investment environment? If the situation continues to be the same, the share price being too high, you cannot make investments. Is it possible that this number goes down further? Is there such possibility happening? Well, thank you.

About the ROE, underlying ROE, as I explained earlier, for this fiscal year, ORIX Bank gains on sale and the major sale of others are included. In the previous fiscal year, the Toshiba was showing strong. There was a gain in relation to KIOXIA which are also included. In terms of our feeling, in real terms, maybe we are very close to 11%, but we have to work a little bit harder.

That's how we feel. That's the very honest feeling that I can share. As for the capital utilization, relatively speaking, divestment under the current environment, the setting I think is, well, I wouldn't say easier, but easy to handle than buying. Divestment is leading, divestment are happening at the relatively high price. Therefore, the collection is proceeding, the capital utilization comes down and the liquidity position goes up. That has been the trend. As you correctly said, in terms of the real assets, the real estate and also the aircrafts and also the PE, the valuations are rising.

Under those circumstances, the projects that we'll interested in working with us, there are many of those examples. How can we increase those projects will be the key. It's not an easy environment to invest in, but unique investment opportunities are the ones that we would like to continue to pursue. Thank you.

I'm Watanabe from Daiwa Securities. Thank you presentation. I have two questions. Page 49, employed capital ratio. Since April, we had exits and the ORIX Bank and SUGIKO. Based on that pipeline, do you have the pro forma employed capital ratio? How much is that right now? On page 49 on the left-hand side, insurance debt, assessment evaluation. Compared to end of December, the amount of debt is actually bigger. Have you changed the evaluation method? What is the background for this?

With regard to employed capital ratio, for 26th March, 86%. ORIX Bank sales was mentioned before, and also SUGIKO. This is PE investment, so this is in and out. Anyway, those are not really reflected in these numbers yet. ORIX Bank sales, if this is included, roughly speaking, 86%, employed capital ratio at the end of the term will be coming down to about 80% according to our pro forma calculations. As I have explained, PE investment and the real asset-focused investments will be accelerated. With regard to your second question, the debt evaluation. Method of evaluation has been changed. That is true. I would like to ask Yamamoto to explain the details of this.

Yes. I would like to provide some additional explanation. For insurance policies acquisition, things are progressing smoothly, this is pushing up the amount of liabilities. Liabilities evaluation, especially for long-term interest. In order to be able to apply this more stably, we did something. Well, our corporate debt market was quite unstable for a while. We combined multiple indices in order to evaluate it more accurately. This is pushing up the number. In terms of net asset, this is basically a negative impact. That's all from me. Thank you.

That's very clear. Thank you very much.

Thank you very much. The person in the third row.

Sakamaki from Mizuho Securities. I have two questions. The first is on page 15. The ROE 15%, FY 2035 March. I think you included your enthusiasm there. A year passed, and I think you have already made a progress. This, the feasibility of achieving 15%, is it becoming better? Could you talk about that? The second question, U.S. business Restructuring is progressing. What is the timeframe that before you see the improvement of the profitability? Thank you.

15%, how confident are we? I think that's your question? Last fiscal year and this fiscal year, if you look at the numbers on page seven, there's a comparison to the FY March 2025. I think it's increasing and getting close to that level. I think that's the reason why you asked this question. Frankly speaking, our feeling is that we really have to work very much harder to get to this level. How can I say this? What should we do to reach that level? With us, that we have our Chief Operating Officers and Chief Strategic Officer. We have a Chief Risk Officer. We have the top management team.

We have a very frequent discussion, and we are updating the content. Going through the PDCA, and as long as we take the steady initiatives, I think we can get close to this level. I strongly believe in that. Of course, there could be some temporal improvement of our ROE, and also there is a decline at some time. There is still nine years to go, so we like to make sure that we make the linear growth. If you look at the three, five years timeframe, we would like to get closer to these targets. We would continue to execute what we need to do one by one.

About the ORIX USA, there are several, in March, April, in the area of the private equity portfolio, we made announcement about the sale. In addition to those, there are core and non-core, and we are rotating the portfolio. Maybe we have reached the bottom, but in order to get to the normal profit level, I think we would probably need a few more years. The size of the business could shrink, but we like to make sure that we recover the profitability. That is our priority. In charge of U.S. and Europe, the Chief Operating Officer, Suzuki, is here with us. Suzuki is usually in New York, but very frequently we have a discussion with him to take necessary initiative. We like to spend a few more years so that we can normalize the profitability level. That's the very frank views that I shared. Thank you very much.

Any other questions? Third row from the front.

Thank you. Takemura, Morgan Stanley, MUFG. I have two questions. My first question is related to the last question. How do you view the future of the U.S.? What is your outlook? Page eight shows that the finance category profit JPY 189.2 billion, and excluding one-time factors, JPY 175.8 billion. This is JPY -13.4 billion. Last fiscal year I'm sorry. Correction. The U.S. are actually included in finance, I think. Anyway, debt recovery gain on sales was about JPY 8 billion or JPY 7 billion last year. I think there's an absence of this. You now have a absence of the profit from the bank. Naturally should be about JPY -20 billion, but actually JPY 13.4 billion.

The difference explains the recovery in the United States. Is that the correct understanding? Can you please also talk about the background? That's my first question.

There are multiple factors, and therefore it is very difficult to do an apple-to-apple comparison, but what you said is largely correct. Gain on sales of the servicer and also for ORIX Bank sales in the first half, that is the assumption. Second half, profit will not be coming in from ORIX Bank. The last fiscal year, we had the profit coming in for the full year, contributing for the full year. Net-net for the finance category, we believe that the profit will increase slightly. As you have mentioned, ORIX USA recovery is accounted for. Credit cost allocation was done for ORIX USA in the prior fiscal year. This was a big allocation, and the absence of this will lead to recovery, big recovery. There are many positive and negative factors. I cannot explain everything today. That is, basically the picture.

Outlook for the United States. This is a very difficult question to answer. In terms of the businesses that we have, downside protection wise, we have done everything we could in the last fiscal year already, basically. It's just a question of how long will it take to recover. Example deal, project sales is now ongoing, and potential buyers are sometimes private equities. Private equity also has private debt business. The private equity, private debt within the current U.S. environment, including the major players, are basically struggling, and the PEPDs that are listed are suffering from much lower share prices as well. When these problems start to materialize to a greater extent, then speed of asset recycling will slow down, and therefore, we don't have a extremely positive outlook for the United States.

Rather than that, we need to take a very close look at what's happening in the U.S. on a day-by-day basis. Just this weekend, Suzuki has come back from the U.S., I think maybe he has a comment about his own assessment.

I'm in charge of Europe and the U.S. My name is Suzuki. Our Chief Executive Officer, Takahashi, has basically given you the overall picture of the U.S. already. Macroeconomic environment-wise, when you look at the non-bank business, including the fund business, private debt impact does slow things down. With regard to ORIX USA, thankfully, the impact is quite small, as was explained before. Our business partners are impacted, affected by this. Again, we are exiting some private equity business, and also there is a non-core portion.

Compared to when we were planning things last year, timing of sales and also the amount that we can get from that is something that we have to pay close attention to, and we need to follow up closely in terms of recovery of the assets. With regard to new projects, new deals, there are three things that we're considering, largely speaking. One is a company, Hilco, and Hilco can do asset-based leasing, asset-based financing based on their asset evaluation capabilities, and we can turn this into an asset management business. This is alternative asset management product structure that can be done for the future. Product mix-wise, we also want to focus on real estate. This is, of course, real assets.

In the United States, agency targeted mortgage in real estate has been our focus, but we want to expand further, including multi-family residential financing and also not just financing, but also equity investments. These are the potential areas that we want to get into, and also other areas where we have real estate related opportunities. Now, asset management and alternative focus asset management, this is something that we will continue to promote. NXT is one of the cores. They do direct lending. The market recognition has improved and the first closing of a new fund launch was also successful. We want to continue to promote this. Will we see the result of this already within six months? The answer would be no. It will take a little bit longer. We will continue to run this business meticulously over the long term.

Thank you very much for a very detailed explanation. I have one more question about dividend. ORIX Bank sales expected in the first half. SUGIKO also first half. First half dividend is 39% against the profit of the first half. Is that the correct understanding? This year you'll be paying out a lot of dividend. Is this going to be the baseline for the next fiscal year's dividend?

With regard to your first question, your understanding is correct. With regard to your second question, at the board of directors, we are debating this quite a lot, and we need some more time to debate this. We thought that this question will be asked. Let me explain about Toshiba. KIOXIA share based on the large shareholding report sold by several percentage point by March. Equity ratio is already 17.6% as far as we know. This is what we found out at the end of the fiscal year. Toshiba uses U.S. accounting standards. Their accounting process, well, they'll be doing the earnings call May 15. We have to wait for that to see how they will do this. Toshiba may reclassify KIOXIA to marketable securities. This is a possibility. According to U.S. accounting standards, it will no longer be equity method. It will be market to market.

Which means that, based on the share price of last fiscal year-end, it's possible that they want to capture the gain on valuation. Whether Toshiba will sell KIOXIA, even if they don't sell KIOXIA, if it's reclassified to marketable securities, then the evaluation will be different based on the share price at the end of the term. Whatever Toshiba captures will be captured by us based on the equity method, based on the stake. I'm sure as analysts you have already did the calculation, but we have to take that into consideration. Last year's prior's dividend, you'd been used as a full may be questionable when you consider sustainable return policy. There is still a potential debate there, and we need some more time, and we would like to deliberate this at the board level and decide on the policy, the direction.

Thank you.

Thank you very much. Next, I'd like to take a question from the remote participants. JPMorgan Securities, Sato-san, go ahead.

Thank you very much for this opportunity. This is Sato speaking. Two questions, please. First, about the U.S., especially the credit business. I'd like to know more about the current situation. I think you referred to it earlier. The credit value creation expenses is included and in the supplementary information. It's about JPY 10 billion, the lending support, and this I think is mostly U.S. You mentioned that the risk is not so big. What is your recognition about this credit loss being included here? Could you explain that? Second is about the capital gain. On page 46, this fiscal year capital gains are mentioned.

Already something which was discussed, bank and SUGIKO, JPY 180 billion, I think. On the now the capital gain in comparison to your plan, the normal level, something that might emerge from now on, I think that the budget for that is quite controlled. Other sales, does that mean that you're not very aggressive about that? This about the capital gain plan. Could you explain the capital gain plan a little bit further? Sato-san, thank you.

About the U.S. credit cost. If you go deeper and calculate, I think you will be able to get the numbers relatively roughly speaking, about the JPY 24 billion credit cost included in the previous fiscal year. The breakdowns include, as we mentioned in the past earnings call, one thing, as it was mentioned earlier, is the mortgage business. For the agencies, we have that business. With the high interest rate, which is continuing, the borrower's credit quality is coming down. Among the numbers that we mentioned, the major credit expense is for the real estate mortgage business. Another is the growth capital for the startups, the financing business. In that portfolio, specific names, the situation is not so great. We have some reserves for that.

Those are the two, that is the mortgage related and the gross capital financing. It's the reserve for a specific name. Those two are the major part of this. Of course, that, we do have a debt business which is very much diversified. Even at the normal level, a certain level of the reserve becomes unnecessary, and that would continue to be the case. When we announce the interim results, we mention this. As much as we can foresee, when we can reserve or have a provision in the first half, we would like to have a conservative approach to have that. For this fiscal year, we expect that we can reach to that normalized level.

As for the capital gain plan, it just happens that it's not really toward the end of the fiscal year, but the beginning of the fiscal year, there are some major gains from the sale. It just happened to be happening at that timing. It doesn't mean that there will be a major time lag. We have to look at the market and we would like to try to maximize our assets when we consider the timing of the sale. I wouldn't mention the specific name or specific number, but in the case of real estate and the renewable projects and the private equities, and we continue to do the asset rotation and the capital recycling. We apply our strategies.

For this fiscal year, only one month and 11 month to go. We would proceed with the sale from now on, and there will be some the proceeds or the gains from those sales booked in eventually. Thank you.

One point of clarification. Earlier, U.S. in the United States, what I wanted to ask was that on page 32, especially the credit business line and for the full year, reserve or provision was mentioned. At the end of the fiscal year, credit line probably was included. That's the growth capital. This is for the startup lending. That is the debt. That is where the reserve provision happened?

Yes, that's correct. Your understanding is correct.

Okay. Thank you very much.

Thank you, Mr. Sato. We see two more hands up. Nomura Securities, Sasaki-san, please ask your question.

This is Sasaki, Nomura Securities. Thank you. Page eight of the presentation material, I would like to understand how to read this slide. For FY 2027 March, profit is high. For 2028 March, considering the following fiscal year, I think you have big names with latent profit. Until March 2028, I expect the profit level to continue to be high or continue to increase. What about FY 2029 March or 2030 March? Is there going to be some ups and downs, or do you think the profit, the growth trend will still continue? What is the management's understanding? That's my question.

Last year, Greenko gain on sales and also ORIX servicer sales are a little bit smaller. For this fiscal year, we have a latent gain for sales for ORIX Bank. These are one-offs. This is not something that we can book year after year, as you can imagine. In order to maintain the growth in profitability, we believe that there are a lot of latent profit in core business as well, we have to materialize that. We don't want to sell things just for that purpose. Real estate, energy, and aircrafts. We will be recycling assets, we buy and sell and buy and sell. We need to continuously do that. Rather than going up and down year after year, we want to grow a recurring capital gain on a continuous basis as much as possible.

It depends on the market situation. Sometimes we can sell at a higher price or lower price against our expectations. Considering the recent environment, we are seeing some deals which are priced higher than our original expectations. Can we continue this trend into the next fiscal year and the following fiscal year? Well, we have to think about the macroeconomic environment impact. We're not talking about 2035, we're not just thinking about next fiscal year, the 4th fiscal year. We're really focused on executing what we can within this current fiscal year. Meaning that we want to capture all the profit opportunities, and also we have the long-term vision into 2035, and there was a question about the feasibility of this. We will be focusing both on ROE and profit growth.

We have the mid to long-term plan, but we, as management, focused on what we execute within this current fiscal year in terms of resource and also time. I know that I'm not answering your question directly. I'm sorry. That is what we're thinking.

I understand. Thank you very much.

Thank you. We are getting close to the end time. I'd like to take one last question. BofA, Tsujino-san.

Thank you. Two questions. This year's forecast. Business investment and equity profit. It's difficult, I'm sure, to try to come up with the expectations, so higher than last year and relatively conservative forecast, I think, is shown. Earlier, you mentioned that there could be investment securities or the, it's possible that the shares are being sold quite a bit. In that sense, you are having the conservative view. That's how you got to JPY 530 billion. That's my first question. Should I go one by one?

Tsujino-san, hello. To your first question, you're referring to Toshiba. This, JPY 550 billion, the assumption that we have is that Toshiba has KIOXIA under the equity method, and ORIX also have that under the equity method. We are the LP. How Toshiba will announce their business results, we don't know. After checking on their business or earnings, if the classification changes, then from the equity method to the investment securities, it could change. I'm talking about the KIOXIA. We need to look at how they announce their business results. Once again, based on that, we would like to make the evaluation. I think that there is a sale on the gain on sale of the KIOXIA.

Based on a certain level of the assumption, you made this forecast number. Well, there's a three-month delay to incorporate the equity profit of innovation to Toshiba. As far as we can confirm, during the last fiscal year, there was a sale and the unit price of the sale is not known, but we base our forecast on the reasonable price and the parts that were sold are incorporated into the forecast.

As for the forecast for this fiscal year, the environment and energy, the impairment, I expected a bigger impairment, but it was smaller than what I expected. That is in Q4, I think, in Q4, it's JPY 6.1 billion. This, March 27th, I think there could be some additional impairment. Is that the case?

As of now, no. Well, I was the head of the energy and environment in the past, so Tsujino-san probably thought that this is low. I was actually my impression was that this was quite high, so this is regrettable. We have no plans to incorporate any additional impairment.

Just one last point. March 28th, the ROE of 11%, it's a long way in the future, and probably it's up to Toshiba. I'm sure that it was difficult for you to come up with this number, those are the very rough numbers. If no changes from Toshiba, then 11% probably is difficult to achieve. Is that right?

Well, earlier, during the press, or Q&A with the mass media, there was a similar question. Of course, it's not an easy number for us to achieve. We need to make further efforts. Naturally, when we made the plan, in the previous fiscal year, we said that our target remains the same. At 11%. We continue to make efforts, and it is an achievable number. Right now we are May 2026. In March 2028, there is still two years to go. I think there are many initiatives that we can take. We are not changing this.

As a management team, who are here today, we will be working hard in coming two years in order to get to this level. Thank you very much.

Thank you very much. That concludes the earnings call. Before closing, we would like to ask our Chief Executive Officer Takahashi to say a few words.

Again, thank you very much for joining us today. As I said in the beginning, last year, we announced our long-term vision and also long-term financial objectives that we want to achieve over time. We're talking about long duration, and there are many things that will need to be executed. 12 months have passed. We have nine years still to go. It's a very long duration, but we just need to focus on execution. We will be implementing action plans one by one steadily in order to achieve our goals. To that end, the whole management team will work closely together. We really appreciate your kind support going forward, and I would like to thank you again for joining us today. Thank you.

Thank you very much. That concludes the earnings call. Thank you very much for your participation.

It's time to begin. Thank you for joining us despite your busy schedule today for ORIX's earnings call for 9 months ended December 31, 2025. My name is Nakane from Investor Relations, Sustainability Department. I'll be the master of ceremony. Thank you for this opportunity. Today, we have Operating Officer responsible for IR, Kazuki Yamamoto. And he will provide you with an explanation for about and it will be followed by Q&A and the whole program is scheduled to be approximately 1 hour. Yamamoto-san, the floor is yours.

Thank you for the introduction. Thank you very much for taking the time out of your busy schedule to attend the ORIX Group's earnings presentation. I am Kazuki Yamamoto, responsible for Corporate Planning, Investor Relations and Sustainability. Let me explain the financial results for the third quarter of the fiscal year ending March 2026. Page 2 of the handout contains the key points we want to convey today. The first point is net income. Net income for the 9-month period was JPY 389.7 billion, up by JPY 117.9 billion from the same period last year. This was our highest third quarter cumulative net profit level. We achieved 89% of our revised full year forecast of JPY 440 billion announced at the time of first half results call. The second point is pretax profits. Pretax profits were JPY 567.7 billion, an increase of JPY 184.3 billion, year-over-year, and all 3 categories of finance, operation and investments saw profit growth compared to the same period last year. Growth was particularly strong in investments, and we still achieved an increase in pretax profits year-over-year, even after excluding a large gain on the sale of Greenko shares and valuation gains on the remaining stake. The third point is shareholder returns, along with first half results. We also announced the expansion of the share buyback program from JPY 100 billion to JPY 150 billion. By the end of January, we had completed buybacks equivalent to JPY 128.1 billion with a progress rate of 85%. This is the increased program. We will continue to make steady progress on acquiring shares to complete our full share buyback program. Please turn to Page 3. I will explain pretax profits for each of the 3 categories. This page shows our chart for each of the 3 categories, Finance. Operation and Investments with 9 months cumulative results for the previous and current fiscal year. First, at the top, the dark blue represents Finance. Segment profits increased by 8% year-over-year to JPY 145.5 billion with a progress rate of 81% against the full year forecast. ORIX Life reported growth in investment income, and we were able to increase finance revenues in the Australia and Asia, excluding Greater China. Next, the light blue bar, second from the top represents Operation. Segment profit increased by 17% to JPY 189.5 billion compared to the same period last year with a progress rate of 79% against the full year forecast. In the third quarter, we recorded a gain on the partial sale of shares held in Canara Robeco, an asset management company in India at the time of IPO of the company. Airport concessions and real estate operations also saw improved performance in the third quarter. Moreover, the Auto segment posted strong earnings, thanks to a robust used car market. The Ships business also boosted earnings with high asset efficiency, having leveraged synergies with Santoku Shipbuilding, which joined ORIX Group the fiscal year ending March 2024. Finally, the pink bar from the top represent Investment segment's profit -- segment's profit in this category increased by 100% compared to the same period last year, reaching JPY 261.4 billion, marking a significant increase in earnings. As outlined earlier, we booked a large gain on the sales of Greenko in second quarter and sales of Ormat geothermal power business, which also was a contributor. In real estate, we sold several properties, including Hotel Universal Port VITA as well as office buildings and rental condos. Furthermore, domestic PE investees mostly performed well, resulting in increased profit contributions. As a result, segment profits for the 9-month period increased by 40% year-over-year to a total of JPY 596.4 billion. Further, pretax profits increased by 48% year-over-year to JPY 567.7 billion. The difference of JPY 28.7 billion between the total segment profits and pretax profit is due to business expenses in the administrative departments and other areas. Steady profit growth across our finance, operations and investment segment was a key feature of our performance in the third quarter. For the fiscal year ending March 2026, while building on achievement to date, we aim to drive sustainable growth and further improve capital efficiency. In the fourth quarter, based on the business plan currently being formulated and the medium-term outlook for each segment, we will continue to take timely and appropriate actions as needed. Accordingly, there is no change to our full year net income forecast at this time. Now please turn to Page 4. This page explains ORIX's progress in capital recycling. The upper section with a light orange background shows sales, while the lower section with a light blue background indicates new investments. Also, the blue and pink circles in the central box shows the category for each of the businesses sold or bought. For the 9 months -- so for the 9-month period, we recorded JPY 196.6 billion in capital gains with cash inflow due to divestments amounting to JPY 790 billion and cash outflows from new investments amounting to JPY 700 billion in total. Now new investments are being continuously pursued both domestically and overseas, focusing on operation and investments among the 3 categories. A key investment in operations is the acquisition of our Hilco Global, a world-leading company in asset valuation. Furthermore, we have expanded our investments in aircraft supported by generally strong passenger demand. In Investments, we made a PE investment in LULUARQ, the operator of capsule toy specialty source during the first quarter. In the third quarter, a TOB for I-NET, a company listed on the Tokyo Exchange -- Stock Exchange Prime Market was executed. This initiative is part of Pathways, one of our strategic investment areas, which aims to undertake investment in AI infrastructure businesses and DX-related business fields. Additionally, we invested in AM Green convertible bonds and logistics facilities. Although not shown on this page, we announced the formation of a PE fund with the Qatar Investment Authority, QIA, last November and although this fund specializes in domestic investment, but investment in LULUARQ and I-NET were before the fund launch. So we plan to leverage the fund for use in future deals. Gains on asset sales, cash inflows and new investments are all progressing steadily. However, there is no change to our full year forecast from the revision announced at the second quarter. Now next Page 5 and 6 provide a summary of segment profits and assets. On January 1, 2026, we announced organizational reforms to restructure our 10 segments into 3 business divisions: the APAC business division, Infrastructure Business Division and Europe and America business division as well as new banking and insurance units. However, for FY '26 March end, we continue to manage our business using the existing 10 segment framework. So we will explain our results using these. For detailed information on the performance of each segment, please refer to the slides from Page 10 onwards. First, cumulative segment profit in Corporate Financial Services and Maintenance Leasing for 9 months period increased by JPY 14 billion, up 21% year-over-year, reaching JPY 80.2 billion. The Corporate Financial Services unit in the second quarter posted a profit on the sales of ORIX Asset Management and Loan Services Corporation and Nissay Leasing. The business enjoyed increased fee income from various activities, including operating lease investments. Together, these resulted in increased profits year-over-year. The Automobile unit steadily expanded earnings by successfully passing through higher maintenance and other cost increases through pricing with customers understanding. They also sustained strong used car sales. This helped the unit achieve its highest ever profit for the third quarter. The Rentec unit achieved growth in inventory style rentals of ICT equipment on Windows 11 related replacement demand and saw robust sales of used rental equipment resulting in profit growth. Despite Auto and Rentec posting growth in new auto lease executions and PC rentals, respectively, segment assets decreased by JPY 10.1 billion to JPY 1.8745 trillion compared to the previous period year-end due to the sales of ORIX Asset Management and Loan Services and Corporations. Next, Real Estate segment profit was JPY 56.9 billion for the 9 months. The Investment and Operation unit posted revenue growth of the sales of -- from the sales of Hotel Universal Port VITA as well as from the operation of Inns and Hotels. However, it experienced a year-over-year decline in segment profits, owing to the absence of the large-scale gain from the sales of 100 [indiscernible] in FY '25 March. Details concerning the outlook for the facilities operations business will be explained later. The Daikyo unit was increased profits aided by activities such as the sales of rental condos. Segment assets increased by JPY 44.3 billion compared to the end of the previous period, reaching JPY 1.2025 trillion. The main reason behind this increase was investment in the Osaka Integrated Resort project, progressing as planned. In addition, assets rose owing to the completion of several logistics facilities by the investment and operation unit. And Daikyo also increased its investment in newly built condos. The PE Investment and Concession segment achieved profit growth of JPY 27.8 billion or 42% year-over-year to JPY 94 billion. The PE Investment unit reported higher profits year-over-year due to robust performance at current domestic PE investees such as Toshiba and DHC. On a stand-alone third quarter basis, we did not execute any individual exits from our PE investments. However, equity earnings from our investment in Toshiba made significant contributions. As a result, quarterly profit exceeded both the first quarter of the previous fiscal year, which included gains from the sales of Sasaeah Holdings and the fourth quarter when the exit of Wako Pallet was realized. Regarding the Toshiba investment, while we recognize its earnings as equity method investment income, there is a 3-month lag in reflecting those results in our financial statements. Now the Concession unit continued to perform well as Kansai International Airport saw increased passenger numbers, especially on international flights. We will explain the impact of China later, but please note that earnings at -- the third quarter earnings at Kansai Airports will be reported together with ORIX's fourth quarter results with a 3-month lag. While the impact for FY '26 March is likely to be minimal, we anticipate a certain downside for the next fiscal year. Data on passenger numbers and other details for the 3 Kansai Airports up to December are shown on Page 7 for your information. The Investments and Concession segment assets was up by JPY 127.7 billion from the end of the previous period to JPY 1.1506 trillion. The main reasons include new investment in LULUARQ, the successful TOB of I-NET, making it our subsidiary from this third quarter and increased balances in equity method investments. Environment Energy segment's profit increased by JPY 109.1 billion year-over-year, reaching JPY 102.2 billion, a substantial profit increase is mainly due to gains on the sale of Greenko energy and valuation gains on the remaining stake as well as gains on the sale of Zeeklite and Ormat. We completely divested our stake in Ormat in third quarter. Domestic earnings show that solar power sales revenue decreased in the third quarter due to seasonal factors, but electricity retail sales volumes and prices remain strong. Regarding overseas operations, interest income from convertible bonds of AM Green, which were purchased in second quarter, contributed to positive performance. Additionally, over [indiscernible] sales are in the recovery trend, we continue to remain cautious on development and operation projects at this firm. Segment assets decreased by JPY 11.1 billion to JPY 1.002 trillion compared to the end of the previous term due to capital recycling. Profit of the Insurance segment increased by JPY 12.4 billion, up 20% year-over-year, reaching JPY 74.1 billion. The impact from expansion in investment assets and rotation of portfolio securities has boosted revenue. In terms of product sales, along with a single premium wholesale insurance Moonshot and income protection insurance Keep Up. Launched -- and in the first half of FY '26 March, respectively, sales of whole life insurance, RISE and Yen Can launched in December was also strong. Segment assets increased JPY 193.7 billion to JPY 3.203 trillion compared to the end of the previous term. Profit of the Banking and Credit segment decreased by JPY 2.2 billion year-over-year, reaching JPY 19.9 billion with interest rates rising, while asset management yields have gradually improved, funding costs for deposits are rising ahead of those. The main reason for the year-over-year decrease is the booking of losses from selling long-term bonds through the third quarter aimed at improving the bond portfolio. We are responding flexibly with priority on maintaining financial soundness and enhancing future profitability. Segment assets increased by JPY 115.3 billion to JPY 3.2599 trillion compared to the end of the previous term. New executions of investment real estate loans and lending to strategic areas have grown steadily. Additionally, we explained in the first quarter, a JPY 30 billion dividend was paid out to the parent company, ORIX in July of last year, helping to optimize capitalization. Profit in the Aircraft and Ship segment increased by JPY 4 billion, which is 9% higher year-over-year, reaching JPY 48.6 billion. Aircraft leasing saw increased plant sales in the third quarter, resulting in profit growth during the 9-month period. Lease rates continue to improve and the business environment remains favorable. Of note also advanced aircraft sales and booked profit contributions from the Castlelake portfolio, which was acquired in January last year, resulting in similar profit growth. Ships saw increased ship sales in the third quarter, but experienced a slight profit decrease due to the absence of the sharp rise in charter fees in some contracts seen in Q2 of FY '25 March. Segment assets increased by JPY 46.5 billion to JPY 1.2785 trillion compared to the end of the previous term. Aircraft leasing assets increased on investment of new planes, but assets in the ships unit was lower on sales on owned ships. And overall, it was flat, excluding ForEx. ORIX USA segment reached JPY 14 billion for the 9-month period, showing positive recovery, thanks to valuation gains on investments in PE booking in Q3. However, profits for the 9-month period decreased year-on-year due to the absence of the reversals of the credit costs booked in FY '25 March and the credit loss expenses and impairments booked in the same year. Credit losses and impairments mostly stemmed from real estate lending originated primarily during the post-COVID period of financial easing and legacy assets before those days, higher U.S. dollar interest rates and prolonged inflation and uncertain economic outlook stemming from tariffs and other factors also contributed. To date, we have strengthened our investment and lending standards, applied more rigorous screening to new deals and enhanced risk management to existing assets. And through these efforts, we continue to improve and reshape our portfolio. Please refer to supplementary information, Page 25 and 24 for further details of OCU performance. Segment assets increased JPY 491.6 billion to JPY 2.0856 trillion compared to the end of the previous term. Excluding the impact of the Hilco Global acquisition and exchange rate fluctuations, assets are declining, and we are steadily moving forward with rebuilding our business and portfolio rotation. Profit in ORIX Europe segment increased by JPY 9.2 billion, which is a 24% rise year-over-year, reaching JPY 47.3 billion. In the third quarter, ORIX sold a portion of its holdings in Canara Robeco in conjunction with its IPO. Additionally, Robeco Group increased net cash inflows and expanded AUM to a record JPY 500.5 billion, boosting management fees and underpinning profits. Segment assets increased by JPY 127.6 billion to JPY 796.9 billion compared to the end of the previous term, mainly due to exchange rate effects. Profit in Asia and Australia segment increased by JPY 11.4 billion, which is 41% rise year-on-year, reaching JPY 39.3 billion. Although the increase in profit this quarter was partly driven by one-off factor and valuation gains and unlisted equities, we continue to restrict investment stance in Greater China, while in other APAC regions, we expanded earnings primarily through financial income generated by local operations, resulting in overall profit growth. Segment assets increased by JPY 125.9 billion to JPY 1.851 trillion compared to the end of the previous term. Assets have increased in some regions such as Australia and India, mainly due to exchange rate effects. Please see Page 29 for graph showing a segment asset breakdown by country and region, where China has seen recent increase driven by exchange rate effects. That concludes the explanation by segment. Please turn to Page 7. I would like to add some explanation about inbound tourism. Concession centered on Kansai International Airport is reflected in ORIX's consolidated results with a 3-month lag through the earnings of Kansai Airport. So for this third quarter, we incorporate Kansai Airport's July through September performance, which contributed to higher profits. Since December, the number of Chinese passengers has declined approximately 40% year-on-year, just looking at September. And in addition, late January, major Chinese airlines announced extensions of the deadlines, allowing free cancellations for Japan-bound tickets. As a result, unfortunately, we expect downward pressure on earnings and continue for the time being. However, the number of international passengers and inbound tourists in general, well, you can see the trend after the COVID-19 pandemic and also the impact of Mainland China. You can see that on the right-hand side graph. As for real estate operations in Kansai area, there is an impact of a discount, mainly focusing on group tourists from China. And therefore, currently, it is difficult to increase the unit price. However, real estate operations directly operated by ORIX, we have been working to improve RevPAR focusing on hotels in Kansai region. The share of Mainland Chinese customers to total assets in both hotels and inns is small. And ORIX Hotels and Inns tend to specialize in individual Chinese travelers and earnings have remained steady. Meanwhile, some facilities have seen bookings slow during the Lunar New Year period. So we are carefully monitoring the situation. Real estate operations like hotels and inns are affected by inflation and rising construction costs. And therefore, we will aim for sustainable growth while carefully selecting new investments. There's basically no impact on rental cars because driving licenses issued by [indiscernible] in Mainland China are not valid in Japan. And in Aircraft and Ships segment, we continue to see steady passenger traffic, mainly from Europe and United States and solid supply and demand in aircraft. And therefore, overall ORIX's inbound tourism-related businesses appear to be well balanced. Thanks in part to the success of the Expo held last year, global interest in the Kansai region rose significantly, both in terms of the economy and opportunities. In our integrated report 2025, we highlighted a range of value creation initiatives, including the Expo Kansai International Airport, advanced opening of [ Kita ] district and the launch of globally branded hotels. We would give a broader audience and effortless way to experience the atmosphere and momentum of this region. And to that end, we are planning to introduce a video -- short video on our website. Apologies for taking a moment during this earnings presentation, but we would like to share this video teaser preview over the next 90 seconds or so. [Presentation]

I believe Kansai is now entering a period of significant change. Kansai refers to a region in Western Japan centered around Osaka, Kyoto and Kobe. We know that there is a great expectation. So during the World Expo, many dignitaries are participating from around the world, we were able to show the world that Tokyo isn't the only global city in Japan, Osaka is also a global city. We want to be very active in Asia as a result. And I hope that the people understand that what we're trying to do. Thank you very much for viewing the video. Please turn to the presentation material and turn to Page 8. This is our financial strategy, consolidated balance sheet. Financial breakdown is shown on the left and key indicators on the right. Total assets increased by JPY 1.2594 trillion compared to the end of last year. Excluding the FX effect, there was an increase of JPY 800 billion. And the largest factor was the consolidation of Hilco Global. And then we have a PE investment and also assets increasing in insurance and banking. But for insurance and banking, self-funding is also possible. Long-term debt, short-term debt and deposits increased by JPY 363.4 billion, mainly due to the growth in deposits in ORIX Bank and the new bond issuance. We will continue to diversify funding sources and increase the ratio of long-term borrowings to maintain stable and competitive funding. Insurance contract liabilities and policy reserves decreased by JPY 234.2 billion. This was mainly because of higher discount rate used to measure insurance contract liabilities, resulting in a reduction of liabilities on the balance sheet. And this more than offset an increase of new single premium policy sales. And the total shareholders' equity was increased by JPY 495.2 billion, of which JPY 234.2 billion was attributable to the reduction in insurance contract liabilities. And the remaining increase primarily reflects the accumulation of retained earnings. Shareholders' equity ratio is 25.3%. The ratio, excluding deposit is still at 1.5x. On the right-hand side, the graph shows the employed capital ratio, which remained at around 90% due to capital recycling. By maintaining appropriate employed capital ratio, we aim to maintain an international credit rating at the A level going forward. Please note that the calculation model has been updated since -- from Q3. There are no changes in terms of risk tolerance or risk-taking policy, but the risk ratios are now defined at more precise business and unit levels than before. While uni-funding costs, including bank deposits are gradually rising, foreign currency funding costs, mostly in U.S. dollars continue their downward trend. We strive to reduce capital costs by leveraging our competitive A-level credit ratings and diversified funding capabilities. Please turn to Page 9. Progress in our share buyback program is as indicated in the executive summary. Payout ratio for full year is 39% of our net income per share. We want to maintain this level. Left bottom, JPY 153 or so per share, this is based on the assumption of net income forecast of JPY 440 billion. We will give further details at the end of the fiscal year. That concludes my presentation. Thank you very much for your kind attention.

Thank you. We are now ready for the Q&A session. [Operator Instructions] So we have from JPMorgan [ Sato san].

Yes, I am Sato from JPMorgan. So I'd like to ask a question about ORIX USA, a little details. However, at the time of financial results announcement this time, so the closed ORIX Capital partner, I think you have closed it. So is it related to that, is what I want you to confirm? And Hilco Global, so you have integrated the company under consolidation. And I know that you're going to be revisiting your business plan based on this acquisition. And on Page 24, earnings outlook, for example, as compared to 3 months ago or 6 months ago, it is going to be revised to downside or rather than upside. And also, if there was to be any kind of progress that is made in terms of other businesses.

So first of all, OCP evaluation -- profit within the portfolio, the investees, there was a growth of EBITDA, and that was quite significant. And as a result, that evaluation gain was -- occupies the majority. And also other closed deals, so we are aspiring to exit sooner rather than later. And at the end of the day, we are considering to exit out of those investments. And as for Hilco Global, thank you for your question, has been shown, so we have 100 days plan, which is currently being executed. And so ORIX Group Global and Hilco and also out of the entire group, -- so what -- how can we enjoy the collaboration, in fact, is what we are foreseeing. On Page 25, as you can see, so Hilco Global, where it is heading to, like automotive, like parts and components and also at the same time, advisory businesses. So it is quite speedy. So without losing any kind of strength of Hilco, we would like to acquire new kind of businesses that would work out to be positive. And also OCU as a whole, Hilco Global inclusive, the overall picture of the matter is in the business plan that we are formulating currently, leveraging on our balance sheet, we are, in fact, scrutinizing the details so that the OCU business can be rebuilt, and we hope to be able to explain that at the next earnings call. So I hope this answers your question.

Well, in that case, just so that I'll be able to have a better understanding. So what was closed back in January. In the next quarter, irrespective of the size, I understand that there will be a profit that will be generated.

As to your question just now, towards the closing, so there will be an evaluation that will be conducted. And so additional kind of gains on sales is not to be expected because the valuation gain has already been incorporated.

From Morgan Stanley, MUFG Securities, Takemura-san, please.

This is Takemura, Morgan Stanley. I have a question about the overall progress and your view on the progress. Third quarter was closed. In the second quarter, you upgraded the plan, and even against that plan, the progress was quite fast. So compared against the plan, what was better or worse or was stronger or weaker? Can you please share as much as possible. And also because of the high progress rate, maybe in the fourth quarter, do you expect some downside that will offset this faster progress.

Thank you for your question. In the first 9 months, first of all what is progressing strongly. This is Page 3. I would like to use this page to explain. As I have mentioned, as for investment, this is JPY 261 billion and Greenko JPY 95 billion. And in terms of investment efficiency, this is very good. Toshiba noncore business divestiture and also Kioxia post IPO. So these are all captured with 3 months for LP earnings, and this is progressing faster than expected. But we're talking about the semiconductor share prices. So this is not something that we should be commenting on, but the share price level is quite high in our view. As for the operations, as we have explained, Canara Robeco again, this was very smoothly launched. And with remaining share, this is equity based investment. We will continue to move to a situation. But including the emerging markets, we see this kind of business definitely growing. And the third point I would like to mention is based on the result of the election, we expect the domestic economy to grow stronger. I talked about inbound, but automotive, lease, IT and also funding requirement. We believe all of these are moving very solidly. And until we close the fiscal year, we will continue to build up the deals, and we are really hoping that we can do better than the plan in terms of finance business as well. However, with regard to the first quarter, as I have just explained, for the full year, it seems to be good, but performance for next fiscal year or the next 3 years, we need to verify the outlook and think about the capital efficiency as well as the solidity of the earnings plan. And based on that understanding, we will continue to address the situation. So I'm not talking about specific deals or projects, but we will be evaluating things on a regular basis as appropriate. And right now, I don't have anything specific that I can mention. But we will continue to scrutinize the business plan and share information. And I hope that answers your question.

Yes. Just one point of clarification. USA, gain on valuation, was this part of the plan?

Thank you for your question. Ultimately, company's situation is always looked at in detail. So this is within our expectations, we can say. But invest in ORIX USA and ORIX Capital Partners website, when you look at website, you know who are investing and the telecom network data center service investees impacted by the AI boom in the U.S. performing very strongly. And the EBITDA growth of those companies can be incorporated at fair value, which means that this domain is growing stronger than we had expected. And this is one of the factors that was reflected in the performance in the third quarter.

So next, we have from SMBC Nikko Securities, Muraki-san.

I am Muraki from SMBC Nikko Securities. So I may repeat some questions, but towards the fourth quarter in terms of cost incurrence, is there anything that we need to be mindful of. So in posting some of the losses in the past, such as ORIX Bank, ORIX Life. There was some loss on sales of some fixed income products. And also in the United States, credit cost of JPY 4 billion was generated as well. So there was some credit loss that had incurred as well. So in more precise manner, I wasn't able to hear you. But with regard to Elawan, with the individual kind of project, I think you said taking a cautious and careful step. I suppose there is a goodwill. Can you carry it over the goodwill for Elawan. So I know that there are a lot of technical kind of details, financial technical details, but...

Okay. I would like to answer one by one. First of all, as I have mentioned, in whatever the way the cost that may incur, so it's not that we are being careless, but such as the public AI or data center that has been remaining to be pretty robust, but also tariff related, trade related, in fact, remains to be uncertain. So therefore, it's pretty mix.and real estate although the short-term interest rate is coming down, but long term, especially super long-term interest rate is still rising. So the credit cost may be posting dollar interest rate, while it was almost 0, especially the short-term rate, especially the mortgage loan that is increasing. So some credit loss that may incur has been incorporated and also legacy assets out of the corporate is what I have mentioned is kind of corporate risk. There are certain provisioning that may perhaps prove to be necessary. So this is why every quarter -- so some of the fixed income assets that we will be kind of listing them out for seeing some risk that may generate some losses. So as for the fourth quarter, I think the same kind of procedures will be undertaken. So from that perspective, with regard to the credit cost for this year, so we will not wait until the fourth quarter. And at the regular pace, we would continue to revisit the situation so that we'll be able to in advance incorporate the losses, if there was to be any. So as you have mentioned about Elawan, on an individual project by project basis, we have been taking a very careful and also cautious stance. So Elawan's goodwill and also at the same time, the project that is in progress, for example, work in process, for example, and we have been incorporating some intangible assets as well. So the business progress as compared to our initial plan, especially at the reset of the economy and other factors taken into account, there has been some delay, however, in the project, but we are beginning to see some signs of improvement. So therefore, the plan will be reviewed. And so this is what we need to do, we know. But if there was to be any kind of aggravation in terms of the P&L, then we will not wait until the very end, but rather to review the project itself. So Elawan at the center on a midterm business plan perspective by project by project, we are scrutinizing each and every project and also reflecting the result of the assessment. And in light of all the individual assets, we would like to take necessary measures so that there will be no carryover of any kind of negative legacies onto the next term. So as has been mentioned, this year as well as the last as a result of yen's interest rate rising, if there was any loss incurring from the bond of fixed income assets, we are incorporating some of the foreseeable losses by the third quarter. In terms of the amount, it is not that sizable, to be honest. So we would not have unrealized loss, not a huge amount. And as a result of some impairment that has been conducted, there should be no further impact that we can foresee. On the other hand, life insurance, it is true that the unrealized loss is enlarging. However, basically, -- so we have -- we do kind of match it against the policy kind of asset as well. So in terms of the switchover, order churn has not been happening very much, which means that from an operation perspective, there seems to be no kind of -- the accounting kind of loss that we may have to calculate. We are not prepared to be doing so at this point in time, so I think we still have some leeways. I will not be able to say anything in definitive terms, but that's all I can share at this point in time.

Daiwa Securities, Watanabe-san, please ask your question.

This is Watanabe, Daiwa Securities. I would like this question about Page 8. 92% at the end of September, now 89%. This is improving the employed capital ratio. And you have explained this in your presentation, but what did you change? And did the target level change. And in thinking about how to use the excess capital, do you have any updates on the capital strengthening for the insurance?

Yes, please turn to Page 8 for employed capital ratio. [indiscernible] was updated in the third quarter. So I would like to add some explanation. As was said before, year-end team looks at the risk dashboard. We have been improving the dashboard. Portfolio risk management is now more detailed. We can look at this on a project-by-project basis. We are trying to do that. And the risk volume that we were looking at as a lump sum was broken down to project level and the risk level was actually lower than we expected. So the employed capital ratio is now lower. And maximum loss based on global financial crisis. That was what was used as a parameter, but we also reviewed that. So from 91% to 81%, the ratio has come down. Does it change our risk appetite? Well, this is just a result of calculating in great detail, so it doesn't directly impact our risk appetite. However, 10% investment capacity of buffer is present. And also in terms of PE ratio and the equity ratio, this is quite conservative. But as long as it doesn't negatively impact our rating, it is actually possible for ORIX to make flexible investments. And your second question about liability for Life assessment. Thank you for your question. On the left-hand side, on the table, you can see the insurance contract liabilities, reduction of JPY 234 billion. I was explaining that. And this is mark-to-market based on the long-term bonds. As you may know, toward the end of last year, 20-year or 30-year term bond issuance reduced. So there are fewer bonds that we can refer to. So what can we do now? Now the life insurance company is looking into various parameters. Financial institutions and accounting auditors, they are discussing these details in order to review the references so that we can improve the index to provide more stable evaluation of the assets. And as a result of the improvement, the life insurance company wants to introduce better indices. And if they can do that, we believe that is an improvement. And this is still in discussion. And we're just telling you what kind of initiatives are being done. So bond issuance was smaller, spread was expanding. These factors had impacts, and we wanted to make some adjustments. I hope you understand, I'm sorry that my answer is not very clear, I know.

So after the adjustment, if you can just step evaluation, can you utilize the excess capital for shareholder return, for example, growth investment?

Well, the liability assessment evaluation, we don't need to be overly discounted. So we have to check that first. Utilization of net assets is not really the focus. We're looking at the parameter whether the parameters are accurate. We wanted to evaluate the accurateness of the parameters.

Next, we have from Mizuho Securities, Sakamaki-san.

I am Sakamaki from Mizuho Securities. I have one question. So this time, from the deck, so capital profit and base profit, I think, was not incorporated because I think there is a lot of evaluation gain or evaluation profit. So how -- what was your takeaway in accordance with the previous way you were expressing?

So capital gain -- as to the capital gain versus base profit, we did not incorporate such a page this time, but I think we had some mention of this. So capital gain, in fact, is shown in the capital recycling page. So let me make sure. So JPY 195.6 billion. And if you were to subtract that, you would end up seeing how much was generated as the best profit. So as a result of this JPY 196.6 billion, and so therefore, you see this was not to be kind of replicated. So therefore, some -- from investment community had said that it is quite misleading. So this is why, as a result of escalating this to the Board and we have decided to disclose on a fee category basis and Canara Robeco's gain on sales, for example. So capital gain business of finance could be a possibility as well. So it's not that we have decided to refrain from disclosing what we used to. But as for the base profit, for sure, it is steadily growing. And so therefore, we just wanted to prioritize this closure based on those 3 categories. And so the base profit versus capital gain, so we do, of course, respond. Should you have any questions and should you want the precise numbers by all means. Thank you very much.

Nomura Securities, Sasaki-san, please ask your question.

This is Sasaki, Nomura Securities. Just one point of clarification. Performance up to Q3, pretty strong. Credit cost is posted. And in the fourth quarter, certain things may happen. And as a result, next fiscal year or the next 3 years, how is the plan shared with the management or how is it aligned?

With Takahashi-san as a new CEO, more emphasis were placed on ROE. The biggest point of your question, I believe, is can we invest actively into high-quality deals. And this is a focus of our discussion internally. PE investments generating new profit. As Takahashi-san mentioned, this is one of the important strategic pillars. So wants specifically, which domain do we want to promote this? This is the most imminent discussion. And once we have the results for FY '27 March and '28 March, we should be able to aim for continuous growth in profit. But divesture will also happen and as a turnover will also happen during this time period, and we may have some new capital. So JPY 150 billion of share buyback. So we added JPY 50 billion. JPY 150 billion is not the baseline going forward. But we increased from JPY 50 billion to JPY 100 billion in the beginning of the year. So we want to be flexible in considering the shareholder return as well. So this is something that we're discussing for the short term. For JPY 100 billion of performance as we said when we made the adjustment, this is the highest in accord, and it reflects the major sales like [indiscernible]. And for next fiscal year and beyond, we have to check again. But our own watermark has -- high watermark has also increased. But we will not just look at that. We will also think about high capital efficiency investments. I don't think I'm answering your question very directly, but I hope that's okay.

What you have just said is profit growth will continue to some extent. And we want to increase ROE and meet the 11% target for ROE. Is that the correct understanding. Because first half and second half had slightly different nuance.

Absolute amount of growth in terms of profit, I'm not saying that we are committing to that within this structure. Whatever contributes to capital efficiency, well, in terms of P&L losses, we will not be just focusing on that, we will try to do that. But the ultimate objective is increased capital efficiency. So if we do something financially and the PL profit drops from this year's high level, well, that kind of thing could happen. But business plan for next fiscal year has not been translated into financial plan just yet. But once we have a better idea, we would like to explain that perhaps at the end of the fiscal year presentation.

Bank of America, Tsujino-san.

This time I think you had some evaluation gain and also capital gain in Asia as well as in North America as well. So with regard to PE investee in U.S. as well as in China, up until now, you had -- you, in fact, shared your idea as to being stringent in terms of the scrutinization necessary for those investees. And this is why you did not revise upward your earnings. And so why you thought that you have to remain cautious, you did manage to enjoy gain on -- enjoy capital gain or evaluation kind of gain as well. So was your outlook wrong? Or were you anticipating some loss generation from some kind of investment or investee. So this is why you have not made any kind of changes or the revision to your earnings despite the fact that you have been exceeding your expectations. So that is the first question. And then can I expect the fourth quarter to be even on upward trend. And -- but of course, it may have to be revisited perhaps. So it's just that your outlook was slightly kind of wrong and PE investee in U.S. was pretty strong. But then of course, Elawan is emerging and that is kind of encouraging you to have the heads up.

So I hope that I will be able to answer to your question as you have in accordance with your intent. So in China as well as in United States, so the capital gain as well as evaluation gain as a result of the evaluation that we have conducted on an individual basis. So the risk appetite as well as the direction going forward, which I mentioned earlier, in terms of the P&L of that just as been pointed out by Tsujino. So the nuance may be slightly different from what we have mentioned in the past that is something that I will not be able to deny. So especially USP investee, in the areas of technology, for example, it is expanding on a fair value basis. So therefore, it is really based on the individual P&L. And also in the United States or North America, we were proceeding with reducing down the position. So therefore, we hope that this evaluation gain should lead us in generating the actual gain on sales. So Asia, while we enjoyed some evaluation gain, but from an accounting technicality, so it's not -- but it is recovering from the bottom, in other words, in some cases. So therefore, on an individual name-by-name basis, there were mixed situations. So therefore, in terms of the risk appetite-wise towards investment, we remain to be kind of conservative or we remain to be -- we would contain from making aggressive investment, refrain from making such investment. But at the end of the day, what is proceeding in a strategic manner -- so those, unfortunately, will start to perhaps dilute in other words, going forward. So towards the fourth quarter in each of the business lines, so while we are scrutinizing each and every business line. With regard to Elawan, that is one category and also with regard to real estate as well, we are doing the same, so that we'll be able to take necessary actions earlier rather than later. And so dependent on the business environment changes, external factor changes against such a backdrop, if we cannot foresee an immediate recovery in some of the businesses, we do not wait until the very end, but rather take earlier actions. So in other words, we will prioritize taking actions as opposed to wait and see. So from that perspective, we may have some further evaluation gain or losses. But Elawan, for example, is one. And also with regard to real estate, there will be some kind of preparation in terms of procurement and so on and so forth. So therefore, I mean, so far as we haven't gone as far as being able to explain one by one, to the investment community, but there is some kind of progress that we may be able to make going forward. So I just wanted to indicate the direction going forward. I hope this answers your question in some way or the other.

Well, if I could ask a question about Robeco's AUM on a Q-on-Q basis, it is increasing quite significantly. What is that the backdrop? So it is increasing by 18%. So is there anything that you can explain as an appeal?

So Page 27, yes, we have shown. So the Robeco, the asset management fee is under pressure, but the AUM is what we feel the need to kind of increase on a 2-dimensional basis, but also at the same time, we are trying to enhance the profitability as well. So relatively speaking, we did manage to win the mandate for a quite sizable fund or deal. And that, in fact, was reflected. And also equity market is remaining to be strong, and on the other hand, the fee income competition, especially advisory as well as index, it needs to be tough. And so therefore, we would like to remain to be competitive and centered around Robeco, of course, in proceeding with this business. So AUM, it is true that it is growing significantly, but we hope to be able to generate growing of profit out of this growth of AUM as well as AUA.

Okay. Well, in that case, in this there is no kind of specific strategy that worked out to be positive. You will not be able to mention that?

Well, we hope to be able to share some further details. But as to Tsujino-san knows, like index related, for example, what was build, what was not, if you were to -- you will be able to perhaps enjoy a better inflow of the fund, but the needs are quite limited. So therefore, if you were to seek for the quantity, for sure, you may be able to benefit from it. But of course, we will have to ensure, as I have said, that leads to our betterment of profitability. So this is what we need to work on. So it is not just the quantitative improvement but also we are trying to achieve qualitative improvement at the same time.

Before we run over the scheduled time, this is going to be the last question. [indiscernible], please ask your question.

This is Niwa speaking. Follow up question to what Tsujino-san asked. My question is management resource allocation and also appetite for Japan. Real estate was covered broadly. And my question is, in Japan, what is better areas that you would like to focus on? And is there a sign for improvement in terms of demand for financing? 17 strategic domains have been identified by the central government. And are there some of them in line with the business that ORIX is trying to do?

More domestic market, as I explained during the real estate mid-market private equity and manufacturing included new economy-related area is seeing increase in the interest rate. So lease and CapEx investments demand strengthening. This is our impression. For example, for auto lease cost increase. Well, we asked people to send that, and it was not really accepted, but recently negotiation is most smooth, retention is going up. So based on the financial capacity, tangible asset-related business is looking very promising in Japan as well. In relation to the strategic focus, ship loading, well, we are not really thinking about going directly into ship loading. So there is nothing within the 17 areas that are committed. But we believe that intermediary business will grow. For example, [indiscernible], which we made a release the other day, we are getting a good sense that this is going to be a good business. And we have adjacent areas surrounding the 17 pillars mentioned by the central government, and we will discern, identify good areas for us to enter. So that's one direction. And in addition, I'm sure that [indiscernible], but the result of the election was very clear. So looking at the governmental budget and financing, we believe that we will be able to see which private sectors will be more active and we will try to capture those. I think the budget is still yet to be discussed in detail. So we will continue to monitor that and listen to the customer needs, our customers' voices and response to their needs for financing, and we have great expectations as we try to build the business plan for next year.

Another related question. Overseas business domestic ratio compared to what you had in the midterm plan, maybe the ratio of domestic business is going to be bigger? Is that true or not?

Well, the domestic market is not expected to improve dramatically. And for overseas, when you look at aircraft, for example, in aircraft, crafts and ships, in Asia, we were controlling risk taking. So we believe that there is a good expectation there. In terms of overseas versus domestic ratio, my impression is that this is not going to change largely, but hopefully, we can provide more information in May.

We would like to close the Q&A session. And lastly, we would like to ask Yamamoto-san to close.

Thank you very much. So the third quarter remains to be strong. Thank you for your support. And just as I had explained, so we will be revisiting the business plan. And from Takahashi-san CEO, we hope to be able to share our plan going forward at the time of the earnings call at the end of the fiscal period. So after working hard at the fourth quarter businesses, so we will then continue to seek for your understanding as well as your support. So with this, would like to bring third quarter earnings call to a close. Thank you very much for your participation.

Now that is time. I would like to begin the ORIX Corporation's second quarter financial results briefing for fiscal year ending in March 2026. Thank you for joining us. I'll be the facilitator. I'm from IR, Sustainability Promotion Department. My name is Nakane. We have 2 speakers today. We have a Director, Representative Executive Officer, President and COO, Hidetake Takahashi as well as our Operating Officer, Head of IR, Kazuki Yamamoto. First half will be presented by Takahashi. Second half by Yamamoto then we'll have a Q&A session. We are planning to have 60 minutes for this briefing session. Takahashi-san?

Thank you very much for taking your time out of your busy schedule to attend the ORIX Group's financial results briefing today. I'm Hidetake Takahashi, ORIX Group's COO. I'll explain the key initiative as the business progress toward achieving the long-term vision announced in May this year, which is making impacts through alternative investments and operation and business solutions as well as management indicators of 15% ROE and JPY 1 trillion in net profit for the fiscal year ending March 2035. And following this, Kazuki Yamamoto, who is in charge of Management Planning and IR, will explain the second quarter financial results for the fiscal year ending March 2026. If you could please refer to the Page 3. There are 5 points that I'd like to convey today. First, I'd like to discuss the revision to our earnings forecast. Our first half, all 3 categories, finance, operation and investment performed well and capital recycling is also progressing smoothly. As a result, we decided to raise net profit forecast from the previous JPY 380 billion to JPY 440 billion. We also revised the full year dividend forecast per share from JPY 132.13 based on a net profit of JPY 380 billion to JPY 153.67. And in addition, as we look forward to proceed with optimizing our portfolio and capital structure and considering the completion of the sale of Greenko announced yesterday, we have decided to increase the amount of our share buyback program from JPY 1 billion to JPY 150 billion, (sic) JPY 100 billion to JPY 150 billion and Kazuki Yamamoto will explain in more details shortly. The second point is the establishment of a PE fund together with the Qatar Investment Authority, which was announced yesterday. ORIX is strengthening our asset management function to help us achieve the long-term vision. As a milestone, we aim to achieve 11% ROE and JPY 100 trillion in AUM by the fiscal year ending in March 2028. Since the establishment of a PE Investment segment in 2012, we have executed over 30 investment in Japan and all utilizing our own balance sheet. We have reached an agreement with Qatar Investment Authority to establish a fund aiming at investing in Japanese companies. For the first time, we will incorporate the third-party funds into this business. Through this fund, which has a total scale of USD 2.5 billion, we will expand our investment, including those in a large-scale project. ORIX will contribute 60% and QIA, Qatar Investment Authority, 40%. The main investment target will be business section type deals, privatization of listed companies and carve-outs with an expected investment size of JPY 30 billion or larger in EV project. We will intend to continue strengthening our asset management function, including our business segments. The third point is our future business expansion with Hilco Global. In September, we acquired a U.S. company, Hilco, a subsidiary. Hilco provides services globally such as evaluation and disposal of mobile assets like inventory and equipment, intangible assets like IP and trademarks and ABL asset-backed lending. ORIX USA will position Hilco as a platform for creation of ABL investment fund, strengthening its origination capability and expand private credit business. Similar to the domestic PE fund mentioned earlier, this is a strategic investment to aid expansion of our asset management business. And further, Hilco's asset evaluation services are a countercyclical business. In an uncertain economic environment, we believe we have acquired a fee-based business at a good time. Hilco's evaluation capability, asset disposal expertise will be utilized in assessing risk as we expand credit globally. The fourth point, Osaka IR project, integrated resort. We aim to open the IR in Osaka City around the fall of 2030 and construction began in April of this year. In September, some changes were made in existing plan. Primarily, these involve higher costs after taking inflation into account from currently JPY 1.27 trillion to approximately JPY 1.51 trillion. After carefully reviewing business income and expenditure plan, we believe that the higher cost will not significantly impact the project profitability. The Osaka-Kansai Expo concluded successfully in October. We were able to confirm growing inbound demand in the Osaka, Kansai area with many foreign tourists visiting -- in Osaka, which is also a birth space of ORIX. In the Kansai area, we are engaged in the development and operation of our sales office with offer financial -- which offer financial services, Kansai 3 airports and Umekita project and [indiscernible]. We also operate the business such as hotels and inns, we will maximize synergies by adding Osaka IR to these resources. Finally, my final point is portfolio optimization. As I discussed in May, the most important measures to achieve our ROE target are disciplined portfolio management and sophisticated risk management and new business creation, those 3 points. We have begun utilizing a dashboard to visualize the status of our business portfolio in finer detail and are progressing with our portfolio optimization. We have sold all of -- all or partial shares in Greenko Energy, ORIX Credit and Ormat and Nissay Leasing, Canara Robeco and other businesses. We will continue to review our portfolio based on our 4 criteria: growth potential, capital efficiency and impact on credit rating and group synergies. We will continue to revisit our portfolio. And furthermore, in July, ORIX Bank paid a dividend of JPY 30 billion to ORIX Group. We will also optimize the capital scale of other group companies, not just the bank. As of the end of September 2025, the AUM became JPY 88 trillion, bringing us one step closer to the medium-term target of JPY 100 trillion. We will also continue to proceed with the transition to an asset-light portfolio. Out of the plan that we disclosed in the mid- to long-term corporate value enhancement is in ROE in order to further improve the efficiency of the capital use. And all the measures that I mentioned that we carried out in the last 6 months is a good sign that we are making the right stride toward achieving a midterm business plan. We will continue to work toward achieving a midterm business plan and to achieve the long-term vision through various tactics and measures. That's all from me. Next, Yamamoto will explain about the most recent financial results.

Please go to the Page 5 of the presentation material. First, I would like to talk about the first half results and an upgrade -- update to our full year forecast. Net income for the first half was JPY 271.1 billion, a record high for the first half year and an increase of JPY 88.2 billion, up 48% compared to the same period last year. At first half, we achieved a healthy 71. -- initial full year net income forecast and ROE reached an annualized figure of 12.7%. This is a result of a contribution from gains of sales and valuation gains from a large exit deals such as Greenko Energy. As explained by our President, our forecast reflects that our efforts to enhance profitability through portfolio optimization and beginning to bear results. And we raised our full year profit forecast upward -- as our COO, Takahashi explained, and full year profit forecast is JPY 440 billion, expanded the share buyback program to JPY 150 billion. Our full year ROE is forecasted at 10.3%, an increase of 1.3 percentage point compared to the same period last year. Second point is the 3 categories: earning and capital recycling. First half, all 3 categories, finance, operation and investment booked profit growth year-on-year and ROE improved. And even excluding a gain on the sales of Greenko, first half ROE was healthy at around 10%, exceeding the previous full fiscal year ending in the March 2025 level that was 8.8%. The third point is shareholder returns. In line with the upward revision of net income forecast, should ORIX achieve a full fiscal year net income target of JPY 440 billion. DPS forecast will increase from JPY 132.13 to JPY 153.67. The share buyback program also expanded from JPY 100 billion to JPY 150 billion. At the end of October, JPY 78 billion has already been repurchased, representing 78 progress rate toward our previous JPY 100 billion. Page 6. Here, I'll explain the details of revision of our earnings forecast and expansion of shareholder returns mentioned earlier. Based on the stellar performance in the first half and the current business environment, we have revised our forecast and second half earnings, especially -- specifically, we raised the pretax profit forecast from JPY 540 billion to JPY 640 billion, net income forecast from JPY 380 billion to JPY 440 billion. This represents an increase of JPY 100 billion and JPY 60 billion, respectively, on increase. As a result, we forecast a full year EPS of JPY 394. ROE will improve to 10.3%. Outlined earlier, we raised our full year dividend forecast accordingly, expanded share buyback program. Total shareholder return should reach JPY 320.7 billion. Total payout ratio expected to rise from 65% to 73%. While improving ROE and maintaining a healthy D/E ratio, ORIX also aims to expand AUM. As our COO, Takahashi mentioned, total group AUM reached JPY 88 trillion at the end of first half. Addition to growth in the traditional asset AUM such as Robeco, which has performed very well, ORIX aims to expand its AUM in an asset-light fashion and that's not overly reliant on our balance sheet. Please go to Page 7. And also, we newly announced a joint PE fund with QIA. The page shows the first half results for the 3 categories and for both previous year and this year and segment profit, pretax profit, net income shown at the bottom. Pretax profit for the first half was JPY 391.5 billion, an increase of JPY 134.5 billion compared to the same period last year. Like the net income, it reached a record high. We implemented capital recycling, not only in the investment category, which achieved a large exit, but also in finance and operation category. All 3 categories achieved a profit growth year-on-year. This page shows the first half results for previous current year, 3 categories: investment on top to bottom. And the dark blue represents finance. Our profit increased 8% year-on-year, JPY 99.6 billion, progress rate of 55% versus full year target. Gross investment income was strong in the Insurance segment. Asia, Australia saw steady increase in financial income from leases and loans. In addition, as a part of portfolio optimization, contribution from the sales of ORIX Asset Management and Loan Services Corporation, Nissay Lease shares also contributed to the profit gain. Next, the light blue part represents operation. Profit increased by 9% year-on-year to JPY 114.9 billion with a progress rate of 48% versus our forecast, which we raised by JPY 10 billion. Business driven by inbound tourism demand such as Kansai Airports and real estate operation at Inns and hotels continue to perform well. Strong used car market helped auto business with Rentec capture the demand for Windows 11 replacement PCs. Both businesses saw growth increased profit. Environment and Energy Segment, the gain on the sales of Zeeklite, which operates the waste and final disposal side also losses profit. The pink represents investment. Profit was up sharply, 117% year-on-year to JPY 194.9 billion. The sales of Hotel Universal Port VITA in the first quarter and Greenko in the second quarter as well as a gain from the sales of shares of NYSE-listed renewable energy company, Ormat contributed to this increase. In addition, performance of domestic PE investments such as Toshiba was strong, leading to higher profit contribution. As a result, segment profit, pretax profit and net income all increased by 42%, 52% and 48%, respectively. Next, please look at Page 8. Now on this page, I explain ROE, shareholders' equity for each of the 3 categories. You see on the right, at the end of previous year, shareholders' equity was JPY 4.1 trillion, while annualized ROE was 8.8%. For first half this year, these figures were JPY 4.4 trillion and JPY 12.7 trillion, respectively. Please look at the graph on the right. The dark blue ROE of finance improved from 8.3% at the end of the previous period to 8.5%. The allocated capital finance is JPY 1.8 trillion. Now light blue ROE in the operation category improved from 13.5% to 14% due to the sale of subsidiaries and other factors. Allocated capital here is JPY 1.3 trillion. And then pink ROE in the investment category rose significantly from 7.4% to 16.6% due to sales of Greenko and hotels, allocated capital is JPY 1.6 trillion. The total allocated capital for 3 categories is JPY 4.7 trillion, which is slightly different from shareholders' equity amount of JPY 4.4 trillion on a consolidated BS. As explained last time, this is because of the allocated capital is a management accounting figure. Next page shows ROA and asset for the 3 categories. With the start of portfolio optimization, total asset ROA improved by 1.03% from the end of previous period to 3.15%. The ROA for the investment category improved significantly for the reason that I just outlined. ROA for the both finance, operation category also improved in first half. This page shows the progress of capital recycling. In the first half, we recorded a capital gains of JPY 157.1 billion. We had cash inflows from sales amounting JPY 500 billion. Major asset sales included Greenko Energy, that was a cash in of JPY 178.9 billion, capital gain JPY 95 billion. And Hotel Universal Port VITA, cash in about JPY 34 billion, capital gain JPY 21.9 billion. We also sold ORIX Asset Management and Loan Services Group and Nissay Lease in the Corporate Finance Business segment too, and Zeeklite in Environment and Energy segment too. In all 3 categories of finance, operation, investment, we flexibly recycled capital to optimize our portfolio while balancing new investment. Cash outflows from new investments amounted to JPY 470 billion. The main new investments made in the first half were Hilco Global, JPY 776 million and convertible bonds for the next-generation energy company, AM Green. Hilco Global is a leading asset appraisal company in the United States and a platform for asset-based lending. Additionally, we made a PE investment in specialty capsule toy retailer, LULUARQ as well as new purchases of aircraft where prices are favorable and new investments in logistics. We also made additional investments in Osaka Integrated Resort project as planned. We continue to have a promising investment pipeline for the future and will carefully select projects. For the year, fiscal year '26, we forecast realization and new investments of between JPY 600 billion to JPY 800 billion. By flexibly recycling capital in all 3 categories in a well-balanced manner, we will, as Mr. Takahashi explained, work to optimize our portfolio. Page 11 is about our financial strategy. This shows the important balance sheet items and the breakdown on the left and the key indicators from the perspective of financial soundness on the right. In the table on the left, you can see the total assets increased by JPY 738 billion compared to the end of FY '25, with half of about JPY 600 billion amount, excluding FX effects due to the U.S.-related factors. The remainder was primarily caused by asset growth in the Insurance segment, which saw strong sales of single premium whole life insurance, JPY 131.4 billion and at ORIX Bank, which increased the new execution of the real estate investment loans, JPY 109 billion. Next, short-term and long-term debt deposit increased by JPY 416.9 billion, mainly due to higher deposit at ORIX Bank and issuance of the corporate bond. We continue to diversify our funding methods and currencies and have realized competitive funding cost levels through this and maintaining a stable ratio of the long-term debt. Insurance contract liabilities and policyholder reserves decreased by JPY 223.2 billion, mainly due to the lower liabilities from the higher discount rate for insurance contract liabilities. This was offset by the increase in single premium insurance policyholder accounts. Of the JPY 351.9 billion increase in shareholder equity in the row below, JPY 223.2 billion is due to the lower insurance contract liabilities and policyholder accounts explained earlier. Other factors contributed to the increase of the shareholders' equity are mainly net income. Debt-to-equity ratio was steady at 1.5x. Looking to the graph at the right, we maintained the capital utilization rate at an appropriate level in the 90% range as a result of the capital recycling in the first half. This has helped us sustain an A-level credit ratings at global agencies. While yen funding rates are gradually increasing, including those for the bank group deposits, our overseas currency-based funding costs, mostly U.S. dollars remain in downtrend. We are working to reduce our cost of capital by keeping competitive A-level credit ratings and by utilized diversified funding source. Pages 12 and 13 are segment summaries. Please refer to the slides from the Pages 16 and onwards for details. Links to supplementary financial materials and the integrated report are included in these slides for your reference. First, segment profits for the Corporate Financial Services and Maintenance Leasing segment increased by JPY 13.1 billion or 29% to JPY 58.6 billion. Corporate Financial Services posted significant growth, thanks to the sale of ORIX Asset Management and Loan Services Corporation and Nissay Lease in Q2. Growth in various fee revenues was also positive. The Auto business continued to enjoy robust used car sales, achieving a record high profit for the first half. Rentec profit grew on higher rentals from ICT equipment inventories fueled by demand for Windows 11 PC replacement. Although asset for Auto and Rentec increased due to new executions in car leasing and PC rentals, the sale of ORIX Asset Management and Loan Services Corporation reduced the total segment assets by JPY 29.2 billion versus the previous year, totaling JPY 1,855.3 billion. Second, the Real Estate segment's profit decreased by JPY 1.3 billion, 3% year-on-year to JPY 49.1 billion. The RE Investment and Facilities Operation units saw significant increase in profits from hotel and inn operations in addition to the sale of the Universal Port VITA. However, profits were down slightly year-on-year due to the previous year's gain from the sale of Hundred Circus. Meanwhile, the profits at Daikyo units increased on the sale of rental apartments, properties and other factors. Real Estate segment assets remained flat compared to the end of previous fiscal year. In addition, in response to the expanding investor demand, we increased asset size of our first equipment -- equity commitment type real estate value-add fund established in January this year from JPY 100 billion to JPY 120 billion. Please refer to Page 18 of the Real Estate. The third is PE Investment and Concession. Segment profit increased by JPY 9.7 billion or 21% year-on-year to JPY 56.7 billion. PE Investment unit enjoyed steady performance of the investees such as Toshiba and DHC, resulting in higher profits even after considering the previous year's gain. Regarding the domestic PE fund information with the Qatar Investment Authority mentioned by Takahashi, you'll find the details on Page 20. The Concession unit saw a significant increase in profits, as Kansai Airports continue to perform well. Please refer to Page 45 for related data, such as passenger numbers. The segment assets for PE Investment and Concession increased by JPY 31.9 billion versus the end of fiscal year '25, totaling JPY 1.548 trillion. The main reason was the new investment in LULUARQ and increased profit contribution from the investees, leading to an increase in equity method. Fourth, Environment and Energy segment profit increased by JPY 117.3 billion year-on-year to JPY 119.7 billion. Profit was bolstered by sale of Greenko Energy, which resulted in gains on sale and valuation gains as well as gains from the sale of shares of Ormat. Additionally, the domestic electricity retail business enjoyed both higher sales volume and unit price. Segment asset decreased by JPY 38.8 billion from the previous year-end to JPY 977.4 billion because of the progress in capital recycling. The fifth is Insurance segment profit increased by JPY 10 billion or 24% to JPY 50.9 billion. Continuing the recent trend, asset income rose sharply on growth in investment assets in effort to diversify portfolio management. In terms of business, both the single premium wholesale life insurance Moonshot and revamped income protection insurance Keep Up launched this June are selling well. Insurance segment assets increased by JPY 131.4 billion versus end of FY '25 to JPY 3,140.6 billion. Sixth, the Banking and Credit segment profit decreased by JPY 600 million or 5% year-on-year to JPY 12.5 billion. Amid rising interest rates, while deposit procurement costs are increasing, the asset management yield is also improving. The main reason for the decrease versus the first half FY '25 is the recording of the losses from the sale of public and corporate bonds in Q2 to improve bond portfolio quality. Banking and Credit segment assets increased by JPY 109 billion versus the end of FY '25 to JPY 3,253.6 billion. Both investment real estate loans and the merchant banking business saw increase in new executions. As explained in Q1, ORIX Bank paid parent group a dividend of JPY 30 billion in July to optimize in capital size. Seventh, the Aircraft and Ships segment profit decreased by JPY 10.1 billion or 31% year-on-year to JPY 22 billion. Aircraft leasing profit for the first half was roughly in line with the previous year. But with lease rates remaining high, the number of owned aircraft increased and the business climate as a whole is positive. Avolon profit rose year-on-year, partly due to the contributions from Castlelake, which was acquired in January this year. Profits in ships unit was lower year-on-year on the absence of higher charter fees from certain contracts last year, reflecting the impact of marine shipping prices. Segment assets increased by JPY 24.1 billion versus the end of FY '25 to JPY 1,256.1 billion, owing to aircraft purchases. Segment number 8, is ORIX USA. ORIX USA segment profit decreased by JPY 18.1 billion year-on-year, resulting in a loss of JPY 1.8 billion. Compared to the same period last year, the main reasons for the substantial profit decline were absence of reversals of the provisions recorded in last year, a decrease in capital gains and the booking of credit cost and impairment in the first half this year. The credit losses and impairments stem from the real estate financing originated during the period of monetary easing during the pandemic and legacy assets from before that. The extended period of the elevated interest rate inflation and uncertain economic conditions in the U.S. negatively impacted these assets. More recently, based on our disciplined investment policy, we have conservatively chosen deals, and thus have no exposure to the First Brands Group or Tricolor Holdings. Please see Pages 30, 31 and 32 in this presentation for more details. Excluding the Hilco Global segment assets in U.S. dollars shrunk from JPY 12.2 billion at the end of March '23 to JPY 11.3 billion at the end of September 2025. With the addition of -- this is a decline of 7.4% in the past 2.5 years. With the addition of Hilco as a subsidiary, we will review the ORIX USA business portfolio and continue to responsibly manage the portfolio while controlling asset risk -- asset size. Uncertainty persists in the operating environment for ORIX USA. And we are conservatively reviewing our full fiscal year forecast for ORIX USA compared to the initial plan. Next is ORIX Europe. Segment profit increased by JPY 1.3 billion or 6% year-on-year to JPY 22.1 billion. Net fund inflows grew, thanks to the favorable global capital markets and AUM rose to a record high of EUR 425 billion. This resulted in higher profits even after adjusting for performance fees booked in the same period last year. ORIX Europe assets were flat year-on-year, excluding the currency impacts. Finally, Asia and Australia. Segment profit increased by JPY 600 million or 3% year-on-year to JPY 19.7 billion. In Greater China, profit contributions from investees decreased versus the same period last year. We maintained a constrained investment stance and reduced our exposure to -- in both leases and investments. Meanwhile, the financial income increased in countries such as Singapore, India and Australia, resulting in higher profits. Segment assets increased by JPY 15.5 billion versus the end of fiscal year '25 to JPY 1,741.1 billion. The main reason was the FX impact, but the breakdown shows a decrease in assets in Greater China region, while there was an increase in Australia and India. And that concludes each segment explanation. Next is Page 14. Finally, regarding the shareholder returns and enhancing corporate value, we added JPY 50 billion to JPY 100 billion share buyback program announced in May for the new total of JPY 150 billion. Regarding the dividends, the full year DPS forecast was raised from the previous JPY 132.13 to JPY 153.67, 39% increase over our full year net income target. Compared to FY '25 a DPS, we expect an increase of JPY 33.66 per share or 28%. Since announcing the 3-year plan and long-term vision in May, CEO, Inoue and COO, Takahashi have been engaged in a direct dialogue with institutional investors, both in Japan and overseas. We also plan to provide access to outside directors. And we are providing opportunities to have a direct dialogue from the outside director and the investors. We continue to enhance the corporate value by increasing opportunities for direct dialogue with the market regarding our most important management KPI, ROE improvement. EPS growth, which is also important and capital cost are also key areas of discussion. This concludes my remarks. Thank you for your attention.

Now we'd like to move on to the Q&A session. [Operator Instructions] First, from SMBC Nikko Securities, Muraki Masao.

Muraki from SMBC Nikko. This is a bit off from results, content briefing material, but I would like to hear more about joint investment with QIA. What led you to this joint PE establishment because in the past, you have been covering everything on your own 100% and the asset was JPY 1 trillion. And do you think for the future, domestic PE, you're going to run off the existing one and balance sheet will reduce? And the 60% holding of this new PE that you're establishing with the QIA, it will be on the addition -- net additions on the BS, right? ROE or -- do you think this will allow you to invest more in a large project. But what kind of impact would this have to the total balance?

This is Takahashi speaking. Masao-san, let me answer, take this one. How we came about to establish a joint PE, as I explained in yesterday's announcement, almost about 2 years, we've been negotiating with QIA. We've always been in contact, having a dialogue with various sovereign fund and QIA was especially interested in investing in Japan. So in which field we can collaborate. We've been discussing that way. And we thought that the domestic PE investments is probably where we can jointly approach. So investment criteria policies, we've discussed quite a bit. And this includes a right fit to -- we have the right chemistry. That is how we came about this agreement to establish the PE. And regarding the running off of existing portfolio and to focus on the fund with QIA, that is not the case. As we mentioned in the press release. Our fundamental approach is enterprise value in the market cap of JPY 30 billion or mid-cap larger items, we will leverage this joint fund with QIA. And this JPY 2.5 billion -- JPY 370 billion, that's unlevered base. So 1x or 2x, we will be financing. In the newspaper, I know it says that with the borrowing, we will be able to have this JPY 1 trillion investment capacity, but we don't know whether we'll get there. But anything that is below JPY 30 billion for market cap in investment, that's something that we will continue to handle within the balance sheet. The balance on the balance sheet is -- we do have JPY 2.5 billion, 60% is what we are committing. So I don't think we will see a significant bloating of the asset balance, but we aim to maintain the balance of the current JPY 1 trillion going forward. So far, we had a majority share. So we had a controlling share so that our target companies, we would try to keep it in consolidated accounting so that we can get benefit from profit. But for this fund, we would apply the fund accounting so then incorporate the fair market value. So the way we would incorporate the profit into our business will be different from the one that we are financing fully on our own.

I understand. Is this part of your ROE enhancement effort?

Yes, that too, plus goodwill and also recognition of intangible asset will be different, too. And also, there will be an impact on the credit rating, too. That will be eased too, I think. In the last 10 years, we've been building up a track record in the private equity area. That's one thing. And reflecting the market trend and the movement, what we are seeing more and more good quality pipeline in front of us that's building up. So incorporating that in all into our balance sheet, adding them up would impact us in various different areas. So at this timing, we wanted to leverage our third-party funds to shift to leverage third parties funds to try to capture larger, better quality deals. It would be a benefit in our long-term growth. That's our strategy.

Next from JPMorgan Securities, Sato-san.

This is Sato speaking from JPMorgan. About ROE target and your commitment to that and also net assets, the balance between the 2, I'd like to confirm one thing. Now the JPY 50 billion increase in buyback, I think there are different reasons. But the net profit increase, most of it will be used for the shareholder return, I understand. But at the same time, there is a big impact of the interest rate. So about this insurance with the change of the discount rate, about JPY 200 billion in the 6 months, I think that the profit has expanded. So in comparison to the medium-term business plan, the JPY 20 billion or higher needs to be enhanced so that you can achieve the ROE target. And depending on the macro environment, noncash or cash in without that, there could be some higher risks. So in that sense, in achieving the ROE in order to maintain the probability of achieving that, what kind of initiatives are you thinking of taking?

Thank you for your questions. Yamamoto will respond to your question.

As you pointed out correctly, for this fiscal year, the interest rate higher and the discount rate, discount and also the insurance account, the net asset increase was a little more than JPY 200 billion. And achieving the 11% ROE, of course, that the numerator will not naturally increase. So we have to take some measures or initiatives that will be necessary. So U.S. accounting and Japanese accounting, there is some gap. So with the shareholders and ORIX, we are trying to consider the various initiatives to be taken. So in achieving the targets of the medium term in the final year, we will be taking initiatives. As for the interest rate, I think we have come to an end of the cycle and this would stabilize. So this increase is not going to continue from now on. So in other words, if the interest rate comes down, the denominator will be less. So that is something that will be possible to -- make it possible to reach the ROE that we want to achieve. So we would like to monitor that closely and communicate to you. But that's something that we will be doing in the future, but the impact of this in achieving the ROE, yes, we do understand that possibilities.

Next Daiwa Securities, Watanabe-san.

This is Watanabe from Daiwa. This year's lending forecast and next year's profit forecast. You said that there will be a reduction -- reduced provision for the Bank and the U.S. business. If you have any trend outlook for the second half. For this fiscal year, you will be generating quite a significant profit. What's your outlook for the next year? Is it going to be challenging? Are you going to go with your current cruising speed? What's your thought on the next year?

Regarding ORIX Bank, regarding our debt portfolio, liability portfolio. And this is a reversal of what I mentioned about liability insurance. And various portfolio that we are maintaining for the better liquidity together with the interest rate hike, there will be more and more incurred losses. And as much as we can within the profit because we have a profit momentum, we will actively reshuffle the portfolio and recorded some losses from the sale. And this year's credit loss burden in ORIX USA, as I before mentioned, so far, in the fourth quarter, we usually check -- do the checkup of all our assets. But we are doing more flexible risk management. So we have decided to book the loss to some extent in the second quarter, too. If you could go to Page 32, ORIX USA pretax profit, additional information there as well. For portfolio, as I mentioned, because of the interest rate in the dollar would be plateaued and inflation and equity real estate business-related impact, we are recording capital gain. We are losing opportunity to record capital gain, sorry. And before COVID, we had a real estate legacy asset of the credit loss. That is now materialized. So going forward, what would happen is real estate for multifamily condominium performance. Interest rate hike and insurance premium increase will impact the rent. And I believe that we will need to closely monitor property management and appropriate asset monitoring, too. So those potential risk, we are quite clear at ORIX USA side. So we don't foresee this kind of situation will continue. So at least by the end of this second half or at the latest in the beginning -- within the first half of next year, we will resolve. We will conclude our countermeasures. And going forward, I'd like to have Takahashi to explain.

And the second question about the next year's forecast, let me give some brief thinking about the next year. Usually, the income gains, for example, on the real estate or private equities exit, those gain from sales, we have been recording pretty much on every fiscal year, it's a recurring gain from sales. But the kind of gains from sales like divestments as Greenko that is almost like a one-off profit. So this proceeds that we received is a reason that we were able to do a share buyback in addition -- additional share buyback. And another reason is we averaged out the EPS, and we are intending to continue to increase EPS in a linear fashion. If there is some surplus in capital, and we would use it for that. And going forward, in the next year, we'll continue to aim to realize sustainable profit growth. So the sales from a gain, especially something in this scale of almost like a one-off would be volatile. And sometimes we do, sometimes we don't. And when we have surplus, we will leverage a buyback to continue to increase our EPS linearly. I'm not sure I'm answering your questions, but it's not that we are aiming to generate a certain amount of profit every single year. That's a bit different far from our actual business practices in reality.

Next Mizuho Securities, Sakamaki-san.

Sakamaki speaking from Mizuho. I'd like to ask some questions on the forecast for the second half. On Page 10, capital recycling forecast. So for this fiscal year, JPY 200 billion or higher for capital gain. So compared with the past range, there could be some upside. So in the second half, the segment profit is only JPY 200 billion. So how should we understand this balance between the 2? If you can explain it?

Yes. Thank you. On Page 10, this JPY 200 billion. If I may talk about this further. As you know, usually, our capital gain is about JPY 100 billion. That's the normalized level. So Greenko part, JPY 995 billion is added. So it's JPY 200 billion. So that is on track. And the real estate market is very solid and private equity portfolio, the performance, as we mentioned, is good. So if there is good opportunities, we will invest and also realize in a very flexible manner. In the second half, if you deduct that, the pretax income or revenue level, I think that's what you are referring to. We did not specify the first half and second half, but some of them were already realized in the first half. So there could be some differences. So capital gain -- about the capital gain, this is -- this can be considered as the income or the profit in other areas. I hope that answers your question.

From Nomura Securities, Sasaki-san.

This is Sasaki from Nomura Securities. I have a question about your performance. This year's second half pretax profit forecast, the level is quite a bit declining versus the first half. So it looks like a JPY 250 billion pretax profit. This is along the line of your base profit, but you also are going to record some capital gain as well, right? I was wondering, perhaps you have some significant impairment loss or some kind of a negative factor that you're forecasting for the first half. Is my understanding correct? And regarding next year's business plan, I'm sure you're in the midst of discussion right now. If you can share as much as you can about the next year's plan, please.

So the first question will be answered by Yamamoto.

Regarding the first point, you're right, the base profit first half, I mentioned was quite brisk. Within our base profit, we have the profit from the company that we have invested. So that is contributing like Toshiba is performing quite well, that we have invested. And for the second half, we have set that to the regular cruising speed, not buoyant. So for the second half, we are expecting certain base profit plus some capital gain. It is not that we are expecting some one-off significant loss.

Let me add to that. This is a bit of details, but as Yamamoto mentioned, Toshiba's performance is quite good now. And divestment of Toshiba material is recorded in Toshiba's performance. And KIOXIA's share price is quite well. So they sold a part of KIOXIA shares. So base profit -- our size base profit and our gain from sales -- and also the income from equity method affiliate are all recorded under base profit. So what I mentioned is that there are various onetime gains that we experienced from the equity method affiliate. And those happen in the first half, and that's not necessarily a recurring income that we can continue to expect in the second half. So that's the reason. And you asked me about the second -- next year plans. Actually, we will start this discussion from next -- beginning of next year. What we are sharing right now to the market is ROE of 11%. And by [ FY '20 ] ending in March, -- but of course, we are creating bottom-up plans up to 3 years into the future. What we'll be discussing going forward is what went well, what didn't go well for the past year and make a rolling update to what we have established in the last March and this year's March too our MTP. We are not expecting any downward change to our initial plan. I'm sure next year will be quite positive, but the detail will be discussed from the segment leaders of each divisions. That's all.

May I add one more thing, please?

Yes.

You mentioned that next year's profit can be volatile. I got the nuance in your wording. This year, 10% ROE, you need to grow the profit at a certain level. Otherwise, I don't think ROE can go up to the 10% levels. Is that okay to say that it can be volatile?

You have a point. Needless to say, we need to continuously grow. Otherwise, we will never get to 11% ROE. We're not there yet. So of course, we need a profit growth to get there. And with the current portfolio, what can be sold at what price is something that -- some of it where we have a higher probability where we are already in the negotiation process, then we can factor in, but others are just pie in the sky. So of course, we need to make a right decision at the right timing being considered appropriate capital recycling to maximize our gains from sales. As I mentioned, this fiscal year, the proceeds from Greenko is, I would say, a bit extraordinary. So what we've been discussing going forward internally is compared to this year, how much base profit that we can increase. And on top, how much gains from sales of asset we can expect. Ultimately, we would like to achieve the ROE target by 2025 that we have. That's our grand plan.

Next from BofA Securities, Tsujino-san.

Some detailed question about Environment and Energy. If you look at the quarterly number, JPY 117 billion segment profit. The Greenko sales, gain on sales is JPY 95 billion. So the gain on securities, Ormat sales gain on sales is included, I think. But we don't know how much that is. So that means it is said that for JPY 15 billion, but the equity method, this is JPY 83 billion. So Ormat gains on sales and also if you deduct the JPY 95 billion, you are in red in terms of segment profit. So in Environment and Energy segment, excluding the gains of sales of those 2, what is happening? Was there any kind of impairment? And if so, what was it? And what about the impairment risk of others in coming months and years?

Takahashi-san will respond.

Sorry, this is Takahashi responding. If I may talk about the details, the renewable energy in Japan, especially the mega solar that is already operating, and we operate that. So we are getting a stable profit. And also, we are in the Energy Business in the previous year, Hibikinada and Soma, there was our impairment loss, and that led to the lower depreciation and amortization and maintaining the sales volume included and this part was profitable. And in Environment and Energy, the major one is Elawan, and Elawan concerning that, it is breakeven or just slightly in red. So a lower interest rate and also the ones that we are developing projects and also the program has started. So in terms of business, we are in the recovery phase. Also on the Environment side, the ORIX Environment is a circular economy company, and they are generating stable profit. So ORIX [indiscernible] or resource recycling, which is engaged in the interim processing, and they are going through the rebuilding or replacement phase. So we expect some red deficit. And in actual performance, they are in red. So it's a mixed performance, but we are not seeing the signs of the major impairment loss. I do not recognize that.

Okay. So a way of thinking, if you calculate this, you are in red, as I said. So is that correct understanding?

Yes. We do not recognize this as a major deficit. It's really close to the breakeven level. It's a very small deficit.

I see. But if you calculate the [ JPY 117 billion ] minus JPY 98 billion, sorry, the loss of JPY 8.2 billion or so, you're talking about Q2?

Okay. So Q2, as you said, yes, that's a correct calculation. But Ormat, it depends on what kind of number that you would include in Ormat. But we did not recognize that in Q2 only. But I think if you look at the bigger picture, it will be almost breakeven.

Now we are reaching the closing time. So we would like to take one last question from Morgan Stanley, MUFG Securities, Takemura-san.

I'm Takemura from Morgan Stanley, MUFG. I have a question about some numbers. You have made a revision to the lending forecast. Page 7, bottom right, in financial, it's remaining 180.0 so no change. Were there any changes under -- regarding the business profit, an increase of JPY 10 billion. What's the reason for investment, GreenKo of JPY 95 billion addition plus JPY 80 billion. So I would like to know why you are postponing some of it, the reason for that, which is the best way you can, please share. Regarding ORIX USA, I understand that you have a revised performance forecast. So how that impacts this overall segment, please?

What you explained toward the end is very much a reason for that for finance and life insurance included, we did quite well in asset management. We have management income in the bank, we also recorded a loss of our debt liabilities. And in order to improve the portfolio quality and the credit-related business, we have conservatively recorded some new losses too. And those are what's impacting this finance business. For business, many of the operating units are quite brisk. But in ORIX USA real estate origination, the fee environment, competitors -- competitive landscape, we are having quite a difficult situation. So that's impacting our profit. Regarding investment, the third point, you are right regarding JPY 95 billion addition from Greenko's divestment, doesn't mean that we put some of the sales plan for the sales to the later date at all. We did have certain uncertainty in the fair value part about the future gain from the sales that ORIX USA is doing in the PE business. As Takahashi-san pointed out, regarding ORIX USA, we have more conservative outlook because of intransparency.

Thank you very much. We would like to conclude the Q&A session. Now we'd like to have our last remarks from Takahashi.

As I said at the outset, there are a mixture in terms of the business performance between the segment. The businesses are diversified. And also in May, we announced the strategy. We are executing that steadily in the first half. Relatively speaking, I think we kept good results. But we would like to stay focused, and we took notes of what you pointed out, and we will continue to take initiatives. And we consider those target numbers are not easy numbers and also in the medium-term plan and the long-term vision, the numbers that we are committed to, we would like to make sure to try to achieve those targets. And I hope you would continue to support us. Thank you very much.

With that, we'd like to conclude today's conference, the briefing on the second quarter results. And thank you very much for your participation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]