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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for attending Shinsei Bank's Fourth Quarter FY 2021 Analyst Meeting.
GM of the Group, Investor Relations and Corporate Communication Division, Ishii, will present to share the results and followed by Q&A. For details, please refer to the quarterly results information on the business IR on Shinsei Bank's website.
So we would like to start the presentation. Over to you, Mr. Ishii.
So we announced the results of the third quarter of FY 2021, and that is why we are holding this conference call. In order to maintain a stable broadcasting pace, I will make the screen off.
So this is for the third quarter FY 2021 Shinsei Bank's analyst meeting, and thank you for your attending. The details are available on the results information on the Business and Investor Relations on Shinsei Bank website.
Before starting the presentation, we have an announcement, as you're aware. So following the TOB by SBI Regional Bank Holdings, SBI Regional Bank Holdings has become our parent company with 47.77% volume rights, including indirect holdings. So this effective December 17. So this is a topic that happened during this third quarter.
So based on the material, which is available on the website on the Business Investor Relations quarterly results, please refer to the information on our slide presentation.
Please see Page 4. I'd like to give you financial highlights. In the third quarter of FY 2021, net income attributable to owners of the parent increased to 43.3% year-on-year to JPY 37.4 billion, which represents 94% progress toward the full year forecast of JPY 40 billion.
EPS was 176.85, an increase of 52.3% year-on-year. BPS stood at 4,516.64, up 8.6% compared to December last year. Segment profit or the OBP after net credit cost, is about 75%. Lastly, CET1 ratio is steadily increasing and is now at 12.2%. So it's being maintained at sufficient level.
Now please go to Page 5. Please look at the bar chart on the left-hand side. Loan bank businesses. The revenues from the business continued to increase steadily. The total OBP after net credit cost of domestic nonbank businesses and overseas nonbank businesses increased from JPY 28.6 billion to JPY 29.8 billion year-on-year. As a result, as shown on the graph on the right, the share of segment profit from domestic nonbank businesses is now at 63.4% and overseas nonbank businesses is at 11.3%. Banking businesses recovered from the impact of COVID-19, and segment profit improved significantly from JPY 3.7 billion to JPY 10.1 billion year-on-year.
Please look at Page 6. Page 6 explains acquisition of treasury shares. Due to the TOB, we temporarily suspended the acquisition of treasury shares on September 27. However, as announced, we have now resumed it from December 28, 2021. The acquisition period has also been extended until May 12, 2022.
Going on to Slide 7. We're pleased to introduce Shinsei Bank major initiatives for sustainability management and digital transformation in fiscal 2021. These are some of the initiatives that have been made public. Our key initiatives during this fiscal year have been outlined on Pages 37 to 40 in the Appendix section. At this telephone conference, I will not mention each and every one of those initiatives, but please go through those pages at your leisure.
If you could turn to Page 9, I would like to give you an overview of our financial results. Total revenue increased 4.3% year-on-year to JPY 169.2 billion. Net interest income increased 2% year-on-year to JPY 93.5 billion as the contribution from UDC Finance and dividend payment from Latitude were partly offset by a decline in net interest income from unsecured loans. Noninterest income increased 7.4% year-on-year to JPY 75.7 billion. This was mainly due to the absence of investment losses which were booked in the previous year and the capital gain associated with exit from equity investments in principal transactions.
On expenses. Expenses increased 6.1% year-on-year mainly due to the consolidation of UDC Finance and resumed business activities in the midst of recovery from the pandemic. Our expenses are 74% of the annual target of JPY 156.5 billion, which is almost in line with our initial plan. Net credit costs decreased by 36.2% year-on-year mainly due to a reversal of credit reserves in institutional business and structured finance businesses.
So OBP after net credit costs increased by 23.5% from JPY 32.3 billion in the same period previous fiscal year to JPY 39.9 billion. As far as Q3 is concerned, as indicated in the red box in the bottom right, simplified method for tax calculation was applied for Q3, which was positive, that will be result on a full year basis. So on full year basis, we are expected to do JPY 7 billion of tax expenses. Thus, third quarter net income attributable to earnings of the parent increased by 43.3% year-on-year to JPY 37.4 billion.
Mr. Ishii's voice has been cut off tentatively.
It seems that the connection has been cut off tentatively. Let me try once again. There was an extraordinary impact due to the tax calculation. So there will be an increase of expenses by JPY 5 billion to JPY 7 billion in Q4. And as indicated in the unsecured loan business, we are beginning to see signs of improvement and recovery. And net credit costs is expected to increase for Q4. So the JPY 40 billion full year forecast remains unchanged.
That concludes my presentation.
Now we would like to start Q&A. [Operator Instructions] Now let's start Q&A. [Operator Instructions]
Can you hear me all right? This is Nakamura. I have two questions. First question regarding CET1 ratio, 12%. So you're having the extra capital, the M&A and nonbank business, you are focusing on it, and that remains unchanged. So is management correct? And to conduct M&A, you need to enhance partnership with SBI. But regardless of that, can you expand M&A, including talent? I think you have limited internal resources and continue current situation resources. The M&A expansion once you -- can you expand M&A regardless of your enhanced partnership with SBI? That's my second question -- first question.
And second question is regarding consumer finance. Diversifying our -- the balance start to increase. Do you have an outlook? And this Q3, the increase of the cost, segment profit level for -- was shown to the DIC. Are you -- we -- should we assume that the costs will increase -- initial costs will increase to our next fiscal year?
Thank you for your question, Nakamura san. So regarding first question, CET1 ratio on Page 16, 12.0%. Maintaining more than 10% towards that target, now we have 2 points extra capital. And also, this increase [ helped ] this quarter by 0.7 points.
And also, is there any -- not change of the M&A strategy going forward. First, for M&A itself. This is not something that we can give you the specific example, but we are working steadily on our pipeline. So when there's progress or once it's progressed and they are ready, we will -- should be able to share information with you.
And regarding resources, of course, resources, I explained on this, we are allocating resources as needed. I think your concern is that the resources will be used for the partnership with SBI. Of course, we will enhance the team for the extra or additional partnership. But for those the projects or transactions that is progressing, we have already allocated resources. So the projects will be promoted steadily.
Next regarding the unsecured loan business. As you pointed out, there's a sign of the recovery. And so on Page 22, the balance the end of October and November compared to the previous month, the balance starts to increase. But as shown on the slide, December is a bonus payment season. So that which -- when customers have a lot of cash, so the demand decreases in December for loans and the customers are able to make payment.
So every year, we see a drop in December because of seasonality. So for this drop itself, we do not see it as a concern, but the outlook of the balance increase specifically, this is about next fiscal year. So we cannot give you specific numbers, but our assumptions for it. So we are expecting or looking forward to the balance increase. And we are continuing marketing efforts to increase balance. And if you look at Page 23, the conduct rate is also improving and that we are having more applications from customers and the new acquisition of the customers is growing steadily. So when the balance is increasing, acquisition of new customers will be extremely important.
So in that sense, if we acquire more new customers, then why we accumulate balance?
We'll have to [ stand ] in the credit process if that business structures will remain unchanged. In that sense, before generating profit, our -- we'll spend cost. And as the time passes, then the balance increasing and then we will see revenue. And there will be the contributions to the profits. Until then, we'll be spending our initial cost first. But we will acquire customers first, and then we will encourage existing customers to borrow as well.
So that business structure will continue. So based on that, our world adapt in those and we have a quotation for that. So these will be the answers to your questions. Thank you.
[Operator Instructions]
My name is Takai of Daiwa. I have two questions. First of all, on the [indiscernible] business to [indiscernible] can be uplift. Well, [ unfortunately ], however, due to the Omicron variant, separate from whether a state of emergency will be declared. In Q4, Omicron variant infection and positive cases spread. How has that been factored in? And also, credit costs, yes, they are trying to [indiscernible], it's going up in comparison to the previous year. And in comparison to the first half in Q3 for Q3 financial, the rise of credit costs seemed to be quite significant. Is this explained about just from the recovery factor? That's my first question regarding [indiscernible].
Going on to my second question, international business, relative to dividend, it is mentioned. But if possible, can you mention the absolute number? And sorry for the detailed question. Before September 2021, minus [ JPY 400 million ] [indiscernible] of capital adequacy. What's the reason behind the significant improvement in foreign exchange in the number? Is it just explained by -- with the fluctuation of extension? Or are there other factors? So those are my two questions.
Thank you, Mr. Takai, for the questions. [indiscernible] and against our forecast for increased balance, how would that projection be affected by the spread of Omicron? On that point, we are aware that infections are spreading and priority measures to prevent the certain infection has been ordered by the government. And how will that affect the behavior of the consumers, that's one thing that we will continue to monitor. But on this factor, we are still observing and monitoring the situation. We have not concluded that this will immediately [ wane ] demand. So I think we need to watch the situation more closely.
And the other question was on a global basis, what about credit cost? Sorry. [ In the link ], credit cost on year-on-year basis has gone up [indiscernible]. And I touched upon in my presentation, this is Ishii speaking, on increase of credit costs. The balance have gone down. But last year, last fiscal year, JPY 100,000 was provided to all Japanese citizens as cash transfer. So it was extremely low from the previous fiscal year.
So that's one factor. And on Q-on-Q, it continues to go up. You know that new acquisition, new customer acquisition has gone up. And therefore, write-offs. If new customer goes up, then write-down expenses go up as well. Due to new acquisitions, balance is going up, and that leads to credit cost increase. And historically, the bank aid for Shinsei credit loan rate kept going down and again -- increasingly -- it's increasing that also. So that is one factor that's impacting the results.
And relative to dividends, JPY 600 million, slightly north of JPY 600 million is not just feasible. And ForEx, [indiscernible]. Let us reconfirm and get back with you. We are going to put that one day in writing, and we will upload our responses on the website.
[Operator Instructions] [indiscernible]
It's a little [ bit hard ] to ask this question. But with SBI, you have a lot of things with SBI. And what is the situation in the group? What is the motivation of the bank employees? You see any news as to moving forward positively towards the current situation?
[indiscernible], thank you for your question. Regarding the current environment, our employees are just accepting this [ added ]. And since we have joined SBI Group, I will be promoting collaboration with the group to increase the corporate value of the Shinsei Bank Group, and a project team will be established to this forward in a positive manner.
In atmosphere in the bank, a long time ago, we couldn't have seen this by coming to office. But including myself, there are a lot of people working remotely. So in that sense, they are working at home. So it's hard to actually feel the atmosphere. But in observation, I've just seen a reform to steadily increase the corporate value, and so we will implement initiatives needed. So we will be working this in positive manner.
One participant has raised a hand. [Operator Instructions]
Can you hear me?
Yes, we hear you.
Nishihara, JPMorgan. Just one for me. For confirmation, SBI collaboration or you become part of the group and the cowork will proceed according to Mr. Ishii. On the [indiscernible] management plans [ were not forecast ]. And that indicated that you hardly expect any synergy. But on the other hand, SBI expects that there will be significant synergy. And in the end, SBI has agreed to [ reflect ] your existing plan. But at the moment, qualitative -- I guess the only comment will be qualitative, but [ then in the -- ] what should we expect, very little synergy or very big synergy. I believe that announcement is currently underway. But to the extent possible, can you share some information with us regarding synergies?
Thank you very much for the question. That's a good difficult question. Frankly speaking, at this stage, we are about to review the mid-term plan that has been submitted to the DIC in order to update the plan. And we joined the SBI Group, how will the synergy impact be reflected in the mid-term plan? That's where we are. So at this stage, I cannot give you any specific comment on the stage we are in, in terms of progress. Thank you very much.
There appears no more questions. So I will like to conclude our analyst meeting. So if you have any questions, please invest -- Investor Relations team separately.
And lastly, Mr. Ishii, for closing remarks.
Thank you for joining the conference today. So let's conclude the analyst meeting.
[Operator Instructions] Thank you very much. [indiscernible] We'll conclude this analyst meeting.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]