Good day, everyone, and welcome to ORIX Corporation's Third Quarter Financial Results Conference Call. At this time, I would like to turn the call over to your moderator, Mr. Chun Yang. Please go ahead, sir.

Good evening. This is Chun Yang, and I would like to welcome you to ORIX' conference call to review our third quarter consolidated results for the period ended December 31, 2014. I'm joined here this evening by Mr. Haruyuki Urata, Deputy President and CFO; as well as Mr. Shintaro Agata, Corporate Executive Vice President and Head of the Treasury Headquarters; and Mr. Takao Kato, Corporate Senior Vice President and Head of the Accounting Headquarters. During this evening's call, Mr. Urata will discuss the third quarter result, and then we will open up the line to Q&A. I presume that everyone has in front of them the presentation material that were posted on the IR section of the website this afternoon, Tokyo time. The following live broadcast is copyright to ORIX. Statements made today may contain forward-looking information. While this information reflects management's current expectations or beliefs, you should not place undue reliance on such statements, as our future results and business activities may be affected by a wide variety of factors that are beyond our control. You should read the forward-looking disclaimer in our earning presentation, as it contains additional important disclosures on this topic. You should also consult our reports filed with the SEC for any additional information, including risk factors specific to our business. Also, please note that the net income used in this presentation is same as the net income attributable to ORIX Corporation shareholders, as referred to in the latest financial statement titled Consolidated Financial Results April 1 to December 31, 2014. And without further ado, I will turn the call over to Mr. Urata.

Thank you. Hello, everyone, and thank you for participating in today's conference call announcing ORIX' results for the third consolidated quarter of the fiscal year ending March 31, 2015. My name is Urata, CFO of ORIX Corporation. Please turn to Slide 1, where I would like to start with an overview. Net income for the consolidated third period was JPY 186.7 billion, a 58% increase compared to the same period last fiscal year. ROE was 12.4% on an annualized basis. We already achieved 89% progress towards the original full year net income target of JPY 210 billion, which was announced at the beginning of this fiscal year. Furthermore, considering the path that there are no foreseeable material negative concerns on our business environment, for in the fourth quarter, as of this moment, we have decided to revise our full year target upward by JPY 5 billion to JPY 215 billion. Doing so, our current progress towards our new full year target becomes 87%. Our decision to revise our net income target upwards attributes to a number of factors: reserve contributions from Robeco, Hartford Life Insurance, new subsidiaries that we acquired under our private equity investment business; and large capital gains recorded as fund in the first half of this fiscal year; and the bargain purchase gains from Hartford Life Insurance. In addition, the fact that each segment continued its solid performance into the third quarter was also a major factor behind our decision. Amidst all of these, we realized that we're already approaching closely to the goals that we announced in the beginning of this fiscal year while achieving new record net income and realizing profit increase for the sixth consecutive year. While each business segment continued to generate solid profits, we will seek new growth opportunities in the ever-changing…

This concludes the presentation part of the call. Now Mr. Urata, Mr. Agata and Mr. Kato will be happy to answer any questions you may have.

[Operator Instructions] Our first question today comes from Raj Chaudhary from Odey Asset Management.

This is Rajesh Chaudhary from Odey Asset Management. I appreciate the additional disclosure you've made with regard to the service income and the split-out of gains on sales and on securities. Is it right to think of the gains on securities -- I imagine some of that relates to fixed-income securities, and therefore, as interest rates fall, the bonds will increase in value. And therefore, if interest rates were to rise, those gains would disappear but you would have an offsetting benefit in your spread business. Is that one of the things that gives you confidence that you can carry on delivering double-digit growth?

Thank you very much for your interest. And regarding the kind of the capital gains through the sales and investment in securities, one part is, for example, regarding our private equity fund investments, we can recognize that sometimes, at certain times, through the actual exit of some of the investment through the fund. So that is also included in those -- these types of capital gain. And also in your case, we have made some or based our capital parts of the investment under the active capital market, especially in Japan, but we also enjoy some capital we gain from the sale of our major capital businesses. So regarding the operations, our capital gain from the sale of the investment security is not really is through the sale of the fixed-income rate in the investment securities. So of course, some capital gain from the sale of the new start [ph] bonds or in the United States, that has also created some capital gain. And that area, of course, creates some of the change of the interest standards later [ph]. But in your case, mostly, those investments have been hit or in terms of the [indiscernible] of the interest rate. So we don't have any concerns about that old portfolio. So coming back on original questions, I have no big concern about various portfolio of investment securities in total.

Okay. And with regard to the shareholder return, did the board discuss the possibility of a share buyback and given that the shares are trading below 0.9x trailing book?

Well, of course, at every board meeting, I have made some feedback about the idea of the investment shareholders or our market as a whole in terms of the possibility of the share buyback. And of course, so with the board members, we have exchanged various ideas about the balance between our new investment for future growth as well as the shareholder return. But although today, we have just decided to increase our dividend and the dividend payout ratio. And we have not reached any conclusion about that share buyback possibility in the future. So going forward, as we have discussed before or basically, we want to use our internal money or capital for our future growth through various new investment opportunities, but at the same time, from time to time, we want to basically, first, focus on the dividend policy, but from time to time, we are not going to completely close the window for the share buyback.

I would urge you to at least review it compared to your alternative uses of capital. And once again, I appreciate the disclosure to show the importance of services income. And hopefully, that will help the stock market to recognize the value of that annuity.

I fully appreciate also. Then I expect the capital markets will respond positively to this kind of the result.

Our next question comes from Mr. Konishi from TTO Capital.

It's Keita Arisawa from TPG-Axon Capital. You've raised the full year guidance on net profits. If we subtract the first 3 quarters, the fourth quarter net profit assumption is JPY 28 billion. That seems quite low relative to the third quarter results. Is there some sort of seasonality in the fourth quarter assumption that we should expect? And also, I understand that the corporate tax cuts in Japan should be favorable to you, so expecting a gains on the fourth quarter, I know you haven't assumed that yet in your full year guidance, but could you give us a ballpark number of what that gain could be?

Thank you very much. And regarding your first questions, about forecast for the just the fourth quarter, to be honest, judging from the past experiences, from time to time, the fourth quarter has not shown that very good numbers in the past. But as of today, I haven't had any big concern for some or special investments for our portfolios in asset quality. So just based on the current situations and with some uncertainties on a global basis, we believe that, at this moment, this revision from the JPY 210 billion to JPY 215 billion should be appropriate as of today. And the second question is related to the corporate tax, the change on that. Of course, let me point out basically the lower corporate tax should impact positively to our financial results. And we have not included any forecast to this revision of the full year target. And I'm sorry, I don't have any numbers responding to your questions relating to what kind of the -- or which level of the impact or what amount of the impact can be expected with a certain -- about the reduction of the corporate tax rate. Sorry.

The second question is that your third quarter net profit recorded 20% growth year-on-year, which is a very strong number. And my understanding is that there was no big capital gains in this third quarter. And I know you don't disclose the base profits anymore, but can I understand this 20% earnings growth year-over-year to be kind of a sustainable growth and that it does not include any major onetime profits?

Thank you for your interest. And regarding this quarter's results, of course, as you see that, always, we have created some of capital gains in terms of the income over years. And of course, through this third quarter, we have made some -- such kind of that income. So for example, in the Real Estate segment, you can see some figures of kind of the capital gains from the sale of the Real Estate portfolios. But in overall, we don't have any big size of the capital gains from the Real Estate investment portfolio. So basically, the comparison with the previous third quarter results, the growth have been made through the various businesses' results, so for the base profit we have used in the past.

And last question, if you don't mind. In your overseas segment, your credit costs, including the valuation losses, at the third quarter was JPY 6.6 billion. It went up quarter-on-quarter and also year-over-year. So it's a little bit of a high number, and I was just wondering. Obviously, we've seen a big move in the oil price, commodity price; big move seen on Swiss franc, so lots of volatilities in the overseas market. I would like to ask if there had been any of those impacts towards your third quarter credit costs and if there are any assets that we should be worried about that you hold in your exposures towards commodities or any other volatile assets in your overseas segments.

Thank you. Regarding the impact by the various volatile situations in the many different types of the commodities markets but especially in the energy or oil markets, we don't have a big size of the exposure in this industry, very, very small and very, very limited. So never lucky that we don't have any negative impact to our performance by the price decline of the energy or oil market. And also as you point out, there have been various volatile markets on a global basis, but very lucky in our case, we don't have any concerns about those volatile markets in terms of the existing impact to our profitabilities. Now of course, through those volatile markets, various uncertain situations is expected to increase, so in that sense, we have some ideas in our mind to respond to the uncertainties, but that kind of the uncertain have been increased all the time, so -- or basically, that's to be honest, I don't have any big concerns about our existing portfolio or as well as our future growth strategy. And regarding this quarter's impairments in the overseas areas, those are limited to the [indiscernible] areas, so I don't have any concerns.

[Operator Instructions] There are no further questions today, so at this time, I would like to turn the conference back over to you for any additional or closing remarks.

If there are no further questions, I would like to take this opportunity to thank you for participating in tonight's conference call. If you have any questions or comments, please do not hesitate to get in touch with us using the contact information found on the last page of this evening's presentation material. Also, a replay of this conference call will be available shortly on the ORIX IR website, if you joined partway through or would like to listen to certain sections again. On behalf of the management and the entire ORIX Group, thank you for your participation. I hope that we have a chance to meet, whether it is in your corner of the world or here in Tokyo.

Thank you.

Thank you. That concludes today's conference. Thank you for your participation, and you may now disconnect.