SBI Mortgage Co., Ltd.

1. Why is SBI Mortgage listing on the Korean stock market?

The enhancement and diversification of external financing is one of the key strategies of our business expansion plan, and stock listing is one of the most effective ways of raising capital. However, it was nearly impossible to list securities in the Japanese stock market due to listing restrictions imposed on a holding company and affiliates, and therefore, SBI Mortgage decided to promote cross-border listing of securities, particularly in Korea, for the following two reasons:

1. Strength of the Korean stock market
   The comparative strength of the Korean stock market includes relatively low listing fees and high liquidity. By listing on the Korean stock market, we will not only have an easy access to external funding, but should be able to raise our competitiveness by expanding equity capital. The high liquidity of the Korean stock market is forecast to have a positive impact on our stock price, and with better stock performance, we should be able to raise our creditworthiness in the global market.
2. High possibility of successful business launch
   Japan and Korea are geographically close to each other and share many cultural similarities. Furthermore, there is an active movement in Korea to reduce variable-rate mortgages in the medium to longer term, and the Korean government is implementing various policies to increase the proportion of fixed-rate mortgages. In particular, the Korean government has shown its determination to expand the proportion of fixed-rate mortgages by announcing the "Comprehensive Plan for Household Debts", which targets to increase the proportion of fixed-rate debts to 30% level.
   It is our belief that, just like in Japan, the solution to raising fixed-rate in Korea is mortgage bank. Therefore, the Korean market is the ideal market that matches our overseas expansion strategies.

2. What are the major differences between 'FLAT35' in Japan and 'Bogeumjari-loan' in Korea?

The major differences are the loan period and LTV(Loan to Value). In addition, the interest rate of 'Bogeumjari-loan' is decided by the Korea Housing Finance Corporation, and therefore the same interest rate is applied to all financial institutions. On the other hand, the interest rate of 'FLAT35' is not fixed, and each financial institution decides its own interest rate and transaction fees, as well as additional services provided, based on the guidelines provided by the JHF.

3. Many people fear the U.S. subprime mortgage crisis in 2008. Does SBI mortgage have any risk in the Japanese mortgage market?

The U.S. subprime and our business model are entirely different in two ways.

1. First, we don't deal with customers with subprime credit profile.
   When servicing loans, we thoroughly evaluate customers' repayment capability and their lines of credit.
2. SBI Mortgage does not have the risk of bad loans.
   Our main product, 'FLAT35', is designed in a way that it keeps our company free of bad loans. After originating mortgages, we sell our mortgages and therefore, we do not have any risk of bad loans.
3. Geographical advantages and closeness
   As stated above, we do not service customers with low credit profiles, and we are also free from the risk of bad loans. Therefore, there shouldn't be any subprime-like problems come to the fore.

4. What are the competitive edges that enable SBIMortgage to be the No.1 company among the FLAT35 providers in Japan?

1. Product Competitiveness
   SBI Mortgage has been providing the lowest interest rate in the industry. Avoiding complacency and to stay ahead of competition, we developed an insurance with a special option for housing mortgages, and introduced an online mortgage repayment option for borrowers.
2. Establishment of various sales channel
   In addition to the online sales channel that we have been concentrating on since our inception, we have launched a franchise system starting from February 2007. Since then, the number of franchises has expanded greatly, and there are 119 loan shops operating as of February 2012. In addition, we have established call centers in an effort to further differentiate our products while enhancing our sales capabilities.
3. Differentiation by introducing new systems
   SBI Mortgage has greatly improved overall operational efficiency by being the first financial institution to adopt a cloud system. In addition, we are the first in the industry to directly link our information system with the JHF's system, thereby facilitating the real time information sharing between the two. In doing so, we are able to offer the fastest mortgage application process in the industry, and with this competitive edge, we continue to gain market share in the mortgage industry.
4. Established brand power as an online-oriented comprehensive financial group
   The SBI Group has been establishing its brand power as an online-oriented comprehensive financial group, expanding online financial businesses. Today, we continue to expand our sales channel by utilizing this brand power.

5. How will SBI Mortgage use the raised funds? What are the specific business plans?

The fund raised through this IPO will be used to fund newly-released hybrid mortgage loans by our company. In addition, after an IPO, we will fully evaluate our potential entry into Korea. Specifically, we will investigate the needs of Korean customers and simultaneously evaluate the current status of liquidity in the stock market. Then, we plan to draw specific strategies for our entry into Korea.

6. What kind of IR activities will be carried out after listing on the Korean stock market?

SBI Mortgage has appointed two outside directors, who are living in Korea, for the interest of the shareholders in the Korean stock market. Also, the company's articles of association state that it shall hold a general shareholders' meeting in Korea after an IPO. In addition, an IR officer will be available to communicate with investors in Korean language.

7. How are you going to take the dividend policy?

Based on its net income, 30 percent of dividend payout is expected to maintain continuously.

8. Is SBI Mortgage's growth strategy in a situation where FALT35 market is declining?

Our company is enhancing our products competitiveness and sales which are continuing to grow. For more information, please refer to our 1Q results IR data.

9. I am aware that Japan's real estate market is depressed in recent years. In this market environment, what are the growth strategies of SBI Mortgage?

Our company is enhancing our products competitiveness and sales while promoting new markets. In particular, our company's remark is pre-reform market. In case of pre-reform market, by 2020, the Japan's government policy which is "Japan Regeneration Policy" will promote economic growth and will set the policy of expanding its market up to two times. To capture the reform market, in July 2012, our company released SBI FLAT reform loan with funds to buy pre-owned houses and loans for remodeling costs.

10. Who is the main investor buying the MBS of FALT35?

Private financial institutions are the main investors including the insurance company for the Japan's Housing Finance Supporting Agency based on FLAT25 bonds. In case of MBS in Japan's Housing Finance Supporting Agency credit rating of AAA is granted so investment is in high demand.

11. What are the screening process and screening criteria?

Our company's screening is proceeded at a franchise, and second screening will be conducted at our department. Also, if it is the case of FLAT35, with the approval of the department, the third screening will be processed at the Japan's Housing Finance Supporting Agency.
Based on appropriate judging criteria, it includes the suitability of Japan's Housing Finance Supporting Agency DTI, screening of financial and a proper house's price.

12. I am aware of the fact that sales are for the real estate agent, but is there a rebate that will go towards the real estate agent?

Rebates to the real estate agent that does not exist. Due to Japan's convention, rebates are rarely given to the real estate agents.

updated 29th August, 2012

© Copyright 1996-2016 irasia.com Ltd. All rights reserved.

DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any information provided on this website. Under no circumstances shall irasia.com Ltd be liable for damages resulting from the use of the information provided on this website. TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website.