Today, the Japanese multinational technology, energy, and financial services, SoftBank, has officially released the consolidated financial results for the last quarter of the 2021 fiscal year, which ended on March 31, 2022.
The result released by the Japanese financial services shows that the company records a total net loss of 2.1 trillion yen, about $16.2 billion dollars, the largest quarterly net loss ever recorded.
According to the company, it recorded a total loss of JPY 669,540 million yen in connection with an investment in listed stocks and other instruments by its asset management subsidiary, including a loss on valuation of investments in consolidated and affiliated partnerships, and provision of allowance for doubtful accounts.
SoftBank has been investing in listed equities and other instruments to diversify assets owned by SBG and manage surplus money since its inception in the second quarter of the fiscal year ending March 31, 2021. This was accomplished while adhering to SBG’s stated financial rules on loan-to-value (LTV) and cash position.
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However, the Japanese financial services have suffered significant investment losses (JPY 249.1 billion in the fiscal year ended March 31, 2022, and JPY 746.2 billion since inception) and are scaling down its business to reallocate funds to investments under SoftBank Vision Fund 2, which is currently SBG’s primary focus.
In light of these circumstances, SBG reported a loss of JPY 39,793 million on the valuation of investments in Northstar Godo Kaisha in its non-consolidated financial results for the fiscal year ended March 31, 2022, as well as a provision of JPY 629,746 million for estimated uncollectible loans to the Delaware Subsidiaries in its provision of allowance for doubtful accounts and others.
Additionally, in the fiscal fourth quarter, rising interest rates and political instability put a strain on some of SoftBank’s biggest bets, including its $100 billion Vision Fund and its $51 billion Vision Fund 2. SoftBank’s tech equities dropped substantially in the fiscal fourth quarter (January-March 2022). Coupang, a South Korean e-commerce company, dropped 40%, Grab, a Singapore-based ride-hailing giant, dropped 51%, and Paytm, an Indian digital payments startup, dropped 60%.
In April and May of this year, many SoftBank-owned equities continued to tumble. SoftBank’s investments have also dropped as the value of technology companies has fallen. SoftBank led a new round of fundraising for Japanese biotech startup AI Medical Service in late April, however, the sum invested was only $70 million.
Of course, income from its Japanese mobile subsidiary SoftBank Corp and British chip manufacturer ARM largely offset the Vision Funds’ investment losses. Masayoshi Son, Chairman, and CEO of SoftBank Group has stated that ARM will be listed this fiscal year, which has already begun and ending March 2023.
Consequently, the Japanese financial services shares fell 8% ahead of earnings results with a total net loss for the entire fiscal year 2021 of 2.1 trillion yen (about 16.2 billion dollars) as against the 5 trillion yen profit records in the 2020 fiscal year, noting the largest quarterly net loss ever recorded in the history of the financial services.