Japan Securities Finance Co., Ltd. · TSE:8511
Japan Securities Finance — FY2014 Earnings Presentation
39 slides from Japan Securities Finance's earnings presentation, May 2015
Slide 1: Financial Presentation for FY2014
Financial Presentation for FY2014 Japan Securities Finance Co.,Ltd This is the English translation of the document originally written in Japanese for non-Japanese convenience. Although Japan Securities Finance intends to faithfully translate the Japanese-written documents into English version, the a
Slide 2: Financial Summary
a Financial Summary
Slide 3: Financial Summary for Mar 2014
Financial Summary for Mar 2014 ¥ mil Parent Consolidated Mar-14 Mar-15 Change Mar-14 Mar-15 Change Operating Revenues 16,392 17,185 793 19,566 20,300 733 ex Premium charges 13,021 12,741 ▲279 16,195 15,856 ▲338 Operating Expenses 7,513 8,288 774 8,747 9,450 702 ex Premium charges 4,179 3,845 ▲333 5,
Slide 4: Breakdown of Operating Revenues by business
Breakdown of Operating Revenues by business \ mil ( )：ratio of OR Mar-14 Mar-15 Securities Finance Bussiness 16,363 17,162 Mar-14 Mar-15 Margin Loan Business 9,240 9,667 (47.2%) (47.6%) Interest on Loans 4,012 3,111 Interest on collateral money of securities borrowed 436 611 Fees on Lending Securiti
Slide 5: Financial Highlights FY2014①
Financial Highlights FY2014① 1 Margin Loan Balance for FY2014 Avg. Margin Avg. Stock Loan Rate \ mil Loan Loan （as of Mar） Mar-14 Mar-15 Change \ bn \ bn ％ Margin Loan Business 9,240 9,667 4.6% FY2014 428 220 0.64 (ex Premium Charges) 5,869 5,223 ▲10.9％ Interest on Loans 4,012 3,111 ▲22.4% Interest
Slide 6: Financial Highlights FY2014②
Financial Highlights FY2014② 2 General Loans increased 【Performance of Operating Revenues】 Loans to Securities Companies increased by making loan conditions mil. more flexible 2,500 Loans for Negotiable margin Transaction 2,000 Loan to Individual 817 Investors or Firms 1,500 810 【Loan Lineup】 (236)
Slide 7: Financial Highlights FY2014③
Financial Highlights FY2014③ 3 Securities Lending Business 【General Stock Lending Business】 Borrowing demands of stock lending increased, especially long-term borrowing demand, so fees on Lending Securities increased. Not only had increased the number of loanable Issues , but also had matched the
Slide 8: Financial Highlights FY2014 ④ ⑤
Financial Highlights FY2014 ④ ⑤ 4 Bond investment Diversification of investment portfolio to improve returns under appropriate risk controls in low interest environment ①Investment in foreign government bonds (Treasury, Bund, OAT) (It started in April, 2014, and got into full swing after last Sep.)
Slide 9: Financial Results of Group Companies
Financial Results of Group Companies Subsidiary Affiliate （ ) Shareholding Ratio Japan Securities Finance （100%） （100%） （20.0%） （20.8%） JSF Nihon Japan Information Building JSFIT Trust Bank Processing \ mil FY 2014 Results (Reference) Shareholding FY2013 Ratio Operating Recurring Net Net Income Reve
Slide 10: Financial Results of JSF Trust Bank
Financial Results of JSF Trust Bank ¥mil Highlights FY2013 FY2014 Change Trust charges increased and Recurring Revenues 2,356 3,400 1,044 booked 546 ¥mil(Record-high). The main reason was an Trust charges 486 546 60 increase of trustee balance. Reversal of ADR* － 345 345 Interest on Loans decrea
Slide 11: Estimated Figures for FY2015
Estimated Figures for FY2015 Precondition Balance of Margin Loans ¥mil FY2015 Precondition FY2015 Estimated Figures (Reference) Operating Recurring Net FY2014 Over-lent Income Income Income Net Income Margin Loan Over-lent ¥280bn Stock Loan ¥140bn 2,600 3,200 2,600 Consolidated (▲425) (▲1,030) (▲920
Slide 12: Estimated Figures for FY2015
Estimated Figures for FY2015 ¥mil Parent Consolidated FY2015 FY2015 FY2014 FY2015 FY2015 FY2014 1Q-2Q 1Q-4Q Results 1Q-2Q 1Q-4Q Results Operating 1,200 2,100 2,010 1,500 2,600 3,025 Income Recurring 1,700 2,700 2,653 1,800 3,200 4,230 Income Net Income 1,400 2,300 2,219 1,400 2,600 3,520 EPS (Yen) 1
Slide 13: Management Matters
a Management Matters
Slide 14: JSF Earnings structure
JSF Earnings structure With the stock market is booming, Margin Loan Balance is recovering . JSF profit has been steadily recovering, too. ROE(5 the past yearly average)：Approximately 2.5% ¥bil Margin Loan Balance （Year average） ¥bil ％ Japan Securities Finance Co.,Ltd 14
Slide 15: Specific nature of Securities Finance business
Specific nature of Securities Finance business ① Our role as the infrastructure of securities market: We need to ensure fund-raising capability for extending loan funds and securities lending at any time upon demands of securities companies Required strong credit ratings ② A licensed company under
Slide 16: ROE
ROE Net Income Net Income Operating Revenues Total Assets ROE ＝ ＝ × × Net Assets Operating Revenues Total Assets Net Assets （A） （B) （C) ROE Profitability(A) Inventory turnover(B) Financial leverage (C) Bank, securities Bank, securities Bank, securities Bank, securities JSF JSF JSF JSF （TSE 1sec.） （T
Slide 17: The medium-and-long term prospects
The medium-and-long term prospects 1 Improvement of the profitability in the mid-and-long term The fruition of the profit expansionary policy Operation of the new system (FY2016) and Expense reduction by the repayment end (FY2021) Rise in interest rate levels 2 Development of the new system（re
Slide 18: The medium-and-long term prospects
The medium-and-long term prospects 2 Development of the new system（release in January, 2017） Development cost Development scale Development cost 4.5(¥bil) Maintenance expense 0.6(¥bil) ＊Current maintenance expense 1.4(¥bil) ＜Image of development cost＞ Current system New system Japan Securities Fin
Slide 19: The medium-and-long term prospects
The medium-and-long term prospects 3 Action to profit expansion（Progress of the Mid-term Management Plan） Margin Loan Business Increase the number of Loanable Issues Mar-13 2,059 → Mar-14 2,202(+143) Setting of the business promotion team for the use promotion of the Brokers Enhance our inform
Slide 20: Revision of Shareholder Return Policy
Revision of Shareholder Return Policy 1 Basic Policy Retain solid equity capital to secure the financial health and management stability that society demands of the company as the infrastructure of securities market, and provide stable long-term return of profits to shareholders by comprehensively
Slide 21: Revision of Shareholder Return Policy
Revision of Shareholder Return Policy (２) Setting the Share Buyback Policy （Share Buyback Policy） In a view of further enhancing of return to shareholders, we will appropriately implement share buyback, after taking into consideration of some factors such as business performance, level of share pr
Slide 22: Dividend
Dividend FY2014 Annual ¥15 [Interim ¥7, year-end ¥8] (+¥1 FY2013) FY2015(Forecast) Annual ¥16 [Interim ¥8, year-end ¥8] (+¥1 FY2014) FY FY FY FY FY FY FY 2009 2010 2011 2012 2013 2014 2015 Forecast Annual Dividend per share ¥14 ¥14 ¥14 ¥14 ¥14 ¥15 ¥16 （year-end ） ¥7 ¥7 ¥7 ¥7 ¥7 ¥8 ¥8 （interim） ¥
Slide 23: Share Buyback Program
Share Buyback Program Resolution of share buyback program (announced on May11, 2015) Number of shares to be acquired： up to 3million shares Ratio to total shares issued：3.0% Total value to be acquired：Y2.5bn Schedule：from 12May2015 to 18Mar2016 【The past results】 total shares purchased amoun
Slide 24: Appendix
i Appendix
Slide 25: Breakdown of Operating Revenues by business (historical)
Breakdown of Operating Revenues by business (historical) \ mil Mar-15 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Securities Finance Bussiness 20,817 17,558 15,186 14,093 16,363 17,162 Margin Loan Business 12,954 8,922 6,756 6,625 9,240 9,667 (46.5%) (39.0%) (33.4%) (37.5%) (47.2%) (47.6%) Interest on Loans
Slide 26: Outstanding Loan Balance
Outstanding Loan Balance (Year average and year-end balance) \ mil FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 avg. 324,205 293,429 218,059 214,164 490,635 428,329 Margin Loans term-end 328,755 305,083 241,035 502,322 601,206 541,052 Bond Financing & General avg. 46,863 45,850 50,893 55,865 157,232 22
Slide 27: Margin Transactions & Loans for Margin Transactions
Margin Transactions & Loans for Margin Transactions ¥ tri 3.0 50% Margin Buying Balance 45% 2.5 Margin Loan Balance 40% Ratio 2.0 35% 30% 1.5 25% 20% 1.0 15% 0.5 10% 5% 0.0 0% 08 09 10 11 12 13 14 1.0 ￥tri 100% Margin Selling Balance 0.9 90% Stock Loan Balance 0.8 Ratio 80% 0.7 70% 0.6 60% 0.5 50% 0
Slide 28: Revenue structure of Loans for margin transactions
Revenue structure of Loans for margin transactions Over-lent Income statement Margin Loans Over-lent 【Operating revenues】 Interest on loans＝(A)×0.64% (E) Stock Loans ※ =(A)-(D) Fee on lending securities (lending fees) (C) ＝(B)×0.40％ Interest on collateral money of matching matching securities borrow
Slide 29: Margin Loan Rates
Margin Loan Rates Margin Loan Stock Loan BOJ Policy Interest Rate Jul 2006 Uncollateralized O/N Call Rate:0.25％ Securities Company Securities Company Feb 2007 Uncollateralized O/N Call Rate:0.50％ JSF Oct 2008 Uncollateralized O/N Call Rate:0.30％（▲0.20%） Loan Rate Lending 0.64% Fee Dec 2008 U
Slide 30: Loan Rate of Loans for Margin Transactions
Loan Rate of Loans for Margin Transactions 10.0% 9.0% 8.75% Loan Rate Interest Rate on Collateral Money of Stock Loan 8.0% Lending Fee 7.0% Profit Margin 6.0% 5.00% 5.0% Sep-93 4.0% 3.75% Nov-10 Aug-14 3.0% Jan-09 2.0% May-02 1.17% 1.0% 1.04% 0.0% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 0
Slide 31: Features of Balance Sheet (Consolidated)
Features of Balance Sheet （Consolidated) \mil Change from Features of Assets Mar-15 Mar-14 (1) Fluctuation of Loan Balance Total assets 3,482,601 ▲ 431,786 Loan balance moves everyday Current assets 2,484,418 ▲ 224,465 because margin loan is over- Cash & Deposit 31,792 ▲ 61,277 Deposit at BOJ night
Slide 32: Securities Holdings
Securities Holdings \ mil Mar-14 Mar-15 notes Unrealized Unrealized Securities Holdings B/S Amount B/S Amount profits and loses profits and loses Equity 9,238 4,643 11,951 7,356 Bond 1,548,702 7,787 1,516,245 13,651 JGB&Municipal Bond 1,410,019 7,766 1,383,045 12,442 Corporate Bond 138,682 20 98,932
Slide 33: JSF Trust Bank (Loan Balance)
JSF Trust Bank（ Loan Balance） ● Loan Balance by Industry \mil Mar-14 Sep-14 Mar-15 Loan Loan Loan Balance ratio Balance ratio Balance ratio Manufacturing 15,809 24.7% 12,639 23.3% 11,284 20.5% Fishery 0 0.0% 0 0.0% 0 0.0% Mining 192 0.3% 144 0.3% 96 0.2% Construction 367 0.6% 0 0.0% 0 0.0% Energy &
Slide 34: The 4th Mid-term Management Plan (FY2014-FY2016)
The 4th Mid-term Management Plan（FY2014〜FY2016） Corporate As an institution specializing in the securities finance identity business, Japan Securities Finance has a mission, while always maintaining a keen awareness of our public role Contribute to the development of the securities industry by pro
Slide 35: Business Strategies for the 4th MMP
Business Strategies for the 4th MMP 1. Expand the Loans for Margin Transactions Business as Key Infrastructure for the Securities Market Increase the number of loanable issues and improve both the system and operation of loans for margin transactions Enhance our informational outreach activities c
Slide 36: Reinforcing Management Systems for the 4th MMP
Reinforcing Management Systems for the 4th MMP ① Enhancing Internal Controls Enhance the effectiveness of our compliance and internal auditing Work ever harder to improve our risk management in view of the increasingly diverse and complex risks associated ② Strengthening Our Business Management St
Slide 37: Business Strategies of JSF Trust Bank
Business Strategies of JSF Trust Bank Management Policy (Outline) As a trust bank supporting the business infrastructure of securities companies, etc., JSF Trust and Banking Co., Ltd. provides customers with finely-tuned services that cannot be expected from other banks, including mega banks, and ai
Slide 38: Rating Information
Rating Information JCR R&I Standard & As of 31/Mar/2015 Poor’s Rating Outlook Rating Outlook Rating Outlook Japan Long-term AA- Stable AA- Stable A Stable Securities Short-term J-1+ a-1+ A-1 Finance （Highest） （Highest） CP Issue ¥1tri ¥1tri ― JSF Trust Long-term A+ Stable A+ Stable ― ― Bank Short-ter
Slide 39: Notice
Notice This document includes statements for business forecast. These statements donʼt guarantee companyʼs future achievement and that involve risk or uncertain factors. Companyʼs future achievement may be changed drastically up to stock market or financial conditions. Japan Securities Finance Co.,L
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