Japan Securities Finance Co., Ltd. · TSE:8511
Japan Securities Finance — H1 FY2016 Earnings Presentation
45 slides from Japan Securities Finance's earnings presentation, 2016
Slide 1: Financial Presentation for 1st Half, FY2016
Financial Presentation for 1 Half, FY2016 st 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 ver
Slide 2: Agenda
Agenda ◆ Appendix (P22～P44) ◆Financial Summary (P3~P13) Share Buyback Program Financial Summary for 1st Half, FY2016(P4) Financial Result (Historical data) Breakdown of Operating Revenues by business Breakdown of Operating Revenues by business (P5) (Historical data) Breakdown of Operatin
Slide 3: Financial Summary
a Financial Summary
Slide 4: Financial Summary for 1st Half, FY2016
Financial Summary for 1st Half, FY2016 ¥ mil Parent Consolidated FY2015 FY2016 FY2015 FY2016 Change Change 1H 1H 1H 1H Operating Revenues 9,724 8,567 ▲1,157 11,492 10,683 ▲809 ex Premium charges 6,564 5,974 ▲589 8,332 8,090 ▲242 Operating Expenses 5,089 4,015 ▲1,073 5,747 4,909 ▲838 ex Premium charg
Slide 5: Breakdown of Operating Revenues by business
Breakdown of Operating Revenues by business \ mil ( )：ratio of OR Sep-15 Sep-16 Securities Finance Bussiness 9,712 8,563 Margin Loan Business 5,810 4,395 Margin Loan Business (50.6%) (41.1%) Interest on Loans 1,512 840 For details, see 「Financial Highlights for 1H FY2016①」 (P6) Interest on collatera
Slide 6: Financial Highlights for 1st Half, FY2016 ①
Financial Highlights for 1st Half, FY2016 ① 1 Margin Loan Balance for 1st Half, FY2016 【First Half】 Though Margin Loan Balance decreased on a year-over-year basis, Stock Loan Balance bottomed out. FY2015 FY2016 2Q 1H （\ bn、%） 1Q 2Q 1H 3Q 4Q full year 1Q 2Q 1H YoY YoY Margin Loan 425 459 442 386 33
Slide 7: Financial Highlights for 1st Half, FY2016 ①-2
Financial Highlights for 1st Half, FY2016 ①-2 Margin Loan Business resulted in decrease, driven by decreases in both Margin Loan Balance and Stock Loan Balance. 【Operating Revenues Transition】 1H (¥ mil） Revenue 1H Point 1st Half (YoY) Margin Loan 4,395 ¥ mil Business (△24.4%) （ex premium 1,802 char
Slide 8: Financial Highlights for 1st Half, FY2016 ②
Financial Highlights for 1st Half, FY2016 ② Impact of Negative Interest Rate Policy of BOJ and Our Initiative ① Transition of Average Outstanding Loan Balance Our Initiative for Negative Interest Rate 〜 Change vs. Prior year (%) 〜 Mar Cut margin loan rate（0.64%→0.60%） +100% Cut loan rate (ex. Ma
Slide 9: Financial Highlights for 1st Half, FY2016 ③
Financial Highlights for 1st Half, FY2016 ③ Impact of Negative Interest Rate Policy of BOJ and Our Initiative ② Change of JGBʼs yield curve Investment of JGBs JGBs with maturities around 10 years goes negative. 1.5 It has been difficult to reinvest principal payments from December 30, 2015 holdi
Slide 10: Financial Results of JSF Trust Bank①
Financial Results of JSF Trust Bank① ¥mil FY2015 FY2016 Highlights Change 1H 1H Trust charges remained stable, Recurring Revenues 1,408 1,702 293 contributing from strengthening Trust charges 321 338 16 custodian type trust service. Interest on Loans increased Reversal of ADR* － － － somewhat, bec
Slide 11: Financial Results of JSF Trust Bank②
Financial Results of JSF Trust Bank② Trust charges continued increasing trend. 【Trust charges Transition】 1st Half 1H (¥ mil） Revenue 1H Point (YoY) Trust charges, though growth declined, posted record level Trust contributing from strengthening Charges 338 custodian type trust (+5.1%) service (trus
Slide 12: 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 2016, 1H Results (Reference) Shareholding FY2015 1H Ratio Operating Recurring Net Net Inco
Slide 13: Estimated Figures for FY2016
Estimated Figures for FY2016 Precondition Balance of Margin Loans ¥mil FY2016 Estimated Figures FY2016 Precondition (Reference) Operating Recurring Net FY2015 Income Income Income Net Income Over-lent Margin Loan Over-lent Stock Loan 2,500 3,200 2,600 ¥130bn ¥110bn Consolidated (▲58) (▲149) (▲45) 2,
Slide 14: Management Matters
a Management Matters
Slide 15: Assessment of business performance in 1st Half
Assessment of business performance in 1st Half Even though Balance of Margin Loans remained at lower level of the same period of the previous year, we prevented a downturn in the results. Balance of Margin Loans: (Beginning of period) Both Margin Loan and Stock Loan were sluggish. → (After July)
Slide 16: Assessment of business performance in 1st Half
Assessment of business performance in 1st Half Trend of Margin Transaction and ○Transition of Nikkei Stock Average and Outstanding of Margin Transaction Loans for Margin Transaction ¥ 18,000 After July, although Nikkei Stock Average 24. Jun showed recovery, outstanding purchases on U.K.ʼs vote t
Slide 17: Outlook for 2nd Half
Outlook for 2nd Half （¥ mil） Parent Consolidated 【Estimated figures】 Previous Previous (Jul) Current Change (Jul) Current Change Operating Income 1,100 1,600 +500 2,000 2,500 +500 Recurring Income 1,800 2,300 +500 2,700 3,200 +500 Net Income 1,500 2,000 +500 2,100 2,600 +500 Previous estimated fig
Slide 18: Our Current Initiatives
Our Current Initiatives Development of business 1 Raise our profile as a Securities 4 responding to changes in financial Finance Company regulatory and system Increase usage rate of LMT. Development of service that respond to Expand trade volume of Margin reducing the settlement interval in th
Slide 19: Stable return to stockholders
Stable return to stockholders 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 conside
Slide 20: Dividend and Share Buyback Program for FY2016
Dividend and Share Buyback Program for FY2016 【Dividend】 Interim ：¥ 8 Year-end（Forecast） ：¥ 8 Annual（Forecast） ：¥16 * (YoY ±０) *Consolidated DPR (forecast)： 59.5％ Dividend yield：3.4％ （calculated based on stock price ¥467 as of 31 Oct 2016） 【Share Buyback】 Number of shares to be acquired：up t
Slide 21: Dividend and Share Buyback Program (historical)
Dividend and Share Buyback Program (historical) FY FY FY FY FY FY FY 2016 2010 2011 2012 2013 2014 2015 Forecast/ Framework Annual Dividend per share ¥14 ¥14 ¥14 ¥14 ¥15 ¥16 ¥16 Share Buyback (shs) ー ー ー ー 7.46mil 3mil 2mil （amount） ー ー ー ー ¥4.6bn ¥1.9bn ¥1.0bn <Consolidated> : EPS ¥37.7 ¥8.4 ¥19.1
Slide 22: Appendix
i Appendix
Slide 23: Share Buyback Program
Share Buyback Program Resolution of share buyback program (announced on May12, 2016) Number of shares to be acquired： up to 2million shares Ratio to total shares issued：2.0% Total value to be acquired：Y1.0bn Schedule：from 13May2016 to 22Mar2017 【The past results】 start end total shares purch
Slide 24: Financial Result (Historical data)
Financial Result (Historical data) ¥ mil FY2015 FY2016 FY2012 FY2013 FY2014 FY2015 Apr.‐Sept. Apr.‐Sept. Operating Revenues 17,675 19,566 20,300 11,492 22,035 10,683 Ex Premium charges 14,718 16,195 15,856 8,332 16,160 8,090 Operating Expenses 8,193 8,747 9,450 5,747 11,537 4,909 General & Administr
Slide 25: Breakdown of Operating Revenues by business (Historical data)
Breakdown of Operating Revenues by business (Historical data) \ mil Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Sep-15 Mar-16 Sep-16 Securities Finance Bussiness 17,558 15,186 14,093 16,363 17,162 9,712 17,776 8,563 Margin Loan Business 8,922 6,756 6,625 9,240 9,667 5,810 10,579 4,395 (39.0%) (33.4%) (37.5%)
Slide 26: Breakdown of Operating Revenues by business (Quarterly)
Breakdown of Operating Revenues by business (Quarterly) Margin Loan Business resulted in decrease, driven by decreases in both Margin Loan Balance and Stock Loan Balance. 2Q 1H 1H 【Operating Revenues Transition】 (mil） Revenue Revenue (YoY) (YoY) Point Quarterly 1st Half ¥ mil Margin Loan 2,337 4,359
Slide 27: Breakdown of Operating Revenues by business (Quarterly)
Breakdown of Operating Revenues by business (Quarterly) Bond Financing and General Loans Business declined mainly driven by large decrease in balance of loan to Securities Companies. 【Operating Revenues Transition】 Quarterly 1st Half 2Q 1H 1H ¥ mil (¥ mil） Revenue Revenue (YoY) (YoY) Point 371 Loan
Slide 28: Breakdown of Operating Revenues by business (Quarterly)
Breakdown of Operating Revenues by business (Quarterly) Securities Lending Business：Fees in Bond Lending saw large increase. 【Operating Revenues Transition】 Quarterly 1st Half 2Q 1H 1H ¥ mil (¥ mil） Revenue Revenue (YoY) (YoY) Point 487 Since balance of General long-term trade Stock 237 487 decrease
Slide 29: Breakdown of Operating Revenues by business (Quarterly)
Breakdown of Operating Revenues by business (Quarterly) JSF Trust Bank : Trust charges continued increasing trend. 【Trust charges Transition】 Quarterly 1st Half 4Q YTD YTD (¥ mil） Revenue Revenue (YoY) (YoY) Point ¥ mil Trust charges, though growth 315 321 declined, posted record level Trust contrib
Slide 30: Analysis of YoY Change in Operating Revenue by business
Analysis of YoY Change in Operating Revenue by business (Quarterly, 1st Half) 【Quarterly】 YoY △348 mil¥（△6.5%） 【Full Year】 YoY △809 mil¥（△7.0%） ¥ mil ¥ mil +794 △0 +301 +37 △1,415 △526 +318 +28 +26 11,492 10,683 △263 △15 △443 5,381 5,032 Margin Bond Sec Margin Bond Sec Others ー ー Others ー ー FY2015 L
Slide 31: Outstanding Loan Balance
Outstanding Loan Balance (Year average and year-end balance) \ mil FY2015 FY2016 FY2011 FY2012 FY2013 FY2014 FY2015 Interim Interim avg. 218,059 214,164 490,635 428,329 442,341 401,400 263,604 Margin Loans term-end 241,035 502,322 601,206 541,052 453,479 324,113 263,699 Bond Financing & avg. 50,893
Slide 32: 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 15 16 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
Slide 33: Structure of Margin Transaction & Loans for Margin Transaction
Structure of Margin Transaction & Loans for Margin Transaction Margin Loans for Margin Transaction Transaction Institutional Margin buying order Margin Loan application Stock Investors Margin selling order Stock Loan application Securities Companies Investor Broker Fund for Purchasing Fund (Margin l
Slide 34: 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)×0.60% (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 35: Margin Loan Rates
Margin Loan Rates Margin Loan Stock Loan BOJ Policy Interest Rate Jul 2006 Uncollateralized O/N Call Rate:0.25％ Feb 2007 Uncollateralized O/N Call Rate:0.50％ Securities Company Securities Company Oct 2008 Uncollateralized O/N Call Rate:0.30％（▲0.20%） JSF Loan Rate Lending Dec 2008 Uncollatera
Slide 36: 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 Mar-16 4.0% 3.75% Nov-10 Aug-14 3.0% Jan-09 2.0% May-02 1.0% 1.00% 0.0% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
Slide 37: Features of Balance Sheet (Consolidated)
Features of Balance Sheet （Consolidated) \mil Change from Features of Assets Sep-16 Mar-16 (1) Fluctuation of Loan Balance Total assets 3,328,200 79,029 Loan balance moves everyday Current assets 2,436,241 99,877 because margin loan is over-night Cash & Deposit 770,748 504,370 Deposit at BOJ loan Sh
Slide 38: Securities Holdings
Securities Holdings \ mil Sep-15 Mar-16 Sep-16 notes Unrealized Unrealized Unrealized Securities Holdings B/S Amount B/S Amount B/S Amount profits and loses profits and loses profits and loses Equity 12,171 7,228 12,079 6,550 11,184 5,687 Bond 1,041,739 14,423 1,264,085 32,820 908,525 29,285 JGB&Mun
Slide 39: JSF Trust Bank (Loan Balance)
JSF Trust Bank（ Loan Balance） ● Loan Banance by Industry \mil Sep-15 Mar-16 Sep-16 Loan Loan Loan ratio ratio ratio Balance Balance Balance Manufacturing 10,283 23.9% 8,578 6.3% 8,078 6.2% Fishery 0 0.0% 0 0.0% 0 0.0% Mining 48 0.1% - 0.0% - 0.0% Construction 0 0.0% 0 0.0% 0 0.0% Energy & Utilities
Slide 40: 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 41: 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 42: 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 43: 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 44: Rating Information
Rating Information JCR R&I Standard & As of 30/Sep/2016 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 45: 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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