Japan Securities Finance Co., Ltd. · TSE:8511
Japan Securities Finance — H1 FY2015 Earnings Presentation
40 slides from Japan Securities Finance's earnings presentation, November 2015
Slide 1: Financial Presentation for 1st Half, FY2015
Financial Presentation for 1 Half, FY2015 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 ◆Financial Summary (P3~13) ◆ Appendix (P22～39) Financial Summary for 1st Half, FY2015 (P4) Financial Result (Historical data) Breakdown of Operating Revenues by business Breakdown of Operating Revenues by business (P5) (Historical data) Financial Highlights for 1st Half, FY2015 (P6~
Slide 3: Financial Summary
a Financial Summary
Slide 4: Financial Summary for 1st Half, FY2015
Financial Summary for 1st Half, FY2015 ¥ mil Parent Consolidated FY2014 FY2015 FY2014 FY2015 Change Change 1H 1H 1H 1H Operating Revenues 8,546 9,724 1,178 10,107 11,492 1,385 except Premium charges 6,500 6,564 64 8,061 8,332 271 Operating Expenses 4,043 5,089 1,045 4,629 5,747 1,117 except Premium
Slide 5: Breakdown of Operating Revenues by business
Breakdown of Operating Revenues by business \ mil ( )：ratio of OR Sep-14 Sep-15 Securities Finance Bussiness 8,534 9,712 Sep-14 Sep-15 Margin Loan Business 4,627 5,810 (45.8%) (50.6%) Interest on Loans 1,589 1,512 Interest on collateral money of securities borrowed 287 351 Fees on Lending Securities
Slide 6: Financial Highlights 1st Half, FY2015①
Financial Highlights 1st Half, FY2015① 1 Margin Loan Balance for 1st Half, FY2015 【First Half】 Both average of Margin Loan Balance and Stock Loan Balance showed a steady growth. FY2014 FY2015 2Q 1H （\ bn、%） 1Q 2Q 1H 3Q 4Q full year 1Q 2Q 1H YoY YoY Margin Loan 419 394 406 423 477 428 425 459 442 6
Slide 7: Financial Highlights 1st Half, FY2015②
Financial Highlights 1st Half, FY2015② 2 Margin Loan Business remained solid in revenue 【Operating Revenues Transition】 2Q 1H (mil） Revenue Revenue 1H Point Quarterly 1st Half (YoY) (YoY) mil Margin Loan 2,780 5,810 Business (△0.3%) (+25.6%) （ex premium 1,347 2,650 charges） (△0.2%) (+2.7%) 3,704 Fee
Slide 8: Financial Highlights 1st Half, FY2015③
Financial Highlights 1st Half, FY2015③ 3 Bond Financing and General Loans Business declined somewhat 【Operating Revenues Transition】 Quarterly 1st Half 2Q 1H ¥ mil 1H (¥ mil） Revenue Revenue Point (YoY) (YoY) Loan to 425 371 Individual Investors 193 371 The revenue (△6.3%) (△12.8%) in Loan to or Fir
Slide 9: Financial Highlights 1st Half, FY2015④
Financial Highlights 1st Half, FY2015④ Securities Lending Business： 4 General Stock Lending remains solid, Bond Lending improved in earnings 【Operating Revenues Transition】 Quarterly 1st Half ¥ mil 2Q 1H Revenue Revenue 1H (¥ mil） Point (YoY) (YoY) 314 Borrowing demands General of stock lending 513
Slide 10: Financial Highlights 1st Half, FY2015⑤⑥
Financial Highlights 1st Half, FY2015 ⑤ ⑥ 5 JSF Trust Bank : Trust charges continued to increase 【Trust charges Transition】 Quarterly 1st Half 2Q 1H Revenue Revenue 1H (¥ mil） ¥ mil Point (YoY) (YoY) Trust charges continued increase, contributing from 258 315 strengthening Trust custodian type 142 1
Slide 11: 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 2015, 1H Results (Reference) Shareholding FY2014 2Q Ratio Operating Recurring Net Net Inco
Slide 12: Financial Results of JSF Trust Bank
Financial Results of JSF Trust Bank ¥mil FY2014 FY2015 Change Highlights 1H 1H Recurring Revenues 1,664 1,408 ▲256 Trust charges increased , contributing from Trust charges 259 321 62 strengthening custodian type Reversal of ADR* 358 － ▲358 trust service. Gains on sales of bonds were Recurring Ex
Slide 13: 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 ¥290bn Stock Loan 2,200 3,900 2,300 ¥90bn Consolidated (▲825) (▲1,330) (▲1,22
Slide 14: Management Matters
a Management Matters
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, collaterals (such as JGBs
Slide 16: Our Challenges
Our Challenges 1 Enhancement of profitability Enhance profitability by expanding our business and developing new business Cost-reduction through the new system launch, etc. 2 Stable return to stockholders Stable long-term return of profits to shareholders Revision of Basic Dividend Payment P
Slide 17: Enhancement of profitability ①
Enhancement of profitability ① 1 Expanding our business / Developing new business Loans for Margin Transactions Increase the usage rate＊ of LMT Boost the needs of securities companies, especially on-line brokers and mid-sized brokers Increase the number of Loanable Issues (Issues which we are ab
Slide 18: Enhancement of profitability ②
Enhancement of profitability ② 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 Finance
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
Dividend 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） ¥7 ¥7 ¥7 ¥7 ¥7 ¥7 ¥8 <Consolidated> : EPS ¥38.6 ¥37.7 ¥8.4 ¥
Slide 21: 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】 start end total shares purch
Slide 22: Appendix
i Appendix
Slide 23: Financial Result (Historical data)
Financial Result (Historical data) ¥ mil FY2014 FY2015 FY2010 FY2011 FY2012 FY2013 FY2014 Apr.-Sept. Apr.-Sept. Operating Revenues 22,848 20,229 17,675 19,566 10,107 20,300 11,492 Ex Premium charges 19,037 17,082 14,718 16,195 8,061 15,856 8,332 Operating Expenses 11,327 9,634 8,193 8,747 4,629 9,45
Slide 24: 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 Sep-14 Mar-15 Sep-15 Securities Finance Bussiness 17,558 15,186 14,093 16,363 8,534 17,162 9,712 Margin Loan Business 8,922 6,756 6,625 9,240 4,627 9,667 5,810 (39.0%) (33.4%) (37.5%) (47.2%) (45.8%) (47.
Slide 25: Analysis of YoY Change in Operating Revenue by business
Analysis of YoY Change in Operating Revenue by business (Quarterly, 1st Half) 【Quarterly】 YoY △12 mil¥（△0.2%） 【1st Half】 YoY +1,385 mil¥（+13.7%） ¥ mil +1,182 +69 +262 ¥ mil △54 △59 △16 +34 +90 11,492 10,107 △7 △37 △60 △32 5,393 5,381 Margin Bond Sec Margin Bond Sec Others ー ー Others ー ー FY2014 Loan
Slide 26: Outstanding Loan Balance
Outstanding Loan Balance (Year average and year-end balance) \ mil FY2014 FY2015 FY2010 FY2011 FY2012 FY2013 FY2014 Interim Interim avg. 293,429 218,059 214,164 490,635 406,931 428,329 442,341 Margin Loans term-end 305,083 241,035 502,322 601,206 445,464 541,052 453,479 Bond Financing & General avg.
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 15 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
Slide 28: 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 29: 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 30: 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 31: 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 32: Features of Balance Sheet (Consolidated)
Features of Balance Sheet （Consolidated) \mil Change from Features of Assets Sep-15 Mar-15 (1) Fluctuation of Loan Balance Total assets 3,373,007 ▲ 109,593 Loan balance moves everyday Current assets 2,617,731 133,313 because margin loan is over- night loan Cash & Deposit 71,846 40,054 Deposit at BOJ
Slide 33: Securities Holdings
Securities Holdings \ mil Sep-14 Mar-15 Sep-15 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 9,469 4,874 11,951 7,356 12,171 7,228 Bond 1,627,303 10,451 1,516,245 13,651 1,041,739 14,423 JGB&Mu
Slide 34: JSF Trust Bank (Loan Balance)
JSF Trust Bank（ Loan Balance） ● Loan Banance by Industry \mil Sep-14 Mar-15 Sep-15 Loan Loan Loan ratio ratio ratio Balance Balance Balance Manufacturing 12,639 23.3% 11,284 20.5% 10,283 23.9% Fishery 0 0.0% 0 0.0% 0 0.0% Mining 144 0.3% 96 0.2% 48 0.1% Construction 0 0.0% 0 0.0% 0 0.0% Energy & Uti
Slide 35: 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 36: 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 37: 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 38: 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 39: Rating Information
Rating Information JCR R&I Standard & As of 31/Oct/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 40: 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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