Japan Securities Finance Co., Ltd. · TSE:8511

Japan Securities Finance — 1H FY2013 Earnings Presentation

38 slides from Japan Securities Finance's earnings presentation, March 2013

  1. Slide 1: Financial Presentation for 1st Half, FY2013

    Financial Presentation for 1st Half, FY2013 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 vers

  2. Slide 2: Financial Summary

    a Financial Summary

  3. Slide 3: Financial Summary for 1st Half, FY2013

    Financial Summary for 1st Half, FY2013 ¥ mil Parent Consolidated FY2012 FY2013 FY2012 FY2013 Change Change 1H 1H 1H 1H Operating 566 620 7,242 7,809 (7.8%) 8,682 9,303 (7.2%) Revenues EX Premium 748 803 Charges 5,679 6,428 7,120 7,923 (13.2%) (11.3%) Operating Expenses 3,771 3,550 ▲221 4,190 4,150 ▲

  4. Slide 4: Breakdown of Operating Revenues by business

    Breakdown of Operating Revenues by business Real Estate Management, \ mil Sep-12 4.7% Sep-12 Sep-13 Trust Banking, Securities Finance Bussiness 7,211 7,792 12.2% Margin Loan Business 3,157 4,196 Margin Loan, 36.4% (36.4%) (45.1%) Interest on Loans 838 1,946 Interest on collateral money of securities

  5. Slide 5: Financial Highlights for 1st Half, FY2013 ①

    Financial Highlights for 1st Half, FY2013 ① 1 Margin Margin Loan Loan Balance Balance for for 1 st Half, 1st Half, FY2013 FY2013 【1Q・2Q】 Avg. Margin Avg. Stock Loan Rate \ mil Loan Loan （ as of sep） Sep-12 Sep-13 Change \ bn \ bn Margin Loan Business 3,157 4,196 32.9% FY2013, 1H 472 168 0.77% Intere

  6. Slide 6: Financial Highlights for 1st Half, FY2013②

    Financial Highlights for 1st Half, FY2013② 2 Profit Profit on on bond bond investment investment decreased decreased 【1Q・2Q】 \m il  In JSF, profit on bond investment (both interest F Y2 0 1 2 F Y2 0 1 3 change income and trading income) decreased. 2Q 2Q JSF 2 ,6 3 8 1 ,5 4 0 ▲ 1 ,0 9 8 J S F T ru s

  7. Slide 7: Financial Results of Group Companies

    Financial Results of Group Companies Subsidiary Japan Securities Finance Affiliate （ ) Shareholding Ratio （100%） （100%） （20.0%） （20.8%） JSF Nihon Japan Information JSFIT Trust Bank Building Processing ※ \ mil FY2013, 1H Results (Reference) Shareholding FY2012 1H Ratio Operating Recurring Net Net Inc

  8. Slide 8: Financial Results of JSF Trust Bank

    Financial Results of JSF Trust Bank \mil FY2012 FY2013 change 2Q 2Q Financial Financial Highlights Highlights for for 2Q, 2Q, FY2013 FY2013 Recurring Revenues 1,192 1,076 ▲115  Trust charges increased Trust charges 157 230 72 compared with the year-earlier period. Ordinary Expenses 894 1,283 389 Th

  9. Slide 9: Estimated Figures for FY2013

    Estimated Figures for FY2013 Precondition Balance of Margin Loans ¥mil FY2013 Precondition FY2013 Estimated Figures (Reference) FY2012 Over-lent Operating Recurring Net Margin Loan Over-lent Income Income Income Net Income ¥350bn Stock Loan 1,900 2,400 5,400 ¥50bn Consolidated 1,777 （▲500） （▲400） （+

  10. Slide 10: Management Matters

    Management Matters

  11. Slide 11: Margin Transactions & Margin Loans (Average balance)

    Margin Transactions & Margin Loans (Average balance) \ tri 6 60% Margin Buying Balance 5 Margin Loan Balance 50% Ratio 4 40% 3 30% 2 20% 1 10% 0 0% 03 04 05 06 07 08 09 10 11 12 13 1.8 ￥tri 100% 1.6 Margin Selling Balance 90% Stock Loan Balance 80% 1.4 Ratio 70% 1.2 60% 1.0 50% 0.8 40% 0.6 30% 0.4 2

  12. Slide 12: Margin Loans Balance (Apr. 2012～Oct. 2013)

    Margin Loans Balance (Apr. 2012～Oct. 2013） Margin Loan Balance Stock Loan Balance \ bn \ bn 700 600 600 500 500 400 P reco ndition FY2013 \ 170 bn 400 Precondition FY201 3 \ 47 0 bn 300 300 200 200 100 100 Avg .FY2012 \ 2 14 b n Avg.FY20 12 \ 183 bn 0 0 '12/04 '12/07 '12/10 '13/01 '13/04 '13/07 '13/

  13. Slide 13: Margin Loan Balance and Nikkei 225 Index

    Margin Loan Balance and Nikkei 225 Index Margin Loan Balance(TSE) and Nikkei 225 Index Nikkei 225 （\ bn） Index (\) 19,000 Margin Loan 3,000 Peak \ 2,712 bn Nikkei 225 Index (Left) 18,000 2,750 Margin Loan (Right) Stock Loan (Right) 17,000 2,500 16,000 '07/12 2,250 Nikkei 225 Index 15,000 \ 15,000～\

  14. Slide 14: Comprehensive Review of the Short Selling Regulation

    Comprehensive Review of the Short Selling Regulation 【Outline of Comprehensive Review 】 Enforced on November 5, 2013 Before Revision After Revision ①Price Test Restriction Prohibition of short selling at the same or Applied only when the price fall below a certain lower price than the most recent pr

  15. Slide 15: Merger with Osaka Securities Finance <outline>

    Merger with Osaka Securities Finance <outline>  Background  Establishment of JPX and consolidation of cash equity markets  Date of Merger  July-22, 2013  Merger ratio  1：0.39  Number of shares allocated : 14,257,763 shares  Total number of JSF’s shares issued after merger :107,307,763 shares

  16. Slide 16: Management Policy after Merger with OSF

    Management Policy after Merger with OSF Management Policy  Establish solid credibility  Retain solid equity capital, stable and long-term return of profits to shareholders  Further solidify the profit base  Further improve the efficiency of organizational and business management ⇒ No change Busi

  17. Slide 17: Our Organization after the Merger with OSF

    Our Organization after the Merger with OSF Change of Organization  Integration of the business of JSF’s former Loan Department and OSF’s former Tokyo branch, and division into new two department  Establishment of new two department - Institutional Sales Department - Retail Business Department  Es

  18. Slide 18: Effect of the Merger with OSF ①

    Effect of the Merger with OSF ① 1 Expansion of target market of margin loan business  Former OSE only listed issues became target of margin loan business  Issues listed on an emerging market “JASDAQ” became target 【Increase of the number of Loanable Issues 】  Increased 272 issues (former OSE list

  19. Slide 19: Effect of the Merger with OSF ②

    Effect of the Merger with OSF ② 3 Expansion of use of Loans for Negotiable margin Transactions 【Loan balance & number of Customers】 ¥mil  Contracted with OSF’s customers Number of Loan and started to loan Customers Balance Mar-13 12 companies 34,380 Sep-13 16 companies 40,782 4 Cost reduction effec

  20. Slide 20: Dividend Policy

    Dividend Policy   Dividend Policy Basically, Dividend Payout Ratio of about 40% on Consolidated Financial Results, Results considering Dividend on Equity (DOE) Ratio. FY2013 Forecast：Annual ¥14（Interim ¥7, year-end ¥7） FY FY FY FY FY FY FY 2007 2008 2009 2010 2011 2012 2013 Annual Dividend per sha

  21. Slide 21: Appendix

    a Appendix

  22. Slide 22: Breakdown of Operating Revenues by business (historical)

    Breakdown of Operating Revenues by business (historical) \ mil Dec-08 Mar-09 Mar-10 Mar-11 Mar-12 Sep-12 Mar-13 Sep-13 Securities Finance Bussiness 34,427 20,817 17,558 15,186 7,211 14,093 7,792 Margin Loan Business 14,483 19,638 12,954 8,922 6,756 3,157 6,625 4,196 (41.7%) (44.3%) (46.5%) (39.0%) (

  23. Slide 23: Outstanding Loan Balance (Period average and term-end balance)

    Outstanding Loan Balance (Period average and term-end balance) \ mil FY2012 FY2013 FY2009 FY2010 FY2011 FY2012 Interim Interim avg. 324,205 293,429 218,059 205,739 214,164 472,976 Margin Loans term-end 328,755 305,083 241,035 172,283 502,322 569,353 Bond Financing & General avg. 46,863 45,850 50,893

  24. Slide 24: The 3rd Mid-term Management Plan（FY2012～FY2014）

    The 3rd Mid-term Management Plan（FY2012～FY2014） Management Policy Establish solid credibility Retain solid equity capital, stable and long-term return of profits to shareholders Further solidify the profit base Further improve the efficiency of organizational and business management Business Str

  25. Slide 25: Improve the convenience of Margin Loan Business

    Improve the convenience of Margin Loan Business Increase the number of Loanable Issues JSF Web System ・ Boost approach to listed companies. Client Ａ Client Ｂ Client ｎ JSF JSF Web System Certificate Authority IE IE IE IE Publish Client Certificate ・Provide Margin Loans application using the Internet.

  26. Slide 26: Revenue Structure of Margin Loan Business

    Revenue Structure of Margin Loan Business BLUE：Operating Revenues RED：Operating Expenses Interest on Loans （ B） ×0.77% Over-lent Fees on Lending Securities Interest on Margin Loans Over-lent （ Lending Fees ） Borrow ing （ D） ×0.40% （ B） ×Funding rate （B） Stock Loans Interest on collateral m oney （D）

  27. Slide 27: 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 Loan Rate Lending  Oct 2008 Uncollateralized O/N Call Rate:0.30％（▲0.20%） 0.77% Fee 0.40%  Dec

  28. Slide 28: Loan Rate of Loans for Margin Transactions

    Loan Rate of Loans for Margin Transactions 10.0% 9.0% 8.75% Loan R ate Interest Rate on C ollateral Money of S tock Loan 8.0% Lending Fee 7.0% P rofit Margin 6.0% 5.00% 5.0% Sep-93 4.0% 3.75% Nov-10 3.0% Jan-09 2.0% M ay-02 1.17% 1.0% 0.0% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

  29. Slide 29: Weekly trading value and margin balances

    0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2012/12 week 4 2013/1 week 2 (rate ) 2013/1 week 3 2013/1 week 4 2013/1 week 5 2013/2 week 1 2013/2 week 2 2013/2 week 3 2013/2 week 4 2013/3 week 1 2013/3 week 2 2013/3 week 3 Total Trading Value(Left） 2013/3 week 4 Japan Securities Finance Co.,Ltd 2013/4

  30. Slide 30: Features of Balance Sheet (Non-Consolidated)

    Features of Balance Sheet （NonｰConsolidated) Features of Assets Features of Liabilities (1) Fluctuation of Loan Balance (1) Fluctuation of money funding amount Loan balance moves everyday because margin loan is Need to response flexibly to fluctuating cash demands, over-night loan because of the flu

  31. Slide 31: Changes in accounting policies (Securities Accounts)

    Changes in accounting policies (Securities Accounts)  Changed our accounting policy regarding balance sheets  We changed not to record “securities accounts”, such as “securities lent”, “securities in custody”, “securities in deposit”, “collateral securities deposited”, “securities borrowed” and “s

  32. Slide 32: Balance of JGB held by group companies

    Balance of JGB held by group companies \ bn JSF \ mil 3,000 2.0 JSF Sep-12 Mar-13 Sep-13 2,500 (1.28) (1.69) 1.5 JGB Balance 1,681,442 1,050,772 1,173,933 2,000 (1.13) 1 year or less 946,967 650,205 472,803 1,500 1.0 over 1Y 734,475 400,567 701,130 734 (15Y floating JGB) 152,898 151,912 150,752 1,00

  33. Slide 33: JSF Trust Bank (outline)

    JSF Trust Bank (outline) 【Management 【ManagementPolicy】 Policy】outline outline As Asaatrust trustbank banksupporting supportingthethebusiness businessinfrastructure infrastructureof ofsecurities securities companies, companies,etc., etc.,JSF JSFTrust Trustand andBanking BankingCo., Co.,Ltd. Ltd.prov

  34. Slide 34: JSF Trust Bank (Loan & Securities)

    JSF Trust Bank (Loan & Securities) ● Loan Balance by Industry ● Securities Holdings \mil \mil Sep-12 Mar-13 Sep-13 Sep-12 Mar-13 Sep-13 Notes Loan Loan Loan ratio ratio ratio JGB 346,931 172,968 375,273 Balance Balance Balance Manufacturing 31,047 30.1% 23,386 29.4% 20,828 31.7% less than 266,998 99

  35. Slide 35: Share Buyback Program

    Share Buyback Program total shares start end purchased amount cancellation shares issued shs \ mil shs shs FY2008 2008/4/1 2008/4/18 4,312,800 2,999 99,704,000 2008/5/15 2008/6/11 978,900 999 99,704,000 2008/6/27 2008/7/25 1,000,000 881 99,704,000 2008/9/24 6,004,000 93,700,000 6,291,700 4,881 Numbe

  36. Slide 36: Credit Ratings

    Credit Ratings JCR R&I Standard & Poor’s As of 30/Sep/2013 Rating Outlook Rating Outlook Rating Outlook Japan Securities Long-term AA- Stable AA- Stable A Stable Finance Short-term J-1+ a-1+ A-1 （Highest） （Highest） CP Issue ¥1tri ¥1tri ― JSF Trust Bank Long-term A+ Stable A+ Stable ― ― Short-term J-

  37. Slide 37: Securities-related Business by JSF Group Companies

    Securities-related Business by JSF Group Companies TSE TSE Securities Finance Business Sapporo JapanSecurities SecuritiesFinance Finance Sapporo Japan Loansfor Loans forMargin Margin Transactions Fukuoka Transactions Fukuoka Designated as securitiers Loansfor Loans fornegotiable negotiablemargin mar

  38. Slide 38: Notice

    Notice This document includes statements for business forecast. These statements don’t guarantee company’s future achievement and that involve risk or uncertain factors. Company’s future achievement may be changed drastically up to stock market or financial conditions. Japan Securities Finance Co.,L

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