Japan Securities Finance : INTEGRATED REPORT - Integrated Report 2025 for viewing (ir2025 all e)

About this update from Japan Securities Finance Co., Ltd.

Japan Securities Finance Co., Ltd. Be unique. JAPAN SE CUR ITIES FINANCE C 0., LTD. 1-2-10 Nihonbashi-Kayabacho, Chuo-ku, Tokyo Integrated Report 2025 Japan Securities Finance Co., Ltd. Integrated Report JAPAN SECURITIES FINANCE About Us The JSF Group at a Glance Group Composition The JSF Group comprises three companies that operate in sync with the securities and financial markets: Japan Securities Finance Co., Ltd (JSF), which responds to the diverse needs of financial institutions and investors as a provider of securities and financial market infrastructure, JSF Trust and Banking Co., Ltd., which provides highly distinctive trust services, and Nihon Building Co., Ltd., which provides high-quality office environments for Group Real estate leasing business 5.9 % ¥1.1 billion Trust banking business 16.0 % JSF Group Gross Profit* by Business (FY2024) Securities finance business Loans for negotiable margin transactions 4.1% ¥0.3 billion Equity repo transactions 23.3% ¥1.7 billion Bond repo and gensaki transactions 54.8% ¥4.0 billion Securities financing Gross profit ¥7.3 billion Loans to retail 6.8% ¥0.5 billion General stock lending 8.2% ¥0.6 billion Trust banking business Real estate leasing business Loans for margin transactions 23.0 % ¥4.3 billion companies and other companies. Securities Finance Business Japan Securities Finance Co., Ltd. See page 24 for details. JSF's Mission: Supplying Liquidity to Stock and Bond Markets JSF is the only securities finance company in Japan licensed by the Prime Minister to operate as a company specializing in ¥3.0 billion Securities investment, etc. 16.6 % ¥3.1 billion Securities financing Consolidated gross profit ¥18.7 billion securities finance, providing essential lending of funds and securities to the stock and bond markets. As an institution specializing in securities finance, JSF has a mission to contribute to the long-term development of the securities and financial markets by proactively meeting diverse needs both in Japan and overseas. JSF's Main Businesses JSF's core business is securities financing (lending funds and securities to financial institutions, etc.), which is centered on loans for margin transactions. Loans for margin transactions Supplying funds and stocks necessary for standardized margin transactions Bond repo and gensaki transactions Acting as an intermediary between the Japanese government bond (JGB) investment needs of domestic financial institutions and institutional investors, and the JGB borrowing needs of prime brokers and overseas financial institutions 39.0 % ¥7.3 billion * Figures for gross profit by business are on a non-consolidated basis (before elimination of the effects of consolidation), therefore the sum of these figures does not correspond to consolidated gross profit. Market Size and JSF's Share (As of March 31, 2025) JSF's Business Model Equity repo transactions Transactions that meet securities companies' needs to raise funds using stock as collateral and for procuring JGBs and other securities Bond repo and gensaki transactions Source: Prepared by JSF based on Statistics on Securities Financing Transactions in Japan , published by the Bank of Japan Total bond repo and gensaki transactions market balance Approx. ¥226 trillion JSF's market share: Approx. 4.4% Investors Standardized margin transactions Loans for margin transactions (Margin loans/Stock loans) Source: Prepared by JSF based on publicly available data from domestic stock exchanges, including Standardized margin transaction buying balance Approx. ¥2,700 billion Utilization rate for loans for margin Standardized margin selling balance Approx. ¥460 billion Utilization rate for loans for margin Loans for margin transactions involve lending securities companies the funds and stocks essential for settling standardized margin transactions. Bond repo, gensaki , and equity repo transactions (securities financing) involve lending funds and securities (government bonds and stocks) to meet the funding needs of securities companies, institutional investors and others, as well as their needs for securities as collateral. Stocks Securities companies Institutional investors, etc. Lenders Securities companies Financial institutions Institutional investors, etc. Borrowing side (Domestic and overseas) Gave rise to Strengthening the Earnings Base Securities Loans for margin transactions JSF Securities companies Borrowers Funds/ Securities Bond repo and gensaki transactions Equity repo transactions JSF Securities Financing Securities companies Financial institutions Lending side (Domestic and overseas) Funds/ Stocks (Collateral) Funds/ Securities Funds/ Stocks proprietary trading systems transactions: Approx. 14.6% transactions: Approx. 32.0% Equity repo transactions, general stock lending, and other Source: Prepared by JSF based on Statistics on Securities Financing Transactions in Japan , published by the Bank of Japan Stock (collateral) lending transactions balance Approx. ¥21 trillion JSF's market share: Approx. 5.0% Note: Funds lent by JSF are procured from the money market, etc. (Collateral) Strengthened by growth in securities financing, our business portfolio has become more robust and our earnings structure more diversified. Trust Banking Business JSF Trust and Banking Co., Ltd. See page 36 for details. Nihon Building Co., Ltd. See page 37 for details. Real Estate Leasing Business Based on its management philosophy of contributing to the development of the securities and financial markets, JSF Trust and Banking Co., Ltd., focuses on providing management trust banking services, such as segregated management of customer assets required by securities companies. With the increasing range of sectors in which customer asset preservation trusts are obligatory, JSF Trust and Banking offers a wide range of trust products for customers in different industries. Gross Operating Profit 3,766 2,876 5,850 3,173 3,670 1,434 7,854 7,351 2,098 2,616 2,524 2,176 3,164 3,000 3,043 (Securities Finance Business and Trust Banking Business) (Millions of yen) Securities Finance Business (Non-consolidated) Loans for margin transactions Securities financing Other Trust Banking Business (Non-consolidated) 3,853 2,814 3,077 3,814 4,390 2020 2021 2022 2023 2024 (FY) 2 Japan Securities Finance Co., Ltd. Integrated Report 2025 Japan Securities Finance Co., Ltd. Integrated Report 2025 3 About Us Japan Securities Finance's Roadmap to the Future Vision Announced November 2025 Announced November 2021 Management Policy through FY2025 Medium-Term Management Policy FY2022 Results Consolidated ordinary profit: ¥7.6 billion ROE: 4.36 % Management Goals Sixth Medium-Term Plan Period (through FY2022) ROE: 4% Seventh Medium-Term Plan Period (through FY2025) ROE: 5% Strategies Strengthen securities financing centered on loans for margin transactions Announced February 2023 Seventh Medium-Term Management Plan Management goals achieved in the plan's first year FY2023 Results Consolidated ordinary profit: ¥11.0 billion ROE: 5.73 % Management Goals (Revised upward on November 6, 2023) Maintain ROE at a stable level above 5% and consolidated ordinary profit at a stable level of over ¥10.0 billion while aiming for further improvement in both Announced November 2023 Long-Term Management Vision FY2024 Results Consolidated ordinary profit: ¥12.5 billion ROE: 7.44 % (6.5% on an actual basis, excluding extraordinary income) ROE Continue working toward steady improvement, keeping the 8% level in mind Shareholder Returns Maintain a total payout ratio of 100% during the Seventh Medium-Term Management Plan period, and strive to enhance shareholder returns thereafter PBR Target a market valuation consistently above 1.0x Eighth Medium-Term Management Plan See page 16 for details. Management Goals Consolidated ordinary profit: ¥15.0 billion Consolidated ROE: 8% Six Strategies for Achieving Management Goals See page 17 for details. Shareholder Return Policy during the Eighth Medium-Term Management Plan Until ROE reaches 8%, aim for a total payout ratio of 100% through dividends and flexible implementation of share buybacks Actively pay dividends, with a target dividend payout ratio of 70% ROE and PBR ROE ( ％ ) 8.0 6.0 4.0 3.79 3.03 2.66 4.36 Establish a Global Position Enhance presence and recognition in overseas markets Establish a Position as the Market Leader in Securities Finance Further strengthen securities lending Expand securities financing Innovate business and improve operational efficiency by leveraging digital technology Ensure Stable Operation of Infrastructure Functions and Strengthen Corporate Foundation Ensure stable operations and improved usability of loans for margin transactions in response to market changes Initiatives for new businesses Strengthen consolidated management of the Group Strengthen the human resource base 7.44 ROE PBR (Times) 2.0 5.73 1.09 PBR 1.6 1.2 0.97 Long-Term Vision Deploy the Group's collective strengths to become the leader in securities finance Contribute to the development of securities and financial markets as Japan's only securities finance company supporting the infrastructure functions of these markets Sustain growth and enhance corporate value while maintaining strong financial soundness Aim to be a distinctive and unique company that operates with a high degree of agility and flexibility. Strengthen consolidated management of the Group Improve operational efficiency Further enhance shareholder returns (targeting a total payout 2.0 0.35 0.54 0.59 0.64 0.8 0.4 ratio of 100%) 0.0 2019 2020 2021 2022 2023 2024 (FY) 0.0 Material Issues Climate change Education Human resources Human rights Capital market Corporate governance Compliance Risk management Business continuity planning (BCP) Eighth Medium-Term Management Plan Ninth Medium-Term Management Plan 4 Japan Securities Finance Co., Ltd. Integrated Report 2025 Japan Securities Finance Co., Ltd. Integrated Report 2025 5 Message from the President As the only securities finance company in Japan, we will contribute to the development of the country's securities and financial markets. FY2024 Results and Achievements Shigeki Kushida Representative Executive Officer & President During FY2024, the second year of the Seventh Medium-Term Management Plan, the securities finance business encompassing loans for margin transactions and equity repo transactions continued to perform strongly. As a result, consolidated ordinary income for FY2024 totaled ¥12.5 billion, and consolidated profit attributable to owners of parent totaled ¥10.3 billion. Both were record highs for Japan Securities Finance (JSF or "the Company"). Furthermore, consolidated return on equity (ROE) was 7.4%, or 6.5% before adjustment for extraordinary gains on sale of real estate owned by consolidated subsidiary Japan Building Co., Ltd. We therefore made steady progress toward the 8% ROE goal in our Long-Term Management Vision. I extend my heartfelt appreciation to our shareholders, business partners, market participants, and all stakeholders for their ongoing understanding and support. I attribute the notable improvement in our performance over recent years to two key factors. First, from a business strategy perspective, our initiatives to diversify revenue streams and cultivate multiple earnings drivers to stabilize revenue have yielded positive results, thereby gradually reinforcing our foundation for sustainable growth. Second, under the organizational design of a company with a Nominating Committee, etc., I believe we have made progress in strengthening corporate governance by proactively addressing key issues such as enhancing the functions of the Board of Directors, formulating the medium-term management plan and the Long-Term Management Vision, overseeing operational execution, and appointing excellent members to the management team. 6 Japan Securities Finance Co., Ltd. Integrated Report 2025 Japan Securities Finance Co., Ltd. Integrated Report 2025 7 First, I will discuss our initiatives from a business strategy perspective. As Japan's sole securities finance company, we fulfill an essential infrastructure role within the securities market, facilitating the smooth circulation of stocks and supporting the proper price discovery process. We play a critical role in enabling standardized margin transactions through our loans for margin transactions business operations. This role holds great importance for us, with the loans for margin transactions business serving as a cornerstone of our operations. However, from an earnings perspective, the business has faced notable fluctuations influenced by stock market conditions. In addition, the utilization of standardized margin transactions and loans for margin transactions has declined compared with the period prior to the introduction of negotiable margin transactions in the late 1990s. To this end, we have focused on diversifying our revenue streams and the factors causing their fluctuations, in an effort to build a business portfolio that supports stable, consistent growth. Amid these initiatives, our fastest growing business in recent years has been securities financing-equity repo, bond repo and gensaki transactions-originating from our loans for margin transactions business. This business, launched in the early 2010s, is a relatively new area for us, but we have expanded and deepened our relationships with institutional investors and financial institutions in Japan. Internationally, we have participated in forums for securities lenders, primarily in Asia but also in Europe and North America, to cultivate new clients and to identify and meet a wide range of transaction needs. In recent years, heightened attention to settlement security and financial regulations has led to a notable increase in global demand for borrowing high-quality securities, primarily for use as collateral. In response, we have enhanced our performance over the past several years by steadily honing our function as a bridge connecting liquidity between the domestic and overseas markets. This function is one of our core capabilities. Securities financing features a relatively high return in proportion to risk, as net credit exposure is limited in transactions secured by collateralized securities. Moreover, in addition to being sensitive to stock price trends, securities financing is also affected by interest rate fluctuations. In Japan, the end of the negative interest rate policy has created a market environment in which interest rate mechanisms are functioning again and interest rate volatility has returned. As a result, our lending interest rates have increased, and funding demand from our clients has also increased. In addition, our wholly owned subsidiary JSF Trust and Banking Co., Ltd. has secured a high market share and steadily enhanced its profitability by improving its proprietary services with emphasis on the niche area of preservation trusts and other management trusts. I believe that our efforts to diversify our revenue streams and strengthen our business portfolio are steadily building a solid foundation for the Group's sustainable growth. suitable for making decisions on medium- to longterm management policies while enabling the board to effectively fulfill its oversight function, taking into account the Company's business portfolio. From this perspective, the skills matrix was formulated following discussions in the Nominating Committee. In addition, independent outside directors have been appointed as Chairperson of the Board of Directors and as chairpersons of the Nominating Committee, the Compensation Committee, and the Audit Committee. In 2022, we also added two outside directors to further broaden the board's skill set. Furthermore, based on an approach aligned with the Company's business portfolio, we have determined our basic policy for appointing senior management and the succession plan for the Representative Executive Officer & President through discussions in the Nominating Committee, and are also advancing discussions on the long list of management candidates. We established the Corporate Governance Office to function as a secretariat supporting the Board of Directors. This office enhances board deliberations by providing directors with preliminary explanations ahead of board meetings, sharing wide-ranging information, and facilitating opportunities for outside directors to exchange views. In FY2024, recognizing the need to further deepen discussions aimed at enhancing corporate value, we focused on enhancing the substance of agenda items and reports prepared from a medium- to long-term perspective, while sharpening the focus of discussions in line with their relative importance. Specifically, we discussed and established an annual schedule for the board and each committee, enabling deliberations and reviews to be conducted in a planned and efficient manner. Furthermore, in FY2025, while reviewing the progress of the Seventh Medium-Term Management Plan, the board is engaging in active discussions on the formulation of the Eighth Medium-Term Management Plan, with a focus on setting appropriate agenda items that contribute to medium- to long-term corporate value. In this way, we are working to enhance both the substance and effectiveness of discussions at the board and committee levels. Corporate Governance Enhancement Initiatives Recognizing that stronger corporate governance is essential to the execution of our business strategy, we transitioned to a company with a Nominating Committee, etc. in 2019. Since then, we have clearly separated supervisory and executive roles, establishing a structure that enables swift decision-making and execution by management while strengthening the supervisory function, including the formulation of management policies and the effective monitoring of their execution. Specifically, with regard to the composition of the Board of Directors, we are aiming for a structure Recently, based on the progress of the Seventh Medium-Term Management Plan and the Company's Long-Term Management Vision, we formulated and announced the Eighth Medium-Term Management Plan (FY2026-FY2028). In the plan we have set specific management goals of consolidated ordinary profit of ¥15 billion and ROE of 8%. These goals are premised on our primary objective of generating returns that exceed our current cost of equity, which is in the low-6% range. They are also grounded in our basic management approach of pursuing sustainable growth and enhancing corporate value while simultaneously improving profitability and capital efficiency and ensuring financial soundness. As mentioned earlier, we believe that our initiatives to date have laid a solid foundation for achieving higher profitability and capital efficiency. Our plan encompasses the following six specific strategies for achieving our management objectives: Strategy One is "Stable Operations and Enhanced Accessibility of the Loans for Margin Transactions as Part of the Securities Market Infrastructure." In other words, we will ensure stable operations and improve usability of the loans for margin transaction business as securities market infrastructure by maintaining a framework that responds appropriately to changes in the equity market environment. Moreover, we will promote the use of loans for margin transactions by proactively providing information regarding these transactions and accurately identifying market needs. Strategy Two is "Expansion of Securities Financing Centered on Further Strengthening of Securities Lending." This involves strengthening the role of our securities financing business as a bridge between Japanese and international markets. To this end, we will continue to expand our client base, including financial institutions outside Japan, while also diversifying the range of securities we handle. We will leverage the expertise in funds and securities transactions that we have developed over the years to expand revenue opportunities, primarily by increasing securities-for-securities transactions and strengthening our capabilities in developing transaction schemes within the securities lending business. Strategy Three is "Enhancing Presence and Recognition in Overseas Markets." We will reinforce our position as a leading player in Asia by promoting our loans for margin transactions and securities financing outside Japan, actively participating in forums for international market participants, and expanding target markets and the products we handle in cross-border transactions. Strategy Four is "Business Innovation and Operational Efficiency through Digital Technology Utilization." In other words, we will use digital technology to innovate our businesses and improve operating efficiency. By aggressively deploying these technologies, we will strengthen our competitive foundation, focusing on strategic IT investments and exploring ways to improve operating efficiency in line with changes in our business portfolio. We will also continue our medium- to long-term initiatives targeting business innovation, such as the practical application of transactions using distributed ledger technology (DLT). Strategy Five is "Strengthening of Group Consolidated Management." We will intensify collaboration in areas such as sales, risk management, and operations management, thereby strengthening consolidated management across Group companies. Strategy Six is "Strengthening the Human Resource Capabilities." We believe that initiatives to enhance our human capital are extremely important as the basis for sustainable growth and enhancement of corporate value. We will strengthen our human resource foundation by recruiting external talent for highly specialized business and by developing professional talent who can drive our strategies in areas such as loans for margin transactions, securities financing, international business, digital technology, and consolidated management. Furthermore, we aim to improve employee engagement by promoting diversity and inclusion and creating a comfortable working environment, which will enhance our corporate vitality and organizational transformation capabilities. Through these initiatives, we will cultivate organizational capabilities that enable us to accurately identify changes in the business environment and translate them into concrete actions in a more proactive and self-directed manner, while engaging and mobilizing those around us. Our goal for shareholder returns is a total return ratio of 100% on a cumulative basis through dividends and the flexible implementation of share buybacks until we achieve ROE of 8%. In addition, the Company has a policy of actively paying dividends with a target payout ratio of 70%. To Our Stakeholders As Japan's only securities finance company supporting the infrastructure functions of securities and financial markets, JSF aims to be a distinct and unique company that operates with a high degree of agility and flexibility, by contributing to the development of securities and financial markets and, in doing so, achieving sustainable growth and enhancing corporate value while maintaining strong financial soundness. From FY2026 onward, under our corporate philosophy and the newly formulated Eighth Medium-Term Management Plan, we are committed to further advancing initiatives based on this vision of the future. We look forward to your ongoing support. Value Creation Process Inputs Business Model Outcomes Vision Financial Capital JSF's Unique Features Business Activities Generation of social activity Stability: Financial foundation External credit ratings: R&I AA− JCR AA− S&P A Capital adequacy ratio (based on FIEA): 367.5% (March 31, 2025) A leading securities finance company that addresses change and market needs by leveraging its core strengths in securities transactions and cross-border loans for margin transactions Securities markets In Japan Services that can link the needs of Outside Japan Providing liquidity in the form of funds Fulfilment of role as infrastructure that functions to link securities and financial markets Linkage of Japan with the world through supply of market liquidity Customer asset preservation in the trust banking business International cooperation with the Asian securities industry Collaborative empirical research with the University of Tokyo and other institutions Deploy the Group's collective strengths to become the leader in securities finance Human Capital Human resources with expertise and initiative Hiring of talent with diverse backgrounds Promotion of personnel across the Group Intellectual Capital securities markets and financial markets In Japan JSF Financial markets and securities to clients in and outside Japan Outside Japan Creation of economic value Achievement of Eighth Medium-Term Management Plan's goals: ROE of 8% or higher, consolidated ordinary profit of ¥15.0 billion or more (FY2024 results: ROE of 7.4%; Consolidated ordinary profit of ¥12.5 billion) Aim for a total payout ratio of 100% on a cumulative basis until ROE reaches 8%. Proactive payment of dividends with a Enhancement of corporate value Enhance presence in global Many years of accumulated experience: Capabilities in managing systems for loans for margin transactions Transaction proposal capabilities in securities financing operations Risk management expertise Social and Relationship Capital Network with domestic and overseas financial institutions and institutional investors such as securities companies, banks and insurance companies Leveraging our unique capabilities by strengthening our earnings base and internal control system Strengthen the Strengthen the internal Promote operational efficiency Strengthen management of the risk appetite framework: Use various risk-return simulations, etc. Further enhance corporate governance control system Strengthen the human Advance our human capital policy and the human resource development program Secure diverse human resources and promote the creation of a comfortable working environment resource base earnings base Expand target markets and position in Asian and Western margin transactions: Maintain margin transaction system in of securities lending: Expand strengthen capabilities for Expand securities financing centered on further strengthening transactions focused on the securities themselves, and structuring transaction schemes Enhance presence and recognition in overseas markets: product offerings for cross-border transactions and strengthen markets Ensure stable operations and improved usability of loans for and update the operational framework of the loans for response to changes in the market environment External Environment target payout ratio of 70% Contributions to shareholders and investors High resilience and stable performance Sustainable growth and enhancement of corporate value Stable and proactive shareholder returns markets as a securities finance company Innovate business and improve operational efficiency by leveraging digital technology Strengthen consolidated management of the Group with an emphasis on risk and return Strengthen the human resource base Promote diversity and inclusion Vitalization of stock markets in Japan due to increased profitability Shift toward rising interest rates in Japan Demand for Japanese government bonds as high-quality liquid assets Growing demand for funds Progress of digitalization Corporate governance reforms Message from the Chairperson of the Board of 8% by FY2028. The Company has developed a business portfolio centered on expanding securities financing, primarily loans for margin transactions, and has continued to strengthen corporate governance. Going forward, these efforts are slated for further acceleration. The Board of Directors has held a series of discussions on business strategies as well as on human capital and system investments to support the Company's long-term growth, and the outcomes of these discussions are reflected in the plan. Starting in FY2026, initiatives under the new medium-term management plan will begin. We outside directors will continue monitoring progress toward management objectives and providing the necessary advice and oversight to support their achievement. I intend to support the Company in remaining a unique organization that combines agility and flexibility as it carries out the infrastructure functions of the securities and financial markets and pursues sustainable growth while maintaining strong financial soundness. With a long-term perspective, I will work to support JSF's efforts to take on new challenges that enhance its corporate value on a sustainable basis and enable it to meet stakeholder expectations. Naotaka Obata Chairperson of the Board, Nominating Committee Chairperson, Compensation Committee Chairperson Succession Plans (Initiatives of the Nominating Committee) We outside directors serve as a bridge between stakeholders and executive officers. We provide objective opinions from an independent, external perspective, bearing in mind JSF's corporate philosophy of contributing to the development of the securities and financial markets while maintaining a keen awareness of its public role. As Chairperson of the Board, I always strive to enhance the effectiveness of deliberations and ensure that the Board of Directors fulfills its role as a "monitoring board." In 2019, JSF transitioned to a company with a Nominating In 2023, the Company formulated and announced its approach to in-house human resource development with a view to selecting the management team and refined its approach to the composition of the Board of Directors and the appointment of executive officers. For the key position of Representative Executive Officer & President, in addition to the qualities required of executive officers, candidates must demonstrate the ability to oversee execution, enhance corporate value, and have high ethical standards as a representative of a company fulfilling a public role. Historically, JSF's management has been led by individuals with a public-sector background, reflecting its business portfolio centered on loans for margin transactions, which are an integral part of the securities market infrastructure. However, for the successor to the current Representative Executive Officer & President, in light of the orientation toward business development with securities financing and other businesses positioned as growth areas and the overall composition of the executive team, the Company has adopted a policy of placing greater emphasis on knowledge and experience in securities and finance operations, including technological innovation. Discussions will focus primarily on internal candidates, including experienced hires, and will exclude individuals from the public sector. Based on this policy, the Board of Directors continues to discuss the preliminary list of successor candidates and the requisite qualifications. Committee, etc. structure. The current Board of Directors comprises five outside directors and two inside directors. Through the use of a skills matrix tailored to the Company, the board composition reflects a multifaceted skill set and diversity in age, gender, and areas of expertise. Officer Compensation System and Determination of Individual Compensation (Initiatives of the Compensation Committee) The primary role of the Board of Directors is to formulate basic management policies and strategies and to supervise overall management based on them. Drawing on the insights of directors with diverse backgrounds, discussions and exchanges of opinions at Board of Directors meetings are free, open, and substantive. In addition, a framework is in place for executive management to thoroughly consider the issues and opinions raised during these discussions and provide appropriate feedback. I will continue to do my utmost as Chairperson to lead discussions and ensure that the Board of Directors meets stakeholder expectations. Eighth Medium-Term Management Plan The Compensation Committee decides on the compensation of directors, executive officers, and corporate officers, as well as policies related to officer compensation and other matters. The Company has established performance-linked compensation for executive officers to ensure that incentives are aligned with management policies. Bonuses are positioned as a short-term incentive, with consolidated profit used as the reference indicator to clarify management responsibility each fiscal year. performance of the Company as a whole and individual contributions to that performance are reflected. Under this framework, for share-based compensation, the Company uses a Board Benefit Trust (BBT) scheme under which points determined in line with achievement of management goals in the medium-term management plan are granted. Until now, the Company deployed a system whereby shares corresponding to the number of accumulated points were delivered upon retirement. In August 2025, however, the system was partially revised. Based on the Seventh Medium-Term Management Plan (FY2023-FY2025), formulated in February 2023, and the Long-Term Management Vision, formulated and announced in November of the same year, the Company has been working to achieve its management goals of maintaining consolidated ordinary profit at a stable level of over ¥10.0 billion and ROE at a stable level above 5%, while aiming for further improvement profit and ROE have steadily improved during the Seventh Medium-Term Management Plan period, reaching levels that exceeded the management goals. Given the steady progress in enhancing profitability in preparation for new challenges, the Company first revised its Long-Term Management Vision when formulating the Eighth Medium-Term Management Plan. The revised Long-Term Management Vision clearly states Share-based compensation is positioned as a longterm incentive, using ROE and consolidated ordinary profit-the management goals of the medium-term management plan-as reference indicators. In addition, bonuses are divided into two components: one linked to the Company's performance and the other reflecting individual evaluations, to ensure that both the Board of Directors Initiatives Specifically, the Company transitioned to a Board Benefit Trust-Restricted Stock (BBT-RS) system in which restricted stock corresponding to the number of points is delivered to executive officers and corporate officers at a fixed time each year. This change enhances the linkage of share-based compensation to performance and allows for clearer disclosure. in both. The Company has focused on strengthening that the Company will work toward achieving ROE of 8% corporate governance, reinforcing its earnings base, and diversifying its earnings structure, while also pursuing management with an awareness of the cost of capital and working to improve capital efficiency. It has also advanced efforts to further enhance human capital and strengthen internal controls. As a result of these initiatives, consolidated ordinary to further improve profitability and capital efficiency, and that it will maintain a total payout ratio of 100% as its shareholder return policy until ROE reaches 8%. In the Eighth Medium-Term Management Plan (FY2026-FY2028), announced in November 2025, the Company set management goals of achieving consolidated ordinary profit of ¥15.0 billion and ROE As part of formulating the Eighth Medium-Term Management Plan, the Board of Directors held extensive discussions in FY2025 on management policies and growth strategies for FY2026 and beyond, with a view to realizing the Company's corporate philosophy and the Vision of the Future Targeted by JSF. As Chairperson of the Board, I am committed to ensuring that the Board of Directors responds flexibly to changes in the securities and financial markets and engages in free and open discussion so that it can ensure the effective implementation of management policies, supervise business execution, and strengthen corporate governance, thereby fulfilling its role as a monitoring board. Overview of the Eighth Medium-Term Management Plan Revision of the Long-Term Management Vision Management Goals of the Eighth Medium-Term Management Plan The Company has updated its Long-Term Management Vision, taking into account changes in its business environment and the steady progress being made in strengthening its earnings base. The revised vision clearly states that the Company will work toward achieving ROE of 8% as it seeks to enhance profitability and capital efficiency, and that it will maintain a total payout ratio of 100% as its shareholder return policy until the ROE target is reached. Long-Term Management Vision Targeted by JSF Profitability Ordinary profit: ¥15.0 billion We aim to achieve our profitability targets by focusing on two key pillars: the stable operation and enhancement of usability in loans for margin Ordinary Profit transactions, and the expansion of securities financing with a focus on further strengthening securities lending. Capital Efficiency ROE: 8% ROE We recognize that our cost of equity is in the low-6% range. We will strive to achieve returns that enable us to exceed this level while simultaneously enhancing profitability and maintaining financial soundness, as we work to improve ROE. (Billions of yen) 15.0 Sixth Medium-Term Management Plan Seventh Medium-Term Management Plan ¥15.0 billion (％) 8.0 Sixth Medium-Term Management Plan Vision of the Future Targeted by JSF As Japan's only securities finance company supporting the infrastructure functions of securities and financial markets, JSF aims to be a distinct and unique company that operates with a high degree of agility and flexibility. It will achieve sustainable growth and enhance its corporate value, while maintaining strong financial soundness and contributing to the development of securities and financial markets. 10.0 5.0 5.5 Forecast 7.1 7.6 11.0 12.5 13.2 7.0 6.0 5.0 4.0 3.0 gains) Seventh Medium-Term Management Plan 7.4 8% 7.0 5.7 6.5% (excl. extraordinary 4.4 3.8 3.0 0 2.0 2020 2021 2022 2023 2024 2025 (Forecast) Eighth Medium-Term (FY) 2020 2021 2022 2023 2024 2025 Eighth (Forecast) Medium-Term (FY) Corporate Message Be unique. Be a pioneer. Strategy Management Plan Management Plan Long-Term Direction As Japan's only securities finance company, JSF will continue to agilely and flexibly address the trading needs of securities and financial market participants. Through its contributions to market development, JSF will seek to concentrate the collective efforts of its Group companies to sustain growth and enhance its corporate value, while maintaining strong financial soundness. Under this management direction, JSF will continue striving to strengthen its earnings base and pursue returns, JSF will maintain a total payout ratio of 100% until it achieves ROE of 8%, and will strive to enhance shareholder returns thereafter as well. Through these management efforts, JSF aims to maintain a market valuation with a price-to-book ratio (PBR) in excess of 1x. In addition, under its organizational design as a company with a Nominating Committee, etc., JSF will strive to strengthen its corporate governance by Six Strategies for Achieving Management Goals (5) Group management enhancement identification of market needs (2) Expansion of Securities Financing Centered on Further Strengthening of Securities Lending Expansion of transactions focused on securities Strengthening transaction scheme development capabilities Stable Operations and Enhanced Usability of Loans for Margin Transactions as Part of the Securities Market Infrastructure Adapting systems to changes in market conditions Proactive communication on loans for margin transactions and accurate (6) Talent enhancement stable and steady improvement of its capital efficiency, while remaining mindful of the cost of capital. JSF aims to achieve ROE of 8% during the period of the Eighth Medium-Term Management Plan, and will continue to work toward steady improvement thereafter as well. At the same time, with regard to shareholder tackling sustainability issues while focusing on further improvement of the effectiveness of deliberations by its Board of Directors and respective committees, the further enhancement of information disclosure, and the development of a robust human capital base. (4) Business Innovation and Operational Efficiency through Digital Technology Utilization Strategic IT investment Continuing medium- to long-term initiatives such as the practical application of distributed ledger technology (DLT) (3) Enhancing Presence and Recognition in Overseas Markets Expanding target markets and products for cross-border transactions Enhancing position as a key player in Asia Main Measures and Initiatives Shareholder Return Policy Promoting Sustainability Management We aim to achieve sustainable growth through initiatives in each business area aligned with our management strategies, supported by investments in human capital and systems. To enhance shareholder returns, JSF will aim for a total payout ratio of 100% until it achieves ROE of 8%, by paying dividends and flexibly repurchasing shares. Dividend payout ratio of around 70% Dividends Purchase on the market Share Buybacks 100 % Total Payout Ratio Driving IT strategies to support management and operations System Investment Promoting Diversity & Inclusion (D&I) Dividends will be paid proactively, with a dividend payout ratio of around 70% as a guideline. Human Capital Investment Talent Portfolio Promoting experienced hires and increasing specialized talent ratio Offensive IT Investment Strategic investments aligned with changes in the business portfolio Dividends Shareholder Returns Loans for Margin Transactions Maintaining the presence of loans for margin transactions in the stock market by enhancing usability for market participants Securities Financing Enhancing quality and driving revenue growth by further developing overseas clients and expanding the range of handled foreign securities Strengthening position as a key player in Asia Securities Investment Strengthening the framework to secure revenue by building a strong risk-return portfolio as a core pillar of the business portfolio New Business Fields (Medium- to Long-Term Initiatives) Steady growth in fund administration services Ongoing efforts toward business expansion in emerging markets (Indonesia) and the practical application of DLT Trust Banking (JSF Trust & Banking) Further growth in trust operations through expansion in adjacent niche areas Strengthening Group collaboration in securities financing Initiatives for Each Business Field (Yen) Adding and improving functions to strengthen competitiveness Introducing new technologies to deliver new value Implementing IT tools to promote DX 100 Ordinary dividend per share Special dividend per share (Billions of yen) 12.0 Profit attributable to owners of parent Share buybacks Training & Career Path Strengthening talent with a focus on expertise and proactivity 80 60 40 20 0 Dividend payout ratio 60.1% 53.0% 47.2% 50.0% 26 30 32 47 16 67.4% 80 68 10.0 69.7% 8.0 6.0 4.0 2.0 0 3.9 Dividends 5.1 2.3 2.7 2.4 5.9 8.0 2.8 3.0 10.3 3.8 4.0 9.4 2020 2021 2022 2023 2024 2025 Forecast (FY) 2020 2021 2022 2023 2024 2025 2.8 3.0 6.5 7.0 Forecast (FY) Evaluation & Rewards Actively evaluating employees' contributions to task execution Defensive IT Investment Investments supporting smooth operations and business continuity Workplace Improvement Balancing work with childcare and caregiving, utilizing telework Promoting a comfortable work environment Maintaining and ensuring stable operation of existing systems including IT upgrades Strengthening measures against cyberattacks and data breaches Expanding BCP frameworks Aiming to be a company that earns the trust of all stakeholders Yutaka Okada Senior Managing Executive Officer Responsible for Corporate Strategy Message from the Officer Responsible for Corporate Strategy Management Strategy In the Seventh Medium-Term Management Plan, in addition to accelerating and deepening our initiatives to date, we have been strengthening the human resource base, and making management efforts toward the management goal we set for ROE: maintain at a stable level above 5% and aim for further improvement. Based on these ongoing management efforts, we formulated our Eighth Medium-Term Management Plan in November 2025. Here I will explain our business portfolio, our efforts to implement management with an awareness of the cost of equity and stock price, as well as our growth strategy, shareholder returns, and our initiatives for corporate governance and sustainability. FY2024 Consolidated Financial Results Business Portfolio The JSF Group is keenly aware of its public role as part of the infrastructure of Japan's securities and financial markets, and provides a variety of related services to meet the diverse needs of the securities and financial sectors. These services mainly involve securities financing centered on loans for margin transactions, a licensed business. JSF is the only securities finance company in Japan authorized to offer loans for margin transactions. In our securities financing operations, we play a unique role by focusing on the provision of liquidity in the form of securities, a physical asset, and by acting as a bridge between domestic and overseas markets. Going forward, we will continue to leverage these distinctive features in our loans for margin transactions business.Our business portfolio also encompasses securities investment, trust banking and real estate leasing. We have been using these businesses to diversify our revenue sources and cultivate multiple earnings drivers to stabilize revenue as we continue to pursue more sustainable growth and work to achieve the Vision of the Future Targeted by JSF. The economic environment in FY2024 was characterized by a continued, moderate recovery supported by factors and trust banking operations. As a result, consolidated results for FY2024 saw increases Efforts to Implement Management That is Conscious of Cost of Capital and Stock Price including stronger corporate earnings and increased inbound demand. Furthermore, signs of increased demand for funding emerged in Japan's financial markets, and market interest rates began to rise as the Bank of Japan ended its negative interest rate policy. Japan's stock markets turned bullish following favorable corporate earnings reports. However, after the Bank of Japan announced an additional interest rate hike, expectations of a narrowing interest rate gap between Japan and the United States led to a correction. The market then rebounded, but concerns about U.S. tariff policies and other issues kept prices subdued toward the end of the fiscal year. Japan Securities Finance is working to enhance its corporate value over the medium to long term under a business portfolio that includes securities in all profit categories to record highs. Operating profit rose 11.3% year on year to ¥11,329 million, ordinary profit increased 13.4% to ¥12,507 million, and profit attributable to owners of parent increased 29.2% to ¥10,375 million. During FY2024, results were solid for securities financing such as loans for margin transactions and equity repo transactions, backed by factors including increased demand for funds in a strong stock market and the shift to an environment of fluctuating market interest rates. In addition, management trust services continued to perform well in the trust banking business. We are counting on the continued understanding and support of our stakeholders as we strive to enhance JSF's corporate value over the medium to long term with our public role in mind, and to strengthen corporate governance and advance our Based on the Seventh Medium-Term Management Plan (FY2023-FY2025) formulated in February 2023 and the Long-Term Management Vision formulated and announced in November 2023, JSF is working to achieve its management goals of maintaining a stable ROE of 5% and ordinary profit exceeding ¥10 billion, with a continued focus on further enhancing these metrics. As a Prime Market-listed company that supports the infrastructure of the securities and financial markets, we have strengthened corporate governance and pursued improvements in profitability and capital efficiency to achieve sustainable growth and enhance corporate value over the medium to long term. ROE for FY2024 was 7.44%, or 6.50% on a core basis before adjustment for extraordinary income, significantly exceeding the management goal in the Seventh Medium-Term Management Plan. In addition, market valuation of the Company has steadily improved, with PBR generally above 1.0 times and total shareholder return (TSR) significantly outperforming TOPIX. Given these achievements, in November 2025 we formulated and announced the Eighth Medium-Term Management Plan, which targets even higher levels of profitability and capital efficiency. After estimating the cost of equity in the low 6% range, we set management goals of ¥15 billion for consolidated ordinary profit and 8% for ROE. We will continue to steadily strengthen our earnings base and improve capital efficiency. financing, which centers on loans for margin transactions, sustainability initiatives. ROE and PBR Total Shareholder Return (Index*) FY2024 Consolidated Results (Millions of yen) (%) 7 ROE (Left axis) PBR (Right axis) 7.44 (Times) 1.4 (%) 500 JSF TOPIX (incl. dividends) FY2023 FY2024 Year-on-year change Operating revenue 50,259 59,486 +9,226 Excluding premium charges 42,751 55,334 +12,582 Operating expenses 32,615 40,740 +8,124 Excluding premium charges 25,160 36,606 +11,445 Gross profit 17,644 18,746 +1,102 General and administrative expenses 7,463 7,416 −47 Operating profit 10,180 11,329 +1,149 Ordinary profit 11,024 12,507 +1,482 Profit attributable to owners of parent 8,030 10,375 +2,345 ROE 5.73% 7.44% +1.71% 6 5 4 3 3.03 3.79 4.36 5.73 0.97 7.00 (Forecast) 1.09 1.12 1.2 1.0 0.8 0.6 400 300 200 198.1 224.1 367.1 406.6 213.4 430.4 254.8 2 0.54 1 0 0.59 0.64 0.4 100 142.1 144.9 153.3 0 Year ended Year ended Year ended Year ended Year ended Nine months Mar. 2021 Mar. 2022 Mar. 2023 Mar. 2024 Mar. 2025 ended Sep. 2025 0.2 0 167.1 216.7 Year ended Mar. 2021 Year ended Mar. 2022 Year ended Mar. 2023 Year ended Mar. 2024 Year ended Mar. 2025 Nine months ended Sep. 2025 Note: Premium charges (lending fees) included in operating revenue are received from borrowers when lending securities as part of loans for margin transactions, and the same amount is paid to the lender as premium charges (borrowing fees) and recorded as an operating expense. Therefore, although changes in premium charges increase or decrease operating revenue, lending fees and borrowing fees offset each other and thus do not affect profit. To facilitate understanding of the Company's business performance, we have presented operating revenue and operating expenses excluding premium charges on lending and borrowing securities. Notes: PBR is the value at the end of each fiscal year. ROE for the nine months ended September 2025 has been calculated using the estimated consolidated results announced on May 15, 2025, and PBR for September 2025 has been calculated using the stock price on September 30, 2025. Growth Strategy Corporate Governance Initiatives Our central sales strategy in the Seventh Medium-Term Management Plan is to further strengthen the loans for margin transactions business and securities financing. secure stable earnings by accumulating carry income through fund procurement on favorable terms backed by our high creditworthiness. We will conduct risk management within Composition of the Board of Directors JSF transitioned to a company with a Nominating Committee, etc. in FY2019, and the Board of Directors currently comprises five outside directors, two of whom are women, and two inside directors. Accounting for about 70% of board members, outside directors play a central role in formulating management policies and in making personnel and compensation decisions involving executive management. Securities financing is influenced not only by equity our risk appetite framework (RAF) to appropriately control Initiatives of the Board of Directors and the Nominating Committee prices but also by fluctuations in interest rates. In Japan, the end of the negative interest rate policy has created an environment in which interest rate mechanisms are functioning again. As a result, our lending interest rates have increased, and we are seeing signs of increased funding demand from our clients. To respond appropriately to this change in the environment, we will work to improve the quality of our internal control through focusing on the balance between risk and return, and to enhance the stability of the middle and back-office operations in tandem with front-office sales activities. We will also secure stable revenues in the other businesses that make up our portfolio. In the securities investment business, as part of the asset-liability management (ALM) necessary for securities financing, including loans for margin transactions, our basic policy is to Shareholder Returns We remain committed to enhancing shareholder returns. Our goal through FY2025 is to achieve a total payout ratio of 100% on a cumulative basis through the payment of dividends and flexible implementation of share buybacks. market risk and expand stable funding methods, including foreign currencies, as well as focusing efforts on liquidity management. Regarding subsidiaries, the trust banking business will continue to flexibly meet transaction needs for preservation trusts-including client money segregation trusts-and management trusts across a range of fields, while maintaining a strong presence in niche sectors and conducting distinctive operations. The real estate leasing business will continue to steadily promote leasing of buildings owned by the JSF Group (for details of subsidiary businesses, see pages 36-37). During the Eighth Medium-Term Management Plan, we will further accelerate and develop existing initiatives, centered on expanding securities financing, primarily loans for margin transactions. share buybacks, resulting in a total payout ratio of 96.8%. For FY2025, we continue to aim for a total payout ratio of 100% through dividends and flexible implementation of share buybacks based on our shareholder return In FY2024, having steadily achieved the management goals set out in the Seventh Medium-Term Management Plan and recognizing that management efforts to date have produced solid results, the Board of Directors engaged in discussions and took other steps toward formulating the next medium-term management plan, while also working to set appropriate agenda items aimed at enhancing corporate value over the medium to long term. Regarding nominations for director, executive officer and other positions, the Board of Directors and the Nominating Committee finalized the list of director candidates to be submitted to the General Meeting of Shareholders, and the candidates for executive officers and corporate officers for FY2025. Specifically, the appointment process Officer Compensation JSF has structured officer compensation to align incentives with its management policies. Performance-linked compensation is divided into short-term and long-term incentives, with bonuses positioned as a short-term incentive and share compensation as a long-term incentive. Bonuses are based on reference indicators for performance, and Status of Dialogue with Shareholders As a Prime Market-listed company, JSF follows Japan's Corporate Governance Code in proactively engaging in dialogue with shareholders to support sustainable growth and the enhancement of corporate value over the medium to long term. The three main themes and matters of interest that came up in dialogue with shareholders in FY2024 were management strategy, business model and changes in the external environment. For management strategy, we mainly discussed our medium-term management plan and shareholder return policy. For business model, we discussed initiatives to strengthen our business foundation by diversifying revenue sources and establishing multiple involves discussion by the Nominating Committee of a preliminary list of candidates, which is narrowed down to a short list from which final decisions are made following interviews with the individual candidates. To improve the transparency of this process, the Company has disclosed the status of the nomination process, particularly the active involvement of outside directors and the approach to internal talent development with a view to the selection of management executives (details on page 60). In addition, the duties of executive officers were redefined to make them easier for stakeholders to understand, and with a view to making the nomination process more transparent the Nominating Committee discussed matters such as a preliminary list of candidates for the succession plan for the current Representative Executive Officer & President. individual evaluations have also been incorporated. Furthermore, JSF partially revised its executive compensation system in August 2025 to enhance the linkage of share-based compensation to performance and allow for clearer disclosure (details on pages 61-62). revenue drivers. For changes in the external environment, we mainly discussed the impact of rising interest rates on profitability. Many shareholders expressed their appreciation for the Company's initiatives to date. The insights gained through dialogue were discussed by the Board of Directors, after which the board took action on insights that it determined the Company should incorporate (details on page 62). The status of dialogue with shareholders is promptly reported to the Board of Directors after each such opportunity so that the board and various committees can also take into account the feedback of shareholders in their discussions. Our policy is to actively pay dividends, with a target policy during the period of the Seventh Medium-Term Enhancement of Information Disclosure and Support for Outside Directors payout ratio of 70%. Under this policy, we increased dividends for FY2024 by ¥37 from the previous fiscal year to ¥84 per share, including a special dividend of ¥16 per share. In addition, we conducted ¥3.0 billion in on-market Management Plan. Accordingly, dividends for FY2025 will total ¥80 per share, including a special dividend of ¥12 per share. In FY2024, as part of our initiatives to improve our information tools, we renewed the Company website and adopted a new logo. We also refine the content of our integrated report each year to enable stakeholders to gain a more comprehensive understanding of our initiatives. We will continue to focus on providing information to all stakeholders, including shareholders, investors, and business partners. Furthermore, with the addition of new directors in FY2025, we will continue with initiatives to enhance support for outside directors by the secretariat of the Board of Directors and thereby improve the board's effectiveness. We will continue to develop a corporate governance system suited to our operating environment and business portfolio, and remain committed to the sustainable enhancement of corporate value. Shareholder Returns 80 3.8 3.5 16 60 3.0 40 2.3 JSF will actively pay dividends during the period from FY2024 through FY2025, aiming for a target payout ratio of 70% 20 0 3.0 2.5 2.0 1.5 1.0 0.5 0 32 30 47 68 3.0 2.8 80 Ordinary dividend per share Special dividend per share Share buyback amount Initiatives for Sustainability (Yen) 100 (Left axis) 2021 2022 2023 (Left axis) 2024 (Right axis) 2025 (Forecast) (FY) (Billions of yen) 4.0 We also take a proactive approach to key issues related to sustainability. Developing and maintaining the infrastructure that forms the foundation of socioeconomic activity is a key element in realizing a sustainable society. It is also one of the Sustainable Development Goals (SDGs) set by the United Nations, and is an area in which JSF believes it is particularly well positioned to contribute as a company that has long supported infrastructure functions of Japan's securities and financial markets. Based on that market infrastructure overseas. Moreover, as part of our promotion of academic research activities through industry-academia collaboration, we conducted joint demonstration tests with the University of Tokyo on the potential application of distributed ledger technology to securities financing transactions. We published a paper summarizing the research findings, presented the results at an academic conference overseas, and engaged in ongoing discussions of other topics. We also recognize that addressing climate change is a critical issue. Dividends per share (Yen) 30 32 47 84 80 (Special dividend incl. in above) - - - 16 - Share buyback amount (Billions of yen) 2.3 3.0 3.8 3.0 2.8 The total shareholder return ratio is calculated using the earnings Total payout ratio (%) 60.1 97.6 97.6 96.8 100.0 forecast announced on May 15, 2025. Note: Dividends per share for FY2025 are an estimate, and the share buyback amount represents the upper limit. Aiming for a total payout ratio of 100% on a cumulative basis through dividends and flexible implementation of share buybacks Regarding shareholder returns during the Eighth Medium-Term Management Plan, we are targeting a total return ratio of 100% through dividends and the flexible implementation of share buybacks until we achieve ROE of 8%. Additionally, JSF plans to actively pay dividends with a target payout ratio of 70%. belief, in addition to the governance initiatives described above, we are carrying out environmental and social initiatives. Specifically, we continue to provide technical and other assistance to an Indonesian securities finance company as a contribution to securities and financial To Our Stakeholders We respectfully request the continued understanding and support of our stakeholders as we work to enhance corporate value over the medium to long term with our Although our CO 2 emissions have never been large due to the nature of our businesses, in line with the TCFD recommendations, we disclose information on climate change on our corporate website and elsewhere (details on page 47). public role in mind, strengthen corporate governance, and advance our sustainability initiatives. Corporate Strategy Securities Financing Centered on Loans for Margin Transactions Message from the Responsible Executive Officer We will achieve growth by meeting the diverse transaction needs of the securities and financial sectors in Japan and overseas. Our core loans for margin transactions business, licensed under the Financial Instruments and Exchange Act, serves as infrastructure for the securities market as a source of funds and stock certificates for the smooth implementation of standardized margin transactions. Securities financing, which has become a key pillar of our earnings in recent years, leverages the expertise we have cultivated in handling securities and funds through our founding business of loans for margin transactions. It comprises five business areas: (1) bond repo and gensaki transactions, (2) equity repo transactions, (3) general stock lending, (4) loans for negotiable margin Business Environment and Recognized Issues In stock-related businesses such as loans for margin transactions and general stock lending, demand for stock lending transactions has been rising amid robust equity market conditions since the second half of FY2022. In terms of transaction needs, in addition to conventional covering of short sales, there has been a trend toward borrowing Japanese equities for use as collateral. Furthermore, the balance of equity repo transactions continues its uptrend in line with the growing purchases of Japanese stocks by foreign financial institutions and others. In the bond-related business, balances of bond repo and gensaki transactions have remained high, reflecting growing demand for Japanese government bonds and similar instruments from domestic and overseas financial institutions, given stronger settlement risk management and tighter international financial regulations. One challenge we face is that the performance of loans for margin transactions, our founding business, is significantly affected by stock market conditions and the balance of standardized margin transactions. To ensure that we can continue to provide stable infrastructure functions for securities and financial markets even during market downturns, we have been promoting securities financing to diversify our revenue sources beyond loans for margin transactions and to maintain financial soundness. We will continue to expand securities financing by making the most of our high credit rating (creditworthiness) backed by solid equity capital and the expertise we have cultivated in finance and securities-related businesses. transactions, and (5) loans to retail. These businesses broadly provide liquidity to the securities and financial markets by meeting the financing needs of securities firms, financial institutions, and others for their securities inventories, as well as their need Strategies in the Eighth Medium-Term Management Plan to borrow securities for collateral purposes in various financial transactions. We are promoting securities financing as one of our growth engines, and are also working to expand our services by increasing the number of business partners we work with, including foreign financial institutions, and by diversifying securities handled to include foreign stocks and foreign government bonds. Recently, there has been an Enhance the Loans for Margin Transactions Business Further Enhancing Our Presence Continuous engagement Building relationships with clients Effective public relations efforts Enhancing Deal Planning and Responsiveness Human resource development Building transaction expertise and a proven track record Gathering Information and Identifying Potential Clients Discovering transaction schemes Cultivating new clients Deepening relationships with existing clients In addition to ensuring the stable operation of the loans for margin transactions business by appropriately responding to changes in the stock market environment in ways such as expanding the number of loanable Challenges for Future Expansion increase in transactions where assets in the Asia region, including Japanese equities, are accepted as collateral in exchange for high-quality qualified liquid assets (HQLA) such as Japanese yen and Japanese government bonds. As an institution specializing in transactions related to stocks and bonds, we will continue to provide agile and flexible proposals to meet the diverse transaction needs of the securities and financial sectors in Japan and overseas. Morikuni Shimoyamada Senior Managing Executive Officer Responsible for Margin Loan Department, Institutional Sales Department, Retail Business Department stock issues and stepping up the procurement of stock certificates, we will continue to review measures to promote the use of loans for margin transactions by accurately identifying the trading needs of market participants. Business Environment and Strengths Service Details Securities Financing Loans for negotiable margin transactions While loans for margin transactions provide funds and stocks necessary for the settlement of standardized margin transactions, the business of loans for negotiable margin transactions involves lending funds to securities companies to enable them to purchase stocks in negotiable margin transactions. Loans to financial instruments companies We are responding to the diversification of financing methods of securities companies through transactions such as those in which stocks are used as collateral when lending funds to securities companies (general loans), and those in which cash is deposited in exchange for borrowing stock held by a securities company (equity repo transactions). Loans to retail These are transactions that involve lending funds to individual investors and others, using stock as collateral. The main service in this business is COM-STOCK loans (securities-backed loans that can be transacted online). General stock lending General stock lending is the business of procuring stock from institutional investors and others, and lending it to securities companies that mainly require it for trading, thus contributing to the stability of the settlement system. Bond repo and gensaki transactions This is the business of matching (brokering) various financial institutions' lending and borrowing needs, mainly for Japanese government bond repo and gensaki transactions (transactions in which bonds are exchanged for cash). Securities Financing Expand and Enhance Securities Financing In securities financing, we will deepen relationships with existing clients while continuing to expand our client base, primarily overseas. To increase the number of securities borrowers, we will actively attend international conferences and other events to further enhance our presence and cultivate new business with foreign financial institutions and others. To increase bond procurement sources, we will work to strengthen relationships and expand transactions with regional financial institutions and others. With respect to loans to financial instruments companies, we will continue to flexibly respond to client needs, enhancing our commercial appeal and improving transaction convenience in various ways, including diversifying types of collateral accepted and currencies handled. We will also advance our response to the digitalization of securities and explore collaboration with new market entrants, including fintech companies, in Japan and overseas. At the same time, we will focus on developing human resources to drive these initiatives forward. (Please refer to the "An Employee Roundtable Discussion" on page 44 for details.) Status of Bond Repo and Gensaki Transactions and Equity Repo Transactions Equity Repo Transactions Since the 2010s, balances of bond repo and gensaki transactions and equity repo transactions have continued to trend upward as a result of our efforts to expand transactions with non-residents by participating in overseas conferences and to diversify transaction Bond Repo and Gensaki Transactions Bond repo and gensaki transactions mainly involve the exchange of Japanese government bonds for cash. In recent years, there has been an increase in transactions in which these bonds are procured from institutional investors in Japan and lent to overseas financial institutions and hedge funds. Factors driving this increase include the globalization of Japan's bond market due to the increased entry of foreign-affiliated financial institutions, and the significant increase in the ratio of overseas financial institutions participating in Japan's repo market due to increased demand for collateral to reduce settlement risk and for Japanese government bonds to comply with financial regulations. Amid these circumstances, transactions now include the exchange of equities for government bonds, not only securities for cash. Outstanding Bond Repo and Gensaki Transaction Balance (Average) Domestic financial institutions, etc. Overseas financial institutions, etc. (Japan-based) schemes, including accepting foreign securities as collateral and using derivatives such as total return swaps (TRS). The following sections outline specific initiatives and risk management related to bond repo and gensaki transactions and equity repo transactions. Institutional investors in Japan, including regional financial institutions, have investment needs with respect to the Japanese government bonds they hold, but directly lending those bonds to overseas entities such as financial institutions involves the significant burden of establishing business relationships, including creating credit lines and handling international contracts. As one of the leading players in the repo market, we cover almost all financial institutions in Japan and serve as a bridge between the investment needs of domestic institutional investors and the procurement needs of overseas financial institutions from a relatively neutral standpoint. Going forward, we will continue to increase bond repo and gensaki transactions both domestically and internationally. Number of Counterparties (Contract Basis) Domestic financial institutions, etc. Overseas financial institutions, etc. (Japan-based) In order to meet the diverse needs of our domestic and overseas clients for purposes including fund procurement and fund management mainly using domestic and overseas equities, we are increasing the number of contract-based transactions (such as stock loan agreements, Global Master Securities Lending Agreements (GMSLAs), TRSs, and loan agreements). Amid the recent trend toward stronger corporate governance, market expectations for awareness of the cost of capital in management has led to widespread purchases of Japanese stocks by overseas financial institutions and other investors. Against this backdrop, Outstanding Equity Repo Transaction Balance (Average) Domestic financial institutions, etc. Overseas financial institutions, etc. (Japan-based) Overseas financial institutions, etc. (Overseas-based) (Billions of yen) 1,400 1,200 1,000 800 600 400 200 0 2020 2021 2022 2023 2024 (FY) equity repo transactions for funding purposes have increased, and our transaction balance has been trending upward. In addition, we are actively meeting the needs of overseas financial institutions for funding in Japanese yen collateralized by Asian equities. Going forward, we will continue to leverage our neutral position, high credit ratings and accumulated transaction expertise to flexibly meet the needs of our clients in ways such as diversifying the types of collateral accepted and currencies handled. * The standard international contract for securities lending transactions Number of Counterparties (Contract Basis) Domestic financial institutions, etc. Overseas financial institutions, etc. (Japan-based) Overseas financial institutions, etc. (Overseas-based) (Companies) 30 20 10 0 2020 2021 2022 2023 2024 (FY) Overseas financial institutions, etc. (Overseas-based) (Billions of yen) 10,000 8,000 6,000 4,000 2,000 0 12,000 2020 2021 2022 2023 2024 (FY) Overseas financial institutions, etc. (Overseas-based) (Companies) 200 175 150 125 100 2020 2021 2022 2023 2024 (FY) Funding to overseas financial institutions (overseas-based) and lending of Japanese government bonds collateralized by Japanese equities to foreign-affiliated financial institutions remain solid. Transactions with overseas financial institutions (overseas-based) are steadily increasing. As we focus on securities demand rather than funding demand, our presence in specific collateral (SC) transactions* is growing. * In general collateral (GC) transactions, no specific security is designated, as the primary purpose is to meet funding requirements. In SC transactions, a specific security is designated, as the primary purpose is to obtain that security. Expanding Overseas Transactions through Participation in International Conferences and Other Events Risk Management for Securities Financing For JSF, international conferences provide a valuable point of contact with potential new clients. We actively participate in international conferences and have expanded our scope to locations worldwide. In addition to having participated in the ISLA, PASLA, ISLA Americas, and other conferences held in Europe, North America, and Asia, in 2025 we participated for the first time in the SASLA conference held in South Africa. Transaction lots are large for securities financing, especially for bond repo and gensaki transactions, and their balances have increased significantly due to the growth of the business, as explained above. This tends to inflate the balance sheets. Following here is an explanation of the structure and risk management in this business. Bond repo and gensaki transactions are brokerage transactions that match the needs of lenders and borrowers. As a result, on the balance sheets, both assets (cash collateral for securities borrowed and securities purchased under resale agreements) and liabilities (cash collateral received for securities lent and securities sold under repurchase agreements) expand, as shown in (1) below. In recent years, the balance of bond repo and gensaki transactions has been at a high level. However, we reduce net exposure through a series of measures, including receiving and paying cash equivalent to the market value of the bonds as collateral for the bonds involved in these transactions, marking the bonds to market during the transaction period, and executing margin calls (receiving/paying the difference between the cash collateral and the market value of the bonds) as appropriate (see (2) below). In addition, most of our clients are eligible for debt assumption by financial institutions with relatively high credit ratings or by the Japanese Securities Clearing Corporation (JSCC). These risk controls have helped limit increases in net exposure and credit risk even as the balance sheets and transaction balances have grown. CASLA ISLA GFF PASLA ISLA Americas SASLA March 31, 2025 Details Total assets 13,769.6 Cash and deposits 1,435.3 Bank of Japan current account Operating loans 796.8 Outstanding balances of margin loans, loans for negotiable margin transactions, bond and general loans, and trust bank loans Securities purchased under resale agreements 6,441.1 Cash collateral provided for securities borrowed 4,307.1 Collateral deposited (for bond repo and equity repo transactions, etc.) (Billions of yen) JSF conducts daily mark-to-market valuations (receipt and payment of the difference between the market value and cash collateral), which limits exposure. Exposure (Traded (Collateral) securities) March 31, 2025 Details Total liabilities 13,635.2 Borrowings 408.6 Bank of Japan market operation bank loans Call money 1,506.0 Securities sold under repurchase agreements 8,044.0 Cash collateral received for securities lent 2,549.6 Cash received as collateral (for bond repo transactions, etc.) (2) International Securities Lending Association (ISLA) Industry association representing the common interests of securities financing market participants across Europe, the Middle East and Africa (established in 1989) Pan Asia Securities Lending Association (PASLA) APAC market equivalent to ISLA (established in 1995) Canadian Securities Lending Association (CASLA) Canadian market equivalent to ISLA (established in 2009) Entered in both assets and liabilities South African Securities Lending Association (SASLA) African market equivalent to ISLA (established in 1989) International Securities Lending Association Americas (ISLA Americas) Industry association dedicated to research and education on various regulatory responses and topics in the financial services industry (established in 1914) Global Funding and Financing (GFF) International conference on securities financing, organized by Clearstream (1) Entered in both assets and liabilities When attending conferences, we meet with a diverse group of clients based outside Japan, including securities firms, banks, tri-party agents and other financial institutions, as well as stock exchanges, platform operators and magazines and other media outlets based in various countries. These meetings enable us to acquire up-to-date information about the latest technologies and overseas market trends and regulations in the finance sector, which we then share within our organization. In addition, JSF participated for the first time as a sponsor at the PASLA conference held in Macau in February 2025. Participation in overseas conferences has led to the conclusion of an increasing number of new transactions in Asia, thereby contributing to the diversification of the Company's revenue. (Please refer to "An Employee Roundtable Discussion" on page 44 for details.) The balance of transactions in other securities financing, such as equity repo transactions, has also been trending upward. In equity related transactions, JSF applies the same risk control measures as for bond repo and gensaki transactions, and also sets appropriate haircuts (value markdowns) based on the volatility and market liquidity of the equity involved in the transactions to limit the increase in exposure. As with other securities finance businesses, such as loans for margin transactions, securities financing is managed within an integrated risk management framework by measuring the amount of credit risk on a daily basis and keeping it within the limit for risk capital set based on JSF's financial strength. In addition, we monitor counterparty exposure for each counterparty on a daily basis to ensure that exposure in times of stress remains within a certain limit, thereby preventing excessive exposure to specific counterparties. Risk Appetite Framework Message from the Responsible Executive Officer Risk appetite is the type and total amount of risk that a company takes on in order to achieve its medium-term management plans. JSF's management goals center on capital efficiency, profitability and shareholder returns, and we clearly identify risks that we should be willing to take 1 and risks that we should avoid 2 in order to achieve those goals within the scope of our management capabilities. Our risk appetite framework (RAF) integrates business management and risk management. In setting the management goals for the medium-term management plan, we review the Company's risk appetite and the associated indicators and conduct regular monitoring. In addition, the Company plays a public role as a provider of securities market infrastructure, so we are strongly aware that the risks we take on should in no way impact our ability to maintain financial soundness or stably operate our loans for margin transactions business. We will continue strengthening our monitoring system, developing an operational structure that places greater emphasis on risk and return, and promoting Group-wide RAF management, while further enhancing our RAF to increase corporate value over the medium to long term. Notes: 1. Risks to be taken: Risks associated with revenue-generating activities 2. Risks to be avoided: Unacceptable risks such as conduct risk Risk Appetite Framework Shinichi Sugiyama Managing Executive Officer Responsible for Risk Management Department Governance In the execution of business management, we set more detailed targets and formulate plans for each business in promoting the medium-term management plan, keeping in mind our risk management policy, risk appetite and risk appetite indicators decided by the Board of Directors. The Board of Directors works to improve and strengthen the Operation In the operation of the RAF, the Board of Directors establishes a risk management policy for overall management based on the social role that JSF should play as a company responsible for infrastructure functions of Japan's securities market and its medium- to longterm vision for the future. At the same time, the board determines the basic items of the RAF, such as risk appetite Process for Setting and Managing Risk Appetite Confirm premises for management plan formulation effectiveness of the RAF on an ongoing basis by monitoring risk appetite and risk appetite indicators as part of its supervision of business execution. If risk appetite indicators deviate from the levels set, the board analyzes the causes and formulates countermeasures. and the risk appetite indicators that specifically reflect its components, in conformance with the medium-term management plan. Risk appetite is set from a wide range of perspectives, including management stability and financial soundness, as well as the social responsibility for the infrastructure functions of and contribution to Japan's securities market. Formulate multiple scenarios that take into account changes in the domestic and overseas environment, and verify premises for formulating medium-term management strategies, including capital and liquidity constraints. Social and public role Business characteristics (licensed business, concurrent businesses), risk characteristics Risk culture RAF operational structure Corporate philosophy and management strategy Business management Risk management management plan Integrated management Management Committee Type and amount of risk to be taken (Risk appetite) Risk appetite indicators Improvement Monitoring Analysis and reporting Corporate Planning Department Risk Management Department RAF overview Risk Management Committee Execution Board of Directors Supervision Integrated risk management Management of capital adequacy ratio (based on FIEA) Risk management policy Medium-term Consider medium-term management plan proposals Consider management plan proposals that encompass management goals, risk appetite, and management strategy in order to realize the Vision of the Future Targeted by JSF. Verify risk appetite Review as appropriate based on verification results Evaluate the propriety of financial plans and risk appetite through stress tests, and revise management plan proposals, as necessary. Determine medium-term management plan The Board of Directors discusses and decides management goals, risk appetite and management strategies. Regularly monitor the indicators established for each aspect of risk appetite and check compliance status. Monitor risk appetite compliance Reset risk appetite Upper limit exceeded or other reason Reset risk appetite in the case of discrepancies between risk appetite indicators and actual operations, or if significant changes occur in the operating environment. Basic Policy The Group considers the RAF to be part of its corporate governance framework. Our objective is to maintain the high degree of financial soundness required of a securities finance company responsible for the infrastructure functions of Japan's securities market, while improving medium- to long-term corporate value as expected of a listed company. To this end, the RAF enhances the transparency of the review and decision-making process for establishing the Company's overall risk-taking policy, including capital allocation and strengthening profitability. It also optimizes the allocation of management resources and reinforces monitoring. Fostering and Embedding a Risk Culture We must provide risk management education and training and share risk information to foster and embed a risk culture across the Group. Therefore, we conduct regular in-house training to help employees deepen their understanding of the RAF and enable them to apply it in business operations. Regarding risk information, we conduct surveys of market trends and monitor business partners as needed and share necessary information in cooperation with relevant business operations departments. In addition, risk governance is further strengthened through a continuous cycle in which operation of the RAF keeps risk culture in focus, thereby further fostering and embedding this culture. We will continue to promote greater sophistication in our risk governance, which is an integral part of our corporate governance, with the aim of achieving sustainable growth and increasing corporate value over the medium to long term. Risk Management Basic Policy JSF plays a public role as a provider of infrastructure for securities and financial markets, so we are strongly aware that the risks we take on should help maintain financial soundness and increase corporate value. Furthermore, we position risk management as one of our most important Risk Management System We broadly classify assumed risks for management as credit risk, market risk, liquidity risk, operational risk and system risk. For credit risk and market risk, we strive to secure profits while quantitatively identifying risks and keeping them within levels that match our financial strength. For liquidity risk, operational risk and system risk, we strive to prevent their manifestation by implementing appropriate management according to risk characteristics. Risk Management System management issues, and through the JSF Business Conduct Guidelines and our risk management policy we instill a mindset and risk culture that emphasizes risk management throughout JSF. Regarding reporting, credit risk and market risk are reported to the Management Committee following discussion at the Risk Management Committee, and liquidity risk is reported to the Management Committee following deliberations at the Asset Liability Management (ALM) Committee. The officers responsible for each committee regularly report to the Board of Directors on the status of risks and measures to improve risk management. Capital Adequacy Ratio (Adequacy of Equity Capital) As one of the conditions for our involvement in the Japanese Securities Clearing Corporation (JSCC) clearing and settlement system and in the operations of the Bank of Japan, we are required to calculate, manage and maintain our capital adequacy ratio above a certain level in accordance with the Financial Instruments and Exchange Act. Specifically, we precisely calculate and manage this ratio on a monthly basis, monitor the impact of daily market fluctuations on equity capital, and quickly report this information to management. To ensure we can maintain these levels, we implement management measures such as setting upper limits on the risk equivalent amount for each business segment. Integrated Risk Management We quantify credit risk and market risk using statistical methods. Operational risk and system risk are quantified using a basic approach. We manage calculated risk amounts within the scope of allocated risk capital for each risk type. Risk capital is allocated to each business based on the assumed maximum amount of risk, after securing a risk buffer for times of stress. In addition, we verify our capital adequacy by using stress tests to calculate impacts on our equity capital, and formulate action plans, as necessary. We conduct two types of stress tests. The first type is monthly tests based on individual stress scenarios. These include credit stress, such as the bankruptcy of a counterparty, and market stress, such as fluctuations in the yield curve or a sudden drop in stock prices. The second type consists of comprehensive semiannual stress tests based on scenarios that reflect the current financial environment. In addition, we are going beyond integrated risk management, further enhancing our approach by linking it with the risk assessment framework (RAF) in ways such as using calculated risk amounts for risk-return analyses by business category and transaction type. Management Committee or department Managing departments Board of Directors President Management Committee Executive Officer Responsible for Risk Management Department ALM Committee Risk Management Committee Executive Officer Responsible Executive Officer for Information Systems Responsible for Internal Planning Department Audit Department Checks Information Systems Planning Committee Risk Management Department (Supervising department for risk management) Information Systems Planning Department Liquidity risk Checks Market risk Checks Credit risk Checks Operational risk System risk Checks Checks Operation departments Treasury Department Treasury Department Margin Loan Department Institutional Sales Department Retail Business Department Margin Loan Department Treasury Department Osaka Branch Each department Each department Executive Officer Responsible for Treasury Department Integrated Risk Management Integrated Risk Management Identify risk capital Secure a buffer, then allocate capital based on assumed maximum amount of risk Control risk within the scope of allocated capital Operational risk Risk tolerance limit Operational risk Credit risk Credit risk Market risk Market risk Buffer for times of stress Risk capital Illiquid assets such as fixed assets Internal Audit Department Supervising department for internal audits Based on this approach to risk management, the system we have developed supports the expansion of our balance sheet through the risk appetite framework described as follows. Equity capital Capital allocation limit Measurement results Credit Risk Management Liquidity Risk Management JSF quantifies and manages credit risk using default rates for in-house ratings that it has calculated for each of its business partners. To manage credit risk (except for loans to retail), we adopted the Monte Carlo simulation method starting in FY2025 to improve the sophistication of credit risk measurement. For credit management, we screen business partners, securities accepted as collateral, and loans, and set and manage transaction limits for each business partner. For each loan transaction, we reduce exposure by marking to market the relevant collateral on a daily basis and requesting additional collateral as needed. In the event of borrower bankruptcy, we take steps including selling securities held as collateral to promptly collect receivables, and each business unit also conducts rigorous self-assessments of the assets under its management. Additionally, we manage large credit positions by calculating the stress exposure for each business partner across our businesses on a daily basis and sharing this information with business departments. JSF recognizes liquidity risk as a significant risk and strives to ensure the liquidity necessary for stable business operations by obtaining commitment lines from multiple financial institutions and by diversifying funding methods and maturities. For cash flow management, we set a minimum amount of liquidity reserves based on the assumption that certain stress events will occur in financial markets. We monitor the state of liquidity reserves by formulating cash flow forecasts and confirming the amount of funding available, as well as the status of highly liquid asset holdings, while confirming concentrated maturities for large amounts of funds. We also have a system for reporting the status of daily cash flow to management. Furthermore, we conduct stress tests that simulate scenarios such as cash outflows during stress in the funding environment to assess and monitor the required level of liquidity on hand. In addition, we manage liquidity risk on a consolidated basis by receiving daily reports from JSF Trust and Banking that include cash flow forecasts and the status of its liquidity reserves. Furthermore, we prepare for unforeseen circumstances with measures to supplement liquidity, such as holding a certain amount of government bonds that we can immediately convert into cash. Market Risk Management Operational Risk Management The market risk of our portfolio securities and other assets is quantified using the historical method or variance-covariance methods, and results are promptly shared with the front office and management to ensure proper risk management. Furthermore, to validate the reliability of our market risk quantification model, we conduct back testing to compare calculated VaR with hypothetical profit and loss from a given portfolio. At the same time, we appropriately control investment losses by setting loss limits on an overall profit and loss basis. Trigger points are set just short of the limits to enable prompt formulation and implementation of action plans based on the situation, before the limits are breached. Each department at JSF is responsible for managing operational risk, which we mitigate by ensuring that employees are fully versed in appropriate administrative procedures through the development of rules, manuals and other guidelines, as well as through training and other education. In addition, we regularly conduct internal audits to prevent incidents and to improve administrative processes. System Risk Management JSF has established an information security management policy as the basis for information security measures, with the System Planning Department responsible for managing system risks and implementing necessary measures for each risk. To ensure stable operation of our information systems, we proactively prevent system failures by employing redundant networks and equipment. To ensure secure and efficient system development and operation, we clarify work procedures and establish monitoring systems. In addition, we protect our information assets, encompassing information and systems, through measures against unauthorized access and cybersecurity threats. We have also established rules that all officers and employees must adhere to, and ensure thorough understanding. Furthermore, we have implemented measures to minimize and quickly recover from the impact of system failures, such as preparing various response manuals and conducting training. Group Company Initiatives JSF Trust and Banking Co., Ltd. Net assets ¥24.4 billion Balance of trust assets: ¥5,562.5 billion Number of employees: 43 Business Description and Policy A wholly owned subsidiary of JSF, Nihon Building was established in 1958 as the JSF Group's real estate leasing company. Nihon Building is tasked with providing suitable, comfortable offices and various facilities to a range of clients, including those in the securities and financial sectors. In addition to working for the Group, such as managing the JSF head office building, and steadily promoting the leasing business for buildings owned by the Group mainly in the Nihonbashi-Kayabacho district, Nihon Building will continue to improve its services in cooperation with parent company JSF, while responding to changes in the business environment, including the redevelopment projects under way in the Nihonbashi and Kabutocho districts. Shinichi Sugiyama President Ordinary Profit (Non-consolidated) (Millions of yen) 800 715 600 400 200 0 2020 2021 2022 2023 2024 (FY) Nihon Building No. 3 Net assets: ¥8.1 billion Number of employees: 17 (As of March 31, 2025) Nihon Building Co., Ltd. (As of March 31, 2025) Business Description and Policy JSF Trust and Banking Co., Ltd. was established in 1998 amid financial system reforms known as the "Japanese Big Bang." A wholly owned subsidiary of JSF, it aims to contribute to the development of financial and capital markets as the JSF Group's trust business. Since its establishment, JSF Trust and Banking has been enhancing and expanding its investment service systems and evolving its financial technologies to meet needs that become more diverse year by year. Through these efforts, it has built, deepened and enhanced a proprietary business model for its management trust business that includes preservation trusts for securities companies and other financial instruments companies. The Medium-Term Management Plan and Our Progress Tai Nishida President During the Seventh Medium-Term Management Plan, which began in FY2023, we have been implementing the following key management policies: (1) Further expand the management trust business; (2) Provide credit services that complement trust services; (3) Based on appropriate risk management, generate stable earnings from securities investments; and (4) Work to enhance internal control and governance systems and bolster their supporting operational structure, including human capital and systems development, as a key management strategy. In FY 2024, in the core trust banking business, various preservation trusts-including cl...

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