SBI E*TRADE SECURITIES Co., Ltd.
Financial Review
3rd Quarter Fiscal Year 2006
January 31, 2007
SBI E*TRADE SECURITIES Co., Ltd.
Stock code: 8701
The items in this document are provided by E*TRADE SECURITIES as information related to its business strategy and not as an invitation
to invest in E*TRADE stock or securities. E*TRADE does not guarantee the completeness of this document in terms of information andfuture business strategy. The content of this document is subject to revision or cancellation without warning.

1. Performance Overview

Consolidated Performance, 3Q FY 2006
(Unit: Million yen, %)3Q FY 2005

3Q FY 2006

(2005/4 to 2005/12)(2006/4 to 2006/12)

Compared tosame period in
previous year

Operating revenue

40,59042,311+4.2

Net operating
revenue

37,69539,435+4.6

Operating profit

19,48018,015-7.5

Ordinary profit

19,54018,212-6.8

Interim net profit

10,719

10,164-5.2<3>

Quarterly Consolidated Performance for FY 2006
For the third quarter, E*TRADE achieved higher income and profit compared tothe previous quarter.

(Unit: Million yen, %)FY 2006
1Q

2Q

3Q(2006/4 to 2006/6)(2006/7 to 2006/9)(2006/10 to 2006/12)

Comparedtoprevious
quarter (%)

Operatingrevenue

15,691

12,882

13,737+6.6

Net operating
revenue

14,886

11,905

12,642+6.2

Operatingprofit

7,168

5,043

5,803

+15.1

Ordinary
profit

7,391

5,077

5,744

+13.2

Quarter net
profit

4,182

2,789

3,191

+14.4
<4>

Performance Comparison

Management Performance Trends of Main Online Securities Companies
Operating revenue(Million yen)

17,00015,691

15,000SBI E*TRADE
Matsui
MBH
RakutenKabu.com

12,882

13,00013,737(Million yen)

7,000

9,000

4,000

7,000

3,000

5,000

2,000

3,000
FY 2006

1,000

Quarterly net profit(Million yen)

4,500

4,182

FY 2006 1Q

3Q
SBI E*TRADE
Matsui
MBH
RakutenKabu.com(Million yen)

10,000

2,789

9,681

1,500

4,000

2Q

3Q
SBI E*TRADE
Matsui
MBH
RakutenKabu.com

6,750
7,060

6,000

1Q

Commission

5,744

3,191

2,500

500
FY 2006

2Q

8,000

3,500

SBI E*TRADE
Matsui
MBH
RakutenKabu.com

5,077

6,000
5,000

2Q

7,391

8,000

11,0001Q

Ordinary profit

3Q

2,000
FY 2006 1Q

2Q

3Q

Source: Public documents from each company.
<5>
Note: Kabu.com Securities uses non-consolidated figures.

Consolidated Performance Highlights, 3Q FY 2006
Income increased over same period in previous year and both income and profit increased overprevious quarter.
1. Commission earnings: Down 12.5% compared to same period in previous year, decreasing to 23.492 billion yen; but
up 4.6% compared to previous quarter.
• Combined accounts: 1,351,576 (as of December 31, 2006) In 9 months, the number of accounts grew by 183,798 (20,422 accounts per month).
• E*TRADE's individual broker trading value share expanded further to 29.2% (3Q FY 2006).

2. Financial revenue: Up 41.6% compared to the same period in the previous year, expanding to 12.692 billion yen.
• Based on expansion of self-financing, the financial balance increased 62.1% compared to the same period in the previous year, expanding to9.833 billion yen.
• Margin trading accounts: 140,904 (as of December 31, 2006) In 9 months, the number of accounts grew by 25,293 (2,810 accounts per month).
• The margin balance at the end of December 2006 was down compared to the end of September. However, accounts and underwriting share
expanded.

3. Commissions from underwriting, public subscriptions, and secondary offerings: Up 5.3% compared to the same
period in the previous year, expanding to 1.471 billion yen.
• From the interim period on, E*TRADE has continued to have the top IPO underwriting participation rate among securities companies.
• The IPO underwriting amount increased based on strong performance in the lead managing underwriter business.

4. Profit from trading and other earnings: Up 37.6% compared to the same period in the previous year, expanding to4.655 billion yen.
• To meet the needs of investors, E*TRADE started to handle more types of investment trusts.

5. Sales and management expenses• The variable cost per contract decreased sharply.

• E*TRADE Korea outlook• E*TRADE Korea achieved higher income and profit compared to the same period in the previous year. E*TRADE Korea plans to become listedon the KOSDAQ market on February 21.
<6>Performance Highlights

1) Consolidated Commission Earnings(Million yen)

30,00026,84723,49225,00012.5% decrease
20,00015,00010,0005,000
03Q FY 2005
(2005/4 to 2005/12)

3Q FY 2006
(2006/4 to 2006/12)<7>1) Commission Earnings

Brokerage Trading Value and Basis(100 million yen)

700,000

Brokerage trading value and basis comparison at SBI E*TRADE(Basis)611,765

Basis

600,000

500,000

6.0

Brokerage trading value

4.9

5.0

498,4674.0

3.4

400,000

3.0

300,000

200,000

2.0
3Q FY 2005
(2005/4 to 2005/12)

3Q FY 2006
(2006/4 to 2006/12)
Note: Total brokerage trading value from April to December.
Basis = Brokerage commission / Brokerage turnover<8>1) Commission Earnings

Account Comparison for Main Online Securities Companies
Accounts of five main online securities companies(Accounts)(Current from end of 2006/12)

1,400,000

Account trend of five main online securities companies(Accounts)

1,351,576

1400000

Market influences caused thepace of account acquisition to
decrease. However, the gap
with No. 2 Rakuten (1.7 times
more accounts) and other
online securities continued towiden.

1300000

1,200,000(2004/4 to 2006/12)

1200000
1100000

SBI E*TRADE 1,351,576

1000000

1,000,000

900000800000800,000

Monex 719,785

719,785

700000645,414 644,847
600,000

Rakuten 645,414

600000

Matsui 644,847

542,990 500000

Kabu.com 542,990

400000400,000

300000200000200,000

100000SBIE*TRADE

Monex

RakutenMatsuiKabu.com

Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec

2004

2005

2006

Source: Public documents from each company‘s website.
Note: Monex Securities and Nikko Beans are totaled as Monex. On January 1, 2006, Kabu.com Securities merged with MeNet Securities.

<9>1) Commission Earnings

SBI E*TRADE Account Trend
3Q FY 2006
(9-month average)
20,422Average monthly account acquisition(Accounts)

1,400,000
FY 2005 (12-month average): 47,919

1,300,000
1,200,000

1,259,163

1,311,004

1,351,576

1,167,778

1,100,000
1,000,000
900,000
800,000

777,455
683,696700,000
600,000

934,674

FY 2004(12-month average)
20,066

FY 2003592,743(12-month average)

500,000

8,163 452,493

400,000

351,950
290,558

300,000 253,988
200,000
100,000

Mar Sep Mar Sep Mar

FY 2003 FY 2004 FY 2005

Jun

Sep

Dec

Mar
FY 2006

Jun

Sep

Dec
<10>

1) Commission Earnings

Brokerage Trading Value of Main Online Securities Companies(Million yen)

Daily average turnover of five main online securities companies(2004/1 to 2006/12)
Daily average turnover for 2006/12(Unit: Million yen)

500,000

400,000

SBI E*TRADE 317,603
300,000

200,000
Rakuten 143,306

100,000

Matsui 96,233
Monex 66,029
Kabu.com 62,267

0
JanFebMarAprMayJun Jul AugSepOctNovDecJanFebMar AprMayJun Jul AugSepOctNovDecJanFebMarAprMayJunJul AugSepOctNovDec
2006
2005
2004

Source: Public documents from each company's website.
Note: Monex Securities and Nikko Beans are totaled as Monex. Kabu.com Securities merged with MeNet Securities in January 2006.

<11>

1) Commission Earnings

Brokerage Trading Value Trend of Main Online Securities Companies
Brokerage trading value for five main online securities companies(Index)120(2006/4 as a base index of 100)
SBI E*TRADE
RakutenKabu.com
Matsui

100

Monex
Individual brokerage trading value

80.4

80

73.3
67.5
67.0
66.2

60

62.4

40
Apr
2006

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Source: Tokyo Stock Exchange statistical data, JASDAQ statistical data, and public documents from each company's website.
Note: Individual brokerage turnover in individual margin trading is totaled from three exchanges (sections one and two) and JASDAQ.

<12>1) Commission Earnings

Individual Brokerage Trading Value Share of Main Online Securities
Trend in individual brokerage trading value share
3Q FY 2004
(2004/4 to 2004/12)

Others40.0%

Five main
onlinesecurities
companies
60.0%

3Q FY 2005
(2005/4 to 2005/12)

Others43.7%

Five main
onlinesecurities
companies
56.3%

3Q FY 2006
(2006/4 to 2006/12)

Others35.4%

Five main
onlinesecurities
companies
64.6%

SBI E*TRADE

20.9％

SBI E*TRADE

22.2％

SBI E*TRADE

29.2％

Matsui Securities

13.6

Rakuten Securities

10.6

Rakuten Securities

13.6

Rakuten Securities

11.4

Matsui Securities

10.2

Matsui Securities

9.5

Monex

8.7

Monex

8.3

Monex

6.4

Kabu.com

5.4

Kabu.com

5.0

Kabu.com

6.0

Source: Tokyo Stock Exchange statistical data, JASDAQ statistical data, and public documents from each company's website.
Note: Individual brokerage trading value is totaled from three exchanges (sections one and two) and JASDAQ. Monex Securities andNikko Beans are totaled as Monex. Kabu.com Securities merged with MeNet Securities in January 2006.

<13>

1) Commission Earnings

Share of Individual Margin Trading Value for Main Online Securities
Trend in individual margin trading value share
3Q FY 2004
(2004/4 to 2004/12)

Others30.6%

Five main
onlinesecurities
companies
69.4%

3Q FY 2005
(2005/4 to 2005/12)

3Q FY 2006
(2006/4 to 2006/12)

Five main
onlinesecurities
companies
69.3%

Five main
Others 25.5%
onlinesecurities
companies
74.5%

Others30.7%

SBI E*TRADE

28.1％

ＳＢＩE*TRADE

26.8％

ＳＢＩE*TRADE

34.4％

Matsui Securities

21.5

Matsui Securities

14.8

Rakuten Securities

14.8

Rakuten Securities

12.2

Rakuten Securities

12.2

Matsui Securities

12.1

Kabu.com

7.7

Monex

9.1

Kabu.com

7.2

Monex1n/aKabu.com

6.5

Monex

6.1

Note 1: Monex Securities and Nikko
Securities did not publish figures forApril 2004.

Source: Tokyo Stock Exchange statistical data, JASDAQ statistical data, and public
documents from each company's website.
Note: Individual brokerage trading value is totaled from three exchanges (sections one andtwo) and JASDAQ. Monex Securities and Nikko Beans are totaled as Monex. Kabu.com<14>
Securities merged with MeNet Securities in January 2006.

1) Commission Earnings

Basis Comparison for Main Online Securities Companies(Basis)Basis comparison among five main online securities companies(Brokerage commission / Brokerage turnover)

14.0

3Q FY 2006

11.3

3Q FY 2005

12.0

11.8

9.4

10.0

10.0

8.6

8.0

8.1
6.0
4.0

5.5

4.9
4.7

3.4

2.0
0.0
SBI E*TRADE

Kabu.com

MBH

Matsui

Source: Prepared by E*TRADE using settlement of account documents from each company.

Rakuten<15>

1) Commission Earnings

SBI E*TRADE SECURITIES Basis Trend
Basis trend from 2Q FY 2005

(Basis)6.0

Loweredcommission
rate from 2005/7/1

5.2

Launched new rate systemupon 2006/9/1 completion ofcommission campaign

Implemented
commission
ratecampaign from 2006/6/1 to 2006/8/31

5.0
4.3

4.4
4.0

4.0

Lowered commission ratefrom 2005/10/3

3.1

3.2

2Q

3Q

3.0

2.0
2Q
FY 2005

3Q

4Q

1Q
FY 2006(Commission / Brokerage turnover) calculated every three months.

<16>1) Commission Earnings

Client Asset Trend (Reference)(100 million yen)
50,00045,00040,000Compared toprevious year
-14.0%End of 2005/12

44,475End of 2006/12

38,25535,000Compared toprevious year
-4.1%

30,00025,00021,220 20,344

20,000Compared toprevious year
-11.9%

18,797

16,568Compared toprevious year
+2.9%

12,543 12,910

15,00010,000Compared toprevious year
+25.5% 1

11,782
9,389

5,000
0
SBI E*TRADE

Monex

Matsui

Source: Public documents from each company's website.
Note: Kabu.com Securities merged with MeNet Securities in January 2006.

Rakuten1

Kabu.com<17>

1) Commission Earnings

Expansion of Trading in Futures and Options
Trading in futures and options is a pillar of earning power and growing rapidly.
We expect further expansion in the future.
(Accounts)

Futures and options accounts(1000 yen)
20,536

Futures and options commissions

450,000

20000

385,916
367,998

400,000
350,000

315,186
302,43615000
300,000

279,472

250,000

10000
200,000
150,000

140,450

106,669

5000

100,000
50,0000

0
4 5 6 7 8 9 1011121 2 3 4 5 6 7 8 9 1011121 2 3 4 5 6 7 8 9 101112

2004

2005

2006

1Q

2Q

FY 2005

3Q

4Q

1Q

2Q

FY 2006

3Q<18>

Performance Highlights

2) Consolidated Financial Revenue(Million yen)

14,00012,00010,0008,000

Financial revenue

12,692Financial balance (Revenue - Expense)

8,961

Financial
revenue
41.6% Up

6,067

6,000

9,833

Financialbalance62.1% Up

4,000
2,000
0
3Q FY 2005
(2005/4 to 2005/12)

3Q FY 2006
(2006/4 to 2006/12)<19>2) Financial Revenue

Expanding Financial Revenue over Expenses
Diversifying channels to raise funds helps to increase the rate of self-financing and to
reduce financial expenses.
Diversification of fund sources for margin
trading lending
Rate of self-financing on margin balance

Consolidated financial revenue
and financial expenses(Million yen)

14,00012,692Rate of self-financing
Rate of self-financing

19.3%

34.7%

12,00010,000

金融収益
金融費用

8,961

41.6%
increase

8,000
6,000
4,000

2005/12/31

2006/12/31

2,894

1.2%
increase

2,859

2,000

• More efficient fund management has led to sharp
increase in financial revenue.
• New revenue sources are expanding such as the lending
stock that uses collateral stock financing from thebroker's own capital.

0

3Q FY 2005

3Q FY 2006

As margin trading accounts and margin open interest expand, cash management is being
strengthened.
<20>2) Financial Revenue

Margin Trading Account Comparison for Main Online Securities Companies(Margin accounts)

Margin trading accounts of five main
online securities companies(Margin accounts)

Margin Account Comparison
with Matsui Securities(Current from end of 2006/12)(2004/3 to 2006/12)
150,000

140,904
140,000

120,000

125,000

100,000
87,328

E*TRADE has 10.4% of
total accounts as of the endofDecember(Matsui:
13.5%). Economic recovery
is expected to spur an
increase in accounts andfinancial revenue.

SBI E*TRADE
140,904

Matsui87,328100,000

80,00071,44160,00075,00050,966
41,64740,00050,00020,000

RakutenKabu.com

Monex

2004

2005

Ju
l
Se
p
No
v
Ja
n
Ma
r
Ma
y
Ju
l
Se
p
No
v

Matsui

Ju
l
Se
p
No
v
Ja
n
Ma
r
Ma
y

SBI
E*TRADEMar
Ma
y25,0000

2006

Source: Public documents from each company's website.

<21>2) Financial Revenue

Margin Open Interest Trend(Million yen)Margin open interest

600,000(End of month transaction balance)

567,988

93,512 83,237

General (unlimited) margin trading

500,000

570,686

System margin trading

519,033
510,385
492,093468,715
69,92564,271
65,407

387,891

400,000

321,529 67,089
307,869

300,000

55,881 65,190

213,856
210,686
203,499

200,000

487,449
474,475
449,108
403,308
427,82129,762 35,946
164,545 23,751

320,801
256,339251,987
179,747
174,739
164,545
184,093
108,488

112,925 108,488

100,000

78,532112,925
78,532

0

Jun

2003

Sep

Dec

Mar

2004

Jun

Sep

Dec

Mar

Jun

2005

Sep

Dec

Mar

Jun

2006

Sep

Dec

Jan 292007

Note: Calculated from settlement day base. Figures for January 29, 2007 are preliminary contract base results.<22>

2) Financial Revenue

Margin Trading Comparison with Matsui Securities
The share of individual margin trading value increased by 7.6% over the same period in the previous
term to 34.4%. Compared to the interim period (33.9%), the share gap has widened further.
Share of individual margin trading value(Nine months from 2006/4 to 2006/12)

Margin open interest comparison with(100 million yen)Matsui Securities
8,000
SBI E*TRADE

7,000

Matsui Securities

6,000

SBI E*TRADE
34.4%

4,661
4,173

5,000

(26.8% for same periodof previous year)

Others 53.5%

4,000
3,000

Matsui Securities
12.1%(14.8% for same periodof previous year)

Source: Tokyo Stock Exchange statistical data, JASDAQ statistical data,and public documents from each company's website.
Note: Individual margin trading is totaled from three exchanges (sections
one and two) and JASDAQ.

2,000
1,000
0

Mar
2005

Sep

Mar
2006

Sep

Nov

Source: Public documents from each company's website.
Figures are on a contract day base.

<23>2) Financial Revenue

Expanding Revenues from Lending Stock Business
The third quarter had average monthly gains of 100 million yen, which contributed to the overall
increase in financial revenue.
(Million yen)

Lending stock balance at theend of each month

60,00053,79655,000(Million yen)

57,51654,55451,35150,000350

Revenue trend from lending
stock business

312
300

280

45,000249

250
40,000209

35,000200

30,00025,000150

22,605136

20,000100

15,00010,000
5,000

50
4,282

25
8

2,169

0

0

Jun
2005

Sep

Dec

Mar

Jun

Sep Dec

2006

Note: Calculated using the market price at the end of each month.

1Q
FY 2005

2Q

3Q

4Q

1Q

2Q

FY 2006

3Q<24>

Performance Highlights

3) Consolidated Commissions from Underwriting, Public Subscriptions,and Secondary Offerings(Million yen)

1,500

1,471

1,397
5.3%
increase

1,000

500

0

3Q FY 2005

3Q FY 2006

(2005/4 to 2005/12)(2006/4 to 2006/12)<25>3) Underwriting and Other Commissions

Consolidated Commissions from IPOs and Public Offerings(Million yen)

813

800

631
600

28.8%
increase

400

200

0

3Q FY 2005

3Q FY 2006

(2005/4 to 2005/12)(2006/4 to 2006/12)

Note: These figures were calculated from commissions for underwriting, public subscriptions, and secondary offerings after
excluding commissions related to bonds and investment trusts.

<26>3) Underwriting and Other Commissions

IPO Underwriting Performance(Underwritings)

SBI E*TRADE SECURITIESIPO underwriting ranking

IPO stock underwriting performance(2006/4 to 2006/12)

3rd quarter
100

94

96

Top among all securities firms

87
Rank

80

60

38

40

42

38

3rd quarter

74

23
20

Company name

Underwritings

Participation
ratio (%)

1

E*TRADE SECURITIES

96 companies

66.7%

2

Mitsubishi UFJ Securities

96 companies

66.7%

3

Monex Securities

76 companies

52.8%

4

Shinko Securities

75 companies

52.1%

４

Nikko City Group

75 companies

52.1％

６

Nomura Securities

69 companies

47.9％

７

Daiwa Securities SMBC

66 companies

45.8％

8
0
FY
1999

FY
2000

FY
2001

FY
2002

FY
2003

FY
2004

FY
2005

FY
2006

Note: Figures do not include listing date base, agency transaction,and real estate investment trust.

Note: The data was collected as much as possible from public
documents by E*TRADE. Data was collected from 2006/4 until 2006/12
for domestic underwriting of 144 companies (listing date base)undergoing an IPO, not including secondary offerings.

<27>3) Underwriting and Other Commissions

IPO Underwriting Performance
Four main online securities companies(Underwritings) Underwriting performance for 3Q FY 2006

Four main online securities companies(Underwritings)
450

Underwriting comparison

426

100

96

400

333

350

76

80

300
250

60

222
194

200
40

32
20

20

150

100
50

0

0
SBI E*TRADE

Monex

MatsuiRakutenNote: Figures include over allotment. Listing date base. Dealer agency
not included.

SBI E*TRADE

Monex

MatsuiRakutenSource: Public documents at each company. The data is from the firstday of online trading for each company to December 31, 2007 (Listingdate base). Figures do not include agency transactions and real estate<28>
investment trusts.

3) Underwriting and Other Commissions

Approach to Lead Managing Underwriter for IPOs
Actively participate in lead managing underwriter operations to expand corporate
business and underwriting commission revenue.
2nd case: Netage Group, Inc.
2006/8/30: Listing on Mothers (TSE)
3rd case: IREP Co., Ltd.

SBI E*TRADE has also become thelead managing underwriter for 21
more companies (as of 2007/01/31).

2006/11/16: Listing on Hercules (OSE)

SBI E*TRADE
Issuing company
Business expansion strategy

Individual investor• Pursue both quality and volume as alead managing underwriter.

• Increase share allotment.

• Raise funds through listing
activities.
• Ensure stock liquidity throughincrease of individual shareholders.

• Offer more attractive products.
• Leverage IPO business as anenterprise growth strategy.

In 2007, become more active as a lead managing underwriter and contribute more tototal earnings through this business.

<29>3) Underwriting and Other Commissions

IPO Underwriting Performance
Four main online securities companies
Underwriting amount for 3Q FY 2006

(10 million yen)

1,200

1,153

(Public offering price X Number of underwriting shares)

1,065
3Q FY 2005
3Q FY 2006

900

801

600
461
300 309

300
164
65

0
SBI E*TRADE

Monex

MatsuiRakutenSource: Public documents at each company.
Note: Figures include over allotment, but do not include agency transactions and real estate investment trusts. Dealer agency
not included. Listing date base as of 2006/12/31, excluding agency transactions and real estate investment trusts.

<30>3) Underwriting and Other Commissions

Off-Floor Distribution Performance (Reference)
Performance on TSE, OSE, and JASDAQ
3Q FY 2006 (2006/4 to 2006/12)

Companies with off-floor
distributions handled by E*TRADE(3Q FY 2006)
Date
implemented

Companies handled: 72 (3Q FY 2005: 93)

Distribution total: 23.7 billion yen (3Q FY 2005: 51.6 billion yen)

E*TRADE application total : 21.5 billion yen (3Q FY 2005: 111.9 billion yen)Handling total: 5.2 billion yen (3Q FY 2005: 9.9 billion yen)

E*TRADE handling share: 22.2% (3Q FY 2006: 19.3%)

Company name

Stock exchange

2006/5/12

GAGA Communications

ＨＣ

2006/6/29

GEO

Tokyo Section 1

2006/8/ １

Met’s Corporation

Tokyo Mothers

2006/8/23

Eighting Co., Ltd.

Tokyo Mothers

2006/11/17

Kyoritsu Printing Co., Ltd.

Tokyo Section 1

2006/12/11

Forval Telecom Inc.

Tokyo Mothers

Note: Earnings from off-floor distributions include commissions.

E*TRADE handling share trend
19.3%

3Q FY 2005
(2005/4 to 2005/12)

22.2%

3Q FY 2006
(2006/4 to 2006/12)<31>

Performance Highlights

4) Consolidated Trading Profits and Other Earnings(Million yen)

5,000

Other underwriting commissions, trading profits, operating revenues, and401K related sales

4,655

4,500
4,000
3,500

3,382

37.6%
increase

3,000
2,500
2,000
1,500
1,000
500
0
3Q FY 2005

3Q FY 2006

(2005/4 to 2005/12)(2006/4 to 2006/12)<32>4) Trading Profits and Other Earnings

Bond and Other Product Performance
Handling over 250 types of investment
trusts as a top class online securities
company

Bond sales (public and foreign)
The bearish market brought a slowdown in the sale ofgovernment bonds for individuals (yen denominated) andSouth Africa rand-based interest-bearing bonds. The "happy(Unit: Million yen) choice" campaign promotes future sales and helps increase
sales volume.
20,00018,00018,084Foreign bonds

300

16,284 16,651

Number of funds handled by each online
securities company

251

16,000250

Yen-based bonds

14,00012,325 7,044

6,322

8,744

13,704200

12,00010,000SBI E*TRADE handles a wide variety of funds tomatch the diverse needs of individual investors.

6,724

9,563

153
140

150

7,101
8,000
6,000

6,070

100

9,240

4,000
2,000

10,329

9,339
6,979

5,223

53
50

3,493

0

0
Jul to Sep

Oct to Dec Jan to Mar Apr to Jun

2005

2006

Jul Sep

Oct to Dec

Note: Earnings from government bonds for individuals includes commissions from underwriting
and secondary offering. Figures include agency transactions.

SBI E*TRADE

Kabu.com

Monex

RakutenNote: Compiled by SBI E*TRADE and current as of 2006/1/26. Commissions
from investment trust operations are included in subscription/secondary<33>
offering commissions.

4) Trading Profits and Other Earnings

Expansion of FX Margin Trading
Earnings through the end of the third quarter have expanded steadily, up by 18.6%.
FX margin trading accounts

Earnings from FX margin trading(1000 yen)

(Accounts)
50,00048,483 500,000

454,465 432,109
413,598

45,000375,877
356,053

400,000

40,000335,208

35,000300,000

30,00025,000200,000 192,049

20,00015,000100,000

10,000
5,000

0

0
4

7

2004

10

1

4

2005

7

10

1

4

2006

7

10 12

１Q

2Q

FY 2005

3Q

4Q

1Q

2Q
FY 20063Q<34>4) Trading Profits and Other Earnings

M&A Brokerage Activities
M&A brokerage activities are expected to grow as a core feature of investment banking.
Anticipate the needs and conditions of a customer's industry and offer acomprehensive growth strategy.
SBI E*TRADE underwriting
performance up to now

426 companies1
Underwriting activities
diverse industries

Discover latent needs andnegotiate on behalf ofmatching companies.

spanning• Investment
Grouptargetsof

SBI• Underwriting performance up
to now• Planned IPOs

Note 1: From the start of online business to 3Q
FY 2006

As management strategy, arrange proposals from a broad perspective,
including standardized M&A methods.
3Q M&A brokerage performance: 2 cases (1 completed)
3Q M&A brokerage commission: 150 million yen (included as earnings: 1 case)
Current M&A activity: 12 cases

Support the total growth strategy of an enterprise and expand corporate business.
<35>Performance Highlights

5) Consolidated Sales and General Management Expenses(Million yen)

25,00021,41920,00015,00010,0005,000

018,214
5,920

6,485
2,248

2,052
2,606
958

3,953

4,706
344
1,626

5,080

3Q FY 2005
(2005/4 to 2005/12)

1,082 11

Trading expenses
Exchange association,
advertising, other expenses

Personnel expenses
Real estate expenses
System lease, other expenses

Amortization of goodwill
Depreciation expenses
Software depreciation, other expenses

Office expenses
System back office, other expenses

Taxes and public charges

413
2,142
3Q FY 2006
(2006/4 to 2006/12)

Addition to loan loss reserves
and other expenses
Service information, other expenses<36>Performance Highlights

3Q FY 2006 Performance of E*Trade Korea Co., Ltd.
(Unit: Million yen, %)3Q FY 2005

3Q FY 2006

(2005/4 to 2005/12)(2006/4 to 2006/12)

Compared tosame period
in previous year

Operating revenue

3,461

4,283

+23.7

Net operating
revenue

3,333

4,030

+20.9

Operating profit

664

1,107

+66.6

Ordinary profit

666

1,114

+67.3

Quarterly net profit

535

776

+45.0
<37>

6) E*TRADE Korea

E*TRADE Korea Outlook
SBI E*TRADE is achieving growth in revenue and profit through expansion ofcustomer accounts and trading value share.
Outlook (as of 2006/12/31)• Stock capitalization: 56 billion Korean won• Investment ratio: 87%• Accounts: 120,591• Brokerage trading value: 36.6109 trillion won(Interim FY 2006)

Main strengths• The lowest online commission rate in
Korea (Stock: 0.024%)• Online investment consulting (video,
audio, chat)

Towards listing on KOSDAQ• Planned listing date: February 21, 2007

• New shares issued: 2,000,000• Total shares after issue: 13,200,000• SBI E*TRADE investment ratio after issue:
73.8%• Issue price: 6,500 won per share (845 yen1)• Impact on consolidated performance of SBI
E*TRADE SECURITIES in FY 2006
290 million yen in estimated profit on sales1
Note 1: 1 won = 0.13 yen (as of 1/29)<38>

2 . Main Business Tasks During
Third Quarter2. Main Business Tasks in Third Quarter

Main Tasks 3Q FY 2007
Month

A bullet mark (“•”) indicates a service release and a yellow asterisk("*") indicates a business decision/alliance.

Task content

April* Cooperated with Sumitomo Trust Bank in the market promotion business.

May• Enhanced the system to handle 1.75 million accounts.
• Launched bond lottery and gift certificate service (Informal name: Happy Choice).
* Cooperated with Kanto Tsukuba Bank in the market promotion business.

June

July

• Lowered the commission rate on stocks traded over the Internet (Active Plan lowest rate: 0yen).
• Launched lower stock commission rate campaign (Until August 31).
• Raised the open interest limit when starting a margin trading account (From 50 to 100
million yen).
• Covered all market making issues.
* Cooperated with Chuo Mitsui Trust Bank in the market promotion business.
• Enhanced the system to handle 2.0 million accounts.
• Launched i-appli trading tool "HYPER MOBILE Lite," which is compatible with FOMA 700i
series and newer models.
* Agreed with Rakuten Securities and SBI Securities to jointly prepare for launch of evening
trading.

August• Lowered commission rate for Nikkei 225 futures trading.
* Acquired additional stock of SBI Benefit Systems Co., Ltd. and made it a subsidiary.

Sep• Implemented large rate reductions on stock commissions and regular commissions.
• Started accepting new account applications from persons under age.
• Launched "Golf Membership Market" service in cooperation with E-Golf Co., Ltd.
• Added news feature "Kabushik Shimbun Update" (10-minute delay).
* ORIX Securities and GMO Internet Securities decided to participate in preparation ofevening trading system.

Indicator trend
Total securities
accounts top 1.2 million

Individual brokerage
trading value shareexceeded 30%
on a monthly basis(See note)

Total securities
accounts
top 1.3 million(Note) Source: Tokyo Stock Exchange statistical data, JASDAQ statistical data, and public documents from each company's website.
Individual brokerage turnover in individual margin trading is totaled from three exchanges (sections one and two) and JASDAQ.

<40>

2. Main Business Tasks in Third Quarter

Main Tasks 3Q FY 2007
Month
Oct

A bullet mark (“•”) indicates a service release and a yellow asterisk("*") indicates a business decision/alliance.

Task content

Indicator trend

Launched a "commission cash back campaign" for new accounts.
Launched securities brokerage service with OMC Card.

Nov

Released version 2.0 of the trading tool HYPER E*TRADE.
Announced lower free usage conditions for HYPER E*TRADE from January.
Launched securities brokerage service with So-net M3.

Dec* Cooperated with Shonai Bank in the market promotion business.
* Passed the preparation inspection for listing E*Trade Korea Co., Ltd on the KOSDAQ
market.

<41>

2. Main Business Tasks in Third Quarter

HYPER E*TRADE Version 2.0 Release
Improvements in service information and trading environment promote active trading.
①②③

New features
Useability
improvements① It is possible to show hot stocks and rankings in part of thewindow.

Information
improvements② It is possible to show more individual issue information (e.g.
PER, dividend yield)③ A stock futures index appears in a popup window. And it ispossible to make stock transactions while looking at pricemovements in real time.
④ Added the Shikiho News Alert (Toyo Keizai Inc.), with over
2,800 volumes distributed in FY 2005.

Visibility
improvements⑤ New fonts have been added and the navigation buttons
have been improved. (Fonts and backgrounds can becustomized.)

Lower free usage conditions starting from January 2007
Until December 2006

From January 2007

40 or more domestic contracts during
the previous monthly period (contract
day base)

10 or more domestic contracts during
the previous monthly period (contract
day base)<42>

2. Main Business Tasks in Third Quarter

Securities Brokerage Expansion
Diversify account acquisition channels for individual investors. Up to now it has been difficult to captureindividual accounts alone without cooperation with other companies.
November 2006 service launch

December 2006 service launch

OMC Card, Inc.

So-net M3, Inc.
Main business: Medical services using the Internet

Main business: Credit card service
Card members: 8.46 million nationwide (2006/8/31)
Member characteristic: 60% female
Encourage new account applications through website
and news pamphlet for women members.

September 2005 service launch

Doctor members: 136,000 nationwide (2006/9/30)
53% of Japanese total
Member characteristic: Broadphysicians in their 20s to 60s

age

range

from

Encourage new account applications through lifestyle
information portal for medical professionals.

Currently, alliance with four
companies

October 2005 service launch<43>

3. Future Business Development

3. Future Business Development
1) Comprehensive online securities company• Maintain our "customer-centric principle“• Further development the two essential features of a comprehensive online
securities company: Retail business and corporate business• Establish stable earnings structure2) Corporate business promotion• Expand investment banking• Actively engage in M&A brokerage activities• Strengthen structure of corporate business divisions3) Other future developments• Prepare launch evening trading market• Release stop limit order function in February• Offer global investment products• Take advantage of potential synergies with the community service business of SBI Holdings• Plan to offer variable annuity services• Plan to offer lending stock services, which customers highly demand<45>1) Comprehensive Online Securities Company

Management Philosophy and Basic Policy
Management Philosophy

Total "customer-centric principle"

Offer the lowest commission rate system in the industry and the highest quality service.

Significantly reducethe cost of investment

Provide abundant
high-quality investment
information

Offer attractive
investment products

Provide a safe andstable trading
environment

Capture the largest market share in the industry.
Customer accounts

Brokerage trading value

Client assets

Capture an overwhelming share of business, expand business opportunities, andachieve stable earnings.

<46>

1) Comprehensive Online Securities Company

Expand Corporate Business as a Comprehensive Online Securities Company
Build a stable earnings structure by developing corporate businessthat leverages the retail customer base.
Overwhelming customer share: 1,351,576 accounts (As of 2006/12/31)
Expanding share of individual brokerage trading value: 29.2% (As of 3Q FY 2006)

Retail business
IPO
IPOstock,stock,
subscriptions,subscriptions,off-floor
off-floor
distribution
distribution

Stocks,Stocks,investment
investmenttrusts,
trusts,
bonds
bonds

Corporate business
IR,IR,investment
investment
information
information

Expand market share throughnew services and an attractive
commission system. Broaden
the customer base even further.

FX,
FX,futures,
futures,
options,
options,
coveredcoveredwarrant
warrant

IPO
IPO
underwriting
underwriting

Secondary
SecondaryfinancefinanceExpand corporate businessby leveraging retail sales
power and SBI Group content.

Off-floor
Off-floor
Distribution
Distribution(Main(Mainbroker)
broker)IR
IRsupport
supportSecuritized
Securitized
products
products

M&A
M&A
<47>

1) Comprehensive Online Securities Company

Establish Stable Earnings Structure
Build an earnings structure not influenced by market conditions.
SBI E*TRADE operating revenue distribution ratio(%)

Brokerage commission

Financial revenue

Commission from underwriting andsecondary offering
Commission from subscription andsecondary offering

FY 2006
3rd Quarter

55.5

Profit from trading
Others

4.9
6.1
3.5

30.0

4% increase
compared toprevious period‐0.4（収益 36.9％増）

FY 2005
3rd Quarter

66.1

22.1

4.8
3.4 3.6<48>

2) Corporate Business Promotion

Expand Investment Banking
Use various methods to expand the business of our customers.
IPO

PO

Lead managing
underwriter

Unlisted company

Lead managing
underwriter

Listed company

M&A
Brokerage service

Listed, unlisted companies

Listed, unlisted companies

Meet the diverse needs of listed and unlisted companies.
3Q FY 2007 lead managing underwriter performance: 2 companies
Underwriting share of 20% or more: 6 companies
3Q M&A brokerage performance: 2 cases (contract base)<49>2) Corporate Business Promotion

Actively Engage in M&A Brokerage
Network with M&A brokerage companies
To offer optimum enterprise solutions, SBI E*TRADE is strengthening
information collection capability and alliance networking.
• Expand opportunities to match enterpriseneeds through collect of information froma wide range of sources.
• Gainessential
expertise
towards
expanding M&A brokerage services.
Information exchange,knowledge accumulation
M&A brokeragecompany(Ex.) Human resource training through case
M&A brokerage study researchcompany

M&A brokeragecompany

Actively promote the M&A business through expansionof information resources and enhancement of skills andsystem.
<50>

2) Corporate Business Promotion

Strengthen Structure of Corporate Business Divisions
Strengthen corporate structure for the expansion of investment banking
Maintain a corporate structure that offers support services before public listing,at the time of listing, and after listing.

Enterprise

Corporate Headquarters, Legal Affairs Division• Proposals to PO and unlisted companies forraising funds• Proposals to raise funds after public listing
Increase from 12 staff to 16

Capital Market Division

Underwriting Inspection Division• IPO guidance and support• Financial inspection after IPO

Increase from 7 staff to 10

Increase from 5 staff to 6

Along with staff increase, enhance the quality and volume of operations.
Current as of 2006/3/31

Current as of 2007/1/31

24 staff

32 staff

Continue to enhance the corporate structure and strive towards higher earnings in corporate business.

<51>3) Other Future Developments

Prepare Launch of Evening Trading Market
Aim to launch the evening trading market next year at the earliest possible time.
Image of evening trading market

Service content under examination

Proprietary trading system (PTS)

Trading launch

March 2007

Time frame

20:00 to 23:50 (Plan)

Price determination
methodAuctionType of trading

Domestic stocks (Spot,general funds)

Target stocks

Issues from TSE, OSE,
Nagoya Stock Exchange,
Sapporo Stock Exchange
JASDAQ (Including market
make issues), but details are
undecided

Bid and price limit

Same as stock exchanges

Application for approval

Connection

Evening trading system
operator

Connection

Connection

Connection

Connection

E*TRADE plans to apply to the Financial Service Agency for PTS
approval. Each securities company that participates connects to the
trading system operator. Depending on the outcome of ongoing
examinations, E*TRADE may handle settlement of account operations.

All details about the launch and content of evening trading are subject to approval by the
Financial Service Agency.
<52>3) Other Future Developments

February Release of Stop Limit Order Function
In February 2007, plan to add a much anticipated order function.
56.6% of SBI E*TRADE customers are company employees(as of 2006/12/31).

Order input window under development

It is difficult to place an order on the exchange during trading hours.

Inability to place an order equals an opportunity loss.

Offer a reliable environment in which to place orders.
Usage method example
Prevent loss from expanding

Don't miss a chance to buy

Ensure profit upon selling<53>

3) Other Future Developments

Synergies with Community Service Business of SBI Holdings
Provide an investment information exchange portal to support asset formation of individual investors.
New Community Service Business Division of SBIH

Specify the detailed format later.

Community Service Business
Division

Community management

Activate
Stock investment
Loan community
community
SBI Community

Insurance community

Activate

Lifestyle community
Activate

Activate
Attract
customers
In April 2007, as a first step, launch a community portal aimed at attracting SBI E*TRADE customers.
The community portal will be a place to obtain more useful information to support the asset formation of individual investors. <54>3) Other Future Developments

Offer Global Investment Products
Expand currency pairs for FX margin trading.
Trading volume is expanding smoothly as FX trading provides an effective
method to diversify risk.
Currently handling 14 currency pairs

Now examining whether to add two more currency pairs, which
would provide new foreign exchange investment opportunities.

RMB-JPY
KRW-JPY
USD-JPN

NZD-JPY

SGD-JPY

EUR-JPY

CAD-JPY

ZAR-JPY

GBP-JPY

CHE-JPY

Euro-USD

AUD-JPY

HKD-JPY

GBP-USD

Mexico Peso

Japanese Yen

Australian Dollar

US Dollar

Additions are planned.

<55>3) Other Future Developments

Plan to Offer Variable Annuity Service
The first online securities company to offer variable annuity service
ManageTemporarily distribute insurance money

Special account
A FundStart receiving payments at theend of management period

B FundC FundD FundDiverse methods to receive
payment based on life plan

Insurance company manages fundInvest from a long-term perspective to build future capital and to support lifestyle finance in old age.
Expand the product lineup so that one account can support all asset management needs.
Provide a total Internet-based service from filing application to receiving payment.

<56>3) Other Future Developments

Plan to Offer Lending Stock Services
Anticipate a further increase in number of accounts through offering services in high demand.
SBI E*TRADE SECURITIESStock loan market

Accounts

A issue

B issue

C issue

D issue

Select a stock issue to loan.

Loan

Loan

Interest

Interest

Institutional investors

Use and manage shares procured
from the lending stock market.

• It is also possible to obtain voting rights, a payout sum equivalent to the dividend, and complimentary gifts for shareholders.
• Through interest on stock loan, it is possible to increase the effective yield on investment by means other than dividend
payment and a rise in the stock price.
The lending stock service enables individual investors to manage their asset holdings more effectively without waste and toearn income through interest payments.
SBI E*TRADE is aiming to launch the new service at the earliest possible date (currently undecided).

<57>http://www.etrade.ne.jp