21-D-1185
January 20, 2022

Highlights of Online Securities Companies’ Financial Resultsfor Period from April to September 2021
The following is Japan Credit Rating Agency, Ltd. (JCR)’s perception of the current status and highlights
for rating concerning the financial results for the period from April to September 2021 (first half of fiscalyear ending March 2022 (FY2021)*) for Japan’s five major online securities companies: SBI SECURITIESCo., Ltd., Rakuten Securities, Inc., Monex Group, Inc., MATSUI SECURITIES CO., LTD., and au
Kabucom Securities Co., Ltd.
1. Business Environment
Looking at the domestic stock market, the Nikkei Stock Average recovered to the 30,000-yen level inFebruary 2021 for the first time in about 30 years, and then generally weakened to about 27,000 yen inlate August. However, it then rose at a rapid pace through the middle of September, and there are phases
where it recovered to 30,000 yen again. Although there were signs of a slowdown in the individual stock
brokerage trading value in the first half of FY2021, compared to the large increases of approximately 50%
year-on-year in the first half and second half of FY2020 against the backdrop of rising stock volatility andstock price recovery after the COVID-19 outbreak, the trading value during the period increased byapproximately 10% year-on-year and remained at a high level, thanks partly to a sharp increase in tradingin September. In addition, U.S. stock prices have been rising for a long time, and they continued to risein the first half of FY2021. Although there have been moves to lower trading commissions or make them
free of charge, trading has remained relatively active, and the business environment has been generallyfavorable.
2. Financial Results
In the first half of FY2021, four companies of the five major online securities companies, with theexception of Rakuten Securities, posted higher revenues and profits compared to the same period of theprevious year. Rakuten Securities was the only company to report a decline in profit due to an increasein SG&A expenses, despite an increase in revenue. One of the main reasons for the increase in revenuecommon to all companies was the improvement in net financial income. In recent years, there has beena trend to lower or eliminate trading and other commissions for domestic stocks, and many companies
are focusing on expanding margin transactions as an alternative measure to compensate for the decline
in revenue. The balance of margin transactions has been increasing for all companies, and the increase
in interest income from margin transactions is believed to have contributed to the improvement in the net
financial income. Although brokerage commissions decreased at SBI SECURITIES, Monex Group, andMATSUI SECURITIES, the increase in net financial income at each of these companies was sufficient tooffset the decrease. As for the balance of margin transactions at the end of September 2021, Rakuten
Securities and SBI SECURITIES showed particularly strong growth, with increases of about 50% andover 30%, respectively, compared to the end of the same month year earlier. The balance of Monex
Group and MATSUI SECURITIES increased by over 20%, and that of au Kabucom Securities increased
by about 10%. As for brokerage trading value for stock, etc., the value of Rakuten Securities, SBI
SECURITIES, and MATSUI SECURITIES increased by around 10%, but the value of other companies
decreased.
SBI SECURITIES, outside of net financial income, saw the net operating revenues increase by morethan 10%, thanks partly to an increase in corporate-related business compared to the previous year when
it was affected by the COVID-19 pandemic, despite a decrease in brokerage commissions due to theintroduction of free brokerage commissions. Its ordinary income increased only slightly due to a large
increase in SG&A expenses, mainly transaction-related expenses. Although Monex Group's US segment
posted a loss due to upfront investments to expand its business, its crypto-asset business segment
expanded rapidly on the back of strong crypto-asset market conditions and strengthening of businessbase, resulting in an increase in the total operating revenue after deducting financial expenses of morethan 70% and an increase in the amount equivalent to operating income of nearly four times, which weresecond only to SBI Securities, the top company in terms of the amount. At au Kabucom Securities, net
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operating revenues increased by a little less than 10%, despite a decline in brokerage trading value forstock, etc., thanks partly to an increase in brokerage commissions following the restoration of margin
trading commissions, which had been free of charge. Its ordinary income rose about threefold, partly withcost containment and reaction to an increase in provision of allowance for doubtful accounts in theprevious fiscal year. Rakuten Securities saw the net operating revenues increase by a little let than 20%
with an increase in brokerage commissions in addition to the increase in the net financial income, but theordinary income declined by more than 10% due to a large increase in SG&A expenses, mainlytransaction-related expenses. At MATSUI SECURITIES, both net operating revenues and ordinary
income increased by around 10%, thanks mainly to an increase in net financial income.
Looking at the customer base, the number of accounts and assets under custody increased for allcompanies. In particular, the top two companies, SBI SECURITIES and Rakuten Securities, continued toincrease at a rapid pace. Among the remaining three companies, au Kabucom Securities is doing well interms of account acquisition. Monex Group is steadily expanding its customer base not only in domestic
securities but also in the US and crypto-asset business.
3. Highlights for Rating
The revenue growth for all companies in the first half of FY2021 was partly driven by the businessenvironment. On the other hand, the free-of-charge for commissions has been gradually progressing.
JCR is paying attention to the progress of the companies' efforts to diversify and stabilize their revenue
sources in preparation for a downturn in the market and further progress of the free-of-charge forcommissions. While there are differences in companies, their efforts are bearing fruits in addition to theaforementioned margin transactions and crypto assets. In recent years, companies dealing in U.S.
equities have been expanding their transactions and revenues have been growing, and with theestablishment of a margin trading system for U.S. equities scheduled for July 2022, it is expected tobecome a new source of revenue. In terms of stable earnings, the balance of investment trusts is steadily
increasing along with the expansion of installment investment trusts, and many companies are seeing an
increase in trust fees, although the scale is still small. It is considered that there are a relatively large
number of transactions by young people and investment beginners in foreign stocks and installment
investment trusts and the increase in the number of customers is thought to have led to an increase intransactions. In order to be chosen by customers, it is necessary to differentiate themselves from theircompetitors, while reducing unfavorable comparison with competitors in terms of commission levels,products and services. As for stock trading commissions, etc., there are moves to bring them closer tothe industry's lowest level, similar to those of the top two firms, and the trend toward free-of-charge will
not be avoided. On the other hand, system costs related to the acquisition of customers and theintroduction of new products and services are on the rise, and clear expenses are required. The shift inthe earnings structure is not yet sufficient, and the differences in management strength and customer
base may show up as differences in business performance when the environment is bad, so JCR will pay
close attention to the efforts of each company to improve its competitiveness.
Kengo Sakaguchi, Tatsuya Shimizu*Rakuten Securities settles accounts in December. The six-month period from April to September is used
as its first half in this document.

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(Chart) Financial Results of Online Securities Companies (from April to September)(Unit: JPY mn)
SBI SECURITIES(consolidated)

Rakuten Securities(consolidated) *1

Monex Group(consolidated) *2

2020

2021

YoY2020

2021

YoY2020

2021

YoY

Operating Revenues

74,03082,027+10.8%

35,34642,449+20.1%

29,31749,094+67.5%

Commissions

31,24036,270+16.1%

15,945

18,263+14.5%

16,83818,237+8.3%

Brokerage Commissions

21,68919,612-9.6%

12,997

13,796+6.1%

12,612

12,115-3.9%

Underwriting andDistribution Commissions

485

2,132

+339.6%38

69+81.6%

24

57+137.5%

Subscription andDistribution Commissions

1,040

1,822

+75.2%

442

685+55.0%

49+125.0%

Other Commissions

8,025

12,703+58.3%

2,468

3,714

+50.5%

4,198

6,056

+44.3%Net Gain on Trading

24,60524,263

-1.4%

8,137

8,861

+8.9%

4,445

21,891+392.5%

Financial Revenues

18,146

21,458+18.3%

9,672

13,022+34.6%

7,486

8,361

+11.7%

Financial Expenses

3,711

3,165

-14.7%

1,254

2,349

+87.3%

2,211

2,280

+3.1%

Net Operating Revenues *2

68,85877,253+12.2%

34,091

40,100+17.6%

27,106

46,799+72.7%

SG&A Expenses

41,62149,669+19.3%

26,83533,959+26.5%

22,85130,670+34.2%

Operating Income *2

27,237

27,584

+1.3%

7,255

6,142

-15.3%4,255

16,129+279.1%

Ordinary Income

27,316

27,684+1.3%

7,329

6,463

-11.8%---Net Income Attributable toOwners of Parent

18,98818,684

-1.6%

4,212

3,973

-5.7%

2,919

12,027+312.0%Assets in Custody(JPY 100 mn) *3

141,779

188,000+32.6%

88,232

139,818+58.5%

54,90372,780+32.6%

595

772+29.7%

440

624+41.9%

189

197

+4.4%

Number of Accounts (10thousand accounts) *3

MATSUI SECURITIES(unconsolidated)

au Kabucom Securities(unconsolidated)

2020

2021

YoY

14,18815,316

+8.0%

9,572

9,759

+2.0%

8,789

8,719

-0.8%

3,165

3,507

+10.8%

Brokerage Commissions

8,425

8,309

-1.4%

2,585

2,660

+2.9%

Underwriting andDistribution Commissions

26

42+61.5%---

Subscription andDistribution Commissions-0-

Operating Revenues
Commissions

2020

2021

YoY

325+733.3%

338

369

+9.2%

576

821

+42.5%Net Gain on Trading

414

374

-9.7%

744

593

-20.3%

Financial Revenues

4,984

6,222

+24.8%

5,531

5,528

-0.1%

Other Commissions

Financial Expenses

749

569

-24.0%

1,5781,060-32.8%

Net Operating Revenues *2

13,44014,747+9.7%

7,915

8,623+8.9%

SG&A Expenses

7,570

8,123+7.3%

7,095

6,158

-13.2%

Operating Income *2

5,869

6,624+12.9%

819

2,464

+200.9%Ordinary Income

5,912

6,647

+12.4%

831

2,415+190.6%

Net Income Attributable toOwners of Parent

5,488

6,397+16.6%

252

1,748

+593.7%

Assets in Custody(JPY 100 mn) *3

24,842

29,535+18.9%

23,23527,051+16.4%

128136+6.4%

119133+12.1%

Number of Accounts (10thousand accounts) *3(Source: Prepared by JCR based on financial materials of above companies)

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*1: As Rakuten Securities settles accounts in December, figures in the table are the cumulative figures of the 6 monthperiod from April to September in 2020 and 2021.
*2: As Monex Group adopts IFRS, figures in the table are reclassified figures based on JGAAP. Its “total operating revenue
after deducting financial expenses” should be read as Net Operating Revenues and “amount equivalent to operatingincome” should be read as Operating Income.
*3: Assets in Custody as of the end of September are used for all companies. The Number of Accounts as of the end ofJune is used for Rakuten Securities and that of the end of September is used for other companies. The Number ofAccounts for Monex Group is the number for Japan segment only.

<Reference>Issuer: SBI SECURITIES Co., Ltd.
Long-term Issuer Rating: A-Outlook: Stable

Issuer: Monex Group, Inc.
Long-term Issuer Rating: BBB+

Outlook: Stable

Issuer: au Kabucom Securities Co., Ltd.
Long-term Issuer Rating: A+

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