Financial Presentation
for FY2016
Japan Securities Finance Co.,Ltd

This is the English translation of the document originally written in Japanese for non-Japanese convenience.
Although Japan Securities Finance intends to faithfully translate the Japanese-written documents into English
version, the accuracy and correctness of translation are not guaranteed, so you are kindly encouraged to refer tothe original Japanese version of the document.

AgendaFinancial
Summery

Management
Matters

 Financial Summery for Mar 2017

P4

 Financial Summary for Mar 2017(JSF parent)

P5

 Financial Highlights for FY2016

P6〜P8

 Financial Results of JSF Trust Bank

P9

 Estimated Figures for FY2017

P10

 Return to Shareholders

P12

 Dividend and Share Buyback Program for FY2017

P13

 Dividend and Share Buyback Program (historical)

P14

 Review of the previous Mid-term Management Plan

P15〜P16

 Overview of the 5th Mid-term Management Plan

P17

 The 5 th MMP ~Strategies and Major measures~

P18◆ Appendix (P19〜P40)











Financial Result (Historical data)
Breakdown of Operating Revenues by business(Historical data)
Breakdown of Operating Revenues by business(Quarterly)
Analysis of YoY Change in Operating Revenue bybusiness (Quarterly, Full Year)
Outstanding Loan Balance
Margin Transactions & Loans for Margin transactions
Structure of Margin Transaction & Loans for Margin
Transactions

Japan Securities Finance Co.,Ltd













Revenue structure of Loans for margin transactions
Margin Loan Rates
Loan Rate of Loans for Margin Transactions
Features of Balance Sheet (Consolidated)
Securities Holdings
JSF Trust Bank (Loan Balance)
The 5th mid-term Management Plan
Business Strategies and Reinforcing Management System
for the 5th MMPBusiness Strategies of JSF Trust Bank
Rating Information

2

Financial Summary for Mar 2017
Consolidated

Parent（¥ mil）

Mar-17
Operating
Revenues

YoY.⊿

JSF

(%⊿)

Nihon Building

YoY.⊿

YoY.⊿

YoY.⊿

¥ 23,066

1,031(+4.7%)

19,418

1,620

ExceptPremium Charges

16,522362(+2.2%)

12,874951

Operating Expenses

11,892355(+3.1%)

10,5401,151

ExceptPremium Charges

5,358

▲314

(▲5.5%)

4,006

481

General &Administrative Expenses

8,371

432

(+5.4%)

7,009

287

Operating Income

2,802

243

(+9.5%)

261(+7.8%)(Operating Income Ratio)(12.1%)

Recurring Income

3,611(Recurring Income Ratio)(15.7%)

Gain or Loss inEquity-Method

92

38(+70.3%)Extraordinary
Profit or Loss

▲52

▲52

―

Net Income

3,078(Net Income Ratio)(13.3%)

432(+16.3%)

Japan Securities Finance Co.,LtdJSF Trust Bank

1,868
(9.6%)

2,636(13.6%)▲120
2,332(12.0%)

181

128

▲120

360

2,799

▲677

1,258

58

1,356

▲827

22

▲1

1,022

188

730

4

420
(15.0%)

426(15.2%)―
351(12.6%)

▲37

▲43

―

▲99

505
(40.1%)

589(46.9%)

63
431(34.3%)

56

72

114

115

3

Financial Summary for Mar 2017 (JSF parent)Highlights

Japan Securities Finance（parent）（¥ mill）

Operating Revenues

Mar−17●Operating Revenues

(%⊿)

̶

19,4181,620(+9.1%)

10,721142(+1.3%)

907▲846(△48.3%)

Securities Lending
Business

4,464

2,218

(+98.8%)Others3,325

106(+3.3%)

Ex. Premium Charges

12,874951(+8.0%)

10,5401,151(+12.3%)

4,006

481

(+13.7%)

General & Administrative
Expenses

7,009

287

(+4.3%)

Operating Income

1,868

181

(+10.8%)̶

128(+5.1%)

̶

▲120

―

360

(+18.3%)

Margin Loan Business

¥

YoY.⊿

Bond Financing andGeneral Loans Business

Operating Expenses
Ex. Premium Charges(Operating Income Ratio)

Recurring Income(Recurring Income Ratio)(9.6%)

2,636(13.6%)

Extraordinary
Profit and Loss▲120

Net Income

2,332(Net Income Ratio)(12.0%)

Japan Securities Finance Co.,Ltd̶̶̶Margin Loan Business resulted in increase.
Stock Loan Balance showed recovery after
last July , in spite of a decline in Margin Loan
Balance.
※For details, see 「Financial Highlights for
FY2017①」(P6)
Bond Financing and General Loans Businessdeclined due to large decrease in balance ofloan to securities companies.
Securities Lending Business resulted in large
increase in revenue driven by fees on Bond
Lending. Additionally General Stock Lending
turned increase.
The revenue increased contributing fromdiversification of investment portfolio.
(“Others”).
※For details, see 「Financial Highlights for
FY2017②」(P8)●Operating Expenses
̶

Funding costs decreased reflecting lower
market rate.
Fees on borrowing securities with respect to
LMT and Bond borrowing and lendingtransactions increased.
Costs on adjustment of investment portfolio
increased.

●General & Administrative Expenses
̶Retirement benefit costs increased.

●Extraordinary Profit and Loss̶

Recorded disposal loss on old system, etc.

4Financial Highlights for FY2016 ①
1

Margin Loan Balance for FY2016

 【Full year】 Though Stock Loan Balance showed a clear recovery trend, Margin
Loan Balance remained low.
FY2015（\ bn、%）

1Q

2Q

1H

FY2016

3Q

4Q

full year

1Q

2Q

1H

3Q

4Q

4Q
YoY

full year

full year
YoY

Margin Loan

425

459

442

386

334

401

283

243

263

247

287

265

▲46

▲135

Margin Loan Rate

0.64

0.64

-

0.64

0.60

-

0.60

0.60

-

0.60

0.60

-

-

-

Stock Loan

287

223

255

209

188

227

224

230

227

345

366

291

177

63

Margin Loan（FY2015）
Margin Loan Rate（FY2015）

¥ tri
0.6

Margin Loan（FY2016）
Margin Loan Rate（FY2016）

Full year Margin Loan
FY16：¥265bn
FY15：¥401bn

Stock Loan（FY2015）
Stock Loan Rate (FY2015)

¥ tri
1.5%

0.6

Stock Loan（FY2016）
Stock Loan Rate (FY2016)

Full year Stock Loan
FY16：¥293bn
FY15：¥227n

0.64%

1.5%

0.40%

0.4

1.0%

0.4

1.0%

0.2

0.5%

0.2

0.5%

1Q Margin Loan
FY16：¥283bn
FY15：¥425bn

2Q Margin Loan
FY16：¥243bn
FY15：¥459bn

3Q Margin Loan
FY16：¥247bn
FY15：¥386bn

4Q Margin Loan
FY16：¥287bn
FY15：¥366bn

0.0

0.0%
Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

0.60%

Japan Securities Finance Co.,Ltd

Jan

Feb

Mar

0.0

1Q Stock Loan
FY16：¥224bn
FY15：¥287bn

2Q Stock Loan
FY16：¥230bn
FY15：¥223bn

3Q Stock Loan
FY16：¥345bn
FY15：¥209bn

4Q Stock Loan
FY16：¥366bn
FY15：¥188bn

Apr

Jul

Oct

Jan

May

Jun

Aug

Sep

Nov

Dec

Feb

0.0%

Mar

0.40%

5

Financial Highlights for FY2016 ①−２
Margin Loan Business was almost flat as Stock Loan balance
growth was offset by decline in Margin Loan Balance.
【Operating Revenues Transition】
Full year(¥ mil）¥ mil

Margin Loan
Business(5,874)(966)

10,721(＋1.3%)

4,177(△11.2%)

7,771(6,543)(1,227)

2,720

1,694

575

887

Full Year

Full Year

FY2015YTD Point(YoY)（ex premium
charges）

6,840

YTD
Revenue

FY2016

Japan Securities Finance Co.,Ltd

Fees onLending
Securities

7,771(＋13.6%)

6,543

Premium
Charges(＋11.4%)

LendingFees(＋27.0%)Intereston
LoansInterest on
collateralmoney ofsecurities
borrowed

1,227

1,694

(△37.7%)

 Operating revenues ofthis business, except
Premium Charges,
declined.
 Fees on Lending
Securities resulted inincrease, because Stock
Loan balance remained
at lower level of thesame period of theprevious year andpremium charges on
over-lent issues declined.
 Interest on Loansdecreased, because
Margin Loan Balance still
remained sluggish.

887(＋54.3%)6

Financial Highlights for FY2016 ②
Diversification of investment portfolio
States of investment portfolio

FY2015

Holdings of JGBs has been decreased

Others 0.9%

Foreign

Equity 1.2%

Bonds 5.9%
Domestic

EquityBonds 92.0%

Domestic Bonds
Foreign Bonds
Others

Revenue from securities investment increased

Others

FY2016

2.7%■ Revenue from Securities Investment (JSF)
FY2016

YoY

Domestic Bonds¥ 1,830 mil△¥ 581 mil

Foreign Bonds¥ 983 mil＋¥ 283 mil

EquityOthers※¥ 491 mil＋¥ 491 mil

Domestic Bonds

Total¥ 3,305 mil＋¥ 194 mil

EquityForeign

1.8%

Bonds
6.8%

Domestic

Bonds 88.7%

Foreign Bonds
OthersJapan Securities Finance Co.,Ltd※ Investment trust, etc.

7

Financial Summary of JSF Trust Bank Trust charges remained stable, contributing from strengthening custodian type trust service.
Highlights

 Interest on Loans increased somewhat, because loan balance increased. Interest on investment
securities also increased due to purchase of government guaranteed bond.
 Gains on sales of bonds decreased. Costs of unwinding IRS also decreased, too.
 Recurring Income and Net Income decreased compared with the last year.

JSF Trust Bank（¥ mil）

Recurring Revenue

FY2016¥【Point of Trust Charge】

YoY
(%)

2,805

▲744

(△20.9%)Trust charges

707

61

(+9.4%)

Reversal of ADRー▲55(△100.0)

Recurring Expenses

2,378

▲700

(△22.7%)

Provision of ADR*

92

92(+100.0%)▲43(△9.2%)▲99(△22.0%)Recurring Income(Recurring Income Ratio)

Net Income(Net Income Ratio)426(17.7%)

351(15.5%)

Trust charges, though growthdeclined, posted record level
contributing from strengthening
custodian type trust service(trusts for the separate
management of money andsecurities, ABL trust, etc).

Full Year*ADR: Allowance for Doubtful Receivables

Japan Securities Finance Co.,Ltd8

Estimated Figures for FY2017
Precondition Balance of Margin Loans
FY2017 Precondition
Over-lentOver-lentMargin Loan Stock Loan
¥140bn¥140bnMatching¥160bnMargin Loan
¥300bnStock Loan
¥300bn（Reference）
FY2016 Results
Over-lentOver-lent
Stock Loan
Margin Loan
¥147bn¥122bnMatching¥143bnMargin Loan Stock Loan
¥291bn¥265bnJapan Securities Finance Co.,Ltd（¥ mil）

FY2016
Results

FY2017
Estimated
FiguresYoY.⊿⊿ fromprev. EF

Consolidated
Operating Income

2,802

2,600

▲202

ー

Recurring Income

3,611

3,300

▲311

ー

Net Income

3,078

2,600

▲478

ー

Operating
Income

1,868

1,800

▲68

ー

Recurring
Income

2,636

2,500

▲136

ー

Net
Income

2,332

2,100

▲232

ー

Recurring
Income

426

250

▲176

ー

Recurring
Income

351

220

▲131

ー

Operating
Income

505

540

＋34

ー

Recurring
Income

589

625

＋35

ー

Net
Income

431

410

▲21

ー

JSF

JSF
Trust andBanking

Nihon
Building

Preconditions of Loans for Margin Transactions●Loan Rate ：0.60％,●Interest on Collateral Money ：0%,●Lending Fee ：0.40％

9Return to stockholders
1

2

Basic PolicyRetain solid equity capital to secure the financial health and management
stability that society demands of the company as the infrastructure of securities
market, and to ensure profits are returned to shareholders bycomprehensively considering revenues environment or investment plans. etc.
(medium-term management plan, management policy)

Based upon this policy, we will strive to place more importance onshareholder return.

Shareholder Return Policy（released on 11 May 2015）(１) Dividend Payment PolicyOur policy is that the consolidated payout ratio, as a standard that reflects ourbusiness performance, shall not fall below the 60% level and that we shall return
profits to shareholders while taking into account the consolidated dividend on equity ratio(DOE = ratio of the dividend amount to shareholder equity).
⇒ We strive to maintain stability in dividends payment unaffected by temporary
fluctuation in business result.

(２) Share Buyback PolicyWith a view to offering even more rewarding returns to shareholders, we will buy backshares as needed in future while considering the companyʼs financial situation, stock
price levels, and so forth.

Japan Securities Finance Co.,Ltd

10

Dividend and Share Buyback Program for FY2017
FY2016(Forecast, Results)

FY2017（Forecast, Framework）¥ 18（YoY +¥2）

¥ 16（YoY ▲¥2）

Interim¥ 8（YoY ±0）¥ 8（YoY ±0）

Year-end¥ 10（YoY +¥2）

¥ 8（YoY ▲¥2）

Consolidated
DPR

56.4％

59.2％

No. of shares
to be acquired

0.63mil shs

Up to 1.5mil shs

0.6%

1.5%

Total Value tobe acquired¥ 0.3bn

Up to ¥ 1bn

PeriodFrom 13 May 2016 to
22 Mar 2017

From 12 May 2017 to
16 Mar 2018

66.3%

97.7%

AnnualDividend

Share
Buyback

Ratio to total
shares issued

Total Return Ratio

Japan Securities Finance Co.,Ltd

11

Dividend and Share Buyback Program (historical)
FY
2011

FY
2012

FY
2013

FY
2014

FY
2015

FY
2016
¥18

FY
2017

Forecast/
Framework

Annual Dividend per share

¥14

¥14

¥14

¥15

¥16

Interim ¥8Year-end ¥10¥16

Share Buyback

(shs)

ー

ー

ー

7.46mil

3mil

0.63mil

1.5mil（amount）

ー

ー

ー¥4.6bn¥1.9bn¥0.3bn¥1.0bn¥0.7bn¥1.7bn¥6.2bn¥3.5bn¥2.6bn¥3.0bn¥2.6bn

: EPS

¥8.4

¥19.1

¥60.4

¥33.9

¥26.9

¥31.9

¥27.0

: DPR

166.3%

73.3%

23.2%

44.2%

59.5%

56.4%

59.2%

: DOE

1.2%

1.2%

1.2%

1.2%

1.2%

1.2%

1.1%

166.3%

73.3%

23.2%

173.9%

133.1%

66.3%

97.7%

<Consolidated> : Net Income(reference) Total Return Ratio

Japan Securities Finance Co.,Ltd12

Review of the previous Medium-term Management Plan
• Expand the Loans for Margin Transactions Business as key Infrastructure
for the Securities Market

Business Strategy I（¥100mil, numbers）
2,322

2,300
4,906

 Increasing the number of loanable issues andenhancing information outreach activities wentaccording to plan
（information outreach activities）― Seminars held for securities companies― Video distribution on securities companyʼs website― Launched e-mail service for investors― Launched new website about LMT

4,283
2,913

4,014
2,059

2,202

2,654

2,220

1,764

FY20132,274

FY2014Magin Loan Balance(Ave)
No. of loanable issues

FY2015FY2016

Stock Loan Balance(Ave) Stock Loan Balance showed recovery trend. On
the other hand, Margin Loan Balance decreased
affected by stock market trend and BOJʼs policy.

• Respond to the Diversifying needs of Financial Instruments Companies
and Other Customers

Business Strategy II



2,016
1,368

1,434

2,216

2,293

2,241

FY2013

FY2014FY20154,453

286

FY2016



Revenues on General Loans picked up
contributing from our flexible responses to loan
conditions or schemes. But after negativeinterest rate policy of BOJ, revenue dropped.
Revenues on Securities Lending remained
steady even after negative interest rate policy of
BOJ.

Sec Lending （Revenue：¥ mil）
Loan Balance （Ave：¥100 mil）

Japan Securities Finance Co.,Ltd13

Review of the previous Medium-term Management Plan
Business Strategy III• Strengthening System Infrastructure● Estimated system cost（¥ mil）


FY2014FY2015FY2016

266

221

471

1,761

1,772

1,591

Depreciation cost

Business Strategy IV

FY2017Developed the new system (total ¥4.5bn) for
enhancing convenience for business partners
and supporting all our business strategies.
（enhancing convenience）― Connecting via the internet supports the BCP
system of our clients.
― Expanding data supply function.
― Our clients can acquire historical data.

1,136

1,041



New system will bring cost savings over the
medium-to-long term.

Maintenance Cost

• Improving the efficiency of fund management● Transition of income from securities investment
3,305

¥ mil



3,111
2,979

Income from diversification of investment
portfolio increased.

2,838

FY2013

FY2014FY2015

Japan Securities Finance Co.,Ltd

FY201614

Overview of the 5th Mid-term Management Plan
（FY2017〜FY2019）2020

Concept of 5 th MMP(FY2017-FY2019)

Our initiative underthe 4 th MMP(FY2014-FY2016)
 Since JSF merged with OSF, We
had moved forward with efforts
to integrate our activities,
organization, and system and tocreate an efficient, dynamic
structure.

 While bearing in mind the possibility that thecurrent ultra-low interest rates may continue, ourGroup will work to strengthen our existing businessby leveraging the management capabilities andcreditworthiness that we have acquired over time infinance and securities business management aswell as our market neutrality; at the same time,
proactively addressing new domestic and overseas
transaction needs.

New financial transaction needs are emerging.

Majorchangesin theenvironment•Along with technical improvements(AI), the globalization anddevelopment of finance haveincreased speed.
•International financial regulations andsecurities clearing system haveundergone further reviews aimed atstabilizing financial market.

Japan Securities Finance Co.,Ltd

Business
Strategies

Reinforcing
Management
Systems

Enhance thefundamental
stability ofour businessand maintainthe trust of
markets andinvestors•Enhancing the Margin Loan Business as part of
securities market infrastructure•Flexibly addressing the needs of domestic and foreign
financial instrument companies•Developing new business•Diversified management of securities as an efficient use
of capital•Enhancing collaboration with Group companies•Strengthening business management structure•Developing an employee-friendly work environment andmaking the company more dynamic

15

The 5th Mid-term Management Plan 〜Strategies and Major measures〜
Strategies
Enhancing the Margin Loan Business as
part of securities market infrastructure

Flexibly addressing the needs ofdomestic and foreign financial
instrument companies
Developing new business
Diversified management of securities as
an efficient use of capital

Major measures Increasing the number of loanable issues andenhance procurement capability.
 Participating Study Group concerning reducing thesettlement interval (T+2) in the stock market.
 Promoting direct transactions with non-resident
and transactions with foreign securities (securities
loan transaction, accepting as collateral).
 Supporting the establishment of Securities Finance
Company in Indonesia.
 Securing stable revenues.

Enhancing collaboration with groupcompanies Bolstering coordination in terms of sales and IT
system.

Strengthening business management
structure Reinforcement of compliance system
 Improvement of our risk management in response
to diversification of risks.
 Promoting cyber security management system

Developing an employee-friendly work
environment and making the company
more dynamic

 Increasing the productivity of individual personnel
and make the company more dynamic

Japan Securities Finance Co.,Ltd

16

Appendix

Financial Result (Historical data)¥ mil
FY2011FY2012FY2013

FY2014FY2015FY2016

Operating Revenues

20,22917,675

19,566

20,30022,03523,066

Ex Premium charges

17,082

14,71816,19515,856

16,16016,522

Operating Expenses

9,634

8,193

8,747

9,450

11,537

11,892

General & Administrative
Expenses

7,554

7,694

8,249

7,824

7,939

8,371

Operating Income

3,039

1,787

2,568

3,025

2,558

2,802

Gain or Loss inEquity-Method

▲868

486

179

▲144

54

92

Recurring Income

2,387

2,557

3,119

4,230

3,349

3,611

Extraordinary
Profit or Loss

▲452

13

3,602

54

−

▲52

Net Income

779

1,777

6,211

3,520

2,645

3,078

18

Breakdown of Operating Revenues by business(Historical data)\ mil

Securities Finance BussinessMargin Loan Business
Interest on Loans
Interest on collateral money of securities borrowed
Fees on Lending Securities
Premium Charges
Lending Fees
Bond Financing and General Loans Business
Bond financing & General Loans
Loans for Negotiable Margin Transactions
Securities Lending Business
General Stock Lending
Bond Lending
OthersBond Investment (Parent only)

Trust Business
Interest on Loans
Trust Charges
Bond Investment

Real Estate Management Business
Operating Revenues(excluded Premium Charges)

Japan Securities Finance Co.,Ltd

Mar-11Mar-12Mar-13Mar-14Mar-15Mar-16

Mar-17

17,55815,186

14,093

16,363

17,162

17,776

19,4078,922(39.0%)
2,809

6,756
(33.4%)
1,783

6,625
(37.5%)
1,760

9,240
(47.2%)
4,012

9,667
(47.6%)
3,111

10,579(48.0%)
2,720

10,721(46.5%)
1,694

826

639

652

436

611

575

887

4,807
3,811
996
1,047
(4.6%)
659
200
1,754
(7.7%)
331
1,422
5,834
(25.5%)
5,754

3,957
3,147
809
827
(4.1%)
492
189
1,701
(8.4%)
219
1,482
5,901
(29.2%)
5,824

3,746
2,957
789
810
(4.6%)
440
175
1,862
(10.5%)
289
1,573
4,794
(27.1%)
4,719

4,132
3,371
761
1,959
(10.0%)
1,149
323
2,217
(11.3%)
425
1,791
2,946
(15.1%)
2,838

5,389
4,443
945
2,107
(10.4%)
1,279
236
2,294
(11.3%)
784
1,509
3,094
(15.2%)
2,979

6,840
5,874
966
1,753
(7.9%)
1,070
128
2,241
(10.2%)
907
1,334
3,201
(14.5%)
3,111

7,771
6,543
1,227
907
(3.9%)
691
77
4,453(19.3%)
941
3,512
3,325
(14.4%)
3,305(19.1%)
1,079
308
2,657

(20.9%)
741
300
3,134

(15.6%)
590
338
1,808

(11.9%)
317
485
1,494

(11.2%)
186
545
1,507

(15.7%)
144
627
2,645

(12.1%)
147
668
1,899

(4.1%)(4.0%)(4.7%)(4.5%)(4.3%)(3.7%)(3.8%)

22,84819,037

20,22917,082

17,675
14,71819,566
16,19520,30015,85622,035
16,16023,066
16,522

4,360

930

4,224

818

2,762

819

2,322

880

2,269

868

3,451

807

2,792

865

19

Breakdown of Operating Revenues by business(Quarterly)

Margin Loan Business resulted in some increase, driven byincrease in Stock Loan Balance.
【Operating Revenues Transition】
Quarterly(mil）Full Year

¥ mil

6,840

(5,874)
(966)

1,409
(1,186)
(222)
654

1,727
(1,528)
(199)

116

554
107

3Q

4Q

FY2015

1,398(1,162)
(236)

448
142

1Q

2,453

2,243

(2,085)(1,865)

391
162

(367)
401
297

(377)
452

2Q

3Q

4Q

1,676
(1,429)(246)

284

FY2016

Japan Securities Finance Co.,Ltd

2,720
575

7,771

YTD
Revenue

(YoY)

(YoY)

3,114

10,721Margin Loan
Business(＋23.0%)（ex premium
charges）(＋24.5%)

Fees onLending
Securities

1,249
2,243

(+29.9%)

1,865

Premium
Charges(＋22.1%)(1,227)

LendingFees(+89.8%)1,694Interest
on
Loans(6,543)887

Full Year Full Year
FY2015

4Q
Revenue

FY2016

Interest on
collateralmoney ofsecurities
borrowed377

452(△18.5%)284(+165.5%)

YTD
Point

(＋1.3%)

4,177(△11.2%)

 Fees on Lending
Securities resulted(＋13.6%)in an increase,driven by higher
Stock Loan
6,543
balance and(＋11.4%)premium charges
1,227
on over-lent(＋27.0%)issues.
 Interest on Loansdecreased,
1,694
because Margin(△37.7%)
Loan Balanceremained sluggish.
 Operating
revenues of this887
business, except(＋54.3%)
Premium Charges,
declined.

7,771

20

Breakdown of Operating Revenues by business(Quarterly)

Bond Financing and General Loans Business declined mainly due tolarge decrease in balance of loan to Securities Companies.
【Operating Revenues Transition】
Quarterly

Full Year¥ mil(¥ mil）

743

Loan toIndividual
Investors
or
Firms

(128)

1,009

205
(26)

229
3Q

167
(28)

166
4Q

FY2015

157

156

79

65

(19)

1Q

(19)

151
(18)

2Q

3Q

68

(77)

148

294

(19)

81
4Q

FY2016612

Full Year Full Year
FY2015

Loan toSecurities
Companies
Loans for
Negotiable
MarginTransaction

4Q
Revenue

YTD
Revenue

(YoY)

(YoY)

148

(△11.4%)81(△51.2%)19(△29.6%)

YTD
Point

612 Though(△17.6%)294(△70.8%)77△39.8%)

balance of
Com-STOCK
Loan wasalmost flat, therevenueresulted inlarge decrease
due to large
decrease inbalance of loan
to Securities
Companies.

FY2016＜ Loan Lineup ＞
 Loan to Securities Companies ・・・ General Loans, Bond Financing, Loans for Negotiable margin Transaction,
Stabilizing fund loan, Equity Repo(Cash-secured Stock Lending Transaction)
 Loan to Individual Investors or Firms ・・・ Com-STOCK Loan

Japan Securities Finance Co.,Ltd21

Breakdown of Operating Revenues by business(Quarterly)

Securities Lending Business：Fees in Bond Lending saw large increase.
【Operating Revenues Transition】
Quarterly

Full Year(¥ mil）¥ mil

4Q
Revenue

YTD
Revenue

(YoY)

(YoY)

941

GeneralStock
Lending
907
250

237

207
276

186
406

782

688

3Q

4Q

1Q

2Q

FY2015

263
942

190

(＋2.4%)

3,512

190
1,098

3Q

4Q

FY2016

1,334

Bond
Lending

Full Year Full Year
FY2015FY2016

1,098(+170.4%)

YTD
Point

Revenue increased
somewhat. Because
in the 2nd Half
941 borrowing demands(＋3.8%)of stock increased,
especially aimed at
fail-cover.
Revenue rose,
boosted by large
increase of bond
3,512 lending fee under(+163.2%) tighter supply anddemand conditionsof JGBs in the repo
market.

※ Genera Stock Lending is ・・・
Lending stock to securities companies depending on their various demands (ex. Fail-cover, arbitrage), except
on demand to settle Margin Transaction
 Main business partner ‒ 【Lenders】 Institutional investors, etc 【Borrowers】 Securities CompaniesJapan Securities Finance Co.,Ltd22

Breakdown of Operating Revenues by business(Quarterly)

JSF Trust Bank : Trust charges continued increasing trend.
【Trust charges Transition】
Quarterly

Full Year(¥ mil）

百万円

627

158

153

156

164

167

178

3Q

4Q

1Q

2Q

3Q

4Q

FY2015FY2016【Trust Lineup】

YTD
Revenue

(YoY)

(YoY)

668

Trust
Charges
Full Year Full Year
FY2015

4Q
Revenue

FY2016

178(+16.0%)

YTD
Point

Trust charges,
though growthdeclined, posted
record level
contributing fromstrengthening
668 custodian type(+6.5%) trust service(trusts for the
separate
management ofmoney andsecurities, ABL
trust, etc).

Trusts for the separate managementof money and securities

Trust for protecting deposits which securities companies received from
customers

Trusts for currency future trading

Trust for protecting guarantee deposits which FX business operators
received from customers

Asset Backed Loan (ABL) Trust

For setting up ABL, which is investment product for institutional
investors, JSFTB provides functions as SPC.

Japan Securities Finance Co.,Ltd23

Analysis of YoY Change in Operating Revenue by business(Quarterly, Full Year)【Quarterly】 YoY ＋ ¥ 147 mil（＋2.5%）【Full Year】 YoY ＋ ¥ 1,031 mil（＋4.7%）

¥ mil

¥ mil

+2,212

+142

＋123

+58
△658

△846

23,06622,035+696+582

FY2015
4Q

△80

△104

5,886
MarginLoan

BondFiancing

+15
△963
6,033

Sec
Lending

OthersSecurities Finance Business

ー

ー

Trust
Bank

Real
EstateFY20164Q

FY2015Full Year

MarginLoan

BondFiancing

Sec
Lending

OthersSecurities Finance Business

ー

ー

Trust
Bank

Real
EstateFY2016
Full Year〜 Summary of the points for quarterly 〜〜 Summary of the points for Full Year 〜 Margin Loan Business : Revenue increased driven by
an increase of Stock Loan Balance.
 Bond Financing and General Loan Business : Loanbalance decreased.
 Securities Lending Business : Fees on Bond Lending
increased. General Stock Lending Business was alsosteady.
 Trust Bank : Gains on sales of bonds dropped.

 Margin Loan Business : Resulted in increase driven by
an increase in Stock Loan Balance.
 Bond Financing and General Loan Business : Loanbalance decreased.
 Securities Lending Business : Resulted in large
increase in revenue boosted by fees on Bond Lending.
General Stock Lending Business was also steady Trust Bank : Gains on sales of bonds dropped.

Japan Securities Finance Co.,Ltd24

Outstanding Loan Balance(Year average and year-end balance)\ mil

Margin Loansavg.
term-end

avg.
Bond Financing &term-end
General Loans
avg.
Loans for negotiablemargin transactions term-end

Trust Bank Loansavg.
term-end
avg.

Othersterm-end

Total

Stock Loansavg.
term-end
avg.
term-end

Japan Securities Finance Co.,Ltd

FY2011FY2012FY2013

FY2014FY2015FY2016

218,059
241,035
50,89396,48820,33025,727
141,310
98,26012,53018,000422,793453,784

214,164
502,32255,865122,01118,472
34,380101,094
78,641
13,21329,500384,338
732,475

490,635
601,206
157,232
201,076
36,223
48,10377,612
63,04323,09232,500748,572
897,825

428,329541,052
223,484
254,717
29,16830,93958,677
54,831
32,50032,500742,991
883,101

401,400
324,113
162,347
95,046
15,512
11,49954,561
136,089
28,71812,500647,027
567,748

265,458
368,508
44,84040,872
9,568
11,334
149,956
176,3717,008
2,000
467,262
587,752

184,698
259,058

183,013
216,206

176,476
198,781

222,031316,544

227,422258,656

291,392
393,698

25

Margin Transactions & Loans for Margin Transactions
3.0

¥ tri

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

Margin Buying Balance
Margin Loan Balance
Ratio

2.5
2.0
1.5
1.0
0.5
0.0
08

09

10

11

12

13

14

15

16

1.0 ￥tri

100%
Margin Selling Balance
Stock Loan Balance
Ratio

0.9
0.8

90%
80%

0.7

70%

0.6

60%

0.5

50%

0.4

40%

0.3

30%

0.2

20%

0.1

10%

0.0

0%
08

09

10

Japan Securities Finance Co.,Ltd

11

12

13

14

15

16

26

Structure of Margin Transaction & Loans for Margin Transaction
Loans for Margin
Transaction

Margin buying order

Margin Loan application

Margin selling order

Stock Loan application

Stock

Institutional
Investors

Fund for Purchasing
Stock to sell

Fund (Margin loan)
Stock (Stock loan)

JSF

Securities
Companies

BrokerInvestor

MarginTransaction

Funds

Call Market

Purchased Stock
Sale ProceedBank of Japan

Stock Exchange
Clearing facilities
27

Revenue structure of Loans for margin transactions
Income statement

Over-lentMargin Loans

Over-lent(E)=(A)-(D)Stock Loans ※(C)matching(D)=(B)-(C)matching(D)=(B)-(C)Margin Loans(A)

Stock Loans(B)【Operating revenues】
Interest on loans＝(A)×0.60%
Fee on lending securities (lending fees)＝(B)×0.40％
Interest on collateral money of
securities borrowed＝(C)×0.60％【Operating expenses】
Interest on borrowing＝(E)×fundingrateBesides the above, Premium Charges are posted in Operating Revenues (Fees on Lending
Securities) in a part of Over-lent Stock Loan. But the same amount are posted in Operating
Expenses (Fees of Borrowing Charges), so the amount of Premium Charges does not affect our
profit.
【revenue】 Fees on lending securities (premium charges) = 【expense】 Fees on borrowing
securities (premium charges) = (C)ʻ×rate of Premium charges
Japan Securities Finance Co.,Ltd

28

Margin Loan Rates

LendingFee
0.40%

Securities
Company

Loan Rate
0.60%

Stock Loan

JSF

Securities
Company

Margin Loan

BOJ Policy Interest RateJul 2006 Uncollateralized O/N Call Rate:0.25％



Feb 2007 Uncollateralized O/N Call Rate:0.50％



Oct 2008 Uncollateralized O/N Call Rate:0.30％（▲0.20%）

Dec 2008 Uncollateralized O/N Call Rate:0.10％（▲0.20%）



Oct 2010 Uncollateralized O/N Call Rate:0〜0.10％（▲0.10~0%）
Apr 2013 Switched from interest rate to monetary baseJan 2016 Embraced negative interest rates
Sep 2016 Introduced QQE with Yield Curve Control

Interest on Collateral Money
0%

1.2%

Loan Rate
Lending Fee
Interest Rate on Collateral Money of Stock Loan
BOJ Policy Rate

Margin Loan Rate



1.0%




0.8%



0.6%




0.4%
Apr.2013〜
Monetary base start

0.2%

0.0%

Japan Securities Finance Co.,Ltd

27/Jul/2006 0.74％（+0.14％）
22/Sep/2006 0.86％（+0.12％）
15/Mar/2007 1.02％（+0.16％）
05/Apr/2007 1.11％（+0.09％）
29/Jan/2009 0.97％（▲0.14％）
22/Nov/2010 0.77％（▲0.20％）
06/Aug/2014 0.64％（▲0.13％）
09/Mar/2016 0.60％（▲0.04％）

 Margin Loan Rates are decided by reflecting thechange of market rates and BOJʼs Policy Interest
Rate.

29

Loan Rate of Loans for Margin Transactions
10.0%
9.0%

8.75%

Loan Rate
Interest Rate on Collateral Money of Stock Loan

8.0%

Lending Fee
7.0%

Profit Margin

6.0%
5.0%

5.00%
Sep-93

4.0%

Mar-16

3.75%

Nov-10Aug-14

3.0%
Jan-092.0%
May-02

1.00%

1.0%
0.0%
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16Japan Securities Finance Co.,Ltd

30

Features of Balance Sheet （Consolidated)\mil
Mar-17
Total assets
Current assets
Cash & Deposit

Change from
Mar-16

4,645,051

1,395,881

3,942,440

1,606,077

1,076,761
238,498

Short-term loans
receivable

587,752

Collateral money of
securities borrowed

1,930,722

Non-current assets

702,610▲ 210,195

Investments insecurities

690,208▲ 209,958

4,505,339

1,398,200

4,477,440

1,401,987

Call money

626,898▲ 94,001

Short-termborrowings

13,010▲ 185,000

Commercial Paper

185,000

63,0002,492,578

942,925

1,095,054

642,281

27,898▲ 3,787

139,712▲ 2,318

Total liabilities
Current liabilities

Collateral money
received of securities
lent
Borrowed money fromtrust accountNon-current liabilities

Total net assets(1) Fluctuation of Loan Balance

810,383 Deposit at BOJ

Short-term
investments▲ 193,067

Loan balance moves everyday
because margin loan is over-nightloan

JGB and other bonds (Maturity: 1year
or less)(2) Holding JGBs for flexible cash
funding

Margin loan / Loans for negotiable

Holding certain amount of JGBs tofund money flexibly in short-termmoney market

20,003 margin transactions / General loans /Trust bank loans
Collateral money of bond borrowing
905,105
Collateral money of stock borrowing

Japan Securities Finance Co.,Ltd

Features of Assets

JGB and other bonds (Maturity: morethan 1year), Stock

Bank borrowing
Market operation by BOJ
Collateral money of bond lending
Collateral money of stock lending

Features of Liabilities(1) Fluctuation of money funding
amountNeed to response flexibly tofluctuating cash demands, becauseof the fluctuation of margin loanbalance(2) Dependent on market
Cash funding structure is notstable and depends on money
market(3) Funding with low rate
Required to fund in low cost to
supply money for securities market
stably and flexibly

31Securities Holdings\ mil
Mar-16

Mar-15
Securities Holdings

Unrealized
profits and loses

B/S Amount

B/S Amountnotes

Mar-17

Unrealized
profits and loses

B/S Amount

Unrealized
profits and loses

Equity11,951

7,356

12,0796,550

11,824

6,516

Bond

1,516,245

13,651

1,264,085

32,820893,715

20,9001,383,045

12,442

1,003,869

32,628655,082

24,524

Corporate Bond

98,932▲19

204,474

217

197,558

Others34,267

1,228

55,741▲26

41,073

1,750

813

2,615

675

5,791

880

Total

1,529,947

21,821

1,278,780

40,045911,330

28,297held-to-maturity
bonds

B/S Amount

JGB&Municipal Bond

Other Securities

JGB

Unrealized
profits and loses

40,736

B/S Amount135

Unrealized
profits and loses

41,454B/S Amount

583

1,515

166 Mainly Government Guaranteed Bond
▲3,791 Foreign government bonds

Unrealized
profits and loses

notes

179

※Unrealized proﬁts and losses is not inclueded the eﬀects of hedging with derivatives

Yen Bond Portfolio （JSF Trust Bank）

Yen Bond Portfolio（JSF）
12,00010,000
8,000
6,000
4,000
2,000
010 years 9,424（億円） over
2.69
14/3（¥ 100 mil）
12,00010,000

9,498

8,158

5 years
to9,798
10 years
2.32
14/9

5,560
3.27

4,000

3.23
2.69

（year）
6.0

8,428

8,000
6,000

9,210
2.819,498
1 year to 5 years
2.69
2.41
14/12
15/3

5,018

2.90

0

Mar.16

Sep.16

Mar.17（year）
6.0

10,000

5.0

4.0

8,000

4.0

3.0

6,000

2.0

4,000

2,075

1.0

2,000

1.53

0.0

Sep.15

6.0
5.0
4.0

3.0
2.0
1.0
0.0
3.948,378（年）
Averageremaining
period
3.54
15/12

5.0

3.10

2,000

Mar.15（¥ 100 mil）
12,0003.67
within3.23
1 year
8,158
15/9

0

5,550

3.0

3,680
3,009
1.42

1.28

Mar.16

Sep.160.85

Mar.15

3,225

2.0
1.0

1.11

0.0

Sep.15Mar.17(Note) Average remaining period is calculated excluding Floating JGB, held-to-maturity bonds, bonds for which hedge-accounting is applied

Japan Securities Finance Co.,Ltd

32

JSF Trust Bank（ Loan Balance）● Loan Banance by Industry\mil

Mar-16
Loan
Balance
ManufacturingSep-16ratio

Loan
BalanceMar-17ratio

Loan
Balance

ratio

8,578

6.3%

8,078

6.2%

5,022

2.8%

Fishery

0

0.0%

0

0.0%

0

0.0%

Mining

-

0.0%

-

0.0%

-

0.0%

Construction

0

0.0%

0

0.0%

0

0.0%

Energy & Utilities

0

0.0%

0

0.0%

0

0.0%

Communication

0

0.0%

0

0.0%

0

0.0%

Transportation

5,309

3.9%

5,119

3.9%

3,941

2.2%

800

0.6%

800

0.6%

800

0.5%

0

0.0%

0

0.0%

0

0.0%

Finance & Insurance

3,851

2.8%

3,150

2.4%

5,150

2.9%

Real Estate

3,335

2.4%

2,092

1.6%

1,350

0.8%

Service Industries

1,600

1.2%

800

0.6%

800

0.5%

112,84182.8%

110,869

84.7%

159,52890.3%

Wholesale
RetailGovernments
Total

Japan Securities Finance Co.,Ltd

136,316

130,909

176,59333

The 5th Mid-term Management Plan（FY2017〜FY2019）

Corporate
identityAs an institution specializing in the securities financebusiness, Japan Securities Finance has a mission, while
always maintaining a keen awareness of our public roleContribute to the development of the securities
industry by proactively meeting the diverse needs of
securities and financial circles
Working to boost the long-term interests of securities
market users and participants

Management
PolicyEstablish solid credibility
Maintaining solid equity capital, ensure return of profits
to shareholders
Further solidify the profit base
Further improve the efficiency of organizational andbusiness management

Japan Securities Finance Co.,Ltd

34

The 5th Mid-term Management Plan
〜Business Strategies and Reinforcing Management Systems 〜•Along with technical improvements (AI), the globalization and development of finance have increased
speed.
•International financial regulations and securities clearing system have undergone further reviews
aimed at stabilizing financial market.

Business
Environment〜 Business Strategies 〜
Enhancing the Margin Loan Business as part of
securities market infrastructureIncreasing the number of loanable issues andenhance procurement capability
Pursuing stable management of ML business
Promoting and expand the base of MT & LMT
Expanding the use of loans for negotiablemargin transactions

Developing new business in Japan and foreigncountries
Promoting effective utilization of resources

〜





Expanding general loans to financial
instrument companies
Expanding securities lending business
Expanding loans to individuals

Diversified management of securities as anefficient use of capital

Developing new business

Flexibly addressing the needs of domestic andforeign financial instrument companies



Securing stable revenues
Establishing foreign currency funding methods

Reinforcing Management Systems 〜

Enhancing collaboration with Group companies

Strengthening business management structure

Bolstering coordination in terms of sales and system
Strengthening profit management

Ensuring that compliance is positioned as a prerequisite ofmanagement
Securing the effectiveness of our internal auditing
Upgrading our backup arrangements in the event that a majordisaster occurs.
Making corporate governance betterDeveloping an employee-friendly work environment
and making the company more dynamic

Japan Securities Finance Co.,Ltd

Increasing the productivity of individual personnel and make thecompany more dynamic

35

Business Strategies of JSF Trust BankManagement Policy (Outline)
As a trust bank supporting the business infrastructure of securities companies, etc.,
JSF Trust and Banking Co., Ltd. provides customers with finely-tuned services thatcannot be expected from other banks, including mega banks, and aims at theestablishment of the business model mainly on the following duties.
Make efforts in trust services and plan expansion of it, mainly on products orservice for securities industry
Deals with products and service such as the loan to securities companies andperforms banking functions that are commensurate with its management
capacityView the role of the securities investment as complementing profit
Offer financial services in connection with JSF

Japan Securities Finance Co.,Ltd36

Our Group Companies
Subsidiary
Affiliate（ ) Shareholding Ratio

Japan Securities Finance（100%）
JSF
Trust Bank

（100%）Nihon
Building（20.0%）
Japan Information
Processing

Capital（20.8%）
JSFIT

Shareholding
Ratio

Name

100%

JSF Trust and Banking Co., Ltd.

14,000100%

Nihon Building Co., Ltd.

100

Real estate ownership and leasing
Real estate trading and brokerage

20.0%

Japan Information Processing Service Co., Ltd

2,460

Information processing services
Software development and sales

20.8%

JSF Information Technology Co., Ltd

100

Information processing services
Software development and sales

Japan Securities Finance Co.,Ltd(mill yen)

Business overview
Trust service, Banking service

37

Rating Information

JCR

R&I

As of 31/Mar/2017
Japan
Securities
Finance

JSF TrustBank

Standard &Poor’sRatingOutlookRatingOutlookRatingOutlookLong-term

AA-

StableAA-

StableA

StableShort-term

J-1+

a-1+

（Highest）（Highest）

CP Issue

¥1tri

¥1tri

Long-termA+

Short-term

J-1+

Stable

A+
a-1

A-1
―
Stable――――（Highest）

Japan Securities Finance Co.,Ltd38

NoticeThis document includes statements for business forecast. Thesestatements donʼt guarantee companyʼs future achievement and thatinvolve risk or uncertain factors. Companyʼs future achievement may
be changed drastically up to stock market or financial conditions.

Japan Securities Finance Co.,Ltd

39