Japan Securities Finance Co., Ltd.
FY2018Financial Results Presentation

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜Table of Contents
 １．Overview of Financial Results for FY2018

Ｐ３

 ２．Summary Financial Results for FY2018

Ｐ４ ３．Summary Financial Results for FY2018（JSF parent）

Ｐ５ ４．Financial Highlight（Margin Loan Business）

Ｐ６

 ５．Financial Highlight（Non-Margin Loan Business）

Ｐ７

 ６．Financial Highlight（Securities Investment of JSF parent）

Ｐ８ ７．Summary Financial Results for FY2018（ JSF Trust Bank）

Ｐ９

 ８．Balance Sheet Summary (Consolidated)

Ｐ１０

 ９．Estimated Figures for FY2019

Ｐ１１

 10．Return to Shareholders

Ｐ１２

 11．Dividend and Share Buyback Program for FY2019

Ｐ１３

 12．Dividend and Share Buyback Program（historical）

Ｐ１４

 13．Changing the Corporate Governance Structure

Ｐ１５

 Appendix

Ｐ１7

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜

2１．Overview of Financial Results for FY2018
 Recurring income increased slightly year on year, while net income declined slightly Both Margin Loan balance and Stock Loan balance were below initial estimates, thedecline in earnings was limited.
① Securities Lending Business showed steady growth due to flexible responses to customer needs.
② Revenue from Securities Investment remained at the same level as the previous year in spite of theultra-low interest rate environment.
③ Two subsidiaries also showed solid performance.

（¥ mil）

FY2017
Result

FY2018Result〜 Transition of estimated figures 〜

YoY .⊿

Feb-19

Nov-18

Jul-18May-18Operating
Income

3,881

3,981

＋100

3,800

3,600

3,600

3,700

Recurring
Income

4,685

5,046

＋361

4,700

4,500

4,500

4,500

Net Income

4,225

3,765

▲459

3,400

3,200

3,100

3,100

【Reference】 Margin Loan Balance（¥ bn）
Margin Loan

350

284

▲65

280

310

340

410

Stock Loan

366

261

▲104

250

250

250

250

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜

3２．Summary Financial Results for FY2018
Consolidated（¥ mil）

FY2018Full Year

Parent
JSF

YoY.⊿

(%⊿)

24,321▲2,011(△7.6%)

20,971▲1,518

ExceptPremium Charges

18,603220(＋1.2%)

15,253

713

Operating Expenses

12,284▲1,046(△7.9%)

11,404▲313

ExceptPremium Charges

6,566

1,181

(＋21.9%)

5,686

1,913

General &Administrative Expenses

8,056▲1,065(△11.7%)

6,754

Operating Income

3,981

100

(＋2.6%)

Recurring Income

5,046

361

(＋7.7%)

Gain or Loss inEquity-Method

248

125

(＋101.5%)

Extraordinary
Profit or Loss

▲41

▲172

Net Income

3,765

▲459

Operating
Revenues

JSF Trust Bank

Nihon Building

YoY.⊿

YoY.⊿

YoY.⊿

2,538

▲441

1,275

7

943

▲664

20

▲4

▲1,112

1,004

31

689

14

2,812

▲92

590

192

565

▲2

3,654

29

29

192

673

25

(ー)

▲41

▲172

―

―

―

―

(△10.9%)

2,677

▲762

538

172

445

18

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜

4３．Summary Financial Results for FY2018（JSF parent）
Key Points

Japan Securities Finance（parent）*excluding premium charge
FY2018Full Year●Operating Revenues

Operating Revenues*

15,253713(＋4.9%)

Margin Loan Business*

3,943▲1,360(△25.7%)

 Though Margin Loan Businessstruggled due to sluggish marginloan balance and stock loan balance,
Business other than Margin Loan
showed solid performance.

General Loans
Business *1

1,242

324

(＋35.4%)̶̶Securities Lending
Business *2

6,481

1,443

(+28.7%)

Others3,586

304(＋9.3%)

Operating Expenses*

5,686

1,913

(＋50.7%)

General &Administrative Expenses

6,754▲1,112(△14.1%)

Operating Income

2,812

▲92

(△3.2%)

Recurring Income

3,654

29

(＋0.8%)（¥ mil）

YoY.⊿

(%⊿)

Extraordinary
Profit or Loss

▲41

▲172

（ー）

Net Income

2,677

▲762

(△22.2%)＊1 Loans of funds other than Margin Loan Business＊2 Securities lending other than Margin Loan Business
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

Recorded ¥15,253mil, up ¥713mil YoY
In General Loan Business, revenue increased
due to an increase in the balance of loans tofinancial instruments business operators andEquity repo transactions, as well as anincrease in the use of COM-STOCK loan.
̶ Securities Lending Business showed asignificant increase in revenue reflecting
strong performance in Bond Lending and anincrease in the balance of Stock Lendingtransactions.
※For details of each business, see “Financial
Highlights for FY2018” (P6-P8)●Operating Expenses
̶̶

¥5,686 mil , Up ¥1,913mil (+50.7%) YoY
reflected that fees on borrowing securities
related to Securities Lending business andcosts on Gensaki transactions increased.

●Extraordinary Loss̶

Recorded disposal loss on old system of
Com-Stock Loan (from May to Jul)

〜 All For Securities Market 〜

5

４．Financial Highlight （Margin Loan Balance）
Margin Loan Balance had been a gradual declining trend
throughout the fiscal year after peaking in April.
Stock Loan Balance, showed recovery trend after the turn of theyear, remained sluggish mainly in 1Q-3Q.



FY2017（\ bn、%）

1Q

2Q

1H

FY20183Q

4Q

full year

1Q

2Q

1H

3Q

4Q

4Q
YoY

full year

Full Year
YoY

Margin Loan

308

319

313

352

422

350

375

277

326

264

219

284

▲202

▲65

Margin Loan Rate

0.60

0.60

-

0.60

0.60

-

0.60

0.60

-

0.60

0.60

-

-

-

Stock Loan

373

374

373

405

310

366

265

257

261

260

262

261

▲47

▲104

Margin Loan（FY2017）
Margin Loan Rate（FY2017）

¥ tri
0.6

Margin Loan（FY2018）
Margin Loan Rate（FY2018）

Stock Loan（FY2017）
Stock Loan Rate (FY2017)¥ tri

Stock Loan（FY2018）
Stock Loan Rate (FY2018)

1.5%

0.6

0.4

1.0%

0.4

1.0%

0.2

0.5%

0.2

0.5%

Full Year Margin Loan

FY18︓¥284bn
FY17︓¥350bn

1Q Margin Loan

2Q Margin Loan

3Q Margin Loan

4Q Margin Loan

Jul

Oct

Jan

FY18︓¥375bn
FY17︓¥308bn

FY18︓¥277bn
FY17︓¥319bn

FY18︓¥264bn
FY17︓¥352bn

FY18︓¥219bn
FY17︓¥422bn

0.0

0.0%
Apr

May

Jun

Aug

Sep

Nov

Dec

Feb

Mar

0.60%
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

1.5%

Full Year Stock Loan
FY18︓¥261bn
FY17︓¥366bn

0.0

1Q Stock Loan
FY18︓¥265bn
FY17︓¥373bn

2Q Stock Loan
FY18︓¥257bn
FY17︓¥374bn

3Q Stock Loan
FY18︓¥260bn
FY17︓¥405bn

4Q Stock Loan
FY18︓¥262bn
FY17︓¥310bn

Apr

Jul

Oct

Jan

May

Jun

Aug

Sep

Nov

Dec

Feb

0.0%

Mar

0.40%

〜 All For Securities Market 〜

6５．Financial Highlight （Non-Margin Loan Business）


In the Securities Lending Business and the General Loan
Business, both revenues increased significantly due to the flexile
response to the needs of customers

Securities Lending Business

General Loan Business■ Initiatives under the 5 th Midterm Management Plan

■ Initiatives under the 5 th Midterm Management Plan

Percentage※ of total revenues※Securities Lending Business＋ General Loan Business+8.5％

 Expansion of stock and bondprocurement (To cultivate newlenders in Japan and overseas,
approach to dormant customers)
 Responding various borrowing
needs (transactions with
automatic extension requirements)

 Loans to non-residents for
Asian assets
 Capturing new needs in
response to Financial
Regulations【FY2016】■ Trend of Operating Revenues
8,000■ Trend of Operating Revenues(¥ mil)(¥ mil)＋45.5%

6,480

6,000

1,500

＋36.9%

1,242

1,000

4,000
2,000

4,453

5,035

FY2016FY2017

500

907

917

FY2016FY20170

0【FY2018】

FY2018

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

FY2018

 Steady progress in diversificationof business portfolio as a result ofcontinued initiatives under the 5th
mid-term management plan.
 Avoid to a certain extent a decline
in business results even if Margin
Loan Business, which is sensitive
to market conditions, becomessluggish.

〜 All For Securities Market 〜

7６．Financial Highlight（Securities Investment of JSF parent）
Revenues from securities investment showed slight increase fromthe previous fiscal year.



Revenues from securities investment（JSF）
FY2018

YoY¥ 2,625 mil＋¥ 46 milDomestic Bonds¥ 1,599 mil＋¥ 15 mil

Others※¥ 1,026 mil＋¥ 31 mil

¥ 904 mil+¥ 219 mil¥ 3,530 mil+¥ 266 mil

Yen-based

In foreign currencies
Total

Transition of investment portfolio
EquityForeign Bonds

Others

95%
90%
90%
85%
80%
Mar.2016※ Investment Trust, etc.

Mar.2017

ref. Trend of Interest Rate and Hedge Cost (JPY v.s. USD, EUR)

4.0%

Trend of Interest Rate
US

Germany

Japan

3.0%
2.0%
1.0%
0.0%
▲1.0%

2013

2014

2015

2016

2017

2018

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

2019

Domestic Bonds

100%

4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
▲0.5%
▲1.0%

2013

Mar.2018

Mar.2019

source）Bloomberg

Trend of hedge cost
USD3M
EUR3M

2014

2015

2016

2017

2018

2019

〜 All For Securities Market 〜

8７．Summary Financial Results for FY2018（JSF Trust Bank）

Highlights

 Trust charges remained stable, contributing from strengthening custodian type trust service.
 Interest on Loans decreased due lower interest rate on loans. Interest on investment securities
decreased due to decrease in outstanding of investment securities.
 Gains on sales of bonds decreased. Costs of unwinding IRS and fund raising also decreased.
 Recurring Income and Net Income increased compared with the last year.

JSF Trust Bank（¥ mil）

Recurring Revenue

FY2018¥【Point of Trust Charge】

YoY
(%)

2,562

▲440

(△14.6%)

Trust charges

817

23

(+2.9%)

Reversal of ADR*

298

▲429

(△59.3%)

Recurring Expenses

1,948

▲633

(△24.5%)

Provision of ADR*

12

▲28

(△68.9%)Recurring Income

613

192

(＋45.7%)Net Income

538

172

(＋47.0%)Trust charges increased
contributing from strengthening
custodian type trust service(trusts for the separate
management of money andsecurities, ABL trust, etc).

(¥ mil)*ADR: Allowance for Doubtful Receivables
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜

9８．Balance Sheet Summary（end of Mar-2019, consolidated）\mil
Mar-19Total assets

5,291,372

Features of Assets

Change from
Mar-18(1) Fluctuation of Loan Balance

331,211

Cash & Deposit

990,670

212,775 Deposit at BOJ

Short-term
investments

238,643

177,826

Margin loan / Loans for negotiable▲ 334,036 margin transactions / General loans /Trust bank loans

Short-term loans
receivable

668,894

Receivables underresale agreements

546,542546,542

Collateral money of
securities borrowed

2,137,589▲ 30,580

Investments insecurities

505,163
5,150,579

334,229

Call money

1,016,460

245,045

Short-termborrowings

16,547

Commercial Paper

214,000▲ 245,000

Payables under
repurchase agreements

1,453,352

1,453,352

1,563,430▲ 941,704

743,329▲ 218,281

140,793▲ 3,018

Total net assets

Collateral money of bond borrowing
Collateral money of stock borrowing

JGB and other bonds (Maturity: more
▲ 282,068
than 1year), Stock

Total liabilities

Collateral money
received of securities
lent
Borrowed money fromtrust account

JGB and other bonds (Maturity: 1year
or less)(2) Holding JGBs for flexible cash
funding
Holding certain amount of JGBs tofund money flexibly in short-termmoney market.
(3) Cash and Deposit
Balance moves responding tosituation of funding and borrowed
money from trust account.

Features of Liabilities

Bank borrowing
1,037
Market operation by BOJ(1) Ensuring variety methods offund raising

Collateral money of bond lending
Collateral money of stock lending

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

Loan period including Margin Loan ismainly short-term (from over-night to
1 month). And outstanding of loans
moves responding to trend of stock
market, etc.

Ensuring varieties of methods offund raising (Bank borrowing, CP, Callmoney, Bond repo, etc.) for
responding to situations of money
market and meeting clientsʼ needs.
(2) Borrowed money from trust
account
Reserved money of trust account of
JSF Trust Bank.

〜 All For Securities Market 〜 10

９．Estimated Figures for FY2019
Precondition Balance of Margin Loans
FY2019 Precondition（¥ mil）

Operating Income

3,600

▲381

ー

Recurring Income

4,400

▲646

ー

Net Income

3,200

▲565

ー

Operating
Income

2,500

▲312

ー

Recurring
Income

3,000

▲654

ー

Net Income

2,100

▲577

ー

Recurring
Income

550

▲63

ー

Net Income

465

▲73

ー

Operating
Income560▲5ー

Recurring
Income675

1

ーNet Income

445

▲0

ー

Matching¥130bnStock Loan
¥300bnJSF（Reference）
FY2018 Results

JSF
Trust andBankingOver-lentOver-lent
Stock Loan
Margin Loan
¥118bn¥140bnNihon
Building

Matching¥143bnMargin Loan Stock Loan
¥261bn¥284bn⊿ fromprev. EF

YoY.⊿

Consolidated

Over-lentOver-lent
Stock Loan
Margin Loan
¥170bn¥70bn

Margin Loan
¥200bnFY2019Estimated
Figures

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 11

10．Return to Shareholders
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 by comprehensively
considering revenues environment or investment plans. etc. (medium-term
management plan, management policy)

Based upon this policy, we will strive to place more importance on shareholder
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 our businessperformance, shall not fall below the 60% level and that we shall return profits toshareholders 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.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 12

11．Dividend and Share Buyback Program for FY2019

Dividend

Share
Buyback

FY2018FY2019（Forecast, Framework）

Annual¥ 22（YoY ▲¥４）

¥ 22（YoY ±¥０）Interim¥ 11（YoY +¥２）

¥ 11（YoY ±¥０）Year-end¥ 11（YoY ▲¥６）

¥ 11（YoY ±¥０）

Consolidated
DPR

55.0％

63.7％

No. of shares
to be acquired

2.0mil shs※

Up to 1.0mil shs

2.0%

1.0%

Total Value tobe acquired¥ 1.2bn

Up to ¥ 0.7bn

Period①From 6 Jun 2018 to 11 Nov 2018
②From 18 Dec 2018 to 3 Mar 2019

From 16 May 2019
to 23 Mar 2020

87.8%

88.7%

Ratio to total
shares issued

Total Return Ratio※based on actual results
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 13

12．Dividend and Share Buyback Program (historical)

FY
2013

FY
2014

FY
2015

FY
2016

FY
2017

FY
2018

¥18

¥26

¥22

FY
2018

Forecast/
Framework

Annual Dividend per share

¥14

¥15

¥16

Interim ¥8Year-end ¥10

Interim ¥9Year-end ¥17

Interim ¥11Year-end ¥11¥22

Share Buyback

(shs)

ー

7.46mil

3mil

0.63mil

1.5mil2.0mil1.0mil（amount）

ー¥4.6bn¥1.9bn¥0.3bn¥0.9bn¥1.2bn¥0.7bn<Consolidated> : Net
Income¥6.2bn¥3.5bn¥2.6bn¥3.0bn¥4.2bn¥3.7bn¥3.2bn

: EPS

¥60.4

¥33.9

¥26.9

¥31.9

¥44.2

¥40.0

¥34.5

: DPR

23.2%

44.2%

59.5%

56.4%

58.8%

55.0%

63.7%

: DOE

1.2%

1.2%

1.2%

1.2%

1.8%

1.4%

1.4%

23.2%

173.9%

133.1%

66.3%

79.3%

87.8%

88.7%

(reference) Total Return Ratio

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 14

13. Changing the Corporate Governance StructureTransition to a “Company with Nominating Committee, etc.” structure.
 Cleary separate supervisory and executive functions and strengthen the
supervisory functions of the Board of Directors.
 Realize prompt business execution that respond quick to change in thebusiness environment.
An Outside Director is scheduled to be appointed Chairman of the Board of
Directors

Our Corporate Governance Initiatives
2015
2016

2017

2018

Actively inviting outside directors

A “Company with

Establishment of a Voluntary Nominating
and Remuneration Committee

The Board of
Directors

2019

Nominating
Committee, etc.”

Appointment of female directors

Executive
remuneration

Introduction of equity remuneration plans

CG codeCopyright Japan Securities Finance Co., LTD. All Rights Reserved

CG code revision〜 All For Securities Market 〜 15

Appendix
 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) Outstanding Loan Balance Margin Transactions & Loans for Margin transactions
 Structure of Margin Transaction & Loans for Margin
Transactions
 Revenue structure of Loans for margin transactions
 Margin Loan Rates

Copyright Japan Securities Finance Co., LTD. All Rights Reserved Features of Balance Sheet (Consolidated) Securities Holdings
 JSF Trust Bank (Loan Balance) The 5th mid-term Management Plan I
 The 5th mid-term Management Plan II The 5th mid-term Management Plan III
 Business Strategies of JSF Trust Bank Announcement of implementing new SBL scheme
for shareholders rights recovery
 Our Group Companies Rating Information〜 All For Securities Market 〜 The Trend of Financial Result (consolidated)¥ mil
FY2013

FY2014FY2015FY2016FY2017FY201819,566

20,30022,03523,06626,33324,321

16,19515,856

16,16016,522

18,38318,603

8,747

9,450

11,537

11,892

13,33012,284

Ex Premium charges

5,413

5,008

5,672

5,358

5,385

6,566

General & Administrative
Expenses

8,249

7,824

7,939

8,371

9,121

8,056

Operating Income

2,568

3,025

2,558

2,802

3,881

3,981

179

▲144

54

92

123

248

Recurring Income

3,119

4,230

3,349

3,611

4,685

5,046

Extraordinary
Profit or Loss

3,602

54

−

▲52

131

▲41

Net Income

6,211

3,520

2,645

3,078

4,225

3,765

Operating
Revenues
Ex Premium charges

OperatingExpensesGain or Loss inEquity-Method

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 17 Breakdown of Operating Revenues by business(Historical data)\ mil

Securities Finance BussinessMargin Loan Business
Interest on Loans

Mar-13Mar-14Mar-15Mar-16

Mar-17Mar-18Mar-1914,093

16,363

17,162

17,776

19,40722,487

20,9696,625(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

13,253(50.3%)
2,225

9,661
(39.7%)
1,799

652

436

611

575

887

1,073

708

3,746
2,957
789

4,132
3,371
761

5,389
4,443
945

6,840
5,874
966

7,771
6,543
1,227

9,481
7,949
1,531

6,819
5,717
1,101

810
(0.0%)
1,862(10.5%)
289
1,573
4,794
(27.1%)
4,719

1,959
(0.0%)
2,217(11.3%)
425
1,791
2,946
(15.1%)
2,838

2,107
(0.0%)
2,294(11.3%)
784
1,509
3,094
(15.2%)
2,979

1,753
(7.9%)
2,241(10.2%)
907
1,334
3,201
(14.5%)
3,111907(3.9%)
4,453(19.3%)
941
3,512
3,325
(14.4%)
3,305

917(3.5%)
5,035(19.1%)
1,458
3,576
3,281
(12.5%)
3,263

1,242
(5.1%)
6,480(26.7%)
1,517
4,962
3,586
(14.8%)
3,530(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

(11.3%)
89
741
2,087

(10.1%)
58
746
1,590

(4.7%)(4.5%)(4.3%)(3.7%)(3.8%)(3.3%)(3.6%)

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

26,333
18,38324,321
18,603

Interest on collateral money of securities borrowed
Fees on Lending Securities
Premium Charges
Lending Fees
Business other than Margin Loan Business
Loan to Securities companies & Investors
Securities Lending Business
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)

2,762

819

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

2,322

880

2,269

868

3,451

807

2,792

865

2,971

873

2,467

884

〜 All For Securities Market 〜 18 Breakdown of Operating Revenues by business(Quarterly・Full Year)
Margin Loan Business resulted in large decrease due to lower level ofMargin Loan Balance and Stock Loan Balance【Operating Revenues Transition】
Quarterly(mil）Full Year

Margin Loan
Business

¥ mil
9,481

（ex premium
charges）(7,949)6,819(1,531)

3,119(2,691)

1,556(1,235)

(427)

(321)

568

656

307

178

3Q

4Q

FY2017

1,783

1,859

(1,044)(279)(1,580)(1,506)(1,587)

588

(272)

442

(277)

(272)

178

198

160

1Q

171

424

2Q
FY2018

3Q

344

4Q

1,073

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

(YoY)

(YoY)

2,509

9,661

(△1.6%)

922(△29.9%)1,859(＋19.5%)

1,587

Premium
Charges(＋28.5%)

1,799

LendingFees(△15.3%)708

Full Year Full Year
FY2017Full Year
Revenue(1,101)

2,225

1,852

1,323

(5,717)

Fees onLending
Securities

4Q
Revenue

FY2018272

Interest
on
Loans

344

(△47.6%)

Interest on
collateralmoney ofsecurities
borrowed

198(＋10.9%)Full Year
Point(△27.1%)

 Operating revenues
this business,
3,943 ofexcept Premium(△25.7%)
Charges, resulted indecrease.

6,819  Fees on Lending(△28.1%)

5,717(△28.1%)

1,101(△28.1%)

1,799

Securities resulted
in large decrease,because Stock Loanbalance remained atlower level of thesame period of theprevious year andpremium charges on
over-lent issues
decreased.

(△19.1%)  Interest on Loans

708(△34.0%)decreased, because
average balance ofMargin Loan turned
to decrease in third
quarter.

〜 All For Securities Market 〜 19 Breakdown of Operating Revenues by business(Quarterly・Full Year)
General Loans Business resulted in increase due to higher loan balance.
【Operating Revenues Transition】
Quarterly

Full Year(¥ mil）

¥ mil

(80)

Loan toIndividual
Investors
or
Firms

715

Loan toSecurities
Companies

526

4Q
Revenue

Full Year
Revenue

(YoY)

(YoY)

125

(△2.7%)

136
(17)

128
(26)

95

141

3Q

4Q

FY2017

134
(22)

135
(22)

132
(18)

125
(17)

184

205

177

148

1Q

2Q

3Q

4Q

FY2018148(＋5.0%)

526

715(＋83.8%)389

Full Year Full Year
FY2017Loans for
Negotiable
MarginTransaction

17(△36.2%)

Point(△0.2%)

527(79)

Full Year

Loan toSecurities
Companies
remained highand Individual
Investors ofFirms also
picked up.

80(＋1.8%)FY2018＜ 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
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 20 Breakdown of Operating Revenues by business(Quarterly・Full Year)
Securities Lending Business︓Both General Stock Lending and Bond
Lending continued solid performance【Operating Revenues Transition】
Quarterly

Full Year(¥ mil）

¥ mil
1,517

GeneralStock
Lending

1,458

3,576
482

467

875

967

3Q

4Q

FY2017

553

353

350

1,097

1,350

1,237

1Q

2Q

3Q

4Q

FY2018Full Year
Revenue

(YoY)

(YoY)

259

(△44.3%)

4,962

Bond
Lending

259

1,277

4Q
Revenue

1,237(+27.9%)Full Year
Point

Revenue increased.
Because borrowing
1,517 demands for short(＋4.1%)
covering ,etc. weresteady.
Revenue increased.
Tighter supply and4,962 demand conditions(+38.7%) of JGBs in the repo
market continued.

Full Year Full Year
FY2017 FY2018※ 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



Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 21 Breakdown of Operating Revenues by business(Quarterly・Full Year)
JSF Trust Bank︓Trust charges remained steady.
【Trust charges Transition】
Quarterly

Full Year(¥ mil）

¥ mil

741
192

188

182

188

182

192

3Q

4Q

1Q

2Q

3Q

4Q

FY2017FY2018Full Year
Revenue

(YoY)

(YoY)

746

Trust
Charges
Full Year Full Year
FY2017

4Q
Revenue

FY2018192(＋2.1%)

Full Year
Point

Trust charges
continued
increasing,
contributing fromstrengthening
custodian type
746 trust service(+0.7%) (trusts for the
separate
management ofmoney andsecurities, ABL
trust, etc).

【Trust Lineup】
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.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 22 Analysis of YoY Change in Operating Revenue by Business(Quarterly, Full Year)【Quarterly】 YoY ▲ 1,389mil¥（△25.2%）【Full Year】 YoY
¥ mil

¥ mil

＋324

▲ 2,011mil¥（ △ 7.6%）+1,444

+304

+11
△504

△3,592

26,333+35,505

FY2017
4Q

+63
+27

△41

MarginLoan＋2△1,444GeneralLoans

24,321

Sec
Lending

OthersSecurities Finance Business

4,115
ー

ー

Trust
Bank

Real
EstateFY20184Q

FY2017Full Year

MarginLoan

GeneralLoans

Sec
Lending

OthersSecurities Finance Business

ー

ー

Trust
Bank

Real
EstateFY2018Full Year〜 Summary of the point for quarterly 〜〜 Summary of the points for Full Year 〜 Margin Loan Business ︓ The decrease was mainly
due to decreases in Margin Loan Balance and Stock
Loan Balance Margin Loan Business : The revenue decreased due
to decreases in Margin Loan Balance and Stock Loan
Balance.

 General Loan Business︓Resulted in increase driven
by higher balance.

 General Loans Business : Resulted in increase
driven by higher balance of loans mainly to securities
companies.

 Securities Lending Business︓Though General Stock
Lending decreased, Bond Lending continued solid
performance.
 Others︓Foreign exchange gains posted at the endoof the third quarter dropped.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved Securities Lending Business : Both revenue ofGeneral Stock Lending and Bond Lending increased.
 Trust Bank : Gains on sales of bonds decreased.

〜 All For Securities Market 〜 23 Outstanding Loan Balance(Year average and 4Q end balance)\ mil

Margin Loansavg.
term-end

avg.
Loans of funds other thanterm-end
Margin Loans

Trust Bank Loansavg.
term-end
avg.

Othersterm-end

Total

Stock Loansavg.
term-end
avg.
term-end

FY2013

FY2014FY2015FY2016490,635
601,206
157,232
201,076
77,612
63,04323,09232,500748,572
897,825

428,329541,052
223,484
254,71758,677
54,831
32,50032,500742,991
883,101

401,400
324,113
162,347
95,04654,561
136,089
28,71812,500647,027
567,748

265,458
350,175
368,508
519,590
44,84046,33140,87258,142
149,956
273,561
176,371425,197
7,008
152
2,000
−
467,262
670,220587,752 1,002,931

284,225
249,304
81,13354,687431,292
364,903−−796,651
668,894

176,476
198,781

222,031316,544

227,422258,656

291,392
393,698

261,603
433,072

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

FY2017366,147
369,852

FY2018〜 All For Securities Market 〜 24 Margin Transactions & Loans for Margin Transactions
3.0

¥ tri

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

17

18

1.0 ￥tri

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
100%

Margin Selling Balance
Stock Loan Balance
Ratio

0.9
0.8
0.7

90%
80%
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

11

12

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

13

14

15

16

17

18

〜 All For Securities Market 〜 25 Structure of Margin Transaction& Loans for Margin Transaction
MarginTransaction

Loans for Margin
Transaction
Margin Loan application
Stock Loan application

Margin buying order
Margin selling order

Institutional
Investors

Fund for Purchasing
Stock to sell

Fund (Margin loan)
Stock (Stock loan)

JSF

Securities
Companies

BrokerInvestor

Stock

Funds

Call Market

Purchased Stock
Sale ProceedBank of Japan

Stock Exchange
Clearing facilities
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 26 Revenue structure of Loans for margin transactions

Over-lent

Income statement

Margin 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
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 27 Margin Loan Rate

Loan Rate
0.60%

Stock Loan

JSF

Securities
Company

Margin Loan

Lending
Fee
0.40%

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%

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

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.

〜 All For Securities Market 〜 28 Loan Rate of Loans for Margin Transactions
2.00%

Loan Rate
Lending Fee

1.60%

1.20%

0.6%
0.80%

0.40%

0.4%
0.00%

97

98

99

00

01

02

03

04

05

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

06

07

08

09

10

11

12

13

14

15

16

17

18

19

〜 All For Securities Market 〜 29 Securities Holdings\ mil
Mar-18
Securities Holdings

Unrealized profits andloses

B/S Amountnotes

Mar-19Unrealized profits andloses

B/S Amount

Equity13,741

8,461

13,323

8,118

Bond

806,526

25,412

694,835

32,715

JGB&Municipal Bond

640,687

25,631

623,00933,538

Corporate Bond145,665841,424

20,173▲227

30,402OthersOther Securities
Total

6,255

1,328

10,926

1,137

826,522

35,203

719,085

41,970ー(27,584)

ー(25,714)（included the eﬀects ofderivatives）

held-to-maturity bonds

Unrealized profits andloses

B/S AmountJGB

31 Government Guaranteed Bond ,etc.
▲854 Foreign government bonds

1,514

Unrealized profits andloses

B/S Amount

208

1,513

notes

244

※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）
10,000
8,000
6,000
4,000

5,560
3.27

5,018

5 years
to9,798
10 years
2.32
14/9

9,210
2.819,498
1 year to 5 years
2.69
2.41
14/12
15/3
（year）
6.0
5.0

5,678
5,296
2.57

3.10

5,286

4,930

4.0

2.0

2.50
1.99

1.0
0.0

0

Sep.16

Mar.17

Sep.17

Mar.18

Sep.18Mar.19

6.0
5.0
4.0

3.0
2.0
1.0
0.0
3.948,378（年）
Averageremaining
period
3.54
15/12（year）
6.0
5.0

8,000

4.0

6,000

3.0

2.10

2,000

（¥ 100 mil）
10,0003.67
within3.23
1 year
8,158
15/9

4,000

3,009

3,225

3,764

3.0
2,279
1.24

2,000
1.28

0

Sep.16

1,255

1,310

1.18

1.06

2.0
1.0

0.89

Mar.170.94

Sep.170.0

Mar.18

Sep.18Mar.19(Note) Average remaining period is calculated excluding Floating JGB, held-to-maturity bonds, bonds for which hedge-accounting is applied
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 30 JSF Trust Bank （Loan Balance）● Loan Banance by Industry\mil

Mar-18Loan
Balance
ManufacturingSep-18ratio

Loan
BalanceMar-19ratio

Loan
Balance

ratio

4,800

1.1%

4,800

1.0%

2,000

0.5%

Fishery

0

0.0%

0

0.0%

0

0.0%

Mining

0

0.0%

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

1,769

0.4%

1,769

0.4%

1,069

0.3%

800

0.2%

800

0.2%

800

0.2%

0

0.0%

0

0.0%

0

0.0%

1,650

0.4%

0

0.0%

200

0.1%

Real Estate

500

0.1%

500

0.1%

-

0.0%

Service Industries

800

0.2%

0

0.0%

0

0.0%

414,877

97.6%

492,28798.4%

360,83498.9%

Wholesale
RetailFinance & Insurance

Governments
Total

425,197

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

500,157

364,903〜 All For Securities Market 〜 31 The 5 th Mid-term Management Plan（FY2017〜FY2019）Ⅰ

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 32 The 5 th Mid-term Management Plan（FY2017〜FY2019）Ⅱ

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.

Strategies•International financial regulations andsecurities clearing system haveundergone further reviews aimed atstabilizing financial market.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved

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
and making the company more dynamic〜 All For Securities Market 〜 33 The 5 th Mid-term Management Plan（FY2017〜FY2019）Ⅲ
Business
Environment•Along with technical improvements (AI), the globalization and development of finance haveincreased speed.
•International financial regulations and securities clearing system have undergone further reviews
aimed at stabilizing financial market.

〜

Reinforcing Management Systems

〜





Increasing the number of loanable issues and enhanceprocurement capability
Pursuing stable management of ML business
Promoting and expand the base of MT & LMT
Expanding the use of loans for negotiable margin transactions

Flexibly addressing the needs of domestic
and foreign financial instrument companies

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

Developing new business

Developing new business in Japan and foreign countries
Promoting effective utilization of resources

Diversified management of securities as anefficient use of capitalSecuring stable revenues
Establishing foreign currency funding methods

Enhancing collaboration with Group
companies

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Enhancing the Margin Loan Business as partof securities market infrastructure

Strengthening business management
structure

Developing an employee-friendly work
environment and making the company
more dynamic
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

Increasing the productivity of individual personnel and make thecompany more dynamic〜 All For Securities Market 〜 34 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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 35 Announcement of implementing new SBL scheme
for shareholders rights recovery


The Working Group on Shortening Stock Settlement Cycle (referred to as “WG”) discussed how to recovershareholders rights (rights to receive dividends, shareholders benefit plan and voting rights, etc.) for
customers who could not receive securities on the record date due to settlement failure.



As a result of the discussions, the WG has decided to implement “SBL scheme for shareholders rights
recovery” that JSF loans securities accepted from securities companies as collateral in exchange for Loans for
Margin Transactions, and simultaneously receives them as collateral under exceptional delivery scheme by
JASDEQ (“Tsuika Furikae Seido”), which recovers shareholders rights of those who were allotted settlement
failure.



The new SBL scheme will be implemented on 16 th July 2019 when shortening stock settlement cycle (T+2)
will start.



JSF will develop IT engine, formulate operational rules and sign contracts with related counterparties. By
providing this new scheme, JSF continues to contribute smooth T+2 implementation and securities market
development accordingly.

(reference) Conceptual chart of new SBL scheme for shareholders rights recovery
Issuing Company (Administrator of shareholder registry)
Notify the settlement failure allotted customer as actual shareholder

Securities Companies

Japan Securities Finance

Customer
Account③Collateral
Delivery※

Prop Account

①SBL

②SBL

Prop
Account④Collateral
Delivery※

Collateralmanagement
account※Deliver the SBL securities as collateral
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 36 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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved(mill yen)

Business overview
Trust service, Banking service〜 All For Securities Market 〜 37 Rating Information

JCR

R&I

As of 31/Mar/2019
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）

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 38

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.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜