Japan Securities Finance Co., Ltd.

1Q FY2022
Financial Results Presentation

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～Table of Contents◼ １．Executive summary (Consolidated)

Ｐ３◼ ２．Summary Financial Results for1Q, FY2022

Ｐ４◼ ３．Summary Financial Results for 1Q, FY2022（JSF, non-consolidated）

Ｐ５◼ ４．Financial Highlight（Margin Loan Business）

Ｐ６◼ ５．Financial Highlight（Securities Financing）

Ｐ７◼ ６．Financial Highlight（Securities Investment of JSF, non-consolidated）

Ｐ８◼ ７．Summary Financial Results for 1Q, FY2022（ JSF Trust Bank）

Ｐ９◼ ８．Estimated Figures for FY2022

Ｐ１０◼ ９．Shareholder Returns

Ｐ１１◼ Appendix

Ｐ１３～

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～2

１．Executive Summary (Consolidated)（¥ mil）

FY2022
1Q

Highlights
YoY ⊿

⊿％
✓

Operating
Revenues

11,092+3,686+49.8％✓✓

Operating
Income

1,783

▲484

△21.4％

Recurring
Income

2,199

▲265

△10.8％Net
Income

2,063

＋285

＋16.0％

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

Margin loan revenues decreased on adecline in balances (△4.7%).
Securities financing saw an increase inrevenue（+35.6%). Both bond lending andequity repo increased steadily.

Recorded losses on sales due to therepositioning of held securities to enable
future portfolio management.
Increase in general and administrative
expenses due to reduction in theallowance for doubtful accounts reversal
amount.

✓ Recorded extraordinary gains on reduction
in retirement benefit liabilities due tochange in retirement bonus structure.

～ All For Securities Market ～3

２．Summary of Financial Results for 1Q FY2022
Consolidated（¥ mil）

Non-consolidated
JSF

FY2022
1Q

YoY.⊿

11,092

3,686(+49.8%)

10,184

3,677

10,3353,612(＋53.7%)

9,427

3,603

7,530

3,910

(+108.0%)

7,492

3,940

6,773

3,836

(＋130.6%)

6,734

3,866

General &Administrative Expenses

1,778

260

(+17.2%)

1,427

Operating Income

1,783

▲484

(△21.4%)

Recurring Income

2,199

▲265

(△10.8%)49

20(+69.3%)

671

632

2,063

285

Operating Revenues
ExceptPremium Charges

Operating Expenses
ExceptPremium Charges

Gain or Loss inEquity-Method

Extraordinary
Profit or LossNet Income(%⊿)

JSF Trust Bank

Nihon Building

YoY.⊿

YoY.⊿

YoY.⊿

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

776

49

304

▲19

108

▲2

7

3

227

277

32

173

▲2

1,265

▲490

390

19

123

▲20

3,573

397

391

19

172

▲17

(+1,604％)

671

632

―

―

―

―

(＋16.0)

3,618

951

267

10

114

▲11

～ All For Securities Market ～4

３．Summary of Financial Results for 1Q FY2022（Non-consolidated）
Key Points

Japan Securities Finance（Non-consolidated）*Excluding premium charge（¥ mil）

FY2022
1Q●Operating Revenues◆

Revenues increased YoY on firm earnings
from securities financing and services
other than margin loan business.
－Revenues increased ¥3,603 mil to ¥9,427
mil (+61.9%).
－Margin loan business revenues decreasedon lower balances for both margin loan andstock loans.
－Securities financing revenues increasedon higher balances for bond lending andequity repo.
－Other revenues (mainly securities
investment) increased from recording
gains on repositioning held securities for
future portfolio management.

YoY.⊿

(%⊿)

9,427

3,603

(+61.9%)Margin Loan Business*

722

▲146

(△16.9%)Securities Financing

4,821

1,268

(＋35.7%)

Others

3,883

2,482

(＋177.1%)

Operating Expenses*

6,734

3,866

(＋134.8%)—

General &Administrative Expenses

1,427

227

(+18.9%)—Operating Income

1,265

▲490

(△27.9%)Recurring Income

3,573

397

(＋12.5%)Extraordinary
Profit or Loss

671

632

(+1,604％)

Net Income

3,618

951

(＋35.7%)

Operating Revenues*●Operating Expenses

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

Expenses increased 3,866 million yen
YoY to 6,734 million yen (+134.8%).
This was mainly due to increased
borrowing fees for the favorable Bond
Lending business and losses on sales
recorded from securities repositioning toenable future portfolio management.

●General & Administrative Expenses—

System depreciation expenses decreased
but expenses increased YoY due to theremoval of special factors from theprevious fiscal year (recorded reversal
following revision of the method to
calculate the allowance for doubtful
accounts）～ All For Securities Market ～5

４．Financial Highlights （Margin Loan Business）◼

Margin loan balances low, down YoY.

◼

Stock loans were down but June monthly average balances recovered toaround ¥170 bil.
FY2021（\ bn、%）

1Q

2Q

1H

3Q

4Q

full year

FY2022

YoY

1Q

YTD

Margin Loan

296

286

291

288

259

283

248

▲48

Stock Loan

181

194

188

174

150

175

156

▲25

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～6

５．Financial Highlights （Securities Financing）◼
◼

Bond lending and equity repo responded to wide range of needs, continued
previous FY performance trend of recording a new record high balances.
General stock lending largely unchanged YoY thanks to recovery of borrowing
demand for fail-cover.
(¥ mil)FY2022
1Q

YoY⊿

31

2

+6.9％

✓ The balance of loans outstanding
increased due to a increase in theuse of clients.

Loan to Securities
Companies*

369

134

+57.1％✓ Outstanding equity repo transactions
have been on increasing.

Retail

129

9

+7.7％

✓ The mainstay COM-STOCK Loan
remained steady.

General Stock Lending

175

0

+0.5%

✓ General stock lending largely
unchanged YoY thanks to recovery ofborrowing demand for fail-cover.

4,114

1,121

＋37.5%

4,821

1,268

＋35.7%

Type of transaction

Loans for Negotiable
Margin Transactions

Securities Financing

Bond Lending

Total Revenues

YoY%✓ Both outstanding gensaki
transactions and repo transactions
have been increasing.

* General Loans, stabilizing funding loan, equity repo, etc.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～7

６．Financial Highlights （Securities Investment / Non-consolidated）◼

Repositioned for future portfolio management in response to rising interest rates overseas
and other changes in operating environment.

◼

This resulted in recording gains on sales of domestic bonds and losses on sales of foreign
currency bonds.

Gains on management of market assets*1 （JSF）

FY2022
Yen-based

YoY¥ 3,454 mil¥ 2,299 mil

Domestic Bonds¥ 2,417 mil¥ 2,090 mil

Others*2¥ 1,037 mil¥ 209 mil△¥ 2,681 mil△¥ 2,844 mil¥ 751 mil△¥ 537 mil

In foreign currencies

Total

Ref. Trend of Interest Rate

Changes in Investment Portfolio

Source） Bloomberg

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～8

７．Summary of Financial Results for FY2022（JSF Trust Bank）

Highlights⚫ Asset-backed loan trusts drove increased revenues from trust fees.
⚫ Recurring revenues increased on growth in trust fees and having
recorded gains on sale of securities.

JSF Trust Bank
(Non-consolidated)（¥ mil）

Recurring Revenue
Trust Fees

【Trust Fees】

YoY

1Q
FY2022¥(¥ mil)
(%)

800

51

(＋6.8%)

336

16(+5.2%)

Recurring Expenses

409

32

(+8.4%)

Recurring Income

391

19

(＋5.1%)Net Income

267

10

(+4.2%)

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

319

336

1Q
FY2021

1Q
FY2022～ All For Securities Market ～9

8．Estimated Figures for FY2022
Precondition

FY2022Estimated
Figures（¥ mil）

FY2022 Estimate⊿ from prev.
EF

YoY.⊿

Consolidated
Over-lentMargin Loan
¥160bnOver-lent
Stock Loan
¥80bn

Operating Income

6,500

264

▲700

Recurring Income

7,400

235

▲600

Net Income

5,600

425

―

Operating
Income

4,479

232

―

Recurring
Income

7,872

1,943

―

Net Income

6,766

2,226

―

Recurring
Income

1,400

14

―

Net Income

971

▲52

―

Operating
Income

560

▲35

▲5

Recurring
Income

675

▲32

▲5
―

Net Income

445

▲20

―

Matching¥90bn
Margin Loan
¥250bnStock Loan
¥170bnJSF（Reference）
FY2021 Results
Over-lentMargin Loan
¥182bn

JSF
Trust andBankingOver-lent
Stock Loan
¥74bn

Nihon
Building

Matching¥101bnMargin Loan
¥283bnStock Loan
¥175bnPreconditions of Loans for Margin Transactions●Loan Rate： 0.60％,●Interest on Collateral Money： 0%,●Lending Fee： 0.40％<Approach to Estimated Figures for FY2022>✓Due to stagnant margin loan balances, we conducted a downward revision to estimated figures for operating income

and recurring income.
✓We maintained estimated figures for net income due to having recorded extraordinary income during the first quarter.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～10

9. Shareholder Returns
Policy for Shareholder Return⚫ To further enhance shareholder returns, JSF aims at cumulative total payout ratio of 100%
through dividends and the flexible implementation of share buy-backs in the period fromFY2021 through FY2025 (achieving the goal of ROE 5%).
ー With regard to dividends, our aim is to aggressively pay annual dividends in the period
from FY2022 through FY2025 at a level that does not fall below the amount of JPY 30
per share.
Shareholder Returns in FY 2022

Dividend (forecast)

Share Buy-BackTotal Payout Ratio

3.2 mil. shares
JPY 32（YoY ＋JPY 2）（3.5% of total number ofshares outstanding)

103.4%

JPY 300 mil.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～11Appendix⚫ Dividend and Share Buyback Program (Historical)⚫ About the Margin Loan Rates⚫ Results of JSF’s Efforts to Date

⚫ Rate of Loans for Margin Transactions⚫ Financial Result Trends (Consolidated)⚫ Securities Holdings⚫ Gross Profit by Business⚫ JSF Trust Bank (Loan Balance)⚫ Breakdown of Operating Revenues by Business (Historical
Data)⚫ Medium-term Management Policy: Overview⚫ Breakdown of Operating Revenues by Business⚫ Corporate Philosophy/Management Principles(The 6th MMP)

⚫ Analysis of YoY Change in Operating Revenue by Business(Quarterly)⚫ Management Goals/Strategies(The 6th MMP）

⚫ Outstanding Balance of Transactions by Group Business⚫ Strategies(The 6th MMP）

⚫ Margin Transactions & Loans for Margin transactions⚫ Structure of Margin Transactions & Loans for Margin
Transactions⚫ Revenue Structure of Loans for Margin Transactions⚫ Balance Sheet Summary （ end of June-2022, consolidated ）Copyright Japan Securities Finance Co., LTD. All Rights Reserved⚫ Medium-term Management Policy⚫ Management Goals(The 6th MMP)
⚫ Our Group Companies⚫ Rating Information⚫ ESG/SDGｓ Initiatives⚫ Our Corporate Philosophy and History to Date

⚫ Our Business Field (image chart)～ All For Securities Market ～⚫ Dividend and Share Buyback Program (Historical)
FY2022

FY
2016

FY
2017

FY
2018

FY
2019

FY
2020

FY
2021

¥18

¥26

¥22

¥22

¥26

¥30

Interim ¥16
Year-end ¥16(shares)

0.63mil

1.5mil2.0mil1.0mil

―2.4mil3.2mil（amount）¥0.3bn¥0.9bn¥1.2bn¥0.5bn―¥2.3bn¥3.0bn<Consolidated> : Net Income¥3.0bn¥4.2bn¥3.7bn¥3.5bn¥3.9bn¥5.1bn¥5.6bn

: EPS

¥31.9

¥44.2

¥40.0

¥38.4

¥43.2

¥56.6

¥65.0

: DPR

56.4%

58.8%

55.0%

57.2%

60.1%

53.0%

49.2%

(reference)
Total Return Ratio

66.3%

79.3%

87.8%

71.0%

60.1%

97.6%

103.4%

Annual Dividend per share

Share Buyback

Forecast/
Framework¥32

Note for FY2022 (Forecast)⚫ The number of shares and the amount of the “Share Buyback“ are both subject to a repurchase limit⚫ The “Annual Dividend per share” is a forecast⚫ "Net income (consolidated)" refers to the estimated figure announced on May 10, 2022. Moreover, EPS and DPR havebeen calculated using this estimated figure.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～13⚫ Results of JSF’s Efforts to Date
⚫ Our efforts under the current Medium-term Management Plan have stacked up
and steadily increased our ROE.

⚫ Additionally, Total Shareholder Returns at JSF have risen to a level that exceeds
the recent TOPIX average.
ROE

Total Shareholder Return

4.5%

180.0%

JSF's Total Shareholder
Return3.8%

4.0%

176.8%

160.0%TOPIX Return Including
Dividends

3.5%

3.0%

3.0%
3.0%

140.0%

2.6%

151.0%
144.3%

2.7%

141.5%
120.0%

2.5%

100.0%

2.0%

1.5%

115.8%

110.0%

99.5%

114.6%

106.7%

95.1%

80.0%

FY2017FY2018FY2019FY2020

FY2021

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

3/31/18 3/31/19 3/31/20 3/31/21 3/31/22～ All For Securities Market ～14⚫ Financial Result Trends (Consolidated)¥ mil
FY2017FY2018FY2019FY20201Q
FY2021

FY2021

1Q
FY2022

26,33324,321

29,10130,924

7,406

30,138

11,092

18,38318,603

20,84623,711

6,722

27,305

10,335

13,33012,284

16,83518,0183,620

16,533

7,530

5,385

6,566

8,585

10,8192,936

13,728

6,773

General &Administrative Expenses

9,121

8,056

8,136

8,129

1,517

7,368

1,778

Operating Income

3,881

3,981

4,129

4,777

2,268

6,235

1,783

123

248

306

395

29

446

49

4,685

5,046

4,894

5,558

2,464

7,164

2,199

Extraordinary
Profit or Loss

131

▲41

▲36

43

39

▲17

671

Net Income

4,225

3,765

3,556

3,971

1,778

5,174

2,063

Operating Revenues
Ex Premium charges

Operating Expenses
Ex Premium charges

Gain or Loss inEquity-Method

Recurring Income

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～15⚫ Gross Profit by Business
\ mil

1Q
FY2021

FY2021

1Q
FY2022

Operating Revenues (ex. premium charges) A
Secrities Finance BusinessMargin Loan Business (ex. Premium charges)
Securities Financing

6,722
5,823
869
3,553

27,30523,753
3,285
15,391

10,335
9,427
722
4,821

Loans for Negotiable Margin Transactions
Loans to Seurities Companies
RetailStock Lending
Bond Lending

29
235
120
174
2,993

156
1,196
510
657
12,869

31
369
129
175
4,114

Others （mainly securities investment）
Trust Business
Real Estate Management Business
Operate Expense (ex. premium charge) B

1,401
726
324

5,076
2,960
1,286
13,728

3,883
776
304

Gross Profit (A - B)
Secrities Finance BusinessMargin Loan Business (ex. Premium charges)
Securities Financing

3,785
2,955
817
849

13,604
10,251
2,814
3,766

3,562
2,692
673
1,267

Loans for Negotiable Margin Transactions
Loans to Seurities Companies
RetailStock Lending
Bond Lending

24
242
81
103
398

135
1,179
352
355
1,742

27
359
88
102
689

1,288
616
320

3,670
2,524
1,261

751
667
297

Others （mainly securities investment）
Trust Business
Real Estate Management Business

Note）
Figures for each Group company are on a non-consolidated basis (before elimination of consolidation), and the sum ofthese figures does not correspond to the figures for “Operating Revenues (A)” and “Gross Profit (A-B)” .

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～16⚫ Breakdown of Operating Revenues by Business(Margin Loan Business)
 Revenues decreased due to stagnant margin loan and stock loanbalances.
Changes in Operating Revenues

1Q
Revenue
(YoY)

(mil）

Quarterly

¥:mil

877

984
(776)

(684)

1,113
606

(955)

925

(193)

469

(207)
(189)

(157)

(167)

455
461

110

133

1Q

2Q

406

(△4.7%) ✓ Operating revenues（ex premium
charges）(△16.9%)Fees onLending
Securities

722

925

89

103

3Q

4Q

1Q
FY2022

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

757(+10.7%)

LendingFees(△13.4%)

Intereston
LoansInterest on
collateralmoney ofsecurities
borrowed

for services
decreased evenwhen excluding
premium charges.

(+5.4%)

Premium
Charges

393

112

FY2021

1,480

Margin Loan
Business

(757)

(416)

1Q Point

167✓ Revenues fromlending fees
decreased due to
YoY decline instock loan balances.

✓ Revenues frominterest on loans
decreased due to393
YoY decline in(△16.1%)
margin loanbalances.

103(△5.9%)～ All For Securities Market ～17⚫ Breakdown of Operating Revenues by Business(Securities Financing (1))
 Loans to securities companies resulted in an increase.
Outstanding balance of equity repo transactions contributed to the result.
Changes in Operating Revenues
Quarterly¥:mil(¥ mil）

1Q
Revenue

Point

(YoY)

39

43

306

307

31

43

Loans for
Negotiable
MarginTransactions

31 ✓ Revenues increased

Loans toon growth in loanbalances fornegotiable margintransactions andretail.

Securities369 ✓ Loans to securities(＋6.9%)

29
369

346

235

Companies
120

128

134

127

129

1Q

2Q

3Q

4Q

1Q

FY2021

FY2022

1Q

Retail(＋57.1%)

129(＋7.7%)

companies resulted
in an increase.
Outstanding balanceof equity repo
transactions
contributed to theresult.

＜ Loan Lineup ＞◆ Loans to securities companies: General loans, bon financing, loans for negotiable margin transactions,stabilizing fund loans, equity repo (cash-secured stock lending transactions)◆ Loan to retail: Com-STOCK loans
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～18⚫ Breakdown of Operating Revenues by Business(Securities Financing (2))
 Bond lending revenues increased on growth in gensaki transaction and repo
transaction balances General stock lending largely unchanged YoY thanks to recovery of borrowing
demand for fail-cover.
Changes in Operating Revenues
Quarterly¥:mil(¥ mil）

1Q
Revenue

1Q

(YoY)

Point

295
175

174

183

152

3,422

3,360

147

GeneralStock
Lending

Largely unchanged
175 YoY on recovery in(+0.5%) borrowing demand
for fail-cover.

Bond
Lending

Revenues increased
4,170 on growth in gensaki(+37.4%) transaction and repo
transaction balances.

4,107
2,989

1Q

3,074

2Q

3Q

FY2021

4Q

1Q
FY2022*Genera stock lending is ・・・➢

Lending stock to securities companies depending on their various demands (ex. fail-cover and arbitrage),
except on demand to settle margin transactions.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～19⚫ Breakdown of Operating Revenues by Business(JSF Trust Bank) Balances for crypto asset related trusts declined due to downturn on
crypto asset market but secured increase in trust fees on continued
favorable performance of asset-backed loan trusts.
*Consolidated base

Changes in Trust Fees
Quarterly(¥ mil）¥:mil

1Q
Revenue
(YoY)

307

311

323

324

324

1Q

2Q

3Q

4Q

1Q

FY2021

Trust
Charges

1Q
Point

Slowed on revenuebasis but secured
324 revenues(＋5.4%) outperforming theprevious FY.

FY2022Trust Lineup
Trusts for the separate management ofmoney and securities

Trust for segregated deposits which securities companies receive from customers

Trusts for currency future trading

Trust for segregated guarantee deposits which FX business operators receive from
customers

Crypto-asset related trust

Trust for segregated guarantee deposits which crypt-asset exchangers receivefrom customers

Asset Backed Loan (ABL) Trust

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～20⚫ Analysis of YoY Change in Operating Revenue by Business(Quarterly)
Summary of the Significant Points for quarterly
Margin Loan Business【1Q】 YoY ¥ 3,686 mil（+49.8%）⚫ Revenues decreased on decline in balances forboth margin loans and stock loans.

Securities Financing Business¥ mil＋2,479+21△5+1,118
＋2

+134

+9

+0

△73

11,092

7,406

1Q
FY2021MarginLoan

Loans for Loans for Loans for StockBond
NMT Sec Com Retail Lending Lending Securities

Others
ー

ー

Trust
Bank

Real
EstateSecurities Financing

Securities Finance Business⚫ Revenues from capital loans to securities
companies increased on high balances forequity repo.
⚫ Revenues from loans to retail increased onhigher balances for COM-STOCK loans.
⚫ General stock lending largely unchanged YoY
thanks to recovery of borrowing demand for
fail-cover.
⚫ Bond Lending revenues increased on highbalances for gensaki transactions and repo
transactions.

1Q
FY2022⚫ Revenues increased YoY on recording gain on
sales of held securities (also recorded loss on
sales).

Trust Business⚫ Revenues increased on growth in trust fees.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～21⚫ Outstanding Balance of Transactions by Group Business(Average Balance)

Transaction TypeFY2021
1Q

FY2022

FY2022
１Q

Margin Loans

296,923

283,118

248,573

Stock Loans

181,656

175,578

156,110

8,873,270

9,969,762

11,318,568

Loans for Negotiable Margin
Transaction

16,71521,50918,282Loans to Securities Companies

402,643585,974

682,635

Retail

13,60914,993

15,586

General Stock Lending

15,52047,50936,2838,424,780

9,299,775

10,565,780

723,263

682,499552,120

Securities Financing

Bond Lending
Trust Bank Loans

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～22⚫ Margin Transactions & Loans for Margin Transactions

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～23

MarginTransaction

Loans for Margin
Transaction

Margin buying order
Margin selling order

Margin loan application
Stock loan application

Stock

Institutional
Investors

Fund for purchasing
Stock to sell

Fund (Margin loan)
Stock (Stock loan)

JSF

Securities
Companies

BrokerInvestor⚫ Structure of Margin Transactions& Loans for Margin Transactions

Funds

Call Market

Purchased stock
Sale proceeds
Bank of Japan

Stock Exchange
Clearing Facilities
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～24⚫ 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)×funding
rate◆Besides the above, premium charges are posted in operating revenues (fees on lending
securities) in part of over-lent stock loans. However, the same amount is 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) = Expenses: Fees on borrowing
securities (premium charges) = (C)‘×rate of premium charges
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～25⚫ Balance Sheet Summary （ end of June-2022, consolidated ）\mil
Jun-22
Total assets
Cash & Deposit
Short-term
investments
Short-term loans
receivable
Receivables
under resaleagreements
Collateral money of
securities borrowed

Investments insecurities
Total liabilities
Call money
Short-termborrowings
Commercial Paper
Payables under
repurchaseagreements

Collateral money
received of
securities lent
Borrowed money
fromtrust accountTotal net assets

14,263,073

Change from
Mar-22

94,4171,280,055▲ 19,014 Deposit at BOJ

119,650

9,925 1year or less)

941,499

50,013 negotiable margin transactions /JGB and other bonds (Maturity:
Margin loan / Loans for
General loans / Trust bank loans

4,923,323

5,638,717
905,809995,176
Collateral money of bondborrowing▲ 860,704 Collateral money of stock
borrowing
JGB and other bonds (Maturity:▲ 136,687 more than 1year), Stock

14,125,828

95,1691,811,000▲ 47,400

168,010▲71,200

461,500▲ 34,500

6,465,606

920,7074,234,477

Bank borrowing
Market operation by BOJ

Collateral money of bond lending▲ 472,018 Collateral money of stock lending

874,660▲ 156,751

137,245▲ 751

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

Features of Assets
The major components of assets are
margin loans (short-term loans
receivable), deposits in current
account balance at the BOJ (cashand deposits), both of which are
subject to daily fluctuations,collateral deposited for the
procurement of securities (collateralmoney of securities
borrowed/receivables under resaleagreements), and securities held forinvestment.
Cash and cash equivalents maychange significantly depending on
the amount of standby funds in thetrust account of JSF Trust andBanking Co., Ltd. and the surplus ofcash position of the Group as awhole.

Features of Liabilities
In addition to market funding, suchas call money and commercial paper,
which can be adjusted daily in orderto address daily changes in assets,major liabilities are collateraldeposits received against lending
securities (collateral money
received of securities lent/payables
under repurchase agreements).
Ref) Capital adequacy ratio*
at the end of Jun 2022: 343％
*Based on FIEA

～ All For Securities Market ～26

⚫ About the Margin Loan Rate

LendingFee
0.40%

Securities
Company

Loan Rate
0.60%

BOJ Policy Interest Rate

Stock Loan

JSF

Securities
Company

Margin Loan◼

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 an interest rate to monetary baseJan 2016 Embraced negative interest rates
Sep 2016 Introduced QQE with yield curve control◼

Interest on Collateral
Money: 0%◼
◼

Margin Loan Rate
◼
◼
◼
◼

◼
◼
◼
◼

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％）◆ The margin loan rate is decided byreflecting the changes in market rates andthe BOJ’s Policy Interest Rate.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～27⚫ Rate of Loans for Margin Transactions

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～28⚫ Securities Holdings\ mil
Mar-22
Securities Holdings

Jun-22

Unrealized Profits andLossesB/S Amount

Notes

Unrealized Profits andLossesB/S Amount

Equity26,955

12,20722,341

Bond

9,268

1,100,835

3,587

976,062▲9,119

JGB&Municipal Bond

527,8264,267

446,862▲7,005

Corporate Bond

447,409▲786

426,525

Others125,600

106

102,674

14,571

0

17,104

2,534

1,142,362

15,794

1,015,509

2,682

ー

(11,290)ー(9,093)

Other Securities
Total（included the effects ofderivatives）

Held-to-maturity
bonds

JGB

B/S Amount

Unrealized Profits andLosses

1,511

162

B/S Amount

1,510▲689 Government guaranteed bonds etc.
▲1,425 Foreign government bonds etc.

Unrealized Profits andLossesNotes

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

Yen Bond Portfolio（JSF）
12,000
8,000
9,798
6,000
4,000
（億円）10,000
2,000
0 years9,424 5 years2.32
Over10
to 10 years
2.69
14/3
14/9

Yen Bond Portfolio （JSF Trust Bank）
9,210
2.81
9,498
3.67
8,158
2.69
1 year to 5 years
Within3.23
1 year
2.41
14/12
15/3
15/9

6.0
5.0
4.0
3.94
3.0
2.0
（年）
1.0
8,378
3.54
0.0
Averageremaining
period15/12(Note) The average remaining period is calculated excluding held-to-maturity bonds and bonds for which hedge-accounting is applied

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～29⚫ JSF Trust Bank （Loan Balance）● Loan Balnance by Industry\mil

Jun-21
Loan
BalanceMar-22ratio

Loan
BalanceJun-22

Ratio

Loan
Balance

Ratio

Manufacturing

0

0.0%

0

0.0%

0

0.0%

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

689

0.1%

689

0.1%

689

0.1%

Wholesale

0

0.0%

0

0.0%

0

0.0%

Retail

0

0.0%

0

0.0%

0

0.0%

Finance & Insurance

1,650

0.2%

4,650

0.9%

4,650

0.8%

Real Estate

1,200

0.2%

1,196

0.2%

1,194

0.2%

0

0.0%

0

0.0%

0

0.0%
98.9%

Service Industries
Governments
Total

691,613

99.5% 526,090

98.8% 577,455

695,152

532,625

583,988

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～30⚫ Medium-term Management Policy: Overview

Corporate
Philosophy

Long-term
direction forrealizing corporate
philosophy

As an institution specializing in securities finance, JSF has a mission to contributeto the development of the securities market by proactively meeting the diverse
needs of the securities and financial sectors and to enhance the long-term
interests of users, while always maintaining a keen awareness of its public role.

Vision for JSF in the Future
Be a company that maintains strong financial soundness, achieves thesustainable growth expected of a listed company, and enhances its
enterprise value over the medium to long-term, while firmly embracing
the public roles expected of it as a securities finance company providing
infrastructural functions to the securities market.
Management Policy through 2025

Medium-termManagement
PolicyManagement
goals(targets to beachieved)

Strategies⚫ Strengthen securities finance business centered on loans for
margin transactions⚫ Reinforce consolidated management of the group⚫ Improve operational efficiency⚫ Further enhance shareholder returns (aim for total payout ratio of100%)

Corporate
Governance⚫ Expeditiously tackle the diverse challenges that need to be
overcome in order to maintain the level of corporate governanceexpected of a listed company.

6th Medium-termManagement Plan
（FY2020-2022)

 ROE of 4% during period of 6th Medium-term Business Plan
(through FY2022)
 ROE of 5% during period of next plan (FY2023-2025)― ROE target set at a level above costs of equity (recognized as
mid-4% range)

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～31⚫ Medium-term Management Policy
１．Vision for JSF in the Future
JSF, guided by its corporate philosophy, will strive to be a company that maintains strong financial
soundness, achieves the sustainable growth expected of a listed company, and enhances its
enterprise value over the medium and longer term, while firmly embracing the public roles expectedof it as a securities finance company providing infrastructural functions to the securities market.

２．Medium-term management Goals
For its new medium-term management goals, JSF will aspire to attain an ROE of 4% during theperiod of the current medium-term management plan (ending with FY2022), and of 5% during theperiod of the next plan (FY2023‒2025).

３．Strategies
JSF will endeavor to attain the medium-term management goals by increasing its earning power and capitalefficiency through diverse actions such as: 1) strengthening its securities finance business centered onloans for margin transactions, 2) reinforcing consolidated management of the group, and 3) improving
operational efficiency.
With regard to shareholder returns, JSF will seek to further enhance them by striving for a total payout ratioof 100％on a cumulative basis in the years from FY2021 through FY2025 (achievement of 5% ROE target)
through dividend payments and agile implementation of share repurchases. In the case of dividends, theannual per-share amount for FY2021 is, as announced on November 2, 2021, expected to be JPY30; as forthe period from FY2022 through FY2025 (achievement of 5% ROE target), since JSF has set the
aforementioned total payout ratio target, it will replace its established dividend policy (consolidated payout
ratio of 60%) with a policy of actively aiming to pay an annual dividend per share of no less than JPY30.

４．Commitment to Corporate Governance
We will expeditiously tackle the diverse challenges that need to be overcome in order to maintainthe level of corporate governance expected of a listed company.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～32⚫ Corporate Philosophy / Management Principles(The 6th Mid-term Management Plan)

Corporate
Philosophy

Management
Principles

As an institution specializing in securities finance, JSF has a mission tocontribute to the development of the securities market by proactively meetingthe diverse needs of the securities and financial sectors and to enhance thelong-term interests of users, while always maintaining a keen awareness of its
public role.
⑴ To practice sound business management by thoroughly
implementing compliance, corporate governance, andrisk management under a new governance structure
and thereby establish solid credibility, while always
maintaining a keen awareness of our social
responsibilities as a securities finance company.

Basic concept asa securities
finance company⑵ To enhance enterprise value while maintaining solid
equity capital in order to ensure stability inmanagement and the financial health required of acompany that is a key player in securities market
infrastructure, to give comprehensive consideration to
the earnings environment, investment plans, etc., andto ensure profits are returned to shareholders.

Solid equity
capitalFinancial health⑶ To further enhance JSF’s core margin loan businesswhile also striving to expand the finance- andsecurities-related services provided by JSF and Group
companies, to develop new business, and to further
grow and solidify our base.

Future businessdevelopment⑷ To build a quick and efficient business management
structure and strengthen our competitive base in orderto address changes in the business environment in a
flexible manner.

Businessmanagement
structure

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～33⚫ Management Goals / Strategies(The 6th Medium-term Management Plan)

Management
Goals

Given that the margin loan business, JSF’s core business, is greatly affectedby market fluctuations, we will strengthen its base by steadily increasing ournumber of loanable stock issues and stabilize our role as part of the securities
market infrastructure by diversifying revenue sources and steadily increasing
our basic profit

Enhance the margin loanbusiness as part of
securities market
infrastructure

Strategies

Develop and realize new
business

Diversify managementof securities as anefficient use of capital

Facilitate diverse work
styles and make JSF more
dynamic

Expand and enhance thesecurities finance business

Strengthen the business
management structure

Strengthen our competitive
base through efficientbusiness operation＜Framework to integrate management goals and strategies with risk management＞

Use of the Risk Appetite Framework
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 34

● Management Goals (The 6th Medium-term Management Plan)

Number of loanable stock issues: We will aim to increase our number of loanable stock issues steadily tostrengthen our margin loan business base

Basic profit: We will aim to diversify revenue sources and steadily increase our basic profit to stabilize
our role as part of the securities market infrastructure⇒ Actual results on the base of fiscal years will be disclosed (at the announcement of thefinancial results)◆ Definition of “basic profit”
Recurring income as a trend calculated based on the assumed gross operating profit of the margin loan business (average over the past three years)

1. Characteristics of Our Recurring Income

2. Calculation of Basic Profit

(A)

(B)

(C)

20XX-320XX-2

20XX-1Margin loan business profit❖❖(A) + (B) + (C)3
FY20XX

20XX+1

20XX+2Non-margin loan business profit
Assumed gross operating profit of margin loan business

Non-margin loan business profit

Margin loans, JSF’s core business, are

Basic profit

Change in recurring income(Conceptual illustration)❖

We calculate the basic profit to visualize

susceptible to market fluctuations

our profitability based on our average(profit fluctuates significantly)

margin loan business profit.

It is difficult to understand the changes
in our basic earnings

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

This makes the changes in our basic
earnings easier to understand～ All For Securities Market ～35⚫ Strategies (The 6th Medium-term Management Plan)
Enhance the margin loanbusiness as part of
securities market
infrastructure.

We aim to pursue stable management of our margin loan business and improve profitability byappropriately responding to changes in the stock market environment. Moreover, we aim to monitor
trends among market participants carefully, increase our number of lending issues steadily, promote
the use of margin loans, enhance the provision of information relating to margin transactions andmargin loans, and expand the range of investors.

Expand and enhance thesecurities finance businessWe aim to utilize the financial and securities transaction expertise we have cultivated thus far tohandle diverse transactions with domestic and overseas financial instruments businesses in aproactive manner and increase business partners and applicable securities to enhance and expand
our securities finance business, increasing opportunities for profit.

Develop and realize new
business

We will leverage our strengths as a company with a history in the securities finance field, anddevelop and realize new business based on a long-term perspective in collaboration with Group
companies and domestic and foreign partners.

Diversify management of
securities as an efficientuse of capital

We will secure stable revenues by responding to changes in the external environment and revising
our portfolio in a flexible manner while maintaining appropriate risk controls. Moreover, we will move
forward with expanding management based on foreign currency-denominated securities such as
foreign government bonds and establishing funding methods for foreign currencies in order tosupport the development of business using foreign currencies.

Strengthen business
management structure

We will proactively address our social obligations and ensure that compliance is positioned as aprerequisite of management in order to achieve our corporate philosophy.
To establish unwavering social trust in our company, we aim to secure theeffectiveness of our internal auditing and further enhance our risk management in response to theincreasingly diverse and complex risks associated with the finance business.
In order to fulfill our role as part of the securities market infrastructure even in the event that amajor disaster occurs, we will continue to upgrade our business continuity system.

Strengthen our competitive
base through efficientbusiness operation

As our transaction volume increases and our business becomes more complex, we will
review our processes and actively promote the use of digital technologies such as robotic process
automation (RPA) to build an efficient business operation structure andstrengthen our competitive base.

Facilitate diverse work
styles and making JSF more
dynamic

As work changes and diversifies with work-style reform, delayed retirement and more,
we will increase the productivity of individual personnel and make the company more
dynamic by reviewing our employment system and developing a rewarding andemployee-friendly workplace.

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%）（100%）Nihon
Building

JSF
Trust Bank

Shareholding
Ratio

100%

Name
JSF Trust and Banking Co., Ltd.

100%

Nihon Building Co., Ltd.

20.0%

Japan Information Processing Service Co., Ltd

20.8%

JSF Information Technology Co., Ltd

Copyright Japan Securities Finance Co., LTD. All Rights Reserved（20.0%）（20.8%）

Japan Information
Processing

JSFIT

Capital(mill yen)

Business Overview

14,000Trust service and banking
service

100

Real estate ownership andleasing
Real estate trading andbrokerage

2,460

Information processing services
Software development and sales

100

Information processing services
Software development and sales～ All For Securities Market ～37⚫ Rating Information

JCR

R&I

Standard &Poor’s

As of 30/June/2022

Japan
Securities Finance

JSF TrustBank

RatingOutlookRatingOutlookRatingOutlookLong-term

AA-

StableAA-

StableA

StableShort-term

J-1+

a-1+

（Highest）（Highest）

CP Issue

¥1tri

¥1tri

Long-termAA-

Short-term

J-1+

a-1+

（Highest）（Highest）

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

Stable

A-1

―

AA-

Stable――――～ All For Securities Market ～38⚫ ESG/Sustainability (1)The development of infrastructure that forms the foundation of socio-economic
activities is a key element to realize a sustainable society. It is also one of the
Sustainable Development Goals (SDGs: Goal 9). Our Group provides a variety ofservices, including the Margin Loan Business, as a part of the infrastructure of the
securities market and strives to improve the liquidity of securities and financial
markets and to improve convenience for market participants. Through these
activities, we aim to play a role that includes supporting market participants who are
engaged in similar initiatives to realize a sustainable society.
Our Group believes that it is important to build a system that ensures stable
operations even under various circumstances as it assumes responsibility for the
infrastructure of securities and financial markets. To this end, it is important not
only to respond to disasters in a narrow sense, but also to ensure the stability andhigh reliability of our business base.
In addition, we believe that there are issues to which we can contribute byutilizing the know-how and other resources that our Group has cultivated over theyears.
Based on this perspective, we are currently aware of the following material issues(materialities). Our Group recognizes the roles expected of our Group in addressingthese material issues (materialities) and will advance various initiatives while
flexibly responding to future changes in the social environment.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～39⚫ ESG/Sustainability (2)Important issues we recognize
Classification

E

Item
Climate change⚫

Promote a reduction in environmental impact

Education⚫
⚫

Promote financial and economic education activities
Promote academic research activities⚫
⚫

Promote diversity
Develop and secure human resources and create a pleasant
workplace⚫
⚫

Respect human rights, non-discrimination and diversity
Prohibit various types of harassment⚫

Enhance functions as infrastructure for securities andfinancial markets
Contribute to overseas securities and financial market
infrastructure

Human resources

S
Human rights

Capital market

G

Challenges⚫

Corporate governance⚫

Continuously improve corporate governance

BCP⚫

Stably operate business that is not affected by disasters etc.

Compliance⚫

Operate business based on a high awareness of compliance

Risk management⚫

Implement the Risk Appetite Framework (RAF)

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～40⚫ ESG/Sustainability (3)Specific Initiatives on Key Issues
Classification

E

S

G

Challenges

Initiatives

Reduce environmental impact⚫ Improve company facilities to conserve electricity and be conscious ofenvironmental impact⚫ Promote paperless operations in all areas of the company

Promote financial and economic
education activities⚫ Hold various seminars on margin transactions⚫ Hold seminars for investors and training for securities company employees,
etc.

Promote academic research
activities⚫ Conduct joint empirical research with the University of Tokyo (Securities
Lending and Lending Transactions Utilizing Distributed Ledger Technology)⚫ Collaborate with Kyoto University in Index Development Utilizing Margin
and Credit/Debit Transaction Data

Contribute to overseas
securities and financial market
infrastructure⚫ Provide technical assistance and investment in Indonesian Securities
Finance

Realize diverse work styles for
employees⚫ Provide support for childbirth, childcare, and nursing care
− Introduce company-wide teleworking− Understand employee engagement

Enhance corporate governance⚫ Strive to enhance governance as a company with a Nominating Committeeetc.
− Ensure that the majority of directors are independent outside directors− Ensure that the Chairman of the Board of Directors and Chairman of the
3 Committees are Independent Outside Directors⚫ Establish dedicated departments to address various corporate governanceissues with a sense of urgency

Implement risk management⚫ Implement RAF and establish a system to integrate business management
and risk management

Implement BCP⚫ Continue to strengthen the BCP system and cyber security system toensure stable business operations as a part of the infrastructure of
securities and financial markets

Implement compliance⚫ Prepare manuals and establish Compliance Enhancement Month

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～41⚫ Our Corporate Philosophy and History to Date

Corporate Philosophy
As an institution specializing in securities finance, JSF has a mission tocontribute to the development of the securities market by proactively
meeting the diverse needs of the securities and financial sectors andto enhance the long-term interests of users, while always maintaininga keen awareness of its public role.
Our History to Date◼

Focus on stable management of the margin loan business and improving convenience as
infrastructure for securities markets◼

We will also engage in new operations that meet market needs.

1950
Established as
an institution
specializing insecurities
finance in
response torequests fromthe securities
industry withthe aim ofstabilizing andpromoting thesecurities
market1951

1977

 Launched themargin loanbusiness Launched
the generalstock
lendingbusiness

1989

1998

 Launched Establishedthe
JSF Trust
brokerageBankbusiness forbond lending2019 Launchedloans formargintransactions
for PTS

In conjunction with the establishment of the margin transaction system,
commenced the margin loan business of lending funds or stock
certificates, etc. necessary for the settlement of margin transactions tosecurities companies.

⇒ Roots as a licensed company stipulated in the Financial Instruments
and Exchange Law

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～42

● Our Business Field （Image Chart）＜Funds＞(Margin Loan/Stock Loan)

Securities Financing
Securities
Lending(Equity andBonds)

Equity Repo
Loan to Individual
Investors or Firms

LenderMoney Market,
etc.

Financial
Institutions

SubsidiaryBusiness

Loan to Securities
Companies

Investors

Margin Loan BusinessBorrower

Securities Companies

For
Standardized
MarginTransactions＜Securities＞

Institutional
Investors andSecurities
Companies, etc.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～43NoticeThis document includes statements relating to business forecasts.
These statements do not guarantee future business performance;
they contain risks and uncertainties. Future business performance
may vary significantly depending on the stock market and financial
conditions or other factors.

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