Japan Securities Finance Co., Ltd.
1st Half of FY2023
Financial Results Presentation

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

Table of Contents＜Part Ⅰ＞ Overview of Financial Results for the 1st Half of FY2023


１．Executive Summary (Consolidated)Ｐ３



２．Summary Financial Results for the1H of FY2023

Ｐ４



３．Summary Financial Results for the 1H of FY2023（Non-consolidated）

Ｐ５



４．Financial Highlights（Margin Loan Business）

Ｐ６



５．Financial Highlights（Securities Financing）

Ｐ７



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

Ｐ８



７．Summary Financial Results for the 1H of FY2023（ JSF Trust Bank）

Ｐ９



8．Estimated Figures for FY2023（Revised on November 6）

Ｐ１0＜Part Ⅱ＞ Long-term Management Vision Targeted by JSF


１．Our Initiatives and Results

P１2

２．Long-term Management Vision Targeted by JSF

P１４



３．Revision of Management Goals under the 7th Medium-Term
Management Plan

P１５



４．Shareholder Return Policy During the Period of the 7th Medium-termManagement Plan

P１６

(Appendix)

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

P１８-362

１．Executive Summary (Consolidated)（¥ mil）

1H
FY2023Highlights
YoY ⊿

⊿％


Operating
Income5,944

Recurring
Income6,489+1,354+26.4%Net
Income

4,682

+571

+13.9%+1,418Both margin loan and stock loanbalances increased.

+31.3%  Showed favorable results in securities
financing business mainly in Bond repo
and gensaki transactions and Equity
repo transactions.

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

3２．Summary of Financial Results for the 1H of FY2023
Consolidated（¥ mil）

1H
FY2023

YoY.⊿

Non-consolidated
(%⊿)

JSF

606

+3

48

▲179

15

+1

+165

545

+7

273

▲52

4,768

+1,362

856

+5

317

+55

6,587

+763

857

+5

373

+52

(△97.2%)

18

▲652

―

(―)

―

(―)

(+13.9%)

5,171

▲2

592

+6

246

+34

22,898+3,686

ExceptPremium Charges

19,791+721(+3.8%)

18,009+809

Operating Expenses

15,033+2,060(+15.9%)15,045+2,158

10,145▲816(△7.4%)

10,157▲718

General &Administrative Expenses

3,701

+119

(+3.3%)

3,084

Operating Income

5,944+1,418(+31.3%)

Recurring Income

6,489+1,354(+26.4%)

249

+123

(+98.3%)

18

▲652

4,682

+571

Extraordinary
Profit or LossNet Income

YoY.⊿

▲166

(+17.1%)Gain or Loss inEquity-Method

YoY.⊿

1,450

+3,598

ExceptPremium Charges

Nihon Building

YoY.⊿

24,679Operating Revenues

JSF Trust Bank

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

4３．Summary of Financial Results for the 1H of FY2023（Non-consolidated）
Japan Securities Finance（Non-consolidated）*Excluding premium charge（¥ mil）

1H
FY2023

YoY.⊿

(%⊿)

Operating
Revenues*

18,009+809(+4.7%)

Operating Expenses*

10,157▲718(△6.6%)

Operating Profit

7,852+1,528(+24.2%)Margin Loan Business *

1,956

+430

(+28.2%)

Securities Financing

3,767+1,048(+38.5%)

Others2,128+49(+2.4%)

General &Administrative
Expenses

3,084

+165

(+5.7%)

Operating Income

4,768+1,362(+40.0%)Recurring Income

6,587

+763

(+13.1%)

Extraordinary
Profit or Loss

18

▲652

(△97.2%)Net Income

5,171

▲2

(△0.0%)

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

Key Points●Operating Profit
 Revenues increased mainly due to higher
balances in the margin loan business andsecurities financing.
 Other income (mainly securities
investment) was secured at the samelevel YoY due to the absence of theportfolio substitution implemented in theprevious fiscal year (gains on sales ofdomestic bonds and other securities andlosses on sales of foreign currency
bonds).

●Recurring Income
 Dividends from two consolidated
subsidiaries decreased by ¥ 447 million
YoY due to the drop-off of dividends
paid in the previous fiscal year for theefficient capital allocation within theGroup. It had no impact on consolidated
results because of consolidation
eliminations.

●Net Income
 Extraordinary gains of ¥671 million due tochange in retirement bonus structurerecorded in the previous fiscal year have
dropped off.

5

４．Financial Highlights （Margin Loan Business）
Margin loan and stock loan balances remained at a level higher than the previous fiscal year.



Stock loans maintained YoY growth in 2Q despite a decline in stock prices since July.

FY2023

FY2022（\ bn）

1Q

2Q

1H

3Q

4Q

full
year

1Q

2Q

YoY
1H

2Q

YTD

Margin Loan

248

256

252

253

260

254

279

268

274

12

21

Stock Loan

156

215

185

183

200

188

301

243

272

27

86

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

6５．Financial Highlights （Securities Financing）


Bond repo and gensaki transactions continues to benefit from capturing diverse
investment and financing needs to continue upward trend and increased revenuesAll other businesses also increased profit against the backdrop of robust stock market
development(¥ mil)Type of transaction

1H
FY2023

YoY⊿

YoY%

Securities Financing

Loans for Negotiable
Margin Transactions

116+59 (+105.7%)

 Increased profit due to higher
balances on the back of robust stock
market development.

Equity repo transactions *

860

+113

(+15.1%)

 Outstanding equity repo transactions
remained at high levels.

Loans to Retail

209

+25

(+14.1%)

 Increased revenues thanks to
improved merchantability, including
expansion of eligible collateral.

General Stock Lending

373

+176

(+90.0%) General stock lending increased YoY
thanks to recovery of borrowing
demand for fail-cover in addition torobust stock market development.

Bond repo andgensaki transactions

2,207

+672

(+43.8%)

 Outstanding Bond repo and gensaki
transactions remained at record highlevels.

3,767+1,048(+38.5%)

Total Gross Profit* General Loans, stabilizing funding loan, equity repo, etc.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

7６．Financial Highlights （Securities Investment / Non-consolidated）
Securities investment revenues secured at the same level YoY.



Due to the portfolio substitution implemented in the previous fiscal year (gains on sales ofdomestic bonds and other securities and losses on sales of foreign currency bonds) ,the composition of gains changed but in total the level of gains remained unchanged.

Gains on management of market assets （JSF）
１H
FY2023
Yen-based

YoY

2,217 mil

△2,621 mil

Domestic Bonds

994 mil△2,303 mil

Stocks and Others

1,223 mil

△318 milIn foreign currencies

10 mil

2,542 mil

2,128 mil

49 mil

Total

Ref. Trend of Interest Rate

Changes in Investment Portfolio

Source） Bloomberg

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

8７．Summary of Financial Results for the 1H of FY2023（JSF Trust Bank）


Custodian type trust services, particularly asset-backed loan trusts, drove increased
revenues from trust fees.
Recurring revenues decreased due to a decrease in interest income resulting from a
reduction in the investment portfolio balances.
Net income increased thanks to lower recurring expenses such as interest on borrowing.

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

Recurring Revenue【Trust Fees】
YoY

１H
FY2023

1,508(¥ mil)(%)▲166(△9.9%)

687

Trust Fees

770

+83

(+12.1%)

Recurring Expenses

651

▲172

(△20.9%)Recurring Income

857

+5

(+0.6%)Net Income

592

+6

(+1.1%)

１H
FY2022

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

770

１H
FY20239

8．Estimated Figures for FY2023（Revised on November 6）
Precondition

FY2023
Estimated
Figures（¥ mil）

FY2023 Estimate

YoY.⊿⊿ from prev.
EF

Consolidated
Over-lentMargin Loan
¥150bnOver-lent
Stock Loan
¥130bnMatching¥110bnMargin Loan
¥260bnStock Loan
¥240bnOperating Income

8,900＋2,545＋500

Recurring Income

9,800＋2,198＋400

Net Income

7,000＋1,033＋300

Operating
Income6,803＋2,412＋422

Recurring
Income

9,370

▲904

＋991

Net Income

7,274▲2,028＋866

Recurring
Income

1,530

＋114

+50

Net Income

1,061

＋85

+34

Operating
Income

550

＋13

―

Recurring
Income660＋8―

Net Income

435

＋5

―

JSF

（Reference）
FY2022 Results
Over-lentMargin Loan
¥160bnOver-lent
Stock Loan
¥94bn

Matching¥94bn
Margin Loan
¥254bn

JSF
Trust andBanking

Stock Loan
¥188bnNihon
Building

Preconditions of Loans for Margin Transactions●Loan Rate： 0.60％,●Interest on Collateral Money： 0%,●Lending Fee： 0.40％<Approach to Estimated Figures for FY2023（Revised on November 6）>
 We conducted an upward revision based on strong 1H results in both the margin loan business and Security Financing Business.

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

10Long-term Management Vision Targeted by JSF

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

１．Our Initiatives and Results
FY2021

Medium-termManagement
PolicyFY2025

FY2023• Establishment of sophisticated governance system• Improvement of profitability and capital efficiency

The 6th Medium-termManagement Plan Management Goals

The 7th Medium-termManagement Plan
• Further accelerating current initiatives, such asenhancing the margin loan business, expanding andstrengthening securities financing business• Formulating “Human Capital Policies” as our basic
approach for promoting initiatives related to theformation of “human capital,” such as human resource
development, with the aim of strengthening thefoundation of human resource capabilities, which are
the source of enterprise value creation

Achievement 4% ROE by
FY2022

Achievement 5% ROE by FY2025

 Shareholder returns︓Seeking 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.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

12１．Our Initiatives and Results
ROE, PBR (Historical)


Expecting to achieve the 5% ROE
goal set out in our Medium-termManagement Policy in thecurrent fiscal year, two years
ahead of our expectation.
P/B ratios recently hovering
around 1x .

Given that JSF's management efforts todate have achieved a certain level ofsuccess and that we have reached amilestone, JSF now believes it isappropriate to reorganize its approach to
future management, and its Board of
Directors has engaged in repeateddiscussions with regard thereto.

The 6th Medium-termManagement Plan

The 7th Medium-termManagement Plan

* ROE as of the end of 2023/09 was calculated based on the FY2023 estimated performance figures.

As a result, JSF has reached theconclusion①Setting out the long-term
management vision targeted by JSF②Formulating, in line with this longterm management vision, a Mediumterm Management Plan and ashareholder return policy based on
specific business strategies.

Formulation and Public Release of the Long-term Management Vision Targeted by JSF（November 6, 2023）
Formulation of “Longterm Management
Vision Targeted by
JSF”

Upward revision of Management
Goals under the 7th Medium-Term
Management Plan throughFY2025.

Copyright Japan Securities Finance Co., LTD. All Rights ReservedFormulation of “Shareholder
Return Policy During the
Period of the 7th Mediumterm Management Plan”

13

2．Long-term Management Vision Targeted by JSF
Vision of the Future Targeted by JSF

As Japan’s only securities finance company supporting the infrastructural functions of
securities and financial markets, JSF aims to be a distinct and unique company, with a highdegree of agility and flexibility, that achieves sustainable growth and enhances its corporate
value, while maintaining strong financial soundness, through its contributions to thedevelopment of securities and financial markets.

Corporate Message（Newly Formulated）

Be unique. Be a pioneer.
唯一をつくる、開拓者であれ。
This message represents the image of what we want to become, which is to pioneer the future
by contributing to the market as a distinctive and unique company.
A company that responds agilely and flexibly to the trading needs of participants in the
securities and finance markets while bridging domestic and international markets in anenvironment of constant change, including the evolution of financial technologies andinternationalization.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

14

2．Long-term Management Vision Targeted by JSF
Long-term Direction

As Japan’s only securities finance company, in the future as well, JSF will continue to agilely and flexibly
address the trading needs of securities and financial market participants. Through its contributions tomarket development, JSF will seek to concentrate the collective efforts of its Group companies tosustain growth and enhance its corporate value, while maintaining strong financial soundness.



Under this management direction, in the future as well, JSF will strive to steadily strengthen its earnings
base and seek the stable and steady improvement of its capital efficiency, while remaining mindful ofthe cost of capital, and will continue to work towards the steady improvement of its ROE, keeping the
8% level in mind.

At the same time, with regard to shareholder returns, JSF will continue to maintain a total payout ratio of
100% during the period of its 7th Medium-Term Management Plan (the three fiscal years from FY2023
through FY2025), and will fully strive to enhance shareholder returns thereafter as well.



Through these management efforts, JSF aims to establish a market valuation with a PBR in excess of 1x.



In addition, under its organizational design as a company with a nomination committee, etc., JSF will
strive to strengthen its corporate governance by tackling sustainability issues while focusing on thefurther improvement of the effectiveness of the deliberations by its Board of Directors and respective
committees, the further enhancement of the disclosure of information, and the formation of a deep
human capital base.

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

15

3．Revision of Management Goals under the 7th Medium-Term
Management Plan
Based on its long-term vision and its performance in FY2023, JSF has upwardly
revised its management goals, as follows, under the 7th Medium-Term
Management Plan
ROE: Maintain a stable level above 5% and aim for further improvement.
Consolidated recurring income:Maintain a stable level of over 10 billion yen and aim for further improvement.

4．Shareholder Return Policy During the Period of the 7th Medium-termManagement Plan
Shareholder returns
With respect to shareholder returns, form a viewpoint of further enhancement, JSF will continue
its policy of aiming for a total payout ratio of 100% on a cumulative basis in the years fromFY2023 through FY2025, through the payment of dividends and the flexible implementation ofshare repurchases.

Dividends
With regard to the payment of dividends, traditionally JSF has been very proactive, and for
FY2023 it will increase its dividend to JPY44, and in the period from FY2024 through FY2025,
it will proactively pay dividends, aiming for a payout ratio of 70%.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

16

4．Shareholder Return Policy During the Period of the 7th
Medium-term Management Plan

Annual Dividend per share and Share Buyback (Historical)¥3.3bn¥50¥3.0bnAnnual Dividend
per share¥45¥40

Share Buyback¥2.3bn

＋￥12

¥44

¥35
¥30

¥30
¥25

¥0.5bn

¥20

¥22

¥32

¥26

In the period
from FY2024
through FY2025,
it will proactively
pay dividends,
aiming for apayout ratio of
70%.

¥15

FY2019FY2020

FY2021

FY2022The 6th Medium-term Management Plan

FY2023 Estimated Figures
Recurring
Income¥9.8bnNet Income¥7.0bnFY2023

FY2024FY2025

The 7th Medium-term Management Plan

Striving for a total payout ratio of 100％ on a cumulative basis throughdividend payments and agile implementation of share repurchases.
※Estimated Figures for FY2023 were revised on November 6, 2023.
Annual dividend per share in FY2023 is a forecast.
The amount of share buyback in FY2023 is subject to a repurchase limit.

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

17Appendix
 Dividend and Share Buyback Program (Historical)
 Financial Result Trends (Consolidated) Gross Profit by Business Breakdown of Operating Revenues by Business Analysis of YoY Change in Operating Revenue by
Business Outstanding Balance of Transactions by Group
Business
 Securities Holdings
 Balance Sheet Summary, consolidated

Copyright Japan Securities Finance Co., LTD. All Rights Reserved Margin Transactions & Loans for Margintransactions
 Structure of Margin Transactions & Loans for
Margin Transactions
 Revenue Structure of Loans for Margin
Transactions
 About the Margin Loan Rates Our Group Companies Rating Information
 Our Business Field (image chart) Dividend and Share Buyback Program (Historical)
FY2023

FY
2017

FY
2018

FY
2019

FY
2020

FY
2021

FY
2022

Annual Dividend per share

¥26

¥22

¥22

¥26

¥30

¥32

Interim ¥17
Year-end ¥27

Share Buyback(shares)

1.5mil2.0mil1.0mil

―2.4mil3.1mil3.3mil（amount）¥0.9bn¥1.2bn¥0.5bn―¥2.3bn¥3.0bn¥3.3bn

79.3%

87.8%

71.0%

60.1%

97.6%

97.6%

101.0%¥4.2bn¥3.7bn¥3.5bn¥3.9bn¥5.1bn¥5.9bn¥7.0bn

：EPS

¥44.2

¥40.0

¥38.4

¥43.2

¥56.6

¥67.7

¥81.4

： DPR

58.8%

55.0%

57.2%

60.1%

53.0%

47.2%

54.0%

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

Forecast/
Framework¥44

Note for FY2023 (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 November 6, 2023. Moreover, EPS and DPR
have been calculated using this estimated figure.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved19 Financial Result Trends (Consolidated)¥ mil
FY2018FY2019FY2020

FY2021

１H
FY2022

FY2022

１H
FY202324,321

29,10130,92430,13821,081 42,518

24,67918,603

20,84623,711

27,305

19,06937,806

19,791

12,284

16,83518,018

16,533

12,97328,76515,033

6,566

8,585

10,81913,728

10,962

24,053

10,145General &Administrative
Expenses

8,056

8,136

8,129

7,368

3,581

7,398

3,701

Operating Income

3,981

4,129

4,777

6,235

4,526

6,354

5,944

248

306

395

446

125

523

249

5,046

4,894

5,558

7,164

5,135

7,601

6,489

Extraordinary
Profit or Loss

▲41

▲36

43

▲17

671

671

18

Net Income

3,765

3,556

3,971

5,174

4,110

5,966

4,682

Operating
Revenues
Ex Premium charges

OperatingExpenses
Ex Premium charges

Gain or Loss inEquity-Method

Recurring Income

Copyright Japan Securities Finance Co., LTD. All Rights Reserved20 Gross Profit by Business\ mil

Operating Revenues(ex. premium charges)

Gross Profit

1H
FY2022

FY2022

1H
FY2023

1H
FY2022

FY2022

1H
FY202319,06937,806

19,7918,108

13,753

9,645

Secrities Finance Business

17,19933,91918,0096,324

10,363

7,852

Margin Loan Business(ex. Premium charges)

1,628

3,292

2,078

1,525

3,077

1,956

Securities Financing

10,385

21,976

13,458

2,719

5,850

3,767

Loans for Negotiable
Margin Transactions

65

149

128

56

130

116

Equity repo
transactions

757

1,529

875

747

1,514

860

Loans to Retail

264

544

299

183

377

209

General Stock Lending

329

799

523

196

496

373

8,968

18,953

11,630

1,535

3,332

2,207

5,185

8,651

2,472

2,079

1,434

2,128

Trust and Banking Business

1,616

3,364

1,450

1,387

2,616

1,401

Real Estate Management Business

602

1,197

606

588

1,162

591

Consolidated

Bond repo andgensaki transactions
Others（mainly
securities investment）

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 Reserved21 Breakdown of Operating Revenues by Business(Margin Loan Business) Both interest on loans and lending fees increased due to an increase in both margin loan andstock loan balances.

Changes in Operating Revenues(￥：mil）

Quarterly

Margin Loan
Business（ex premium
charges）
3,883

3,581

3,883

(4,888)

2,409

2,070
1,484
(1,253)

925

(167)

1Q

1,039

(199)

411
168

(2,011)(1,322)

406

(398)

407

442

432

135

156

3Q

4Q

1Q

FY2022

(261)

(210)

264

2Q

6,967

(＋91.4%)  Revenues increased

2,078

875
805
452

188

272

2Q

1H

1H

FY2022

FY2023

FY2023due to higher
balances.

(+27.6%)

Fees onLending
Securities

5,468(+126.9%)  Revenues

increased due to alarge increase instock loan balances.

4,888

Premium
Charges(+143.0%)

LendingFees(＋45.6%)

579

(579)

(318)
(230)

103

(1,859)

(840)

(757)

393

1,484

1,584

Point

5,468

(3,565)9
8
4

1H
Revenue(YoY)

Copyright Japan Securities Finance Co., LTD. All Rights ReservedIntereston
LoansInterest on
collateralmoney ofsecurities
borrowed875

 Interest on loans
increased due toincreased marginloan balances.

(＋8.7%)  Interest on

452(+66.1%)collateral money of
securities borrowed
increased due to anincrease in thebalance of overlent stock loans.

22 Breakdown of Operating Revenues by Business(Securities Financing (1))
 Loans for negotiable margin transactions revenue increased due to an increase in
outstanding balances against the backdrop of robust stock market development.
 Equity repo transactions increased due to a continued increase in Equity repo balances.
 Loans to retail increased due to improved merchantability, including expansion of eligible
collateral.

Changes in Operating Revenues(¥ mil）

Quarterly

65

31

34

29

58

70
757

369

387

369

403

422

129

135

139

140

146

153

264

299

1Q

2Q

3Q

4Q

1Q

2Q

1H

1H

FY2023Loans for
Negotiable
MarginTransactions

875

452

FY2022

Point

(YoY)

128

54

１H
Revenue

FY2022

FY2023

128(+95.9%)Equity repo

875

transactions(＋15.6%)Loanｓ toRetail299(+13.0%) Loans for negotiablemargin transactions
revenue increased
due to an increase in
outstanding balances.

 Equity repo
transactions resulted
in an increase.
Outstanding balanceof equity repo
transactions
contributed to theresult.
 Loans to retailincreased due to anincrease in
outstanding balances.

＜ Loan Lineup ＞
 Equity repo transactions: General loans, stabilizing fund loans, Equity repo(cash-secured stock lending transactions) Loanｓ to retail: Com-STOCK loans
Copyright Japan Securities Finance Co., LTD. All Rights Reserved23 Breakdown of Operating Revenues by Business(Securities Financing (2))
 Bond repo and gensaki transactions increased due to strong demand of the backdrop
of JGBs as HQLA.
 General stock lending increased thanks to recovery of borrowing demand against the
backdrop of robust stock market development.
Changes in Operating Revenues
Quarterly(¥ mil）

１H
Revenue

Point

(YoY)
523

329
214
153

266

257

255

11,626

175

4,107

4,846

4,564

5,410

5,737

5,889

GeneralStock
Lending523(+59.0%)8,954

Bond repo
and
1Q

2Q

3Q

4Q

1Q

FY2022

FY20232Q

 Increased
revenues thanks
to recovery ofborrowing demand
for fail-cover.

1H

1H

FY2022

FY2023gensakitransactions

11,626(＋29.8%)

 Increased
revenues due tooutstanding Bond
repo and gensaki
transactions
remained at highlevels.

*General 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 Reserved24 Breakdown of Operating Revenues by Business(JSF Trust Bank) Rising stock prices have led to an increase in Trusts for the separate
management of money and securities, while the favorable performance ofasset-backed loan trusts continues to drive up trust fees.
Changes in Trust Fees
Quarterly(¥ mil）

１H
Revenue

Point

(YoY)

664
324

1Q

339

346

2Q

3Q

336

4Q

364

379

1Q

FY2022744

2Q

FY2023

Trust
Fees
1H

1H

FY2022

FY2023744(＋12.0%) Asset-backed loans
driving continued
increase.

*Consolidated baseTrust 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 Reserved25 Analysis of YoY Change in Operating Revenue by Business≪Summary of the Significant Points for 1H≫
 Operating revenue increased by ¥3,598 million (+17.1%) YoY
 In the Margin Loan Business, revenues increased due to an increase in both margin loan and stock loanbalances.
 In the Securities Finance Business, revenues increased in all operations against the backdrop ofstrong transaction needs and other factors.
 In Others, revenues decreased due to the absence of gains on sales of JGBs, etc. in securities
investment resulting from portfolio substitution implemented in the previous fiscal year (operating
expenses also decreased due to the absence of losses on sales of foreign bonds holdings).
 In the Trust Business, trust fees remained strong, while interest income from securities investment
decreased.
￥：mil+2,672+3,326

+63

+118

+34

+194

+2
△2,712△100

24,67921,081

１H
FY2022MarginLoan

Loans for
NMT

Equityrepo

Loans toRetailStock
Lending

Securities Financing

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

Bond
repo

Securities
investment
etc.

ー

ー

Trust
Bank

Real
Estate1H
FY202326

 Outstanding Balance of Transactions by Group Business(Average Balance)￥︓milTransaction Type1H
FY2022

FY2022

1H
FY2023

Margin Loans

252,436

254,701

274,116

Stock Loans

185,951

188,918

272,110

11,558,679

11,473,992

12,027,482

17,431

18,85635,701

695,236

697,788

787,394

Loans to Retail

16,096

16,75919,151

General Stock Lending

34,006

63,342

122,816

Bond repo and gensaki
transactions

10,795,907

10,677,245

11,062,417

555,906

539,931546,806

Securities Financing
Loans for Negotiable
Margin Transaction
Equity Repo
transactions

Trust Bank Loans

Copyright Japan Securities Finance Co., LTD. All Rights Reserved27 Securities Holdings￥:mil
Mar-23
Securities Holdings

Sep-23

Unrealized Profits
and Losses

B/S Amount

Unrealized Profits
and Losses

B/S Amount

Equity23,233

10,34928,90016,156

Bond768,722▲ 16,048

849,194▲ 27,656

JGB&Municipal Bond

356,081▲ 11,630

338,616▲ 22,540

Corporate Bond

340,053▲ 536

435,141

72,587▲ 3,881

75,436

16,167

2,623

14,914

2,495

808,123▲ 3,075

893,009▲ 9,004ー(7,416)ー(13,377)

OthersOther Securities
Total（included the effects ofderivatives）

Notes▲ 974 Government guaranteed bonds etc.
▲ 4,141 Foreign government bonds etc.

*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 Reserved28 Balance Sheet Summary （consolidated）\mil
Sep-23
Total assets

16,271,887

Change from
Mar-23+2,215,670

Cash & Deposit

928,887▲669,386 Deposit at BOJ

Short-term
investments

189,448+118,434

Short-term loans
receivable
Receivables
under resaleagreements
Collateral moneyof securities
borrowed
Investments insecurities

1,117,156
5,943,123
6,810,521

JGB and other bonds (Maturity: 1year
or less)
Margin loan / Loans for negotiable+161,606 margin transactions / General loans /Trust bank loans+2,381,717
Collateral money of bond borrowing+140,699 Collateral money of stock borrowing
JGB and other bonds (Maturity: morethan 1year), Stock712,122▲33,498

Total liabilities

16,129,633+2,209,144

Call money

1,355,400▲835,000

Short-termborrowings

103,010+10,000 Market operation by BOJ

Commercial Paper

465,254+14,254

8,317,232+3,535,431

Payables under
repurchaseagreements
Collateral money
received of
securities lent
Borrowed moneyfrom trust
account
Long-term
borrowings

Total net assets

Bank borrowing

Collateral money of bond lending

4,263,685▲810,090 Collateral money of stock lending

1,034,719+163,384

433,800
142,254+201,100 Market operation by BOJ+6,526Ref) Capital adequacy ratio* at the end of Sep 2023: 370％
*Based on FIEA
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

Balance sheet characteristics and risk management
In recent years, within the securities financing
business, which has been our focus, Bond repo andgensaki transactions have seen their balances increasesignificantly in line with the growth of the businessdue to the large transaction lots involved. As a result,the balance sheet tends to become larger.
Since Bond repo and gensaki transactions aretransactions that match the needs of lenders andborrowers, they increase both assets (collateral moneyof securities borrowed, receivables under resaleagreements) and liabilities (collateral money of
securities lent, payables under repurchaseagreements) on the balance sheet, as shown on theleft. In such transactions, we receive and pay cash
equivalent to the market value of the bonds as
collateral for the bonds to be traded, and during theterm of the transaction, we evaluate the market valueof the bonds on a daily basis and appropriately
implement margin calls (i.e., receiving and paying thedifference between the cash collateral and the market
value of the bonds) to control our exposure. In addition,
most of our clients are subject to debt assumption byrelatively high credit and quality financial institutions
or central clearing houses. Through this type of risk
control, even while the balance sheet and transactions
outstanding balance expanded, the increase in
exposure and margin transactions risk remained undercontrol.
For other securities financing business, in addition to
the same risk control measures as Bond repo andgensaki transactions, we set appropriate haircut rates(margins) based on the volatility and market liquidity ofthe equities involved in the transactions to control the
expansion of exposure.
Under the framework of integrated risk management,
we quantify the amount of credit risk on a daily basis
and manage it to keep it within the risk capital limit set
based on our company's management strength. We also
monitor daily on a client-by-client basis to ensure that
their exposure is within a certain limit assuming timesof stress, thereby reducing excessive exposure tocertain clients.

29

 Margin Transactions & Loans for Margin Transactions

Copyright Japan Securities Finance Co., LTD. All Rights Reserved30MarginTransaction

Loans for Margin
Transaction

Margin buying order
Margin selling order

Margin loan
application
Stock loan application

Stock

Institutional
Investors

Securities
Companies

Fund (Margin loan)
Stock (Stock loan)

JSF

Fund for purchasing
Stock to sell

BrokerInvestor Structure of Margin Transactions& Loans for Margin Transactions

Funds
Purchased stock
Sale proceeds

Money
MarketStock Exchange
Clearing Facilities
Copyright Japan Securities Finance Co., LTD. All Rights Reserved31 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 (lendingfees) ＝(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 isposted in operating expenses (fees of borrowing charges), so the amount ofpremium charges does not affect our profit.
Revenue: Fees on lending securities (premium charges) = Expenses: Fees onborrowing securities (premium charges) = (C)‘×rate of premium charges
Copyright Japan Securities Finance Co., LTD. All Rights Reserved32 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 Reserved33 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

34 Rating Information

JCR

R&I

Standard &Poor’s

As of 30/Sep/2023

Japan
Securities Finance

RatingOutlookRatingOutlookRatingOutlookLong-term

AA-

StableAA-

StableA

StableShort-term

J-1+

a-1+

（Highest）（Highest）

¥1tri

¥1tri

CP Issue

A-1―※Euro-yen CP issuance limit set at US$3 billion (S&P)

JSF TrustBank

Long-termAA-

Short-term

J-1+

a-1+

（Highest）（Highest）

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

AA-

Stable

―

―

―

―

35

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

Securities Financing

LenderEquity Repo
transactions

Bond repo andgensakitransactions

Loanｓ to Retail

General Stock
Lending

Money Market

Institutional
Investors andSecurities
Companies, etc.

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

Financial
Institutions

SubsidiaryBusiness

Loans for Negotiable
Margin Transactions

Investors

Margin Loan BusinessBorrower

Securities Companies

For
Standardized
MarginTransactions＜Securities＞

36

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