Japan Securities Finance Co., Ltd.

FY2021
Financial Results Presentation

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～Table of Contents＜Part Ⅰ＞ Overview of Financial Results for FY2021◼

１．Executive summary (Consolidated)

Ｐ３◼

２．Summary Financial Results for FY2021

Ｐ４◼

３．Summary Financial Results for FY2021（JSF parent）

Ｐ５◼

４．Financial Highlight（Margin Loan Business）

Ｐ６◼

５．Financial Highlight（Securities Financing）

Ｐ７◼

６．Financial Highlight（Securities Investment of JSF parent）

Ｐ８◼

７．Summary Financial Results for FY2021（ JSF Trust Bank）

Ｐ９◼

８．Balance Sheet Summary (Consolidated)

Ｐ１０◼

９．Estimated Figures for FY2021

Ｐ１１＜Part Ⅱ＞ Our Initiatives and achievements in the 6th Mid-Term Management Plan◼

１．FY2021 Results

P１３◼

２．Achievements of the 6th Mid-Term Management Plan

P１４◼

３．Results of JSF's Efforts to Date

P１５◼

４．Efforts in FY2021 (Summary)P１６◼

５．Medium-term Management Policy: Overview

P１７◼

6. Measures to Realize Management Goals & Concept of our Business portfolio

P１８◼

7. Effort in Corporate Governance (1) Composition of Board of Directors

P１9(2) Appointment of Executive Officers

P２０(3) Sustainability

P２１

◼
◼

8. Shareholder

P２2(Results for the previous term and planned for this term)(Reference) Medium-term management policy(Appendix)
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

P２3
P２4

P２６-５２～ All For Securities Market ～2

１．Executive Summary (Consolidated)（¥ mil）

FY2021
Full YearYoY ⊿Highlights⊿％✓

Operating
Revenues✓

30,138

▲786

△2.5％
✓
✓

Operating
Income6,235＋1,458＋30.5％

Recurring
Income7,162＋1,606＋28.9％Net
Income5,172＋1,203＋30.3％

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

There was a downturn in the margin loanbusiness （△46.1％） due to a decrease in
the balance of stock loans.
Securities financing saw an increase inrevenue（+22.4%). Bond lending
remained steady and outstanding equity
repo transactions also increased.
Revenue of subsidiary JSFTB increased(+10.3%) due to steady trust business.
Operating expenses decreased due to adecrease in borrowing fees accompanying
a decrease in the stock loan balance.
General and administrative expenses
decreased mainly due to a revision of themethod to calculate the allowance for
doubtful accounts, etc.

～ All For Securities Market ～3

２．Summary of Financial Results for FY2021
Consolidated（¥ mil）

Non-consolidated
JSF

FY2021
Full Year

YoY.⊿

30,138▲786(△2.5%)

26,586▲964

27,3053,593(＋15.2%)

23,753

3,416

16,533▲1,484(△8.2%)

16,335▲1,312

13,7282,908(＋26.9%)13,5293,080

General &Administrative Expenses

7,368

▲760

(△9.4%)

6,004

Operating Income

6,235

1,458

(＋30.5%)Recurring Income

7,164

1,606

(＋28.9%)446

51(+13.1%)

▲17

▲61

5,174

1,203

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

2,960

335

1,286

▲8

435

▲90

25

5

▲985

1,140

293

666

▲12

4,246

1,334

1,383

132

595

▲1

5,928

1,444

1,385

130

707

▲8

(ー)

▲17

▲17

―

―

―

▲43

(＋30.3%)

4,539

1,029

1,023

166

465

▲35

～ All For Securities Market ～4

３．Summary of Financial Results for FY2021（Non-consolidated）
Key Points

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

Operating Revenues*

FY2021
Full Year

YoY.⊿

(%⊿)

23,753

3,416(+16.8%)Margin Loan Business*

3,285

▲860

(△20.8%)

Securities Financing

15,391

3,021(＋24.4%)

Others

5,076

1,255

(＋32.9%)Operating Expenses*

13,5293,080(＋29.5%)General &Administrative Expenses

6,004

▲985

(△14.1%)

Operating Income

4,246

1,334

(+45.8%)Recurring Income

5,928

1,444

(＋32.2%)Extraordinary
Profit or Loss

▲17

▲17

(ー)

Net Income

4,539

1,029

(＋29.3%)●Operating Revenues◆ Up ¥3,416 mil (+16.8%) YoY driven by
Securities Investment （”Others”）.
— Margin loan business decreased YoY.
The balance of stock loans continued
to decline.
— Securities financing saw an increase
in revenue. Bond lending remained
steady and outstanding equity repo
transactions also increased.
— Others (securities investment) also
saw an increase in revenue due tothe steady accumulation of carry
income and the recording of gains onsale under portfolio management.
*For details of segments, see “Financial
Highlights for FY2021 (P6-P8)”

Copyright Japan Securities Finance Co., LTD. All Rights Reserved●Operating Expenses— Up ¥3,080mil (+29.5%) YoY— Fees on borrowing securities in bondlending increased.

●General & Administrative Expenses— Decreased ¥985mil (△14.1%) YoY— This was mainly due to a revision of
the method to calculate theallowance for doubtful accounts.

～ All For Securities Market ～5

４．Financial Highlights （Margin Loan Business）◼

Margin loan balance remained steady at a level higher than the same period of
the previous fiscal year.

◼

Stock loans has been on a downward trend and continue to be below the levelof the previous year.
FY2020（\ bn、%）

FY2021

1Q

2Q

1H

3Q

4Q

Margin Loan

199

219

209

223

256

Stock Loan

295

333

314

316

255

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

YoY

1Q

2Q

1H

3Q

4Q

224

296

286

291

288

259

283

3

58

300

181

194

188

174

150

175

▲104

▲125

full year

full year

4Q

YTD

0.40%

～ All For Securities Market ～6

５．Financial Highlights （Securities Financing）◼
◼

Both outstanding balance of Bond Lending and equity repo have been
increasing.
On the other hand, General stock lending was sluggish due to a decrease inborrowing demand.
(¥ mil)Type of transaction

Loans for Negotiable
Margin Transactions

Securities Financing

Loan to Securities
Companies*
RetailGeneral Stock Lending

Bond Lending

Total Revenues

FY2021
Full Year

YoY⊿

156

74

+94.7％✓ The balance of loans outstanding
increased due to a increase in theuse of clients.

1,196

411

+52. 4％✓ Outstanding equity repo transactions
have been on increasing.

510

42

+9.0％

YoY%

✓ The mainstay COM-STOCK Loan
remained steady.

657

▲292

△30.8%✓ Although the balance of large-lot
transactions is recovering, it was notenough to cover the decline ininterest margins. Borrowing demand
for use of fail-cover also decreased.

12,8692,784＋27.6%✓ Both outstanding gensaki
transactions and repo transactions
have been increasing.

15,391

3,021＋24.4%* 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）◼

Revenues increased year on year due to the steady accumulation ofcarry income and the recording of gains on sale under portfolio
management.

Gains on management of market assets*1 （JSF）

FY2021
Yen-based

YoY¥ 3,135 mil△¥ 95 milDomestic Bonds¥ 1,395 mil¥ 354 mil

Others*2¥ 1,739 mil△¥ 449 mil¥ 620 mil¥ 64 mil¥ 3,670 mil¥ 474 milIn foreign currencies

Total

Changes in Investment Portfolio

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

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

Source） Bloomberg～ All For Securities Market ～8

７．Summary of Financial Results for FY2021（JSF Trust Bank）

Highlights⚫ Trust fees increased steadily due to the growth of trusted deposits and the asset backed
loan trust.
⚫ Though interest expenses decreased, depreciation expenses increased due to an update of
the bank accounting system.
⚫ Recurring income and Net Income both increased.

JSF Trust Bank
(Non-consolidated)【Growth of Trust Fees】

YoY（¥ mil）

FY2021(%)

Recurring Revenue

¥

2,962

148

(＋5.2%)

Trust Fees

1,316

221

(+20.2%)

Recurring Expenses

1,576

18

(+1.1%)

Trust fees increased contributed
to by the strengthening ofcustodian type trust services(crypt-asset related deposits andsegregated cash of customers
deposited at the brokers) andABL trust, etc.

(¥ mil)1,094

Recurring Income

1,385

130

(＋10.4%)Net Income

1,023

166

(+19.4%)*ADR : Allowance for Doubtful Receivables
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

FY20201,316

FY2021～ All For Securities Market ～9

８．Balance Sheet Summary （FY2021 / Consolidated）\mil

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

Mar-22

Change from
Mar-21

14,168,656

2,032,426

1,299,070▲ 122,486 Deposit at BOJ

109,724

66,757 1year or less)

JGB and other bonds (Maturity:
Margin loan / Loans for

891,485▲ 224,867 negotiable margin transactions /General loans / Trust bank loans

3,928,146

6,499,422
1,042,496

926,289
Collateral money of bondborrowing
1,173,851 Collateral money of stock
borrowing
JGB and other bonds (Maturity:
107,151 more than 1year), Stock

14,030,659

2,029,596

1,858,400

151,800

239,210496,000
5,544,898
4,706,496

Bank borrowing
101,616
Market operation by BOJ▲ 117,000
1,353,090
Collateral money of bond lending

677,793 Collateral money of stock lending

1,031,412▲ 112,050

137,996

2,829

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 Mar 2022: 348％
*Based on FIEA

～ All For Securities Market ～ 10

９．Estimated Figures for FY2022
Precondition

FY2022Estimated
Figures（¥ mil）

FY2022 Estimate⊿ from prev.
EF

YoY.⊿

Consolidated
Over-lentMargin Loan
¥200bnOver-lent
Stock Loan
¥110bnOperating Income

7,200

964

―

Recurring Income

8,000

835

―

Net Income

5,600

425

―

Operating
Income

5,216

969

―

Recurring
Income

8,496

2,567

―

Net Income

6,726

2,186

―

Recurring
Income

1,400

14

―

Net Income

971

▲52

―

Operating
Income

565

▲30

―

Recurring
Income

680

▲27

―

Net Income

445

▲20

―

Matching¥90bn
Margin Loan
¥290bnStock Loan
¥200bnJSF（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＞•

Assumes further expansion of security financing operations and a decrease in system amortization expenses.

•

Subsidiary results are expected to be on par with the previous fiscal year.

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

Our Initiatives and achievements in the 6th Mid-Term
Management Plan

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～1. FY2021 Results
1.
➢

Improvement in business performance
Steady implementation of the Sixth Medium-Term Management Plan has improved both earning
power and capital efficiency➢

Growth was driven especially by the security finance business and trust banking business2. Formulation of the "Medium-Term Management Policy" (announced in Nov.
2021)➢

The aim of the policy is to become a company that maintains a high degree of financial soundness,and realizes both the sustainable growth expected of us as a listed company and a medium- tolong-term enhancement of our corporate value.

➢

We are aiming to achieve an ROE of 4% in FY2022 and an ROE of 5% by FY2025.
― ROE target set at a level above costs of equity (recognized as in the mid-4% range)

3. Efforts in Corporate Governance➢In anticipation of the revised CG Code and our transition to the new TSE market classification, we
addressed various issues required of us as a listed company, such as a need to fulfill the functionsof the board of directors and to address sustainability issues.
➢ Consider and disclose the composition of the Board of Directors and the appointment of
Executive Officers➢ Formulate a basic approach to sustainability➢ Disclose climate change-related financial information based on the TCFD recommendations
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 13

2. Achievements of the 6th Mid-Term Management Plan
Management
Goals

Given that the margin loan business, JSF’s core business, is greatly affected bymarket 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 our revenue sources and steadily increasing
our basic profit*Recurring income as a trend calculated based on the assumed gross operating profit of the margin loan business●Status of “Basic Profit"●Status of “Number of Loanable Stock Issues”（units：the number of issues）
2,661

2,572

4,887

2,479
2018年度FY20182019年度FY20192020年度FY20202021年度FY2021➢ Due to the active use of videoconferencing
and prioritization based on past performance,
the number of loanable stock issues was
2,661 at the end of March 2021. That was anincrease of 89 issues from the end of theprevious fiscal year.

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

8,454

一般管理費
SGA and
Others・その他

2021年度FY2021
Basic
基礎収支額

+122

+852

2,522

+1230
+532

5,718

FY2019FY20202019年度
2020年度ｾｷｭﾘﾃｨ・
Securities
Basic
Basic
Financing
基礎収支額
基礎収支額
ﾌｧｲﾅﾝｽ業務
ProfitProfit

国債等
Bond
Investment
運用収益

子会社

Subsidiary
Subsidiaries

Profit➢ “Basic Profit” in fiscal 2021 was 8,454 mil yen, up
47.8% from the previous fiscal year.

～ All For Securities Market ～ 14

３. 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 ～15

４．Efforts in FY2021 (Summary)(1) Further Growth inSecurities Financing◆ Sales activities to expand
transactions and develop business
partners◆ Responded flexibly and promptly
to transaction needs◆ Bond lending and equity repo
transactions increased(3) New Business◆ Commencement of fundadministration services◆ JSF and University of Tokyo Start
Empirical Research on Securities
Lending and Borrowing Using
Distributed Ledger Technology
Copyright Japan Securities Finance Co., LTD. All Rights Reserved(2) Improvement in JSF
Trust & Banking’s
Profitability◆ Trust fees increased steadily due
to the growth of trusted deposits
and the asset backed loan trust◆ Trust fees increased contributed
to by the strengthening ofcustodian type trust services(4) Strengthening Corporate
Governance◆ Formation and Disclosure of“Policy on the Composition of theBoard of Directors” and “Policy for
Executive Officer Appointments”◆ Sustainability Issue Initiative◆ Establishment of the Corporate
Governance Office～ All For Securities Market ～ 16

５．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 ～17

6. Measures to Realize Management Goals& Concept of our Business Portfolio
Measures for Realization of Management Goals
1)
2)
3)

Strengthening its securities finance business centered on loans
for margin transactions
Reinforcing consolidated management of its group
Improving its operational efficiency

Accelerate its efforts toincrease its earning powerand capital efficiency

Policy for Business Portfolio⚫
⚫
⚫
⚫

JSF is supposed to have business related to loans for margin transactions as its main business under applicable law, and has its
other business mandatorily restricted within the scope that does not interfere with its operations in loans for margin transactions.
The group’s business portfolio, inclusive of its subsidiaries, is limited to a relatively narrow range which is considered to be related
and contribute to the execution of JSF’s business.
The group’s business portfolio is not subject to frequent change arising from M&A or other transaction.
Based on the fundamental nature of this group business and the purport of Corporate Governance Code, Board of Directors havedeliberated and determined a fundamental policy for its business portfolio.

Fundamental
Policy for
Business Portfolio◆ With a strong recognition of the public role it plays as infrastructure in securities
markets, the JSF Group will actively respond to diverse needs in the securities andfinance sectors to provide a variety of securities and finance related services focusedon their licensed business of securities financing centered on loans for margintransactions.
◆ In addition, in consideration of the large susceptibility of its loans for margintransactions services to market fluctuations and other factors, JSF Group will continue
its efforts to diversify the sources of its earnings and to achieve its management goals
in each sector with an increased consciousness of enhanced capital efficiency.
◆ Under this concept, JSF Group will endeavor to realize its vision of the future througha business portfolio consisting of security financing business centered on loans for
margin transactions, securities management business, trust banking business and realestate management business.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～18

7. Effort in Corporate Governance (1)Composition of Board of Directors

Overview⚫ Transitioned to a company with a nominating committee, etc., in 2019 to separate
oversight from execution.
⚫ Creating a Board of Directors composed of 5 directors with 3 outside directors.
⚫ Appointing outside directors to serve as the chairs of the Board of Directors andall committees.

Environmental changes➢ Revision of the Corporate Governance Code➢ Transition to a new TSE market segment➢ Internationalization & Digital Transformation

Thinking➢ Formation & Implementation of a next
medium-term management plan

⚫ Multifaceted skills required to face the changing environment.
⚫ Balance of the number of people engaged in the oversight and execution.
⚫ Diversification in terms of age and gender.

◆ Adding 2 outside directors⇒ Board Composition of 7 directors :5 outside & 2 inside➢ Under an overall skillset package◆ Proposing 8 seats as a maximum number of the Board of
Directors under its Articles of Incorporation.
➢ Consideration the availability of speedy decision making and the size of JSF.
➢ Consisting of 7 actual members and one vacant seat.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～19

7. Effort in Corporate Governance (2) Appointment of Executive Officers⚫ Comprehensive reexamination was conducted regarding criteria on the appointment of executive
officers, due to changes in the environment.
⚫ In the light of the fact that the purpose of their appointment is to create an executive system thatfacilitates the advancement of the medium-term management plan, specific appointments are
conducted to classify the talent expected of executive officers.
【Long list】
People from- Inside thecompany- Public sector- Finance &Securities sectors【Talent expected of Executive Officers】◆ Someone who is able to fully recognize JSF’s public role in theexecution of JSF’s business.
◆ Someone who has extensive of knowledge of the overall financeand securities markets.
◆ Someone who is well versed in the Financial Instruments andExchange Act and other various laws and regulations.
◆ Someone with knowledge and experience involving JSF’s highly
specialized business.
◆ Someone with the internationality required in the advance of
JSF’s business.
◆ Someone with a high degree of knowledge and experience inbusiness management and risk management.
◆ Someone with a high degree of knowledge and experience infinance and accounting.
◆ Someone who is able to nimbly respond to the various
environmental changes encircling JSF in the finance andsecurities sectors.

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

Appointmentof 7 Executive
Officers
People from the
BOJ have been
appointed basedon a determinationthat they havethese talents～ All For Securities Market ～20

7. Effort in Corporate Governance (3) Sustainability
Basic Stance on Sustainability⚫

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 of services, including the Margin Loan Business, as a part of theinfrastructure of the securities market, and strives to improve the liquidity of securities andfinancial 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.

Key Initiatives

E⚫ Disclosure of climate change-related financial information
based on the TCFD recommendations⚫ Promote a reduction in our environmental impact （Improvecompany facilities to conserve electricity and be conscious of
our environmental impact and promote paperless operations in
all areas of the company, etc.)

S⚫ Conduct joint empirical research with the University of Tokyo(Securities Lending and Lending Transactions Utilizing
Distributed Ledger Technology)⚫ Hold a lecture on “Financial and Securities Markets andIndustry-Academia Alliance” at the Faculty of Engineering in
the University of Tokyo

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～21

8. 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, the amount of our annual dividends reached JPY 30 per share
in FY2021, and our aim is to aggressively pay annual dividends in the period fromFY2022 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 ～22⚫ Shareholder Returns (Results for the previous term andplanned for this term)≪ Policy for Shareholder Return ≫To strive for a total payout ratio of 100% on a cumulative basis
from FY2021 through FY2025 through dividend payments andagile implementation of share repurchases.
FY2022(Forecast)

FY2021￥30￥32（YoY+￥4）（YoY+￥2）

Interim¥15¥16

Year-End

¥15

¥16

53.0%

49.2%

Aggregate shares tobe repurchased

2.3 billion yen
2.8 million shares

3.0 billion yen
3.2 million shares

Result

2.3 billion yen
2.4million shares―

Repurchase period

December 21, 2021
― March 11, 2022

May 11, 2022
― March 31, 2023

97.6%

103.4%

Dividends

DPR

Share
repurchaseTotal Payout Ratio
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 23

【Reference】 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 ～24Appendix⚫ Dividend and Share Buyback Program (Historical)⚫ Financial Result Trends (Consolidated)⚫ Gross Profit by Business⚫ Breakdown of Operating Revenues by Business(Historical Data)⚫ Breakdown of Operating Revenues by Business⚫ Analysis of YoY Change in Operating Revenue by
Business (Quarterly)⚫ Outstanding Balance of Transactions by Group
Business⚫ Margin Transactions & Loans for Margin transactions⚫ Structure of Margin Transactions & Loans for Margin
Transactions⚫ Revenue Structure of Loans for Margin Transactions

Copyright Japan Securities Finance Co., LTD. All Rights Reserved⚫ About the Margin Loan Rates⚫ Rate of Loans for Margin Transactions⚫ Securities Holdings⚫ JSF Trust Bank (Loan Balance)⚫ Corporate Philosophy/Management Principles(The 6th
MMP)⚫ Management Goals/Strategies(The 6th MMP）
⚫ Management Goals(The 6th MMP)
⚫ Strategies(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 ～ 26

⚫ Financial Result Trends (Consolidated)¥ mil
FY2016FY2017FY2018FY2019FY2020

FY2021

23,06626,33324,321

29,10130,92430,138Ex Premium Charges

16,522

18,38318,603

20,84623,711

27,305

Operating Expenses

11,892

13,33012,284

16,83518,018

16,533

Ex Premium Charges

5,358

5,385

6,566

8,585

10,81913,728General & Administrative
Expenses

8,371

9,121

8,056

8,136

8,129

7,368

Operating Income

2,802

3,881

3,981

4,129

4,777

6,235

92

123

248

306

395

446

3,611

4,685

5,046

4,894

5,558

7,164

Extraordinary
Profit or Loss

▲52

131

▲41

▲36

43

▲17

Net Income

3,078

4,225

3,765

3,556

3,971

5,174

Operating Revenues

Gain or Loss inEquity-Method

Recurring Income

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 27⚫ Gross Profit by Business\ mil

FY2020

FY2020

FY2021

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

20,846
17,1284,262
8,849

23,711
20,337
4,146
12,36927,30523,753
3,285
15,391Loans for Negotiable Margin Transactions
Loans to Seurities Companies
RetailStock Lending
Bond Lending

80
737
494
1,015
6,521

80
785
468
950
10,085

156
1,196
510
657
12,869Others （mainly securities investment）
Trust Business
Real Estate Management Business
Operate Expense (ex. premium charge) B

4,016
2,946
1,282
8,585

3,820
2,624
1,295
10,819

5,076
2,960
1,286
13,728Gross Profit (A - B)
Secrities Finance BusinessMargin Loan Business (ex. Premium charges)
Securities Financing

12,266
9,657
3,959
2,502

12,906
9,903
3,853
2,876

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

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

62
611
354
562
911

53
669
323
536
1,293

135
1,179
352
355
1,742

3,196
1,716
1,261

3,173
2,098
1,275

3,670
2,524
1,261

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 ～ 28⚫ Breakdown of Operating Revenues by Business(Margin Loan Business)
 Revenues decreased YoY. Though Margin Loan balance increased,
Stock Loan balance continued to decline.
Changes in Operating Revenues(mil）Full Year

Quarterly

Full Year
Revenue
(YoY)

1,684

6,118

Margin Loan
Business(△36.3%)（ex premium
charges）

802

3,285

(△26.7%)(△20.8%)

¥ mil

3,581

Fees onLending
Securities(2,832)Premium
Charges(△42.1%)

1,793

LendingFees(△41.3%)446Interest
on
Loans

8,491

¥ mil

4Q
Revenue
(YoY)

1,113
(△42.0%)

2,417
2,193
1,987
(1,853)

2,193(7,213)

1,918

1,962
(1,649)(1,278)
(748)

1,918

(1,853)(339)(1,649)
(268)

(339)
364

(268)
406

364
306
306

3Q

(684)

(776)

877

984
(207)
(776)
(207)
455

406
220
220

(193)
(684)
(193)
469
469
110
110

4Q

1Q

2Q

FY2020

955

455
133
133

877
(955)

(416)

1,113

(189)
606
(416)
(189)
461

(955)
(157)

461
112
112

(157)
406
406
89
89

3Q

4Q

FY2021

1,453

1,108

Full Year Full YearFY2020 FY2021

Copyright Japan Securities Finance Co., LTD. All Rights ReservedInterest on
collateralmoney ofsecurities
borrowed157

406(△0.0%)

89(△59.1%)

Full Year
Point(△46.1%) ✓ Operating

revenues except
premium charges
resulted in adecrease.

✓ Fees on lending
securities
3,581
resulted in a(△57.8%)decrease,because thestock loanbalance remained
2,832
at a lower level(△60.7%)than in the same
period of theprevious year and748
premium charges(△41.4%)on over-lentissues also
decreased.

1,793(＋23.4%)✓ Interest on loans
increased,because theaverage balance446
of margin loans(△59.7%)
remained steadyduring 1Q-3Q.

～ All For Securities Market ～ 29⚫ 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

Full Year

¥ mil
156

80
1,196

(¥ mil）

Loans for
Negotiable
MarginTransactions

4Q
Revenue

Full Year
Revenue

(YoY)

(YoY)

43

156

(＋60.7%)(＋94.7%)785

Loans to
39

43

43

19
175

27
187

29
235

306

307

346

121

117

120

128

134

127

3Q

4Q

1Q

2Q

3Q

4Q

FY2020

FY2021＜ Loan Lineup ＞◆ Loans to securities companies:◆

Loan to individual investors or firms:

468

346

Companies(＋85.2%)510

Full Year Full YearFY2020

Securities

FY2021Retail127(＋8.9%)

Full YearPoint✓ LNMT andloans toindividual
investorsof firms
increased.

✓ Loans tosecurities
1,196
companies(＋52.4%)
resulted in
an increase
boosted byan increasein the use
510
of equity(＋9.0%)
repo

General loans, bon financing, loans for negotiable margintransactions, stabilizing fund loans, equity repo (cash-secured
stock lending transactions)
Com-STOCK loans

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 30

⚫ Breakdown of Operating Revenues by Business(Securities Financing (2))
 Bond lending: Both outstanding gensaki transactions (repurchase agreement)
and repo transactions increased.
 General stock lending: Borrowing demand for mainly fail-cover decreased.
Changes in Operating Revenues
Quarterly

Full Year

657

¥ mil

4Q
Full Year
Revenue Revenue(¥ mil）(YoY)

12,846

GeneralStock
Lending152(△30.7%)

10,069

232
2,491

3Q

2,514

4Q

FY2020

Point

950

295

220

(YoY)

Full Year

174
2,989

1Q

147
3,074

2Q

183

152

3,422

3,360

3Q

FY2021

4Q

Full Year Full YearFY2020

FY2021

Bond
Lending

3,360(+33.6%)

Revenuedecreasedbecause657 borrowing(△30.8%)demand formainly fail-coverdecreased.
Revenueincreased. Bothoutstanding
12,846 gensaki(+27.6%) transactions andrepo transactions
increased.

*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
Main business partners: Lenders – Institutional investors, etc. / Borrowers – Securities companies

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 31

⚫ Breakdown of Operating Revenues by Business(JSF Trust Bank) Trust fees grew steadily, reaching record highs on a quarterly basis.
Changes in Trust Fees
Quarterly*Consolidated base

Full Year

4Q
Full Year
Revenue Revenue(¥ mil）

¥ mil

(YoY)

(YoY)

Full Year
Point

1,266

1,031

255

292

307

311

323

324

3Q

4Q

1Q

2Q

3Q

4Q

FY2020

FY2021

Trust
Charges
Full Year Full Year324(＋10.7%)

Trust fees
continued
increasing
contributed to1,266 by strengthening(+22.8%) of custodian
type trust
services and ABL
trust, etc.

FY2020 FY2021

Trust 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 ～ 32⚫ Analysis of YoY Change in Operating Revenue by Business(Full Year)

Summary of the Significant Points for Full Year
Margin Loan Business⚫ Results decreased due tooutstanding of stock loans.

【Full Year】 YoY ▲ ¥ 786 mil（△2.5%）adecreasein

Securities Financing
¥ mil
+76
△5,241+411+2,777+42+1,250

+256
△66

△292

30,92430,138⚫ Loans to Securities Companies: Revenues
increased due to an increase of outstanding
equity repo transactions, etc.
⚫ Loan to Individual Investors or Firms: Revenues
increased due to an increase of outstanding
Com-STOCK loans.
⚫ General Stock Lending: Borrowing demand foruse of fail-cover decreased.
⚫ Bond Lending: Both outstanding gensaki
transactions and repo transactions increased.

Others

FY2020MarginLoan

Loans for Loans for Loans for StockBond
NMT Sec Com Investors Lending Lending

Othersーー
FY2021

Securities Financing

Securities Finance Business

Trust
Bank

Real
Estate⚫ Revenues increased due to due to steady
accumulation of carry income and recording ofgains on sale under portfolio management.

Trust Business⚫ Trust fees grew steadily.

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 33⚫ Outstanding Balance of Transactions by Group Business(Average Balance)\ mil

Transaction TypeFY2019FY2020

FY2021Margin Loans

219,979

224,615

283,118

Stock Loans

333,949

300,638

175,578

4,609,077

7,099,013

9,969,762

Loans for Negotiable Margin
Transaction

10,434

9,910

21,509Loans to Securities Companies

309,033

327,444585,974Retail13,934

13,092

14,993General Stock Lending

60,85947,12647,5094,214,817

6,701,439

9,299,775

473,808

571,109682,499

Securities Financing

Bond Lending
Trust Bank Loans

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 34⚫ Margin Transactions & Loans for Margin Transactions

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 35

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 ～ 36

⚫ 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 ～ 37⚫ 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%

1.2%

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

Margin Loan Rate
◼
◼

1.0%

◼
◼

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％）

0.8%
◼

0.6%

◼
◼

0.4%
Apr.2013～
Monetary base start

0.2%

0.0%

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

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.

～ All For Securities Market ～ 38⚫ Rate of Loans for Margin Transactions

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 39⚫ Securities Holdings\ mil
Mar-21
Securities Holdings

Mar-22

Unrealized Profits andLossesB/S Amount

Notes

Unrealized Profits andLossesB/S Amount

Equity15,338

10,61012,022

7,786

Bond

921,896

18,8581,100,835

3,587

JGB&Municipal Bond

510,390

17,593527,8264,267

Corporate Bond355,499▲326

447,409▲786 Government guaranteed bonds etc.

56,006

1,591

125,600

OthersOther Securities
Total

17,506

3,539

14,933

4,421

954,741

33,007

1,127,790

15,794ー(14,359)ー(11,290)（included the effects ofderivatives）

Held-to-maturity
bonds

JGB

106 Foreign government bonds

B/S Amount

Unrealized Profits andLosses

1,512

194

B/S Amount

1,511

Unrealized Profits andLossesNotes

162*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 ～ 40⚫ JSF Trust Bank （Loan Balance）● Loan Balnance by Industry\mil

Mar-21
Loan
Balance

Sep-21

Ratio

Loan
BalanceMar-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

2,100

0.3%

1,000

0.2%

4,650

0.9%

Real Estate

1,120

0.2%

1,200

0.2%

1,196

0.2%

0

0.0%

0

0.0%

0

0.0%
98.8%

Service Industries
Governments
Total

723,947

99.5% 660,382

99.6% 526,090

727,856

663,271532,625

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 41⚫ 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 ～ 42⚫ 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 ～ 43

● 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 ～ 44⚫ 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 ～ 45⚫ 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 ～ 46⚫ Rating Information

JCR

R&I

Standard &Poor’s

As of 17/May/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 ～ 47

⚫ 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 ～ 48

⚫ 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 ～ 49

⚫ 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 ～ 50⚫ 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 ～ 51

● 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 ～ 52

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 ～