Japan Securities Finance Co., Ltd.
1st Half FY2018
Financial Results Presentation

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

Ｐ３

 ２．Financial Summary for 1st Half FY2018（JSF parent）

Ｐ４ ３．Financial Highlight（Margin Loan Business①）

Ｐ５

 ４．Financial Highlight（Margin Loan Business②）

Ｐ６

 ５．Financial Highlight（Bond Lending Business）

Ｐ７

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

Ｐ８ ７．Summary Financial Results for 1H, FY2018（ JSF Trust Bank）

Ｐ９

 ８．Balance Sheet Summary (Consolidated)

Ｐ１０

 ９．Estimated Figures for FY2018

Ｐ１１

 10．Return to Shareholders

Ｐ１２

 11．Dividend and Share Buyback Program for FY2018

Ｐ１３

 12．Review of the Business Operation system and Initiative toStrengthen the Business Continuity Plan

Ｐ１４

 Appendix

Ｐ１６

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

2１．Summary Financial Results for 1st Half FY2018
Consolidated（¥ mil）

Operating
Revenues

FY2018
1H

YoY.⊿

Parent(%⊿)

JSF

JSF Trust Bank

Nihon Building

YoY.⊿

YoY.⊿

YoY.⊿

12,052▲856(△6.6%)

10,247▲847

ExceptPremium Charges

9,428

541

(＋6.1%)

7,622

551

Operating Expenses

5,748

▲769

(△11.8%)

5,207

▲592

ExceptPremium Charges

3,124

624

(＋25.0%)

2,583

801

General &Administrative Expenses

4,077

106

(＋2.7%)

3,517

Operating Income

2,226

▲194

(△8.0%)

Recurring Income

2,695

▲27

(△1.0%)

Gain or Loss inEquity-Method

0

+58

(−)

Extraordinary
Profit or Loss

▲41

▲44

Net Income

1,946

▲280

1,395

13

638

6

567

▲147

10

▲0

143

418

▲39

341

7

1,522

▲398

408

200

286

▲0

2,077

▲289

409

198

348

14

(ー)

▲41

▲44

―

―

―

―

(△12.6%)

1,500

▲528

355

190

232

10

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

3２．Summary Financial Results for 1H, FY2018（JSF parent）
Key Points

Japan Securities Finance（parent）*excluding premium charge（¥ mil）

FY20181H

YoY.⊿●Operating Revenues(%⊿)

Operating Revenues*

7,622

551

(＋7.8%)

Margin Loan Business*

2,083

▲534

(△20.4%)659

244(＋58.9%)Securities Lending
Business *2

3,281

1,037

(+46.2%)Others

1,598

▲195

(△10.9%)Operating Expenses*

2,583

801

(＋45.0%)General &Administrative Expenses

3,517

143

(+4.2%)

Operating Income

1,522

▲398

(△20.7%)

Recurring Income

2,077

▲289

(△12.2%)Extraordinary
Profit or Loss

▲41

▲44

(ー)

Net Income

1,500

General Loans
Business *1

 Businesses other than Margin Loan
showed strong performance, butrevenues decreased due to sluggish
margin loan balance.
̶ Up ¥551mil YoY reflecting strong
performance in General Loan
Business(higher loan balance mainly tosecurities companies) and Securities
Lending Business(both General Stock
Lending and Bond Lending continued
solid performance)̶ Others(Securities investment) down
10.9% YoY
※For details of Margin Loan Business,
Securities Lending Business and Others, see“Financial Highlights for 1H FY2018(P5-P8)”●Operating Expenses

̶ Up ¥801mil reflecting higher fees onborrowing securities related toSecurities Lending Business●Extraordinary Loss
▲528(△26.0%)̶ Recorded disposal loss on old system
of Com-Stock Loan

＊1 Loans of funds other than Margin Loan Business＊2 Securities lending other than Margin Loan Business
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜

4

３．Financial Highlight （Margin Loan Business①）
Margin Loan Balance rose y-o-y in the 1st half, but fell y-o-y in
July-September.



Stock Loan Balance remained at lower level during the 1st half.
FY2017（\ bn、%）

1Q

2Q

1H

FY20183Q

4Q

full year

1Q

2Q

2Q
YoY

1H

1H
YoY

Margin Loan

308

319

313

352

422

350

375

277

326

▲41

12

Margin Loan Rate

0.60

0.60

-

0.60

0.60

-

0.60

0.60

-

-

-

Stock Loan

373

374

373

405

310

366

265

257

261

▲116

▲112

Margin Loan（FY2017）
Margin Loan Rate（FY2017）

¥ tri
0.6

Margin Loan（FY2018）
Margin Loan Rate（FY2018）

1H Margin Loan

Stock Loan（FY2017）
Stock Loan Rate (FY2017)

¥ tri
1.5%

0.6

FY17：¥313bn

0.4

0.2
2Q Margin Loan
FY18：¥277bn
FY17：¥319bn

3Q Margin Loan
FY18： ー
FY17：¥352bn

1.0%

0.4

1.0%

0.5%

0.2

0.5%

4Q Margin Loan
FY18： ー
FY17：¥422bn

0.0

0.0%
Apr

May

Jun

Jul

Aug

Sep

Oct

1.5%

1H Stock Loan
FY18：¥261bn
FY17：¥373bn

FY18：¥326bn

1Q Margin Loan
FY18：¥375bn
FY17：¥308bn

Stock Loan（FY2018）
Stock Loan Rate (FY2018)

Nov

Dec

Jan

Feb

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

Mar

0.0

1Q Stock Loan
FY18：¥265bn
FY17：¥373bn

2Q Stock Loan
FY18：¥257bn
FY17：¥374bn

3Q Stock Loan
FY18： ー
FY17：¥405bn

4Q Stock Loan
FY18： ー
FY17：¥310bn

Apr

Jul

Oct

Jan

May

Jun

Aug

Sep

Nov

Dec

Feb

0.0%

Mar

0.40%

〜 All For Securities Market 〜

5

４．Financial Highlight（Margin Loan Business②）
 Margin Loan Business resulted in large decrease due tolower level of Stock Loan Balance.
【Operating Revenues Transition】
1st Half(¥ mil）

1H
Revenue(YoY)

Margin Loan
Business¥ mil（ex premium
charges）

587
4,805
(782)

331
3,175
(551)

(2,624)(4,023)

1H
FY20171H
FY2018

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

4,707
2,083

(△20.4%)1,031(+3.1%)

 Operating revenues of thisbusiness, except Premium
Charges, resulted indecrease.
 Interest on Loans
increased, because Margin
Loan Balance remained
steady.

331(△43.6%)

Fees onLending
Securities(△33.9%)LendingFees(△29.6%)Premium
ChargesPoint(△29.1%)

1,000
1,031

1H

3,175
551

2,624

(△34.8%) Fees on Lending Securities
resulted in large decrease,because Stock Loanbalance remained at lower
level of the same period of
the previous year andpremium charges on overlent issues decreased.

〜 All For Securities Market 〜

6５．Financial Highlight（Bond Lending Business）
Revenue increased significantly as a result of solid balance of lending outstanding.
Pursue further business expansion by increasing the number of bond lenders andborrowers
Respond to a variety of needs, including the introduction of a repurchase agreement(Gensaki) transactionProgress under the 5th Mid-term Management Plan

 Increase the number of bond lenders andborrowers
・・・ Approach to dormant customers, increase thenumber of new customers, expand automatic
extension transactions, etc.

Transitions of revenue（¥ mil）

5,000
4,000
3,000
2,000

3,576

+168%

2,374

3,512

Outstanding of Repo and Gensaki in the Market

1,334

YoY
＋37%

1,000
0

FY2015

Revenue increased from FY2016 onwards
In the 1st Half of the FY under review, revenue
increased by 37% YoY, and revenue continued to
be strong.



FY2016FY20172QFY2018(¥ tn)
150

Repo Transactions
Gensaki Transactions

120

Shortening of JGB
settlement
cycle(T+1) started

90
60
30
0

Jan-18Mar-18May-18

Jul-18

Sep-18Source）JSDA
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜

76．Financial Highlight（Securities Investment of JSF parent）
Revenue from foreign bonds and investment trust decreased

Revenue from securities investment（JSF）
1H FY2018

YoY

Domestic Bonds¥ 940 mil＋¥ 214 mil

Foreign Bonds¥ 169 mil△¥ 404 mil

Others※¥ 478 mil△¥ 8 mil¥ 1,588 mil△¥ 197 mil

Total

Transition of investment portfolio
EquityForeign Bonds

95%
90%
90%
85%
80%
Mar.2016

Mar.2017

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

3.0%

US

Germany

2015

2016

Japan

2.0%
1.0%
0.0%
▲1.0%

2013

2014

2017

2018

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

Domestic Bonds

100%※ Investment Trust, etc.

4.0%

Others

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

2013

Mar.2018

Jun.2018

source）Bloomberg

Trend of hedge cost
USD3M( v.s. JPY)
EUR3M( v.s. JPY)

2014

2015

2016

2017

2018

〜 All For Securities Market 〜

87．Summary Financial Results for 1H, FY2018（JSF Trust Bank）

Highlights

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

JSF Trust Bank（¥ mil）

Recurring Revenue

FY20181H¥【Point of Trust Charge】

YoY
(%)

1,452

65

(＋4.7%)

Trust charges

408

26

(+6.8%)

Reversal of ADR*

56

53(＋1,919.0)

Recurring Expenses

1,042

▲133

(△11.3%)

Provision of ADR*

ー

ー

(ー)

Recurring Income

409

198

(＋94.3%)Net Income

164

190

(＋115.7%)

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

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

9８．Balance Sheet Summary（end of Sep-2018, consolidated）\mil
Sep-18
Total assets
Current assets
Cash & Deposit
Short-term
investments

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

5,460,926

500,764

4,825,059

663,573

1,042,461

264,566 Deposit at BOJ

142,437

81,620

JGB and other bonds (Maturity: 1year
or less)

Margin loan / Loans for negotiable▲ 120,941 margin transactions / General loans /Trust bank loans
Collateral money of bond borrowing
11,101
Collateral money of stock borrowing

Short-term loans
receivable

881,989

Collateral money of
securities borrowed

2,179,271

Non-current assets

635,866▲ 162,808

622,400

JGB and other bonds (Maturity: more
▲ 164,831
than 1year), Stock

Investments insecurities
Total liabilities
Current liabilities
Call money
Short-termborrowings
Commercial Paper
Collateral money
received of securities
lent
Borrowed money fromtrust accountNon-current liabilities

Total net assets

5,317,420

501,070

5,297,432

504,980

1,254,497

483,0828,010▲ 265,000

2,392,698▲ 112,437

935,944▲ 25,666

19,988▲ 3,909

143,505▲ 305

Loan period including Margin Loan ismainly short-term (from over-night to
1 month). And outstanding of loans
moves responding to trend of stock
market, etc.
(2) Holding JGBs for flexible cash
funding
Holding certain amount of JGBs tofund money flexibly in short-termmoney market.
(3) Cash and Deposit
Balance moves responding tosituation of funding and borrowed
money from trust account.

Features of Liabilities(1) Ensuring variety methods offund raising

Bank borrowing▲7,500Market operation by BOJ

194,000

Features of Assets

Collateral money of bond lending
Collateral money of stock lending

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

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

〜 All For Securities Market 〜 10

９．Estimated Figures for FY2018
Precondition Balance of Margin Loans
FY2018 Precondition（¥ mil）

Operating Income

2,600

▲281

▲100

Recurring Income

3,300

▲185

ー

Net Income

2,600▲1,125ーOperating
Income

2,600

▲305

ー

Recurring
Income

3,400

▲225

ー

Net Income

2,400▲1,039ー

Recurring
Income

590

169

190

Net Income

510

170

170

Operating
Income

545

▲22

ー

Recurring
Income650

1ーNet Income

430

2

ー

Matching¥170bnStock Loan
¥280bnJSF（Reference）
FY2017 Results

JSF
Trust andBankingOver-lentOver-lent
Stock Loan
Margin Loan
¥179bn¥163bnNihon
Building

Matching¥187bnMargin Loan Stock Loan
¥366bn¥350bn⊿ fromprev. EF

YoY.⊿

Consolidated

Over-lentOver-lentMargin Loan Stock Loan
¥100bn¥110bnMargin Loan
¥280bnFY2018Estimated
Figures

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

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

10．Return to Shareholders
1

2

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

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

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

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

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

11．Dividend and Share Buyback Program for FY2018

FY2017FY2018（Forecast, Framework）¥ 26（YoY +¥2）

¥ 22（YoY ▲¥4）

Interim¥ 9（YoY +¥１）

¥ 11（YoY ＋¥2）

Year-end¥ 17（YoY +¥７）

¥ 11（YoY ▲¥6）

Consolidated
DPR

58.8％

67.1％

No. of shares
to be acquired

1.5mil shs

Up to 1.0mil shs※

1.5%

1.0%

Total Value tobe acquired¥ 0.9bn

Up to ¥ 0.8bn※

PeriodFrom 12 May 2017 to
16 Mar 2018

From 6 June 2018 to
22 Mar 2019

79.3%

85.0%

AnnualDividend

Share
Buyback

Ratio to total
shares issued

Total Return Ratio※Buyback of Treasury Stock (Jun-Nov 2018)： 1.0mil shares, 6.39mil¥
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 13

12．Review of the Business Operation system and Initiative toStrengthen the Business Continuity Plan I
Review of the Business Operation(consolidation of the head office of customer loan operations)

At the time of the merger with the former OSF in July 2013, both the head office and the Osakabranch started providing customer lending services in parallel in order to ensure smoothtransition of customer lending business.

Subsequently, efforts had been made to improve the efficiency of customer lending operations,such as the partial abolition of face-to-face lending operations.



In May of this year, data center was established in the Kanto region in line with the start ofoperations of the new Com-STOCK Loan system (formerly in the Kansai region) The business operations were consolidated at the head office on Sep.18 this year to
optimize the business operations.

〜 Post-merger with OSF 〜
Osaka Branch

Customer Lending(face-to-face)〜 Current 〜

Head office

Customer Lending(face-to-face)

Com-STOCK Loan

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

Head officeconsolidation

Customer Lending(face-to-face)
Com-STOCK Loan

〜 All For Securities Market 〜 14

13．Review of the Business Operation system and Initiative toStrengthen the Business Continuity Plan Ⅱ
Efforts to Strengthen the BCP System(Utilization of the Osaka Branch Office)Background

In 2003, the Central Disaster Management Council reviewed damage estimates in the eventof an earthquake with an epicenter in western Japan and Tokyo metropolitan area.
Review of the BCP system by JPX Group：designated Margin Transactions as one of theoperations eligible for continuity in the event of a wide-area disaster One of the strategies of the 5 th Mid-term Management Plan is to establish the Osaka Branch
as a base for BCPs in order to continue our core business (Margin Loan Business) even in
the event of disaster in Kanto region.
 At the same time, the Osaka Branch will be used as a sales base in western Japan to further
promote sales.
Margin Loan
Business
Promoting a “Dual Operation
System” in which the head officeand Osaka branch conduct businessin parallel（”Cold Standby System”
for some operations）

Funds andsecurities
settlement
Copyright Japan Securities Finance Co., LTD. All Rights Reserved

JSF

Promoting “Cold Standby
System” in which business
operations are switched to
the Osaka Branch in theevent of a disaster

Funding ,etc.

〜 All For Securities Market 〜 15

Appendix
 Dividend and Share Buyback Program (historical)
 Share Buyback Results Financial Result (Historical data) Breakdown of Operating Revenues by business(Historical data) Breakdown of Operating Revenues by business(Quarterly) Analysis of YoY Change in Operating Revenue bybusiness (Quarterly) Outstanding Loan Balance Margin Transactions & Loans for Margin transactions

Copyright Japan Securities Finance Co., LTD. All Rights Reserved Structure of Margin Transaction & Loans for Margin
Transactions
 Revenue structure of Loans for margin transactions
 Margin Loan Rates
 Features of Balance Sheet (Consolidated) Securities Holdings
 JSF Trust Bank (Loan Balance) The 5th mid-term Management Plan I
 The 5th mid-term Management Plan II The 5th mid-term Management Plan III
 Business Strategies of JSF Trust Bank
 Rating Information〜 All For Securities Market 〜 Dividend and Share Buyback Program (historical)

FY
2012

FY
2013

FY
2014

FY
2015

FY
2016

FY
2017

¥18

¥26

FY
2018

Forecast/
Framework

Annual Dividend per share

¥14

¥14

¥15

¥16

Interim ¥8Year-end ¥10

Interim ¥9Year-end ¥17¥22

Share Buyback

(shs)

ー

ー

7.46mil

3mil

0.63mil

1.5mil1.0mil（amount）

ーー¥4.6bn¥1.9bn¥0.3bn¥0.9bn¥0.8bn¥1.7bn¥6.2bn¥3.5bn¥2.6bn¥3.0bn¥4.2bn¥3.2bn

: EPS

¥19.1

¥60.4

¥33.9

¥26.9

¥31.9

¥44.2

¥33.9

: DPR

73.3%

23.2%

44.2%

59.5%

56.4%

58.8%

64.9%

: DOE

1.2%

1.2%

1.2%

1.2%

1.2%

1.8%

1.4%

73.3%

23.2%

173.9%

133.1%

66.3%

79.3%

95.0%

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 17 Share Buyback Results
Resolution of share buyback program (announced on May14, 2018)
 Number of shares to be acquired： up to 1.0million shares Ratio to total shares issued：1.0%
 Total value to be acquired：Y0.8bn
 Schedule：from 6 Jun 2018 to 22 Mar 2019

【The past results】
start

end

amounttotal shares purchased

cancellation

shares issued

shs(digestive rate)\ mil(digestive rate)

shs

shs

Result In FY2014

2014/5/13

2015/3/20

7,464,400

-

4,652

-

7,307,063

100,000,000

Result In FY2015

2015/5/12

2016/3/18

3,000,000

-

1,937

-

0

100,000,000

Result In FY2016

2016/5/13

2017/3/22

635,800

-

297

-

0

100,000,000

Result In FY2017

2017/5/12

2018/3/16

1,500,000

-

890

-

0

100,000,000

Limit for FY2018

2018/6/6

2019/3/22

1,000,000

-

800

-

-

-

ResultJun-18200,000(20.0%)

126(15.8%)

0

100,000,000

From Jul-18 to Sep-18

80,000(8.0%)

50(6.3%)

0

100,000,0000(0.0%)

0(0.0%)

0

100,000,000

6-Nov-18

720,000(72.0%)

462(57.8%)

0

100,000,000

FY20181,000,000(100.0%)639(79.9%)

0

100,000,000

Oct-18Total

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 18 The Trend of Financial Result (consolidated)¥ mil
FY2013

FY2014FY2015FY2016FY20172Q

FY2017FY20182Q

19,566

20,30022,03523,066

12,90926,333

12,052

16,19515,856

16,16016,522

8,886

18,383

9,428

8,747

9,450

11,537

11,892

6,518

13,3305,748

Ex Premium charges

5,413

5,008

5,672

5,358

2,499

5,385

3,124

General & Administrative
Expenses

8,249

7,824

7,939

8,371

3,970

9,121

4,077

Operating Income

2,568

3,025

2,558

2,802

2,420

3,881

2,226

179

▲144

54

92

▲57

123

0

Recurring Income

3,119

4,230

3,349

3,611

2,723

4,685

2,695

Extraordinary
Profit or Loss

3,602

54

−

▲52

3

131

▲41

Net Income

6,211

3,520

2,645

3,078

2,227

4,225

1,946

Operating
Revenues
Ex Premium charges

OperatingExpensesGain or Loss inEquity-Method

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 19 Breakdown of Operating Revenues by business(Historical data)\ mil

Securities Finance BussinessMargin Loan Business
Interest on Loans
Interest on collateral money of securities borrowed
Fees on Lending Securities
Premium Charges
Lending Fees
Business other than Margin Loan Business
Loan to Securities companies & Investors
Securities Lending Business
Stock Lending
Bond Lending
OthersBond Investment (Parent only)

Trust Business
Interest on Loans
Trust Charges
Bond Investment

Real Estate Management Business
Operating Revenues(excluded Premium Charges)

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

Mar-17

Sep-17Mar-18

Sep-1814,093

16,363

17,162

17,776

19,407

11,092

22,487

10,247

6,625(37.5%)
1,760

9,240
(47.2%)
4,012

9,667
(47.6%)
3,111

10,579(48.0%)
2,720

10,721(46.5%)
1,694

6,640
(51.4%)
1,000

13,253(50.3%)
2,225

4,707
(39.1%)
1,031

652

436

611

575

887

587

1,073

331

3,746
2,957
789

4,132
3,371
761

5,389
4,443
945

6,840
5,874
966

7,771
6,543
1,227

4,805
4,023
782

9,481
7,949
1,531

3,175
2,624
551

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

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

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

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

414(3.2%)
2,242(17.4%)
508
1,734
1,794
(13.9%)
1,785

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

658(5.5%)
3,281(27.2%)
907
2,374
1,598
(13.2%)
1,588(15.6%)
590
338
1,808

(11.9%)
317
485
1,494

(11.2%)
186
545
1,507

(15.7%)
144
627
2,645

(12.1%)
147
668
1,899

(10.7%)
50
360
944(11.3%)
89
741
2,087

(11.3%)
33371
923(4.7%)(4.5%)(4.3%)(3.7%)(3.8%)(3.4%)(3.3%)(3.7%)

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

12,9098,886

26,333
18,383

12,052
9,428

2,762

819

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

2,322

880

2,269

868

3,451

807

2,792

865

1,380

435

2,971

873

1,364

219

〜 All For Securities Market 〜 20 Breakdown of Operating Revenues by business (Quarterly)
Margin Loan Business resulted in large decrease due to lower level ofStock Loan Balance【Operating Revenues Transition】
Quarterly(mil）

1st Half

Margin Loan
Business¥mil（ex premium
charges）

2Q
Revenue

1H
Revenue

(YoY)

(YoY)

2,567

(△25.2%)987(△27.0%)4,805(4,023)

3,119
2,330
(1,941)

2,475(2,691)(2,081)

1,556(1,235)

(389)

(393)

(427)

(321)

489

510

568

656

288

299

307

178

1Q

2Q

3Q

4Q

FY2017

1,323

1,852

(1,044)(1,580)

(279)

(272)

588

442

160

171

1Q

2Q

FY20183,175

Fees onLending
Securities(2,624)

Premium
Charges(△24.1%)

LendingFees(△30.9%)

(782)
(551)

1,000

1,852

(△25.2%)

1,580

272

1,031
587

331

1H

1H

FY2017FY2018

Copyright Japan Securities Finance Co., LTD. All Rights ReservedInterest
on
Loans

442

(△13.2%)

Interest on
collateralmoney ofsecurities
borrowed

171(△42.9%)

1H
Point

4,707

(△29.1%)

 Operating revenues
this business,
2,083 ofexcept Premium(△20.4%)Charges, resulted indecrease.

3,175(△33.9%)  Fees on Lending

2,624(△34.8%)551(△29.6%)

1,031

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

(＋3.1%)

331(△43.6%)

 Interest on Loans
increased, because
Margin Loan Balance
increased.

〜 All For Securities Market 〜 21 Breakdown of Operating Revenues by business (Quarterly)
General Loans Business resulted in increase due to higher loan balance.
【Operating Revenues Transition】
Quarterly

1st Half(¥ mil）

¥ mil

(45)

Loan toIndividual
Investors
or
Firms

389

Loan toSecurities
Companies

269

134
128
134
(17)

81
1Q

128
(17)

70

136
94

2Q
FY2017

3Q

142
4Q

184

205

1Q
FY20182Q

1H
Revenue

(YoY)

(YoY)

135

(＋5.5%)(35)

205(＋192.2%)

1H

1H

FY2017FY201822(＋28.5%)

Point

269

389

(＋156.0%)152
Loans for
Negotiable
MarginTransaction

1H(＋2.6%)

262

(22)

(22)
(26)

(17)

135

2Q
Revenue

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

45(＋29.0%)＜ Loan Lineup ＞
 Loan to Securities Companies ・・・ General Loans, Bond Financing, Loans for Negotiable margin Transaction,
Stabilizing fund loan, Equity Repo(Cash-secured Stock Lending Transaction)
 Loan to Individual Investors or Firms ・・・ Com-STOCK Loan
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 22 Breakdown of Operating Revenues by business (Quarterly)
Securities Lending Business：Both General Stock Lending and Bond
Lending continued solid performance【Operating Revenues Transition】
Quarterly

1st Half(¥ mil）

¥ mil

907

508
553
232

276

482

848

885

875

967

1Q

2Q

3Q

4Q

FY2017

353

467

1,734

FY20182Q

1H
Revenue

(YoY)

(YoY)

353

(＋27.9%)

2,374

Bond
Lending

1,277 1,097

1Q

GeneralStock
Lending

2Q
Revenue

1H

1H

FY2017FY20181,097(+23.9%)

1H
Point

Revenue increased.
Because borrowing
907 demands for short(＋78.4%)covering weresteady.
Revenue increased.
Tighter supply and2,374 demand conditions(+36.9%) of JGBs in the repo
market continued.

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



Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 23 Breakdown of Operating Revenues by business (Quarterly)
JSF Trust Bank：Trust charges remained steady.
【Trust charges Transition】
Quarterly

1st Half(¥ mil）

¥ mil

360
174

1Q

185

192

2Q

3Q

188

4Q

182

FY20172Q

FY2018

1H
Revenue

(YoY)

(YoY)

371

Trust
Charges

188

1Q

2Q
Revenue

1H

1H

FY2017FY2018188(+1.9%)

1H
Point

Trust charges
continued
increasing,
contributing fromstrengthening
custodian type
371 trust service(+3.1%) (trusts for the
separate
management ofmoney andsecurities, ABL
trust, etc).

【Trust Lineup】
Trusts for the separate managementof money and securities

Trust for protecting deposits which securities companies received from
customers

Trusts for currency future trading

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

Asset Backed Loan (ABL) Trust

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 24 Analysis of YoY Change in Operating Revenue by Business(Quarterly, 1st Half)【Quarterly】 YoY △ 601mil¥（△9.3%）【First Half】 YoY△ 856mil¥（ △ 6.6%）

¥ mil

¥ mil

＋244

+1,038△195△1,932

+142

6,437

FY2017
2Q

+288

+64

+5
△16

12,909＋4

12,052

△235

△866

5,836

MarginLoan

GeneralLoans

Sec
Lending

OthersSecurities Finance Business

ー

ー

Trust
Bank

Real
EstateFY20182Q

FY2017
1H

MarginLoan

GeneralLoans

Sec
Lending

OthersSecurities Finance Business

ー

ー

Trust
Bank

Real
EstateFY20181H〜 Summary of the point for quarterly 〜〜 Summary of the points for 1st Half 〜

 Margin Loan Business：Revenue decreased due to adecrease of Margin Loan Balance Margin Loan Business : The revenue decreased
largely affected from a decrease in Stock Loan Balance.
 General Loans Business : Resulted in increase driven
by higher balance of loans mainly to securities
companies.
 Securities Lending Business : Both revenue ofGeneral Stock Lending and Bond Lending increased.
 Others : The revenue from foreign bonds andinvestment trust decreased.

 General Loan Business：Resulted in increase driven
by higher balance.
 Securities Lending Business ： Both General Stock
Lending and Bond Lending showed solid performance.
 Trust Bank：Gains on sales of bonds decreased.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 25 Outstanding Loan Balance(Year average and Interim balance)\ mil

Margin Loansavg.
term-end

Loans of funds other than avg.
term-end
Margin Loans
Trust Bank Loansavg.
term-end
avg.

Othersterm-end

Total

Stock Loansavg.
term-end
avg.
term-end

FY2013

FY2014FY2015FY2016FY2017
Interim490,635
601,206
157,232
201,076
77,612
63,04323,09232,500748,572
897,825

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

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

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

313,843
350,175
389,331519,590
36,216
46,331
41,084
58,142
186,347
273,561
204,041
425,197152
303−−
536,710670,220
634,457 1,002,931

326,076
305,360
94,091
76,471
413,546
500,157−−
833,714881,989

176,476
198,781

222,031316,544

227,422258,656

291,392
393,698

373,888454,434

261,650
415,901

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

FY2017366,147
369,852

FY2018Interim〜 All For Securities Market 〜 26

 Margin Transactions & Loans for Margin Transactions
3.0

¥ tri

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

Margin Buying Balance
Margin Loan Balance
Ratio

2.5
2.0
1.5
1.0
0.5
0.0
08

09

10

11

12

13

14

15

16

17

18

1.0 ￥tri

100%
Margin Selling Balance
Stock Loan Balance
Ratio

0.9
0.8

90%
80%

0.7

70%

0.6

60%

0.5

50%

0.4

40%

0.3

30%

0.2

20%

0.1

10%

0.0

0%
08

09

10

11

12

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

13

14

15

16

17

18

〜 All For Securities Market 〜 27 Structure of Margin Transaction& Loans for Margin Transaction
MarginTransaction

Loans for Margin
Transaction
Margin Loan application
Stock Loan application

Margin buying order
Margin selling order

Institutional
Investors

Fund for Purchasing
Stock to sell

Fund (Margin loan)
Stock (Stock loan)

JSF

Securities
Companies

BrokerInvestor

Stock

Funds

Call Market

Purchased Stock
Sale ProceedBank of Japan

Stock Exchange
Clearing facilities
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 28 Revenue structure of Loans for margin transactions

Over-lent

Income statement

Margin Loans

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

Stock Loans(B)【Operating revenues】
Interest on loans＝(A)×0.60%
Fee on lending securities (lending fees)＝(B)×0.40％
Interest on collateral money of
securities borrowed＝(C)×0.60％【Operating expenses】
Interest on borrowing＝(E)×fundingrateBesides the above, Premium Charges are posted in Operating Revenues (Fees on Lending
Securities) in a part of Over-lent Stock Loan. But the same amount are posted in Operating
Expenses (Fees of Borrowing Charges), so the amount of Premium Charges does not affect our
profit.
【revenue】 Fees on lending securities (premium charges) = 【expense】 Fees on borrowing
securities (premium charges) = (C)ʻ×rate of Premium charges
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 29 Margin Loan Rate

Loan Rate
0.60%

Stock Loan

JSF

Securities
Company

Margin Loan

Lending
Fee
0.40%

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



Feb 2007 Uncollateralized O/N Call Rate:0.50％



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

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



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

Interest on Collateral Money
0%

1.2%

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

Margin Loan Rate



1.0%




0.8%



0.6%




0.4%
Apr.2013〜
Monetary base start

0.2%



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

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

0.0%

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

 Loan Rate of Loans for Margin Transactions
2.00%

Loan Rate
Lending Fee

1.60%

1.20%

0.6%
0.80%

0.40%

0.4%
0.00%

97

98

99

00

01

02

03

04

05

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

06

07

08

09

10

11

12

13

14

15

16

17

18

〜 All For Securities Market 〜 31 Securities Holdings\ mil
Mar-18
Securities Holdings

Unrealized profits andloses

B/S Amountnotes

Sep-18
Unrealized profits andloses

B/S Amount

Equity13,741

8,461

13,905

8,626

Bond

806,526

25,412

716,055

18,076

JGB&Municipal Bond

640,687

25,631

636,899

18,083

Corporate Bond145,665854,274

20,173▲227

24,881

6,255

1,328

10,588

826,522

35,203

740,549

28,035ー(27,584)

ー(26,118)

OthersOther Securities
Total（included the eﬀects ofderivatives）

held-to-maturity bonds

BS計上額

JGB

評価損益

1,514

42 Government Guaranteed Bond ,etc.
▲49 Foreign government bonds
1,333

208

notes

評価損益

BS計上額

1,514

175

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

Yen Bond Portfolio （JSF Trust Bank）

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

5 years
to9,798
10 years
2.32
14/9

8,000

5,678

（¥ 100 mil）
10,000

6,000
4,000

5,560
3.27

5,018

9,210
2.819,498
1 year to 5 years
2.69
2.41
14/12
15/3
（year） （¥ 100 mil）
6.0 10,000
5.0

5,296

5,286

2.57
2.10

3.10

4.0

2,000

1.0

0

0.0

Sep.16

Mar.17

Sep.17

Mar.18

Sep.18（year）
6.0
5.0

8,000

4.0

6,000

3.0
2.0

2.50

6.0
5.0
4.0

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

3.67
within3.23
1 year
8,158
15/9

4,000

3,764
3,009

3,225

3.0
2,279
1.24

2,000

1,255
1.18

2.0
1.0

1.28
0.89

0

Sep.16

Mar.170.94

Sep.170.0

Mar.18

Sep.18(Note) Average remaining period is calculated excluding Floating JGB, held-to-maturity bonds, bonds for which hedge-accounting is applied
Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 32 JSF Trust Bank （Loan Balance）● Loan Banance by Industry\mil

Sep-17
Loan
Balance
Manufacturing

Mar-18ratio

Loan
Balance

Sep-18ratio

Loan
Balance

ratio

5,022

2.5%

4,800

1.1%

4,800

1.0%

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

1,769

0.9%

1,769

0.4%

1,769

0.4%

800

0.4%

800

0.2%

800

0.2%

0

0.0%

0

0.0%

0

0.0%

Finance & Insurance

650

0.3%

1,650

0.4%

-

0.0%

Real Estate

500

0.2%

500

0.1%

500

0.1%

Service Industries

800

0.4%

800

0.2%

-

0.0%

194,72095.3%

414,877

97.6%

492,287

98.4%

Wholesale
RetailGovernments
Total

204,263

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

425,197

500,157〜 All For Securities Market 〜 33 The 5 th Mid-term Management Plan（FY2017〜FY2019）①

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

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 34 The 5 th Mid-term Management Plan（FY2017〜FY2019）②

2020

Concept of 5 th MMP(FY2017-FY2019)

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

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

New financial transaction needs are emerging.

Majorchangesin theenvironment•Along with technical improvements(AI), the globalization anddevelopment of finance haveincreased speed.

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

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

Enhance thefundamental
stability ofour businessand maintainthe trust of
markets andinvestors•Enhancing the Margin Loan Business as part of
securities market infrastructure•Flexibly addressing the needs of domestic and foreign
financial instrument companies•Developing new business•Diversified management of securities as an efficient use
of capital•Enhancing collaboration with Group companies• Strengthening business management structure•Developing an employee-friendly work environment
and making the company more dynamic〜 All For Securities Market 〜 35 The 5 th Mid-term Management Plan（FY2017〜FY2019）③
Business
Environment•Along with technical improvements (AI), the globalization and development of finance haveincreased speed.
•International financial regulations and securities clearing system have undergone further reviews
aimed at stabilizing financial market.

〜

Reinforcing Management Systems

〜





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

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

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

Developing new business

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

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

Enhancing collaboration with Group
companies

Bolstering coordination in terms of sales and system
Strengthening profit management

Ensuring that compliance is positioned as a prerequisite ofmanagement
Securing the effectiveness of our internal auditing
Upgrading our backup arrangements in the event that a majordisaster occurs.
Making corporate governance betterEnhancing the Margin Loan Business as partof securities market infrastructure

Strengthening business management
structure

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

Increasing the productivity of individual personnel and make thecompany more dynamic〜 All For Securities Market 〜 36 Business Strategies of JSF Trust BankManagement Policy (Outline)
As a trust bank supporting the business infrastructure of securities companies, etc.,
JSF Trust and Banking Co., Ltd. provides customers with finely-tuned services thatcannot be expected from other banks, including mega banks, and aims at theestablishment of the business model mainly on the following duties.
Make efforts in trust services and plan expansion of it, mainly on products orservice for securities industry
Deals with products and service such as the loan to securities companies andperforms banking functions that are commensurate with its management
capacityView the role of the securities investment as complementing profit
Offer financial services in connection with JSF

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 37 Our Group Companies
Subsidiary
Affiliate（ ) Shareholding Ratio

Japan Securities Finance（100%）
JSF
Trust Bank

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

Capital（20.8%）
JSFIT

Shareholding
Ratio

Name

100%

JSF Trust and Banking Co., Ltd.

14,000100%

Nihon Building Co., Ltd.

100

Real estate ownership and leasing
Real estate trading and brokerage

20.0%

Japan Information Processing Service Co., Ltd

2,460

Information processing services
Software development and sales

20.8%

JSF Information Technology Co., Ltd

100

Information processing services
Software development and sales

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

Business overview
Trust service, Banking service〜 All For Securities Market 〜 38 Rating Information

JCR

R&I

As of 30/Sep/2018
Japan
Securities
Finance

JSF TrustBank

Standard &Poor’sRatingOutlookRatingOutlookRatingOutlookLong-term

AA-

StableAA-

StableA

StableShort-term

J-1+

a-1+

（Highest）（Highest）

CP Issue

¥1tri

¥1tri

Long-termA+

Short-term

J-1+

Stable

A+
a-1

A-1
―
Stable――――（Highest）

Copyright Japan Securities Finance Co., LTD. All Rights Reserved〜 All For Securities Market 〜 39NoticeThis document includes statements for business forecast. Thesestatements donʼt guarantee companyʼs future achievement and thatinvolve risk or uncertain factors. Companyʼs future achievement may
be changed drastically up to stock market or financial conditions.

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