Information Meetingfor Fiscal 2007 Results of Operations
Year ended March 31, 2007
April 26, 2007

SBI E*TRADE SECURITIES Co., Ltd.
Code 8701

This presentation was prepared for the purpose of explaining the operations and business strategies of SBI E*TRADE SECURITIES. This is not a solicitation topurchase stock or other securities issued by the company. SBI E*TRADE SECURITIES makes no guarantee that this information is com plete or that strategies orother goals will be accomplished. In addition, the contents of this presentation may be revised or deleted without prior notice.

1. Financial Highlights

Fiscal 2007 Consolidated Financial Highlights(Million Yen, %)Year ended March
2006

Year ended March
2007

ChangeOperating revenues

60,21357,412-4.7

Net operating revenues

56,31753,296-5.4

Operating income

30,011

24,543-18.2

Ordinary income

30,077

24,571-18.3

Net income

16,97013,811-18.6<3>

Fiscal 2007 Consolidated Quarterly Financial Highlights
Revenues and earnings up quarter-to-quarter in last two quarters of FY07
(Million Yen, %)March 2007
1Q

2Q

3Q

4Q

(Apr-June)(July-Sep)(Oct-Dec)(Jan-March)

Operating revenues

15,691

12,882

13,737

15,100+9.9

Net operating revenues

14,886

11,905

12,642

13,861+9.6

Operating income

7,168

5,043

5,803

6,527

+12.5

Ordinary income

7,391

5,077

5,744

6,358

+10.7

Net income

4,182

2,789

3,191

3,646

+14.3

4Q vs. 3Q<4>

Highlights of Fiscal 2007 Consolidated Performance
Revenues and earnings down YoY but higher on QoQ basis(1) Brokerage commissions : Down 21.1% to ¥31,695 million but up 16.2% in 4Q vs. 3Q• 1,405,897 customer accounts at end of March 2007; 238,119 new accounts during FY07(avg.of 19,843 accounts per month)• Share of individual brokerage trading value rose to an all-time high of 29.4% (for FY07)(2) Financial revenues : Up 32.0% to ¥17,470 million• Big increase of 43.5% in net financial revenues to ¥13,396 million due mainly to growth in the use of internal resources to meet fundingneeds 147,659 margin accounts at end of March 2007; 32,048 new accounts during FY07 (avg. of 2,670 accounts per month)(3) Underwriting, offering and selling commissions :Down 2.4% to ¥1,954 million, but IPO commissions increased• Stock underwriting, offering and selling commissions (non-consolidated) increased 19.2% to ¥750 million.
• Was lead manager for 3 IPOs; underwriting commissions up due to further growth in number of offerings underwritten(4) Trading gains and others

Up 30.9% to ¥6,291 million• Handled larger number of investment trusts; results also benefited from growth in foreign exchange margin trading(5) Selling, general and administrative expenses• Variable expenses declined even though the number of executed trades was up about 20%(6) E*TRADE Korea Co., Ltd.
• Shares registered on KOSDAQ on February 21, 2007; contributed deemed gain on sale of securities of about ¥200 million to
consolidated earnings<5>

FY07 Highlights(1) Consolidated Brokerage Commissions
Brokerage commissions
Million Yen

Brokeragecommissions
down 21.1%

50,00045,000Brokerage trading value
Billion yen

100,000

40,17440,00077,65535,00030,000Brokerage
trading value
up 10.0%85,42280,00031,695

Brokeragecommissions

25,00060,000Brokerage
trading value

20,00040,00015,00010,00020,0005,000
0Fiscal 2006
（Apr.2005 to Mar.2006）

Fiscal 2007
（Apr.2006 to Mar.2007）0<6>

(1) Brokerage commissions

FY07 Quarterly Brokerage Commissions(Million Yen)

10,000

9,681
8,202

Down 30.3%

6,750

7,500

7,060
Up 16.2%
Up 4.6%

5,000

2,500

0

FY 2007

1Q

2Q

3Q

4Q
* Figures are for each quarter<7>(1) Brokerage commissions

SBI E*TRADE SECURITIES Basis
Basis beginning in 2nd quarter of FY06

(Basis)6.0

July 1, 2005
Lowered commissions

5.2

June 1 to August 31, 2006
Reduced commission campaign

5.0
4.3

September 1, 2006
Introduced newcommission structure

4.4
4.0

4.0
October 3, 2005
Lowered commissions

3.1

3.2

2Q

3Q

3.0

3.0

2.0
2Q
FY 2006

3Q

4Q

1Q
FY 2007

4Q

Quarterly index calculated by dividing non-consolidated brokeragecommissions by brokered trades, using brokerage commissions asshown in the kessan tanshin.

<8>

(1) Brokerage commissions

Brokerage trading value at major Japanese Online securities companies(Index)120Monthly brokerage trading value of big five Online securities companies(April 2006 = 100)
SBI E*TRADE
RakutenKabu.com
Matsui
Monex

102.1

Individual brokerage trading value

100

85.8
81.8
81.4

80

71.0
70.8
60

40

Apr

2006

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

2007
Source: Compiled by SBI E*TRADE SECURITIES based on Tokyo Stock Exchange and JASDAQ materials and Web sites andother public information for each company*Individual brokerage trading value is for 1st and 2nd Sections of Tokyo, Nagoya and Osaka exchanges and JASDAQ. <9>(1) Brokerage commissions

Customer accounts at major Online securities companies
Customer accounts at big five Online
securities companies(# of account)

Growth in customer accounts at big five
Online securities companies(# of account)(March 31, 2007)

1,405,897(April 2004 to March 2007)

1400000

1,400,000
1300000
1200000

1,200,000

1100000
1000000

1,000,000

New accounts declined
from FY06 to FY07, but
the lead overcompetitors grew as
new account growth was
up to 170% higher thanat competitors.

900000800000750,364

800,000

700000675,548 668,073

600000562,606 500000

600,000

400000400,000

SBI E*TRADE
1,405,897

Monex
750,364
Rakuten675,548
Matsui
668,073

Kabu.com
562,606

300000200000100000200,000SBI
E*TRADE

Monex

RakutenMatsuiKabu.com

Apr Jun Aug Oct Dec Feb Apr Jun Aug OctDec Feb Apr Jun Aug Oct Dec Feb Apr
2004
2005
2006
2007

Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other public information for each company*Monex is the sum of Nikko Beans and Monex. Kabu.com merged with MeNet in January 2006.

<10>

(1) Brokerage commissions

Growth in customer accounts at SBI E*TRADE SECURITIESFY07 average
19,843

Average new accounts per month(# of account)

1,405,897

FY06 average
47,9191,400,000
1,300,000

1,259,163

1,311,004

1,351,576

1,167,778

1,200,000
1,100,000
1,000,000

934,674

900,000

FY05 average
20,066800,000

777,455
683,696700,000
592,743

600,000

FY04 average
8,163
500,000

452,493

400,000

351,950
290,558
300,000
253,988
200,000
100,000

Mar Sep Mar Sep Mar
2003

2004

2005

Jun

Sep

Dec

Mar
2006

Jun

Sep

Dec

Mar
2007<11>

(1) Brokerage commissions

Brokerage trading value at major Online securities companies
The average daily brokerage trading value at major Online securities companies(January 2004 to March 2007)

Daily average inMarch 2007
(million yen)
SBI E*TRADE
403,438(Million yen)

500,000

400,000

300,000

Rakuten167,866
Matsui
102,930
Monex
86,508200,000

100,000

0
JanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJul AugSepOctNovDecJanFebMar

2004

2005

2006

Kabu.com
75,0752007

Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other public information for each company*Monex is the sum of Nikko Beans and Monex. Kabu.com merged with MeNet in January 2006.

<12>

(1) Brokerage commissions

Comparison with brokerage trading value of Japan s big three securities companies
Brokerage trading value(Billion Yen)

Stock brokerage market share in 4Q FY07

30,000SBI E*TRADE
25,00024,738(9.29%)

20,000Nomura18,324(6.88%)

15,000SBI E*TRADE tops Nomura in 4Q FY05
Daiwa SMBC 9,928(3.73%)

10,000
Matsui 6,863(2.58%)
Nikko Citigroup5,890(2.21%)

5,000

Daiwa 4,602(1.73%)
Nikko Cordial
1,878(0.71%)

0
1Q 2Q 3Q
FY 20024Q

1Q 2Q 3Q
FY 20034Q

1Q 2Q 3Q
FY 2004

4Q

1Q 2Q 3Q
FY 2005

4Q

Source: Compiled by SBI E*TRADE SECURITIES based on company Web sites and Tokyo Stock
Exchange materials (SBI E*TRADE includes orders from overseas investors)

1Q 2Q 3Q
FY 2006

4Q

1Q 2Q 3Q
FY 2007

4Q( Billion yen, percentages are calculatedby dividing transactions by all brokered )<13>

(1) Brokerage commissions

Major Online securities company share of individual brokerage trading value
Trend in individual brokerage trading value share

FY 2005

FY 2006

FY 2007（Apr.2004〜Mar.2005）（Apr.2005〜Mar.2006）（Apr.2006〜Mar.2007）

Others
40.4％

Big five
Onlinesecurities
companies
59.6%

Others
42.6％

Big five
Onlinesecurities
companies

Others35.5％

Big five
Onlinesecurities
companies
64.5%

57.4%

SBI E*TRADE

21.1％

SBI E*TRADE

23.1％

SBI E*TRADE

29.4％

Matsui

13.1

Rakuten

11.1

Rakuten

13.5

Rakuten

11.3

Matsui

10.0

Matsui

9.2

Monex

8.7

Monex

8.0

Monex

6.5

Kabu.com

5.4

Kabu.com

5.2

Kabu.com

5.9

Source: Compiled by SBI E*TRADE SECURITIES based on Tokyo Stock Exchange and JASDAQ materials and Web sites and other public information for each company*Individual brokerage trading value is sum for Tokyo, Nagoya and Osaka exchanges and JASDAQ.
Monex is the sum of Nikko Beans and Monex. Kabu.com merged with MeNet in January 2006.

<14>

(1) Brokerage commissions

Major Online securities company share of individual margin trading value
Trend in individual margin trading value share

FY 2005

FY 2006

FY 2007（Apr.2004〜Mar.2005）（Apr.2005〜Mar.2006）（Apr.2006〜Mar.2007）

Others31.7％

Big four
Onlinesecurities
companies*
68.3％

Others30.4％

Big five Online
securities
companies
69.6％

Others25.9％

Big five
Onlinesecurities
companies
74.1％

SBI E*TRADE

28.1％

SBI E*TRADE

27.5％

SBI E*TRADE

34.4％

Matsui

20.4

Matsui

14.4

Rakuten

14.9

Rakuten

12.3

Rakuten

12.6

Matsui11.6

Kabu.com

7.5

Monex

8.4

Kabu.com

7.1

Kabu.com

6.7

Monex

6.3

Monex*

n/ａ*Monex figure is not available because theApril ’04 transactions of Nikko Beans were notannounced.

Source: Compiled by SBI E*TRADE SECURITIES based on Tokyo Stock Exchange andJASDAQ materials and Web sites and other public information for each company*Individual margin trading value is sum for Tokyo, Nagoya and Osaka exchanges and JASDAQ.
Monex is the sum of Nikko Beans and Monex. Kabu.com merged with MeNet in January 2006.

<15>

(1) Brokerage commissions

Basis for major Online securities companies
Basis for big five Online securities companies
Basis(Brokerage commissions/Brokered transactions)

14.0

FY 2007
FY 2006

12.0

10.9
9.1

10.0

11.7
9.1

9.9
8.0

7.9
6.0
4.0

5.5

4.8
4.5

3.3

2.0
0.0
SBI E*TRADE

Kabu.com

MBH

MatsuiRakutenSource: Compiled by SBI E*TRADE SECURITIES based on company materials and monthly announcements
Cumulative figures for years from April to March; brokerage commissions use non-consolidated kessan tanshin and monthly announcement data<16>

(1) Brokerage commissions(Reference) Assets in Customer Accounts(100 million)

Down 10%
YoY

50,00045,82545,000End of FY 2006
End of FY 2007

41,26340,000(Reference)

35,000

Down 5.4%
YoY

30,00025,00022,487

21,27620,000

Down 10.3%
YoY
19,377

17,384

Down 2.2%
YoY
13,803 13,494

15,000

Down 0.8%
YoY
12,347 12,451

10,0005,000
0SBI E*TRADE

Monex

MatsuiRakutenKabu.com

Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other public information for each company<17>(1) Brokerage commissions

Growth in futures and options transactions
Record revenues in fourth quarter
Growth in futures and options accounts(# of accounts)

25000

Growth in futures and optionscommissions(1000 yen)

23,985 450,000

418,559
385,916
367,998

400,000

20000
350,000

315,186
302,436

300,000

279,47215000
250,000
200,000

10000

150,000

140,450

106,669
100,000

5000

50,0000

0
4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3

2004

2005

2006

2007

1Q

2Q

FY 2006

3Q

4Q

1Q

2Q

FY 2007

3Q

4Q
<18>

FY07 Highlights(2) Consolidated Financial Revenues(Million Yen)

17,47018,00016,00014,000Financial revenues
Net financial revenues (revenues – expenses)

12,00010,00013,396

13,230
9,334

8,000

Financial
revenues
up 32.0%

Financial
revenues
up 42.5%

6,000
4,000
2,000
0
Fiscal 2006
（Apr.2005 to Mar.2006）

Fiscal 2007
（Apr.2006 to Mar.2007）<19>

(2) Financial revenues

Big increase in net financial revenues
Lower financial costs due to rising pct. of self-financing due todiversification of procurement channels
Diversified funding sources for margin
trading loans
Self-financing pct. for margin trading balance

Consolidated financial revenues and costs(Million Yen)

16,00014.6%

14,00033.0%

17,47018,000Financial
revenues
Financial costs

Up 32.0%

13,23012,00010,0008,000（Apr.2005 to Mar.2006） （Apr.2006 to Mar.2007）

6,000
4,000

*Average using balance at end of each monthNon-consolidated data for SBI E*TRADE SECURITIESUp 4.6%
3,896

4,074

2,000
0

• More productive use of capital is raising self-financing• Strong performance at stock lending operations by using
collateral stock financing from the broker’s own capital• Plan to further strengthen operations to achieve more growthFiscal 2006
（Apr.2005 to Mar.2006）

Fiscal 2007
（Apr.2006 to Mar.2007）

Big increase in net financial revenues due to better cash management<20>

(2) Financial revenues

Margin accounts at major Online securities companies
Margin accounts at big five Online securities(Marginaccounts)(March 31, 2007)

147,659

Comparison with margin account growth at
Matsui Securities(Marginaccounts)

140,000

150,000

120,000
125,000

100,000

91,22076,09780,00060,000100,000(March 2004 to March 2007)
At end of March 2007,
margin accounts were10.5% of accounts at
E*TRADE and 13.7% at
Matsui.
In FY07, E*TRADE had
about 60% more marginaccounts than Matsui.

SBI E*TRADE
147,659

Matsui
91,22053,37475,00039,53340,00050,00020,0000
SBI
E*TRADE

MatsuiRakutenKabu.com

Monex

25,000Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar
2006
2004
2005
2007
Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other public
information for each company<21>

(2) Financial revenues

Margin trading balance(Million Yen)

Margin trading balance (total of long and short positions) at end of month

600,000

567,988 570,686
93,512 83,237

General (no expiration)

500,000

Limited (long and short)

519,112519,033
492,093468,715
69,92564,00464,271
65,407

387,891

400,000

321,529 67,089
307,869
300,000
55,881

65,190213,856
210,686
203,499
200,000

164,545
78,532455,107449,108
403,308
427,82123,751 29,762 35,946
320,801
256,339

112,925 108,488
100,000

487,449
474,475

179,747
164,545
108,488

251,987
174,739
184,093

112,925
78,532
0
Jun

2003

Sep

Dec

Mar

2004

Jun

Sep

Dec

Mar

2005

Jun

Sep

Dec

Mar

2006

Jun

Sep

Dec

Mar

2007

Note: Data based on trade closing dates, non-consolidated figures for SBI E*TRADE SECURITIES<22>

(2) Financial revenues

Margin trading comparison with Matsui Securities
FY07 share of individual margin trading value up 7.6 points YoY to34.4% of all margin trades Even higher than 33.9% in first half of FY07
Share of retail margin brokerage volume(100million)

8,000（Apr.2005 to Mar.2006）

Comparison with margin balance at
Matsui Securities
SBI E*TRADE

7,000

SBI E*TRADE 34.4%(up 27.5% YoY)

Others53.5%

Matsui

6,000

5,606

5,000

4,673

4,000
3,000

Matsui 11.6%(up 14.4% YoY)

Source: Compiled by SBI E*TRADE SECURITIES based on Tokyo Stock Exchange andJASDAQ materials and Web sites and other public information for each company*Individual margin trading value is for 1st and 2nd Sections of Tokyo, Nagoya andOsaka exchanges and JASDAQ.

2,000
1,000
0

Mar Jun Sep Dec Mar Jun Sep Dec Mar

2005

2006

2007

Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other<23>
public information for each company. Based on trade dates.

(2) Financial revenues

Growth in revenues from stock lending operations
Plan to expand stock lending organization by increasing workforce, etc. to further increase revenues(Million Yen)
60,000Shares loaned at end of month

55,00057,51654,74654,55453,79651,35150,000Stock lending revenues(Million Yen)

350

321
300

306

280

45,000249

250
40,000209

35,000200

30,00025,000136

150

22,60520,000100

15,00010,000
5,000

50
4,282
2,169

25
8

0

0

Jun Sep Dec Mar Jun Sep Dec Mar

2005

2006

2007

*Market value at end of each month

1Q 2Q
FY 2006

3Q

4Q

1Q 2Q
FY 2007

3Q

4Q
<24>

FY07 Highlights(3) Consolidated underwriting, offering and selling commissions(Million Yen)

2,500
2,000

2,002

1,954
Down 2.4%

1,500
1,000
500
0
Fiscal 2006
（Apr.2005 to Mar.2006）

Fiscal 2007
（Apr.2006 to Mar.2007）<25>

(3) Underwriting, offering and selling commissions

Non-consolidated IPO and PO underwriting commissions(Million Yen)

750

800

629
Up 19.2%

600

400

200

0
Fiscal 2006
（Apr.2005 to Mar.2006）

Fiscal 2007
（Apr.2006 to Mar.2007）* Underwriting, offering and selling commissions excluding bond and investment trust commissions<26>

(3) Underwriting, offering and selling commissions

IPO underwriting (1)
SBI E*TRADE SECURITIES(Companies)
IPO issues underwritten
120

Major Online securities companies(Companies)
FY07 IPO issues underwritten
121
121
120
100

94

100

91

87
80

80

60

60

38

40

42

38

40

40

22

23
20

20

8
0

0
FY2000FY2001 FY2002

FY2003 FY2004

FY2005 FY2006

FY2007

SBI E*TRADE

Monex

Matsui*Includes over-allotments. Based on listing date. Excludes brokerage sales and real estate investment trusts.

Rakuten<27>

(3) Underwriting, offering and selling commissions

IPO underwriting (2)Big four Online securities companies
Cumulative IPO issues underwritten(Companies)

Big four Online securities companies
IPO underwriting(Offering price x Shares underwritten)(10million)

500

451
450

FY2006

1,436

1,500

FY2007

1,293

400

348

350

1,200

300

224

250

864

900

202

646

200

600
150

424

100

319

254

300

81

50
0
SBI E*TRADE

Monex

MatsuiRakutenSource: Compiled by SBI E*TRADE SECURITIES based on public information. Covers
period from establishment of each company to March 2007 (based on listing date).
Excludes brokerage sales and real estate investment trusts.

0
SBI E*TRADE

Monex

MatsuiRakuten*Includes over-allotments but not wholesale brokerage.
Source: Compiled by SBI E*TRADE SECURITIES based on public information. Covers period
from to March 2007 (based on listing date). Excludes brokerage sales and real estate investment<28>

(3) Underwriting, offering and selling commissions(Reference) Off-market distributions
TSE, OSE and JASDAQ off-market distributions

E*TRADE off-market sales (FY07)

Fiscal 2007(Apr.2006 to Mar.2007)
Number of companies: 106 (173 in FY06)
Off-market distributions: About ¥31.9 billion(about ¥71.0 billion in FY06)
E*TRADE subscriptions: About ¥31.5 billion(about ¥145.4 billion in FY06)
Third-party portion of subscriptions: About ¥7.3 billion(about ¥14.7 billion in FY06)
E*TRADE share: About 23.1% (about 20.8% in FY06)

Date

Company

Market2006/5/12

GAGA communications, Inc.

HC

2006/6/29

GEO Corporation

TSE 1

2006/8/1

MET’S CORPORATION

Mothers

2006/8/23

Eighting Co., Ltd.

Mothers

2006/11/17

Kyoritsu Printing Co., Ltd.

TSE 1

2006/12/11

Forval Telecom INC.

Mothers*Off market selling commissions are included in brokerage commissions

SBI E*TRADE SECURITIES share of off-market distributions

20.8%

Fiscal 2006
(Apr.2005 to Mar.2006)

23.1%

Fiscal 2007
(Apr.2006 to Mar.2007)<29>

FY07 Highlights(4) Consolidated trading gain and other revenues(Million Yen)

Other commissions + Trading gain + Other revenues + 401k sales

7,000

6,291

6,000
5,000

4,805

Up 30.9%

4,000
3,000
2,000
1,000
0
Fiscal 2006
(Apr.2005 to Mar.2006)

Fiscal 2007
(Apr.2006 to Mar.2007)<30>

(4) Trading gain and other revenues

Bonds and investment trusts
Government, corporate and foreign bond sales(Million Yen)

20,00018,000Investment trust sales

Bond sales weakened in 2H FY07 but were up
32.7% in FY07. Foreign bond sales almost set a
new record in 4Q.

Foreign bonds
18,084
Yen-denominated bonds
16,284 16,651(100million Yen)
450

13,704
12,325

7,044

6,322

422

400

16,00014,000Plan to further increase the investment trust
lineup, including addition of no-load funds.

13,608

8,744

350
300

12,000

6,724

10,000

7,101

234

250

8,687

219

203
200

8,000

163
6,000

150

9,240

4,000
2,000

10,329

99

9,339
100

6,979
5,223

4,920

0

50
0

Oct-Dec

Jan-Mar

2005

2006

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar

2007*Retail JGB revenues includes underwriting and selling commissions. Above figures
include brokerage sales.

Oct-Dec

2005

Jan-Mar2006

Apr-Jun

Jul-Sep

Oct-Dec*Investment trust sales commissions include offering commissions.

Jan-Mar2007<31>

(4) Trading gain and other revenues

Growth in foreign exchange margin trading
Planning to expand services to achieve more growth in revenues
Foreign exchange margin trading accounts

Foreign exchange margin trading revenues(1000yen)(#of accounts)

53,849500,000

449,834

454,465

432,109413,598

50,000375,877
356,053

400,000

335,208

40,000300,000

30,000200,000 192,049

20,000100,000

10,000

0

0
Apr

2004

Jul

Oct Jan Apr Jul

Oct Jan Apr

2005

2006

Jul

Oct Jan

2007

１Q

2Q

Fiscal 2006

3Q

4Q

1Q

2Q

3Q

Fiscal 2007

4Q
<32>

FY07 Highlights(5) Consolidated selling, general and administrative expenses(Million Yen)

28,75330,00026,30525,000

Trading expenses
Exchange memberships,
advertising, etc.

8,798

Personnel expenses

9,188

Real estate expenses

20,0003,221
15,0002,850

Goodwill amortization

5,394
3,520

10,000

Leases for on-line securities
systems, etc.

1,314

1,495

Depreciation

23

Software, etc.

Administrative expenses
IT systems, back office, etc.

5,000

0

6,836

6,713

439
2,154

417
2,688

Fiscal 2006
(Apr.2005 to Mar.2006)

Fiscal 2007
(Apr.2006 to Mar.2007)

Taxes
Others, provision for
doubtful accounts
Cost of information
provided, etc.

<33>

(5) Selling, general and administrative expenses

Trades executed and variable expenses(Index)130

Cost cutting initiatives keep variable expenses low
Index for number of executed trades and variable expenses(Variable expenses = Trading expenses + Administrative expenses)

Tradesexecuted

120

120

110

100

100
Variable
expenses

90
Fiscal 2006
(Apr.2005 to Mar.2006)

96
Fiscal 2007
(Apr.2006 to Mar.2007)*Based on non-consolidated trades

80
Variable expenses down despite approximate 20% growth in trades executed.
E*TRADE’s broad-based cost reduction program yielded substantial savings.

<34>

FY07 Highlights

E*TRADE Korea Financial Highlights(Million Yen, %)Fiscal 2006
(Apr.2005 to Mar.2006)

Fiscal 2007
(Apr.2006 to Mar.2007)

ChangeOperating revenues

5,202

5,780

+11.1

Net operating revenues

4,977

5,446

+9.4

Operating income

1,182

1,474

+24.7

Ordinary income

1,189

1,482

+24.6

922

1,048

+13.7

Net income(Converted to yen using average monthly exchange rates.)<35>(6) E*TRADE Korea summary

Summary of E*TRADE Korea performance
Higher revenues and earnings due to growth in customer accounts andshare of trading volume
New initiatives• Provide customers with global access to markets
Capital : 66,195 million won• Plan to begin handling trades on U.S., Chinese
E*TRADE ownership : 73.6%
and Hong Kong exchanges (first Korean Online
Customer accounts : 135,139
securities company to offer this service)• Upgrade sales capabilities by using sophisticated
Brokeragetransactions : 49,456.1 bil. won (FY07) IT systems
Profile (March 31, 2007)

Key strengths• Lowest trading commissions among
Korea’s Internet brokers (0.024% forstocks)• Only Korean broker to handle Japanesestocks

IPO and KOSDAQ registration
IPO date : February 21, 2007
Shares sold : 2 million
Post-IPO shares issued : 13.2 million
Contribution to E*TRADE FY07 consolidated
earnings : Deemed gain on sales of about ¥200
millionUnrealized gain on E*TRADE Korea shares held by
E*TRADE : About ¥15.1 billion (March 31, 2007)*Using exchange rate as of March 31, 2007<36>

2. Major Initiatives in Fiscal 2007

2. Major initiatives in 4Q of fiscal 2007

Major initiatives in fiscal 2007
Month・items are new services.
※ items are alliances and other announcements.

Description

Apr※Market guidance business alliance with Sumitomo TrustMay・Expanded IT system to handle 1.75 million customer accounts
・Started gift service campaign that offers customers bond lottery tickets and gift certificates※Market guidance business alliance with Kanto Tsukuba Bank

Jun

・Reduced stock brokerage commissions for Internet trades(minimum of ¥0 for active plan)
・Started stock brokerage commission reduction campaign(for all trades until August 31)
・Raised limit on new margin accounts (¥50 million to ¥100 million)
・Extended market-making to all publicly owned stocks※Market guidance business alliance with Chuo Mitsui TrustJul・Expanded IT system to handle 2 million accounts
・Introduced HYPER MOBILE Lite, an application tool for the FOMA700i series and subsequent
handsets※E*TRADE and Rakuten Securities agree to collaborate in preparation for start of nighttime
tradingAug・Lowered commissions for Nikkei 225 futures trading※Increased investment in SBI Benefit Systems, making this company a subsidiary

Sep・Big reduction in stock brokerage commissions and standard commissions
・Started opening accounts for minors
・Started golf membership open market service based on alliance with E*GOLF SERVICE
・Added “Kabushiki Shimbun Report” (10-minute delay) to the stock news
※ORIX Securities and GMO Online securities joined the joint program to prepare for nighttime
trading

performance
Customer accounts
top 1.2 million

Monthly retail stock
brokerage trading
volume market
share tops 30%

Customer accounts
top 1.3 million

Source: Compiled by SBI E*TRADE SECURITIES based on Tokyo Stock Exchange and JASDAQ materials and other public information for each company*Retail transactions are sum for Tokyo, Nagoya and Osaka exchanges and JASDAQ.

<38>

2. Major initiatives in 4Q of fiscal 2007

Major initiatives in fiscal 2007
Month・items are new services.
※ items are alliances and other announcements.

Description

Oct・Started “Commission 100% Cash-back Campaign”

Nov

・Started securities intermediary business with OMC Card
・Introduced HYPER E*TRADE Ver. 2.0 trading tool・Announced provision of HYPER E*TRADE at no cost starting in January

Dec・Started securities intermediary business with So-net M3※Market guidance business alliance with Shonai Bank

Feb

・Started accepting reverse price orders※E*TRADE Korea shares registered on KOSDAQ※Market guidance business alliance with Resona Bank

Mar

・Started HYPER E*TRADE special benefits campaign
・Expanded foreign exchange margin trading to 16 currency pairs
・Conducted spring no-load fund campaign※Started joint sales operations through alliance with Sumitomo Trust※Traders Financial Systems becomes an equity-method affiliate

performance

Customer
accounts top 1.3
million<39>

2. Major initiatives in 4Q of fiscal 2007

IPO lead manager mandates
Growth in IPO lead manager mandates. Up from one in FY06 to three in FY07.
Mandate no. 2 : Netage Group, Inc.
Listed on TSE Mothers on August 30, 2006
Mandate no. 3 : IREP Co., Ltd.
Listed on OSE Hercules on November 16, 2006

Mandate no. 4 : Diamond Dining Co., Ltd.
Listed on OSE Hercules on March 6, 2007
Mandate in 4Q FY07 raised to four the number of IPOs where E*TRADE served as alead manager.
Use IPOs to rapidly
expand lead manager
underwriting activity

Pursue improvements
in quality and quantity
as a lead manager

Further increase
wholesale operations
and train employees

A total of 24 lead manager mandates (as of April 20, 2007)<40>

2. Major initiatives in 4Q of fiscal 2007

Started sales agency operations through alliance with Sumitomo Trust
Aiming for multi-faceted growth of wholesale business by attracting chiefly corporate clients
Started March 1, 2007 following approval by Financial
Services Agency

Corporate clients

Explain Sumitomo Trust services to corporate clients that
require these services
Leverage the E*TRADE IPO underwriting business

Sales
activities
Agreement

Upgrade wholesale businessactivities and offer various
solutions through the provision ofmany services.

Joint sales visits

Sumitomo
Sumitomo Trust
Trust
Introduction
fees<Joint sales activities>
Targeting publicly owned companies and companies planning an IPO
Stock transfer agency
operations

Management of shareholder list, registration of new shareholders,shareholder meeting services, etc.

Targeting executives and employees of corporate clients

Will trusts

Advice on preparing wills, storage and announcement of wills, execution ofwills, etc.

Estate managementbusiness

Assessment of estate assets, list of assets, tax and other advice, divisionof estate, etc.

<41>

2. Major initiatives in 4Q of fiscal 2007

Added reverse price capability to orders for Japanese stocks
Added to Web site and mobile site in Feb. ’07 and to HYPER E*TRADE in April ‘07
Reduces opportunity losses at customers who
cannot submit, revise and cancel orders on areal-time basis

Standard order : Sell at or above a specific price
Buy at or below a specific price
Reverse price order : Sell at or below a specific price
Buy at or above a specific price
Customers can submit orders with the opposite
timing of a conventional order.
By using this capability in many ways dependingon market trends, customers can manage risk andlock in profits.
By offering services that many customers have been
asking for, E*TRADE aims to offer a comprehensive
service lineup.

<42>

3. New Initiatives

3. New initiatives(1) Aim to become an Internet full-line securities company
Establish a consistently profitable operating structure
Strength in both elements of Internet full-line securities services: Retail and wholesale(2) Merger with SBI Securities
Japan’s first “real based on Internet” securities organization
Aiming to establish a higher profile in the entire securities industry
Cost reductions by integrating IT systems
Expand wholesale business by using face-to-face sales skills
Expand business serving high-net-worth individuals(3) Other goals
Continue working on preparations for nighttime trading market
Enlarge selection of financial products<44>(1) Aim to become an Internet full-line securities company

Establish a consistently profitable operating framework
Build a profit structure that is not vulnerable to market fluctuations
SBI E*TRADE SECURITIES Consolidated Operating Income
Commissions(%)

Financial revenues

55.2

FY2007(down 4.7% YoY)

30.4

(down 21.1%)

Trading
gains/losses
Others

3.4

4.9
6.1

(up 28.3%)

66.7

FY2006

Underwriting/sellingcommissions
Offering/sellingcommissions

22.0

4.4
3.3 3.6(reference)
Nomura

18.7

19.2

23.6

22.5

16.0

First 3Q of FY07<45>

(1) Aim to become an Internet full-line securities company
The two elements of offering comprehensive services: Retail business and wholesale business
Leverage the retail business operating base to expand the wholesale businesswith aim of establishing a consistently profitable operating structure
Overwhelming lead in customers served:1,405,857 customer accounts (March 31, 2007)
Growing share of retail monetary brokerage volume: 36.3% (March 2007)**Compiled by SBI E*TRADE SECURITIES based on public information from
TSE, JASDAQ and other sources.

Retail business
IPO
IPO
stock
stockselling
selling
Off-market
Off-market
sales
sales
Stocks,Stocks,investment
investment
trusts,trusts,
bonds
bonds

Wholesale business
Provision
ProvisionofofIR/investment
IR/investment
information
information

Increase market share andattract more customers byoffering new services andattractive commissions

Forex,
Forex, futures,
futures,
options,
options,etc.
etc.

IPO
IPO
under
under
writing
writing

Secondary
SecondaryfinancefinanceExpand wholesale
operations by leveraging
retail sales capabilities
and all group resources

Off-market
Off-market
sales
sales
(primary(primary
broker)broker)IR
IRsupport
supportSecuritized
Securitized
products
products

M&A
M&A
<46>

(2) Merger with SBI Securities

Summary of merger
Plan to merge with SBI Securities on October 1, 2007
(1) Objective

To establish Japan’s first “real based on Internet” securities organization.
Post-merger company will combine the low cost structure, strong appeal to customers, massive
trading volume and other strengths of an Online securities company with the deep regional roots
and consulting-based sales activities that distinguish “face-to-face” securities companies.
The new company will aggressively pursue an unprecedented business model that can offer evenmore sophisticated services. The ultimate goal is becoming a comprehensive securities company
that can expanding into business domains outside the realm of Online securities companies.

(2) Merger method(3) Timetable

SBI Securities will be absorbed by SBI E*TRADE SECURITIES, which will be the surviving
company.

April 26, 2007

Approval of merger agreement by directors
Signing of merger agreement

October 1, 2007

Closing date

*As stipulated by Article 769, Paragraph 3 of the Company Law, the merger agreement does
not require approval of SBI E*TRADE SECURITIES shareholders.

(4) Merger ratio

SBI E*TRADE SECURITIESSBI Securities

1

0.255
<47>

(2) Merger with SBI Securities

Profiles of SBI E*TRADE SECURITIES and SBI Securities
Aiming to grow by using Japan’s first comprehensive securities business model
based on an Online securities company
SBI E*TRADE SECURITIESSBI Securities

A broad range of individuals, extending
from people building wealth (mainlysalaried workers in their 30s and 40s) towealthy individuals

Mainly corporate clients andwealthy individuals throughout
Japan

Sales method

Internet and call centers

Consulting-based sales using personal
contact by a sales team of about 250
based at 27 offices throughout Japan

Capital (March
31, 2007)¥47,864 million¥12,118 million

Shares issued

3,188,493

1,018,563.87

Employees(March 31, 2007)

140

370

Customers<48>

(2) Merger with SBI Securities

Japan’s first “real based on Internet” securities organization
Grow by using Internet sales base to leverage the advantages of face-to-face sales

SBI E*TRADE SECURITIES (Intenet)
Strengths

Weaknessesü Low cost
ü Ability to attract large numbers of retailcustomers
ü Large brokerage trading volume

SBI Securities (“Real”)
ü Deep local roots
ü Face-to-face (“push” sales) sales skills
ü Ability to differentiate customers

Mutuallycomplementary• High reliance on brokerage operations• Inability to provide personalized services• High cost (personnel, offices, etc.)• Cannot attract large numbers ofcustomers• Small brokerage trading volume

Customer accounts by age (March 31, 2007)<30

Offset each other’s weaknesses and differentiate
services from those of competitors
Difficult to use the Internet to sell investment
trusts and other financial products that requiredetailed explanations.

SBI E*TRADE
SECURITIES

14.3

30's

40's

35.7

Under 40: 50.0%
SBI Securities

3.4
7.0 13.0

21.6

50's

60's

21.9

70's/over

16.2

2.9
8.9

Over 60: 54.8%
25.3

29.5

Ability to use advantages offered by face-to-facesales activities

0%

20%

40%

60%

80%

100%
<49>

(2) Merger with SBI Securities

Establish a higher profile in the securities industry (number of customers)
Ranking by customer accounts (March 31, 2006)

Ranking by customer assets (March 31, 2006)(Billion Yen)(# of account)1

Nomura*80,480.9

2Daiwa Group

52,438.1

3

Nikko Group

42,542.9

2,176,000

4Mitsubishi UFJ

23,723.1

E*TRADE + SBI

1,231,273

5

Shinko14,164.5

Mitsubishi UFJ*

1,092,000

6Mizuho Investors

7,478.0

7

E*TRADE + SBI

5,110.4

6

Shinko1,017,000

8

SMBC Friend

4,689.6

7

Monex631,548

9

Tokai-Tokyo

4,606.9

8

Rakuten552,816

10

Okasan Holdings

4,057.6

11

9517,521MBH

2,248.7

Matsui

12

Marusan

2,111.2

10

Kabu.com

475,425

13

Cosmo

2,074.1

14

Ichiyoshi

1,974.0

15

Matsui

1,937.8

16

Toyo

1,399.0

17

Rakuten

1,370.0

18

Kabu.com

1,234.719

Mito

1,178.6

20

Aizawa1,155.3

1

Nomura*3,780,000

2Daiwa Group

2,695,000

3

Nikko Group4
5*Accounts with balances
Source: Compiled by SBI E*TRADE SECURITIES based on
available information

These rankings are comparisons based on the sum of figures for publicly owned
securities companies, Rakuten Securities and the two SBI Group securities companies.

<50>

Source: Compiled by SBI E*TRADE SECURITIES based on information in May 1, 2006 Nikkei Kinyu Shimbun

(2) Merger with SBI Securities

Establish a higher profile in the securities industry (financial performance)
Ranking by operating revenues (FY 2006)

Ranking by ordinary income (FY 2006)(Million Yen)

(Million Yen)

＊545,013＊ 1,792,840

1

Nomura*Daiwa Group

845,659

2

Daiwa Group206,651

3

Nikko Group488,513

3

Nikko Group

167,834

4

Mitsubishi UFJ

309,6214

Mitsubishi UFJ

96,842

5

Shinko152,915

5

Shinko43,184

6

Okasan Holdings

88,899

6

E*TRADE + SBI

38,256

7

Mizuho Investors

84,4837

Matsui37,062

8

E*TRADE + SBI

76,275

8

Okasan Holdings

35,3809

Tokai-Tokyo

71,7769Mizuho Investors

32,70010

SMBC Friend

68,572

10

SMBC Friend

31,16811

Matsui57,072

11

Tokai-Tokyo

27,19112

MBH

39,22312

MBH

24,93813

Marusan

29,85013

Marusan

12,996

14

Ichiyoshi

27,56914

Kabu.com

12,67215

Cosmo

26,65015

Ichiyoshi

9,855

16

Aizawa25,087

16

Mito

9,091

17

Toyo

24,19917

Aizawa

8,783

18

HS

23,650

18

Toyo

8,338

1

Nomura*2

Source: Compiled by SBI E*TRADE SECURITIES based on informationin May 1, 2006 Nikkei Kinyu Shimbun

Source: Compiled by SBI E*TRADE SECURITIES basedon available information*Nomura is income<51>
These rankings are comparisons based on the sum of figures for publicly owned securities companies and the two SBI Group securities companies.
before income taxes

(2) Merger with SBI Securities

IT system cost reductions
Cut IT system expenses by consolidating securities back-office systems<Current system><After merger>

Each company
uses its own
systemOnline and branch
office operations
will use the same
systemBack-office system

Back-office system

Back-office system

Will use the same vendor as before to consolidate systems
with the aim of achieving significant cost savings.

<52>

(2) Merger with SBI Securities

Expand the wholesale business
Leverage face-to-face sales channels to increase public offering underwriting and other services

Investors<Current system>
Sales

Internet

Public offerings require
selling underwritten
shares quickly; difficult
to accomplish this using
solely Internet sales

SBI E*TRADE SECURITIESIssuers

Investors<After merger>

Internet
Sales

Underwriting

SBI E*TRADE SECURITIESIssuers

Offices

Using face-to-face sales
makes it possible to selllarge amounts of stock
quickly

Sales

Adding another sales channel opens the way to entering new sectorsof the wholesale securities business<53>

(2) Merger with SBI Securities

Expand investment banking operations
Identify corporate fund procurement needs to enlarge the entire wholesale business<Corporate needs>
Business
expansion needs

IPO needs

Fund procurement
needs<Solutions offered by SBI E*TRADE SECURITIES>IPO underwriting

IR support

IPOs underwritten by
SBI E*TRADE
SECURITIES

M&A intermediaryservices
Financial strategy
assistance

Public offering
underwriting

Alliance with M&A intermediary firm
to Gather info Reinforce M&A
operations Train personnel

Leverage face-to-face sales
skills of SBI Securities

451**Since start of Internet operations through March 2007

Ability to use Internet toattract large numbers ofcustomers

IPO lead manager mandates: 3 in FY07

M&A intermediary services: 2 deals in FY07

Offer many ideas to companies that want to grow in order to identify
fund procurement needs and expand underwriting volume.

<54>

(2) Merger with SBI Securities

Increase business with wealthy individuals
Assist in building wealth for owners and other executives of companies where
E*TRADE/SBI have been an underwriter
IPOs underwritten by SBIE*TRADE SECURITIES

451**Since start of Internet
operations throughMarch 2007

Executives and employees

Face-to-face sales capabilities• 27 offices nationwide
Consulting-based
sales activities• Sales team of about 250

Use consulting-based sales, which is difficult to accomplishusing the Internet, to sell financial products that assist inbuilding wealth for executives and employees of companies
that E*TRADE/SBI has served.

Example: E*TRADE/SBI underwrote the IPOs of 121 companies in FY07
HUB, JTEC, ASCII Solutions, Golf Do, Raccoon, Cluster Technology, Nepro Japan, Image Information, QOL, System Location, Alconix, SystemD,
Honyaku Center, SBI Futures, Stylife, Tear, Yume no Machi Souzou Iinkai, Keyware Solutions, Fisco, Kobebussan, Pharma Foods International, Tokuden,
J-REP, Beauty Kadan, Living Corporation, Atect, OKWave, Modulat, Adways, Japan Third Party, Amita, SecuAvail, Vario Secure Networks, Power Up, Bitisle, Value Commerce, JIN, Infomart, E-supportlink, Bic Camera, Gomez Consulting, eZuz Japan, Medical Care Service, SPACE ALC, Netage Group,
Orvis, Sanei Architecture Planning, Mixi, Media Kobo, Interspace, Pepper Food Service, Miyano, Furuya Metals, Hyper Conception, Star Mica, GCA,
Nihon M&A Center, Fractalist, JSC, Novarese, Acrodea, Zetton, JPN Servicer, media5, Optrom, Fund Creation, Sanyodo Books, Members, Takata, IREP,
Elecom, Magaseek, KFE Japan, Remix Point, GABA, Japaninvest Group, Celsys, Trust Park, GameOn, Duskin, Properst, Hirata Corporation, Advantage
Risk Management, Life Foods, Gigaprize, Intrance, Kyoei Steel, VSN, Sourcenext, Piped Bits, Central General Development, JB Eleven, Tokyo Ichiban
Foods, T&C Holdings, Asahi Net, Amagasa, Diva, Fujishoji, Sowa Jisho, Web Do Japan, Will Real Estate Sales, Innext, Chuco, AQ Interactive, Diamond
Dining, ODK Solutions, Choushimaru, Golf Partner, eGuarantee, Ecash, Soliton Systems, Jedat, Shubunsha, NextGen, USJ, Yamane Medical, Comture,<55>
FreeBit, I-FREEK, Urbanet Corporation

(3) Other Initiatives

Progress in preparing for nighttime trading market
Examining this market by prioritizing link to PTS established by SBI Japannext Securities
First step: SBI E*TRADE SECURITIES receives PTS approval, four companies
consider proposal for a link

Today: Five companies are considering offering this service via a link to the
PTS of SBI Japannext Securities
Reasons• SBI Japannext Securities has completed registration as a securities company• Other securities companies may participate, too, further increasing market liquidity<PTS operating framework>

SBI Japannext Securities
Connection

Connection

Connection

Connection

Connection

Companies will consider making an equity investment once SBI Japannext Securities obtains PTS
approval and based on progress toward starting transactions.
<56>

(3) Other Initiatives

Enlarge selection of financial products
Target many investment needs by extending the product lineup beyond equities
Plan to begin handling overseas ETF

Offer more investment trust services

Overseas ETF: Exchange-traded funds. Listed
investment trusts that track an overseas equity
index or other index.

Increase lineup of no-load funds

Plan to begin handling overseas ETF,
an overseas investment product inwhich customer interest is very highEasier to understand than individual stocks because
ETF simply track an index

Easier to establish standards for selecting stocks thanwhen investing in individual stocks

Allows offering a broader range of choices toindividual investors with a global perspective

Plan to begin handling ETF as soon as possible

Considering an increase from current
46 funds to about 60 funds
Offer customers more opportunities to invest in low-cost
investment trusts by expanding the lineup of popular noload funds.

More funds covered by the “investment
trust regular purchase service”
Considering an increase from thecurrent seven funds to about 30 funds
Allow customers to use the “investment trust regular purchaseservice” for a lager number of funds, thus providing moreassistance in the long-term accumulation of savings.

Plan to increase the number of applicablefunds in stages.

<57>

4. Dividends

4. Dividends

Proposal for FY07 year-end dividend
SBI E*TRADE SECURITIES has announced its intention of paying a FY07 year-end
ordinary dividend of ¥1,600 per share and a commemorative dividend of ¥100 per sharefor the IPO of E*TRADE Korea. The FY07 dividend will thus be ¥100 higher than in FY06.

Year ended March 2007

Year ended March 2007

Per share

Per share

Ordinary dividend¥1,600¥1,600E*TRADE Korea
commemorative
dividend

¥100

−

Total

¥1,700¥1,600

Dividend policy: Make substantial dividend payments while taking into account the need to retain
earnings for future growth and financial soundness and to reflect past dividend payments and theearnings outlook.
<59>http://www.etrade.ne.jp