Medium-Term Management Planof Nikko Cordial Securities Inc.
(FY ending March 2011 to FY ending March 2013)

March 26, 2010 (Friday)
Nikko Cordial Securities Inc.

Translation of the Japanese material

Management Philosophy of Nikko Cordial Securities Inc.
yy TheThe Company’s
Company’s Management
Management Philosophy
Philosophy has
has been
been partiallypartially amended
amended inin thethe first
first fiscal
fiscal year
year since
since thethe CompanyCompany
becameamemberofSumitomo
Mitsui
FinancialGroup.
became a member of Sumitomo Mitsui Financial Group.
yy TheThe newnew Management
Management Philosophy
Philosophy places
places priority
priority onon thethe “provision“provision ofof values”
values” which
which waswas emphasizedemphasized byby thetheCompany
Company inin thethe past,
past, thethe “best“best confidence
confidence ofof customers”
customers” thatthat thethe Company
Company cancan obtainobtain inin return
return forfor provision
provision ofofvalue,
value, “general“general securities
securities company’scompany’s responsibilities
responsibilities to
to markets
markets andand society,”society,” andand “diversity”“diversity” andand “sense“sense ofof unity”
unity”
among
among departments
departments andand personnel.
personnel. The
The Medium-Term
Medium-Term Management
Management Plan
Plan isis preparedprepared based
based onon this
thisManagement
Management Philosophy.
Philosophy.

Management Philosophy
We provide customers with higher value.
We aim at becoming a company that can grow with customers
and obtain their utmost confidence.
We perform sound financial intermediary functions andcontribute to the development of markets and society as a whole.
We create a workplace where diversity is respected, the sense ofunity is enhanced but individuality can be demonstrated .
2

Favorable Beginning as General Securities Company
yy TheThe Company
Company commenced
commenced businessbusiness operations
operations as
as generalgeneral securities
securities company,company, aa 100%
100% subsidiarysubsidiary ofof
Sumitomo
Sumitomo Mitsui
Mitsui Banking
Banking Corporation
Corporation (SMBC)(SMBC) on
on October
October 1,1, 2009.
2009.
yy BothBoth retail
retail andand wholesale
wholesale businessbusiness operations
operations have
have got
got off
off toto aa favorable
favorable start.
start.

Wholesale Business

Retail Business
Client assets and net inflow of assets
Member of SMFG
(Client assets: trillions of yen)
（預り資産：兆円）
30
25.9

25.9

26.6

Underwriting
Underwriting ofof equities
equities andand bonds
bonds
(in
(in andand afterafter Oct.
Oct. 2009)
2009)
More
More than
than 300
300 deals
deals

Investment
投信
trust

20

Bond
債券

10

Ranking
Ranking ofof domestic
domestic corporate
corporate bondbond book
book runners
runners(Oct.-Dec.
2009)(Oct.-Dec. 2009)
yy League
League table:table: 1st
1st placeplace
yy Underwriting
Underwriting amount:amount: 645.2
645.2 billion
billion yen（*）
yen（*）

株式Equity0
FY2009年度
2009
Net inflowof assets
資金導入：(billions of yen)

1Q

2Q

3Q

1,175億円
117.5

20億円
2.0

8,133億円
813.3（*） Thomson Reuters

Partnership with SMBC
Funds
Funds handled
handled jointly
jointly byby SMBCSMBC andand thethe CompanyCompany
yy Balance
Balance ofof net
net assets:
assets: 512.6
512.6 billion
billion yenyen (at(at endendofFeb.
2010)(Amounthandledbytheof Feb. 2010) (Amount handled by theCompany:
Company: 371.3
371.3 billion
billion yen)yen)
yy Thebond
fundformedinThe bond fund formed in October
October achievedachieved aa
recordrecord amountamount inin thethe industry
industry inin thisthis fiscal
fiscal year
year

Relationship-based
Relationship-based businessbusiness(In(In andand after
after October
October 2009)2009)
yy Number
Number ofof successful
successful deals:
deals:
morethan500
more than 500

Intermediation
Intermediation ofof financial
financial products
products
yy Started
Started businessbusiness forfor corporate
corporate customers
customers
inJanuary
in January
yy WillWill start
start businessbusiness forfor individual
individual customers
customers
inAprilin April

3

Medium- and Long-Term Prospects

Future prospect（in 10 years）

No.1 general securities company in Japan which is excellent
both in quality and in quantity and globally competitive¾

Demonstrating an overwhelming presence through the growth realized by the combined
effects of: 1) capabilities to sell risk products in retail business; 2) sophisticated proposalmaking capabilities in wholesale business; and 3) personnel and networks of SMBC¾

Continually being in the top ten in all sectors and markets in which the Company participates
as a global player¾

Contributing to the integration of securities-related infrastructure, know-how and personnel,
and providing supreme satisfaction as well as a sense of security to customers in both thebanking and securities businesses

With the above prospects, the Company has established the Medium-Term Management Plan for thethree years from April 2010.
4

Medium-Term Management Plan: Management Targets (1)Basic Policy
1.1. Aiming
Aimingatatbecoming
becomingone
oneofofthe
theleading
leadingand
andsolid
solidgeneralgeneralsecurities
securitiescompaniescompaniesininJapan
Japanthatthatcancanoffer
offerfullfullline
lineservices
servicestotocustomers
customersand
andobtain
obtaintheir
theirutmost
utmostconfidence
confidence(1)(1) Sustainable
Sustainableexpansion
expansionofofexisting
existingbusinessbusinesscentering
centeringon
onretail
retailbusinessbusiness••••

Improving
Improvingthe
theoperation
operationsystems
systemstotofurther
furtherexpand
expandourourrevenue
revenuebase
basewhile
whilemaintaining
maintaininghighhighproductivity
productivity
Providing
Providingcustomers
customerswith
withaabroad
broadlineup
lineupofofproducts
productsandandservices
servicesthroughthroughintroduction
introductionororintermediationintermediation
businessofSumitomoMitsui
BankingCorporation(SMBC)
business of Sumitomo Mitsui Banking Corporation (SMBC)••

AimingAimingtotodrasticallydrasticallyincrease
increaseproductproductsales
salesandandthethenetnetinflow
inflowofofassets
assetsthroughthroughthe
theexpansion
expansionofof
primarydeals
inconcertwiththewholesale
divisionprimary deals in concert with the wholesale division(2)(2) Creation
Creationofofnew
newbusinessbusinesscentering
centeringon
onthe
thewholesale
wholesalebusinessbusiness••

Realizing
Realizingbusinessbusinessresults
resultsby
bywhichwhichthetheCompanyCompanycan
candemonstratedemonstrateaasolid
solidpresence
presencethroughthroughmaintenancemaintenanceand
andenhancement
enhancementofofrelations
relationswith
withcustomers
customersfor
forwhom
whomthetheCompany
Companyworked
workedasasaaleadleadmanager
andenhancementofleadmanagement
capabilities
utilizing
ourpartnership
with
SMBC
manager and enhancement of lead management capabilities utilizing our partnership with SMBC••

Increasing
Increasingthe
thenumbernumberofofskilled
skilledpersonnel
personnelandandinvesting
investingininsystems
systemsininorder
ordertotoexpand
expandnew
newbusiness,business,suchsuchasastrading
tradingoperations,operations,overseas
overseasbusinessbusinessand
andourourpartnershippartnershipwith
withSMBC
SMBC(3)(3)Improvement
Improvementofofthe
theorganizationalorganizationalstructure
structureofofthe
theheadheadoffice
officeininorder
ordertotoestablish
establishriskriskmanagement
managementand
andcompliancecompliancesystems
systemsininresponse
responsetotofull-line
full-linebusinessbusinessoperations
operations
2.2. Responding
Respondingtotosociety,society,thetheeconomy
economyandandmarkets
marketsininaamore
moreresponsible
responsiblemannermannerasasaamajor
majorfinancial
financial
institution
institutionininJapan
Japanandandaimingaimingatatimproving
improvingboth
bothourourreliability
reliabilityand
andpresence
presence
3.3. Establishing
Establishingaagrowth
growthstrategy
strategyas
asaageneralgeneralsecurities
securitiescompany
companythat
thatconducts
conductsboth
bothretail
retailand
andwholesale
wholesalebusinessbusiness5Medium-Term Management Plan: Management Targets (2)Numerical Targets

TheTheCompany
Companyaims
aimstotoachieve
achievethe
thefollowing
followingtargets
targetsininthe
thefiscal
fiscalyear
yearending
endingMarch
March2013
2013(*1).
(*1).
FY ending March 2010
3Q (annualized) (*2)(billions of yen)

1.

2.

FY ending March 2013
Planned targets(billions of yen)

Net operating revenue (*3)

181.4300(1) From retail business

167.4200(2) From wholesale business14.0100

37.9100

Ordinary income(*1) Market figures used as preconditions for establishing numerical targets (Nikkei stock average in the fiscal year ending March 2013: 13,000 yen, domestic
long-term interest rate (JGB10Y) : 1.6%, Exchange rate: 99 yen per U.S. dollar, 143 yen per Euro, and 98 yen per Australian dollar)(*2) The business results for the 3Q (October to December) of FY ending March 2010 are quadrupled. Net operating revenues from retail business andwholesale business represent those of management accounting.
(*3) Net operating revenue: operating revenue less financial expenses

6Medium-Term Management Plan: Main Measures (1)Retail Business (*)(*) Business targeting Individual customers, medium-sized companies, public interest corporations, etc.

1.1. Enhancement
Enhancementof
ofefforts
effortsininbusinessbusinesstargetingtargetingwealthy
wealthyindividuals
individuals—— Improvement
Improvementofofthethesales
salesstructure,
structure,suchsuchas
asby
byincreasing
increasingthe
thenumbernumberofofconsultants
consultantsatatbranches
branchesandandexpansion
ofsupportivemeasuresforbranches(solutions,M&A,etc.)
expansion of supportive measures for branches (solutions, M&A, etc.)—— TheTheuseuseofofmixed
mixedsales
salesmodel
model (＝organic(＝organiccoordination
coordinationofofvarious
variousIT-based
IT-basedchannels
channelswith
withuniqueuniquefunctions
functionsandspecialties,
suchasface-to-facechannels,
acallcenteranddirectchannels)
and specialties, such as face-to-face channels, a call center and direct channels)—— Promotion
Promotionofofglobal
globaldiversification
diversificationofofinvestments
investments-----“from“fromJapan
Japantotothe
theworld”
world”

2.2. Meeting
Meetingthe
thediversified
diversifiedneeds
needsofofcustomers
customersby
byenhancing
enhancingour
ourpartnershippartnershipwith
withSMBC
SMBC—— Enhancing
Enhancingintroduction
introductionororintermediationintermediationbusinessbusinessfor
formedium-sized
medium-sizedcompanies
companiesand
andpublic
publicinterest
interest
corporations
nationwide
corporations nationwide—— Financial
Financialproductproductintermediaryintermediaryservice
servicefor
forindividual
individualcustomerscustomerstotobe
bestarted
started(from(fromAprilApril2010)
2010)—— Expansion
Expansionofofthe
thesalessalesstructure
structureininthe
theKansai
Kansairegion,region,loaning
loaningsales
salespersonnel
personneltotoSMBC,
SMBC,andandstudying
studyingthe
thepossibility
ofa
singleaccountforbankingandsecurities
transactions(tie-upbetweenEZTradeandSMBC
possibility of a single account for banking and securities transactions (tie-up between EZ Trade and SMBCDirect)
Direct)3.3. Enhancing
Enhancingefforts
effortsfor
forprimaryprimarydeals
dealsthroughthroughcollaboration
collaborationwithwithwholesale
wholesaledivision
divisionas
asaageneralgeneralsecurities
company
securities company

7

Medium-Term Management Plan: Main Measures (2)Wholesale Business (*)(*) Business targeting listed corporations, institutional investors, etc.

1.1. Establishment
Establishmentofofthe
thefront
frontsystemsystemtotoachieve
achievebusinessbusinessresults
resultsby
bywhichwhichthetheCompany
Companycan
candemonstratedemonstrateaasolid
solidpresence
presence—— Maintenance
Maintenanceand
andenhancement
enhancementofofrelations
relationswith
withcustomers
customersfor
forwhom
whomthetheCompany
Companyworked
workedasasaalead-manager,lead-manager,andandenhancement
enhancementofoflead
leadmanagement
managementcapabilities
capabilitiesthroughthroughour
ourpartnershippartnershipwith
withSMBC
SMBC—— Establishment
Establishmentofofaafront
frontsystemsystemthat
thatcancansatisfy
satisfythe
thediversified
diversifiedneeds
needsofofcustomers
customersand
andprovide
providesophisticatedsophisticatedsolutions
solutions2.2. Increasing
Increasingthe
thenumbernumberofofskilled
skilledpersonnel
personnelandandinvesting
investingininsystems
systemsininorder
ordertotoexpand
expandnew
newbusiness,business,suchsuchasas
trading
tradingoperations,operations,overseasoverseasbusinessbusinessand
andourourpartnershippartnershipwith
withSMBC
SMBC
——
——

Enhancement
Enhancementofofour
ourpartnershippartnershipwith
withSMBC
SMBC(introduction(introductionofofbusinessbusinessfor
forunderwriting,underwriting,M&A,M&A,fundfundmanagement,management,etc.)
etc.)
Continuanceofalliance
withCitigroupContinuance of alliance with Citigroup——

Strengthening
Strengtheningproduct-related
product-relatedfunctions
functionsincluding
includingoverseas
overseasexpansion
expansion
Reference: Estimated Composition ofIncome from Wholesale Business

League Table
Estimation for the fiscal year
ending March 2013

UnderwritingUnderwriting ofof industrial
industrial
bonds:
1stbonds: 1st place
place
Underwriting
Underwriting ofof equities:
equities:
Within3rdplace
Within 3rd place

3Q of FY ending March
2010(annualized)
OthersEstimation for FY ending
March 2013

Underwriting

M&ATrading8Medium-Term Management Plan: Main Measures (3)Personnel and Middle/Back Offices
1.1. Active
Activeemployment
employmentofofpersonnel
personneland
andenhancement
enhancementofofpersonnel
personneldevelopment
developmentprograms
programs¾¾ Increase
Increaseininthe
thenumbernumberofofemployees
employeesby
byapproximately
approximately1,000
1,000over
overthethethreethreeyears
yearsthroughthroughactive
activeemployment
employmentofofnew
newgraduates(approximately500ayear)
andmid-career
personnel
graduates (approximately 500 a year) and mid-career personnel
2.2. Increase
Increaseininsystemsysteminvestment
investment¾¾ Investinginsystems
Investing in systemsby
bymoremorethanthanapproximately
approximately50
50billion
billionyen
yenover
overthethethreethreeyears
years(*)(*)(for(forexample,
example,thetheestablishment
establishmentofoftrading
tradinginfrastructure,
infrastructure,risk/credit
risk/creditmanagement
managementsystem,
system,systemsystemfor
forresponding
respondingtotooverseas
overseasoffices,
offices,callcallcenterandbusiness
infrastructureforbranches)
center and business infrastructure for branches)
3.3. Improvement
Improvementofofthe
theorganizationalorganizationalstructure
structureofofthe
theheadheadoffice
officeininresponse
responsetotofull-line
full-linebusinessbusinessoperations
operations¾¾ Improvement
Improvementofofthe
theorganizationalorganizationalstructure
structureininresponse
responsetotoan
anexpansion
expansionininwholesale
wholesalebusiness,business,suchsuchasasmarket/credit
market/creditriskmanagement,compliance,
legal/taxrisk
management
andaccountsettlement
infrastructurerisk management, compliance, legal/tax risk management and account settlement infrastructure
4.4. Maintenance
Maintenanceofoflow-cost
low-costoperations
operationsbased
basedononIT,
IT,etc.
etc.(improvement(improvementofofproductivity
productivityofofsales
salesactivities)
activities)(*) The amount will be reviewed from time to time depending on the progress of the plan.

Number of employees(including temporary employees)
Approx. 8,000

System investment amount(billions of yen)
20

Approx. 7,000
Approx. +1,000

End of Dec. 2009

Estimation for end ofMarch 201310

Approximately 50
billion yen or more
over three years

0Mar.2008

Mar.2009

Mar.2010

Estimation for
FY ending Mar. 2011 toFY ending Mar. 20139