Information Meeting for First
Quarter Results of Operations
Fiscal Year Ending March 31, 2008
July 31, 2007
SBI E*TRADE SECURITIESCode 8701
This presentation was prepared for the purpose of explaining the operations and business strategies of SBI E*TRADE SECURITIES. This is not asolicitation to purchase stock or other securities issued by the company. SBI E*TRADE SECURITIES makes no guarantee that this information is completeor that strategies or other goals will be accomplished. In addition, the contents of this presentation may be revised or deleted without prior notice.

1. Financial Highlights

Fiscal 2008 First Quarter Consolidated Financial Highlights(million yen/%)

FY07 First Quarter(April-June ’06)

FY08 First Quarter(April-June ’07)

ChangeOperatingrevenues
Net operating
revenues

15,691

15,440-1.6

14,886

14,115-5.2

Operating income

7,168

6,113

-14.7

Ordinary income

7,391

6,112

-17.3

Net income

4,182

3,221

-23.0
<3>

Fiscal 2007 and 2008 Consolidated Quarterly Financial Highlights
Revenues up and earnings down compared with fourth quarter of FY07
(million yen / %)Fiscal 2007
First Quarter(Apr-June)

Second Quarter(July-Sep)

Third Quarter(Oct-Dec)

Fiscal 2008
Fourth Quarter(Jan-March)

First Quarter(Apr-June)

1Q vs. 4Q

Operatingrevenues

15,691 12,882 13,737 15,100 15,440+2.2

Net operating
revenues

14,886 11,905 12,642 13,861 14,115+1.8

Operatingincome

7,168

5,043

5,803 6,527

6,113

Ordinary
income

7,391

5,077

5,744 6,358

6,112 -3.9

Net income

4,182

2,789

3,191 3,646

3,221 -11.7

-6.3

<4>

(1) Reasons for Lower Revenues and Earnings

(1) Reasons for Lower Revenues and Earnings

SBI E*TRADE SECURITIES Basis
July 1, 2005
Loweredcommissions(basis)6.0

5.2

Basis since 2Q of Fiscal 2006

June 1 to August 31, 2006
Reduced commission
campaign

5.0

4.3

September 1, 2006
Campaign ended

4.4

Introduced new commission
structure

4.0

4.0
October 3,2005 Loweredcommissions

3.1

3.2

3.0

3.0

-30％
2.8

2.0
2Q

FY20063Q

4Q

1Q

FY2007

2Q

3Q

4Q

1Q

FY2008

Quarterly index calculated by dividing non-consolidated brokerage commissions by brokerage trading value, using brokerage commissions as shown in the kessan tanshin.

<6>

(1) Reasons for Lower Revenues and Earnings

Basis Comparison with Major Online Securities Companies(basis)Basis at Big Five Online Securities Companies

12.0

1Q 2008
1Q 2007

10.0

11.0

11.2

10.7

9.0

8.3
8.0

7.5

5.2

6.0
(brokerage commissions divided by brokerage trading value)

4.0

4.3

4.0

2.0

2.8

0.0
SBI E*TRADE

Kabu.com

MBH

Matsi

RakutenSource: Compiled by SBI E*TRADE SECURITIES based on earnings releases and monthly disclosure materials
First quarter figures and brokerage commissions are non-consolidated data from earnings releases.

<7>(1) Reasons for Lower Revenues and Earnings

Consolidated Brokerage Commissions
Brokeragecommissions
down 17.8%

Brokerage commissions(million yen)

12,000

9,681
9,000

22,104

Brokerage
trading value
Up 6.1%brokerage trading value(billion yen)

23,44430,00024,0007,957

Brokeragecommissions

18,0006,000
Brokerage
trading value

3,000

12,000

6,000

0

0

Fiscal 2007/1Q(April-June ‘06)

Fiscal 2008/1Q(April-June ‘07)
<8>

(1) Reasons for Lower Revenues and Earnings

Brokerage Trading Value at Major Online Securities Companies
Quarterly brokerage trading value at big five online securities companies(index)120(FY03/1Q = 100)

SBI E*TRADE
RakutenKabu.com
Matsui
Monex
Retail Total

SBI E*TRADE
106.1

100

Rakuten 86.9
Retail Total 86.8
Kabu.com 83.9
80

Monex 71.8
Matsui 70.9
60

1Q
FY 2007

2Q

3Q

4Q

1Q
FY 2008

Source: Compiled by SBI E*TRADE SECURITIES based on TSE and JASDAQ materials, company Web sites and other available information.
*Individual brokerage trading values are the sum for the three major exchanges and JASDAQ.

<9>

(2) Highlights of Fiscal 2008 First Quarter Consolidated Performance
Revenues and earnings down YoY but revenues higher than in FY07/4Q(1) Brokerage commissions

Down 17.8% to ¥7,957 million and 3% less than in FY07/4Q

・1,450,764 customer accounts at end of June 2007; 44,867 new accounts during FY08/1Q (avg. of 14,955 accounts per month)・Share of retail stock brokerage transactions rose to an all-time high of 33.4% (for FY07/1Q)(2) Financial revenues

Up 31.8% to ¥5,386 million

・Net financial revenues increased 24.2% to ¥4,077 million due mainly to growth in the use of internal resources to meet funding needs
・153,228 margin accounts at end of June 2007; 5,569 new accounts during FY08/1Q (avg. of 1,856 accounts per month)(3) Underwriting, offering and selling commissions Up 48.2% to ¥540 million
・Stock underwriting, offering and selling commissions (non-consolidated) increased 88.5% to ¥156 million
・Continued to rank among Japan’s leading securities companies in terms of the number of offerings underwritten(4) Trading gains and others

Down 0.2% to ¥1,555 million

・Bond trading volume set a new quarterly record; foreign exchange margin trading volume was also high(5) Growth in investment trust activities
・Investment trust revenues increased 43.3% due to growth in the number of trusts offered, including no-load funds(6) Selling, general and administrative expenses
・Variable expenses were lower despite an increase in the number of executed trades(7) E*TRADE Korea Co., Ltd.
・Achieved big increases in revenues and earnings because of high trading volume in Korean stock markets<10>(1) Brokerage commissions

Customer Accounts at Major Online Securities Companies
Growth in customer accounts at big
Customer accounts at big five online(accounts) five online securities companies(accounts)
securities companies
1,450,764(April 2004 to June 2007)(June 30, 2007)

1500000

1,400,000

1400000
1300000

1,200,000

1200000
1100000
1000000

1,000,000

SBI E*TRADE
1,450,764

Growth in new
accounts slowed
in FY08/1Q, but
SBI E*TRADE led
competitors with
44,867 new
accounts.

Monex
774,028

900000

Rakuten704,508
Matsui
684,243

800000774,028800,000

700000704,508 684,243

600000580,781600,000

500000Kabu.com
580,781400000400,000

300000200000100000SBIE*TRADE

Monex

RakutenMatsuiKabu.com

Jun
r
Ap
b
Fe
c
De
t
Oc
g
Au
Jun
r
Ap
b
Fe
c
De
t
Oc
g
Au
n
Ju
r
Ap
b
Fe
c
De
t
Oc
g
Au
Jun
r
Ap

200,000

2004年

2005年

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

2006年

2007年

<11>

(1) Brokerage commissions

New Accounts at Major Online Securities Companies
New accounts during year ended June 2007

(accounts)

200,000

191,601
1Q(Apr-Jun 2007)
4Q(Jan-Mar 2007)
3Q(Oct-Dec 2006)
2Q(Jul-Sep 2006)

1Q

44,867150,000
4Q

54,321
100,000

112,299
28,9603Q

40,572

98,136

95,976

23,664

16,17078,454

23,226

18,17530,13430,57950,0002Q

23,942

51,841

22,52819,56529,26324,328

RakutenMonex

19,616
18,79934,052

21,8640

SBI E*TRADE

MatsuiKabu.com

Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other available information for each company<12>

(1) Brokerage commissions

Brokerage Trading Value at Major Online Securities Companies
Average daily brokerage trading value at big five online securit ies companies(million yen)(January 2004 to June 2007)

Daily transactions
in June 2007
(million yen)

500,000

SBI E*TRADE
399,350
400,000

300,000

Rakuten158,271
Matsui96,157200,000

100,000

0
n
Ju
y
Ma
r
Ap
r
Ma
b
Fe
n
Ja
c
De
v
No
t
Oc
p
Se
g
Au
l
Ju
n
Ju
y
Ma
r
Ap
r
Ma
b
Fe
n
Ja
c
De
v
No
t
Oc
p
Se
g
Au
l
Ju
n
Ju
y
Ma
r
Ap
r
Ma
b
Fe
n
Ja
c
De
v
No
t
Oc
p
Se
g
Au
l
Ju
n
Ju
y
Ma
r
Ap
r
Ma
b
Fe
n
Ja

2004

2005

2006

Monex
75,354
Kabu.com
70,3682007

Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other available information for each company<13>*Monex is the sum of Nikko Beans and Monex. Kabu.com merged with MeNet in January 2006.

(1) Brokerage commissions
Comparison with Brokerage Trading Value of Japan’s Big Three Securities Companies(billion yen)

Brokerage Trading Value

30,000Stock brokerage market share in FY08/1Q
SBI E*TRADE

25,00023,911（9.4%）

20,000Nomura17,902（7.1%）
15,000SBI E*TRADE tops Nomura in FY05/4Q
Daiwa SMBC
9,488(3.7%)
Nikko Citigroup 6,640(2.6%)

10,000

Matsui 5,423（2.1%）
Daiwa 3,757(1.5%)
Nikko Cordial 1,454（0.6%)

5,000

0
1Q 2Q 3Q
FY 2002

4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY 2004
FY 20033Q

4Q 1Q 2Q 3Q
FY 2005

4Q

1Q 2Q 3Q
FY 2006

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)

4Q

1Q 2Q 3Q
FY 2007

4Q

1Q
FY 2008(Unit: Billion yen, percentages are calculated by
dividing transactions by all brokerage trading
valueon the three major exchanges)<14>(1) Brokerage commissions

Major Online Securities Company Share of Individual Brokerage Trading Value
Share of individual brokerage trading value
1Q FY2006(Apr.2005-Jun.2005)

Others38.5％

Big five
onlinesecurities
companies
61.5％

1Q FY2007(Apr.2006-Jun.2006)

Others
37.2％

Big five
onlinesecurities
companies
62.8％

1Q FY2008(Apr.2007-Jun.2007)

Others
34.3％

Big five
onlinesecurities
companies
65.7％

SBI E*TRADE

24.8％

SBI E*TRADE

27.3％

SBI E*TRADE

33.4％

Rakuten

11.8

Rakuten

13.2

Rakuten

13.2

Matsui

11.2

Matsui

9.5

Matsui

7.7

Monex

8.3

Monex

6.8

Kabu.com

5.8

Kabu.com

5.4

Kabu.com

6.0

Monex

5.6

Source: Compiled by SBI E*TRADE SECURITIES based on Tokyo Stock Exchange and JASDAQ materials and Web sites and other available information for each company*Individual brokerage trading value are sum for the three major exchanges and JASDAQ.
Monex is the sum of Nikko Beans and Monex. Kabu.com merged with MeNet in January 2006.
<15>

(1) Brokerage commissions(Reference) Assets in Customer Accounts(billion yen)
50,000Up 12.0%
YoY

45,00040,000End of Jun. 2006

42,057

End of Jun. 2007

37,56635,000Up 6.8％30,000Up 1.8％25,00020,446

21,828Up 8.5％

Up 9.5％

17,412 17,729

20,00012,89515,00013,98911,663

12,77410,0005,000
0SBI E*TRADE

Monex

MatsuiRakutenSource: Compiled by SBI E*TRADE SECURITIES based on Web sites and other available information for each company

Kabu.com<16>

(1) Brokerage commissions

Growth in Futures and Options Transactions
Reduction of commissions in May 2007 expects to increase earnings by raising volume of transactions
Growth in futuresand options accounts(account)
30,000Growth in futuresand options commissions(000 yen)

28,024 450,000

418,559
385,916
367,998

400,000

25,000350,000
315,186
302,436

20,000300,000

322,010279,472

250,000

15,000200,000
150,000140,450

10,000100,000

5,000
50,0000

0
4 5 6 7 8 91011121 2 3 4 5 6 7 8 910
11121 2 3 4 5 6 7 8 91011121 2 3 4 5 6

2004

2005

2006

2007

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
FY2006

FY2007

FY2008<17>FY08/1Q Highlights(2) Consolidated Financial Revenues(million yen)

6,000

Financial revenues

5,386

Net financial revenues (revenues – expenses)

4,086
4,000

3,281

Financial
revenues
up 31.8%

4,077

Net
financial
revenues
up 24.2%2,000

01Q FY2007(Apr.2006-Jun.2006)

1Q FY2008(Apr.2007-Jun.2007)<18>

(2) Financial Revenues

Margin Accounts at Major Online Securities Companies(accounts)

160,000

Margin accounts at big five online
securities companies
153,228

Comparison with margin accountgrowth at Matsui Securities(accounts)(As of end of Jun.2007)
140,000

120,000

125,000

94,387100,000

100,000

79,56580,00054,88860,000(March 2004 to June 2007)

150,000

SBI E*TRADE
153,228

At end of June 2007,
margin accounts
were 10.6% ofaccounts at
E*TRADE (10.5% at
end of March) and13.8% at Matsui.

Matsui94,38775,00037,29340,00050,00020,000025,000
n
Ju
r
Ma
c
De

2006

p
Se

Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other available information for each company

n
Ju
r
Ma

2005

c
De

2004

p
Se

Monex

n
Ju
r
Ma
c
De

Kabu.comp
Se

RakutennJu

Matsuir
Ma

SBI
E*TRADE

2007

<19>

(2) Financial Revenues

Margin Trading Balance
Margin trading balance (total of long and short positions) at end of month
567,988 570,686
530,493
519,112519,033
83,237
General (no expiration)
492,093
93,51264,31569,925
468,715(million yen)

600,000

500,000

Limited (long and short)

64,27164,00465,407

387,891

400,000

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

55,881 65,190
487,449

213,856
210,686
203,499

200,000

164,545

23,751

112,925
108,488
179,747
100,000 78,532
164,545
108,488

29,762474,475

455,107466,178

449,108
403,308
427,82135,946
320,801
256,339251,987
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

Jun

<20>
Note: Data based on trade closing dates; non-consolidated figures for SBI E*TRADE SECURITIES(2) Financial Revenues

Margin Trading Balances at Major Online Securities Companies(hundred million yen)

6,000

Margin trading balances at big five online securities companies at end of month
5,190

5,000

5,204

5,191

5,304

4,673

4,419

4,920
4,687
4,473

4,000

3,000

SBI E*TRADE
MatsuiMonex
RakutenKabu.com

4,173

2,629
2,426

2,442

2,686

2,736

2,155
1,845

2,000

1,922

1,731

1,756

1,715

Sep

Dec

1,928
1,834

1,913
1,773

1,000

Jun

2006

Mar

2007

Jun

Source: Compiled by SBI E*TRADE SECURITIES based on Web sites and other available information for each company; uses figures announced by each company<21>

(2) Financial Revenues

Growth in Revenues from Stock Lending Operations
Plan to expand stock lending operations by upgrading cash management to increase self-financing

Shares loaned at end of month(million yen)

Stock lending revenues(million yen)350

80,000321

74,233300

70,00057,51654,55454,746
53,79651,35160,00050,000

306

280
249

256

250

209
200

40,000136

150

30,00022,605100

20,00050

10,000

4,282

25
8

2,169
0

0
Jun Sep Dec Mar Jun Sep Dec Mar Jun

2005

2006

*Market value at end of each month2007

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
FY 2006
FY 2008
FY 2007<22>

FY08/1Q Highlights(3) Consolidated Underwriting, Offering and Selling Commissions(million yen)

600

400

540
365

Up 48.2%

200

0
1Q FY2007(Apr.2006-Jun.2006)

1Q FY2008(Apr.2007-Jun.2007)<23>

(3) Consolidated Underwriting, Offering and Selling Commissions

Non-consolidated IPO and PO Underwriting Commissions(million yen)

156
150

Up 88.5%
100

82

50

0
1Q FY2007(Apr.2006-Jun.2006)

1Q FY2008(Apr.2007-Jun.2007)* Shows only stock underwriting, offering and selling commissions<24>

(3) Consolidated Underwriting, Offering and Selling Commissions

IPO Underwriting (1)
SBI E*TRADE(companies)(companies)

IPO issues
underwritten

120

500

121

Major Online Securities
Companies
468 Cumulative IPO issues

450

underwritten

400

100

361

94
87

350

80

300

226

250

60

206

200

38

40

42

38

150

23
20

8

1Q

34

1Q

17

0

100
50
0

FY2000FY2001FY2002FY2003FY2004FY2005FY2006FY2007FY2008*Includes over-allotments.
Based on listing date.Excludes brokerage sales andreal estate investment trusts.

SBI E*TRADE

Monex

MatsuiRakutenSource: SBI E*TRADE SECURITIES based on available information. Covers
operations from inception through June 2007 (based on listing date). Excludes<25>
brokerage sales and real estate investment trusts.

(3) Consolidated Underwriting, Offering and Selling Commissions

IPO Underwriting (2)(companies)

Big Four Online Securities
Companies
17(million yen)

3,000

IPO issues underwritten
in FY08/1Q (issues)

Big Four Online Securities
Companies

2,838

2,700

15

(offering price x shares underwritten)

2,400

13

IPO issues underwritten
in FY08/1Q (value)

2,100
1,800

10

1,500
1,200

5

4

900

571

600

2

361

300

12

0

0
SBI E*TRADE

Monex

MatsuiRakuten

SBI E*TRADE

Monex

MatsuiRakuten*Includes over-allotments but not wholesale brokerage.
Source: Compiled by SBI E*TRADE SECURITIES based on available information. Covers period through June 2007 (based on listing date).
Excludes brokerage sales and real estate investment trusts.

<26>

FY08/1Q Highlights(4) Consolidated Trading Gain and Other Revenues(million yen)

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

2,000

1,558
1,500

1,555
Down 0.2%

1,000

500

0

1Q FY2007(Apr.2006-Jun.2006)

1Q FY2008(Apr.2007-Jun.2007)<27>

(4) Consolidated Trading Gain and Other Revenues

Sales of Bonds
Government, corporate and foreign bond sales(million yen)

Yen-denominated bonds
Foreign BondYen Bond
18,08420,00016,284

19,59916,651
7,094

15,00012,325 7,044

6,322

8,744

13,704 13,608

Foreign bonds
Continuation of strong sales of South African
rand bonds and exchangeablebonds (receipt
of another company’s stock upon redemption)

6,724

10,000

Sales up 154% YoY due to very strong sales ofcorporate bonds and of Japanese government
bonds for individuals
Yen-denominated bond sales set a newquarterly record

8,687

7,101

12,504

5,000

9,240

10,329Combined sales of yen andforeign bonds reached an
all-time high

9,339
6,979

5,223

4,920

0
3Q

4Q

FY2006

1Q

2Q

3Q

FY20074Q

1Q

FY2008*Retail JGB revenues are included in underwriting and selling commissions. Above figures include brokerage sales.

<28>

(4) Consolidated Trading Gain and Other Revenues

Growth in Foreign Exchange Margin Trading
Conducted a “zero commission campaign” in June and then lowered regular commissions
Foreign exchange margin(accounts)
trading accounts

Foreign exchange margin trading
revenues（000yen）

62,320500,000

449,834

454,465

432,109413,598

60,000375,877
356,053

400,000

50,000374,987

335,208
40,000300,000

30,000200,000 192,049

20,000100,000

10,000

0

0
4

7

2004

10

1

4

2005

7

10

1

4

2006

7

10

1

4 6

2007

１Q

2Q

FY2006

3Q

4Q

1Q

2Q

FY20073Q

4Q

1Q
FY2008<29>

FY08/1Q Highlights(5) Growth in Investment Trust Operations(million yen)

Investment Trust Revenues

633

600

Up 143.3%
400

260
200

0

1Q FY2007(Apr.2006-Jun.2006)

1Q FY2008(Apr.2007-Jun.2007)*Total of sales commissions and trust fees (including Money Reserve Fund)<30>(5) Growth in Investment Trust Operations

Investment Trust Sales and Highlights
Using SBI Group synergies to offer moreinvestment trusts

Investment trust sales(hundred million yen)

434

450

419

SBI India & Vietnam Equity Fund
Started sales in June 2007400

• Allows individuals to invest in two
countries with fast-growing economies• Now conducting 1% sales commission
campaign(cash rebate of 2% of investment)

350
300

230

250
200

189
Set a new sales record*

150

101

July 18 Completed sale of E*TRADE allotmentof ¥15 billion (out of total initial fundsubscription of ¥20 billion)
July 25 Started additional sales of SBI India &Vietnam Stock Fund

100
50
0

1Q
FY2007

2Q

3Q

4Q

1Q
FY2008*Includes Money Management Fund and Midium Term Gov. Bond Fund

*New investment trust sales by E*TRADE<31>

(5) Growth in Investment Trust Operations

Sales of No-load Funds
Sales of no-load funds in FY08/1Q increased about 3.6 times YoY
due to a significant increase in the number of funds offered(# of fund)Growth in number of
no-load funds offered

70

Growth in sales of no-load funds

67

267

(hundred million yen)

59

60
50

45
41

44

46

250

227

200

41

150

40

114
100

30
20

75
40

50

18

0

10
Mar Jun Sep Dec Mar Apr May Jun
2006

2007

1Q

FY2007

2Q

3Q

4Q

1Q

FY2008 <32>

(5) Growth in Investment Trust Operations

Growth in Assets in Investment Trusts and Trust Fees
Trust fees increased more than the balance due to growth in sales of no-load funds(hundred million yen)

Growth in balance ininvestment trusts

Growth in trust fees from(million yen)investment trusts
390
1,625

1,600

360

1,402
1,400

330

1,277
1,177 1,200
1,091
982

1,200
1,000

293

300
270
240

214

210

717

800
600

372

190

180

579

150
120

400

92

90

69

60

200

30

0

105

28

46

0

1Q

2Q

FY2006

3Q

4Q

1Q

2Q

FY20073Q

4Q

1Q
FY2008(Note) Includes Money Management Fund and Medium Term Gov. Bond Fund

１Q

2Q

FY2006

3Q

4Q

1Q

2Q

FY20073Q

4Q

1Q

FY2008(Note) Includes Money Management Fund, Money Reserve Fund
<33>
and Medium Term Gov. Bond Fund

FY08/1Q Highlights(6) Consolidated Selling, General and Administrative Expenses(million yen)

9,000

7,717
6,000

3,000

0

2,382

8,001
Trading expenses

2,383

Exchange memberships, advertising, etc.

Personnel expenses
Real estate expenses

726

801

1,290
343

1,532

1,915
137
922

1,702
185
977

1Q FY2007(Apr.2006-Jun.2006)

406 11

1Q FY2008(Apr.2007-Jun.2007)

Leases for on-line securities
systems, etc.
Goodwill amortization
Depreciation
Software, etc.
Administrative
expenses
IT systems, back office, etc.
Taxes
Others, provision for
doubtful accounts
Cost of information
provided, etc.
<34>

(6) Consolidated Selling, General and Administrative Expenses

Trades Executed and Variable Expenses
Cost cutting initiatives continued to hold down variable expenses(Index)120

Index for number of executed trades and variable expenses(Variable expenses = Trading expenses + Administrative expenses)

110

100

90

Tradesexecuted

100

Variable
expenses

1Q FY2007(Apr.2006-Jun.2006)
80

105

89
1Q FY2008(Apr.2007-Jun.2007)

Variable expenses were down about 10% despite growth in trades executed. E*TRADE
significantly lowered variable expenses through efforts to cut trade-related administrative
expenses.
<35>*Based on non-consolidated data

FY08/1Q Highlights(7)E*TRADE Korea Financial Highlights(million yen/%)

1Q FY2007

1Q FY2008(Apr.2006-Jun.2006) (Apr.2007-Jun.2007)

ChangeOperatingrevenues
Net operating
revenues

1,502

2,291

+52.5

1,413

2,068

+46.3

Operating income

411

623

+51.6

Ordinary income

417

620

+48.5

Net income

316

384

+21.6

(Converted to yen using average monthly exchange rates for monthly operating results.)<36>

(7) E*TRADE Korea summary

Summary of E*TRADE Korea Performance
Growth in customer accounts and high trading volume on stock markets raised
revenues and earnings; revenues rose to an all-time high16
(10 thousand accounts)

Profile (June 30, 2007)

Customer accounts

15

Capital : 66,390 million won
E*TRADE ownership : 73.4%

14

Online customer accounts : 150,888 (4th in Korea)
Brokerage trading value: 19,431,283 million won(11th in Korea)

13

New initiatives
12• Provide customers with global access tomarkets
Plan to begin handling trades on U.S.,
Chinese and Hong Kong stock exchanges

11
10
1Q
FY2007

2Q

3Q

4Q

1Q
FY2008• Upgrade sales capabilities by usingsophisticated IT systems

Unrealized gain of about ¥15.8 billion on E*TRADE Korea shares held by SBI E*TRADE JAPAN (June 30, 2007)*Using exchange rate as of June 29, 2007<37>

2. Major Initiatives in the First Quarter2. Major Initiatives in the First Quarter

First Quarter Operating Highlights
Month

White items are new services.
Yellow items are alliances and other announcements.

Description

April• Started reverse limit order service using HYPER E*TRADE• Started instant settlement service through agreement with Seven Bank
• Started offering to account holders access to The SBI Community, E*TRADE Chouja Mura
(E*TRADE billionaires Village) community website operated by SBI Holdings*Approved resolution to merge with SBI Securities on October 1, 2007.

May• Introduced HYPER MOBILE cell phone service compatible with the “S!Appli” Java application
service• 「空前絶後の大作戦」Conducted customer appreciation campaign by lowering fees to theindustry’s lowest level for eight financial instruments• Started “Mobile E*TRADE for W-ZERO3” service for the Willcom W-ZERO3 series of handsets• Started the “Double Smile” investment trust sales campaign*Approved resolution to purchase TradeWin and Traders Financial Systems through an
exchange of stock on July 9

June• Lowered regular fees for E*TRADE FX foreign exchange margin trading• Reduced interest rates for long margin trades with no maturity (general margin trades)• “Kuuzenzetsugo-no-dai-sakusen” campaign conducted new customer appreciation campaign• Started providing information on individual 401k accounts through the “Minna no Money Site”
website of Seven Bank
• Started selling overseas exchange-traded funds (ETF)<39>

2. Major Initiatives in the First Quarter
Customer Appreciation Campaign Lowered Fees to the Industry’s Lowest Levels

E*TRADE began offering the lowest fees on many products and services
General margin trade interest*
rate (long)*

From 3.3% to 3.09%

6%off

Odd-lot trades (S shares)

Transaction value x 0.63%No minimum

60%offForeign exchange margin
trading E*TRADE*¥300 per unit trade ¥4,500 for alltransactions of 15 or more unit trades

66%offNikkei 225 futures¥525 per contract

41%offMini Nikkei 225 futures¥105 per contract

50%offNikkei 225 options

Transaction value x 0.21% ¥210
minimum

71%offChinese stocks

Transaction value x 0.4095% HK$31.50
minimum HK$315 maximum

22%offe-Warrants¥262 under ¥200,000 ¥525 for larger
transactions

50%offFurthermore*Items further lowered fees after the campaign

E*TRADE conducted a campaign from June 18 to July 28 where customers could win prizes of up to ¥100,000 dependingon trading activity.

E*TRADE is helping individual investors diversify risks by making many types of<40>
investments in addition to Japanese stocks easily accessible.

2. Major Initiatives in the First Quarter

Started Sales of Overseas Exchange Traded Funds
Started selling U.S. funds on June 19 and Chinese (Hong Kong) funds on June 29<Profile of overseas ETF>
1. Index-linked management makes ETF
easy to understand2. Can purchase using limit orders just as
with overseas stocks

10 U.S.
ETF

4 Chinese
ETF

3. Trust fees are lower than at ordinary
investment trusts
4. E*TRADE customers can buy ETF at theindustry’s lowest commission rate, justas with overseas stocks
5. ETF can be held as a foreign-currency
investment

ETF share of all foreign stock trades executed by E*TRADE(Since start of service to July 27)◆U.S. stock trades

42.1%◆Chinese (Hong Kong) stock trades

7.1%

More funds will be added in line with the needs of individual investors<41>

2. Major Initiatives in the First Quarter

Purchased All Shares of Two Financial Software and Systems Companies
Establishes a more powerful IT system development framework

100% Owner

Exchange of stock on July 9, 2007
made two companies wholly owned
subsidiaries

100% Owner

TradeWin Co., Ltd.

Traders Financial Systems Co., Ltd.

<Relationship with E*TRADE><Relationship with E*TRADE>• Developer of back office system
for foreign stocks• Developer of futures and options
trading system• Developer of systems for cell phones(Benefits of acquiring these companies)• Ability to develop new services faster by sharing information and issues to be solved• Cost savings for development of IT systems<42>

3. New Initiatives

3. New Initiatives(1) Become a online comprehensive securities company• Establish a consistently profitable operating framework• Establish sound positions in retail and wholesale businesses, the two coreelements of an online comprehensive securities company(2) Actions• Merge with SBI Securities to create Japan’s first securities company
combining online and conventional (face-to-face) operations• Proceed with preparations to start an off-hours market for stocks• Pursue synergies between online bank and SBI Group companies• Use the securities brokerage business to upgrade investment trust sales
capabilities• Consider renovating and upgrading the visitor website<44>

(1) Become a online comprehensive securities company

Establish a consistently profitable operating framework
Build a profit structure that is not vulnerable to market fluctuations
FY08/1Q Consolidated Operating Income at Selected Securities Companies
Underwriting/selling commissions
Offering/selling commissions
Commissions
Financial revenues(%)

SBI*ETRADE

51.5

34.9

Trading
gains/losses

3.5 4.7 5.4
OthersMatsui

54.2

41.0

Monex

52.7

Rakuten

54.7

38.0

0.7
2.04.6

Kabu.com

57.4

34.5

1.17.0

31.0

4.7
4.3 0.4 11.8

(Non Consolidated)

Nomura

13.3

20.5

18.4

30.9

16.9

Source: Company websites and earnings releases (*Nomura Securities earnings use Japanese accounting standards.)<45>

(1) Become a online comprehensive securities company

Establish sound positions in retail and wholesale businesses
Build a stable profit structure by using retail businessstrengths to expand the wholesale business
Dominant share of the retail market: 1,450,764 customer accounts (June 30, 2007)
Large and growing share of individual brokerage trading value :33.4% (FY08/1Q) (Note)

Retail Business
IPO
IPOand
and
other
other
offerings,
offerings,
after-hours
after-hours
sales
sales

Stocks,Stocks,investment
investment
trusts,trusts,
bonds
bonds

IR
IR
assistanceassistance
Provision
Provisionofofinvestor
investor
informatio
informationnServe even morecustomers and raisemarket share by offering
new services and highly
competitive fees
Forex,
Forex,
futures/opti
futures/opti
ons,
ons,
coveredcoveredwarrants
warrants

Wholesale Business
IPO
IPO
underwriti
underwritingng

Secondar
Secondaryyfinance
financeExpand the wholesale
business by taking
advantage of retailsales resources and
SBI Group content

AfterAfterhours
hours
sales
sales
(primary(primary
broker)broker)IRIRassistanceassistance
Securitize
Securitize
ddproducts
products

M&A
M&A

Note: Calculated by SBI E*TRADE SECURITIES based on TSE and JASDAQ materials and other available information.<46>

(2) Actions

Merger with SBI Securities
Create Japan’s first online and conventional (face-to-face) securities company
Combine operations based on the Internet with skill in face-to-face services to become an online
comprehensive securities company with growing retail and wholesale operations

Wholesale Business
Integration of trading andsettlement systems
Internet Business・IPO underwriting＜Growth initiatives＞
・Support for post-IPO fund-raising・Expansion of public offering underwriting

・Offer the industry’s best services with the lowest
fee structure＜Ideas for post-merger services＞
・Hold seminars at offices
・Use the Internet to provide information about
offices and personnel
・Establish a call center that offers consulting services

Branch Office (face-to-face) Business＜Ideas for new services＞
・Start private banking business・Asset management services for executives
at companies where SBI E*TRADE was an
IPO underwriter・Open online securities accounts
・Hold real seminars

A total of 11 task forces (sales, IT systems, operations, legal affairs, administrative functions, finance,etc.) are now at work to study specific actions to take following the October 2007 merger.

<47>

(2) Actions

Preparations to Start Evening Trading Market for Stocks
SBI Japannext received PTS* approval on June 27, 2007 *Proprietary trading system

SBI Japannext
Price determination method: Matching customer orders
Trading hours : 19:00 to 23:50
Stocks traded : Listed Japanese stocks selected by thiscompany*Summary based on announcement by
SBI Holdings (not final)(Note)(Note)

Goldman Sachs(Note)(Note)The participation of Goldman Sachs is expected to greatly improve the liquidity of this trading system.

SBI E*TRADE SECURITIES plans to start offering this service when SBI Japannext
begins operating its PTS, which is currently scheduled for the end of August.
Note: Securities companies that plan to participate in this PTS. Specific starting dates and services will depend on each participating securities company.

<48>

(2) Actions

Pursue Synergies Between Online Bank and SBI Group Companies
E*TRADE plans to act as an agent for the online bank to be established by the SBI Group andSumitomo Trust

Sumishin SBI Net Bank Research Co., Ltd.
Capital : About ¥14 billion
Ownership : 50% each by SBI Holdings andSumitomo Trust• Sumishin SBI Net Bank Researchplans to start banking operations
during the first half of fiscal 2008.
• Assuming this company receives
a banking license, E*TRADE
plans to immediately begin
offering banking agency services.

Possible services

Closely link securities accounts and bank accounts• Use a “sweep” service to simplify the transfer of funds; permit access to a securities and bankaccount with a single Internet sign on• Use a secure network link to permit opening a bank account without submitting documents for proofof identity (assumes that identity has been confirmed when the securities account was opened)

Offer more services to enhance convenience in line with the customer-first philosophy*These services can be started only after regulatory approval is received for banking operations.

<49>

(2) Actions

Use Securities Brokerage To Increase Investment Trust Sales
Established a sales network solely for investment trusts in order to increase sales and assets undermanagement

SBI Fund Bank
Securities brokerage businesswith emphasis on investment
trustsSecurities
brokeragreement

Handles mainly the funds sold by
SBI E*TRADE SECURITIES (about
270 funds as of June 30, 2007)<Profile of SBI Fund Bank>
In addition, this company uses its
website to provide thoroughexplanations of other funds that it
has carefully selected on its own.

Established

April 19, 2007

Ownership

SBI Holdings (100%)

CapitalCommon stock ¥200 million
Capital surplus ¥100 million

By making investment trusts its core product, SBI Fund Bank is dedicated to meeting the growth in asset
management needs among individuals as the investment trust industry expands.
*These services can be started only after SBI Fund Bank receives regulatory approval as a securities broker.

<50>(2) Actions

Consider Upgrading the Visitor Website
Work has started to structure the website to attract more customers
The current site has an excellent
reputation among Internet users

AAlargelargeselection
selectionofofservicesandinformation
services and information
Popular among investors who areexperienced PC users

Difficult for first-time users to locate andselect information

Goal is to offer outstanding ease of use
so that visiting the site is a pleasant,stress-free experience
Improve convenience for current customers while attracting customers of conventional
securities companies and individuals
with no investment experience, thereby further increasing the volume of online securities<51>
transactions.

http://www.etrade.ne.jp