Japan Securities Finance Co., Ltd.
3Q FY2018
Financial Results Presentation

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～Table of Contents
 １．Summary Financial Results for 3Q, FY2018

Ｐ３

 ２．Summary Financial Results for 3Q, FY2018（JSF parent）

Ｐ４ ３．Financial Highlight（Margin Loan Business①）

Ｐ５

 ４．Financial Highlight（Margin Loan Business②）

Ｐ６

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

Ｐ７

 ６．Summary Financial Results for 3Q, FY2018（ JSF Trust Bank）

Ｐ８

 ７．Balance Sheet Summary (Consolidated)

Ｐ９

 ８．Estimated Figures for FY2018

Ｐ１０

 ９．Dividend and Share Buyback Program for FY2018

Ｐ１１

 【IR Topics】~ Leveraging Margin Transactions Data for Investment Reference ~Ｐ１２

 Appendix

Ｐ１５

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～2

１．Summary Financial Results for 3Q, FY2018
Consolidated（¥ mil）

Operating
Revenues

FY2018
1Q-3Q

YoY.⊿

Parent(%⊿)

JSF

JSF Trust Bank

Nihon Building

YoY.⊿

YoY.⊿

YoY.⊿

20,206▲622(△3.0%)

17,637▲99

ExceptPremium Charges

16,075

1,961(＋13.9%)13,5062,484

Operating Expenses

10,645▲262(△2.4%)

9,952

476

ExceptPremium Charges

6,514

2,317

(＋55.2%)

5,821

3,056

General &Administrative Expenses

5,896

▲166

(△2.8%)

5,018

Operating Income

3,664

▲192

(△5.0%)

Recurring Income

4,464

▲118

(△2.6%)

Gain or Loss inEquity-Method

60

▲65

(△52.1%)

Extraordinary
Profit or Loss

▲41

▲44

Net Income

3,343

▲432

1,958

▲479

958

8

740

▲685

15

▲0

▲122

653

▲48

520

8

2,666

▲453

564

255

422

0

3,437

▲341

587

275

520

23

(ー)

▲41

▲44

―

―

―

―

(△11.4%)

2,567

▲630

511

259

345

16

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～3

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

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

FY2018
1Q-3Q

YoY.⊿

●Operating Revenues(%⊿)

Operating Revenues*

13,5062,484(＋22.5%)

Margin Loan Business*

3,020

▲967

(△24.3%)968

321(＋49.6%)

Securities Lending
Business *2

4,983

1,380

(+38.3%)

Others

4,533

1,749

(＋62.9%)Operating Expenses*

5,821

3,056

(＋110.5%)

General &Administrative Expenses

5,018

▲122

(△2.4%)

Operating Income

2,666

▲453

(△14.5%)Recurring Income

3,437

▲341

(△9.0%)

General Loans
Business *1

 Though Margin Loan Businessdecreased due to sluggish marginloan balance and stock loan balance,
Business other than Margin Loan
continued solid performance.
̶ Up ¥2,484mil YoY reflecting strong
performance in General Loan
Business(higher loan balance mainly tosecurities companies) and Securities
Lending Business(both General Stock
Lending and Bond Lending continued
solid performance)̶ Others(Securities investment) up
62.9% YoY due to foreign exchange
gains concerning foreign currency
funding at the end of the quarter.
※For details of Margin Loan Business andOthers, see “Financial Highlights for 3Q,
FY2018(P5-P7)”●Operating Expenses

Extraordinary
Profit or Loss

▲41

▲44

(ー)

Net Income

2,567

▲630

(△19.7%)＊1 Loans of funds other than Margin Loan Business＊2 Securities lending other than Margin Loan Business
Copyright Japan Securities Finance Co., LTD. All Rights Reserved̶ Up ¥3,056mil YoY reflecting loss on
valuation of derivatives (concerning
foreign currency funding)●Extraordinary Loss

̶ Recorded disposal loss on old system
of Com-Stock Loan (from May to Jul)

～ All For Securities Market ～4

３．Financial Highlight （Margin Loan Business①）
Margin Loan Balance made the second consecutive quarter ofdeclines, also fell y-o-y in 1Q-3Q.



Stock Loan Balance remained at lower level during 1Q-3Q.
FY2017（\ bn、%）

1Q

2Q

1H

FY2018

3Q

YTD

4Q

full year

1Q

2Q

1H

3Q

３Q
YoY

YTD

YTD
YoY

Margin Loan

308

319

313

352

326

422

350

375

277

326

264

305

▲87

▲21

Margin Loan Rate

0.60

0.60

-

0.60

-

0.60

-

0.60

0.60

-

0.60

-

-

-

Stock Loan

373

374

373

405

384

310

366

265

257

261

260

261

▲145

▲123

Margin Loan（FY2017）
Margin Loan Rate（FY2017）

¥ tri
0.6

Margin Loan（FY2018）
Margin Loan Rate（FY2018）

1Q-3Q Margin Loan

Stock Loan（FY2017）
Stock Loan Rate (FY2017)

¥ tri
1.5%

0.6

FY17：¥326bn

0.4

0.2
FY18：¥375bn
FY17：¥308bn

2Q Margin Loan

3Q Margin Loan

FY18：¥277bn
FY17：¥319bn

FY18：¥264bn
FY17：¥352bn

1.0%

0.4

1.0%

0.5%

0.2

0.5%

4Q Margin Loan

FY18： ー
FY17：¥422bn

0.0

0.0%
Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

1.5%

1Q-3Q Stock Loan
FY18：¥261bn
FY17：¥384bn

FY18：¥305bn

1Q Margin Loan

Stock Loan（FY2018）
Stock Loan Rate (FY2018)

Dec

Jan

Feb

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

Mar

0.0

1Q Stock Loan
FY18：¥265bn
FY17：¥373bn

2Q Stock Loan
FY18：¥257bn
FY17：¥374bn

3Q Stock Loan
FY18：¥260bn
FY17：¥405bn

4Q Stock Loan
FY18： ー
FY17：¥310bn

Apr

Jul

Oct

Jan

May

Jun

Aug

Sep

Nov

Dec

Feb

0.0%

Mar

0.40%

～ All For Securities Market ～5

４．Financial Highlight（Margin Loan Business②）
Margin Loan Business resulted in large decrease due to lower
level of Margin Loan Balance and Stock Loan Balance.

【Operating Revenues Transition】
1Q-3Q(¥ mil）

1Q-3Q
Revenue(YoY)

Margin Loan
Business¥ mil（ex premium
charges）

894
7,925(1,210)

510
4,959
(829)

(4,130)(6,714)

1Q-3Q

1Q-3Q

FY2017FY2018

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

7,151
3,020

(△24.3%)1,455(△7.2%)

510

 Operating revenues of thisbusiness, except Premium
Charges, resulted indecrease.
 Interest on Loansdecreased, because
average balance of Margin
Loan turned to decrease inthird quarter.

(△43.0%)Fees onLending
Securities(△37.4%)

LendingFees(△31.5%)Premium
ChargesPoint(△33.2%)

1,568
1,455

1Q-3Q

4,958
829

4,130

(△38.5%)

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

～ All For Securities Market ～6

５．Financial Highlight（Securities Investment of JSF parent）
Revenues are boosted in large part by foreign exchange gains
concerning foreign currency funding at the end of the quarter.



Revenues from securities investment（JSF）
1Q-3Q FY2018

YoY

Transition of investment portfolio
Equity△¥ 23 mil

¥ 1,273 mil＋¥ 62 mil

¥ 827 mil△¥ 85 milIn foreign currencies¥ 2,404 mil+¥ 1,758 mil

85%

Total

¥ 4,506 mil+¥ 1,735 mil

80%

Domestic Bonds
Others※90%90%Mar.2016

Mar.2017

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

Germany

2015

2016

Japan

3.0%
2.0%
1.0%
0.0%
▲1.0%

2013

2014

2017

2018

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

Domestic Bonds

95%※ Investment Trust, etc.

4.0%

Others100%¥ 2,101 mil

Yen-based

Foreign Bonds

4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
▲0.5%
▲1.0%

2013

Mar.2018

Dec.2018

source）Bloomberg

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

2014

2015

2016

2017

2018

～ All For Securities Market ～7

６．Summary Financial Results for 3Q, FY2018（JSF Trust Bank）

Highlights

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

JSF Trust Bank（¥ mil）

Recurring Revenue

FY2018
1Q-3Q¥【Point of Trust Charge】

YoY
(%)

2,040

▲399

(△16.3%)

Trust charges

607

20

(+3.4%)

Reversal of ADR*

59

59

(―)

Recurring Expenses

1,453

▲675

(△31.7%)

Provision of ADR*ー

▲19(△100.0%)

Recurring Income

587

275

(＋88.4%)Net Income

511

259

(＋102.7%)

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

(¥ mil)*ADR: Allowance for Doubtful Receivables
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～8

７．Balance Sheet Summary（end of Dec-2018, consolidated）\mil
Dec-18
Total assets
Current assets

Change from
Mar-184,896,478▲ 63,682

4,297,321

135,834

Cash & Deposit

665,641

Short-term
investments

155,429(1) Fluctuation of Loan Balance▲ 112,253 Deposit at BOJ
94,612Features of Assets

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

Margin loan / Loans for negotiable▲ 234,969 margin transactions / General loans /Trust bank loans
Collateral money of bond borrowing▲ 267,434
Collateral money of stock borrowing

Loan period including Margin Loan ismainly short-term (from over-night to
1 month). And outstanding of loans
moves responding to trend of stock
market, etc.
(2) Holding JGBs for flexible cash
funding

Short-term loans
receivable

767,961

Collateral money of
securities borrowed

1,900,735

Non-current assets

599,157▲ 199,517(3) Cash and Deposit

589,111

JGB and other bonds (Maturity: more
▲ 198,120
than 1year), Stock

Investments insecurities
Total liabilities
Current liabilities
Call money

4,755,953▲ 60,396

Balance moves responding tosituation of funding and borrowed
money from trust account.

4,730,355▲ 62,097

601,459▲ 169,954

Features of Liabilities

Short-termborrowings

118,650

Commercial Paper

46,000▲ 413,000

1,698,261▲ 806,873

705,965▲ 255,645

25,5981,700

140,525▲ 3,285

Collateral money
received of securities
lent
Borrowed money fromtrust accountNon-current liabilities

Total net assets

Holding certain amount of JGBs tofund money flexibly in short-termmoney market.

(1) Ensuring variety methods offund raising

Bank borrowing
103,140
Market operation by BOJ
Collateral money of bond lending
Collateral money of stock lending

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

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

～ All For Securities Market ～9

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

Operating Income

3,800

▲81

＋200

Recurring Income

4,700

＋14

＋200

Net Income

3,400

▲825

＋200

Operating
Income

2,600

▲305

＋100

Recurring
Income

3,400

▲225

＋100

Net Income

2,400▲1,039＋100

Recurring
Income

640

218

＋50

Net Income

550

183

＋40

Operating
Income

545

▲22

ー

Recurring
Income650

1ーNet Income

430

2

ー

Matching¥140bnStock Loan
¥250bnJSF（Reference）
FY2017 Results

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

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

YoY.⊿

Consolidated

Over-lentOver-lentMargin Loan
Stock Loan
¥140bn¥110bnMargin Loan
¥280bnFY2018Estimated
Figures

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 10

９．Dividend and Share Buyback Program for FY2018

Dividend

Share
Buyback

FY2017FY2018（Forecast, Framework）

Annual¥ 26（YoY +¥2）

¥ 22（YoY ▲¥4）

Interim¥ 9（YoY +¥１）

¥ 11（YoY ＋¥2）

Year-end¥ 17（YoY +¥７）

¥ 11（YoY ▲¥6）

Consolidated
DPR

58.8％

60.9％

No. of shares
to be acquired

1.5mil shs

Up to 1.0mil shs※

Up to 1.0mil shs

1.5%

1.0%

1.1%

Total Value tobe acquired¥ 0.9bn

Up to ¥ 0.6bn※

Up to ¥ 0.8bn

PeriodFrom 12 May
2017
to 16 Mar 2018

From 6 June 2018
to 6 Nov 2019

From 18 Dec 2018
to 22 Mar 2019

Ratio to total
shares issued

Total Return Ratio

79.3%

103.3%※based on actual results
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 11

【IR TOPICS】
Leveraging Margin Transactions Data for Investment Reference

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～【IR TOPICS】～ Leveraging Margin Transactions Data for Investment Reference ～＜Background of Developing Investment Reference＞
Quantified margin transactions investors’ behavior could be useful when
making investment decision in light of its presence and features in the stock
market…
 Presence of Margin Transactions at Tokyo Stock Exchange（trading value）
Market Overall The more influence in the emerging markets
50%

13.4%

40%
30%

margin transactions

20%

margin transactions

10%
0%

24.1%

35.1%

38.6%

JASDAQ

Mothers

9.3%

1st section

2nd section（source）Trading Value of Stocks by Investor Type 2017（individual), TSE

 Features of Margin Transactions Investors**individual investors account for 95.4%
 Close the position quickly as they need to pay costs depending on the trading term
(interests, etc.)
Pick up promising stocks thinking about market view and each stocksʼ characteristic
though they are regarded as contrarian in general

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 13

【IR TOPICS】～ Leveraging Margin Transactions Data for Investment Reference ～ Our Current Effort

 Joint Research with Prof. Kato of Kyoto University（Nov 2016~）
 Defining “Margin Transactions Factor (MTF)” which indicates margin transactions
investorsʼ behavior
 Verifying the portfolio performance constructed by leveraging MTF
 Finding out the possibility for utilizing MTF as complemental factor with well-known
conventional factors＜Definitions of MTF (summary)＞
MTF＝margin transactions ratio score×0.9+ rate of change in loans for margin transactions ratio score×0.1※The higher margin transactions ratio or the higher rate of change in loans for margin transactions toward end of month, the higher score

 Objective Evaluation of MTF by Axioma, Inc.（Jan 2018~）
 Publication of the Paper about MTF（Securities Analysts Journal, Jan 2019）（reference） Performance of MTF score top150 portfolio
400
300
200

score top
150 portfolio

score top150 portfolio
TOPIX（including dividends）

100
0
2005/5 2007/5 2009/5 2011/5 2013/5 2015/5

TOPIX

monthly average
return(%) (a)

1.04

0.52

standard
deviation(%) (b)

5.99

5.38

(a) / (b)

0.17

0.10

 Outperform TOPIX (including dividends)
 Continue the project considering developing indices (investment products)
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 14

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved Structure of Margin Transaction & Loans for Margin
Transactions
 Revenue structure of Loans for margin transactions
 Margin Loan Rates
 Features of Balance Sheet (Consolidated) Securities Holdings
 JSF Trust Bank (Loan Balance) The 5th mid-term Management Plan I
 The 5th mid-term Management Plan II The 5th mid-term Management Plan III
 Business Strategies of JSF Trust Bank Our Group Companies Rating Information～ All For Securities Market ～ Return to Shareholders
1

2

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

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

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

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 16 Dividend and Share Buyback Program (historical)

FY
2012

FY
2013

FY
2014

FY
2015

FY
2016

FY
2017

¥18

¥26

FY
2018

Forecast/
Framework

Annual Dividend per share

¥14

¥14

¥15

¥16

Interim ¥8Year-end ¥10

Interim ¥9Year-end ¥17¥22

Share Buyback

(shs)

ー

ー

7.46mil

3mil

0.63mil

1.5mil1.0mil（amount）

ーー¥4.6bn¥1.9bn¥0.3bn¥0.9bn¥1.4bn¥1.7bn¥6.2bn¥3.5bn¥2.6bn¥3.0bn¥4.2bn¥3.4bn

: EPS

¥19.1

¥60.4

¥33.9

¥26.9

¥31.9

¥44.2

¥36.1

: DPR

73.3%

23.2%

44.2%

59.5%

56.4%

58.8%

60.9%

: DOE

1.2%

1.2%

1.2%

1.2%

1.2%

1.8%

1.4%

73.3%

23.2%

173.9%

133.1%

66.3%

79.3%

103.3%<Consolidated> : Net Income(reference) Total Return Ratio

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 17 Share Buyback Results◆Resolution of share buyback
programFirst (Result)

Announcement date

Second (current)

May 14, 2018

Dec 17, 2018

1.0 million shares

Up to 1.0 million shares

Ratio to total shares issued

1.0％

1.1％

Total value to be acquired

6.39 million yen

Up to 8 million yen

From Jun 6, 2018
to Nov 6, 2018

From Dec 18, 2018
to Mar 22, 2019

Number of shares to be acquired

Period【The past results】
start

end

amounttotal shares purchased

cancellation

shares issued

shs(digestive rate)\ mil(digestive rate)

shs

shs

Result In FY2014

2014/5/13

2015/3/20

7,464,400

-

4,652

-

7,307,063

100,000,000

Result In FY2015

2015/5/12

2016/3/18

3,000,000

-

1,937

-

0

100,000,000

Result In FY2016

2016/5/13

2017/3/22

635,800

-

297

-

0

100,000,000

Result In FY2017

2017/5/12

2018/3/16

1,500,000

-

890

-

0

100,000,000

Limit for FY2018①

2018/6/6

2019/3/22

1,000,000

-

800

-

-

-

Result2018/6/6

2018/11/6

1,000,000(100.0%)639(79.9%)

0

100,000,000

Limit for FY2018②

2018/12/18 2019/3/22

1,000,000

-

800

-

-

-

0

(0.0%)

0(0.0%)

0

100,000,000

1,000,000(100.0%)639(79.9%)

0

100,000,000

From Dec-18 to Jan-19

Total

FY2018

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

FY2014FY2015FY2016FY2017
1Q-3Q

FY2017FY2018
1Q-3Q

19,566

20,30022,03523,066

20,82826,333

20,206

16,19515,856

16,16016,522

14,113

18,383

16,075

8,747

9,450

11,537

11,892

10,907

13,33010,645

Ex Premium charges

5,413

5,008

5,672

5,358

4,197

5,385

6,514

General & Administrative
Expenses

8,249

7,824

7,939

8,371

6,063

9,121

5,896

Operating Income

2,568

3,025

2,558

2,802

3,857

3,881

3,664

179

▲144

54

92

126

123

60

Recurring Income

3,119

4,230

3,349

3,611

4,582

4,685

4,464

Extraordinary
Profit or Loss

3,602

54

－

▲52

3

131

▲41

Net Income

6,211

3,520

2,645

3,078

3,775

4,225

3,343

Operating
Revenues
Ex Premium charges

OperatingExpensesGain or Loss inEquity-Method

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

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

Trust Business
Interest on Loans
Trust Charges
Bond Investment

Real Estate Management Business
Operating Revenues(excluded Premium Charges)

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

Mar-17

Dec-17Mar-18Dec-1814,093

16,363

17,162

17,776

19,407

17,734

22,487

17,6366,625(37.5%)
1,760

9,240
(47.2%)
4,012

9,667
(47.6%)
3,111

10,579(48.0%)
2,720

10,721(46.5%)
1,694

10,702(51.4%)
1,568

13,253(50.3%)
2,225

7,151
(35.4%)
1,455

652

436

611

575

887

894

1,073

510

3,746
2,957
789

4,132
3,371
761

5,389
4,443
945

6,840
5,874
966

7,771
6,543
1,227

7,925
6,714
1,210

9,481
7,949
1,531

4,959
4,130
829

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

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

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

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

647(3.1%)
3,600(17.3%)
991
2,609
2,783
(13.4%)
2,771

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

968(4.8%)
4,982(24.7%)
1,258
3,724
4,533
(22.4%)
4,506(15.6%)
590
338
1,808

(11.9%)
317
485
1,494

(11.2%)
186
545
1,507

(15.7%)
144
627
2,645

(12.1%)
147
668
1,899

(11.7%)
70
552
1,776

(11.3%)
89
741
2,087

(9.4%)
46
554
1,252

(4.7%)(4.5%)(4.3%)(3.7%)(3.8%)(3.1%)(3.3%)(3.3%)

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

20,828
14,113

26,333
18,383

20,206
16,075

2,762

819

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

2,322

880

2,269

868

3,451

807

2,792

865

2,437

655

2,971

873

1,904

664

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

(mil）

1Q-3Q

Margin Loan
Business¥ mil（ex premium
charges）

3Q
Revenue

1Q-3Q
Revenue

(YoY)

(YoY)

2,443

(△39.8%)937(△31.6%)

7,925(6,714)

4,959

2,475
(2,081)
(393)

510

299

2Q

(1,210)3,119(2,691)

1,556

(427)

(1,235)
(321)

568

656

307

3Q
FY2017年

178

4Q

1,323

(1,044)
(279)

588
160

1Q

1,852
(1,580)

1,783

(272)

(1,506)
(277)

171

178

442

2Q
FY2018(4,130)
(829)

1,568

1,455

424

894

3Q

1Q-3Q

1Q-3Q

FY2017FY2018

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

510

Fees onLending
Securities

1,783(△42.8%)

1,506

Premium
Charges(△44.0%)LendingFees(△35.0%)277

Interest
on
Loans

424

(△25.3%)

Interest on
collateralmoney ofsecurities
borrowed

178(△41.8%)

1Q-3Q
Point

7,151

(△33.2%)

 Operating revenues
this business,
3,020 ofexcept Premium(△24.3%)Charges, resulted indecrease.

4,959  Fees on Lending(△37.4%)4,130(△38.5%)829(△31.5%)

1,455

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

(△7.2%)  Interest on Loans

510(△43.0%)decreased, because
average balance ofMargin Loan turned
to decrease in third
quarter.

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

1Q-3Q(¥ mil）

¥ mil

(63)

Loan toIndividual
Investors
or
Firms

567

Loan toSecurities
Companies

401

3Q
Revenue

1Q-3Q
Revenue

(YoY)

(YoY)

132

(△3.4%)

128
(17)

136
(17)

70

95

2Q

3Q
FY2017

128
(26)

141
4Q

134
(22)

184
1Q

(22)

205
2Q
FY2018

132

(52)

(18)

177
3Q

177

(＋85.3%)401

567(＋128.7%)

248

1Q-3Q

1Q-3Q

FY2017FY2018Loans for
Negotiable
MarginTransaction

18(＋5.5%)

Point(＋0.5%)

399
135

1Q-3Q

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

63(＋21.2%)＜ Loan Lineup ＞
 Loan to Securities Companies ・・・ General Loans, Bond Financing, Loans for Negotiable margin Transaction,
Stabilizing fund loan, Equity Repo(Cash-secured Stock Lending Transaction)
 Loan to Individual Investors or Firms ・・・ Com-STOCK Loan
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 22 Breakdown of Operating Revenues by business (Quarterly)
Securities Lending Business：Both General Stock Lending and Bond
Lending continued solid performance【Operating Revenues Transition】
Quarterly

1Q-3Q(¥ mil）

¥ mil

1,258

GeneralStock
Lending

991

553
276

482

467

885

875

967

2Q

3Q

4Q

FY2017

353

350

2,609

2Q
FY20183Q

1Q-3Q
Revenue

(YoY)

(YoY)

350

(△27.4%)

3,724

Bond
Lending

1,277 1,097 1,350

1Q

3Q
Revenue

1Q-3Q

1Q-3Q

FY2017FY20181,350(+54.3%)

1Q-3Q
Point

Revenue increased.
Because borrowing
1,258 demands for short(＋26.9%)covering weresteady.
Revenue increased.
Tighter supply and3,724 demand conditions(+42.7%) of JGBs in the repo
market continued.

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



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

1Q-3Q(¥ mil）

¥ mil

552
185

192

188

182

188

182

2Q

3Q

4Q

1Q

2Q

3Q

FY2017FY2018

3Q
Revenue

1Q-3Q
Revenue

(YoY)

(YoY)

554

Trust
Charges
1Q-3Q

1Q-3Q

FY2017FY2018182(△5.2%)

1Q-3Q
Point

Trust charges
continued
increasing,
contributing fromstrengthening
custodian type
554 trust service(+0.2%) (trusts for the
separate
management ofmoney andsecurities, ABL
trust, etc).

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

Trust for protecting deposits which securities companies received from
customers

Trusts for currency future trading

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

Asset Backed Loan (ABL) Trust

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

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 24

 Analysis of YoY Change in Operating Revenue by Business(Quarterly, 1Q-3Q)【Quarterly】 YoY ＋ 234mil¥（＋3.0%）¥ mil【1Q-3Q】 YoY△ 622mil¥（ △ 3.0%）¥ mil+1,749＋321+1,381+9△532△3,551+76
7,918

FY2017
3Q+342+1,94520,206△516△1,618MarginLoan

20,828＋3
8,153

GeneralLoans

Sec
Lending

OthersSecurities Finance Business

ー

ー

Trust
Bank

Real
EstateFY20183Q

FY2017
1Q-3Q

MarginLoan

GeneralLoans

Sec
Lending

OthersSecurities Finance Business

ー

ー

Trust
Bank

Real
EstateFY2018
1Q-3Q〜 Summary of the point for quarterly 〜〜 Summary of the points for 1Q-3Q 〜

 Margin Loan Business ： The decrease was mainly
due to decreases in Margin Loan Balance and Stock
Loan Balance Margin Loan Business : The revenue decreased
largely affected from a decrease in Stock Loan Balance.
 General Loans Business : Resulted in increase driven
by higher balance of loans mainly to securities
companies.
 Securities Lending Business : Both revenue ofGeneral Stock Lending and Bond Lending increased.
 Others : The increase was driven by foreign exchange
gains concerning foreign currency funding at the end of
the quarter.

 General Loan Business：Resulted in increase driven
by higher balance.
 Securities Lending Business：Though General Stock
Lending decreased, Bond Lending continued solid
performance.
 Trust Bank：Gains on sales of bonds decreased.
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 25 Outstanding Loan Balance(Year average and 3Q end balance)\ mil

Margin Loansavg.
term-end

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

Othersterm-end

Total

Stock Loansavg.
term-end
avg.
term-end

FY2013

FY2014FY2015FY2016FY2017
1Q-3Q

490,635
601,206
157,232
201,076
77,612
63,04323,09232,500748,572
897,825

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

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

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

326,655
350,175
371,166
519,590
37,976
46,331
60,83958,142
226,757
273,561
429,005
425,197201
152－－
591,591
670,220
861,010 1,002,931

305,485
230,703
84,24490,244
442,559
447,014－－832,289
767,961

176,476
198,781

222,031316,544

227,422258,656

291,392
393,698

384,399362,759

261,173242,259

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

FY2017366,147
369,852

FY2018
1Q-3Q～ All For Securities Market ～ 26

 Margin Transactions & Loans for Margin Transactions
3.0

¥ tri

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

Margin Buying Balance
Margin Loan Balance
Ratio

2.5
2.0
1.5
1.0
0.5
0.0
08

09

10

11

12

13

14

15

16

17

18

1.0 ￥tri

100%
Margin Selling Balance
Stock Loan Balance
Ratio

0.9
0.8

90%
80%

0.7

70%

0.6

60%

0.5

50%

0.4

40%

0.3

30%

0.2

20%

0.1

10%

0.0

0%
08

09

10

11

12

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

13

14

15

16

17

18

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

Loans for Margin
Transaction
Margin Loan application
Stock Loan application

Margin buying order
Margin selling order

Institutional
Investors

Fund for Purchasing
Stock to sell

Fund (Margin loan)
Stock (Stock loan)

JSF

Securities
Companies

BrokerInvestor

Stock

Funds

Call Market

Purchased Stock
Sale ProceedBank of Japan

Stock Exchange
Clearing facilities
Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 28

 Revenue structure of Loans for margin transactions

Over-lent

Income statement

Margin Loans

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

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

Loan Rate
0.60%

Stock Loan

JSF

Securities
Company

Margin Loan

Lending
Fee
0.40%

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



Feb 2007 Uncollateralized O/N Call Rate:0.50％



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

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



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

Interest on Collateral Money
0%

1.2%

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

Margin Loan Rate



1.0%




0.8%



0.6%




0.4%
Apr.2013～
Monetary base start

0.2%



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

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

0.0%

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

 Loan Rate of Loans for Margin Transactions
2.00%

Loan Rate
Lending Fee

1.60%

1.20%

0.6%
0.80%

0.40%

0.4%
0.00%

97

98

99

00

01

02

03

04

05

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

06

07

08

09

10

11

12

13

14

15

16

17

18

～ All For Securities Market ～ 31

 Securities Holdings\ mil
Mar-18
Securities Holdings

Unrealized profits andloses

B/S Amountnotes

Dec-18
Unrealized profits andloses

B/S Amount

Equity13,741

8,461

12,213

6,934

Bond

806,526

25,412

697,483

24,312

JGB&Municipal Bond

640,687

25,631

616,602

25,230

Corporate Bond145,665851,185

OthersOther Securities
Total

20,173▲227

29,695

6,255

1,328

10,344

768

826,522

35,203720,041

32,015ー(27,584)ー(22,956)（included the eﬀects ofderivatives）

held-to-maturity bonds

B/S AmountJGB

36 Government Guaranteed Bond ,etc.

Unrealized profits and
loses

1,514

Unrealized profits andloses

B/S Amount208▲954 Foreign government bonds

1,513

notes

209

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

Yen Bond Portfolio （JSF Trust Bank）

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

5 years
to9,798
10 years
2.32
14/9

8,000

5,678

（¥ 100 mil）
10,000

6,000
4,000

5,560
3.27

5,018

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

5,296

5,286

2.57
2.10

3.10

4.0

2,000

1.0

0

0.0

Sep.16

Mar.17

Sep.17

Mar.18

Sep.18（year）
6.0
5.0

8,000

4.0

6,000

3.0
2.0

2.50

6.0
5.0
4.0

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

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

4,000

3,764
3,009

3,225

3.0
2,279
1.24

2,000

1,255
1.18

2.0
1.0

1.28
0.89

0

Sep.16

Mar.170.94

Sep.170.0

Mar.18

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

Dec-17
Loan
Balance
Manufacturing

Mar-18ratio

Loan
BalanceDec-18ratio

Loan
Balance

ratio

4,800

1.1%

4,800

1.1%

2,000

0.4%

Fishery

0

0.0%

0

0.0%

0

0.0%

Mining

0

0.0%

0

0.0%

0

0.0%

Construction

0

0.0%

0

0.0%

0

0.0%

Energy & Utilities

0

0.0%

0

0.0%

0

0.0%

Communication

0

0.0%

0

0.0%

0

0.0%

Transportation

1,769

0.4%

1,769

0.4%

1,769

0.4%

800

0.2%

800

0.2%

800

0.2%

0

0.0%

0

0.0%

0

0.0%

1,650

0.4%

1,650

0.4%

0

0.0%

Real Estate

500

0.1%

500

0.1%

500

0.1%

Service Industries

800

0.2%

800

0.2%

0

0.0%

418,684

97.6%

414,87797.6%

441,94498.9%

Wholesale
RetailFinance & Insurance

Governments
Total

429,005

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

425,197447,014～ All For Securities Market ～ 33 The 5 th Mid-term Management Plan（FY2017〜FY2019）Ⅰ

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

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

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

2020

Concept of 5 th MMP(FY2017-FY2019)

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

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

New financial transaction needs are emerging.

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

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

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

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

〜

Reinforcing Management Systems

〜





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

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

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

Developing new business

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

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

Enhancing collaboration with Group
companies

Bolstering coordination in terms of sales and system
Strengthening profit management

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

Strengthening business management
structure

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

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

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

Japan Securities Finance（100%）
JSF
Trust Bank

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

Capital（20.8%）
JSFIT

Shareholding
Ratio

Name

100%

JSF Trust and Banking Co., Ltd.

14,000100%

Nihon Building Co., Ltd.

100

Real estate ownership and leasing
Real estate trading and brokerage

20.0%

Japan Information Processing Service Co., Ltd

2,460

Information processing services
Software development and sales

20.8%

JSF Information Technology Co., Ltd

100

Information processing services
Software development and sales

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

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

JCR

R&I

As of 30/Sep/2018
Japan
Securities
Finance

JSF TrustBank

Standard &Poor’sRatingOutlookRatingOutlookRatingOutlookLong-term

AA-

StableAA-

StableA

StableShort-term

J-1+

a-1+

（Highest）（Highest）

CP Issue

¥1tri

¥1tri

Long-termA+

Short-term

J-1+

Stable

A+
a-1

A-1
―
Stable――――（Highest）

Copyright Japan Securities Finance Co., LTD. All Rights Reserved～ All For Securities Market ～ 39

NoticeThis document includes statements for business forecast. Thesestatements donʼt guarantee companyʼs future achievement and thatinvolve risk or uncertain factors. Companyʼs future achievement may
be changed drastically up to stock market or financial conditions.

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