8511.T

7th Mid-Term Management Plan (2023-2025) Performance

• The original plan set targets of consolidated ordinary profit over 10 billion yen and consolidated ROE over 5%. Both targets were achieved two years ahead of schedule in the first year of the plan
• In 2024 (the second year of the plan), the group recorded the highest net profit in its history since starting consolidated reporting. The first half of the final year (current fiscal year) is progressing on plan overall
• Initiatives to diversify revenue sources delivered steady results, with improvements to profitability and capital efficiency, alongside progress on corporate governance strengthening

8th Mid-Term Management Plan: Core Direction

• No change to core corporate philosophy or long-term vision; management will deepen and accelerate existing initiatives, with core focus on further strengthening security finance business
• Long-term direction confirms: the group will target ROE of 8% (the standard requirement for listed companies), and maintain a 100% total payout ratio until ROE 8% is achieved, to sustain a market PBR above 1x
• Official 8th Mid-Term Plan targets: Consolidated ordinary profit of 15 billion yen, and consolidated ROE of 8% during the plan period

6 Core Strategic Priorities

• 1. Stable operation and improved convenience of loan and borrowing transaction business, as core securities market infrastructure
• 1. Expand security finance business, centered on further strengthening securities lending
• 1. Improve presence and recognition in overseas markets: expand cross-border transaction markets and product offerings, and strengthen position as a leading player in Asia
• 1. Drive business innovation and operational efficiency via digital technology: upgrade systems to handle growing transaction volumes, and accelerate long-term initiatives including distributed ledger technology (DLT) commercialization
• 1. Strengthen consolidated group management, particularly improving the effectiveness of subsidiary business risk management
• 1. Strengthen human capital base to support all growth initiatives

Supporting Enabling Initiatives

• Business segment-specific targets:
  • Loan and borrowing: Continue updating services to adapt to changing market needs and improve convenience
  • Security finance: Grow cross-border business by expanding overseas client bases and offshore securities coverage, to strengthen Asian market position
  • Securities investment: Rebalance portfolios to improve risk-adjusted returns and build higher-yield portfolios
  • New businesses: Grow fund administration business steadily; continue long-term initiatives including Indonesia market expansion and DLT commercialization
  • Trust business: Expand the niche managed trust business to further improve profitability
• Human capital investment: Continue aggressive experienced hiring and internal training to increase the share of specialized talent, with focus on building expertise and proactivity to support differentiated security finance growth
• System investment: Pursue "offensive IT investment" to build competitive operational infrastructure aligned with the changing business portfolio; continue risk management and business continuity planning (BCP) enhancement to support long-term sustainability

Shareholder Return Policy

• The 100% total payout ratio (dividends + share buybacks) policy will be maintained until ROE 8% is achieved. The dividend payout ratio target remains 70% of consolidated net income.

• Full-year 2026 March fiscal year guidance is unchanged from the May 2025 announcement, as first-half results are progressing in line with plan
• Reported net profit attributable to parent shareholders is forecast to decline year-over-year, due to the expiration of a large special profit recorded in the prior fiscal year. Excluding this special profit effect, management forecasts an underlying net profit increase of approximately 300 million yen
• 2025 fiscal year shareholder return plans are unchanged: planned ordinary dividend of 80 yen per share, a share buyback program with a cap of 2.8 billion yen / 1.7 million shares. Total planned payout ratio for the full year is expected to hit 100%.

日本証券金融 (JSF) Parent Only (excluding matching stock lending/borrowing fees that have no net profit impact):

• Overall gross operating profit: 8.682 billion yen, +9.3% year-over-year (YoY)
• 1. Loan and Borrowing Transaction Business: Gross profit up 33.6% YoY, driven by higher loan/securities lending balances from robust equity markets and higher lending rates from rising market rates
• 1. Security Finance Business Total: Gross profit down 7.8% YoY, with sub-segment performance:
  • Stock repo transactions: Gross profit up YoY, driven by increased securities firm funding demand from rising interest rates
  • Bond repo and overnight transactions: Gross profit down YoY, as high demand for collateral/regulatory compliance kept balances at high levels but narrow rate ranges compressed net interest margins
  • General credit finance: Gross profit up YoY on strong equity market conditions
  • General securities lending: Gross profit up YoY on higher fail-avoidance borrowing demand
  • Retail securities-backed loans: Gross profit up YoY on strong equity market conditions
• 1. Securities Investment Business: Gross profit up YoY, driven by accumulated carry income and portfolio rebalancing effects
• Operating profit (parent): 5.619 billion yen, +13.2% YoY; Ordinary profit (parent): 8.443 billion yen, +30.8% YoY (includes higher dividend income from consolidated subsidiaries, eliminated at the consolidated level); Net profit (parent): 6.718 billion yen, +21.7% YoY

Consolidated Group (excluding matching stock lending/borrowing fees):

• Operating revenue: 46.943 billion yen, +86.2% YoY; Operating profit: 6.894 billion yen, +9.8% YoY; Ordinary profit: 7.317 billion yen, +7.1% YoY
• Net profit attributable to parent shareholders declined YoY due to the expiration of a special profit recorded in the prior year period

日証金信託銀行 (JSF Trust Bank, 100% subsidiary):

• Trust fee revenue: 876 million yen, +4.6% YoY; Ordinary profit: 1.042 billion yen (up YoY); Net profit: 721 million yen (up YoY). All subsidiary results are in line with initial plans.

No specific operational or financial risks were explicitly discussed in the provided transcript segment.

No question and answer section was included in the provided earning call transcript.