kabu.com securities co., ltd. chief executive officer ... · 1993 joined dai-ichi securities co.,...

©2001-2017 kabu.com Securities Co., Ltd. All rights reserved. 0

kabu.com Securities Co., Ltd. Chief Executive Officer Masakatsu Saito

CLSA Japan Forum 2017

©2001-2017 kabu.com Securities Co., Ltd. All rights reserved.

2. Online Brokerage Industry

1. Company Profile

3. Overview of Our Business Condition

1


Company name kabu.com Securities Co., Ltd.Business domain Online brokerage for mainly individual investorsEstablished November 1999

Stock exchange listing

Tokyo Stock Exchange 1st Section (Code: 8703)JPX-Nikkei Index 400 Constituent

Headquarters TokyoCapital stock 7,196 million yenCorporate Governancestructure

Company with nominating committee, etc.

Main shareholders Mitsubishi UFJ Securities Holdings: 52.1%Bank of Tokyo Mitsubishi UFJ: 6.2%

Credit rating A+ (JCR : long-term issuer rating)

No. of employees 134 (including 99 persons who hold official qualifications as Information Processing Engineer issued by Japan’s Ministry of Economy, Trade and Industry)

No. of customers 1,035,750Amount of customerassets 2,107 billion yen (as of the end of Dec. 2016)

1. Company Profile


[Career summary]1989 Joined Nomura System Services Co., Ltd.1993 Joined Dai-ichi Securities Co., Ltd.1998 Joined ITOCHU Corporation

Participated in Online Securities Establishment Project

1999 Joined Japan Online Securities Co., Ltd.; General Manager, Information Systems Department

2001 Executive Officer, kabu.com Securities Co., Ltd.2002 COO, kabu.com Securities Co., Ltd.2004 President and CEO, kabu.com Securities Co., Ltd.

(current position)

[Outside positions]

・ Secretary General, Keidanren (Japan Business Federation)・ Director, Japan Data Management Consortium・ Vice-chairman , Net Securities Association, Japan Securities Dealers Association・ Committee Member, Finance and Securities Education Support Committee,

Japan Securities Dealers Association・ Mentor, MUFG FinTech Accelerator 2016Others

Masakatsu Saito, President and CEO

(as of the end of Dec. 2016)

2. President’s Career Summary

3


FinTech

Developing rigid business base for more distribution of surplus to customers and shareholders

Developing rigid business base for more distribution of surplus to customers and shareholders

Transfer of financial assets to the baby

boomers


boomers


boomers

Financial/capital markets becoming more information

processing-oriented


processing-oriented


processing-oriented

Advancement of internet/telecommuni-cations environment



RegulationsAbenomicsAbenomicsAbenomics

• Only leading online brokerage that has developed all systems in-house

• Capable of high-speed high-functional transactions

• Seamless connection with settlements infrastructure

• Low-cost operation with our own business core system

System and IT strength

MUFG Group strength

Shift towards the unified taxation on financial

income


income


income

Deregulation/System revisions



Introduction of the Junior

NISA


NISA


NISA

“From savings to Asset formation”“From savings to Asset formation”“From savings to Asset formation”

JPX system(arrowhead, J-GATE)

JPX system(arrowhead, J-GATE)

JPX system(arrowhead, J-GATE) My Number

SystemMy Number

SystemMy Number

System

Enhanced financial literacy of individualsEnhanced financial

literacy of individualsEnhanced financial

literacy of individuals

Development of smart phones/tablet devicesDevelopment of smart phones/tablet devicesDevelopment of smart phones/tablet devices

SNS/VideoVideo phoneSNS/Video

Video phoneSNS/Video

Video phone

System utilization

System utilization

Online retail business strategies

Online retail business strategies

Group collaboration

Group collaboration

• One of the leading global financial groups• Retains blue-chip customers in the baby

boom generation• MUFG’s brand strength and reliability• High credit rating/solid financial strength

backed by superior creditworthiness

Social infrastructure

Creditworthiness/Brand strength

Fiduciary duty

iDeCo

3. Environment Surrounding kabu.com

4


A member of the Mitsubishi UFJ Financial Group (MUFG)The only online securities company that is part of a megabank group in Japan

The only leading online brokerage that has developed and operates all securities systems in-house

The only leading online securities company with all systems in-house

One of the top 5 online brokerageTop five companies account for more than 80% of individual equity trading

Proactive in providing returns to shareholdersROE20% is the managements’ objective since its stock listing

Solid corporate governanceHas developed corporate governance as a company with nominating committee, etc.

4. Key Features of kabu.com


MUFG

Bank of TokyoMitsubishi UFJ

Mitsubishi UFJ Trust and Banking

Mitsubishi UFJ Securities Holdings

Morgan Stanley

KDDI kabu.com Securities

<online securities>

Mitsubishi UFJMorgan Stanley

Securities<general securities>

Morgan Stanley MUFG

Securities

Mitsubishi UFJ Morgan Stanley PB Securities

<services for affluent customers>

Jibun Bank<online/mobile bank>

Mitsubishi UFJ Kokusai Asset Management

Mitsubishi UFJ NICOS

22%

51%

49%60%

40%

52%6%50%

100% 100%100%

75%25%

85%

50%

51% 15%

15%

(Percentage figures indicate the voting rights ratio.)

5. Alliance with MUFG Group

6


６. Management strategy ~utilizing MUFG Group strength~

MUFG Group

Products, services, customer baseInternet-related

＜System collaboration＞・Provision of system infrastructure to each MUFG Group company

＜ Provision of infrastructure/provision of ASP ＞・Provision of FX platform to Jibun Bank

＜Online financial instruments intermediation services＞

・Can access 36 million accounts of Bank of Tokyo-Mitsubishi UFJ and 2.35 million accounts of Jibun Bank・Collaborate with Mitsubishi UFJ NICOS as well as MUFG’s partner regional banks

＜Products＞・IPO/PO, foreign bonds, investment trust/ETFMitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ Kokusai Asset Management

＜Services＞・TOB sub-agent, collaboration with shareholding association, investment information reports

＜Customer base＞・Smartphone app one-stop accounts

opening with Bank of Tokyo-Mitsubishi UFJ

＜Fintech＞・Fostering venture companies as a mentor in the MUFG FinTech Accelerator program and demonstrating functions.

～Recent initiatives～・Introduction of corporate currency “OOIRI”・Personal advisory service for individuals・Robo-advisory app for smartphones

＜Bank agency business＞・Residential loans, preferential interest rates,

and extended hours for disbursement at Bank of Tokyo-Mitsubishi UFJ

MUFG Group special zone for

demonstrating near-future technology

7


Unlike the competitors outsourcing their IT work to system vendors affiliated to major general securities companies, we have developed all securities systems in-house since the company’s inception.

<Advantages of in-house system development>

Independence of managementCompetitors are outsourcing their system services, which are online brokers’ core management competency, to system vendors (including Nomura Research Institute, Daiwa Institute of Research and Nikko Systems Solutions) affiliated to major general securities companies offering person-to-person transactions.

Competitive cost structureCosts of Japanese securities system vendors are expensive and variable due to oligopoly of the providers affiliated to major general securities companies. We have developed open systems dedicated to the online brokerage business since the company’s inception, achieving high management efficiency with low and fixed costs.

Deployment of flexible and unique servicesCompetitors are outsourcing to shared systems, thus subject to constraint in providing unique services. Our systems that have been developed and being operated completely in-house enable us to deploy unique and differentiated competitive services.

New business developmentWe own intellectual property for our proprietary systems (we have 16 patents which is the most among the online securities companies), which enables us to develop system-based BtoBtoC business models.

7. Complete In-house Securities System Development


Examples of our unique and differentiated competitive services enabled by the complete in-house systems

Ranking of stocks with trade volume expected to soar (since April 2015)By searching real-time stock quotes for all listed stocks utilizing high-speed processing of big data, “kabuStation” provides a function that gives real-time notice of stocks nearing the price limits (up or down) during trading hours.

High-speed processing system “RAIDEN” (since November 2014)Introduced a new ordering system “RAIDEN,” which attained processing capability ten times faster than our existing ordering system. This is by far the fastest processing capability in the industry and is contributing to the soaring market share of our equity margin trading service.

Various types of automatic buying and selling (since 2000)We started to offer stop order on menu in 2000 as a pioneer in the industry. We can handle the most variety of orders among peers, including trailing stop, relay order and time-specified order.

Settlement through automatic bank debit (since 2000)Our industry’s only direct linkage to the Japan Bankers Association system has made possible since the company’s inception share transaction settlement through automatic bank debit from customers’ bank accounts. We still remain the only player in the industry offering this service.

8. “Only One” Service Provided Through Our Systems


9. Establishing new revenue bases ~BtoBtoC strategy~

kabu.com provides “kabu.com API” environment that is compliant with stocks, futures, and options, as an open innovation platform to third-party tool developers and investment advisory service providers.

API

0

50

100

150

200

250

0.0%

3.0%

6.0%

9.0% 当社API株式等約定⾦額/⽇（億円）(右軸）当社API先物約定⾦額/⽇（億円）(右軸）当社株式等約定⾦額API⽐率(左軸）当社先物約定⾦額API⽐率(左軸）

• Equity API trading value up 8% quarter-on-quarter.

• API proportion of futures trading value declined for the first time in three quarters.

Investment firmsInvestment management business

Software provisionSoft house

Investment advice agency business

Tool Provision

App server

Securities exchangeC

ustomers

Transactionreport

kabu.com Securities

Kabu.com Equity API trading value/day(bn. yen: right scale)

25

20

15

10

5

Kabu.com API proportion of futures trading value (left scale)

Kabu.com API proportion of Equity trading value (left scale)

Kabu.com Futures API trading value/day(bn. yen: right scale)

10

8.3%

11.7

2.1

2.2%

WEB server


Begun offering financial instruments intermediation services in July 2005, utilizing our proprietary technological expertise and characteristics of online securities. Fully automated intermediation services provided to Bank of Tokyo-Mitsubishi UFJ and Jibun Bank. Bank customers can open their securities accounts within the same day at the earliest and start trading, without human intervention.


0

10

20

30

40

50

60

70

0.0%

3.0%

6.0%

9.0%当社仲介株式約定⾦額/⽇（億円）(右軸）当社株式約定⾦額仲介⽐率(左軸）当社株式委託⼿数料仲介⽐率(左軸）

• Intermediary trading value and intermediary proportion of trading value both increased.

• While the intermediary proportion of brokerage commissions declined to 6.5%, it maintained a high level from the previous quarter.

Online financial instruments intermediation services

Kabu.com intermediary trading value/day(bn. yen: right scale)

Kabu.com intermediary proportion of brokerage commissions(left scale)

Kabu.com intermediary proportion of trading value(left scale)

11

6.5%

3.7%

7

6

5

4

3

2

1

3.6


ASP


Offering system infrastructure as an ASP (Application Service Provider: software service provider) utilizing our strength in system infrastructure developed and operated in-house.

■ASP (Application Service Provider) clients：Jibun bank

0

100

200

300

400

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

ASP提供先店頭FX約定⾦額/⽇（億円）(右軸）

ASP提供先店頭FX約定⾦額⽐率(左軸）※

• The proportion of ASP increased for the first time in three quarters, and was above 10% for the fifth consecutive quarter.

Kabu.com ASP OTC-FX trading value/day (bn. yen: right scale)

40

30

20

10

The proportion of Kabu.com ASP OTC-FX trading value (left scale)

12

23.9

12.0%



■progress on software development contracting agreement with Mitsubishi UFJ Morgan Stanley Securities

Establishing a new business model of providing system infrastructure to MUFG Group and other financial institutions.

Provision of system infrastructure

�Agreement amount: approx. 2.9 billion yen�Timing of report: scheduled to be reported once the respective receipt and inspection have been completed (scheduled for Q4 FY2016 and 1H FY2017)�Account item: scheduled to be reported as “other net sales” and “cost of sales”�Monthly disclosure: scheduled to be disclosed as a component of net operating revenue in the monthly business results for the month following the month of receipt and inspection

�Permission of use of our software in equity transactions・Contracting of software development required for using our software

Agreement content

Impact on financial results

・Investment information services, smartphone services, some of the trading infrastructure--> Released on January 10, 2017

�Internet equity trading, main automatic buying and selling--> Scheduled for release in Q4 FY2016

�Additional automatic buying and selling--> Scheduled for release in 1H FY2017

Release timing

�Maintenance for software provided�Additional development and support for system changeFuture plans

g yStatus of progress on software development contracting agreement with

Mitsubishi UFJ Morgan Stanley Securities

Provision of system infrastructure

financial institutionsOur system infrastructure

Agreement amount: approx. 2.9 billion yen

13


13. Management Objectives 〜ＲＯＥ and shareholder return〜

Basic Approach to Management ObjectivesPosition the policies “to increase return on equity” and “proactive shareholder return” as the foundation for maximizing corporate value.

ROE (return on equity) objectives and shareholder return• Our measure of profitability is ROE. We have set a target ROE of 20%. ROE for Q1-3 2016 was 14% (annual

basis).• Our shareholder return is focused on “Total Return Ratio,” and we target an average of 100% for the three

fiscal years starting FY2015.• With a minimum of “50% payout ratio and 4% DOE” for annual dividend payment, we will buy back shares

flexibly.• Plan for a year-end dividend of 6 yen, the same as the interim dividend.• Plan for a share buyback between February 9 and April 21 with an upper limit of 5.00 million shares / 2.0billion

yen, amounting to 1.48% of outstanding shares (excluding treasury stock).

Net income ROE

Dividend per share Total amount of dividend

Payout ratio DOE Buy back

Total amount of

return

Total Return Ratio(Interim) (Year-end) (Total)

FY2011 ¥1.5 bil. 4.9% － ¥4.0 ¥4.0 ¥1.4 bil. 89% 4.3% － ¥1.4 bil. 89%FY2012 ¥0.5 bil. 6.7% － ¥4.0 ¥4.0 ¥1.4 bil. 62% 4.1% － ¥1.4 bil. 62%FY2013 ¥6.6 bil. 17.0% － ¥9.0 ¥9.0 ¥3.1 bil. 48% 8.1% － ¥3.1 bil. 48%FY2014 ¥7.6 bil. 17.2% － ¥11.5 ¥11.5 ¥4.0 bil. 52% 9.1% ¥0.8 bil. ¥4.8 bil. 64%FY2015 ¥8.0 bil. 17.7% ¥6.0 ¥6.0 ¥12.0 ¥4.0 bil. 51% 9.1% ¥3.8 bil. ¥7.9 bil. 100%FY2016 －－ ¥6.0 ¥6.0(Plan) ¥12.0(Plan) －－－－－－

Actual shareholder return

Note: Retroactive adjustment has been made with respect to the two-for-one stock split conducted in July 2015.

14


General Meeting of Shareholders

Outside directors(3 members)

(Chairperson, 2 independent directors)

Inside directors(4 members)

(CEO and 3 other member)

Nominating Committee(3 members)

(2 outside directors)

Compensation Committee(3 members)

(2 outside directors)

Appointment and dismissal of directors

Representative executive officers executive officers

Business execution

Divisions responsible for business execution

Executive Committee

Basic management policies and appointment/dismissal of executive officers

Decisions on important matters related to business execution

<Characteristics of our corporate governance>

Ｗe transitioned to a company with nominating committee, etc to completely separate the “management oversight function” by the Board of Directors and the committees, from the “business execution function” by representative executive officers and other executive officers.

Chairperson of the Board of Directors, as an outside director, is independent of business execution.

The Internal Audit Office is independent of the divisions responsible, and carries out audit activities assisting the Audit Committee.

Compensation for directors are solely composed of fixed remuneration. Compensation for representative executive officers and other executive officers are composed of fixed remuneration and variable remuneration based on performance indicators such as ROE.

Decision on proposals for appointment/dismissal of directors and executive officers

Decision on the compensation for individual directors and executive officers

Audit Committee (4 members)(3 outside directors)

Internal Audit Office

14. Corporate Governance System

15


• Despite the lowered ratio of individual shareholders due to the rise in our share price, the number of shareholders increased due to the stock split.

Trends in Shareholding Ratios and Share Price of kabu.com

10.2%

17.8%

338yen

100円

300円

500円

700円

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Ratio of non‐Japanese shareholders (left scale) Ratio of individual shareholders (left scale) Our share price*including adjustments (right scale)

15. Shareholder Composition

yen

yen

yen

yen

16



1. Company Profile


17


0

20

40

60

2012 2013 2014 2015 2016Q2

その他現預⾦投資信託株式

0

500

1000

1500

2012 2013 2014 2015 2016Q2

その他現預⾦投資信託株式

• Majority of financial assets held by Japanese individuals are cash and deposits. (2016Q2: 52.7%)

Sources: Bank of Japan and disclosure materials of FRB

（兆円）（兆ドル）

Trends in Individual Financial Assets in Japan Trends in Individual Financial Assets in the U.S.

(trl. yen) (trl. dollars)EquityInvestment trusts

Cash and deposits

Others EquityInvestment trusts

Cash and deposits

Others

16. Individual Financial Assets in Japan and the U.S.

18


2.7% 15.1%

21.4%19.5%

24.7%

16.7%

30才未満30才代40才代50才代60才代70才以上

Cash trading

Margin trading

Internet Equity Trading Value by Investors’ AgeThe Number of Internet Trading Accounts and Internet Trading Value

• In line with retirements and inheritances, external environment may shift to one with active online transactions thanks to those in their 50s and 60s, which have high investment and PC literacy.

• Expectations that financial assets, currently retained at major over-the-counter securities firms, to transfer to those in their 50s and 60s, owing primarily to retirements and inheritances.

(10 thousand accounts/100 bn. yen)

(Reference) Statistics by the Japan Securities Dealers Association (from April 2016 to December 2016)

Ratio of trading conducted by investors in their 50s and 60s

44.1%

Ratio of trading conducted by investors in their 50s and 60s

35.6%

* From disclosure materials of Japan Securities Dealers Association

Under 30

30s

40s

50s

60s

70s or older

2.5% 23.4%

30.3%19.5%

16.1% 8.3%

0

1000

2000

05/9

06/3

06/9

07/3

07/9

08/3

08/9

09/3

09/9

10/3

10/9

11/3

11/9

12/3

12/9

13/3

13/9

14/3

14/9

15/3

15/9

16/3

16/9

インターネット取引⼝座数（万/左軸）

インターネット売買代⾦（千億円/左軸）

Number of internet trading accounts(10thousands/left scale)

Internet trading value(100bn.yen/left scale)

17. Status of Internet Trading

19


0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

140

03/3

04/3

05/3

06/3

07/3

08/3

09/3

10/3

11/3

12/3

12/6

12/9

12/1

213

/313

/613

/913

/12

14/3

14/6

14/9

14/1

215

/315

/615

/915

/12

16/3

16/6

16/9

⽇本：個⼈株式資産（上場株式のみ）：(A)ネット証券⼤⼿5社預り資産：(B)預り資産シェア：(B)÷(A)

0%

20%

40%

60%

80%

100%

0

5,000

10,000

15,000

20,000

25,000

03Q

103

Q3

04Q

104

Q3

05Q

105

Q3

06Q

106

Q3

07Q

107

Q3

08Q

108

Q3

09Q

109

Q3

10Q

110

Q3

11Q

111

Q3

12Q

112

Q3

13Q

113

Q3

14Q

114

Q3

15Q

115

Q3

16Q

116

Q3

個⼈信⽤市場(ETF/REIT含む）

個⼈現物市場(ETF/REIT含む）

ネット証券⼤⼿5社シェア

20

23.3%

• Individual investor trading value of equities was up for the first time in three quarters, and market conditions recovered.

• Top 5 online brokers struggled to grow share in both transaction flow (trading volume) and stock (assets held).

(100 mil. yen)(trl. yen)

Trends in the Shares of the Top 5 Online Brokers in Daily Individual Investor Trading Value of Equities Equity Assets of Individuals in Japan and the Shares of

Customer Assets Held by the Top 5 Online Brokers

Sources : Bank of Japan, Tokyo Stock Exchange and each online broker information.

Individual margin trading

Individual cash trading

Share of top 5 online brokers

Japanese household asset of listed stocks：(A)

Total customer assets of top 5 online brokers：(B)

Share：(B)÷(A)

11,302

74.4%

18. Individual Equity Trading (Flow/Stock)


0.0

5.0

10.0

15.0

05Ｑ

105

Ｑ3

06Ｑ

106

Ｑ3

07Ｑ

107

Ｑ3

08Ｑ

108

Ｑ3

09Ｑ

109

Ｑ3

10Ｑ

110

Ｑ3

11Ｑ

111

Ｑ3

12Ｑ

112

Ｑ3

13Ｑ

113

Ｑ3

14Ｑ

114

Ｑ3

15Ｑ

115

Ｑ3

16Q

116

Q3

カブドットコム松井ＳＢＩ

楽天マネックス

40

60

80

100

120

140

160

05Q

105

Q3

06Q

106

Q3

07Q

107

Q3

08Q

108

Q3

09Q

109

Q3

10Q

110

Q3

11Q

111

Q3

12Q

112

Q3

13Q

113

Q3

14Q

114

Q3

15Q

115

Q3

16Q

116

Q3

カブドットコム松井

SBI 楽天

マネックス

21

(basis point)

3.0

Trends in Equity Brokerage Commission Rate at Major Online Brokers

Trends in Equity Trading Market Share of the Top 5 Online Brokers (*on the basis of 2005/4 figures set at 100)

Sources : Calculated by kabu.com based on the disclosure materials of the Japan Exchange Group and each online brokers

kabu.com

RAKUTEN

MATSUI

MONEX

kabu.com

MONEX

SBIMATSUI

RAKUTEN147

SBI

19. Online Brokers’ Share of Trading Volume

• kabu.com proportion of cash transactions, which reached a record low in the previous quarter, recovered sharply to 25.9%, and equity commission rate increased to 3.0bp.


(basis point)

• kabu.com proportion of cash trading, which reached a record low in the previous quarter, recovered sharply to 25.9%, and equity commission rate increased to 3.0bp.

0bp

2bp

4bp

6bp

8bp

10bp

12bp

14bp

16bp

18bp

20bp

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000 株式約定単価（左軸）現物約定単価信⽤約定単価

株式⼿数料率（右軸）現物⼿数料率信⽤⼿数料率

3.0bp(Dec)

FY2014 FY2015 FY2016Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q３

Commission Rate

Equity 2.9bp 3.0bp 2.9bp 3.0bp 2.9bp 2.8bp 2.8bp 2.8bp 3.0bp 2.7bp 3.0bpCash trading (7.7bp) (7.5bp) (7.2bp) (7.3bp) (7.4bp) (7.4bp) (6.9bp) (6.9bp) (7.2bp) (7.1bp) (6.8bp)

Margintrading (1.6bp) (1.6bp) (1.5bp) (1.5bp) (1.4bp) (1.4bp) (1.5bp) (1.7bp) (1.8bp) (1.6bp) (1.7bp)

proportion of cash trading（kabu.com）

21.7% 23.6% 25.0% 25.3% 24.9% 23.3% 23.7% 21.6% 22.3% 20.4% 25.9%

A：Reduction of commission on cash equities for small amount transactions（15/11）

ʻ14/ 4 5 6 7 8 9 10 11 12 14/1 2 3 4 5 6 7 8 9 10 11 12 16/1 2 3 4 5 6 7 8 9 10 11 12

Trading value per equity transactions

Trading value per cash transactions

Commission rate on equity transactions

Commission rate on cash transactions

Trading value per margin transactions

Commission rate on margin transactions

A↓ 6.8bp(Dec)

1.7bp(Dec)

20. kabu.com’s Commission Rate



1. Company Profile



FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16Q3

Net operating revenue 19.8 19.7 19.2 14.9 13.5 12.6 10.7 11.4 21.2 20.9 22.3 13.8Ordinary income 12.6 11.0 9.9 5.9 4.9 4.4 3.0 3.9 11.7 10.2 10.7 5.3Net income 9.7 6.0 6.0 3.6 3.0 0.5 1.5 2.2 6.6 7.6 8.0 4.6Ratio of ordinary income to net operating revenue 64% 56% 52% 40% 36% 35% 29% 34% 55% 49% 48% 39%

0%

10%

20%

30%

40%

50%

60%

70%

0.0

5.0

10.0

15.0

20.0

25.0

24

• From Q1 to Q3, revenue and profit fell as a result of deteriorating market conditions. Individual investor trading value of equities was down 21%, but net operating revenue was down just 19%.

• Record-high net operating revenue and income before income taxes.(bn. yen)

(Apr-Dec)

21. Trends in Our Business Results


14.8

12.0

9.17.1 6.7

5.4 4.4 4.8

9.58.0 8.1

5.1

3.0

4.7

5.6

3.83.5

3.93.4 3.5

7.38.4 8.8

5.6

1.11.6

2.0

1.81.5

1.2

0.81.1

1.5 1.31.5

0.7

0.00.0

0.9

1.10.8

0.9

1.10.9

1.4 1.62.0

1.2

0.2 0.4 0.7

0.40.4

0.6

0.50.6

0.9 0.90.9

0.6

0.8 1.1 1.0

0.80.7

0.7

0.50.6

0.7 0.81.0

0.6

0.0

5.0

10.0

15.0

20.0

25.0

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16(4‐12)

Equity Financial income Future/Option FX Invest.trust Other

25

• Revenues from all products were down, mainly because of factors such as a more cautious stance among individual investors owing to uncertainties in the external environment, and lower volatility.

• Revenue enhancement of investment trust and derivatives is an issue.

Revenue by Products(bn. yen)

(Apr-Dec)

22. Revenue by Products


3,181 3,899 3,981 3,556 3,230 3,206 3,041 3,050

4,155 4,029 4,371 2,915

2,319

3,074 3,500 3,594 3,672 3,490 3,168 2,932

3,454 3,716 3,848

3,259

774

889 1,003

954 958 927 906 921

1,154 1,159 1,166

1,050 387

429 349

295 379 270 385 408

516 1,470

1,537

828 435

449 526

565 384 302

264 279

427

465 846

575

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16(4‐12)

Transaction related System related Employment Advertising Others

26

• Transaction related cost and system related cost are the main cost elements in online brokerage business.

• Fixed costs increased as we strengthened our management foundations, with an eye to future business development.

• Total SG&A costs were roughly in line with the previous year as we controlled advertising costs and variable costs declined.

SG&A(mil. yen)

* “System related cost” is the total of “Facility cost,” ”Outsourcing cost” and “Depreciation and amortization” that is incurred from online brokerage.

(Apr-Dec)

23. SG&A Cost Structure


20,938

3%

4%

5%

6%

0

10,000

20,000

30,000

40,000

50,000

60,000

05Q

105

Q3

06Q

106

Q3

07Q

107

Q3

08Q

108

Q3

09Q

109

Q3

10Q

110

Q3

11Q

111

Q3

12Q

112

Q3

13Q

113

Q3

14Q

114

Q3

15Q

115

Q3

16Q

116

Q3

⼆市場信⽤買建残⾼

当社買建残⾼シェア6.1%

1,866

0

500

1,000

1,500

2,000

2,500

13Q

1

13Q

2

13Q

3

13Q

4

14Q

1

14Q

2

14Q

3

14Q

4

15Q

1

15Q

2

15Q

3

15Q

4

16Q

1

16Q

2

16Q

3

信⽤買建平残（億円）

⾦融収⽀（百万円）

27

• Although long margin positions continued to decline, kabu.com share of long positions increased to 6.1%.

• Revenues from equity lending increased thanks to the lending AI adopted in August. Financial income was 186.6 billion yen, up 5% quarter-on-quarter.

Margin Trade Balance and Financial Income Stock Exchange Margin Trade Balance and kabu.com’s Share(100 mil. yen/

mil. yen)

Source: Calculated by kabu.com based on the data of the Japan Exchange Group

Margin buy-side balance (100 mil. yen)Financial income(mil. yen)

(100 mil. yen)Entire margin buy-side balance of exchange

kabu.com share

1,269

24. Financial Income and Margin Balance


0

5

10

15

20

25

30

0

200

400

600

800

1,000

13Q

113

Q2

13Q

313

Q4

14Q

114

Q2

14Q

314

Q4

15Q

115

Q2

15Q

315

Q4

16Q

116

Q2

16Q

3

当社店頭FX約定⾦額/⽇（⼗億円：左軸）

当社店頭FX収益 ※ （百万円：左軸）

店頭FX市場約定⾦額/⽇（兆円：右軸）

0

5,000

10,000

15,000

20,000

25,000

0

100

200

300

400

500

600

700

800

900

1,000

13Q

1

13Q

2

13Q

3

13Q

4

14Q

1

14Q

2

14Q

3

14Q

4

15Q

1

15Q

2

15Q

3

15Q

4

16Q

1

16Q

2

16Q

3

⽇経225オプション⼿数料（左軸）

TOPIX先物等⼿数料（左軸）

⽇経225ミニ⼿数料（左軸）

⽇経225ラージ⼿数料（左軸）

先物個⼈市場/⽇（右軸）

8,195

28

• An introduction of unified taxation might expand individual listed derivatives trading.• OTC-FX market trading value was up 20% owing to increased volatility in foreign exchange markets.• OTC-FX-related revenue was up 1%.

(mil. yen)(100 mil. yen)

Sources: Calculated by kabu.com based on the data of the Japan Exchange Group and The Financial Futures Association of Japan

OTC FX Market Trading Value and kabu.com Revenues

Nikkei Future Individual Trading Value and kabu.com Commission Revenues

Nikkei 225 Option commission (left scale)

TOPIX Future commission (left scale)

Nikkei 225 mini commission (left scale）

Nikkei 225 Future (regular) commission (left scale)Future individual trading value/day (right scale)

kabu.com OTC-FX trading value/day (bn. yen: left scale)kabu.com OTC-FX revenue※ (mil. yen: left scale)

Market trading value/day (trl. yen: right scale)

(trl. yen)

25. Derivatives Products (Listed Future & Option, OTC FX)

20

343

176


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0

50

100

150

200

250

300

350

400

450

14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3

Revenue related to investment trust (left scale)

Investment trust sales amount (right scale)

0

50

100

150

0

500

1,000

1,500

2,000

05/6

05/12

06/6

06/12

07/6

07/12

08/6

08/12

09/06

09/12

10/6

10/12

11/6

11/12

12/6

12/12

13/6

13/12

14/6

14/12

15/6

15/12

16/6

16/12

Total net outstandings of publicly offered investment trusts(trl. yen: right scale)kabu.com investment trust balance in custody (100 mil.yen: left scale)

29

* Total net outstandings of publicly offered investment trusts based on public materials from The Investment Trusts Association,Japan

* Investment trust balance in custody calculated as of the end of the quarter based on current market price. Excludes MRF.

* Revenue related to investment trust = Investment trust commission fees + investment trust trust income

* Investment trust sales amount includes foreign currency-denominated MMF, MMF, and mid-term national bond funds

• kabu.com investment trust balance in custody increased quarter-on-quarter to 151.6 billion yen.• Our investment trust sales amount, which had declined for four consecutive quarters, bottomed

out.

Investment Trusts Balance in Custody kabu.com’s Sales Amount and Revenue(100 mil.yen)

(mil. yen)

(mil. yen)(trl. yen)

26. Investment Trust

14,070

187

1,516

96


29.6%

27.8%

33.2%

8.2%

0.4%0.1% 0.1% 0.6%

３００万未満３００〜５００万未満５００〜１０００万未満１０００〜３０００万未満３０００〜５０００万未満５０００万〜１億未満１億以上不明

45.5%

13.5%

9.4%

8.9%

5.6%4.4%

2.8%2.5%

2.2% 1.3% 0.5% 0.4%3.1%

Employees of companies and organizations People without occupation (including full-time home traders)HousewivesSelf-employed Executives of companies and organizationsNational or municipal government employees Part-time workers or people on side jobsDoctors and other medical workersStudentsTeachersLawyers, CPAs, tax accountantsAgricultural/forestry/fishery workersOthers

35.4%

17.1%19.4%

18.6%

5.3%

2.6% 1.1%0.6%

３００万未満

３００〜５００万未満

５００〜１０００万未満

１０００〜３０００万未満

３０００〜５０００万未満

５０００万〜１億未満

１億以上

不明

4%

19%

31%21%

16%

7%

3%

20代30代40代50代60代70代その他合計

77%

23%

男性⼥性

as of January 2017

Gender Age

Annual income

Occupation

Financial assets

MaleFemale

20s

30s

40s

50s

60s

70s

Others

Employees of companies and organizations People without occupation (including full-time home traders)HousewivesSelf-employed Executives of companies and organizationsNational or municipal government employees Part-time workers or people on side jobsDoctors and other medical workersStudentsTeachersLawyers, CPAs, tax accountantsAgricultural/forestry/fishery workersOthers

Less than 3 mil. yen

3-5 mil. yen

5-10 mil. yen

10-30 mil. yen

30-50 mil. yen

50-100 mil. yen

More than 100 mil. yen

Unknown

• Attributes of our customers are as follows.

Less than 3 mil. yen

3-5 mil. yen

5-10 mil. yen

10-30 mil. yen

30-50 mil. yen

50-100 mil. yen

More than 100 mil. yen

Unknown

25. Attributes of Our Customers

30


The investor relations information on this material is provided for the purpose of disclosing information on kabu.com Securities Co., Ltd. It is not intended as a means of promoting investment. Therefore, it is advised that users should not rely solely on the information provided on this material when making investment decisions, but rather should use your own judgment in making such decisions. Although close attention has been paid to the contents of this material, kabu.com Securities does not guarantee or ensure the accuracy or completeness. Users should be also aware that the contents of this material are subject to revision, update and deletion without prior notice. kabu.com Securities disclaims any obligation to give notice, publicly or otherwise, of any changes. Please be advised that kabu.com Securities assumes no responsibility for omissions, inaccuracies or other errors.

31

kabu.com securities co., ltd. chief executive officer ... · 1993 joined dai-ichi securities co.,...

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