IR Presentation Financial Summary & Business Strategy August 218
Contents Overview of Tokai Tokyo Financial Holdings 2 Business Characteristics 6 Financial Overview 8 Business Focus 14 Capital Policy 2 Business Theme 25 * Unless otherwise specified, the numerical data we quote here were all compiled as consolidated figures of the Tokai Tokyo Financial Holdings, Inc. 1
Overview of Tokai Tokyo Financial Holdings
Overview of Tokai Tokyo Financial Holdings Corporate Profile Company Name: Tokai Tokyo Financial Holdings, Inc. (TSE, NSE:8616) Representative: Tateaki Ishida, President & CEO Consolidated Net Assets: 174.8 billion yen Client Assets under Custody of Tokai Tokyo Securities: 4,659.1 billion yen (Retail Client Assets: 2,653. billion yen) ket Capitalization: 198.8 billion yen Number of Employees: Holding Company 183 Consolidated Basis: 3,397 (As of ch 31, 218) Group History Current group configuration was formed in October 2 through merger between Tokyo Securities and Tokai uman Securities Apr. 9 Group company of the Nikko Securities (a) Tokyo Securities Tokai uman Securities Group company of the Tokai Bank(b) Tokai Tokyo Securities Oct. 7 YM Tokai Tokyo Financial Holdings was established Nov. 8 Hamagin TT Apr. 1 Relocated HQ of TTSC to Nagoya City May 1 Nishi- Nippon City TT * Currently, (a) SMBC Nikko Securities, (b) Bank of Tokyo-Mitsubishi UFJ Apr. 1 TTSC merged with Toyota Financial Services Sec. Oct. 12 Senshu Ikeda TT ch. 17 Acquired ETERNAL Jan. 17 Hokuhoku TT Apr. 17 Acquired Takagi Sec. Apr. 17 Tochigi Bank invested in Utsunomiya Securities Sep. 17 Acquired Pinnacle. 18 Basic Agreement with Juroku Bank regarding Comprehensive Business Alliance 3
Overview of Tokai Tokyo Financial Holdings Area Coverage [Brokerage Business] Nationwide Network Tokai Tokyo Securities : 64 operating outlets Takagi Securities : 14 operating outlets JV Securities : 76 operating outlets Tohoku 1 outlets Senshu Ikeda TT (7 operating outlets) Kinki 3 outlets Koushin etsu 2 outlets Hokuhoku TT (5 operating outlets) Utsunomiya Securities (6 operating outlets) YM Securities (22 operating outlets) Kyushu 1 outlets Chugoku/ Shikoku 4 outlets Nishi-Nippon City TT (19 operating outlets) Tokai 41 outlets (32 in Aichi Pref.) Kanto 12 outlets (8 in Tokyo) Hamagin TT (17 operating outlets) ETERNAL (Insurance Terrace 7 outlets) (As of May 11, 218) 4
Overview of Tokai Tokyo Financial Holdings Overseas Network Tokai Tokyo Securities Europe Stifel Financial Corp. Mirae Asset Daewoo Securities Guotai Junan Securities Tokai Tokyo Financial Holdings Tokai Tokyo Securities (Asia) Tokai Tokyo Securities (USA) Bualuang Securities Bank of East Asia Kenanga Investment Bank Bao Viet Securities Phillip Securities First Metro Investment Corporation Phillip Tokai Tokyo Investment Management Tokai Tokyo Investment Management Singapore Tokai Tokyo Global Investments Headquarters Overseas Subsidiary Overseas Affiliate Business Partnership (As of July 26, 218) Business Partnership with Capital Injection 5
Business Characteristics
Business Characteristics Segmented retail business Strength in ket Div. - Foreign equities - Structured Notes Alliance & Platform - High net worth - Matured - Next generation Corporate sales & investment bank Bonds IPOs - 7 alliances with regional banks for jointly funded securities - Brokers broker business (58 cos.) Solid business base in Tokai Area Tokai area: No.1 shipment of manufactured goods / Linear bullet train Hydrogen fuel cell vehicle / Mitsubishi Regional Jet (MRJ) Sound management Governance: Outside directors / Audit & Supervisory Committee / 3 defense lines 7
Financial Overview
Financial Overview Characteristics of Business and Financial Performance Group Operating Revenue image including the affiliates figures on pro rata basis* 1 Group Ordinary Income image including the affiliates figures on pro rata basis* 1, 2 ETERNAL 2% FH + other Subsidiaries 4% Takagi Securities 6% JV6 companies +Ace 13% TTSC 75% Equity Method Profits (JV 6 companies +Ace 11% FH + other Subsidiaries 3% Dividend Income 3% TTSC 85% * 1 The charts present images of the source of Group revenue and income in 218, which, being different from our consolidated PL, include affiliates figures on pro-rata basis. * 2 Takagi Securities is not included in this chart because of its ordinary loss. 9
Financial Overview Financial Trend (Nikkei 225) 28, 24, 2, 16, (Yen) Operating Revenue, Ordinary Income (Million Yen) 35, 3, 25, 2, 15, 1, 5, 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 214 215 216 11.16 billion gain of negative goodwill by acquiring Takagi Securities Operating revenue Ordinary income Net Income 217 Recorded positive ordinary income for 31 consecutive quarters 218 219 12, Net Income (Million Yen) 15, 12,5 1, 7,5 5, 2,5 1
Financial Overview Financial Trend Operating Revenue, Ordinary Income (Million Yen) 1, 8, 6, 4, 2, 9,547 Operating Revenue Ordinary Income Net Income 23,243 33,45 214 82,7 18,499 28,524 215 67,584 12,423 15,297 216 11.16 billion gain of negative goodwill by acquiring Takagi Securities 65,412 11,99 13,269 217 85,261 25,397 2,939 218 Net Income (Million Yen) 3, 25, 2, 15, 1, 5, 11
Financial Overview Financial Performance in Industry Top 1 Securities Companies by Operating Revenue Operating Revenue 218 Company Name Amount (Million Yen) YoY 1 Nomura * 1 1,972,158 15.% 2 Daiwa 712,61 15.6% 3 SMBC Nikko 397,45 1.% 4 Mizuho 381,474-1.4% 5 Mitsubishi UFJ Morgan 376,91-6.8% 6 Tokai Tokyo 85,261 3.3% 7 Okasan 81,921 1.6% 8 Ichiyoshi 26,52 27.9% 9 IwaiCosmo 21,89 3.6% 1 usan 18,985 2.9% Ordinary Income 218 Company Name Amount (Million Yen) YoY 1 Nomura * 1 328,158 1.7% 2 Daiwa 155,676 14.8% 3 SMBC Nikko 94,982 18.6% 4 Mitsubishi UFJ Morgan 84,26-15.5% 5 Mizuho 43,26-42.9% 6 Tokai Tokyo 2,939 57.8% 7 Okasan 12,771-17.2% 8 Ichiyoshi 7,229 134.9% 9 IwaiCosmo 5,465 184.5% 1 Kyokuto 3,567-24.7% : Bank-affiliated companies *1 US GAAP based Note: Excluding online brokers Tokai Tokyo Financial Holdings prepared the table compiling from publicly disclosed data 12
Financial Overview Features of Financial Result ch 218 Retail business ket Div. Growth of Non Retail Business by Revenue Corporate Finance 2% Other 4% Foreign equity, structured bond, mutual fund, Japan equity Corporate & Institutional Sales 5% ket & Products 32% Retail 57% High-net-worth business Joint securities Platform business New projects Takagi Sec., Ace Sec. ETERNAL, ANAM, MONEQUE Profit by Business Segment* Other 13% ket & Products 56% Retail 31% * Corporate & Institutional Sales and Corporate Finance are not included in this chart because of its ordinary loss of -1% and -2% respectively. 13
Business Focus
Business Focus Feature of Retail Business 1. High net worth business 2. Aging society Middle 4% Non Faceto Face General 2% 6% High Wealth 19% Wealth 33% Revenue share image (. 218) 4s 4% 5s 13% Under 4 2% Corporate 2% Over 8 19% 3. Tokai area 4. Variety of Product Osaka (Western Japan) 12% Tokyo (Eastern Japan) 19% Non Faceto Face 2% Tokai (Central Japan) 67% Mutual Funds 22% 6s 29% Bonds 13% Other 7% Foreign Equities 3% 7s 31% Japan Equities 28% 15
Business Focus Growth of ket Division 1. Stable growth 2. Well-balanced by product (Million Yen) 3, 2, 1, 3, 2, 216 Trading Revenue 217 218 1Q 219 Other Foreign Bonds and Derivatives Foreign Equities Bond Trading Equity Trading 3. High profitability by client flow & prop. trading 1, (Million Yen) 3, 2, 1, -1, 216 Fund Revenue Position Revenue Customer Revenue Flow 216 217 217 218 218 1Q 219 1Q 219 16
Business Focus Focused Project Alliance with regional banks - Growth of AUC - Income contribution - Expectation for the next JV with Juroku Bank Assets under Custody from JVs (6 Entities) Income Contribution from JV Affiliates (Billion Yen) 1,6 1,4 1,2 1, 8 6 4 2 5 245 371 78 642 54 1,469 1,244 1,45 884 1,47 998 (Million Yen) 9, 8, 7, 6, 5, 4, 3, 2, 1, -1, Income and Other Benefits Realized from Transactions with JVs Gain on Investments in Partnership 9 465 554 29 Proportion to Consolidated Ordinary Income 39 1,636 1,325 1,41 389 12 526 636 21 211 45 212 2,434 3,31 3,996 3,464 3,78337 38 32 22 23 2,57 2,568 1,41 17 1,431 1,73 213 214 215 216 217 5,63 2,317 218 82 1,373 386 1Q 219 8 7 6 5 4 3 2 1 (%) 17
Business Focus Alliance with Regional Banks Top 2 Regional Banks (by Total Deposits) Bank Name Bank Deposits (Trillion Yen) JV Name (As of ch 31, 218) Operation started 1 Concordia Financial Group* 15.4 Hamagin Tokai Tokyo Sec Nov-28 2 Mebuki Financial Group 13.9 3 Fukuoka Financial Group 13.7 4 Chiba Bank 12. 5 Hokuhoku Financial Group* 11. Hokuhoku Tokai Tokyo Sec Jan-217 6 Shizuoka Bank 9.5 7 Yamaguchi Financial Group* 8.7 YM Securities Sec Oct-27 8 Kyushu Financial Group 8.3 9 Nishi-Nippon Financial Holding 7.8 Nishi-Nippon City Tokai Tokyo Sec May-21 1 The 77 Bank 7.4 11 Hiroshima Bank 7.1 12 Kyoto Bank 6.8 13 Gunma Bank 6.6 14 The Hachijuni Bank 6.5 15 Chugoku Bank 6.4 16 The Juroku Bank* 5.4 TBA 17 The Toho Bank 5.2 18 Iyo Bank 5. 19 Ogaki Kyoritsu Bank 4.9 2 Senshu Ikeda Holdings* 4.9 Senshu Ikeda Tokai Tokyo Sec Sep-213 Total Bank Deposits JPY55.8 Trillion - Tochigi Bank* 2.6 Utsunomiya Sec Apr-217 : Banks having subsidiary securities companies by their own * : Denotes Tokai Tokyo Financial Holdings alliance partners 18
Business Focus High net worth Business Assets under Custody (Wealth Management Unit & Premier Executive Advisors) Number of Membership & Assets under Custody (Orque d or members) 6 5 Total PEA Overlap Wealth Management Unit 425 48 84 532 84 53 46 5 45 4 Assets under Custory Number of Membership 1,951 2,5 2, 4 355 365 367 78 35 (Billion Yen) 3 2 1 85 78 251 263 62 284 325 374 392 449 (Billion Yen) 3 25 2 15 1 679 1,24 178 1,171 23 1,29 246 1,361 267 327 1,5 1, 5 5 15 Sep 215 216 Sep 216 217 Sep 217 218 Jun 218 216 Sep 216 217 Sep 217 218 Jun 218 19
Capital Policy
Capital Policy Indicator per Share in Comparison with Peers Dividend Information of TTFH 214 215 216 217 218 Shareholders' Equity (million yen) 14,462 154,633 153,89 155,312 172,629 Treasury Stock 3,835 3,639 6,39 7,572 6,188 Dividend per Share (yen) 32. 34. 28. 26. 38. Dividend Payout Ratio 36.5 % 48.9 % 59.7 % 56.9 % 39.1 % DOE (Dividend On Equity ratio) 6.5 % 6.1 % 4.8 % 4.4 % 6. % Indicator per Share in Comparison with Peers (Yen) 15 1 5 (%) 3 2 1 (%) 6 5 4 3 2 1 Tokai Tokyo Nomura Daiwa 99.6 87.7 97.3 87.1 69.5 68.3 57.6 46.9 45.7 61.736.5 67.363.1 61.5 54.5 66.9 45.8 24.1 6.2 17.7 12.6 8.1 5.2 4.5 4.5 3.7 3.7 EPS ROE 17. 15.5 12.8 7.8 9. 8.9 8.6 8.7 7.9 9.5 8.4 8.8 5.8 3.7 4.9.7 Dividend Yield 3.8 4.2 3.8 4.1 3.3 2.6 3.2 2.7 2.6 2.9 214 215 216 217 218 * EPS and ROE are annualized by multiplying 4 to actual quarterly figures. 1Q 219 21
Capital Policy Available Capital TTFH (Consolidated Basis) 216 217 (Billion Yen) [Capital in a broad sense] Net Assets+Long-term Bonds & Long-term Loans of TTFH (non-consolidated) Net Assets 155 157 174 Long-term Bonds & Long-term Loans of TTFH (non-consolidated) 2 31 41 Subtotal (1) 157 188 216 [Uses of Capital] Non-current Assets (Excluding Policy Investments & Net Investments) 28 39 43 Capital Necessary for Operating Securities Business 99 99 17 Subtotal (2) 127 139 151 (3) Available Capital (1) - (2) 29 49 65 218 22
Capital Policy Shareholder return - Dividend - Share buyback - Benefit program Reserved capital for future growth M&A / Capital investment (Bank, broker, FinTech) Business expansion (ket div., high-net-worth, IFA) Investment in IT/AI 23
Capital Policy Stock Price Trend in Comparison with Nomura and Daiwa (27/4/1=1) 18 Stock Price 16 14 12 1 8 6 4 2 27/4 28/4 29/4 21/4 211/4 212/4 213/4 214/4 215/4 216/4 217/4 218/4 Tokai Tokyo Daiwa Nomura (X) 1. 6. ket Cap Multiple (Million Yen) 35, 3, ket Cap Tokai Tokyo 11. 16. 25, 2, 15, 21. 26. 31. Daiwa/Tokai Tokyo Nomura/Tokai Tokyo 1, 5, 27/4 28/4 29/4 21/4 211/4 212/4 213/4 214/4 215/4 216/4 27/4 28/4 29/4 21/4 211/4 217/4 218/4 212/4 213/4 214/4 215/4 216/4 217/4 218/4 24
Business Theme
Business Theme Environmental Change and New Strategy Aging society Social polarization Work style reforms Rising interest in investment Social environment change Regional revitalization Digital era Business structure change Fiercer competition in industry FSA Fiduciary duty, Business model, Governance 26
Business Theme Management Plan New Age s Flag Bearer 5 Key factors of New Age s Flag Bearer 5 ket Div. targeting JPY3B/month Great Platform JV (jointly funded sec.) Mid size brokers IFA Segmented retail business High net worth Matured Mass, MONEQUE Productivity Revolution Personnel system reform Targeting JPY3B level of ordinary income in the future ket Div. Retail Others (IB, affiliates, etc.) JPY15~2B JPY5~7.5B JPY5~1B 27
Business Theme Plan for Next Generation Internet FinTech Future plan Consulting ( Mutual fund concierge ) Securities 3. FinTech TORANOTEC Spare change investment Life plan Research ( Fund Labo ) MONEY DESIGN Payment (settlement) Robo advisor THEO IFA network Point (mileage) MONEQUE MONEQUE for regional banks Takagi Sec. / Ace Sec. (IFA) [Smartphone trading] Mobile carrier Retailer Insurance agency Small amount investment Loan 28
Memo 29
Memo 3
Inquiries to be directed to: Corporate Communications Department TEL: +81-3-3517-8618 FAX: +81-3-3517-8314 E-mail: fh_ir@tokaitokyo-fh.jp Effective April 1, 29, the Company spun off its financial instrument operation and Tokai Tokyo Security Co., Ltd. (former Tokai Tokyo Securities Spin-off Preparation Co., Ltd.) took it over. The Group (Tokai Tokyo Financial Group) at the same time shifted to a holding company system. Effective the same date, the Company and Tokai Tokyo Securities Spin-off Preparation Co., Ltd. changed their corporate names to Tokai Tokyo Financial Holdings, Inc., and Tokai Tokyo Securities Co., Ltd. respectively. The result for the fiscal year ended on ch 31, 29 or any earlier date account for the operation of the former Tokai Tokyo Securities Co., Ltd. under then existing organizational structure. This material is intended to provide information regarding the Company s most recent operational result and NOT to solicit investment in securities issued by the Company.