JAPAN SECURITIES FINANCE CO., LTD.
8511・Prime Market・Other Financing Business
Business
Japan Securities Finance Co., Ltd. (JSF) is Japan's only securities finance company, licensed by the Prime Minister under the Financial Instruments and Exchange Act. Centered on the Loan for Stock Transaction Business, which lends funds and shares required for margin transactions to securities companies, JSF also operates Security Finance Business activities such as bond repo/gensaki transactions, stock repo transactions, and general stock lending. Its group comprises consolidated subsidiaries JSF Trust and Banking, which handles Administrative Trust Services (Customer Segregated Deposit Trust, etc.) banking operations, and Nihon Building, which handles real estate leasing and management, along with two equity-method affiliates (information processing services). Its main clients are domestic and overseas securities companies, financial institutions, and institutional investors, and it fulfills a public role in supporting smooth distribution and fair price formation in the stock and bond markets.
Business Model
The company raises market-based funds through call money and commercial paper, etc., and earns interest margin by lending funds and securities to securities companies and financial institutions. In bond repo and repurchase transactions, the balance scale is expanding as intermediary transactions that match the needs of lenders and borrowers. The trust bank subsidiary earns fee income through Administrative Trust Services (Customer Segregated Deposit Trust, etc.) for securities companies' customer asset segregation trusts. The real estate leasing subsidiary provides stable rental income from group-owned real estate, contributing to the diversification of revenue streams.
Company Strengths
The company is Japan's only securities finance company licensed by the Prime Minister under Article 156-24 of the Financial Instruments and Exchange Act, and exclusively handles the Loan for Stock Transaction Business for margin transactions under the standardized margin trading system. With over 70 years of operating history since commencing securities finance business in 1949, the regulatory entry barrier—which prevents competitors from entering the market in a short period—forms a permanent competitive advantage.
Revenue sources are diversified, including the Loan for Stock Transaction Business (gross operating profit of ¥6,977 million in FY2026 (ending March 2026)), the Security Finance Business (¥7,095 million), Securities Investment Business and other (¥2,794 million), the Trust Banking Business (¥4,295 million), and the Real Estate Leasing Business (¥1,110 million). During the 7th Medium-Term Management Plan period, diversification of revenue sources achieved certain results, with consolidated ordinary profit of ¥14.9 billion and ROE of 7.8% achieved.
Under an integrated risk management framework, credit risk amounts are measured daily and managed within the bounds of risk capital. In bond repo and repurchase transactions, net exposure is contained through daily mark-to-market valuation and margin calls, with the majority of counterparties being highly creditworthy financial institutions or entities subject to debt assumption by central clearing organizations. Governance has also been strengthened through the transition to a company with a Nomination Committee, etc. (2019).
ENVALITH's Perspective
Performance Trend
For FY2026 (ending March 2026), consolidated operating revenue was ¥114,211 million (up 92.0% year on year), operating income was ¥14,016 million (up 23.7%), ordinary income was ¥14,996 million (up 19.9%), and net income attributable to owners of the parent was ¥10,611 million (up 2.3%). As an external factor, the steady stock market and rising market interest rates pushed up demand for funds in the Loan for Stock Transaction Business and stock repo transactions, causing a sharp expansion in repo transaction interest income (¥32,779 million) and interest on cash collateral for borrowed securities (¥29,934 million). The decline of ¥1,828 million in extraordinary income recorded in the prior period limited the growth in net income. For FY2027 (ending March 2027), operating income is forecast to continue increasing to ¥14,400 million (up 2.7%), but the pace of growth is expected to slow.
Growth Strategy
8th Medium-Term Management Plan aiming to improve ROE and PBR through expansion of the Security Finance Business and diversification of revenue streams
Promoting expanded transactions with foreign financial institutions and diversification of securities handled. In FY2026 (ending March 2026), average balance expanded to ¥13,252,300 million (up ¥1,036,400 million year on year), while stock repo transactions and other items maintained high growth at ¥1,077,500 million (up ¥270,500 million year on year).
In connection with the 8th Medium-Term Management Plan, securities of ¥635,339 million held for the Security Finance Business and Trust Banking Business were reclassified to current assets. This aims to achieve asset management aligned with actual business operations and improve investment efficiency.
Segment profit at Japan Securities Finance Trust and Banking Co., Ltd. expanded significantly to ¥2,783 million (versus ¥1,755 million in the previous fiscal year, up 58.6% year on year). This was driven by increased demand for Administrative Trust Services and higher investment income resulting from rising market interest rates, contributing to diversification of Group earnings.
In FY2026 (ending March 2026), the annual dividend was ¥86 per share (payout ratio of 66.3%), and share buybacks of ¥3,401 million were conducted. For FY2027 (ending March 2027), the annual dividend is planned to be raised to ¥94 per share (payout ratio forecast of 69.2%). Cancellation of treasury shares (equivalent to ¥8,202 million) was also carried out to improve capital efficiency.
Last updated: July 19, 2026