IR Presentation Financial Summary & Business Strategy August 2018 - PowerPoint PPT Presentation

IR Presentation Financial Summary & Business Strategy August 2018

Contents Overview of Tokai Tokyo Financial Holdings 2 Business Characteristics 6 Financial Overview 8 Business Focus 14 Capital Policy 20 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: 2,653.0 billion yen) Market Capitalization: 198.8 billion yen Number of Employees: Holding Company 183 （ As of March 31, 2018 ） Consolidated Basis: 3,397 Group History Apr. ‘17 Current group configuration was formed in Apr. ‘10 October 2000 through merger between Tokyo Relocated HQ of TTSC Securities and Tokai Maruman Securities Acquired to Nagoya City Apr. ‘09 Takagi Sec. Group company of the Apr. ‘10 Nikko Securities (a) Tokai Tokyo March. ‘17 Sep. ‘17 TTSC merged with Financial Holdings Toyota Financial Acquired Tokyo was established Acquired Services Sec. ETERNAL Securities Pinnacle Tokai Tokyo Securities Tokai May ‘10 Jan. ‘17 Apr. ‘17 Mar. ‘18 Maruman Nov. ‘08 Oct. ‘12 Nishi- Hokuhoku Tochigi Bank Basic Agreement Hamagin Senshu Securities Oct. ‘07 Nippon invested in with Juroku Bank TT TT Ikeda TT YM City TT Utsunomiya regarding Group company of the Tokai Bank(b) Securities Comprehensive Business Alliance * Currently, (a) SMBC Nikko Securities, (b) Bank of Tokyo-Mitsubishi UFJ 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 : Tohoku 1 outlets 76 operating outlets Koushin’etsu 2 outlets Senshu Ikeda TT Hokuhoku TT (7 operating outlets) (5 operating outlets) Kinki Utsunomiya Securities 3 outlets (6 operating outlets) YM Securities Hamagin TT Kanto 12 outlets (22 operating outlets) (17 operating outlets) (8 in Tokyo) Kyushu Tokai Chugoku/ 1 outlets Shikoku 41 outlets 4 outlets (32 in Aichi Pref.) ETERNAL Nishi-Nippon City TT (Insurance Terrace 70 outlets) (19 operating outlets) (As of May 11, 2018) 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 Tokai Tokyo Investment Investment Management Management Singapore Tokai Tokyo Global Investments Headquarters Overseas Subsidiary Overseas Affiliate Business Partnership (As of July 26, 2018) Business Partnership with Capital Injection 5

Business Characteristics

Business Characteristics Strength in Market Div. Segmented Alliance - Foreign equities retail business - Structured Notes & Platform - High ‐ net ‐ worth - 7 alliances with regional banks for Corporate sales & jointly funded securities - Matured investment bank - Brokers’ broker business (58 cos.) - Next generation ‐ Bonds ‐ IPOs 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 Group Ordinary Income image including the affiliates’ figures on pro ‐ rata basis* 1 the affiliates’ figures on pro ‐ rata basis* 1, 2 Equity Method JV6 Profits (JV 6 Dividend companies FH + other companies Income +Ace Subsidiaries +Ace 3% 13% 4% 11% FH + ETERNAL other 2% Subsidiaries Takagi 3% Securities 6% TTSC TTSC 85% 75% * 1 The charts present images of the source of Group * 2 Takagi Securities is not included in this chart because of revenue and income in FYE Mar 2018, which, being its ordinary loss. different from our consolidated PL, include affiliates’ figures on pro-rata basis. 9

Financial Overview Financial Trend 28,000 (Yen) (Nikkei 225) 24,000 20,000 16,000 12,000 ¥11.16 billion gain of negative goodwill by acquiring Takagi Securities Operating Revenue, Ordinary Income Net Income (Million Yen) (Million Yen) 35,000 15,000 Operating revenue Ordinary income Net Income 30,000 12,500 25,000 10,000 20,000 7,500 15,000 5,000 10,000 2,500 5,000 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FYE FYE FYE FYE FYE FYE Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018 Mar 2019 Recorded positive ordinary income for 31 consecutive quarters 10

Financial Overview Financial Trend ¥11.16 billion gain of negative goodwill by acquiring Takagi Securities Operating Revenue, Ordinary Income Net Income (Million Yen) (Million Yen) Operating Revenue Ordinary Income Net Income 100,000 30,000 25,397 90,547 23,243 25,000 80,000 85,261 82,700 18,499 20,000 67,584 60,000 65,412 15,000 12,423 40,000 11,990 10,000 33,405 28,524 20,000 5,000 20,939 15,297 13,269 0 0 FYE FYE FYE FYE FYE Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018 11

Financial Overview Financial Performance in Industry Top 10 Securities Companies by Operating Revenue Operating Revenue FYE Mar 2018 Ordinary Income FYE Mar 2018 Amount Amount Company Name YoY Company Name YoY (Million Yen) (Million Yen) Nomura * 1 Nomura * 1 1 1,972,158 1 328,158 15.0% 1.7% 2 Daiwa 712,601 2 Daiwa 155,676 14.8% 15.6% 3  SMBC Nikko 3  SMBC Nikko 397,405 94,982 18.6% 10.0% 4  Mizuho 4  Mitsubishi UFJ Morgan 381,474 -10.4% 84,206 - 15.5% 5  Mitsubishi UFJ Morgan 5  Mizuho 376,901 - 6.8% 43,260 - 42.9% 6 Tokai Tokyo 85,261 30.3% 6 Tokai Tokyo 20,939 57.8% 7 Okasan 81,921 1.6% 7 Okasan 12,771 - 17.2% 8 Ichiyoshi 26,502 27.9% 8 Ichiyoshi 7,229 134.9% 9 IwaiCosmo 21,089 30.6% 9 IwaiCosmo 5,465 184.5% 10 Marusan 18,985 20.9% 10 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 FYE March 2018 Growth of Non ‐ Retail Business by Revenue Retail Other Corporate 4% Finance Market Div. business 2% Market & Products 32% Retail Foreign equity, structured 57% bond, mutual fund, Japan Corporate & equity Institutional Sales 5% Profit by Business Segment* Joint securities High-net-worth business Platform business Other 13% Retail 31% New projects Market & Takagi Sec., Ace Sec. Products 56% ETERNAL, ANAM, MONEQUE * 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 Non ‐ Face ‐ Revenue share image High to ‐ Face General Wealth 2% (FYE Mar. 2018) 6% 19% 1. High ‐ net ‐ worth business Middle 40% Under 40 Wealth 2% Corporate 33% 40s 2% Over 80 4% 19% 50s 13% 2. Aging society Osaka Non ‐ Face ‐ 70s 60s (Western to ‐ Face 31% 29% Japan) 2% 12% Tokyo (Eastern 3. Tokai area Japan) 19% Other Japan 7% Equities Tokai 28% (Central Mutual Japan) Funds 67% 22% 4. Variety of Product Bonds 13% Foreign Equities 30% 15

Business Focus Growth of Market Division Trading Revenue （ Million Yen ） 30,000 20,000 1. Stable growth 10,000 0 FYE FYE FYE 1Q FYE Mar Mar Mar Mar 2016 2017 2018 2019 Other Foreign Bonds and Derivatives 2. Well-balanced by product Foreign Equities 30,000 Bond Trading Equity Trading 20,000 10,000 by client flow 0 FYE FYE 1Q FYE FYE Mar Mar Mar Mar & prop. trading 2017 2016 2018 2019 Fund Revenue （ Million Yen ） Position Revenue 30,000 Customer Revenue Flow 20,000 3. High profitability 10,000 0 FYE FYE FYE 1Q FYE -10,000 Mar Mar Mar Mar 2016 2017 2018 2019 16