SBIH Group Financial Results Financial Results SBIH Group for the Nine Nine- -month Period Ended Dec. 31, 2008 month Period Ended Dec. 31, 2008 for the (Fiscal Year Ending March 31, 2009 9) ) (Fiscal Year Ending March 31, 200 January 29 9, 2009 , 2009 January 2
The items in this document are provided as information related to the business strategy of SBIH Group companies and not as an invitation to invest in the stock or securities issued by each company. None of the Group companies guarantees the completeness of this document in terms of information and future business strategy. The content of this document is subject to revision or cancellation without warning. Note: Fiscal Year (“FY”) ends March 31 of the following year 1
1. Consolidated Financial Performance 1. Consolidated Financial Performance 2
FY2008/3Q (Apr 8/3Q (Apr- -Dec) Dec) Consolidated Consolidated Performance Performance FY200 (Unit: million yen) YoY Change FY2007/3Q(9M) FY2008/3Q(9M) (%) (Apr.-Dec. 2007) (Apr.-Dec. 2008) Operating 170,113 101,172 -40.5 Revenues Operating 32,892 5,147 -84.4 Income Ordinary 28,000 1,730 -93.8 Income Income Before － 30,614 -10,084 Income Taxes － 10,523 -11,847 Net Income 3
Highlights of Consolidated Financial Performance Highlights of Consolidated Financial Performance (1) All major business units* recorded Operating Income in the first three quarters despite challenging market conditions ・ Number of IPOs in Japan: Down from 78 during FY07 1Q-3Q to 28 during FY08 1Q-3Q ・ Nikkei Average: Down 29.3% from 12,525.54 yen at end of March 2008 to 8,859.56 yen at end of December 2008 ・ Retail brokerage trading value: Down 30.4% from FY07 1Q-3Q to FY08 1Q-3Q *Asset Management, Brokerage and Investment Banking, Financial Services, and Housing and Real Estate (2) Net loss for 3Q (Oct-Dec) was due primarily to 9.8 billion yen securities valuation losses: ・ Total of 8.3 billion yen of securities valuation losses, including 2.3 billion yen in operating expenses (1.4 billion yen for VSN, etc.) and 5.9 billion yen in extraordinary losses (5.5 billion yen for Sumitomo Trust & Banking, etc.) ・ Also recorded extraordinary loss of 1.5 billion yen for valuation loss on real estate used as collateral (allowance for doubtful accounts) for 11.3 billion yen loan to ZEPHYR ・ The above losses are valuation charges that did not involve a cash outflow (3) The SBIH Group maintains a sound financial position ・ Cash and cash equivalents (on consolidated cash flow statement) increased from 129.5 billion yen at the end of December 2007 to 185.4 billion yen at the end of December 2008 (4) Expect some new businesses to quickly become profitable ・ SBI Liquidity Market, which started operations on Nov. 17, 2008, expects to contribute about 2.8 to 3.3 billion yen (before SG&A expenses) to consolidated earnings in FY08 ・ SBI Sumishin Net Bank, which had deposits of 550 billion yen at the end of December 2008, expects to become profitable in FY09 4
Adverse Effect of the Financial Meltdown Adverse Effect of the Financial Meltdown on the Consolidated Performance on the Consolidated Performance Change in end-of-period Nikkei Average and individual stock brokerage trading value on a quarter basis (yen) (100 million yen) 19,000 700,000 18,138.36 Individual stock trading value (right scale) Nikkei Average (left scale) 16,785.69 650,000 （ Nikkei Average ） 17,000 End. FY08/2Q → End. FY08/3Q 15,307.78 - 21.3% 600,000 15,000 13,481.38 550,000 12,525.54 13,000 11,259.86 500,000 11,000 （ Nikkei Average ） 450,000 8,859.56 End. FY07/4Q → End. FY08/3Q 9,000 - 29.3% 400,000 （ Individual stock trading value ） 7,000 FY07/3Q(9M) → FY08/3Q(9M) 350,000 - 30.4 ％ 5,000 300,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q Year 2007 Year 2008 5
Quarterly Operating Income by Segments Quarterly Operating Income by Segments (Unit: million yen) FY2008 3Q 1Q 2Q From 1Q to 3Q (Apr.-Jun. 2008) (Jul.-Sept. 2008) (Apr.-Dec. 2008) (Oct.-Dec. 2008) *1 331 2,193 -517 2,007 Asset Management *2 *2 Brokerage and 3,389 1,265 233 4,888 Investment Banking 372 382 358 1,114 Financial Services Housing and Real 850 498 103 1,453 Estate -104 -137 98 -143 System Solution *1 Recorded 2.3 bil yen of valuation losses on portfolio securities (1.4 bil yen for VSN, etc.) *2 Includes amortization of goodwill corresponding to making SBI SECURITIES a wholly owned subsidiary 6 （ 2Q: 698 mil. yen 3Q:1,047mil. yen ）
Comparison of Operating Income by Segment Comparison of Operating Income by Segment Asset Management Brokerage & Investment Banking FY2008 / 3Q(9M) Financial Services (Unit: billion yen) Operating Income Housing and Real Estate System Solution Eliminations for consolidation and corporate expenses 5.1 -4.2 1.5 2.0 4.9 （ -81.1% ） (39.0%) (95.0%) （ 28.2% ） 1.1 -0.1 （ 21.6% ） （ -2.8% ） -5 -4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 *Amounts are rounded to the nearest 100 million yen. Eliminations for Consolidation: 0.9 billion yen Corporate Expenses: 3.3 billion yen ( 1,080 mil. yen of personnel cost, 360 mil. yen of rent account, commission paid, and others) 7
Securities Valuation Losses in Third Quarter (Oct- -Dec) Dec) Securities Valuation Losses in Third Quarter (Oct Valuation losses in operating expenses and extraordinary losses: 8,301 mil yen (Unit: million yen) Valuation losses on portfolio securities ・・ Recorded as operating expenses SBI Capital holds 24.89% of VSN stock through its SBI Value Up Fund No. 1 (Marked down because market price at end of Dec 1,452 VSN ’08 was less than 954 yen, half the book value per share of 1,907 yen. Closing price on Jan 27 ’09 was 1,000 yen.) 359 mil yen for Fleg International (declared bankruptcy), 887 Others 155 mil yen due to insolvency of Singapore-listed company in New Horizon Fund, and others 2,339 Total Valuation losses on investment securities ・・・ Recorded as extraordinary losses SBIH Group has cross-shareholdings with Sumitomo Trust & Sumitomo Trust 5,539 Banking, which operates SBI Sumishin Net Bank with the SBIH & Banking Group 358 mil yen (for stock purchased to acquire intellectual property) 422 Others for ODC Therapy, an alliance partner of SBI Biotech 5,962 Total Loss on real estate collateral for 11.3 billion yen loan to ZEPHYR (allowance for doubtful accounts, extraordinary losses): 1,579 million yen 8
Bonds to be Redeemed (SBI SECURITIES) Bonds to be Redeemed (SBI SECURITIES) Bonds of SBI SECURITIES to be redeemed during this fiscal year Amount (100 mil. yen) Redemption period Unsecured Straight Bond 500.0 Mar. 2009 SBI SECURITIES * Cash and deposits (non-consolidated, as of the end of Dec. 2008) of SBI Holdings (consolidated) Cash and deposits*: 131.4 billion yen ： 185.2 billion yen SBI SECURITIES’ cash and deposits (non-consolidated) 131.4 End Dec. 2008 End Mar. 2008 79.6 35.4 End Mar. 2007 0 20 40 60 80 100 120 140 (billion yen) 9 * Cash and cash equivalents on Balance Sheet
Bonds to be Redeemed (SBI Holdings) Bonds to be Redeemed (SBI Holdings) Bonds of SBIH to be redeemed during next fiscal year (FY2009) Amount Redemption period (100 mil. yen) Yen-denominated CB * 127.7 Apr. 2009 (maturing in 2009) 300.0 Sept. 2009 Unsecured Straight Bond Total 427.7 * Amount of bonds yet to be converted as of the end of Dec. 2008 Preparing to set Euro Medium Term Note (Euro Preparing to set Euro Medium Term Note (Euro MTN) Program to diversify financing method and MTN) Program to meet upcoming capital demand including the bond redemption above. 10
Characteristics of SBIH SBIH’ ’s s Characteristics of Consolidated Balance Sheet (1) Consolidated Balance Sheet (1) The consolidated balance sheet is larger than normal in relation to the group’s scale of operations because it includes deposits and other assets in customer accounts at subsidiary SBI SECURITIES. Posted as both Current Assets Current Liabilities assets and liabilities Margin transaction assets, Margin transaction liabilities, Corresponding Deposits Customers’ security deposits Total of 479.5 bil. yen Total of 353.5 bil. yen The difference is mainly margin transaction loans using SBI SECURITIES’ own funds; normally, these margin transactions can be financed by margin loans of securities finance companies, etc. Current assets (cash) increases even more if loans from securities finance companies are used for the margin transaction loans for all customers. 11
Characteristics of SBIH SBIH’ ’s s Characteristics of Consolidated Balance Sheet (2) Consolidated Balance Sheet (2) • Eliminated all asset and liability items associated （ Unit: billion yen) solely with the securities company • Assumed that securities finance companies are used for all customer margin transaction loans, and then added the difference between these assets and liabilities to current assets Same result as deducting an amount equal to all liability accounts from current assets Liabilities, Assets and current liabilities etc. 1,197.8 771.9 Liabilities, Assets etc. 844.3 418.4 Net Assets Net Assets 425.9 425.9 12
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