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MESSAGE FROM THE PRESIDENT & CEO

We remain committed to full disclosure of our information in order to strengthen the relationship and trust with our clients and business partners. We produced this Annual Report 2016/ Corporate Profile 2017 to inform you of our business results, financial status, and bus.


Kunihiro Mita President & CEO MITA SECURITIES Co., Ltd.

Kunihiro Mita
President & CEO
MITA SECURITIES Co., Ltd.

During the preceding fiscal year, UK decided to leave the European Union following the June referendum vote, and Mr. Donald Trump won the US presidential election in November. These incidents were surely huge surprises. The stock prices fell and JPY appreciated in the stock market and the foreign exchange market respectively due to Brexit, and these were followed by rises in the stock price and JPY depreciation after the Mr. Trump’s victory in autumn. The Japanese market was kept swayed by these external factors. Moreover, FRB raised its key interest rate in March for the first time in one year. It was the message to end the super easy monetary policy implemented since Lehman Crisis, and the long-lasting bull bond market finally showing a sign of market reversal.
In such environment, we achieved the best business result in the last 20 years thanks mostly to the strong proprietary trading business. Among this, we had an outstanding performance for trade of the stock purchase warrant, and the dealing business was also in good condition. The bond trading business which started from the last fiscal year was also going smoothly. Based on the above, the profit of our proprietary trading business doubled compared with the previous year. Since the criminal charges of conducting fraudulent means with regard to the medical accounts receivable securitized bonds with a number of victims defrauded by those fraudulent companies came to light, the number of unscrupulous or illegal business players decreased. After that, our purchase business of medical accounts receivable securitized bonds (factoring), for which our customers were once taken away by those unprincipled companies, has recovered. As for our TOB agent services, we served 4 TOB deals as their TOB agent, and this has totaled up to 19 deals since our start with this service. In addition, while we are the only one Japanese financial institution which provides US mortgage loan services, we securitized some of our loans and formed JPY-denominated collateral securities backed by loans (CLO - Collateralized Loan Obligation) three times last year. With the current negative interest rate policy in Japan, we are grateful that we could make our clients happy with this high yield JPY bonds. As for the real estate services, we launched the No.2 Kyomachiya (townhouses in Kyoto) Reconstruction Fund utilizing Real Estate Specified Joint Enterprise Act. We renovated and tried to raise the value of Kyomachiya in Kyoto in order to maintain the traditional views of Kyoto which is a worldwide sightseeing city, and this project was highly supported by our investors from the standpoint of SRI (Socially Responsible Investment). The above-mentioned CLO and Kyomachiya Reconstruction Fund are our unique financial products, and we continuously aim to provide these types of products for our clients.
As the result of our business activities, our net operating income exceeded JPY 4 billion, and the ordinary profit was JPY 1.42 billion, and the net income reached JPY 860 million.
The brokerage commissions were deregulated in 1998, and the price competition for the brokerage commissions got accelerated in the security industry. At that time, most of our income came from the brokerage commissions, so that we made a quick move to shift our business models and have embarked various new services since then. As a result, we were successful in creating diversified and unique services and financial products, and the diversification of income sources has contributed to our stable financial results. It is inevitable for us to have the courage and the commitment in order to try new things, and we cannot help consuming huge amount of energy for that. However, it also makes us feel grateful when we could reach our clients’ needs. We can come up with new services or ideas of products when we listen to our clients’ talks. We keep standing firm in thorough bottom-up approach and continue exciting challenges.
We are deeply thankful for our customers. We wouldn’t have been able to keep running until today without our customers’ warm supports. We would like to express our deep appreciation to our clients and business partners, and we look forward to your continued patronage and support for us in the future.

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