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Ken Oiwa, CFA * | Equity Analyst+813 5251 6126 | koiwa@jefferies.comHiroko Sato * | Equity Analyst813 5251 6185 | hsato@jefferies.com Company DescriptionSBI Sumishin Net BankSBI Sumishin Net Bank, Ltd. offers general banking services. The company provides transfer accounts, deposits, currency savings, mortgages, netloans, investment trusts, insurance products, and other banking services. SBI Sumishin Net Bank offers services to individuals and businesses.Company Valuation/RisksSBI Sumishin Net BankWe value SBI Sumishin Net Bank on a PBR basis. This is derived using Gordon Growth Model where the present value of a company is the sum offuture dividends. Target PBR = (ROE - g)/(COE-g). Risks inclde 1) decrease in deposit and loan growth; 2) SBI Holdings taking greater emphasis onSBI Shinsei Bank; 3) the shares probably reflect a recent takeover story, and if that does not happen, the share price could be adversely affected;and 4) competition fears from megabanks undercutting mortgage rates to gain market share.Analyst Certification:I, Ken Oiwa, CFA, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report.I, Hiroko Sato, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectcompany(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or viewsexpressed in this research report.Registration of non-US analysts:Ken Oiwa, CFA is employed by Jefferies (Japan) Limited, a non-US affiliate of Jefferies LLC and is not registered/qualifiedas a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore may not be subjectto the FINRA Rule 2241 and restrictions on communications with a subject company, public appearances and trading securities held by a research analyst.Registration of non-US analysts:Hiroko Sato is employed by Jefferies (Japan) Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified asa research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore may not be subjectto the FINRA Rule 2241 and restrictions on communications with a subject company, public appearances and trading securities held by a research analyst.As is the case with all Jefferies employees, the analyst(s) responsible for the coverage of the financial instruments discussed in this report receivescompensation based in part on the overall performance of the firm, including investment banking income. We seek to update our research as appropriate,but various regulations may prevent us from doing so. Aside from certain industry reports published on a periodic basis, the large majority of reports arepublished at irregular intervals as appropriate in the analyst's judgement.Investment Recommendation Record(Article 3(1)e and Article 7 of MAR)Recommendation PublishedRecommendation DistributedExplanation of Jefferies RatingsBuy - Describes securities that we expect to provide a total return (price appreciation plus yield) of 15% or more within a 12-month period.Hold - Describes securities that we expect to provide a total return (price appreciation plus yield) of plus 15% or minus 10% within a 12-month period.Underperform - Describes securities that we expect to provide a total return (price appreciation plus yield) of minus 10% or less within a 12-month period.The expected total return (price appreciation plus yield) for Buy rated securities with an average security price consistently below $10 is 20% or more withina 12-month period as these companies are typically more volatile than the overall stock market. For Hold rated securities with an average security priceconsistently below $10, the expected total return (price appreciation plus yield) is plus or minus 20% within a 12-month period. For Underperform ratedsecurities with an average security price consistently below $10, the expected total return (price appreciation plus yield) is minus 20% or less within a 12-month period.NR - The investment rating and price target have been temporarily suspended. Such suspensions are in compliance with applicable regulations and/orJefferies policies.CS - Coverage Suspended. Jefferies has suspended coverage of this company.NC - Not covered. Jefferies does not cover this company.Restricted - Describes issuers where, in conjunction with Jefferies engagement in certain transactions, company policy or applicable securities regulationsprohibit certain types of communications, including investment recommendations.Monitor - Describes securities whose company fundament