1. September 16, 2004 Mahn Chey Sandra Chong Gerald Koh Jeong Min Lee Jun Kyu Lee Cynthia Morikone Team Presentation

2. 1 Contents  Overview  Business Model  Competitive Structure  Value Chain Analysis  SWOT Analysis  IT Use  Q&A

3. 2 E*TRADE FINANCIAL has emerged as a diversified financial services company. Overview Customers  Retail  Corporate  Institutional  Retail  Corporate  Institutional Products  Brokerage  Banking  Brokerage  Banking Channels  Web  ATMs  Financial Centers  Relationship Managers  Call Centers  Web  ATMs  Financial Centers  Relationship Managers  Call Centers  Website : www.etrade.comwww.etrade.com  Core strategy is to create value for customers and competitive advantage by utilizing technology primarily through electronic delivery channels  The third largest online brokerage and a leading site for active traders.  More than 4 million account holders trade stock through online services, the Internet and phone.  Power E*TRADE : $9.99 flat commissions and 9-second execution guarantee  The eighth largest OTS 1) -regulated financial institution.  The second largest domestic ATM network 1) OTS: Office of Thrift Supervision (U.S. Dept. of Treasury) Source: Yahoo! Financial, Hoover’s Online, E*TRADE website

4. 3 Building on its foundation in online brokerage, E*TRADE has expanded to provide an integrated financial services  1982 William Porter founded E*Trade, an electronic brokerage service for stockbrokers  1992 Established E*Trade Securities, which became one of the pioneers in electronic brokerages  1996 Began offering its services on the Internet with the launch of its website www.etrade.com  1996 IPO  1998 Began to position itself globally (Australia, Canada, Germany, Israel, Korea and Japan)  1999 Acquired Telebanc, an online bank with more than 100,000 depositors, and started E*TRADE Bank  2000 Acquired more than 4,000 ATMs from XtraCash ATM, Inc.  2001Began the consolidation, restructuring and exit of certain international brokerage operations  2002 Became E*TRADE Financial  2003 Progressing on its restructuring plan implementation Source: Yahoo! Financial, Hoover’s Online, E*TRADE website Overview – Brief History

5. 4 E*trade provides a wide array of financial services to retail, corporate, and institutional customers Business Model – Products and Services Retail Corporate Institutional Brokerage Bank  U.S. retail  International retail  Professional trading  U.S. retail  International retail  Professional trading  Stock plan administration  Options management  Stock plan administration  Options management  Institutional marketing making  Cross-border trading  Independent research  Institutional marketing making  Cross-border trading  Independent research E*TRADE Product and Service Offerings  Deposits (checking, savings)  Credit cards  Mortgages  Consumer finance  Insurance  ATM Network  Deposits (checking, savings)  Credit cards  Mortgages  Consumer finance  Insurance  ATM Network  Money management programs  Employee banking  Money management programs  Employee banking  Asset management  Investment portfolio  Correspondent mortgage  Asset management  Investment portfolio  Correspondent mortgage Source: E*TRADE 10-K, 10-Q SEC Filings, www.etrade.com

6. 5 Diversification drives revenue growth Business Model - Revenue Source: E*TRADE 10-K SEC Filings Unit: Million $ Net Revenues (2002) Gain on sales of loans held-for-sale and securities $867 Million (65.4%)$459 Million (34.6%) Other banking related revenues Other brokerage related revenue Principal transactions Commissions BrokerageBanking Net brokerage Interest income Gain on sales of originated loans Net banking interest income $ 52 Million U.S. retail brokerage $ 1,326 Million Revenue growth (1996-2002)

7. 6 Cost of services and operating expense are 43 % and 38% respectively as a percentage of revenue. Business Model - Cost Total net revenue Cost of services Selling and marketing Technology development General and administrative Operating expenses Operating income  Cost of services –Customer service, system maintenance and technology operation.  General and administrative expenses –Executive and administrative personnel, professional services and other corporate activities  Selling and marketing expenses –Expenditures for advertising placements, creative development and collateral materials  Technology development –Design and development expense to internally develop software to add substantial new functionality 503 Source: E*TRADE 10-K SEC Filings Cost of services and operating expenses (2002) ($ million)

8. 7 However, profitability has been low and was severely strained in the recent economic slowdown and fierce competition Source: E*TRADE 10-K SEC Filings, www.etrade.com ROE, % (1996 - 2002) Business Model - Profitability

9. 8 1996 Market Space Competitive Structure

10. 9 Current Market Space Competitive Structure

11. 10 Competitive Structure using Porter’s model Competitive Structure

12. 11 Value Chain Analysis  Target market & set risk criteria  Develop account strategy  Manage relationships/ cross sell  Define & price products  Setup & maintain account files  Process transactions  Calculate fees/interest  Process & maintain positions  Perform Credit analysis  Structure & negotiate transaction  Review & Extend credit  Develop investment strategy  Perform cash management  Perform customer service  Perform remittances  Prepare customer statements  Prepare deal confirmations  Perform collections  Perform asset recovery  Manage assets Banking Brokerage Procure Materials / Services Develop & Maintain Systems/Technology Manage Human Resources Planning/Management Environmental Corporate Services/Facilities Financials Legal External Relationships Market & Sell Process & Maintain Accounts Customer Service CollectOriginate & Monitor Credit Manage Investment Source: PriceWaterhouseCoopers Value Chain

13. 12 SWOT Analysis Threat  Customer’s service demand increase  Intense competition  High switching cost  Easily be commoditized  Customer’s service demand increase  Intense competition  High switching cost  Easily be commoditized Opportunities Strength Weakness  Hard to expand services that require human interaction  First mover & strong ecommerce brand  Strong IT background  Efficiency and scalability of its E-business model  Revenue diversification  Personalized and integrated online hub  First mover & strong ecommerce brand  Strong IT background  Efficiency and scalability of its E-business model  Revenue diversification  Personalized and integrated online hub  Economic recovery  Increasing number of internet users  High switching cost  Economic recovery  Increasing number of internet users  High switching cost SWOT

14. 13 Early Stage  IT Background: On-line brokerage services provider  Outstanding IT system –Reduced cost & commission  Attracted more frequent traders  IT Background: On-line brokerage services provider  Outstanding IT system –Reduced cost & commission  Attracted more frequent traders Today  Backbone of the company's strategy –Fully integrated financial operations –Digital Financial Media : wireless trading anytime, anywhere and from any device –Global cross-border trading network  Backbone of the company's strategy –Fully integrated financial operations –Digital Financial Media : wireless trading anytime, anywhere and from any device –Global cross-border trading network Leveraging IT and passing savings on to customers IT Use

15. 14 Thanks! Q & A