Daiwa Securities Group Inc. · TSE:8601

Daiwa Securities — Q1 FY2016 Earnings Presentation

35 slides from Daiwa Securities's earnings presentation, Jul 27, 2016

  1. Slide 1: 1Q FY2016 Earnings Announcement

    1Q FY2016 Earnings Announcement July 27, 2016 Daiwa Securities Group Inc.

  2. Slide 2: Table of Contents

    Table of Contents Consolidated Results  Summary 3～6  Breakdown of SG&A 7～8  Balance Sheet 9  Financial Management 10  Overseas Operation 11  Segment Information 12～19 Reference 20～34 2

  3. Slide 3: Highlights (1Q / FY2016)

    Consolidated Highlights （1Q / FY2016） ■Both net operating revenues and ordinary income decreased YoY, but increased QoQ.  Net operating revenues: Y114.0 bil (-26.3% YoY, +2.0% QoQ)  Ordinary income: Y32.5 bil (-48.4% YoY, +13.7% QoQ)  Profit attributable to owners of parent company: Y24.5 bil (-4

  4. Slide 4: Summary (1Q / FY2016)

    Consolidated Summary （1Q / FY2016）  1Q FY2016 Net operating revenues: Y114.0 bil （+2.0% QoQ）  Revenues for Retail Division recorded small increase as individual investors continued to be in risk-off mode, while revenues for Wholesale Division delivered strong profit, led by FICC trading in Global

  5. Slide 5: Financial Summary

    Consolidated Financial Summary FY2015 FY2016 % Change FY2015 % Change (Y mil) vs vs FY2015 4Q 1Q 4Q/FY15 1Q 1Q/FY15 Operating revenues 150,579 151,859 0.9% 191,389 -20.7% 653,711 Net operating revenues 111,772 114,049 2.0% 154,663 -26.3% 514,815 SG&A 88,329 86,029 -2.6% 95,574 -10.0% 364,517 Ordinar

  6. Slide 6: P/L Summary

    Consolidated P/L Summary F Y2015 F Y2016 % Change % Change (Y m il) vs vs F Y2015 Net operating revenues : Y114.0 bil 1Q 2Q 3Q 4Q 1Ｑ 4Q/FY15 1Q/FY15 (+2.0% QoQ） Operating revenues 191,389 158,126 153,616 150,579 151,859 0.9% -20.7% 653,711  Commission received was Y61.6 bil Com m ision received 80,

  7. Slide 7: Breakdown of SG&A

    Consolidated Breakdown of SG&A % % FY2015 FY2016 Change Change （ Y mil） FY2015 SG&A : Y86.0 bil vs vs 1Q 2Q 3Q 4Q 1Q 4Q/FY15 1Q/FY15 （-2.6% QoQ） SG&A 95,574 91,281 89,331 88,329 86,029 -2.6% -10.0% 364,517  Trading related expenses was Y16.3 bil (-5.6% QoQ) as advertising expenses decreased. Tradin

  8. Slide 8: Cost Structure

    Consolidated Cost Structure （Y bil） 100 95.5 92.9 FY2014 FY2015 FY2016 91.4 91.2 89.3 (Y bil) 88.1 88.8 88.3 1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q 1Q 86.0 Total SG&A 88.1 88.8 91.4 92.9 361.3 95.5 91.2 89.3 88.3 364.5 86.0 80 Variable costs 41.3 Variable costs 36.4 37.1 38.9 39.7 152.2 41.3 37.4 35.8

  9. Slide 9: Balance Sheet

    Consolidated Balance Sheet Consolidated Balance Sheet （June 30, 2016） （Y bil） Current assets 20,877 (1,026) Current liabilities 17,863 (1,035) Total assets: Y21.4 tri Cash and deposits 3,533 (199) Trading products 5,341 (40) Short-term investm ent securities 2,033 (-57) Trading securities and other

  10. Slide 10: Financial Management (Regulatory Capital & Regulatory Liquidity)

    Consolidated Financial Management (Regulatory Capital & Regulatory Liquidity) Consolidated Capital Adequacy Ratio Total Qualifying Capital (Y bil) Common Equity Tier 1 (Y bil) Consolidated Total Capital Ratio Consolidated Common Equity Tier 1 Capital Ratio 1,238 【Regulatory Capital (Basel III)】 1,21

  11. Slide 11: Overseas Operation

    Consolidated Overseas Operation % % FY2015 FY2016 Change Change （Y m i l ） FY2015 Overseas Operation vs vs 1Q 2Q 3Q 4Q 1Q 4Q/FY15 1Q/FY15 Total : Y 1.3 bil Overseas operation 196 -692 -3,474 -714 1,366 - 595.1% -4,684 Total  Overseas operation total turned into the black for the first time Europe -

  12. Slide 12: Segment Information

    Segment Information Net operat ing rev enues FY2015 FY2016 % Change % Change （ Y mil ） vs vs FY2015 1Q 2Q 3Q 4Q 1Q 4Q/FY15 1Q/FY15 Retail 64,631 57,081 51,839 44,371 45,013 1.4% -30.4% 217,922 Wholesale 57,174 38,468 38,663 43,709 43,427 -0.6% -24.0% 178,014 Global M arkets 47,546 28,670 30,670 35,8

  13. Slide 13: Retail Division

    Retail Division % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs vs FY2015 1Q Equity 75 4Q/FY15 1Q/FY15 Net operating revenues 45,013 1.4% -30.4% 217,922 Fixed income Ordinary income 6,566 23.2% -72.9% 61,080 50 Distribution commission for investment trust Agency fee f

  14. Slide 14: Retail Division: Sales and distribution by product

    Retail Division Daiwa Securities Sales and distribution amount by product 【Stock Investment Trusts】  Sales of investment trusts slightly increased QoQ. Funds investing 1,600 in Fin-tech related companies and REIT (domestic/international) Equity were most popular as the proposals well captured chang

  15. Slide 15: Wholesale Division Global Markets

    Wholesale Division Global Markets % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs vs FY2015 1Q 4Q/FY15 1Q/FY15 60 Net operating revenues 36,028 0.6% -24.2% 142,695 Ordinary income 14,100 4.1% -35.8% 46,057 Equity 40 FICC* Others 【Equity】  Equity revenues decreased by

  16. Slide 16: Wholesale Division Global Investment Banking

    Wholesale Division Global Investment Banking % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs vs FY2015 1Q 4Q/FY15 1Q/FY15 12 Equity Net operating underwriting revenues 7,398 -6.3% -23.2% 35,318 10 Ordinary income 798 - -61.4% 2,821 Debt underwriting 【Equity】 8 M&A / o

  17. Slide 17: Asset Management Division

    Asset Management Division % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs vs FY2015 1Q 16 4Q/FY15 1Q/FY15 Net operating revenues 11,623 5.3% -25.0% 50,528 Daiwa AM Ordinary income 6,748 12.6% -27.1% 29,990 Others 12 Ordinary income 【Daiwa Asset Management】  Ordinary

  18. Slide 18: Asset Management Division Assets Under Management

    Asset Management Division Assets Under Management Daiwa Asset Management AUM （Investment Trusts） Daiwa AM & Daiwa SB Net Asset Inflow (Stock Investment Trusts, excl. ETF) 1,500 15,000 1,271 Stock investment 1,093 trusts Daiwa SB 1,010 1,200 10,000 Investments Bond investment 768 900 trusts 5,000 Dai

  19. Slide 19: Investment Division

    Investment Division % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs vs FY2015 15 1Q 4Q/FY15 1Q/FY15 Net operating revenues 4,956 328.5% 17.0% 19,730 Ordinary income 4,624 698.3% 25.9% 17,397 12 Principal investment values Net operating revenues 100 Private equity 9 an

  20. Slide 20: Reference

    Reference

  21. Slide 21: Breakdown of commission

    Consolidated Breakdown of commission FY2015 FY2016 % Change % Change （ Y mil ） vs vs FY2015 1Q 2Q 3Q 4Q 1Q 4Q/FY15 1Q/FY15 Total commission 80,041 76,460 69,215 62,701 61,693 -1.6% -22.9% 288,418 Brokerage commission 21,035 18,417 15,922 14,950 13,888 -7.1% -34.0% 70,325 Underwriting commission 9,03

  22. Slide 22: Equity & FICC Income: Consolidated Trading Gain/Loss

    Daiwa Securities/Overseas Equity & FICC Income: Consolidated Trading Gain/Loss Consolidated trading gain / loss 【Managerial accounting basis】 (Managerial accounting basis) % Change % Change FY2016 60 （ Y bil ） vs vs FY2015 1Q 4Q/FY15 1Q/FY15 Equity Equity 5.0 -28.6% -70.6% 38.0 FICC* 50 FICC* 36.0 9

  23. Slide 23: Financial Summary Ⅰ (Daiwa Securities)

    Daiwa Securities Financial Summary Ⅰ FY2015 FY2016 % Change % Change （ Y mil ） vs vs FY2015 1Q 2Q 3Q 4Q 1Q 4Q/FY15 1Q/FY15 Operating revenues 112,934 88,119 86,225 81,878 81,872 0.0% -27.5% 369,158 Commission received 53,512 49,384 45,103 39,290 40,345 2.7% -24.6% 187,290 Brokerage commission 15,512

  24. Slide 24: Financial Summary Ⅱ (Daiwa Securities)

    Daiwa Securities Financial Summary Ⅱ FY2015 FY2016 % Change % Change （ Y mil） vs vs FY2015 1Q 2Q 3Q 4Q 1Q 4Q/FY15 1Q/FY15 SG&A 59,990 58,647 57,091 57,951 56,386 -2.7% -6.0% 233,680 Trading related expenses 9,695 10,331 10,364 10,655 9,307 -12.6% -4.0% 41,046 Personnel expenses 27,895 25,252 24,337

  25. Slide 25: Balance Sheet (Daiwa Securities)

    Daiwa Securities Balance Sheet Balance Sheet （June 30, 2016） （Y bil） Current assets 12,156 (1,736) Current liabilities 10,236 (1,675) Trading products 7,368 (1,988) Trading products 4,391 (281) Trading securities and other 3,396 (1,505) Trading securities and other 870 (-254) Derivatives 3,971 (482)

  26. Slide 26: Assets under Custody

    Daiwa Securities Assets under Custody Equity 60 Domestic bonds 50 Foreign bonds 40 Stock investment trusts 30 Bond investment trusts 20 Foreign investment trusts Others 10 0 FY2014 FY2015 FY2016 （Y tri） 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Equity 28.4 29.5 30.6 32.5 34.2 31.0 33.0 30.1 28.8 Domestic bonds 8.1

  27. Slide 27: Number of accounts and Equity trading

    Daiwa Securities Number of accounts and Equity trading FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Cash Management Service accounts (thousands) 3,614 3,642 3,680 3,719 3,747 3,778 3,808 3,821 3,833 Accounts with balance (thousands) 2,839 2,857 2,877 2,910 2,926 2,948 2,961 2,973 2,973 Accounts h

  28. Slide 28: Net Inflow of Assets

    Daiwa Securities Net Inflow of Assets Retail Division (Daiwa Securities) Net inflow of assets Retail Division (Daiwa Securities) Net inflow of assets (individuals) 300 300 Net inflow of cash Corporation New inflow of securities Individual 250 200 200 150 100 100 50 0 0 ‐50 FY2014 FY2015 FY2016 FY201

  29. Slide 29: Stock Investment Trusts & Wrap Accounts

    Daiwa Securities Stock Investment Trusts & Wrap Accounts Retail Division (Daiwa Securities) Sales of stock investment trusts Wrap account contract and contract AUM 750 30% 300 2,000 Sales amount (left) Contract amount (left) Contract assets under management (right) Net increase ratio (right) 600 240

  30. Slide 30: League Table

    Daiwa Securities League Table Primary an d Straight bon ds Samurai bon ds M&A sec on dary e qu ity IPO (excl. family Agency bonds Municipal bon ds (e xcl. family (Nu mber of offerin gs bonds) bonds) deals) 1Q FY2016 League Table Ban k of America Daiwa Mizu ho Mitsubishi UFJMS Daiwa Daiwa Me rrill Ly

  31. Slide 31: Financial Summary (Daiwa Asset Management)

    Daiwa Asset Management Financial Summary FY2015 FY2016 % Change % Change （ Y mil ） vs vs FY2015 1Q 2Q 3Q 4Q 1Q 4Q/FY15 1Q/FY15 Operating revenues 24,129 23,020 22,175 20,324 20,132 -0.9% -16.6% 89,650 Management fee 23,899 22,814 21,982 20,154 19,950 -1.0% -16.5% 88,850 Stock investment trust 23,805

  32. Slide 32: Earnings and Deposit Balance (Daiwa Next Bank)

    Daiwa Next Bank Earnings and Deposit Balance Gross Profits / Ordinary Income Daiwa Next Bank Deposit balance & number of accounts （Y bil） （thousands） 24 3,500 1,500 Gross Profits (YTD) Gross Profits (QTD) Ordinary Ordinary income (YTD) Ordinary income (QTD) deposits 3,000 21 2,500 Time 1,000 18 depo

  33. Slide 33: Value at Risk

    Consolidated Value at Risk Range and assumption of VaR  Confidence level：99% (one-side test)  Holding period：1 day  Adjusted for price correlation between product FY2014 FY2015 FY2016 (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q VaR （Quarter end） 1.29 2.00 2.07 2.32 1.74 1.53 1.25 1.55 1.01 High 1.94 2.30

  34. Slide 34: Number of Group Employees

    Consolidated Number of Group Employees FY2014 FY2015 FY2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Total 14,918 14,827 14,792 14,757 15,301 15,209 15,179 15,028 15,637 Overseas 1,650 1,656 1,627 1,636 1,617 1,611 1,603 1,566 1,592  Number of employees as at end of each quarter. ※ Total figures are the sum of c

  35. Slide 35: Daiwa Securities Group Inc. Investor Relations

    Contact Daiwa Securities Group Inc. Investor Relations TEL: +81-3-5555-1300 FAX: +81-3-5555-0661 E-mail: ir-section@daiwa.co.jp URL: http://www.daiwa-grp.jp/ir/english/

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