Daiwa Securities Group Inc. · TSE:8601

Daiwa Securities — Q2 FY2015 Earnings Presentation

34 slides from Daiwa Securities's earnings presentation, Oct 28, 2015

  1. Slide 1: 2Q FY2015 Earnings Announcement

    2Q FY2015 Earnings Announcement October 28, 2015 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  Segment Information 11～18  DIR Group, Daiwa Next Bank and Overseas Operation 19 Reference 20～33 2

  3. Slide 3: Highlights (1H / FY2015)

    Consolidated Highlights （1H / FY2015） ■ Ordinary income increased YoY against the backdrop of strong result achieved in 1Q FY2015  Net operating revenues: Y278.2 bil (+10.1% YoY), Ordinary income: Y98.5bil (+17.4% YoY), Profit attributable to owners of parent company: Y69.1 bil (-3.2% YoY)  1H FY2

  4. Slide 4: Summary (2Q / FY2015)

    Consolidated Summary （2Q / FY2015）  2Q FY2015 Net operating revenues: Y123.5 bil （-20.1% QoQ）  Net operating revenues decreased due to the market turmoil in the global financial market.  Global Investment Banking achieved growth in net operating revenues due to the increase in underwriting and M&

  5. Slide 5: Financial Summary

    Consolidated Financial Summary FY2015 % Change FY2014 FY2015 % Change (Y mil) vs vs FY2014 1Q 2Q 1Q/15 1H 1H 1Ｈ /14 Operating revenues 191,389 158,126 -17.4% 304,357 349,515 14.8% 659,396 Net operating revenues 154,663 123,579 -20.1% 252,654 278,242 10.1% 532,220 SG&A 95,574 91,281 -4.5% 177,053 186

  6. Slide 6: P/L Summary

    Consolidated P/L Summary FY2014 FY2015 % FY2014 FY2015 % (Y m il) Change Change FY2014 2Q 3Q 4Q 1Q 2Q vs 1Q/15 1H 1H vs 1H/14 Net operating revenues : Y123.5 bil (-20.1% QoQ） Operating revenues 155,656 179,583 175,454 191,389 158,126 -17.4% 304,357 349,515 14.8% 659,396  Commission received was Y76

  7. Slide 7: Breakdown of SG&A

    Consolidated Breakdown of SG&A % % FY2014 FY2015 FY2014 FY2015 Change Change （ Y mil） FY2014 SG&A : Y91.2 bil vs vs 2Q 3Q 4Q 1Q 2Q 1Q/15 1H 1H 1H/14 （-4.5% QoQ） SG&A 88,889 91,408 92,918 95,574 91,281 -4.5% 177,053 186,856 5.5% 361,380  Trading related expenses decreased to Y18.3 bil (-3.0% Trading

  8. Slide 8: Cost Structure

    Consolidated Cost Structure （Y bil） 100 95.5 92.9 FY2013 FY2014 FY2015 90.1 91.4 91.2 (Y bil) 88.8 86.9 87.2 88.1 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q 1Q-2Q Variable costs 80 Total SG&A 86.9 90.1 87.2 357.3 88.1 88.8 91.4 92.9 361.3 95.5 91.2 186.8 41.3 Variable costs 36.0 38.9 36.4 152.3 36.4 37.

  9. Slide 9: Balance Sheet

    Consolidated Balance Sheet Consolidated Balance Sheet （September 30, 2015） （Y bil） Current assets 22,625 (435) Current liabilities 19,671 (317) Cash and deposits 3,248 (262) Trading products 5,825 (-189) Total assets: Y23.18 tri Short-term investm ent securities 2,202 (-427) Trading securities and o

  10. Slide 10: Financial Management

    Consolidated Financial Management Consolidated Capital Adequacy Ratio （Basel Ⅲ） Total Qualifying Capital (Y 100mil) Tier1Capital （Y 100mil) Consolidated Total Capital Ratio Tier1Ratio 【Regulatory Capital (Basel III)】 12,387 (As at June 30, 2015) 11,598 12,117 11,921 11,137 10,804 11,125 10,410  Con

  11. Slide 11: Segment Information

    Segment Information Net operating revenues （ Y mil） FY2015 % Change FY2014 FY2015 % Change vs vs FY2014 1Q 2Q 1Q/15 1H 1H 1H/14 Retail 64,631 57,081 -11.7% 110,807 121,712 9.8% 232,033 Wholesale 57,174 38,468 -32.7% 85,977 95,642 11.2% 180,568 Global M arkets 47,546 28,670 -39.7% 66,335 76,216 14.9%

  12. Slide 12: Retail Division

    Retail Division % Change % Change Net operating revenues and ordinary income FY2015 FY2015 （ Y mil） vs vs 80 2Q 1Q/15 1H 1H/14 Equity Net operating revenues 57,081 -11.7% 121,712 9.8% Fixed income Ordinary income 17,942 -26.1% 42,206 19.8% 60 Distribution commission for investment trust Agency fee f

  13. Slide 13: Retail Division: Sales and distribution amount by product

    Retail Division Daiwa Securities Sales and distribution amount by product 【Stock Investment Trust】 1,600 Equity  The sales of stock investment trust which invest in Japan equity was steady owing to timely proposals which captured changes in SMA + Fund Wrap* 1,200 market environment. The total sales

  14. Slide 14: Wholesale Division Global Markets

    Wholesale Division Global Markets % Change % Change Net operating revenues and ordinary income FY2015 FY2015 （ Y mil） vs vs 2Q 1Q/15 1H 1H/14 60 Net operating revenues 28,670 -39.7% 76,216 14.9% Ordinary income 3,838 -82.5% 25,799 41.3% Equity FICC* 40 【Equity】 Others  Client flow decreased due to

  15. Slide 15: Wholesale Division Global Investment Banking

    Wholesale Division Global Investment Banking % Change % Change Net operating revenues and ordinary income FY2015 FY2015 （ Y mil） vs vs 2Q 1Q/15 1H 1H/14 12 Net operating revenues 9,798 1.8% 19,426 -1.1% Equity underwriting Ordinary income 1,749 -15.3% 3,816 -30.7% 10 Debt 【Equity】 underwriting 8  A

  16. Slide 16: Asset Management Division

    Asset Management Division % Change % Change Net operating revenues and ordinary income FY2015 FY2015 （ Y mil） vs vs 2Q 1Q/15 1H 1H/14 16 Net operating revenues 12,074 -22.0% 27,563 3.4% Ordinary income 7,536 -18.6% 16,797 4.6% Daiwa AM 12 Others 【Daiwa Asset Management】 Ordinary  Despite steady inc

  17. Slide 17: Asset Management Division Assets Under Management

    Asset Management Division Assets Under Management Daiwa Asset Management AUM （Investment Trusts） Daiwa Real Estate Asset Management AUM 15,000 Nippon 600 Stock 532 537 Healthcare investment Investment 479 477 trusts Corp. 455 430 10,000 Bond Daiwa 400 investment Residential trusts Private 5,000 Inve

  18. Slide 18: Investment Division

    Investment Division % Change % Change Net operating revenues and ordinary income FY2015 FY2015 （ Y mil） vs vs 2Q 1Q/15 1H 1H/14 Net operating 5 revenues 1,712 -59.6% 5,946 48.6% Ordinary income 1,168 -68.2% 4,840 48.2% Principal investment values 4 100 Net Private equity operating 3 and PIPEs revenu

  19. Slide 19: DIR Group, Daiwa Next Bank and Overseas Operation

    DIR Group, Daiwa Next Bank and Overseas Operation Ordinary Income FY2014 FY2015 % % DIR Group* Change FY2014 FY2015 Change （ Y mil） FY2014 vs 1H 1H vs  Ordinary income increased 2Q 3Q 4Q 1Q 2Q 1Q/15 1H/14 QoQ with the increase in orders received for regulation correspondence system DIR Group* 1,806

  20. Slide 20: Reference

    Reference

  21. Slide 21: Breakdown of commission

    Consolidated Breakdown of commission % % FY2014 FY2015 Change FY2014 FY2015 Change （ Y mil ） FY2014 vs 1H 1H vs 2Q 3Q 4Q 1Q 2Q 1Q/15 1H/14 Total commission 70,954 76,029 75,445 80,041 76,460 -4.5% 139,641 156,502 12.1% 291,115 Brokerage commission 16,585 20,010 19,271 21,035 18,417 -12.4% 30,668 39,

  22. Slide 22: Customer Assets, Deposit Balance & Accounts

    Daiwa Securities/Daiwa Next Bank Customer Assets, Deposit Balance & Accounts Daiwa Securities assets under custody Daiwa Next Bank Deposit balance & number of accounts （Y tri） （Y bil） （thousands） 60 Ordinary 3,500 1,500 Equity deposits Domestic bonds 50 3,000 Time deposits Foreign bonds 40 2,500 1,0

  23. Slide 23: 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 FY2015 FY2015 60 （ Y bil ） vs vs Equity 2Q 1H 1Q/15 1H/14 FICC* Equity 5.0 -70.6% 22.0 -12.0% 50 FICC* 32.0 -2

  24. Slide 24: Financial Summary I

    Daiwa Securities Financial Summary Ⅰ FY2014 FY2015 % Change % Change FY2014 FY2015 （ Y mil ） vs vs FY2014 2Q 3Q 4Q 1Q 2Q 1H 1H 1Q/15 1H/14 Operating revenues 95,484 101,344 100,775 112,934 88,119 -22.0% 184,539 201,053 8.9% 386,659 Commission received 46,919 49,556 49,186 53,512 49,384 -7.7% 91,823

  25. Slide 25: Financial Summary II

    Daiwa Securities Financial Summary Ⅱ FY2014 FY2015 % Change % Change FY2014 FY2015 （ Y mil） vs 1H 1H vs FY2014 2Q 3Q 4Q 1Q 2Q 1Q/15 1H/14 SG&A 57,363 58,767 58,512 59,990 58,647 -2.2% 112,722 118,637 5.2% 230,001 Trading related 8,708 9,703 9,576 9,695 10,331 6.6% 17,314 20,026 15.7% 36,594 expenses

  26. Slide 26: Balance Sheet

    Daiwa Securities Balance Sheet Balance Sheet （September 30, 2015） （Y bil） Current assets 12,358 (389) Current liabilities 10,559 (262) Trading products 5,810 (-74) Trading products 4,516 (190) Trading securities and other 2,909 (155) Trading securities and other 2,119 (442) Derivatives 2,900 (-230)

  27. Slide 27: Number of accounts and Equity trading

    Daiwa Securities Number of accounts and Equity trading FY2013 FY2014 FY2015 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Cash Management Service accounts (thousands) 3,546 3,577 3,603 3,614 3,642 3,680 3,719 3,747 3,778 Accounts with balance (thousands) 2,792 2,794 2,825 2,839 2,857 2,877 2,910 2,926 2,948 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 Corporation Net inflow of cash Individual New inflow of securities 200 200 100 100 0 0 -100 -100 -200 -200 FY2013 FY2014 FY2015

  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 accounts sales and contract AUM 750 30% 250 1,500 Sales amount (left) Sales amount (left) Net increase ratio (right) Contract assets under 600 200 management (right) 1,20

  30. Slide 30: League Table

    Daiwa Securities League Table Primary and Straigh t bonds Samurai bonds M&A sec on dary e qu ity IPO (e xcl. family Agency bonds Mu nicipal bonds (excl. family (Number of offerin gs bon ds) bonds) deals) 2Q FY2 015 Le ague Table Nomura Daiwa Nomura Mitsu bish i UFJMS Daiwa Mitsu bish i UFJMS 1 st SM

  31. Slide 31: Financial Summary: Daiwa Asset Management

    Daiwa Asset Management Financial Summary FY2014 FY2015 % Change FY2014 FY2015 % Change （ Y mil ） vs vs FY2014 2Q 3Q 4Q 1Q 2Q 1Q/15 1H 1H 1H/14 Operating revenues 22,667 23,585 23,778 24,129 23,020 -4.6% 44,494 47,150 6.0% 91,858 Management fee 22,382 23,348 23,553 23,899 22,814 -4.5% 44,022 46,714 6

  32. Slide 32: 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 FY2013 FY2014 FY2015 (Y bil) 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q VaR （Quarter end） 1.30 1.41 1.48 1.29 2.00 2.07 2.32 1.74 1.53 High 2.95 2.47

  33. Slide 33: Number of Group Employees

    Consolidated Number of Group Employees FY2013 FY2014 FY2015 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Total 14,627 14,533 14,426 14,918 14,827 14,792 14,757 15,301 15,209 Overseas 1,718 1,680 1,676 1,650 1,656 1,627 1,636 1,617 1,611  Number of employees as at end of each quarter. ※ Total figures are the sum of c

  34. Slide 34: Daiwa Securities Group Inc.

    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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