Daiwa Securities Group Inc. · TSE:8601

Daiwa Securities — Q3 FY2019 Earnings Presentation

36 slides from Daiwa Securities's earnings presentation, Jan 31, 2020

  1. Slide 1: 3Q FY2019 Earnings Announcement

    Daiwa Securities Group Inc. 3Q FY2019 Earnings Announcement January 31, 2020 This presentation may contain forward-looking statements about the Daiwa Securities Group. You can identify these statements by the fact that they do not relate strictly to historic or current facts. These statements discus

  2. Slide 2: Table of Contents

    Table of Contents Highlights 3-4 Financial Summary 5-7 B/S & Financial Management Summary 8-9 P/L Summary 10 Breakdown of SG&A 11-12 Overseas Operations 13 Segment Information 14-21 Reference 22-35 2

  3. Slide 3: Highlights (1Q-3Q/FY2019, YoY)

    Highlights (1Q-3Q/FY2019, YoY) Both Net operating revenues and Ordinary income decreased YoY. % Changes vs % Changes vs Consolidated earnings results FY2019 1Q-3Q 1Q-3Q/FY2018 FY2019 3Q 2Q/FY2019 Net operating revenues ¥315.6 bn -5.4% ¥112.1 bn +16.5% Ordinary income ¥50.0 bn -23.6% ¥22.2 bn +125.5%

  4. Slide 4: Summary (3Q/FY2019, QoQ)

    Summary (3Q/FY2019, QoQ) ※The following shows the percentage change from the previous quarter. 3Q FY2019 Net operating revenues: ¥112.1 bn (+16.5%)  Revenues in Retail Division increased. In addition to an increase in Japanese equity transaction, contract amount of wrap account service and sales of

  5. Slide 5: Financial Summary

    Consolidated Financial Summary FY2018 FY2019 % Change % Change FY2018 FY2019 % Change (¥ Millions) vs vs vs FY2018 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q 1Q-3Q/FY18 Operating revenues 188,753 184,086 181,341 159,666 170,672 6.9% -9.6% 536,499 511,680 -4.6% 720,586 Net operating revenues 110,302

  6. Slide 6: Segment Summary

    Consolidated Segment Summary (¥ Millions) FY2018 FY2019 % Change % Change FY2018 FY2019 % Change Net operating revenues vs vs vs FY2018 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q 1Q-3Q/FY18 Retail 46,388 41,552 43,095 40,763 41,322 1.4% -10.9% 144,313 125,182 -13.3% 185,865 Wholesale 37,092 42,618 3

  7. Slide 7: Segment Summary

    Consolidated Segment Summary Net operating revenues Ordinary income Retail Division Wholesale Division (¥ Billions) (¥ Billions) Global Markets (Net operating revenues) 59.5 54.5 Global Investment Banking (Net operating revenues) 50.6 48.6 47.3 45.7 47.1 46.3 43.0 42.6 41.5 40.7 41.3 39.7 39.3 39.4

  8. Slide 8: B/S Summary

    Consolidated B/S Summary Consolidated Balance Sheet （December 31, 2019） (¥ Billions) Current assets 23,454 (3,048) Current liabilities 20,498 (3,416) Cash and deposits 4,307 (154) Trading products 4,894 (147) Total assets: ¥24.40 tn Short-term investment securities 899 (86) Trading securities and ot

  9. Slide 9: Financial Management (Regulatory Capital & Regulatory Liquidity)

    Consolidated Financial Management (Regulatory Capital & Regulatory Liquidity) Consolidated Capital Adequacy Ratio Total qualifying capital (¥ billions) Common equity tier 1 (¥ billions) 【Regulatory Capital (Basel III)】 Consolidated total capital ratio Consolidated common equity tier 1 capital ratio

  10. Slide 10: P/L Summary

    Consolidated P/L Summary % % FY2018 FY2019 Change Change FY2018 FY2019 % Change  Commission received increased (¥ Millions) vs FY2018 vs vs (+5.6%). 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q 1Q-3Q/FY18 Operating revenues 188,753 184,086 181,341 159,666 170,672 6.9% -9.6% 536,499 511,680 -4.6% 720,

  11. Slide 11: Breakdown of SG&A

    Consolidated Breakdown of SG&A % % FY2018 FY2019 Change Change FY2018 FY2019 % Change (¥ Millions) vs vs vs FY2018  SG&A increased (+3.8%). 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q 1Q-3Q/FY18  Trading related expenses increased SG&A 94,117 94,019 94,708 89,836 93,209 3.8% -1.0% 279,894 277,754 -

  12. Slide 12: Cost Structure

    Consolidated Cost Structure FY2017 FY2018 FY2019 (¥ Billions) 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q Total SG&A 94.7 97.5 370.2 93.4 92.3 94.1 94.0 373.9 94.7 89.8 93.2 Variable costs 39.8 41.3 152.3 36.7 35.2 36.7 36.8 145.5 36.6 32.2 35.2 Trading related expenses 18.4 18.6 72.4 17.9 17.9 18.5 17.5

  13. Slide 13: Ordinary Income of Overseas Operations

    Consolidated Ordinary Income of Overseas Operations % % FY2018 FY2019 FY2018 FY2019 % Change Change Change (¥ Millions) vs vs vs FY2018 Overseas operations remained 1Q-3Q/FY18 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q profit for 15 consecutive quarters. Overseas Operations Total 302 2,190 627 1,651

  14. Slide 14: Retail Division

    Retail Division % Change % Change Net Operating Revenues and Ordinary Income FY2019 FY2019 (¥ Millions) vs vs 3Q 2Q/FY19 1Q-3Q 1Q-3Q/FY18 Equity 60 Net operating revenues 41,322 1.4% 125,182 -13.3% Ordinary income 1,039 -8.3% 4,853 -78.7% Fixed income 40 Distribution  Equity revenues rose as both J

  15. Slide 15: Retail Division: Sales and Distribution Amount by Product

    Retail Division Daiwa Securities Sales and Distribution Amount by Product 【Wrap Account Service】  Contract AUM hit a record high of ¥2.31 trillion* at the end of 1,500 December thanks to an increase in contract amount and recovery of the market. Equity 【Stock Investment Trusts】 SMA + Fund  Man AHL

  16. Slide 16: Wholesale Division Global Markets

    Wholesale Division Global Markets % Change % Change Net Operating Revenues and Ordinary Income FY2019 FY2019 (¥ Millions) vs vs 3Q 2Q/FY19 1Q-3Q 1Q-3Q/FY18 40 Net operating revenues 35,021 25.7% 90,192 14.4% Ordinary 11,319 105.3% 21,373 86.1% Equity income FICC 【Equity】 20  Equity revenues rose du

  17. Slide 17: Reference: Equity & FICC Income

    ＜Reference＞ Equity & FICC Income: Consolidated Trading Gain/Loss (Daiwa Securities/Overseas Subsidiaries) 【Managerial accounting basis】 Consolidated Trading Gain / Loss (Managerial Accounting Basis) % Change % Change FY2019 FY2019 (¥ Billions) vs vs 3Q 2Q/FY19 1Q-3Q 1Q-3Q/FY18 Equity Equity 8 -27.3%

  18. Slide 18: Wholesale Division Global Investment Banking

    Wholesale Division Global Investment Banking % Change % Change Net Operating Revenues and Ordinary Income FY2019 FY2019 (¥ Millions) vs vs 3Q 2Q/FY19 1Q-3Q 1Q-3Q/FY18 20 Net operating revenues 13,667 14.0% 37,769 0.8% Equity Ordinary underwriting income 3,324 18.6% 7,051 25.2% 【Equity】 15  IPO deal

  19. Slide 19: Asset Management Division

    Asset Management Division % Change % Change Net Operating Revenues and Ordinary Income FY2019 FY2019 (¥ Millions) vs vs 3Q 2Q/FY19 1Q-3Q 1Q-3Q/FY18 15 Net operating revenues 12,664 8.9% 35,645 -2.3% Daiwa AM Ordinary income 7,038 7.3% 19,808 -9.3% Others 10 【Daiwa Asset Management】 Ordinary income 

  20. Slide 20: Asset Management Division: Assets Under Management and Net Increase

    Asset Management Division Assets Under Management and Net Increase Real Estate Asset Management Business AUM Daiwa Asset Management AUM of Two Companies* * Daiwa Real Estate Asset Management, Samty Asset Management 18,000 Daiwa Office Investmen t Corp. 1,000 Daiwa Reside ntia l P riva te Stock inves

  21. Slide 21: Investment Division

    Investment Division % Change % Change FY2019 FY2019 (¥ Millions) vs vs 3Q 2Q/FY19 1Q-3Q 1Q-3Q/FY18 Net operating revenues 2,151 - -1,715 - Ordinary income 1,581 - -4,081 - Principal Investment Value Net Operating Revenues and Ordinary Income 10 200 Energy and infrastructure* 150 Net Private equity a

  22. Slide 22: Reference

    Reference Daiwa Securities Group Inc.

  23. Slide 23: Breakdown of Commission

    Consolidated Breakdown of Commission FY2018 FY2019 % Change % Change FY2018 FY2019 % Change (¥ Millions) vs vs vs FY2018 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q 1Q-3Q/FY18 Total commission 78,347 64,629 64,962 64,810 68,448 5.6% -12.6% 218,397 198,222 -9.2% 283,027 Brokerage commission 14,507 12,

  24. Slide 24: Balance Sheet (Daiwa Securities)

    Daiwa Securities Balance Sheet Daiwa Securities Balance Sheet (December 31, 2019) (¥ Billions) Current assets 12,145 (2,435) Current liabilities 10,215 (2,654) Trading products 5,046 (460) Trading products 3,843 (249) Trading securities and other 2,217 (559) Trading securities and other 1,211 (316)

  25. Slide 25: Financial Summary Ⅰ

    Daiwa Securities Financial Summary Ⅰ FY2018 FY2019 % Change % Change FY2018 FY2019 % Change (¥ Millions) vs vs vs FY2018 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q 1Q-3Q/FY18 Operating revenues 83,370 77,462 79,513 73,965 78,520 6.2% -5.8% 254,912 231,999 -9.0% 332,374 Commission received 53,538 39,

  26. Slide 26: Financial Summary Ⅱ

    Daiwa Securities Financial Summary Ⅱ FY2018 FY2019 % Change % Change FY2018 FY2019 % Change (¥ Millions) vs vs vs FY2018 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q 1Q-3Q/FY18 SG&A 60,198 59,147 61,472 58,973 60,246 2.2% 0.1% 180,344 180,693 0.2% 239,492 Trading related expenses 11,167 10,501 11,687

  27. Slide 27: Assets under Custody

    Daiwa Securities Assets under Custody 75 Equity Japanese bonds 60 Foreign bonds 45 Stock investment trusts Bond investment trusts 30 Foreign investment trusts 15 Others 0 FY2017 FY2018 FY2019 (¥ Trillions) 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Equity 39.9 46.3 45.9 46.8 40.8 43.8 41.9 42.5 45.4 Japanese bonds

  28. Slide 28: Number of Accounts and Equity Trading

    Daiwa Securities Number of Accounts and Equity Trading FY2017 FY2018 FY2019 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Accounts with balance (thousands) 2,965 2,989 2,994 3,001 3,011 3,025 3,021 3,026 3,009 Accounts holding equity (thousands) 1,386 1,395 1,397 1,394 1,438 1,439 1,439 1,438 1,427 Online trading acco

  29. Slide 29: Net Asset Inflow

    Daiwa Securities Net Asset Inflow Retail Division (Daiwa Securities) Net Asset Inflow Retail Division (Daiwa Securities) Net Asset Inflow (Individuals) 500 400 Corporation Net inflow of cash Individual Net inflow of securities 400 300 300 200 200 100 100 0 0 -100 FY2017 FY2018 FY2019 FY2017 FY2018 F

  30. Slide 30: Stock Investment Trusts & Wrap Accounts

    Daiwa Securities Stock Investment Trusts & Wrap Accounts Agency Fee and Management Fee (Daiwa Securities) AUC of Stock Investment Trusts and Contract AUM of Wrap Account Agency fee and others (left) Investment advisory and account management fees (left) Percentage of asset-based revenue to retail di

  31. Slide 31: League Table

    Daiwa Securities League Table Primary and Straight bonds Samurai bonds M&A secondary equity IPO (excl. family Agency bonds Municipal bonds (excl. family (Number of offerings bonds) bonds) deals) FY2019 3Q League Table SMBC Nikko Nomura Mizuho Mitsubishi UFJMS Nomura Mizuho 1st Deloitte 14.7% 28.4% 2

  32. Slide 32: Financial Summary (Daiwa Asset Management)

    Daiwa Asset Management Financial Summary FY2018 FY2019 % Change % Change FY2018 FY2019 % Change (¥ Millions) vs vs vs FY2018 3Q 4Q 1Q 2Q 3Q 2Q/FY19 3Q/FY18 1Q-3Q 1Q-3Q 1Q-3Q/FY18 Operating revenues 18,838 17,821 17,759 17,626 17,972 2.0% -4.6% 58,904 53,358 -9.4% 76,725 Management fee 18,672 17,665

  33. Slide 33: 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 (¥ Billions) (thousands) 25 4,500 1,500 Gross profits (annually) Gross profits (quarterly) Ordinary Ordinary income (annually) Ordinary income (quarterly) deposits 20 Tim

  34. Slide 34: 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 products FY2017 FY2018 FY2019 (¥ Billions) 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q VaR （Quarter end） 1.93 1.13 1.34 1.39 1.76 1.06 1.33 1.42 0.94 High 2.00 2.

  35. Slide 35: Number of Group Employees

    Consolidated Number of Group Employees FY2017 FY2018 FY2019 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Total 16,200 16,088 16,651 16,516 16,519 16,419 16,499 16,306 16,078 Overseas 1,760 1,776 1,799 1,820 1,881 1,921 1,960 1,963 1,963  Number of employees as at the end of each quarter. ※ Total figures are the sum

  36. Slide 36: Contact

    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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