Daiwa Securities Group Inc. · TSE:8601

Daiwa Securities — FY2016 Earnings Presentation

35 slides from Daiwa Securities's earnings presentation, Apr 28, 2017

  1. Slide 1: 4Q FY2016 Earnings Announcement

    4Q FY2016 Earnings Announcement April 28, 2017 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 12～20 Reference 21～34 2

  3. Slide 3: Highlights (1Q-4Q FY2016)

    Consolidated Highlights （1Q-4Q FY2016） ■ Maintained stable profits, though consolidated results declined YoY % Change Consolidated earnings results 1Q-4Q FY2016 vs FY2015 Net operating revenues Y472.7 bil -8.2% Ordinary income Y135.6 bil -17.9% Profit attributable to owners of parent company Y104.0

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

    Consolidated Summary （4Q / FY2016）  4Q FY2016 Net operating revenues: Y121.6 bil （-0.3% QoQ）  While trading value remained flat, products sales and distribution amount in Retail Division increased.  For Wholesale Division, DCM and M&A businesses in Global Investment Banking posted increased reven

  5. Slide 5: Financial Summary

    Consolidated Financial Summary FY2015 FY2016 % Change % Change % Change (Y mil) vs vs FY2015 FY2016 vs 4Q 1Q 2Q 3Q 4Q 3Q/FY16 4Q/FY15 FY15 Operating revenues 150,579 151,859 145,117 153,198 166,322 8.6% 10.5% 653,711 616,497 -5.7% Net operating revenues 111,772 114,049 115,096 121,985 121,618 -0.3%

  6. Slide 6: P/L Summary

    Consolidated P/L Summary % % F Y2015 F Y2016 % Change Change Change (Y m il) F Y2015 F Y2016 vs vs vs 4Q 1Q 2Q 3Q 4Q 3Q/FY16 4Q/FY15 FY15  Commission received increased Operating revenues 150,579 151,859 145,117 153,198 166,322 8.6% 10.5% 653,711 616,497 -5.7% (+8.1% QoQ). Com m ision received 62,7

  7. Slide 7: Breakdown of SG&A

    Consolidated Breakdown of SG&A FY2016 % % FY2015 % Change C hange C hange （ Y mil） vs vs FY2015 FY2016 vs FY15 4Q 1Q 2Q 3Q 4Q 3Q/ F Y16 4Q/ F Y15  Trading related expenses increased (+7.9% QoQ) as advertising expenses rose. SG&A 88,329 86,029 85,772 90,376 91,508 1.3% 3.6% 364,517 353,687 -3.0%  P

  8. Slide 8: Cost Structure

    Consolidated Cost Structure FY2014 FY2015 FY2016 (Y bil) 1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q 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 85.7 90.3 91.5 353.6 Variable costs 36.4 37.1 38.9 39.7 152.2 41.3 37.4 35.8 35.9 150.5 34.1 35.1 36.6 38.0 143.9 Trading

  9. Slide 9: Balance Sheet

    Consolidated Balance Sheet Consolidated Balance Sheet （March 31, 2017） （Y bil） Current assets 19,258 (-592) Current liabilities 16,007 (-819) Total assets: Y19.82 tri Cash and deposits 3,828 (493) Trading products 4,658 (-642) Net assets: Y1.34 tri Short-term investm ent securities 1,742 (-348) Trad

  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 【Regulatory Capital (Basel III)】 1,211 (As

  11. Slide 11: Overseas Operation

    Consolidated Overseas Operation % % % FY2015 FY2016 Change Change Change （ Y mil） FY2015 FY2016 Full-year results returned to the black for vs vs vs 4Q 1Q 2Q 3Q 4Q 3Q/FY16 4Q/FY15 FY15 the first time in 7 years since FY2009. On a quarterly base, all regions moved Overseas operation -714 1,366 3,829

  12. Slide 12: Segment Information

    Segment Information (Y mil) FY2015 FY2016 % Change % Change % Change Net operating revenues vs vs FY2015 FY2016 vs 4Q 1Q 2Q 3Q 4Q 3Q/FY16 4Q/FY15 FY15 Retail 44,371 45,013 43,720 49,663 49,654 -0.0% 11.9% 217,922 188,051 -13.7% Wholesale 43,709 43,427 45,906 46,427 47,113 1.5% 7.8% 178,014 182,875 2

  13. Slide 13: Retail Division

    Retail Division % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs FY2016 vs 4Q 3Q/FY16 FY15 75 Equity Net operating revenues 49,654 -0.0% 188,051 -13.7% Ordinary income 8,700 -8.5% 29,375 -51.9% Fixed income 50 Distribution commission for investment trust Agency fee for

  14. Slide 14: Retail Division

    Retail Division Daiwa Securities 【Stock Investment Trusts】 Sales and distribution amount by product  Funds investing in both domestic and overseas REITs and US 1,500 infrastructure related equities saw strong sales. Equity 【Wrap Account Service】 SMA + Fund Wrap*  In addition to “Daiwa Fund Wrap Pr

  15. Slide 15: Wholesale Division Global Markets

    Wholesale Division Global Markets % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs FY2016 vs 4Q 3Q/FY16 FY15 60 Net operating revenues 33,645 -8.6% 142,859 0.1% Equity Ordinary income 10,759 -24.0% 53,595 16.4% FICC* 40 【Equity】 Others  In January, risk aversion senti

  16. Slide 16: Equity & FICC Income: Consolidated Trading Gain/Loss

    Daiwa Securities/Overseas Equity & FICC Income: Consolidated Trading Gain/Loss 【Managerial accounting basis】 Consolidated trading gain / loss (Managerial accounting basis) % Change % Change FY2016 （ Y bil ） vs FY2015 FY2016 vs 60 4Q 3Q/FY16 FY15 Equity Equity 10.0 -9.1% 38.0 35.0 -7.9% 50 FICC* FICC

  17. Slide 17: Wholesale Division Global Investment Banking

    Wholesale Division Global Investment Banking % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs FY2016 vs 4Q 3Q/FY16 FY15 Net operating 15 revenues 13,468 40.2% 40,015 13.3% Ordinary income 5,607 125.0% 11,369 303.0% Equity underwriting 【Equity】 11  Steadily managed dea

  18. Slide 18: Asset Management Division

    Asset Management Division % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs FY2016 vs 4Q 3Q/FY16 FY15 16 Net operating revenues 11,798 1.8% 46,438 -8.1% Daiwa AM Ordinary income 6,627 1.6% 26,572 -11.4% 12 Others 8 【Daiwa Asset Management】 Ordinary income  Since AUM in

  19. Slide 19: 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) 15,000 1,500 Stock 1,271 investment 1,093 1,200 trusts 10,000 Daiwa SB 1,010 Investments 768 900 Bond investment 5,000 Daiwa Asse

  20. Slide 20: Investment Division

    Investment Division % Change % Change Net operating revenues and ordinary income FY2016 （ Y mil） vs FY2016 vs 4Q 15 3Q/FY16 FY15 Net operating revenues 2,484 -3.3% 15,736 -20.2% Ordinary income 1,553 -17.9% 13,041 -25.0% 12 Principal investment values 120 Net operating revenues 9 Private equity and

  21. Slide 21: Reference

    Reference

  22. Slide 22: Breakdown of Commission

    Consolidated Breakdown of Commission FY2015 FY2016 % Change % Change % Change （ Y mil ） vs vs FY2015 FY2016 vs 4Q 1Q 2Q 3Q 4Q 3Q/FY16 4Q/FY15 FY15 Total commission 62,701 61,693 64,373 70,752 76,515 8.1% 22.0% 288,418 273,335 -5.2% Brokerage commission 14,950 13,888 13,197 17,189 16,672 -3.0% 11.5%

  23. Slide 23: Financial Summary I

    Daiwa Securities Financial Summary Ⅰ FY2015 FY2016 % Change % Change % Change （ Y mil ） vs vs FY2015 FY2016 vs 4Q 1Q 2Q 3Q 4Q 3Q/FY16 4Q/FY15 FY15 Operating revenues 81,878 81,872 79,320 88,975 84,742 -4.8% 3.5% 369,158 334,911 -9.3% Commission received 39,290 40,345 42,196 48,339 50,354 4.2% 28.2%

  24. Slide 24: Financial Summary II

    Daiwa Securities Financial Summary Ⅱ FY2015 FY2016 % Change % Change % Change （Y mil） vs vs FY2015 FY2016 vs 4Q 1Q 2Q 3Q 4Q 3Q/FY16 4Q/FY15 FY15 SG&A 57,951 56,386 56,715 58,662 59,923 2.2% 3.4% 233,680 231,688 -0.9% Trading related 10,655 9,307 9,428 10,212 10,507 2.9% -1.4% 41,046 39,456 -3.9% exp

  25. Slide 25: Balance Sheet

    Daiwa Securities Balance Sheet Balance Sheet （March 31, 2017） （Y bil） Current assets 10,177 (-242) Current liabilities 8,227 (-333) Trading products 4,655 (-724) Trading products 3,529 (-580) Trading securities and other 1,964 (72) Trading securities and other 1,135 (10) Derivatives 2,691 (-797) Der

  26. Slide 26: Assets under Custody

    Daiwa Securities Assets under Custody 60 Equity Domestic bonds 45 Foreign bonds Stock investment trusts 30 Bond investment trusts Foreign investment 15 trusts Others 0 FY2014 FY2015 FY2016 （Y tri） 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Equity 32.5 34.2 31.0 33.0 30.1 28.8 29.4 32.7 32.9 Domestic bonds 7.3 7.3 7

  27. Slide 27: Number of Accounts and Equity Trading

    Daiwa Securities Number of Accounts and Equity Trading FY2014 FY2015 FY2016 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Cash Management Service accounts 3,719 3,747 3,778 3,808 3,821 3,833 3,848 3,866 3,886 (thousands) Accounts with balance (thousands) 2,910 2,926 2,948 2,961 2,973 2,973 2,976 2,963 2,974 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 250 250 Individual New inflow of securities 200 200 150 150 100 100 50 50 0 0 -50 -50 -100 -100 -

  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 25% 300 2,000 Sales amount (left) Contract amount (left) Net increase ratio (right) Contract assets under management (right) 600 20%

  30. Slide 30: League Table

    Daiwa Securities League Table Primary and Straight bon ds Samurai bonds M&A sec ondary equ ity IPO (exc l. f amily Age ncy bo nds Munic ipal bon ds ( excl. family (Number o f off erings bonds) bo nds) deals) 4 Q FY201 6 Le ague Table SMB C Nikko Nomura Mizuh o Mitsubishi UFJMS Daiwa Mizuho 1 st MHFG

  31. Slide 31: Financial Summary

    Daiwa Asset Management Financial Summary FY2015 FY2016 % Change % Change % Change （ Y mil ） vs vs FY2015 FY2016 vs 4Q 1Q 2Q 3Q 4Q 3Q/FY16 4Q/FY15 FY15 Operating revenues 20,324 20,132 19,930 20,051 20,360 1.5% 0.2% 89,650 80,474 -10.2% Management fee 20,154 19,950 19,754 19,874 20,167 1.5% 0.1% 88,8

  32. Slide 32: Earnings and Deposit Balance

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

  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) 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q VaR （Quarter end） 2.32 1.74 1.53 1.25 1.55 1.01 1.00 1.74 2.32 High 3.46 2.43

  34. Slide 34: Number of Group Employees

    Consolidated Number of Group Employees FY2014 FY2015 FY2016 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Total 14,757 15,301 15,209 15,179 15,028 15,637 15,559 15,410 15,093 Overseas 1,636 1,617 1,611 1,603 1,566 1,592 1,597 1,592 1,614  Number of employees as at the end of each quarter. ※ Total figures are the sum

  35. Slide 35: 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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