Daiwa Securities Group Inc. · TSE:8601

Daiwa Securities — Q3 FY2015 Earnings Presentation

34 slides from Daiwa Securities's earnings presentation, Jan 28, 2016

  1. Slide 1: 3Q FY2015 Earnings Announcement

    3Q FY2015 Earnings Announcement January 28, 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  Segment Information 11～18  DIR Group, Daiwa Next Bank and Overseas Operation 19 Reference 20～33 2

  3. Slide 3: Highlights (1-3Q / FY2015)

    Consolidated Highlights （1-3Q / FY2015） ■ Ordinary income increased compared to the previous year  Net operating revenues: Y403.0 bil (+2.6% YoY); Ordinary income: Y136.5 bil (+1.1% YoY); Profit attributable to owners of parent company: Y95.5 bil (-13.1% YoY, as tax rate normalized at Daiwa Securit

  4. Slide 4: Summary (3Q / FY2015)

    Consolidated Summary （3Q / FY2015）  3Q FY2015 Net operating revenues: Y 124.7 bil （+1.0% QoQ）  The Retail Division recorded a decrease of -9.2% QoQ, while the Wholesale Division achieved an increase of +0.5% QoQ with the contribution by Global Markets (+7.0% QoQ)  Investment Division revenues inc

  5. Slide 5: Financial Summary

    Consolidated Financial Summary FY2015 % Change FY2014 FY2015 % Change (Y mil) vs vs FY2014 2Q 3Q 2Q/15 1Q-3Q 1Q-3Q 1Q-3Q/14 Operating revenues 158,126 153,616 -2.9% 483,941 503,132 4.0% 659,396 Net operating revenues 123,579 124,799 1.0% 392,903 403,042 2.6% 532,220 SG&A 91,281 89,331 -2.1% 268,462

  6. Slide 6: P/L Summary

    Consolidated P/L Summary % FY2014 FY2015 % FY2014 FY2015 Change (Y m il) Change FY2014 3Q 4Q 1Q 2Q 3Q vs 2Q/15 1Q-3Q 1Q-3Q vs Net operating revenues : Y124.7 bil 1Q-3Q/14 ( +1.0% QoQ） Operating revenues 179,583 175,454 191,389 158,126 153,616 -2.9% 483,941 503,132 4.0% 659,396  Commission received

  7. Slide 7: Breakdown of SG&A

    Consolidated Breakdown of SG&A % FY2014 FY2015 FY2014 FY2015 % Change Change （ Y mil） vs FY2014 SG&A : Y89.3 bil vs 3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q 1Q-3Q/14 2Q/15 （-2.1% QoQ） SG&A 91,408 92,918 95,574 91,281 89,331 -2.1% 268,462 276,187 2.9% 361,380  Trading related expenses decreased to Y17.8 bil (-2.7

  8. Slide 8: Cost Structure

    Consolidated Cost Structure （Y bil） 100 95.5 FY2013 FY2014 FY2015 90.1 91.4 92.9 91.2 88.8 (Y bil) 87.2 88.1 89.3 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q 1Q-3Q Variable costs 80 Total SG&A 90.1 87.2 357.3 88.1 88.8 91.4 92.9 361.3 95.5 91.2 89.3 276.1 41.3 Variable costs 38.9 36.4 152.3 36.4 37.1 38.

  9. Slide 9: Balance Sheet

    Consolidated Balance Sheet Consolidated Balance Sheet （December 31, 2015） （Y bil） Current assets 22,437 (246) Current liabilities 19,465 (111) Cash and deposits 3,427 (441) Trading products 5,185 (-828) Total assets: Y23.02 tri Short-term investm ent securities 2,259 (-370) Trading securities and ot

  10. Slide 10: Financial Management

    Consolidated Financial Management Consolidated Capital Adequacy Ratio （Basel Ⅲ） 【Regulatory Capital (Basel III)】 Total Qualifying Capital (Y 100mil) Tier1Capital （Y 100mil) Consolidated Total Capital Ratio Tier1Ratio (As at September 30, 2015) 12,387 12,117  Consolidated Total Capital Ratio : 21.0％

  11. Slide 11: Segment Information

    Segment Information Net operating revenues （ Y mil） FY2015 % Change FY2014 FY2015 % Change vs vs FY2014 1Q 2Q 3Q 2Q/15 1Q-3Q 1Q-3Q 1Q-3Q/14 Retail 64,631 57,081 51,839 -9.2% 171,549 173,551 1.2% 232,033 Wholesale 57,174 38,468 38,663 0.5% 129,870 134,305 3.4% 180,568 Global M arkets 47,546 28,670 30

  12. Slide 12: Retail Division

    Retail Division % Change % Change Net operating revenues and ordinary income FY2015 FY2015 （ Y mil） vs vs 3Q 2Q/15 1Q-3Q 1Q-3Q/14 80 Net operating Equity revenues 51,839 -9.2% 173,551 1.2% Ordinary income 13,545 -24.5% 55,752 -2.0% Fixed income 60 Distribution commission for investment trust Agency

  13. Slide 13: Retail Division

    Retail Division Daiwa Securities 【Newly opened accounts】 Sales and distribution amount by product  The number of new accounts reached a high level with a huge contribution by the IPOs of three Japan Post Group companies. Equity 1,600 (thousand accounts) 60 - Newly opened accounts - SMA + Fund Wrap*

  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 3Q 2Q/15 1Q-3Q 1Q-3Q/14 Net operating 60 revenues 30,670 7.0% 106,886 5.3% Ordinary income 6,718 75.0% 32,517 15.7% Equity FICC* 40 【Equity】 Others  Equity revenues increased

  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 3Q 2Q/15 1Q-3Q 1Q-3Q/14 Net operating 12 revenues 7,993 -18.4% 27,419 -3.4% Equity underwriting Ordinary income -287 - 3,528 -49.4% 10 【Equity】 Debt underwriting 8 

  16. Slide 16: Asset Management Division

    Asset Management Division % Change % Change Net operating revenues and ordinary income FY2015 FY2015 （ Y mil） vs vs 3Q 2Q/15 1Q-3Q 1Q-3Q/14 16 Net operating revenues 11,925 -1.2% 39,488 -3.2% Ordinary income 7,201 -4.5% 23,998 -0.5% Daiwa AM 12 Others 【Daiwa Asset Management】 Ordinary income 8  Man

  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 Japan Rental 761 800 Stock Housing investment Investments Inc. trusts Nippon 10,000 Healthcare 532 537 600 Investment Corp. 479 477 Bond 455 investment Daiwa

  18. Slide 18: Investment Division

    Investment Division % Change % Change Net operating revenues and ordinary income FY2015 FY2015 （ Y mil） vs vs 3Q 2Q/15 1Q-3Q 1Q-3Q/14 Net operating 15 revenues 12,626 637.5% 18,573 145.6% Ordinary income 11,978 925.0% 16,818 170.5% Principal investment values 12 100 Private equity Net operating 9 an

  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） vs FY2014  Increased in both revenue and vs 1Q-3Q 1Q-3Q 3Q 4Q 1Q 2Q 3Q 2Q/15 1Q-3Q/14 profit with the increase in orders received, mainly for regulation correspondence

  20. Slide 20: Reference

    Reference

  21. Slide 21: Breakdown of commission

    Consolidated Breakdown of commission % FY2014 FY2015 % Change Change FY2014 FY2015 （ Y mil ） vs FY2014 vs 1Q-3Q 1Q-3Q 3Q 4Q 1Q 2Q 3Q 1Q-3Q/14 2Q/15 Total commission 76,029 75,445 80,041 76,460 69,215 -9.5% 215,670 225,717 4.7% 291,115 Brokerage commission 20,010 19,271 21,035 18,417 15,922 -13.5% 50

  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 bil） （thousands） （Y tri） Ordinary 3,500 1,500 60 deposits Equity 3,000 Domestic bonds 50 Time deposits 2,500 Foreign bonds 40 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 3Q 1Q-3Q 2Q/15 1Q-3Q/14 FICC* Equity 9.0 80.0% 31.0 -18.4% 50 FICC* 28

  24. Slide 24: Financial Summary Ⅰ

    Daiwa Securities Financial Summary Ⅰ FY2014 FY2015 % Change % Change FY2014 FY2015 （ Y mil ） vs vs FY2014 3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q 2Q/15 1Q-3Q/14 Operating revenues 101,344 100,775 112,934 88,119 86,225 -2.1% 285,884 287,279 0.5% 386,659 Commission received 49,556 49,186 53,512 49,384 45,103 -8.7%

  25. Slide 25: Financial Summary Ⅱ

    Daiwa Securities Financial Summary Ⅱ FY2014 FY2015 % Change % Change FY2014 FY2015 （ Y mil） vs 1Q-3Q 1Q-3Q vs FY2014 3Q 4Q 1Q 2Q 3Q 2Q/15 1Q-3Q/14 SG&A 58,767 58,512 59,990 58,647 57,091 -2.7% 171,489 175,729 2.5% 230,001 Trading related 9,703 9,576 9,695 10,331 10,364 0.3% 27,018 30,391 12.5% 36,59

  26. Slide 26: Balance Sheet

    Daiwa Securities Balance Sheet Balance Sheet （December 31, 2015） （Y bil） Current assets 12,196 (227) Current liabilities 10,370 (73) Trading products 6,298 (413) Trading products 3,718 (-607) Trading securities and other 3,405 (651) Trading securities and other 1,357 (-320) Derivatives 2,893 (-238)

  27. Slide 27: Number of accounts and Equity trading

    Daiwa Securities Number of accounts and Equity trading FY2013 FY2014 FY2015 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Cash Management Service accounts (thousands) 3,577 3,603 3,614 3,642 3,680 3,719 3,747 3,778 3,808 Accounts with balance (thousands) 2,794 2,825 2,839 2,857 2,877 2,910 2,926 2,948 2,961 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 1,600 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 an d Straigh t bonds Samurai bon ds M&A sec on dary e qu ity IPO (exc l. family Agency bonds Municipal bonds (e xcl. family (Nu mber of offe rin gs bon ds) bon ds) deals) 3Q FY2 015 Le ague Table Nomura Nomura Nomura Mitsu bish i UFJMS Daiwa Nomura 1 st MHFG 2 1

  31. Slide 31: Financial Summary

    Daiwa Asset Management Financial Summary FY2014 FY2015 % Change FY2014 FY2015 % Change （ Y mil ） vs vs FY2014 3Q 4Q 1Q 2Q 3Q 2Q/15 1Q-3Q 1Q-3Q 1Q-3Q/14 Operating revenues 23,585 23,778 24,129 23,020 22,175 -3.7% 68,079 69,325 1.8% 91,858 Management fee 23,348 23,553 23,899 22,814 21,982 -3.6% 67,371

  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) 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q VaR （Quarter end） 1.41 1.48 1.29 2.00 2.07 2.32 1.74 1.53 1.25 High 2.47 2.33

  33. Slide 33: Number of Group Employees

    Consolidated Number of Group Employees FY2013 FY2014 FY2015 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Total 14,533 14,426 14,918 14,827 14,792 14,757 15,301 15,209 15,179 Overseas 1,680 1,676 1,650 1,656 1,627 1,636 1,617 1,611 1,603  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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