Daiwa Securities Group Inc. · TSE:8601

Daiwa Securities — Q1 FY2015 Earnings Presentation

34 slides from Daiwa Securities's earnings presentation, Jul 29, 2015

  1. Slide 1: 1Q FY2015 Earnings Announcement

    1Q FY2015 Earnings Announcement July 29, 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: Consolidated Highlights (1Q / FY2015)

    Consolidated Highlights （1Q / FY2015） ■ Profit attributable to owners of parent company marked an increase for 5 consecutive quarters  Net operating revenues: Y154.6 bil (+26.3% YoY), Ordinary income: Y63.1bil (+59.0% YoY), Profit attributable to owners of parent company: Y44.8 bil (+30.4% YoY)  R

  4. Slide 4: Consolidated Summary (1Q / FY2015)

    Consolidated Summary （1Q / FY2015）  1Q FY2015 Net operating revenues: Y154.6 bil （+11.0% QoQ）  Net operating revenues and ordinary income increased in all four divisions; Retail Division, Wholesale Division, Asset Management Division, and Investment Division.  Amid strong coordination between div

  5. Slide 5: Consolidated Financial Summary

    Consolidated Financial Summary FY2014 FY2015 % Change FY2014 % Change (Y mil) vs vs FY2014 4Q 1Q 4Q/14 1Q 1Q/14 Operating revenues 175,454 191,389 9.1% 148,701 28.7% 659,396 Net operating revenues 139,316 154,663 11.0% 122,490 26.3% 532,220 SG&A 92,918 95,574 2.9% 88,164 8.4% 361,380 Ordinary income

  6. Slide 6: Consolidated P/L Summary

    Consolidated P/L Summary FY2014 FY2015 % Change % Change (Y m il) FY2014 1Q 2Q 3Q 4Q 1Q vs 4Q/14 vs 1Q/14 Net operating revenues : Y154.6 bil (+11.0% QoQ） Operating revenues 148,701 155,656 179,583 175,454 191,389 9.1% 28.7% 659,396 Com m ision received 68,686 70,954 76,029 75,445 80,041 6.1% 16.5%

  7. Slide 7: Breakdown of SG&A

    Consolidated Breakdown of SG&A FY2014 FY2015 % Change % Change （ Y mil） vs vs FY2014 SG&A : Y95.5 bil 1Q 2Q 3Q 4Q 1Q 4Q/14 1Q/14 （+2.9% QoQ） SG&A 88,164 88,889 91,408 92,918 95,574 2.9% 8.4% 361,380  Trading related expenses Trading related 17,870 18,569 18,762 18,473 18,871 2.2% 5.6% 73,676 increa

  8. Slide 8: Cost Structure

    Consolidated Cost Structure （Y bil） 100 92.9 95.5 FY2013 FY2014 91.4 92.9 FY2015 90.1 (Y bil) 86.9 87.2 88.1 88.8 1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q 1Q Variable costs 80 Total SG&A 92.9 86.9 90.1 87.2 357.3 88.1 88.8 91.4 92.9 361.3 95.5 40.3 39.7 38.0 38.9 Variable costs 39.7 35.5 38.1 35.5 149.0

  9. Slide 9: Consolidated Balance Sheet

    Consolidated Balance Sheet Consolidated Balance Sheet （June 30, 2015） （Y bil） Current assets 22,878 (687) Current liabilities 20,007 (653) Total assets: Y23.4 tri Cash and deposits 3,427 (441) Trading products 5,206 (-807) Short-term investm ent securities 2,561 (-68) Trading securities and other 2,

  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 March 31, 2015) 12,387 12,117 11,137 11,125 11,598  Consolidated Total Capi

  11. Slide 11: Segment Information

    Segment Information Net operating revenues （Y mil） FY2014 FY2015 % Change % Change vs vs FY2014 1Q 2Q 3Q 4Q 1Q 4Q/14 1Q/14 Retail 53,971 56,836 60,741 60,483 64,631 6.9% 19.8% 232,033 Wholesale 41,426 44,551 43,893 50,697 57,174 12.8% 38.0% 180,568 Global M arkets 30,540 35,794 35,145 41,120 47,546

  12. Slide 12: Retail Division

    Retail Division % Change % Change Net operating revenues and ordinary income FY2015 （ Y mil） vs vs FY2014 1Q 4Q/14 1Q/14 80 Net operating Equity revenues 64,631 6.9% 19.8% 232,033 Ordinary income 24,263 16.1% 41.4% 77,756 Fixed income 60 Distribution commission for investment trust 40  Equity reven

  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 that invest in Japan equity, such as Japanese Equity Alpha Quartet, increased. SMA + Fund 1,200 Wrap* ＜Popular investment trusts and sales amount in 1

  14. Slide 14: Wholesale Division Global Markets

    Wholesale Division Global Markets % Change % Change Net operating revenues and ordinary income FY2015 （ Y mil） vs vs FY2014 1Q 4Q/14 1Q/14 Net operating 47,546 15.6% 55.7% 142,601 50 revenues Ordinary income 21,960 30.9% 232.2% 44,878 40 Equity FICC* 30 【Equity】 Others  Client flow of Japan stock t

  15. Slide 15: Wholesale Division Global Investment Banking

    Wholesale Division Global Investment Banking % Change % Change Net operating revenues and ordinary income FY2015 （ Y mil） vs vs FY2014 1Q 4Q/14 1Q/14 Net operating 9,628 0.5% -11.6% 37,966 12 revenues Equity Ordinary income 2,066 100.5% -47.4% 8,009 underwriting 10 【Equity】 Debt underwriting  Reven

  16. Slide 16: Asset Management Division

    Asset Management Division % Change % Change Net operating revenues and ordinary income FY2015 （ Y mil） vs vs FY2014 1Q 4Q/14 1Q/14 Net operating revenues 15,488 7.9% 21.2% 55,140 16 Ordinary income 9,260 15.5% 15.6% 32,142 Daiwa AM 12 【Daiwa Asset Management】 Others  Net asset inflow into publicly

  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 Stock 600 Nippon Healthcare 532 investment trusts 10,000 Investment Corp. 479 477 455 430 Bond investment 400 5,000 Daiwa Residential trusts Private Investme

  18. Slide 18: Investment Division

    Investment Division % Change % Change Net operating revenues and ordinary income FY2015 （ Y mil） vs vs FY2014 1Q 4Q/14 1Q/14 5 Net operating revenues 4,234 436.7% 93.7% 8,351 Ordinary income 3,671 1,170.7% 94.9% 6,506 4 Principal investment values 100 Net operating 3 Private equity revenues and PIPE

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

    DIR Group, Daiwa Next Bank and Overseas Operation Ordinary Income FY2014 FY2015 % Change % Change DIR Group* （ Y mil） vs vs FY2014 1Q 2Q 3Q 4Q 1Q 4Q/14 1Q/14  Ordinary income decreased QoQ with the decline in the number of system development projects. DIR Group* 1,062 1,806 2,010 3,085 2,000 -35.2%

  20. Slide 20: Reference

    Reference

  21. Slide 21: Breakdown of commission

    Consolidated Breakdown of commission FY2014 FY2015 % Change % Change （ Y mil） vs vs FY2014 1Q 2Q 3Q 4Q 1Q 4Q/14 1Q/14 Total commission 68,686 70,954 76,029 75,445 80,041 6.1% 16.5% 291,115 Brokerage commission 14,082 16,585 20,010 19,271 21,035 9.1% 49.4% 69,950 Underwriting commission 11,172 10,214

  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 Equity 3,500 1,500 Domestic bonds 50 Ordinary 3,000 Foreign bonds deposits 40 2,500 1,000 Stock inves

  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 （ Y bil ） vs vs FY2014 60 1Q 4Q/14 1Q/14 Equity Equity 17.0 21.4% 54.5% 52.0 FICC* 50 FICC* 41.0 10.8%

  24. Slide 24: Daiwa Securities Financial Summary Ⅰ

    Daiwa Securities Financial Summary Ⅰ FY2014 FY2015 % Change % Change （ Y mil ） vs vs FY2014 1Q 2Q 3Q 4Q 1Q 4Q/14 1Q/14 Operating revenues 89,054 95,484 101,344 100,775 112,934 12.1% 26.8% 386,659 Commission received 44,904 46,919 49,556 49,186 53,512 8.8% 19.2% 190,566 Brokerage commission 10,232 12

  25. Slide 25: Daiwa Securities Financial Summary Ⅱ

    Daiwa Securities Financial Summary Ⅱ FY2014 FY2015 % Change % Change （ Y mil） vs vs FY2014 1Q 2Q 3Q 4Q 1Q 4Q/14 1Q/14 SG&A 55,359 57,363 58,767 58,512 59,990 2.5% 8.4% 230,001 Trading related 8,605 8,708 9,703 9,576 9,695 1.2% 12.7% 36,594 expenses Personnel expenses 24,333 25,960 26,274 26,337 27,8

  26. Slide 26: Daiwa Securities Balance Sheet

    Daiwa Securities Balance Sheet Balance Sheet （June 30, 2015） （Y bil） Current assets 12,131 (162) Current liabilities 10,472 (174) Trading products 6,163 (278) Trading products 3,609 (-716) Trading securities and other 3,279 (525) Trading securities and other 1,199 (-478) Derivatives 2,883 (-247) Der

  27. Slide 27: Number of accounts and Equity trading

    Daiwa Securities Number of accounts and Equity trading FY2013 FY2014 FY2015 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Cash Management Service accounts 3,516 3,546 3,577 3,603 3,614 3,642 3,680 3,719 3,747 (thousands) Accounts with balance (thousands) 2,776 2,792 2,794 2,825 2,839 2,857 2,877 2,910 2,926 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) 300 300 200 200 100 100 0 0 ‐100 ‐100 Corporation Individual Net inflow of cash New inflow of securities ‐200 ‐200 FY2013 FY2014 FY 2015

  29. Slide 29: Mutual Funds & Wrap Accounts

    Daiwa Securities Mutual Funds & Wrap Accounts Retail Division (Daiwa Securities) Sales and net increase ratio of mutual funds Wrap accounts sales and contract AUM 900 30% 250 1,500 Sales amount (left) Sales amount (left) 750 Net increase ratio (right) Contract assets under 200 management (right) 1,2

  30. Slide 30: League Table

    Daiwa Securities League Table Primary and Straight bonds Samurai bonds Municipal bonds M&A secondary equity IPO (excl. family Agency bonds (excl. family etc. (Number of deals) offerings bonds) bonds) 1Q FY2015 League Table Daiwa Nomura Mitsubishi UFJMS Mitsubishi UFJMS Nomura Nomura 1st SMFG 23.5% 6

  31. Slide 31: Daiwa Asset Management Financial Summary

    Daiwa Asset Management Financial Summary FY2014 FY2015 % Change % Change （ Y mil ） vs vs FY2014 1Q 2Q 3Q 4Q 1Q 4Q/14 1Q/14 Operating revenues 21,827 22,667 23,585 23,778 24,129 1.5% 10.5% 91,858 Management fee 21,639 22,382 23,348 23,553 23,899 1.5% 10.4% 90,924 Stock investment trust 21,493 22,235

  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) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q VaR （Quarter end） 1.96 1.30 1.41 1.48 1.29 2.00 2.07 2.32 1.74 High 2.41 2.95

  33. Slide 33: Number of Group Employees

    Consolidated Number of Group Employees FY2013 FY2014 FY2015 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Total 14,703 14,627 14,533 14,426 14,918 14,827 14,792 14,757 15,301 Overseas 1,724 1,718 1,680 1,676 1,650 1,656 1,627 1,636 1,617  Number of employees as at end of each quarter. ※ Total figures are the sum of c

  34. Slide 34: 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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