Daiwa Securities Group Inc. · TSE:8601

Daiwa Securities — Q3 FY2016 Earnings Presentation

35 slides from Daiwa Securities's earnings presentation, Jan 30, 2017

  1. Slide 1: 3Q FY2016 Earnings Announcement

    3Q FY2016 Earnings Announcement January 30, 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 12～19 Reference 20～34 2

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

    Consolidated Highlights （1Q-3Q FY2016） ■ Wholesale Division showed growth in both revenues and profits, despite the decline in revenues and profits for the consolidated basis. % Change vs % Change vs Consolidated earnings results 1Q-3Q FY2016 3Q FY2016 1Q-3Q FY2015 2Q FY2016 Net operating revenues Y

  4. Slide 4: Summary (3Q / FY2016)

    Consolidated Summary （3Q / FY2016）  3Q FY2016 Net operating revenues: Y121.9 bil （+6.0% QoQ）  Sales and trading of each product in Retail Division increased by capturing customer needs amid changing market environment after the US presidential election. Equity revenue was also pushed up by distrib

  5. Slide 5: Financial Summary

    Consolidated Financial Summary FY2015 FY2016 % Change % Change FY2015 FY2016 % Change (Y mil) vs vs vs FY2015 3Q 4Q 1Q 2Q 3Q 2Q/FY16 3Q/FY15 1Q-3Q 1Q-3Q 1Q-3Q/FY15 Operating revenues 153,616 150,579 151,859 145,117 153,198 5.6% -0.3% 503,132 450,175 -10.5% 653,711 Net operating revenues 124,799 111,

  6. Slide 6: P/L Summary

    Consolidated P/L Summary % % F Y2015 F Y2016 F Y2015 F Y2016 % Change Change Change (Y m il) vs F Y2015 vs vs 3Q 4Q 1Q 2Q 3Q 2Q/FY16 3Q/FY15 1Q - 3Q 1Q - 3Q 1Q-3Q/FY15 Operating revenues 153,616 150,579 151,859 145,117 153,198 5.6% -0.3% 503,132 450,175 -10.5% 653,711  Commission received was Y70.7

  7. Slide 7: Breakdown of SG&A

    Consolidated Breakdown of SG&A FY2015 FY2016 % % FY2015 FY2016 % Change C hange C hange  Trading related expenses （ Y mil） vs vs vs FY2015 1Q-3Q/FY15 increased to Y17.5bil (+3.1% 3Q 4Q 1Q 2Q 3Q 2Q/ F Y16 3Q/ F Y15 1Q-3Q 1Q-3Q QoQ) as advertising expenses rose. SG&A 89,331 88,329 86,029 85,772 90,37

  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 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 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 Trading related expenses 17.8 18.5 18.

  9. Slide 9: Balance Sheet

    Consolidated Balance Sheet Consolidated Balance Sheet （December 31, 2016） （Y bil） Current assets 19,945 (93) Current liabilities 16,909 (81) Total assets: Y20.52 tri Cash and deposits 3,665 (330) Trading products 4,748 (-552) Short-term investm ent securities 1,880 (-210) Trading securities and othe

  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) 【Regulatory Capital (Basel III)】 Consolidated Total Capital Ratio Consolidated Common Equity Tier 1 Capital Ratio 1,238 (As

  11. Slide 11: Overseas Operation

    Consolidated Overseas Operation FY2015 FY2016 % Change % Change FY2015 FY2016 % Change （ Y mil） vs vs vs FY2015 2Q/FY16 3Q/FY15 1Q-3Q/FY15 3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q Overseas operation -3,474 -714 1,366 3,829 2,606 -31.9% - -3,970 7,801 - -4,684 Total  For Europe, equity and M&A revenues decreased

  12. Slide 12: Segment Information

    Segment Information (Y mil) FY2015 FY2016 % Change % Change FY2015 FY2016 % Change Net operating revenues vs vs vs FY2015 3Q 4Q 1Q 2Q 3Q 2Q/FY16 3Q/FY15 1Q-3Q 1Q-3Q 1Q-3Q/FY15 Retail 51,839 44,371 45,013 43,720 49,663 13.6% -4.2% 173,551 138,397 -20.3% 217,922 Wholesale 38,663 43,709 43,427 45,906 4

  13. Slide 13: Retail Division

    Retail Division % Change % Change Net operating revenues and ordinary income FY2016 FY2016 （ Y mil） vs vs 3Q 2Q/FY16 1Q-3Q 1Q-3Q/FY15 75 Equity Net operating revenues 49,663 13.6% 138,397 -20.3% Ordinary income 9,512 106.9% 20,675 -62.9% Fixed income 50 Distribution commission for investment trust A

  14. Slide 14: Retail Division: Sales and distribution amount by product

    Retail Division Daiwa Securities Sales and distribution amount by product 【Investment Trusts】  Funds investing in US equities, Asia equities and medical equipment 1,500 related equities were the most popular products sold, as sales proposals Equity well captured investor demands. As a result, sales

  15. Slide 15: Wholesale Division Global Markets

    Wholesale Division Global Markets % Change % Change Net operating revenues and ordinary income FY2016 FY2016 （ Y mil） vs vs 3Q 1Q-3Q 60 2Q/FY16 1Q-3Q/FY15 Net operating revenues 36,819 1.2% 109,214 2.2% Equity Ordinary income 14,164 -2.8% 42,836 31.7% FICC* 40 Others 【Equity】  Equity trading volume

  16. Slide 16: Wholesale Division Global Investment Banking

    Wholesale Division Global Investment Banking % Change % Change Net operating revenues and ordinary income FY2016 FY2016 （ Y mil） vs vs 3Q 2Q/FY16 1Q-3Q 1Q-3Q/FY15 10 Net operating revenues 9,608 0.7% 26,547 -3.2% Ordinary income 2,492 0.9% 5,761 63.3% Equity 8 underwriting 【Equity】  Equity underwri

  17. Slide 17: Asset Management Division

    Asset Management Division % Change % Change Net operating revenues and ordinary income FY2016 FY2016 （ Y mil） vs vs 3Q 2Q/FY16 1Q-3Q 1Q-3Q/FY15 16 Net operating revenues 11,586 1.4% 34,639 -12.3% Ordinary income 6,522 -2.3% 19,944 -16.9% Daiwa AM 12 Others 8 【Daiwa Asset Management】 Ordinary  Manag

  18. Slide 18: 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 1,271 Stock 1,093 investment 10,000 Daiwa SB 1,200 1,010 trusts Investments 768 900 Bond 5,000 investment Daiwa Asse

  19. Slide 19: Investment Division

    Investment Division % Change % Change Net operating revenues and ordinary income FY2016 FY2016 （ Y mil） vs vs 15 3Q 2Q/FY16 1Q-3Q 1Q-3Q/FY15 Net operating revenues 2,570 -55.1% 13,252 -28.7% Ordinary income 1,891 -62.0% 11,488 -31.7% 12 Principal investment values Net operating 120 revenues 9 Privat

  20. Slide 20: Reference

    Reference

  21. Slide 21: Breakdown of Commission

    Consolidated Breakdown of Commission FY2015 FY2016 % Change % Change FY2015 FY2016 % Change （ Y mil ） vs vs vs FY2015 3Q 4Q 1Q 2Q 3Q 2Q/FY16 3Q/FY15 1Q-3Q 1Q-3Q 1Q-3Q/FY15 Total commission 69,215 62,701 61,693 64,373 70,752 9.9% 2.2% 225,717 196,819 -12.8% 288,418 Brokerage commission 15,922 14,950

  22. Slide 22: Equity & FICC Income: Consolidated Trading Gain/Loss

    Daiwa Securities/Overseas Equity & FICC Income: Consolidated Trading Gain/Loss 【Managerial accounting basis】 Consolidated trading gain / loss % Change % Change (Managerial accounting basis) FY2016 FY2016 （ Y bil ） vs vs 3Q 2Q/FY16 1Q-3Q 1Q-3Q/FY15 60 Equity Equity 11.0 22.2% 25.0 -19.4% 50 FICC* FIC

  23. Slide 23: Financial Summary Ⅰ

    Daiwa Securities Financial Summary Ⅰ FY2015 FY2016 % Change % Change FY2015 FY2016 % Change （ Y mil ） vs vs vs FY2015 3Q 4Q 1Q 2Q 3Q 2Q/FY16 3Q/FY15 1Q-3Q 1Q-3Q 1Q-3Q/FY15 Operating revenues 86,225 81,878 81,872 79,320 88,975 12.2% 3.2% 287,279 250,168 -12.9% 369,158 Commission received 45,103 39,29

  24. Slide 24: Financial Summary Ⅱ

    Daiwa Securities Financial Summary Ⅱ FY2015 FY2016 % Change % Change FY2015 FY2016 % Change （Y mil） vs vs vs FY2015 3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q 1Q-3Q/FY15 2Q/FY16 3Q/FY15 SG&A 57,091 57,951 56,386 56,715 58,662 3.4% 2.8% 175,729 171,764 -2.3% 233,680 Trading related 10,364 10,655 9,307 9,428 10,212 8

  25. Slide 25: Balance Sheet

    Daiwa Securities Balance Sheet Balance Sheet （December 31, 2016） （Y bil） Current assets 10,797 (377) Current liabilities 8,882 (320) Trading products 5,081 (-298) Trading products 3,854 (-255) Trading securities and other 1,974 (82) Trading securities and other 1,068 (-56) Derivatives 3,107 (-381) D

  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） 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Equity 30.6 32.5 34.2 31.0 33.0 30.1 28.8 29.4 32.7 Domestic bonds 7.5 7.3 7

  27. Slide 27: Number of Accounts and Equity Trading

    Daiwa Securities Number of Accounts and Equity Trading FY2014 FY2015 FY2016 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Cash Management Service accounts 3,680 3,719 3,747 3,778 3,808 3,821 3,833 3,848 3,866 (thousands) Accounts with balance (thousands) 2,877 2,910 2,926 2,948 2,961 2,973 2,973 2,976 2,963 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 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 016 Le ague Table Nomura Nomura Mizuho Mitsu bish i UFJMS Daiwa Nomura 1 st MHFG 2 5

  31. Slide 31: Financial Summary (Daiwa Asset Management)

    Daiwa Asset Management Financial Summary FY2015 FY2016 % Change % Change % Change F Y2015 FY2016 （ Y mil ） vs vs vs FY2015 3Q 4Q 1Q 2Q 3Q 2Q/FY16 3Q/FY15 1Q-3Q 1Q-3Q 1Q-3Q/FY15 Operating revenues 22,175 20,324 20,132 19,930 20,051 0.6% -9.6% 69,325 60,114 -13.3% 89,650 Management fee 21,982 20,154 1

  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 21 3,000 Time deposits 2,500 18 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) 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q VaR （Quarter end） 2.07 2.32 1.74 1.53 1.25 1.55 1.01 1.00 1.74 High 2.37 3.46

  34. Slide 34: Number of Group Employees

    Consolidated Number of Group Employees FY2014 FY2015 FY2016 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Total 14,792 14,757 15,301 15,209 15,179 15,028 15,637 15,559 15,410 Overseas 1,627 1,636 1,617 1,611 1,603 1,566 1,592 1,597 1,592  Number of employees as at end of each quarter. ※ Total figures are the sum of c

  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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