Daiwa Securities Group Inc. · TSE:8601

Daiwa Securities — Q2 FY2019 Earnings Presentation

36 slides from Daiwa Securities's earnings presentation, Oct 30, 2019

  1. Slide 1: 2Q FY2019 Earnings Announcement

    Daiwa Securities Group Inc. 2Q FY2019 Earnings Announcement October 30, 2019 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 (1H/FY2019, YoY)

    Highlights (1H/FY2019, YoY) Both Net operating revenues and Ordinary income decreased YoY. % Changes vs % Changes vs Consolidated earnings results FY2019 1H 1H/FY2018 FY2019 2Q 1Q/FY2019 Net operating revenues ¥203.4 bn -8.9% ¥96.3 bn -10.1% Ordinary income ¥27.7 bn -39.6% ¥9.8 bn -45.0% Profit attr

  4. Slide 4: Summary (2Q/FY2019, QoQ)

    Summary (2Q/FY2019, QoQ) ※The following shows the percentage change from the previous quarter. 2Q FY2019 Net operating revenues: ¥96.3 bn (-10.1%)  Revenues in Retail Division decreased due to a drop in trading value of foreign equities during correction phase since August. Investment trust sales a

  5. Slide 5: Financial Summary

    Consolidated Financial Summary FY2018 FY2019 % Change % Change FY2018 FY2019 % Change (¥ Millions) vs vs vs FY2018 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18 Operating revenues 172,570 188,753 184,086 181,341 159,666 -12.0% -7.5% 347,746 341,007 -1.9% 720,586 Net operating revenues 107,837 110,302

  6. Slide 6: Segment Summary

    Consolidated Segment Summary (¥ Millions) FY2018 FY2019 % Change % Change FY2018 FY2019 % Change Net operating revenues vs vs vs FY2018 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18 Retail 47,314 46,388 41,552 43,095 40,763 -5.4% -13.8% 97,924 83,859 -14.4% 185,865 Wholesale 39,394 37,092 42,618 39,4

  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 Global Investment Banking (Net operating revenues) 54.5 51.2 50.6 47.3 45.7 47.1 46.3 43.0 43.0 42.6 41.5 40.7 39.7 39.3 39.4

  8. Slide 8: B/S Summary

    Consolidated B/S Summary Consolidated Balance Sheet （September 30, 2019） (¥ Billions) Current assets 21,883 (1,477) Current liabilities 18,896 (1,814) Cash and deposits 4,379 (226) Trading products 5,477 (730) Total assets: ¥22.80 tn Short-term investment securities 839 (27) Trading securities and o

  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  Commission received decreased % % % FY2018 FY2019 FY2018 FY2019 (-0.2%). Change Change Change (¥ Millions) vs vs vs FY2018 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18 • Brokerage commission* was ¥12.6 billion (+2.2%). Operating revenues 172,570 188,753 184,086 181,341 159

  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 decreased (-5.1%). 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18  Trading related expenses declined SG&A 92,321 94,117 94,019 94,708 89,836 -5.1% -2.7% 185,776 184,545 -0.7% 373,

  12. Slide 12: Cost Structure

    Consolidated Cost Structure FY2017 FY2018 FY2019 (¥ Billions) 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q Total SG&A 90.9 94.7 97.5 370.2 93.4 92.3 94.1 94.0 373.9 94.7 89.8 Variable costs 37.5 39.8 41.3 152.3 36.7 35.2 36.7 36.8 145.5 36.6 32.2 Trading related expenses 18.6 18.4 18.6 72.4 17.9 17.9 18.5

  13. Slide 13: Ordinary Income of Overseas Operations

    Consolidated Ordinary Income of Overseas Operations % % % FY2018 FY2019 Change Change FY2018 FY2019 Change (¥ Millions) vs vs vs FY2018 Overseas operations remained 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18 profit for 14 consecutive quarters. Overseas Operations Total 1,259 302 2,190 627 1,651 16

  14. Slide 14: Retail Division

    Retail Division % Change % Change Net Operating Revenues and Ordinary Income FY2019 FY2019 (¥ Millions) vs vs 2Q 1Q/FY19 1H 1H/FY18 Equity 60 Net operating revenues 40,763 -5.4% 83,859 -14.4% Ordinary income 1,133 -57.7% 3,813 -77.0% Fixed income 40 Distribution  Equity revenues decreased as both J

  15. Slide 15: Retail Division

    Retail Division Daiwa Securities Sales and Distribution Amount by Product 【Wrap Account Service】  Contract AUM hit a record high of ¥2.23 trillion* at the end of 1,500 September thanks to an increase in contract amount. Equity 【Stock Investment Trusts】  Daiwa U.S. REIT Plus saw solid sales. SMA +

  16. Slide 16: Wholesale Division: Global Markets

    Wholesale Division Global Markets % Change % Change Net Operating Revenues and Ordinary Income FY2019 FY2019 (¥ Millions) vs vs 2Q 1Q/FY19 1H 1H/FY18 40 Net operating revenues 27,860 2.0% 55,170 -6.9% Ordinary Equity income 5,512 21.4% 10,053 -31.3% FICC 【Equity】 20  Equity revenues decreased due t

  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 2Q 1Q/FY19 1H 1H/FY18 Equity Equity 11 - 22 -29.0%

  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 2Q 1Q/FY19 1H 1H/FY18 20 Net operating revenues 11,992 -1.0% 24,101 20.9% Equity Ordinary underwriting income 2,802 203.1% 3,726 - 15 【Equity】  IPO deals contri

  19. Slide 19: Asset Management Division

    Asset Management Division % Change % Change Net Operating Revenues and Ordinary Income FY2019 FY2019 (¥ Millions) vs vs 2Q 1Q/FY19 1H 1H/FY18 15 Net operating revenues 11,627 2.4% 22,980 -5.7% Daiwa AM Ordinary income 6,560 5.6% 12,769 -14.2% Others 10 Ordinary 【Daiwa Asset Management】 income  AUM

  20. Slide 20: Asset Management Division: AUM

    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 Samty Residential 18,000 Investment Corp. 1,000 Other Stock investment trusts Daiwa H

  21. Slide 21: Investment Division

    Investment Division % Change % Change FY2019 FY2019 (¥ Millions) vs vs  Posted the loss from provision due to revaluation of existing 2Q 1Q/FY19 1H 1H/FY18 investments. Net operating revenues -5,550 - -3,867 - Ordinary income -6,588 - -5,663 - Principal Investment Value Net Operating Revenues and O

  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 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18 Total commission 66,236 78,347 64,629 64,962 64,810 -0.2% -2.2% 140,050 129,773 -7.3% 283,027 Brokerage commission 14,766 14,507 12,49

  24. Slide 24: Balance Sheet

    Daiwa Securities Balance Sheet Daiwa Securities Balance Sheet (September 30, 2019) (¥ Billions) Current assets 10,723 (1,013) Current liabilities 8,761 (1,200) Trading products 5,696 (1,111) Trading products 4,500 (906) Trading securities and other 2,117 (458) Trading securities and other 1,112 (217

  25. Slide 25: Financial Summary Ⅰ

    Daiwa Securities Financial Summary Ⅰ FY2018 FY2019 % Change % Change FY2018 FY2019 % Change (¥ Millions) vs vs vs FY2018 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18 Operating revenues 82,151 83,370 77,462 79,513 73,965 -7.0% -10.0% 171,541 153,479 -10.5% 332,374 Commission received 42,866 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 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18 SG&A 60,023 60,198 59,147 61,472 58,973 -4.1% -1.7% 120,146 120,446 0.2% 239,492 Trading related expenses 10,701 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) 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Equity 36.8 39.9 46.3 45.9 46.8 40.8 43.8 41.9 42.5 Japanese bonds

  28. Slide 28: Number of Accounts and Equity Trading

    Daiwa Securities Number of Accounts and Equity Trading FY2017 FY2018 FY2019 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Accounts with balance (thousands) 2,969 2,965 2,989 2,994 3,001 3,011 3,025 3,021 3,026 Accounts holding equity (thousands) 1,399 1,386 1,395 1,397 1,394 1,438 1,439 1,439 1,438 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 Net inflow of securities Individual 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) 8 AUC of stock investment trusts Percentage of

  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 2Q League Table Daiwa Nomura Mizuho Mitsubishi UFJMS SMBC Nikko SMBC Nikko 1st Deloitte 14.8% 41.3

  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 2Q 3Q 4Q 1Q 2Q 1Q/FY19 2Q/FY18 1H 1H 1H/FY18 Operating revenues 20,022 18,838 17,821 17,759 17,626 -0.8% -12.0% 40,065 35,385 -11.7% 76,725 Management fee 19,847 18,672 17,665

  33. Slide 33: Earnings and Deposit Balance

    Daiwa Next Bank Earnings and Deposit Balance Gross Profits / Ordinary Income Daiwa Next Bank Deposit Balance & Number of Accounts (¥ Billions) (thousands) 25 4,000 1,500 Gross profits (annually) Gross profits (quarterly) Ordinary income (annually) Ordinary income (quarterly) Ordinary deposits 3,000

  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) 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q VaR （Quarter end） 1.16 1.93 1.13 1.34 1.39 1.76 1.06 1.33 1.42 High 4.19 2.

  35. Slide 35: Number of Group Employees

    Consolidated Number of Group Employees FY2017 FY2018 FY2019 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Total 16,207 16,200 16,088 16,651 16,516 16,519 16,419 16,499 16,306 Overseas 1,683 1,760 1,776 1,799 1,820 1,881 1,921 1,960 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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