4Q FY2011 Earnings Announcement April 27, 2012 Daiwa Securities Group Inc.

Transcription

1 4Q Earnings Announcement April 27, 212 Daiwa Securities Group Inc. 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 discuss future expectations, identify strategies, contain projections of results of operations or of financial conditions or state other forward-looking information. These statements are based on currently available information and represent the beliefs of the management of the Daiwa Securities Group. These statements are subject to numerous risks and uncertainties that could cause the Daiwa Securities Group s actual results, performance, achievements or financial condition to differ materially from those described or implied in the forward-looking statements. The Daiwa Securities Group undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. These potential risks and uncertainties include, but are not limited to: competition within the financial services industries in Japan and overseas, our ability to adjust our business focus and to maintain profitable strategic alliances, volatile and sudden movements in the international securities markets, foreign exchange and global economic situations affecting the Daiwa Securities Group.

2 Table of Contents Consolidated Results Summary 3-6 Break Down of SG&A 7-8 Balance Sheet 9 Segment Information 1-15 Other Domestic Group Companies and Overseas Operation 16 Reference Consolidated Daiwa Securities Daiwa Asset Management 32 2

3 Highlights : Net operating revenues increased by 5.5% y/y to Y 336 bil Retail: sales of investment trusts exceeded Y 2 tri, and its commissions rose by 6% y/y (p11). Asset Management: achieved an increase in net operating revenue compared to (p12). 4Q : Operating performances are bottoming out by increased revenue and cost reduction effect, achieving ordinary income Y 9.6 bil Retail: increased in revenues of Equity, Bond and Investment trust. Wholesale: cost/income structure substantially improved with cost reduction effect. Overseas business: completed approx. 5 personnel reduction by the end of March 212, and cost reduction plan has steadily progressed. Europe and America have returned to profitability (p16). Asset Management Division succeeded to expand market share in net asset balance of investment trust, achieving our historically highest level Asset Management: net asset balance of investment trust continued to expand successfully, reaching 18.8% at our highest level as of the end of 4Q. 3

4 Summary 4Q Net operating revenues were Y 9.9 bil (+29.3% q/q) Under the upturn in the market, Retail and Global Markets Divisions reached s highest net operating revenues in 4Q, achieving a large increase in commission received; Y 57. bil (+8.6% q/q) and in net trading income; Y 29.7 bil (+246.5% q/q). 4Q Ordinary income was Y 9.6 bil Ordinary income/loss returned to profitability through increased revenue in Retail Division and drastic improvement of cost/income balance in Wholesale Division. Consolidated personnel costs decreased to Y 36.2 bil (down Y 6 bil compared to 1Q). Overseas operation in Europe and America achieved a surplus. 4Q Net income was Y 1.9 bil Extraordinary income regarding consolidation of Daiwa Office Investment Corporation and booking of its negative goodwill were Y 37.3 bil, being offset by extraordinary loss of Y 29.9 bil including restructuring cost Y 7.9 bil and impairment loss Y 17.1 bil, resulted in extraordinary income Y 8.4 bil in total. Proposed Dividend per Share is 6 yen (including interim: 3 yen) Net operating revenues Ordinary income Net income (Y bil) (Y bil) (Y bil) Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/ Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/ Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11

5 Financial Summary (Y mil) 3Q 4Q 3Q FY11 FY1 Operating revenues 92, , % 43,42 422, % Net operating revenues 7,344 9, % 318, ,16 5.5% SG&A 86,352 85, % 363, , % Ordinary income -14,713 9, ,62-12,2 - Net income -21,567 1, ,331-39,434 - Total assets 17,22,452 18,924,38 16,842,411 18,924,38 Net assets 86,65 951,72 921, ,72 Shareholders' equity* 729, , , ,498 EPS (Y) BPS (Y) ROE (Annualized) - 5.8% - - * Shareholders equity = owners equity + accumulated other comprehensive income <Reference> Consolidated Capital Adequacy Ratio: 24.5% (As of December 31, 211) FY11 Dividend FY11 Proposed Dividend per Share: 6 yen (including 3 yen interim dividend) 5

6 P/L Summary ( Y mil) 4Q 1Q 2Q 3Q 4Q 3Q FY11 FY1 Operating revenues 83, ,625 12,48 92, , % 43,42 422, % Commissions 58,763 55,6 56,171 52,535 57,77 8.6% 218,63 22,845 1.% Net gain/loss on trading 15,985 26,244 14,895 8,572 29, % 92,476 79, % Net gain/loss on private equity and other securities -2,154 1,251 1,892 1,47-2, ,259 1,955 - Interest and dividend income 19,26 2,76 19,865 2,91 18,99-9.6% 71,915 79, % Other operating revenues 9,818 1,992 9,656 9,429 1, % 37,278 4, % Interest expenses 14,864 15,217 12,937 16,329 15,25-6.9% 58,61 59, % Other operating expenses 6,576 7,325 5,922 6,245 7, % 26,415 26,668 1.% Net operating revenues SG&A Operating income Non-operating income/loss Ordinary income Extraordinary income/loss Income before income taxes Total income taxes Net income 61,998 91,83 83,621 7,344 9, % 318, ,16 5.5% 94,697 94,21 93,729 86,352 85, % 363, , % -32,699-2,938-1,18-16,8 5, ,355-23,713-2,17 2,134 3,741 1,294 4, % 12,752 11, % -3, ,366-14,713 9, ,62-12,2 - -5,59-2,53-9,55-1,976 8, ,923-4, ,182-2,856-15,422-16,69 18, ,525-16,874-4,582 6,271 4,92 4,544 8, % 9,713 24, % -33,129-9,434-19,353-21,567 1, ,331-39,434-6

7 Break Down of SG&A (Y mil) 4Q 1Q 2Q 3Q 4Q 3Q FY11 FY1 SG&A 94,697 94,21 93,729 86,352 85, % 363, , % Trading related expenses 18,692 17,514 18,639 16,286 16,415.8% 7,398 68, % Personnel expenses 41,441 42,268 41,815 37,994 36, % 16, , % Real estate expenses 11,795 11,273 11,374 11,23 11,29-1.6% 45,257 44,88 -.8% Office cost 6,981 6,954 6,832 6,521 7, % 27,26 27, % Depreciation 1,55 1,153 1,235 9,879 9, % 39,163 39, % Taxes and dues 1,492 2,136 1,465 1,436 1, % 7,43 6, % Other 4,238 3,719 3,365 3,31 3, % 14,795 13,5-8.8% 7

8 Cost Structure (Y bil) 12 (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 Variable costs Fixed costs Depreciation Total SG&A Variable costs Trading related expenses Advertis ing expenses Bonus FA remuneration Overtime, part-time Fixed costs Personnel expenses Real estate expenses Depreciation Office expenses Taxes other than income taxes

9 Balance Sheet (Y bil) Consolidated Balance Sheet (3/12) Current assets 18,217 (1,95) Current liabilities 16,3 (2,64) Short-term investment securities 1,474 (1,389) Trading liabilities 5,953 (1,136) Trading assets 8,876 (2,16) Trading securities and others 3,57 (557) Trading securities and others 6,148 (1,598) Stocks, convertible bonds 128 (-153) Stocks, convertible bonds 29 (-221) Bonds 3,42 (69) Bonds 5,72 (1,798) Beneficiary certificates - () Beneficiary certificates 74 (1) CD/CP and others 2 (2) CD/CP and others 62 (11) Derivative liabilities 2,383 (579) Derivative assets 2,728 (57) Collateralized short-term financing agreements 6,68 (729) Private equity and other securities 138 (-39) Deposits for banking business 1,169 (1,169) (after Allowance for possible investment losses) Short-term borrowings 1,794 (-866) Daiwa Securities SMBC PI+Daiwa PI Partners 123 (-3) Commercial paper 275 (-12) Daiwa Corporate Investment 14 (-8) Current portion of bonds 215 (6) Collateralized short-term financing agreements 5,735 (-1,592) Non-current assets 76 (175) Non-current liabilities 1,966 (-12) Tangible fixed assets 394 (261) Bonds and notes 1,282 (-51) Intangible fixed assets 12 (-32) Long-term debts 623 (3) Investments and others 29 (-52) Total liabilities 17,972 (2,51) Investment securities 159 (-29) Net assets 951 (3) Listed stocks 75 (2) Owners' equity 81 (-45) Unlisted stocks 33 () Accumulated other comprehensive income -18 (-6) Others 5 (-31) Minority interests 163 (8) Others 5 (-22) Total assets 18,924 (2,81) Total liabilities and net assets 18,924 (2,81) Note: Figures in parenthesis indicate changes from 3/11. 9

10 Segment Information Net operating revenues (Y mil) 1Q 2Q 3Q 4Q 3Q FY11 FY1 Retail 45,593 42,716 37,88 45, % 178,97 172,33-3.9% Asset Management 9,648 9,778 8,871 9, % 36,324 37,424 3.% Global Markets 16,718 12,296 3,74 19, % 61,495 52, % Global Investment Banking 5,552 5,851 8,299 6, % 3,635 26, % Investment 1,262 1,249 1,527-2, ,277 1,9 - Others/Adjustments 12,38 11,727 1,761 12,181 26,416 46,98 Consolidated total 91,83 83,621 7,344 9, % 318, ,16 5.5% Ordinary income (Y mil) 1Q 2Q 3Q 4Q 3Q FY11 FY1 Retail 12,442 8,186 5,467 12, % 41,866 38, % Asset Management 4,71 4,137 3,26 3,2 -.2% 15,948 14, % Global Markets -12,835-15,827-22,475-3, ,173-54,433 - Global Investment Banking -5,82-4,436-2,731-1, ,733-14,284 - Investment , ,476-1,976 - Others/Adjustments 936 1,194 1,239 1,668-2,34 5,39 Consolidated total -83-6,366-14,713 9, ,62-12,2-1

11 Retail ( Y mil) 6 4Q % Cha nge 3Q FY11 Quarterly figures FY1 Net operating revenues 45, % 172,33-3.9% Ordinary income 12, % 38, % Increased revenues in equity, bond and investment trust, with individual investors return to the market. Sales and Distribution Amount by Product 1,2 Underwriting Equity Bond Investment trust Agency fee for investment trust Others Ordinary income (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Underwriting Equity Bond Investment trust Agency fee for investment trust Others Net operating revenues Ordinary income Note: Figures calculated on managerial accounting basis of Daiwa Securities and Hinode Securities Equity SMA + Fund wrap Pension insurance 8 Domestic bonds 4 Foreign bonds Mutual funds (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Equity SMA + Fund wrap Pension insurance Domestic bonds Foreign bonds Mutual funds Note: Mutual funds include switching transactions between funds. Foreign bonds include yen-denominated bonds. 11

12 Asset Management ( Y mil) Net operating revenues Ordinary income Q Q FY11 Quarterly figures FY1 Net operating revenues 9, % 37,424 3.% Ordinary income 3,2 -.2% 14, % (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net operating revenues Ordinary income Continuously expanded market shares in net asset balance of investment trust, reached 18.8% Daiwa AM (Bond funds) Daiwa AM (Equity funds) Daiwa SB Invesments (Investment trusts) Daiwa SB Investments (Investment advisory) Daiwa Securities Group Share* 合計 16, 12, 8, 4, Asset Under Management 12, % 13, % 13,891 13,997 14, % 17.8% 18.% 12, % 12, % 13, % (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Daiwa AM (Bond funds) 2,835 2,819 2,933 2,844 2,75 2,529 2,465 2,5 Daiwa AM (Equity funds) 5,858 6,111 6,276 6,418 6,76 5,937 5,95 6,624 Daiwa SB Investments (Investment trusts) 1,737 2,98 2,254 2,371 2,428 2,17 2,33 2,547 Daiwa SB Investments (Investment advisory) 2,264 2,269 2,428 2,364 2,3 1,99 1,928 2,21 Total 12,694 13,297 13,891 13,997 14,139 12,626 12,673 13,881 Daiwa Securities Group Share* 17.6% 17.6% 18.% 17.8% 18.% 18.4% 18.7% 18.8% *Industry balance share totaled Daiwa Asset Management (Bond funds + Equity funds) +Daiwa SB Investments (Investment trusts) 12 All figures are as of end of quarter. 19% 18% 17%

13 Global Markets ( Y mil) 4Q % Cha nge 3Q FY11 Net operating revenues 19, % 52, % Ordinary income -3, ,433 - Equity FICC Others Ordinary income Quarterly figures Note: figures calculated on managerial accounting basis of Daiwa Capital Markets. FICC: Fixed Income, Currency and Commodities FY (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Equity FICC Others Net operarting revenues Ordinary income Improved trading income/loss under a favorable market transition from settle-down of the market turmoil to upturn. Equity Revenues increased compared with 3Q through expansion of Block trade of Japanese stocks and Basket trade. FICC Structured bonds / Derivatives Hedge costs declined under the calming of market turmoil. Client flow improved under environmental change such as Yen depreciation. Credit bonds Improved q/q as calming of European debt crisis caused a favorable turn in overseas trading and recovered risk appetite of individuals for foreign bonds. 13

14 Global Investment Banking ( Y mil) 4Q % Cha nge 3Q FY11 FY1 Net operating revenues 6, % 26, % Ordinary income -1, ,284 - Expanded lead managing deals for Global Benchmark Bonds (16deals, USD 24.3 bil in ). Enlarged M&A business in Global, by strengthening of collaboration with DCA* (Europe) and Sagent (America). Equity underw riting Debt underw riting M&A/others Ordinary income Quarterly figures Debt Finance Major deals in 4Q Continuously achieved lead managing deals of Global Benchmark Bonds AfDB USD 1. bil NIB USD 1.25 bil Kommuninvest of Sweden USD 1. bil EBRD USD 1.5 bil Council of Europe Development Bank USD 1. bil M&A -1 (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Equity underwriting Debt underwriting M&A/others Net operarting revenues Ordinary income Note: figures calculated on managerial accounting basis of Daiwa Capital Markets. Tender offer for the Sankei Building Co., Ltd. by Fuji Media Service, Inc. Deal Size Y bil (Advisor to Fuji Media Service, Inc. and TOB Agent) Acquisition of CPA Global by European private equity firm (Cinven) : Deal Size Y 13. bil (Advisor to CPA Global) Acquisition of Special Devices, Inc. by Daicel Corporation (Advisor to Daicel Corporation) * Daiwa Corporate Advisory (its corporate name changed from Daiwa Corporate Advisory Partners) See the Major League Tables p

15 Investment ( Y mil) 4Q % Cha nge 3Q FY11 FY1 Net operating revenues -2,949-1,9 - Ordinary income -3, ,976 - Booked ordinary loss mainly due to provision for real estate investments. Quarterly figures Principal Investment Values Net operating revenues Ordinary income Private equity and PIPEs 2 15 Monetary claims 1 Real estate (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net operating revenues Ordinary income (Y bil) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Private equity and PIPEs Monetary claims Real estate Total All figures are the sum of Daiwa Securities SMBCPI and Daiwa PI Partners. PIPEs: Private Investment in Public Equities. All figures are as of end of quarter. 15

16 Other Domestic Group Companies and Overseas Operation Ordinary Income Domestic Group Companies ( Y mil) 4Q 1Q 2Q 3Q 4Q % Cha nge 3Q FY11 % Cha nge FY1 DIR Group* 2,196 1,84 1,393 1,76 1, % 8,339 6, % Other Domestic Group Companies % 1,59 1,65 3.8% Total ** 2,333 1,712 2,18 2,53 1, % 9,929 8, % Overseas Europe -3,557-2,596-1,899-1, ,954-5,39 - Asia/Oceania -4,17-4,935-4,76-4,884-3, ,133-17,72 - America , ,447-3,58 - Total -8,76-8,175-7,88-7,984-2, ,536-25,818 - * DIR Group includes Daiwa Institute of Research Holdings, Daiwa Institute of Research, and Daiwa Institute of Research Business Innovation. (Excluding in-group transactions and dividend from subsidiaries) ** Total figure of domestic consolidated Group companies excluding Daiwa Securities, Daiwa Capital Markets, Daiwa Asset Management, Daiwa Securities SMBCPI, Daiwa PI Partners, Daiwa Corporate Investment and Daiwa Investment Management. 16

17 Reference

18 Commission by Business Sector Total commission (Y mil) 4Q 1Q 2Q 3Q 4Q 3Q FY11 FY1 58,763 55,6 56,171 52,535 57,77 8.6% 218,63 22,845 1.% Equity Others Fixed Income Investment trust Distribution commission Mangement fee Investment banking Other Brokerage Commission Brokerage commission Others 14,893 1,273 9,952 8,177 11, % 5,254 4,221-2.% 14,58 1, 9,72 7,863 11, % 48,929 38, % % 1,325 1, % % 827 1, % 28,66 35,666 34,654 3,834 33, % 116, , % % % 7,182 13,286 12,498 1,63 12, % 31,144 48, % 21,339 22,232 22,19 2,113 2, % 85,182 85,331.2% Agency commission 8,16 8,277 7,786 7,112 7, % 33,399 3, % Underwriting commission (Equity) Underwriting commission (Bond) Distribution commission Others 11,84 6,183 8,1 1,65 7, % 38,74 32, % 6,983 1,88 2,134 6, % 16,367 1, % 1,866 1,977 2,652 2,49 2, % 9,771 8,91-8.8% % % 2,848 2,243 3,59 2,462 4, % 11,966 12, % M&A commission 2,151 1,845 2,734 2,152 4, % 9,533 11, % Life insurance sales commission Investment enterprise partnership administration fee Custody fee 3,69 2,786 2,971 2,674 4, % 12,18 12, % , % 1,977 2, % % 1,789 1, % % 2,919 2,83-4.% 1,593 1,399 1,472 1,19 1, % 5,422 5, % 18

19 Equity & Bond Division Revenues (Trading gain/loss) Managerial accounting basis (Y bil) 4Q 3Q FY11 FY1 (Y bil) 5 Quarterly figures (Managerial accounting basis) Equity % % Bond % % Total % % 4 3 <Reference> Financial accounting basis: Net Gain/Loss on Trading + Net financial income 2 ( Y mil) 4Q 3Q FY11 FY1 1 Equity 12, % -6,464 - Bond and forex 17, % 85, % Net financial income 3, % 2, % Total 33, % 99, % 4Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 Equity Bond Total

20 Equity Market Share FY29 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Market data Average daily trading value in TSE, OSE, and NSE: (Y bil) Share of individual investors: (%) 1,451 1,598 1,2 1,359 1,79 1,333 1,285 1,9 1, Market share (on and off floor) in TSE: (% ) Daiwa Securities Group (on and off floor) Daiwa Securities Daiwa Securities Capital Markets Share of Daiwa Securities Capital Markets in after-hours and off floor transactions : (% ) Market share Share of Daiwa Securities among individual investor transactions at TSE, OSE, and NSE : (%) Market share Daiwa Securities equity commission rate : (bp) Commission rate* * Adjusted rate: Denominator excludes value that generates revenues not reported as brokerage commission. 2

21 Customer Asset & Sales of Equity Investment Trust (Y tri) 5 Customer Asset (Overall Group) Sales and Net Increase Ratio of Equity Investment Trusts (Y bil) 6 Net increase ratio (right) 3% % % 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 Equity Bond Investm ent trust Others Total *All figures are as of end of quarter. Equity type investment trust (left) 4Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/ Sales through online (left) Net increase ratio (right) 22% 28% 11% 4% 1% 16% 14% 11% 1% purchase - (sell-off + redemption) Note: Net increase ratio(%)= 1 purchase Note: Include switching transaction between funds. % 21

22 Major League Tables 1st 2nd 3rd 4th 5th 1st 2nd 3rd 4th 5th IPO Primary and secondary equity offerings Straight bonds (excl. own bonds) Agency bonds League Table 4Q League Table Samurai bonds Nomura SMBC Nikko Nomura Nomura Mizuho 51.3% 36.5% 25.5% 22.7% 18.% Morgan Stanley MUFG Nomura Daiwa Capital Markets Mitsubishi UFJMS Nomura 15.1% 22.7% 18.3% 22.5% 17.2% Daiwa Capital Markets Daiwa Capital Markets Mitsubishi UFJMS Mizuho Daiwa Capital Markets 11.5% 13.5% 18.2% 19.8% 14.5% SMBC Nikko Mizuho Mizuho SMBC Nikko Mitsubishi UFJMS 8.1% 12.6% 17.4% 13.6% 14.3% Goldman Sachs JP Morgan SMBC Nikko Daiwa Capital Markets SMBC Nikko 5.5% 3.8% 11.5% 11.6% 8.9% Nomura SMBC Nikko Nomura Mitsubishi UFJMS JP Morgan 87.2% 46.7% 32.7% 28.2% 24.7% Mizuho Nomura Daiwa Capital Markets Nomura Nomura 5.2% 22.3% 23.2% 24.% 17.8% SBI Mizuho Mitsubishi UFJMS Mizuho Mizuho 4.5% 1.% 13.3% 21.% 15.8% Daiwa Capital Markets JP Morgan Mizuho SMBC Nikko Goldman Sachs 3.1% 6.8% 13.1% 13.7% 12.6% Deutsche Bank SMBC Nikko Daiwa Capital Markets Mitsubishi UFJMS 5.4% 9.4% 6.2% 11.% M&A (number of deals) Nomura Mizuho FG SMFG Daiwa Securities Group Morgan Stanley Nomura Mizuho FG SMFG Morgan Stanley Daiwa Securities Group Source: Daiwa Securities Capital Markets Apr 211-Mar 212 Note: Straight bonds, agency bonds and samurai bonds are based on launch date. Primary and secondary equity offerings are based on settlement date. IPO is based on listing date. Joint lead manager allotment is based on underwritten amount. Source: THOMSON REUTERS Apr 211-Mar 212 M&A advisory league table for any Japanese involvement announced (AD19) 22

23 VaR Range and assumption of VaR Confidence level: 99% (one-side test) Holding period: 1 day Adjusted for price correlation between product Daiwa Securities Group (Consolidated) (Y bil) 4Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 VaR (Quarter end) High Low Average By risk factors (Quarter end) Equity Interest Currency Commodity *All figures are as of end of quarter 23

24 Number of Group Employees (# of employees) 18, 15,75 15,953 15,731 15,733 15,618 15,895 15,592 15,214 14,759 Total 14,759 (-455) Daiwa Securities Group Inc. 741 (-1) 12, Daiw a Se curitie s 6,277 (-223) 6, Daiw a Securities Capital Markets(Domestic) 1,554 (-37) Other dom estic com panies 4,12 (-49) Overseas 2,175(-145 ) 4Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 Changes 3Q/11 Number of employees as of end of quarter. Total figure is the sum of consolidated group companies and Daiwa SB Investments. Figures for Daiwa Securities include Financial Advisers (FA). Since FY9/4Q, figures for Daiwa Securities SMBCPI and Daiwa PI Partners have been included in other domestic companies. Since FY1/3Q, figures for overseas include employees (approximately 15) gained from acquisition of KBC group s business operations. 24

25 Daiwa Securities Financial Summary (Y mil) 4Q 1Q 2Q 3Q 4Q 3Q FY11 FY1 Operating revenues 45,689 45,695 42,843 38,3 45, % 179, , % Commissions 31,27 3,93 29,51 25,976 3, % 118, , % Brokerage commision 8,252 4,895 5,64 4,19 5, % 26,31 19, % Stock and others 7,792 4,458 4,669 3,739 5, % 25,88 18, % Distribution commission 12,526 15,59 14,229 12,245 13, % 48,675 55, % Stock and others 3, % 7,18 1, % Bond and others 2,589 2,45 1,623 1,612 1, % 11,451 7, % Investment trust 6,924 12,626 12,31 1,349 11, % 3,43 46, % Other commissions 1,491 1,497 1,27 9,711 11,5 13.3% 43,898 41, % Investment trust 7,988 8,14 7,644 6,98 7,39 4.7% 32,621 3,39-7.9% Net gain/loss on trading 12,778 13,96 11,663 1,59 13, % 53,826 49,17-8.9% Equity 2,198 2,499 1,87 2,194 2, % 8,55 9, % Bond and forex 1,579 1,597 9,792 8,314 1, % 45,276 39, % Interest and dividend income 1,641 1,696 1,679 1,544 1, % 6,398 6, % Interest expenses % 1,375 1,376.% Net operating revenues 45,359 45,37 42,52 37,691 45, % 177, , % SG&A 32,937 33,22 34,763 32,336 33, % 137, , % Ordinary income 12,699 12,245 8,33 5,447 12, % 41,272 38, % Net income 8,99 7,183 3,37 2,261 3, % 24,467 16, % ROE(Annualized) 13.% 11.8% 5.1% 4.2% 7.4% - 9.7% 7.2% - Capital adequacy ratio 45.3% 461.% 487.5% 365.2% 44.% % 44.% - 25

26 Daiwa Securities Breakdown of SG&A (Y mil) 4Q 1Q 2Q 3Q 4Q 3Q FY11 FY1 SG&A 32,937 33,22 34,763 32,336 33, % 137, , % Trading related expenses 4,42 3,975 4,481 3,966 3, % 16,692 16,26-2.9% Personnel expenses 13,462 14,63 14,981 13,93 14, % 58,7 57,83 -.4% Real estate expenses 4,651 4,615 4,68 4,42 4,44.5% 18,6 18,86-2.8% Office cost 5,892 5,728 6,14 5,469 5, % 23,84 22, % Depreciation 4,72 3,898 3,886 3,832 3,526-8.% 16,381 15, % Taxes ans dues % 1,159 1, % Other % 2,48 2, % 26

27 Daiwa Securities/Daiwa Next Bank Number of Accounts and Balance of Client Assets Daiwa Securities' Number of Accounts (thousands) FY29 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Cash Management Service accounts 3,359 3,374 3,383 3,392 3,41 3,414 3,435 3,444 3,455 Accounts holding equity 1,4 1,47 1,46 1,397 1,41 1,399 1,41 1,396 1,391 Accounts holding equity investment trusts Daiwa Securities' Newly Opened Accounts (thousands) Newly opened accounts Daiwa Direct Course Daiwa Securities' Wrap Account Number of customers (thousands) Daiwa SMA Daiwa Fund Wrap Contract asset under management (Y bil) Daiwa SMA Daiwa Fund Wrap Daiwa Next Bank's Number of Accounts and Deposit Balance (includes Group's deposits) Number of Accounts (thousands) Deposit Balance (Y bil) * ,233 1,432 Ordinary deposits Time deposits * Deposit Balance includes negotiable certificates of deposit. All figures are as of end of quarter. All figures are as of end of quarter. All figures are as of end of quarter. 27

28 Daiwa Securities Online Trading FY29 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Online trading Number of accounts (thousands) 2,183 2,23 2,218 2,233 2,249 2,31 2,381 2,419 2,457 Assets under custody (Y bil) 11,285 1,462 1,57 11,37 11,46 11,745 11,863 12,24 13,887 Daiwa Direct Course Number of accounts (thousands) 1,251 1,27 1,285 1,299 1,314 1,328 1,34 1,35 1,363 Assets under custody (Y bil) 2,763 2,549 2,547 2,699 2,676 2,666 2,541 2,522 2,81 Daiwa Direct margin transaction service Number of accounts (thousands) Margin position (Y bil) Foreign exchange* Number of accounts (thousands) Trading value (Y bil, quarterly basis) 2,574 4,712 4,875 6,833 7,948 7,319 6,375 4,632 4,369 * Total figure is the sum of Daiw a FX (OTC FX margin trading) and Daiw a 365FX (FX margin trading on exchange) All figures are as of end of quarter. Online ratio for retail investors (Equity) Online ratio (number of contracts) (%) Online ratio (trading value) (%) Online ratio (commission) (%) Online contracts, trading value and equity commission for retail investors Total # of online contracts (thousands) 1,588 1,763 1,235 1,516 2,431 1,65 1,656 1,43 2,24 Total online trading value (Y bil) 1,75 1, ,68 1,73 1,62 1, ,351 Total online equity commission (Y mil) 2,666 2,893 1,44 1,723 2,914 1,71 1,756 1,352 2,26 28

29 Daiwa Securities Equity Brokerage Commissions (Y mil) 1, Daiwa Securities Equity Brokerage Commissions and Market Share 8% 8, 7,572 7,226 7,792 6% 6, 5,669 5,573 4, 4,4 4,458 4,669 3,739 4% 2, 2% 4Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 2,74 2,93 1,46 1,748 2,958 1,721 1,776 1,365 2,51 4,868 4,296 2,94 3,921 4,834 2,737 2,893 2,373 3, % 4.5% 4.3% 5.% 5.3% 4.7% 4.8% 4.8% 5.2% 7,572 7,226 4,4 5,669 7,792 4,458 4,669 3,739 5,573 Equity brokerage commissions excl. online & call center (left) Online & call center (left) Daiwa s retail market share for individual investors (right) % Note: Excludes foreign equities listed on overseas. Market share is the share among total trading value by individuals on the Tokyo, Osaka, and Nagoya Stock Exchanges. 29

30 Daiwa Securities Foreign Equity Foreign Equity Revenues Foreign Equity Trading Value (Y bil) 4 Foreign Equity Revenues (left) Proportion of foreign equity in equity revenues (right) 5% (Y bil) 2 China, Hong Kong Asia (Others) North America India Brazil Others 4% % 2 1 2% 1 1% 5 4Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 Note: Managerial accounting basis. % 4Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 3

31 Daiwa Securities Net Inflow of Assets under Custody Net Inflow of Assets Net Inflow of Cash and Securities (Individuals) (Y bil) (Y bil) Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/11 Corporation Individual Total Net inflow of cash Net inflow of se curitie s 4Q/9 1Q/1 2Q/1 3Q/1 4Q/1 1Q/11 2Q/11 3Q/11 4Q/ Note: Net inflow of assets = net inflow of cash and securities 31

32 Daiwa Asset Management Financial Summary (Y mil) 4Q 1Q 2Q 3Q 4Q 3Q FY11 FY1 Operating revenues 18,174 19,123 19,32 17,274 17,91 3.6% 72,648 73,332.9% Management fee 18,95 19,39 18,938 17,17 17, % 72,33 72,931.9% Equity investment trust 17,857 18,834 18,746 16,99 17, % 71,241 72, % Bond investment trust % 1, % Other operating revenues % % SG&A 14,915 15,69 15,628 14,584 15, % 59,551 61, % Commissions paid 1,322 1,754 1,64 9,646 1,9 3.8% 41,437 41,5 -.9% Other SG&A 4,592 4,935 4,988 4,938 5, % 18,114 2,91 1.9% Operating income 3,259 3,433 3,44 2,69 2,663-1.% 13,97 12,19-6.9% Ordinary income 3,287 3,55 3,374 2,661 2, % 13,741 12, % Net income 1,893 1,932 2,12 1,812 1, % 9,25 7, % 32

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