Daiwa Investment Conference Tokyo 2018 Sustainability & Innovation March 6th, 2018

Transcription

1 Daiwa Securities Group Daiwa Investment Conference Tokyo 2018 Sustainability & Innovation March 6th, 2018 Seiji Nakata, President and CEO 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 condition 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 Daiwa Investment Conference Tokyo 2018 Index Sustainability & Innovation Ⅰ - Evolvement of Daiwa Securities Group 3 Ⅱ - FY2017 Strategic Themes and its Progress 6 Quality No.1 8 Hybrid Securities Group 14 Ⅲ - Direction of the New Medium-Term Management Plan 21 Appendix 25

3 Ⅰ- Evolvement of Daiwa Securities Group : Business Structure Supporting Sustainable Growth

4 Ⅰ- Evolvement of Daiwa Securities Group Established a Robust Business Structure Supported by Stable Revenues Ordinary Income by Business Segments (Y bil) 70 Retail Wholesale Asset Management Investments Consolidated total (Y bil) Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY Fixed Cost Coverage Ratio Overseas Ordinary Income Shareholders equity Fixed cost (left) Stable revenues (left) 34% FY % 3Q FY2017 (Annualized) 60% 40% 20% 0% (Y bil) FY2010 remained in the black FY2017 Y bil FY x Fixed cost coverage ratio (right) 6 for 7consecutive (Y bil) quarters Y1.2 Daiwa Securities % tri 3Q FY2017 Credit Ratings S&P:Upgraded on Jul Group Inc. Daiwa Securities Co. Ltd. Moody s:upgraded on Oct Daiwa Securities Group Inc. Daiwa Securities Co. Ltd. A- A Baa1 A3 4

5 Ⅰ- Evolvement of Daiwa Securities Group Culture and DNA built up over the course of our 116-year History Group strategy Corporate principles formulated in 1999 Building trust Placing importance on personnel HR strategy Initiatives towards improving the quality Introduction of new education program Q-Road (for employees within 3 to 5 years from joining Daiwa) Hold CQ1 mtgs.(to penetrate Client 1 st and Quality No.1 through all employees) The Number of CFP Holders * Contribute to the development of society and economy through financial and capital markets Contributing to society Maintaining healthy earnings results Compliance Self-discipline Supporting the Success of Female Employees % Code of conduct for employees Daiwa Spirit formulated in 2008 (excerpts below) % Integrity and expertise Pioneer spirit Company-employee trust / Solidarity Professionalism Create work environments that allow all employees to fully deploy their abilities with the best intentions Among domestic insurance and financial industry 1 位 ** No.1 Female employees career support training initiatives Implemented a nanny introduction system Female Employees in Managerial Positions Initiatives towards Work Style Innovation High standards Prompt responsiveness Penetration of leaving work by 7pm Removed the age limit of reemployment for sales representatives Expand support for balancing work and nursing care Introduced a plan to support working for employee diagnosed with cancer Bloomberg Financial Service Gender Equality Index MSCI Japan Women Empowering Index (WIN) FTSE Blossom Japan Index Nadeshiko Brand (ministry of economy, Trade and Industry & Tokyo Stock Exchange) Health and Productivity Stock Selection (ministry of economy, Trade and Industry & Tokyo Stock Exchange) 0 Mar Feb Mar Jun *Includes the number of employees who have passed all 6 subjects and are in the process of applying for the certification. ** Based on announcement of Japan Association for Financial Planners. 5

6 Ⅱ- FY2017 Strategic Themes and its Progress

7 Ⅱ- FY2017 Strategic Themes and its Progress For Sustainable Growth Culture and DNA built up over the course of our 116-year history A robust business structure supported by stable revenues Quality No.1 Establish industry s highest quality Hybrid Securities Group Leverage the benefits of being an independent securities group Continued growth through maintaining healthy earnings results=sustainability 7

8 Ⅱ- FY2017 Strategic Themes and its Progress Quality No.1

9 Ⅱ- FY2017 Strategic Themes and its Progress Provide Highest Quality Service Quality No.1 Establish a sales model with more priority on customer perspective to accomplish Quality No.1 Sales System Customer Satisfaction Introducing Bottom-up Sales Approach Visualization of Customer Satisfaction Wealth mgmt. Equities Investment trusts Wrap Account services Each sales branch makes sales decisions based on customer needs Customer Questionnaires <Sample Questions> Whether the latest transaction was based on true understanding of customer needs Level of overall satisfaction with the branch Over-the-Counter Service Survey <Sample Survey Items> Willingness to listen to customers How to use materials and what to explain Appropriate services and proposals Consideration for customers Implementation of a new indicator (NPS : Net Promoter Score ) Branch A Branch B Branch C Further penetration to whole organization as KPI Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc. 9

10 Ⅱ- FY2017 Strategic Themes and its Progress Strengthen Support for Foreign Equities Quality No.1 Further strengthen customer support for foreign equities by providing timely and high quality information from overseas offices. Trading value of foreign equities reached a record high by capturing strong demand from retail customers under the new sales promotion strategy. Expansion of Foreign Equity Trading Value and AUC (vs 4Q FY2016) Strengthened Customer Support for Foreign Equity trading Provide timely and high quality information from overseas offices 売買代 Trading value Asset Under Custody (at the end of the quarter) 2.6x 1.6x London Mumbai New Accounts Purchased Foreign Equities * 2.3x (monthly average) Hong Kong Tokyo Singapore Melbourne New York NY Market Expand foreign equity seminars Foreign equity seminars at each branch Online US equity seminars 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2015 FY2016 FY2017 FY2016 FY2017.3Q *Accounts which did not hold foreign equities for past one year 10

11 Ⅱ- FY2017 Strategic Themes and its Progress Provide Products through Customer s Perspective Provide best-performing investment trusts among the industry, including those other than Daiwa. Newly introduced Daiwa Advance Wrap which offers flexible international diversified investments. Strengthen Product Selection Capabilities for Investment Trusts New lineup funds:11(apr Feb. 2018) Managed by outside the Group:6 Japan equities Developed countries equities Emerging countries equities Global bonds DIAM Domestic Equity Open Manulife US Bank Equity Fund Fidelity European Smaller Companies Open UBS Emerging Countries Equity Selected Investment Fund PIMCO Income strategy fund Manulife US Investment Grade Bond Fund Launch investment Trusts Meeting Customer Needs Jan Newly launched fund Global EV Revolution Fund Investing mainly into companies expected to grow with expansion of EV (Electric Vehicle) Robeco SAM* manages mother fund with ESG perspective Introduced Daiwa Advance Wrap for Meeting the Customers Needs of Performance-oriented High Added value Online Contract AUM for Wrap Account Service (Y bil) 2,500 2,000 1,500 Quality No.1 Daiwa Fund Wrap Premium Minimum Amount of contract PAA Service** Daiwa Advance Wrap Launched in Mar ,242 High Core Investment, Y100 mil - 機動的な国際分散投資の flexible international Daiwa ダイワ diversified investment and コア運用 とお客様独自の Satellite Investment, アドバンスラッ Advance based サテライト運用 on each customers Wrap original needs プ Investment portfolio: Y30 mil - 最大 up to 5つの運用口 5 Investment style: 約 500 通りの運用スタイル Premium about 500 プレミアム 相続時受取人指定サービス Inheritance beneficiary designation service Y3 mil - ダイワ Investment Daiwa 100 種類以上の運用スタイル style: more than 100 Fund ファンドラップ Wrap Y0.5 mil - オンライン Online 1,540 1,661 1,944 ロボ アドバイザーの活用 Utilization of roboadvsior technology Global EV Revolution Fund 1, (FY) * Robeco SAM is an investment specialist, owned 100% by asset management company Robeco Group in Netherlands, focused exclusively on sustainability investing. **Private asset allocation service 11

12 Ⅱ- FY2017 Strategic Themes and its Progress Increase Face-to-Face Customer Contact Optimize sales channels to meet various customer needs. Implement efficient sales branch strategy by rationalizing and integrating existing sales branches, and increasing small-size sales offices at the same time. Optimize Sales Channels Subdivision customers attributes and life stages and optimize sales channels (Started with 7 branches from 2H FY2017) Quality No.1 Sales Branch Strategy (Number of Daiwa Securities Sales Branches) (Sales branches) 160 Sales Offices Low-cost & small-size offices without back-office functions Includes 36 sales offices 153 Customers Life Stages Asset Conservation Period (age 75 -) Asset management / succession period (age 50 -) Asset building period (age 20-40) Non-active clients CS (Client Support) Mass Active clients NEW Financial Consultant Mass-affluent, Affluent NEW Anshin Planner (consultant for elderly) Wealth Consultant Sales branches excl. sales offices Scheduled to integrate 2 large branches in Nagoya (FY) (Scheduled) ( 予定 ) ( 予定 ) Future Plan Anshin Planner and Financial Consultant Scheduled to be introduced to 10 additional branches from Apr Aim to be introduced to all branches by 2020 Select sales branches opening area by local area marketing Increase flexible & low-cost sales offices Improve area coverage ratio to increase customer contacts 12

13 Ⅱ- FY2017 Strategic Themes and its Progress Services for Asset Building Generation Quality No.1 Provide services to be chosen by asset building generation through offering lowest fee in the industry for Daiwa s ideco and strengthening promotion for monthly investment-type NISA. Promote Investment for Savings Utilizing Tax Benefits Promotion of Daiwa s Monthly Investment-type NISA Individual-type Defined Contribution (ideco) 2002 The scope of individuals eligible to participate expanded from 2017 Year Started Monthly Investment-type NISA 2018 Use LUPIN the THIRD, a famous cartoon characters among people in their 40 s, for a character of Daiwa s monthly investment-type NISA Individuals aged between 20 and 60 Eligibility Japan residents aged 20 and above Deductible at time of installment Non-taxable on capital gains Tax benefit at time of receipt Tax Benefit Capital gains, dividends are tax exempt for 20 yrs. Y144,000 to Y816,000 per year Daiwa s ideco Lowest fee in the industry (Zero management fee) Expand customer base by using external channels Amount Limit Daiwa s Services Most attractive level of Competency campaign in the industry (13,000yen gift as maximum) + Future Plan Y400,000 per year Promote Workplace Monthly Investment-type NISA Daiwa s Monthly Investment-type NISA LUPIN the THIRD Launch and Promotion of Workplace Monthly Investment-type NISA Provide Daiwa s monthly investment-type NISA by payroll deduction or deduction from bank account Introduced to Daiwa Securities Group as one of fringe benefits paying 5% incentive (applied for by more than 3,000 employees) 13

14 Ⅱ- FY2017 Strategic Themes and its Progress Hybrid Securities Group

15 Ⅱ- FY2017 Strategic Themes and its Progress Expansion Strategy of Group Business Hybrid Securities Group Traditional securities business x Diversified business portfolio Hybrid Securities Group Leverage the benefits of being an independent securities group Advantageous Position in Securities Business Image of Hybrid Securities Group Group Strategy centered on banking business Low (Bank affiliates, etc.) High Stability of the Group s revenue base Independence of management Low Daiwa Securities Group Business development not bound by industry law Group strategy centered on securities business Stable and efficient diversified business portfolio High (Independent) Business model centered on wholesale business Banking Business Daiwa Next Bank Asset Management Business Daiwa AM Daiwa SB Real Estate/ Infrastructure AM Business Daiwa Real Estate AM Mi-Casa AM Traditional securities business (Daiwa Securities) New Services Utilizing FinTech New Business Investment Business IT/Think Tank Daiwa PI Partners DIR Daiwa Corporate Investment Overseas Business Overseas Subsidiaries Alliance Partners 15

16 Ⅱ- FY2017 Strategic Themes and its Progress Hybrid Securities Group Synergies with Retail Division from Managing Large-deals Retained 1 st place on PO/IPO league table by managing a number of large deals. Realized synergies with Retail Division such as expansion of new customer base and revenue growth. League Table (Apr. Dec. 2017) Rank Primary and Secondery equity offerings Share Rank IPO Share 1 (3) Daiwa 29.3% 1 (3) Daiwa 27.0% 2 (2) Nomura 25.6% 2 (1) Nomura 26.7% 3 (5) Mitsubishi UFJMS 10.5% 3 (2) Mitsubishi UFJMS 13.9% Newly Opened Accounts by PO/IPO * (Apr. Dec. 2017) *Exclude accounts that were newly opened through employee benefit plans such as employee stock ownership and accumulation savings, etc. Renesas Electronics Idemitsu Kosan Japan Post SGHD Katitas Optorun 4 (4) Mizuho 8.0% 4 (4) Mizuho 11.2% 5 (9) Goldman Sachs 7.9% 5 (5) SMBC Nikko 10.0% ():FY2016 results (Source) Daiwa Securities Co. Ltd. Daiwa Securities Underwriting Commission (equities) Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Large PO/IPO Deals Lead-Managed by Daiwa (Y bil) Renesas Elecronics Jun Global PO Offering Size Y348.5 bil Idemitsu Kosan Jul Global PO Offering Size Y bil SG Holdings Dec Global IPO Offering Size Y127.6 bil Successful Investment Experience for Retail Customers (Estimation of wealth effect based on offering price*) (FY) Q-3Q FY2017 Y20.7 bil Y45.7 bil Y12.2 bil ** (Share price on Feb. 28 Offering price) x No. of shares sold by Daiwa to domestic retail customers 16

17 Ⅱ- FY2017 Strategic Themes and its Progress Hybrid Securities Group Promoting M&A Deals by Leveraging Daiwa s Global Network Sagent and Signal Hill integrated into DCS Advisory on March 1st, Continue to aggressively promote M&A advisory by leveraging global network including new platform in the U.S.. Purpose for Acquiring Sagent & Signal Hill Consolidated Group M&A Commission (1Q-3Q FY2017) (Y bil) To create synergy with other overseas offices by expanding size and sector coverage To expand sector and regional coverage within the U.S. (esp. west coast) 0 1Q 2Q 3Q Asia Japan Japanese M&A Market Size * (Y tri) Total deal value of M&As by Japanese corporations cross-border deals within total deal value 0 (CY) Daiwa s M&A Global Network and Cross-border M&A Deal Value ** Europe Between Japanese and European corporations Y1.6 tri Between European and American corporations Y35 tri Alliance partners Japan Asia/ Oceania America Between Japanese and American corporations Y2.3 tri *Source:Recof ** 2017 results(source: Thomson Reuters), 1$=JPY112.2 (2017 average) 17

18 Ⅱ- FY2017 Strategic Themes and its Progress Hybrid Securities Group Further Expansion of Real Estate Asset Management Business Newly invested into Samty Residential Investment Corporation and Samty Asset Management Co.,Ltd.. AUM of real estate asset management stood at Y880 bil and looking to reach Y1 tri Daiwa s Real Estate AM Business AUM Initiatives towards Expanding Real Estate AM Business (Y bil) 1, Samty Residential Investment Corporation Japan Rental Housing Investments Inc. Nippon Healthcare Investment Corporation Daiwa Residential Private Investment Corporation Daiwa Office Investment Corporation Other Investment to Samty Residential and Samty AM 33% Samty Asset Management Co.,Ltd. Type II Financial Instruments Business Operator, Investment Business Management Business, Investment Advisory and Agency Business Capital Y120 mil Main Sponsor Y15 bil Samty Residential Investment Corporation (3459) Total acquisition Y81.5 bil As of Feb amount Investment Targets Residences (Emphasis on single and compact type properties) Prepare for the launch of hotel-focused private REIT As of the end of fiscal year, based on acquisition amount Investment Corporation Name Investment Targets Status Daiwa Office Investment Corporation Offices Listed Daiwa Residential Private Investment Corporation Nippon Healthcare Investment Corporation Japan Rental Housing Investments Inc. Samty Residential Investment Corporation Asset Management Company ():% share held by Daiwa Group Residences Unlisted Daiwa Real Estate Healthcare Asset Management Co. Ltd. (100) Listed facilities Residences Listed Residences Listed Mi-Casa Asset Management Inc. (98) Samty Asset Management Co.,Ltd. (33) Plan to operate in 1H FY2018 Hotel-focused private REIT Primarily investing in 23 wards of Tokyo, 7 major cities(osaka Kyoto Nagoya Yokohama Sapporo Fukuoka Urayasu)and cities located near the international airports such as Narita and Kansai Lease agreements consist of the high proportion of fixed rent Initiatives Going Forward Expand asset size of existing funds Diversification of investment Expand real estate AM business overseas 18

19 Ⅱ- FY2017 Strategic Themes and its Progress Hybrid Securities Group Initiatives on New Businesses Centered on AI and FinTech Create new value utilizing FinTech and business and capital alliances with the companies outside the group by defying the boundaries of existing securities business. Major Initiatives in FY2017 Establish next generation securities platform Foster new businesses Strengthen capabilities of providing information Operational efficiency New company creating next generation financial services Fintertech = Finance Entertainment Technology Foundation Apr Shareholder Daiwa Securities Group Inc. (100%) Establish Fintertech for creating next generation financial services Started to provide Daiwa securities market information compatible with Amazon Alexsa Capital and Business Alliance with KDDI in asset-building field Started to provide market information utilizing AI Entered into an agreement with Finatext and Smartplus Developed real time-based stock volume forecast model by AI Plan of compliance related operational efficiency by AI Invested into startups with next generation through DG Lab Fund Started to apply Blockchain to securities post-trade business Introduced Chatbot to improve operational efficiency of answering internal inquiries Started to provide stock information using stock price forecast model by AI Capital* Y800 mil Forefront Technologies DG Lab Fund LP Investment <Investment Fields> Blockchain AI VR/AR SECURITY BioTech <Investment Examples> *Includes capital reserve Expertise in Securities and Financial Businesses 50% Investment 50% Digital Channel Provide next generation financial services to Digital-Native customers invested into startups with next generation technology LP Investment 19

20 Ⅱ- FY2017 Strategic Themes and its Progress Hybrid Securities Group Capital and Business Alliance in Asset-Building Fields Strengthen service platform through the capital and business alliance with KDDI, the major telecommunications providers owning various customer base to promote customer s asset building by providing ideco and investment trusts. Capital and Business Alliance with KDDI (Establishment of KDDI Asset Management) Household Financial Assets * and Population of Smartphone Holders ** by age groups (Estimated) au users The number of contracts: 39mil 66.6% Investment 33.4% Investment KDDI Asset Management Defined Contribution New ideco Provide Products Investment Trusts Investment Trusts for Asset Building Generation Daiwa s ideco New ideco products Daiwa s Customer Daiwa Institute of Research Business Innovation System (Y ten thousands) Age Group of (Y ten thousands) eligibility for ideco 3,000 2,500 2,000 1,500 1, Others Securities Insurance Cash and Deposits Smartphone Holders (Right) 1,600 1,400 1,200 1, Strongly support the transition from savings to asset building by providing new investment opportunities for individual investors 0 Age 20 to 29 Age 30 to 39 Age 40 to 49 Age 50 to 59 Age 60 to 69 Age 70 and *Household basis(2 or more persons) as at Sep **Estimated by multiplying the ratio of smartphone holders for each age group by population of each age group (2016). over 0 (Source) Complied by Daiwa Securities Group Inc. based on Family budget Survey, Communications Usage Trend Survey, and Population Estimates by the Ministry of Internal Affairs and Communications 20

21 Ⅲ- Direction of New Medium-Term Management Plan : Promoting Innovation

22 Ⅲ- Direction of New Medium-Term Management Plan Direction of New Medium-Term Management Plan 1 Business Opportunities Resolve issues with our clients to prepare for an uncertain future = Create the Future Domestic Household Financial Assets Corporation / Local Government Asia Industrial structure Fierce Population and Widening gap Fiscal Digital Age of longevity competitive economic and diversity stringency transformation environment growth Importance of life planning Diversified financial needs Develop social-issue -solving industries Strengthen global competitiveness Correspond to industrial structure change Approaches to both high net-worth and mass-affluent Link Japan and growth of Asia Direction of Strategy Identify and develop new industries Approaches to new business areas Daiwa Securities Group s Passion, Professionalism, Potential +Innovation Create the Future as Pioneer of Financial and Capital Market Provide value-added solution with the highest quality consulting services Create and provide new value as hybrid securities group 22

23 Ⅲ- Direction of New Medium-Term Management Plan Direction of New Medium-Term Management Plan 2 Customer Oriented KPI Customer Satisfaction AUC at Daiwa Securities Financial KPI Earnings KPI Consolidated Total Capital Ratio ROE Ordinary Income 23

24 Ⅲ- Direction of New Medium-Term Management Plan SDGs as Management Strategy Established SDGs Promotion Committee to solve social issues through our group business in financial and capital markets. Gather latest information on global initiatives on SDGs and discuss group wide approaches and solutions. Daiwa Securities Group SDGs Promotion Committee Chairman:Seiji Nakata, President & CEO of Daiwa Securities Group Inc. Daiwa Securities Group Inc. Establish SDGs Promotion Office Group Companies Daiwa Securities Co. Ltd. Daiwa Institute of Research Holdings Ltd. Daiwa Asset Management Co. Ltd. etc. SDGs Finance SDGs Technology SDGs Local Community 24

25 Appendix

26 nvtoiomsitivcloftrroecyaedansitiofrvinntofmcosapnrgsetesenimlutatnvemeorovaepappendix Medium Term Management Plan ( Passion for the Best 2017) In response to the full-fledged start of an era of transition from savings to investment, attract customers with the industry s top quality, and become their best partner FY2015 FY2016 FY2017 Provide investment services to lead the era of transition from savings to investment Basic Policy 1: Pursue best quality Establish product and service platforms in response to the needs of a wide range of investors Strengthen asset management abilities Expand the pool of talented personnel with advanced expertise Basic Policy 2: Dramatically expand the customer base and revenue Strengthen approach to a wide range of investors by leveraging product and service platforms Dramatically expand the customer base and revenue by responding to growing investment needs Basic Policy 3: Support the sustainable growth of companies and the development of new industries Identify and develop next-generation growth companies and help them to raise capital for growth Provide solutions in response to corporate globalization and M&A needs 1. ROE: 10% or more Numerical targets P 2. Fixed cost coverage ratio : 75% or more in the final fiscal year Provide solutions that contribute to the improvement in corporate value 26

27 Appendix Medium Term Management Plan : Progress of Numerical Targets ROE: 10% or more Fixed cost coverage ratio : 75% or more in the final fiscal year Profit attributable to owners of parent company (Y 100mil) Shareholders equity (Y bil) ROE ROE (excl. effect of losses carried forward belonging to Daiwa Securities) Fixed cost (Y bil) Stable revenues (Y bil) Fixed cost coverage ratio Stable revenues consist of : AM Management fees (including investment advisory fees), agency fees, Daiwa Next Bank profit margins, Daiwa Office Investment net operating revenues, Daiwa Real Estate AM management fees, management fees on SMA/Fund Wrap, interest fees on margin, interest fees on LMS etc. 27

28 Appendix 3Q FY2017 Earnings Result Summary 3Q FY2017 Net operating revenues: Y134.9 bil (+3.1% QoQ) Revenue in Retail Division expanded due to increase in equity trading volume and stock investment trust sales reflecting strong domestic and overseas equity market. For Wholesale Division, Global Investment Banking maintained strong performance and equity revenues in Global Markets grew from increased client flow. 3Q FY2017 Ordinary income: Y43.2 bil (-1.4% QoQ) SG&A rose to Y94.7 bil (+4.2% QoQ) as bonus linked to earnings increased. It remained at a high level, even though ordinary income slightly dropped from the 2nd quarter in which there was a capital gain by an exit of the investment in Investment Division. 3Q FY2017 Profit attributable to owners of parent company: Y22.6 bil (-28.9% QoQ) Profit attributable to owners of parent decreased as provision for loss on litigation (Y9.5 bil) was posted in 3Q FY2017. Annualized ROE: 7.1%, BPS: Y Net Operating Revenues Ordinary Income (Y bil) (Y bil) (Y bil) Profit Attributable to Owners of Parent Company Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 0 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 0 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2015 FY2016 FY2017 FY2015 FY2016 FY2017 FY2015 FY2016 FY

29 Appendix Segment Summary and Stable Revenues Segment Summary Net operating revenues Ordinary income Stable Revenues (Y bil) Retail Division 59.5 (Y bil) Wholesale Division Global グローバル マーケッツ純営業収益 Markets (Net operating revenues) (Y bil) Global Investment Banking グローバル インベストメント バンキング (Net operating revenues) 純営業収益 Q 4Q 1Q 2Q 3Q FY2016 FY2017 3Q 4Q 1Q 2Q 3Q FY2016 FY Asset Management Division (Y bil) (Y bil) Q 4Q 1Q 2Q 3Q FY2016 FY2017 Investment Division Q 4Q 1Q 2Q 3Q FY2016 FY (FY) See page 27 about stable revenues (3Q Annualized) 29

30 Appendix Shareholder Return Policy Share repurchase Payout ratio (actual) Dividend Policy Dividends will be paid semi-annually at a payout ratio of approx. 40% based on the consolidated financial performance. The Company will also consider increasing returns to its shareholder with various options including share buyback when it sufficiently secures capital to pursue further growth. 34.9% 34.1% 34.5% Total payout ratio: 58.3% Amount repurchased Y18.6bil 42.5% Total payout ratio: 60.4% Amount repurchased Y19.0bil Period of share repurchase: Nov. 2, 2017 to Mar. 23, 2018 Amount to be repurchased (upper limit): Y40.0bil Total amount paid for repurchase: Y33.7bil (as at Feb. 28) 42.3% 42.3% (Actual payout ratio in 1H) Dividend per share (JPY) Interim FY2012 Year-end Interim FY2013 Year-end Passion for the Best 2014 (FY2012-FY2014) Interim FY2014 Year-end Interim FY2015 Year-end Interim FY2016 Year-end Passion for the Best 2017 (FY2015-FY2017) Interim FY

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