Daiwa Securities Group Inc. Daiwa Investment Conference Tokyo 2016

Transcription

1 Daiwa Securities Group Inc. Daiwa Investment Conference Tokyo 216 Presented on Tuesday, March 1, 216 at The Prince Park Tower Tokyo Takashi Hibino, 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 216 Contents Ⅰ - Business Environment 3 Ⅱ - Achievements in the Medium Term Management Plan 7 Ⅲ - Progress of Individual Strategies for Basic Policies 13 Ⅳ - Basic Group Strategies 23 Appendix 28 2

3 Ⅰ- Business Environment 3

4 Ⅰ- Business Environment Changes to the Economic Environment Real GDP (Jan Dec. 215) (QoQ, %) 4.5 Consumption tax increase Imports Start of the second Abe administration Exports Publ. Demand Priv. Inventories Priv. Non-Resi. Invt. Priv. Resi. Invt. Priv. Consumer Price Index (Jan Dec. 215) (YoY, %) CPI (less fresh food) CPI (less fresh food and energy) Introduction of QQE -2. Jan.-Mar. Apr.-Jun. Jul.-Sep. Oct-Dec. Jan. 216: Introduction of negative interest rates Consumption Real GDP Expansion of QQE Note: Adjustment of consumption tax conducted by the Bank of Japan. Source: Cabinet Office; compiled by DIR based on the Bank of Japan statistics 4

5 Ⅰ- Business Environment Changes to the Market Environment Nikkei 225 and JPY/USD Rate (Jan. 27 Feb. 216) (Yen) 21, 2, 19, Peak in 215: 2,952yen (JPY/USD) Fed raises 13 interest rate 125 (Yen) 22, 18, 18, 17, 16, 15, Nikkei 225 (left) JPY/USD Rate (right) 14, Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Nikkei 225 (left) JPY/USD Rate (right) Global stocks fall on China worries BOJ introduces negative interest rates (JPY/USD) , 1, Start of the second Abe administration PBR 1.2X (Dec. 26, 212) Pre-Lehman Crisis From Post-Lehman Crisis to Start of the Second Abe Administration Second Abe Administration Recent PBR 1.7X (Feb. 24, 216) Post-Lehman low PBR.81X (Oct. 27, 28) 6,

6 Ⅰ- Business Environment Consolidated Results of 3Q FY215 Consolidated net operating revenues: Y43 bil; Ordinary income: Y136.5 bil; Profit attributable to owners of parent company: Y95.5 bil for 1Q-3Q FY215. (Y mil) Net Operating Revenues SG&A Ordinary Income Profit (loss) attributable to owners of parent Shareholders' Equity BPS (Y) % Change FY215 FY214 FY215 vs 1Q 2Q 3Q 1Q-3Q 1Q-3Q 2Q/15 % Change vs 1Q-3Q/14 FY , , ,799 1.% 392,93 43,42 2.6% 532,22 95,574 91,281 89, % 268, , % 361,38 63,113 35,456 37,95 7.% 135, 136, % 184,578 44,836 24,347 26, % 19,968 95, % 148,49 1,272,263 1,258,269 1,261,87 1,196,39 1,261,87 1,238, Net Operating Revenues (Y bil) Ordinary Income (Y bil) Profit Attributable to Owners of Parent Company (Y bil) Dividend (Y) Q 2Q 3Q 4Q 1Q 2Q 3Q FY214 FY215 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY214 FY215 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY214 FY215 Interim FY end Interim FY214 FY215 6

7 Ⅱ- Achievements in the Medium Term Management Plan 7

8 Ⅱ- Achievements in the Medium Term Management Plan Medium Term Management Plan ( Passion for the Best 217) 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 FY 215 FY 216 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 Numerical targets FY 217 Provide solutions that contribute to the improvement in corporate value 1. ROE: 1% or more 2. Fixed cost coverage ratio : 75% or more in the final fiscal year Positive cycle of transition from savings to investment and improvement of corporate value 8

9 Ⅱ- Achievements in the Medium Term Management Plan Progress of Medium Term Management Plan (Numerical Targets) ROE: 1% or more Fixed Cost Coverage Ratio: 75% or more in the final fiscal year (FY217) Profit attributable to owners of parent company (Y 1mil) 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 1,8 1,6 1,4 1,2 1, 8.6% 17.% 12.8% 12.8% 9.7% 1.2% (Annualized) 18% 16% 14% 12% 1% *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. 45% 56% 62% 68% 8% 7% 6% 5% % 8% 6% 1 4% 3% 4 4% 5 2% 2 2% 1% FY212 FY213 FY214 3Q FY215 % FY212 FY213 FY214 3Q FY215 (Annualized) % 9

10 Ⅱ- Achievements in the Medium Term Management Plan Trend of Fixed Cost Coverage Ratio The Group will aim to further strengthen its robust business structure through disciplinary cost control and steady expansion of stable revenues. Trend of Stable Revenues, Fixed Cost, and Fixed Cost Coverage Ratio (Y bil) 7 6 Fixed Cost (left) Stable Revenues (left) Fixed Cost Coverage Ratio (right) 8% 7% 5 6% 4 3 5% 4% 3% 2 2% 1 1% 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 % FY29 FY21 FY211 FY212 FY213 FY214 FY215 Passion for the Best 214 (FY212-FY214) Passion for the Best 217 (FY215-FY217) 1

11 Ⅱ- Achievements in the Medium Term Management Plan Expansion of Stable Revenues The Group s stable revenues for 3Q FY215 (annualized) have increased approximately 1% from FY214, mainly due to expansion of AUM for wrap accounts. The Group will continue to focus on expanding stable revenues centered on wrap accounts and asset management business, while also enhancing the foreign currency deposit business at Daiwa Next Bank. Factors for Changes in 3Q FY215 Stable Revenues (Annualized) (Y bil) Wrap-related fees Daiwa Next Bank Daiwa AM/Daiwa SB profit margins Agency fees management fees for investment trusts Others (including real estate AM, interest fees on margin, etc.) Stable Revenues +1% 11

12 Ⅱ- Achievements in the Medium Term Management Plan Business Opportunities and Basic Policies Business opportunities expected over the medium term: full-fledged start of an era of transition from savings to investment Move away from deflation Spread of successful investment experiences Government support on policies and systems Enhancement of companies earnings power Expected demand Increase in securities investment needs among all citizens and households Increase in funding demand among growing companies Increase in corporate activities including M&As aimed at improving ROE Basic policies Key Themes Basic policies aimed at achieving the positive cycle of the transition from savings to investment and the improvement in corporate value Provide investment services that lead the era of transition from savings to investment Pursue best quality Dramatically expand the customer base and revenue Establish product and service platforms in response to the needs of a wide range of investors Strengthen asset management abilities Promote alliance strategy actively, mainly in Asia Provide solutions that contribute to the improvement in corporate value Identify and develop next generation growth companies and help them raise capital to grow Identify and develop next generation growth companies and help them raise capital to grow Provide solutions in response to corporate globalization and M&A needs Finance and Risk management Basic Group Strategies Human resources IT 12

13 Ⅲ- Progress of Individual Strategies for Basic Policies 13

14 Ⅲ- Progress of Individual Strategies Establish product and service platforms in response to the needs of a wide range of investors Expansion of Fee-based Products and Services (Wrap Account Services) AUM for wrap account services (SMA and fund wraps) at Daiwa Securities were Y1.5 tri. (as at the end of Dec. 215). Respond to a wide range of customer needs through various product line-up and by expanding sales channels. Change in AUM of Wrap Accounts Future of Daiwa s Wrap Account Services (Y bil) 1,8 1,6 1,4 1,2 1, Contract AUM (left) Number of Contract (right) (thousands) 14 Y1.5 tri H 2H 1H 2H 1H 2H 3Q FY212 FY213 FY214 FY215 Large Minimum investment Low-cost wrap services using the Internet Highly customizable fund wraps for wealthy individuals and corporate clients Fund wraps Wrap services for wealthy individuals, with wealth planning services added Advanced fund wraps SMA Increase value of existing fund wraps Wrap services for the wealthy Japan Y1,684 tri. Individual financial assets U.S. Y8,26 tri. 4.9x Japan Y5.1 tri. Wrap account market U.S. Y581 tri. 93x Wrap services for asset forming generation Small Low Value Added Existing service New service High U.S. figures are calculated at $1= yen (end of Sept. 215) * Japan and U.S. assets are as of the end of Sept

15 Ⅲ- Progress of Individual Strategies Establish product and service platforms in response to the needs of a wide range of investors Respond to the Expanding Inheritance Business By placing inheritance consultants and increasing the number of application for Inheritance Total Service, we prepare to respond to the shift of assets through inheritance. Responding to the Shift of Assets through Inheritance Number of Staff Involved in Inheritance Business* Expansion of inheritance market (Approx. Y5 tri./yr., increasing trend) Increase in inheritance tax rate (Jan ) Number of Staff at Wealth Management Dept. Number of Inheritance Consultants * Mar. 213 is indexed as Shift of assets through inheritance Mar. 213 Dec. 215 Enhance capability to tailor to the needs of customers Prevent cash out (Bring in new assets) Application for Inheritance Total Service* Total Number of Application for Inheritance Total Service * Mar. 213 is indexed as 1 33 Placement of Inheritance Consultants (Dec ) Placed at 4 branches (Dec. 215) Inheritance Total Service* (Jan ) * Provide one-stop service from before to after inheritance (including connecting customers to outside specialists). 1 Mar. 213 Dec

16 Ⅲ- Progress of Individual Strategies Establish product and service platforms in response to the needs of a wide range of investors Further Develop the Combined Securities-Banking Business Model Further develop the securities-banking business model to serve as a gateway from savings to investments and as a platform for comprehensive financial services. Daiwa Next Bank: Deposit Balance and Number of Accounts Cross-selling Ratio and Purchased Products (Total) (Y bil) (thousands) 3,5 Foreign Currency Deposit (left) Yen Deposit (left) Number of Accounts (right) Y3.3 tri. 1,2 Foreign bonds Domestic bonds 3, 2,5 1, 8 Fund wraps Stock investment trusts Equity 2, 1,5 1, 5 Mar. 213 Mar. 214 Mar. 215 Dec Expansion of Foreign Currency Deposits ~Introduction of Tie-up Prepaid Card~ Daiwa Next Bank Foreign currency deposit account Foreign currency deposits Top up (foreign currency) Repayment (foreign currency) Money Partners Card holder account Overseas prepaid card Launch event to be held on Mar. 23, 216 Overseas ATM Shopping * Cross-selling ratio: accumulated total accounts of cross-selling / accumulated total accounts of newly-opened time deposits Newly-opened time deposits: yen denominated time deposits that have been placed within three months of opening time deposit accounts 16

17 Ⅲ- Progress of Individual Strategies Establish product and service platforms in response to the needs of a wide range of investors Improve Consulting Services in Quality and Quantity - Increase Interaction with Clients - Aim to enhance the quality and quantity of proposals to customers by continuing to expand our domestic branch network, and increasing capacity and staff at Contact Centers. Domestic Branch Network Number of Seats at Contact Centers Sales Office Branch Mar. 213 Mar. 214 Mar. 215 Mar. 216 Monthly Average of Proposals Made by Sales Reps FY213 Monthly Average FY214 Monthly Average Monthly average proposals for FY213 are indexed as 1. Apr Jan. 216 Monthly Average 17

18 Ⅲ- Progress of Individual Strategies Establish product and service platforms in response to the needs of a wide range of investors Expand New Client Base Centered on Inbound-Type Clients Continue making multidimensional efforts in order to expand new client base. (thousand) No. of Registered NISA Incremental Account Number of NISA Accounts with Accumulative Services Number of NISA accounts with accumulative services was 1,, total amount purchased was Y16.1 bil, expanding significantly compared to 2Q FY Q FY214 4x 3Q FY215 (Y bil) Funds Dedicated to Direct Course Service x Set up no-load index funds, which are popular with a wide range of investors, including those with modest experience in investing. Dec. 215: Started sale of Daiwa No-Load Nikkei 225 Fund and Daiwa No-Load J-REIT Fund Mar. 216: Plan to expand product line-up 5 Amount Purchased through NISA Incremental Account 1 2Q FY Q FY215 Business Collaboration with GMO Click Holdings Currently discussing the specifics for business collaboration agreement. Daiwa Securities Group Capability to provide products and information globally Acquired 9.6% GMO Click HD Group System development capability Young customer base 18

19 Ⅲ- Progress of Individual Strategies Strengthen asset management abilities Strengthen Asset Management Abilities(Investment Trusts) Total AUM of stock investment trusts (excluding ETFs) for the two asset management companies (Daiwa Asset Management and Daiwa SB Investments) have maintained the largest share in the industry. Daiwa Asset Management, together with Mirae Asset Global Investments in Korea, has launched a new equity fund. Fund with the same scheme is also being distributed in Korea (distributed by Mirae Asset Securities, etc.). Apr. 25 to Jan. 216 AUM of Investment Trusts (excluding ETF) New Fund Launched by Mirae Asset* and Daiwa Asset Management ~Diversifying Asset Management and Distribution Channels~ (Y tri) Daiwa AM + Daiwa SB Company A Daiwa AM Daiwa /Mirae Asset Asia Equity Fund At monthly fund committee which consists of Mirae Asset Global Investments and Daiwa Asset Management, the allocation between Asia/Oceania and Japan equity is discussed and determined through both quantitative and qualitative analysis (launched on Jan. 21, 216). 6 Company B Asia / Oceania equity Japan equity 4 Company C Quantitative analysis Potential stocks Quantitative analysis Potential stocks 2 Daiwa SB Qualitative Analysis Qualitative Analysis Candidate stocks Image of model portfolio Candidate stocks 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H Jan. FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 4 stocks 4 stocks * Established in 1997, Mirae Asset Global Investments Group is one of the largest asset management companies in Korea. It manages an AUM of 77.6 billion USD (approx. Y9.4 tri.) globally and is strong in emerging markets. 19

20 Ⅲ- Progress of Individual Strategies Strengthen asset management abilities Expansion of Asset Management Business - Real Estate and Infrastructure - Since the asset management company of Japan Rental Housing Investments, Mi-Casa Asset Management, has been made a consolidated subsidiary, assets under management for the 4 real estate investment trusts have exceeded Y76 bil. In light of negative interest rates, demand for products with stable returns, such as J-REITs and infrastructure funds, is expected to increase. Made IDI infrastructures Inc., a fund management company specializing in infrastructure, a subsidiary. AUM of Real Estate Asset Management Increasing Business Opportunities (Y bil) Japan Rental Housing Inv (residential) Nippon Healthcare Investment Corp (healthcare facilities) Daiwa Residential Private Investment Corp (residential) Daiwa Office Investment Corp (offices) Introduction of negative interest rates Increased difficulties in money management More need for investment into products with stable returns Expansion of investor base for J-REITs Infrastructure funds, as they are less susceptible to economic fluctuations become more appealing 2 1 Infrastructure Fund Management Company as a Subsidiary Mar. 213 Mar. 214 Mar. 215 Dec. 215 J-REIT Market Size Daiwa s entry into real estate AM business (Jul 29) Market Cap Y2.9 tri. Asset Size Y7.7 tri. Current (Jan. 216) Market Cap Y1.7 tri. (3.7x) Asset Size Y14.1 tri. (1.8x) Subsidiary Management Infrastructure Funds Investment Power retailers Renewable energy plants Thermal power plants Environment, etc. (Source)Association for Real Estate Securitization, Bloomberg 2

21 Ⅲ- Progress of Individual Strategies Provide solutions in response to corporate globalization and M&A needs Provide Solutions to M&A Needs with Quadri-Polar Structure Promote support for providing cross border M&A solutions utilizing a quadri-polar structure spanning Japan, Asia, Europe (Daiwa Corporate Advisory) and the U.S. (Sagent Advisors). Global M&A Quadri-Polar Structure Europe (DCA) Japan Selected Cross-border Deals (FY215 1Q-3Q) Share acquisition of DeLclima (Italy) by Mitsubishi Electric Corporation Acquisition of TGE Marine AG (Germany) by Mitsui Engineering & Shipbuilding Co. Ltd. Acquisition of MIMS Group (Singapore) by SMS Co., Ltd. and Mitsui & Co., Ltd. Acquisition of VTN Beteiligungsgesellschaft mbh (Germany) by IHI Corporation Amount/Number of M&As Involved by Japanese Companies U.S. (Sagent Advisors) (Y tri) OUT-IN IN-OUT IN-IN Number of Deals (right) 3, 2,5 2, 1 8 1,5 Asia / Oceania (DCM & alliance partners) , (Source)Compiled by Daiwa Securities based on Recof M&A database. Amount is calculated based on available figures. 21

22 Ⅲ- Progress of Individual Strategies Proactive promotion of alliance with a focus on Asia Proactive Promotion of Alliance Strategy with a Focus on Asia Enhance business network in Asia through expanding alliance network with leading Asian financial institutions. Thailand Thanachart Securities China China Securities Philippines Development Bank of Philippines Feb. 213, business alliance (Thai equity research) Nov. 214, business alliance (IB/GM covering China) Mar. 1995, joint venture Nov. 215 business alliance (IB covering the Philippines) Malaysia Affin Hwang Investment Bank Dec. 213, business alliance (Malaysia equity research) Feb. 216: Application for minority stake Plans to become equity method affiliate * Application already submitted to Bank Negara Malaysia Indonesia Bahana Securities Vietnam Saigon Securities Jun. 28, business alliance (comprehensive business covering Vietnam) Increase stake in 216 Plans to become equity method affiliate Australia New Zealand Australia and New Zealand Banking Group Sept. 213, business alliance (Indonesian equity research / IB) Feb. 214, business alliance (M&A covering Australia, NZ) 22

23 Ⅳ- Basic Group Strategies 23

24 Ⅳ - Basic Group Strategies Capital Policy Aimed at the Sustainable Improvement of Corporate Value Strive for an optimum balance between maintenance of financial soundness, improvement of capital efficiency and strengthening of shareholder returns, and ultimately aim for sustainable corporate value. Maintenance of Financial Soundness Secure capital and liquidity capable of responding to tighter international financial regulations Establish a financial base for maintaining and improving credit rating Secure financial flexibility that enables agile investments for growth under any environment Continue strict risk control Improve Daiwa s sustainable corporate value Strengthen Shareholder Returns Aim for stable dividend growth by continuously improving earning power Feasibility of share buyback will be reviewed by taking a comprehensive look at factors including the business environment, financial conditions, regulatory requirements, and level of stock price Improvement of Capital Efficiency Invest management resources appropriately in business areas with high growth and profit potential in Japan and overseas with a focus on capital efficiency (ROE) Aim to reduce capital cost by diversifying risks through expansion of the business portfolio FY214 Image of Capital Accumulate profits FY215 onwards Strengthen shareholder returns Invest in growth areas 24

25 Ⅳ- Basic Group Strategies Strengthen Shareholder Returns Raised dividend pay-out ratio In order to strengthen shareholder returns, we raised our dividend pay-out ratio from 3% to 4% beginning this fiscal year. Aim to maintain an upward trend of dividends by continuously improving our earnings power. Share repurchase program Aim to strengthen shareholder returns through increased capital efficiency. Date of resolution: Jan. 28, 216 Total numbers of shares to be repurchased:up to 27 mil shares, 1.57% of total shares outstanding (excluding treasury stock). Total amount to be paid for repurchase: up to Y2 bil Pay-out ratio (Actual)(%) 5.5% 32.4% 31.1% 37.8% 33.4% 35.5% 42.1% 4% Pay-out ratio (%) Dividend per share(jpy) % FY212 FY213 FY214 FY215 Interim Year-end Interim Year-end Passion for the Best 214 (FY212-FY214) Interim Year-end Interim Passion for the Best 217 (FY215-FY217) 25

26 Ⅳ- Basic Group Strategies Maintenance of Financial Soundness Financial Soundness Consolidated total capital ratio was 21.8% (provisional) at the end of December 215, but we aim to secure sufficient level of capital and liquidity to give leeway in case of extreme market downturn and to respond to the tightening global financial regulations. Factors to Increase Qualifying Capital Factors to Decrease Capital Adequacy Ratio Countercyclical buffer Up to +2.5% Consolidated Total Capital Ratio Capital conservation buffer D-SIBs buffer +2.5% +.5% Capital Damage to capital at times of stress Downward factor Required level of capital 8.% Review of the CVA risk framework Upward factor Risk Asset Fundamental review of the trading book Upward factor Increase of risk asset at times of stress Upward factor 26

27 Ⅳ- Basic Group Strategies HR Strategy In order to become the customers first choice securities group, employees are the most valuable asset for the Group. By strategic placement of human resources and planned training, we aim to strengthen organizational capabilities. Supporting the Success of Female Employees Supporting the Success of Young Employees Supporting the Engagement of Veteran Employees Promoting Health Management Increase in number of female branch managers and managers (Daiwa Securities) Branch managers Managers Improve Daiwa Basic Program (Basic education for the first two years) Improve internal education system to nurture professionals with high loyalty and to retain young employees. Expand Education and Training Program Significantly expanded our education and training program by implementing new e-learning programs including online universities, sending employees to overseas business schools, and providing support to obtain certifications. Establish License Certification System Established an incentive system to create a corporate culture in which employees are eager to continue developing as professionals regardless of age. Advanced Skill-building Program(ASP) Expanded programs for improving skills to continue succeeding as professionals. Selected as Health and Productivity Companies, Nadeshiko Brand Appointment of CHO (Chief Health Officer) Organizational structure to carry out health management Health Management Promotion Meetings are being held regularly, and Health Management Promotion Section was established within HR Dept. Establish an incentive system for employees Points will be given to employees that participate in health promotion related events and training programs. 25 companies selected 4 companies selected (14 companies have been selected for two consecutive years) 27

28 Appendix 28

29 Appendix PBR and % of Companies with PBR Below 1x for TSE 1 st Listed Companies pre-lehman high 2.4 (27/2/26) PBR( (TSE1 東証 1 部上場企業 Listed Companies) ) 日次データ daily data Peak after start of Abenomics 1.44 (215/6/24) start of the second Abe administration 1.2 (212/12/26) Recent PBR level of 1.x 1.7 (216/2/24).7.5 7/1 7/7 8/1 8/7 9/1 9/7 1/1 1/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 15/1 15/7 16/1 年 / 月 % post-lehman low.81 (28/1/27) % of Companies with PBR Below 1x PBR1 倍割れ企業比率 ( 東証 1 部上場企業 ) 月次データ (TSE1 Listed Companies) monthly data post-lehman high 77.6%(29/2) pre-lehman low 24.5% (27/1) start of the second Abe administration 64.8% (212/12) Total no. of TSE 1 listed companies: 1,935 Of which no. of companies with PBR below 1x: 1,79 Lowest ratio after start of Abenomics 4.7% (215/5) % Most recent 55.8% (216/2/24) (Source) Compiled by Daiwa Securities based on Factset and Quick data 29

30 Appendix Corporate Earnings, Estimated Dividend Yield for TSE 1 st Listed Companies and 1-year JGB Yield Corporate Earnings (Daiwa 2*) * Earnings estimation by Daiwa Securities consists of 199 major listed companies, excluding financials institutions (Y tri) Ordinary Income of Daiwa 2 Companies (left) % Change in Ordinary Income (right) FY27 FY28 FY29 FY21 FY211 FY212 FY213 FY214 FY215E FY216E FY217E Estimated FY215 Dividend Yield for TSE 1 Listed Companies and 1-year JGB Yield Dividend Yield-1-year JGB Yield Dividend Yield 1-year JGB Yield 8% 6% 4% 2% % -2% -4% -6% -8% % 2.14% % -1. As of Feb. 24, 216 (Source) Compiled by Daiwa Securities based on Factset data 3

31 Appendix Management Vision for 22 Management Vision Be the First Choice Lead the development of capital markets in Japan and Asia, and be the customer s first choice securities group Basic Management Policy Leverage the industry's top quality and dramatically expand our customer base Achieve sustainable growth by linking Japan to the growth of Asia Contribute to the development of society and economy through financial and capital markets 31

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