FY2004 Earnings Results - Reference Data -

Transcription

1 FY2004 Earnings Results - Reference Data - April 27, 2005 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 Table of Contents Breakdown of Operating Revenues - Consolidated - 3 Cost Structure - Consolidated - 4 Highlights from the Balance Sheet - Consolidated - 5 Daiwa Securities Breakdown of SG&A 6 Daiwa Securities SMBC Breakdown of SG&A (Consolidated) 7 Daiwa Securities SMBC Breakdown of SG&A (for reference) 8 Daiwa Asset Management Financial Summary 9 Main Group Companies 10 Assets under Custody 11 Daiwa Securities Number of Accounts 12 Daiwa Securities SMBC Investment Banking (1) 13 Daiwa Securities SMBC Investment Banking (2) 14 Daiwa Securities SMBC Investment Banking (3) 15 Daiwa Securities SMBC - VaR 16 Equity Transactions Overview 17 Asset Management Investment Trust Market in Japan 18 Daiwa Asset Management Monthly Payment Foreign Bond Investment Trust 19 Number of Group Employees 20 Changes in Shareholder Composition 21 2

3 Breakdown of Operating Revenues - Consolidated - (Millions of yen) FY2004 % Change FY2004 FY2003 4Q 3Q 3Q FY04 2Q 1Q 4Q FY2004 FY2003 % Change FY03 Equity 22,498 16, % 16,873 27,723 24,107 83,887 80, % Brokerage commission 21,939 16, % 16,485 27,171 23,641 81,919 78, % Others % ,967 1, % Fixed income (Bond) 1, % 1, ,311 4,263 5, % Brokerage commission % ,463 1, % Others % ,290 2,800 3, % Investment trust 13,490 11, % 9,662 11,248 12,695 45,640 43, % Brokerage commission % % Distribution commission 6,420 4, % 3,434 5,141 6,782 19,687 21, % Other commissions 7,040 6, % 6,188 6,046 5,851 25,793 20, % (Agency commission) (3,909) (3,546) 10.2% (3,324) (3,233) (3,060) (14,014) (10,940) 28.1% Investment banking 20,996 15, % 22,798 12,100 19,813 71,170 55, % Underwriting commission 15,405 11, % 17,299 10,236 16,122 54,743 46, % (Equity) (11,991) (9,822) 22.1% (15,001) (7,843) (13,437) (44,659) (36,927) 20.9% (Bond) (2,824) (1,764) 60.1% (1,751) (2,232) (2,106) (8,573) (8,400) 2.1% Distribution 1, % ,597 1, % Others (M&A commission etc.) 4,351 2, % 4,778 1,152 3,004 12,828 8, % Others 3,978 2, % 2,552 2,405 2,285 11,425 10, % Total commission 62,268 46, % 53,116 54,299 60, , , % Gain/loss on equity trading 21,577 5, % 9,606 19,285 11,450 56,104 50, % Gain/loss on bond and forex trading 22,819 24, % 24,225 23,151 16,885 95,012 70, % Bonds 8,531 18, % 18,431 17,228 14,970 62,407 47, % Forex 14,288 6, % 5,794 5,922 1,915 32,605 22, % Total gain/loss on trading 44,397 30, % 33,831 42,437 28, , , % 3

4 Cost Structure - Consolidated - (Y bil) Q/02 1Q/03 2Q/03 3Q/03 4Q/03 1Q/04 2Q/04 3Q/04 4Q/04 Variable costs Fixed costs Depreciation (Billions of yen) FY2004 FY2003 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q Variable costs Commission & other expenses Bonus Overtime, part-time Fixed costs Personnel costs Real estate expenses Depreciation Office expense Taxes other than income taxes

5 Highlights from the Balance Sheet - Consolidated - (Y bil) 160 Operational Investment Securities (*) (Y bil) Tangible Assets /03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 Other Investments (Y bil) (Y bil) (*) 3/03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 External Debt /03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 0 3/03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 (*): According to the 2004 revision of the Securities and Exchange law, investments in investment enterprise limited partnership or similar partnerships are to be recognized and indicated as securities from FY2004. Due to this change, other investments and operational investment securities decreased JPY 60,169mil. and JPY 76,744mil., respectively. 5

6 Daiwa Securities Breakdown of SG&A (Millions of yen) FY2004 % Change FY2004 FY2003 4Q 3Q 3Q FY04 2Q 1Q 4Q FY2004 FY2003 % Change FY03 SG&A 36,847 33, % 34,392 35,312 35, , , % Commission and other expenses 5,884 5, % 5,902 5,701 6,219 22,827 22, % Personnel costs 17,984 15, % 16,004 17,562 16,969 67,073 64, % Real estate expenses 4,926 4, % 4,854 4,638 5,103 19,165 19, % Office expenses 5,233 5, % 5,160 4,841 5,181 20,382 19, % Depreciation 2,021 1, % 1,672 1,632 1,599 7,126 6, % Taxes other than income taxes % , % Others % ,272 2, % 6

7 Daiwa Securities SMBC Breakdown of SG&A - Consolidated - (Millions of yen) FY2004 % Change FY2004 4Q 3Q 3Q FY04 2Q 1Q FY2004 FY2003 % Change FY03 SG&A 37,523 33, % 36,350 31, , , % Commission and other expenses 14,339 12, % 14,354 10,238 51,144 47, % Personnel costs 10,910 9, % 9,698 9,967 39,857 37, % Real estate expenses 3,425 3, % 3,142 2,961 12,636 12, % Office expenses 3,962 4, % 4,437 3,837 16,368 14, % Depreciation 3,174 3, % 3,007 3,113 12,326 11, % Taxes other than income taxes % 1, ,804 2, % Others % ,692 2, % 7

8 Daiwa Securities SMBC Breakdown of SG&A (for reference) (Millions of yen) FY2004 % Change FY2004 FY2003 4Q 3Q 3Q FY04 2Q 1Q 4Q FY2004 FY2003 % Change FY03 SG&A 32,349 28, % 31,102 26,752 30, , , % Commission and other expenses 14,510 12, % 14,355 10,229 14,423 51,132 48, % Personnel costs 7,246 5, % 6,281 6,526 6,218 25,954 24, % Real estate expenses 2,839 2, % 2,590 2,419 2,883 10,433 10, % Office expenses 3,640 3, % 3,921 3,619 3,340 14,933 13, % Depreciation 2,964 2, % 2,778 2,884 3,168 11,448 10, % Taxes other than income taxes % ,794 2, % Others % ,543 1, % 8

9 Daiwa Asset Management Financial Summary (Millions of yen) FY2004 % Change FY2004 FY2003 4Q 3Q 3Q FY04 2Q 1Q 4Q FY2004 FY2003 % Change FY03 Operating revenues Management fee 5,235 4, % 4,629 4,598 4,477 19,316 16, % 5,207 4, % 4,606 4,578 4,455 19,222 16, % Equity investment trust 5,136 4, % 4,465 4,425 4,248 18,745 15, % Bond investment trust % , % of which MMF % % Other operating revenues SG&A Commissions paid Other SG&A Operating income (loss) Ordinary income (loss) Net income (loss) % % 4,990 4, % 4,253 4,370 4,378 18,070 16, % 2,676 2, % 2,286 2,303 2,273 9,695 8, % 2,314 2, % 1,967 2,067 2,104 8,375 8, % % , % , % % , % 9

10 Main Group Companies FY2004 (Millions of yen, y/y % Chg) Daiwa Securities Group Inc. Daiwa Securities Daiwa Securities SMBC Daiwa Asset Management Daiwa Institute of Research Operating revenues 26, % 164, % 249, % 19, % 64, % SG&A 7, % 139, % 138, % 18, % 9, % Operating income 13, % 24, % 83, % 1,245-5, % Ordinary income 16, % 24, % 85, % 1, % 5, % Group holdings (as of Mar. 31, 2005) FY2004 (Millions of yen, y/y % Chg) --- Daiwa SB Investments 100.0% 60.0% 100.0% 100.0% Daiwa Securities Business Center Daiwa Property NIF Ventures Operating revenues 11, % 8, % 17, % 4, % SG&A 4, % 8, % % 3, % Operating income 2, % % 5, % % Ordinary income 2, % % 3, % % Group holdings (as of Mar. 31, 2005) 44.0% 100.0% 99.6% 79.2% 10

11 Assets under Custody 3/2002 3/2003 3/2004 3/2005 (Billions of yen) Daiwa Securities Daiwa Securities SMBC Daiwa Securities Daiwa Securities SMBC Daiwa Securities Daiwa Securities SMBC Daiwa Securities* Change 4/03 Daiwa Securities SMBC** Change 4/03 Equity Bonds Investment trust 7,164 6,755 6,349 5,253 10,325 8,967 11, % 10, % 3,350 6,686 4,052 7,697 4,394 8,146 5, % 8, % 5,158 1,263 3,902 1,044 4,313 1,001 4, % % Equities 1, , , , % % Bonds 3, , , , % % Others Total , , % 1, % 15,733 14,911 14,351 15,312 19,109 19,394 21, % 20, % Note: Equity figures includes CB and Warrants. *Foreign currency bonds (including Euro yen) under custody at Daiwa Securities JPY 2,108.7bil. (14.7% out of total assets of Daiwa Securities) in 3/2003, JPY 2,475.9bil. (13.0%) in 3/2004, and JPY 2,969.2bil. (13.7%) in 3/2005 ** Amount of assets under custody (foreign currency bonds etc) from Group companies: JPY 3,356.1bil. 11

12 Daiwa Securities Number of Accounts (Thousands of Accounts) CMS (Cash Management Service) accounts FY2002 FY2003 FY2004 6/02 9/02 12/02 3/03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 2,074 2,102 2,278 2,292 2,303 2,332 2,373 2,430 2,411 2,423 2,506 2,522 Accounts holding equity* 1,022 1,028 1,023 1,015 1,147 1,140 1,134 1,121 1,109 1,119 1,209 1,198 Online trading accounts ,143 1,250 Daiwa Direct course accounts Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Newly opened accounts (Accounts associated with IPO of Taiyo Life Insurance Co.) (10) (150) * # of designated accounts was approximately 1.12 million as of the end of 3/05. Note: Figures for Daiwa Direct up to 3/03 are the sum of Daiwa Call and Daiwa Net. 12

13 Daiwa Securities SMBC Investment Banking (1) Major lead manager deals during 4Q (including joint lead issues) Straight Bonds Sumitomo Mitsui Banking Corporation "SMBC" (JPY 100bil.), The Chuo Mitsui Trust and Banking Company, Limited (Total JPY 70bil.), Elpida Memory, Inc. (Total JPY 70bil.), TEPCO (JPY 50bil.), J-Power (Total JPY 50bil.), Softbank Corp. (Total JPY 40bil.), East Japan Railway Company (Total JPY 40bil.), The Kansai Electric Power Co., Inc. (JPY 20bil.), Kajima Corporation (Total JPY 20bil.), Odakyu Electric Railway. Co., Ltd. (JPY 15bil.), The Towa Bank, Ltd. (JPY 15bil.), Daibiru Corporation (JPY 15bil.), Kuraray Medical Inc. (JPY 10bil.), Tobu Railway Co., Ltd. (JPY 10bil.), Marubeni Corporation (JPY 10bil.), Tokyo Gas (JPY 10bil.), Sumitomo Heavy Industries, Ltd. (JPY 10bil.), Mitsubishi Corporation (JPY 10bil.), Kansai Urban Banking Corporation (JPY 10bil.), Sumitomo Corporation (JPY 10bil.) etc. * Issue size over 10 billion Agency Bonds #1 Narita International Airport Corporation (Total JPY 50bil.) etc. 13

14 Daiwa Securities SMBC Investment Banking (2) Major lead manager deals during 4Q (including joint lead issues) Equity Primary & Secondary Offerings IPO Convertible Bond SOFTBANK INVESTMENT CORPORATION (Primary offering JPY 53.7bil.), USEN CORPORATION (Primary, secondary offering JPY 35.8bil.), EDION Corporation (Primary offering JPY 12.5bil.), ORIX Corporation (Secondary offering JPY 7.2bil.), etc. ACCA Networks Co., Ltd. (JPY 19.1bil.), kabu.com Securities Co., Ltd. (JPY 18bil.), MediciNova, Inc. (JPY 13.8bil.), NEC Leasing, Ltd. (JPY11.2bil.), Green Hospital Supply, Inc. (JPY 6.9bil.), etc. Mitsumi Electric Co., Ltd. (Euroyen convertible bond JPY 20bil.), Sumida Corporation (Alpine yen convertible bond JPY 8bil.), Sankyo-Tateyama Holdings, Inc. (Domestic convertible bond JPY 7bil.), etc. Overseas Underwriting Issues * Deals over JPY 5billions Equities (Foreign corporation listed on Japanese stock market) Bonds MediciNova, Inc. (First US-affiliate company to be listed simply on Japanese stock market, JPY 12bil.) Ford Motor Credit Company (Samurai bond JPY 160bil.), EUROFIMA (Eurodollar bond USD 0.75bil.), Council of Europe Development Bank (Eurodollar bond USD 0.5bil.), Alliance & Leicester (Eurodollar bond USD 0.4bil.), Kaupthing Bank (Eurodollar bond USD 0.3bil.), Banco BPI (Euro bond Euro 0.5bil.), GE Capital Corporation (Euroyen bond JPY 50bil.), Hypo Real Estate Bank International (Euroyen bond JPY 25bil.), Indian Railway Finance Corporation (Euroyen bond JPY 13bil.), Landsbanki (Euroyen bond JPY 10bil.), 14

15 Daiwa Securities SMBC Investment Banking (3) Major lead manager deals during 4Q (including joint lead issues) Structured Finance RMBS issued by The Chuo Mitsui Trust and Banking Company, Limited (Issue JPY 136bil., Underwriting JPY 88.4bil.) RMBS issued by Sumitomo Mitsui Banking Corporation SMBC (Issue JPY 126bil., Underwriting JPY 126bil.) Federation of National Public Service Personnel Mutual Aid Associations (ABS for individual investors: Issue JPY 100bil., Underwriting JPY 91bil.) Major Deals During 4Q M&A Fuji Television Network, Inc. made Nippon Broadcasting System, Inc. its wholly owned subsidiary through a tender offer. The company also invested JPY 44bil. in livedoor Co., Ltd. by third-party allocation of new shares. (Advisors to Fuji Television Network) Koyo Seiko Co., Ltd. and Toyoda Machine Works, Ltd. entered into an equal merger on April 1, Based upon their three-year experience in joint business development of electric power steering, integrating their wide-ranging management will lead to significant synergy benefits. (Advisors to Koyo Seiko) The Sumitomo Trust & Banking Co., Ltd. will purchase approximately 60% of the total issued shares of Matsushita Leasing & Credit Co., Ltd. on April 1, 2005 from Matsushita Electric Industrial Co., Ltd. (MEI). (Advisors to MEI) 15

16 Daiwa Securities SMBC -VaR Range and assumption of VaR Confidence level: 99% Holding period: 1 day Adjusted for price correlation between products (Billions of yen) (Month end) 3/02 3/03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 Equity Interest Currecy Total Diversification effect VaR High Low Average FY2004 JPY 5.98bil. JPY 0.6bil. JPY 1.28bil. 4Q FY2004 JPY 5.98bil. JPY 0.6bil. JPY 1.31bil. 16

17 Equity Transactions Overview Market data 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Average daily trading value in TSE, OSE, and NSE; (Billions of yen) ,150 1,197 1,345 1,569 1,180 1,199 1,467 Share of individual investors; (%) Market share in Tokyo Stock Exchange (on and off floor transaction); (%) Daiwa Securities Group Daiwa Securities (Retail) Daiwa Securities SMBC (Wholesale) (on and off floor) (out of hours and off floor) * Share of Daiwa Securities (Retail) among individual investors transactions at TSE, OSE, and NSE; (%) Daiwa Securities / TSE, OSE, NSE Daiwa Securities equity commission rates; (bp) FY2002 FY2003 FY2004 Commission rate ** 70** 69** 70** *preliminary figures **adjusted rate: Denominator excludes value that generates revenues not reported as brokerage commission 17

18 Asset Management Investment Trust Market in Japan (Y bil) 60,000 50,000 40,000 30,000 20,000 10, /01 3/02 3/03 9/03 3/04 6/04 9/04 12/04 3/05 MMF+MTGBF 16,980 13,770 16,610 20,299 18,747 21,545 10,451 7,416 6,373 5,473 4,757 4,454 4,211 3,983 Bonds 18,910 16,890 14,640 15,357 16,041 16,820 15,502 10,712 10,728 10,281 10,034 9,463 9,349 9,520 Equities 12,780 9,980 11,500 15,696 14,610 14,452 15,309 16,266 20,100 23,276 24,809 25,553 27,435 28,901 Nikko AM 8,300 8,268 7,852 7,789 6,924 7,276 4,126 3,817 3,775 3,864 3,676 3,640 3,774 3,906 Nomura AM 10,000 10,155 9,329 12,240 15,101 15,976 13,587 10,421 11,286 10,829 10,627 9,819 10,014 10,052 Daiwa AM 8,000 9,321 11,603 13,999 10,887 12,014 8,271 6,326 6,141 5,947 6,004 5,743 5,788 5,676 Source: The Investment and Trust Association 18

19 Daiwa Asset Management Monthly Payment Foreign Bond Investment Trust (Y bil) Daiwa Global Bond Fund Daiwa Oceania Bond Fund Daiwa European Bond Fund High-Grade Oceania Bond Open Daiwa High-Rating CAD Bond Open Daiwa High-Rating AUD Bond Open Daiwa High-Rating Euro Bond Open High-Grade USD Bond Fund Daiwa High-Rating USD Bond Open /03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 19

20 Number of Group Employees (# of employees) 14,000 12,000 10,000 8,000 13,019 12,834 12,963 12,478 12,677 12,652 12,952 12,756 12,657 12,449 (-208) 1,196(+16) 2,999(-32) 1,800(+3) 6,000 4,000 6,197(-188) 2, (-7) 3/00 3/01 3/02 3/03 9/03 3/04 6/04 9/04 12/04 3/05 Daiwa Securities Group Inc. Daiwa Securities Daiwa Securities SMBC Other domestic companies Overseas (Changes are from 12/04) Total figure is the sum of consolidated group companies and Daiwa SB Investments. Figures for Daiwa Securities includes Financial Advisers (FA). Figures for Daiwa Securities SMBC includes employees of Daiwa Securities SMBC Principal Investments. 20

21 Changes in Shareholder Composition March 04 Types of Ratio of # investors of shares Individuals 20.7 % Financial institutions 39.8 Banks 6.4 Trust Banks 25.1 Other institutions 6.2 Foreigners 31.2 Others 2.1 Total 100 September 04 Types of Ratio of # investors of shares Individuals 20.7 % Financial institutions 41.5 Banks 6.3 Trust Banks 26.7 Other institutions 5.8 Foreigners 30.6 Others 1.4 Total 100 March 05 Types of Ratio of # investors of shares Individuals 20.9 % Financial institutions 40.6 Banks 6.3 Trust Banks 25.8 Other institutions 5.4 Foreigners 31.5 Others 1.6 Total

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