3Q FY2005 Earnings Results - Reference Data -

Transcription

1 3Q FY2005 Earnings Results - Reference Data - January 27, 2006 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 Consolidated Breakdown of Operating Revenues 3 Consolidated Cost Structure 4 Daiwa Securities Breakdown of SG&A 5 Daiwa Securities SMBC -Consolidated- Breakdown of SG&A 6 Daiwa Securities SMBC -Unconsolidated- Financial Summary 7 Daiwa Securities SMBC -Unconsolidated- Breakdown of SG&A 8 Domestic Group Companies and Overseas Operation 9 Equity Market Share 10 Domestic Customer Aseets 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 VaR 16 Asset Management Investment Trust Market in Japan 17 Daiwa Asset Management Monthly Payment Foreign Bond Investment Trust 18 Number of Group Employees 19 Changes in Shareholder Composition 20 Credit Ratings 21 2

3 Consolidated Breakdown of Operating Revenues (Y mil) FY2005 %Change FY2005 %Change FY2005 3Q 2Q 1Q 4Q 3Q 1-3Q 1-3Q 2Q FY05 1-3Q FY04 Equity 39,075 26, % 17,964 22,498 16,791 83,342 61, % 83,887 Brokerage commission 38,628 25, % 17,467 21,939 16,322 82,011 59, % 81,919 Others % ,330 1, % 1,967 Fixed income 741 1, % 717 1, ,466 2, % 4,263 Brokerage commission % , % 1,463 Others % ,679 1, % 2,800 Investment trust 23,600 18, % 14,689 13,490 11,239 56,343 32, % 45,640 Brokerage commission % % 159 Distribution commission 12,627 8, % 6,949 6,420 4,691 28,477 13, % 19,687 Other commissions 10,836 9, % 7,702 7,040 6,518 27,627 18, % 25,793 (Agency commission) 6,010 5, % 4,284 3,909 3,546 15,315 10, % 14,014 Investment banking 21,193 13, % 8,231 20,996 15,274 43,255 50, % 71,170 Underwriting commission 16,378 9, % 5,320 15,405 11,801 30,831 39, % 54,743 (Equity) 13,504 6, % 2,501 11,991 9,822 22,667 32, % 44,659 (Bond) 2,277 2, % 2,410 2,824 1,764 6,699 5, % 8,573 Distribution commission % 566 1, ,557 2, % 3,597 Others (M&A commission etc.) 4,228 4, % 2,345 4,351 2,546 10,867 8, % 12,828 Others 5,243 3, % 3,436 3,978 2,489 12,428 7, % 11,425 Total commission 89,853 62, % 45,039 62,268 46, , , % 216,386 Gain/loss on equity trading 31,102 39, % 7,435 21,577 5,635 77,580 34, % 56,104 Gain/loss on bond and forex trading 26,647 29, % 28,369 22,819 24,816 84,521 72, % 95,012 (Bonds) 5,751 8, % 20,566 8,531 18,216 34,554 53, % 62,407 (Forex) 20,896 21, % 7,802 14,288 6,600 49,967 18, % 32,605 Total gain/loss on trading 57,749 68, % 35,804 44,397 30, , , % 151,117 3

4 Consolidated Cost Structure (Y bil) Q/03 4Q/03 1Q/04 2Q/04 3Q/04 4Q/04 1Q/05 2Q/05 3Q/05 Variable costs Fixed costs Depreciation 3Q 2Q 1Q 4Q 3Q 2Q 1Q Variable costs Commission & other expenses Bonus Overtime, part-time Fixed costs (Y bil) FY Personnel costs Real estate expenses Depreciation Office expenses Taxes other than income taxes

5 Daiwa Securities Breakdown of SG&A (Y mil) FY2005 %Change FY2005 3Q 2Q 2Q FY05 1Q 4Q 3Q FY Q 1-3Q %Change 1-3Q FY04 SG&A 42,437 38, % 34,439 36,847 33, , , % 139,975 Commission and other expenses 5,501 5, % 5,286 5,884 5,337 16,131 16, % 22,827 Personnel costs 24,323 20, % 16,787 17,984 15,521 61,758 49, % 67,073 Real estate expenses 4,422 4, % 4,476 4,926 4,745 13,411 14, % 19,165 Office expenses 4,942 4, % 4,889 5,233 5,146 14,777 15, % 20,382 Depreciation 2,157 2, % 2,033 2,021 1,800 6,299 5, % 7,126 Taxes other than income taxes % , % 1,127 Others % ,832 1, % 2,272 5

6 Daiwa Securities SMBC - Consolidated - Breakdown of SG&A (Y mil) FY2005 %Change FY2005 3Q 2Q 2Q FY05 1Q 4Q 3Q FY Q 1-3Q %Change 1-3Q FY04 SG&A 43,409 40, % 32,978 37,523 33, , , % 138,830 Commission and other expenses 18,145 16, % 11,663 14,339 12,212 45,927 36, % 51,144 Personnel costs 12,316 11, % 9,774 10,910 9,282 33,657 28, % 39,857 Real estate expenses 3,476 3, % 3,152 3,425 3,106 10,047 9, % 12,636 Office expenses 4,377 4, % 3,884 3,962 4,131 12,648 12, % 16,368 Depreciation 3,042 3, % 3,031 3,174 3,031 9,114 9, % 12,326 Taxes other than income taxes 1,282 1, % ,369 2, % 3,804 Others % ,207 1, % 2,692 6

7 Daiwa Securities SMBC - Unconsolidated - Financial Summary (Y mil) FY2005 %Change FY2005 3Q 2Q 2Q FY05 1Q 4Q 3Q FY Q 1-3Q %Change 1-3Q FY04 Operating revenues 76,758 77, % 40,546 62,503 39, , , % 203,609 Commissions 26,575 20, % 11,523 24,097 17,341 58,108 56, % 80,288 Brokerage 5,289 4, % 3,273 3,678 3,058 13,069 10, % 13,887 (Stock and others) 5,249 4, % 3,238 3,641 2,996 12,955 10, % 13,721 Underwriting 15,505 8, % 4,970 13,610 10,063 29,389 32, % 45,775 (Stock and others) 12,843 6, % 2,266 10,514 8,105 21,623 25, % 36,068 (Bond and others) 2,120 1, % 2,294 2,649 1,762 6,359 5, % 8,371 Distribution % % 1,013 Other commissions (M&A and others) 5,551 6, % 3,071 6,302 4,071 14,837 13, % 19,612 Net gain/loss on trading securities 41,432 49, % 22,078 33,936 16, ,479 71, % 105,927 Stock and others 24,568 34, % 3,789 18,475 1,632 63,072 26, % 45,072 Bond, forex and others 16,863 15, % 18,289 15,461 15,215 50,407 45, % 60,854 Interest and dividend income 8,751 7, % 6,944 4,468 5,643 22,718 12, % 17,392 Interest expenses 7,927 6, % 4,885 4,621 5,947 19,220 13, % 18,235 Net operating revenues 68,831 70, % 35,661 57,881 33, , , % 185,373 SG&A 38,817 35, % 28,344 32,349 28, ,148 85, % 118,239 Ordinary income 30,699 34, % 8,039 26,101 11,095 73,723 47, % 73,781 Net income 20,133 21, % 4,965 15,619 8,563 46,243 30, % 46,514 Capital adequacy ratio 417.8% 373.3% % 355.6% 385.3% 417.8% 385.3% % 7

8 Daiwa Securities SMBC - Unconsolidated - Breakdown of SG&A (Y mil) FY2005 %Change FY2005 3Q 2Q 2Q FY05 1Q 4Q 3Q FY Q 1-3Q %Change 1-3Q FY04 SG&A 38,817 35, % 28,344 32,349 28, ,148 85, % 118,239 Commission and other expenses 19,668 17, % 12,092 14,510 12,036 48,935 36, % 51,132 Personnel costs 8,244 7, % 6,253 7,246 5,900 22,364 18, % 25,954 Real estate expenses 2,738 2, % 2,564 2,839 2,583 8,131 7, % 10,433 Office expenses 4,040 4, % 3,689 3,640 3,751 11,771 11, % 14,933 Depreciation 2,780 2, % 2,828 2,964 2,820 8,391 8, % 11,448 Taxes other than income taxes % ,351 2, % 2,794 Others % ,201 1, % 1,543 8

9 Domestic Group Companies & Overseas Operation 1-3Q FY2005 (Y mil, y/y % Chg) Daiwa Securities Group Inc. Daiwa Securities Daiwa Securities SMBC (consolidated) Daiwa Asset Management Operating revenues 34, % 177, % 233, % 21, % SG&A 6, % 115, % 116, % 18, % Operating income 25, % 61, % 87, % 2, % Ordinary income 27, % 61, % 88, % 2, % Group holdings (as of Dec 31, 2005) % 60.0% 100.0% 1-3Q FY2005 (Y mil, y/y % Chg) Daiwa Institute of Research Daiwa SB Investments NIF SMBC Ventures* Overseas Operating revenues 56, % 11, % 6, , % SG&A 7, % 4, % 3,006-29, % Operating income 4, % 3, % 2,946-7, % Ordinary income 4, % 3, % 3,128-8, % Group holdings (as of Dec 31, 2005) 100.0% 44.0% 46.3% - *NIF Ventures and SMBC Capital merged on Oct 1, 2005 into NIF SMBC Ventures. 9

10 Equity Market Share FY2005 FY2003 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q Market data Average daily trading value in TSE, OSE, and NSE; (Y bil) 2,972 1,891 1,356 1,468 1,199 1,180 1,569 1,345 1,197 1, 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) Commission rate 51* 53* 64* 70* 69* 70* 71* * Adjusted rate: Denominator excludes value that generates revenues not reported as brokerage commission 10

11 Domestic Customer Assets 12/05 9/05 6/05 3/05 (Y bil) Daiwa Securities* %Change 9/05 Daiwa Securities SMBC** %Change 9/05 Daiwa Securities Daiwa Securities SMBC Daiwa Securities Daiwa Securities SMBC Daiwa Securities Daiwa Securities SMBC Equity 15, % 14, % 13,106 11,942 11,899 10,382 11,760 10,019 Bond 5, % 8, % 5,829 8,564 5,636 8,905 5,389 8,784 Investment trust 5, % 1, % 5, , , Equity 3, % % 2, , , Bond 2, % % 2, , , Others % % , ,141 Total 27, % 24, % 24,173 22,418 22,208 21,369 21,660 20,890 Note: Equity figures include CB and Warrants. *Foreign currency bonds (including Euro yen) under custody at Daiwa Securities Y 2,969bil. (13.7% out of total assets at Daiwa Securities) in 3/05 Y 3,080bil. (13.9%) in 6/05 Y 3,175bil. (13.1%) in 9/05 Y 3,264bil. (11.9%) in 12/05 ** Amount of assets under custody (foreign currency bonds etc) from Group companies: Y 3,836bil. 11

12 Daiwa Securities Number of Accounts (Thousands of Accounts) CMS accounts (Cash Management Service) FY2005 FY /05 9/05 6/05 3/05 12/04 9/04 6/04 3/04 12/03 9/03 6/03 2,631 2,568 2,539 2,522 2,506 2,423 2,411 2,430 2,373 2,332 2,303 Online trading accounts 1,421 1,359 1,323 1,250 1, Daiwa Direct accounts Daiwa Direct margin transaction service accounts Accounts holding equity* 1,196 1,186 1,193 1,198 1,209 1,119 1,109 1,121 1,134 1,140 1,147 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q Newly opened accounts * # of designated accounts was approximately 1.24million as of the end of 12/05. 12

13 Daiwa Securities SMBC Investment Banking (1) Major lead manager deals during 3Q (including joint lead issues) Straight Bonds NTT Y70bil The Awa Bank (subordinate bond) Total Y15bil J-Power Total Y50bil Q.P.Corporation (for individuals) Y10bil SMBC Y50bil Sumitomo Chemical Y10bil Elpida Memory Total Y40bil Mitsui Fudosan Y10bil The Kansai Electric Power Y30bil Credit Saison Y10bil NTT Leasing Y25bil TOHO GAS Y10bil JFE Holdings Y20bil Sanwa Shutter Corporation Y10bil Kyushu Electric Power Y20bil HANWA Y10bil Hokuriku Electric Power Y20bil THE JAPAN GENERAL ESTATE Y10bil Kajima Corporation Total Y20bil Tohoku Electric Power (for individuals) Y10bil NISSAN DIESEL MOTOR Y15bil Sumitomo Wiring Systems Y10bil Sumitomo Corporation Y15bil Marubeni Corporation Y10bil East Japan Railway Company Y15bil etc. * Issue size over 10 billion Agency Bonds Japan Bank for International Cooperation Japan Student Services Organization Japan Expressway Holding and Debt Repayment Agency Total Y50bil Y20bil Y15bil 13

14 Daiwa Securities SMBC Investment Banking (2) Major lead manager deals during 3Q (including joint lead issues) Equity Primary & Secondary Offerings IPO E TRADE SECURITIES Primary & secondary offerings Y62bil IBIDEN Primary & secondary offerings Y44.6bil TOKYU LAND CORPORATION Primary & secondary offerings Y42.5bil Izumiya Secondary offerings Y8.2bil TAKEUCHI MFG Primary & secondary offerings Y6.4bil OKUWA Secondary offerings Y6.2bil * Deals over Y 5bil SUMCO CORPORATION Y158.4bil Mebix Y2bil Produce Y2.7bil Vinculum Japan Corporation Y1.9bil GMO HOSTING & SECURITY Y2.6bil Fuetrek Y1.2bil WE LL CORPORATION Y2bil Nihon Parking Corporation Y1.2bil Overseas Underwriting Issues POWL (Public offering without listing) Bonds *Deals over Y5bil China Construction Bank Y1,084bil, Y34.6bil Link REIT Y333.6bil, Y9.6bil Electricité de France Y900bil, Y56.2bil Dongfeng Qiche Y69.2bil, Y6bil *From left: total underwriting amount, POWL allocation amount African Development Bank Global/USD bond Y 58.9bil Sparebanken Rogaland Euro/USD bond Y 58.9bil Republic of Poland Samurai bond Y 50bil New South Wales Treasury Corporation Euro/AUD bond Y 47.6bil Korea Gas Corporation Samurai Bond Y 30bil Halifax Bank of Scotland Euro/Samurai bond Y 10bil *Currency rate as of the end of Dec/05 14

15 Daiwa Securities SMBC Investment Banking (3) Major lead manager deals during 3Q (including joint lead issues) Structured Finance SMBC: Series5 RMBS <Lead manager> Issue Y171bil, Underwriting Y171bil The Chuo Mitsui Trust and Banking: Series8 RMBS <Lead manager> Issue Y106bil, Underwriting Y58.3bil Japan Finance Corporation for Small and Medium Enterprise: Series2 Regional Financial Institution CLO <Lead manager> Issue Y17.9bil, Underwriting Y17.9bil Nippon Residential Investment Corporation: J-REIT 4 th PO <Co-lead manager> Issue JPY 22.6bil, Underwriting JPY 7.5bil CRESCENDO Investment Corporation: J-REIT 2 nd PO <Lead manager> Issue JPY 6.9bil, Underwriting JPY 5.4bil Major M&A deals during 3Q M&A Daihatsu Diesel NHN, a subsidiary of Daihatsu Diesel MFG, formed a capital and business alliance with DORMA (Germany) through transfer of 25% of its shares held by Daihatsu Diesel MFG. <Adviser to Daihatsu Diesel MFG> SANYO Electric, which is under business reconstruction, transferred part of its stake in its financial subsidiary SANYO Electric Credit to The Goldman Sachs Group Inc. GS acquired third party allocation of shares and became the largest shareholder. <Adviser to SANYO Electric and SANYO Electric Credit> 15

16 VaR Range and assumption of VaR Daiwa Securities SMBC (Parent) Confidence level: 99% Holding period: 1 day Adjusted for price correlation between products Daiwa Securities Group (Y bil) (Consolidated) (Y bil) (Month end) 3/04 6/04 9/04 12/04 3/05 6/05 9/05 12/05 (Month end) 3/05 6/05 9/05 12/05 Equity Equity Interest Interest Currency Currecy Total Diversification effect VaR Total Diversification effect VaR Quarterly High Low Average Quarterly High Low Average Note: From 1Q FY2005, VaR of the Daiwa Securities Group (consolidated) is disclosed in addition to VaR at Daiwa Securities SMBC as a measure of market risk related to trading positions. 16

17 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 6/05 9/05 12/05 MMF+MTGBF 21,545 10,451 7,416 6,373 5,473 4,757 4,454 4,211 3,983 3,825 3,631 3,490 Bonds 16,820 15,502 10,712 10,728 10,281 10,034 9,463 9,349 9,520 9,214 10,329 11,027 Equities 14,452 15,309 16,266 20,100 23,276 24,809 25,553 27,435 28,901 32,037 34,838 40,829 Nikko AM 7,276 4,122 3,817 3,775 3,864 3,676 3,640 3,774 3,906 4,408 4,906 6,193 Nomura AM 15,976 13,587 10,421 11,286 10,829 10,627 9,819 10,014 10,052 10,408 10,801 12,147 Daiwa AM 12,014 8,271 6,326 6,141 5,947 6,004 5,743 5,788 5,676 5,861 6,434 7,188 Source: The Investment and Trust Association 17

18 Daiwa Asset Management Monthly Payment Foreign Bond Investment Trust (Y bil) 1,400 1,200 1, 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 Open Daiwa High-Rating USD Bond Open /03 3/04 6/04 9/04 12/04 3/05 6/05 9/05 12/05 18

19 Number of Group Employees (# of employees) Overseas 14,000 12,000 12,963 12,952 12,652 12,756 12,657 12,449 13,036 12,900 12,898(-2) 1,210(- 9) Other domestic companies 10,000 3,123(+72) Daiwa Securities SMBC 8,000 6,000 1,863(- 2) Daiwa Securities 4,000 6,441(-65) 2,000 Daiwa Securities Group Inc. 0 9/03 3/04 6/04 9/04 12/04 3/05 6/05 9/05 12/05 261(+2) (Changes are from 9/05) Total figure is the sum of consolidated group companies and Daiwa SB Investments. Figures for Daiwa Securities include Financial Advisers (FA). Figures for Daiwa Securities SMBC include employees of Daiwa Securities SMBC Principal Investments. 19

20 Changes in Shareholder Composition September 04 Types of investors Ratio of # 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 Types of investors March 05 Ratio of # 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 100 September 05 Types of investors Ratio of # of shares Individuals 20.1 % Financial institutions 39.9 Banks 6.4 Trust Banks 25.7 Other institutions 5.3 Foreigners 33.3 Others 1.4 Total

21 Credit Ratings Daiwa Securities Group Inc. Daiwa Securities Daiwa Securities SMBC Long-term Short-term Long-term Short-term Long-term Short-term Moody's Baa1 - Baa1 P-2 A2 P-1 Standard & Poor's BBB+ A-2 BBB+ A-2 A- A-2 Rating and Investment Information A- a-1 A- a-1 A a-1 Japan Credit Rating Agency A - A As of December 31,

22 Contact Daiwa Securities Group Inc. Investor Relations TEL: FAX: URL: