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4Q FY2014Earnings Announcement
April 28, 2015Daiwa 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
Consolidated ResultsSummary 3~6Breakdown of SG&A 7~8Balance Sheet 9Financial Management 10Segment Information 11~17DIR Group, Daiwa Next Bank and Overseas Operation 18
Reference 19~32
Table of Contents
3
Consolidated
Highlights (FY2014 Full Year)
■ Achieved the target ordinary income for the final year (FY2014) of the previous Medium-Term Management Plan
Consolidated ordinary income was Y184.5bil, achieving the target ordinary income of Y120bil as set out in the previous Medium-Term Management Plan.Net income for 4Q FY2014 was Y38.5bil (+0.1% QoQ), marking an increase for four consecutive quarters.
■ Continuous efforts to expand stable revenues proved fruitfulDaiwa Asset Management’s AUM of mutual funds reached Y11tri. The Asset Management Division posted record-high net operating revenues (Y55.1 bil) and ordinary income (Y32.1 bil).As for Daiwa Next Bank, the number of accounts reached one million, and the deposit balance surpassed Y3tri, contributing to diversify the source of stable revenues.
■ FY2014 dividend per share: 30 yen (interim:14 yen, year-end: 16 yen)Dividend payout ratio for year-end dividend will be 35.5%. Annual dividend payout ratio will be 34.5%, which is higher than the FY2013 annual dividend payout ratio of 34.1%.
4
57.2
35.543.4
33.2 34.3 37.0 38.5 38.5
0
20
40
60
80
1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14 4Q/14
65.0
43.050.5
38.4 39.744.2
51.0 49.5
0
20
40
60
80
1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14 4Q/14
155.2
127.1138.3
121.1 122.4 130.1140.2 139.3
0
60
120
180
1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14 4Q/14
Consolidated
Summary (4Q / FY2014)
4Q FY2014 Net operating revenues: Y139.3bil (-0.7% QoQ)In the Wholesale Division, net operating revenues for Global Markets was Y41.1bil (+17.0% QoQ) due to an increase in net trading income.The Asset Management Division posted net operating revenues of 14.3 bil (+1.6% QoQ) with the expansion of AUM, mainly through mutual funds.
4Q FY2014 Ordinary income: Y49.5bil (-2.9% QoQ)SG&A was Y92.9 bil (+1.7% QoQ), resulting in the decrease of ordinary income.
4Q FY2014 Net income: Y38.5bil (+0.1% QoQ)Annualized ROE was 12.7% (-0.5 pts. QoQ), and BPS was Y725.27 (+Y24.42 QoQ)
Net operating revenues Ordinary income Net income(Y bil) (Y bil) (Y bil)
5
Consolidated
Financial Summary
3Q 4Q
Operating revenues 179,583 175,454 -2.3% 642,829 659,396 2.6%
Net operating revenues 140,248 139,316 -0.7% 541,951 532,220 -1.8%
SG&A 91,408 92,918 1.7% 357,358 361,380 1.1%
Ordinary income 51,056 49,578 -2.9% 197,045 184,578 -6.3%
Net income 38,502 38,522 0.1% 169,457 148,490 -12.4%
Total assets 23,583,808 23,001,585 19,480,863 23,001,585
Net assets 1,392,698 1,434,680 1,253,462 1,434,680
Shareholders' equity* 1,196,309 1,238,657 1,078,574 1,238,657
EPS(Y) 22.57 22.56 99.63 87.07
BPS(Y) 700.85 725.27 633.53 725.27
ROE(Annualized) 13.2% 12.7% 17.0% 12.8%
(Y m il)% Change
vs3Q/FY14
% Changevs
FY13
FY2014FY2013 FY2014
* Shareholders’ equity = owners’ equity + accumulated other comprehensive incomeFY2014 Dividend
FY14 Proposed Dividend per Share: 30 yen(including 14 yen interim dividend)
6
Net operating revenues : Y139.3bil(-0.7% QoQ)
Commission received remained flat at Y75.4 bil (-0.8% QoQ).
・Brokerage commission* was Y19.2 bil(-3.7% QoQ) due to a decrease in the value of stock trading.
・Investment advisory and account management fee* increased to Y4.2 bil(+31.5% QoQ) as the AUM of wrap accounts expanded.
・M&A commission* rose to Y3.9 bil(+52.2% QoQ) with the expansion of revenues from overseas operations.
Net trading income increased to Y41.8 bil (+7.8% QoQ).
Ordinary income : Y49.5bil(-2.9% QoQ)
Net income : Y38.5bil(+0.1% QoQ)
Consolidated
4Q 1Q 2Q 3Q 4Q
147,398 148,701 155,656 179,583 175,454 -2.3% 642,829 659,396 2.6%
Com m ision received 65,984 68,686 70,954 76,029 75,445 -0.8% 301,937 291,115 -3.6%
Net trading incom e 35,012 37,579 39,016 38,806 41,817 7.8% 156,499 157,220 0.5%
Net gain/loss on private equityand other securities 3,002 1,916 1,543 3,384 570 -83.1% 17,454 7,415 -57.5%
Financial revenue 24,968 26,578 29,789 34,612 34,954 1.0% 107,974 125,934 16.6%
Other operating revenue 18,430 13,940 14,351 26,750 22,667 -15.3% 58,963 77,710 31.8%
14,346 16,530 15,381 27,660 20,497 -25.9% 60,333 80,070 32.7%
11,884 9,680 10,110 11,674 15,640 34.0% 40,545 47,105 16.2%
121,168 122,490 130,163 140,248 139,316 -0.7% 541,951 532,220 -1.8%
87,255 88,164 88,889 91,408 92,918 1.7% 357,358 361,380 1.1%
33,912 34,326 41,274 48,840 46,398 -5.0% 184,593 170,839 -7.5%
4,510 5,378 2,964 2,215 3,179 43.5% 12,452 13,738 10.3%
38,423 39,705 44,239 51,056 49,578 -2.9% 197,045 184,578 -6.3%
-1,304 23 717 -3,666 264 - -1,466 -2,662 -
37,118 39,728 44,956 47,389 49,842 5.2% 195,579 181,916 -7.0%
3,037 4,286 6,756 7,463 8,937 19.7% 17,670 27,444 55.3%
33,215 34,380 37,085 38,502 38,522 0.1% 169,457 148,490 -12.4%Net incom e/loss
Financial expenses
Other operating expenses
Net Operating revenues
SG&A
Extraordinary incom e/loss
Incom e/loss before incom e taxes
% Changevs
3Q/FY14
% Changevs
FY13
FY2013 FY2014FY2013 FY2014
Total incom e taxes
(Y mil)
Ordinary incom e/loss
Non-operating incom e/loss
Operating incom e/loss
Operating revenues
P/L Summary
* Composition of total commission received (See p.20)
7
4Q 1Q 2Q 3Q 4Q
SG&A 87,255 88,164 88,889 91,408 92,918 1.7% 357,358 361,380 1.1%
17,747 17,870 18,569 18,762 18,473 -1.5% 74,360 73,676 -0.9%
43,785 43,618 44,157 46,061 47,935 4.1% 177,049 181,772 2.7%
9,256 9,212 9,169 9,076 9,550 5.2% 36,260 37,009 2.1%
Office cost 6,036 6,332 6,104 6,485 6,521 0.6% 24,704 25,444 3.0%
Depreciation 6,120 6,030 6,140 6,141 5,772 -6.0% 26,551 24,084 -9.3%
Taxes and dues 1,461 1,883 1,738 1,808 1,556 -13.9% 6,603 6,987 5.8%
Other 2,848 3,215 3,009 3,073 3,107 1.1% 11,829 12,405 4.9%
Real estateexpenses
( Y m il)%
Changevs
3Q/FY14
FY2013 FY2014
Personnelexpenses
Trading re latedexpenses
FY2013 FY2014% Change
vsFY13
SG&A : Y92.9bil
(+1.7% QoQ)
Trading related expenses were Y18.4 bil (-1.5% QoQ), and office cost was Y6.5 bil(+0.6% QoQ). Both items remained almost flat compared to the previous quarter.
Personnel expenses rose to Y47.9 bil (+4.1% QoQ) mainly due to the rise in bonus, which is linked to profit.
Real estate expenses increased to Y9.5 bil(+5.2% QoQ), mainly due to an increase in IT related equipments.
As the depreciation of a large-scale software ended in the previous quarter, office cost decreased to Y5.7 bil(-6.0% QoQ) .
Consolidated
Breakdown of SG&A
8
53.1 51.4 51.9 51.7 52.4 52.5 53.3 53.9
39.735.5 38.1 35.5 35.7 36.3 38.0 38.9
90.187.2 88.1 88.8
91.4
86.9
92.992.9
0
20
40
60
80
100
1Q/13 2Q/13 3Q/13 4Q/13 1Q/14 2Q/14 3Q/14 4Q/14
1Q 2Q 3Q 4Q 1Q-4Q 1Q 2Q 3Q 4Q 1Q-4Q
92.9 86.9 90.1 87.2 357.3 88.1 88.8 91.4 92.9 361.3
39.7 35.5 38.1 35.5 149.0 35.7 36.3 38.0 38.9 149.0
19.0 18.4 19.1 17.7 74.3 17.8 18.5 18.7 18.4 73.6
Advertis ingexpenses 1.2 2.6 2.4 1.9 8.2 1.7 1.7 2.0 2.0 7.5
15.3 12.0 13.6 12.7 53.8 12.1 12.3 13.6 14.6 52.8
2.0 2.0 2.2 2.0 8.3 2.2 2.1 2.3 2.2 9.0
53.1 51.4 51.9 51.7 208.3 52.4 52.5 53.3 53.9 212.3
28.7 27.7 28.1 28.6 113.2 28.8 29.2 29.7 30.6 118.5
9.0 8.8 9.1 9.2 36.2 9.2 9.1 9.0 9.5 37.0
7.0 6.8 6.5 6.1 26.5 6.0 6.1 6.1 5.7 24.0
5.8 6.1 5.9 5.7 23.6 6.0 5.8 6.1 6.2 24.2
2.0 1.4 1.6 1.4 6.6 1.8 1.7 1.8 1.5 6.9
Trading re latedexpenses
FY2013( Y bil)
Total SG&A
FY2014
PersonnelexpensesReal estateexpenses
Depreciation
Office expenses
Taxes and dues
Fixed costs
Bonus
Variable costs
Overtime, part-time
Consolidated
Cost Structure(Y bil)
Variable costsVariable costs
Fixed costsFixed costs
9
Total assets: Y23.0tri
Net assets: Y1.43tri
Shareholders’ equity** : Y1.23tri
89.8% of total assets have high liquidity*.
*Cash and deposits + Short-term investment securities + Trading products + Loans secured by securities
Shareholders’ equity** increased by Y160bil from March 31, 2014, to Y1.23tri.
Consolidated
Balance Sheet
Current Assets 22,190 (3,453) Current liabilities 19,353 (3,199)Cash and deposits 2,985 (1,098) Trading products 6,014 (717)Short-term investment securities 2,629 (46) Trading securities and other 3,374 (-52)Trading products 8,304 (1,193) Stocks , convertible bonds 189 (32)
Trading securities and other 5,192 (456) Bonds 3,049 (-102)Stocks , Convertible bonds 751 (165) CD/CP and others 135 (16)Bonds 3,675 (-84) Derivatives 2,640 (770)Beneficiary certificates 211 (96) Loans payable secured by securities 7,553 (1,222)CD/CP and others 553 (277) Deposits for banking business 2,745 (547)
Derivatives 3,111 (737) Short-term loans payable 1,011 (107)Operational investment securities 119 (11) Commercial papers 388 (121)(after allowance for poss ible inves tm ent losses) Current portion of bonds 264 (40)
110 (11)
Daiwa Corporate Inves tm ent 9 (1)Loans secured by securities 6,728 (839)
Non-current assets 810 (67) Non-current liabilities 2,209 (139)Property, plant and equipment 458 (26) Bonds payable 1,179 (-69)Intangible assets 77 (0) Long-term loans payable 946 (197)Investments and other assets 275 (41) Total liabilities 21,566 (3,339)
Inves tm ent securities 241 (41) Net assets 1,434 (181)Lis ted s tocks 167 (40) Owners ' equity 1,086 (97)Unlis ted s tocks 20 (0) Accumulated other comprehensive income 151 (62)Other 52 (1) Minority interes ts 187 (20)
Total Assets 23,001 (3,520) Total liabilities and net assets 23,001 (3,520)
Daiwa Securities SMBC PI + Daiwa PIPartners
Note: Figures in brackets indicate changes from March 31, 2014
Consolidated Balance Sheet (March 31, 2015)
(Y bil)
**Shareholders’ equity = Owners’ equity +Accumulated other comprehensive income
10
0
1000
2000
3000
4Q 1Q 2Q 3Q 4Q
0
500
1,000
1,500
2,000
2,500
3,000
3,500
13/4Q 14/1Q 14/2Q 14/3Q 14/4Q0%
50%
100%
150%
200%
250%
300%
Supplementary liquidity portfolio (left)
Liquidity Portfolio (left)
Liquidity portfolio and other total / Short-tem unsecured capital (right)
Financial ManagementConsolidated
Consolidated Total Capital Ratio: 22.3%
Consolidated Tier1 Capital Ratio: 21.3%
Consolidated Common Equity
Tier1 Capital Ratio: 20.4%
(Basel Ⅲ basis as at December 31, 2014)
Gross leverage ratio*: 16.0x
Adjusted leverage ratio**: 11.3x
Liquidity portfolio: Y 1.86 tri
Supplementary liquidity portfolio:
Y 1.20tri
Consolidated Capital Adequacy Ratio
Leverage Ratio Liquidity Portfolio and Other
(Y bil)Short -term unsecured capital procurement (left)
* Gross leverage ratio:total assets / net assets** Adjusted leverage ratio:( total assets-assets related to cash forward transaction & repo trading ) / net assets
※ All figures are as at the end of each quarter.
19,48022,050 21,664
23,58323,001
1,4341,3921,3381,2591,253
12.9
15.5 17.5 16.2 16.9 16.0
12.111.4 11.310.8
Total assets (Y bil) Net assets (Y bil)Gross lev erage ratio Adjusted lev erage ratio
9,531 10,163 10,410 11,137 10,804 11,125 11,59812,387
9,0489,759 9,879 10,529 10,375 10,698 11,142
11,829
20.0% 19.7% 20.7% 21.9% 21.8% 22.5% 22.4% 22.3%
19.0% 18.9% 19.6% 20.7% 20.9% 21.6% 21.5% 21.3%
Total Quality Capital (Y 100mil) Tier1Capital (Y 100mil) Consolidataed Total Capital Ratio Tier1Ratio
バーゼルⅢBasel Ⅲ
FY20141Q 2Q 3Q
FY20131Q 2Q 3Q 4Q
FY20124Q
FY2013
4Q
FY2014
1Q 2Q 3Q 4Q
FY2013
4Q
FY2014
1Q 2Q 3Q 4Q
11※ Figures calculated based on managerial accounting of each subsidiary company
Segment Information
13.2%55,14048,7141.6%14,35114,12413,88012,783Asset Management
-1.8%
-58.2%
14.4%0.3%3.0%
-8.3%
% Changevs
FY13
532,22056,1268,351
37,966142,601
180,568232,033
FY2014
541,95144,81519,989
33,181
142,156175,338253,093
FY2013
-0.7%
-77.8%
9.5%17.0%15.5%-0.4%
% Changevs
3Q/14
139,31612,995
788
9,57641,120
50,69760,483
4Q
140,24817,9283,560
8,747
35,14543,89360,741
3Q
130,16313,0791,816
8,756
35,79444,55156,836
2Q
122,49012,1222,186
10,885
30,54041,42653,971
1Q
FY2014
Net operating revenues
WholesaleRetail
(Y mil)
Global MarketsGlobal Investment Banking
Consolidated totalOther/AdjustmentsInvestments
26.9%32,14225,328-0.7%8,0178,0738,0388,013Asset Management
-6.3%
-62.1%
127.8%2.2%
11.5%-23.9%
% Changevs
FY13
184,578 15,284 6,506
8,009 44,878
52,888 77,756
FY2014
197,0454,996
17,171
3,51643,912
47,428102,120
FY2013
-2.9%
-90.2%
-30.0%70.4%57.3%-3.4%
% Changevs
3Q/14
49,5782,573
288
1,03016,772
17,80220,895
4Q
51,0567,0742,951
1,4729,842
11,31421,641
3Q
44,2393,5251,382
1,57511,653
13,22818,064
2Q
39,7052,1101,884
3,9316,610
10,54117,155
1Q
FY2014
Ordinary income
WholesaleRetail
(Y mil)
Global MarketsGlobal Investment Banking
Consolidated totalOther/AdjustmentsInvestments
12
0
20
40
60
80
Equityunderwriting
Equity
Fixed income
Investment trust
Agency fee forinvestment trust
Other
Ordinary income
Net operatingrevenues 60,483 -0.4% 232,033 -8.3%
Ordinary incom e 20,895 -3.4% 77,756 -23.9%
% Changevs
FY13( Y m il)
FY20144Q
FY2014% Change
vs3Q/FY14
Retail DivisionNet operating revenues and ordinary income
* Sales commission from equity underwriting
Net operating revenues remained almost flat compared to the previous quarter (-0.4% QoQ).
・Equity revenues decreased by 7.6% QoQ with the decline in the trading value of both Japan and foreign equity.
・Although sales of foreign bonds and structured bonds were steady, fixed income revenues declined by 1.7% QoQ as a result of a decrease in sales of domestic bonds.
・Other revenues increased by 34.2% QoQ with the solid expansion of the AUM of wrap accounts.
17.1
53.9
4.2
9.0
10.2
17.910.6
1.8
1Q
FY2014
18.0
56.8
4.8
9.4
9.9
18.112.3
2.0
2Q
21.6
60.7
5.3
9.8
10.1
19.314.8
1.2
3Q
20.8
60.4
7.1
9.6
9.9
18.9 13.7 0.9
4Q
Ordinary income
Net operating revenues
Other
Agency fee for investment trust
Distribution Commission for Investment trust
Fixed income
Equity
Equity underwriting*
(Y bil)
54.663.456.778.2
FY2013
4Q3Q2Q1Q
1.01.51.30.8
13.117.914.222.817.718.617.722.5
39.4
4.0
9.0
18.9
19.4
4.0
8.5
10.8
25.5
4.4
8.7
11.9
17.6
4.1
8.7
9.8
13
0
600
1,200
1,800
Equity
SMA +FundWrapPensionInsurance
Domesticbonds
Foreignbonds
Mutualfunds
*Total sales amount of Daiwa fund wrap and Daiwa SMA**Foreign bonds include yen-denominated bonds ***Mutual funds include switching transactions between funds
【 NISA 】 (as at the end of March, 2015)Total number of accounts applied: 704 thousand Total number of accounts opened: 686 thousand . Products purchased : [Transaction basis] Stocks 43% : Investment trusts 57% [Sales value basis] Stocks 44% : Investment trusts 56%Number of accounts and purchasing amount of NISA accumulative funds steadily increased.
【Net inflow of assets】
Net inflow of assets in FY2014 was Y1.0672tri, surpassing that of FY2011, when the deposit balance increased significantly with the start of the Daiwa Next Bank business in May 2011.The accumulation of net increase in assets has made solid progress mainly through mutual funds, fund wrap, and deposit balance which are key products for expanding stable revenues.
Sales and distribution amount by product
Retail Division Daiwa Securities
802.8
367.1
332.3
30.4
52.4
53.2
1Q
FY2013
502.7
376.3
168.9
28.0
71.7
66.0
2Q
624.1
379.3
119.3
22.5
77.1
99.9
3Q
498.6
346.5
122.6
21.6
70.0
68.7
4Q
Mutual funds***
Foreign bonds**
Domestic bonds
Pension Insurance
SMA + Fund Wrap*
Equity
533.6
318.5
144.9
3.0
153.7
86.6
2Q
472.9
324.7
147.6
19.1
64.0
98.4
1Q
FY2014
4Q3Q(Y bil)
51.550.8
238.0228.0
618.5611.7
335.2327.8
119.8162.7
22.42.5
Change in net inflow of assets
-200
0
200
400
600
800
1,000
1,200
FY2010 FY2011 FY2012 FY2013 FY2014
4Q
3Q
2Q
1Q
(Y bil)
14*FICC: Fixed Income, Currency and Commodities
Wholesale Division Global Markets
【Equity】
Principal trading of Japan equity based on client flow was steady, as the domestic market condition improved towards the end of thefiscal year.
【FICC*】Steady sales of structured bonds mainly contributed to the increase in derivatives-related revenues.
Overseas FICC revenues increased, mainly in the Americas.
0
10
20
30
40
50
Equity
FICC*
Others
Ordinaryincome
Net operating revenues and ordinary income
Net operatingrevenues 41,120 17.0% 142,601 0.3%
Ordinary incom e 16,772 70.4% 44,878 2.2%
% Changevs
3Q/FY14
% Changevs
FY13( Y m il)
FY20144Q FY2014
6.6
30.5
0.6
16.2
13.6
1Q
FY2014
11.6
35.7
0.6
19.2
15.9
2Q
9.8
35.1
0.7
18.1
16.3
3Q
16.7
41.1
0.9
21.3
18.8
4Q
12.4
37.5
0.7
13.3
23.4
1Q
FY2013
9.5
34.0
0.7
17.9
15.3
2Q
15.5
40.6
0.6
18.9
21.0
3Q
6.3
29.9
0.4
14.6
14.8
4Q
Ordinary income
Net operating revenues
Others
FICC*
Equity
(Y bil)
15
Net Operatingrevenues 9,576 9.5% 37,966 14.4%
Ordinary incom e 1,030 -30.0% 8,009 127.8%
FY2014( Y m il)FY2014
4Q
% Changevs
3Q/FY14
% Changevs
FY13
Wholesale Division Global Investment Banking
【Equity】
Accomplished deals, mainly for REITs.
<Selected lead managed deals>Daiwa House REIT Investment Corporation REIT PO Y28.3bilAEON REIT Investment Corporation REIT PO Y20.8bilORIX JREIT Inc. REIT PO Y18.4bil
【Debt】Lead managed SoftBank Corp.’s SB issue, one of the largest ever retail bond deals. Panasonic issued the largest wholesale bond for this fiscal year.
<Selected lead managed deals>SoftBank Corp. (7 yrs) SB (subordinated retail bond) Y450bilPanasonic Corporation (5, 7, 10 yrs) SB Total Y400bilNagoya Expressway (5, 10, 15 yrs) Municipal bond Total Y35bilADB (5, 10 yrs) Benchmark dollar bond TotalUSD3.0bil
【M&A】
<Selected deals>Acquisition of YUKIGUNI MAITAKE CO., LTD. by Bain Capital through its SPC.Acquisition of CosmoSteel Holdings Limited (Singapore) shares by HANWA Co., Ltd. Acquisition of eFront (France) by Bridgepoint (UK)
0
3
6
9
12
Equityunderw riting
Debtunderw riting
M&A/ Others
Ordinaryincome
Net operating revenues and ordinary income
0.0
8.1
3.0
2.2
2.7
4Q
1.6
8.9
2.9
2.5
3.4
3Q
1.6
8.4
2.2
2.1
3.9
2Q
0.1
7.6
2.6
2.9
2.0
1Q
FY2013
Ordinary income
Net operating revenues
M&A/others
Debt underwriting
Equity underwriting
(Y bil)
2.7 2.62.72.6
3.9
10.8
2.0
6.1
1Q
FY2014
1.5
8.7
1.8
4.1
2Q
1.4
8.7
2.8
3.3
3Q 4Q
1.0
9.5
4.7
2.0
16
0
5,000
10,000
15,000
20,000Daiwa AM (Bond f unds)
Daiwa AM (Equity f unds)
Daiwa SB Inv estments(Inv estment trust)
Daiwa SB Inv estments(Inv estment adv isory )
0
5
10
15
Daiwa AM
Others
Ordinaryincome
Asset Management Division
* ‘Others’ includes Daiwa Fund Consulting, Daiwa Real Estate Asset Management, and Daiwa Office Investment Corporation
Assets under management
※ All figures are as at the end of each quarter
Net operating revenues and ordinary income
Net Operatingrevenues 14,351 1.6% 55,140 13.2%
Ordinary incom e 8,017 -0.7% 32,142 26.9%
( Y m il)FY2014
4Q
% Changevs
3Q/FY14
% Changevs
FY13FY2014
17.9%
17,321
2,337
2,236
9,601
3,145
1QFY2014
17.7%
17,927
2,482
2,320
9,938
3,186
2Q
17.7%
19,075
2,554
2,545
10,710
3,265
3Q
17.4%
19,545
2,672
2,526
11,032
3,314
4Q
Daiwa Securities Group Share
Total
Daiwa SB Investments(Investment advisory)
Daiwa SB Investments(Investment trust)
Daiwa AM(Equity funds)
Daiwa AM(Bond funds)
(Y bil)
17.8%17.8%17.9%18.1%
FY20134Q3Q2Q1Q
3,0643,2902,9592,757
8,9588,9688,6168,415
16,60017,26416,35115,884
2,3272,7612,6142,500
2,2492,2452,1602,211
8.0
12.7
3.0
9.7
1Q
FY2014
8.0
13.8
3.6
10.2
2Q
8.0
14.1
3.3
10.7
3Q
8.0
14.3
3.2
11.0
4Q
Ordinary income
Net operating revenues
Others*
Daiwa AM
(Y bil)FY2013
4Q3Q2Q1Q
6.26.46.36.3
12.012.212.112.3
2.72.52.72.6
9.39.69.39.6
17
0
50
100
Private equityand PIPEs
Monetaryclaims
Real estate
0
2
4
6
8
10
Netoperatingrevenues
Ordinaryincom e
Net operatingrevenues 788 -77.8% 8,351 -58.2%
Ordinary incom e 288 -90.2% 6,506 -62.1%
(Y m il)FY2014
4Q
% Changevs
3Q/FY14
% Changevs
FY13FY2014
Investment Division
Principal investment values
※ Principal investment values are the sum of Daiwa Securities SMBCPI and Daiwa PI Partners ※ All figures are as at the end of each quarter
Net operating revenues and ordinary income
77
20
21
36
1Q
FY2013
72
20
22
30
2Q
82
20
25
36
3Q
87
20
26
41
4Q
Total
Real estate
Monetary claims
Private equity and PIPEs
(Y bil)
98
20
29
49
4Q
FY2014
3Q2Q1Q
222324
918586
202020
494242
7.7
8.3
1Q
FY2013
5.9
6.8
2Q
0.6
1.6
3Q
2.7
3.1
4Q
Ordinary income
Net operating revenues
(Y bil)FY2014
2.9
3.5
3Q
1.3
1.8
2Q
0.2 1.8
0.7 2.1
4Q1Q
18* 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)
DIR Group
Ordinary income for the three DIR Group companies rose significantly QoQ due to an increase in the number of system development projects.
Daiwa Next Bank
Ordinary income was Y2.6bil mainly due to portfolio rebalancing.
Overseas Operation
Overseas operation saw a decrease in losses, owing to the improvement in earnings in Asia/Oceania and the Americas.
Europe continued to post losses mainly due to a decrease in the number of CB deals, although the M&A business continued to show a steady performance.
Asia’s loss decreased as revenues for equity and FICC improved.
Americas returned to profit mainly due to improved FICC revenues. Ordinary income for FY2014 increased compared to the previous year.
DIR Group, Daiwa Next Bank and Overseas Operation
Ordinary Income
452
-831
-1,326
-1,704
2,561
3,620
4Q
FY2013
25
168
223
417
2,697
1,062
1Q
FY2014
144
-447
-1,527
-1,829
2,381
1,806
2Q
-399
-1,793
-171
-2,364
5,846
2,008
3Q
1,279
-695
-712
-127
2,699
3,087
4Q
1,050
-2,768
-2,187
-3,904
13,625
7,966
FY2014
916
-3,763
-2,307
-5,154
5,700
8,250
FY2013
-3.4%53.7%DIR Group*
139.0%-53.8%Daiwa Next Bank
Americas
Asia /Oceania
Europe
--Overseas operation
Total
--
--
14.6%-
% Change vs
FY13
% Change
vs3QFY14
(Y mil)
Reference
20
FY2013
4Q 1Q 2Q 3Q 4Q
65,984 68,686 70,954 76,029 75,445 -0.8% 301,937 291,115 -3.6%
16,596 14,082 16,585 20,010 19,271 -3.7% 89,634 69,950 -22.0%
5,812 11,172 10,214 9,678 6,487 -33.0% 29,606 37,553 26.8%
10,251 10,569 10,162 10,293 10,025 -2.6% 52,706 41,051 -22.1%
33,323 32,861 33,991 36,046 39,660 10.0% 129,990 142,559 9.7%
2,083 2,029 2,423 3,207 4,218 31.5% 6,737 11,879 76.3%
871 408 522 144 668 361.3% 3,316 1,743 -47.4%
2,528 2,029 1,765 2,586 3,935 52.2% 9,107 10,315 13.3%
20,832 21,639 22,382 23,348 23,553 0.9% 84,771 90,924 7.3%
141 142 157 118 157 33.1% 1,512 575 -62.0%
6,866 6,611 6,740 6,640 7,127 7.3% 24,545 27,120 10.5%
% Changevs
3Q/FY14
% Changevs
FY13
FY2014FY2013 FY2014( Y mil)
M&A commission
Investment advisory andAccount management fees
Other
Total commission
Brokerage com m ission
Other com m ission
Underw riting com m ission
Dis tribution com m iss ion
Investment enterprisepartnership administration fee
Management fee
Life insuranse salescommission
Consolidated
Breakdown of commission
※ Until 2Q FY2014, part of the revenues based on investment entrustment contracts of Daiwa Securities’ wrap accounts had been distributed to two items, namely, Distribution commission and Other of Other commission. The revenues are now recorded in a single item: Investment advisory and Account management fees.
21
0
10
20
30
40
50
60Equity
Domestic bonds
Foreign bonds
Stock investmenttrusts
Bond investmenttrusts
Overseas mutualfunds
Others
0
800
1,600
2,400
3,200
0
500
1,000
1,500
Ordinarydeposits
Timedeposits
Negotiablecertificate ofdeposits /Other
Number ofaccounts(thousands)
Daiwa Securities/Daiwa Next Bank
Customer Assets, Deposit Balance & Accounts
Daiwa Securities assets under custody Daiwa Next Bank Deposit balance & number of accounts(thousands)(Y bil)
※All figures are as at the end of each quarter. ※All figures are as at the end of each quarter.
(Y tri)
50.5
1.2
0.2
1.6
6.1
5.1
8.1
27.8
1Q
FY2014
51.3
1.2
0.2
1.6
6.3
5.1
7.6
29.0
2Q
52.9
1.1
0.2
1.6
6.8
5.1
7.5
30.2
3Q
54.6
1.2
0.2
1.6
6.9
4.9
7.3
32.2
4Q
0.20.30.30.3Overseas mutual funds
FY2013
4Q3Q2Q1Q(Y tri)
48.4
1.1
1.6
5.6
5.0
7.9
26.7
47.5
1.0
1.6
5.5
4.9
8.4
25.4
5.04.8Foreign bonds
5.55.4Stock investmenttrust
1.81.7Bond investment trusts
1.11.1Others
50.547.8Total
8.38.7Domestic bonds
28.225.6Equity
928
2,491
2
1,340
1,147
1Q
FY2014
953
2,560
3
1,387
1,169
2Q
985
2,772
3
1,447
1,321
3Q
1,018
3,047
62
1,528
1,455
4Q
2,3992,3572,2682,229Deposit balance
1,2611,1461,1321,122Time deposits
1,0851,2061,063942Ordinary deposits
901
52
4Q
865
4
3Q
818
73
2Q
775
164
1Q
FY2013
Negotiablecertificate ofdeposits / Other
Number of accounts (thousands)
(Y bil)
22
Equity 13.0 14.0 7.7% 72.0 52.0 -27.8%
FICC* 33.0 37.0 12.1% 111.0 132.0 18.9%
Total 46.0 51.0 10.9% 183.0 184.0 0.5%
FY20144Q FY2013( Y bil)
FY20134Q
% Changevs
3Q/FY14
% Changevs
FY13FY2014
( Y mil)FY2013
4QFY2014
4Q% Change
vs3Q/FY14
FY2013 FY2014% Change
vsFY13
Equity 10,597 4,676 -55.9% 47,314 24,795 -47.6%
Bond and forex 28,209 37,140 31.7% 109,185 132,424 21.3%Net financialincom e 6,952 14,456 107.9% 47,641 45,863 -3.7%
Total 45,758 56,273 23.0% 204,141 203,083 -0.5%
*FICC: Fixed Income, Currency and Commodities
Daiwa Securities/Overseas
Equity & FICC Income: Consolidated Trading Gain/Loss
<Reference>Financial accounting basis:Net trading income / loss + Net financial income
Consolidated trading gain / loss(Managerial accounting basis)【Managerial accounting basis】
0
15
30
45
60EquityFICC*
41.0
26.0
15.0
4Q
51.0
30.0
21.0
3Q
40.0
28.0
12.0
2Q
51.0
27.0
24.0
1Q
FY2013
50.0
32.0
18.0
4Q
FY2012
37.033.032.030.0FICC*
Total
Equity
(Y bil)
46.0
14.0
2Q
41.0
11.0
1Q
FY2014
51.046.0
14.013.0
4Q3Q
23
FY2013
4Q 1Q 2Q 3Q 4Q
Operating revenues 85,312 89,054 95,484 101,344 100,775 -0.6% 399,876 386,659 -3.3%
Commission received 42,655 44,904 46,919 49,556 49,186 -0.7% 206,128 190,566 -7.5%Brokerage commission 12,452 10,232 12,176 15,150 14,353 -5.3% 70,861 51,912 -26.7%
Stock and others 12,177 9,971 11,886 14,537 13,638 -6.2% 69,212 50,035 -27.7%Underwriting commission 5,069 8,777 6,433 7,097 6,079 -14.3% 25,198 28,388 12.7%
Equity 3,229 5,437 2,833 3,397 2,656 -21.8% 13,377 14,324 7.1%Bond and others 1,840 3,340 3,599 3,699 3,423 -7.5% 11,820 14,063 19.0%
Distribution commission 9,744 10,157 12,589 10,054 9,565 -4.9% 50,660 42,367 -16.4%Investment trust 9,276 9,864 12,325 9,803 9,424 -3.9% 49,105 41,417 -15.7%
Other commissions 15,388 15,736 15,719 17,254 19,188 11.2% 59,408 67,899 14.3%Agency fee and others 9,149 9,496 9,998 10,308 10,294 -0.1% 36,704 40,098 9.2%Investment advisory andAccount management fees 2,083 2,029 2,423 3,207 4,218 31.5% 6,737 11,879 76.3%Life insurance sales commission 871 408 522 144 668 361.3% 3,316 1,743 -47.4%M&A commission 661 1,038 481 1,082 1,224 13.2% 3,723 3,827 2.8%
Net trading income/loss 34,281 36,256 37,666 42,234 40,657 -3.7% 161,199 156,815 -2.7%Equity 5,857 5,879 4,098 11,408 5,657 -50.4% 50,137 27,043 -46.1%Bond and forex 28,423 30,377 33,568 30,826 34,999 13.5% 111,062 129,772 16.8%
Financial revenues 8,375 7,893 10,899 9,553 10,931 14.4% 32,549 39,277 20.7%Financial expenses 4,058 6,027 4,123 6,000 3,915 -34.7% 19,515 20,067 2.8%
Net operating revenues 81,254 83,026 91,361 95,344 96,859 1.6% 380,361 366,592 -3.6%
FY2014FY2014
( Y mil)% Change
vsFY13
% Changevs
3Q/FY14FY2013
Financial Summary ⅠDaiwa Securities
※The Distribution commission for Investment trust in 2Q FY2014 includes the amount equivalent to the sales commission for Accordia Golf Trust’ s IPO.
※ Until 2Q FY2014, part of the revenues based on investment entrustment contracts of Daiwa Securities’ wrap accounts had been included in Investment trust of Distribution commission. From 3Q FY2014, those revenues are recorded in Investment advisory and Account management fees.
※The name for Investment trust included in Other commissions has been changed to Agency fee and others.
24
FY2013
4Q 1Q 2Q 3Q 4Q
54,963 55,359 57,363 58,767 58,512 -0.4% 226,185 230,001 1.7%
Trading related expenses 8,729 8,605 8,708 9,703 9,576 -1.3% 36,350 36,594 0.7%
Personnel expenses 23,966 24,333 25,960 26,274 26,337 0.2% 99,164 102,906 3.8%
Real estate expenses 6,135 6,336 6,435 5,835 5,985 2.6% 24,150 24,592 1.8%
Office cost 10,635 10,599 10,659 11,200 11,191 -0.1% 42,246 43,650 3.3%
Depreciation 3,977 3,826 3,984 3,941 3,606 -8.5% 18,004 15,358 -14.7%
Taxes and dues 604 849 718 861 659 -23.5% 2,671 3,088 15.6%
Other 914 808 897 949 1,155 21.8% 3,598 3,810 5.9%
26,661 28,748 34,247 37,041 38,649 4.3% 155,505 138,687 -10.8%
24,241 27,605 31,168 34,231 34,027 -0.6% 144,365 127,032 -12.0%
13.9% 16.0% 18.2% 19.1% 19.0% 22.7% 18.0%
338.0% 342.6% 325.3% 320.7% 288.5% 338.0% 288.5%
SG&A
( Y mil)% Change
vsFY13
% Changevs
3Q/FY14
FY2014FY2013 FY2014
Capital adequacy ratio
Net income
ROE( Annualized)
Ordinary income
Daiwa Securities
Financial Summary Ⅱ
25
Daiwa Securities
Balance SheetBalance Sheet (March 31, 2015)
Current assets 11,969 (1,145) Current liabilities 10,297 (1,215)Trading products 5,885 (759) Trading products 4,325 (290)
Trading securities and other 2,754 (50) Trading securities and other 1,677 (-454)Derivatives 3,131 (709) Derivatives 2,648 (745)
Margin transaction assets 228 (-23) Margin transaction liabilities 47 (0)Loans on m argin transactions 210 (-22) Loans payables secured by securities 3,451 (403)
18 (0) Short-term loans payable 1,158 (180)
Loans secured by securities 3,943 (191) Commercial Papers 388 (121)Short-term guarantee deposits 256 (71) Current portion of bonds 164 (80)Short-term loans receivable 370 (-17) Non-current liabilities 1,065 (-57)
Bonds payable 640 (-178)Long-term loans payable 392 (118)
Non-current assets 98 (5) Total liabilities 11,367 (1,159)Property, plant and equipment 3 (0) Net assets 700 (-8)Intangible assets 44 (2) Shareholders' equity 692 (-11)
Capital s tock 100 -
Total assets 12,068 (1,150) Total liabilities and net assets 12,068 (1,150)
Cash collateral pledged for securitiesborrowing on m argin transactions
Note: Figures in brackets show changes from March 31, 2014
(Y bil)
26
Daiwa Securities
Number of accounts and Equity trading
2,949
3,969
3,483
3,969
24.2
344
35
2,586
1,402
2,765
3,492
4Q
FY2012
2,057
2,550
2,334
2,611
45.1
626
35
2,775
1,357
2,839
3,614
1Q
FY2014
2,534
3,128
2,799
3,135
55.9
763
37
2,810
1,356
2,857
3,642
2Q
2,939
3,745
3,260
3,702
71.8
1,037
42
2,857
1,347
2,877
3,680
3Q
2,790
3,539
3,153
3,552
87.2
1,242
44
2,904
1,342
2,910
3,719
4Q
2,8043,1903,1004,848Online out of total (thousands)
3,0554,4173,7376,567Total trading value (Y bil)
Contracts and trading value for individualinvestors at Daiwa Securities (Equity)
1,3621,3441,3721,383Accounts holding equity (thousands)
Online trading accounts (thousands)
Accounts with balance (thousands)
3,6033,5773,5463,516Cash Management Service accounts (thousands)
2,8252,7942,7922,776
2,7532,7172,6722,631
4,819
5,546
26.3
386
46
1Q
FY2013
2,482
3,144
40.9
564
44
4Q
3,047
3,703
36.4
539
46
3Q
2,892
3,501
31.7
465
44
2Q
Online out of total (Y bil)
Total number of contracts (thousands)
Number of customers (thousands)
Contract assets under management (Y bil)
Newly opened accounts (thousands)
Wrap account service
27
リテール部門(大和証券) 資産導入額の推移
Daiwa Securities
Retail Division (Daiwa Securities) Net inflow of assets Retail Division (Daiwa Securities) Net inflow of assets (individuals)
Note: Net inflow of assets = net inflow of cash and securities
Net Inflow of Assets
-200
-100
0
100
200
300
CorporationIndividual
-200
-100
0
100
200
300
Net inflow of cashNet inflow of securities
248.7
187.7
60.9
4Q
267.4
192.9
74.4
3Q
257.2
151.0
106.2
2Q
210.7
146.5
64.1
1Q
FY2013
147.5
136.3
11.1
4Q
FY2012
293.8
175.8
117.9
1Q
FY2014
162.9
147.4
15.4
4Q
-3.2
-107.6
104.3
3Q
151.7
69.1
82.6
2Q
Individual
Total
Corporation
(Y bil)
53.7
97.2
2Q
15.5
160.3
1Q
FY2014
118.7
74.1
3Q
44.2
102.3
1Q
FY2013
37.7
98.6
4Q
FY2012
75.3
112.4
4Q
69.9
77.5
4Q
49.2
-156.9
3Q
66.5
2.5
2Q
New inflow of securities
Net inflow of cash
(Y bil)
28
0
150
300
450
600
750
900
0%
10%
20%
30%Net increase ratio (right)
Daiwa Securities
Mutual Funds & Foreign Equity
purchase - (sell-off + redemption)Note: Net increase ratio(%)= ×100
purchaseNote: Includes switching transaction between funds.
Foreign equity trading value in retail divisionSales and net increase ratio of mutual funds in retail division
0
50
100
150
200
250
300
12/4Q 13/1Q 13/2Q 13/3Q 13/4Q 14/1Q 14/2Q 14/3Q 14/4Q
OthersAsiaAmericas
4Q3Q2Q1Q
FY2013
4Q
FY2012
1Q
FY2014(Y bil)
4Q3Q2Q 4Q3Q2Q1Q
FY2013
4Q
FY2012
1Q
FY2014(Y bil)
4Q3Q2Q
29
League TableDaiwa Securities
FY2014 League Table
M&A
Number of deals
Samurai bonds(excl. family bonds)
Primary andsecondary equity
offeringsAgency bondsStraight bonds
(excl. family bonds)IPO
Nomura Nomura Nomura Mitsubishi UFJMS Daiwa
43.6% 46.5% 23.3% 25.3% 23.6%
Daiwa Mizuho Mizuho Nomura SMBC Nikko
15.0% 15.4% 22.2% 22.1% 18.6%
Mizuho Mitsubishi UFJMS Daiwa Mizuho Mizuho
12.2% 8.5% 18.0% 17.9% 17.8%
SMBC Nikko SMBC Nikko SMBC Nikko SMBC Nikko Mitsubishi UFJMS
11.7% 7.8% 15.9% 15.2% 17.4%
Goldman Sachs Daiwa Mitsubishi UFJMS Daiwa Nomura
7.3% 6.7% 15.9% 12.4% 13.9%
SMFG
Nomura
Daiwa
1st
2nd
3rd
4th
KPMG
Mizuho
5th
Source: Daiwa Securities Apr 2014 – Mar 2015M&A: THOMSON REUTERS Apr 2014 – Mar 2015 “M&A advisory league table for any Japanese involvement announced (AD19)”
Note: Primary and secondary equity, IPO, Straight bonds, Agency bonds and Samurai bonds are based on settlement dateJoint lead manager allotment of Primary and secondary equity, IPO, Straight bonds and Agency bonds is based on underwritten amountJoint lead manager allotment of Samurai bonds is divided up evenly among the managers
30
4Q 1Q 2Q 3Q 4Q
21,023 21,827 22,667 23,585 23,778 0.8% 85,560 91,858 7.4%
20,832 21,639 22,382 23,348 23,553 0.9% 84,771 90,924 7.3%
Equity investment trust 20,682 21,493 22,235 23,214 23,440 1.0% 84,193 90,383 7.4%
Bond investment trust 150 146 147 134 112 -16.1% 578 540 -6.5%
191 187 285 236 225 -4.6% 788 933 18.4%
17,037 17,590 17,895 18,728 18,695 -0.2% 69,356 72,910 5.1%
11,679 12,062 12,427 12,809 12,679 -1.0% 47,520 49,978 5.2%
5,358 5,527 5,468 5,919 6,016 1.6% 21,836 22,931 5.0%
3,986 4,236 4,771 4,856 5,083 4.7% 16,203 18,948 16.9%
4,060 5,413 4,859 5,050 5,093 0.9% 16,503 20,416 23.7%
Net income 2,338 3,842 3,130 3,227 3,231 0.1% 10,126 13,431 32.6%
FY2013 FY2014FY2014 %
Changevs
FY13
%Change
vs3Q/FY14
Operating revenues
Management fee
(Y mil)FY2013
Other operating revenue
SG&A
Ordinary income
Commission paid
Other SG&A
Operating income
Daiwa Asset Management
Financial Summary
31
Confidence level:99% (one-side test)Holding period:1 dayAdjusted for price correlation between product
Consolidated
Value at RiskRange and assumption of VaR
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
VaR (Quarter end) 1.63 1.96 1.30 1.41 1.48 1.29 2.00 2.07 2.32
High 2.43 2.41 2.95 2.47 2.33 1.94 2.30 2.37 3.46
Low 1.16 1.31 1.09 1.21 1.09 1.22 1.08 1.42 1.61
Average 1.61 1.84 1.57 1.65 1.52 1.50 1.48 1.95 1.93
Equity 0.56 1.11 0.81 0.64 0.82 0.45 0.49 0.43 0.70
Interest 1.52 1.33 1.28 1.35 1.36 1.40 1.82 1.90 2.27
Currency 0.96 0.65 0.22 0.19 0.20 0.32 0.39 0.76 0.32
Commodity - - - 0.01 - - - - 0.02
By risk factors (Quarter end)
FY2013(Y bil)
FY2012 FY2014
32
FY2012
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Total 13,759 14,098 13,946 13,789 13,659 14,117 13,999 13,919 13,807
Overseas 1,664 1,603 1,596 1,551 1,547 1,500 1,508 1,489 1,476
FY2013 FY2014
Number of employees as at end of each quarter.※ Total figures are the sum of consolidated group companies and Daiwa SB Investments.※ Overseas figures are the sum of consolidated group companies under Daiwa International Holdings and Daiwa Securities.
Consolidated
Number of Group Employees
Contact Contact
Daiwa Securities Group Inc.Investor Relations
TEL: +81-3-5555-1300 FAX: +81-3-5555-0661E-mail: ir-section@daiwa.co.jpURL: http://www.daiwa-grp.jp/ir/english/
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