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Daiwa Investment Conference Tokyo 2018Sustainability & Innovation
Daiwa Securities Group
March 6th, 2018
Seiji Nakata, President and CEODaiwa 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.
Index
Ⅰ - Evolvement of Daiwa Securities Group・・・ 3
Ⅱ - FY2017 Strategic Themes and its Progress・・・・ 6
Quality No.1・・・・ 8
Hybrid Securities Group・・・・ 14
Ⅲ - Direction of the New Medium-Term Management Plan・・・・ 21
Appendix ・・・・ 25
Daiwa Investment Conference Tokyo 2018Sustainability & Innovation
Ⅰ- Evolvement of Daiwa Securities Group: Business Structure Supporting Sustainable Growth
0%
20%
40%
60%
80%
050
100150200250
FY2010 3Q FY2017(Annualized)
Fixed cost (left)Stable revenues (left)Fixed cost coverage ratio (right)
FY2010 3Q FY2017-9
-6
-3
0
3
6
4
(Y bil)
Ⅰ- Evolvement of Daiwa Securities Group
Established a Robust Business Structure Supported by Stable Revenues
1.5x(Y bil)remained in the black for 7consecutive quarters
Ordinary Income by Business Segments(Y bil)
Fixed Cost Coverage Ratio Overseas Ordinary Income Shareholders’ equity
FY2010 FY2017
34%
68%
Y 833.9bil
Y1.2tri
(Y bil) ■Daiwa Securities Group Inc.
■Daiwa SecuritiesCo. Ltd.
■Daiwa Securities Group Inc.
■Daiwa SecuritiesCo. Ltd.
S&P:Upgraded on Jul. 2016
Moody’s:Upgraded on Oct. 2014
Credit Ratings
A-
A
Baa1
A3
-50
-30
-10
10
30
50
70
-50
-30
-10
10
30
50
70
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 4Q 1Q 2Q 3Q
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017
Retail Wholesale Asset Management Investments Consolidated total
Mar. 2005 Jun. 20170
200
400
600
800
Mar. 2005 Feb. 2018
Culture and DNA built up over the course of our 116-year History
*Includes the number of employees who have passed all 6 subjects and are in the process of applying for the certification.** Based on announcement of Japan Association for Financial Planners.
Supporting the Success of Female Employees
426
9.3%752.2%
745*
188
Initiatives towards Work Style Innovation
Introduction of new education program Q-Road(for employees within 3 to 5 years from joining Daiwa)
Hold CQ1 mtgs.(to penetrate Client 1st and Quality No.1 through all employees)
Initiatives towards improving the quality
Code of conduct for employees Daiwa Spiritformulated in 2008 (excerpts below)Corporate principles formulated in 1999
Building trust
Placing importance on personnel
Contributing to society
Maintaining healthyearnings results
Compliance Integrity andexpertise
Pioneer spirit Professionalism
High standards
Prompt responsiveness
Company-employeetrust / Solidarity
Self-discipline
5
Create work environments that allow all employees to fully deploy their abilities with the best intentions
Contribute to the development of society and economy through financial and capital markets
1位
Among domesticinsurance and financial industry **
Female employees career support training initiatives
Implemented a nanny introduction system
The Number of CFP Holders Female Employees in Managerial Positions
HR strategy
Group strategy
No.1
Penetration of leaving work by 7pm Removed the age limit of reemployment
for sales representatives Expand support for balancing work and
nursing care Introduced a plan to support working for
employee diagnosed with cancer
Bloomberg Financial Service Gender Equality Index MSCI Japan Women Empowering Index (WIN) FTSE Blossom Japan Index Nadeshiko Brand(ministry of economy, Trade and Industry & Tokyo Stock Exchange) Health and Productivity Stock Selection(ministry of economy, Trade and Industry & Tokyo Stock Exchange)
Ⅰ- Evolvement of Daiwa Securities Group
Ⅱ- FY2017 Strategic Themes and its Progress
7
For Sustainable Growth
Continued growth through maintaining healthy earnings results=Sustainability
Quality No.1Establish industry’s
highest quality
Hybrid Securities GroupLeverage the benefits of being an
independent securities group
Culture and DNA built up over the course of our 116-year history
A robust business structure supported by stable revenues
Ⅱ- FY2017 Strategic Themes and its Progress
Ⅱ- FY2017 Strategic Themes and its Progress
Quality No.1Quality No.1
Further penetration to whole organization as KPI
9
Provide Highest Quality Service
Establish a sales model with more priority on customer perspective to accomplish Quality No.1
Sales System Customer SatisfactionIntroducing Bottom-up Sales Approach
Branch A Branch B Branch C
Equities
Investment trusts
WrapAccountservices
Wealthmgmt.
Visualization of Customer Satisfaction
Customer Questionnaires
Over-the-Counter Service Survey
<Sample Questions>
• Whether the latest transaction was based on true understanding of customer needs
• Level of overall satisfaction with the branch
<Sample Survey Items>• Willingness to listen to
customers• How to use materials
and what to explain• Appropriate services
and proposals• Consideration for
customersEach sales branch makes sales decisions
based on customer needs
Quality No.1Quality No.1
Implementation of a new indicator(NPS® : Net Promoter Score® )
Ⅱ- FY2017 Strategic Themes and its Progress
Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
10
Strengthen Support for Foreign EquitiesFurther strengthen customer support for foreign equities by providing timely and high quality information from overseas offices. Trading value of foreign equities reached a record high by capturing strong demand from retail customers under the new sales promotion strategy.
Strengthened Customer Support for Foreign Equity trading
Provide timely and high quality information from overseas offices
*Accounts which did not hold foreign equities for past one year*Accounts which did not hold foreign equities for past one year
New Accounts Purchased Foreign Equities*
Expansion of Foreign Equity Trading Valueand AUC (vs 4Q FY2016)
売買代⾦
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY2015 FY2016 FY2017
2.6x2.6x
Asset Under Custody(at the end of the quarter)
Expand foreign equity seminars
・Foreign equity seminars at each branch・Online US equity seminars・Foreign equity seminars at each branch・Online US equity seminars
Quality No.1Quality No.1Ⅱ- FY2017 Strategic Themes and its Progress
1.6x1.6x
Trading value
FY2016 FY2017.3Q
2.3x(monthly average)
2.3x(monthly average)
New YorkHong KongMumbai
Melbourne
Singapore
TokyoLondon
NY Market
ダイワアドバンスラッ
プ
・機動的な国際分散投資の 「コア運用」とお客様独自の 「サテライト運用」
プレミアム
・最大5つの運用口・約500通りの運用スタイル・相続時受取人指定サービス
ダイワファンドラップ
・100種類以上の運用スタイル
オンライン・ロボ・アドバイザーの活用
11
Provide Products through Customer’s PerspectiveProvide best-performing investment trusts among the industry, including those other than Daiwa. Newly introduced Daiwa Advance Wrap which offers flexible international diversified investments.
(Y bil)(Y bil)
Introduced Daiwa Advance Wrap for Meeting the Customers Needs ofPerformance-oriented
Contract AUM for Wrap Account Service
**Private asset allocation service
Strengthen Product Selection Capabilities forInvestment Trusts
Launch investment Trusts Meeting Customer Needs
New lineup funds:11(Apr. 2017- Feb. 2018)
Managed by outside the Group:6
Jan. 2018Newly launched fund Global EV Revolution Fund
Investing mainly into companies expected to grow with expansion of EV (Electric Vehicle)
Robeco SAM* manages mother fund with ESG perspective
* Robeco SAM is an investment specialist, owned 100% by asset management company RobecoGroup in Netherlands, focused exclusively on sustainability investing.
Quality No.1Quality No.1Ⅱ- FY2017 Strategic Themes and its Progress
Y100 mil -
Y30 mil -
Y3 mil -
Y0.5 mil -
344564
1,2421,540 1,661
1,944
0
500
1,000
1,500
2,000
2,500
2012 2013 2014 2015 2016 2017.12(FY)(FY)
Minimum Amount of contractMinimum Amount of contract
Added valueAdded value
High
High
DaiwaAdvance
Wrap
PAAService**
PAAService**
OnlineOnline
DaiwaFund Wrap
DaiwaFund Wrap
PremiumPremium
Launched inMar. 2018
HighHigh
DaiwaAdvance
Wrap
PremiumPremium
DaiwaFund Wrap
DaiwaFund Wrap
OnlineOnline
・Core Investment, flexible international diversified investmentand Satellite Investment,based on each customers original needs
・Core Investment, flexible international diversified investmentand Satellite Investment,based on each customers original needs
・Utilization of robo-advsior technology
・Utilization of robo-advsior technology
・Investment style: more than 100
・Investment style: more than 100
・Investment portfolio:up to 5
・Investment style:about 500
・Inheritance beneficiarydesignation service
・Investment portfolio:up to 5
・Investment style:about 500
・Inheritance beneficiarydesignation service
Global EV Revolution Fund
Japan equities DIAM Domestic Equity OpenDevelopedcountriesequities
Manulife US Bank Equity FundFidelity European Smaller Companies Open
Emergingcountriesequities
UBS Emerging Countries Equity Selected Investment Fund
Global bonds PIMCO Income strategy fundManulife US Investment Grade Bond Fund
12
Increase Face-to-Face Customer ContactOptimize sales channels to meet various customer needs.Implement efficient sales branch strategy by rationalizing and integrating existing sales branches, and increasing small-size sales offices at the same time.
Mass Mass-affluent,Affluent
Customers’Life Stages Active
clientsNon-active
clients
FinancialConsultant
CS(Client Support)
Asset buildingperiod
(age 20-40)
Asset management /
succession period
(age 50 -)
AssetConservation
Period (age 75 -)
WealthConsultant
Anshin Planner(consultant for elderly)
Subdivision customers’ attributes and life stages and optimize sales channels
(Started with 7 branches from 2H FY2017)
NEW
NEW
Select sales branches opening area by local
area marketing
Improve area coverage ratio to increase customer contacts
Increase flexible & low-cost sales offices
Future Plan
Optimize Sales ChannelsSales Branch Strategy(Number of Daiwa Securities’ Sales Branches)
Anshin Planner and Financial Consultant Scheduled to be introduced to 10 additional branches
from Apr. 2018 Aim to be introduced to all branches by 2020
Quality No.1Quality No.1Ⅱ- FY2017 Strategic Themes and its Progress
120 118 117120
100
120
140
160
2010 2011 2012 2013 2014 2015 2016 2017(予定)
2018.5(予定)
Includes 36 sales offices
153153
(FY)(FY)
Low-cost & small-size offices without back-office functions
Sales Offices
Scheduled to integrate 2 large
branches in Nagoya
( S c h e d u l e d )( S c h e d u l e d )
Sales branches excl. sales offices
Sales branches excl. sales offices
(Sales branches)(Sales
branches)
13
Services for Asset Building Generation
Provide services to be chosen by asset building generation through offering lowest fee in the industry for Daiwa’s iDeco and strengthening promotion for monthly investment-type NISA.
Daiwa’s Services
【Daiwa’s iDeCo】Lowest fee in the industry(Zero management fee)
Most attractive level of campaign in the industry
(13,000yen gift as maximum)Competency
Expand customer base by using external channels
Promote Investment for Savings Utilizing Tax Benefits
Promote WorkplaceMonthly
Investment-type NISA
FuturePlan
+ Provide Daiwa’s monthly investment-type NISA
by payroll deduction or deduction from bank account
Introduced to Daiwa Securities Group as one of fringe benefits paying 5% incentive (applied for by more than 3,000 employees)
Promotion of Daiwa’s Monthly Investment-type NISA
Launch and Promotion of Workplace MonthlyInvestment-type NISA
Quality No.1Quality No.1Ⅱ- FY2017 Strategic Themes and its Progress
Individual-type DefinedContribution (iDeCo)
Monthly Investment-typeNISA
2002※The scope of individuals eligible to participate expanded from 2017
2018YearStarted
EligibilityIndividuals aged between 20 and 60
Japan residents aged 20 and above
TaxBenefit
Deductible at time of installmentNon-taxable on capital gainsTax benefit at time of receipt
Capital gains, dividendsare tax exempt for 20 yrs.
AmountLimit
Y144,000 to Y816,000 per year Y400,000 per year
Use LUPIN the THIRD, a famous cartoon characters among people in their 40’s, for a character of
Daiwa’s monthly investment-type NISA
Daiwa’s Monthly Investment-type NISA
LUPIN the THIRD
Hybrid Securities GroupHybrid Securities GroupⅡ- FY2017 Strategic Themes and its Progress
15
Expansion Strategy of Group Business
Traditional securities business x Diversified business portfolio
Hybrid Securities GroupLeverage the benefits of being an independent securities group
Hybrid Securities GroupLeverage the benefits of being an independent securities group
Advantageous Position in Securities Business Image of Hybrid Securities Group
Hybrid Securities GroupHybrid Securities Group
High
Low
Daiwa Securities
Group
Stability of the Group’s
revenue base
Independence ofmanagement
Business development not bound by industry law
Group strategy centered on securities business
Stable and efficient diversified business portfolio
Low(Bank affiliates, etc.)
Group Strategy centered on
banking business
Business model centered on wholesale business
Traditional securities business
(Daiwa Securities)
Banking BusinessDaiwa Next Bank
Investment BusinessDaiwa PI PartnersDaiwa Corporate
Investment
New ServicesUtilizingFinTech
IT/Think TankDIR
Real Estate/InfrastructureAM Business
Daiwa Real Estate AMMi-Casa AM
Asset Management BusinessDaiwa AMDaiwa SB
Overseas BusinessOverseas Subsidiaries
Alliance Partners
NewBusiness
Ⅱ- FY2017 Strategic Themes and its Progress
High(Independent)
Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
16
Retained 1st place on PO/IPO league table by managing a number of large deals.Realized synergies with Retail Division such as expansion of new customer base and revenue growth.
Synergies with Retail Division from Managing Large-deals
*Exclude accounts that were newly opened through employee benefit plans such as employee stock ownership and accumulation savings, etc.
JapanPost
IdemitsuKosan
RenesasElectronics
SGHDKatitas
Optorun
(Y bil)
(FY)** (Share price on Feb. 28 – Offering price) x No. of shares sold by Daiwa to domestic retail customers
Successful Investment Experience for Retail Customers(Estimation of wealth effect based on offering price*)
RenesasElecronicsJun. 2017Global PO
Offering SizeY348.5 bil
IdemitsuKosan
Jul. 2017Global PO
Offering SizeY 124.8 bil
SG HoldingsDec. 2017Global IPO
Offering SizeY127.6 bil
Y20.7 bil Y45.7 bil Y12.2 bil
League Table (Apr. – Dec. 2017)
Daiwa Securities Underwriting Commission (equities)
Newly Opened Accounts by PO/IPO*(Apr. – Dec. 2017)
Large PO/IPO Deals Lead-Managed by Daiwa
1Q-3QFY2017
(Source) Daiwa Securities Co. Ltd.
Hybrid Securities GroupHybrid Securities GroupⅡ- FY2017 Strategic Themes and its Progress
13.3 13.4
14.3 14.0
13.7
14.5
2012 2013 2014 2015 2016
Primary andSecondery equity
offeringsShare IPO Share
1 (3) Daiwa 29.3% 1 (3) Daiwa 27.0%
2 (2) Nomura 25.6% 2 (1) Nomura 26.7%
3 (5) Mitsubishi UFJMS 10.5% 3 (2) Mitsubishi UFJMS 13.9%
4 (4) Mizuho 8.0% 4 (4) Mizuho 11.2%
5 (9) Goldman Sachs 7.9% 5 (5) SMBC Nikko 10.0%※():FY2016 results
Rank Rank
17
Promoting M&A Deals by Leveraging Daiwa’s Global NetworkSagent and Signal Hill integrated into DCS Advisory on March 1st, 2018.Continue to aggressively promote M&A advisory by leveraging global network including new platform in the U.S..
Consolidated Group M&A Commission(1Q-3Q FY2017)
Purpose for Acquiring Sagent & Signal Hill
(Y bil)Daiwa’s M&A Global Network and Cross-border M&A Deal Value**
Alliancepartners
Europe
Asia/Oceania
America
JapanBetween
Japanese and Americancorporations
Y2.3 tri
Between European and American
corporations
Y35 tri
*Source:Recof** 2017 results(Source: Thomson Reuters), 1$=JPY112.2 (2017 average)
To create synergy with other overseas offices by expanding size and sector coverage
To expand sector and regional coverage within the U.S. (esp. west coast)
Japanese M&A Market Size*
Between Japanese and European
corporations
Y1.6 tri
(Y tri)
(CY)(CY)
0
10
20
30
40
50
60
1Q 2Q 3Q
Asia
Japan
Hybrid Securities GroupHybrid Securities GroupⅡ- FY2017 Strategic Themes and its Progress
0
5
10
15
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Total deal value of M&As by Japanese corporationscross-border deals within total deal value
18
Further Expansion of Real Estate Asset Management Business
※ As of the end of fiscal year, based on acquisition amount
Expand asset size of existing
funds
Expand real estate AM business
overseasDiversification of investment
Newly invested into Samty Residential Investment Corporation and Samty Asset Management Co.,Ltd.. AUM of real estate asset management stood at Y880 bil and looking to reach Y1 tri
Investment to Samty Residential and Samty AM
Prepare for the launch of hotel-focused private REIT
(Y bil)
Y15 bil
33%
Daiwa’s Real Estate AM Business AUM Initiatives towards Expanding Real Estate AM Business
Initiatives Going Forward
・ Plan to operate in 1H FY2018 Hotel-focused private REIT Primarily investing in 23 wards of Tokyo, 7 major cities(Osaka、Kyoto、
Nagoya、Yokohama、Sapporo、Fukuoka、Urayasu)and cities located near the international airports such as Narita and Kansai
Lease agreements consist of the high proportion of fixed rentM
ain Sponsor
Hybrid Securities GroupHybrid Securities GroupⅡ- FY2017 Strategic Themes and its Progress
InvestmentTargets Status Asset Management Company
※():% share held by Daiwa GroupDaiwa Office Investment Corporation Offices ListedDaiwa Residential Private Investment Corporation Residences Unlisted
Nippon Healthcare Investment Corporation Healthcarefacilities
Listed
Japan Rental Housing Investments Inc. Residences Listed Mi-CasaAsset Management Inc. (98)
Samty Residential Investment Corporation Residences Listed SamtyAsset Management Co.,Ltd. (33)
Investment Corporation Name
Daiwa Real EstateAsset Management Co. Ltd. (100)
Samty Asset Management Co.,Ltd.
Business
Type II Financial InstrumentsBusiness Operator, InvestmentManagement Business,Investment Advisory andAgency Business
Capital Y120 mil
Samty Residential Investment Corporation (3459)Total acquisitionamount
Y81.5 bil ※ As of Feb. 2017
InvestmentTargets
Residences(Emphasis on single and compacttype properties)
0
200
400
600
800
1,000
2009 2010 2011 2012 2013 2014 2015 2016 2018.2
Samty Residential Investment CorporationJapan Rental Housing Investments Inc.Nippon Healthcare Investment CorporationDaiwa Residential Private Investment CorporationDaiwa Office Investment CorporationOther
19
Initiatives on New Businesses Centered on AI and FinTech
Create new value utilizing FinTech and business and capital alliances with the companies outside the group by defying the boundaries of existing securities business.
Establish next generationsecurities platform
Strengthen capabilities of providing information
Foster new businesses Operational efficiency
Major Initiatives in FY2017Fintertech
= Finance × Entertainment × TechnologyFoundation Apr. 2018 Shareholder Daiwa Securities Group Inc. (100%)
DG Lab Fund
Blockchain AI VR/AR BioTechSECURITY
<Investment Fields>
<Investment Examples>
50%50%
Investment
LPInvestment
2018.4 Establish Fintertech for creating nextgeneration financial services
2018.2 Started to provide Daiwa securities’ market information compatible with Amazon Alexsa
2018.2 Capital and Business Alliance with KDDI inasset-building field
2017.12 Started to provide market information utilizing AI 2017.11 Entered into an agreement with Finatext and Smartplus 2017.11 Developed real time-based stock volume forecast
model by AI 2017.10 Plan of compliance related operational efficiency by AI 2017.9 Invested into startups with next generation
through DG Lab Fund 2017.9 Started to apply Blockchain to securities
post-trade business 2017.6 Introduced Chatbot to improve operational efficiency
of answering internal inquiries 2017.5 Started to provide stock information using
stock price forecast model by AI
*Includes capital reserve
ForefrontTechnologies Digital ChannelExpertise in Securities
and Financial Businesses
Provide next generation financial servicesto Digital-Native customers
Hybrid Securities GroupHybrid Securities GroupⅡ- FY2017 Strategic Themes and its Progress
invested into startups with next generation technology
LPInvestment
Capital* Y800 mil
New company creatingnext generation financial services
0
200
400
600
800
1,000
1,200
1,400
1,600
0
500
1,000
1,500
2,000
2,500
3,000
Age 20 to29
Age 30 to39
Age 40 to49
Age 50 to59
Age 60 to69
Age 70 andover
Others
Securities
Insurance
Cash and Deposits
Smartphone Holders (Right)
20
Capital and Business Alliance in Asset-Building FieldsStrengthen service platform through the capital and business alliance with KDDI, the majortelecommunications providers owning various customer base to promote customer’s asset building by providing iDeCo and investment trusts.
Strongly support the transition from savings to asset building by providing new investment opportunities for
individual investors
66.6%Investment
33.4%Investment
KDDIAsset Management
au usersThe number of contracts:
39mil
New iDeCo
Defined Contribution
Investment Trusts for Asset
Building Generation
Investment Trusts
Provide Productsproducts
System
Daiwa’s Customer
New iDeCo
Daiwa’s iDeCo
Age Group of eligibility for iDeCo
Capital and Business Alliance with KDDI (Establishment of KDDI Asset Management)
Household Financial Assets* and Population of Smartphone Holders** by age groups (Estimated)
*Household basis(2 or more persons) as at Sep. 2017. **Estimated by multiplying the ratio of smartphone holders for each age group by population of each age group (2016).
Hybrid Securities GroupHybrid Securities GroupⅡ- FY2017 Strategic Themes and its Progress
(Source) Complied by Daiwa Securities Group Inc. based on Family budget Survey, Communications Usage Trend Survey, and Population Estimates by the Ministry of Internal Affairs and Communications
(Y ten thousands) (Y ten thousands)
Daiwa Institute of ResearchBusiness Innovation
Ⅲ- Direction of New Medium-Term Management Plan: Promoting Innovation
22
Ⅲ- Direction of New Medium-Term Management Plan
Direction of New Medium-Term Management Plan 1
Age of longevity Widening gap and diversity
Fierce competitive environment
Business OpportunitiesResolve issues with our clients to prepare for an uncertain future = Create the Future
Fiscalstringency
Digital transformation
Population and economic growth
Domestic Household Financial Assets Corporation / Local Government Industrial structureAsia
Correspond to industrialstructure changeStrengthen global competitivenessDevelop social-issue
-solving industriesDiversified
financial needsImportance of
life planning
Provide value-added solution with the highest quality consulting services
Create and provide new value as hybrid securities group
Create the Future as Pioneer of Financial and Capital Market
Approaches to bothhigh net-worth and
mass-affluentLink Japan andgrowth of Asia
Identify and developnew industries
Approaches to new business areas
Daiwa Securities Group’sPassion, Professionalism, Potential +Innovation
Direction of Strategy
23
Customer Oriented KPI
Customer Satisfaction
AUC at Daiwa Securities
Earnings KPI
Ordinary IncomeROE
Financial KPI
Consolidated Total Capital Ratio
Ⅲ- Direction of New Medium-Term Management Plan
Direction of New Medium-Term Management Plan 2
SDGs as Management StrategyⅢ- Direction of New Medium-Term Management Plan
24
Daiwa Securities Group SDGs Promotion CommitteeChairman:Seiji Nakata, President & CEO of Daiwa Securities Group Inc.
SDGs × “Finance” SDGs × “Technology” SDGs × “Local Community”
Established SDGs Promotion Committee to solve social issues through our group business in financial and capital markets.
Gather latest information on global initiatives on SDGs and discuss group wide approaches and solutions.
Daiwa Securities Group Inc. Establish SDGs Promotion Office
Group CompaniesDaiwa Securities Co. Ltd. Daiwa Institute of Research Holdings Ltd. Daiwa Asset Management Co. Ltd. etc.
Appendix
26
Medium Term Management Plan (“Passion for the Best” 2017)
In response to the full-fledged start of an era of transition from savings to investment, attract customers with the industry’s top quality, and become their best partner
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
expertiseBasic 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
FY2017FY2016FY2015
1. ROE: 10% or more 2. Fixed cost coverage ratio : 2. Fixed cost coverage ratio : 75% or more in the final fiscal year
Positive cycle of
“transition from savings to
investment
” and
“improvem
ent of corporate value
”
Provide solutions that contribute to the improvement in corporate value
Appendix
27
Medium Term Management Plan : Progress of Numerical Targets
ROE: 10% or more Fixed cost coverage ratio : 75% or more in the final fiscal year
※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.
Appendix
Shareholders’ equity(Y bil)
ROE
ROE (excl. effect of losses carried forward belonging to Daiwa Securities)
Profit attributable to owners of parent company(Y 100mil)
Fixed cost (Y bil)
Stable revenues ※
(Y bil)Fixed cost
coverage ratio
28
Appendix
3Q FY2017 Net operating revenues: Y134.9 bil (+3.1% QoQ)
3Q FY2017 Ordinary income: Y43.2 bil (-1.4% QoQ)
3Q FY2017 Profit attributable to owners of parent company: Y22.6 bil (-28.9% QoQ)
Revenue in Retail Division expanded due to increase in equity trading volume and stock investment trust sales reflecting strong domestic and overseas equity market.
For Wholesale Division, Global Investment Banking maintained strong performance and equity revenues in Global Markets grew from increased client flow.
SG&A rose to Y94.7 bil (+4.2% QoQ) as bonus linked to earnings increased. It remained at a high level, even though ordinary income slightly dropped from the 2nd quarter in which there was
a capital gain by an exit of the investment in Investment Division.
Profit attributable to owners of parent decreased as provision for loss on litigation (Y9.5 bil) was posted in 3Q FY2017. Annualized ROE: 7.1%, BPS: Y780.71
Net Operating Revenues Ordinary Income Profit Attributable to Owners of Parent Company
(Y bil) (Y bil)(Y bil)
124.7111.7114.0 115.0121.9 121.6
108.5130.9134.9
0
60
120
180
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY2015 FY2016 FY2017
37.9
28.632.5 33.2 35.4 34.3
25.1
43.8 43.2
0
20
40
60
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY2015 FY2016 FY2017
26.321.3 24.5
30.426.6
22.3 19.3
31.9
22.6
0
20
40
60
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY2015 FY2016 FY2017
3Q FY2017 Earnings Result Summary
0
20
40
60
80
100
120
140
160
2010 2011 2012 2013 2014 2015 2016 2017
46.4 47.1
35.2
43.0 45.7
16.9 16.4
6.4
12.8 12.7
グローバル・マーケッツ純営業収益
グローバル・インベストメント・バンキング純営業収益49.6 49.6 48.8
51.2
59.5
9.5 8.7 10.3 10.6
18.0
29
Stable Revenues
(FY)(FY)
(Y bil)(Y bil)
(3Q Annualized)(3Q Annualized)
Segment Summary
Retail Division
3Q 4Q 1Q 2Q 3QFY2016 FY2017
Wholesale Division
3Q 4Q 1Q 2Q 3QFY2016 FY2017
Asset Management Division Investment Division
3Q 4Q 1Q 2Q 3QFY2016 FY2017
3Q 4Q 1Q 2Q 3QFY2016 FY2017
Net operating revenues Ordinary income
11.5 11.7 12.0 12.1 12.6
6.5 6.6 7.2 7.1 7.4
(Y bil) (Y bil)
(Y bil)(Y bil)
Segment Summary and Stable RevenuesAppendix
Global Markets (Net operating revenues)
Global Investment Banking(Net operating revenues)
※See page 27 about stable revenues
2.5 2.4 1.8
13.9
6.3
1.8 1.5 1.4
13.1
5.5
30
Shareholder Return Policy
FY2013Interim Year-end
FY2014Interim Year-end
FY2015Interim Year-end
FY2016Interim Year-end
“Passion for the Best”2014 (FY2012-FY2014)
“Passion for the Best” 2017(FY2015-FY2017)
Dividendper share(JPY)
Payout ratio
(actual)
FY2017Interim
Sharerepurchase
Amount repurchased
Y19.0bil
Dividend Policy
Dividends will be paid semi-annually at a payout ratio of approx. 40% based on the consolidated financial performance.
The Company will also consider increasing returns to its shareholder with various options including share buyback when it sufficiently secures capital to pursue further growth.
FY2012Interim Year-end
15 34 30 29 263 12 17 17 14 16 17 12 13 13 13
34.9% 34.1% 34.5%
42.5%
Amount to be repurchased(upper limit):
Total amount paid forrepurchase:(as at Feb. 28)
42.3% 42.3%(Actual payout ratio in 1H)
Amount repurchased
Y18.6bil
Total payout ratio:58.3%
Total payout ratio:60.4%
Appendix
Y40.0bil
Y33.7bil
Period of share repurchase:Nov. 2, 2017 to Mar. 23, 2018
Daiwa Securities Group Inc.Investors Relations
TEL: +81-3-5555-1300 FAX: +81-3-5555-0661E-mail: [email protected]
URL: http://www.daiwa-grp.jp/ir/english