Spring 2010Daiwa Securities Group Business Strategy

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

Index

FY2009 Financial Summary ･ ･ ･ ･ 3

Asia Strategy ･ ･ ･ ･ 6

Retail ･ ･ ･ ･ 11

Wholesale ･ ･ ･ ･ 18

Asset Management ･ ･ ･ ･ 25

3

FY2009 Financial Summary

4

Consolidated

Financial Summary

4Q 3Q

Operating revenues 537,915 413,936 30.0% 116,549 183,615 -36.5%

Net operating revenues 458,105 199,544 129.6% 98,094 165,509 -40.7%

SG&A 362,844 343,270 5.7% 90,946 99,775 -8.8%

Ordinary income 102,917 -141,150 ― 10,160 67,891 -85.0%

Net income 43,429 -85,039 ― -2,798 26,366 ―

Total assets 17,155,345 14,182,579 17,155,345 14,873,191

Net assets 1,017,528 952,329 1,017,528 938,405

Shareholders' equity* 927,163 720,272 927,163 925,983

EPS (Y) 26.41 -63.16 -1.60 15.08

BPS (Y) 530.27 534.99 530.27 529.60

ROE (Annualized) 5.3% ― ― 11.0%

(Y mil)% Change

vs3Q FY09

FY2009FY2009 FY2008

% Changevs

FY2008

* Shareholders’ equity = owners’ equity + valuation and translation adjustments

ROE (Annualized) FY2009 4Q FY09

12.6%9.9%

10.3%9.5%

Daiwa Capital Markets(consolidated)

Daiwa Securities

FY09 Dividend

FY09 Dividend per Share: 13 yen(including 5 yen interim dividend)

5

Topics for FY 2009

Announced MediumAnnounced Medium--term Management Plan (April 2009)term Management Plan (April 2009)

Issued new shares for the first time in 20 years (July 2009)Issued new shares for the first time in 20 years (July 2009)

Total shareholders’ equity: JPY 927.1bil (end of Mar. 2010) Total portfolio of high-liquidity assets: JPY2,350 bil (end of Mar. 2010)

Dissolved Joint Venture with SMFG (September 2009)Dissolved Joint Venture with SMFG (September 2009)

Changed the corporate name of the wholesale unit from Daiwa Securities SMBC Co. Ltd. to Daiwa Securities Capital Markets Co. Ltd. in January 2010

【Management Target】Consolidated ordinary income：JPY 200bil or higher, Consolidated ROE：10% or higherMarket Capitalization：Within top 40 in Japan

Strengthen Asia BusinessStrengthen Asia Business

Consider all Asian markets including Japan as the Group’s “Home market”

6

Invite local influential people as our joint chairman / advisor

Obtain advice and support for our Asian strategies

Invite local influential people as our joint chairman / advisor

Obtain advice and support for our Asian strategies

Increase personnelIncrease personnelIncrease personnel

Invite local influential people as our advisorsInvite local influential people as our advisorsInvite local influential people as our advisors

Increase approx. 300 staff in Asian equity and derivative business

Increase approx. 100 staff in underwriting and M&A business

Increase approx. 300 staff in Asian equity and derivative business

Increase approx. 100 staff in underwriting and M&A business

Assign five senior executives led by representative deputy president of Daiwa Securities Capital Markets (Hong Kong: 4 executives , Singapore: 1 executive)

Station head of Global Equity Sales Division and co-head of Global Investment Banking Division in Hong Kong

Partial transfer of headquarters functions, from Tokyo to Hong Kong, such as management planning Establish hub functions to supervise Asian offices

Assign five senior executives led by representative deputy president of Daiwa Securities Capital Markets (Hong Kong: 4 executives , Singapore: 1 executive)

Station head of Global Equity Sales Division and co-head of Global Investment Banking Division in Hong Kong

Partial transfer of headquarters functions, from Tokyo to Hong Kong, such as management planning Establish hub functions to supervise Asian offices

Upgrade the Hong Kong Subsidiary to “Second headquarters” status to strengthen Asian operationsUpgrade the Hong Kong Subsidiary to Upgrade the Hong Kong Subsidiary to ““Second headquartersSecond headquarters”” status to strengthen Asian operationsstatus to strengthen Asian operations

Global Markets divisionGlobal Markets division

Global Investment Banking divisionGlobal Investment Banking division

Asia Strategy : Core Action Plans

Strengthen capitalStrengthen capitalStrengthen capital

Allocate approx. JPY 100bil capital into overseas locationsAllocate approx. JPY 100bil capital into overseas locations

7

香港

Mar. 10 A fter cap ita lst rengten ing

韓国

Mar . 10 Future p lan

インド

Mar . 10 A fter cap ita lstrengten ing

シンガポール

Mar. 10 A fter cap ita lstrengten ing

英国

Mar. 10 A f ter f unded by

s ubord i na ted l oa n

Asia Strategy : Capital Boost Plan

+ JPY 28bil

+ JPY 18bil(executed)

+ JPY 6.5bil

+ JPY 2.5bil(executed)

Under consideration

JPY 31bil

JPY 59bil

JPY 5.5bil

JPY 9.5bil

JPY 3bil

JPY 6bil

JPY 10bil

+ JPY 35bil

India Singapore

Hong Kong Korea United Kingdom

JPY 46.5bil

JPY 81.5bil

Each capital figure is approximate figure calculated by foreign exchange rate as of Mar. 2010

For United Kingdom, subordinated loan amount is to be set up

+ 4bil

AsiaAsia EuropeEurope

Note:

8

Asia Strategy : Targets

Strengthen Markets and IB Division simultaneously to harness early synergy effectStrengthen Markets and IB Division simultaneously to harness early synergy effect

Target for the Global Markets DivisionTarget for the Global Markets Division

Top 5 Asian equity brokersTop 5 Asian equity brokers

Target for the Global IB DivisionTarget for the Global IB Division

Top 10 Asia ECM League Table*Top 10 Asia ECM League Table*DistributionPower

DistributionPower

Supply PowerSupply Power

*ECM league table: Global Equity, Equity-related – Asia Pacific (Thomson One Banker)

0

10

20

30

40

50

60

2006 2007 2008ResultResult

Image of Asia Oceania revenueImage of Asia Oceania revenue

(Y bil.)

(FY) 2009 2010 2011

Target revenue of Asian business

strategy(JPY 53 billion)

Target revenue of Asian business

strategy(JPY 53 billion)

Aim to become a “World–class, high quality investment bank representing Asia”Aim to become a “World–class, high quality investment bank representing Asia”

9

Basic strategiesBasic strategiesBasic strategies Focus areasFocus areasFocus areas

Increase revenues by strengthening various divisions while giving priorities to each countries and regions

Focus on concentrated global clients coverage methodImprove research products (hire highly-ranked analysts, expand stock coverage, boost pan-Asian research)Boost corporate access serviceStrengthen trade execution infrastructureEnhance principal business

Increase revenues by strengthening various divisions while giving priorities to each countries and regions

Focus on concentrated global clients coverage methodImprove research products (hire highly-ranked analysts, expand stock coverage, boost pan-Asian research)Boost corporate access serviceStrengthen trade execution infrastructureEnhance principal business

Hong Kong /China

Korea

Taiwan

India

Hong Kong /China

Korea

Taiwan

India

Seek to develop Asian derivatives business by leveraging the existing platform built through the derivatives project

Market a broad range of derivatives products in the Asian region as well as on a cross-border basis. Target wide scope of clients such as corporate institutions, institutional investors, hedge funds, and private banks

Seek to develop Asian derivatives business by leveraging the existing platform built through the derivatives project

Market a broad range of derivatives products in the Asian region as well as on a cross-border basis. Target wide scope of clients such as corporate institutions, institutional investors, hedge funds, and private banks

Hong Kong

Singapore

Taiwan

Hong Kong

Singapore

Taiwan

Asia equitiesAsia equities

DerivativesDerivatives

Global Markets Division

Global Markets Global Markets DivisionDivision

Win major IPO/ PO mandates and M&A deals by strengthening the Asian investment banking platform

Increase country bankersStrengthen sector coverage in Hong Kong while deploying the product specialists

Win major IPO/ PO mandates and M&A deals by strengthening the Asian investment banking platform

Increase country bankersStrengthen sector coverage in Hong Kong while deploying the product specialists

Global Investment

Banking Division

Global Global Investment Investment

Banking Banking DivisionDivision

Hong Kong /China

India

Hong Kong /China

India

Asia Strategy : Basic strategies & Focus areas

10

Asia strategy : Our History in Asia

Tokyo Headquarters

Mumbai subsidiaryEst.: Feb. 2006

Singapore subsidiaryEst.: Jun. 1972

Bangkok Representative OfficeEst.: Jan. 2006

Taiwan subsidiaryEst.: Jul. 1993

Seoul BranchEst.: Dec. 1982

Beijing Representative OfficeEst.: Sep. 1983

Shanghai Representative Office(Daiwa SSC Securities)

Est.: Aug. 1986

Hanoi Representative OfficeEst.: Oct. 2007

Philippines subsidiaryEst.: Mar. 1995

Honk KongEst.: Dec. 1970

(2nd Headquartersof Daiwa CM)

Lead managed the world’s first Asian dollar bond (DBS bond), establishing Asian dollar bond market in offshore market in Singapore (1971)

Lead managed the world’s first Euro dollar bond issued by ADB (1978)

Managed the world’s first Asian dollar CP by ITOCHU Corporation’s Hong Kong subsidiary (1980)

Participated in establishment of AFIC, and sent first president (1989)

Lead managed overseas tranche for privatization of Singapore Airlines, DBS Land and Singapore Telecommunications in Singapore, and Tenaga National Berhad, Malaysian electric company and Petronas Gas in Malaysia

Lead managed ADB’s “Dragon” Yen bond (JPY 30bil) (1993)

Lead managed Malaysian YTL Group’s IPO – the first-ever listing by Asian company on TSE (1996)

Cultivated offshore market in the Philippines, and lead managed the Philippines offshore yen bond by Development Bank of the Philippines (1997)

Lead managed SinoCom’s IPO on Hong Kong exchange

Lead managed POWL deals of PO/IPO including Ping An Insurance, Industrial and Commercial Bank of China Limited, Bank of China, China Tung Bank, China Construction Bank, China Merchants Bank, Shanghai Electric, Singapore Post and Chunghwa Telecom (Taiwan) etc.

Lead managed China Boqi Environmental Solutions Technology’s IPO – the first–ever listing by Chinese company on the first section of TSE (2007)

Co-lead managed Tong Yang Life Insurance Company’s IPO in Korea (2009)

Lead managed Shanghai Conant Optics’ IPO on Shenzhen exchange as the first Japanese lead manager (2010)

Lead managed IPO deal on ASX in Australia (2010)

11

Retail

12

Action Plans for FY2010Retail

Reduce cost by rationalizing and streamliningReduce cost by rationalizing and streamliningbackback--office operations utilizing Information Technologyoffice operations utilizing Information Technology

Provide attractive products and services to meet Provide attractive products and services to meet customer needscustomer needs

Expand customer base by strengthening consulting capability

13

21.3

43.5

65.2

93.0(Only Apriland May)

0

50

100

150

2007 2008 2009 2010

Provide attractive products and services utilizing the Group’s resourcesProvide attractive products and services utilizing the GroupProvide attractive products and services utilizing the Group’’s resourcess resources

Sales of Impact Investment Bonds

JPY 32.6bilClimate Awareness BondMay 21, 2010

JPY 24.6bilMicrofinance BondNov. 20, 2009

JPY 9.7bilGreen World bank BondFeb. 3, 2010

JPY 30.9bilVaccine BondMar. 24, 2010

JPY 60.4bilWater BondApr. 16, 2010

JPY 40.8bilVaccine BondFeb. 20, 2009

JPY 2.7bilWorld Cool “CO2L” BondJun. 26, 2008

JPY 21.3bilVaccine BondMar. 19, 2008

Issue Amount(Yen approximate)NameIssue Date

【Market share of Impact Investment Bonds*】

Daiwa 73％

Source: Daiwa Securities *bonds sold for retail investors (as of Apr. 10)

【 Total Issue Amount 】

More issuesplanned

(Y bil)

(FY)

Consulting DivisionRetail

14

0

50

100

150

200

1Q/09 2Q/09 3Q/09 4Q/09

North Ame ric a an d O the rsB raz ilIn diaCh in a, Hong Kong

Consulting DivisionRetail

Foreign equity trade value by regions Asset-based fee from investment trusts(Y bil)

0

2

4

6

1 Q/ 07 1 Q/ 0 8 1 Q/ 0 9

(Y bil)

10/4Q 11/4Q* Each bar indicates monthly average of each quarter

Provide attractive products and services utilizing the Group’s resourcesProvide attractive products and services utilizing the GroupProvide attractive products and services utilizing the Group’’s resourcess resources

15

Focus on marketing competitive products and servicesFocus on marketing competitive products and servicesFocus on marketing competitive products and services

Contract asset under management & Number of customers of Wrap Account Service Market Share in Wrap Account Service

(Y bil) (# of accounts: 000)

0%

10%

20%

30%

40%

50%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

Contract AUM# of accounts

FY2007 FY2008 FY2009

0

1 0 0

2 0 0

3 0 0

4 0 0

1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q

0

5

1 0

1 5

2 0Daiwa SMA Contract AUM (left)Daiwa Fund Wrap Contract AUM (left)# of customers of wrap account (right)*

FY2007 FY2008 FY2009

Source: Japan Securities Investment Advisers Association ; compiled by Daiwa Securities

Consulting DivisionRetail

16

“Daiwa Direct” DivisionRetail

アクティブな投資家に訴求するサービスの充実アクティブな投資家に訴求するサービスの充実アクティブな投資家に訴求するサービスの充実

Expand product line-up and improve usability

0

500

1,000

1,500

3/07 9/07 3/08 9/08 3/09 9/09 3/10 4/10

“Daiwa Direct” Course: number of accounts

(# of accounts: 000)

Expand services to attract active investors

Expand service contents to attract active investorsExpand service contents to attract active investorsExpand service contents to attract active investors

Trading value of “Daiwa 365 FX”

0

300

600

900

11/09 12/09 1/10 2/10 3/10 4/100%

5%

10%

15%Trading value of "Daiwa 365 FX" (left)

Daiwa's share in trading value at Exchange FX"Click 365" (right)

(Y bil)

Commission discount campaign

Share in newly opened accounts of Exchange FX Trades (“Click 365”)

Share from Nov. 09 to Apr. 10

Daiwa16%

Source: Tokyo Financial Exchange Inc.

17

Preparation for Entry into Banking BusinessRetail

Established a subsidiary on April 1, 2010 for preparing to set up an internet bank Bank operation is to start after the approval from authorities

Enhance convenience by providing services through Daiwa Securities as an agency

Offer high-yield deposit to customers by low-cost management utilizing the Internet and banking agency

Established a subsidiary on April 1, 2010 for preparing to set up an internet bank Bank operation is to start after the approval from authorities

Enhance convenience by providing services through Daiwa Securities as an agency

Offer high-yield deposit to customers by low-cost management utilizing the Internet and banking agency

Maximize use of banking agencyUtilize Daiwa Securities’ branches as banking agency in soliciting accounts opening

Develop Internet banking Develop internet banking; no branch office, no sales staff

Marketing & promotion

Marketing & promotion

High net worth clients preferring deposit accounts and Daiwa Securities’ clientsPooling fund to purchase securities products, such as MRF or bank’s saving depositTarget clientsTarget clients

An instrument to support wealth building, rather than just for bill paymentSaving deposit and time deposit with high yield Offer automatic fund transfer and settlement services between the customers’ bankaccount and the account at Daiwa Securities

Product & service

Product & service

18

Wholesale

19

Asian Subsidiary

European Subsidiary

100%

100%

Acquisition of Close Brothers Corporate Finance Limited11

22Transfer of the Research Division (Financial Research Center) from Daiwa Institute of Research

33

44

66

55

As of September 2009 After April 2010

Organizational reinforcement for business expansion / promotion has been completed

European Subsidiary

100%

Over 20%

100%

60%

100%

40%

100%

Daiwa Securities Group

Daiwa Securities CM Daiwa PI Partners

100%

100% 100%

US Subsidiary

95%

Daiwa Corporate Advisory Partners*Sagent

Over 20%

Asian Subsidiary

100%

* Former CBCF

Dissolution of joint venture with Sumitomo Mitsui Financial Group

Formulation of strategy for dramatic expansion of Asian business

Transfer of Principal Investment Division to the holding company

Consolidation of Daiwa Securities America

Main initiatives in FY2009

Summary of FY2009 Activities: Reinforced Organization

Daiwa Securities SMBC

Daiwa Securities Group SMFG

Daiwa Securities SMBC-PI

US Subsidiary

CBCF

Sagent

5%

The next stage is to actively pursue profitability

Wholesale

20

Reinforce domestic operations-- Improve broker ranking- Acquire No. 1 League Tables positions

More collaboration with Daiwa Securities

Make Asia business profitable quickly

Strengthen global management system

Action plans and Priorities for FY 2010Wholesale

21

Recruit talented and well-experienced staff Accelerate infrastructure build-up

Enhance service and support for Daiwa Securities’ promotion of foreign stock business

Promote cross-selling of Japanese and Asian equities under the common marketing platform

Improve competitiveness in Asian equity principal trade business

Raise broker ranking to gain higher commission share

Increase revenue related to equity-finance and electronic trading

Action plans for FY2010Action plans for FY2010

Equity Division : Enhance Asian Equity BusinessWholesale

22

0

20

40

60

80

100

120

140

3Q/08 4Q/08 1Q/09 2Q/09 3Q/09 4Q/090%

20%

40%

60%

80%

100%Total sales of structured bond% of sales for retail customers

Sales of structured bond

Offer structured bond and foreign currency-denominated bond. Promote emerging market currency bond

Daiwa Securities(Retail)

Daiwa CM(Wholesale)

FICC Division : Strengthen Intra-Group Collaboration

Strengthen support and product development for retail customers

Expand product lineupProvide information for sales promotion

Feedback customer needsUnderstand marketing trends

Wholesale

(Y bil)

23

Provide derivative products such as Asian currencies interest rate swap, FX trade and other currency options

Provide Asian products for retail investors

Establish risk management and middle-and-back-office operations in derivative business (Tokyo, London and Asia)

Acquire required licenses for derivative operation in Asia (Taiwan, Korea and India)

Global expansion of derivatives business

FICC Division : Derivative Business to Stabilize RevenuesWholesale

▲ 40

▲ 30

▲ 20

▲ 10

0

10

20

30

40

3Q/08 4Q/08 1Q/09 2Q/09 3Q/09 4Q/09

Trading gain and loss of Daiwa CM

(Y bil)

Set up Asia Derivative TeamSet up Asia Derivative Team

Strengthen organization for global derivative operationStrengthen organization for global derivative operation

Refining of valuation for derivative position

Lehman shock

24

No.1 in the straight bond underwriting league table for 2H (excl. own issue)

11 Reinforcement of core business platformReinforcement of core business platform

Strengthened origination function

Collaboration with Sagent Advisors in the U.S.

Collaboration with CBCF* in Europe

22 Full-fledged operation of global M&A structureFull-fledged operation of global M&A structure

Recruiting of Asia IB head and China IB head

Development of equity underwriting platform in Asia

33Enhancement of marketing platformin Asia / Oceania Enhancement of marketing platformin Asia / Oceania

Organization Reshuffling /build up the sector coverage system

Organization Reshuffling /build up the sector coverage system

Enhance service quality by strengthening solution and origination function

Identify client needs

Continue to recruit capable investment bankers

Develop operational structure by FY 2010

Strengthen the Asia IB businessStrengthen the Asia IB business

Global Investment Banking DivisionWholesale

(*Current Daiwa Corporate Advisory Partners)

Achievements for 2H FY 2009 Strategy for FY 2010

Increase number of mandates and expand revenues

Increase number of mandates and expand revenues

Achieve top 10 in the Asia Pacific equity league table

Achieve top 10 in the Asia Pacific equity league table

25

Asset Management

26

0

5

10

15

20

6 / 0 8 9 / 0 8 1 2 / 0 8 3 / 0 9 6 / 0 9 9 / 0 9 1 2 / 0 9 3 / 1 0

15 .0 %

15 .5 %

16 .0 %

16 .5 %

17 .0 %

17 .5 %Daiwa AM (Bond funds)

Daiwa AM (Equity funds)

Daiwa SB Investments （Investment trusts）

Daiwa SB Investments （Investment advisory）Daiwa Securities Group share* （right）

Assets Under Management

(Y tri)

* Daiwa Asset Management (Bond funds + Equity funds)＋Daiwa SB Investments (Investment trusts)

▲200

0

200

400

600

800

1,000

Net inflow into equity investment trust(excluding ETF) for FY 2009 (from Apr. 09 to Mar. 10)

(Y bil)

Source: The Investment and Trust Association

Expand AUM by Maintaining Net InflowAsset Management

Company A

Company B

Company C

Daiwa Asset Management

Daiwa SB Investments

Daiwa Securities Group Inc.

Investor RelationsTEL: +81-3-5555-1300 FAX: +81-3-5555-0661E-mail: ir-section@dsgi.daiwa.co.jpURL: http://www.daiwa-grp.jp/ir/english/