3Q FY2018 Earnings Announcement January 29, 2019 This presentation - - PowerPoint PPT Presentation

SLIDE 1

3Q FY2018 Earnings Announcement

Daiwa Securities Group Inc. January 29, 2019

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.

SLIDE 2

2

Table of Contents

Highlights

3-4

Financial Summary

5-7

B/S & Financial Management Summary

8-9

P/L Summary

10

Breakdown of SG&A

11-12

Overseas Operations

13

Segment Information

14-21

Reference

22-35

2

SLIDE 3

Highlights (1Q-3Q/FY2018)

3

Both Net operating revenues and Ordinary income decreased YoY.

【Wholesale Division】

 Retained 1st place on primary and secondary equity offerings league table and 2nd place on IPO league table.

• Underwriting and secondary offerings commissions significantly increased by managing several lead

managed deals such as Renesas Electronics global PO, Softbank and Mercari global IPO.

 A number of M&A deals increased utilizing our global network. M&A related commission also rose.

• Managed multiple cross-border deals including acquisition of French subsidiary of the US leading

pharmaceutical company by Taisho Pharmaceutical Co., Ltd..

【Retail Division】

 Net asset inflow from April to December exceeded ¥1 trillion (¥1.05 trillion) and hit a record high in the past

10 years from the ripple effects of SoftBank IPO, the largest IPO deal in Japan, and Mercari IPO which Daiwa Securities lead managed.

 Contract AUM of wrap account service steadily rose from the end of March 2018. Investment advisory and

account management fees also increased. ¥19.4 bn Profit attributable to owners of parent ¥50.4 bn Net operating revenues ¥333.7 bn Ordinary income ¥65.4 bn ¥14.1 bn ¥110.3 bn

FY2018 1Q-3Q FY2018 3Q % Changes vs 1Q-3Q/FY2017

• 10.9%
• 41.6%
• 31.9%

Consolidated earnings results

• 3.3%
• 20.5%

+2.3%

% Changes vs 2Q/FY2018

SLIDE 4

3Q FY2018 Net operating revenues: ¥110.3 bn (+2.3%) 3Q FY2018 Ordinary income: ¥19.4 bn (-3.3%) 3Q FY2018 Profit attributable to owners of parent: ¥14.1 bn (-20.5%)

Summary (3Q/FY2018)

 Revenues in Retail Division decreased as stock investment trust sales and trading value of foreign equities dropped during

correction phase toward the end of the year. On the other hand, SoftBank global IPO brought an increase in net inflow of assets and newly opened accounts.

 For Wholesale Division, revenues in Global Investment Banking reached a record high on quarterly basis since 2010 due to an

increase in underwriting offering commissions and M&A related commission even though revenues from both equities and FICC in Global Markets decreased.

 SG&A rose to ¥94.1 billion (+1.9%) as advertising and promotion expenses related to sales promotion and earnings-linked

bonuses in overseas increased.

 Annualized ROE: 4.5%, BPS: ¥782.06

Net Operating Revenues Ordinary Income Profit Attributable to Owners of Parent

4

※The following shows the percentage change from the previous quarter.

(¥ Billions) (¥ Billions) (¥ Billions)

35.4 34.3 25.1 43.8 43.2 43.4 25.8 20.1 19.4 20 40 60 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2016 FY2017 FY2018 26.6 22.3 19.3 31.9 22.6 36.5 18.5 17.7 14.1 20 40 60 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2016 FY2017 FY2018 121.9 121.6 108.5 130.9134.9 130.8 115.6 107.8 110.3 60 120 180 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2016 FY2017 FY2018

SLIDE 5

Financial Summary

Consolidated

5

* Shareholders’ equity = Owners’ equity + Accumulated other comprehensive income FY2017 FY2018 3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q Operating revenues 190,875 185,461 175,175 172,570 188,753 9.4%

• 1.1%

527,140 536,499 1.8% 712,601 Net operating revenues 134,997 130,886 115,606 107,837 110,302 2.3%

• 18.3%

374,464 333,746

• 10.9%

505,350 SG&A 94,725 97,520 93,454 92,321 94,117 1.9%

• 0.6%

272,771 279,894 2.6% 370,292 Ordinary income 43,216 43,477 25,860 20,154 19,479

• 3.3%
• 54.9%

112,199 65,495

• 41.6%

155,676 Profit (loss) attributable to

• wners of parent

22,697 36,581 18,534 17,751 14,117

• 20.5%
• 37.8%

73,998 50,404

• 31.9%

110,579 Total assets 21,925,865 21,135,041 20,853,852 20,963,519 21,429,204 21,925,865 21,429,204 21,135,041 Net assets 1,375,632 1,370,520 1,371,244 1,300,984 1,247,475 1,375,632 1,247,475 1,370,520 Shareholders' equity* 1,278,643 1,273,133 1,274,457 1,289,355 1,235,676 1,278,643 1,235,676 1,273,133 EPS (¥) 13.73 22.53 11.45 10.99 8.89 44.49 31.36 66.88 BPS (¥) 780.71 786.56 787.29 801.84 782.06 780.71 782.06 786.56 ROE (Annualized) 7.1% 11.5% 5.8% 5.5% 4.5% 7.8% 5.4% 8.8% FY2017

(¥ Millions)

% Change vs 2Q/FY18 % Change vs 3Q/FY17

% Change vs 1Q-3Q/FY17

FY2018 FY2017

SLIDE 6

Segment Summary

6

Consolidated

※Figures calculated based on managerial accounting of each Group companies. Equity in earnings of affiliates is included in each respective segment.

(¥ Millions) FY2017 FY2018 3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q 59,570 54,573 50,609 47,314 46,388

• 2.0%
• 22.1%

159,673 144,313

• 9.6%

214,247 45,726 47,135 39,798 39,394 37,092

• 5.8%
• 18.9%

124,057 116,284

• 6.3%

171,192

Global M arkets 32,633 33,616 28,078 31,177 19,564

• 37.2%
• 40.0%

90,080 78,821

• 12.5%

123,697 Global Investment Banking 13,092 13,518 11,719 8,216 17,527 113.3% 33.9% 33,976 37,462 10.3% 47,495

12,650 12,587 12,268 12,092 12,125 0.3%

• 4.2%

36,802 36,486

• 0.9%

49,390 6,326 5,359 2,435

• 1,861

1,511

• 76.1%

22,042 2,086

• 90.5%

27,401 10,722 11,230 10,494 10,897 13,184

• 31,887

34,577

• 43,118

134,997 130,886 115,606 107,837 110,302 2.3%

• 18.3%

374,464 333,746

• 10.9%

505,350 FY2017 FY2018 3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q 18,002 12,312 9,894 6,723 6,119

• 9.0%
• 66.0%

39,019 22,737

• 41.7%

51,331 12,789 13,252 6,996 7,445 3,466

• 53.4%
• 72.9%

32,120 17,907

• 44.2%

45,373

Global M arkets 9,817 11,228 5,849 8,786

• 3,151
• 23,059

11,484

• 50.2%

34,288 Global Investment Banking 2,794 1,760 823

• 1,492

6,302

• 125.5%

8,349 5,633

• 32.5%

10,109

7,489 7,292 7,488 7,391 6,969

• 5.7%
• 6.9%

21,827 21,850 0.1% 29,119 5,529 4,377 1,760

• 2,377

633

• 88.5%

20,121 15

• 99.9%

24,499

• 594

6,243

• 278

972 2,290

• 890

2,983

• 5,353

43,216 43,477 25,860 20,154 19,479

• 3.3%
• 54.9%

112,199 65,495

• 41.6%

155,676

% Change vs 3Q/FY17

Consolidated total Retail Wholesale Asset Management Investments Other/Adjustments

% Change vs 3Q/FY17

FY2017 FY2018 FY2018 FY2017 FY2017

% Change vs 2Q/FY18

% Change vs 1Q-3Q/FY17

FY2017

% Change vs 2Q/FY18

% Change vs 1Q-3Q/FY17

Retail Wholesale Asset Management Investments Other/Adjustments Consolidated total

Net operating revenues Ordinary income

SLIDE 7

16.9 16.9 6.4 12.8 12.7 13.2 6.9 7.4 3.4 46.4 47.1 35.2 43.0 45.7 47.1 39.7 Global Markets (Net operating revenues) Global Investment Banking (Net operating revenues)

7

Retail Division Wholesale Division Asset Management Division Investment Division

Net operating revenues Ordinary income

Segment Summary

Consolidated

GM GIB

(¥ Billions) (¥ Billions) (¥ Billions) (¥ Billions)

49.6 49.6 48.8 51.2 59.5 54.5 50.6 47.3 46.3 9.5 8.7 10.3 10.6 18.0 12.3 9.8 6.7 6.1 11.5 11.7 12.0 12.1 12.6 12.5 12.2 12.0 12.1 6.5 6.6 7.2 7.1 7.4 7.2 7.4 7.3 6.9 1.5 0.6 37.0 39.3 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2016 FY2017 FY2018 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2016 FY2017 FY2018 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2016 FY2017 FY2018 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2016 FY2017 FY2018 2.5 2.4 1.8 13.9 6.3 5.3 2.4

• 1.8

1.8 1.5 1.4 13.1 5.5 4.3 1.7 -2.3

SLIDE 8

B/S Summary

Consolidated Balance Sheet （Dec. 31, 2018）

Total assets: ¥21.42 tn Net assets: ¥1.24 tn Shareholders’ equity**: ¥1.23 tn



83.3% of total assets have high liquidity*.

* Cash and deposits + Short-term investment securities + Trading products + Loans secured by securities 

Shareholders’ equity** decreased by ¥37.4 billion from March 31, 2018.

** Shareholders’ equity = Owners’ equity + Accumulated other comprehensive income

8

Consolidated

※Figures in parentheses indicate changes from March 31, 2018 (¥ Billions)

Current assets 20,728 (250) Current liabilities 17,289 (254) Cash and deposits 3,623 (-71) Trading products 4,842 (-188) Short-term investment securities 1,083 (96) Trading securities and other 2,495 (-335) Trading products 7,347 (679)

Stocks, Convertible bonds

161 (-130) Trading securities and other 4,748 (577) Bonds 2,325 (-81) Stocks, Convertible bonds 321 (-48) Other 8 (-122) Bonds 3,430 (252) Derivatives transactions 2,347 (147) Beneficiary certificates 119 (-134)

Loans payable secured by securities

6,147 (371) Other 876 (508)

Deposits for banking business

3,606 (217) Derivatives transactions 2,598 (102) Short-term loans payable 1,071 (-19) Operational investment securities 107 (-6) Current portion of bonds 167 (-94) (after allowance for possible investment losses) Loans secured by securities 5,796 (-700) Non-current assets 700 (43) Long-term liabilities 2,888 (162) Property, plant and equipment 147 (23) Bonds payable 1,393 (78) Intangible assets 113 (8) Long-term loans payable 1,411 (83) Investments and other assets 439 (12) Total liabilities 20,181 (417) Listed stocks 132 (-26) Net assets 1,247 (-123) Unlisted stocks 17 (1) Owners' equity 1,191 (-18) Affliated company stocks, etc. 163 (12)

Accumulated other comprehensiv e income

44 (-18) Other 125 (26) Non-controlling interests 3 (-85) Total Assets 21,429 (294) Total liabilities and net assets 21,429 (294)

SLIDE 9

2,428 2,317 2,365 2,499 2,627 2,532 2,687 2,688 2,675 2,501 1,571 1,487 1,627 1,714 1,808 1,700 1,832 1,896 1,883 1,808 154.5%155.8% 145.3%145.8%145.2%148.9%146.6%141.7%142.0% 138.3%

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2016 FY2017 FY2018

High-quality liquid assets (¥ billions) Net cash outflows (¥ billions) Consolidated liquidity coverage ratio

【Regulatory Capital (Basel III)】 (As at September 30, 2018)

 Consolidated Total Capital Ratio : 21.2％  Consolidated Tier 1 Capital Ratio : 21.2％  Consolidated Common Equity Tier 1

Capital Ratio : 21.2％

 Consolidated Leverage Ratio :

5.71％ 【Regulatory Liquidity (Basel III)】 (Daily average Oct. - Dec. 2018)

 Consolidated Liquidity Coverage Ratio :

138.3％

Consolidated Leverage Ratio Consolidated Liquidity Coverage Ratio

Financial Management (Regulatory Capital & Regulatory Liquidity)

Consolidated Capital Adequacy Ratio

9

Consolidated

※ Figures are as at the end of each quarter. ※Before 3Q FY2016: end of monthly average

1,111 1,169 1,131 1,140 1,134 1,142 1,142 1,134 1,111 1,103 1,162 1,131 1,140 1,134 1,142 1,142 1,134 1,111 22.3% 22.9% 22.6% 22.6% 22.2% 21.7% 22.3% 22.7% 21.2% 22.1% 22.7% 22.6% 22.6% 22.2% 21.7% 22.3% 22.7% 21.2% 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY2016 FY2017 FY2018 Total qualifying capital (¥ billions) Common equity tier 1 (¥ billions) Consolidated total capital ratio Consolidated common equity tier 1 capital ratio

18,429 18,979 19,090 18,979 19,524 20,987 20,358 19,902 19,458 1,103 1,162 1,131 1,140 1,134 1,142 1,142 1,134 1,111 5.98% 6.12% 5.92% 6.00% 5.81% 5.44% 5.61% 5.70% 5.71%

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY2016 FY2017 FY18

Total exposures (¥ billions) Tier 1 capital (¥ billions) Consolidated levarage ratio

SLIDE 10

P/L Summary

 Commission received increased

(+18.3%). ・ Brokerage commission* declined to ¥14.5 billion (-1.8%) as foreign equity trading volume dropped. ・ Underwriting and secondary offering commissions* significantly increased to ¥17.9 billion (+188.9%) due to SoftBank global IPO. ・ Distribution commission* decreased to ¥5.5 billion (-25.0%) as stock investment trust sales declined.

 Net trading income dropped (-53.7%)

as customer order flows of both foreign equities and FICC decreased.

 Non-operating income decreased as

dividend income dropped.

 Gain on sales of investment securities

for strategic purpose was posted to extraordinary income.

10

Consolidated

* Breakdown of total commission received (See p.23)

FY2017 FY2018

3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q Operating revenues

190,875 185,461 175,175 172,570 188,753 9.4%

• 1.1%

527,140 536,499 1.8% 712,601

Commission received

85,531 79,616 73,813 66,236 78,347 18.3%

• 8.4%

234,008 218,397

• 6.7%

313,625

Net trading income

30,446 31,411 26,610 27,057 12,526

• 53.7%
• 58.9%

77,594 66,194

• 14.7%

109,005

Net gain (loss) on private equity

6,217 5,085 2,045

• 2,216

970

• 84.4%

21,826 799

• 96.3%

26,912

Financial revenue

47,898 50,612 62,070 68,041 83,589 22.8% 74.5% 139,831 213,701 52.8% 190,444

Other operating revenue

20,782 18,733 10,635 13,451 13,319

• 1.0%
• 35.9%

53,879 37,405

• 30.6%

72,613

Financial expenses

30,441 43,859 50,559 54,643 71,414 30.7% 134.6% 104,488 176,617 69.0% 148,348

Other operating expenses

25,437 10,714 9,009 10,088 7,036

• 30.3%
• 72.3%

48,187 26,134

• 45.8%

58,901

Net operating revenues

134,997 130,886 115,606 107,837 110,302 2.3%

• 18.3%

374,464 333,746

• 10.9%

505,350

SG&A

94,725 97,520 93,454 92,321 94,117 1.9%

• 0.6%

272,771 279,894 2.6% 370,292

Operating income

40,271 33,365 22,151 15,516 16,184 4.3%

• 59.8%

101,692 53,852

• 47.0%

135,058

Non-operating income

2,944 10,111 3,709 4,638 3,294

• 29.0%

11.9% 10,506 11,642 10.8% 20,618

Ordinary income/loss

43,216 43,477 25,860 20,154 19,479

• 3.3%
• 54.9%

112,199 65,495

• 41.6%

155,676

Extraordinary income/loss

• 9,203

2,895 1,141 4,510 2,753

• 38.9%
• 4,708

8,406

• 1,812

34,012 46,373 27,002 24,665 22,233

• 9.9%
• 34.6%

107,491 73,901

• 31.2%

153,864

Total income taxes

11,277 9,764 8,470 6,925 8,121 17.3%

• 28.0%

28,776 23,518

• 18.3%

38,541 22,697 36,581 18,534 17,751 14,117

• 20.5%
• 37.8%

73,998 50,404

• 31.9%

110,579

Profit (loss) attributable to

• wners of parent

FY2017 (¥ Millions)

% Change vs 1Q-3Q/FY17

% Change vs 2Q/FY18 % Change vs 3Q/FY17

Income before income taxes FY2018 FY2017

SLIDE 11

Breakdown of SG&A

11

 Trading related expenses rose

(+3.1%) due to an increase in advertising and promotion expenses related to sales promotion.

 Although personnel expenses

remained flat in Japan, they increased (+2.5%) due to a rise in earnings-linked bonuses in M&A subsidiary in Europe (DCA).

 Office cost rose (+4.6%) due to an

increase in system related office expenses.

 Depreciation increased (+4.1%) as

developed system began operation.

Consolidated

FY2017 FY2018

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

94,725 97,520 93,454 92,321 94,117 1.9%

• 0.6%

272,771 279,894 2.6% 370,292

Trading related expenses

18,488 18,663 17,961 17,952 18,510 3.1% 0.1% 53,785 54,424 1.2% 72,448

Personnel expenses

48,387 49,616 46,903 45,197 46,342 2.5%

• 4.2%

136,249 138,443 1.6% 185,865

Real estate expenses

9,080 9,163 9,260 9,215 9,308 1.0% 2.5% 26,746 27,783 3.9% 35,910

Office cost

6,728 6,879 6,519 6,617 6,918 4.6% 2.8% 19,673 20,055 1.9% 26,552

Depreciation

6,119 6,090 6,290 6,233 6,489 4.1% 6.0% 18,246 19,014 4.2% 24,336

Taxes and dues

2,635 2,606 2,637 2,764 2,612

• 5.5%
• 0.8%

8,125 8,014

• 1.4%

10,732

Other

3,284 4,501 3,881 4,341 3,935

• 9.3%

19.8% 9,945 12,158 22.2% 14,446

(¥ Millions) FY2017

% Change vs 1Q-3Q/FY17

% Change vs 2Q/FY18 % Change vs 3Q/FY17

SG&A FY2018 FY2017

SLIDE 12

Cost Structure

12

Consolidated

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

Total SG&A

90.3 91.5 353.6 87.1 90.9 94.7 97.5 370.2 93.4 92.3 94.1 36.6 38.0 143.9 33.6 37.5 39.8 41.3 152.3 36.7 35.2 36.7

Trading related expenses

17.5 18.8 69.7 16.6 18.6 18.4 18.6 72.4 17.9 17.9 18.5

Advertising and promotion expenses

3.0 3.7 11.1 2.1 3.4 3.1 3.2 12.0 2.7 3.3 3.6

13.6 13.3 52.3 11.2 12.7 15.5 15.7 55.3 12.3 10.6 11.7

Overtime, part-time

2.3 2.2 9.1 2.3 2.3 2.4 2.2 9.3 2.5 2.3 2.4 53.7 53.4 209.6 53.4 53.3 54.8 56.1 217.9 56.7 57.0 57.3

Personnel expenses

28.7 28.5 113.6 29.3 29.3 30.2 31.3 120.3 31.9 32.0 31.9

Real estate expenses

8.8 9.1 35.2 8.8 8.8 9.0 9.1 35.9 9.2 9.2 9.3

Depreciation

5.8 5.9 23.4 6.1 6.0 6.1 6.0 24.3 6.2 6.2 6.4

Office expenses

7.5 6.6 25.7 6.1 6.1 6.4 6.5 25.3 6.2 6.2 6.6

Taxes and dues

2.5 2.9 10.5 2.7 2.7 2.6 2.6 10.7 2.6 2.7 2.6 FY2018 FY2016

Fixed costs Variable costs Bonus and others

FY2017

(¥ Billions)

SLIDE 13

Ordinary Income of Overseas Operations

Ordinary Income

Overseas operations stayed in the black for 11 consecutive quarters.



In Europe, FICC revenues decreased due to widening of credit spread. Equity revenues also dropped.



In Asia / Oceania, income of equity method affiliates, SSI, contributed to the income while revenues of both equities and FICC decreased.



In Americas, ordinary income improved due to a drop in expenses including amortization of goodwill for DCS and an increase in equity revenues including CB.

13

Consolidated

• 2

2 4 6 Europe Asia / Oceania Americas Overseas Operations Total 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q (¥ Billions) FY2018 FY2016 FY2017 FY2017 FY2018 3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q Overseas Operations Total 1,718 4,174 13 1,259 302

• 76.0% -82.4%

7,229 1,574

• 78.2%

11,403 Europe

• 16

3,004

• 1,202

734

• 683
• 1,222
• 1,151
• 4,227

Asia / Oceania 1,047 1,452 1,234 519 550 5.9% -47.4% 2,981 2,304

• 22.7%

4,433 Americas 687

• 282
• 18

4 435 ×91.7

• 36.7%

3,025 421

• 86.1%

2,742

% Change vs 1Q-3Q/FY17

FY2017 (¥ Millions)

% Change vs 2Q/FY18 % Change vs 3Q/FY17

FY2018 FY2017

SLIDE 14

Retail Division

Net Operating Revenues and Ordinary Income

 Although foreign equity trading volume decreased, equity

revenues increased as sales commission from equity underwriting rose by distributing SoftBank global IPO.

 Fixed income revenues decreased mainly due to a decline in

sales of structured bonds.

 Investment trust sales commission dropped as stock investment

trust sales decreased affected by unfavorable market conditions. Investment trust agency fee decreased due to a decline in average level of asset under custody during the quarter.

 In other revenues, wrap-related revenues increased.

14

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

Equity

13.9 12.4 14.2 16.1 21.0 18.6 16.5 15.2 17.4

Fixed income

11.3 12.2 8.6 9.0 9.7 9.4 10.6 8.3 7.3

Distribution commission for investment trust

9.2 9.5 10.6 10.1 12.3 9.8 6.9 6.6 4.6

Agency fee for investment trust

7.2 7.3 7.1 7.2 7.3 7.0 6.8 6.8 6.4

Other (includes w rap- related revenues)

7.7 8.0 8.1 8.6 9.0 9.6 9.6 10.2 10.5

Net operating revenues

49.6 49.6 48.8 51.2 59.5 54.5 50.6 47.3 46.3

Ordinary income

9.5 8.7 10.3 10.6 18.0 12.3 9.8 6.7 6.1

(¥ Billions)

FY2017 FY2018 FY2016 Net operating revenues

46,388

• 2.0%

144,313

• 9.6%

Ordinary income

6,119

• 9.0%

22,737

• 41.7%

(¥ Millions)

FY2018 3Q

% Change vs 2Q/FY18 % Change vs 1Q-3Q/FY17

FY2018 1Q-3Q

20 40 60

Equity Fixed income Distribution commission for investment trust Agency fee for investment trust Other (includes wrap-related revenues) Ordinary income

SLIDE 15

Retail Division

Daiwa Securities

Sales and Distribution Amount by Product

15

*Distribution amount from equity underwriting **Total contract amount of fund wrap and SMA ***Insurance include pension insurance, life insurance and business insurance ****Foreign bonds include yen-denominated foreign bonds *****Stock investment trusts include switching transactions between funds

【Equity Distribution】

 Equity distribution amount rose by distributing SoftBank global IPO,

the largest IPO deal in Japan, which also contributed to an increase in newly opened accounts and net assets inflow. 【Wrap Account Service】

 Net asset inflow remained firm while Contract AUM decreased from

the weak market.

Contract AUM of Wrap Account Service

500 1,000 1,500

Equity SMA + Fund Wrap Insurance Japanese bonds Foreign bonds Stock investment trusts

400 800 1,200 1,600 2,000 2,400 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

(¥ Billions)

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

Equity*

109.5 68.7 64.8 371.8 93.2 53.6 77.1 23.9 486.9

SMA + Fund Wrap**

113.6 161.5 114.2 130.0 155.6 158.2 130.1 142.6 113.5

Insurance***

12.4 12.7 11.4 11.4 12.3 12.5 9.6 10.4 9.8

Japanese bonds

178.6 372.3 170.9 197.8 183.9 204.3 359.0 203.4 248.4

Foreign bonds****

224.6 280.5 196.4 198.9 306.4 281.1 250.2 212.5 203.4

Stock investment trusts*****

540.2 494.9 550.3 513.7 624.1 527.5 399.5 524.6 321.0 (¥ Billions)

FY2017 FY2018 FY2016

SLIDE 16

• 20

20 40 Equity FICC Others Ordinary income

Wholesale Division

Global Markets

*FICC： Fixed Income, Currency and Commodities

Net Operating Revenues and Ordinary Income

【Equity】

 For customer order flows, foreign equities decreased affected by

the weak overseas market even though Japanese equities were

• strong. Revenues from proprietary trading also dropped.

【FICC*】

 As an interest rate declined, customer order flows decreased from

the risk-off trend toward the end of period. Position management also struggled, resulting in a decline in FICC revenues.

16

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

Equity

15.2 15.3 13.7 16.4 18.2 20.5 16.4 17.6 12.2

FICC*

20.7 17.1 12.7 12.2 13.3 12.0 10.7 12.6 6.6

Others

0.7 1.2 0.7 1.4 1.0 1.0 0.8 0.8 0.6

Net operating revenues

36.8 33.6 27.3 30.0 32.6 33.6 28.0 31.1 19.5

Ordinary income

14.1 10.7 5.3 7.8 9.8 11.2 5.8 8.7

• 3.1

(¥ Billions) FY2017 FY2018 FY2016

Net operating revenues

19,564

• 37.2%

78,821

• 12.5%

Ordinary income

• 3,151
• 11,484
• 50.2%

(¥ Millions)

FY2018 3Q

% Change vs 2Q/FY18 % Change vs 1Q-3Q/FY17

FY2018 1Q-3Q

SLIDE 17

Equity & FICC Income: Consolidated Trading Gain/Loss (Daiwa Securities/Overseas Subsidiaries)

【Managerial accounting basis】

＜Reference＞

Consolidated Trading Gain / Loss (Managerial Accounting Basis)

17

20 40

Equity FICC

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Equity 11 10 11 12 15 18 14 17 8 FICC 31 28 20 20 21 20 18 19 12 Total 42 38 31 32 36 38 32 36 20 FY2018 FY2016 FY2017

(¥ Billions)

Equity 8.0

• 52.9%

39.0 2.6% FICC 12.0

• 36.8%

49.0

• 19.7%

Total 20.0

• 44.4%

88.0

• 11.1%

(¥ Billions)

FY2018 3Q

% Change vs 2Q/FY18

FY2018 1Q-3Q

% Change vs 1Q-3Q/FY17 Equity

7.9 4.3% 27.3 8.6%

Bond and forex

4.5

• 76.6%

38.8

• 25.9%

Net financial income

12.1

• 9.1%

37.0 4.9%

Total

24.7

• 38.9%

103.2

• 8.6%

(¥ Billions)

FY2018 3Q

% Change vs 2Q/FY18

FY2018 1Q-3Q

% Change vs 1Q-3Q/FY17 ＜Reference＞ Financial accounting basis： Net gain/loss on trading + Net financial income

SLIDE 18

(5) 5 10 15 20 Equity underwriting Debt underwriting M&A /

• thers

Ordinary income

Wholesale Division

Global Investment Banking

Net Operating Revenues and Ordinary Income

18

【Equity】

 Lead managed several deals including SoftBank global IPO, the largest IPO

deal in Japan, resulting in a significant increase in revenues.

<Selected lead managed deals> <Offering size> SoftBank Group Corp. Tokyu Fudosan Holdings Corporation SHIP HEALTHCARE HOLDINGS, INC GMO Financial Holdings, Inc. Samty Co.,Ltd.

【Debt】

 Lead managed SB and subordinated bonds, and managed a number of

benchmark bonds.

<Selected lead managed deals> <Offering size> Rakuten, Inc. (35/37/40yrs) KDDI CORPORATION (5/7/10yrs) Japan Bank for International Cooperation (5/10yrs) Development Bank of Japan Inc. (7yrs) Standard Chartered PLC (6yrs)

【M&A】

 Managed many overseas and cross-border deals utilizing our global network.

<Selected deals> Acquisition of UPSA (France) and related business assets by Taisho Pharmaceutical Co., Ltd. Sale of Clarion Co., Ltd. to Faurecia (France) Additional Acquisition of Global Switch (UK) by consortium led by Daily-Tech (China) Acquisition of eDriving (US) by Aceable (US) Global IPO Global PO Euro yen CB PO Rights Offering ¥2.64 tn ¥58.2 bn ¥25.0 bn ¥18.1 bn ¥15.6 bn Subordinated Bond SB Benchmark Bond Benchmark Bond Samurai Bond ¥182.0 bn ¥90.0 bn USD 3.0 bn EUR 0.7 bn ¥111.0 bn

Net operating revenues

17,527 113.3% 37,462 10.3%

Ordinary income

6,302

• 5,633
• 32.5%

(¥ Millions)

FY2018 3Q

% Change vs 2Q/FY18 % Change vs 1Q-3Q/FY17

FY2018 1Q-3Q

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Equity underwriting 3.5 3.0 1.7 6.3 4.5 3.0 5.0 1.5 8.3 Debt underwriting 2.2 2.5 2.3 2.5 2.4 1.9 2.7 2.4 2.0 M&A / others 3.8 7.8 3.8 4.0 6.1 8.5 4.0 4.2 7.1 Net operating revenues 9.6 13.4 7.9 12.9 13.0 13.5 11.7 8.2 17.5 Ordinary income 2.4 5.6 0.7 4.8 2.7 1.7 0.8

• 1.4

6.3 (¥ Billions) FY2017 FY2018 FY2016

SLIDE 19

Asset Management Division

※‘Others’ includes Daiwa Fund Consulting and Daiwa Real Estate Asset Management. ※Equity in earnings of affiliates is included in non-operating revenues.

【Daiwa Asset Management】

 Both revenues and income declined as AUM of stock investment

trusts excluding ETF decreased toward the end of period affected by the market condition. 【Others】

 AUM of Daiwa Real Estate Asset Management, operator of REITS,

reached a record high by acquisition of real estates and management fees increased.

Net Operating Revenues and Ordinary Income

19

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Daiwa AM 10.0 10.3 10.4 10.7 11.0 10.6 10.5 10.6 10.0 Others 1.4 1.4 1.5 1.4 1.5 1.9 1.7 1.4 2.0 Net operating revenues 11.5 11.7 12.0 12.1 12.6 12.5 12.2 12.0 12.1 Ordinary income 6.5 6.6 7.2 7.1 7.4 7.2 7.4 7.3 6.9

(¥ Billions)

FY2017 FY2018 FY2016

5 10 15 Daiwa AM Others Ordinary income Net operating revenues

12,125 0.3% 36,486

• 0.9%

Ordinary income

6,969

• 5.7%

21,850 0.1%

(¥ Millions)

FY2018 3Q

% Change vs 2Q/FY18 % Change vs 1Q-3Q/FY17

FY2018 1Q-3Q

SLIDE 20

• 300

300 600 900

Daiwa Asset Management Daiwa SB Investment

Asset Management Division

Assets Under Management and Net Increase

Daiwa Asset Management and Daiwa SB Investments AUM Real Estate Asset Management Business AUM Daiwa Asset Management and Daiwa SB Investments Net Asset Inflow (Stock Investment Trusts, excl. ETF)

20

(¥ Billions) (¥ Billions)

1Q 2Q 3Q FY2018 FY2017 FY2013 FY2014 FY2015 FY2016

1Q 2Q 3Q FY2018 FY2015 FY2016 FY2017 FY2013 FY2014

6,000 12,000 18,000

DAM Stock investment trusts DAM Bond investment trusts DSBI Stock investment trusts DSBI Investment advisory

418 477 780 819 802 816 818 851

500 1,000

Other Japan Rental Housing Investments Inc. Daiwa Hotel Private Investment Corp. Nippon Healthcare Investment Corp. Daiwa Residential Private Investment Corp. Daiwa Office Investment Corp.

1Q 2Q 3Q Daiw a Asset Management (DAM) 8,958 11,032 10,840 12,454 14,123 14,497 15,192 13,490 ETF 1,586 2,550 2,951 4,648 6,406 6,780 7,437 6,577 3,064 3,314 2,563 2,036 1,465 1,494 1,484 1,406 12,023 14,346 13,403 14,491 15,588 15,992 16,676 14,897 15.0% 14.8% 14.5% 14.7% 14.3% 14.3% 14.3% 14.2% Daiw a SB Investments (DSBI) 2,249 2,526 2,481 2,237 2,221 2,141 2,171 1,878 2,327 2,672 2,249 2,435 2,736 2,740 2,828 2,260 4,576 5,198 4,730 4,673 4,957 4,881 5,000 4,139 2.8% 2.6% 2.7% 2.3% 2.0% 1.9% 1.9% 1.8% Total FY2016 FY2015 FY2014 FY2013 Investment advisory FY2017 FY2018 Total Stock investment trust share Stock investment trusts Stock investment trust share Stock investment trusts Bond investment trusts

(¥ Billions)

SLIDE 21

Investment Division

Principal Investment Value Net Operating Revenues and Ordinary Income

21

※ Principal investment value are the sum of Daiwa PI Partners and Daiwa Energy & Infrastructure ※ PIPEs: Private Investment in Public Equities ※ All figures are as at the end of each quarter

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

Private equity and PIPEs

54 54 57 63 59 62 63 64 70

Monetary claims

31 34 35 33 52 58 44 43 49

Real estate investment

20 20 55 35 35 4 4

Total

105 108 147 132 147 120 107 112 124

(¥ Billions)

FY2017 FY2016 FY2018

50 100 150

Private equity and PIPEs Monetary claims Real estate investment

• 5

5 10 15

Net operating revenues Ordinary income 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Net operating revenues 2.5 2.4 1.8 13.9 6.3 5.3 2.4

• 1.8

1.5 Ordinary income 1.8 1.5 1.4 13.1 5.5 4.3 1.7

• 2.3

0.6

(¥ Billions)

FY2017 FY2018 FY2016

Net operating revenues

1,511

• 2,086
• 90.5%

Ordinary income

633

• 15
• 99.9%

(¥ Millions)

FY2018 3Q

% Change vs 2Q/FY18 % Change vs 1Q-3Q/FY17

FY2018 1Q-3Q

SLIDE 22

Reference

SLIDE 23

Breakdown of Commission

23

Consolidated

FY2017 FY2018

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

Total commission

85,531 79,616 73,813 66,236 78,347 18.3%

• 8.4% 234,008 218,397
• 6.7%

313,625 21,753 19,142 16,566 14,766 14,507

• 1.8%
• 33.3%

54,655 45,841

• 16.1%

73,797 9,890 6,537 11,466 6,199 17,908 188.9% 81.1% 28,642 35,574 24.2% 35,180 13,247 10,613 7,669 7,385 5,540

• 25.0%
• 58.2%

35,194 20,595

• 41.5%

45,807 40,640 43,323 38,111 37,884 40,390 6.6%

• 0.6% 115,517 116,386

0.8% 158,840

Investment advisory and account management fees

6,285 6,489 6,630 6,812 6,965 2.2% 10.8% 17,780 20,408 14.8% 24,269

Insurance sales commission

739 864 681 858 651

• 24.2%
• 11.9%

2,209 2,191

• 0.8%

3,073

M&A related commission

6,050 8,021 3,776 3,918 6,637 69.4% 9.7% 13,680 14,333 4.8% 21,702

Management fee

21,388 20,318 20,051 19,989 18,841

• 5.7%
• 11.9%

62,578 58,882

• 5.9%

82,897

Other

6,176 7,629 6,970 6,305 7,294 15.7% 18.1% 19,268 20,570 6.8% 26,897 Brokerage commission Underwriting and secondary

• ffering commissions

Distribution commission Other commission

FY2017 (¥ Millions)

% Change vs 2Q/FY18 % Change vs 3Q/FY17

% Change vs 1Q-3Q/FY17

FY2018 FY2017

SLIDE 24

Daiwa Securities Balance Sheet (Dec. 31, 2018)

Balance Sheet

Daiwa Securities

24

※Figures in parentheses show changes from March 31, 2018 (¥ Billions)

Current assets

10,006 (-1,561)

Current liabilities

7,850 (-1,571) Trading products 4,690 (-473) Trading products 3,476 (-373) Trading securities and other 2,099 (-568) Trading securities and other 1,142 (-509) Derivatives transactions 2,590 (95) Derivatives transactions 2,334 (135) Margin transaction assets 180 (-75) Margin transaction liabilities 56 (-13) Loans on margin transactions 164 (-59)

Loans payables secured by securities

2,248 (-671) 15 (-15) Short-term loans payable 1,075 (-166) Loans secured by securities 2,881 (-930) Current portion of bonds 130 (-54) Short-term guarantee deposits 424 (116)

Long-term liabilities

1,503 (47) Short-term loans receivable 335 (14) Bonds payable 632 (49) Long-term loans payable 834 (-3)

Non-current assets

117 (1)

Total liabilities

9,358 (-1,523) Property, plant and equipment 3 (0)

Net assets

765 (-35) Intangible assets 72 (7) Shareholders' equity 760 (-35) Capital stock 100 －

Total assets

10,123 (-1,559)

Total liabilities and net assets

10,123 (-1,559)

Cash collateral pledged for securities borrowing on margin transactions

SLIDE 25

Financial Summary Ⅰ

25

Daiwa Securities

FY2017 FY2018

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

99,158 91,502 89,390 82,151 83,370 1.5%

• 15.9% 267,333 254,912
• 4.6% 358,835

Commission received

58,694 50,212 49,348 42,866 53,538 24.9%

• 8.8% 158,971 145,754
• 8.3% 209,183

Brokerage commission

17,010 14,681 12,221 10,800 10,895 0.9%

• 36.0%

41,523 33,916

• 18.3%

56,205

Stock and others

16,661 14,173 11,961 10,544 10,448

• 0.9%
• 37.3%

40,567 32,954

• 18.8%

54,740

8,315 4,623 9,562 4,682 16,602 254.5% 99.7% 23,636 30,848 30.5% 28,259

Equity

5,386 2,645 4,736 1,145 13,842 × 12.1 157.0% 14,517 19,724 35.9% 17,163

Bond and others

2,928 1,977 4,826 3,537 2,760

• 22.0%
• 5.8%

9,118 11,124 22.0% 11,096 Distribution commission

13,118 10,515 7,607 7,346 5,483

• 25.4%
• 58.2%

34,842 20,436

• 41.3%

45,357

Investment trust

12,463 9,766 6,835 6,563 4,556

• 30.6%
• 63.4%

32,954 17,955

• 45.5%

42,720 Other commissions

20,250 20,392 19,957 20,037 20,557 2.6% 1.5% 58,969 60,552 2.7% 79,361

Agency fee and others

8,135 7,858 7,693 7,682 7,226

• 5.9%
• 11.2%

23,989 22,602

• 5.8%

31,848

Investment advisory and account management fees

6,285 6,489 6,630 6,812 6,965 2.2% 10.8% 17,780 20,408 14.8% 24,269

Insurance sales commission

739 864 681 858 651

• 24.2%
• 11.9%

2,209 2,191

• 0.8%

3,073

M&A related commission

1,913 1,425 883 1,171 1,703 45.5%

• 11.0%

4,984 3,758

• 24.6%

6,409 Net trading income/loss

27,834 29,651 24,720 25,137 14,572

• 42.0%
• 47.6%

70,311 64,430

• 8.4%

99,962

Financial revenues

12,629 11,638 15,320 14,148 15,259 7.9% 20.8% 38,050 44,727 17.5% 49,689

Financial expenses

9,239 7,516 11,440 8,140 11,522 41.5% 24.7% 25,225 31,103 23.3% 32,742 89,919 83,985 77,949 74,011 71,848

• 2.9%
• 20.1% 242,107 223,808
• 7.6% 326,092

% Change vs 3Q/FY17

% Change vs 1Q-3Q/FY17

FY2017

Operating revenues Net operating revenues

(¥ Millions)

% Change vs 2Q/FY18

Underwriting and secondary offering commissions

FY2018 FY2017

SLIDE 26

Financial Summary Ⅱ

26

Daiwa Securities

FY2017 FY2018

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

61,181 62,664 60,122 60,023 60,198 0.3%

• 1.6% 177,874 180,344

1.4% 240,538

Trading related expenses

10,321 11,144 10,532 10,701 11,167 4.4% 8.2% 29,871 32,402 8.5% 41,015

Personnel expenses

26,667 26,556 25,059 24,597 24,277

• 1.3%
• 9.0%

76,189 73,934

• 3.0% 102,746

Real estate expenses

6,240 6,342 6,245 6,294 6,230

• 1.0%
• 0.2%

18,491 18,770 1.5% 24,833

Office cost

11,723 11,762 11,747 11,869 11,876 0.1% 1.3% 34,743 35,493 2.2% 46,506

Depreciation

4,079 4,166 4,239 4,284 4,474 4.4% 9.7% 12,204 12,998 6.5% 16,371

Taxes and dues

1,168 1,066 1,191 1,120 1,025

• 8.4%
• 12.2%

3,509 3,337

• 4.9%

4,575

Other

980 1,624 1,106 1,155 1,145

• 0.9%

16.9% 2,864 3,407 19.0% 4,488 28,679 22,069 17,648 14,050 11,796

• 16.0%
• 58.9%

64,594 43,495

• 32.7%

86,664 21,712 17,686 11,992 8,987 7,895

• 12.2%
• 63.6%

46,749 28,874

• 38.2%

64,436 11.2% 8.9% 6.2% 4.8% 4.1% 7.7% 4.9% 7.9% 336.2% 348.3% 347.4% 340.0% 377.9%

Capital adequacy ratio

(¥ Millions)

% Change vs 1Q-3Q/FY17

% Change vs 2Q/FY18

FY2017

SG&A Ordinary income Net income ROE（ Annualized）

% Change vs 3Q/FY17

FY2018 FY2017

SLIDE 27

Assets under Custody

27

Daiwa Securities

※All figures are as at the end of each quarter. ※ ETFs are recorded in ‘Equity’.

15 30 45 60 75

Equity Japanese bonds Foreign bonds Stock investment trusts Bond investment trusts Foreign investment trusts Others 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

Equity

32.7 32.9 34.4 36.8 39.9 46.3 45.9 46.8 40.8

Japanese bonds

7.0 7.1 7.1 7.2 7.5 8.1 8.3 8.6 8.7

Foreign bonds

5.0 4.9 4.9 4.9 4.8 4.8 4.6 4.6 4.7

Stock investment trusts

6.3 6.3 6.4 6.5 6.8 6.4 6.4 6.6 5.9

Bond investment trusts

1.0 0.9 0.9 0.9 1.0 0.9 0.9 0.9 0.8

Foreign investment trusts

0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.1

Others

1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Total

53.5 53.6 55.2 57.9 61.5 68.1 67.6 69.0 62.4

Daiwa Next Bank deposit balance

3.2 3.1 3.3 3.4 3.7 3.5 3.6 3.6 3.6

(¥ Trillions) FY2017 FY2016 FY2018

SLIDE 28

Number of Accounts and Equity Trading

28

Daiwa Securities

* Includes Junior NISA.

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2,963 2,974 2,965 2,969 2,965 2,989 2,994 3,001 3,011

Accounts holding equity (thousands)

1,396 1,396 1,388 1,399 1,386 1,395 1,397 1,394 1,438 3,103 3,127 3,140 3,164 3,187 3,214 3,246 3,264 3,302 39 39 35 40 40 41 52 37 47 785 796 803 811 815 829 839 846 855

Contract assets under management (¥ billions)

1,604 1,661 1,738 1,834 1,944 1,971 2,049 2,162 2,034

Number of customers (thousands)

121.5 125.2 127.7 130.9 131.4 134.8 138.7 141.9 143.7

Total number of contracts (thousands)

3,000 2,806 2,783 2,730 3,476 3,305 2,619 2,400 2,723

Online out of total (thousands)

2,593 2,459 2,432 2,384 3,003 2,908 2,295 2,123 2,408

Total trading value (¥ billions)

2,873 2,635 2,692 2,666 3,737 3,420 2,612 2,302 2,502

Online out of total (¥ billions)

2,177 2,024 2,039 2,026 2,743 2,603 1,966 1,769 1,935

Trading value (¥ billions)

157 151 248 276 387 407 398 422 206

Wrap account service (end of quarter) Online trading accounts (thousands) Newly opened accounts (thousands)

Contracts and trading value for individual investors at Daiw a Securities (Japanese Equity)

Foreign equity trading value (Retail）

FY2017

Accounts with balance (thousands) NISA accounts* (thousands)

FY2018 FY2016

SLIDE 29

Retail Division (Daiwa Securities) Net Asset Inflow (Individuals) Retail Division (Daiwa Securities) Net Asset Inflow

Net Asset Inflow

29

Daiwa Securities

※ Net asset inflow = net inflow of cash and securities

• 150
• 50

50 150 250 350 450 Corporation Individual

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Corporation 57.6

• 2.2

58.2 160.7 128.6 44.5 106.6 133.8 158.8 Individual

• 101.2

129.3 43.3 107.0 85.7 111.0 354.0 62.9 234.6 Total

• 43.6

127.1 101.6 267.8 214.4 155.6 460.7 196.8 393.4 (¥ Billions) FY2017 FY2018 FY2016

• 150
• 50

50 150 250 350 Net inflow of cash Net inflow of securities

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Net inflow

• f cash
• 114.0

23.8

• 13.2

74.0

• 13.6

23.7 39.9

• 3.0

228.7 Net inflow

• f securities

12.7 105.5 56.6 33.0 99.4 87.2 314.1 65.9 5.8 Total

• 101.2

129.3 43.3 107.0 85.7 111.0 354.0 62.9 234.6 FY2018 FY2016 FY2017 (¥ Billions)

SLIDE 30

Stock Investment Trusts & Wrap Accounts

Wrap Account Contract and Contract AUM Retail Division (Daiwa Securities) Sales of Stock Investment Trusts

30

Daiwa Securities

sales - （sell-off + redemption） ※Net increase ratio (%) ＝ ×100 sales ※Includes switching transaction between funds. 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Sales 540.2 494.9 550.3 513.7 624.1 527.5 399.5 524.6 321.0

(¥ Billions)

FY2017 FY2018 FY2016

• 30%
• 15%

0% 15% 30% 150 300 450 600 750 Sales (left) Net increase ratio (right) 500 1,000 1,500 2,000 2,500 50 100 150 200 Contract amount (left) Contract assets under management (right)

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Contract amount 113.6 161.5 114.2 130.0 155.6 158.2 130.1 142.6 113.5 Contract AUM 1,604 1,661 1,738 1,834 1,944 1,971 2,049 2,162 2,034

(¥ Billions)

FY2017 FY2016 FY2018

SLIDE 31

League Table

31

Daiwa Securities

Source: Daiwa Securities Apr. 2018 – Dec. 2018 M&A： Mergermarket Primary and secondary equity, IPO, Straight bonds, Agency bonds, Municipal bonds and Samurai bonds are based on settlement date Joint lead manager allotment of Primary and secondary equity, IPO, Straight bonds, Municipal bonds and Agency bonds is based on underwritten amount Joint bookrunner allotment of Samurai bonds is divided up evenly among the bookrunners

Pr i mary and secondary equity

• fferings

IPO Straight bonds (excl. family bonds) Agency bonds Municipal bonds Samurai bonds (excl. family bonds) M&A (Number of deals) Daiwa Nomura Mizuho Mizuho Nomura Mizuho 20.0% 25.5% 22.7% 23.6% 21.9% 22.6% Nomura Daiwa Nomura SMBC Nikko SMBC Nikko SMBC Nikko 16.3% 18.9% 20.5% 21.0% 18.2% 21.9% SMBC Nikko Mizuho SMBC Nikko Nomura Daiwa Mitsubishi UFJMS 12.7% 15.9% 20.2% 20.1% 18.1% 17.9% Bank of America Merrill Lynch SMBC Nikko Daiwa Daiwa Mizuho Nomura 12.4% 14.8% 19.7% 18.7% 16.4% 17.2% Morgan Stanley Mitsubishi UFJMS Mitsubishi UFJMS Mitsubishi UFJMS Mitsubishi UFJMS Daiwa 11.9% 11.2% 13.6% 15.7% 13.0% 16.2% 3Q FY2018 League Table 1st Nomura 2nd MHFG 3rd SMFG 4th Morgan Stanley 5th Deloitte Daiwa 6th

SLIDE 32

Daiwa Asset Management

Financial Summary

32

FY2017 FY2018

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

21,484 20,398 20,042 20,022 18,838

• 5.9%
• 12.3%

62,845 58,904

• 6.3%

83,244 21,299 20,214 19,866 19,847 18,672

• 5.9%
• 12.3%

62,295 58,386

• 6.3%

82,510

Stock investment trust

21,246 20,167 19,822 19,802 18,624

• 5.9%
• 12.3%

62,141 58,249

• 6.3%

82,308

Bond investment trust

53 47 43 45 48 7.0%

• 9.5%

154 137

• 11.0%

201

184 184 176 175 166

• 5.2%
• 10.1%

549 517

• 5.8%

733 16,610 16,014 15,681 15,470 14,842

• 4.1%
• 10.6%

48,818 45,993

• 5.8%

64,832 10,390 9,785 9,472 9,396 8,749

• 6.9%
• 15.8%

30,607 27,618

• 9.8%

40,392 6,219 6,229 6,209 6,074 6,092 0.3%

• 2.0%

18,210 18,375 0.9% 24,439 4,874 4,384 4,361 4,552 3,996

• 12.2%
• 18.0%

14,026 12,910

• 8.0%

18,411 4,944 4,431 4,508 4,736 4,020

• 15.1%
• 18.7%

14,309 13,265

• 7.3%

18,741

Net income

3,396 2,857 3,164 3,297 2,826

• 14.3%
• 16.8%

9,813 9,288

• 5.4%

12,670

FY2017 FY2017

% Change vs 1Q-3Q/FY17

Ordinary income Operating revenues Management fee Other operating revenues SG&A Commission paid Other SG&A Operating income (¥ Millions)

% Change vs 2Q/FY18 % Change vs 3Q/FY17

FY2018

SLIDE 33

Gross Profits / Ordinary Income

Daiwa Next Bank

Earnings and Deposit Balance

Daiwa Next Bank Deposit Balance & Number of Accounts

33

(¥ Billions) (thousands) ※All figures are as at the end of the period.

5 10 15 20 25

Gross profits (annually) Gross profits (quarterly) Ordinary income (annually) Ordinary income (quarterly) 500 1,000 1,500 1,000 2,000 3,000 4,000

Ordinary deposits Time deposits Negotiable certificate of deposits / Other Number of accounts (thousands) 1Q 2Q 3Q

Ordinary deposits 771 1,085 1,455 1,401 1,653 1,756 1,860 1,696 1,591 Time deposits 1,125 1,261 1,528 1,711 1,480 1,746 1,778 1,893 1,940 Negotiable certificate

• f deposits / Other

314 52 62 8 59 53 58 56 108 Deposit balance 2,210 2,399 3,047 3,121 3,193 3,556 3,696 3,647 3,641 Number of accounts (thousands) 719 901 1,018 1,133 1,213 1,289 1,315 1,330 1,353

FY2018 FY2017 FY2016

(¥ Billions)

FY2012 FY2013 FY2014 FY2015

1Q 2Q 3Q

Gross profits 10.5 12.3 20.7 17.3 11.5 11.9 3.0 4.0 4.3 Ordinary income 5.0 5.7 13.6 9.5 3.5 4.2 1.1 2.1 2.3

FY2018 FY2017

(¥ Billions)

FY2015 FY2012 FY2014 FY2013 FY2016

SLIDE 34

Value at Risk

Confidence level：99% (one-side test) Holding period：1 day Adjusted for price correlation between products

Range and Assumption of VaR

Consolidated

34

※Figures of VaR (Quarter end) and VaR by Interest from 3Q FY2016 to 1Q FY2017 are modified in 2Q FY2017 due to reviewing of scenarios about Interest risk.

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q VaR （Quarter end） 1.25 1.96 1.29 1.16 1.93 1.13 1.34 1.39 1.76 High 2.97 3.16 3.41 4.19 2.00 2.03 1.80 1.67 1.87 Low 1.02 1.56 1.28 1.16 1.06 1.07 1.16 1.15 0.95 Average 2.02 2.17 2.59 2.29 1.34 1.46 1.40 1.36 1.34 By risk factors (Quarter end) Equity 0.40 0.54 0.34 0.43 0.68 0.28 0.65 0.51 0.40 Interest 1.15 1.89 1.40 1.15 1.43 1.06 1.21 1.23 1.68 Currency 0.26 0.29 0.20 0.15 0.21 0.21 0.16 0.17 0.24 Commodities 0.03 0.00 0.06 0.00 0.00 0.00 0.00 0.00 0.00

(¥ Billions)

FY2017 FY2018 FY2016

SLIDE 35

 Number of employees as at the end of each quarter.

※ Total figures are the sum of consolidated group companies and Daiwa SB Investments. ※ Number of employees of DIR Information Systems has been included from 1Q FY2017 as it shifted to a consolidated company. ※ Overseas figures are the sum of consolidated group companies under Daiwa International Holdings and Daiwa Securities. The figure also includes

• verseas subsidiaries of Daiwa Asset Management. Number of employees of Sagent Advisors and Signal Hill both of which were integrated into

DCS are also included which have become consolidated companies since 2Q FY2017 and 3Q FY2017 respectively. Number of employees of Montalban, which has become a consolidated company, DCA in Spain, since 3Q FY2018, is also included. ※ Figures include temporary staff.

Number of Group Employees

35

Consolidated

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

15,410 15,093 16,256 16,207 16,200 16,088 16,651 16,516 16,519

Overseas

1,592 1,614 1,634 1,683 1,760 1,776 1,799 1,820 1,881

Total

FY2017 FY2018 FY2016

SLIDE 36

Daiwa Securities Group Inc. Investor Relations TEL: +81-3-5555-1300 FAX: +81-3-5555-0661 E-mail: ir-section@daiwa.co.jp URL: http://www.daiwa-grp.jp/ir/english/

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