4Q FY2017 Earnings Announcement April 27, 2018 This presentation - - PowerPoint PPT Presentation

SLIDE 1

4Q FY2017 Earnings Announcement

Daiwa Securities Group April 27, 2018

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 Operation

13

Segment Information

14-21

Reference

22-35

2

SLIDE 3

【Retail Division】

 Equity revenues rose as trading volume of foreign equities significantly increased by capturing customer needs under a

new sales promotion strategy with more emphasis on customers perspective.

 Contract AUM of Wrap Account Service reached a record high (Y1,971.3 bil) by expanding product line up and after-

sales care.

 Sales of stock investment trust investing in IoT, robot and electronic vehicle related stocks remained strong.

Net operating revenues, Ordinary income and Profit attributable to owners of parent increased YoY all together for the first time in 4 years.

Highlights (1Q-4Q/FY2017)

3

+14.8%

Profit attributable to owners of parent

Y110.5 bil

Net operating revenues

Y505.3 bil

Ordinary income

Y155.6 bil +6.3% +6.9%

FY2017 1Q-4Q % Change vs FY2016

FY2017 dividend per share: 28yen (interim: 13yen, year-end: 15yen)

Consolidated earnings results

 Annual dividend payout ratio: 41.9%. Total payout ratio: 75.2%.

〔※〕 Amendment to dividend payment policy with regard to dividend payout ratio: from “approximately 40%” to “ at least 50%”, which will take effect from interim dividend for FY2018. 【Wholesale Division】

 Acted as a global coordinator for several large deals including JAPAN POST HOLDINGS 2nd PO and global IPO of SG

Holdings Co., Ltd..

 Retained1st place on primary and secondary equity offerings league table and municipal bonds league table. IPO and

straight bonds climbed the league table (2nd place).

 For M&A business, Sagent and Signal Hill, acquired M&A advisory firms in the U.S., integrated to launch DCS Advisory,

establishing a strong global network to retain cross-border and global M&A business.

SLIDE 4

4Q FY2017 Net operating revenues: Y130.8 bil (-3.0% QoQ) 4Q FY2017 Ordinary income: Y43.4 bil (+0.6% QoQ) 4Q FY2017 Profit attributable to owners of parent company: Y36.5 bil (+61.2% QoQ)

Summary (4Q/FY2017)

 Revenues in Retail Division decreased mainly due to a drop in stock investment trust sales during correction phase since

February.

 For Wholesale Division, Equity in Global Markets and M&A business in Global Investment Banking contributed to increase

in revenues.

 SG&A rose to Y97.5 bil (+3.0% QoQ) as personnel expenses increased.  Ordinary income remained at a high level due to a profit from replacement of properties in Daiwa Office Investment Corp.  Profit attributable to owners of parent significantly increased QoQ which posted provision for loss on litigation.  Annualized ROE: 11.5%, BPS: Y786.56

Net Operating Revenues Ordinary Income Profit Attributable to Owners of Parent Company

4

（Y bil） （Y bil） （Y bil）

28.6 32.5 33.2 35.4 34.3 25.1 43.8 43.2 43.4 30 60 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY 2015 FY2016 FY2017 21.3 24.5 30.4 26.6 22.3 19.3 31.9 22.6 36.5 30 60 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY 2015 FY2016 FY2017

111.7 114.0 115.0 121.9 121.6 108.5 130.9 134.9 130.8

60 120 180 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY 2015 FY2016 FY2017

SLIDE 5

Financial Summary

Consolidated

5

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

FY2017 Proposed Dividend

28 yen

(including 13 yen interim dividend)

4Q 1Q 2Q 3Q 4Q

Operating revenues

166,322 159,652 176,611 190,875 185,461

• 2.8%

11.5% 616,497 712,601 15.6%

Net operating revenues

121,618 108,543 130,923 134,997 130,886

• 3.0%

7.6% 472,750 505,350 6.9%

SG&A

91,508 87,121 90,924 94,725 97,520 3.0% 6.6% 353,687 370,292 4.7%

Ordinary income

34,394 25,153 43,829 43,216 43,477 0.6% 26.4% 135,623 155,676 14.8% Profit (loss) attributable to

• wners of parent

22,358 19,395 31,905 22,697 36,581 61.2% 63.6% 104,067 110,579 6.3%

Total assets

19,827,296 19,815,830 20,381,308 21,925,865 21,141,743 19,827,296 21,141,743

Net assets

1,343,433 1,340,130 1,385,594 1,375,632 1,370,520 1,343,433 1,370,520

Shareholders' equity*

1,250,890 1,248,272 1,288,915 1,278,643 1,273,133 1,250,890 1,273,133

EPS (Y)

13.26 11.63 19.12 13.73 22.53 61.53 66.88

BPS (Y)

745.80 748.15 772.32 780.71 786.56 745.80 786.56

ROE (Annualized)

7.1% 6.2% 10.1% 7.1% 11.5% 8.4% 8.8%

(Y mil)

FY2016

% Change vs 3Q/FY17 % Change vs 4Q/FY16 % Change vs FY16

FY2017 FY2016 FY2017

SLIDE 6

Segment Summary

6

Consolidated

(Y mil)

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

4Q 1Q 2Q 3Q 4Q 49,654 48,833 51,269 59,570 54,573

• 8.4%

9.9% 188,051 214,247 13.9% 47,113 35,280 43,051 45,726 47,135 3.1% 0.0% 182,875 171,192

• 6.4%

Global M arkets 33,645 27,356 30,090 32,633 33,616 3.0%

• 0.1%

142,859 123,697

• 13.4%

Global Investment Banking 13,468 7,923 12,960 13,092 13,518 3.3% 0.4% 40,015 47,495 18.7%

11,798 12,011 12,141 12,650 12,587

• 0.5%

6.7% 46,438 49,390 6.4% 2,484 1,801 13,914 6,326 5,359

• 15.3%

115.7% 15,736 27,401 74.1% 10,567 10,618 10,547 10,722 11,230

• 39,647

43,118

• 121,618

108,543 130,923 134,997 130,886

• 3.0%

7.6% 472,750 505,350 6.9% 4Q 1Q 2Q 3Q 4Q 8,700 10,391 10,626 18,002 12,312

• 31.6%

41.5% 29,375 51,331 74.7% 16,429 6,438 12,892 12,789 13,252 3.6%

• 19.3%

65,437 45,373

• 30.7%

Global M arkets 10,759 5,364 7,877 9,817 11,228 14.4% 4.4% 53,595 34,288

• 36.0%

Global Investment Banking 5,607 748 4,805 2,794 1,760

• 37.0%
• 68.6%

11,369 10,109

• 11.1%

6,627 7,200 7,137 7,489 7,292

• 2.6%

10.0% 26,572 29,119 9.6% 1,553 1,417 13,175 5,529 4,377

• 20.8%

181.8% 13,041 24,499 87.9% 1,084

• 294
• 2
• 594

6,243

• 1,196

5,353

• 34,394

25,153 43,829 43,216 43,477 0.6% 26.4% 135,623 155,676 14.8%

Ordinary income

FY2016 FY2017

% Change vs 3Q/FY17

Retail Wholesale Asset Management Investments Other/Adjustments Consolidated total

Net operating revenues

FY2016 FY2017 FY2016 Consolidated total Retail Wholesale Asset Management Investments Other/Adjustments

% Change vs 4Q/FY16 % Change vs 4Q/FY16

FY2017

% Change vs 3Q/FY17 % Change vs FY16

FY2016

% Change vs FY16

FY2017

SLIDE 7

12.8 14.8 17.2 16.9 16.4 6.4 12.8 12.7 13.2 43.7 43.4 45.9 46.4 47.1 35.2 43.0 45.7 47.1 Global Markets (Net operating revenues) Global Investment Banking (Net operating revenues) 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

FY2015

FY2016 FY2017

7

Retail Division Wholesale Division Asset Management Division Investment Division

Net operating revenues Ordinary income

Segment Summary

Consolidated

（Y bil） （Y bil） （Y bil） （Y bil）

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

FY2015

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

FY2015

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

FY2015

FY2016 FY2017 44.3 45.0 43.7 49.6 49.6 48.8 51.2 59.5 54.5 5.3 6.5 4.5 9.5 8.7 10.3 10.6 18.0 12.3 1.1 4.9 5.7 2.5 2.4 1.8 13.9 6.3 5.3 0.5 4.6 4.9 1.8 1.5 1.4 13.1 5.5 4.3 11.0 11.6 11.4 11.5 11.7 12.0 12.1 12.6 12.5 5.9 6.7 6.6 6.5 6.6 7.2 7.1 7.4 7.2 GM GIB

SLIDE 8

B/S Summary

Consolidated Balance Sheet （Mar. 31, 2018）

Total assets: Y21.14 tri Net assets: Y1.37 tri Shareholders’ equity**: Y1.27 tri



84.4% of total assets have high liquidity*.

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

Shareholders’ equity** increased by Y22.2 bil from March 31, 2017.

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

8

Consolidated

( Y bil)

※Figures in parentheses indicate changes from March 31, 2017

Current assets 20,487 (1,228) Current liabilities 17,036 (1,028) Cash and deposits 3,694 (-134) Trading products 5,030 (372) Short-term investment securities 987 (-754) Trading securities and other 2,830 (568) Trading products 6,667 (120)

Stocks, convertible bonds

292 (39) Trading securities and other 4,170 (317) Bonds 2,407 (409) Stocks, Convertible bonds 370 (9) CD/CP and others 130 (120) Bonds 3,177 (613) Derivatives 2,200 (-196) Beneficiary certificates 254 (77)

Loans payable secured by securities

5,775 (-242) CD/CP and others 367 (-382)

Deposits for banking business

3,388 (402) Derivatives 2,496 (-196) Short-term loans payable 1,091 (172) Operational investment securities 114 (0) Current portion of bonds 261 (-16) (after allowance for possible investment losses)

Daiwa PI Partners + Daiwa Securities SMBC PI

105 (-1) Daiwa Corporate Investment 10 (2) Loans secured by securities 6,496 (1,191) Non-current assets 654 (85) Non-current liabilities 2,731 (259) Property, plant and equipment 124 (0) Bonds payable 1,315 (96) Intangible assets 105 (15) Long-term loans payable 1,327 (148) Investments and other assets 424 (71) Total liabilities 19,771 (1,287) Listed stocks 158 (12) Net assets 1,370 (27) Unlisted stocks 16 (0) Owners' equity 1,209 (25) Affliated companies stocks, etc. 151 (22)

Accumulated other comprehensiv e income

63 (-3) Other 97 (37) Non-controlling interests 88 (4) Total Assets 21,141 (1,314) Total liabilities and net assets 21,141 (1,314)

SLIDE 9

【Regulatory Capital (Basel III)】 (As at December 30, 2017)

 Consolidated Total Capital Ratio : 21.7％  Consolidated Tier1 Capital Ratio : 21.7％  Consolidated Common Equity Tier 1

Capital Ratio : 21.7％

 Consolidated Leverage Ratio :

5.44％ 【Regulatory Liquidity (Basel III)】 (Daily average Jan. － Mar. 2018)

 Consolidated Liquidity Coverage Ratio :

146.6％

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 month average

2,120 2,034 2,230 2,428 2,317 2,365 2,499 2,627 2,532 2,687 1,273 1,302 1,345 1,571 1,487 1,627 1,714 1,808 1,700 1,832 166.4% 156.2% 165.7% 154.5% 155.8% 145.3%145.8% 145.2% 148.9% 146.6%

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2015 FY2016 FY2017

High quality liquid assets (Y bil) Net cash outflows (Y bil) Consolidated liquidity coverage ratio 1,196 1,126 1,119 1,111 1,169 1,131 1,140 1,134 1,142 1,147 1,113 1,106 1,103 1,162 1,131 1,140 1,134 1,142 21.8% 21.2% 22.4% 22.3% 22.9% 22.6% 22.6% 22.2% 21.7% 20.9% 21.0% 22.2% 22.1% 22.7% 22.6% 22.6% 22.2% 21.7%

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2015 FY2016 FY2017

Total qualifying capital (Y bil) Common equity tier 1 (Y bil) Consolidated total capital ratio Consolidated common equity tier 1 capital ratio

22,159 18,654 19,254 18,429 18,979 19,090 18,979 19,524 20,987 1,166 1,117 1,106 1,103 1,162 1,131 1,140 1,134 1,142 5.26% 5.99% 5.74% 5.98% 6.12% 5.92% 6.00% 5.81% 5.44%

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2015 FY2016 FY2017

Total exposures (Y bil) Tier 1 capital (Y bil) Consolidated levarage ratio

SLIDE 10

P/L Summary

 Commission received decreased

(-6.9% QoQ). ・ Brokerage commission* declined to Y19.1 bil (-12.0% QoQ) as domestic stock trading volume dropped. ・ Underwriting commission* for both equity and debt decreased to Y6.5 bil (-33.9% QoQ). ・ Even though stock investment trust sales was solid, it decreased QoQ resulting in a decline in distribution commission* to Y10.6 bil (-19.9% QoQ).

 Net trading income** rose to

Y31.4bil (+3.2% QoQ) as equity trading increased.

 Net gain on private equity

secured Y5.0 bil (-18.2% QoQ) due to an exit of the existing investment.

 Non-operating income increased

due to a replacement of properties in Daiwa Office Investment Corp.

10

Consolidated

* Breakdown of total commission received (See p.23) ** Managerial accounting basis (See p.17)

4Q 1Q 2Q 3Q 4Q

Operating revenues 166,322 159,652 176,611 190,875 185,461

• 2.8%

11.5% 616,497 712,601 15.6% Commission received 76,515 69,746 78,730 85,531 79,616

• 6.9%

4.1% 273,335 313,625 14.7% Net trading income 28,330 24,068 23,079 30,446 31,411 3.2% 10.9% 128,120 109,005

• 14.9%

Net gain/loss on private equity and other securities 2,006 1,746 13,862 6,217 5,085

• 18.2%

153.5% 14,846 26,912 81.3% Financial revenue 39,618 43,835 48,096 47,898 50,612 5.7% 27.8% 143,241 190,444 33.0% Other operating revenue 19,850 20,255 12,841 20,782 18,733

• 9.9%
• 5.6%

56,953 72,613 27.5% Financial expenses 30,612 39,566 34,480 30,441 43,859 44.1% 43.3% 98,725 148,348 50.3% Other operating expenses 14,090 11,542 11,207 25,437 10,714

• 57.9%
• 24.0%

45,022 58,901 30.8% Net operating revenues 121,618 108,543 130,923 134,997 130,886

• 3.0%

7.6% 472,750 505,350 6.9% SG&A 91,508 87,121 90,924 94,725 97,520 3.0% 6.6% 353,687 370,292 4.7% Operating income/loss 30,110 21,422 39,998 40,271 33,365

• 17.1%

10.8% 119,062 135,058 13.4% Non-operating income/loss 4,284 3,730 3,831 2,944 10,111 243.4% 136.0% 16,561 20,618 24.5% Ordinary income/loss 34,394 25,153 43,829 43,216 43,477 0.6% 26.4% 135,623 155,676 14.8% Extraordinary income/loss

• 737

2,363 2,131

• 9,203

2,895

• 3,381
• 1,812
• 33,657

27,516 45,961 34,012 46,373 36.3% 37.8% 139,004 153,864 10.7% Total income taxes 11,156 8,106 9,392 11,277 9,764

• 13.4%
• 12.5%

34,726 38,541 11.0% 22,358 19,395 31,905 22,697 36,581 61.2% 63.6% 104,067 110,579 6.3% Profit (loss) attributable to

• wners of parent

(Y mil)

% Change vs FY16 % Change vs 3Q/FY17 % Change vs 4Q/FY16

FY2016

Income/loss before ฀ income taxes

FY2017 FY2016 FY2017

SLIDE 11

Breakdown of SG&A

11

 Trading related expenses

slightly rose (+0.9% QoQ) as advertising expenses for sales promotions increased.

 Personnel expenses rose

(+2.5% QoQ) as expenses increased due to consolidation

• f two M&A advisory firms in

the U.S. in 3Q.

 Office cost rose (+2.3% QoQ)

due to an increase in system related office expenses.

 Other expenses increased

(+37.0% QoQ) due to amortization of intangible assets including goodwill for two M&A advisory firms in the U.S..

Consolidated

4Q 1Q 2Q 3Q 4Q 91,508 87,121 90,924 94,725 97,520 3.0% 6.6% 353,687 370,292 4.7% Trading related expenses 18,884 16,638 18,658 18,488 18,663 0.9%

• 1.2%

69,754 72,448 3.9% Personnel expenses 44,395 43,215 44,645 48,387 49,616 2.5% 11.8% 175,830 185,865 5.7% Real estate expenses 9,150 8,818 8,847 9,080 9,163 0.9% 0.1% 35,267 35,910 1.8% Office cost 6,963 6,450 6,494 6,728 6,879 2.3%

• 1.2%

27,047 26,552

• 1.8%

Depreciation 5,955 6,117 6,009 6,119 6,090

• 0.5%

2.3% 23,406 24,336 4.0% Taxes and dues 2,948 2,754 2,736 2,635 2,606

• 1.1%
• 11.6%

10,530 10,732 1.9% Other 3,210 3,126 3,533 3,284 4,501 37.0% 40.2% 11,852 14,446 21.9% (Y mil)

% Change vs FY16 % Change vs 3Q/FY17 % Change vs 4Q/FY16

FY2016 SG&A FY2017 FY2016 FY2017

SLIDE 12

Cost Structure

12

Consolidated

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

Total SG&A

88.3 364.5 86.0 85.7 90.3 91.5 353.6 87.1 90.9 94.7 97.5 370.2 35.9 150.5 34.1 35.1 36.6 38.0 143.9 33.6 37.5 39.8 41.3 152.3

Trading related expenses

17.3 72.3 16.3 16.9 17.5 18.8 69.7 16.6 18.6 18.4 18.6 72.4

Advertising expenses

2.4 8.1 1.9 2.4 3.0 3.7 11.1 2.1 3.4 3.1 3.2 12.0

12.3 55.5 12.2 13.0 13.6 13.3 52.3 11.2 12.7 15.5 15.7 55.3

Overtime, part-time

2.1 9.1 2.3 2.2 2.3 2.2 9.1 2.3 2.3 2.4 2.2 9.3 52.3 213.9 51.8 50.5 53.7 53.4 209.6 53.4 53.3 54.8 56.1 217.9

Personnel expenses

28.9 117.3 28.4 27.8 28.7 28.5 113.6 29.3 29.3 30.2 31.3 120.3

Real estate expenses

9.1 37.3 8.7 8.5 8.8 9.1 35.2 8.8 8.8 9.0 9.1 35.9

Depreciation

5.9 23.8 5.8 5.7 5.8 5.9 23.4 6.1 6.0 6.1 6.0 24.3

Office expenses

6.3 25.4 5.8 5.7 7.5 6.6 25.7 6.1 6.1 6.4 6.5 25.3

Taxes and dues

1.7 8.8 2.5 2.4 2.5 2.9 10.5 2.7 2.7 2.6 2.6 10.7 FY2017

Fixed costs Variable costs Bonus and others

FY2016

(Y bil)

FY2015

SLIDE 13

• 5

5 10 Europe Asia / Oceania Americas Overseas Operation Total

Ordinary Income of Overseas Operation

Ordinary Income

Overseas operation stayed in the black on yearly basis from last fiscal year and for 8 consecutive quarters.



In Europe, both revenues and income significantly increased due to M&A business and global CB underwriting.



Asia / Oceania posted an increase in income due to a rise in equity brokerage revenues and bond underwriting commission, as well as equity in earnings of affiliates of Saigon Securities.



In Americas, FICC slowed down while U.S. equity trading volume remained strong. Amortization of intangible assets including goodwill for DCS Advisory also affected.

13

Consolidated

FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q (Y bil) FY2016 FY2017 4Q 1Q 2Q 3Q 4Q Overseas Operation฀ Total 5,691 1,700 3,810 1,718 4,174 142.9%

• 26.7% 13,493

11,403

• 15.5%

Europe 2,844

• 338

1,577

• 16

3,004

• 5.6%

2,759 4,227 53.2% Asia / Oceania 378 909 1,024 1,047 1,452 38.6% 283.4% 1,480 4,433 199.5% Americas 2,468 1,129 1,208 687

• 282
• 9,254

2,742

• 70.4%

% Change vs FY16

(Y mil) FY2016

% Change vs 3Q/FY17 % Change vs 4Q/FY16

FY2017 FY2016 FY2017

SLIDE 14

Retail Division

Net Operating Revenues and Ordinary Income

 Equity revenues decreased QoQ due to a decline in domestic

equity trading volume and sales commission from domestic equity underwriting while foreign equity trading volume was strong.

 Fixed income revenues decreased QoQ as sales amount of

foreign bonds including structured bonds decreased.

 Distribution commission for investment trust declined QoQ due

to a decrease in stock investment trust sales. Agency fee for investment trust dropped QoQ as market decline led to decrease in assets under custody.

 Other revenues increased QoQ from the rise in investment

advisory and account management fees, related to wrap business.

14

20 40 60

Equity Fixed income Distribution commission for investment trust Agency fee for investment trust Other (includes wrap-related revenues) Ordinary income FY2015

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

Equity

9.9 10.1 10.2 13.9 12.4 14.2 16.1 21.0 18.6

Fixed income

12.4 12.9 11.9 11.3 12.2 8.6 9.0 9.7 9.4

Distribution commission for investment trust

5.4 5.8 6.2 9.2 9.5 10.6 10.1 12.3 9.8

Agency fee for investment trust

7.6 7.3 7.2 7.2 7.3 7.1 7.2 7.3 7.0

Other (includes w rap- related revenues)

8.8 8.6 8.0 7.7 8.0 8.1 8.6 9.0 9.6

Net operating revenues

44.3 45.0 43.7 49.6 49.6 48.8 51.2 59.5 54.5

Ordinary income

5.3 6.5 4.5 9.5 8.7 10.3 10.6 18.0 12.3 FY2016 FY2017

(Y bil)

Net operating revenues

54,573

• 8.4%

214,247 13.9%

Ordinary income

12,312

• 31.6%

51,331 74.7%

(Y mil)

FY2017 4Q

% Change vs 3Q/FY17 % Change vs FY16

FY2017

SLIDE 15

Retail Division

Daiwa Securities

Sales and Distribution Amount by Product

15

*Distribution amount from equity underwriting **Total contract amount of Daiwa fund wrap and Daiwa 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

【Stock Investment Trusts】

 Global EV Revolution Fund, investing in electronic vehicle related

stocks, saw strong sales. 【Wrap Account Service】

 At the end of March, contract AUM reached a record high of

Y1,971.3 bil on quarterly basis due to an increase in sales contract amount QoQ with less reduction amount.

 Daiwa Advance Wrap which can change portfolio reflecting

investment environment was introduced on March 2018. Expanded product line up to meet customers needs.

Contract AUM of Wrap Account Service

( Y bil)

500 1,000 1,500

Equity* SMA + Fund Wrap** Insurance*** Domestic bonds Foreign bonds**** Stock investment trusts***** FY2015

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

Equity*

24.8 39.2 65.8 109.5 68.7 64.8 371.8 93.2

53.6

SMA + Fund Wrap**

61.5 62.9 78.1 113.6 161.5 114.2 130.0 155.6

158.2

Insurance***

27.9 29.6 14.6 12.4 12.7 11.4 11.4 12.3

12.5

Domestic bonds

125.2 186.2 241.8 178.6 372.3 170.9 197.8 183.9

204.3

Foreign bonds****

244.9 229.2 187.8 224.6 280.5 196.4 198.9 306.4

281.1

Stock investment trusts*****

388.4 396.8 379.3 540.2 494.9 550.3 513.7 624.1

527.5

FY2017

(Y bil)

FY2016

200 200 400 400 600 600 800 800 1, 1,000 000 1, 1,200 200 1, 1,400 400 1, 1,600 600 1, 1,800 800 2, 2,000 000 1Q 1Q 2Q 2Q 3Q 3Q 4Q 4Q 1Q 1Q 2Q 2Q 3Q 3Q 4Q 4Q 1Q 1Q 2Q 2Q 3Q 3Q 4Q 4Q 1Q 1Q 2Q 2Q 3Q 3Q 4Q 4Q 1Q 1Q 2Q 2Q 3Q 3Q 4Q 4Q FY2013 2013 FY2014 2014 FY2015 2015 FY2016 2016 FY2017 2017

SLIDE 16

Wholesale Division

Global Markets

*FICC： Fixed Income, Currency and Commodities

Net Operating Revenues and Ordinary Income

【Equity】

 Equity revenues rose QoQ due to an increase in domestic

equity trading volume and client flow of foreign equities even though brokerage commission declined from stock market correction after February. 【FICC*】

 Unfavorable market situation continued as a long-term interest

rate stayed within the narrow range. FICC revenues remained at a low level due to a decline in client flow of financial products including structured bonds even though credit products recovered.

16

20 40 Equity FICC* Others Ordinary income

FY2015

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

Equity

12.5 9.3 13.1 15.2 15.3 13.7 16.4 18.2

20.5 FICC*

22.4 26.0 22.6 20.7 17.1 12.7 12.2 13.3

12.0 Others

0.7 0.6 0.6 0.7 1.2 0.7 1.4 1.0

1.0

Net operating revenues

35.8 36.0 36.3 36.8 33.6 27.3 30.0 32.6

33.6

Ordinary income

13.5 14.1 14.5 14.1 10.7 5.3 7.8 9.8

11.2

FY2017

(Y bil)

FY2016 Net operating revenues

33,616 3.0% 123,697

• 13.4%

Ordinary income

11,228 14.4% 34,288

• 36.0%

(Y mil)

FY2017 4Q

% Change vs 3Q/FY17 % Change vs FY16

FY2017

SLIDE 17

＜Reference＞ Financial accounting basis： Net gain/loss on trading + Net financial income

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

【Managerial accounting basis】

＜Reference＞

Consolidated Trading Gain / Loss (Managerial Accounting Basis)

17

Equity 18.0 20.0% 56.0 60.0% FICC 20.0

• 4.8%

81.0

• 35.7%

Total 38.0 5.6% 137.0

• 14.9%

(Y bil)

FY2017 4Q

% Change vs 3Q/FY17

FY2017

% Change vs FY16 Equity

13,769 20.8% 38,985 81.6%

Bond and forex

17,641

• 7.4%

70,019

• 34.3%

Net financial income

6,753

• 61.3%

42,095

• 5.4%

Total

38,164

• 20.3%

151,101

• 12.5%

(Y mil)

FY2017 4Q

% Change vs 3Q/FY17

FY2017

% Change vs FY16 20 40 Equity FICC FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Equity 7 5 9 11 10 11 12 15 18 FICC 33 36 31 31 28 20 20 21 20 Total 40 41 40 42 38 31 32 36 38 FY2016 FY2017

(Y bil)

SLIDE 18

Wholesale Division

Global Investment Banking

Net Operating Revenues and Ordinary Income

18

【Equity】

 Steadily managed global CB, IPO and PO deals.

<Selected lead managed deals> <Offering size> CyberAgent, Inc. Euro yen CB Y40.0 bil QB Net Holdings Co.,Ltd. IPO Y25.3 bil Daiwa House REIT Investment Corporation REIT Global PO Y56.8 bil Yakult Honsha Co.,Ltd. Global PO Y140.0 bil

【Debt】

 Lead managed a number of straight bonds and Samurai bonds even

though the amount of newly issued bonds decreased in the overall market.

<Selected lead managed deals> <Offering size> Sumitomo Forestry Co.,Ltd.(7/10/15yrs) SB Total Y30.0 bil Hulic Co.,Ltd.(35yrs) Subordinated Bond Y50.0 bil BPCE(France/bank)(5/7/10/15yrs) Samurai Bond Total Y116.1 bil Hungary(3yrs) Samurai Bond Y30.0 bil Denmark Finance Corporation(3yrs) Benchmark Bond USD10.0 bil

【M&A】

 Sagent and Signal Hill integrated to launch DCS Advisory on March

• 2018. Managed a number of cross-border deals utilizing our global

network.

<Selected deals> Share Acquisition of H.C. Starck Tantalum and Niobium (Germany) by JX Nippon Mining & Metals Corporation Sale of Northgate Public Services(UK) to NEC by Cinven (UK) Acquisition of Trescal (France) by OMERS Private Equity (Canada) Sale of System Control (US) to Combest Partners (US) by Northern Star Industries (US)

• 2

2 4 6 8 10 12 14

Equity underwriting Debt underwriting M&A /

• thers

Ordinary income FY2015

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

Equity underwriting 1.1 2.1 2.6 3.5 3.0 1.7 6.3 4.5 3.0 Debt underwriting 1.9 2.4 2.8 2.2 2.5 2.3 2.5 2.4 1.9 M&A / others 4.7 2.7 4.0 3.8 7.8 3.8 4.0 6.1 8.5 Net operating revenues 7.8 7.3 9.5 9.6 13.4 7.9 12.9 13.0 13.5 Ordinary income

• 0.7

0.7 2.4 2.4 5.6 0.7 4.8 2.7 1.7

FY2017

(Y bil)

FY2016 Net operating revenues

13,518 3.3% 47,495 18.7%

Ordinary income

1,760

• 37.0%

10,109

• 11.1%

(Y mil)

FY2017 4Q

% Change vs 3Q/FY17 % Change vs FY16

FY2017

SLIDE 19

Asset Management Division

⃰

‘Others’ includes Daiwa Fund Consulting, Daiwa Real Estate Asset Management and Mi-Casa Asset Management (since 1Q FY2016). ⃰ Equity in earnings of affiliates is included in non-operating revenues.

【Daiwa Asset Management】

 Revenues and income dropped QoQ due to a decrease in

AUM affected by the weak stock market from February. 【Others】

 Daiwa Real Estate Asset Management, operator of REITs,

increased management fees by replacement of properties.

Net Operating Revenues and Ordinary Income

19

Net operating revenues

12,587

• 0.5%

49,390 6.4%

Ordinary income

7,292

• 2.6%

29,119 9.6%

(Y mil)

FY2017 4Q

% Change vs 3Q/FY17 % Change vs FY16

FY2017

5 10 15

Daiwa AM Others Ordinary income

FY2015

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

Daiwa AM 9.9 9.9 9.9 10.0 10.3 10.4 10.7 11.0 10.6 Others 1.0 1.6 1.4 1.4 1.4 1.5 1.4 1.5 1.9 Net operating revenues 11.0 11.6 11.4 11.5 11.7 12.0 12.1 12.6 12.5 Ordinary income 5.9 6.7 6.6 6.5 6.6 7.2 7.1 7.4 7.2

FY2017

(Y bil)

FY2016

SLIDE 20

Asset Management Division

Assets Under Management

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

（Y bil） （Y bil）

1Q 2Q 3Q 4Q FY2017

FY 2017 FY 2016 FY 2015 FY 2014 FY 2013 FY 2012

1Q 2Q 3Q 4Q FY2017

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

74 768 1,093 1,271

• 56

439 34 57 69 278

• 500

500 1,000 1,500

Daiwa Asset Management Daiwa SB Investment Total

355 418 477 780 819 828 829 825 802

500 1,000 Other Japan Rental Housing Investments Inc. Nippon Healthcare Investment Corp. Daiwa Residential Private Investment Corp. Daiwa Office Investment Corp.

5000 10000 15000

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

1Q 2Q 3Q 4Q Daiwa Asset Management (DAM)

Stock investment trusts

7,875 8,958 11,032 10,840 12,454 12,832 13,491 14,298 14,123

Bond investment trusts

2,600 3,064 3,314 2,563 2,036 2,151 2,035 1,663 1,465

Total

10,476 12,023 14,346 13,403 14,491 14,983 15,526 15,962 15,588

Stock investment trust share

14.4% 15.0% 14.8% 14.5% 14.7% 14.8% 14.8% 14.4% 14.3% Daiwa SB Investments (DSBI)

Stock investment trusts

2,345 2,249 2,526 2,481 2,237 2,208 2,213 2,227 2,221

Investment advisory

2,356 2,327 2,671 2,249 2,435 2,637 2,793 2,955 2,736

Total

4,702 4,577 5,198 4,730 4,673 4,845 5,006 5,182 4,957

Stock investment trust share

3.2% 2.8% 2.6% 2.7% 2.3% 2.2% 2.1% 2.0% 2.0%

(Y bil)

FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 FY2017

SLIDE 21

Investment Division

Principal Investment Values Net Operating Revenues and Ordinary Income

21

※ Principal investment values are the sum of Daiwa PI Partners and Daiwa Securities SMBCPI ※ PIPEs: Private Investment in Public Equities ※ All figures are as at the end of each quarter

50 100 150 Private equity and PIPEs Monetary claims Real estate

FY2015

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

Private equity and PIPEs

49 49 60 54 54 57 63 59 62

Monetary claims

35 35 32 31 34 35 33 52 58

Real estate

20 20 20 20 20 55 35 35

Total

104 104 112 105 108 147 132 147 120

(Y bil)

FY2016 FY2017

FY2015

4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net operating revenues 1.1 4.9 5.7 2.5 2.4 1.8 13.9 6.3 5.3 Ordinary income 0.5 4.6 4.9 1.8 1.5 1.4 13.1 5.5 4.3

(Y bil)

FY2017 FY2016

Net operating revenues

5,359

• 15.3%

27,401 74.1%

Ordinary income

4,377

• 20.8%

24,499 87.9%

(Y mil)

FY2017 4Q

% Change vs 3Q/FY17 % Change vs FY16

FY2017

5 10 15

Net operating revenues Ordinary income

SLIDE 22

Reference

SLIDE 23

Breakdown of Commission

23

Consolidated

4Q 1Q 2Q 3Q 4Q

Total commission 76,515 69,746 78,730 85,531 79,616

• 6.9%

4.1% 273,335 313,625 14.7% 16,672 16,214 16,688 21,753 19,142

• 12.0%

14.8% 60,947 73,797 21.1% 7,926 5,740 13,010 9,890 6,537

• 33.9%
• 17.5%

29,729 35,180 18.3% 10,909 11,143 10,803 13,247 10,613

• 19.9%
• 2.7%

34,287 45,807 33.6% 41,007 36,648 38,228 40,640 43,323 6.6% 5.6% 148,370 158,840 7.1%

Investment advisory and account management fees 5,358 5,569 5,925 6,285 6,489 3.2% 21.1% 21,028 24,269 15.4% Insurance sales commission 942 724 745 739 864 17.0%

• 8.3%

4,363 3,073

• 29.6%

M&A commission 7,051 3,131 3,596 5,676 7,142 25.8% 1.3% 16,186 19,546 20.8% Management fee 20,299 20,349 20,840 21,388 20,318

• 5.0%

0.1% 80,231 82,897 3.3% Other 7,354 6,872 7,121 6,550 8,509 29.9% 15.7% 26,560 29,053 9.4%

(Y mil) FY2016 % Change vs 3Q/FY17 % Change vs 4Q/FY16 % Change vs FY16 FY2017 FY2016 FY2017

Brokerage commission Underwriting commission Distribution commission Other commission

SLIDE 24

Daiwa Securities Balance Sheet (Mar. 31, 2018)

Balance Sheet

Daiwa Securities

24

(Y bil)

※Figures in parentheses show changes from March 31, 2017

Current assets

11,577 (1,399)

Current liabilities

9,421 (1,194)

Trading products

5,163 (507)

Trading products

3,850 (321)

Trading securities and other

2,668 (703)

Trading securities and other

1,651 (516)

Derivatives

2,495 (-196)

Derivatives

2,198 (-194)

Margin transaction assets

256 (58)

Margin transaction liabilities

70 (9)

Loans on margin transactions

224 (55)

Loans payables secured by securities

2,920 (246) 31 (3)

Short-term loans payable

1,242 (75)

Loans secured by securities

3,811 (638)

Current portion of bonds

185 (63)

Short-term guarantee deposits

307 (-21) Non-current liabilities

1,456 (241)

Short-term loans receivable

320 (79)

Bonds payable

583 (-11)

Long-term loans payable

838 (252) Non-current assets

106 (-1)

Total liabilities

10,882 (1,435)

Property, plant and equipment

3 (0) Net assets

801 (-38)

Intangible assets

65 (7)

Shareholders' equity

796 (-36)

Capital stock

100 － Total assets

11,683 (1,397)

Total liabilities and net assets

11,683 (1,397)

Cash collateral pledged for securities borrowing on margin transactions

SLIDE 25

Financial Summary Ⅰ

25

Daiwa Securities

4Q 1Q 2Q 3Q 4Q

84,742 81,949 86,224 99,158 91,502

• 7.7%

8.0% 334,911 358,835 7.1% Commission received 50,354 47,399 52,877 58,694 50,212

• 14.5%
• 0.3%

181,235 209,183 15.4% Brokerage commission 12,388 12,149 12,364 17,010 14,681

• 13.7%

18.5% 44,652 56,205 25.9%

Stock and others 12,071 11,797 12,109 16,661 14,173

• 14.9%

17.4% 42,654 54,740 28.3%

Underwriting commission 6,613 5,163 10,157 8,315 4,623

• 44.4%
• 30.1%

27,535 28,259 2.6%

Equity 3,496 1,920 7,210 5,386 2,645

• 50.9%
• 24.3%

13,670 17,163 25.5% Bond and others 3,117 3,242 2,947 2,928 1,977

• 32.5%
• 36.6%

13,865 11,096

• 20.0%

Distribution commission 10,788 11,019 10,704 13,118 10,515

• 19.8%
• 2.5%

33,477 45,357 35.5%

Investment trust 9,415 10,498 9,992 12,463 9,766

• 21.6%

3.7% 30,099 42,720 41.9%

Other commissions 20,564 19,068 19,650 20,250 20,392 0.7%

• 0.8%

75,569 79,361 5.0%

Agency fee and others 8,003 7,847 8,006 8,135 7,858

• 3.4%
• 1.8%

31,574 31,848 0.9%

Investment advisory and account management fees

5,358 5,569 5,925 6,285 6,489 3.2% 21.1% 21,028 24,269 15.4% Insurance sales commission 942 724 745 739 864 17.0%

• 8.3%

4,363 3,073

• 29.6%

M&A commission 2,944 1,771 1,025 1,736 1,388

• 20.0%
• 52.8%

7,124 5,921

• 16.9%

Net trading income/loss 25,184 22,184 20,291 27,834 29,651 6.5% 17.7% 116,273 99,962

• 14.0%

Equity 6,795 7,563 6,069 12,607 14,173 12.4% 108.6% 21,715 40,414 86.1% Bond and forex 18,389 14,621 14,222 15,227 15,477 1.6%

• 15.8%

94,557 59,548

• 37.0%

Financial revenues 9,203 12,364 13,055 12,629 11,638

• 7.8%

26.5% 37,402 49,689 32.9% Financial expenses 5,076 8,929 7,057 9,239 7,516

• 18.6%

48.1% 20,808 32,742 57.3% 79,666 73,020 79,167 89,919 83,985

• 6.6%

5.4% 314,102 326,092 3.8%

% Change vs 4Q/FY16 % Change vs FY16

Operating revenues Net operating revenues

(Y mil) FY2016 % Change vs 3Q/FY17 FY2017 FY2016 FY2017

SLIDE 26

Financial Summary Ⅱ

26

Daiwa Securities

4Q 1Q 2Q 3Q 4Q

59,923 56,564 60,128 61,181 62,664 2.4% 4.6% 231,688 240,538 3.8% Trading related expenses 10,507 8,836 10,713 10,321 11,144 8.0% 6.1% 39,456 41,015 4.0% Personnel expenses 25,246 24,109 25,413 26,667 26,556

• 0.4%

5.2% 99,719 102,746 3.0% Real estate expenses 6,272 6,073 6,178 6,240 6,342 1.6% 1.1% 24,048 24,833 3.3% Office cost 11,455 11,447 11,572 11,723 11,762 0.3% 2.7% 44,133 46,506 5.4% Depreciation 4,050 4,085 4,039 4,079 4,166 2.1% 2.9% 15,666 16,371 4.5% Taxes and dues 1,245 1,095 1,245 1,168 1,066

• 8.7%
• 14.3%

4,671 4,575

• 2.0%

Other 1,145 917 966 980 1,624 65.7% 41.8% 3,991 4,488 12.4% 20,728 16,883 19,031 28,679 22,069

• 23.0%

6.5% 85,234 86,664 1.7% 13,711 11,618 13,418 21,712 17,686

• 18.5%

29.0% 58,461 64,436 10.2% 6.6% 5.8% 7.1% 11.2% 8.9% 7.2% 7.9% 405.2% 340.0% 343.9% 336.2% 348.3% 405.2% 348.3% Capital adequacy ratio

(Y mil) % Change vs FY16 % Change vs 3Q/FY17

SG&A Ordinary income Net income ROE（Annualized）

% Change vs 4Q/FY16 FY2016 FY2017 FY2016 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 Domestic bonds Foreign bonds Stock investment trusts Bond investment trusts Foreign investment trusts Others FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Equity

30.1 28.8 29.4 32.7 32.9 34.4 36.8 39.9 46.3

Domestic bonds

6.8 6.7 6.9 7.0 7.1 7.1 7.2 7.5 8.1

Foreign bonds

5.0 4.7 4.8 5.0 4.9 4.9 4.9 4.8 4.8

Stock investment trusts

6.2 5.9 5.9 6.3 6.3 6.4 6.5 6.8 6.4

Bond investment trusts

1.3 1.0 1.0 1.0 0.9 0.9 0.9 1.0 0.9

Foreign investment trusts

0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.1

Others

1.2 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Total

51.0 48.7 49.5 53.5 53.6 55.2 57.9 61.5 68.1

Daiwa Next Bank deposit balance

3.1 3.0 3.0 3.2 3.1 3.3 3.4 3.7 3.5

FY2017 (Y tri) FY2016

SLIDE 28

Number of Accounts and Equity Trading

28

Daiwa Securities

* The accumulated number of opened NISA accounts from 4Q FY2015 to 3Q FY2017 are modified to be including Junior NISA in 4Q FY2017.

4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2,973 2,973 2,976 2,963 2,974 2,965 2,969 2,965 2,989

Accounts holding equity (thousands)

1,381 1,402 1,408 1,396 1,396 1,388 1,399 1,386 1,395 3,040 3,060 3,080 3,103 3,127 3,140 3,164 3,187 3,214 31 34 31 39 39 35 40 40 41 753 765 776 785 796 803 811 815 829

Contract assets under management (Y bil)

1,540 1,498 1,537 1,604 1,661 1,738 1,834 1,944 1,971

Number of customers (thousands)

118.4 120.0 122.3 121.5 125.2 127.7 130.9 131.4 134.8

Total number of contracts (thousands)

3,103 2,757 2,374 3,000 2,806 2,783 2,730 3,476 3,305

Online out of total (thousands)

2,775 2,442 2,103 2,593 2,459 2,432 2,384 3,003 2,908

Total trading value (Y bil)

2,561 2,341 2,144 2,873 2,635 2,692 2,666 3,737 3,420

Online out of total (Y bil)

2,063 1,826 1,692 2,177 2,024 2,039 2,026 2,743 2,603

Trading value (Y bil)

75 127 137 157 151 248 276 387 407 FY2017 FY2015 FY2016

Foreign equity trading value (Retail） Accounts with balance (thousands) Wrap account service (end of quarter)

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

Newly opened accounts (thousands) NISA accounts* (thousands) Online trading accounts (thousands)

SLIDE 29

Retail Division (Daiwa Securities) Net Inflow of Assets (Individuals) Retail Division (Daiwa Securities) Net Inflow of Assets

Net Inflow of Assets

29

Daiwa Securities

※ Net inflow of assets = net inflow of cash and securities

• 150
• 100
• 50

50 100 150 200 250 300 Corporation Individual

FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Corporation 8.8 39.9 58.8 57.6

• 2.2

58.2 160.7 128.6 44.5 Individual 81.7 119.9

• 2.6
• 101.2

129.3 43.3 107.0 85.7 111.0 Total 90.6 159.9 56.2

• 43.6

127.1 101.6 267.8 214.4 155.6 （Y bil） FY2016 FY2017

• 150
• 100
• 50

50 100 150 200 250 300 Net inflow of cash Net inflow of securities

FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net inflow

• f cash

49.6 56.9

• 22.9
• 114.0

23.8

• 13.2

74.0

• 13.6

23.7 Net inflow

• f securities

32.1 63.0 20.3 12.7 105.5 56.6 33.0 99.4 87.2 Total 81.7 119.9

• 2.6
• 101.2

129.3 43.3 107.0 85.7 111.0 FY2017 (Y bil) FY2016

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

purchase - （sell-off + redemption） ※Net increase ratio (%) ＝ ×100 purchase ※Includes switching transaction between funds.

• 5%

0% 5% 10% 15% 20% 25% 150 300 450 600 750 Sales amount (left) Net increase ratio (right)

FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Sales amount 388.4 396.8 379.3 540.2 494.9 550.3 513.7 624.1 527.5 (Y bil) FY2016 FY2017 FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Contract amount 61.5 62.9 78.1 113.6 161.5 114.2 130.0 155.6 158.2 Contract AUM 1,540 1,498 1,537 1,604 1,661 1,738 1,834 1,944 1,971 (Y bil) FY2016 FY2017

500 1,000 1,500 2,000 50 100 150 200

Contract amount (left) Contract assets under management (right)

SLIDE 31

League Table

31

Daiwa Securities

Source: Daiwa Securities Apr. 2017 – Mar. 2018 M&A： THOMSON REUTERS Apr. 2017 – Mar. 2018 “M&A advisory league table for any Japanese involvement announced (AD19)” Note: 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

Primary 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 Nomura Mitsubishi UFJMS Daiwa Mizuho 26.5% 26.7% 23.2% 24.9% 19.1% 28.1% Nomura Daiwa Daiwa Nomura Nomura SMBC Nikko 23.7% 26.0% 19.1% 20.6% 18.2% 21.7% Mizuho Mitsubishi UFJMS Mizuho Mizuho Mitsubishi UFJMS Nomura 11.6% 13.6% 19.0% 19.5% 17.9% 21.3% Mitsubishi UFJMS Mizuho SMBC Nikko SMBC Nikko SMBC Nikko Daiwa 9.4% 12.0% 17.4% 17.7% 17.9% 16.6% Goldman Sachs SMBC Nikko Mitsubishi UFJMS Daiwa Mizuho Mitsubishi UFJMS 6.9% 11.8% 17.2% 15.8% 15.4% 11.4% 3rd Nomura 4th Kaede Group 5th KPMG 4Q FY2017 League Table 1st SMFG 2nd MHFG Daiwa 9th

SLIDE 32

Daiwa Asset Management

Financial Summary

32

4Q 1Q 2Q 3Q 4Q

20,360 20,411 20,949 21,484 20,398

• 5.1%

0.2% 80,474 83,244 3.4% 20,167 20,225 20,770 21,299 20,214

• 5.1%

0.2% 79,747 82,510 3.5%

Stock investment trust 20,122 20,177 20,717 21,246 20,167

• 5.1%

0.2% 79,588 82,308 3.4% Bond investment trust 45 48 52 53 47

• 10.9%

5.4% 158 201 26.9%

193 186 178 184 184

• 0.3%
• 4.7%

727 733 0.8% 16,068 15,953 16,254 16,610 16,014

• 3.6%
• 0.3%

63,920 64,832 1.4% 10,033 9,989 10,226 10,390 9,785

• 5.8%
• 2.5%

40,110 40,392 0.7% 6,035 5,963 6,027 6,219 6,229 0.2% 3.2% 23,809 24,439 2.6% 4,292 4,458 4,694 4,874 4,384

• 10.0%

2.1% 16,554 18,411 11.2% 4,396 4,607 4,757 4,944 4,431

• 10.4%

0.8% 16,935 18,741 10.7% Net income 3,165 3,176 3,240 3,396 2,857

• 15.9%
• 9.7%

11,533 12,670 9.9%

FY2016 FY2017 % Change vs FY16

(Y mil)

% Change vs 3Q/FY17 % Change vs 4Q/FY16 FY2016 FY2017

Ordinary income Operating revenues Management fee Other operating revenues SG&A Commission paid Other SG&A Operating income

SLIDE 33

Gross Profits / Ordinary Income

Daiwa Next Bank

Earnings and Deposit Balance

Daiwa Next Bank Deposit Balance & Number of Accounts

33

（Y bil） （thousands） ※All figures are as at the end of the period. 500 1,000 1,500 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Ordinary deposits Time deposits Negotiable certificate of deposits / Other Number of accounts (thousands) 1Q 2Q 3Q 4Q

Ordinary deposits 429 771 1,085 1,455 1,401 1,653 1,703 1,655 1,917 1,756 Time deposits 792 1,125 1,261 1,528 1,711 1,480 1,555 1,694 1,725 1,746 Negotiable certificate

• f deposits / Other

211 314 52 62 8 59 54 56 57 53 Deposit balance 1,432 2,210 2,399 3,047 3,121 3,193 3,313 3,406 3,701 3,556 Number of accounts (thousands) 486 719 901 1,018 1,133 1,213 1,228 1,248 1,269 1,289

FY2017 FY 2016 FY 2015

(Y bil)

FY 2011 FY 2012 FY 2013 FY 2014 1Q 2Q 3Q 4Q

Gross profits 3.9 10.5 12.3 20.7 17.3 11.5 11.9 2.9 2.7 2.9 3.2 Ordinary income

• 0.4

5.0 5.7 13.6 9.5 3.5 4.2 1.0 1.0 1.0 1.1

FY2017 FY 2017 FY 2016 (Y bil) FY 2014 FY 2011 FY 2013 FY 2012 FY 2015

• 5

5 10 15 20 25

Gross profits (annually) Gross profits (quarterly) Ordinary income (annually) Ordinary income (quarterly)

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.

FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q VaR （Quarter end） 1.55 1.01 1.00 1.25 1.96 1.29 1.16 1.93 1.13 High 3.14 2.26 2.53 2.97 3.16 3.41 4.19 2.00 2.03 Low 1.17 0.99 0.98 1.02 1.56 1.28 1.16 1.06 1.07 Average 1.67 1.53 1.40 2.02 2.17 2.59 2.29 1.34 1.46 By risk factors (Quarter end) Equity 0.28 0.27 0.44 0.40 0.54 0.34 0.43 0.68 0.28 Interest 1.64 1.00 1.00 1.15 1.89 1.40 1.15 1.43 1.06 Currency 0.33 0.19 0.17 0.26 0.29 0.20 0.15 0.21 0.21 Commodity 0.00 0.00 0.00 0.03 0.00 0.06 0.00 0.00 0.00

(Y bil)

FY2017 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 which have become consolidated companies since 1Q FY2016. Number of employees of Sagent

Advisors and Signal Hill are also included which have become consolidated companies since 2Q FY2017 and 3Q FY2017 respectively. ※ Figures include temporary staff.

Number of Group Employees

35

Consolidated

FY2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

15,028 15,637 15,559 15,410 15,093 16,256 16,207 16,200 16,088

Overseas

1,566 1,592 1,597 1,592 1,614 1,634 1,683 1,760 1,776

FY2016 FY2017

Total

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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