Daiwa Investment Conference Tokyo 2017 Presented on Tuesday, - PowerPoint PPT Presentation

Daiwa Securities Group Inc. Daiwa Investment Conference Tokyo 2017 Presented on Tuesday, February 28, 2017 at “The Prince Park Tower Tokyo” Takashi Hibino, President and CEO Daiwa Securities Group Inc. This presentation may contain forward-looking statements about the Daiwa Securities Group. You can identify these statements by the fact that they do not relate strictly to historic or current facts. These statements discuss future expectations, identify strategies, contain projections of results of operations or of financial condition or state other “forward-looking” information. These statements are based on currently available information and represent the beliefs of the management of the Daiwa Securities Group. These statements are subject to numerous risks and uncertainties that could cause the Daiwa Securities Group’s actual results, performance, achievements or financial condition to differ materially from those described or implied in the forward-looking statements. The Daiwa Securities Group undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. These potential risks and uncertainties include, but are not limited to: competition within the financial services industries in Japan and overseas, our ability to adjust our business focus and to maintain profitable strategic alliances, volatile and sudden movements in the international securities markets, foreign exchange and global economic situations affecting the Daiwa Securities Group.

Daiwa Investment Conference Tokyo 2017 Contents Ⅰ - Business Environment ・・・・ 3 Ⅱ - Consolidated Earnings Results ・・・・ 7 Ⅲ - Strategic Themes and Business Updates ・・・・ 11 Ⅳ - Approaches to ESG ・・・・ 24 Closing Remarks – Introduction of New CEO ・・・・ 28 Appendix ・・・・ 30 2

Ⅰ - Business Environment 3

Ⅰ - Business Environment Expectations for U.S. Growth under the Trump Administration Implementation of aggressive economic policies by the Trump administration should have positive impact on the Implementation of aggressive economic policies by the Trump administration should have positive impact on the   Japanese stock market even though there is a mixture of optimism and pessimism. Japanese stock market even though there is a mixture of optimism and pessimism. Long-term Interest Rates Gap between U.S. and Japan (U.S.-Japan) and JPY/USD Rate 2.8 (%) (JPY) 130 Impact on Long-term interest rates gap between U.S. and Japan (U.S.-Japan, left) Japanese Stock Market USD/JPY (right) 2.6 Positive 120 2.4 Interest rate hike ⇒ stronger USD 2.2 Increase in U.S. growth rate 110 through aggressive economic policies 2.0 Stable oil prices 1.8 Trump wins Economic deceleration US presidential 100 from policy failure election 1.6 Downward pressure on IMF World Economic Outlook strong USD (Reported on January 17, 2017) 1.4 Recovery of U.S. 90 Increase in geopolitical 2016 2017 2018 economy seems to risk continue 1.2 3.1 3.4 3.6 World Negative U.S. 1.6 2.3 2.5 1.0 80 2016/1 2016/3 2016/5 2016/7 2016/9 2016/11 2017/1 (Source) Bloomberg, International Monetary Fund 4

Ⅰ - Business Environment Domestic Investment Environment and Stock Market Outlook Improvement of Corporate Earnings Results Valuation Comparison of Listed Companies ※ Based on IBES earnings estimates. Country/region is (Yen) (Y tri) Exchange rate based on MSCI (Japan: TOPIX based). 25,000 40 Ordinary income (based on Nikkei 225, right) estimated as JPY 110/USD, JPY 120/EUR Nikkei 225 (left) 35 As of after October PER PBR Feb. 23, 2017 20,000 30 Japan 14.4 1.23 25 U.S. 18.2 2.85 15,000 20 U.K. 14.5 1.79 15 Germany 13.9 1.66 10,000 10 China 12.2 1.47 5 Hong Kong 15.7 1.14 5,000 0 World 16.1 2.05 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*2017* (FY) (*Estimate) Net Share Transaction by Investor Group* Nikkei 225 Outlook* *Cash stock trading on 1 st and 2 nd sections of Tokyo and Nagoya stock exchanges for selected investor groups FY2017 Nikkei 225 Outlook (JPY) (Y bil) Overseas investors (left) Corporate institutions (left) (JPY) PER PER PER PER PER Purchase of ETFs by BOJ (left) Nikkei 225 (monthly, right) 13x 14x 15x 16x 17x 4,000 23,000 JPY100/USD 15,800 17,000 18,200 19,400 20,600 3,000 JPY110/EUR 2,000 JPY105/USD 18,000 16,300 17,500 18,800 20,000 21,300 JPY115/EUR 1,000 JPY110/USD 0 16,800 18,000 19,300 20,600 21,900 JPY120/EUR 13,000 ▲ 1,000 JPY115/USD 17,300 18,600 19,900 21,200 22,600 JPY125/EUR ▲ 2,000 JPY120/USD ▲ 3,000 8,000 17,700 19,100 20,500 21,800 23,200 2012 2013 2014 2015 2016 JPY130/EUR (Source) Japan Exchange Group, Bloomberg, Thomson Reuters *Earnings outlook is based on Daiwa 210 5

Ⅰ - Business Environment Schedule of Major Political and Economic Events FY2016 FY2017 FY2018 FY2019 FY2020 (March 2017) (March 2018) (March 2019) (March 2020) (March 2021) LDP Presidential Consumption tax hike term limit (Sept.) (Oct.) The house of Upper house election Tokyo Olympics representative’s (July) BOJ governor (July) terms of office (Dec.) tenure (Apr.) Nationwide local elections Japan (Apr.) Continuance of weak yen? Strong yen ⇒ Weak yen Continuance of low interest rate ? Normalization of interest rate? Low interest rate policy Demand preceding the Rebound after consumption tax hike consumption tax hike Trump Economic slowdown rally Economic growth before Tokyo Olympics after Tokyo Olympics Presidential election Term ends for Midterm Presidential US (Nov.) FRB chair (Feb.) election elections Presidential (Nov.) (Nov.) inauguration (Jan.) German general Russian presidential UK House of ECB president’s Italy Referendum election (Sept.) Commons election (Mar.) terms of office (Dec.) Overseas Europe French presidential term limit (Jun.) (Oct.) election (Apr.-May) Italian Parliament term (May) Political risk in Europe South Korean National Congress of the Asia presidential election (Apr.) Communist Party of China (Autumn) Chinese economy downturn risk Risk and Unclear Factors in the U.S. Effect of President Trump’s Protectionism Continuity of additional interest rate hike economic policies Downward pressure on strong USD 6

Ⅱ - Consolidated Earnings Results 7

Ⅱ - Consolidated Earnings Results Achieved to Maintain Stable Level of Profits Secured stable profit level from a well-balanced revenue structure even under rapidly changing business environment Nikkei 225, USD/JPY (upper chart), Ordinary Income by Business Segments (lower chart) 22,000 150 (USD/JPY) (JPY) China worries Trump wins Nikkei225 (left) 日経平均（左軸） ドル/円レート（右軸） USD/JPY (right) Introduction of US presidential 140 negative 20,000 election interest rate 130 policy 18,000 Brexit 120 16,000 110 14,000 Introduction of 100 QQE Introduction of QQE 12,000 90 with yield curve control 10,000 80 (Y bil) 70 70 (Y bil) Retail Division Wholesale Division Asset Management Division Investment Division Consolidated Total 60 60 Wholesale Division (FICC) lifted consolidated revenues 50 50 offsetting Retail Division’s slowdown. 40 40 30 30 20 20 10 10 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2014 FY2015 FY2016 (Source) Bloomberg 8

Ⅱ - Consolidated Earnings Results Improvement of Overseas Operation Overseas operations turned into the black and contributed to consolidated results Overseas Ordinary income 6,000 6,000 4,000 4,000 2,000 2,000 0 0 ▲ 2,000 ▲ 2,000 ▲ 4,000 ▲ 4,000 ▲ 6,000 ▲ 6,000 Europe Asia/Oceania Americas Overseas total ▲ 8,000 ▲ 8,000 ▲ 10,000 ▲ 10,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q (Y mil) (Y mil) FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FICC business continued to be a main revenue driver since last fiscal year. FICC business continued to be a main revenue driver since last fiscal year.   Americas Americas Expansion of US equity trading by Japanese individual investors pushed up U.S. equity revenues. Expansion of US equity trading by Japanese individual investors pushed up U.S. equity revenues.   Increase in client activity and efficient position management contributed to FICC revenue growth. Increase in client activity and efficient position management contributed to FICC revenue growth.   Europe Europe DC Advisory, an M&A subsidiary, continued to perform strongly, and pipeline has been building up DC Advisory, an M&A subsidiary, continued to perform strongly, and pipeline has been building up   at a high level. at a high level. Achieved profits for three consecutive quarters owing to revenues from private banking business in Achieved profits for three consecutive quarters owing to revenues from private banking business in   Asia and a large size M&A deal. Asia and a large size M&A deal. Asia/Oceania Asia/Oceania Continued to see revenue contribution from Saigon Securities (Vietnam), which became an equity Continued to see revenue contribution from Saigon Securities (Vietnam), which became an equity   method affiliated company. method affiliated company. 9