3Q FY2016 Earnings Announcement - daiwa-grp.jp€¦ · 4 Net operating revenues Ordinary income...

3Q FY2016Earnings Announcement

January 30, 2017Daiwa Securities Group Inc.

2

Table of Contents

Consolidated Results

Summary 3～6

Breakdown of SG&A 7～8

Balance Sheet 9

Financial Management 10

Overseas Operation 11

Segment Information 12～19

Reference 20～34

3

Consolidated

Highlights （1Q-3Q FY2016）

■.

For Wholesale Division, equity trading recovered and FICC business performed strongly in 3Q. A large PO deal and overseas M&A deals in Global Investment Banking also contributed to rise in revenues and incomes.

■ Wholesale Division showed growth in both revenues and profits, despite the decline in revenues and profits for the consolidated basis.

Profit attributable to owners of parent company Y81.7 bil

Net operating revenues Y351.1 bil

Ordinary income Y101.2 bil

-14.5%

-12.9%

-25.9%

Y26.6 bil

Y121.9 bil

Y35.4 bil

-12.3%

＋6.0%

＋6.5%

1Q-3Q FY2016 % Change vs 1Q-3Q FY2015 3Q FY2016 % Change vs

2Q FY2016

For Retail Division, rise in equity trading and sales of investment trusts in 3Q led to a drastic increase in ordinary income QoQ despite the slowdown YoY due to lower activities of retail investors.

Consolidated earnings results

■ Retail Division recovered as net operating revenues and ordinary income rose QoQ.

■ Announcement of the share repurchase program. Total number of shares to be repurchased: up to 27 mil shares; total amount to be paid for repurchase:

up to Y20 bil(1.59% of total shares outstanding, excluding treasury stock)

4

Net operating revenues Ordinary income Profit attributable to owners of parent company

3Q FY2016 Net operating revenues: Y121.9 bil （+6.0% QoQ）

Sales and trading of each product in Retail Division increased by capturing customer needs amid changing market environment after the US presidential election. Equity revenue was also pushed up by distribution of a large PO deal underwritten in Wholesale Division and as a result, net operating revenues of Retail Division rose by +13.6%.

3Q FY2016 Ordinary income: Y35.4 bil （+6.5% QoQ）

Ordinary income rose by +6.5% while SG&A increased by +5.4% to Y90.3 bil as bonus linked to earnings and system related expenses increased.

3Q FY2016 Profit attributable to owners of parent company: Y26.6 bil （-12.3% QoQ）

Effective corporate tax rate has normalized, leading profit attributable to owners of parent company to decrease by -12.3% QoQ. Annualized ROE was 8.7% (-1.5pt QoQ), BPS was Y740.60 (+Y28.70 QoQ)

（Y bil）

Consolidated

Summary （3Q / FY2016）

（Y bil）（Y bil）

140.2 139.3154.6

123.5 124.7111.7 114.0 115.0

121.9

0

60

120

180

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

FY2014 FY2015 FY2016

51.0 49.5

63.1

35.4 37.9

28.632.5 33.2

35.4

0

25

50

75

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

FY2014 FY2015 FY2016

38.5 38.544.8

24.3 26.321.3

24.530.4 26.6

0

25

50

75

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

FY2014 FY2015 FY2016

5

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

Consolidated

Financial Summary FY2015 FY2016

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

Operating revenues 153,616 150,579 151,859 145,117 153,198 5.6% -0.3% 503,132 450,175 -10.5% 653,711

Net operating revenues 124,799 111,772 114,049 115,096 121,985 6.0% -2.3% 403,042 351,131 -12.9% 514,815

SG&A 89,331 88,329 86,029 85,772 90,376 5.4% 1.2% 276,187 262,179 -5.1% 364,517

Ordinary income 37,950 28,628 32,537 33,256 35,434 6.5% -6.6% 136,519 101,229 -25.9% 165,148

Profit (loss) attributableto owners of parent

26,354 21,311 24,571 30,443 26,693 -12.3% 1.3% 95,537 81,708 -14.5% 116,848

Total assets 23,026,759 20,420,818 21,419,907 20,021,642 20,523,661 23,026,759 20,523,661 20,420,818

Net assets 1,354,598 1,313,005 1,267,304 1,297,756 1,347,052 1,354,598 1,347,052 1,313,005

Shareholders' equity* 1,261,870 1,219,831 1,175,326 1,205,650 1,254,655 1,261,870 1,254,655 1,219,831

EPS (Y) 15.33 12.50 14.52 17.98 15.76 55.73 48.26 68.25

BPS (Y) 734.13 720.86 694.52 711.90 740.60 734.13 740.60 720.86

ROE (Annualized) 8.4% 6.9% 8.2% 10.2% 8.7% 10.2% 8.8% 9.5%

FY2015% Change

vs1Q-3Q/FY15

(Y mil)FY2015 % Change

vs2Q/FY16

FY2016 % Changevs

3Q/FY15

6

P/L Summary

Commission received was Y70.7 bil (+9.9% QoQ)

・Brokerage commission* rose to Y17.1 bil (+30.2% QoQ) as valueof stock trading increased.

・Distribution commission* rose to Y10.0 bil (+42.4% QoQ) due to increase in sales of investment trusts.

・Underwriting commission* dropped slightly to Y8.1 bil (-1.4% QoQ). Rise in equity underwriting revenue did not fully cover for the decrease in debt underwriting revenue QoQ.

Net trading income posted Y34.0 bil (+5.1% QoQ) owing to the rise in equity trading income by increased client flow.

* Breakdown of total commission received (See p.21)

Consolidated

F Y2015 F Y2016

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

Operating revenues 153,616 150,579 151,859 145,117 153,198 5.6% -0.3% 503,132 450,175 -10.5% 653,711

Commision received 69,215 62,701 61,693 64,373 70,752 9.9% 2.2% 225,717 196,819 -12.8% 288,418

Net trading income 29,910 28,688 33,379 32,385 34,025 5.1% 13.8% 102,635 99,790 -2.8% 131,324

Net gain/loss on privateequity

12,327 979 4,802 5,614 2,423 -56.8% -80.3% 17,523 12,839 -26.7% 18,502

Financial revenue 33,587 42,697 35,726 33,088 34,808 5.2% 3.6% 106,753 103,623 -2.9% 149,451

Other operating revenue 8,575 15,511 16,257 9,656 11,188 15.9% 30.5% 50,502 37,102 -26.5% 66,014

Financial expenses 19,551 21,710 26,633 20,701 20,777 0.4% 6.3% 67,819 68,112 0.4% 89,530

Other operating expenses 9,264 17,095 11,177 9,319 10,434 12.0% 12.6% 32,270 30,931 -4.1% 49,366

Net operating revenues 124,799 111,772 114,049 115,096 121,985 6.0% -2.3% 403,042 351,131 -12.9% 514,815

SG&A 89,331 88,329 86,029 85,772 90,376 5.4% 1.2% 276,187 262,179 -5.1% 364,517

Operating income/loss 35,468 23,442 28,019 29,323 31,609 7.8% -10.9% 126,854 88,952 -29.9% 150,297

Non-operating income/loss 2,481 5,186 4,518 3,933 3,825 -2.7% 54.1% 9,664 12,277 27.0% 14,851

Ordinary income/loss 37,950 28,628 32,537 33,256 35,434 6.5% -6.6% 136,519 101,229 -25.9% 165,148

Extraordinary income/loss 3,701 -2,093 1,021 524 2,572 390.5% -30.5% 6,857 4,118 -39.9% 4,764

Income/loss beforeincome taxes 41,651 26,535 33,559 33,781 38,007 12.5% -8.8% 143,377 105,347 -26.5% 169,912

Total income taxes 10,651 5,226 8,974 3,303 11,291 241.8% 6.0% 41,709 23,569 -43.5% 46,935

26,354 21,311 24,571 30,443 26,693 -12.3% 1.3% 95,537 81,708 -14.5% 116,848Profit (loss) attributable toowners of parent

F Y2015(Y mil)% Change

vs1Q-3Q/FY15

FY2015 FY2016 %Change

vs2Q/FY16

%Change

vs3Q/FY15

7

Breakdown of SG&A

Trading related expensesincreased to Y17.5bil (+3.1% QoQ) as advertising expenses rose.

Personnel expenses was Y44.8 bil (+3.4% QoQ) due to a rise in bonus linked to earnings.

Real estate expenses was Y8.8 bil (+3.5% QoQ) due to increase in IT related maintenance expenses and insurance premium.

Depreciation was Y5.8 bil(+2.5% QoQ).

Personnel expenses and office cost were reallocated to each respective account of SG&A in 3Q FY2016, as they were allocated to other operating expenses in 1Q and 2Q FY2016 (No impact to operating income).

Consolidated

FY2015 FY2016

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

SG&A 89,331 88,329 86,029 85,772 90,376 5.4% 1.2% 276,187 262,179 -5.1% 364,517

Trading relatedexpenses

17,805 17,357 16,385 16,979 17,505 3.1% -1.7% 54,981 50,870 -7.5% 72,339

Personnelexpenses

44,626 43,691 43,240 43,356 44,838 3.4% 0.5% 139,600 131,434 -5.8% 183,292

Real estateexpenses

9,235 9,151 8,744 8,538 8,833 3.5% -4.4% 28,209 26,116 -7.4% 37,360

Office cost 7,002 6,689 6,233 6,006 7,843 30.6% 12.0% 20,082 20,083 0.0% 26,771

Depreciation 6,038 5,920 5,897 5,705 5,848 2.5% -3.2% 17,913 17,450 -2.6% 23,833

Taxes and dues 2,078 1,765 2,559 2,467 2,555 3.6% 23.0% 7,122 7,582 6.5% 8,887

Other 2,545 3,753 2,968 2,720 2,952 8.6% 16.0% 8,278 8,641 4.4% 12,032

（Y mil） FY2015% Change

vs1Q-3Q/FY15

FY2015 FY2016 %C hange

v s2Q/ F Y16

%C hange

v s3Q/ F Y15

8

Cost StructureConsolidated

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

Total SG&A 88.1 88.8 91.4 92.9 361.3 95.5 91.2 89.3 88.3 364.5 86.0 85.7 90.3

36.4 37.1 38.9 39.7 152.2 41.3 37.4 35.8 35.9 150.5 34.1 35.1 36.6

17.8 18.5 18.7 18.4 73.6 18.8 18.3 17.8 17.3 72.3 16.3 16.9 17.5

Advertising expenses 1.7 1.7 2.0 2.0 7.5 1.7 1.9 2.0 2.4 8.1 1.9 2.4 3.0

12.8 13.1 14.6 15.5 56.0 16.9 13.5 12.7 12.3 55.5 12.2 13.0 13.6

Overtime, part-time 2.2 2.1 2.3 2.2 9.0 2.3 2.2 2.3 2.1 9.1 2.3 2.2 2.3

51.7 51.7 52.4 53.1 209.1 54.2 53.7 53.5 52.3 213.9 51.8 50.5 53.7

28.1 28.4 28.8 29.7 115.2 29.6 29.4 29.2 28.9 117.3 28.4 27.8 28.7

9.2 9.1 9.0 9.5 37.0 9.2 9.6 9.2 9.1 37.3 8.7 8.5 8.8

Depreciation 6.0 6.1 6.1 5.7 24.0 5.9 5.9 6.0 5.9 23.8 5.8 5.7 5.8

Office expenses 6.0 5.8 6.1 6.2 24.2 6.1 6.2 6.6 6.3 25.4 5.8 5.7 7.5

Taxes and dues 1.8 1.7 1.8 1.5 6.9 2.8 2.1 2.0 1.7 8.8 2.5 2.4 2.5

FY2014 FY2015 FY2016(Y bil)

Fixed costs

Variable costs

Bonus and others

Trading related expenses

Personnel　expenses

Real estate expenses

9

Balance Sheet

Total assets: Y20.52 tri

Net assets: Y1.34 tri

Shareholders’ equity**: Y1.25 tri

87.6% of total assets have high liquidity*.

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

Shareholders’ equity** increased by Y34.8 bil from March 31, 2016 to Y1.25 tri.

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

※Figures in parentheses indicate changes from March 31, 2016

（Y bil）

Consolidated Balance Sheet （December 31, 2016）

Consolidated

Current assets 19,945 (93) Current liabilities 16,909 (81) Cash and deposits 3,665 (330) Trading products 4,748 (-552) Short-term investment securities 1,880 (-210) Trading securities and other 1,954 (-361) Trading products 6,860 (-640) Stocks, convertible bonds 219 (87)

Trading securities and other 3,747 (-269) Bonds 1,623 (-541)Stocks, Convertible bonds 445 (59) CD/CP and others 110 (92)Bonds 2,550 (-301) Derivatives 2,794 (-191)Beneficiary certificates 183 (31) Loans payable secured by securities 6,684 (782)CD/CP and others 568 (-59) Deposits for banking business 3,081 (152)

Derivatives 3,113 (-370) Short-term loans payable 1,049 (229) Operational investment securities 114 (-1) Commercial papers － (-137) (after allowance for possible investment losses) Current portion of bonds 279 (47)

Daiwa PI Partners + Daiwa Securities SMBC PI 107 (0)Daiwa Corporate Investment 8 (0)

Loans secured by securities 5,570 (320) Non-current assets 578 (9) Non-current liabilities 2,263 (-12)

Property, plant and equipment 125 (0) Bonds payable 1,237 (33) Intangible assets 88 (3) Long-term loans payable 960 (-44) Investments and other assets 364 (4) Total liabilities 19,176 (68)

Listed stocks 163 (2) Net assets 1,347 (34)Unlisted stocks 16 (0) Owners' equity 1,173 (40)Affliated companies stocks, etc. 126 (5) Accumulated other comprehensive income 80 (-5)Other 56 (-3) Non-controlling interests 84 (0)

Total Assets 20,523 (102) Total liabilities and net assets 20,523 (102)

10

【Regulatory Capital (Basel III)】

(As at September 30, 2016)

Consolidated Total Capital Ratio : 22.3％

Consolidated Tier1 Capital Ratio : 22.1％

Consolidated Common Equity Tier 1 Capital Ratio : 22.1％

Consolidated Leverage Ratio : 5.98％

【Regulatory Liquidity (Basel III)】

(End of month average Oct.-Dec., 2016)

Consolidated Liquidity Coverage Ratio : 155.8％

Consolidated Leverage Ratio Consolidated Liquidity Coverage Ratio

Financial Management (Regulatory Capital & Regulatory Liquidity)

Consolidated Capital Adequacy Ratio

※ Figures are as at the end of each quarter.

Consolidated

22,733 22,443 22,159 18,654 19,254 18,429

1,160 1,143 1,166 1,117 1,106 1,103

5.10% 5.09% 5.26% 5.99% 5.74% 5.98%

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

FY2015 FY2016

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

1,910 2,025 2,120 2,034 2,230

2,428

2,317

1,609 1,323 1,273 1,302 1,345 1,571

1,487

118.6%

153.0%166.4%

156.2% 165.7%

154.5%

155.8%

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

FY2015 FY2016

High quality liquid assets (Y bil)Net cash outflows (Y bil)Consolidated liquidity coverage ratio

1,238 1,211

1,192 1,169

1,196

1,126 1,119 1,111 1,133 1,136 1,134 1,122 1,147

1,113 1,106 1,103 22.3% 21.0% 21.3% 21.0% 21.8%21.2%

22.4% 22.3%

20.4% 19.7% 20.2% 20.1% 20.9% 21.0%22.2% 22.1%

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

FY2014 FY2015 FY2016

Total Qualifying Capital (Y bil) Common Equity Tier 1 (Y bil)

Consolidated Total Capital Ratio Consolidated Common Equity Tier 1 Capital Ratio

11

Overseas Operation

For Europe, equity and M&A revenues decreased QoQ. FICC revenue continued to maintain strong momentum until October, but weakened after the interest rate hike.

For Asia/Oceania, revenues increased QoQ owing to wealth management business which continued to perform strongly and revenues from M&A business.

Ordinary income for Americas increased as FICC business continued to perform solidly. Equity revenues also rose mainly due to successful promotion of US equities.

Ordinary Income

Consolidated

※ The figures includes overseas subsidiaries of Daiwa Asset Management which has become consolidated since 1Q FY2016.

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3QFY2016

（Y bil）FY2014 FY2015

-4

-2

0

2

4Europe

Asia / Oceania

Americas

Overseasoperation Total

FY2015 FY2016

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

-3,474 -714 1,366 3,829 2,606 -31.9% - -3,970 7,801 - -4,684

Europe -2,175 -665 -667 1,067 -486 - - -2,575 -85 - -3,240

Asia / Oceania -1,749 -742 19 403 677 67.8% - -3,388 1,101 - -4,130

Americas 450 693 2,014 2,357 2,414 2.4% 435.3% 1,993 6,785 240.4% 2,686

（Y mil） FY2015% Change

vs2Q/FY16

% Change vs

1Q-3Q/FY15

FY2015 FY2016 % Changevs

3Q/FY15

Overseas operationTotal

12

Segment Information

※Figures calculated based on managerial accounting of each Group companies. Equity in earnings of affiliates is included in each respective segment.* Since Daiwa Office Investment Corporation changed from consolidated subsidiary to equity-method affiliated company, only equity in earnings of the company has been recorded in the

ordinary income of Asset Management Division since 2Q/FY2015.

(Y mil)FY2015 FY2016

3Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q51,839 44,371 45,013 43,720 49,663 13.6% -4.2% 173,551 138,397 -20.3% 217,922

38,663 43,709 43,427 45,906 46,427 1.1% 20.1% 134,305 135,761 1.1% 178,014

Global M arkets 30,670 35,809 36,028 36,365 36,819 1.2% 20.1% 106,886 109,214 2.2% 142,695

Global Investment Banking 7,993 7,899 7,398 9,540 9,608 0.7% 20.2% 27,419 26,547 -3.2% 35,318

11,925 11,040 11,623 11,429 11,586 1.4% -2.8% 39,488 34,639 -12.3% 50,528

12,626 1,156 4,956 5,725 2,570 -55.1% -79.6% 18,573 13,252 -28.7% 19,730

9,745 11,495 9,028 8,313 11,737 37,122 29,080 48,618

124,799 111,772 114,049 115,096 121,985 6.0% -2.3% 403,042 351,131 -12.9% 514,815

FY2015 FY20163Q 4Q 1Q 2Q 3Q 1Q-3Q 1Q-3Q13,545 5,328 6,566 4,596 9,512 106.9% -29.8% 55,752 20,675 -62.9% 61,080

6,430 12,832 14,899 17,201 16,906 -1.7% 162.9% 36,046 49,008 36.0% 48,878

Global M arkets 6,718 13,539 14,100 14,571 14,164 -2.8% 110.8% 32,517 42,836 31.7% 46,057

Global Investment Banking -287 -707 798 2,470 2,492 0.9% - 3,528 5,761 63.3% 2,821

7,201 5,991 6,748 6,673 6,522 -2.3% -9.4% 23,998 19,944 -16.9% 29,990

11,978 579 4,624 4,972 1,891 -62.0% -84.2% 16,818 11,488 -31.7% 17,397

-1,205 3,897 -301 -187 601 3,904 112 7,801

37,950 28,628 32,537 33,256 35,434 6.5% -6.6% 136,519 101,229 -25.9% 165,148

FY2015

% Change vs

3Q/FY15

% Change vs

3Q/FY15FY2015

% Change vs

2Q/FY16

% Change vs

1Q-3Q/FY15

FY2016

FY2015% Change

vs2Q/FY16

% Change vs

1Q-3Q/FY15

Retail

Wholesale

Asset Management*

Investments

Other/Adjustments

Consolidated total

FY2016Net operating revenues

FY2015

Ordinary income

Consolidated total

Retail

Wholesale

Asset Management*

Investments

Other/Adjustments

13

Retail Division

Trading volume of both Japanese and foreign stocks increased after the US presidential election in November. Equity distribution of a large PO deal also contributed to a +36.3% rise QoQ in equity revenues.

Sales of foreign bonds increased, but was offset by decrease in sales of domestic bonds, resulting in decline of fixed income revenue by -4.9% QoQ.

Distribution commission for investment trust rose by +48.6% QoQand Agency fee for investment trust increased by +0.2% QoQ as sales of investment trust increased.

Net operating revenues and ordinary income

1Q 2Q 3Q 4Q 1Q 2Q 3QEquity 16.3 14.4 12.3 9.9 10.1 10.2 13.9

Fixed income 19.8 16.1 13.7 12.4 12.9 11.9 11.3Distribution commissionfor investment trust 11.0 9.2 8.1 5.4 5.8 6.2 9.2Agency fee forinvestment trust 9.7 9.0 8.5 7.6 7.3 7.2 7.2Other (includes w rap-related revenues) 7.5 8.1 8.9 8.8 8.6 8.0 7.7Net operatingrevenues 64.6 57.0 51.8 44.3 45.0 43.7 49.6

Ordinary income 24.2 17.9 13.5 5.3 6.5 4.5 9.5


0

25

50

75Equity

Fixed income

Distributioncommission forinvestment trust

Agency fee forinvestment trust

Other (includeswrap-relatedrevenues)

Ordinary income

Net operatingrevenues 49,663 13.6% 138,397 -20.3%

Ordinary income 9,512 106.9% 20,675 -62.9%

（Y mil）FY2016

3Q

% Changevs

2Q/FY16

FY20161Q-3Q

% Change vs

1Q-3Q/FY15

14

【Investment Trusts】

Funds investing in US equities, Asia equities and medical equipment related equities were the most popular products sold, as sales proposals well captured investor demands. As a result, sales of stock investment trusts increased by +42.4% QoQ.

【Wrap Account Service】

Contract AUM for wrap account service exceeded Y1.6 tri owing to “Daiwa Fund Wrap Premium”, a new service which started from October 2016.

Began to offer “Daiwa Fund Wrap Online” from January 27, 2017 which is the Internet-based service utilizing Robo-Advisor technology with minimum contract amount of Y0.5 mil . With the expansion of service line-up, we will further aim to expand the contract asset of wrap account service.

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

Sales and distribution amount by product

Retail Division Daiwa Securities

1Q 2Q 3Q 4Q 1Q 2Q 3QEquity 87.8 89.0 136.9 24.8 39.2 65.8 109.5

SMA + Fund Wrap* 231.8 180.7 125.9 61.5 62.9 78.1 113.6

Insurance** 23.5 20.8 30.8 27.9 29.6 14.6 12.4

Domestic bonds 74.5 83.0 103.8 125.2 186.2 241.8 178.6

Foreign bonds*** 379.6 312.5 306.5 244.9 229.2 187.8 224.6Stock investmenttrusts**** 677.2 598.0 653.3 388.4 396.8 379.3 540.2


1,604

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

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

FY2012 FY2013 FY2014 FY2015 FY2016

Contract AUM for Wrap Account Service（Y bil） 0

500

1,000

1,500Equity

SMA + Fund Wrap*

Insurance**

Domestic bonds

Foreign bonds***

Stock investmenttrusts****

15

Wholesale Division Global Markets

*FICC： Fixed Income, Currency and Commodities


【Equity】

Equity trading volume remained low during October as

investors awaited the outcome of US presidential election.

However, revenue rose QoQ as client flow increased after mid-

November owing to weaker yen and higher stock prices

triggered by the US interest rate hike.

【FICC*】 Trading revenues increased due to JGB trading until mid-

November despite little movement in domestic interest rate

market under yield curve control policy. However, after mid-

November, client flow decreased as uncertainty remained in the

market due to increased volatility stemming from overseas. As

a result, FICC revenues fell QoQ, but still achieved a high level.

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

Equity 22.6 11.3 14.2 12.5 9.3 13.1 15.2

FICC* 23.9 16.5 15.7 22.4 26.0 22.6 20.7

Others 0.9 0.7 0.6 0.7 0.6 0.6 0.7Net operatingrevenues

47.5 28.6 30.6 35.8 36.0 36.3 36.8

Ordinary income 21.9 3.8 6.7 13.5 14.1 14.5 14.1


0

20

40

60

Equity

FICC*

Others

Ordinaryincome

Net operatingrevenues 36,819 1.2% 109,214 2.2%

Ordinary income 14,164 -2.8% 42,836 31.7%

（Y mil）FY2016

3Q

% Changevs

2Q/FY16

FY20161Q-3Q

% Change vs

1Q-3Q/FY15

16

Wholesale Division Global Investment Banking


【Equity】

Equity underwriting revenues increased owing to the largest PO deal in this quarter.

【Debt】 By capturing issuers and investors needs accurately, lead

managed a number of deals such as issuance of benchmark bond by domestic issuers.

【M&A】 By providing solutions utilizing our strengthened global

network, managed various domestic, overseas, and cross-border deals.

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

Equity underwriting 5.1 4.2 2.5 1.1 2.1 2.6 3.5

Debt underwriting 2.6 2.2 1.7 1.9 2.4 2.8 2.2

M&A / others 1.8 3.2 3.7 4.7 2.7 4.0 3.8

Net operatingrevenues

9.6 9.7 7.9 7.8 7.3 9.5 9.6

Ordinary income 2.0 1.7 -0.2 -0.7 0.7 2.4 2.4


-2

0

2

4

6

8

10

Equityunderwriting

Debtunderwriting

M&A / others

Ordinaryincome

＜Selected lead managed deals＞ <Offering size>KEYENCE CORPORATION PO Y128.0 bilBAROQUE JAPAN LIMITED IPO Y27.6 bil

＜Selected lead managed deals＞ <Offering size>Sumitomo Mitsui Trust Bank (3 yrs) Benchmark bond Total USD1 bilMS&AD Insurance Group Holdings, Inc. Subordinated bond Total Y100.0 bilCitic Group Corporation (3/5/7/10 yrs) Samurai bond Total Y100.0 bilJapan Housing Finance Agency (35 yrs) RMBS Y252.9 bil

＜Selected deals＞Tender offer for share certificates of Accordia Golf Co., Ltd. by K.K. MBKP ResortAcquisition of APEM Group (France) by IDEC CORPORATIONJoint acquisition of Chaucer Food Group (UK) by NAGATANIEN HOLDINGS CO.,LTD. and Innovation Network Corporation of Japan Acquisition of Global Switch Holdings Limited (UK) by the consortium of Daily-TechBeijing Co., Ltd (China)


Ordinary income 2,492 0.9% 5,761 63.3%

（Y mil）FY2016

3Q

% Changevs

2Q/FY16

FY20161Q-3Q

% Change vs

1Q-3Q/FY15

＜Selected Joint managed deal with an alliance partner overseas＞No Va Land Investment Group Corporation IPO(joint deal with Saigon Securities)

USD120 mil

17

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】 Management fee increased QoQ as AUM expanded owing to net

inflow and market appreciation on the back of a weaker yen after mid-November.

【Others】

Asset manager for REITs, Daiwa Real Estate Asset Management and Mi-Casa Asset Management, reported steady results as AUM increased.

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

Daiwa AM 11.4 11.1 10.8 9.9 9.9 9.9 10.0

Others 4.0 0.9 1.0 1.0 1.6 1.4 1.4Net operatingrevenues

15.4 12.0 11.9 11.0 11.6 11.4 11.5

Ordinary income 9.2 7.5 7.2 5.9 6.7 6.6 6.5


0

4

8

12

16

Daiwa AM

Others

Ordinaryincome


Ordinary income 6,522 -2.3% 19,944 -16.9%

（Y mil）FY2016

3Q

% Changevs

2Q/FY16

FY20161Q-3Q

% Change vs

1Q-3Q/FY15

18

Daiwa Asset Management AUM （Investment Trusts）

Daiwa Real Estate Asset Management AUMDaiwa SB Investments AUM （Investment Trusts & Investment Advisory）

Asset Management Division Assets Under Management

Daiwa AM & Daiwa SB Net Asset Inflow (Stock Investment Trusts, excl. ETF)

※ AUMs are as at the end of each quarter

FY20161Q-3Q

(bil)FY2011 FY2012 FY2013 FY2014 FY2015

1Q 2Q 3Q 4Q 1Q 2Q 3QStock investment trusts 11,393 10,466 11,290 10,840 10,297 10,884 11,819Bond investment trusts 3,462 3,113 3,006 2,563 2,174 2,103 2,167Total 14,855 13,579 14,296 13,403 12,472 12,988 13,986Investment trustShare 14.7% 14.6% 14.6% 14.5% 14.5% 14.6% 14.5%

(Y bil)FY2015 FY2016

0

5,000

10,000

15,000

Stockinvestmenttrusts

Bondinvestmenttrusts

1Q 2Q 3Q 4Q 1Q 2Q 3QStock investment trusts 2,751 2,471 2,654 2,481 2,230 2,209 2,283Investment advisory 2,686 2,440 2,719 2,249 2,096 2,201 2,562Total 5,438 4,911 5,373 4,730 4,327 4,411 4,845Investment trustShare 2.7% 2.7% 2.7% 2.7% 2.6% 2.5% 2.4%


0

5,000

10,000

Stock investmenttrusts

Investmentadvisory

1,010

74

768

1,093

1,271

-119 -300

0

300

600

900

1,200

1,500

Daiwa SBInvestments

Daiwa AssetManagement

1Q 2Q 3Q 4Q 1Q 2Q 3QFY2015

(Y bil)FY2016

532 537

761 780 790 805 816

0

250

500

750

1,000Other

Japan RentalHousingInvestments Inc.Nippon HealthcareInvestment Corp.

Daiwa ResidentialPrivate InvestmentCorp.Daiwa OfficeInvestment Corp.

19

Investment Division

Principal investment values

※ 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


1Q 2Q 3Q 4Q 1Q 2Q 3QPrivate equity andPIPEs 42 46 43 49 49 60 54

Monetary claims 29 30 30 35 35 32 31

Real estate 20 20 20 20 20 20 20

Total 91 96 94 104 104 112 105


0

40

80

120

Private equityand PIPEs

Monetaryclaims

Real estate

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

Net operating revenues 4.2 1.7 12.6 1.1 4.9 5.7 2.5

Ordinary income 3.6 1.1 11.9 0.5 4.6 4.9 1.8


0

3

6

9

12

15

Net operatingrevenues

Ordinaryincome

Net operatingrevenues 2,570 -55.1% 13,252 -28.7%

Ordinary income 1,891 -62.0% 11,488 -31.7%

（Y mil）FY2016

3Q

% Changevs

2Q/FY16

FY20161Q-3Q

% Change vs

1Q-3Q/FY15

Reference

21

Breakdown of CommissionConsolidated

FY2015 FY2016

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

69,215 62,701 61,693 64,373 70,752 9.9% 2.2% 225,717 196,819 -12.8% 288,418

15,922 14,950 13,888 13,197 17,189 30.2% 8.0% 55,374 44,275 -20.0% 70,325

6,031 3,930 5,366 8,274 8,161 -1.4% 35.3% 24,623 21,802 -11.5% 28,553

8,237 5,839 6,320 7,037 10,020 42.4% 21.7% 28,903 23,378 -19.1% 34,743

39,023 37,980 36,119 35,863 35,379 -1.3% -9.3% 116,815 107,362 -8.1% 154,796

5,273 5,287 5,177 5,270 5,221 -0.9% -1.0% 15,210 15,669 3.0% 20,497

1,577 1,573 1,696 984 740 -24.8% -53.1% 3,150 3,420 8.6% 4,724

3,354 3,658 2,533 3,338 3,263 -2.3% -2.7% 7,772 9,135 17.5% 11,431

21,982 20,154 20,083 19,866 19,981 0.6% -9.1% 68,696 59,931 -12.8% 88,850

6,836 7,307 6,628 6,404 6,172 -3.6% -9.7% 21,984 19,205 -12.6% 29,291

Management fee

Other

Brokerage commission

Underwriting commission

Distribution commission

Other commission

Investment advisory andaccount management fees

Insurance sales commission

FY2015

Total commission

% Changevs

2Q/FY16

M&A commission

% Change vs

1Q-3Q/FY15（Y mil）


3Q/FY15

22

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

Equity & FICC Income: Consolidated Trading Gain/Loss

【Managerial accounting basis】

*FICC： Fixed Income, Currency and Commodities

Daiwa Securities/Overseas

Consolidated trading gain / loss(Managerial accounting basis)

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

Equity 13 14 17 5 9 7 5 9 11

FICC* 33 37 41 32 28 33 36 31 31

Total 46 51 58 37 37 40 41 40 42

FY2016FY2015（Y bil）

FY20140

10

20

30

40

50

60

Equity

FICC*Equity 11.0 22.2% 25.0 -19.4%

FICC* 31.0 - 98.0 -3.0%

Total 42.0 5.0% 123.0 -6.8%

（Y bil）FY2016

3Q

% Changevs

2Q/FY16

FY20161Q-3Q

% Change vs

1Q-3Q/FY15

Equity 7,672 44.3% 15,051 -21.5%Bond andforex 26,352 -2.7% 84,738 1.5%Net financialincome 14,030 13.3% 35,510 -8.8%

Total 48,055 7.3% 135,301 -4.4%

（Y mil）FY2016

3Q

% Changevs

2Q/FY16

FY20161Q-3Q

% Change vs

1Q-3Q/FY15

23

Financial Summary ⅠDaiwa Securities

FY2015 FY2016

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

86,225 81,878 81,872 79,320 88,975 12.2% 3.2% 287,279 250,168 -12.9% 369,158Commission received 45,103 39,290 40,345 42,196 48,339 14.6% 7.2% 148,000 130,881 -11.6% 187,290Brokerage commission 11,638 11,094 10,093 9,317 12,852 37.9% 10.4% 40,783 32,264 -20.9% 51,877

Stock and others 10,905 10,225 9,453 8,848 12,281 38.8% 12.6% 38,144 30,583 -19.8% 48,369Underwriting commission 5,878 3,599 5,301 7,975 7,645 -4.1% 30.1% 20,572 20,922 1.7% 24,171

Equity 3,466 1,504 2,229 3,379 4,565 35.1% 31.7% 12,533 10,174 -18.8% 14,038Bond and others 2,411 2,094 3,072 4,595 3,080 -33.0% 27.7% 8,038 10,748 33.7% 10,133

Distribution commission 7,916 5,605 6,137 6,821 9,729 42.6% 22.9% 27,834 22,689 -18.5% 33,440Investment trust 7,658 5,162 5,648 6,045 8,991 48.7% 17.4% 27,220 20,684 -24.0% 32,383

Other commissions 19,670 18,990 18,812 18,081 18,111 0.2% -7.9% 58,810 55,005 -6.5% 77,800Agency fee and others 9,191 8,187 7,970 7,788 7,813 0.3% -15.0% 29,392 23,571 -19.8% 37,580Inv estment adv isory andaccount management fees 5,273 5,287 5,177 5,270 5,221 -0.9% -1.0% 15,210 15,669 3.0% 20,497Insurance sales commission 1,577 1,573 1,696 984 740 -24.8% -53.1% 3,150 3,420 8.6% 4,724M&A commission 1,020 1,067 1,185 1,348 1,647 22.2% 61.4% 2,573 4,180 62.5% 3,640

Net trading income/loss 31,838 31,935 32,529 27,877 30,681 10.1% -3.6% 107,118 91,089 -15.0% 139,053Equity 7,614 2,585 1,683 4,752 8,484 78.5% 11.4% 20,175 14,920 -26.0% 22,760Bond and forex 24,223 29,350 30,845 23,125 22,197 -4.0% -8.4% 86,942 76,168 -12.4% 116,292

Financial revenues 9,284 10,653 8,997 9,246 9,954 7.7% 7.2% 32,161 28,198 -12.3% 42,814Financial expenses 5,765 4,765 5,519 4,220 5,993 42.0% 3.9% 16,170 15,732 -2.7% 20,936

80,459 77,113 76,352 75,100 82,982 10.5% 3.1% 271,108 234,436 -13.5% 348,221

FY2015

Operating revenues

Net operating revenues

（Y mil）% Change

vs2Q/FY16

% Change vs

1Q-3Q/FY15

FY2016FY2015 % Changevs

3Q/FY15

24

Financial Summary ⅡDaiwa Securities

FY2015 FY2016

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

57,091 57,951 56,386 56,715 58,662 3.4% 2.8% 175,729 171,764 -2.3% 233,680

Trading relatedexpenses 10,364 10,655 9,307 9,428 10,212 8.3% -1.5% 30,391 28,948 -4.7% 41,046

Personnel expenses 24,337 24,634 24,556 24,727 25,190 1.9% 3.5% 77,486 74,473 -3.9% 102,120

Real estate expenses 5,938 6,063 5,847 5,940 5,987 0.8% 0.8% 18,080 17,776 -1.7% 24,144

Office cost 10,931 10,565 10,667 10,753 11,256 4.7% 3.0% 33,262 32,677 -1.8% 43,827

Depreciation 3,741 3,793 3,880 3,851 3,883 0.8% 3.8% 10,767 11,615 7.9% 14,560

Taxes and dues 894 607 1,174 1,097 1,154 5.2% 29.1% 2,929 3,426 17.0% 3,537

Other 882 1,631 952 916 977 6.6% 10.8% 2,810 2,846 1.3% 4,442

23,138 20,123 20,580 18,363 25,561 39.2% 10.5% 96,148 64,505 -32.9% 116,272

15,659 15,194 13,934 13,440 17,374 29.3% 11.0% 65,664 44,749 -31.9% 80,859

8.3% 7.9% 7.1% 6.7% 8.5% 11.9% 7.4% 10.9%

330.8% 337.8% 369.2% 397.0% 398.7% 330.8% 398.7% 337.8%Capital adequacy ratio

（Y mil）% Change

vs1Q-3Q/FY15

% Changevs

2Q/FY16FY2015

SG&A

Ordinary income

Net income

ROE（Annualized）


3Q/FY15

25

Balance Sheet （December 31, 2016）

Balance SheetDaiwa Securities

※Figures in parentheses show changes from March 31, 2016

（Y bil）

Current assets 10,797 (377) Current liabilities 8,882 (320) Trading products 5,081 (-298) Trading products 3,854 (-255)

Trading securities and other 1,974 (82) Trading securities and other 1,068 (-56)Derivatives 3,107 (-381) Derivatives 2,785 (-199)

Margin transaction assets 177 (-18) Margin transaction liabilities 66 (14)Loans on margin transactions 145 (-30) Loans payables secured by securities 2,815 (562)

32 (12) Short-term loans payable 1,277 (253) Loans secured by securities 3,179 (388) Commercial Papers － (-137) Short-term guarantee deposits 408 (59) Current portion of bonds 140 (44) Short-term loans receivable 212 (-1) Non-current liabilities 1,192 (14)

Bonds payable 605 (-14) Long-term loans payable 551 (28)

Non-current assets 107 (2) Total liabilities 10,078 (335) Property, plant and equipment 3 (0) Net assets 825 (44) Intangible assets 56 (4) Shareholders' equity 818 (44)

Capital stock 100 －

Total assets 10,904 (380) Total liabilities and net assets 10,904 (380)

Cash collateral pledged for securitiesborrowing on margin transactions

26

Assets under Custody

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

Daiwa Securities

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

Equity 30.6 32.5 34.2 31.0 33.0 30.1 28.8 29.4 32.7

Domestic bonds 7.5 7.3 7.3 7.3 7.1 6.8 6.7 6.9 7.0

Foreign bonds 5.1 4.9 4.8 4.7 4.8 5.0 4.7 4.8 5.0

Stock investment trusts 6.5 6.6 6.8 6.1 6.5 6.2 5.9 5.9 6.3

Bond investment trusts 1.6 1.6 1.7 1.6 1.5 1.3 1.0 1.0 1.0

Foreign investment trusts 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1

Others 1.1 1.2 1.3 1.2 1.3 1.2 1.2 1.1 1.1

Total 52.9 54.6 56.6 52.4 54.5 51.0 48.7 49.5 53.5

（Y tri）FY2015 FY2016FY2014

0

15

30

45

60Equity

Domestic bonds

Foreign bonds

Stock investmenttrustsBond investmenttrustsForeign investmenttrustsOthers

27

Number of Accounts and Equity TradingDaiwa Securities

* The accumulated number of opened accounts

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

3,680 3,719 3,747 3,778 3,808 3,821 3,833 3,848 3,866

Accounts with balance (thousands) 2,877 2,910 2,926 2,948 2,961 2,973 2,973 2,976 2,963

Accounts holding equity (thousands) 1,347 1,342 1,336 1,343 1,367 1,381 1,402 1,408 1,396

Online trading accounts (thousands) 2,857 2,904 2,942 2,980 3,020 3,040 3,060 3,080 3,103

42 44 43 42 50 31 34 31 39

661 686 709 723 741 749 756 763 769

Contract assets under management (Y bil) 1,037 1,242 1,459 1,466 1,575 1,540 1,498 1,537 1,604

Number of customers (thousands) 71.8 87.2 100.3 110.7 116.5 118.4 120.0 122.3 121.5

Total number of contracts (thousands) 3,702 3,552 3,540 3,441 2,912 3,103 2,757 2,374 3,000

　Online out of total (thousands) 3,260 3,153 3,130 3,094 2,571 2,775 2,442 2,103 2,593

Total trading value (Y bil) 3,745 3,539 3,877 3,560 2,850 2,561 2,341 2,144 2,873

　Online out of total (Y bil) 2,939 2,790 3,027 2,871 2,241 2,063 1,826 1,692 2,177

Trading value (Y bil) 245 176 185 129 126 75 127 137 157

FY2014 FY2015 FY2016

Foreign equity trading value (Retail）

Cash Management Service accounts(thousands)

Wrap account service (end of quarter)

Contracts and trading value for individualinvestors at Daiwa Securities (Japanese Equity)

Newly opened accounts (thousands)

NISA accounts* (thousands)

28

Retail Division (Daiwa Securities) Net inflow of assets (individuals)Retail Division (Daiwa Securities) Net inflow of assets

Net Inflow of Assets

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

Daiwa Securities

-150

-100

-50

0

50

100

150

200

250

300

Corporation

Individual

-150

-100

-50

0

50

100

150

200

250

300

Net inflow of cash

New inflow of securities

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

Corporation 74.4 60.9 186.4 111.5 20.6 8.8 39.9 58.8 57.6

Individual 192.9 187.7 73.3 107.6 72.4 81.7 119.9 -2.6 -101.2

Total 267.4 248.7 259.7 219.2 93.1 90.6 159.9 56.2 -43.6

（Y bil）FY2014 FY2015 FY2016

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

Net inf low ofcash 74.1 112.4 -1.9 112.9 59.9 49.6 56.9 -22.9 -114.0

New inflow ofsecurities 118.7 75.3 75.2 -5.2 12.4 32.1 63.0 20.3 12.7

FY2016FY2014 FY2015（Y bil）

29

Retail Division (Daiwa Securities) Sales of stock investment trusts

Stock Investment Trusts & Wrap Accounts

Wrap account contract and contract AUM

Daiwa Securities

purchase - （sell-off + redemption）

※Net increase ratio（%）＝ ×100purchase

※Includes switching transaction between funds.

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

Contractamount

228.0 238.0 231.8 180.7 125.9 61.5 62.9 78.1 113.6

ContractAUM

1,037 1,242 1,459 1,466 1,575 1,540 1,498 1,537 1,604

FY2016(Y bil)

FY2014 FY20150

400

800

1,200

1,600

2,000

0

60

120

180

240

300Contract amount (left)

Contract assets under management (right)

0%

5%

10%

15%

20%

25%

0

150

300

450

600

750Sales amount (left)

Net increase ratio (right)

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

Salesamount

611.7 618.5 677.2 598.0 653.3 388.4 396.8 379.3 540.2

FY2016（Y bil）

FY2014 FY2015

30

Primary andsecondary equity

offeringsIPO

Straight bonds(exc l. family

bonds)Agency bonds Munic ipal bonds

Samurai bonds(excl. family

bonds)

M&A(Number of

deals)

Nomura Nomura Mizuho Mitsubish i UFJMS Daiwa Nomura

25.7% 31.3% 24.1% 26.3% 18.7% 23.4%

Daiwa Mitsubishi UFJMS Nomura Nomura SMBC Nikko Daiwa

18.1% 19.6% 19.9% 21.1% 17.9% 19.6%

Mizuho J.P. Morgan Mitsubishi UFJMS SMBC Nikko Nomura Mizuho

12.9% 9.3% 17.9% 19.5% 17.1% 19.5%

Bank of AmericaMerrill Lynch

Mizuho SMBC Nikko Mizuho Mitsubish i UFJMS SMBC Nikko

11.6% 8.5% 17.1% 17.4% 17.0% 19.5%

SMBC Nikko Morgan Stan ley Daiwa Daiwa Mizuho Mitsubishi UFJMS

11.3% 8.1% 16.1% 13.2% 16.4% 18.1%

Daiwa

8.1%

3Q FY2016 League Table

1st MHFG

2nd SMFG

3rd Nomura

Daiwa

5thPLUTUS

CONSULTING

4th

7th

League TableDaiwa Securities

Source: Daiwa Securities Apr. 2016 – Dec. 2016M&A： THOMSON REUTERS Apr. 2016 – Dec. 2016 “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 dateJoint lead manager allotment of Primary and secondary equity, IPO, Straight bonds, Municipal bonds and Agency bonds is based onunderwritten amountJoint bookrunner allotment of Samurai bonds is divided up evenly among the bookrunners

31

Daiwa Asset Management

Financial Summary

FY2015 FY2016

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

22,175 20,324 20,132 19,930 20,051 0.6% -9.6% 69,325 60,114 -13.3% 89,650

21,982 20,154 19,950 19,754 19,874 0.6% -9.6% 68,696 59,579 -13.3% 88,850

Stock investment trust 21,884 20,077 19,916 19,715 19,833 0.6% -9.4% 68,415 59,465 -13.1% 88,493

Bond investment trust 98 76 34 39 40 3.6% -58.8% 281 113 -59.5% 357

192 170 181 175 177 1.3% -7.9% 628 534 -15.0% 799

17,417 16,350 16,123 15,753 15,974 1.4% -8.3% 54,216 47,852 -11.7% 70,567

11,335 10,330 10,159 9,966 9,952 -0.1% -12.2% 35,834 30,077 -16.1% 46,165

6,081 6,020 5,964 5,787 6,022 4.1% -1.0% 18,382 17,774 -3.3% 24,402

4,758 3,974 4,008 4,176 4,076 -2.4% -14.3% 15,108 12,261 -18.8% 19,082

4,799 3,970 4,056 4,233 4,248 0.4% -11.5% 15,500 12,538 -19.1% 19,471

Net income 3,099 2,764 2,693 2,792 2,881 3.2% -7.0% 10,498 8,368 -20.3% 13,262

FY2015% Change

vs1Q-3Q/FY15

Ordinary income

Operating revenues

Management fee

Other operating revenues

SG&A

Commission paid

Other SG&A

Operating income

（Y mil）% Change

vs2Q/FY16


3Q/FY15

32

Gross Profits / Ordinary Income Daiwa Next Bank Deposit Balance & Number of Accounts

Daiwa Next Bank

Earnings and Deposit Balance

（Y bil）（thousands）

※All figures are as at the end of the period.

1Q 2Q 3Q

Ordinary deposits 429 771 1,085 1,455 1,401 1,416 1,474 1,723

Time deposits 792 1,125 1,261 1,528 1,711 1,641 1,558 1,498

Negotiable certificateof deposits / Other

211 314 52 62 8 10 10 13

Deposit balance 1,432 2,210 2,399 3,047 3,121 3,069 3,043 3,235

Number of accounts（thousands) 486 719 901 1,018 1,133 1,155 1,174 1,194

FY2016FY2015(Y bil） FY2011 FY2012 FY2013 FY2014

0

500

1,000

1,500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Ordinary deposits

Time deposits

Negotiablecertificate ofdeposits / Other

Number ofaccounts(thousands)

-3

0

3

6

9

12

15

18

21

24 Gross Profits (YTD) Gross Profits (QTD)Ordinary income (YTD) Ordinary income (QTD)

1Q 2Q 3Q

Gross profits 3.9 10.5 12.3 20.7 17.3 2.6 2.9 3.1Ordinaryincome

-0.4 5.0 5.7 13.6 9.5 0.9 0.9 0.7

FY2016(Y bil) FY14FY11 FY13FY12 FY15

33

Consolidated

Value at Risk

Confidence level：99% (one-side test)

Holding period：1 day

Adjusted for price correlation between product

Range and assumption of VaR

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

VaR （Quarter end） 2.07 2.32 1.74 1.53 1.25 1.55 1.01 1.00 1.74

High 2.37 3.46 2.43 2.59 1.71 3.14 2.26 2.53 2.97Low 1.42 1.61 1.68 1.34 1.13 1.17 0.99 0.98 1.02

Average 1.95 1.93 2.04 1.65 1.47 1.67 1.53 1.40 2.02

By risk factors (Quarter end)Equity 0.43 0.70 0.56 0.83 0.39 0.28 0.27 0.44 0.40Interest 1.90 2.27 1.98 1.42 1.13 1.64 1.00 1.00 1.38

Currency 0.76 0.32 0.25 0.33 0.59 0.33 0.19 0.17 0.26Commodity - 0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.03

(Y bil)FY2014 FY2015 FY2016

34

Consolidated

Number of Group Employees

Number of employees as at end of each quarter.

※ Total figures are the sum of consolidated group companies and Daiwa SB Investments.

※ Overseas figures are the sum of consolidated group companies under Daiwa International Holdings and Daiwa Securities. The figure also includes overseas subsidiaries of Daiwa Asset Management which have become consolidated companies since 1Q FY2016.

※ Figures include temporary staff.

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

14,792 14,757 15,301 15,209 15,179 15,028 15,637 15,559 15,410

Overseas 1,627 1,636 1,617 1,611 1,603 1,566 1,592 1,597 1,592

Total

FY2014 FY2015 FY2016

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Daiwa Securities Group Inc.Investor Relations

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