Daiwa Securities Group...This presentation may contain forward-looking statements about the Daiwa...

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.

FY2017 Management Strategy Update Daiwa Securities Group

November 2017

Seiji Nakata, President and CEO Daiwa Securities Group Inc.

Index

Ⅰ - 1H FY2017 Overview・・・・ 3

Ⅱ - Progress of Strategic Themes・・・・ 7

Quality No.1・・・・ 9

Hybrid Securities Group・・・・ 16

Ⅲ - Capital Policy・・・・ 23

Ⅳ - Closing Remarks・・・・ 27

Appendix ・・・・ 29

FY2017 Management Strategy Update

Ⅰ- 1H FY2017 Overview

010203040506070

010203040506070

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

FY2014 FY2015 FY2016 FY2017

Retail Division Wholesale Division Asset Management Division Investment Division Consoildated Total

4

1H FY2017 Consolidated Results Although the FICC business faced challenging market conditions, the retail business, with its new sales system, and GIB business, which acquired top place on the PO league table due to large deal mandates, showed solid performances.

(Y bil)


Consolidated Ordinary Income

Capital gain by an exit from a real estate investment pushed up revenues and profits.

Net operating revenues and ordinary income rose as AUM for Daiwa AM increased due to net inflow of money and steady stock market performance from May onwards.

Achieved 1st place on the 1H primary and secondary equity offerings league table (first time since 1H FY2011) by managing large PO deals such as Japan Post, Renesas Electronics and Idemitsu Kosan.

With high trading volume of foreign equities and equity offering distribution, net operating revenues and ordinary income in 1H reached Y100.0bil and Y20.0bil level for the first time since 1H FY2015.

Retail Division Wholesale Division

Asset Management

Division

Investment Division

5

Overseas operation stayed in the black for 6 consecutive quarters and overseas ordinary income for 1H came out to be Y5.5bil, +6.1% YoY.

Market environment continued to be challenging for the FICC business, but increase in U.S. equity trading volume for the Retail Division contributed to equity revenues.

Revenues from equity underwriting significantly increased due to global offerings by Japanese issuers, in addition to solid performance by the M&A business.

Ordinary income rose as the wealth management business continued to perform well and equity brokerage revenue and bond underwriting commission increased.

Americas

Europe

Asia / Oceania

Overseas Ordinary Income

(Y mil) (Y mil)

Profit Contribution from Overseas Operations Ⅰ- 1H FY2017 Overview

▲ 10,000

▲ 8,000

▲ 6,000

▲ 4,000

▲ 2,000

0

2,000

4,000

6,000

8,000

▲ 10,000

▲ 8,000

▲ 6,000

▲ 4,000

▲ 2,000

0

2,000

4,000

6,000

8,000

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

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

Europe Asia / Oceania Americas Overseas Total

46%

57%

64%69%

66% 68%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

50

100

150

200

250

FY2012 FY2013 FY2014 FY2015 FY2016 1HFY2017

6

Progress of Medium-Term Management Plan (Numerical Targets)

ROE

ROE：10% or more


Profit attributable to owners of parent company （Y 100mil）

Shareholders’ equity （Y bil）

ROE（excl. effect of losses carried forward belonging to Daiwa Securities）

Fixed cost （Y bil）

Stable revenues （Y bil）

Fixed cost coverage ratio

6.3%

12.8%

9.7% 9.5%

8.1%8.6%

17.0%

12.8%

8.4% 8.1%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

FY2012 FY2013 FY2014 FY2015 FY2016 1HFY2017

(Annualized)

Fixed Cost Coverage Ratio: 75% or more in the final fiscal year (FY2017)

(Annualized)

Ⅱ- Progress of Strategic Themes

8

For Sustainable Growth Ⅱ- Progress of Strategic Themes

Culture and DNA built up over the course of our 115-year history

A robust business structure supported by stable revenues

Quality No.1 Establish industry’s

highest quality

Hybrid Securities Group Leverage the benefits of being an

independent securities group

Sustainable growth through maintaining healthy earnings results

Quality No.1 Ⅱ- Progress of Strategic Themes

10

1H FY2017 Approach

Establish a sales model with more emphasis on customer perspective to accomplish Quality No.1

Expand Evaluation System

Ⅱ- Progress of Strategic Themes Quality No.1

Sales System Customer Satisfaction

Further reflection in sales branch evaluation

Customer Questionnaires

Over-the-Counter Service Survey

• Whether the latest

transaction was based on true understanding of customer needs

• Level of overall satisfaction with the branch

• Willingness to listen to customers

• How to use materials and what to explain

• Appropriate services and proposals

• Consideration for customers

Implementation of a new indicator （NPS: Net Promoter Score）

Introducing Bottom-up Sales Approach

Branch A Branch B Branch C

Equity

Investment trusts

Wrap account services

Wealth mgmt.

Each sales branch makes sale decisions based on customer needs

0

100

200

300

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

FY2014 FY2015 FY2016 FY2017

Sell Buy

11

Effects of Introducing the New Sales System After the introduction of the new sales system, trading volume of foreign equities reached a record high by capturing strong customer needs for foreign equities. The challenge is to uncover investment needs in foreign and structured bonds.

Expansion of Foreign Equity Trading Volume Uncover Investment Needs in Foreign and Structured Bonds

Sales Amount of Foreign Bonds

Achievement Challenge

Business Environment and Our Approach

Long-term negative interest rate in Japan

Uncover investment needs in foreign bonds and structured bonds, and provide timely proposals

Early redemption of equity-linked structured bonds

Foreign Equity Trading Volume

0

100

200

300

400

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

FY2014 FY2015 FY2016 FY17


(Y bil) (Y bil)

Other Positive Effects

Sales strategies unique to each branch and representative are further reflected in their achievements due to increased discretion.

The number of customer contact by sales representatives has increased since April.

Change in ranks of top sale branches

Increased customer contact

Increase in commission by top sales reps

Financial

Consultant

(FY2018) - FY2019

Create variety of jobs and career paths for employees

Establish Sales Systems Adaptable to Changing Business Environment = Optimize Sales Channel

Aging of existing customers Approach to children of the baby boom generation (in their 40s)

Expand approach to asset building generation

Low employee turnover, Diversified work styles Increase productivity of sales representatives

Improve efficiency of back office operations by using technology

Optimize sales channels depending on customers’ attributes and life stages

Current Sales Channel Optimize Sales Channel

Mass Mass-affluent, Affluent

CS

Mass-affluent, Affluent

Wealth Management

Consultant

Client Support

(CS)

Concept

Customers’ Life Stages

Asset building period

(age 20 ‐ 40)

Asset management/ succession

period (age 50 ‐)

Asset conservation

period (age 75 ‐) Cope with the aging society

Strengthen wealth management business

Expand business for asset building generation

Create diverse career paths

Mass Active traders

Non-active traders

2H FY2017

Start with 7 branches

Gradually expand to aｌｌ branches

※

12

Inbound

Wealth Management Consultant

Anshin Planner (consultant for elderly)


Further Development of Quality No.1① - Sales System -

※Customer segmentation is decided based on AUM etc.

分類 1 分類 2 分類 3 分類 4

13

Further Development of Quality No.1② - Customer Satisfaction -

According to our customer satisfaction survey, improvement can be seen in score for quality of service. We will continue to further raise customer satisfaction through the introduction of our original NPS.

Result of Customer Satisfaction Survey Introduction of NPS (Net Promoter Score)

Daiwa Consulting Course Customers

Daiwa Direct Course Customers

Q. How likely is it that you would recommend Daiwa Securities (products/services) to your friend or your colleague ?

6 5 4 3 2 1 0 8 7 10 9

Detractors Passives Promoters

The percentage of promoters (%)

The percentage of detractors (%) NPS －＝

Strongly disagree Strongly agree

Introduction of “Daiwa NPS” Visualization of customer satisfaction

Common scale for sharing companywide basic value

FY2018 - Full scale operation 2H FY2017 - Pilot testing


4.83 4.77 4.834.86

4.88 4.884.96 4.97

5.22 5.21 5.245.32

4.3

4.5

4.7

4.9

5.1

5.3

FY2015.2H FY2016.1H FY2016.2H FY2017.1H

Overall SatisfactionSatisfaction for sales representativeSatisfaction for over-the-counter service

4.78 4.754.81

4.85

4.714.67

4.714.77

4.4

4.5

4.6

4.7

4.8

4.9

FY2015.2H FY2016.1H FY2016.2H FY2017.1H

Satisfaction for online serivceSatisfaction for call center operators

344

564

1,242

1,5401,661

1,834

0

500

1,000

1,500

2,000

2012 2013 2014 2015 2016 2017.9

14

Investment Trusts Wrap Account Services

Select investment trusts with an emphasis on fund performance, including those other than Daiwa. Enhance value-added functions for fund wraps and examine expanding product lineup to meet customers’ higher demands.

Strengthen product selection capabilities for public investment trusts

Continue expanding consulting capabilities and enhancing service functions

(Y bil)

（FY）

Japan equities

Developed countries equities

Global bonds

Apr. ‐Oct. 2017 New lineup funds: 9

DIAM Japan equity fund

Manulife U.S Bank related stock fund

Fidelity European Mid/ Small Cap Fund

PIMCO Income strategy fund

AUM of Wrap Account Service

Managed by outside the Group: 4

Continue to select investment trusts by fund performance

Increase value by added functions


Further Development of Quality No.1③ - Investment Trusts and Fund Wrap -

Examine further product lineup

To meet customers’

higher demands

Daiwa Fund Wrap Premium

Daiwa Fund Wrap Online

Daiwa Fund Wrap

54

87

2017.3 2017.11

FY2015.2Q FY2017.2Q

15

Further Development of Quality No.1 ④ - Services for Asset Building Generation and High Net Worth Individuals -

Promote “Investment for Savings” Utilizing Tax Benefits

Support for Inheritance-related Business

Strengthen price competitiveness on services for asset building generation to attract more inbound clients. The number of sales branches with inheritance consultants has steadily increased and our goal is early placement at all branches.

Revenues

Number of Branches with Inheritance Consultants

Number of CFP Holders

Private Banking Business in Asia

Inbound Service (For asset building generation) Outbound Service (For high net worth individuals)

Approx. 3.2x

Individual-type Defined Contribution (iDeCo)

Monthly Investment-type NISA

Reinforcement of overseas personnel

Enhanced regional coverage

Increased cooperation

between divisions

2002 ※The scope of individuals eligible to participate expanded from 2017

2018 ※ Registration from Oct. 2017

Year Started

Eligibility Individuals aged between 20 and 60 Japan residents

aged 20 and above

Tax Benefit

Deductible at time of installment Non-taxable on capital gains Tax benefit at time of receipt

Capital gains, dividends are tax exempt for 20 yrs.

Amount Limit

Y144,000 to Y816,000 per year Y400,000 per year

Daiwa’s Services

Lowest fee in the industry (Zero management fee)

Most attractive level of campaign in the industry (13,000yen gift as maximum)

Competency

Increase inbound clients through further promotion

Use of external channels


Early placement at all branches

※

※Includes the number of employees who have passed all 6 subjects and are in the process of applying for the certification.

616643

717

2016.3 2017.3 2017.11

Ⅱ- Progress of Strategic Themes Hybrid Securities Group

17

Expansion Strategy of Group Business

Traditional securities business x Diversified business portfolio

Hybrid Securities Group Advantageous Position in Securities Business

High

Low

Daiwa Securities

Group

Stability of the Group’s

revenue base

Image of Hybrid Securities Group

Independence of management

Hybrid Securities Group

Traditional securities business

(Daiwa Securities)

Banking Business Daiwa Next Bank

Investment Business Daiwa PI Partners Daiwa Corporate

Investment

New Services Utilizing FinTech

IT/Think Tank DIR

Real Estate/ Infrastructure AM Business

Daiwa Real Estate AM Mi-Casa AM

Asset Management Business Daiwa AM Daiwa SB

Overseas Business Overseas Subsidiaries

Alliance Partners

New Business

Business development not bound by industry law

Group strategy centered on securities business

Stable and efficient diversified business portfolio

High (Independent)

Low (Bank affiliates, etc.)

Group Strategy centered on

banking business

Business model centered on wholesale business

Ⅱ- Progress of Strategic Themes

Apr. May Jun. Jul. Aug. Sept.

Idemitsu Kosan

Jul. 2017 Global PO

Offering Size Y124.8bil

18

Sales network based on solid client base both in and outside of Japan contributed to large scale deals in 1H. In Retail Division, synergy between divisions increased new clients and revenues.

Positive Impact of Large Deal Mandates on Retail Division

Japan Post Sept. 2017 Global PO

Offering Size Y1.3tri

Renesas Electronics

Jun. 2017 Global PO

Offering Size Y348.5bil

Allocation of Large PO Deals Lead-Managed by Daiwa in 1H FY2017

Newly Opened Accounts by PO/IPO

Impact on Retail Division (Daiwa Securities)

Net Inflow of Cash by PO/IPO

3x FY2016

Monthly Average FY2017

Monthly Average

※Excludes accounts that were newly opened through employee benefit plans such as employee stock ownership and accumulation savings, etc.

Japan Post Idemitsu

Kosan Renesas

Electronics

Successful Investment Experience for Retail Customers (Estimation of wealth effect based on offering price*)

Note 1: (Share price on Nov. 2 – Offering price) x No. of shares sold by Daiwa to domestic retail customers Note 2: The figure for Japan Post includes estimated interim dividend of 25 yen

Domestic Retail Domestic Institutional Foreign Institutional

Hybrid Securities Group Ⅱ- Progress of Strategic Themes

Wealth effect of stock price

increase on asset Allocation breakdow

n

Y30.1bil Y24.8bil Y1.7bil

(2017)

02468

1012141618

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total deal value of M&As by Japanese corporationsValue of cross-border deals (In-Out, Out-In)

Daiwa Sagent & Signal Hill Company A

19

Promoting M&A Deals by Leveraging Daiwa’s Global Network

Increase in Cross-border M&A Deals by Japanese Corporations

Strengthened M&A coverage in North America by fully acquiring Sagent and Signal Hill. We will continue to promote M&A advisory by leveraging Daiwa’s new global network, adding the U.S. platform.

Strengthened Global Network with the Acquisition of Sagent and Signal Hill

(Y tri)

(CY)

Fee Pool by Region Deal Value by Region

Global Total Y3.3tri

(2016) Americas 59.2％

Europe 27.6％

Asia 9.4％

Japan 2.4％

Global Total Y352.1tri

(2016)

Americas 51.3％

Europe 23.5％

Asia 21.2％

Japan 2.7％

※The figures for each region is calculated according to domicile of the target (Source: Thomson Reuters) ※The figures are calculated at 1 USD = 108.8 JPY (2016 average)

To create synergy with other overseas offices by expanding size and sector coverage To expand sector and regional coverage within the U.S. (esp. west coast)

Purpose for Acquiring Sagent and Signal Hill

Deal Value of Cross-border M&As between Japanese and American Corporations

Approx. Y2.8tri

Deal Value of Cross-border M&As between European and American Corporations

Approx.Y33tri

Market where synergy with DC Advisory is expected

M&A Revenues

** Sagent & Signal Hill: sum of each revenues for CY2016


※Calculated at 1 USD = 108.8 JPY (2016 average) ※Deal values are as of CY2016 (Source: Thomson Reuters)

FY2015 FY2016*

(Source: RECOF)

(Source: Materials disclosed by company)

20

Further Expansion of Stable Revenues through Portfolio Diversification

【Industry Trend】 Total Value of Real Estates Acquired by J-REITs Daiwa’s Real Estate AM Business AUM

Initiatives Going Forward

Source: The Association for Real Estate Securitization, Ministry of Finance

(Y bil)

As the J-REIT market continues to grow, we will aim to expand the Group’s stable revenues by diversifying our portfolio, in addition to accelerating growth of our existing funds.

※The figures are as of the end of calendar year, based on purchase amount

Offices (J-REIT)

Y265.0bil Y829.0bil

End of Mar. 2009

End of Sept. 2017

Further expansion of stable revenues

Expand asset size of existing

funds Diversification of investment

(CY)


Offices (J-REIT)

Residences (Private REIT)

Residences (J-REIT)

Healthcare facilities (J-REIT)

Logistics facilities

(Private fund)

Estimated dividendyield (%)

4.1 7.3 6.8 4.5 6.2 4.6 3.6 3.0 3.4 3.5 4.1

10-yr JGB yield (%) 1.50 1.18 1.29 1.13 0.99 0.79 0.74 0.33 0.27 0.04 0.01

Spread 2.6 6.1 5.5 3.4 5.2 3.8 2.9 2.7 3.2 3.5 4.1

Expand real estate AM business

overseas

0

3,000

6,000

9,000

12,000

15,000

18,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017.8

Office Commercial Residence Logistics

Hotel Healthcare Other

0

200

400

600

800

1,000

1,200

1,400

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY20171H

Yen deposit (left)Foreign Currency Deposit (left)Number of accounts (right)

21

Gateway Function of the Securities-Banking Business Model

Daiwa Next Bank: Deposit Balance and Number of Accounts Cross-selling Ratio* and Purchased Products (Total)

Amidst the ultra low interest rate environment, we will continue to provide the gateway function “from savings to investment” and enhance banking services, as well as propose cross-selling according to client needs.

(Y bil) (thousands) (Y bil)

Promote Client Transactions through Enhancement of Functions and Services

Continue efforts to acquire new clients

Campaign for newly opened yen time deposits Began offering time deposits in Brazilian Real

Strengthen initiatives to expand deposit balance of high interest rate currency

Strengthen capturing inbound clients Enhancement of Functions and Services

*Cross-selling ratio: Accumulated total accounts of cross-selling to accumulated total accounts of newly-opened deposits. Newly-opened time deposits: yen denominated time deposits that have been placed within three months since opening time deposit accounts.


15.2%

23.6%

37.4%

46.1%

50.6%

56.2% 55.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0

200

400

600

800

1,000

1,200

1,400

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY20171H

Equity Stock investment trustsFund wraps Domestic bondsForeign bonds OtherCross-selling ratio (right)

22

Initiatives on New Businesses Centered on AI and FinTech

Invested into Startups with Next Generation Technology

Acquire opportunities for IB deals Enhance support for startups

R&D functions for AI and Blockchain Strengthen relationships With LP investor companies

Blockchain AI VR/AR BioTech SECURITY

＜Investment Fields＞

50% 50%

LP Investment

Operation management

Investment

Investor companies

LP Investment

＜Investment Examples＞

※2 As of the end of October 2017 ※3 Five areas of focus: Blockchain, AI, VR/AR, Security, BioTech


LP Investment

Entered into a basic agreement※1 for strategic business cooperation with Finatext and Smartplus to establish next generation securities platform.

Invested into 14※2 startups in five areas※3 which DG Lab Fund focuses on for research and development.

Strategic Corporation with Finatext and Smartplus※1

Smartplus (Subsidiary of Finatext )

Front system for each customer needs

(Mobile Apps)

Securities exchange

Investment (Acquire a majority of the shares)

Transaction

Investment Personnel dispatch

Support for system construction

Agency

Agent Securities Firm

Order execution

Provide new financial value for individual investors

Expansion of business areas through alliance

Business for asset building generation, R&D functions related

to online securities business Take into revenue opportunities

Middle – Back office system

※1 Plan to enter into capital and business alliance defining a specific content in 2017. The contents presented on the slide, which is based on the basic agreement, is subject to change in the process of finalizing the agreement.

Ⅲ- Capital Policy

24

Ⅲ- Capital Policy

Minimum regulatory requirements (If Basel III is fully applied)

11% or more

Risk appetite indicator (Internal criteria)

Growth investments, shareholder returns, etc.

Effects from financial regulations

11.0%

Consolidated Total Capital Ratio

Daiwa’s Consolidated Total Capital Ratio

22.6%

Breakdown of minimum regulatory requirements

Factors to increase Risk Weighted Assets ＝ Factors to decrease capital ratio Fundamental review of trading book Review of credit risk calculations Review of the CVA framework

※There continues to be uncertain factors such as risk calculation method and finalization of regulatory rules, so effect of such factors is subject to be reviewed.

Capture opportunities for growth investments while achieving the optimal balance between “maintenance of financial soundness”, “improvement of capital efficiency”, and “strengthening shareholder returns”.

Takes into account minimum regulatory requirements and comprehensive stress test.

Required level of capital 8.0％

Capital conservation buffer 2.5％

D-Sib surcharge 0.5％

Total 11.0％

Current Level of Total Capital Ratio Aim to maintain sufficient level of capital ratio while aptly responding to regulatory changes and securing funds for future growth investments. Additionally, aim to improve sustainable corporate value through securing liquidity and enhanced shareholder returns.

※As of the end of June 2017

25

Stance Towards Investment for Growth - Examples of Investments and Business Alliances -

Basic Stance

Investments for the expansion of client base and earnings power in the domestic securities business Initiatives directed towards investment in areas that have an affinity with our securities business Investment in overseas business to strengthen mid-to-long term revenue sources

Domestic Overseas

iDeCo 2017.3 Capital and business alliance with SBI Benefit

2017.11 Entered into a basic agreement with Finatext and Smartplus

Continue to increase number of WCS (Wealth and Corporate Client Solutions) personnel

Expansion of Stable Revenues

2015.12 Mi-Casa AM became consolidated company

Promotion of Alliance Strategy

2016.4 Saigon Securities became equity method affiliate

2016.12 Acquired shares in China Securities (Business alliance in 2014)

Singapore

Vietnam

China

Strengthening of M&A Business

2016.12 Business alliance with Ambit Private Limited

2017.9 Fully acquired Sagent 2017.10 Fully acquired Signal Hill

India

U.S.

Strengthening IPO Business and Support for Startups

2016.7 Established and invested in DG Lab Fund, an investment fund directed towards startups Take in Economic Growth Potential of the Asia Region

2017.4 Invested in COL Financial (leading online brokerage company in the Philippines)

Philippines

Improve Platforms to Respond to the Needs of Wide Range of Investors

FinTech

Private Banking Business in Asia / Wealth Management

Real Estate AM

Infrastructure

Ⅲ- Capital Policy

2016.2 IDI Infrastructures became consolidated company

26

Maintaining Solid Shareholder Returns

Dividend per share (JPY)

Payout ratio (actual)

Share repurchase

Dividend Policy Dividends will be paid semi-annually at a payout ratio of approx. 40% based on the consolidated financial performance. The Company will also consider increasing returns to its shareholder with various options including share buyback

when it sufficiently secures capital to pursue further growth.

34.9% 34.1% 34.5%

42.5% 42.3%

Amount to be repurchased (upper limit) Y40.0bil

Share repurchase program

Ⅲ- Capital Policy

Total payout ratio: 58.3%

42.3% (Actual payout ratio in 1H)

Total payout ratio: 60.4%

Amount repurchased Y18.6bil

Amount repurchased Y19.0bil

15 34 30 29 26

3 12 17 17 14 16 17 12 13 13 13

FY2013 Interim Year-end




“Passion for the Best” 2014 （FY2012-FY2014）

“Passion for the Best” 2017 （FY2015-FY2017）

FY2017 Interim


Ⅳ- Closing Remarks

Initiatives Toward Realization of High Productivity and Innovation Ⅳ- Closing Remarks

Unpredictable market changes faced by the industry with the

advancement of IT, FinTech, etc.

Diversified work styles in light of decreasing birthrate

and aging society

Improvement × Innovation Improve productivity ahead of government and industry

× The pioneer mentality engrained in Daiwa’s DNA

Reforms led by two “I”s

Utilize the time gained through improved productivity for the realization of innovation

Employees

Clients Shareholders

Society

Realize work style that leads to higher motivation

Offer products, services, and solutions that accurately meets client needs

Sustainable growth through healthy profits

Lead the Japanese society in high productivity and innovation

28

Expectation for the shift “from savings to asset formation”

Take various initiatives toward the realization of higher productivity and innovation

Appendix

30

Third-Party Recognitions on ESG Practices Appendix

DJSI World / Asia Pacific

Selected 7 consecutive years

FTSE4Good Index Series


Dow Jones・RobecoSAM FTSE

GRESB 2017 “Green Star”

Awarded the high recognition 6 consecutive years (Daiwa Office Investment Corporation)

GRESB Survey

Bloomberg Financial Services Gender Equality Index

Selected for the first time in 2017

Bloomberg

ESG Related Indices

MSCI Japan Women Empowering Index （WIN)

FTSE Blossom Japan Index

FTSE

MSCI

Nadeshiko Brand (Companies with excellent track records in empowering women)


Health and Productivity Stock Selection

Ministry of Economy, Trade and Industry Tokyo Stock Exchange

Ministry of Economy, Trade and Industry Tokyo Stock Exchange

Certified as Family-Friendly Employer (“Platinum Kurumin”)

Certified as Promoting Working Environment Favorable for Balancing

Work with Long-Term Care

Ranked in Top Companies to Work For (New Graduates)

Ministry of Health, Labour and Welfare

Minister Prize in Equal Employment/Work-Life Balance

Advanced Corporation Award for Promotion of Women

Received the Excellence Award in the “Family Friendly Enterprise” category. We were recognized for proactively supporting employees to balance work and child care or long-term care.


Received the Minister of State for Special Missions Award for proactively promoting women in the workplace, for efforts to curb long working hours, and for supporting employees with their work-life balance.

Overall Ranking: 7th (male: 2nd )

BEST 100 Companies where Women Play an Active Part


Ranked No.3 in “Promotion of Women” Category

Highly recognized for implementing a wide range of initiatives that help female employees succeed by reaching their full potential.


Gender Equality Bureau, Cabinet Office Nikkei WOMAN

Nikkei Womenomics Project

(2006 Overall Ranking: 27th)

Weekly Toyo Keizai’s Top Companies to Work For Ranking by 2018 graduates, 2nd half period

31

Credit Ratings of Our Group

S&P

Moody’s

Appendix

Daiwa Securities Group Inc.

Daiwa Securities Co. Ltd.

A A

A- A-

BBB+ BBB+

BBB BBB

BBB- BBB-


FY2017FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Daiwa Securities Group Inc.

Daiwa Securities Co. Ltd.

A2 A2

A3 A3

Baa1 Baa1

Baa2 Baa2

Baa3 Baa3


FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

32

Enhance Corporate Governance System

Ratio of outside directors:

71.4%

Nominating Committee

Audit Committee

80.0%

Compensation Committee

60.0% (5 out of 7) (4 out of 5) (3 out of 5)

Elected outside directors as chairperson of all three committees to establish more transparent and objective governance system

Recent initiatives in corporate governance June 2004

Oct. 2015

June 2016 Shifted to a Committee System

(Currently, a company with Three Committees System)

Complied with the Corporate Governance Code

Established the Outside Directors Council

Elected one additional outside director and six out of 14 Board of Directors as outside directors (Outside directors ratio: 42.9%)

Apr. 2017 Chairperson of all three Committees have become

outside director

Appendix

Ratio of outside directors: Ratio of outside directors:

33

Overseas Alliance Network Appendix

Europe

Daiwa Corporate Advisory

May 2009: acquisition of Close Brothers (Currently DC Advisory)

Sanford C. Bernstein Limited

Apr. 2014: business alliance (Europe equity research)

Thanachart Securities

Feb. 2013, business alliance (Thai equity research)

Thailand 中信建投証券

Nov. 2014, business alliance

(IB/GM covering China)

China Ambit Private Limited

India

Dec. 2016: business alliance for wealth management business

(Opened Japan Desk)

Myanmar Securities Exchange Centre (MSEC)

(JV with Myanma Economic Bank)

Feb. 2016: grant of securities license Mar. 2016: began stock trading/ became equity method affiliate

Myanmar

Bahana Securities

Sept. 2013: business alliance

(Indonesian equity research / IB)

Indonesia

Saigon Securities

June 2008, capital and business alliance(comprehensive

business covering Vietnam)

Increased stake in Apr. 2016 Became equity method affiliate

Vietnam Affin Hwang

Investment Bank

Dec. 2013: business alliance

(Malaysia equity research)

Malaysia

Australia and New Zealand Banking Group

Feb. 2014: business alliance

(M&A covering Australia, NZ)

Australia New Zealand Philippines

Development Bank of Philippines

Mar. 1995: established joint venture

Nov. 2015: business alliance

(IB covering the Philippines)

Dec. 2016: business alliance

(M&A covering India)

Mirae Asset Global Investments

Cooperation of management and sales of investment trusts

South Korea

大和國泰證券 (Daiwa-Cathay

Capital Markets)

Oct. 2001: established joint venture

Taiwan

Dec. 2016: acquisition of share

U.S.

Sagent Advisors Apr. 2007: Capital and business alliance in M&A business

Signal Hill

Sept. and Oct. 2017: Fully acquired the two companies

18.4

-50

0

50

100

150

（Y tri）

91.8

-8.4

21.9

-50

0

50

100

150

（Y tri）

853

945

32

24480

5201,566

1,832

0

400

800

1,200

1,600

2012/9 2017/6

（Y tri）

Stocks/Equity Interests Investment TrustsCash/Deposits BondsInsurance/Pension Others

34

Progress of the Shift “from Savings to Investment”

Household Financial Assets (Sept. 2012 vs June 2017)

Market Factor (Market Value Adjustment)

Transaction Factor (In/Outflow of Assets)

Appendix

Transaction Factor

Y104.5tri (39.3％)

Market Factor

Y161.5tri (60.7％)

96 56

191

100 Stocks/

Equity Interests +Y94.9tri （+99.2％）

Investment Trusts

+Y44.1tri (+78.5％)

Cash/ Deposits +Y91.6tri （+10.7％）

Bonds ▲Y8.3tri （▲26.0％）

Insurance/ Pension +Y40.2tri （+8.4％）

Total Assets +Y266.0 tri (+17.0％)

117.3

Stocks Equity Interests

Investment Trusts

Cash Deposits

Insurance Pension

Insurance Pension

Investment Trusts

Stocks Equity Interests

Bonds

21.0

-22.4 23.1

Value Profit

Value Loss

Value Profit

Value Loss

Factor Analysis

(Source) Compiled by Daiwa Securities Group Inc. based on the Bank of Japan’s Flow of Funds Account

Daiwa Securities Group Inc. Investors Relations

TEL: +81-3-5555-1300 FAX: +81-3-5555-0661 E-mail: [email protected]

URL: http://www.daiwa-grp.jp/ir/english

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