Daiwa Securities : 1Q FY2021 Earnings Announcement

Daiwa Securities Group Inc.

1Q FY2021 Earnings Announcement

July 29, 2021

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 Groupʼs 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.

Table of Contents

Highlights	3-4
Financial Summary	5-7
B/S & Financial Management Summary	8-9
P/L Summary	10
Breakdown of SG&A	11-12
Overseas Operations	13
Segment Information	14-21
Reference	22-35

2

Highlights (1Q/FY2021, YoY)

Both net operating revenues and ordinary income up YoY

Consolidated earnings results		FY2021 1Q		FY2020 1Q		% Changes vs
			1Q/FY2020
Net operating revenues	¥126.7 bn	¥105.4 bn	＋20.2％
Ordinary income
¥34.9 bn	¥21.3 bn	＋63.4％
Profit attributable to owners of parent	¥23.5 bn	¥17.5 bn	＋34.2％

【Retail Division】

• Ordinary income reported ¥10 bn led by steady progress in changing to wealth management business model and cost reduction.
• Investment trust sales amount doubled to ¥478.9 bn owing to asset based fee plan for investment trust*.
• Contract amount of wrap account service increased 2.4x and contract AUM reached a record high (¥2.7 tn**).

【Wholesale Division】

• In Global Markets, revenues from equity remained flat but FICC revenues dropped compared with last fiscal year when bond market was favorable.
• Both net operating revenues and ordinary profits up YoY in Global Investment Banking with contributions from equity and debt underwriting deals and M&A deals.

【Asset Management Division】

• • AUM for both Securities AM and Real Estate AM reached a record high which led increase in both net operating revenues and ordinary income.

  * A commission plan in which customer pays an asset-based fee instead of the commission charged for the investment trust at the time of purchase. The fee will depend on the investment trust total valuation and holding period.

• Includes Wholesale Division

3

Summary (1Q/FY2021, QoQ)

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

1Q FY2021 Net operating revenues: ¥126.7 bn (+1.7%)

• Revenues in Retail Division down QoQ. Investment trust and wrap-related revenues grew but equity revenues slowed from stock market correction.
• Revenues in Wholesale Division down QoQ. In Global Markets, FICC revenues declined on the back of low bond market volatility. In Global Investment Banking, debt underwriting revenues expanded driven by several large deals but equity underwriting and M&A revenues decreased.
• Revenues in Investment Division up QoQ lifted by income gain and capital gain in Daiwa Energy & Infrastructure.

1Q FY2021 Ordinary income: ¥34.9 bn (-1.7%)

• Non-operatingincome decreased from the prior quarter when strong equity method investment gains were posted.
• SG&A declined to ¥94.8 billion (-5.1%) as earnings-linked bonuses decreased.

1Q FY2021 Profit attributable to owners of parent: ¥23.5 bn (-53.4%)

			Annualized ROE: 7.1%	BPS: ¥866.74
				Net Operating Revenues							Ordinary Income							Profit Attributable to
																Owners of Parent
(¥ Billions)												(¥ Billions)									(¥ Billions)
150				112.1 110.6		126.1 124.5 126.7	60											60									50.6
	107.1	96.3	105.4 110.4						40
100																				34.5	35.5	34.9	40
														17.9		22.2	20.2	21.3	23.7								24.9		23.5
50														20						20		16.0	17.3	15.7		17.5	15.2
														9.8									11.2
0														0											0
	1Q	2Q		3Q	4Q	1Q	2Q		3Q	4Q	1Q			1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q		1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q
			FY2019			FY2020		FY21					FY2019			FY2020		FY21				FY2019			FY2020		FY21

4

Consolidated

Financial Summary

(¥ Millions)		FY2020		FY2021	% Change	% Change				FY2020
1Q	2Q	3Q	4Q	1Q	vs 20/4Q	vs 20/1Q
Operating revenues	128,612	128,568	151,636	167,355	149,836	-10.5%	16.5%			576,172
Net operating revenues	105,445	110,488	126,149	124,576	126,721	1.7%	20.2%			466,660
SG&A	88,833	90,768	94,207	99,990	94,873	-5.1%	6.8%				373,800
Ordinary income	21,370	23,750	34,514	35,540	34,922	-1.7%	63.4%			115,175
Profit (loss) attributable to	17,552	15,252	24,985	50,606	23,560	-53.4%	34.2%				108,396
owners of parent
Total assets	25,657,575	25,583,609	26,234,974	26,099,330	25,586,624						26,099,330
Net assets	1,264,195	1,285,466	1,300,145	1,591,841	1,581,457						1,591,841
Shareholders' equity*	1,217,225	1,235,097	1,250,130	1,333,570	1,321,883						1,333,570
EPS (¥)	11.55	10.01	16.40	33.22	15.45					71.20
BPS (¥)	800.39	810.92	820.74	875.12	866.74						875.12
ROE (Annualized)	5.8%	5.0%	8.0%	15.7%	7.1%					8.5%

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

5