Daiwa Securities : Presentation for 4Q FY2023

Daiwa Securities Group Inc.

4Q FY2023 Earnings Announcement

April 25, 2024

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.

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 (4Q/FY2023, YoY)

Achieved revenue and profit growth in all divisions*. Ordinary income reached the highest level in 9 years.

Consolidated earnings results

Net operating revenues

Ordinary income

Profit attributable to owners of parent

FY2023 1Q-4Q

¥590.9 bn

¥174.5 bn

¥121.5 bn

FY2022 1Q-4Q

¥464.2 bn

¥86.9 bn

¥63.8 bn

• Changes vs FY2022

+27.3%

+100.8%

+90.3%

• Retail Division's ordinary income was ¥58.9 bn, due to the steady progress of shifting to wealth management business model (highest level in 8 years).
• • 4Q's contract amount of wrap account service was at new record high (¥826.7 bn). Net inflow was the highest level in 9 years (¥487.9 bn). Contract AUM hit a record high of ¥4.1 tn**.
  • Assets under Custody reached record high of ¥91.0 tn**.
• Wholesale Division secured ordinary income of ¥44.0 bn due to the recovery in both primary and secondary markets.
• • Global Markets saw revenue and profit growth in both equity and FICC due to the increase in customer activities.
  • Global Investment Banking's M&A related revenue (¥43.5 bn) reached new record high***.
• Asset Management Division reached new record highs in both net operating revenue (¥73.1 bn) and ordinary income (¥45.9 bn)***.
• • Daiwa Asset Management reported a net inflow of ¥663.3 bn in publicly offered stock investment trusts (excluding ETFs), highest level in 9 years. AUM reached a record high (¥29.0 tn).

Annual dividend: 44 yen (Interim dividend: 19 yen, Year-end dividend: 25 yen)

• Annual dividend payout ratio: 51.8%, Total payout ratio: 80.1%

• Divisions as of end-Mar 2024 (Retail, Wholesale, Asset Management, Investment)

**	Includes Wholesale Division	3
***	Since disclosing division information in FY2010

Summary (4Q/FY2023, QoQ)

Ordinary Income was ¥56.7 bn, highest level in 9 years.

Consolidated earnings results

Net operating revenues

Ordinary income

Profit attributable to owners of parent

FY2023 4Q

¥164.5 bn

¥56.7 bn

¥39.5 bn

• Changes vs 3Q/FY2023

+11.3%

+38.9%

+39.1%

• For Retail Division, both net operating revenues and ordinary income increased. Asset based revenues (¥24.9 bn) were record high due to increase in stock investment trust sales (¥470.0 bn) and high level of wrap account service's contract amount (¥217.9 bn).
• For Wholesale Division, Global Markets saw equity revenue growth due to increased customer flows. For Global Investment Banking, M&A related revenue hit new record high. Expenses related to strategic strengthening in M&A in US/Europe resulted to decline in profits.
• Annualized ROE: 10.6%

Net Operating Revenues

200 (¥ Billions)

164.5

150					125.7 134.1	144.3 147.8
			121.4
111.7	106.1 110.9
100
50

0

4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
FY21		FY2022			FY2023

Ordinary Income

		(¥ Billions)
60			56.7
40	40.8	40.8
	36.0
	30.8

23.323.1

20 18.0 14.8

0

4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
FY21		FY2022			FY2023

60

40

20

0

Profit Attributable to

Owners of Parent

(¥ Billions)

				39.5
			29.7	28.4
		19.5	23.7
17.9		17.1
11.8	15.2

4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
FY21		FY2022			FY2023		4

Consolidated

Financial Summary

	FY2022		FY2023			% Change	% Change			% Change
(¥ Millions)				vs	vs	FY2022	FY2023	vs
4Q	1Q	2Q	3Q	4Q
		3Q/FY23	4Q/FY22			FY22
Operating revenues	293,860	266,259	303,827	335,378	372,016		10.9%	26.6%	866,090	1,277,482	47.5%
Net operating revenues	125,737	134,110	144,321	147,894	164,583		11.3%	30.9%	464,226	590,910	27.3%
SG&A	101,822	103,377	106,492	109,834	117,500		7.0%	15.4%	397,952	437,205	9.9%
Ordinary income	30,818	36,096	40,835	40,876	56,778		38.9%	84.2%	86,930	174,587	100.8%
Profit (loss) attributable to	17,124	23,712	29,793	28,457	39,594		39.1%	131.2%	63,875	121,557	90.3%
owners of parent
Total assets	26,413,248	31,501,328	33,424,666	31,734,346	32,027,299				26,413,248	32,027,299
Net assets	1,675,489	1,736,856	1,773,266	1,728,706	1,788,658				1,675,489	1,788,658
Shareholders' equity*	1,407,840	1,468,713	1,504,956	1,459,671	1,522,186				1,407,840	1,522,186
EPS (¥)	11.79	16.32	20.60	20.02	28.22				43.53	84.94	95.1%
BPS (¥)	968.93	1,010.78	1,046.95	1,031.99	1,086.20				968.93	1,086.20
ROE (Annualized)	4.9%	6.6%	8.0%	7.7%	10.6%				4.6%	8.3%

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

FY2023 Dividends

44 yen

(including 19 yen interim dividend)

5

Consolidated

Segment Summary

(¥ Millions)

Net operating revenues	FY2022		FY2023		% Change	% Change	FY2022	FY2023	% Change
					vs	vs	vs
4Q	1Q	2Q	3Q	4Q
	3Q/FY23	4Q/FY22			FY22
Retail	40,550	49,845	49,387	49,886	59,262	18.8%	46.1%	164,336	208,380	26.8%
Wholesale	43,344	51,627	54,990	51,840	62,021	19.6%	43.1%	160,891	220,479	37.0%
Global Markets	25,155	36,848	36,921	33,758	41,866	24.0%	66.4%	102,850	149,394	45.3%
Global Investment Banking	18,188	14,778	18,069	18,081	20,155	11.5%	10.8%	58,041	71,084	22.5%
Asset Management	17,569	17,309	18,031	18,620	19,221	3.2%	9.4%	70,394	73,182	4.0%
Securities Asset Management	10,346	10,862	11,653	11,886	12,776	7.5%	23.5%	42,882	47,179	10.0%
Real Estate Asset Management	7,222	6,447	6,377	6,733	6,444	-4.3%	-10.8%	27,512	26,003	-5.5%
Investments	7,046	1,838	4,534	8,303	8,233	-0.8%	16.8%	16,446	22,910	39.3%
Other/Adjustments	17,226	13,489	17,377	19,244	15,845	-	-	52,157	65,956	-
Consolidated total	125,737	134,110	144,321	147,894	164,583	11.3%	30.9%	464,226	590,910	27.3%
Ordinary income	FY2022		FY2023		% Change	% Change	FY2022	FY2023	% Change
					vs	vs	vs
4Q	1Q	2Q	3Q	4Q
	3Q/FY23	4Q/FY22			FY22
Retail	6,272	13,542	12,024	12,575	20,780	65.2%	231.3%	25,886	58,924	127.6%
Wholesale	3,608	11,041	12,766	6,823	13,405	96.5%	271.5%	2,822	44,037	15x
Global Markets	196	9,783	9,157	5,093	13,613	167.3%	69x	-3,130	37,648	-
Global Investment Banking	3,235	886	3,206	1,059	-642	-	-	4,738	4,510	-4.8%
Asset Management	11,998	9,022	11,551	11,646	13,720	17.8%	14.3%	44,526	45,940	3.2%
Securities Asset Management	3,978	4,403	5,196	5,303	6,056	14.2%	52.2%	18,076	20,959	15.9%
Real Estate Asset Management	8,020	4,619	6,355	6,342	7,664	20.8%	-4.4%	26,450	24,981	-5.6%
Investments	6,563	2,975	4,702	5,304	6,686	26.1%	1.9%	13,068	19,669	50.5%
Other/Adjustments	2,375	-486	-209	4,526	2,185	-	-	626	6,015	-
Consolidated total	30,818	36,096	40,835	40,876	56,778	38.9%	84.2%	86,930	174,587	100.8%

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

※ Reporting segments as of the end of March 2024. For reporting segments after April 2024, please refer to the press release "Notice of Changes in	6
Reporting Segments" (https://ssl4.eir-parts.net/doc/8601/tdnet/2404863/00.pdf).

Consolidated

Segment Summary

Net operating revenues		Ordinary income

Retail Division

(¥ Billions)

Wholesale Division

(¥ Billions)

Global Investment Banking (Net operating revenues)

59.2

49.8 49.3 49.8

42.0

40.3

41.1

42.2

40.5

20.7

13.5 12.0 12.5

6.7 6.2 6.1 7.1 6.2

Global Markets (Net operating revenues)

		51.6	54.9
44.9	42.7	43.3
GIB	38.8
	35.9
GM
10.4		11.0	12.7

2.4 3.6

-2.6-0.5

62.0

51.8

13.4

6.8

4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
FY2021		FY2022			FY2023

Asset Management Division

(¥ Billions)

Real Estate AM (Net operating revenues)

Securities AM (Net operating revenues)			18.6	19.2
17.7	18.6	16.9	17.2	17.5	17.3	18.0
11.2	11.1	10.7	10.5	11.9	9.0	11.5	11.6	13.7
4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
FY2021		FY2022			FY2023

4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
FY2021		FY2022			FY2023

Investment Division

(¥ Billions)

				7.0			8.3	8.2
					4.5
4.1	3.6	1.9	3.7	6.5	1.8		6.6
	4.4			5.3
4.1			4.7
			2.9
		0.7	1.2
4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
FY2021		FY2022			FY2023

7

Consolidated

B/S Summary

Consolidated Balance Sheet （March 31, 2024）

(¥ Billions)

Current assets	30,439	(5,566)	Current liabilities	26,797	(5,216)
Cash and deposits	4,398	(531)	Trading products	5,863	(421)
Short-term investment securities	1,410	(279)	Trading securities and other	3,368	(-82)
Trading products	7,534	(-90)	Stocks, Convertible bonds	206	(101)
Trading securities and other	4,870	(-554)	Bonds	3,074	(-224)
Stocks, Convertible bonds	196	(-52)	Other	87	(39)
Bonds	3,398	(-1,051)	Derivatives transactions	2,495	(504)
Beneficiary certificates	43	(-9)	Loans payable secured by securities	11,698	(3,769)
Other	1,231	(559)	Deposits for banking business	4,511	(578)
Derivatives transactions	2,664	(463)	Short-term loans payable	1,272	(-19)
Operational investment securities	138	(11)	Current portion of bonds	159	(-325)
(after allowance for possible investment losses)
Loans secured by securities	12,368	(4,026)
Non-current assets	1,587	(47)	Long-term liabilities	3,435	(283)
Property, plant and equipment	921	(4)	Bonds payable	1,276	(-28)
Intangible assets	127	(2)	Long-term loans payable	2,020	(313)
Investments and other assets	539	(41)	Total liabilities	30,238	(5,500)
Listed stocks	130	(16)	Net assets	1,788	(113)
Unlisted stocks	21	(-4)	Owners' equity	1,318	(25)
Affliated company stocks, etc.	179	(9)	Accumulated other comprehensive income	203	(88)
Other	207	(19)	Non-controlling interests	259	(0)
Total Assets	32,027	(5,614)	Total liabilities and net assets	32,027	(5,614)

• Figures in parentheses indicate changes from March 31, 2023

Total assets:	¥32.02 tn
Net assets:	¥1.78 tn
Shareholders' equity**:	¥1.52 tn

• 80.3% of total assets have high liquidity*.
• • Cash and deposits + Short-term investment securities + Trading products + Loans secured by securities
• Shareholders' equity** increased by ¥114.3 bn from March 31, 2023.
• • Shareholders' equity = Owners' equity +
    Accumulated other comprehensive income

8

Consolidated

Financial Management (Regulatory Capital & Regulatory Liquidity)

Consolidated Capital Adequacy Ratio

Total qualifying capital (¥ billions)			Common equity tier 1 (¥ billions)
Consolidated total capital ratio			Consolidated common equity tier 1 capital ratio

		1,437	1,444	1,449	1,439	1,495	1,502	1,498
1,337	1,360		1,308	1,299
1,246	1,258	1,250	1,240	1,305
	1,189
1,166
19.67%	19.77%	20.43%	20.66%	21.28%	21.13%	21.57%	22.12%	22.40%
17.15%	17.29%	17.72%	17.99%	18.36%	18.22%	18.83%	19.26%	19.42%
3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q
FY2021		FY2022			FY2023

【Regulatory Capital (Basel III)】 (As at December 31, 2023)

• Consolidated Total Capital Ratio : 22.40%
• Consolidated Tier 1 Capital Ratio : 22.26%
• Consolidated Common Equity Tier 1

	Capital Ratio :	19.42%
◼	Consolidated Leverage Ratio :	6.09%

• Figures are as at the end of each quarter.

Consolidated Leverage Ratio

Consolidated Liquidity Coverage Ratio

【Regulatory Liquidity (Basel III)】

Total exposures (¥ billions)

Tier 1 capital (¥ billions)

Consolidated levarage ratio

25,76926,077

22,721

21,947

22,195

19,588 20,641

6.82% 6.59% 6.30% 5.60% 6.56% 6.44% 5.72%

27,268

24,439

5.48% 6.09%

High-quality liquid assets (¥ billions)

Net cash outflows (¥ billions)

Consolidated liquidity coverage ratio

145.4%149.0% 141.1% 143.8%139.6% 135.9% 131.3% 130.7% 131.4% 135.2%

					2,902	2,933	2,930
2,642
	2,593	2,757		2,729			2,886
2,615	2,447
				2,242	2,229	2,134
				2,135
					1,974	2,077
1,797	1,772	1,733	1,802

(Daily average Jan. - Mar. 2024)

• Consolidated Liquidity Coverage Ratio : 135.2%

1,337	1,360	1,431	1,444	1,440	1,429	1,491	1,495	1,489
3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q
FY2021		FY2022			FY2023

3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q
FY2021		FY2022			FY2023

9

Consolidated

P/L Summary

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

(¥ Millions)

Operating revenues Commission received

Net trading income

Net gain (loss) on private equity

Financial revenue Other operating revenue Financial expenses Other operating expenses Net operating revenues SG&A Operating income Non-operating income Ordinary income/loss Extraordinary income/loss Income before income taxes

Total income taxes

Profit (loss) attributable to owners of parent

FY2022 4Q 293,860 72,890 13,891 937 120,218 85,922 101,427 66,696 125,737 101,822 23,915 6,903 30,818 -2,45228,365 8,617 17,124

	FY2023		% Change % Change	FY2022	FY2023	% Change
1Q	2Q	3Q	4Q	vs	vs	vs
3Q/FY23	4Q/FY22			FY22
266,259	303,827	335,378	372,016	10.9%	26.6%	866,090	1,277,482	47.5%
82,381	86,124	86,254	103,771	20.3%	42.4%	279,991	358,532	28.1%
20,480	24,186	26,580	26,913	1.3%	93.7%	70,253	98,160	39.7%
186	3,272	2,968	7,954	168.0%	748.9%	3,692	14,381	289.4%
134,340	154,436	161,866	156,945	-3.0%	30.6%	332,548	607,590	82.7%
28,869	35,807	57,707	76,431	32.4%	-11.0%	179,604	198,816	10.7%
113,701	130,846	141,751	139,554	-1.5%	37.6%	268,498	525,853	95.8%
18,447	28,659	45,733	67,878	48.4%	1.8%	133,365	160,718	20.5%
134,110	144,321	147,894	164,583	11.3%	30.9%	464,226	590,910	27.3%
103,377	106,492	109,834	117,500	7.0%	15.4%	397,952	437,205	9.9%
30,733	37,828	38,060	47,083	23.7%	96.9%	66,273	153,705	131.9%
5,363	3,007	2,816	9,695	244.2%	40.5%	20,657	20,882	1.1%
36,096	40,835	40,876	56,778	38.9%	84.2%	86,930	174,587	100.8%
747	1,865	1,130	1,666	47.4%	-	9,835	5,409	-45.0%
36,844	42,701	42,007	58,444	39.1%	106.0%	96,766	179,997	86.0%
10,886	10,694	11,296	16,682	47.7%	93.6%	23,082	49,561	114.7%
23,712	29,793	28,457	39,594	39.1%	131.2%	63,875	121,557	90.3%

• Commission received increased (+20.3%).

• Brokerage commission* was ¥29.4 bn (+45.2%).
• Underwriting and secondary offering commissions* were ¥8.5 bn (-8.0%).
• Distribution commission* was ¥6.5 bn (+56.2%).
• M&A related commission* was

¥13.3 bn (+14.2%).

• • Breakdown of total commission received (See p.23)
• Net gain on private equity increased due to revenues from energy/infrastructure investments increased (+168.0%).
• Non-operatingincome increased due to increase in equity method investment income.

10