Daiwa Investment Conference Tokyo 2016 Presented on Tuesday, March - PowerPoint PPT Presentation

Daiwa Securities Group Inc. Daiwa Investment Conference Tokyo 2016 Presented on Tuesday, March 1, 2016 at “The Prince Park Tower Tokyo” Takashi Hibino, President and CEO Daiwa Securities Group Inc. This presentation may contain forward-looking statements about the Daiwa Securities Group. You can identify these statements by the fact that they do not relate strictly to historic or current facts. These statements discuss future expectations, identify strategies, contain projections of results of operations or of financial condition or state other “forward-looking” information. These statements are based on currently available information and represent the beliefs of the management of the Daiwa Securities Group. These statements are subject to numerous risks and uncertainties that could cause the Daiwa Securities Group’s actual results, performance, achievements or financial condition to differ materially from those described or implied in the forward-looking statements. The Daiwa Securities Group undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. These potential risks and uncertainties include, but are not limited to: competition within the financial services industries in Japan and overseas, our ability to adjust our business focus and to maintain profitable strategic alliances, volatile and sudden movements in the international securities markets, foreign exchange and global economic situations affecting the Daiwa Securities Group.

Daiwa Investment Conference Tokyo 2016 Contents Ⅰ - Business Environment ・・・・ 3 Ⅱ - Achievements in the Medium Term Management Plan ・・・・ 7 Ⅲ - Progress of Individual Strategies for Basic Policies ・・・・ 13 Ⅳ - Basic Group Strategies ・・・・ 23 Appendix ・・・・ 28 2

Ⅰ- Business Environment 3

Ⅰ - Business Environment Changes to the Economic Environment Real GDP (Jan. 2007 - Dec. 2015) (QoQ, %) Consumption 4.5 tax increase 3.0 1.5 2015 2.0 0.0 Imports Exports -1.5 1.0 Publ. Demand -3.0 Start of the second Abe administration Priv. 0.0 Inventories -4.5 Priv. Non-Resi. 2007 2008 2009 2010 2011 2012 2013 2014 2015 Invt. -1.0 Priv. Resi. Invt. Priv. Consumption Consumer Price Index (Jan. 2007 - Dec. 2015) -2.0 Real GDP Jan.-Mar. Apr.-Jun. Jul.-Sep. Oct-Dec. (YoY, %) 3.0 Jan. 2016: Introduction of CPI (less fresh food) negative 2.0 CPI (less fresh food and energy) interest rates Introduction of 1.0 QQE 0.0 -1.0 Expansion of -2.0 QQE Note: Adjustment of consumption tax conducted by the Bank of Japan. -3.0 Source: Cabinet Office; compiled by DIR based on 2007 2008 2009 2010 2011 2012 2013 2014 2015 the Bank of Japan statistics 4

Ⅰ - Business Environment Changes to the Market Environment Nikkei 225 and JPY/USD Rate (Jan. 2007 – Feb. 2016) (Yen) (JPY/USD) Peak in 2015: 21,000 130 Fed raises 20,952yen interest rate 20,000 125 19,000 18,000 120 17,000 Global stocks fall on China worries BOJ introduces 16,000 115 negative interest rates 15,000 Nikkei 225 (left) JPY/USD Rate (right) 14,000 110 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 (JPY/USD) (Yen) 22,000 130 Nikkei 225 (left) JPY/USD Rate (right) 120 18,000 110 14,000 100 Start of the second Abe administration Recent PBR 1.02X (Dec. 26, 2012) PBR 1.07X 90 10,000 (Feb. 24, 2016) 80 Post-Lehman low PBR 0.81X (Oct. 27, 2008) 6,000 70 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Pre-Lehman Crisis Second Abe Administration From Post-Lehman Crisis to Start of the Second Abe Administration 5

Ⅰ - Business Environment Consolidated Results of 3Q FY2015   Consolidated net operating revenues: Y403 bil; Ordinary income: Y136.5 bil; Profit attributable to owners of parent Consolidated net operating revenues: Y403 bil; Ordinary income: Y136.5 bil; Profit attributable to owners of parent company: Y95.5 bil for 1Q-3Q FY2015. company: Y95.5 bil for 1Q-3Q FY2015. % Change % Change FY2015 FY2014 FY2015 (Y mil) FY2014 vs vs 1Q 2Q 3Q 1Q-3Q 1Q-3Q 2Q/15 1Q-3Q/14 Net Operating Revenues 154,663 123,579 124,799 1.0% 392,903 403,042 2.6% 532,220 SG&A 95,574 91,281 89,331 -2.1% 268,462 276,187 2.9% 361,380 Ordinary Income 63,113 35,456 37,950 7.0% 135,000 136,519 1.1% 184,578 Profit (loss) attributable to owners of parent 44,836 24,347 26,354 8.2% 109,968 95,537 -13.1% 148,490 Shareholders' Equity 1,272,263 1,258,269 1,261,870 1,196,309 1,261,870 1,238,657 BPS (Y) 744.30 732.15 734.13 700.85 734.13 725.27 Profit Attributable to Owners of Net Operating Revenues (Y bil) Ordinary Income (Y bil) Dividend (Y) Parent Company (Y bil) 154.6 20 160 80 80 17 122.4 130.1 140.2 139.3 16 123.5 124.7 63.1 14 15 120 60 60 51.0 49.5 44.8 39.7 44.2 34.3 37.0 38.5 38.5 35.4 37.9 80 10 40 40 24.3 26.3 40 20 20 5 0 0 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Interim FY end Interim FY2014 FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 FY2015 6

Ⅱ- Achievements in the Medium Term Management Plan 7

Ⅱ - Achievements in the Medium Term Management Plan Medium Term Management Plan (“Passion for the Best” 2017) In response to the full-fledged start of an era of transition from savings to investment, attract customers with the industry’s top quality, and become their best partner FY 2015 FY 2016 FY 2017 investment” and “improvement of corporate value” Positive cycle of “transition from savings to Provide investment services to lead the era of transition from savings to investment Basic Policy 1: Pursue best quality Establish product and service platforms in response to the needs of a wide range of  investors Strengthen asset management abilities  Expand the pool of talented personnel with advanced expertise  Basic Policy 2: Dramatically expand the customer base and revenue Strengthen approach to a wide range of investors by leveraging product and service  platforms Dramatically expand the customer base and revenue by responding to growing  investment needs Provide solutions that contribute to the improvement in corporate value Basic Policy 3: Support the sustainable growth of companies and the development of new industries  Identify and develop next-generation growth companies and help them to raise capital for growth  Provide solutions in response to corporate globalization and M&A needs Numerical targets 2. Fixed cost coverage ratio : 1. ROE: 10% or more 75% or more in the final fiscal year 8

Ⅱ - Achievements in the Medium Term Management Plan Progress of Medium Term Management Plan (Numerical Targets) Fixed Cost Coverage Ratio: ROE: 10% or more 75% or more in the final fiscal year (FY2017) ROE （ excl. effect of losses Stable Profit attributable to Shareholders’ Fixed cost Fixed cost carried forward belonging ROE equity （ Y bil ） revenues owners of parent （ Y bil ） coverage ratio to Daiwa Securities ） （ Y bil ） company （ Y 100mil ） *Stable revenues consist of : AM Management fees （ including investment advisory fees ） , agency fees, Daiwa Next Bank profit margins, Daiwa Office Investment net operating revenues, Daiwa Real Estate AM management fees, management fees on SMA/Fund 17.0% 1,800 18% Wrap, interest fees on margin, interest fees on LMS etc. 250 80% 1,600 16% 68% 70% 62% 1,400 14% 12.8% 12.8% 200 56% 60% 1,200 12% 10.2% （ Annualized ） 9.7% 45% 50% 150 1,000 10% 8.6% 40% 800 8% 6.3% 100 30% 600 6% 20% 400 4% 50 10% 200 2% 0 0% 0 0% FY2012 FY2013 FY2014 3Q FY2015 FY2012 FY2013 FY2014 3Q FY2015 (Annualized) 9

Ⅱ - Achievements in the Medium Term Management Plan Trend of Fixed Cost Coverage Ratio   The Group will aim to further strengthen its robust business structure through disciplinary cost control and steady expansion of stable The Group will aim to further strengthen its robust business structure through disciplinary cost control and steady expansion of stable revenues. revenues. Trend of Stable Revenues, Fixed Cost, and Fixed Cost Coverage Ratio (Y bil) 70 80% Fixed Cost (left) Stable Revenues (left) Fixed Cost Coverage Ratio (right) 70% 60 60% 50 50% 40 40% 30 30% 20 20% 10 10% 0 0% 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 3Q FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Passion for Passion for the Best “2014” the Best “2017” （ FY2012-FY2014 ） （ FY2015-FY2017 ） 10