Daiwa Securities Group Inc.
2Q FY2023 Earnings Announcement
October 31, 2023
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 (2Q/FY2023, YoY)
Net operating revenues and ordinary income increased YoY, ordinary income was 2.3x (highest level in 8 years).
Consolidated earnings results
Net operating revenues Ordinary income Profit attributable to owners of parent
FY2023 1H
¥278.4 bn
¥76.9 bn
¥53.5 bn
FY2022 1H
¥217.0 bn
¥32.9 bn
¥31.4 bn
- Changes vs 1H/FY2022
+28.3%
+133.5%
+70.1%
- Retail Division's ordinary income doubled to ¥25.5 bn, due to the steady progress of shifting to wealth management business model.
- 2Q's asset based revenues of Retail Division of Daiwa Securities expanded to ¥22.8bn (¥91.2bn in annualized basis). Total cost coverage ratio was 62.6%.
- Both contract amount (¥409.4 bn) and net inflow (¥258.2 bn) of wrap account service* was the highest since FY2015 1H. Contract AUM was record high (¥3.5 tn).
- Wholesale Division secured ordinary income of ¥23.8 bn due to the recovery in both primary and secondary markets.
- Global Markets saw revenue increase in both equity and FICC due to the increase in customer activities.
- Global Investment Banking revenue increased due to contributions from underwriting equity deals and debt deals, as well as expansion in M&A related revenues.
Continue high level of shareholder returns (Interim dividend: 19 yen, Set up of share repurchase program)
- FY2023 interim dividend: 19 yen (highest for interim dividend), dividend pay-out ratio: 51.5%
- Total number of share to be repurchased: up to 35.0 mil shares. Total amount to be paid for
repurchase: up to ¥35.0 bn (2.43% of total shares outstanding, excluding treasury stock).
* Includes Wholesale Division | 3 |
Summary (2Q/FY2023, QoQ)
Ordinary Income was ¥40.8 bn, +13.1% QoQ .
Consolidated earnings results | FY2023 2Q | ||
Net operating revenues | ¥144.3 bn | ||
Ordinary income | ¥40.8 bn | ||
Profit attributable to owners of parent | ¥29.7 bn |
- Changes vs 1Q/FY2023
+7.6%
+13.1%
+25.6%
- Retail Division secured ordinary income of ¥12.0 bn. Wrap account service's contract amount
(¥237.3bn) and net inflow (¥162.1bn) increased rapidly. Asset based revenues were record high. - Wholesale Division's revenue and income increased. M&A related revenues increase in Global Investment Banking was the main driver.
- Annualized ROE: 8.0%
Net Operating Revenues | Ordinary Income | |||||||||||||||||||||||||||||||||||||
(¥ Billions) | 144.3 | (¥ Billions) | ||||||||||||||||||||||||||||||||||||
150 | 134.3 | 134.0 | 60 | |||||||||||||||||||||||||||||||||||
129.2 | 121.4 | 125.7 | ||||||||||||||||||||||||||||||||||||
111.7 106.1 110.9 | ||||||||||||||||||||||||||||||||||||||
100 | 40 | 40.5 | 40.8 | |||||||||||||||||||||||||||||||||||
36.9 | 30.8 | 36.0 | ||||||||||||||||||||||||||||||||||||
23.3 | 18.0 | 23.1 | ||||||||||||||||||||||||||||||||||||
50 | 20 | 14.8 | ||||||||||||||||||||||||||||||||||||
0 | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 0 | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | |||||||||||||||||||
FY2021 | FY2022 | FY2023 | ||||||||||||||||||||||||||||||||||||
FY2021 | FY2022 | FY2023 | ||||||||||||||||||||||||||||||||||||
Profit Attributable to
Owners of Parent
(¥ Billions) 60
40 | ||||||||||||||||||
26.6 | 26.6 | 23.7 | 29.7 | |||||||||||||||
19.5 | ||||||||||||||||||
20 | 17.9 | 15.2 | 17.1 | |||||||||||||||
11.8 | ||||||||||||||||||
0 | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | |||||||||
FY2021 | FY2022 | FY2023 |
4
Consolidated
Financial Summary
FY2022 | FY2023 | % Change | % Change | FY2022 | FY2023 | % Change | ||||||||
(¥ Millions) | vs | vs | vs | FY2022 | ||||||||||
2Q | 3Q | 4Q | 1Q | 2Q | 1H | 1H | ||||||||
1Q/FY23 | 2Q/FY22 | 1H/FY22 | ||||||||||||
Operating revenues | 192,552 | 233,036 | 293,860 | 266,259 | 303,827 | 14.1% | 57.8% | 339,193 | 570,087 | 68.1% | 866,090 | |||
Net operating revenues | 110,933 | 121,433 | 125,737 | 134,110 | 144,321 | 7.6% | 30.1% | 217,055 | 278,432 | 28.3% | 464,226 | |||
SG&A | 98,942 | 99,913 | 101,822 | 103,377 | 106,492 | 3.0% | 7.6% | 196,216 | 209,870 | 7.0% | 397,952 | |||
Ordinary income | 14,855 | 23,170 | 30,818 | 36,096 | 40,835 | 13.1% | 174.9% | 32,941 | 76,932 | 133.5% | 86,930 | |||
Profit (loss) attributable to | 19,576 | 15,295 | 17,124 | 23,712 | 29,793 | 25.6% | 52.2% | 31,455 | 53,505 | 70.1% | 63,875 | |||
owners of parent | ||||||||||||||
Total assets | 31,461,475 | 28,115,421 | 26,413,248 | 31,501,328 | 33,424,666 | 31,461,475 | 33,424,666 | 26,413,248 | ||||||
Net assets | 1,697,428 | 1,657,832 | 1,675,489 | 1,736,856 | 1,773,266 | 1,697,428 | 1,773,266 | 1,675,489 | ||||||
Shareholders' equity* | 1,428,464 | 1,388,380 | 1,407,840 | 1,468,713 | 1,504,956 | 1,428,464 | 1,504,956 | 1,407,840 | ||||||
EPS (¥) | 13.24 | 10.52 | 11.79 | 16.32 | 20.60 | 21.24 | 36.91 | 43.53 | ||||||
BPS (¥) | 971.62 | 955.66 | 968.93 | 1,010.78 | 1,046.95 | 971.62 | 1,046.95 | 968.93 | ||||||
ROE (Annualized) | 5.5% | 4.3% | 4.9% | 6.6% | 8.0% | 4.5% | 7.3% | 4.6% | ||||||
* Shareholders' equity = Owners' equity + Accumulated other comprehensive income
FY2023 Interim Dividend
19 yen
5
Consolidated
Segment Summary
(¥ Millions)
Net operating revenues | FY2022 | FY2023 | % Change | % Change | FY2022 | FY2023 | % Change | FY2022 | |||||||||||||||||||||||||||||||
vs | vs | vs | |||||||||||||||||||||||||||||||||||||
2Q | 3Q | 4Q | 1Q | 2Q | 1H | 1H | |||||||||||||||||||||||||||||||||
1Q/FY23 | 2Q/FY22 | 1H/FY22 | |||||||||||||||||||||||||||||||||||||
Retail | 41,187 | 42,203 | 40,550 | 49,845 | 49,387 | -0.9% | 19.9% | 81,581 | 99,232 | 21.6% | 164,336 | ||||||||||||||||||||||||||||
Wholesale | 38,853 | 42,727 | 43,344 | 51,627 | 54,990 | 6.5% | 41.5% | 74,819 | 106,617 | 42.5% | 160,891 | ||||||||||||||||||||||||||||
Global Markets | 36,921 | 0.2% | 46.0% | 73,770 | 48.2% | ||||||||||||||||||||||||||||||||||
25,280 | 27,923 | 25,155 | 36,848 | 49,772 | 102,850 | ||||||||||||||||||||||||||||||||||
Global Investment Banking | 13,573 | 14,804 | 18,188 | 14,778 | 18,069 | 22.3% | 33.1% | 25,047 | 32,847 | 31.1% | 58,041 | ||||||||||||||||||||||||||||
Asset Management | 16,943 | 17,276 | 17,569 | 17,309 | 18,031 | 4.2% | 6.4% | 35,549 | 35,341 | -0.6% | 70,394 | ||||||||||||||||||||||||||||
Securities Asset Management | 10,715 | 10,514 | 10,346 | 10,862 | 11,653 | 7.3% | 8.8% | 22,021 | 22,515 | 2.2% | 42,882 | ||||||||||||||||||||||||||||
Real Estate Asset Management | 6,227 | 6,762 | 7,222 | 6,447 | 6,377 | -1.1% | 2.4% | 13,527 | 12,825 | -5.2% | 27,512 | ||||||||||||||||||||||||||||
Investments | 1,918 | 3,791 | 7,046 | 1,838 | 4,534 | 146.6% | 136.4% | 5,607 | 6,373 | 13.7% | 16,446 | ||||||||||||||||||||||||||||
Other/Adjustments | 12,029 | 15,434 | 17,226 | 13,489 | 17,377 | - | - | 19,496 | 30,867 | - | 52,157 | ||||||||||||||||||||||||||||
Consolidated total | 110,933 | 121,433 | 125,737 | 134,110 | 144,321 | 7.6% | 30.1% | 217,055 | 278,432 | 28.3% | 464,226 | ||||||||||||||||||||||||||||
Ordinary income | FY2022 | FY2023 | % Change | % Change | FY2022 | FY2023 | % Change | FY2022 | |||||||||||||||||||||||||||||||
vs | vs | vs | |||||||||||||||||||||||||||||||||||||
2Q | 3Q | 4Q | 1Q | 2Q | 1H | 1H | |||||||||||||||||||||||||||||||||
1Q/FY23 | 2Q/FY22 | 1H/FY22 | |||||||||||||||||||||||||||||||||||||
Retail | 6,151 | 7,164 | 6,272 | 13,542 | 12,024 | -11.2% | 95.5% | 12,449 | 25,567 | 105.4% | 25,886 | ||||||||||||||||||||||||||||
Wholesale | -549 | 2,435 | 3,608 | 11,041 | 12,766 | 15.6% | - | -3,221 | 23,807 | - | 2,822 | ||||||||||||||||||||||||||||
Global Markets | -1,481 | 227 | 196 | 9,783 | 9,157 | -6.4% | - | -3,554 | 18,941 | - | -3,130 | ||||||||||||||||||||||||||||
Global Investment Banking | 733 | 1,924 | 3,235 | 886 | 3,206 | 261.6% | 336.9% | -421 | 4,092 | - | 4,738 | ||||||||||||||||||||||||||||
Asset Management | 11,551 | 28.0% | 7.1% | 20,574 | -6.3% | ||||||||||||||||||||||||||||||||||
10,785 | 10,569 | 11,998 | 9,022 | 21,958 | 44,526 | ||||||||||||||||||||||||||||||||||
Securities Asset Management | 4,594 | 4,195 | 3,978 | 4,403 | 5,196 | 18.0% | 13.1% | 9,903 | 9,599 | -3.1% | 18,076 | ||||||||||||||||||||||||||||
Real Estate Asset Management | 6,191 | 6,374 | 8,020 | 4,619 | 6,355 | 37.6% | 2.6% | 12,055 | 10,975 | -9.0% | 26,450 | ||||||||||||||||||||||||||||
Investments | 788 | 1,233 | 6,563 | 2,975 | 4,702 | 58.0% | 496.3% | 5,271 | 7,677 | 45.6% | 13,068 | ||||||||||||||||||||||||||||
Other/Adjustments | -2,320 | 1,768 | 2,375 | -486 | -209 | - | - | -3,517 | -695 | - | 626 | ||||||||||||||||||||||||||||
Consolidated total | 14,855 | 23,170 | 30,818 | 36,096 | 40,835 | 13.1% | 174.9% | 32,941 | 76,932 | 133.5% | 86,930 |
*Figures calculated based on managerial accounting of each Group companies. Equity in earnings of affiliates is included in each respective segment.
6
Consolidated
Segment Summary
Net operating revenues | Ordinary income | |
Retail Division
(¥ Billions)
(¥ Billions)
Wholesale Division
Global Investment Banking (Net operating revenues)
Global Markets (Net operating revenues)
49.6 | 49.7 | 49.8 | 49.3 |
42.0 40.3 41.1 42.2 40.5
12.3 | 12.7 | 6.7 | 7.1 | 13.5 | 12.0 | |||
6.2 | 6.1 | 6.2 | ||||||
2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q |
FY2021 | FY2022 | FY2023 |
Asset Management Division
(¥ Billions)
Real Estate AM (Net operating revenues)
Securities AM (Net operating revenues)
17.6 | 18.2 | 17.7 | 18.6 | 16.9 | 17.2 | 17.5 | 17.3 | 18.0 |
12.7 | 11.2 | 11.2 | 11.1 | 10.7 | 10.5 | 11.9 | 9.0 | 11.5 |
2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q |
FY2021 | FY2022 | FY2023 |
50.6 | 53.4 | 51.6 | 54.9 | |||||
44.9 | ||||||||
42.7 | 43.3 | |||||||
38.8 | ||||||||
GIB | 35.9 | |||||||
GM | 16.5 | |||||||
12.6 | 11.0 | 12.7 | ||||||
10.4 | ||||||||
-2.6 | -0.5 | 2.4 | 3.6 | |||||
2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q |
FY2021 | FY2022 | FY2023 |
Investment Division
(¥ Billions)
4.1 | 3.6 | 3.7 | 7.0 | 4.5 | ||||
1.0 | 3.1 | 1.9 | 6.5 | 1.8 | ||||
4.1 | 4.4 | 4.7 | ||||||
1.7 | 1.2 | 2.9 | ||||||
-0.4 | 0.7 | |||||||
2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q |
FY2021 | FY2022 | FY2023 |
7
Consolidated
B/S Summary
Consolidated Balance Sheet (September 30, 2023)
(¥ Billions)
Current assets | 31,846 | (6,973) | ||||
Cash and deposits | 4,403 | (536) | ||||
Short-term investment securities | 1,273 | (141) | ||||
Trading products | 10,711 | (3,085) | ||||
Trading securities and other | 7,678 | (2,253) | ||||
Stocks, Convertible bonds | 214 | (-34) | ||||
Bonds | 5,429 | (979) | ||||
Beneficiary certificates | 38 | (-14) | ||||
Other | 1,995 | (1,323) | ||||
Derivatives transactions | 3,032 | (831) | ||||
Operational investment securities | 127 | (0) | ||||
(after allowance for possible investment losses) | ||||||
Loans secured by securities | 10,720 | (2,378) | ||||
Non-current assets | 1,578 | (38) | ||||
Property, plant and equipment | 923 | (6) | ||||
Intangible assets | 128 | (3) | ||||
Investments and other assets | 526 | (28) | ||||
Listed stocks | 126 | (12) | ||||
Unlisted stocks | 21 | (-4) | ||||
Affliated company stocks, etc. | 182 | (11) | ||||
Other | 195 | (8) |
Current liabilities | 28,338 | (6,756) | ||
Trading products | 6,344 | (902) | ||
Trading securities and other | 3,552 | (100) | ||
Stocks, Convertible bonds | 158 | (53) | ||
Bonds | 3,299 | (1) | ||
Other | 94 | (45) | ||
Derivatives transactions | 2,792 | (801) | ||
Loans payable secured by securities | 12,097 | (4,167) | ||
Deposits for banking business | 4,441 | (508) | ||
Short-term loans payable | 1,351 | (59) | ||
Current portion of bonds | 251 | (-233) | ||
Long-term liabilities | 3,309 | (156) | ||
Bonds payable | 1,148 | (-155) | ||
Long-term loans payable | 2,016 | (309) | ||
Total liabilities | 31,651 | (6,913) | ||
Net assets | 1,773 | (97) | ||
Owners' equity | 1,313 | (21) | ||
Accumulated other comprehensive income | 191 | (75) | ||
Non-controlling interests | 260 | (1) |
Total assets: | ¥33.42 tn |
Net assets: | ¥1.77 tn |
Shareholders' equity**: | ¥1.50 tn |
- 81.1% of total assets have high liquidity*.
- Cash and deposits + Short-term investment securities + Trading products + Loans secured by securities
- Shareholders' equity** increased by ¥97.1 bn from March 31, 2023.
- Shareholders' equity = Owners' equity + Accumulated other comprehensive income
Total Assets | 33,424 | (7,011) | Total liabilities and net assets | 33,424 | (7,011) |
*Figures in parentheses indicate changes from March 31, 2023
8
Consolidated
Financial Management (Regulatory Capital & Regulatory Liquidity)
Consolidated Capital Adequacy Ratio
【Regulatory Capital (Basel III)】
Total qualifying capital (¥ billions)
Consolidated total capital ratio
1,327 | 1,314 | 1,337 | 1,360 |
1,152 | 1,148 | 1,166 | 1,189 |
21.17% | 20.18% | 19.67% | 19.77% |
18.38% | 17.63% | 17.15% | 17.29% |
Common equity tier 1 (¥ billions)
Consolidated common equity tier 1 capital ratio
1,437 | 1,444 | 1,449 | 1,439 | 1,495 |
1,305 | ||||
1,246 | 1,258 | 1,250 | 1,240 | |
20.43% | 20.66% | 21.28% | 21.13% | 21.57% |
17.72% | 17.99% | 18.36% | 18.22% | 18.83% |
(As at June 30, 2023)
- Consolidated Total Capital Ratio : 21.57%
- Consolidated Tier 1 Capital Ratio : 21.52%
- Consolidated Common Equity Tier 1
Capital Ratio : | 18.83% |
Consolidated Leverage Ratio : | 5.72% |
- Figures are as at the end of each quarter.
1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | ||
FY2021 | FY2022 | FY2023 |
Consolidated Leverage RatioConsolidated Liquidity Coverage Ratio
【Regulatory Liquidity (Basel III)】 (Daily average Jul. - Sep. 2023)
Consolidated Liquidity Coverage Ratio : 130.7%
9
Consolidated
P/L Summary
※The following shows the percentage change from the previous quarter.
(¥ Millions) | FY2022 | FY2023 | % Change % Change FY2022 FY2023 | % Change | FY2022 | ||||||||||||||
vs | vs | vs | |||||||||||||||||
2Q | 3Q | 4Q | 1Q | 2Q | 1Q/FY23 | 2Q/FY22 | 1H | 1H | 1H/FY22 | ||||||||||
Operating revenues | |||||||||||||||||||
192,552 | 233,036 | 293,860 | 266,259 | 303,827 | 14.1% | 57.8% | 339,193 | 570,087 | 68.1% | 866,090 | |||||||||
Commission received | 70,506 | 69,588 | 72,890 | 82,381 | 86,124 | 4.5% | 22.2% | 137,511 | 168,506 | 22.5% | 279,991 | ||||||||
Net trading income | 24,186 | 18.1% | 31.2% | 44,667 | 31.2% | ||||||||||||||
18,441 | 22,324 | 13,891 | 20,480 | 34,036 | 70,253 | ||||||||||||||
Net gain (loss) on private equity | -1,523 | 1,735 | 937 | 186 | 3,272 | 17x | - | 1,020 | 3,458 | 238.9% | 3,692 | ||||||||
Financial revenue | 66,607 | 110,885 | 120,218 | 134,340 | 154,436 | 15.0% | 131.9% | 101,444 | 288,777 | 184.7% | 332,548 | ||||||||
Other operating revenue | 35,807 | 24.0% | -7.0% | 64,676 | -0.8% | ||||||||||||||
38,519 | 28,502 | 85,922 | 28,869 | 65,179 | 179,604 | ||||||||||||||
Financial expenses | 52,486 | 91,027 | 101,427 | 113,701 | 130,846 | 15.1% | 149.3% | 76,043 | 244,548 | 221.6% | 268,498 | ||||||||
Other operating expenses | 29,132 | 20,574 | 66,696 | 18,447 | 28,659 | 55.4% | -1.6% | 46,094 | 47,106 | 2.2% | 133,365 | ||||||||
Net operating revenues | 110,933 | 121,433 | 125,737 | 134,110 | 144,321 | 7.6% | 30.1% | 217,055 | 278,432 | 28.3% | 464,226 | ||||||||
SG&A | 98,942 | 99,913 | 101,822 | 103,377 | 106,492 | 3.0% | 7.6% | 196,216 | 209,870 | 7.0% | 397,952 | ||||||||
Operating income | 11,990 | 21,519 | 23,915 | 30,733 | 37,828 | 23.1% | 215.5% | 20,838 | 68,561 | 229.0% | 66,273 | ||||||||
Non-operating income | 2,864 | 1,650 | 6,903 | 5,363 | 3,007 | -43.9% | 5.0% | 12,102 | 8,370 | -30.8% | 20,657 | ||||||||
Ordinary income/loss | 14,855 | 23,170 | 30,818 | 36,096 | 40,835 | 13.1% | 174.9% | 32,941 | 76,932 | 133.5% | 86,930 | ||||||||
Extraordinary income/loss | 9,499 | 693 | -2,452 | 747 | 1,865 | 149.5% | -80.4% | 11,594 | 2,613 | -77.5% | 9,835 | ||||||||
Income before income taxes | 24,355 | 23,864 | 28,365 | 36,844 | 42,701 | 15.9% | 75.3% | 44,536 | 79,545 | 78.6% | 96,766 | ||||||||
Total income taxes | 2,609 | 6,330 | 8,617 | 10,886 | 10,694 | -1.8% | 309.8% | 8,134 | 21,581 | 165.3% | 23,082 | ||||||||
Profit (loss) attributable to owners of parent | 19,576 | 15,295 | 17,124 | 23,712 | 29,793 | 25.6% | 52.2% | 31,455 | 53,505 | 70.1% | 63,875 | ||||||||
- Commission received increased (+4.5%).
- Brokerage commission* was ¥21.9 bn (+0.9%).
- Underwriting and secondary offering commissions* were ¥9.2 bn (-19.1%).
- Distribution commission* was ¥3.7 bn (-3.6%).
- M&A related commission* was ¥10.9 bn (+37.7%).
- Breakdown of total commission received (See p.23)
- Net gain on private equity was ¥3.2 bn (17x).
- Revenues from private equity investments increased.
10
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Daiwa Securities Group Inc. published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 06:41:08 UTC.