Daiwa Securities Group Inc. Q4 FY2026 earnings call

• Wealth Management division focused on total asset consulting led to record highs in contract amount and net inflow for wrap account services, net asset inflows expanded. • Securities Asset Management and real estate asset management saw steady growth in assets under management. • Global Markets accurately captured customer flows amid market fluctuations leading to increased revenues in equity and FICC. • Global Investment Banking had strong domestic M&A. • FY 2025 base profit grew steadily to JPY 182.7 billion, up 32.9% year-on-year, exceeding the JPY 150 billion target. • Year-end dividend is JPY 35 per share, combined with interim dividend makes annual dividend a record high of JPY 64 with a payout ratio of 50.8%. • Daiwa Next Bank's NII totaled JPY 11.2 billion, up 11.2%; ordinary profit reached JPY 6.2 billion, up 30.2%; deposit balance surpassed JPY 5 trillion. • Acquisition of ORIX Bank as a wholly owned subsidiary with objectives to deepen total asset consulting, establish sustainable growth model through deposit and lending expansion, and maximize synergy effects through future merger.

Wealth Management division: Net operating revenues were JPY 81 billion, up 5.2%; ordinary income was JPY 33.1 billion, up 12.1%. Equity revenue increased due to increased trading in Japanese equities, fixed income revenues increased as investment needs were captured, fund wrap sales increased significantly with wrap-related revenues reaching a record high of JPY 18 billion, asset-based revenues reached a new record high of JPY 33.4 billion. Asset Management segment: Securities Asset Management - net operating revenues JPY 19.7 billion, up 5.9%; ordinary income JPY 11.4 billion, up 11.6%. Daiwa Asset Management publicly offered securities investment trust AUM topped JPY 37 trillion. Real estate asset management - net operating revenues JPY [9.9] billion, down 10.6%; ordinary income JPY 9.8 billion, down 5.6%. AUM at Daiwa Real Estate Asset Management surpassed JPY 1.6 trillion. Alternative Asset Management - net operating revenues negative JPY 2.6 billion; ordinary income negative JPY 4.8 billion due to provisions and impairments from revaluation of certain portfolio investments. Global Markets and Investment Banking division: Global Markets - net operating revenues JPY 51.3 billion, up 13.4%; ordinary income JPY 17.7 billion, up 48.6%. Both equities and FICC performed strongly. Global Investment Banking - net operating revenues JPY 24.1 billion, down 7.4%; ordinary income 2.1 billion, down 60.5% but domestic M&A remained strong and revenues increased in Europe.

• FY 2025 base profit grew steadily to JPY 182.7 billion, up 32.9% year-on-year, exceeding the JPY 150 billion target. • Expect stable midterm growth in real estate asset management in line with continued AUM accumulation. • Aim to accumulate JPY 2 trillion in deposits over the next 5 years as a synergy effect from acquisition. • Plan to invest a total of JPY 3.5 trillion in real estate investment loans and securities-backed loans. • Dividend payout ratio remains at 50.8% with annual dividend target including year-end and interim dividends reaching record high.

• Market volatility could impact financial performance. • Potential risks associated with the acquisition of ORIX Bank such as integration challenges and uncertainties in achieving synergy effects. • Impact of changes in interest rates on net interest income. • Uncertainties in the performance of alternative asset management due to provisions and impairments from revaluation of portfolio investments. • Risks related to the performance of Global Investment Banking, especially in the face of market fluctuations and changes in M&A activities.

Q: Related to ORIX Bank's acquisition, questions about deposit increase, loan growth breakdown, capital strategy and share buybacks.

A: Confident of acquiring JPY 2 trillion in deposits, feasible to achieve JPY 3.5 trillion in lending, capital adequacy ratio will decline but financial soundness ensured, AT1 bonds issuance under consideration, no change in general capital and share buyback policy.

Q: About goodwill amortization scale.

A: Amortization amounts and details to be discussed in details later.

Q: About wealth management asset inflow and acquisition of ORIX Bank key men retention.

A: Asset inflow net inflow increased despite AUM decline due to factors like U.S. and domestic stock price falls, details on key men retention not disclosed.

Q: About asset inflow reasons and ORIX Bank client life stage focus.

A: Asset inflow reasons include fund wraps, Daiwa Next Bank deposit, and Japanese equity transactions; ORIX Bank focuses on different life stages customers for loan products.

Q: About acquisition background, interest margin, and private asset exposure.

A: Acquisition background involves good relationship and complementarity between banks, interest margin scenario discussed, private asset exposure limited with no impact on margin and retail investors' exposure monitored