Translation
Note: This English translation of the original Japanese version of the notice has been prepared for the sole purpose of theconvenience of non-Japanese shareholders and shall by no means constitute an official or binding version of the notice.
(Securities Code: 8601)
May 30, 2024
To Our Shareholders

Daiwa Securities Group Inc.
9-1, Marunouchi 1-Chome, Chiyoda-ku, Tokyo
Representative Corporate Executive Officer, President and CEO
Akihiko Ogino

Notice of Convocation of
the 87 Ordinary General Meeting of ShareholdersthDaiwa Securities Group Inc. (the “Company”) would like to express its gratitude for your courtesies.
You are hereby notified that the 87th Ordinary General Meeting of Shareholders (the “Meeting”) will be held as statedbelow.
When convening this Meeting, the Company takes measures for providing information in electronic format that
constitutes the content of reference documents for the General Meeting of Shareholders, etc. (items for which measuresfor electronic provision are to be taken), and posts this information as “Notice of the 87th Ordinary General Meeting of
Shareholders” on the Company’s website. Please access the Company’s website by using the Internet address shown
below to check the information.
The Company’s website: https://www.daiwa-grp.jp/ir/shareholders/meeting/ (in Japanese)
In addition to the above website, you can also check using the sites provided below.
TSE website (Listed Company Search):https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show (in Japanese)(Enter “Daiwa Securities Group” in “Issue name (company name)” or the Company’s securities code “8601” in“Code,” and click “Search.” Then, click “Basic information” and select “Documents for public inspection/PR
information.” Under “Filed information available for public inspection,” click “Click here for access” under “[Notice ofGeneral Shareholders Meeting /Informational Materials for a General Shareholders Meeting].”)
The Meeting will also be streamed live via the Internet.
Please examine the “Reference Documents for the General Meeting of Shareholders” provided below, and exercise yourvoting rights by 17:00 (5:00 p.m.) Thursday, June 20, 2024, following the instructions below.
Particulars
1.

Date and Time
10:00 a.m., Friday, June 21, 2024 (Doors open at 9:00 a.m.) (JST)

2.

Venue
Fuji Room, Main Building 3rd Floor, Imperial Hotel, Tokyo
1-1, Uchisaiwaicho 1-Chome, Chiyoda-ku, Tokyo(The venue has changed from last year.)1

3.

Purpose of the Meeting
Matters to be reported:
1. Report on the contents of the Business Report, the Consolidated Financial Statements, and the outcome of
the audit of the Consolidated Financial Statements conducted by Independent Auditors and the Audit
Committee, with respect to the 87th fiscal year (from April 1, 2023 to March 31, 2024).
2. Report on the contents of the Non-Consolidated Financial Statements for the 87th fiscal year (from April 1,
2023 to March 31, 2024).
Matters to be resolved:
Proposal: Election of twelve (12) Directors (Members of the Board)

4.

Matters regarding the Exercise of Voting Rights(1) You may exercise your voting rights via an electronic device (via the Internet, etc.) or in writing.
(2) If you exercise your voting rights in writing and submit the “Voting Rights Exercise Form” without any
indication in the space for approval or disapproval of the resolution, it shall be deemed as an intention of
approval.
(3) If you exercise your voting rights by proxy, you must delegate your voting rights to a proxy who is ashareholder of the Company entitled to vote. In such case, in addition to the letter of proxy to prove theproxy, the proxy’s own “Voting Rights Exercise Form” is required. Furthermore, delegation of your voting
rights is limited to only one proxy.
(4) If you choose to exercise your voting rights in a non-uniform manner, please inform the Company, in writing,of your intention to exercise your voting rights in a non-uniform manner and the reason for it, three days inadvance of the Meeting.

5.

Items Disclosed via the Internet with Measures for Electronic Provision, etc.
(1) In case there arise any matters that should be corrected regarding items for which measures for electronic
provision are to be taken by the day before the Meeting, notification of the revisions and the details of thematters before and after the revisions will be provided on each website listed on page 1.
(2) In case there arise any matters that shareholders should be made aware of regarding operations of the Meetingin relation to any changes up to the day of the Meeting, notification will be provided on the Company website
on page 1.
(3) We have sent the written documents stating the items for which measures for electronic provision are to betaken (Written Documents) to all shareholders who requested so, but the following items are not included inWritten Documents on law and Article 23, Paragraph 2 of the Company’s Articles of Incorporation.
(i) As to Business Report, “Status of Share Acquisition Rights, etc.” and “System to Ensure
Appropriateness of Business and State of Operation of Such System”(ii) As to Consolidated Financial Statements, “Consolidated Statements of Changes in Net Assets” and“Notes to the Consolidated Financial Statements”(iii) As to Non-Consolidated Financial Statements, “Balance Sheet,” “Statement of Income,” “Statement of
Changes in Net Assets,” and “Notes to the Non-Consolidated Financial Statements”(iv) As to Auditor’s Report, “Independent Auditor’s Report Related to the Non-Consolidated Financial
Statements”
The Business Report and the Consolidated Financial Statements included in the Written Documents, as wellas the items listed in (i) to (iii) above, are the documents audited by the Audit Committee or Independent
Auditors when they create the audit report or accounting audit report.
(4) The documents listed on each website as the items for which measures for electronic provision are to be taken
are the reference documents for the Meeting and other documents in their entirety. Therefore, please keep inmind that their page numbers do not match the page numbers in this notice of convocation sent toshareholders.

2 Please note that any proxy or person, who is not a shareholder, accompanying a shareholder of the Company may notattend the Meeting.
 When you attend the Meeting, please submit the “Voting Rights Exercise Form” sent with the notice of convocation
to shareholders, to the receptionist at the venue of the Meeting.
 If you are a nominee shareholder such as a custodian bank (including a standing proxy), and if you have applied inadvance to use the web-based platform to exercise voting rights for institutional investors that is managed by Investor
Communications Japan, Inc. (ICJ), you may use that platform as a method, instead of the Internet, of exercising yourvoting rights via an electronic device.

3

Reference Documents for the General Meeting of Shareholders
Proposals and reference materials
Proposal

Election of twelve (12) Directors (Members of the Board)

Member of the Board, Hiromasa Kawashima resigned as of March 31, 2024. The terms of office of all thirteen (13)members of the Board of Directors are expiring as of the conclusion of this shareholder meeting. Accordingly, theCompany requests shareholders’ approval to elect, in total, twelve (12) Directors pursuant to the decision of theNominating Committee.
The candidates for Directors (Members of the Board) are as follows. Ms. Eriko Kawai, Mr. Katsuyuki Nishikawa,Mr. Toshio Iwamoto, Ms. Yumiko Murakami, Ms. Noriko Iki, and Ms. Mami Yunoki are the candidates for Outside
Directors as defined in Article 2, Paragraph 3, Item 7 of the Ordinance for Enforcement of the Companies Act.

Candidate
NumberTitle and charge in the Company(★ indicates Chairperson of the committee)

Name

Years onBoard
(as of the Attendanceconclusion
rateof this(FY2023)
shareholder
meeting)

Chairperson of the Board andCorporate Executive Officer
Member of the Nominating Committee
Member of the Compensation Committee

9

10/10
(100%)

1

Seiji Nakata

Reappointment
Male

2

Akihiko Ogino

Reappointment
Male

Member of the Board,
Representative Corporate Executive Officer,
President and CEO

4

10/10
(100%)

3

Shinsuke Niizuma

New appointment
Male

Representative Corporate Executive Officer,
Deputy President,
COO and Head of Wealth Management

-

-

4

Keiko Tashiro

Reappointment
FemaleMember of the Board,
Corporate Executive Officer and Deputy
President,
Head of Sustainability, Financial Education,
Securities Asset Management and Think Tank

10

10/10
(100%)

5

Eiji Sato

New appointment
Male

Senior Executive Managing Director and Head ofPlanning--

Sachiko Hanaoka

Reappointment
FemaleNon-Executive

Member of the Board
Member of the Audit Committee

5

10/10
(100%)

Eriko Kawai

Reappointment
FemaleOutsideIndependent

Outside Director
Member of the Nominating Committee
Member of the Compensation Committee

6

10/10
(100%)

Katsuyuki Nishikawa

Reappointment
Male
OutsideIndependent

Outside Director
Member of the Nominating Committee
Member of the Audit Committee

5

10/10
(100%)

6
7

8

4

9

10

11

12

Toshio Iwamoto

Reappointment
Male
OutsideIndependent

Outside Director★Member of the Nominating Committee
Member of the Compensation Committee

4

10/10
(100%)

Yumiko Murakami

Reappointment
FemaleOutsideIndependent

Outside Director
Member of the Audit Committee
Member of the Compensation Committee

3

10/10
(100%)

Noriko Iki

Reappointment
FemaleOutsideIndependent

Outside Directors
Member of the Nominating Committee
Member of the Audit Committee

1

8/8(100%)

Mami Yunoki*

New appointment
FemaleOutsideIndependent--

Reappointment
New appointment
Non-Executive
OutsideIndependent*

Reappointed member of the board candidate
Newly appointed member of the board candidate
Non-executive member of the board candidate
Outside member of the board candidate
Independent Director as defined by the stock exchange

Ms. Mami Yunoki’s name in her family register is Mami Kato.

5Expertise and experience of the candidates for Outside Director
Name

Corporate
Management

Finance/
Accounting

Legal/
Compliance

DX /ICT

GlobalSustainability*

Seiji Nakata●

Akihiko Ogino●

Shinsuke Niizuma

They have expertise and experience to adequately manage and control
the Group.

Keiko Tashiro

●

●

●

●

Eiji Sato
Sachiko Hanaoka●

Eriko Kawai
Katsuyuki
Nishikawa●Toshio Iwamoto●

Yumiko Murakami

●

●

●

Noriko Iki
Mami Yunoki

●
●

●

●

●

●

●

The table above does not represent the full range of expertise and experience of the candidates.
*●

Judgment criteria: Persons with sustainability-related work experience (including work experience promoting the Group’s sustainability
strategy)6Candidate
Number1

Reappointment

Seiji Nakata

Male

Date of Birth

July 16, 1960
Chairperson of the Board andCorporate Executive Officer(common stock 393,230 shares)

Title and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)

9 (Note)Board of Directors 10/10 (100%)
Nominating Committee 4/4 (100%)Compensation Committee 5/5 (100%)

Attendance Rate
(Note) The total years served as Member of the Board.

The reason for election
He joined the Company in 1983 and served successively as the Deputy Head of Corporate Planning and Human
Resources of the Company, the Head of Corporate Institution and the Head of Sales of Daiwa Securities Co. Ltd., and
COO and the Head of Retail of the Company, and thereby has broad experience related to the business of the whole
Daiwa Securities Group. Also, he served as the Representative Corporate Executive Officer, President and CEO of theCompany from 2017 to 2024 and has broad experience and insights as a manager. Therefore, he is considered to bequalified to serve as a Member of the Board.
Brief personal history, title, charge and significant concurrent positions

Apr. 1983
Apr. 1999
Apr. 2005
Apr. 2006
Apr. 2007

Joined the Company
Transferred to Daiwa Securities SB Capital Markets Co., Ltd.
Head of Product Strategy Dept. of Daiwa Securities SMBC Co. Ltd.
Senior Managing Director and Head of Corporate Planning of the above company
Corporate Executive Officer,
Deputy Head of Corporate Planning and Human Resources, andHead of Corporate Planning Dept. of the Company
Oct. 2008
Deputy Head of Corporate Planning and Human Resources of the Company
Apr. 2009
Executive Managing Director of the Company
June 2009
Member of the Board and Executive Managing Director of the Company
Apr. 2010
Member of the Board of the Company
Member of the Board and Executive Managing Director of Daiwa Securities Capital Markets Co. Ltd.
June 2010
Senior Head of Corporate Sales, Corporate Institution Sales andHead of Corporate Division Planning of Daiwa Securities Capital Markets Co. Ltd.
Apr. 2011
Senior Head of Corporate Institution Sales and Head of Corporate Sales and Corporate Presiding of theabove company
Apr. 2012
Member of the Board, Senior Executive Managing Director andHead of Corporate Institution of Daiwa Securities Co. Ltd.
Apr. 2015
Senior Executive Managing Director and Deputy Head of Retail of the Company
Apr. 2016
Deputy President, Representative Corporate Executive Officer, COO andHead of Retail of the Company; andRepresentative Director and Deputy President of Daiwa Securities Co. Ltd.
June 2016
Member of the Board, and Deputy President, Representative Corporate Executive Officer of the Company
Apr. 2017
Member of the Board, Representative Corporate Executive Officer, President, CEO and Head of Retail of
the Company; andRepresentative Director and President, Member of the Board of Daiwa Securities Co. Ltd.
Apr. 2020
CEO of the Company
Apr. 2024
Chairperson of the Board and Corporate Executive Officer of the Company (current position); andRepresentative Director and Chairperson of the Board of Daiwa Securities Co. Ltd. (current position)(Significant concurrent positions)Representative Director and Chairperson of the Board of Daiwa Securities Co. Ltd.

7

Candidate
Number2

Reappointment

Akihiko Ogino

Male

Date of Birth

January 28, 1966
Member of the Board,
Representative Corporate Executive Officer,
President and CEO(common stock 216,800 shares)

Title and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)Attendance Rate

4
Board of Directors 10/10 (100%)

The reason for election
He joined the Company in 1989 and he has served successively as the Head of Legal, the Deputy Head of Overseas
Operations, and the Head of Corporate Planning of the Company and the Executive Head of Human Resources andCorporate Planning of the Company. He serves as the Representative Corporate Executive Officer, President, and CEOof the Company from 2024. He has expertise and experience to present a management strategy based on a wide vision
and also to adequately execute the management and control of the Daiwa Securities Group. Therefore, he is considered
to be qualified to serve as a Member of the Board.
Brief personal history, title, charge and significant concurrent positions
Apr. 1989
Joined the Company
Apr. 2010
Head of Corporate Planning Dept. of the Company
Apr. 2014
Senior Managing Director,
Head of Legal and Deputy Head of Corporate Planning of the Company; andSenior Managing Director of Daiwa Securities Co. Ltd.
Apr. 2015
Head of Legal and Deputy Head of Corporate Planning and Overseas Operations of the Company
Apr. 2016
Head of Legal and Deputy Head of Corporate Planning of the Company
Apr. 2017
Executive Managing Director of the Company; andExecutive Managing Director of Daiwa Securities Co. Ltd.
Apr. 2019
Senior Executive Managing Director, Corporate Executive Officer and Head of Corporate Planningand Legal, and Executive Head of Human Resources of the Company; andSenior Executive Managing Director, Member of the Board of Daiwa Securities Co. Ltd.
June 2020
Member of the Board, Senior Executive Managing Director of the Company
Apr. 2022
Member of the Board, Deputy President, Corporate Executive Officer,
Executive Head of Corporate Planning and Human Resources of the Company; andRepresentative Director and Deputy President of Daiwa Securities Co. Ltd.
Apr. 2024
Member of the Board, Representative Corporate Executive Officer,
President and CEO of the Company (current position); andRepresentative Director and President of Daiwa Securities Co. Ltd. (current position)(Significant concurrent positions)Representative Director and President of Daiwa Securities Co. Ltd.

8

Candidate
Number3

New appointment

Shinsuke Niizuma

Male

Date of Birth

September 19, 1965
Representative Corporate Executive Officer,
Deputy President,
COO and Head of Wealth Management(common stock 166,300 shares)

Title and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)Attendance Rate––

The reason for election
He joined the Company in 1988 and served successively as the Head of Chiba Branch and Nagoya Branch of Daiwa
Securities Co. Ltd. He became the Senior Managing Director of Daiwa Securities Co. Ltd. in 2015, and since then he hasserved successively as the Head of Retail Marketing Strategy, the Head of Sales, the Executive Head of Sales, and theHead of the Product Solution Division of Daiwa Securities Co. Ltd. He currently serves as the Representative Corporate
Executive Officer, Deputy President and COO, and Head of Wealth Management of the Company. He has broad
knowledge and experience in Wealth Management. Therefore, he is considered to be qualified to serve as a Member ofthe Board.
Brief personal history, title, charge and significant concurrent positions
Apr. 1988
Joined the Company
Apr. 1999
Transferred to Daiwa Securities Co. Ltd.
May 2014
Head of Nagoya Branch of the above company
Apr. 2015
Senior Managing Director and Head of Regional Marketing, and Head of Nagoya Branch of theabove company
Apr. 2016
Head of Retail Marketing Strategy of the above company
Apr. 2018
Executive Managing Director, Chief Customer Officer (CCO) and Head of Retail Marketing Strategyof the above company
Apr. 2019
Senior Executive Managing Director and Deputy Head of Retail of the Company
Senior Executive Managing Director, Member of the Board and Head of Sales of Daiwa Securities
Co. Ltd.
Apr. 2020
Head of Retail of the Company
Apr. 2022
Deputy President, Corporate Executive Officer and Head of Retail of the Company; andRepresentative Director and Deputy President of Daiwa Securities Co. Ltd. (current position)
Apr. 2024
Representative Corporate Executive Officer, Deputy President, COO andHead of Wealth Management of the Company (current position); andMember of the Board of Daiwa Next Bank, Ltd. (current position)(Significant concurrent positions)Representative Director and Deputy President of Daiwa Securities Co. Ltd.
Member of the Board of Daiwa Next Bank, Ltd.

9

Candidate
Number4

Reappointment

Keiko Tashiro

FemaleDate of BirthAugust 5, 1963
Member of the Board,
Corporate Executive Officer and Deputy President,
Head of Sustainability, Financial Education, Securities AssetManagement and Think Tank
(common stock 177,300 shares)

Title and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)Attendance Rate

10
Board of Directors 10/10 (100%)

The reason for election
She joined the Company in 1986 and served successively as the Head of Investor Relations Office of the Company andthe Head of the Daiwa Direct Planning Dept. of Daiwa Securities Co. Ltd. She became a Senior Managing Director of theCompany in 2009, and since then she has served successively as its Head of Daiwa Direct Business, the Head of Fixed
Income, Currency, and Commodities and as the Head of Americas, the Head of Overseas Operations and the Executive
Head of Overseas Operations. She currently serves as the Corporate Executive Officer, Deputy President, the Head of
Sustainability, Financial Education, Securities, Asset Management, and Think Tank of the Company. She has broad
knowledge and experience in Overseas and Corporate Planning. Therefore, she is considered to be qualified to serve as a
Member of the Board.
Brief personal history, title, charge and significant concurrent positions
Apr. 1986
Joined the Company
Apr. 1999
Transferred to Daiwa Securities SB Capital Markets Co., Ltd.
July 1999
Transferred to the Company
Sept. 2005
Head of Daiwa Direct Planning Dept. of Daiwa Securities Co. Ltd.
Apr. 2009
Senior Managing Director, Head of PTS and Daiwa Direct Business of the above company
June 2009
Head of Online Product and Daiwa Direct Business of the above company
Apr. 2011
Senior Managing Director,
Head of Fixed Income, Currency and Commodities of Daiwa Securities Capital Markets Co. Ltd.
Apr. 2012
Senior Managing Director,
Head of Fixed Income, Currency and Commodities of Daiwa Securities Co. Ltd.
Apr. 2013
Executive Managing Director and Head of Americas of the Company; andChairperson of the Board of Daiwa Capital Markets America Holdings Inc.
July 2013
Chairperson of the Board of Daiwa Capital Markets America Inc.
Apr. 2014
Executive Managing Director, Corporate Executive Officer,
Deputy Head of Overseas Operations and Head of Americas of the Company
June 2014
Member of the Board and Executive Managing Director of the Company
Apr. 2016
Member of the Board, Senior Executive Managing Director, Corporate Executive Officer andHead of Overseas Operations of the Company; andSenior Executive Managing Director, Member of the Board of Daiwa Securities Co. Ltd.
Apr. 2019
Member of the Board, Deputy President, Corporate Executive Officer of the Company (current
position); andRepresentative Director and Deputy President, Member of the Board of Daiwa Securities Co. Ltd.
Head of Overseas Operations and SDGs of the Company
Apr. 2020
Executive Head of Overseas Operations, Head of SDGs and Think Tank of the Company; andApr. 2022
Member of the Board of Daiwa Institute of Research Ltd. (current position)
Executive Head of Overseas Operations, Head of Sustainability and Think Tank of the Company
Apr. 2023
Head of Sustainability, Financial Education, Securities Asset Management, and Think Tank of theApr. 2024
Company (current position); andMember of the Board of Daiwa Asset Management Co. Ltd. (current position)(Significant concurrent positions)
Member of the Board of Daiwa Asset Management Co. Ltd.
Member of the Board of Daiwa Institute of Research Ltd.

10

Candidate
Number

Eiji Sato

New appointment

Date of BirthTitle and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)Attendance Rate

February 14, 1969
Senior Executive Managing Director and Head of Corporate Planning(common stock 120,300 shares)

5

Male

–
–

The reason for election
He joined the Company in 1991 and served as the Head of the Finance Dept. and the Head of the Corporate Planning
Dept. of the Company. He became a Senior Managing Director of the Company in 2017, and since then he has served
successively as CFO, the Deputy Head of Corporate Planning, and the Deputy Head of Overseas Operations of theCompany and currently serves as the Senior Executive Managing Director and the Head of Corporate Planning of theCompany. He has solid record and experience in Planning and Finance and also has experience in Investment Banking.
Therefore, he is considered to be qualified to serve as a Member of the Board.
Brief personal history, title, charge and significant concurrent positions
Apr. 1991
Joined the Company
Oct. 2005
Transferred to Daiwa Securities SMBC Co. Ltd.
Oct. 2014
Head of Corporate Planning Dept. of the Company
Apr. 2017
Senior Managing Director, Deputy Head of Corporate Planning and Head of Corporate Planning
Dept. of the Company; andSenior Managing Director of Daiwa Securities Co. Ltd.
Apr. 2019
Corporate Executive Officer, Chief Financial Officer (CFO) and Deputy Head of Corporate Planningand Overseas Operations of the Company
Apr. 2020
Executive Managing Director, Corporate Executive Officer of the Company; andExecutive Managing Director of Daiwa Securities Co. Ltd.
Apr. 2022
Chief Financial Officer (CFO), Head of Corporate Planning and Deputy Head ofOverseas Operations of the Company
Executive Managing Director, Member of the Board of Daiwa Securities Co. Ltd.
Apr. 2023
Senior Executive Managing Director, Corporate Executive Officer, Chief Financial Officer (CFO)and Head of Corporate Planning of the Company
Senior Executive Managing Director, Member of the Board of Daiwa Securities Co. Ltd. (current
position)
Apr. 2024
Head of Corporate Planning of the Company (current position)(Significant concurrent positions)
Member of the Board, Senior Executive Managing Director of Daiwa Securities Co. Ltd.

11

Candidate
Number6

Sachiko Hanaoka

Non-Executive

Date of BirthTitle and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)

Reappointment
FemaleMay 28, 1967
Member of the Board(common stock 89,800 shares)
5
Board of Directors 10/10 (100%)
Audit Committee 14/14 (100%)

Attendance Rate

The reason for election
She joined the Company in 1990. After serving in the Research and Product Divisions, she served successively as the
Head of the Products Planning Dept., the Education and Training Dept., and the Investment Strategy Dept. of Daiwa
Securities Co. Ltd. Throughout her broad accumulated experience in the Research Division, she has developed a strong
analytical ability and broad knowledge in business accounting and broad accumulated experience in management.
Therefore, she is considered to be qualified to serve as a Member of the Board.
Brief personal history, title, charge and significant concurrent positions
Apr. 1990
Joined the Company
Mar. 1995
Transferred to Daiwa Institute of Research Ltd.
Oct. 1999
Transferred to Daiwa Securities Co. Ltd.
Apr. 2012
Head of Investment Strategy Dept. of the above company
Apr. 2019
Senior Managing Director of the Company;
Audit & Supervisory Board Member of Daiwa Securities Co. Ltd. (current position);
Audit & Supervisory Board Member of Daiwa Asset Management Co. Ltd. (current position);
Audit & Supervisory Board Member of Daiwa Institute of Research Business Innovation Ltd.; andAudit & Supervisory Board Member of Daiwa Real Estate Asset Management Co. Ltd.
June 2019
Member of the Board of the Company (current position)
Apr. 2021
Audit & Supervisory Board Member of Daiwa Institute of Research Ltd. (current position)(Significant concurrent positions)Audit & Supervisory Board Member of Daiwa Securities Co. Ltd.
Audit & Supervisory Board Member of Daiwa Asset Management Co. Ltd.
Audit & Supervisory Board Member of Daiwa Institute of Research Ltd.

12

Candidate
Number7

Reappointment
FemaleEriko Kawai

OutsideIndependent

Date of BirthTitle and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)

April 28, 1958
Outside Director(common stock 14,300 shares)
6
Board of Directors 10/10 (100%)
Nominating Committee 4/4 (100%)Compensation Committee 5/5 (100%)

Attendance Rate

The reason for election and overview of the expected roles
She held positions such as the Pension Funds Administrator of Bank for International Settlements (BIS) and theOrganization for Economic Cooperation and Development (OECD), and she has extensive experience at global
companies and international organizations, as well as experience and a solid record as a manager. The Company requests
that shareholders elect her as an Outside Director since the Company expects, based on her significant experience andknowledge about corporate management accumulated through her career, that she will be able to advise on the
management of the Company and supervise the execution of duties by Corporate Executive Officers.
Brief personal history, title, charge and significant concurrent positions
Oct. 1981
Joined Nomura Research Institute, Ltd.
Sept. 1985
Management Consultant at McKinsey & Company, Inc.
Oct. 1986
Fund Manager of Mercury Asset Management / SG Warburg plc
Nov. 1995
CIO of Yamaichi Regent ABC Polska, Head of Investment
July 1998
Pension Funds Administrator of Bank for International Settlements (BIS)Oct. 2004
Senior Pension Funds Administrator of Organization for Economic Cooperation and Development(OECD)
Mar. 2008
Representative of Kawai Global Intelligence
Apr. 2012
Professor of Institute for the Promotion of Excellence in Higher Education, Kyoto University
Apr. 2013
Professor of Institute for Liberal Arts and Sciences, Kyoto University
Apr. 2014
Professor of Graduate School of Advanced Integrated Studies in Human Survivability, Kyoto
University
June 2018
Member of the Board of the Company (current position)
Apr. 2021
Emeritus Professor of Kyoto University (current position)(Significant concurrent positions)
Outside Audit & Supervisory Board Member of Yamaha Motor Co., Ltd.
Outside Director of Mitsui Fudosan Co., Ltd.
Senior Advisor of International Management Forum Co., Ltd.
External Director of DMG Mori Co., Ltd.

13

Candidate
Number8

Reappointment
Male

Katsuyuki Nishikawa

OutsideIndependent

Date of BirthTitle and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)February 20, 1954
Outside Director(common stock 10,300 shares)
5
Board of Directors 10/10 (100%)
Nominating Committee 4/4 (100%)
Audit Committee 14/14 (100%)

Attendance Rate

The reason for election and overview of the expected roles
He held positions such as the Vice-Minister of Justice, the Superintending Prosecutor of the Tokyo High Public
Prosecutors Office, and the Prosecutor General, and is currently an attorney at law. The Company requests thatshareholders elect him as an Outside Director since the Company expects, based on his significant experience andprofessional knowledge about law and compliance accumulated through his career, that he will be able to advise on the
management of the Company and supervise the execution of duties by Corporate Executive Officers. Based on theabove-mentioned reasons, the Company made the decision that he could adequately carry out his assignment as one of
the Company’s Outside Directors even though he had never been involved directly in corporate management.
Brief personal history, title, charge and significant concurrent positions
Apr. 1979
Prosecutor of Osaka District Public Prosecutors OfficeJan. 2008
Director-General of the Rehabilitation Bureau of the Ministry of Justice
July 2008
Director-General of the Immigration Bureau of the Ministry of Justice
July 2009
Director-General of the Criminal Affairs Bureau of the Ministry of JusticeAug. 2011
Vice-Minister of the Ministry of JusticeJan. 2014
Superintending Prosecutor of the Sapporo High Public Prosecutors Office
Dec. 2015
Superintending Prosecutor of the Tokyo High Public Prosecutors Office
Sept. 2016
Prosecutor General
July 2018
Retired as Prosecutor General
Sept. 2018
Attorney at law (current position)
June 2019
Member of the Board of the Company (current position)(Significant concurrent positions)
Attorney at Nishikawa Katsuyuki Law OfficeOutside Audit & Supervisory Board Member of Aeon Hokkaido Corporation

14

Candidate
Number9

Reappointment
Male

Toshio Iwamoto

OutsideIndependent

Date of BirthTitle and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)January 5, 1953
Outside Director(common stock 7,000 shares)
4
Board of Directors 10/10 (100%)
Nominating Committee 4/4 (100%)Compensation Committee 5/5 (100%)

Attendance Rate

The reason for election and overview of the expected roles
He held positions such as the President of NTT DATA Corporation and currently is the Advisor of NTT DATA Group
Corporation. The Company requests that shareholders elect him as an Outside Director since the Company expects,
based on his significant experience in management of global companies and experience and extensive knowledge about
IT accumulated through his career, that he will be able to advise on the management of the Company and supervise theexecution of duties by Corporate Executive Officers.
Brief personal history, title, charge and significant concurrent positions
Joined Nippon Telegraph and Telephone Public Corporation
Apr. 1976
Member of the Board of NTT DATA Corporation (currently known as NTT DATA Group
June 2004
Corporation)
Senior Managing Director of the above company
June 2005
Member of the Board and Executive Managing Director of the above company
June 2007
Representative Director and Deputy President of the above company
June 2009
Representative Director and President of the above company
June 2012
Advisor of the above company (current position)
June 2018
Member of the Board of the Company (current position)
June 2020(Significant concurrent positions)
Advisor of NTT DATA Group Corporation
Outside Director of East Japan Railway Company
Outside Director of Isetan Mitsukoshi Holdings Ltd.
Outside Director of Sumitomo Forestry Co., Ltd.

15

Candidate
Number10

Reappointment

Yumiko Murakami

FemaleOutsideIndependent

Date of BirthTitle and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)February 6, 1965
Outside Director(common stock 4,600 shares)
3
Board of Directors 10/10 (100%)
Audit Committee 14/14 (100%)Compensation Committee 5/5 (100%)

Attendance Rate

The reason for election and overview of the expected roles
She worked for the United Nations, Goldman Sachs Japan Co., Ltd., and Credit Suisse Securities (Japan) Limited, andserved as the Head of Organization for Economic Cooperation and Development (OECD) Tokyo Centre. The Company
requests that shareholders elect her as an Outside Director since the Company expects, based on her significant global
experience, experience and track record of corporate management, and understanding of the securities businessaccumulated through her experience, that she will be able to advise on the management of the Company and supervise
the execution of duties by Corporate Executive Officers.
Brief personal history, title, charge and significant concurrent positions
United Nations Development Programme (Barbados)
Aug. 1989
United Nations Secretariat (New York)Jan. 1991
United Nations Transitional Authority in Cambodia (Phnom Penh)
Sept. 1991
Vice President of Goldman Sachs International (London)
Aug. 1994
Managing Director of Goldman Sachs and Co. (New York)May 1997
Managing Director of Goldman Sachs Japan Co., Ltd. (Tokyo)
Apr. 2008
Managing Director of Credit Suisse Securities (Japan) Limited (Tokyo)
Sept. 2009
Head of Organization for Economic Cooperation and Development (OECD) Tokyo Centre
Sept. 2013
Member of the Board of the Company (current position)
June 2021(Significant concurrent positions)
General Partner of MPower KK
Outside Director of Raksul Inc.

16

Candidate
Number11

Reappointment
FemaleNoriko Iki

OutsideIndependent

Date of BirthTitle and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)March 21, 1956
Outside Director(common stock 3,800 shares)
1

Board of Directors 8/8 (100%)
Nominating Committee 4/4 (100%)
Audit Committee 10/10 (100%)(Note) Attendance Rate at the Board of Directors’ meetings, etc. since her appointment in June 2023.
Attendance Rate (Note)

The reason for election and overview of the expected roles
She has held positions such as the Director-General of Equal Employment, Children and Families Bureau, Ministryof Health, Labour and Welfare, the Director-General of Tokyo Labor Bureau, Ministry of Health, Labour and Welfare,and Ambassador Extraordinary and Plenipotentiary to Brunei, and the Company requests that shareholders elect her as
an Outside Director since the Company expects, based on her expert knowledge and experience related laboradministration and diversity and significant global experience cultivated through that experience, that she will be able
to advise on the management of the Company and supervise the execution of duties by Corporate Executive Officers.
Based on the above-mentioned reasons, the Company made the decision that she could adequately carry out her
assignment as one of the Company’s Outside Directors, even though she had never been involved directly in corporate
management.
Brief personal history, title, charge and significant concurrent positions
Entered Ministry of Labour
Apr. 1979
Director-General of Equal Employment, Children and Families Bureau, Ministry of Health, Labour
July 2009and Welfare
Research Director of Japan Institute for Labour Policy and Training
July 2010
Director-General of Tokyo Labour Bureau, Ministry of Health, Labour and Welfare
Sept. 2012
Ambassador Extraordinary and Plenipotentiary to Brunei
Apr. 2014
President of Japan Institute for Women’s Empowerment & Diversity Management
June 2018
Special Adviser of Japan Institute for Women’s Empowerment & Diversity Management (current
June 2023
position); andMember of the Board of the Company (current position)(Significant concurrent positions)
Special Adviser of Japan Institute for Women’s Empowerment & Diversity Management
Outside Director of FUJI KYUKO CO., LTD.

17

Candidate
Number12

New appointment
FemaleMami Yunoki

OutsideIndependent

Date of BirthTitle and charge in the Company
Number of shares of the Company held
Years on Board(as of the conclusion of this shareholder meeting)Attendance Rate

May 27, 1963–
(common stock 0 shares)––

The reason for election and overview of the expected roles
She has been involved in auditing many listed companies as a certified public accountant for many years at
PricewaterhouseCoopers Aarata (currently known as PricewaterhouseCoopers Japan LLC). The Company requests thatshareholders elect her as an Outside Director since the Company expects, based on her expert knowledge and experience
related to financial accounting, that she will be able to advise on the management of the Company and supervise theexecution of duties by Corporate Executive Officers. Based on the above-mentioned reasons, the Company made thedecision that she could adequately carry out her assignment as one of the Company’s Outside Directors, even though she
had never been involved directly in corporate management.
Brief personal history, title, charge and significant concurrent positions
May 1985
Joined Aoyama Audit Corporation
Sept. 2006
Joined PricewaterhouseCoopers Aarata (currently known as PricewaterhouseCoopers Japan LLC)
July 2008
Partner of the above corporation
July 2016
Member of the firm management committee and executive officer in charge of the manufacturing,
distribution, and services divisions of the above corporation
Member of the Examination Board for Strengthening of Financial Function, Financial Services
Agency (current position)
Sept. 2020
Part-time lecturer at Graduate School of Hitotsubashi University (current position)
July 2023
Representative of Mami Yunoki Certified Public Accountant Office (current position)
Mar. 2024
Outside Audit & Supervisory Board Member of Chugai Pharmaceutical Co., Ltd. (current position)(Significant concurrent positions)Representative of Mami Yunoki Certified Public Accountant OfficeOutside Audit & Supervisory Board Member of Chugai Pharmaceutical Co., Ltd.

18

(Notes)1.

The independence of the candidates for Outside Director from the Company is as follows.
‧ None of the candidates for Outside Director has executed business of or has become an executive of the Company or its
subsidiaries by means other than being an Outside Director of the Company in the past.
‧ None of the candidates for Outside Director executes business of or is an executive of, or has done or been so during thelast ten (10) years, any entity that has a special relationship with the Company.
‧ None of the candidates for Outside Director has received a large sum of money or other financial benefits from theCompany or any entity that has a special relationship with the Company in the past, and none of them anticipates
receiving them in the future.
‧ None of the candidates for Outside Director has a spouse, family member within the third degree of kinship, or othersimilar person who executes business of or is an executive of the Company or any entity that has a special relationshipwith the Company.
‧ All of the candidates for Outside Director fulfill the requirements for Independent Directors as defined by the Tokyo Stock
Exchange, Inc. and the Nagoya Stock Exchange, Inc. The Company is scheduled to designate all of the candidates for
Outside Director as Independent Directors and to report this designation to the exchanges mentioned above.

2.

Ms. Mami Yunoki’s name in her family register is Mami Kato.

3.

Violations of laws, regulations and the Articles of Incorporation, incidents of unjust execution of business, and actions taken
to prevent the occurrence of such incidents during the term of office are as follows.
In February 2024, it was found that IHI Power Systems Co., Ltd., a subsidiary of IHI Corporation where Mr. Toshio Iwamoto
served as Outside Audit & Supervisory Board Member until June 23, 2023, made improper alterations in the test operation
records for engines manufactured by IHI Power Systems Co., Ltd. In April 2024, IHI Power Systems Co., Ltd. was subject
to an on-site inspection by the Ministry of Land, Infrastructure, Transport and Tourism. While he was unaware of theseincidents until they came to light after he retired, he had been making recommendations in a timely manner regarding theimportance of compliance with laws and regulations and internal control on a regular basis during his term of office.

4.

The current five Outside Directors, Ms. Eriko Kawai, Mr. Katsuyuki Nishikawa, Mr. Toshio Iwamoto, Ms. Yumiko Murakami,
and Ms. Noriko Iki, have each executed an agreement to limit liability to the Company. Each agreement stipulates that the
maximum amount of liability is 10 million yen or the minimum amount of liability provided in Paragraph 1 of Article 425of the Companies Act, whichever is higher. In case the election of those candidates for Outside Director is duly approved,
the Company will continue to be a party to such agreement with each Outside Director. Also, in the event Ms. Mami Yunoki’s
appointment is approved, there is a plan to conclude an agreement to limit liability to the Company in the same way with
her.

5.

The Company has entered into a directors and officers liability insurance agreement as provided in Paragraph 1 of Article
430-3 of the Companies Act with an insurance company, and the insurance agreement is designed to cover damages that
may be incurred by the insured Directors of the Company who are liable for the execution of their duties or receiving aclaim for pursuing their liability. If each candidate is appointed and assumes office as Director, he/she will be insured under
the insurance agreement. The Company also plans to renew the insurance agreement on the same terms at the time of thenext renewal.

19[References]

The Company is scheduled to appoint the following directors as members and Chairperson of the Nominating Committee,
the Audit Committee, and the Compensation Committee respectively, through resolutions of the Board of Directors and eachcommittee to be held after the conclusion of the Meeting. A majority and the Chairperson of each committee will be Outside
Directors as described below.
Name

Title

Nominating
Committee

Audit
Committee

Compensation
Committee

Seiji Nakata

Chairperson of the Board andCorporate Executive Officer○○

Akihiko Ogino

Member of the Board,
Representative Corporate Executive
Officer and President○○

Sachiko Hanaoka

Member of the Board

Eriko Kawai

Member of the Board (Outside)
Independent Officer○

Katsuyuki Nishikawa

Member of the Board (Outside)
Independent Officer○

Toshio Iwamoto

Member of the Board (Outside)
Independent Officer

Yumiko Murakami

Member of the Board (Outside)
Independent Officer

Noriko Iki

Member of the Board (Outside)
Independent Officer

Mami Yunoki

Member of the Board (Outside)
Independent Officer

○
◎
◎
○

◎
○
○

○

○
○

○

(Note) ◎ indicates that the director is a Chairperson of such committee and ○ indicates that the director is a memberof such committee.

20

Business Report (From April 1, 2023 to March 31, 2024)
Status of the Group’s Business Activities
The Group (Note) strives to improve the corporate value of the Group through its core business- the securities business. The outline of the Group’s performance in the current fiscal year
(FY2023) is as follows.
(Note) In this report, the “Group” means the corporate group consisting of Daiwa Securities Group
Inc. (the “Company”) and its subsidiaries and affiliates.

Outline of the Consolidated Performance(1) Profits and Losses of the Group(Billions of yen)

Fiscal 2023

YoY Change(Year ended March 31, 2024)

Operating revenue

1,277.4

47.5%

Net operating revenue

590.9

27.3%

Ordinary income

174.5

100.8%

Profit attributable to owners of parent

121.5

90.3%
(Millions of yen)

Net operating revenue

Ordinary income

Fiscal 2022
(86th term)

Fiscal 2023
(87th term)

YoY Change

Fiscal 2022
(86th term)

Fiscal 2023
(87th term)

YoY Change

RetailWholesale

164,336
160,891

208,380
220,479

26.8%
37.0%

25,886
2,822

58,92444,037

127.6%
15 Times

Asset Management

70,39473,1824.0%

44,52645,9403.2%

Investment
OthersTotal

16,44652,157464,226

22,91065,956590,910

39.3%
–
27.3%

13,068626
86,93019,6696,015
174,587

Global Markets
Global Investment Banking
Securities Asset Management
Real Estate Asset Management

102,850
58,04142,882
27,512

149,394
71,084

45.3%
22.5%

47,17926,003(3,130)
4,738

10.0%
(5.5)%

18,076
26,45037,648
4,510
20,95924,981–(4.8)%
15.9%(5.6)%

50.5%–
100.8%(2) Assets, Liabilities, and Net Assets of the Group(Billions of yen)

Fiscal 2023
(As of March 31, 2024)

YoY Change

Total assets

32,027.2

5,614.0

Total liabilities

30,238.6

5,500.8

Total net assets

1,788.6

113.1

Net assets per share (yen)1,086.20

117.2721

Economic and Market Environment
During the FY2023 under review, Japan’s economy gradually recovered due to normalizationof economic activity, expansion of external demand, and accommodative domestic fiscal andmonetary policies. However, stagnation in domestic demand was noticeable, with wage
increases unable to keep up with rising prices and then personal consumption declining. In the
April-June quarter, real GDP grew for the third consecutive quarter compared to the same
period in the previous year, with domestic automobile production accelerating due to the easingof the semiconductor shortage and the number of foreign visitors to Japan increasing, and real
GDP reaching a record high in amount. In the July-September period, exports continued toincrease due to the increasing growth rate of the U.S. and Chinese economies, and government
consumption, including public expenditures for medical expenses, also increased. However, real
GDP turned to negative growth as personal consumption, capital investment, and housing
investment continued to decline from the previous quarter. In the October-December period,
military conflicts between Hamas and Israel occurred in October, and there were concerns about
the impact on energy prices, etc., but crude oil prices remained stable until December.
Meanwhile, in Japan, as personal consumption continues to decline, the government in earlyNovember compiled a comprehensive economic package worth approximately 37 trillion yen,which included an extension of measures to counter high energy prices, fixed tax cut, andrelated cash handouts. In the January-March period, Domestic production was significantly
pushed down from January to February due to the Noto Peninsula earthquake in Ishikawa
Prefecture, which caused some automobile manufacturers to suspend operations. In March, notonly large companies but also small and medium-sized enterprises reached a series ofagreements with large wage increases in the annual wage negotiation between employers andunions. The wage increase rate, which includes regular wage increases, was calculated by theJapanese Trade Union Confederation (Union) on March 21 to be 5.25%, which was the second
highest rate since 1991. After confirming that the virtuous cycle between wages and prices wasstrengthening, the Bank of Japan decided at its monetary policy meeting in March to abolish its
negative interest rate policy.
In the stock market, Tokyo Stock prices trended upward as increased expectations for an end
to deflation against the backdrop of wage increases and progress in price pass-through, and thegovernance reforms requested of listed companies by the stock exchange were well received,
etc., in addition to progress in global economic normalization that has continued since theprevious fiscal year, and increased profits of exporting companies due to the weaker yen. In
February 2024, the Nikkei Stock Average hit a new all-time high since December 1989, andexceeded 40,000 yen in March. The Nikkei Stock Average at the end of the current period was
40,369.44 yen, a significant increase of 44.0% compared to the end of the previous period.
In the bond market, upward pressure on interest rates in Japan increased during the first halfof FY2023 due to continued interest rate hikes by European and American central banks. In
addition, the Bank of Japan made its long-term interest rate operations more flexible in July andOctober 2023, and the yield on 10-year government bonds at one point exceeded 0.9%.
Subsequently, interest rate increases were halted in Europe and the United States, putting a
brake on the rise in interest rates, and the yield on 10-year government bonds at the end of
FY2023 was 0.725%.

22

Outcome of the Group’s Business Activities (Performance by Each Operating Division)
Retail Business[Main products and services]
Stocks, bonds, investment trusts, wrap account services, insurance, deposits, loans, inheritancerelated services, etc.
In order to achieve “Customer First” & “Quality No. 1,” Daiwa Securities Co. Ltd. is pursuing thecustomer’s best interests by establishing a wealth management business model, providing products
and services responding to various customer needs, expanding its solutions-based business through a
total assets approach, and developing new business that utilizes partnerships with external channels.
During FY2023, in order to establish a wealth management business model, Daiwa Securities Co.
Ltd. continued to listen to customers about their asset status and needs, and proposed optimal
portfolios. As a result, the number of contracts for wrap account services increased and the contract
asset balance reached a record high, contributing to the creation of a revenue base that is lesssusceptible to market conditions.
In addition, in order to provide products and services that meet the needs of diverse customers,
Daiwa Securities Co. Ltd. launched the Daiwa Blackstone Private Credit Fund in April 2023 and theBlackstone Private Equity Strategies Fund in March 2024 and worked to expand investment
opportunities in alternative assets (Note 1) for a wide range of customers. In December 2023, webegan handling U.S. stocks through online trading, working to improve customer convenience.
Based on the deliberations of the Customer Satisfaction Council, which aims to improve products
and services based on customer feedback, we simplified various procedures and held webinars toprovide after-sales care for our products. As a result of focusing on these initiatives, Daiwa
Securities Co. Ltd. ranked first in the face-to-face securities section in an external NPS survey (Note2).
Furthermore, Daiwa Securities Co. Ltd. provides “Yucho Fund Wrap” at JAPAN POST BANK
Co., Ltd., which has a solid customer base in Japan, and worked to expand the customer base andenhance services in the asset formation field. In addition to the above, based on the comprehensive
business tie-up with Shikoku Bank, Ltd., we started business tie-up in April 2023 to provide a wide
range of products and services of the Group, as well as comprehensive consulting.

(Note 1) Alternative assets: New investment assets that are an alternative to the traditional investment
assets such as listed stock and bond investments.
(Note 2) The NPS survey is the NPS (a measure that quantifies customer loyalty) benchmark results of anindustry specific survey conducted on users, announced in November 2023 by NTTCom Online
Marketing Solutions Corporation.

23

Wholesale Business[Main products and services]
Global Markets: Stocks, Bonds/FX, Derivatives
Global Investment Banking: Stock underwriting, bond underwriting, M&A advisory, listing
consulting, etc.
The wholesale business of the Group comprises the Global Markets business and the Global
Investment Banking business.
In the Global Markets business, Daiwa Securities Co. Ltd. conducts sales and trading of equities,
bonds, forex, and financial derivative products to and with institutional investors and corporateclients and also provides products and sales support to retail investors.
During FY2023, Daiwa Securities Co. Ltd. established the Global Markets Strategy Planning
Department in April 2023 and worked to strengthen customer-oriented marketing and rebuild its
overseas business through collaboration with the sales headquarters.
As a result of our efforts to realize our “Quality No. 1” objective, Nikkei Veritas ranked Daiwa
Securities Co. Ltd. in first place in the analyst rankings in the equity category for a sixth straight year
and first place in the financial markets category for a second straight year.
In the Global Investment Banking business, Daiwa Securities Co. Ltd. is involved inunderwriting, M&A advisory, etc.
In underwriting business, we served as a global coordinator (Note 1) for Rakuten Group Inc.’spublic capital increase and Trial Holdings Inc.’s initial listing, served as an advisor for Japan’sissuance of GX Economy Transition Bonds (Note 2), and served as lead manager and structuring
agent (Note 3) in the issuance of various SDGs bonds in Japan.
In M&A advisory business, Daiwa Securities Co. Ltd. has been involved in projects in a variety ofindustries in various countries and regions, in addition to domestic projects including TAISHOPHARMACEUTICAL HOLDINGS CO., LTD.’s delisting, Benesse Holdings, Inc.’s delisting,sponsored by EQT, the largest private equity fund in Northern Europe, and NIDECCORPORATION’s tender offer for Takisawa Machine Tool Co., Ltd.
(Note 1) Global coordinator is the lead manager securities company that oversees all activities whencarrying out a public offering or sale of shares inside and outside of Japan.
(Note 2) GX Economy Transition Bond: Decarbonized growth economic structure transition bond. A
government bond issued to achieve net zero greenhouse gas emissions by 2050.
(Note 3) Structuring Agent: A person that provides support in issuing SDGs debt, etc. through providing
advice related to drafting framework and getting second opinions when issuing SDGs debt, etc.

24Asset Management Business[Main products and services]
Various investment trust products (composition and investment), investment advisory, customer
and sales company support, real estate investment trusts (composition and management), etc.
Daiwa Asset Management Co. Ltd. has been working to expand assets under management byimproving its fund management capabilities, development of new products with high added value,and promotion in line with the start of the new NISA. Sales of the “Daiwa Blackstone Private Credit
Fund,” which was established in May 2023, were strong, and as of the end of FY2023, the fund had
increased by 77.1 billion yen. In addition, mainly due to the inflow of funds into new NISA products
such as the iFree series and Fund Wrap, the total amount of funds increased by 850.7 billion yen for
publicly offered stock investment trusts during FY2023, and the company’s assets undermanagement (Note 1) at the end of FY2023 were 32.3 trillion yen.
Global X Japan Co. Ltd. provided twelve listed ETFs, including a growth theme-based ETF (Note2) and income ETF (Note 3). Its assets under management were 339.7 billion yen at the end of thecompany’s FY2023
Daiwa Real Estate Asset Management Co. Ltd. conducted a public offering in October 2023 at
Daiwa Securities Living Investment Corporation, which it manages, and acquired new assets,
including large-scale acquisitions of 19 properties totaling 45.3 billion yen. As a result of its efforts
to improve the quality of its real estate portfolio and increase the value of existing properties throughproperty acquisition and asset replacement, its assets under management at the end of FY2023
amounted to 1,295.0 billion yen.
(Note 1) Total of investment trusts and the balances of discretionary investment and advisory contracts (Thefigure is an estimate including the assets under management for some overseas subsidiaries of thecompany. The finalized figure excluding the assets under management for those overseas
subsidiaries was 31.9 trillion yen.)(Note 2) Growth theme-based ETF: An ETF that aims to benefit from structural changes while paying
attention to the theme of expected advancement and growth.
(Note 3) Income ETF: An ETF that aspires to obtain a high dividend yield, paying attention to dividend
yield, dividend continuity, etc.

25

Investment Business[Main products and services]
Venture investment, private equity investment, monetary debt investment, energy/infrastructure
investment, etc.
Daiwa Corporate Investment Co., Ltd. has invested in venture companies at various stages inJapan and overseas and has promoted the exit of existing investments.
Daiwa PI Partners Co. Ltd. invested in monetary claims, real estate loans and equity, and loans tocorporations at home and abroad in addition to proceeding with collection of existing projects.
Additionally, in September 2023, Daiwa PI Capital Co., Ltd., a wholly owned subsidiary of thecompany, established DPIC growth support fund I L.P., a private equity fund.
Daiwa Energy & Infrastructure Co. Ltd. invested in and financed small and medium-sized solar
power plants and storage battery businesses in Japan, and overseas investment, it invested andfinanced in power distribution companies in Finland, solar power plants in the U.S. and Australia,
and an Irish toll highway operator, among others, based on partnerships with external companies.
Also, it proceeded with collection of existing projects.
Other[Main products and services]
Economic and social research/recommendations, consulting, system consulting, system
integration, AI/data science, banking operations, etc.
As a think tank, Daiwa Institute of Research Co., Ltd. has disseminated information based on
economic and social trends, such as countermeasures against the declining birthrate and social
security. In addition, in system development for the Group and other systems, it steadily
implemented system support for the launch of the new NISA. In addition to promoting the healthtech business through the establishment of a health tech promotion office and a capital and businessalliance with Value HR Co., Ltd., it also worked to utilize cutting-edge technologies such as
generative AI.
Daiwa Next Bank, Ltd. started handling “foreign currency savings” in April 2023 with the aim offurther improving services.
Daiwa Connect Securities Co., Ltd. has begun mutual customer referrals based on a basic
agreement signed in June 2023 as order to collaboration with Minna Bank Co., Ltd. on multifaceted
services. In addition, in line with the launch of the new NISA in January 2024, we worked to
improve convenience by raising the upper limit for investment savings with a credit card to 100,000
yen.
Daiwa Securities Realty Co., Ltd. has contributed to expanding the assets under management ofinvestment companies operated by Daiwa Real Estate Asset Management Co. Ltd. by providing awarehousing function (Note).
(Note)

Warehousing function: A function to temporarily obtain a property before the investing company
finally obtains it, in order to control the time of property acquisition.

26

Status of the Capital Investment of the GroupThe Group makes capital investments so that we can offer products and services that meet ourcustomers’ needs, achieve digital transformation (Note 1) through business process digitalization,
data analysis, research and application, develop infrastructure to ensure business efficiency andsecurity, address legal and regulatory requirements, and strengthen risk management.
During FY2023, Daiwa’s online trading system has created a system that enables real-time
entrusted trading of U.S. stocks during the trading hours of U.S. exchanges, and has launched “U.S.
Stock Real Market Price Information,” which provides real-time market price information on U.S.
stocks, and has introduced functions such as timely notification of stock prices and trade results.
Additionally, as an investment in cutting-edge technology, we have developed a highly scalable
security token wallet (Note 2) in preparation for future expansion of the security token market.
Furthermore, we implemented system development in line with system reforms such as the new
NISA that started in January 2024 and the inclusion of English characters in securities codes.
Additionally, regarding the Zero Trust (Note 3) type security infrastructure that we built last year, we
proceeded with technical verification to enable our systems to be used safely and quickly by ourcollaborators and partners. As a result of these measures, the Group made 35.4 billion yen in ITrelated capital investments.
Additionally, Daiwa Securities Co., Ltd. has newly established its Kurashiki, Tsukuba, and Narita
Sales offices.
(Note 1) Digital Transformation (DX): When a company utilizes data and digital technology to keep up
with the drastic changes in the business environment and reforms the business itself, theorganization, processes, and corporate culture and environment and establishes priority incompetition while also reforming products, services, and business models based on needs ofcustomers and society.
(Note 2) Security token wallet: A system for managing the private keys of security tokens, which are
digitized securities whose rights are transferred and recorded using blockchain technology, andfor processing the transfer of rights on the blockchain.
(Note 3) Zero trust: The security concept under which the security of every access to data systems
requiring protection, whether from inside or outside the company, is verified and not based solely
on trust.

Status of Financing of the GroupThe Company issued the bonds below amounting to 197 billion yen in total.
Amount ofBonds payableliabilities
40th Series of Unsecured Bonds
50 billion yen
41st Series of Unsecured Bonds
50 billion yen
42nd Series of Unsecured Bonds
41 billion yen
43rd Series of Unsecured Bonds
45 billion yen
44th Series of Unsecured Bonds (Green Bond)
10 billion yen
1st Series of Unsecured Security Token Bonds
1 billion yen

27

Payment dateNov. 28, 2023
Nov. 28, 2023
Dec. 18, 2023
Dec. 18, 2023
Feb. 27, 2024
Mar. 21, 2024

Five-Year Trend of Consolidated Performance and Assets(Billions of yen)
Term
Item

83rd

84th

85th

86th

87th

(April 1, 2019-(April 1, 2020-(April 1, 2021-(April 1, 2022-(April 1, 2023-

March 31, 2020)

March 31, 2021)

March 31, 2022)

March 31, 2023)

March 31, 2024)

Operating revenue

672.2

576.1

619.4

866.0

1,277.4

Net operating revenue

426.2

466.6

502.0

464.2

590.9

Ordinary income

70.2

115.1

135.8

86.9

174.5

Profit attributable toowners of parent

60.3

108.3

94.8

63.8

121.5

Total net assets

1,257.7

1,591.8

1,639.8

1,675.4

1,788.6

Total assets

23,822.0

26,099.3

27,531.0

26,413.2

32,027.2

Net assets per share(Yen)

796.33875.12925.81

968.93

1,086.20

Net income per share
(Yen)

39.11

71.20

63.06

43.53

84.94

Return on equity
(ROE)

4.9%

8.5%

7.0%

4.6%

8.3%

Number of
consolidated
subsidiaries

66

118

136

140

144

Number of affiliates
accounted for using theequity method

15

17

18

17

21

(Note) The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020),
etc. are applied from the beginning of the 85th term. Each number from the 85th term is the number
after the application of these accounting standards.

28

Issues to Be Addressed by the GroupFY2023 marked a major turning point for the Japanese economy. Japan is on the verge of a full
departure from the deflationary trend it has endured for the past 30 years. A complete return to postpandemic economic normalcy has begun, led by increasingly clear signs of recovery in areas such as
inbound demand. The Japanese stock market has also been performing well, with the Nikkei index
surpassing its all-time high of 38,915 yen for the first time in 34 years. The rise reflects solid
corporate earnings, a push by the Tokyo Stock Exchange for greater awareness of cost of capital andstock price among the management of listed companies, and greater foreign investor demand forJapanese equities. Monetary policy has also taken a step toward normalization by getting rid of thenegative interest rates that persisted for the past eight years. The Group’s steady advances intransitioning to a wealth management business model and in growing our hybrid business areas have
led to a recovery in earnings.
“Passion for the Best” 2026 is the name of the New Medium-term Management Plan that theGroup has devised to respond to this outside environment and Japan’s incipient tidal shift fromsavings to asset building. The Plan will run for the three-year period from FY2024 to 2026. This
Medium-term Management Plan is a collection of priority strategies and policies that draw on
backcasting to achieve the Group’s FY2030 vision—creating a solid earnings foundation resistant toimpacts from the outside environment. “Maximizing the value of customer assets” is the Group’s
basic management policy. All Group business activities are designed to grow client asset value overthe medium to long term by providing high-quality consulting services and solutions driven by
accurate analysis of market environments and in-depth understanding of client needs.
As the inaugural year of the Medium-term Management Plan, FY2024 will be devoted to
executing the action plans detailed below. The Japanese government has recently announced a policy
plan for promoting Japan as a leading asset management center. The Group’s activities will help
bring this plan to life and ultimately help create a prosperous future made possible by financial andcapital markets.

29Action Plan for Each Business Division
Wealth Management Division
1 Refining our wealth management business by providing optimum consulting services rooted
in an in-depth understanding of client needs
2 Augmenting our lineup of high-added-value bespoke products, services and solutions
tailored to the advanced demands of high-net-worth and corporate clients
3 Using digital marketing to create an organization for providing the right services for clientneeds in a timely manner
4 Growing our client base through outside partnerships and workplace business
5 Augmenting our banking solutions for high-net-worth clients
Asset Management Division
1 Providing high-added-value asset management services by offering more advanced asset
management options and improving our product development capabilities
2 Building a new business foundation by augmenting our alternative product lineup and fully
entering the investment advisory sector
3 Working on our real estate asset management segment by enhancing our asset management
and property sourcing capabilities, and having Group members work together
4 Drawing on our alternative investment expertise and experience to provide high-quality
investment opportunities that seek to outperform
Global Markets & Investment Banking Division
1 Providing a diverse and advanced lineup of products and solutions tailored to a wide range of2
3
4

client needs
Growing our business foundation by working more closely with our Wealth Management
Division
Providing more solutions to unlisted companies while enhancing M&A activities inside andoutside Japan
Boosting profitability by reallocating management resources

Other (Daiwa Institute of Research Group)
1 Enhancing research quality to provide higher quality information in a timely manner
2 Enhancing client services by creating an IT service platform and drawing on AI and data
science
3 Helping extend healthy life expectancy by providing solutions driven by data gathered by oursocial insurance business

30

Status of the Group(1) The Group’s Primary Business
The Group’s primary business is the investment/financial business, with securities-related
business at its core. Specifically, the Group is involved in trading and brokerage of securities andderivative products, underwriting and secondary offering of securities, dealing in public offering,
secondary offering and private placement of securities and other security-related business, banking
business and other financial business.
(2) Status of Major Subsidiaries and Affiliates
Location

Capital(millions ofyen)

Daiwa Securities Co. Ltd.

Chiyoda-ku, Tokyo

100,000

100.0%
Investment advisory and agency(100.0%)Daiwa Asset Management Co.
Ltd.

Chiyoda-ku, Tokyo

15,174100.0%(100.0%)Daiwa Institute of Research Ltd.

Koto-ku, Tokyo

3,898

Daiwa Securities BusinessCenter Co. Ltd.

Koto-ku, Tokyo

100

Daiwa Facilities Co., Ltd.

Chuo-ku, Tokyo

100

Daiwa Next Bank, Ltd.

Chiyoda-ku, Tokyo

50,000Daiwa Corporate Investment
Co., Ltd.

Chiyoda-ku, Tokyo

100

Daiwa PI Partners Co. Ltd.

Chiyoda-ku, Tokyo

12,000Daiwa Energy & Infrastructure
Co. Ltd.

Chiyoda-ku, Tokyo

500

Company nameDaiwa Real Estate AssetManagement Co. Ltd.
Daiwa Securities Realty Co.
Ltd.
Daiwa Office Investment
Corporation
Samty Residential Investment
Corporation
Daiwa Capital Markets Europe
LimitedDaiwa Capital Markets Hong
Kong Limited

Chuo-ku, Tokyo

200

Chuo-ku, Tokyo

500

Chuo-ku, Tokyo

238,093

Chiyoda-ku, Tokyo

81,642London, U.K.
Hong Kong, China

Daiwa Capital Markets
Singapore, Singapore
Singapore Limited
Daiwa Capital Markets America
New York, U.S.A.
Holdings Inc.
Daiwa Capital Markets America
New York, U.S.A.
Inc.

GBP732
million
HKD100
million
USD276
million
SGD140
million
USD621
million
USD100
million31

Ratio of voting
rights(directly owned)

Main businesses
Securities-related business100.0%(100.0%)100.0%(100.0%)100.0%(100.0%)100.0%(100.0%)100.0%( － )100.0%( － )100.0%( － )business
Investment managementbusiness
Investment advisory and agency
business
Information service
Back office operation
Lending, borrowing andmanagement of real estate
Banking business
Investment business
Investment business
Investment business
Investment management

100.0% business(100.0%) Investment advisory and agency
100.0%(100.0%)41.0%(14.1%)
40.2%(38.9%)
100.0%( － )business

Real estate related business
Investment in specified assets
Investment in specified assets
Securities-related business100.0%
Securities-related business( － )100.0%( － )100.0%( － )100.0%( － )Securities-related business
Integration and management ofsubsidiaries
Securities-related business(3) Situation of Specified Wholly-Owned Subsidiary at the End of FY2023
Not applicable.
(4) Status of the Group’s Business Combinations, etc.
Not applicable.
(5) Status of Major Business Alliances
On May 13, 2024, the Company agreed with Aozora Bank, Ltd. to form a capital and businessalliance.
On May 15, 2024, the Company and Daiwa Asset Management Co., Ltd. agreed with JAPANPOST INSURANCE Co., Ltd. on a capital and business alliance in the field of asset management.

(6) The Group’s Primary Business Locations(i) The Company’s Head Office: 9-1, Marunouchi 1-Chome, Chiyoda-ku, Tokyo(ii) Main Subsidiary’s Business Locations: Daiwa Securities Co. Ltd.
Hokkaido / Tohoku

Sapporo Branch, Sendai Branch, and 8 other branches

Kanto(excluding Tokyo)

Yokohama Branch, Chiba Branch, Omiya Branch, and 43 other branches

Tokyo

Head Office, Ginza Branch, Shinjuku Branch, Shibuya Branch, Ikebukuro Branch,and 33 other branches

Chubu / Hokuriku

Nagoya Branch, Shizuoka Branch, and 27 other branches

Kinki

Kyoto Branch, Osaka Branch, Namba Branch, Kobe Branch, and 29 other branches

Chugoku /Shikoku

Hiroshima Branch, and 13 other branches

Kyushu / Okinawa

Fukuoka Branch, and 11 other branches(7) Status of Employees(i) The Group’s Employees
Number of employees

Change from previous fiscal year

14,600Decrease of 131(Note) The number of employees reflects the number of the people who actually work in the Group.

(ii) The Company’s Employees
Number of employees

Average age

Average years of service

588

43.2

13.8 years(Note 1) The number of employees reflects the number of the people who actually work in the Company. 588
employees work for both the Company and Daiwa Securities Co. Ltd.
(Note 2) Average age and average years of service above show the average age and years of the employees
including those who work concurrently for the Company and Daiwa Securities Co. Ltd.

32

(Note 3) In calculating the average years of service above, we include the years of service in other companies
in the Group.

(8) Major Lenders

Balance(millions of yen)

Name of lenderType of loan

Sumitomo Mitsui Banking
Corporation

Short-Term Borrowings

30,000Long-Term Borrowings

180,141

Mizuho Bank Ltd.

Long-Term Borrowings

102,000

MUFG Bank, Ltd.

Long-Term Borrowings

61,000Resona Bank Ltd.

Long-Term Borrowings

31,000(Note) We state above the main borrowings from outside of the Group (excluding call money, etc.).

(9) Other Significant Matters relating to the Group’s Current Status
Not applicable.
(Note) This business report is prepared in accordance with the provisions of the Companies Act (Act No. 86 of2005), the Ordinance for Enforcement of the Companies Act (Ministry of Justice Ordinance No. 12 of
2006) and the Accounting Regulation Ordinance (Ministry of Justice Ordinance No. 13 of 2006). We
stated the status of the Group instead of the status of the Company alone, where possible.

33

Summary of the Company (as of March 31, 2024)
Status of Shares(1) Total number of authorized shares:
4,000,000,000 shares
Total number of authorized shares in a class of each type of shares is as follows:
Type of shares
Total number of authorized class shares
Common Stock
4,000,000,000
Class 1 Preferred Stock
100,000,000
Class 2 Preferred Stock
100,000,000
Class 3 Preferred Stock
100,000,000(2) Total number of issued and outstanding shares: 1,569,378,772 shares of Common Stock(including treasury stock)(3) Total number of Shareholders: 148,746(4) Major Shareholders (top ten)
Number of shares ofNamecommon stocks held(% of total outstanding shares)
230,614 thousand shares
The Master Trust Bank of Japan, Ltd. (Trust Account)(16.45%)72,313 thousand shares
Custody Bank of Japan, Ltd. (Trust Account)(5.16%)
41,140 thousand shares
Taiyo Life Insurance Company(2.93%)
34,000 thousand shares
Barclays Securities Japan Limited(2.42%)
31,164 thousand shares
Nippon Life Insurance Company(2.22%)
30,000 thousand sharesJAPAN POST HOLDINGS Co., Ltd.
(2.14%)
STATE STREET BANK WEST CLIENT - TREATY
29,842 thousand shares
505234(2.12%)
19,272 thousand shares
JP MORGAN CHASE BANK 385781(1.37%)
19,091 thousand shares
Daiwa’s Employee Stock Ownership Association(1.36%)The Nomura Trust and Banking Co., Ltd. (Investment
17,314 thousand shares
Trust Account)(1.23%)(Note 1) The Company holds 168,064,760 of its own shares as treasury stock as of March 31, 2024, and theCompany is excluded from the above list of major shareholders.
(Note 2) Treasury stock shares are excluded for calculating the percentages in the list of major shareholders above.

34

(5) Status of shares allotted to officers as consideration for execution of duties during thecurrent fiscal year
The Company has introduced the Restricted Stock Compensation Plan for the purpose offurther enhancing incentives to improve medium- and long-term business performance andpromoting further value sharing between the Company, its subsidiaries’ Directors, Corporate
Executive Officers, etc. and shareholders. The Restricted Stock allotted to Directors andCorporate Executive Officers during FY2023 is as follows.
Executive category
Numbers allotted
Allotted Shares(persons)
Directors
2
22,400
Corporate Executive Officers
12
246,000
Outside Directors––(Note) Number of shares allotted to five (5) persons, who concurrently take on the post of Directors and Corporate
Executive Officers, is listed in the column of the Corporate Executive Officers.

35

The Corporate Governance System of the Group
Basic Stance on Corporate Governance
The Company practices group management based on a holding company structure, establishes ahighly transparent and objective governance structure that conforms to international standards, andbuilds a unified group management system that elicits synergies among group companies withhighly efficient oversight of group companies.
The Company has adopted a company with Three Committees System (a company withnominating committee, etc.) as an institutional design with the objective of supervising
management through the following (1) and (2). The chairperson of each committee is appointed
from among the Outside Directors who are members of each committee.
(1) Making swift and decisive decisions by having the Board of Directors assign wideranging authority to Corporate Executive Officers while clarifying the division of duties
among Corporate Executive Officers.
(2) Improving transparency and fairness of the management by establishing of threecommittees: the Nominating Committee, Audit Committee, and Compensation
Committee with highly independent Outside Directors as a majority of their members.
Corporate Governance System (as of March 31, 2024)(Note) In principle, it is the policy of the Company that the majority of the Directors do not concurrently serve as the
Corporate Executive Officers.

36State of Activities of Three Committees
To create a highly transparent and objective corporate governance system, the chairpersons of all
three committees (Nominating Committee, Audit Committee and Compensation Committee) are
Outside Directors.
Nominating Committee
In FY2023, the Nominating Committee met four (4) times to discuss matters,
including the composition of the Board of Directors with consideration of
corporate governance, the basic policy for nominating candidates for Director,
State ofthe selection of Director candidates, the candidates for Representative Corporate
activities for
Executive Officer, President and CEO, and the skill matrix of Directors.
periodThe Nominating Committee selects candidates for Director in light of theGroup’s selection standards for Directors. These standards include criteria toensure the independence of Outside Directors.
Toshio Iwamoto (Chairperson, Outside Director)
Takashi Hibino
Seiji Nakata
Hirotaka Takeuchi (Outside Director)
Members
Eriko Kawai (Outside Director)
Katsuyuki Nishikawa (Outside Director)
Noriko Iki (Outside Director)
Audit Committee
In FY2023, the Audit Committee met fourteen (14) times. The committeeState ofevaluated the execution of duties of Directors and Corporate Executive Officers,
activities foraudited documentation, including financial statements and business reports, andperiodprepared an audit report for the period under review.
Ikuo Nishikawa (Chairperson, Outside Director)
Sachiko Hanaoka
Hiromasa Kawashima
Members
Katsuyuki Nishikawa (Outside Director)
Yumiko Murakami (Outside Director)
Noriko Iki (Outside Director)
Compensation Committee
In FY2023, the Compensation Committee met five (5) times to discuss thecompensation policy and to determine the compensation of each Director andState ofCorporate Executive Officer. It also studied a Group-wide incentive plan aimed
activities forat improving consolidated earnings results and a compensation system based on
periodthe new medium-term management plan.
Hirotaka Takeuchi (Chairperson, Outside Director)
Takashi Hibino
Seiji Nakata
Ikuo Nishikawa (Outside Director)
Members
Eriko Kawai (Outside Director)
Toshio Iwamoto (Outside Director)
Yumiko Murakami (Outside Director)
State of Outside Director’s Meeting Activities
In FY2023, the meeting was held five (5) times to cover topics such as the new medium-termbusiness plan, the role of outside directors in the event of a takeover proposal, human resources
strategy, geopolitical risk, and crisis management in the financial and capital markets, as well as a
discussion with the Representative Corporate Executive Officer, President (CEO). Mr. Katsuyuki
Nishikawa was appointed as the chairperson.

37

Status of the Company’s Officers(1) Status of Directors

Area of responsibility andsignificant concurrent positions

Title

Name

Chairperson of the
Board

Takashi Hibino

See “(2) Status of Corporate Executive Officers”

Member of the Board

Seiji Nakata

See “(2) Status of Corporate Executive Officers”

Member of the Board

Toshihiro Matsui

See “(2) Status of Corporate Executive Officers”

Member of the Board

Keiko Tashiro

See “(2) Status of Corporate Executive Officers”

Member of the Board

Akihiko Ogino

See “(2) Status of Corporate Executive Officers”
Audit & Supervisory Board Member of Daiwa
Securities Co. Ltd.
Audit & Supervisory Board Member of Daiwa AssetManagement Co. Ltd.
Audit & Supervisory Board Member of Daiwa
Institute of Research Ltd.
Audit & Supervisory Board Member of Daiwa
Securities Co. Ltd.
Audit & Supervisory Board Member of Daiwa Real
Estate Asset Management Co. Ltd.
Audit & Supervisory Board Member of Daiwa Food &Agriculture Co. Ltd.

Member of the Board

Sachiko Hanaoka

Member of the Board

Hiromasa Kawashima

Member of the Board

Hirotaka Takeuchi

See “(3) Outside Officers”

Member of the Board

Ikuo Nishikawa

See “(3) Outside Officers”

Member of the Board

Eriko Kawai

See “(3) Outside Officers”

Member of the Board

Katsuyuki Nishikawa

See “(3) Outside Officers”

Member of the Board

Toshio Iwamoto

See “(3) Outside Officers”

Member of the Board

Yumiko Murakami

See “(3) Outside Officers”

Member of the Board

Noriko Iki

See “(3) Outside Officers”(Note 1) Members of the Board, Mr. Hirotaka Takeuchi, Mr. Ikuo Nishikawa, Ms. Eriko Kawai, Mr. Katsuyuki
Nishikawa, Mr. Toshio Iwamoto, Ms. Yumiko Murakami, and Ms. Noriko Iki, are seven Outside Directors as
defined under Article 2, Item 15 of the Companies Act. The Company reports to the Tokyo Stock Exchange,
Inc. and the Nagoya Stock Exchange, Inc. that those Directors are Independent Directors.
(Note 2) One of Directors, Hiromasa Kawashima, resigned as of March 31, 2024. Furthermore, Hiromasa Kawashima
resigned as Audit & Supervisory Board Member of Daiwa Securities Co., Ltd. and Daiwa Real Estate AssetManagement Co., Ltd. as of March 31, 2024, and as Audit & Supervisory Board Member of Daiwa Food &Agriculture Co. Ltd. as of April 1, 2024, and was appointed as a Director of Daiwa Food & Agriculture Co.
Ltd. as of April 1, 2024.
(Note 3) Mr. Ikuo Nishikawa is a certified public accountant and has considerable knowledge of finance andaccounting.

38

(Note 4) As a “company with a nominating committee, etc.,” the Company formed the following three committees,composed of the following Directors.

Nominating
Committee
Audit Committee
Compensation
Committee

Toshio Iwamoto (Chairperson), Takashi Hibino, Seiji Nakata, Hirotaka Takeuchi,
Eriko Kawai, Katsuyuki Nishikawa, Noriko Iki
Ikuo Nishikawa (Chairperson), Sachiko Hanaoka, Hiromasa Kawashima,
Katsuyuki Nishikawa, Yumiko Murakami, Noriko Iki
Hirotaka Takeuchi (Chairperson), Takashi Hibino, Seiji Nakata, Ikuo Nishikawa,
Eriko Kawai, Toshio Iwamoto, Yumiko Murakami

Effective April 1, 2024, the composition of the Audit Committee has been changed as follows.

Audit Committee

Ikuo Nishikawa (Chairperson), Sachiko Hanaoka, Katsuyuki Nishikawa, Yumiko
Murakami, Noriko Iki(Note 5) The Company selected Sachiko Hanaoka and Hiromasa Kawashima as full-time Audit Committee Members
to hear from the Corporate Executive Officers, receive reports from the Internal Audit Department, gather
information through the audit of subsidiaries, and attend the meetings continuously and effectively. Effective
March 31, 2024, Hiromasa Kawashima resigned as Audit Committee Member.
(Note 6) Effective April 1, 2024, the roles of Directors have been changed as follows.
Member of the Board

Takashi Hibino

Chairperson of the Board

Seiji Nakata(2) Status of Corporate Executive Officers
Title
President/
Representative
Corporate Executive
Officer
Deputy President/
Representative
Corporate Executive
OfficerNameArea of responsibility andsignificant concurrent positions

Seiji Nakata

Chief Executive Officer (CEO) of the Company and
Representative Director and President of Daiwa
Securities Co. Ltd.

Toshihiro Matsui

Deputy President

Keiko Tashiro

Deputy President

Akihiko Ogino

Deputy President

Shinsuke Niizuma

Deputy President

Tomoyuki Murase

Senior Executive
Managing Director

Hiroko Sakurai

Chief Operating Officer (COO) and Head ofWholesale of the Company
Representative Director/Deputy President of Daiwa
Securities Co. Ltd.
Executive Head of Overseas Operations and Head of
Sustainability and Think Tank of the Company
Representative Director/Deputy President of Daiwa
Securities Co. Ltd.
Member of the Board of Daiwa Institute of Research
Ltd.
Executive Head of Corporate Planning and Human
Resources of the Company
Representative Director/Deputy President of Daiwa
Securities Co. Ltd.
Head of Retail of the Company
Representative Director/Deputy President of Daiwa
Securities Co. Ltd.
Head of Information Technology, Chief Information
Officer (CIO), and Head of Data Management of theCompany
Representative Director/Deputy President of Daiwa
Securities Co. Ltd.
Head of Compliance of the Company
Representative Director/Senior Executive Managing
Director of Daiwa Securities Co. Ltd.

39

TitleName

Senior Executive
Managing Director

Eiji Sato

Senior Executive
Managing Director

Kana Shirakawa

Executive Managing
Director

Shikou Yanagisawa

Executive Managing
Director

Tsutomu Kobayashi

Corporate Executive
Officers

Takashi Hibino

Area of responsibility andsignificant concurrent positions
Chief Financial Officer (CFO) and Head of Corporate
Planning of the Company
Member of the Board/Senior Executive Managing
Director of Daiwa Securities Co. Ltd.
Member of the Board of Daiwa Asset Management
Co. Ltd.
Head of Human Resources and Chief Health Officer(CHO) of the Company
Member of the Board/Senior Executive Managing
Director of Daiwa Securities Co. Ltd.
Head of Internal Audit of the Company
Member of the Board/Executive Managing Director of
Daiwa Securities Co. Ltd.
Chief Risk Officer (CRO) of the Company
Member of the Board/Executive Managing Director of
Daiwa Securities Co. Ltd.
Member of the Board/Chairperson of the Board of
Daiwa Securities Co. Ltd.
Outside Director of Imperial Hotel, Ltd.

(Note 1) Corporate Executive Officers Seiji Nakata, Toshihiro Matsui, Keiko Tashiro, Akihiko Ogino, and Takashi
Hibino also serve as Directors.
(Note 2) Two of Corporate Executive Officers, Takashi Hibino and Shikou Yanagisawa, resigned as of March 31, 2024.
Effective on the same date, Takashi Hibino resigned his position as Member of the Board, Chairperson of theBoard of Daiwa Securities Co. Ltd. and Shikou Yanagisawa resigned his position as Member of the Board,
Executive Managing Director of Daiwa Securities Co. Ltd.
(Note 3) Effective March 31, 2024, Seiji Nakata and Toshihiro Matsui resigned the position of Representative Corporate
Executive Officer, and effective April 1, 2024, Akihiko Ogino and Shinsuke Niizuma assumed office as
Representative Corporate Executive Officer.
(Note 4) Effective April 1, 2024, Junichi Serizawa, Kotaro Yoshida, and Keiichi Ishikawa were appointed as Corporate
Executive Officers, and on the same date Corporate Executive Officer’s positions and responsibilities werechanged as follows:
President/Representative
Akihiko
Chief Executive Officer (CEO)Corporate Executive Officer
Ogino
Deputy President/Representative Shinsuke
Chief Operating Officer (COO) and Head of WealthCorporate Executive Officer
NiizumaManagement
Deputy President
Keiko Tashiro Head of Sustainability, Financial Education, Securities
Asset Management, and Think Tank of the Company
SeniorExecutive
Managing Junichi
Deputy Head of Wealth Management
Director
Serizawa
SeniorExecutive
Managing Eiji Sato
Head of Corporate Planning
Director
Executive Managing Director
KotaroChief Financial Officer (CFO)
YoshidaCorporate Executive Officers
KeiichiHead of Internal Audit
Ishikawa
Corporate Executive Officers
Seiji Nakata
Effective March 31, 2024, Keiko Tashiro resigned the position of Representative Director and Deputy
President of Daiwa Securities Co. Ltd., and Eiji Sato resigned the position of Member of the Board of Daiwa
Asset Management Co. Ltd Effective April 1, 2024, Seiji Nakata assumed office as Representative Director
and Chairperson of the Board of Daiwa Securities Co. Ltd., Toshihiro Matsui assumed office as Representative
Director and Deputy Chairperson of the Board of Daiwa Securities Co. Ltd., Akihiko Ogino assumed office as
Representative Director and President of Daiwa Securities Co. Ltd., Keiko Tashiro assumed office as Memberof the Board of Daiwa Asset Management Co. Ltd., and Shinsuke Niizuma assumed office as Member of theBoard of Daiwa Next Bank, Ltd.

40

(3) Outside Officers(i) Significant concurrent positions held by outside officers in other companies and therelationships between these companies and the Company
Name

Hirotaka Takeuchi

Ikuo Nishikawa

Eriko Kawai

Katsuyuki Nishikawa

Toshio Iwamoto

Yumiko Murakami
Noriko Iki

Significant concurrent positions
Outside Director of Integral Corporation (Audit and Supervisory Committee
Member)Senior Advisor of P&E Directions, Inc.
Outside Director of BrightPath Biotherapeutics Co., Ltd.
Director of T-Lab.
Principal of Global Academy K. K.
Chair of the Board of Trustees of International Christian University
EHL (Ecole Hoteliere de Lausanne) Group International Advisory Board
memberCouncilor of Yanai Family Association
Outside Director of MEGMILK SNOW BRAND Co., Ltd.
Guest Professor of Graduate School of Keio University, Faculty of Business& Commerce
Outside Audit & Supervisory Board Member of Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Outside Audit & Supervisory Board Member of Yamaha Motor Co., Ltd.
Outside Director of Mitsui Fudosan Co., Ltd.
Senior Advisor of International Management Forum Co., Ltd.
External Director of DMG Mori Co., Ltd.
Attorney at Nishikawa Katsuyuki Law OfficeOutside Audit & Supervisory Board Member of AEON Hokkaido Corporation
Advisor of NTT DATA Group Corporation
Outside Director of East Japan Railway Company
Outside Director of Isetan Mitsukoshi Holdings Ltd.
Outside Director of Sumitomo Forestry Co., Ltd.
General Partner of MPower KK
Outside Director of Raksul Inc.
Special Adviser of Japan Institute for Women’s Empowerment & Diversity
Management
Outside Director of FUJI KYUKO CO., LTD.

(Note) The Company has no special relationships with the companies listed above in which outside officers holdconcurrent positions.

41

(ii) Major activities during FY2023
Status of attendance and remarks and overview of the performed dutiesNameregarding expected roles
Attended all 10 Board of Directors’ meetings and, as a chairperson of theCompensation Committee and a member of the Nominating Committee,
attended all 5 meetings of the Compensation Committee and 4 meetings ofHirotaka Takeuchi
the Nominating Committee held in FY2023. Made remarks on the resolutions,contributed to discussion in such meetings, and played a role related to advice
for and supervision over management based mainly on his knowledge andexperience relating to management strategies.
Attended all 10 Board of Directors’ meetings and, as a chairperson of the
Audit Committee and a member of the Compensation Committee, attended all
14 meetings of the Audit Committee and 5 meetings of the Compensation
Ikuo Nishikawa
Committee held in FY2023. Made remarks on the resolutions, contributed to
discussion in such meetings, and plays a role related to advice for andsupervision over management from his professional perspectives as a certified
public accountant.
Attended all 10 Board of Directors’ meetings and, as a member of theNominating Committee and Compensation Committee, attended all 4
meetings of the Nominating Committee and 5 meetings of the Compensation
Eriko Kawai
Committee in FY2023. Made remarks on the resolutions, contributed to
discussion in such meetings, and plays a role related to advice for andsupervision over management based mainly on her knowledge and experience
relating to the financial business.
Attended all 10 Board of Directors’ meetings and, as a member of theNominating Committee and Audit Committee, attended all 4 meetings of theNominating Committee and 14 meetings of the Audit Committee held in
Katsuyuki Nishikawa
FY2023. Made remarks on the resolutions, contributed to discussion in suchmeetings, and played a role related to advice for and supervision overmanagement from his professional perspectives as a lawyer.
Attended all 10 Board of Directors’ meetings and, as a chairperson of theNominating Committee and a member of the Compensation Committee,
attended all 4 meetings of the Nominating Committee and 5 meetings of the
Toshio Iwamoto
Compensation Committee in FY2023. Made remarks on the resolutions,contributed to discussion in such meetings, and played a role related to advice
for and supervision over management based mainly on his abundant
experience as a manager and knowledge of IT.
Attended all 10 Board of Directors’ meetings and, as a member of the Audit
Committee and Compensation Committee, attended all 14 meetings of the
Audit Committee and 5 meetings of the Compensation Committee held in
FY2023. Made remarks on the resolutions, contributed to discussion in such
Yumiko Murakami
meetings, and played a role related to advice for and supervision overmanagement based mainly on her abundant international experience and herexperience and achievements in business, as well as her knowledge about the
securities business.

42

Name

Noriko Iki

Status of attendance and remarks and overview of the performed duties
regarding expected roles
Attended all 8 Board of Directors’ meeting held after her appointment in
FY2023, and as a member of the Nominating Committee and Audit
Committee, attended all 4 meetings of the Nominating Committee and 10
meetings of the Audit Committee held after her appointment in FY2023.
Made remarks on the resolutions, contributed to discussion in such meetings,
and played a role related to advice for and supervision over management
based mainly on her professional knowledge and experience regarding laboradministration and diversity, as well as knowledge based on her extensive
international experience.

(iii) Outline of the Agreement to limit liability
Each outside director executed an agreement with the Company to limit liability as
provided for in Article 423, Paragraph 1 of the Companies Act. The maximum amount ofliability under said agreement shall be 10 million yen or the minimum liability amountprovided for in Article 425, paragraph 1 of the Companies Act, whichever is higher.
(4) Outline of Directors and Officers liability insurance agreement(i) Scope of insured
Member of the board and senior managing directors of the Company and importantGroup companies(ii) Outline of insurance agreement
The agreement shall indemnify the insured against damages such as compensation anddispute expenses that the insured may have to bear as a result of claims for damages arisingfrom acts (including omissions) committed by the insured in connection with his/her duties
in the position described in (i) above. However, measures are taken to ensure that the proper
execution of duties by officers, etc. is not compromised by excluding from coveragedamages resulting from criminal or intentionally illegal acts by the insured.

43

(5) Remuneration of Directors and Corporate Executive Officers(i) Policies for Determination of Remuneration of Directors and Corporate Executive
Officersa) Decision of the policy
As stipulated by Japan’s Companies Act, the Compensation Committee has
determined Policies for Determination of Remuneration of Directors and Corporate
Executive Officers.
b) Outline of the contents of the policy
Policies for Determination of Remuneration of Directors and Corporate Executive Officers
Compensation for Directors and Corporate Executive Officers is determined based on thefollowing fundamental policies.
- To create effective incentives, which contribute to the increase of shareholder value
through sound business development and also lead to the improvement of businessperformance in the short term as well as the medium and long-term.
- To maintain a remuneration level which is competitive enough to recruit and retain people
not only in Japan but also in the world as a global securities company group.
- To ensure the execution and supervision functions operate effectively as a company with anominating committee, etc.
Compensation for directors and corporate executive officers is determined by theCompensation Committee and consists of base remuneration, stock-linked remuneration, andperformance-linked remuneration. Specifically, these are as follows:
Base remuneration- A fixed amount calculated based on his/her position, duties and role, and paid monthly andin cash.
Stock-linked remuneration- To increase the link between remuneration and shareholder value, granted by the Company
as Restricted Stock, etc., the value of which corresponds to a certain percentage of baseremuneration, as non-monetary remuneration annually at a fixed time.
- Does not apply to outside directors.
Performance-linked remuneration- Determined depending on the level of individual contribution, based on consolidated ROE
and consolidated ordinary income, which are settled as Performance KPIs of the MediumTerm Management Plan, while also comprehensively taking into account achievement
status of the managerial goals set in the Medium-Term Management Plan and otherrelevant factors, and paid annually at a fixed time.
- A certain upper limit is set on performance-linked remuneration that is paid in cash basedon business performance. If such remuneration exceeds the limit, the excess amount will be
paid in Restricted Stock instead of cash.
- Does not apply to directors who do not serve as corporate executive officers.
c)Reasons for determining the remuneration is in line with the policy
Regarding individual remuneration, etc., for directors and corporate executive
officers in FY2022, the Compensation Committee decided on the content of such
remuneration after confirming the consistency of the Policies for Determination of
Remuneration of Directors and Corporate Executive Officers. Therefore, theCommittee judges that the remuneration is in line with the guiding policies.

44

(ii) Matters regarding the performance-linked remunerationa) Indicators related to performance-linked remuneration and reasons for choosing
the indicators
The Company sets the KPIs that are set as the Group numerical goal in the MediumTerm Management Plan “Passion for the Best” 2023 as indicators to calculate
performance-linked remuneration.
b)

How to determine performance-linked remuneration and (c) Performance ofindicators related to the performance-linked remuneration for FY2023
The performance assessments used in calculating performance-linked remunerationreflect the financial performance evaluation, which is based on the Performance KPIs
using the financial information and the quality evaluation, which is a comprehensive
assessment of the KPIs other than the Performance KPI. Financial Performance
Evaluation and Quality Evaluation are determined in the Compensation Committee.
Performance-linked remuneration is calculated by multiplying the base amount for eachposition by the performance assessment, and reflects the individual’s level of contribution.

(Note) The figure of consolidated capital ratio is as of the end of December 2023.

45

(iii) Matters regarding the non-monetary remuneration
The Company introduced the Restricted Stock Compensation Plan as non-monetary
remuneration.

Stock Remuneration I(Stock-linked
remuneration)

It is intended to provide restricted stock for amount which equals the fixedratio of the Base remuneration, and to function effectively as an incentive forlong-term performance improvement, restriction will be released when he/she
resigns his/her position as director, officers etc., of the Company and its
subsidiaries and affiliates.

Stock Remuneration II(Performance-linked
remuneration)

A fixed limit is set for Performance-linked remuneration, which is provided in
cash based on the performance, and if the amount exceeds the limit, part of
the remuneration will be replaced by restricted stock. Restriction period is 3
years, it will function as substantial fee deferral when Performance-linked
remuneration exceeds a certain limit.

(iv) Remuneration paid to Directors and Corporate Executive Officers

Executive
category

Total amount of
remuneration(Millions of yen)

Total amount by type of remuneration, etc.
(millions of yen)Baseremuneration

Restricted
stocksPerformancelinked
remuneration

Retirement
benefits

Numberpaid(person)Directors

90

75

15

–

–

2

Corporate
Executive
Officers

1,402

528

166

707

–

12

OutsideDirectors

144

144

–

–

–

8

(Note 1)The remuneration to the five (5) Directors who also serve as the Corporate Executive Officers are stated in thecolumn of amount paid to the Corporate Executive Officers.
(Note 2)The amount of performance-linked remuneration is the amount to be paid for FY2023.
(Note 3)Performance-linked remuneration does not include restricted stocks.

(v) Other
The Compensation Committee has decided to change the remuneration for Directors andCorporate Executive Officers from FY2024. The outline of the changes is as follows.
・ Provision of restricted stock, the value of which corresponds to a certain percentage ofperformance-linked remuneration (Stock Remuneration II. The restriction period is three
years, and it will function as substantial remuneration deferral, in addition to functioning
as an incentive for long-term performance improvement. Accordingly, the previous
Stock Remuneration II will be changed to Stock Remuneration III.)・ Provision of stock-linked remuneration to Outside Directors
・ In the performance assessments used in calculating performance-linked remuneration,change to using the KPIs that are set as the Group numerical goals in the Medium-Term
Management Plan “Passion for the Best” 2026 as the indicators

46

・ Change the points of the quality evaluation in the performance assessments used in
calculating performance-linked remuneration to a range from –20 to +20

47

Status of Independent Auditors(1) Name: KPMG AZSA LLC(2) Amount of Fees, etc.
(i) The amount of fees, etc. to be paid by the Company to the independent auditor:

96 million yen(ii) The total amount of monetary and other financial benefits to be paid by the Company and its
subsidiaries to the independent auditor:
606 million yen(Note 1)We did not distinguish clearly, in the audit engagement contract between the Company and the independent auditor, and also
cannot distinguish practically, the amounts of audit fees for audit services under the Companies Act and for audit service under
the Financial Instruments and Exchange Act of Japan. Therefore, the fees, etc. above (1) are the aggregated amount of both.
(Note 2)The Audit Committee consented to the audit fees after reviewing the adequacy of the fees in FY2023, by examining theappropriateness of the audit plan explained by the independent auditor and also by confirming the calculation basis of the fee
estimate such as working hours and hourly rate through the procedure of analysis and evaluation of actual records in previous
fiscal years, comparison to other companies, etc.
(Note 3)The Company and its subsidiaries pay fees to the independent auditor for its services such as the assessment of control risk as
to business commissioned to third parties and also the compliance concerning segregation of customers’ assets, in addition to
the service stipulated in Article 2, Paragraph 1 of the Certified Public Accountant Law (audit and attestation service).

(3) Policies for Determination of Discharge or Refusal of Reappointment(i) Discharge in the cases stipulated in law
The Audit Committee shall discharge an independent auditor with the consent of all members of thecommittee, in the case where the independent auditor falls under any of the items of Paragraph 1 of
Article 340 of the Companies Act.
(ii) Discharge or refusal of reappointment in other cases
The Audit Committee evaluates the independent auditor’s general competency, independence, quality
control system, etc. every year. In the case where the Audit Committee, after such evaluation, deems thatthe adequacy of the independent auditor is questionable or deems it reasonable to retain anotherindependent auditor from the viewpoint of efficacy, etc., the Audit Committee will determine content of aresolution to be voted upon at a shareholders’ meeting as to discharge or refuse reappointment of an
independent auditor.
(4) Other
Among major subsidiaries of the Company, Daiwa Capital Markets Europe Limited, Daiwa CapitalMarkets America Holdings Inc. and other foreign subsidiaries are audited by certified public accountants or
audit corporations (including those who have comparable qualifications in foreign countries) other than the
independent auditor of the Company in relation to the audits stipulated in the Companies Act or the Financial
Instruments and Exchange Act (including foreign laws equivalent to those).
(Note)The Company has not executed an agreement to limit liability and indemnity agreement with the independent auditor KPMG
AZSA LLC.

Policies for Determination of Distribution of Surpluses
The Company aims to continuously raise shareholder value, including profit-sharing.
The Company will generally pay dividends semiannually as the mid-term dividend and the year-end dividend ata pay-out ratio of at least 50% based on the consolidated financial performance. The Company will also, taking
into account stability, consider increasing returns to its shareholders in various ways including share buybacks
when it has sufficient accumulated capital to pursue further growth.
Based on the basic policies above, we have decided that the distributions of surplus for FY2023 are 19 yen per
share as the mid-term dividend (resolved at the Board of Directors’ meeting held on October 31, 2023) and 25 yen
per share as the year-end dividend. Accordingly, the annual dividend will be 44 yen per share.
At the Board of Directors’ meeting held on May 17, 2024, the Company resolved to set a minimum dividend
for the full year of 44 yen per share from FY2024 to FY2026 based on the basic policies above.
48

[References] Health Management of the Group
Included in the Group’s Corporate Principles is “placing importance on personnel.” Based on the idea that thesource of the Group’s competitiveness lies in the capabilities of its officers and employees, we seek to raise
productivity by enhancing employees’ well-being (Note) and to maintain high performance as an organization in
the future. To this end, we are undertaking strategic measures to promote health management.
As a result, the Group has been selected as a “Health & Productivity Stock Selection” jointly sponsored by the
Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange in March 2024. This is the ninth time wehave been selected since the selection began in 2015.

Structure to Promote Health Management

The Group is implementing various initiatives through a three-part system, the cooperation among the Group’s
Human Resources Department, the Health Insurance Society, and the General Health Development Center inorder for its officers and employees to stay healthy mentally and physically so that they will be able to deliver
their best performance. Such initiatives include “Daiwa Online Care,” which provides online diagnosis to officers
and employees, “Daiwa ELLE Plan,” which provides comprehensive support for women’s health, “Employment
Support Plan for Employees with Cancer,” which supports employees in balancing work and cancer treatment,
and “Mindfulness Seminar” as a mental-health measure and “Good Sleep Daiwa Project” in order to support
improving executive sleeping skills of its officers and employees. In addition, the Group appointed the executive
in charge of human resources as Chief Health Officer (CHO) to promote health management. Executives fromeach Group company are also actively involved in the promotion. The Group annually issues the “White Book on
Health” analyzing the health conditions of all the executives and employees of the Group and holds “HealthManagement Promotion Meetings” sponsored by the CHO in a cross-Group manner on a regular basis for
identification of issues, evaluation of initiatives and improvement and running of the health management PDCA.
Promotion system
Daiwa Securities Group Health Insurance Society

Daiwa Securities Group Inc.

Daiwa Securities Group General Health Development
Center<Health Management Promotion Meetings>
Chairperson: CHO
Secretariat: Human Resources Department,
Health Management Promotion Section

Daiwa Securities

Daiwa Asset Management

Daiwa Institute of
ResearchDaiwa Securities Business Center* Other group companies(Note) Well-being: The state of being physically, mentally and socially well.

49

Consolidated Balance Sheets(Millions of yen)
Fiscal 2023
(As of Mar. 31, 2024)[References]
Fiscal 2022
(As of Mar. 31, 2023)

AssetsCurrent assets:
Cash and deposits
Cash segregated as deposits
Notes and accounts receivable-trade, and contract assets
Securities
Trading products:
Trading securities and other
Derivatives
Private equity and other investments
Allowance for investment loss
Operating loans receivable
Work in process
Margin transaction assets:
Loans on margin transactions
Cash collateral pledged for securities borrowing on margintransactions
Loans secured by securities:
Cash collateral pledged for securities borrowed
Securities purchased under resale agreements
Advances paid
Short-term loans receivable
Accrued income
Other current assets
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property, plant and equipment:
Buildings
Machinery and equipment
Furniture and fixtures
Land
Construction in progress
Intangible assets:
Goodwill
Leasehold right
Software
Other
Investments and other assets:
Investment securities
Long-term loans receivable
Long-term guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Allowance for investment loss
Total non-current assets

Total assets

50

4,398,616
544,815
29,6271,410,877
7,534,999
4,870,657
2,664,341
138,663(4)2,722,321
839
158,635
149,301

3,866,819
541,629
22,062
1,131,682
7,625,713
5,425,159
2,200,554
127,693(70)
2,015,034
853
160,255
153,574

9,333

6,680

12,368,472
9,128,456
3,240,015
33,633791
88,4601,018,117(9,554)30,439,313

8,341,562
6,844,292
1,497,270
18,756810
63,805965,074(8,822)
24,872,860

921,181
238,526
6,096
17,123643,845
15,589127,602
17,1395,638
69,50235,322539,201
492,226
7,216
15,903
6,825
19,813(2,783)―
1,587,986

916,873
241,775
9,103
17,449643,695
4,850
125,571
18,526
5,638
65,251
36,154497,943455,317
6,498
15,796
7,840
17,771(1,660)(3,620)1,540,388

32,027,299

26,413,248

(Millions of yen)
Fiscal 2023
(As of Mar. 31, 2024)

Liabilities

Current liabilities:
Notes and accounts payable-trade
Trading products:
Trading securities and other
Derivatives
Trade date accrual
Margin transaction liabilities:
Borrowings on margin transactions
Cash received for securities lending on margin transactions
Borrowings secured by securities:
Cash collateral received for securities lent
Securities sold under repurchase agreements
Deposits for the banking business
Deposits received
Guarantee deposits received
Short-term borrowings
Commercial papers
Current portion of bonds payable
Income taxes payable
Provision for bonuses
Other current liabilities
Total current liabilities
Non-current liabilities:
Bonds payable
Long-term borrowings
Deferred tax liabilities
Retirement benefit liability
Provision for loss on litigation
Other non-current liabilities
Total non-current liabilities
Reserves under special laws:
Reserve for financial instruments transaction liabilities
Total reserves under special laws

[References]
Fiscal 2022
(As of Mar. 31, 2023)

8,507
5,863,821
3,368,679
2,495,141
1,457,301
54,414
4,769
49,645
11,698,956
8,270,945
3,428,011
4,511,603
562,416
522,809
1,272,859
440,000
159,780
42,91643,054
159,110
26,797,550

8,120
5,442,548
3,451,608
1,990,940
1,155,831
52,785
3,817
48,9677,929,609
6,508,873
1,420,735
3,932,761
430,664
431,383
1,292,848
261,300
485,029
10,67533,287
114,430
21,581,275

1,276,312
2,020,812
45,61643,715
235
48,761
3,435,452

1,304,543
1,706,985
42,28044,309169
53,906
3,152,195

5,637
5,637

4,287
4,287

30,238,640

24,737,758

247,397
232,461
961,438(123,153)
83
1,318,227

247,397
230,274
886,160(71,522)―
1,292,309

52,936
16,873
134,149
203,959
6,956
259,515

24,717
16,02874,785
115,5318,793
258,855

Total net assets

1,788,658

1,675,489

Total liabilities and net assets

32,027,299

26,413,248

Total liabilities

Net assets

Shareholders’ equity:
Share capital
Capital surplus
Retained earnings
Treasury shares
Deposits for subscriptions of treasury shares
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Share acquisition rights
Non-controlling interests

51

Consolidated Statements of Income(Millions of yen)

Operating revenue:
Commission received:
Brokerage commission
Commission for underwriting, secondary distribution and solicitation for
selling and others for professional investors
Fees for offering, secondary distribution and solicitation for selling andothers for professional investors
Other commission received
Net trading income
Net gain on private equity and other investments
Financial revenue
Other operating revenue
Total operating revenue
Financial expenses
Other operating expenses
Net operating revenue
Selling, general, and administrative expenses:
Trading related expenses
Personnel expenses
Real estate expenses
Office expenses
Depreciation
Taxes and dues
Provision of allowance for doubtful accounts
Other
Total selling, general and administrative expenses
Operating income
Non-operating income:
Dividend income
Share of profit of entities accounted for using the equity method
Foreign exchange gains
Gain on investments in investment partnerships
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Bond issuance costs
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sale of non-current assets
Gain on sale of investment securities
Gain on sale of shares of subsidiaries and associates
Gain on reversal of share acquisition rights
Total extraordinary income
Extraordinary losses:
Loss on sale and retirement of non-current assets
Impairment losses
Loss on sale of investment securities
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries and associates
Loss on change in equity
Provision of reserve for financial instruments transaction liabilities
Business restructuring expenses
Expenses related to the 120th anniversary project
Other
Total extraordinary losses
Income before income taxes
Income taxes-current
Income taxes-deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

52

Fiscal 2023
(Apr. 1, 2023 toMar. 31, 2024)[References]
Fiscal 2022
(Apr. 1, 2022 toMar. 31, 2023)

358,532
93,42738,490279,991
64,272
28,165

18,390208,225
98,16014,381
607,590
198,816
1,277,482
525,853
160,718
590,910

11,316
176,237
70,253
3,692
332,548
179,604
866,090
268,498
133,365464,226

80,635
222,532
40,273
26,58635,141
12,881
15
19,138437,205
153,705

71,545
199,790
38,70425,76834,497
10,19149
17,404397,952
66,273

6,513
4,828
4,629
2,508
6,303
24,782

3,535
8,954
2,274
7,851
2,063
24,679

2,020
213
1,665
3,900
174,587

1,909
177
1,935
4,022
86,93011,031
6,206
39
1,164
18,441

12,235
5,282—
667
18,185

1,818
3,799
7
232
2,587
71
1,349
3,024
—
140
13,032
179,997
55,960(6,399)130,436
8,878
121,557

2,279
—
142
2,215
432
85
570
2,173
452
—
8,350
96,766
19,9803,102
73,683
9,808
63,875

Consolidated Independent Auditor’s Report Related to the Consolidated Financial
Statements
Independent Auditor’s Report
May 15, 2024
To the Board of Directors of Daiwa Securities Group Inc.:
KPMG AZSA LLC
Tokyo Office, Japan
Kenji Tanaka
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Tomomi Mase
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Koji Fukai
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
OpinionWe have audited the consolidated financial statements, which comprise the consolidated balance
sheet, the consolidated statement of income, the consolidated statement of changes in net assets,
a summary of significant accounting policies and other explanatory information of Daiwa
Securities Group Inc. (“the Company”) and its consolidated subsidiaries (collectively referred toas “the Group”), as at March 31, 2024 and for the year from April 1, 2023 to March 31, 2024 inaccordance with Article 444-4 of the Companies Act.
In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the consolidated financial position and the results of operations of the Groupfor the period, for which the consolidated financial statements were prepared, in accordance withaccounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

53

Other Information
The other information comprises the business report and its supplementary schedules.
Management is responsible for the preparation and presentation of the other information. The
audit committee is responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the reporting process for the otherinformation.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to readthe other information and, in doing so, consider whether the other information is materiallyinconsistent with the consolidated financial statements or our knowledge obtained in the audit, orotherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern in accordance with accounting principles generally accepted in Japan.
The audit committee is responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:

Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The selection and application of audit procedures depends on the auditor’s
judgment.

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the objective of the audit is not
to express an opinion on the effectiveness of the Group’s internal control.

54Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements
are in accordance with accounting standards generally accepted in Japan, the overall
presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.

We communicate with the audit committee regarding, among other matters, the planned scope
and timing of the audit, significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company and its
subsidiaries which are required to be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.
Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’sReport as required by the Companies Act for the conveniences of the reader.

55

Auditor’s Report from Audit Committee
Auditor’s Report

The Audit Committee has audited the execution of duties by the Directors and the Corporate
Executive Officers for the 87th fiscal year from April 1, 2023 to March 31, 2024. We report themethods and the results of the audit as follows.
1. Methods used in audits and content of audits
The Audit Committee has audited the contents of the resolutions of the Board of Directors
regarding the matters stipulated in Article 416, Paragraph 1, Item 1(b) and 1(e) of the Companies
Act and the system (internal control systems) organized based on such resolutions, by receiving
the report on the situation of the development and operation of the systems from the Directors,
the Corporate Executive Officers, and the employee, and the like, at fixed intervals, demanding
explanation as needed, expressing an opinion and also by the following methods.
(1) In conformity with the audit standard of the Audit Committee decided by the Committee
and in accordance with audit policies, assignment of duties, and the like, and cooperatingwith the internal control department, the Audit Committee attended significant meetings,
received reports from Directors and Corporate Executive Officers, and the like, about
their execution, requested their explanation when necessary, inspected the contents of theimportant approval documents and other important documents, and investigated the statusof the Company’s business and assets. As to subsidiaries, the Audit Committee
communicated and exchanged information with and, when necessary, received reports ofbusiness from subsidiaries’ Directors and Audit & Supervisory Board Member, and thelike.
(2) The Audit Committee observed and verified whether the independent auditor wasmaintaining its independence and was carrying out its audits in an appropriate manner.
The Audit Committee also received reports from the independent auditor on the executionof its duties and, when necessary, requested explanations regarding those reports. Further,
the Audit Committee received notification from the independent auditor that it had
established the “system for ensuring the proper execution of its duties” (as enumerated ineach Item of Article 131 of the Accounting Regulation Ordinance) in compliance with the“Quality Control Standards Relating to Auditing” (the Business Accounting Council), andthe like. When necessary, the Audit Committee requested explanations regarding thenotification.

Based on the methods above, the Audit Committee has examined the business report and its
supplementary schedules, and the consolidated financial statements (the consolidated balance
sheet, the consolidated statement of income, the consolidated statement of changes in net assets,
a summary of significant accounting policies and other explanatory information) and the financial
statements (the balance sheet, the statement of income, the statement of changes in net assets, asummary of significant accounting policies and other explanatory information) and its
supplementary schedules.
2. Results of the Audit(1) Results of audit of the business report, etc.
In our opinion, the business report and its supporting schedules fairly present thesituation of the Company, in compliance with the provisions of applicable laws,
regulations and the Articles of Incorporation.

56

-

In our opinion, none of the actions taken by Directors and Corporate Executive Officers
in executing their duties were fraudulent and none of their actions materially violated
the provisions of applicable laws, regulations or the Articles of Incorporation.
Details of Board of Directors resolution related to internal system are considered to beappropriate. Also, the contents of the business report regarding internal control systems
were appropriate, and, furthermore, all actions of Directors and Corporate Executive
Officers with respect to executing internal control systems were carried out
appropriately.
(2) Results of the audit of the consolidated financial statements
In our opinion, the auditing methods used by the independent auditor KPMG AZSA LLC
and the results of its audit were appropriate.
(3) Results of the audit of the financial statements and its supplementary schedules
In our opinion, the auditing methods used by the independent auditor KPMG AZSA LLC
and the results of its audit were appropriate.
May 15, 2024
Audit Committee
Daiwa Securities Group Inc.

Committee Chairperson
Ikuo Nishikawa (stamp)
Member of the Audit Committee
Sachiko Hanaoka (stamp)
Member of the Audit Committee
Katsuyuki Nishikawa (stamp)
Member of the Audit Committee
Yumiko Murakami (stamp)
Member of the Audit Committee
Noriko Iki (stamp)(Note 1)

(Note 2)

Mr. Ikuo Nishikawa, Mr. Katsuyuki Nishikawa, Ms. Yumiko Murakami, and Ms. Noriko Iki are the outside
directors provided under the provisions of Article 2, Item 15 and Article 400, Paragraph 3 of the Companies
Act.
Mr. Hiromasa Kawashima resigned as his position of member of the Audit Committee as of March 31, 2024.

57

Translation
Note: This English translation of the original Japanese version of the notice has been prepared for thesole purpose of the convenience of non-Japanese shareholders and shall by no means constitute an
official or binding version of the notice.
May 30, 2024

Matters Subject to Measures for Electronic Provision When Convening
the 87th Annual General Meeting of Shareholders
 Business Report
Status of Share Acquisition Rights, etc.
System to Ensure Appropriateness of Business and Stateof Operation of Such System Consolidated Financial Statements
Consolidated Statements of Changes in Net Assets
Notes to the Consolidated Financial Statements
 Non-Consolidated Financial Statements
Balance Sheet
Statement of Income
Statement of Changes in Net Assets
Notes to the Non-Consolidated Financial Statements
 Auditor’s Report
Independent Auditor’s Report

p. 1
p. 4
p. 10
p. 12
p. 39
p. 41
p. 42
p. 43
p. 51

Daiwa Securities Group Inc.
In accordance with the provisions of laws and regulations and Article 23, Paragraph 2 of the Company’s
Articles of Incorporation, the above matters are excluded from the paper-based documents delivered toshareholders who have made a request for delivery of documents stating matters for which measuresfor electronic provision are to be taken.

Business Report

Status of Share Acquisition Rights, etc.

1. Status of Share Acquisition Rights (Stock Option) at the end of the current fiscal year
(1) Share Acquisition Rights issued under Article 280-20 and Article 280-21 of the previous
Commercial Code
Name
(Record date)
Share Acquisition Rights issuedin June 2005
(June 24, 2005)

Number of Rights(Class and Numberof shares)
49(Common stock
49,000 shares)

Amount to be
paid in upon
issuance

Amount to be paid in
upon exercise

Period of exercise

Gratuitous grant

1,000 yen
(1 yen per share)

From July 1, 2005 to June 30,2025(2) Share Acquisition Rights issued under Article 236, Article 238, and Article 239 of theCompanies Act
Name(Record date)
Share Acquisition Rights
issued in July 2006
(July 1, 2006)
Share Acquisition Rights
issued in July 2007
(July 1, 2007)
Share Acquisition Rights
issued in July 2008
(July 1, 2008)
Share Acquisition Rights
issued in July 2009
(July 1, 2009)
Share Acquisition Rights
issued in July 2010
(July 1, 2010)
Share Acquisition Rights
issued in July 2011
(July 1, 2011)
Share Acquisition Rights
issued in Feb. 2013
(February 12, 2013)
Share Acquisition Rights
issued in Feb. 2014
(February 10, 2014)
Share Acquisition Rights
issued in Feb. 2015
(February 9, 2015)
Share Acquisition Rights,
Series 11(February 9, 2015)
Share Acquisition Rights
issued in Feb. 2016
(February 16, 2016)
Share Acquisition Rights,
Series 12(February 16, 2016)

Number of Rights(Class and Numberof shares)
32(Common stock
32,000 shares)
43(Common stock
43,000 shares)
73(Common stock
73,000 shares)
213(Common stock
213,000 shares)
466(Common stock
466,000 shares)
773(Common stock
773,000 shares)
599(Common stock
599,000 shares)
307(Common stock
307,000 shares)
394(Common stock
394,000 shares)
3,783(Common stock
3,783,000 shares)
526(Common stock
526,000 shares)
2,727(Common stock
2,727,000 shares)

Amount to be
paid in upon
issuance

Amount to be paid in
upon exercise

Period of exercise

Gratuitous grant

1,000 yen
(1 yen per share)

From July 1, 2006 to June30, 2026

Gratuitous grant

1,000 yen
(1 yen per share)

From July 1, 2007 to June30, 2027

Gratuitous grant

1,000 yen
(1 yen per share)

From July 1, 2008 to June30, 2028

Gratuitous grant

1,000 yen
(1 yen per share)

From July 1, 2009 to June30, 2029

Gratuitous grant

1,000 yen
(1 yen per share)

From July 1, 2010 to June30, 2030

Gratuitous grant

1,000 yen
(1 yen per share)

From July 1, 2011 to June30, 2031

Gratuitous grant

1,000 yen
(1 yen per share)

From February 12, 2013 toJune 30, 2032

Gratuitous grant

1,000 yen
(1 yen per share)

From February 10, 2014 toJune 30, 2033

Gratuitous grant

1,000 yen
(1 yen per share)

From February 9, 2015 toJune 30, 2034

Gratuitous grant

931,000 yen(931 yen per share)

From July 1, 2019 to June25, 2024

Gratuitous grant

1,000 yen
(1 yen per share)

From February 16, 2016 toJune 30, 2035

Gratuitous grant733,000 yen(733 yen per share)

From July 1, 2020 to June24, 2025

1

Name(Record date)
Share Acquisition Rights
issued in Feb. 2017
(February 8, 2017)
Share Acquisition Rights,
Series 13(February 8, 2017)
Share Acquisition Rights
issued in Feb. 2018
(February 8, 2018)
Share Acquisition Rights,
Series 14(February 8, 2018)
Share Acquisition Rights,
Series 15(August 10, 2018)
Share Acquisition Rights,
Series 16(August 26, 2019)
Share Acquisition Rights,
Series 17(August 17, 2020)
Share Acquisition Rights,
Series 18(August 13, 2021)
Share Acquisition Rights,
Series 19(August 15, 2022)
Share Acquisition Rights,
Series 20(August 15, 2023)
Total

Number of Rights(Class and Numberof shares)
530(Common stock
530,000 shares)
4,989(Common stock
4,989,000 shares)
563(Common stock
563,000 shares)
5,710(Common stock
5,710,000 shares)
47,454(Common stock
4,745,400 shares)
84,625(Common stock
8,462,500 shares)
79,200(Common stock
7,920,000 shares)
79,465(Common stock
7,946,500 shares)
79,778(Common stock
7,977,800 shares)
78,969(Common stock
7,896,900 shares)
471,219(Common stock
66,677,100 shares)

Amount to be
paid in upon
issuance

Amount to be paid in
upon exercise

Period of exercise

Gratuitous grant

1,000 yen
(1 yen per share)

From February 8, 2017 toJune 30, 2036

Gratuitous grant

767,000 yen(767 yen per share)

From July 1, 2021 to June27, 2026

Gratuitous grant

1,000 yen
(1 yen per share)

From February 8, 2018 toJune 30, 2037

Gratuitous grant815,000 yen(815 yen per share)

From July 1, 2022 to June27, 2027

Gratuitous grant

68,600 yen(686 yen per share)

From July 1, 2023 to June
26, 2028

Gratuitous grant

50,200 yen(502 yen per share)

From July 1, 2024 to July 30,
2029

Gratuitous grant

50,800 yen(508 yen per share)

From July 1, 2025 to July 30,
2030

Gratuitous grant

63,300 yen(633 yen per share)

From July 1, 2026 to July 28,
2031

Gratuitous grant

60,700 yen(607 yen per share)

From September 1, 2024 toJuly 28, 2032

Gratuitous grant

77,400 yen(774 yen per share)

From September 1, 2025 toJuly 30, 2033

(Note 1)Each share acquisition right may not be exercised in part.
(Note 2)As to the Share Acquisition Rights issued in June 2005, July 2006, July 2007, July 2008, July 2009, July 2010,
July 2011, February 2013, February 2014, February 2015, February 2016, February 2017, and February
2018, it was stipulated in the applicable issue terms and grant agreement that each holder of these shareacquisition rights may exercise his/her rights from the next day after he/she loses all of the positions as Directoror Corporate Executive Officer, or Senior Managing Directors of the Company, its subsidiaries, and its
affiliated companies which are determined by the Board of Directors of the Company or the Corporate
Executive Officers to whom the determination has been delegated by a resolution of the Board of Directors of
the Company; provided, however, that he/she can exercise his/her rights from the day 30 days before the endof his/her exercise period subject to other conditions for exercise of such rights.
(Note 3)Other conditions for exercise shall be set forth in the allocation agreement for each share acquisition right.
(Note 4)The number of share acquisition rights above includes the share acquisition rights held by the Company.
(Note 5)As for Share acquisition rights, Series 15, 16, 17, 18, 19 and 20, the number of shares underlying one shareoption is 100, because the share unit of common stock has been changed to 100.

2

2. Status of Share Acquisition Rights (Stock Options) held by the Company’s Officers at the end of
the current fiscal year
Number of holders(Directors and Corporate
Executive Officers)

Number of Rights

Share Acquisition Rights issued in June 2005

1

7

Share Acquisition Rights issued in July 2006

2

7

Share Acquisition Rights issued in July 2007

2

7

Share Acquisition Rights issued in July 2008

2

8

Share Acquisition Rights issued in July 2009

430

Share Acquisition Rights issued in July 2010

443

Share Acquisition Rights issued in July 2011

470

Share Acquisition Rights issued in Feb. 2013

453

Share Acquisition Rights issued in Feb. 2014

426

Share Acquisition Rights issued in Feb. 2015

534

Share Acquisition Rights, Series 11

840

Share Acquisition Rights issued in Feb. 2016

754

Share Acquisition Rights, Series 12

635

Share Acquisition Rights issued in Feb. 2017964

Share Acquisition Rights, Series 13

4

36

Share Acquisition Rights issued in Feb. 20181176

Share Acquisition Rights, Series 14

3

25

Share Acquisition Rights, Series 15

1

90

Share Acquisition Rights, Series 16

1

95

Name of Share Acquisition Rights(Note 1)No share acquisition right as a stock option was allocated to any Outside Directors.
(Note 2)The officers at the end of the current fiscal year did not hold Share Acquisition Rights, Series 17, 18, 19, and 20.

3. Status of Share Acquisition Rights (Stock Options) allotted to Employees, etc., during the current
fiscal year
Name of Share Acquisition
RightsClass of holders

Share Acquisition Rights,
Series 20

Directors of Subsidiaries

00

Employees of Subsidiaries

5,400

78,969

Total

5,400

78,969Number of holders

Number of Rights(Note 1)The numbers above are those as of the allocation issue date of each share acquisition right.
(Note 2)Senior Managing Directors of subsidiaries are classified as employees of subsidiaries.
(Note 3)No share acquisition right as a stock option was allocated to Audit & Supervisory Board Members of subsidiaries.

3

System to Ensure Appropriateness of Business and State of Operation of Such System

The following is an outline of the matters resolved by the Board of Directors as a system to ensure appropriatenessof business and status of the operations.
1. Outline of the matters necessary for execution of the Audit Committee’s duties(1) Matters as to Directors and employees who shall assist in the duties of the Audit Committee
The Company established the Audit Committee Office as a department, the sole role of which is to assist in theduties of the Audit Committee.
<Outline of the status of the operation>
The Company established the Audit Committee Office. The Audit Committee Office conducts planning anddesign of the audit policy and the audit plan and also gathers, arranges, and analyzes the information and materials
necessary for the audit in order to assist in the audit activities of the Audit Committee.
Also, the Audit Committee Office conducts additional investigations, etc. as necessary in order to assist in theactivities of the Audit Committee.
(2) Matters regarding the enhancement of the independence of Directors and employees set forth in thepreceding item from the Corporate Executive Officers and the effectiveness of instructions from the
Audit Committee- The Audit Committee Office sits directly under the Audit Committee.
- Corporate Executive Officers have to obtain the prior consent of the Audit Committee or its member
designated by the Committee (hereinafter the “Selected Committee Member”), when deciding on personnel
matters (personnel change, evaluation, etc.) or reorganizing the Audit Committee Office, taking theimportance of the Audit Committee into consideration.
- The Audit Committee or the Selected Committee Member may request that Corporate Executive Officers
secure an adequate number of staff with the knowledge and ability necessary to carry out the duties of the
Audit Committee Office. Corporate Executive Officers shall respect the request.
- The Audit Committee Office may request that each department (including the internal audit department)
provide support for investigations and information gathering by the Audit Committee. Each department shallrespect the request.
- The Audit Committee Office may attend various meetings, etc. when necessary.
<Outline of the status of the operation>
The Company ensures independence of the Audit Committee Office from the Corporate Executive Officers by
establishing the Audit Committee Office directly under the Audit Committee and obtaining prior consent of theSelected Committee Member as to the personnel matters of the Audit Committee Office and securing a satisfactory
number of staff in accordance with the rules of the Audit Committee.
Based on the rules, the Audit Committee Office attends certain meetings to gather various information, enabling
itself to ensure effectiveness of instructions from the Audit Committee.
(3) Reporting system to the Audit Committee(i) System to ensure that Directors (excluding Audit Committee Members), Corporate Executive
Officers, and employees report to the Audit Committee
The following rule shall be included in the rules regarding reports to the Audit Committee, etc.
- Directors (excluding Audit Committee Members), Corporate Executive Officers, and employees must
report the following matters to the Audit Committee or the Selected Committee Member by adequatemeans, such as by using the whistleblowing system.
1) Any facts that have the potential to cause significant damage to the Company or the Group,
immediately after they learn of such facts
2) Any activities of officers or employees of the Company or the Group that violate or may violate
any laws and regulations or the Articles of Incorporation4

3)

Matters that the Audit Committee or the Selected Committee Member of the Company requests bereported and other matters that are deemed useful for the audit(ii) System to ensure that Directors, Audit & Supervisory Board Members, and employees of theCompany’s subsidiaries or the persons who receive reports from them shall report to Audit
Committee of the Company
The following rule shall be included in the rules regarding reports to Audit & Supervisory Board
Member, etc. of such subsidiaries.
- Directors, Audit & Supervisory Board Members, and employees of the Company’s subsidiaries or the
persons who receive reports from them must report the following matters to the Audit Committee or the
Selected Committee Member by adequate means, such as by using the internal whistleblowing system.
1) Any facts that have the potential to cause significant damage to the Company’s subsidiaries or
the Group, immediately after they learn of such facts
2) Any activities of officers or employees of the Company’s subsidiaries or the Group that violate
or may violate any laws and regulations or the Articles of Incorporation
3) Matters that the Audit Committee or the Selected Committee Member of the Company requests
be reported and other matters that are deemed useful for the audit<Outline of the status of the operation>
The Company obliges its Directors (excluding Audit Committee Members), Corporate Executive Officers, andemployees in the rules on reporting to the Audit Committee, etc. and the Company’s subsidiaries oblige their
Directors, Audit & Supervisory Board Members and employees or the persons who receive reports from them in
the rules on reporting to the Audit & Supervisory Board Members, etc. of such subsidiaries, to report, by adequatemeans such as by using the whistleblowing system, to the Audit Committee or the Selected Committee Member,any facts that have a possibility to cause significant damage to the Company or the Group or any activities ofofficers or employees of the Company or the Group which violate or may violate any laws and regulations or the
Articles of Incorporation. Thus, the Company provides an appropriate system to ensure reports will be adequately
received.
(4) System to ensure that reporters in the preceding item are not treated unfavorably due to the report
The Company adopted a rule that the persons who make reports in accordance with the preceding item shallnot suffer dismissal, demotion, salary reduction, or any other disadvantages due to their report. In order to secure
the effectiveness of such rule, we established the rules on reporting to the Audit Committee, etc. and rules onreporting to Audit & Supervisory Board Member, etc. of the Company’s subsidiaries.
<Outline of the status of the operation>
The Company has prepared rules on reporting to the Audit Committee, etc. and the Company’s subsidiaries
have prepared rules on reporting to Audit & Supervisory Board Members, etc. No disadvantage such as dismissal,
demotion, salary cut, termination of secondment contract, change in working conditions, etc. has been given topersons who make reports in the preceding item due to the fact that they made such reports.
(5) Procedures for prepayment and reimbursement of expenses incurred in execution of the duties of Audit
Committee Members (limited to those related to execution of the duties of the Audit Committee) andother matters relating to the policy on expenses and obligations incurred in execution of such duties- When the Audit Committee or Audit Committee Members request the Company to carry out the following
matters, the Company shall not refuse such requests unless the Company proves that the expenses andobligations concerning such requests are unnecessary for execution of the duties of the Audit Committee or
Audit Committee Members.
a. Prepayment of expenses
b. Reimbursement of expenses paid and interest accrued after payment
c. Payment to creditors of obligations (or, in the case where such obligations are not due, the provision ofcollateral equivalent to such obligation)
5

<Outline of the status of the operation>
In accordance with rules of the Audit Committee, the Company adequately pays expenses, accrued interests,
and obligations, incurred in execution of duties of the Audit Committee and Audit Committee Members.
(6) Other systems to ensure the effective audit by the Audit Committee- Audit Committee Members may attend meetings of the Group Compliance Committee, the Group Risk
Management Committee, and the Group Internal Audit Committee and also may ask for explanations andstate their opinions. They may also attend other important meetings.
- Audit Committee Members periodically receive reports (i) on the risk management system and the risk statusof the Group from the departments handling each risk and (ii) on the status of implementation of the internal
audit of the Group from the Internal Audit Department.
- Consent of the Audit Committee or the Selected Committee Member is necessary, in order to reorganize theinternal audit policy, the internal audit plan, the Group internal audit basic policy, and the rules for the internal
audit, or request the delegation of the internal audit.
- The Audit Committee or the Selected Committee Member may, if necessary, request that the Internal Audit
Department conduct an investigation on its behalf.
- The Audit Committee periodically receives reports from the independent auditor as to the audit status of eachcompany of the Group.
- The Audit Committee or the Selected Committee Member may have external experts independent from thebusiness execution department support audit activities.
<Outline of the status of the operation>
In accordance with the Audit Committee Auditing Standard, the Selected Committee Member of the Company
tries to gather information as to execution status of duties of Directors and Corporate Executive Officers byattending important meetings such as meetings of the Executive Management Committee, browsing corporate
decision documents and other important documents and receiving reports of the internal audit, etc. from theInternal Audit Department. The Selected Committee Member also obtains periodically the reports from theindependent auditor on the state of the accounting audit. The Selected Committee Member shares such information
and reports with other Audit Committee Members.
The Audit Committee and the Selected Committee Member, based on the Audit Committee Auditing Standard,
strive to enhance the cooperation with the Internal Audit Department to secure effectiveness of auditing by the
Audit Committee, by obtaining consent on important issues regarding the internal audit, such as the Audit Policy
on Internal Audit, developing internal audit plans, etc.

62.

The outline of the system to ensure the compliance with laws and regulations and the Articles ofIncorporation in execution of Corporate Executive Officers’ duties and other systems to ensure
appropriateness of the business of the company and the corporate group consisting of such company andits subsidiaries(1) System to ensure the compliance with laws and regulations and the Articles of Incorporation in
execution of duties of the Company’s Corporate Executive Officers and employees and also its
subsidiaries’ Directors, etc. and employees(i) Compliance System- Establish a whistleblowing system for the purpose of identifying and correcting any conduct violatinglaws and regulations or other rules in the Group, etc. at an early stage.
- Enact the rules of ethics and the standards of ethical conduct for the purpose of officers’ and employees’compliance with laws, etc.
- Hold training seminars as to compliance for officers and employees in each company of the Group which
address the respective business features of each company.
- Appoint a person in charge of formation and promotion of the system as to corporate ethical complianceacross the Group, and establish a section to promote instilling and maintaining corporate ethics among
officers and employees.
- Establish a section that gives advice regarding overall legal issues of the Group, and assist each companyof the Group in activities relating to formation of systems for compliance with laws and regulations, etc.
(ii) Group Compliance Committee- The Group Compliance Committee, as a sectional committee of the Executive Management Committee,
discusses and determines general policies and specific measures on the compliance with the laws andregulations, establishment of corporate ethics, internal control, etc. of the Group.
(iii) Group Risk Management Committee- The Group Risk Management Committee, as a sectional committee of the Executive Management
Committee, oversees the risk management system and the risk status of the Group, etc., and discusses
and determines the policies and actual implementation of measures relating to risk management.
(iv) Group Internal Audit Committee- The Group Internal Audit Committee, as a sectional committee directly under the CEO, discusses anddetermines the matters relating to development of a system to execute the internal audit and verificationof the internal controls for the Group’s business.
(v) Internal Audit Department- For structuring sound and effective internal controls for the Group, the Group believes that the internal
audit is an important function and has established internal audit departments in major companies of theGroup as well as the Company.
- The Internal Audit Department evaluates and examines the effectiveness of the Group’s internal controls,
and makes proposals for improvement and efficiency of the Group’s business operations.
- The Internal Audit Department makes proposals and reports to the Group Internal Audit Committee
about the plans for and results of the internal audit.
(vi) Internal Controls on Financial Reporting- For preparing the structure necessary to ensure appropriateness of financial statements and otherfinancial information, the Company establishes basic rules relating to internal controls on financial
reporting.
- The Disclosure Committee and the Group Internal Audit Committee discuss and determine important
issues concerning internal controls on financial reporting.

7

<Outline of the status of the operation>
The Company has already implemented the rules, departments, and systems, etc. on the matters listed above
and operates them adequately.
The Company tries to ensure the spread of information as to the laws and regulations and internal rules, etc.,
and instill a focus on compliance and corporate ethics through compliance seminars for all officers and employees,
compliance training, and orientation activities for new employees, newly appointed managers, etc.
In FY2023, the Company held meetings of the Group Compliance Committee five times to grasp matters on thecompliance with the laws and regulations, establishment of corporate ethics, internal control, etc. of the Group.
Also, the Company held meetings of the Group Risk Management Committee eight times to understand the risk
status, etc. of the Group, and the Group Internal Audit Committee five times to share the results of the internal
audit conducted by the Internal Audit Department. Further, the Internal Audit Department evaluated and verified
the internal controls as to financial reporting and reported the result to the CEO and CFO.
(2) System for storing and managing information relating to execution of Corporate Executive Officers’
dutiesInformation relating to execution of Corporate Executive Officers’ duties shall be stored and managed
properly in accordance with the rules for filing and storing documents.
<Outline of the status of the operation>
The Company has stipulated the retention period for each document based on the characteristic of eachdocument in the rules to arrange and retain documents. The information concerning execution of Corporate
Executive Officers’ duties is maintained and managed properly as the responsibility of the relevant department incharge.
(3) Rules and other systems relating to management of risk of loss of the Company and its subsidiaries- Enact rules of risk management for the purpose of properly managing various risks involved in the businessof the Group considering each characteristic of the Group and thereby secure sound financial status andappropriate business operations. Further, clarify the risk management system by providing for policies of risk
management, the category of risks to be managed, Corporate Executive Officers managing each risk, sections
in charge of each risk, etc.
- Each section shall establish its own management rules for each risk it has control over, and shall report the
preparation for risk management and the status of the risk, etc., to the Group Risk Management Committee,
etc.
<Outline of the status of the operation>
The Company has designated market risk, credit risk, liquidity risk, operational risk, model risk, investment
risk, reputational risk, and accounting/taxation risk as the risks to be managed in the rules on risk management.
Further, it has obtained the information as to the status of the risk management system and risks themselves
through the meetings of the Group Risk Management Committee, etc. In FY2023, such meetings were held eighttimes, where the departments in charge of each risk shared such information.
(4) System to ensure efficient execution of the duties of Corporate Executive Officers of the Company andDirectors, etc. of its subsidiaries- Clarify Corporate Executive Officers’ duties, the methods of execution thereof, and the business operationsin their charge in the rules for Corporate Executive Officers.
- As to matters which have a material effect on the Company or the Group, clarify the matters to be resolved
and reported in the rules of the Executive Management Committee and Overseas Management Committee,
etc.
- By having Corporate Executive Officers serve concurrently as representatives of main companies of theGroup, etc., enact their business strategy quickly and efficiently based on the strategy of the Group in eachcompany of the Group.
8

- Formulate the Group Medium-Term Management Plan, the term of which is three fiscal years, and, in orderto pursue this Plan, determine management policy and budget allocations, etc. for the entire Group for eachfiscal year.
<Outline of the status of the operation>
The Company realizes quick decision-making and efficient business execution through role assignment among
Corporate Executive Officers. Further, Corporate Executive Officers serve concurrently as the representatives ofmain companies of the Group and share information as to the situation of their business execution in the meetingsof the Executive Management Committee consisting of all Corporate Executive Officers including such
representatives.
In FY2023, the meetings of the Executive Management Committee were held eighteen times, where its members
discussed and determined the important matters which affect the Company or the Group. Further, the Executive
Management Committee properly reported the situation of execution of its duties to the Board of Directors. In thisway, the Board of Directors supervises the adequacy and efficiency of execution of the duties of the Company’s
Corporate Executive Officers and its subsidiaries’ Directors.
(5) System for the report of matters concerning execution of duties by the subsidiaries’ Directors, etc. to theCompany and other systems to ensure appropriateness of business operation in the corporate groupconsisting of the Company and its subsidiaries- Clarify the measures for information gathering and the matters to be approved and reported from eachcompany of the Group, by establishing the rules for management of companies of the Group and overseas
offices, etc., for the purpose of proper management of business activities of each company of the Group,
domestic and overseas.
- Establish the rules at each company of the Group to obtain important information regarding the managementof each company of the Group and also to ensure the fair, timely, and appropriate disclosure of suchinformation in compliance with laws, regulations, and rules.
<Outline of the status of the operation>
The Company receives reports from each company of the Group, domestic and overseas, and approves
important matters as to such companies at the Company’s governance meetings, in accordance with the rules for
management of companies of the Group and overseas offices, etc. In FY2023 the Company held meetings of the
Executive Management Committee eighteen times and the Overseas Management Committee seven times foradequate discussions, decisions, and reports.

9Consolidated Financial Statements

Consolidated Statements of Changes in Net Assets(Apr. 1, 2023 - Mar. 31, 2024)
Item(Millions of yen)

Shareholders’ equity
Deposits for
Treasury shares subscriptions oftreasury shares

Total
shareholders’equity(71,522)–

1,292,309(44,746)––(44,746)–

121,557––

121,557–––(60,012)–(60,012)

Disposal of treasury shares

–

2,187

–

8,381

–

10,568

Other

–

(0)

(1,532)–83(1,449)–2,187

75,278(51,631)83

25,917247,397

232,461

961,438(123,153)

83

1,318,227

Retainedearnings

Share capital

Capital surplus

247,397

230,274

886,160

Dividends of surplus––

Profit attributable to ownersof parent–

Purchase of treasury shares

Balance at the beginning of theperiodChanges of items during theperiodTotal changes of items during
the period
Balance at the end of theperiod(Millions of yen)
Item

Accumulated other comprehensive income
Valuation
Share acquisition Non-controlling
Foreign currency
difference on Deferred gains orinterests
rightstranslation
available-for-sale losses on hedges
adjustment
securities

Balance at the beginning of theperiodChanges of items during theperiodNet changes of items otherthan shareholders’ equity
Total changes of items during
the period
Balance at the end of theperiod24,717

16,02874,785

8,793

258,855

28,219844

59,364(1,837)660

28,219844

59,364(1,837)660

52,936

16,873

134,149

6,956

259,515

10

[References]

Consolidated Statements of Changes in Net Assets(Apr. 1, 2022 - Mar. 31, 2023)(Millions of yen)

Shareholders’ equity
Item

Deposits for
Treasury shares subscriptions oftreasury shares

Retainedearnings

Total
shareholders’equityShare capital

Capital surplus

247,397

230,451

942,793(134,201)26

1,286,467

Dividends of surplus––(39,905)––(39,905)

Profit attributable to ownersof parent––

63,875––63,875Purchase of treasury shares

–

–

–

(19,733)–(19,733)

Disposal of treasury shares

–

128

–

1,668

–

1,796

Cancellation of treasury
shares–(128)(80,615)80,744

–

–

Other

–

(176)

12

–

(26)

(190)

–

(176)

(56,633)

62,678

(26)

5,842

247,397

230,274

886,160(71,522)–

1,292,309

Balance at the beginning of theperiodChanges of items during theperiodTotal changes of items during
the period
Balance at the end of theperiod(Millions of yen)
Accumulated other comprehensive income
Item

Balance at the beginning of theperiodChanges of items during theperiodNet changes of items otherthan shareholders’ equity
Total changes of items during
the period
Balance at the end of theperiodValuation
Share acquisition Non-controlling
Foreign currency
difference on Deferred gains orinterests
rightstranslation
available-for-sale losses on hedges
adjustment
securities
29,5879,940

47,2889,109

257,497(4,870)6,088

27,496

(315)

1,358

(4,870)6,088

27,496

(315)

1,358

24,717

16,02874,785

8,793

258,855

11

Notes to the Consolidated Financial Statements

The Consolidated Financial Statements of the Company are prepared in accordance with the Regulations on
Corporate Accounting (Ministry of Justice Order No. 13, 2006), the Cabinet Office Ordinance on Financial
Instruments Business, etc. (Cabinet Office Ordinance No. 52, 2007) and the Uniform Accounting Standards for
Securities Companies (set by the Board of Directors of the Japan Securities Dealers Association, November 14, 1974),
the two latter of which are applied to the balance sheets and the income statements of companies that engage insecurities-related business, the main business of the Group, based on Article 118 of the Accounting Regulation
Ordinance.
The figures in the Consolidated Financial Statements are expressed in millions of yen, with amounts of less than
one million omitted.

Significant items associated with the preparation of Consolidated Financial Statements

1. Scope of consolidation(1) Number of consolidated subsidiaries and the names of major consolidated subsidiaries
Number of consolidated subsidiaries: 144 companies
Names of major consolidated subsidiaries:
Daiwa Securities Co. Ltd.
Daiwa Asset Management Co. Ltd.
Daiwa Institute of Research Ltd.
Daiwa Securities Business Center Co., Ltd.
Daiwa Facilities Co., Ltd.
Daiwa Next Bank, Ltd.
Daiwa Corporate Investment Co., Ltd.
Daiwa PI Partners Co. Ltd.
Daiwa Energy & Infrastructure Co. Ltd.
Daiwa Real Estate Asset Management Co. Ltd.
Daiwa Securities Realty Co. Ltd.
Daiwa Office Investment Corporation
Samty Residential Investment Corporation
Daiwa Capital Markets Europe Limited
Daiwa Capital Markets Hong Kong Limited
Daiwa Capital Markets Singapore Limited
Daiwa Capital Markets America Holdings Inc.
Daiwa Capital Markets America Inc.
In the current fiscal year, we newly included in the scope of consolidation 16 companies due to the newacquisition of shares, 1 company due to the new investment in the silent partnership investment business, and3 companies due to newly incorporated. Further, we have excluded from the scope of consolidation 2
companies due to decrease in proportion of the Group, 2 companies due to transfer of investment equity, 1
company due to absorption merger, and 11 companies due to liquidation.
(2) Names, etc. of major non-consolidated subsidiaries
Names of major non-consolidated subsidiaries
IDI Infrastructure #3 Limited Liability PartnershipGood Time Living Co. Ltd.
Daiwa Investor Relations Co. Ltd.
Rationale for exclusion from the scope of consolidation
IDI Infrastructure #3 Limited Liability Partnership and 2 other companies have been excluded fromthe scope of consolidation due to the significant risk of stakeholders making erroneous judgments.
The other non-consolidated subsidiaries had no material impact on the Consolidated Financial
Statements in terms of total assets, operating revenues or sales, the share of net income or loss (ascalculated by the equity method), and the retained earnings (as calculated by the equity method), andwere immaterial as a whole; therefore, they were excluded from the scope of consolidation.
(3) Companies not treated as subsidiaries regardless of the Company’s ownership of the majority of the voting
rightsNumber of companies not treated as subsidiaries: 8 companies
Names of major companies not treated as subsidiaries
SEKAIE INC.
12

Rationale for not being treated as subsidiaries:
Some subsidiaries have owned these companies’ stocks as operational transactions for the purpose of
acquiring capital gains by investments/developments and revitalizing businesses. These investment
activities meet the requirements of the Accounting Standards Implementation Guidance No. 22 and thus
it is clear that such subsidiaries do not control the decision-making organizations of these investee
companies.
(4) Special Purpose Entities subject to disclosure
Summary, etc. of Special Purpose Entities subject to disclosure and the transactions which utilize Special
Purpose Entities
The Group utilizes Special Purpose Entities in structuring and distributing structured notes and funds inorder to deal with its customers’ needs for investment.
In structured note-related transactions, the Group transfers its acquired bonds to Special Purpose Entities
in the Cayman Islands, and the Special Purpose Entities issue structured notes collateralized by those bonds.
Although there are 6 Special Purpose Entities, neither the Company nor the consolidated subsidiaries holdany voting rights or shares in Special Purpose Entities, and have also not dispatched any officers or employees
to those Special Purpose Entities. The outstanding issued amount of notes by those Special Purpose Entities
is 797,100 million yen as of March 31, 2024. Further, in fund-related transactions, the Group transfers its
renewable energy investment assets to those Special Purpose Entities through silent partnerships, and thoseSpecial Purpose Entities solicits investments backed by the acquired renewable energy investment assets.
There is 1 special purpose company, and the Group does not have any investment, etc. with voting rights, andno officers or employees are dispatched. The amount of investment received by the special purpose company
is 13,019 million yen, and the Group has invested 162 million yen in the special purpose company.
2. Application of equity method(1) Number of non-consolidated subsidiaries and affiliates to which the equity method is applied, and names ofmajor companies among them
Number of non-consolidated subsidiaries to which the equity method is applied: 3 companies
Number of affiliates to which the equity method is applied: 21 companies
Names of major non-consolidated subsidiaries to which the equity method is applied:
IDI Infrastructure #3 Limited Liability Partnership
Names of major affiliates to which the equity method is applied:
Sumitomo Mitsui DS Asset Management Company, Limited
Daiwa Securities Living Investment Corporation
In the current fiscal year, the equity method has been newly applied to 2 companies due to the newacquisition of shares, 1 company due to additional acquisition of shares, 1 company due to the new investmentin the silent partnership investment business, and 2 companies who became equity-applied affiliates fromconsolidated subsidiaries due to a decrease in proportion of the Group. Further, we have excluded from thescope of application of the equity method 2 companies due to transfer of investment equity, 1 company due
to liquidation, and 1 company due to decrease influence.
Among the companies to which the equity method is applied and with fiscal year ending on a date otherthan March 31, 2024, we used the tentative financial statements as of March 31, 2024 or other record date as
to 1 company and the financial statements for the fiscal year of said company as to the other companies.
(2) The names, etc. of non-consolidated subsidiaries and affiliates to which the equity method is not applied
The names of major companies
Good Time Living Co. Ltd.
Daiwa Investor Relations Co. Ltd.
Rationale for not applying the equity method
These non-consolidated subsidiaries and affiliates had no material impact on the Consolidated
Financial Statements in terms of the share of net income or loss (as calculated by the equity method) andthe retained earnings (as calculated by the equity method), and were immaterial as a whole, and therefore,
the Company did not apply the equity method to these non-consolidated subsidiaries and affiliates.
(3) The names, etc. of companies not treated as affiliates regardless of the ownership of not less than 20% andnot more than 50% of the voting rights
Number of companies not treated as affiliates: 9 companies
The names of major companies not treated as affiliates
NJT Copper Tube Corporation
13

Rationale for not being treated as affiliates
Some subsidiaries have owned these companies’ stocks as operational transactions for the purpose of
acquiring capital gains by investments/development and revitalizing businesses. These investment
activities meet the requirements of the Accounting Standards Implementation Guidance No. 22 and thus
it is clear that the Company’s subsidiaries cannot exercise significant influence on these investee
companies.
3.

Fiscal year, etc. of consolidated subsidiaries
Fiscal year ends of consolidated subsidiaries are as follows:
January
9
companies
February
3companies
March
80
companies
April
4companies
November3
companies
December43
companies
January and July
1
company
May and November
1company
Among the consolidated subsidiaries with a fiscal year ended on a date other than March 31, 2024, weused the financial statements for the fiscal year end of such subsidiary as to 59 consolidated subsidiaries andthe tentative financial statements as of March 31, 2024 as to the other 5 subsidiaries. We also madeadjustments necessary for consolidation as to the important transactions that occurred between such dates
and March 31, 2024.

4. Accounting policies(1) Valuation standards and methods for major assets(i) Valuation standards and methods for securities, etc. classified as trading products
Trading products, including securities and derivatives for trading purposes, held by consolidated
subsidiaries are recorded at fair value.
With regard to the valuation of specific market risk and credit risk for derivatives, the fair value iscalculated for each group of each financial assets and financial liabilities based on net assets and liabilities
after offsetting the financial assets and liabilities.
(ii) Valuation standards and methods for securities, etc. not classified as trading products
Securities, etc. which are not classified as trading products are as follows:(a) Trading securities
Valued at fair value (cost is determined based on the moving average method).
(b) Held-to-maturity debt securities
Held-to-maturity debt securities are recorded using the amortized cost method.
(c) Available-for-sale securities
Available-for-sale securities are recorded at fair value, based on quoted market prices, etc. as of theend of the fiscal year (net unrealized gains (losses) are booked directly in net assets, and the costs of
securities sold are generally calculated based on the moving average method). However, securities
without market prices (such as unlisted stocks) and partnership investment, etc. are mainly recorded
at cost using the moving average method.
Investments in investment limited partnerships, etc. are stated as “Private equity and otherinvestments” or “Investment securities” mainly at the investment shares of the net asset values of thepartnerships based on the partnerships’ financial statements (shares of net unrealized profits and losses
on securities held by the partnerships are directly posted into net assets).
Furthermore, some portion of securities and private equity and other investments held by someconsolidated subsidiaries is stated in current assets.
(d) Derivatives
Valued at fair value.
(iii) Valuation standards and methods for inventories
Work in process is mainly stated at cost using the specific identification method (book value is written
down based on decrease in profitability).

14

(2) Depreciation methods for major depreciable assets(i) Property, plant and equipment
Property, plant and equipment are generally depreciated based on the straight-line method. The Company
generally computes depreciation over estimated useful lives as stipulated in the Corporation Tax Act ofJapan.
(ii) Intangible assets, and investments and other assets
Intangible assets, and investments and other assets are generally amortized based on the straight-line
method. The Company generally computes amortization over estimated useful lives as stipulated with the
Corporation Tax Act of Japan; provided, however, that software used in-house is amortized over internallyestimated useful lives (5 years).
(3) Accounting policies for significant allowances and provisions(i) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on the estimated historical default rate for normalloans, and based on individual assessment of financial condition and estimated cash flow for claims withdefault possibility, claims in bankruptcy, claims in reorganization, and others.
(ii) Allowance for investment loss
The Company and some consolidated subsidiaries provide allowances based on estimated losses on
private equity and other investments and shares of non-consolidated subsidiaries, assessing the financial
conditions of investee companies.
(iii) Provision for bonuses
We provide allowance for bonuses of directors, officers, and employees based on the estimated payment
amount corresponding to the current fiscal year in accordance with the calculation standards of eachcompany.
(iv) Provision for loss on litigation
We provide allowance for future monetary damage as to the litigation, etc. regarding financialtransactions, based on the estimated amount of restitution at the end of the fiscal year ended March 31,2024,
considering the status of litigation, etc.
(4) Accounting for retirement benefits
The Company and some domestic consolidated subsidiaries provide retirement benefit liabilities for
employees’ retirement benefits payments based on the amount required to be paid at the end of the fiscal year
ended March 31, 2024 in accordance with each company’s retirement benefit policy. This is because, in thesecompanies, retirement benefits are not affected by future salary increases, etc. and the service costs are
determined for each individual in accordance with their contributions, capabilities, achievements, etc. foreach fiscal year. Some of the consolidated subsidiaries appropriate the amounts deemed to have been accruedin the fiscal year ended March 31, 2024 based on the estimated amount of retirement benefits obligations at
the end of the fiscal year ended March 31, 2024.
(5) Accounting standard for revenue and cost recognition
The Company and its domestic consolidated subsidiaries recognize revenues at the amount expected to bereceived in exchange for promised goods or services at the time when control of the relevant goods or services
is transferred to customers. Regarding the major businesses through which we generate revenue fromcontracts with customers, details on main performance obligations and normal point of time at which such
performance obligations have been satisfied (the point at which revenue is recognized) are described in“Notes to the Consolidated Financial Statements (Notes to revenue recognition)”.
(6) Accounting methods for material hedging
Marked-to-market gains or losses on hedging instruments are principally deferred as net assets until the
profits or losses on the hedged items are realized. Certain eligible interest swaps for hedging purposes are
based on cost without being marked-to-market under generally accepted accounting principles in Japan(“Tokurei-shori”). Furthermore, the premium or discount on certain eligible foreign exchange forward forhedging purposes is allocated to each fiscal term without being marked-to-market under generally accepted
accounting principles in Japan (“Furiate-shori”).
In order to avoid interest rate fluctuation risk and foreign exchange fluctuation risk associated with someof the securities, borrowings and bonds issued, etc., the Company and some consolidated subsidiaries execute
hedging using derivatives instruments such as interest rate swaps, currency swaps and similar transactions.
The effectiveness of hedging is evaluated based upon the correlation between cumulative change in thefair value or cash flow of the hedging instrument and that of the hedged item. Also, in some consolidated
subsidiaries, some hedges intended to cancel the market fluctuation and designed to make the material
15conditions of hedging instruments and hedged items almost identical are deemed to be highly effective
without effectiveness tests. Hedges exempted from being marked-to-market under the two accounting
treatments described in the first paragraph are judged to pass the effectiveness tests of hedging with theireligibility for applying those treatments.
A subsidiary engaged in the banking business applies deferral hedge accounting stipulated in “Treatmentof Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking
Industry” (Japanese Institute of Certified Public Accountants (JICPA) Industry Audit Committee Report No.
25, October 8, 2020) to hedging instruments used to hedge foreign exchange risks associated with various
foreign currency -denominated monetary assets and liabilities. The effectiveness of hedging instruments, suchas currency swaps and foreign exchange swap used for hedging the foreign exchange risks of monetary assets
and liabilities denominated in foreign currencies, is assessed by comparing the foreign currency position ofhedged monetary assets and liabilities denominated in foreign currencies with that of the hedging instrument.
(7) Amortization method and period of goodwill
Goodwill is amortized, when incurred, by using the straight-line method over the amortization period
within 20 years estimated based on each condition of acquired subsidiaries and affiliates. Goodwill isamortized in a lump sum in the fiscal year when incurred in cases where the amount is immaterial.
(8) Other significant items associated with the preparation of the Consolidated Financial Statements
Application of Group Tax Sharing System
The Group Tax Sharing System has been adopted, under which the Company is treated as the total parent
company.
5.

Notes on changes in accounting policy(Application of Practical Solution on the Accounting for and Disclosure of the issuance and holding ofElectronically Recorded Transferable Rights That Must Be Indicated on Securities, etc.)
The Company has applied “Practical Solution on the Accounting for and Disclosure of the issuance andholding of Electronically Recorded Transferable Rights That Must Be Indicated on Securities, etc.” (PITF
No. 43, issued on August 26, 2022, Accounting Standards Board of Japan) from the beginning of the fiscal
year ended March 31, 2024, and this practical solution is retroactively applied to all prior periods.
There is no impact on the consolidated financial statements.

6.

Notes on accounting estimatesAmong the items for which the amount has been recorded in the consolidated financial statements for thecurrent fiscal year based on accounting estimates, those that may have a significant impact on the consolidated
financial statements for the next fiscal year are as follows:(1) Valuation of Level 3 derivatives belonging to trading products(i) Amount recorded in the consolidated financial statements for the current fiscal year
Of the derivatives that belong to trading products, assets and liabilities classified as Level 3 amounted to30.6 billion yen and 17.0 billion yen, respectively. These amounts involve estimation uncertainty because
the fair value is measured using inputs that cannot be observed in the market.
(ii)
Information that contributes to understanding the contents of significant accounting estimates related tothe identified items
The fair value of derivatives belonging to trading products is measured using the expected cash flow
discount model under a risk-neutral measure.
The main assumptions in the accounting estimation of this fair value measurement are the inputs used in
the pricing model. The measurement of fair value by the pricing model uses a variety of inputs such as
interest rates, exchange rates, stock prices, volatility, and correlation coefficients, and in particular, we use
inputs unobservable in the market such as long-term swap rates, long-term currency basis, long-term stock
price volatility, long-term credit spreads, and correlation coefficients to measure the fair value of Level 3
derivatives.
The details of these are described in “Notes to Financial Instruments (Note) 1 Explanation of Evaluation
Techniques Used for Measurement of Fair Value and Inputs for Measurement of Fair Value”. Changes inmajor assumptions due to changes in the market environment, etc. may have a significant impact on thevalue of trading products in the consolidated financial statements for the next fiscal year. The impact onfair value in the case of changes in significant unobservable inputs is described in “Notes to Financial
Instruments (Note) 2 Information on Level 3 Fair Value of Financial Instruments Recorded on theConsolidated Balance Sheets at Fair Value”.

16

(2) Evaluation of private equity and other investments and operating loans receivable (Investment Segment)(i) Amount recorded in the consolidated financial statements for the current fiscal year
Private equity and other investments
Allowance for investment loss (current assets)
Operating loans receivable (Investment Segment)
Allowance for doubtful accounts (Investment Segment)
Total(Millions of yen)
138,663(4)
106,705(6,127)239,237

Daiwa PI Partners Co. Ltd. and Daiwa Energy & Infrastructure Co. Ltd., which are consolidated
subsidiaries belonging to the Investment Segment of the Group, make investments in and loans to private
equity, real estate, energy and infrastructure, etc. mainly through securities that do not belong to trade
products, such as private equity and other investments and operating loans receivable, etc. At the end of
the current fiscal year, the Investment Segment has recorded the balances listed in the above table.
(ii) Information that contributes to understanding the contents of important accounting estimates related to theidentified items
There is uncertainty in the valuation of assets measured using the financial condition of the investee,
the present value of future cash flows based on the latest business environment, the business plan thatreflects it, etc., multiples observed from transaction cases of similar companies, etc. Impairment loss,
allowance for investments loss, and allowance for doubtful accounts are recorded based on the valuation
amount. In the current fiscal year, we recorded a loss of 6.3 billion yen, mainly due to domestic andoverseas investments and loans.
When using the estimated future cash flow in measuring the value of an asset, the estimates are madeusing assumptions that management thinks appropriate, considering the performance of the investee, thetrends of the industry to which the investee belongs, etc. The main assumptions used as assumptions for
future cash flow estimates in the valuation of energy-related investments are trends in imported fuel prices
and prospects for promoting renewable energy in Japan. Imported fuel prices fluctuate due to impact of
the energy policies of various countries and trends in supply and demand, etc.; however, projections frominternational organizations are used for the medium to long term price forecasts that have a significant
impact on investment evaluations.
Due to the uncertainty associated with the estimates and assumptions used in the valuation of theseassets, if the accounting estimates for the valuation fluctuate due to unpredictable changes of assumptionsin the future, etc., additional losses or reversals of allowances may be recognized in the next fiscal year.

17Notes to consolidated balance sheets

1. Assets pledged as collateral and liabilities secured(1) Assets pledged as collateral
Cash and deposits
Securities
Trading products
Operating loans receivable

21,911
223,932
314,497
1,254,916

Other
Investment securities
Total(Note)

51,44917,2591,883,966

The amounts above are based on the amounts in the consolidated balance sheets. In addition to the above pledged
assets, borrowed securities of 85,996 million yen are also pledged as collateral.

(2) Liabilities secured
Borrowings on margin transactions
Short-term borrowings
Long-term borrowings
Total(Note)

2.

million yen

4,735
345,374
795,582
1,145,691

million yen

The amounts above are based on the amounts in the consolidated balance sheets.

Fair value of securities transferred
Lending securities under loan agreements (shohi-taishaku)
Securities sold under repurchase agreement (Gensaki)
Other
Total
(Note)

9,453,808
3,273,956
463,554
13,191,320

million yen

We exclude those belonging to “Assets pledged as collateral” in 1(1) above.

3.

Fair value of securities received as collateral
Borrowed securities under loan agreements (shohi-taishaku)
Securities purchased under resale agreement (Gensaki)
Other
Total

4.

10,333,855
3,085,681
453,776
13,873,314

million yen

Allowance for doubtful accounts deducted directly from assets
Investments and other assets, other

2,501

million yen

5.

Accumulated depreciation of property, plant and equipment

188,867

million yen

6.

Liabilities on guarantees
Name of the guaranteed

Liabilities guaranteed

Good Time Living Co. Ltd.

Lump-sum payment for occupancy
refundable debt

10,840Other

Standby letter of credit

1,075

Total
7.

Amount of liabilities

11,916The clauses of the laws and regulations that prescribe recording of reserves under special laws
Reserve for financial instruments transaction liabilities
Article 46-5, Paragraph (1) of the Financial Instruments and Exchange Act

18

million yen

Notes to consolidated statement of changes in net assets
1.

Type and total number of shares outstanding as of the end of the fiscal year ended March 31, 2024
Common Stock
1,569,378,772 shares

2. Dividends(1) Amount of dividends
Resolution
Board of Directors on
Apr. 27, 2023
Board of Directors on
Oct. 31, 2023
Total

Type of shares

Total amountof dividends(millions ofyen)

Dividend per
share
(yen)

Common Stock

17,435

Common Stock

27,311

Record date

Effective date

12

March 31, 2023

June 5, 2023

19

September 30,
2023

December 1,
2023

44,746(2) Among dividends with record dates during the fiscal year ended March 31, 2024, dividends to be distributed
after the end of the fiscal year
It was resolved at the meeting of the Board of Directors on April 25, 2024 as to dividends on common sharesas follows:
1. Total amount of dividends
35,032 million yen
2. Dividend per share
25 yen3. Record Date
March 31, 2024
4. Effective Date
May 31, 2024
(Note) The dividends will be paid from retained earnings.

19

3.

Class and number of shares subject to share acquisition rights upon exercise thereof as of March 31, 2024

Decrease

As of Mar.
31, 2024

Balance as ofMar. 31, 2024
(Millions ofyen)

Number of shares
Breakdown

Increase

Share Acquisition Rights issued in July 2006

51,000–19,00032,00043

Share Acquisition Rights issued in July 2007

67,000–24,00043,00056

Share Acquisition Rights issued in July 2008

85,000–12,00073,00070

Share Acquisition Rights issued in July 2009

268,000–

55,000213,000

123

Share Acquisition Rights issued in July 2010

552,000–

86,000466,000

174

Share Acquisition Rights issued in July 2011

814,000–

41,000773,000

276

Share Acquisition Rights issued in Feb. 2013

661,000–

62,000599,000

340

Share Acquisition Rights issued in Feb. 2014

319,000–

12,000307,000

293

Share Acquisition Rights, Series 10

3,422,000–

3,422,000––(treasury rights)(541,000)(–)(541,000)

(–)

(–)

Share Acquisition Rights issued in Feb. 2015

406,000–

12,000394,000

335

Share Acquisition Rights, Series 11

4,651,000–

1,724,000

2,927,000

563(treasury rights)(767,000)(89,000)(–)(856,000)(–)

Share Acquisition Rights issued in Feb. 2016

538,000–

12,000526,000

348

3,875,000(603,000)–(65,000)

1,816,000(–)

2,059,000(668,000)

238(–)

547,000–

17,000530,000

375

Share Acquisition Rights, Series 13

6,553,000–

2,563,000

3,990,000

496(treasury rights)(894,000)(105,000)(–)(999,000)(–)

Share Acquisition Rights issued in Feb. 2018

580,000–

17,000563,000

409

Share Acquisition Rights, Series 12(treasury rights)
The Company

As of Apr. 1,
2023

Share Acquisition Rights issued in Feb. 2017

Share Acquisition Rights, Series 14

6,596,000–

1,859,000

4,737,000

590(treasury rights)(866,000)(107,000)(–)(973,000)(–)

Share Acquisition Rights, Series 15

6,677,000–

2,820,600

3,856,400

407(treasury rights)(792,500)(96,500)(–)(889,000)(–)

Share Acquisition Rights, Series 16

7,659,000–

161,000

7,498,000

436(treasury rights)(803,500)(161,000)(–)(964,500)(–)

Share Acquisition Rights, Series 17

7,370,000–

153,000

7,217,000

444(treasury rights)(550,000)(153,000)(–)(703,000)(–)

Share Acquisition Rights, Series 18

7,605,000–

154,000

7,451,000

262(treasury rights)(341,500)(154,000)(–)(495,500)(–)

Share Acquisition Rights, Series 19

7,854,500–

176,400

7,678,100376(treasury rights)(123,300)(176,400)(–)(299,700)(–)

Share Acquisition Rights, Series 20–

7,896,900

84,5007,812,400

292(treasury rights)(–)(84,500)(–)(84,500)

(–)

Total

6,956
(–)

(Note 1) All shares underlying share acquisition rights above are common shares.
(Note 2) Exercise periods of “Share Acquisition Rights, Series 16”, “Share Acquisition Rights, Series 17”, “Share Acquisition Rights,
Series 18”, “Share Acquisition Rights, Series 19”, and “Share Acquisition Rights, Series 20” have not yet started.

20

Notes to financial instruments
1. Concerning the situation of financial instruments(1) Policy for dealing with financial instruments
The Group is engaged in securities-related business, and investment and loan businesses. Specifically, theGroup is involved in trading and brokerage of securities and derivative products, underwriting and secondaryoffering of securities, dealing in public offering, secondary offering and private placement of securities andother security-related business, the banking business and other financial businesses.
The Group holds financial assets and liabilities such as “Trading securities and other”, “Derivatives”, “Private
equity and other investments”, “Loans” and “Investment securities”, etc., in its businesses and raises funds withcorporate bonds, medium-term notes, borrowing from financial institutions, commercial papers, call money,
acceptance of deposit, repurchase agreements, etc. In fundraising, under the basic policy for financing such thatenough liquidity for continuing business should be effectively and stably secured, the Group tries to realize
efficient and stable financing by diversifying financial measures and maturity dates and maintaining anappropriate balance between assets and liabilities. Also, the Group utilizes interest rate swaps and foreign
currency swaps, etc., for the purpose of hedging fluctuations in interest rates and foreign currencies in terms offinancial assets and liabilities.
The Group tries to secure financial soundness by appropriately managing a variety of risks incurred byholding financial assets and liabilities in accordance with the characteristics of such risks.
(2) Contents and risks of financial instruments
The Group holds financial instruments in the trading business as follows: (a) trading securities and other(stocks and warrants, bonds and beneficiary certificates, etc.), loans secured by securities and borrowings
secured by securities, margin transaction assets and liabilities, etc.; (b) derivatives traded on exchanges, such as
stock index futures, bond futures, interest rate futures and options for such derivatives; (c) derivatives not tradedon exchanges (OTC derivatives), such as interest rate swaps, currency swaps, foreign currency futures, bondoptions, currency options, FRA and OTC securities derivatives, etc. The Group also holds private equity andother investments, etc., in the investments business, loans and securities, etc., in the banking business andinvestment securities for business relationships.
Among the various risks associated with these financial instruments, the major risks are market risk and credit
risk. Market risk means the risks of suffering losses from fluctuations in the value of financial instruments andtransactions in accordance with changes of market prices or rate of stock prices, interest rates, foreign exchange
rates and commodity prices, etc., and from the market environment in which no transaction can be executed
because of an excessive decrease of liquidity or one in which market participants are forced to trade in extremely
unfavorable conditions. Credit risk means the risk of suffering losses from defaults or creditworthiness changes,
etc., of counterparts or issuers of financial instruments which the Group holds. In addition to these, there is amodel risk. Model risk means the risk of suffering losses due to errors in model development or implementation,or due to misuse of the model.
In the trading business, the Group conducts derivative transactions as single transactions or as transactions
embedded in structured notes, in order to meet customers’ needs. These include transactions which are highly
volatile in comparison to the fluctuation of stock prices, interest rates, foreign exchange rates and commodity
prices of reference assets and the correlation between them, or transactions which tend to move in a complicatedmanner. Therefore, these carry higher risk than the reference assets. These derivative transactions are
categorized as trading products in the consolidated balance sheets and the realized and unrealized gains or losses
by fluctuation of fair values are recorded as net trading income.
While holding the financial instruments as above, the Group also raises funds utilizing corporate bonds,
medium-term notes, borrowing from financial institutions, commercial papers, call money, acceptance of
deposit, repurchase agreements, etc., and is exposed to liquidity risk. Liquidity risk means the risk of suffering
losses such that cash management may be impossible or require remarkably higher financing costs than usual
as a result of abrupt change of market environment or the deterioration of financial conditions of the Group.
Securities subsidiaries engaged in the trading business utilize derivative transactions as brokers and end-users
in the derivatives market. Derivative products have been necessary to deal with a variety of customers’ financial
needs and subsidiaries provide customers with financial instruments to meet their requests in many ways as
brokers. For instance, they provide customers with foreign currency futures to hedge the exchange rate risk offoreign currency of foreign bonds held by customers and also with interest rate swaps to hedge interest rate risk
when customers issue corporate bonds. As end-users, the Group utilizes interest rate swaps to hedge interest raterisk regarding financial assets and liabilities of the Group and utilizes many kinds of futures and options tohedge its trading positions.
21

(3) Risk management system concerning financial instruments
The Company adopted the “Risk Management Rule” at the meeting of the Board of Directors, which states
the basic policy of risk management, types of risks that should be managed and responsible executive officers
and departments for each major risk, and conducted risk management of the entire Group in accordance with
the Risk Appetite Framework. Furthermore, the Company also prepared a risk management framework throughestablishment of guidelines regarding the “Three Lines of Defense” in order to develop an effective risk
governance system.
Each subsidiary conducts risk management suitable for its business profile and size in accordance with thebasic policy of risk management. The Company also monitors the system and process of subsidiaries’ risk
management. Also, the Group Risk Management Committee as a sub-committee of the Executive Management
Committee of the Company receives reports on and discusses matters such as risk exposure and issues
concerning the risk management system of each subsidiary identified by monitoring subsidiaries. Major
subsidiaries regularly hold Risk Management Committee meetings, etc. to strengthen their risk management.
(i) Management of risk of financial instruments held for trading purposes(a) Management of market risk
The Group manages its trading business by establishing the limit for VaR, position and sensitivity, etc.,
considering the financial situation, the business plan and budget of each division. The risk management
department of the Company monitors and reports the market risk to the management of the Company on adaily basis.
In order to cover the capacity limit of VaR calculated by the statistical hypothesis based on the dataobtained for a certain period, the Company applies the stress test with a scenario based on the impact ofhistorical abrupt changes in the market and assuming hypothetical stress events.
(Quantitative information concerning market risk)
Major subsidiaries engaged in securities business utilize the historical simulation method (holding
period: 1 day, confidence interval: 99%, observation period: 520 business days) for calculating the VaR oftrading products.
The VaR of the trading business as of March 31, 2024 (fiscal year end) was 1.0 billion yen in total. In
the meantime, the Group verifies the model by executing back tests which compare the calculated VaR andthe actual profit/loss. However, as the VaR statistically estimates the risk based on historical market
fluctuation, it may be unable to completely grasp the risk in an environment in which the market
unexpectedly changes beyond the estimation.
(b) Management of credit risk
The credit risks generated in the trading business of the Group consist of counterparty risk and issuer
risk. In regard to counterparty risk, the Group has established the upper limit on the credit-equivalent
exposure that can be tolerated for each counterparty and periodically monitors such credit-equivalent
exposure. In addition, the Group measures total counterparty risk. The Group monitors the risk amountrelated to the issuer risk of financial instruments held for market-making.
Because the Group provides financial instruments, manages assets and makes investments, the Group is
exposed to the risk that various instrument and transaction exposures concentrate on a specific counterparty.
If the counterparty’s credit situation worsens, the Group may incur significant losses. Therefore, the Grouphas established the upper limit on total exposure to any counterparty and periodically monitors such limit.
Because margin transactions generate credit to customers, we require customers to set deposits as
collateral. In connection with securities loan transactions, the Group has tried to reduce credit risk by
establishing credit limit for counterparties, charging necessary collateral, and daily mark-to-market.
(c) Management of model risk
The fair value valuation model for trading products is used after the verification/approval process underthe model risk management system. In addition, in line with changes in market conditions, we regularly
conduct reviews to match market trends.
(ii) Management of risk as to financial instruments held for other than trading purpose
The Group holds financial instruments in the business other than trading, such as private equity and otherinvestments in the investment business, loans, securities, etc., in the banking business and investment securities
for business relationships. These financial instruments carry market risk and credit risk as well. Because thosefinancial instruments have a characteristic risk profile for each product, the Company has conducted risk
management that suits each risk profile.
The subsidiaries in the investment business make an investment decision after investigating each investment
thoroughly in an investment committee, etc. After investments, the subsidiaries regularly monitor and report thesituation of invested companies to the risk management committee, etc.
The subsidiary engaged in the banking business specifies risks which need management and establishes amanagement policy and management system for each risk. Furthermore, it establishes the ALM committee, abody under the Board of Directors, to discuss and decide the way to manage the risks (the ALM committee
22

discusses the important matters relating to the management and control of credit risk, market risk and liquidity
risk etc.). The subsidiary controls the risks by conducting its business within the various limits set by the Boardof Directors, the ALM committee, etc.
In connection with investment securities for business relationships, etc., the Group decides to acquire or sell
the securities in accordance with the policy defined by the relevant company’s rules. Also, the Group regularly
monitors and reports the situation of risk to the management of the Company.
(Quantitative information concerning market risk)(a) Financial assets and liabilities (excluding those held by the subsidiary engaged in the banking business)
The main financial assets that are influenced by market risk are “Private equity and other investments”
in the investment business and “Investment securities” for business relationships. As of March 31, 2024, if
the index, such as TOPIX, were to change by 10%, market prices of the listed equities in “Private equity
and other investments” and “Investment securities” would fluctuate by 10.2 billion yen.
Also, the main financial liabilities in the Group that are influenced by market risk are “Bonds payable”
and “Long-term borrowings”. As of March 31, 2024, if all other risk variables were assumed to beunchanged and the interest rate were supposed to change by 10 basis points (0.1%), the market prices of“Bonds payable” and “Long-term borrowings” would fluctuate by 1.5 billion yen and 500 million yen,respectively.
(b) Financial assets and liabilities held by the subsidiary engaged in the banking business
The subsidiary engaged in the banking business utilizes the VaR in managing market risk (i.e. the riskof loss caused by fluctuation of value of assets and liabilities (including off-balance liabilities) due tofluctuation of interest rates, exchange rates, stocks, and other risk factors in the market and the risk of loss
which caused by fluctuation of income from assets and liabilities).
When measuring the VaR, we utilize the historical simulation method (holding period: 20 days,
confidence interval: 99%, observation period: 750 business days) and convert the number calculated in 20
days of the holding period to the number in 125 days of the holding period. Such number as of March 31,
2024 is 11.3 billion yen.
The subsidiary, in order to verify the effectiveness of the model, periodically conducts the back-tests bycomparing the VaR calculated in the risk measuring model with the virtual profits and losses. Based on the
result of the back-tests conducted in the fiscal year 2023, we consider that our risk measurement modelgrasps the market risk appropriately. However, as the VaR statistically estimates the risk based on historicalmarket fluctuation, it may be unable to completely grasp the risk in an environment in which the market
unexpectedly changes beyond the estimation.
In order to complement the limitation of the management utilizing the VaR, we measure loss calculatedusing a wide variety of scenarios (stress test).
(iii) Management of liquidity
As the Group conducts the securities-related business and the investment and loan business by utilizing avariety of assets and liabilities, it has the basic policy of fundraising to efficiently and stably secure enoughliquidity for continuing its business.
Methods used by the Group to raise funds of the Group include unsecured fundraising such as corporate
bonds, medium-term notes, borrowing from financial institutions, commercial papers, call money andacceptance of deposit, and secured fundraising such as repurchase agreements. The Group intends to realize
efficient and stable fundraising by combining these various methods appropriately.
In terms of financial stability, the Group, preparing for the case that the environment vastly changes,
endeavors even in ordinary times to secure a stable reserve to prevent the business from suffering difficulties.
Also, the Group tries to diversify the maturity and sources of funds in preparation for the event where it becomesdifficult to raise new funds and to roll over the existing funds due to a financial crisis.
The Company is required to comply with the minimum standard of consolidated liquidity coverage ratio(hereinafter referred to as “LCR”) and net stable funding ratio (hereinafter referred to as “NSFR”) based on
2014 Financial Services Agency Notification No. 61. The Company has organized its liquidity management
system other than LCR and NSFR based on the notification of such Financial Services Agency, which is basedon original indices for liquidity management. Namely, concerning unsecured fundraising, the repayment date ofwhich arrives within a year and the prospective outflows in the case where some stress events occur in such
period, we verify every day that enough liquidity is secured for such repayment and outflows even in various
stress scenarios. The Group undertakes to make it possible to continue business even if unsecured fundraising
is not available for one year.
The Group collectively manages and monitors the liquidity of the entire Group under the basic policy of
securing the appropriate liquidity of the Group as a whole. The Company always monitors whether the liquidity
portfolio is sufficiently secured against short-term raised funds without collateral, in preparation for the casewhere it becomes difficult to raise new funds and to roll over the existing funds due to the occurrence of somestress, which is specific to the Company or influences the entire market. Also, the Group raises and manages
23

funds efficiently as a group by establishing a system that enables the Company to flexibly distribute and supply
funds to its Group companies as necessary and also enables companies in the Group to finance each other.
The Group has also established a contingency funding plan as one of the measures of dealing with liquidity
risk. This plan states the basic policy concerning the reporting lines and the method of fundraising, etc.,
depending upon the urgency of stress by internal factors such as decrease in creditworthiness and external factors
such as abrupt change of market environment. The contingency funding plan enables the Group to prepare asystem for securing liquidity through a swift response.
The Group has established the contingency funding plan of the Group considering the stress that the entire
Group may face and also review it periodically to quickly respond to changing financial environments.
Moreover, Daiwa Securities Co. Ltd., Daiwa Next Bank, Ltd. and foreign securities subsidiaries, which aresensitive to influence by financial markets and for which the importance of securing liquidity is significant, haveestablished their own contingency funding plans and periodically review their plans as well.
In addition, the Company periodically monitors the development status of its subsidiaries’ contingency
funding plans. The Company revises, if necessary, its subsidiaries’ fundraising plans or contingency fundingplans themselves considering crisis scenarios to be assumed and also tries to preliminarily executecountermeasures, both increasing liquidity and reducing assets at the same time.
(iv) Supplementary explanation for fair values, etc., of financial instruments
The fair value of financial instruments is calculated based on certain assumptions, etc. and may be changed
under different assumptions, etc.
2.

Fair value and fair value hierarchy by level of financial instruments
The amount recorded on the consolidated balance sheets, fair value breakdown by level, and the difference
between them at the end of the fiscal year are as follows. Investment trusts to which Paragraph 24-9 of the
Implementation Guidance on Accounting Standard for Fair Value Measurement has been applied, securities
without market prices, and partnership investment, etc. to which Paragraph 24-16 of the Implementation
Guidance on Accounting Standard for Fair Value Measurement has been applied are not included in the table(as described in (1) *3, (Note) 3 and (Note) 4).
The fair value of financial instruments is classified into the following three levels according to theobservability and significance of the input used to measure the fair value.
Level 1 fair value:
Level 2 fair value:
Level 3 fair value:

Fair values measured based on quoted prices of the assets
or liabilities being measured which are available in active
markets as observable valuation inputs
Fair values measured based on the inputs other than inputs
included in Level 1 as observable valuation inputs
Fair values measured based on unobservable valuation
inputsWhen multiple inputs that significantly affect the fair value measurement are used, the fair value is classified
into the lowest level in the hierarchy for the fair value measurement among the levels to which those inputs
belong.

24

(1) Financial instruments recorded at fair value on the consolidated balance sheets(Millions of yen)
Fair Value
Assets(1) Trading productsi) Trading securities and other
Equities
Government, municipal and other bonds
Corporate bonds
Foreign bonds
Beneficiary certificates
Otherii) Derivatives
EquityInterest rate
Currency
Credit / Other(2) Securities, private equity and other investments,
and investment securities
Available-for-sale securities
Equities
Government, municipal, and other bonds
General business bonds
Foreign bonds
Beneficiary certificatesTotal assets
Liabilities(1) Trading productsi) Trading securities and other
Equities
Government, municipal and other bonds
Foreign bonds
Beneficiary certificates
Otherii) Derivatives
EquityInterest rate
Currency
Credit / Other
Total liabilities
Derivatives other than trading transactions (*1, *2)
Interest rate

Level 1

Level 285,727
1,197,338–
1,252,902
34,2420333
155,066
327,072
556,350
9,236
1,235,882

1,795
–
–
13,495–
1,213

87,856
1,352,404
327,072
1,822,748
43,4791,237,095

45,314
169––

211,257
1,697,807
620,014
59,10817,433
3,749
5,141
4,343

274,006
1,701,726
625,156
63,451132,097
85,583–435,546
54,885
3,323,808–
12,874
140,676
387,524
76,181
5,489,386––
20,841
33,510–101,525

132,097
98,458
161,517856,581
131,066
8,914,720

198,093
1,856,672
1,154,222
16,060
–

5,627
1,119
65,212–
71,670–––––203,7211,857,792
1,219,434
16,06071,67069,710211
6–3,294,977

177,351
1,713,403
456,830
60,601
2,551,816

3,998
8,322
1,739
2,966
17,026251,060
1,721,936
458,576
63,567
5,863,821–

69,627–

69,627–(14,139)–(14,139)–

55,488–55,488Currency
Total derivatives other than trading transactions

Level 3Total

*1 Net receivables and payables arising from derivatives other than trading transactions are shown in net amount,and total net payables are shown by in parentheses.
*2 The amount booked on the consolidated balance sheets of the derivative transactions to which hedge accounting
is applied is 63,350 million yen.
*3 Investment trusts to which Paragraph 24-9 of the Implementation Guidance on Accounting Standard for Fair
Value Measurement has been applied are not included in the above table. The amount of the investment trust on
the consolidated balance sheets is assets of 10,754 million yen in “Available-for-sale securities”.
*4 The Company and some consolidated subsidiaries made hedge transactions using derivative transactions suchas interest rate swaps and currency swaps in order to hedge interest rate fluctuation risk and exchange rate
fluctuation risk related to some securities, borrowings and corporate bonds issued, etc., and mainly apply deferredhedge accounting to them. We have also applied “Practical Solution on the Treatment of Hedge Accounting for25

Financial Instruments that Reference LIBOR” (PITF No. 40, issued on March 17, 2022) to these hedging
relationships.
(2) Financial instruments other than those recorded on the consolidated balance sheets at fair value(Millions of yen)
Fair Value
Level 1

Level 2

Level 3

Total

Assets(1) Operating loans
receivable
Allowance for
doubtful accounts(2) Securities, private
equity and otherinvestments andinvestment securities
i) Held-to-maturity
debt securities
Bonds payableii) Subsidiary andaffiliated company
stock
Total assets
Liabilities(1) Deposits for thebanking business(2) Bonds payable(3) Long-term borrowings
Total liabilities

Amounts inconsolidatedbalance sheets

Difference

2,722,321(9,186)––2,712,095

2,712,095

2,713,135(1,040)–207,920–

207,920

216,458(8,537)

139,725––

139,725

89,82349,901

139,725

207,920

2,712,095

3,059,741

3,019,417

40,324–

4,508,948–

4,508,948

4,511,603

2,655

–
–

1,273,314
2,018,664––

1,273,314
2,018,664

1,276,312
2,020,812

2,997
2,147

–

7,800,927–

7,800,927

7,808,727

7,800“Cash and deposits”, “Cash segregated as deposits”, “Trade date accrual”, “Loans secured by securities”,“Borrowings secured by securities”, “Deposits received”, “Short-term borrowings”, “Commercial papers”,“Current portion of bonds payable”, etc. are omitted because they are cash or their fair values are close to theirbook values due to being settled in a short period of time. In addition, the following accounts are omitted because
they are considered to be settled in a short period of time due to the nature of the accounts, and thus their fairvalues are close to their book value.
(a) Margin transaction assets, margin transaction liabilities
Margin transaction assets are loans to clients and collateral to securities finance companies associated with
margin transactions. Since the former is settled by counter-trading, etc. at the will of the customer, and the latteris the collateral price-marked in the lending transaction business, they are considered to be settled in a shortperiod of time.
Margin transaction liabilities are the borrowing from securities finance companies associated with customers’
margin transaction and the amount equivalent to the selling price of securities related to the customer’s margin
trading. Since the former is price-marked and the latter is settled by counter transactions, etc. at the will of thecustomer, they are considered to be settled in a short period of time.
(b) Guarantee deposits received
It is mainly a deposit in derivative transactions, and its book value is regarded as the fair value, assuming that
it will be settled in a short period of time due to the characteristics of being price-marked according to thetransaction. For other deposits from customers, the payment amount when settled at the end of the current fiscal
year (book value) is regarded as the fair value.

26

(Note) 1 Explanation of valuation techniques used for measurement of the fair value and inputs for measurement of
the fair value(1) Trading products(i) Trading securities and otherFor stocks, etc., the closing price or final quoted price of the main exchange is used as the fair value, and it
is mainly classified into the Level 1 fair value.
For bonds, the fair values are measured at the market prices (the Company’s OTC and broker screen, etc.)of the bonds, including those of similar bonds or prices that are reasonably calculated using market priceinformation (trading reference statistics, etc.) and the difference between the market price and the index interest
rate, etc. Some government bonds are classified as Level 1 fair value, and other bonds are classified as Level
2 fair value. However, if the price information necessary to classify it as Level 2 fair value is not available, it
is classified as Level 3 fair value. In addition, the fair value of some bonds is measured using a price calculation
model in the same way as derivative transactions. If the fair value is calculated using only observable inputs,
or if the fair value is calculated using unobservable inputs but its effect is not significant, it is classified as
Level 2 fair value. When the fair value is calculated using significant unobservable inputs, it is classified as
Level 3 fair value.
For exchange traded funds, the closing price or closing quoted price of the main exchange is used as the fairvalue, and it is mainly classified as Level 1 fair value. For non-exchange traded funds, the net asset value(NAV) is used as the fair value, and it is classified as Level 2 fair value.
ii) Derivatives
The fair value of listed derivative transactions is mainly measured at the clearing price or the margin
calculation standard price of the exchange, and is classified into Level 1 fair value. However, if the above priceis not available or if transactions are not executed frequently, it is classified as Level 2 fair value.
Over-the-counter (OTC) derivative transactions include interest rate swaps, currency swaps, equity
derivatives, and credit derivatives. In measurement of the fair value, the present value of expected cash flows
under the assumption of risk-neutral measure commonly used in the market is calculated mainly by the pricecalculation model using the numerical integration method, the finite difference method and the Monte Carlo
method. The pricing model has various inputs such as interest rates, exchange rates, stock prices, volatility,
and correlation coefficients. If the fair value is calculated using only observable inputs, or if the fair value iscalculated using unobservable inputs but its effect is not significant, it is classified as Level 2 fair value. Whenthe fair value is calculated using significant unobservable inputs, it is classified as Level 3 fair value. Inputs
that cannot be observed in the market include long-term swap rates, long-term currency basis, long-term
volatility of stock price, long-term credit spreads and correlation coefficients.
For over-the-counter derivative transactions, their fair values are adjusted to the credit risk and liquidity riskof the counterparty and the Company as necessary.
(2) Securities, private equity and other investments and investment securities
For stocks, the closing price or final quoted price of the main exchange is used as the fair value, and it ismainly classified as Level 1 fair value.
For bonds, the fair values are measured at the market prices (through the Company’s OTC and broker screen,etc.) of those including similar bonds, or the prices that are reasonably calculated based on the fair value
information (such as trading reference statistics) and the difference between the market price and the index
interest rate, etc. Some government bonds are classified as Level 1 fair value, and other bonds are classified as
Level 2 fair value. However, if the price information necessary to classify it as Level 2 fair value is not available,
it is classified as Level 3 fair value.
In addition, the fair value of certain bonds (including convertible bonds) is calculated using credit spreads,
stock price volatility, etc. If the price is calculated using only observable inputs, or if the price is calculated using
unobservable inputs but its effect is not significant, it is classified as Level 2 fair value. When the price iscalculated using significant unobservable inputs, it is classified as Level 3 fair value.
For exchange traded funds, the closing price or final quoted price of the main exchange is used as the fairvalue, and it is mainly classified as Level 1 fair value. For non-exchange traded funds, NAV is used as the fairvalue, and it is classified as Level 2 fair value. Also, investment trusts to which Paragraph 24-9 of the
Implementation Guidance on Accounting Standard for Fair Value Measurement has been applied are not assigned
a level.
27

(3) Derivatives other than trading transactions
It is same as “(1) Trading products (ii) Derivatives”.
(4) Operating loans receivable
They are mainly loans in the banking business and securities-backed loan that are secured by customer’ssecurities in our safe keeping.
For loans in the banking business, the fair value is measured by discounting the total amount of principal andinterest at the interest rate expected when a similar new loan is made, based on the type and period of the loan.
In addition, regarding loans with floating interest rates, their book values are used as the fair value because thefair value approximates the book value as long as the credit status of the borrower does not change significantly
since the loan was made, as the floating interest rate reflects the market interest rate in a short period of time.
However, for certain asset securitization loans, we use the fair value obtained from a third party.
For securities-backed loans, the book value is used as the fair value because the fair value is assumed toapproximate the book value based on the expected repayment period and interest rate conditions.
The fair value of the loans in the investment business whose book value exceeds a certain threshold, and which
is supposed to be repaid mainly from business revenue, are individually evaluated based on their financial
condition, etc. For loan receivables whose collection period has passed a certain number of years, since theallowance for doubtful accounts is calculated based on the estimated disposable amount of collateral, theexpected recovery amount by guarantee, or the present value of the estimated future cash flow. Since the fairvalue is close to the amount booked on the consolidated balance sheets net of the allowance for doubtful accounts,
we use such netted amount as the fair value.
These are classified as Level 3 fair value.
(5) Deposits for the banking businessFor demand deposits, the payment amount when requested on the settlement date (book value) is regarded as
the fair value. In addition, the fair value of time deposits is measured by estimating future cash flows anddiscounting them at a certain discount rate. These are classified as Level 2 fair values.
The discount rate is calculated from the yield curve with our credit spread taken into account.
(6) Bonds payable
Regarding the bonds payable with maturities of more than one year, if the market price (reference statistics
for trading, etc.) is available, the fair value is measured using such market price and classified as Level 2 fairvalue. Even if the market price is not available, the fair value is measured by adjusting the book value to reflect
the changes in interest rates and our own credit spread from the time of issuance. Since our own credit spreadrefers to the latest funding rate and market price level of similar bonds issued by us, etc., this fair value isclassified as Level 2 fair value.
(7) Long-term borrowings
The fair value is measured by adjusting the book value to reflect the changes in interest rates and credit spreadfrom the beginning of the borrowing. Since our own credit spread refers to the latest funding rate and the market
price of similar bonds issued by us, etc., this fair value is classified as Level 2 fair value.

28

(Note) 2 Information on the Level 3 fair value financial instruments recorded at fair value on the consolidatedbalance sheets(1) Quantitative information on significant unobservable inputs
Category

Evaluation methodology

Significant unobservable input

Input range

Expected cash flow discount model

Derivatives
Interest rates / Exchange
rates

under risk-neutral measure

EquityCredit / Other

Swap rate

0.9–4.8%

Currency basis
Stock price volatility(0.8)–(0.04)%
18.6–20.9%

Credit spread
Correlation coefficient

0.1–5.3%(0.18)–0.85

Credit spread

0.1–2.3%

Stock price volatility

11.6–23.1%

Available-for-salesecurities(2) Reconciliation from the beginning balance to the ending balance, unrealized gain and loss recognized in thefiscal year
The breakdown of assets and liabilities, the Level 3 fair values of which are recorded on the consolidatedbalance sheets, and their changes during the period are as follows.
(Millions of yen)
Tradingsecurities andother(Assets)
Beginning balancePrivate equity

Derivatives

and otherinvestments(Net)

Available-forsale securities

Total

10,828

101,514

7,317

34,009153,670832(19,024)––(18,191)

Gain / loss for the current fiscal
year
Recorded in gain and loss (*2)
Purchase, sale, issuance andsettlement
Purchase

29,380

338

7,872

5,000

42,590

Sale
Issuance(23,678)
–

(459)
–

–
–

–
–

(24,138)––(13,405)–(5,000)(18,405)

2,577

–

–

–

2,577

(3,435)(55,321)––(58,756)

Settlement
Transfer to Level 3 fair value(*1, *4)
Transfer from Level 3 fair value(*1, *5)
Change in valuation difference
Ending balance
Unrealized gain / loss on financial
instruments held on the
consolidated balance sheets date

–

–

1,169

3,983

5,152

16,504

13,641

16,35837,992

84,498332(32,429)––(32,097)

which was recorded in gain / loss
for this fiscal year (*3)
*1 Transfers between levels are recognized at the beginning of the period.
*2 Gain and loss related to “Trading securities and other (Assets)”, and “Derivatives (Net)” are included in “Net trading income”.
*3 Unrealized gain / loss on Level 3 financial instruments are not only due to unobservable inputs, but also due to fluctuations inobservable inputs. In addition, many Level 3 financial instruments are economically hedged by financial instruments classified
into other levels (Levels 1 and 2), but the gain and loss of such financial instruments are not included in the above table.
*4 The reason for the transfer from Level 1 or Level 2 to Level 3 is that the quoted price of certain securities has become
unavailable, or the input for the valuation method has become unobservable.
*5 The reason for the transfer from Level 3 to Level 1 or Level 2 is that the quoted price of certain securities has become available,or the input for the valuation method has become observable.
29

(3) Explanation of the fair value valuation process
The Group measures and verifies the fair value of financial instruments held by the trading departments ofeach company in accordance with the basic policy established by the Company. The results of measurement,
including the inputs used in the measurement, are verified by a department independent from the trading
department. The results of these processes for the fair value measurement are reported to the Company from eachcompany, and are controlled.
The Group has established guidelines for the process of approving the pricing model used to measure the fairvalue, and in accordance with these guidelines, a department independent from the department which develops
the pricing model verifies the assumptions and techniques in the model. In addition, we have built a system toadjust the pricing model according to market trends by comparing it with observable market information andalternative models.
(4) Explanation of the effect of changes in significant unobservable inputs on the fair value
Significant unobservable inputs include long-term swap rates, long-term currency basis, long-term stock pricevolatility, long-term credit spreads and correlation coefficients. In measuring the fair value, fluctuations ininterest rates affect expected cash flows and discount rates, and fluctuations in credit spreads affect theprobability of bankruptcy. With regard to volatility, the option value increases (decreases) as the volatility
increases (decreases). There are a wide range of combinations of correlation coefficients among multiple assets,
and the level and direction of fluctuations can vary greatly depending on the combination.
The fair value of bonds (including convertible bonds) is measured using inputs such as credit spreads andstock price volatility, and if the market fluctuates, the fair value will increase or decrease depending on the sumof the effects of the inputs.
The fair value of over-the-counter derivative transactions is measured based on multiple inputs given for eachmaturity or currency. When the market fluctuates, the fair value will increase or decrease depending on the sumof the effects of all inputs. In addition, the impact of each input fluctuation on the fair value is determined by the
product features of each transaction. The unobservable inputs used to measure the fair value of Level 3 financial
instruments are not necessarily independent of each other and may correlate with other inputs. Many of these
relationships are captured through correlation coefficients, and the effects of a wide range of correlation
coefficients between multiple assets increase or decrease the fair value of financial instruments.
The impact on the fair value of Level 3 financial instruments when using alternative assumptions that canreasonably occur for each product category is as follows. It is calculated based on the ranges of significant
unobservable input in (1) above.
(Millions of yen)
Positive fair value
fluctuations

Fair value

Negative fair value
fluctuations

Derivatives

13,641804

804

Available-for-salesecurities

37,992

33

695

30

(Note) 3 Information related to investment trusts for which NAV is considered to be the fair value in accordancewith Paragraph 24-9 of the Implementation Guidance on Accounting Standard for Fair Value Measurement(Millions of yen)

Available-for-sale securities
Beginning balance
Gain / loss for the current fiscal year
Recorded in gain and loss
Purchase, sale and reimbursement
Purchase
Sale
Reimbursement
NAV is considered to be the fair value
NAV is not considered to be the fair value
Change in valuation difference
Ending balance

12,930791
3,932(6,285)–––(614)
10,754(Note) 4 Securities without market prices (such as unlisted stocks) and partnership investments, etc. at the end of
the current fiscal year were as follows. They are not included in assets (2) “Available-for-sale securities.”(Millions of yen)Amounts in the consolidated

Categorybalance sheets

Subsidiary stock and affiliated company stock
Unlisted stock*1
Available-for-sale securities

126,327

Unlisted stock*1
Partnership investment, etc.*2

32,501
169,338*1 Since no market price is available for unlisted stocks, they are not subject to fair value disclosure based on Paragraph 5of “Implementation Guidance on Disclosure about Fair Value of Financial Instruments” (ASBJ Guideline No. 19, March
31, 2020).
*2 Partnership investments, etc., are not subject to fair value disclosure based on Section 24, Paragraph 16 of the
Implementation Guidance on Accounting Standard for Fair Value Measurement.

31Notes to rental properties

1. Situation of rental properties
The Group owns rental office buildings, rental housing and other real estate as well as land and other realestate for redevelopment projects in Tokyo and other areas.
2. Fair values of rental properties
Amounts stated in the consolidated balance sheets as of March 31, 2024, changes during the period and thefair value are as below.
(Millions of yen)
FY 2023
780,718

Beginning balance
Amounts in consolidated balance

Increase or decrease

sheetsduring the period(1,815)Ending balance

778,902

Fair value

920,681(Note 1) The carrying amount on the consolidated balance sheets represents the amount of acquisition cost less accumulated
depreciation.
(Note 2) The fair value as of March 31, 2024 is appraised value or surveyed value by the outside real estate appraiser.
(Note 3) The fair value of the assets for redevelopment projects is not included in the above table, because such asset is part ofa largescale complex development project, and it is very difficult to measure its fair value. The amount recorded on
the consolidated balance sheets for these properties was 11,685 million yen as of March 31, 2024.

Notes to revenue recognition

1. Disaggregation of revenue from contracts with customers(Millions of yen)

Reported segments
RetailRevenue fromcontracts withcustomers
Commission
received:
Other operating
revenue (externalcustomers)(Note)

Asset
Management

Wholesale

Investment

Total

Other

Total

146,244

125,955

83,591

28,603384,395

126,364

510,760

146,244

125,955

83,033

1,705

356,939

1,593

358,532--

558

26,89727,455

124,771

152,227“Lease revenue based on rental contracts” was included and disclosed in “Revenue from contracts with customers”
until the previous fiscal year. However, it is not included in the above table due to changes in separate presentation.

2. Basic information for understanding revenue from contracts with customers
The Group provides a wide range of services and recognizes its main sources of revenue as follows. Contracts
including significant financing components are not included below.
Retail Segment and Wholesale Segment
The Retail Segment provides a wide range of financial instruments and services to mainly individuals andunlisted companies. The Wholesale Segment comprises the Global Markets and Global Investment Banking
segments. The Global Markets segment offers sales and trading services for equities, bonds, foreign exchange, andderivative products mainly to domestic and global institutional investors, business corporations, financial
corporations, public corporations, and others. The Global Investment Banking segment provides a diverse rangeof domestic and global investment banking services, including the underwriting of securities and M&A advisory
services.
In the Retail Segment and Wholesale Segment, mainly domestic and international securities subsidiaries of theCompany recognize brokerage commission; commission for underwriting, secondary distribution and solicitation
32

for selling and others for professional investors; fees for offering, secondary distribution and solicitation for sellingand others for professional investors; and other commission received as revenue from contracts with customers.
Brokerage commission. The Group has obligations to provide trade execution services, etc., based on the
stipulations and provisions of the transactions agreements entered into with customers. As these performanceobligations are satisfied when the Group executes an order, revenues are recognized at the point of execution (at apoint in time). Regarding the typical payment term, payment is received within several days of the execution date,
which is the date the performance obligations have been satisfied.
Commission for underwriting, secondary distribution and solicitation for selling and others for professional
investors. The Group has obligations to provide underwriting and secondary distribution services, etc., based oncontracts with securities issuing companies. As these performance obligations are satisfied when underwriting
conditions for underwriting contracts have been determined and when requirements for the measurement of market
risk by underwriters have been set, revenues are recognized when the relevant business is complete (at a point intime), such as the date the conditions are determined. Regarding the typical payment term, payment is received
between the point, when the performance obligations are satisfied, and the payment date or delivery date to theissuing company, etc.
Fees for offering, secondary distribution and solicitation for selling and others for professional investors. The
Group has obligations to provide offering and secondary distribution services, etc. based on contracts withsecurities underwriting companies. As these performance obligations are satisfied when the application to theofferings, etc., is completed, revenues are recognized when the relevant business is complete (at a point in time),such as the date of the registration offering, etc. Regarding the typical payment term, payment is received between
the date of the registration offering, etc., when the performance obligations are satisfied, and the date of payment
or delivery.
Other commission received includes commission received from a range of services, with the main sources ofrevenue coming from agency fees, M&A-related fees, and investment advisory and trade management fees.
Agency fees. The Group has obligations to provide agency services for the handling of offering and sale, etc.,
based on mainly contracts entered into with investment trust companies. Transaction prices are calculated basedon the net assets, etc., of the investment trust. Since these performance obligations are satisfied when the benefit
is consumed by customers as the Group provides services on a daily basis, revenues are recognized over time.
Regarding the typical payment term, in most cases, payment is received within several days of the fiscal year endof the investment trust, etc.
M&A-related fees. The Group has obligations to provide advisory services including proposals, advice, pricecalculations, and document preparation support. For transaction prices, there are cases where contingency fees are
set in addition to fixed fees, and the amount of consideration may be variable. Regarding the amount ofconsideration when setting contingency fees, normally, as the amount is highly influenced by various factors
beyond the control of the Group, and the Group cannot be certain that it is highly possible that a significant decline
in revenue will not occur, only the fees that have been fixed by the end of the current fiscal year are recognized in
the transaction price. For such fees, revenues are recognized upon completion of the service (at a point in time).
Regarding the typical payment term, payment is received by the end of the month after the month in which theservice is completed. In these contracts, when non-repayable prepaid payments for future services have been
received, revenues are recognized when the Company provides the service.
Investment advisory and trade management fees. The Group has obligations to provide asset management
services based on discretionary investment contracts. Transaction prices are calculated based on the fair value ofthe contract asset balances, the net assets of funds, and excess performance, etc. Since these performanceobligations are satisfied when the benefit is consumed by customers as the Group provides services on a daily basis,revenues are recognized over time. Regarding the typical payment term, payment is received between the reference
date of fee calculation and the end of the following month.
Asset Management Segment
The Asset Management Segment is in charge of setting up and running investment trusts that invest in a rangeof assets, as well as offering investment advice and management services for pensions assets for domestic andglobal institutional investors.
In the Asset Management Segment, mainly via Daiwa Asset Management Co. Ltd., commission received
including management fees, etc., is mainly recognized as revenue from contracts with customers.
33

With regard to management fees, the Group has obligations to provide management services for assets undermanagement based mainly on trust agreements. Management fees are recognized as a certain percentage of net
assets, and accordingly a fee is calculated and received. Since these performance obligations are satisfied when thebenefit is consumed by customers as the Group provides services on a daily basis, revenues are recognized overtime during the investment trust management period.
Regarding the typical payment term, payment is received within several days of the balance sheet date of theinvestment trust,etc.
Investment Segment
The Investment Segment invests in assets such as monetary assets, private equity, real estate, energy, andinfrastructure, and also carries out business centered on maximizing investment returns from existing projects andcreating new investment funds.
In the Investment Segment, investment partnership management fees are mainly recognized as revenue fromcontracts with customers.
With regard to investment partnership management fees, the Group has obligations to provide asset management
services based on partnership contracts, which comprise mainly of management fees and contingency fees. Since
these performance obligations are satisfied when the benefit is consumed by customers as the Group provides
services on a daily basis, revenues from management fees are recognized over time, and calculated every quarter
based on the amount of partnership assets and the total commitment amount. Contingency fees are variableconsiderations recognized at a point in time. When it becomes highly possible that a significant decline in revenue
will not occur, revenues are recognized through calculations based on the excess revenue generated when selling
partnership assets.
Regarding the typical payment term, payment is received for management fees every quarter and for contingency
fees when partnership assets are distributed.
Other
The Group’s other businesses include system consulting and system integration services, mainly through the
Daiwa Institute of Research Ltd. Revenue from contracts with customers is recognized mainly as other operating
revenue.
For the sale of devices within our system development services, revenues are recognized at a point in time when
the device is sold. In our system development services other than the sale of devices, performance obligations are
satisfied when accomplishments are transferred to customers in conjunction with the provision of system
integration and software development services, etc., and accordingly revenues are recognized over time. For
information processing services, investigation services, and consulting services, performance obligations are
satisfied when the benefit is consumed by customers as the Group provides said services, and accordingly revenues
are recognized over time.
3. Information on the amount of revenue for the current fiscal year and after the current fiscal year end date(1) Balances of contract assets and contract liabilities
On the consolidated balance sheets, contract assets and liabilities are recorded under “Notes and accounts
receivable-trade, and contract assets” and “Other current liabilities”, respectively. There are no significant revenue
amounts recognized from the performance obligations which were satisfied (or partially satisfied) in the previous
fiscal years.
The breakdown of contract balances is as follows:(Millions of yen)Contract assets
Contract liabilities
Receivables from contracts with customers

FY2022

34

2,136
4,895
37,500

FY2023

5,184
6,487
47,065

(2) Transaction price allocated to the remaining performance obligations
As of the end of the current fiscal year, the total transaction price allocated to the remaining performanceobligations is 7,010 million yen. The Group expects to recognize the remaining performance obligations as revenue
as per the schedule in the following table. The Group applies practical expedients in noting transaction prices
allocated to the remaining performance obligations and does not note contracts with an initially expected contract
period of one year or less.
(Millions of yen)Transaction price allocated to the remaining performanceobligations
Not later than one year

1,550

Later than one year and not later than two years

1,467

Later than two years and not later than three years

883

Later than three years and not later than four years

492

Later than four years and not later than five years

422

More than five years

2,194

Total

7,010

35

Notes to per share information
Net assets per share
Net income per share

1,086.20 yen
84.94 yen

Other notes

1. Notes to impairment loss
The Group recognized the impairment losses in the current fiscal year for the following asset group.
Location

Use

Business assets,
etc.
Americas
Other
Total
Japan

Impairment losses(Millions of yen)
2,028
1,770
3,799

Assets are grouped in accordance with classifications used for internal management accounting.
As a result of the significant decline in profitability, the book values of certain assets were reduced torecoverable amounts and the amounts of reduction were recorded as impairment losses under extraordinary
losses.
The breakdown of the amount is buildings of 15 million yen, furniture and fixtures of 36 million yen, softwareof 1,976 million yen, and goodwill of 1,770 million yen.
The recoverable amount of buildings, equipment, and software is measured by use value and the recoverable
amount of goodwill is measured by re-evaluated corporate value.

36

Notes to significant subsequent events(Underwriting by the Company as the allottee for new shares issued by Aozora Bank, Ltd.)At the meeting of the Company’s Executive Management Committee held on May 13, 2024, the Company
resolved to form a capital and business alliance (hereinafter the “Capital and Business Alliance”) with Aozora Bank,
Ltd. (hereinafter “Aozora Bank”), and entered into an agreement concerning the Capital and Business Alliance(hereinafter the “Capital and Business Alliance Agreement”). The conditions, etc. for the Company, as the allottee,
to underwrite the new shares issued by Aozora Bank are as follows.
Method of offering, etc.
Third party allotment
Class and number of shares to be underwritten
Common shares: 21,500,000 shares
Amount of payments
2,415.5 yen per share
Total amount of payments
51,933,250,000 yen
Payment date (Note)
May 29, 2024 to July 31, 2024 (planned)
Ratio of the Company’s voting rights for the total
number of issued shares before the underwriting of new –sharesRatio of the Company’s voting rights for the total
number of issued shares after the underwriting of new 15.38%
shares(Note) A third party allotment of new shares to be implemented by Aozora Bank (hereinafter the “Third Party
Allotment”) is subject to the effectuation of a Securities Registration Statement in accordance with the
Financial Instruments and Exchange Act for the Third Party Allotment, the permissions and approvals,
etc. from the relevant authorities necessary for the Third Party Allotment in accordance with applicablelaws, etc. (including the approval of the Company as the bank’s major shareholder pursuant to Article
52-9, Paragraph 1 of the Banking Act) and other conditions precedent agreed in the Capital and Business
Alliance Agreement. Since it is not possible to determine the timing of the permissions and approvals, etc.
from the relevant authorities, a payment period has been set and provided above as the payment date. At
this point, the payment date for the Third Party Allotment is expected to be July 1, 2024.
In the Capital and Business Alliance Agreement, it has been agreed that the Company is to nominate one person
as a candidate for outside director of Aozora Bank.
Subject to the completion of the payment under the Third Party Allotment, Aozora Bank will submit a proposal
for the appointment of one person nominated by the Company to be a director of Aozora Bank at the 91st Ordinary
General Meeting of Shareholders to be held in June 2024.
After the conclusion of the Capital and Business Alliance, Aozora Bank will become an equity-method affiliateof the Company.

37

(Issuance of new shares by Daiwa Asset Management Co. Ltd. with JAPAN POST INSURANCE Co., Ltd. as theallottee)At the meeting of the Company’s Executive Management Committee and at the general meeting of shareholdersof the Company’s consolidated subsidiary Daiwa Asset Management Co. Ltd. (hereinafter “Daiwa AssetManagement”) held on May 15, 2024, it was resolved that Daiwa Asset Management will issue new shares with
JAPAN POST INSURANCE Co., Ltd. as the allottee. The conditions, etc. are as follows.
Method of offering, etc.
Class and number of shares to be issued
Amount of payments
Total amount of payments
Amount of increase in share capital
Payment date

Third party allotment
Common shares: 652,132 shares
80,506 yen per share
52,500,538,792 yen
26,250,269,396 yen
July 1, 2024 (planned)
Planned to be appropriated for investments and loans
and for working capital.

Use of funds
Ratio of the Company’s voting rights for the total
number of issued shares before the issuance of newsharesRatio of the Company’s voting rights for the total
number of issued shares after the issuance of newshares

100%

80%

38

Non-Consolidated Financial Statements
Balance Sheet(Millions of yen)
Fiscal 2023
(As of Mar. 31, 2024)

Account title
AssetsCurrent assets:

179,791

Cash and deposits

46,125

Short-term loans receivable

96,054

Accounts receivable – other

24,508

Accrued income

4,870

Other current assets

8,231

Non-current assets:

2,334,338

Property, plant and equipment:

90,982

Buildings

26,906

Machinery and equipment

2

Furniture and fixtures

2,369

Land

49,351

Construction in progress

12,351Intangible assets:

5,438

Software

3,516

Other

1,922

Investments and other assets:

2,237,917

Investment securities

211,460

Shares of subsidiaries and associates

602,549

Investments in other securities of subsidiaries andassociates

166,641

Long-term loans receivable

1,249,514

Long-term guarantee deposits

4,762

Other

4,738

Allowance for doubtful accounts(1,749)Total assets

2,514,12939

(Millions of yen)
Fiscal 2023
(As of Mar. 31, 2024)

Account title
Liabilities
Current liabilities:

250,686

Short-term borrowings

94,914Current portion of bonds payable

83,000Accrued expenses

4,236

Borrowings secured by securities

36,932

Income taxes payable

466

Provision for bonuses

1,459

Other current liabilities

29,678Non-current liabilities:

1,450,768

Bonds payable

776,852

Long-term borrowings

648,739

Deferred tax liabilities

16,653

Other

8,523

Total liabilities

1,701,455
Net assets

Shareholders’ equity:

756,626

Share capital

247,397

Capital surplus:

228,939

Legal capital surplus

226,751

Other capital surplus

2,187

Retained earnings:

403,359

Legal retained earnings

45,335

Other retained earnings

358,024

Reserve for tax purpose reduction entry
Retained earnings brought forward
Treasury shares

1,860
356,163(123,153)

Deposit for subscriptions of treasury shares
Valuation and translation adjustments

83
49,092

Valuation difference on available-for-sale securities

52,643

Deferred gains or losses on hedges(3,551)

Share acquisition rights

6,956

Total net assets

812,674

Total liabilities and net assets

2,514,12940

Statement of Income
Account title
Operating revenue:
Dividends from subsidiaries and associates
Interest on loans receivable from subsidiaries andassociates
Other
Operating expenses:(Millions of yen)
Fiscal 2023
(Apr. 1, 2023 toMar. 31, 2024)
73,36152,06215,8595,439
39,772

Selling, general and administrative expenses:

23,062

Trading related expenses

3,505

Personnel expenses

7,276

Real estate expenses

1,969

Office expenses

4,097

Depreciation

2,259

Taxes and dues

2,010

Other

1,942

Financial expenses

14,069Other operating expenses

2,639

Operating income

33,589Non-operating income:

11,381Dividend income

5,807

Gain on investments in investment partnerships

3,230

Other

2,343

Non-operating expenses:

971

Bond issuance costs

930

Other

41

Ordinary income

43,998Extraordinary income:

13,676

Gain on sale of non-current assets

6,511

Gain on sale of investment securities

5,959

Gain on sale of shares of subsidiaries and associates
Gain on reversal of share acquisition rights
Other

39
1,164
1

Extraordinary loss:

13,218Loss on valuation of shares of subsidiaries
Loss on sale of investment securities

12,121
7

Other

1,089

Income before income taxes

44,456

Income taxes-current

2,975

Income taxes-deferred(755)

Profit42,23641

Statement of Changes in Net Assets(Apr. 1, 2023 - Mar. 31, 2024)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained
earnings

Item

Balance at the
beginning of theperiodTreasuryshares

Deposits
forsubscripti
ons oftreasurysharesTotalshareholders’equitySharecapitalLegalcapitalsurplus

OthercapitalsurplusLegalretainedearnings

Reservefor tax
purposereduction
entry

Retainedearnings
brought
forward247,397

226,751–

45,335

1,860

358,674(71,522)–808,497

–
–

–
–

–
–

–
–

–
–

(44,746)
42,236––––(44,746)
42,236

–

–

–

–

–

–

(60,012)–(60,012)

–

–

2,187

–

–

–

8,381

–

10,568Changes of items
during the period
Dividends of surplus
ProfitPurchase of treasury
shares
Disposal of treasury
shares
Other

–

–

–

–

–

–

–

83

83

Total changes of items
during the period

–

–

2,187

–

–

(2,510)(51,631)83(51,870)

Balance at the end of
the period

247,397

226,751

2,187

45,3351,860

356,163(123,153)

83

756,626(Millions of yen)
Valuation and translation adjustments
Item

Valuation difference on
Deferred gains or losses Share acquisition rights
available-for-saleon hedges
securities

Balance at the beginning of the period

30,605(2,135)

8,793

22,038(1,415)(1,837)

Total changes of items during the period

22,038(1,415)(1,837)

Balance at the end of the period

52,643(3,551)

6,956

Changes of items during the period
Net changes of items other thanshareholders’ equity

42Notes to the Non-Consolidated Financial Statements
The Non-Consolidated Financial Statements of the Company are prepared in accordance with the Regulations on
Corporate Accounting (Ministry of Justice Order No. 13, 2006).
The figures in the financial statements are expressed in millions of yen, with amounts of less than one million
omitted.

Notes to significant accounting policies

1. Valuation standards and methods for major assets(1) Trading securities
Valued at fair value (cost is determined based on the moving average method).
(2) Held-to-maturity debt securities
Held-to-maturity debt securities are recorded using the amortized cost method.
(3) Subsidiary stock and affiliated company stock
Valued at cost based on the moving average method.
(4) Available-for -sale securities
Available-for -sale securities are recorded at fair value, based on quoted market prices, etc. as of the end of
the fiscal year (net unrealized gains (losses) are booked directly in net assets, and the costs of securities soldare generally calculated based on the moving average method). However, securities without market prices(such as unlisted stocks) and partnership investment, etc. are mainly recorded at cost using the moving averagemethod.
Investments in investment limited partnerships, etc. are stated as “Investment securities” mainly at theinvestment shares of the net asset values of the partnerships based on the partnerships’ financial statements(shares of net unrealized profits and losses on securities held by the partnerships are directly posted into net
assets).
(5) Derivatives
Valued at fair value.
2. Depreciation methods for depreciable assets(1) Property, plant and equipment
The Company computes depreciation of property, plant and equipment based on the straight-line method.
The Company computes depreciation over estimated useful lives as stipulated in accordance with the
Corporation Tax Act of Japan.
(2) Intangible assets, and investments and other assets
Intangible assets, and investments and other assets are amortized based on the straight-line method. The
Company computes amortization over estimated useful lives as stipulated in accordance with the Corporation
Tax Act of Japan. Provided, however, that software used in-house is amortized over internally estimated useful
lives (5 years).
3. Accounting policies for provisions(1) Allowance for doubtful accounts
To prepare for losses arising from bad debts, we provide allowance based on estimated historical default
rate for normal loans, and based on individually assessed amounts for claims with default possibility,
bankruptcy reorganization claims, etc.
(2) Allowance for investment loss
To prepare for losses arising from the shares of subsidiaries, we provide allowance based on estimatedlosses in consideration of the actual situation of the investee company.
(3) Provision for bonuses
To prepare for payment of bonuses to officers and employees, we provide allowance based on the estimatedpayment amount corresponding to the fiscal year ended March 31, 2024 in accordance with the calculation
standards of the Company.
43

4. Other significant items associated with the preparation of Non-Consolidated Financial Statements(1) Accounting methods for deferred assets
Bond issuance costs are all accounted for as expenses when they are incurred.
(2) Accounting methods for hedging
Marked-to-market gains and losses on hedging instruments are principally deferred as net assets until the
profits or losses on the hedged items are realized. Certain eligible interest swaps for hedging purposes are
based on cost basis without being marked-to-market under generally accepted accounting principles in Japan(“Tokurei-shori”). Further, the premium or discount on certain eligible foreign exchange forward for hedging
purposes is allocated to each fiscal term without being marked-to-market under generally accepted accounting
principles in Japan (“Furiate-shori”).
In order to avoid interest rate fluctuation risk and foreign exchange fluctuation risk associated with someof the borrowings and bonds issued, etc., the Company applies hedge accounting using derivatives instruments
such as interest rate swaps, currency swaps and similar transactions.
The effectiveness of hedging is evaluated based upon the correlation between cumulative change in the fairvalue or cash flow of the hedging instrument and that of the hedged item. Hedges exempted from being
marked-to-market under the two accounting treatments described in the first paragraph are judged to pass theeffectiveness tests of hedging with their eligibility of applying those treatments.
(3) Application of Group Tax Sharing System
The Group Tax Sharing System has been adopted.

44Notes to balance sheet

1. Securities transferred
Investment securities of 62,912 million yen were loaned.
2. Allowance for doubtful accounts deducted directly from assets
Investments and other assets, other850

million yen

3. Accumulated depreciation deducted from property, plant and equipment

3,902

million yen

4. Guarantee
Name of the guaranteed

Liabilities guaranteed

Related companies

Derivative liabilities

Good Time Living Co. Ltd.

Lump-sum payment for
occupancy refundable debt

Amount of liabilities
813
10,840Total

11,653

5. Monetary claims and obligations with related companies
Short-term monetary claims
122,239
Long-term monetary claims
1,253,649
Short-term monetary liabilities
87,887Long-term monetary liabilities
37,371

million yen
million yen
million yen
million yen

Notes to statement of income

Transactions with related companies
Operating transactions
Non-operating transactions

82,8901,957

Notes to statement of changes in net assets

Class and Balance of Treasury Shares as of March 31, 2024
Common stock
168,064,760 shares

45

million yen
million yen

million yen

Notes to tax effect accounting

Breakdown of main cause for deferred tax assets and liabilities
Deferred tax assets
Allowance for doubtful accounts
Loss on valuation of shares of subsidiaries and associates
Loss on valuation of investment securities
Excess depreciation
Net operating losses carry-forward
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets:

8,571
6,626
6,301
3,587
1,502
5,680
32,270(26,706)
5,563

million yen

Deferred tax liabilities
Valuation difference on available-for-sale securities
Other
Total deferred tax liabilities

20,727
1,488
22,216

million yen

16,653

million yen

Net deferred tax liabilities

46

Notes to transactions with related parties
Subsidiaries and affiliates, etc.
Class

Name of company

Ratio ofvotingrights(Millions of yen)
Relationship withrelated parties

Lending funds(Note 1)
Receipt ofinterest (Note 1)
Debt financing(Note 3)
Receipt of cash
collateral (Note2)

Lending funds
Debt financing
Receipt of cash
collateral
Lending shares

Subsidiary

Daiwa Securities
Co. Ltd.

Subsidiary

Indirect100.0%

Subsidiary

Daiwa Investment
Management Inc.

Direct100.0%

Subsidiary

Daiwa
International
Holdings Inc.

Subsidiary

Daiwa Energy &Infrastructure Co.
Ltd.

Indirect100.0%

Subsidiary

Daiwa AssetManagement Co.
Ltd.

Direct100.0%

Direct100.0%

Amount234,024
8,721

Account title
Long-term loans
receivable
Short-term loans
receivable

Endingbalance
577,592
81,514

1,583

Accrued income

601

40,562Long-term
borrowings

30,000Borrowings
secured by
securities

36,932

Directors holdconcurrent
positionsPayment ofinterest (Note 2)

215

Counter-party ofderivativetransactions

Lending shares(Note 2)

62,912

Accrued income

04

Accrued expenses

2

Receipt ofpremium charges(Note 2)Derivativetransactions(Notes 4, 5)

Direct100.0%

Daiwa PI Partners
Co. Ltd.

Transaction

Lending funds(Note 1)
Receipt ofinterest (Note 1)
Receipt ofinterest (Note 1)

Lending funds

Lending funds
Directors holdconcurrent
positionsLending funds
Directors holdconcurrent
positionsLending funds
Directors holdconcurrent
positions
Debt financing
Directors holdconcurrent
positions47-

19,008
1,323
889

Other current
assets (derivative
assets)Investments andother assets Other(derivative assets)
Other current
liabilities(derivative
liabilities)
Other non-current
liabilities(derivative
liabilities)
Accrued income
Accrued expenses
Long-term loans
receivable
Short-term loans
receivable
Long-term loans
receivable

2
17

379

1,377
422
286
87,5003,600
63,900Lending funds(Note 1)

16,100Long-term loans
receivable

290,440

Lending funds(Note 1)

116,242

Long-term loans
receivable

143,295

Receipt ofinterest (Note 1)

3,839

Accrued income

280

Debt financing(Note 3)

19,533

Short-termborrowings

Payment ofinterest (Note 3)

023,400ClassName of company

Ratio ofvotingrights

Subsidiary

Daiwa Securities
Realty Co. Ltd.

Direct100.0%

Subsidiary

Fintertech Co. Ltd.

Direct80.0%(Millions of yen)
Relationship withrelated parties

Transaction
Lending funds(Note 1)
Receipt ofinterest (Note 1)

Lending funds

Lending funds
Directors holdconcurrent
positions

Amount61,105748

Account title
Long-term loans
receivable
Short-term loans
receivable

Net assets per share
Net income per share

574.91 yen
29.51 yen

48

3,750

12,693Long-term loans
receivable

23,910Receipt ofinterest (Note 1)

301

Short-term loans
receivable

7,070

Notes are omitted, because the revenue subject to the Accounting Standard for Revenue
Recognition is immaterial.

Notes to per share information

61,255

Lending funds(Note 1)

Terms and conditions of transactions and the related policies for determining them
(Note 1) For the amount of loans, we use the average of month-end balances for short-term loans
receivable, and the loan amount for long-term loans receivable.
Interest rates on loans receivable are determined in consideration of market interest
rates. No collateral is obtained.
(Note 2) For the amount, we use the fair value as of the end of the fiscal year ended March 31,
2024 for lending shares and the average of month-end balances of cash collateral.
The premium charges rate for lending shares and interest rates on cash collateral are
determined based on the market rate.
(Note 3) For the amount of loans, we use the average of month-end balances for short-termborrowings, and the borrowing amount for long-term borrowings.
Interest rates on borrowings are determined in consideration of market interest rates. No
collateral is pledged.
(Note 4) We omit the description of the transaction amount, because these are repeatedtransactions.
(Note 5) Terms and conditions of these transactions are determined in consideration of market
rates.

Notes to revenue recognition

EndingbalanceNotes to significant subsequent events(Underwriting by the Company as the allottee for new shares issued by Aozora Bank, Ltd.)At the meeting of the Company’s Executive Management Committee held on May 13, 2024, theCompany resolved to form a capital and business alliance (hereinafter the “Capital and Business
Alliance”) with Aozora Bank, Ltd. (hereinafter “Aozora Bank”), and entered into an agreement
concerning the Capital and Business Alliance (hereinafter the “Capital and Business AllianceAgreement”). The conditions, etc. for the Company, as the allottee, to underwrite the new sharesissued by Aozora Bank are as follows.
Method of offering, etc.
Third party allotment
Class and number of shares to be underwritten
Common shares: 21,500,000 shares
Amount of payments
2,415.5 yen per share
Total amount of payments
51,933,250,000 yen
Payment date (Note)
May 29, 2024 to July 31, 2024 (planned)
Ratio of the Company’s voting rights for the total
number of issued shares before the underwriting of new –sharesRatio of the Company’s voting rights for the total
number of issued shares after the underwriting of new 15.38%
shares(Note) A third party allotment of new shares to be implemented by Aozora Bank (hereinafter the“Third Party Allotment”) is subject to the effectuation of a Securities Registration
Statement in accordance with the Financial Instruments and Exchange Act for the Third
Party Allotment, the permissions and approvals, etc. from the relevant authorities
necessary for the Third Party Allotment in accordance with applicable laws, etc. (including
the approval of the Company as the bank’s major shareholder pursuant to Article 52-9,
Paragraph 1 of the Banking Act) and other conditions precedent agreed in the Capital andBusiness Alliance Agreement. Since it is not possible to determine the timing of thepermissions and approvals, etc. from the relevant authorities, a payment period has been
set and provided above as the payment date. At this point, the payment date for the Third
Party Allotment is expected to be July 1, 2024.
In the Capital and Business Alliance Agreement, it has been agreed that the Company is tonominate one person as a candidate for outside director of Aozora Bank.
Subject to the completion of the payment under the Third Party Allotment, Aozora Bank willsubmit a proposal for the appointment of one person nominated by the Company to be a director of
Aozora Bank at the 91st Ordinary General Meeting of Shareholders to be held in June 2024.
After the conclusion of the Capital and Business Alliance, Aozora Bank will become an equitymethod affiliate of the Company.

49

(Issuance of new shares by Daiwa Asset Management Co. Ltd. with JAPAN POST INSURANCE Co.,
Ltd. as the allottee)
At the meeting of the Company’s Executive Management Committee and at the general meetingof shareholders of the Company’s consolidated subsidiary Daiwa Asset Management Co. Ltd.
(hereinafter “Daiwa Asset Management”) held on May 15, 2024, it was resolved that Daiwa AssetManagement will issue new shares with JAPAN POST INSURANCE Co., Ltd. as the allottee. The
conditions, etc. are as follows.
Method of offering, etc.
Class and number of shares to be issued
Amount of payments
Total amount of payments
Amount of increase in share capital
Payment date
Use of funds
Ratio of the Company’s voting rights for the total
number of issued shares before the issuance of newsharesRatio of the Company’s voting rights for the total
number of issued shares after the issuance of newshares50

Third party allotment
Common shares: 652,132 shares
80,506 yen per share
52,500,538,792 yen
26,250,269,396 yen
July 1, 2024 (planned)
Planned to be appropriated for investments and loans
and for working capital.
100%

80%

Independent Auditor’s Report

May 15, 2024

To the Board of Directors of Daiwa Securities Group Inc.:
KPMG AZSA LLC
Tokyo Office, Japan
Kenji Tanaka
Designated Limited Liability
PartnerEngagement Partner
Certified Public Accountant
Tomomi Mase
Designated Limited Liability
PartnerEngagement Partner
Certified Public Accountant
Koji Fukai
Designated Limited Liability
PartnerEngagement Partner
Certified Public Accountant

OpinionWe have audited the financial statements, which comprise the balance sheet, the statement ofincome, the statement of changes in net assets, a summary of significant accounting policies andother explanatory information, and the accompanying supplementary schedules (“the financial
statements and the accompanying supplementary schedules”) of Daiwa Securities Group Inc.
(“the Company”) as at March 31, 2024 and for the year from April 1, 2023 to March 31, 2024 inaccordance with Article 436-2-1 of the Companies Act.
In our opinion, the financial statements and the accompanying supplementary schedules referred
to above present fairly, in all material respects, the financial position and the results of operationsof the Company for the period, for which the financial statements and the accompanying
supplementary schedules were prepared, in accordance with accounting principles generally
accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements and the Accompanying Supplementary Schedules section of
our report. We are independent of the Company in accordance with the ethical requirements thatare relevant to our audit of the financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
The other information comprises the business report and its supplementary schedules.
Management is responsible for the preparation and presentation of the other information. The
audit committee is responsible for overseeing the directors’ performance of their duties with51

regard to the design, implementation and maintenance of the reporting process for the otherinformation.
Our opinion on the financial statements and the accompanying supplementary schedules does notcover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements and the accompanying supplementaryschedules, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements and theaccompanying supplementary schedules, or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit Committee for the Financial Statements andthe Accompanying Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements
and the accompanying supplementary schedules in accordance with accounting principles
generally accepted in Japan, and for such internal control as management determines is necessary
to enable the preparation of financial statements and the accompanying supplementary schedules
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements and the accompanying supplementary schedules,
management is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern in accordance with accounting
principles generally accepted in Japan.
The audit committee is responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements and the Accompanying
Supplementary Schedules
Our objectives are to obtain reasonable assurance about whether the financial statements and theaccompanying supplementary schedules as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Misstatements canarise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements and the accompanying supplementary schedules.
As part of our audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:

Identify and assess the risks of material misstatement of the financial statements and theaccompanying supplementary schedules, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The selection and application of audit
procedures depends on the auditor’s judgment.

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the objective of the audit is not
to express an opinion on the effectiveness of the Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to52continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
statements and the accompanying supplementary schedules or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.


Evaluate whether the presentation and disclosures in the financial statements and theaccompanying supplementary schedules are in accordance with accounting standards
generally accepted in Japan, the overall presentation, structure and content of the financial
statements and the accompanying supplementary schedules, including the disclosures, andwhether the financial statements and the accompanying supplementary schedules represent
the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the audit committee regarding, among other matters, the planned scope
and timing of the audit, significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company which
are required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Notes to the Reader of Independent Auditor’s Report:
This is an English translation of the Independent Auditor’s Report as required by the Companies
Act of Japan for the conveniences of the reader.

53