Daiwa Securities Group Inc.

Business Details

Serves primarily domestic individual investors and unlisted corporations, offering a broad range of financial products and services. Main revenue sources are fees from asset management-related products and services, and margin income earned from the deployment of deposits raised by Daiwa Next Bank. The division is driving expansion of balance-based revenue centered on Wrap Account Service (Fund Wrap), investment trusts, and foreign currency deposits, and is positioned as a key contributor to "base profit" under the group's medium-term management plan.

Recent Overview

Net operating revenues up 15.6% and ordinary income up 38.9% on higher equity revenue and sustained high level of wrap account contracts

In FY2026 (ending March 2026), equity-related revenue mainly increased due to more active market investment activity and deepening of total asset consulting. In addition, contract amounts and net increases in Wrap Account Service remained at high levels, resulting in net operating revenues of ¥295,788 million, up 15.6% year on year, and ordinary income of ¥112,033 million, up 38.9% year on year. As a subsequent event, the company decided that its wholly owned subsidiary Daiwa Next Bank would make ORIX Bank Corporation a wholly owned subsidiary (acquisition consideration of approximately ¥370 billion, expected to be completed by October 2026), which is expected to substantially strengthen lending and trust functions.

Key Products

Growth Drivers

• Expansion of investment trust and wrap account balances driven by the accelerating "shift from savings to investment" trend triggered by the introduction of the new NISA program
• Continued expansion of balance-based revenue through sustained high levels of Wrap Account Service contract amounts and net increases
• Growth in Daiwa Next Bank's deposit balance and increased margin income amid a rising interest rate environment
• Fundamental strengthening of lending and trust functions and deepening of total asset consulting capabilities through making ORIX Bank a wholly owned subsidiary
• Expansion of the customer base through comprehensive business alliances with Japan Post Bank, The Shikoku Bank, The Iwate Bank, and others
• Capturing affluent and corporate clients through expansion of the investment trust and other product lineup targeting alternative assets

Risks

• Impact on customers' investment activity from fluctuations in domestic and overseas financial markets and economic conditions (risk of reduced fee income during market downturns)
• Impact of changes in the interest rate environment on Daiwa Next Bank's margin income
• Intensifying competition for customer acquisition with rival securities firms, banks, and fintech companies
• Revenue volatility depending on the effectiveness of product development, underwriting conditions, and sales strategies tailored to customer needs
• Risk of market deterioration due to geopolitical risks (Russia-Ukraine situation, Middle East situation) and tariff policies under the Trump administration
• Integration risk associated with making ORIX Bank a subsidiary and uncertainty over whether the acquisition price (approximately ¥370 billion) will be matched by commensurate profit contribution