Daiwa Securities Group Annual Report 2012 Wholesale Division Action Plan for FY2012 Key Events of FY2011 Quarterly Earnings Trends in FY2011 24 Other Information Corporate Summary Executive Messages Business Strategy The Wholesale Division consists of the “Global Markets” business, which provides high-quality financial services and products  such as stocks, bonds, currencies and derivatives brokerage to institutional investors, and the “Global Investment Banking”  business, which underwrites stock and bond issues for corporations and provides IPO and M&A advisory services. The Division  has established a solid platform for operations including offices in the four main financial centers of Tokyo, Hong Kong,  London and New York. Daiwa Securities has extensive experience and knowhow, and has earned a good reputation for  providing financial solutions to global clients including corporations, other financial institutions and institutional investors. 1. Acquire IB deals by utilizing global network cored on Asia  including Japan 2. Provide timely products to link firm client base and markets  environments 3. Develop business focused on client trading flows with  priorities in capital efficiency and based on appropriate risk  management system Business Conditions and Earnings Results for FY2011 began to recover and interest and exchange rates stabilized, trad- ing profits improved and earnings improved dramatically compared  with the start of the fiscal year. During FY2011, the Group took proactive steps to improve earnings  in the Global Markets business including the transfer of Synthetic  Prime Brokerage* operations and the downsizing or closure of  other unprofitable businesses. On the other hand, in order to bolster  stock trading capabilities in Asia, including Japan, the Group estab- lished a Pan-Asian research team that can offer comprehensive  and effective coverage of Japanese and Asian equities. In prepara- tion for the merger of Daiwa Securities and Daiwa Securities Capital  The Wholesale Division was severely affected by harsh business  conditions, as equity financing both in Japan and overseas con- tracted following the East Japan Earthquake, and as the debt crisis  in Europe depressed trading profits. During FY2011 the Global  Markets business experienced a 15.4% drop in net operating  revenues, to ¥52.0 billion, and generated an ordinary loss of ¥54.4  billion. The Global Investment Banking business also saw net oper- ating revenues decline 13.6%, to ¥26.5 billion, and posted a ¥14.2  billion ordinary loss. In the fourth quarter, however, restructuring  efforts and personnel reductions at overseas offices, domestic  improvements in management efficiency and IT-related cost-cutting  greatly improved the profit structure. As major global stock markets  Global Investment Banking (¥ billion) Global Markets (¥ billion) 1Q 2Q 3Q 4Q 0 10 20 30 -20 -10 GLYPH<H18549>  SG&A expenses  GLYPH<H18549>  Net operating revenues  Ordinary loss FY2011 1Q 2Q 3Q 4Q -5 0 5 10 15 GLYPH<H18549>  SG&A expenses  GLYPH<H18549>  Net operating revenues  Ordinary loss FY2011 Financial Section Management Systems & CSR