[Q1 FY2026 Earnings Deep Dive] Daiwa Securities Group Inc. Achieves 88 Billion Yen in Ordinary Profit, Doubling Year-on-Year Behind Broad-Based Growth Across All Segments

Daiwa Securities Group Inc.'s Q1 FY2026 earnings (April–June 2025) mark a powerful start to the final year of its medium-term management plan. Despite prevailing market uncertainties, the Group successfully captured robust corporate and investor activity, achieving significant revenue and profit growth across all business segments .

This report provides a detailed analysis of the Group's overall performance, segment-specific results, the trajectory of base profits, and future growth strategies, based on the officially released financial materials.

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1. Earnings Highlights: Key Performance Indicators and Overview

First, let us examine the consolidated financial summary for the Group. In the first quarter, net operating revenue reached 220.3 billion yen (+42.0% YoY) , ordinary profit hit 88.0 billion yen (+101.5% YoY) , and profit attributable to owners of the parent was 56.4 billion yen (+80.6% YoY) , marking a substantial increase in both revenue and profit. The annualized ROE (Return on Equity) surged to 12.7% .

[Significance of the Slide and Data Background]

The slide above (Earnings Highlights) is the most critical document for grasping the primary achievements of this quarter at a glance . Of particular note is that all major segments—Wealth Management (WM), Asset Management (AM), and Global Markets & Investment Banking (GM&IB)—achieved significant profit growth compared to the same period last year. Furthermore, as noted at the end of the presentation, the acquisition of all shares of ORIX Bank (making it a subsidiary) has been completed , creating a structure poised for further earnings upside as it is integrated into consolidated results from the second quarter onward.

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2. Structural Reform and Expansion Pace of Base Profit

Daiwa Securities Group aims to transition toward a stable earnings structure less susceptible to market fluctuations, setting the expansion of "Base Profit" (the sum of ordinary profit from the WM, Securities AM, and Real Estate AM segments) as a key performance indicator (KPI).

In Q1, Base Profit reached 62.8 billion yen (+83.8% YoY, +15.5% QoQ) . This progress is well ahead of the medium-term management plan's annual target of 150 billion yen , demonstrating a steady qualitative transformation of the Group's revenue base.

[Significance of the Slide and Data Background]

The slide above (Consolidated Ordinary Profit and Base Profit Trends) is core data that underpins the Group's earnings stability and long-term growth story . Looking at the multi-year trend, it is clear that quarterly base profit is on a steady upward trajectory. In particular, the accumulation of balance-based revenue in the WM segment and the expansion of assets under management (AUM) in the AM segment have established a sound structure where the majority of consolidated ordinary profit (88.0 billion yen) is supported by stable base profit (62.8 billion yen).

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3. Detailed Segment Analysis

Below, we delve into the initiatives and achievements of each segment.

(1) Wealth Management (WM) Segment

The WM segment reported net operating revenue of 88.2 billion yen (+40.3% YoY) and ordinary profit of 37.2 billion yen (+88.9% YoY) .

[Significance of the Slide and Data Background]

The WM segment slide illustrates how Daiwa Securities is capturing and monetizing assets amidst the "from savings to investment" trend . Bolstered by a favorable stock market, equity trading volume expanded, while inflows into wrap account services and equity investment trusts accelerated as investors sought hedges against inflation. Consequently, "balance-based revenue" derived from customer asset balances reached 35.8 billion yen , a record high. The fixed-cost coverage ratio via balance-based revenue rose to 125.7%, indicating robust cost resilience.

• Daiwa Securities (WM Division) : Contracted assets for wrap account services reached a record high of 6.765 trillion yen . Sales of equity investment trusts also remained high at 582.2 billion yen.
• Daiwa Next Bank : Collaboration with Daiwa Securities drove deposit growth, with balances expanding to 5.3 trillion yen . As policy rates rose, interest margins widened, leading to significant growth in both fund-related income and ordinary profit (72 billion yen, +66.7% YoY).

(2) Asset Management (AM) Segment

The AM segment's ordinary profit reached a record high of 30.3 billion yen (+105.5% YoY) .

• Securities AM (Daiwa Asset Management, etc.) : Driven by strong investment performance and fund inflows, AUM for public investment trusts surpassed 43 trillion yen (a record high) . Ordinary profit doubled to 15.7 billion yen (+109.0% YoY) .
• Real Estate AM : With the steady accumulation of AUM, the FY2030 target of 1.8 trillion yen was achieved ahead of schedule (ending the quarter at 1.81 trillion yen). Contributions from property sales and REIT-related income helped maintain ordinary profit at 9.8 billion yen (+41.8% YoY).
• Alternative AM : Due to capital gains from the exit of certain investments, ordinary profit saw a sharp recovery to 4.8 billion yen (turning profitable from a loss in the same period last year).

(3) Global Markets & Investment Banking (GM&IB) Segment

The GM&IB segment showed remarkable growth, with net operating revenue of 76.5 billion yen (+53.6% YoY) and ordinary profit of 22.7 billion yen (+354.0% YoY) .

• GM (Global Markets) : Flows from institutional investors and WM clients remained strong for both Japanese and foreign equities. Successful positioning that captured market volatility led to a significant increase in equity revenue to 28.7 billion yen (+84.0% YoY) .
• GIB (Global Investment Banking) : The firm secured equity deals such as large-scale POs and CBs (JX Metals, Japan Airlines, Advantest, etc.), as well as debt deals including corporate and benchmark bonds. M&A advisory also contributed through large cross-border and organizational restructuring deals, resulting in an ordinary profit of 3.2 billion yen (+262.4% YoY) .

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4. Cost Structure, Overseas Business, and Financial Foundation

While revenue expanded rapidly, cost management and financial soundness remained stable.

• Selling, General and Administrative (SG&A) Expenses : SG&A expenses for the quarter were 142.8 billion yen (+3.3% QoQ, +20.0% YoY) . Although performance-linked bonuses, wage increases, and transaction-related fees rose, these were controlled at a level below the revenue growth rate (+42.0% YoY).
• Overseas Business : Ordinary profit reached a record high of 13.1 billion yen (+244.7% YoY) . While M&A remained steady in the European market, the expansion of equity revenue in the U.S. and Asia-Oceania regions served as a powerful driver.
• Financial Foundation : Consolidated total assets stood at 39.8672 trillion yen , with net assets of 2.0773 trillion yen . The consolidated total capital adequacy ratio under Basel III regulations was 20.06% , and the Tier 1 ratio was 20.00% , maintaining high financial soundness well above regulatory requirements.

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5. Summary and Future Outlook

The Q1 FY2026 results for Daiwa Securities Group are a testament to the successful synergy between the tailwinds of Japan's "Asset Management Nation" initiative and the Group's strategic shift toward a stock-based business model (Base Profit).

Key points to watch moving forward include:

1. Synergies from ORIX Bank Integration : The impact of incorporating deposit bases and loan assets into the Group's financial and WM businesses starting in Q2.
2. Sustainability of Base Profit Growth : Whether the expansion of fund wrap and investment trust balances, currently at record levels, will continue and by how much it will exceed the annual target of 150 billion yen.
3. Adaptability to Market Environment : Whether the GM and WM segments can maintain high levels of profitability by flexibly responding to domestic and international interest rate trends and stock market volatility.

The overall growth story and the trajectory of KPIs across each business are extremely favorable, confirming that the Group is making solid progress toward achieving its medium-term management plan.