content_image/181061.jpg content_image/181060.jpg
## Q5 According to the plan, you intend to meet the second basic policy of “Achieve client based high- quality earnings growth” by channeling resources into the Retail and Asset Management businesses. How, exactly, is this expected to work? 

A.  There are actually three specific strategies involved. First of all, we will “create a unique business model with synergies between securities and banking services.”  This strategy is really our top priority, in terms of fostering growth for the “new” Daiwa Securities. By entering the banking sector, the Daiwa Securities Group has opened the door to a lot of new possibilities. We can now offer retail customers a very broad and flexible lineup of products and services, from savings-type accounts with guaranteed principal to higher-risk investment products. This gives the Group access to many customers who are hard to reach through the sales channels used by securities companies. Daiwa Securities can now approach customers with savings accounts as well as show them other ways to manage their money, thus expanding the base of customers in our securities business. 

Meanwhile, we will broaden the product and service lineup to include foreign currency-denominated deposits, and we will enhance our service through convenient online account service and personal service at one of the Group’s sales offices. The Group is developing a business model to link banking and securities operations that will offer customers a single portal to any and all financial services. For example, customers who open a savings account will also be able to conduct stock transactions from that account, thus promoting a shift of assets from savings to more investment-oriented products. 

By creating a business model that fosters synergy between securities and banking operations, the Daiwa Securities Group can offer Japanese individuals more latitude to manage their assets effectively, raising awareness of equity investment and international diversification of investments. I believe that it is our mission to take the lead in this process. 

The second strategy is to “strengthen earnings capacity of the asset management business.”  We concentrated on shifting the Daiwa Securities Group’s human resources into the two companies that handle the 

## Return to Profitability by Pursuing Management Efficiencies (Focus of execution in the first fiscal year) 

 Steadily implement the plan to reduce SG&A 

 Realize greater organizational efficiencies by shifting personnel from the middle- and back-offices to the front division 

Reduce base SG&A from the beginning of FY2011 by more than 60 billion yen. 

 Have already enhanced organizational efficiencies in Japan and reduced headcount by a total of 500 overseas in line with the size reduction / exit from unprofitable businesses / branches. 

 Base SG&A at under 320 billion yen for FY2014. 

<img src='content_image/181061.jpg'>

* Base SG&A: Consolidated SG&A assuming ordinary income of 0 

## SG&A Reduction 

## Efforts to Reduce Base SG&A* 

Continue to shift middle- and back-office personnel to the front division by eliminating redundancies and reorganizing around the launch of the “new” Daiwa Securities. 

 Personnel shift from 2,040 to 1,500 was executed well ahead of the initial plan (to be completed over three years by April 2014) and was completed by April 2012. 

## Trends in Number of Middle- and Back-office Personnel 

<img src='content_image/181060.jpg'>

## Personnel Shifts 

