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## <Net Gains/Losses on Trading> 

Net trading gains decreased by 14.1% year on year, to ¥79.4 billion. Due to weak stock market conditions worldwide, trading gains and net financial income on a managerial accounting basis in the Equity Division declined by 41.8%, to ¥16.0 billion. Trading gains and net financial income on a managerial accounting basis in the Bond Division were affected by a drop in sales of foreign currency- denominated bonds to individual investors, and by increased hedge costs due to yen appreciation. As a result, this income fell 11.7% year on year, to ¥72.0 billion. Exiting some existing private equity positions to take profits produced a ¥2.0 billion net gain on private equity and other investments—a significant improvement over the previous year. 

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Note: Revenues from equity and bond trading divisions have not been audited by an independent auditor. 

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Note: Revenues from equity and bond trading divisions have not been audited by an independent auditor. 

## <Selling, General and Administrative (SG&A) Expenses, Ordinary Income and Net Income> 

Overall SG&A expenses were reduced by 1.2% year on year, to ¥359.7 billion. Cost-cutting plans made progress, with trading- related expenses, and particularly advertising expenses, reduced 2.2%, to ¥68.9 billion. Personnel expenses declined 1.2% year on 

year, to ¥158.3 billion. However, investment in new systems to support the launch of Daiwa Next Bank elevated depreciation expenses by 1.8%, to ¥39.9 billion. After adjustment for net non- operating income/expenses, the Group posted a consolidated ordinary loss of ¥12.2 billion. 

The Group posted ¥39.7 billion in extraordinary gains including gain on negative goodwill from the consolidation of Daiwa Office Investment Corporation, as a consolidated subsidiary. Business restructuring costs, impaired asset write-offs and losses on the disposal of fixed assets generated a total extraordinary loss of ¥44.3 billion. After income taxes and minority interests, the Group posted a consolidated net loss of ¥39.4 billion. 

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Note: Quarterly figures have not been audited by an independent auditor. 

