This is Seiji Nakata, President and CEO of Daiwa Securities Group. Today's management strategy update will focus on the future vision of our group. Let me begin. Please refer to page 4 of the document. First, let us review the market environment. The global economy reached a major turning point during the last fiscal year. This was instigated by Russia's invasion of Ukraine, global inflation, a shift in the long-standing monetary policy, the rapid depreciation of the yen, and financial instability originating in Europe and the US in March. The securities and financial markets have been very volatile over the past year. In particular, a combination of factors caused market turbulence and a sense of uncertainty about the future emerged. As a result, investor sentiment deteriorated even more than index fluctuations. Please turn to page 5.
In the face of such an adverse environment, the group's consolidated ordinary income declined to JPY 86.9 billion. Looking at quarterly trends, consolidated ordinary income bottomed out in Q2 and began to recover. In Q4, the group secured consolidated ordinary income of JPY 30.8 billion. The global investment banking, asset management, and investment division performed well, covering the weak performance of the global markets division. The retail division maintained a highly stable performance. We have been working to establish a profit structure that is less susceptible to the market environment. We are pleased to report that the transition to an asset management business model and strengthening of our hybrid strategy are steadily yielding positive results. The retail division's asset-based revenues for Q4 was JPY 20.2 billion, which accounted for 51.2% of the retail division's total revenues.
The growth of asset-based revenues has been slowed by market value factors, such as share prices. The pace of net increase in Fund Wrap, the core of stock-related assets, exceeded the midterm plan projection. Hybrid-related ordinary income for the full year has expanded to JPY 45 billion. Please turn to page 6. This is the progress of improvement in revenues. We have achieved our cost reduction target of JPY 30 billion from the previous midterm plan by the end of FY 2022, one year ahead of our schedule. Going forward, we will work to achieve additional cost reductions of JPY 7.5 billion in FY 2023, and an additional JPY 3 billion in FY 2024 and beyond, for a total of more than JPY 10 billion. The group as a whole reduced costs by approximately JPY 6.5 billion in FY 2022.
The main reduction items are, in the retail division, relocation of branches to upper floors of buildings, consolidation of middle back functions. In the wholesale divisions, the number of middle and back office personnel were reduced as a result of the transfer of the bonds and CB trading book in London to Tokyo. We are aggressively investing in IT to improve customer convenience and operational efficiency. IT expenses are on a gradual upward trend. In order to achieve thorough company-wide cost control, there is no goal for cost reduction. We will continue our efforts without sanctuary and always with a fresh perspective. As shown on the right, we have achieved our goal of 1,100 people for the strategic shift of middle and back office personnel against the backdrop of digitalization.
The personnel shift will contribute to the expansion of our top line. It has also led to cost reductions by curbing the use of temporary workers and new external hires. Please turn to page 7. The table on the right shows the momentum of each division toward achieving the targets set at the time of the midterm business plan, as shown in the previous briefing. For example, the retail division is marked with a circle. This indicates that the ordinary profit target of JPY 40 billion for FY 2023 is within the target range. We expect to achieve the target level through steady growth in asset-based revenues, backed by an increase in the balance of wrap accounts and a recovery in flow revenues. Asset management and investment divisions are showing that they are generally on track to achieve their targets.
On the other hand, global markets is shown as black triangle. Going forward, we expect a recovery in flow and trading position revenues as a result of higher volatility in interest rates and exchange rates. However, the current business environment is more challenging than we had initially anticipated, and we expect to see a downward swing from our target figures. In the bottom line, in other and adjustments, Daiwa Next Bank expects a significant increase in profit on the back of higher interest margins on fund management, reflecting the rise in global interest rates. The contribution of profits from various funds in which Daiwa Next Bank has invested as part of the expansion of fund-related business, is expected to be larger than initially expected.
The goal of JPY 200 billion or more in consolidated ordinary income, as stated in our midterm management plan, is a challenging target given the current business environment. Our business portfolio is diversified, and some segments are outperforming the target. The market environment is turning around, as both the Nikkei Stock Average and TOPIX have reached new highs since the burst of the bubble economy, and have run up to levels not seen in 33 years. The driving force behind this trend is the inflow of funds from overseas. In April and through the third week of May, the net buying of Japanese stocks by foreign investors exceeded JPY 5.5 trillion. This is a significant net buying pace, similar to the start of the Abenomics market that began at the end of 2012.
As a background, a combination of factors has been pointed out: relatively cheap valuations, economic resumption post the pandemic, expectations of sustained wage growth, management efficiency of companies in response to TSE's request for a correction of PBR below one times, aggressive shareholder returns, and others. Foreign investors are generally sensing a turn in the tide of the Japanese stock market. We believe that buying of Japanese equities within an awareness of the fear of missing out will continue. Therefore, we believe that there is an opportunity for both retail and wholesale to significantly improve their performance. In fact, a look at the current situation shows that both divisions are performing well. In particular, retail is off to a strong start in terms of both flow and asset-based revenues.
In any case, we are committed to achieving results that are appropriate for the final year of the mid-term management plan. Please turn to page 8. Profits from the hybrid business are growing steadily. In FY 2022, we generated JPY 45 billion, 3x the JPY 15 billion we generated in FY 2018. We expect this to grow to more than JPY 50 billion in FY 2023, and even more towards 2030. The securities business is inevitably affected by market volatility, and performance fluctuates widely. Therefore, under our hybrid strategy, we aim to stabilize the group's performance by strengthening businesses that have a low correlation with the securities business and are expected to grow in the future. Looking at the results for the last fiscal year, real estate asset management and Daiwa Next Bank grew stably.
Various fund businesses, such as Daiwa Energy & Infrastructure, venture capital, private equity, and business succession, have steadily contributed to profits after a period of upfront investment and J-curve effect. Going forward, we will continue to pursue stable earnings growth by further strengthening our hybrid businesses. Please turn to page 10. From here, I would like to present our vision for the future and our strategy to achieve it. First of all, on March 31st, TSE announced action to implement management that is conscious of cost of capital and stock price. I would like to share with you our basic approach to improving our PBR. Our PBR is currently around 0.65x , as stated here. PBR is equated to ROE times PER. ROE is the actual financial performance, and PER is the market expectation.
We should aim to achieve these goals: first, increase in ROE, and the second, reduce the cost of capital, which is a component of PER, and number three, increase the expected perpetual growth rate. To this end, we have been working for six years to shift to an asset management business model and a hybrid strategy as our management policy. We have been working to realize the aforementioned three initiatives. In the retail division, we have worked to increase asset-based revenues, which are stable earnings, and the group has expanded and strengthened its business portfolio, including real estate asset management, Daiwa Energy & Infrastructure, and fund businesses. As a result, we aim to achieve stable growth and profits for the group as a whole. Please turn to page 11. This is an image of our future consolidated ordinary income structure by segment.
We are working to finalize our profit structure that is less susceptible to the external environment. To this end, we are building a portfolio that is not overly dependent on the wholesale segment. There are four key points. The first is asset-based revenues in the retail segment. That is, expanding the stable earnings and aiming to achieve ordinary income of over JPY 100 billion by 2030. The second point is to evolve and expand our business portfolio by strengthening our hybrid strategy. In other words, we will further strengthen our asset management business. Specifically, in addition to securities and real estate asset management, we will strengthen our fund management business, including private equity, business succession, and venture capital funds. The investment division will shift from a focus on proprietary investments to the creation of funds through the introduction of external funds.
In other words, we aim to make a gradual transition to the asset management business. Third, we will continue to select and focus on businesses where we have a competitive advantage. We will check the return on capital of each business without setting any boundaries. We will downsize or withdraw from unprofitable businesses. We will reallocate capital and human resources to growth businesses. Finally, we will actively consider and promote disruptive growth strategies. These include alliances with leading external companies, mergers and acquisitions, and inorganic strategies. By pursuing these strategies simultaneously, we will achieve a ROE of 9% or more, which is higher than the cost of capital, excluding the wholesale division, whose performance depends on the market environment. We will also aim to achieve a stable ROE of over 10% for the group as a whole, including the wholesale division.
Please note that the performance of the wholesale division fluctuates significantly from year to year. On average, over the past 5 or 10 years, the wholesale division has generated more than JPY 40 billion in ordinary income per year. At this point, it remains a business with the potential to make a significant contribution to the group's overall performance. Please turn to page 12. I am always conscious of capital efficiency and ROE improvement in the management of the business. In this issue, I would like to focus on capital used and ROE by segment, as this is a topic that is of great interest to investors and analysts. As you can see, wholesale division accounted for 54% of total capital employed. This segment holds trading positions. This makes it a very capital-intensive business under the Basel rules, which results in a low ROE.
On the other hand, the ROE of retail and asset management, which do not much use capital, is higher. However, we believe that this alone should not be the sole criterion for judging the allocation of management resources. As a diversified securities group, our retail and wholesale divisions work closely together. As the two wheels of a cart, they are indispensable for each other to secure a competitive advantage. For example, a strong wholesale presence enables us to offer attractive IPOs, stocks, and bonds to our clients in a timely manner, which leads to a competitive edge in the retail division. On the other hand, a strong retail client base gives us a competitive edge in wholesale, primary underwriting, and trading of stocks and bonds. Therefore, we do not intend to make any major changes to this two wheels of a cart business model at this time.
However, at the current stage, consolidated financial results and ROE may fluctuate significantly depending on the profit generation of the wholesale division, in particular. In the future, when we have confidence in the transition to a retail asset management business model, the expansion of the asset management business, and the stable growth of the hybrid business, then we intend to boldly review the allocation of capital and human resources to the wholesale division as the two wheels of the cart. In particular, we will assess the ROE and synergy effects on global markets, which accounts for about 50% of the usage of the group's total capital. Depending on the situation, we may reduce the allocation and reallocate the capital to other growth areas, or use it to return profits to shareholders.
In addition to the wholesale division, the group as a whole will improve the management of the use of capital and revenues by division and by business. This will enable us to monitor return on capital, use it to evaluate performance, and reallocate personnel and capital to improve consolidated ROE. We would like to share our initiatives in each segment towards 2030. Please turn to page 13. Morgan Stanley's US retail division has been significantly growing revenues by promoting wealth management model. Since the global financial crisis, the combined growth rate of asset management revenues and net interest income has averaged over 10% per year for the 10-year period. Over the same period, retail revenues have nearly doubled and net income has increased tenfold. The average annual increase in our asset-based revenue over the same period was 5.3%.
For FY 2019 through FY 2022 only, the growth rate was approximately 8%. If our asset-based revenue increased at an average annual rate of 8%, even if our flow revenue remains flat and constant, we estimate that our retail division's ordinary income will exceed JPY 100 billion in 10 years' time. Of course, the asset-based revenues themselves will be affected by the future market environment. However, we aim to achieve sustainable profit growth by accelerating our current efforts to shift to asset management-type businesses and expand asset-based revenues. Please turn to page 14. Let me explain our strategy to expand asset-based revenue. First, the asset management business model that we are promoting will greatly expand the range of personal financial assets that we can approach, compared to the conventional brokerage-centered business model of stock trading.
Currently, Japan's household financial assets total approximately JPY 2,000 trillion. Of this amount, cash and deposits account for 55%, while securities, such as stocks, investment trusts, and bonds, account for only 15%. Until now, the brokerage business has only been able to approach so-called satellite assets, which aim for returns by taking risks. The target was mainly marketable securities, which represent only, well, 15% plus alpha of the household financial assets. The asset management business model, on the other hand, proposes long-term, diversified, stable investment portfolios that match the risk tolerance of each client. It can approach both satellite and core assets, that is 70% of the household financial assets. As a result, we expect a shift of funds from individual investments such as stocks, bonds, and cash deposits to portfolio management such as fund wraps.
In order to accelerate the shift, we are working on sales reforms that focus on improving customer satisfactions, such as the introduction of the Net Promoter Score, or NPS. We are also utilizing portfolio diagnostic tools to optimize the allocation of our clients' total assets. We have also taken a series of measures ahead of our competitors to expand our product lineup, including Fund Wraps, asset-based fee plan for investment trust, and various alternative products. Changes in the external environment have also been a tail wind for our strategy. First, there is a growing need for long-term, stable investment. In Japan, there is a growing need to protect the value of assets against inflation and currency risks, as well as to cope with the 100-year life period. In addition, there are policy drivers, such as the Doubling Asset-based Income Plan, including the introduction of the new NISA system.
However, we believe that the shift in funds will be focused on products that are relatively close to defensive investments or products that are suitable for our clients' risk tolerance and goals that allow them to realize portfolio construction. Therefore, we believe that Fund Wrap is the best product for many of our clients. Looking at the portfolio selected by existing Daiwa Fund Wrap customers, about half of them are in the conservative type, which has the lowest risk tolerance out of 5 levels of risk tolerance. We believe that there is still a huge need for those who do not want to take too much risk, but want better returns than deposits. We believe that 10% of the JPY 1.1 quadrillion currently lying dormant in deposits, or JPY 110 trillion alone, could serve as a reservoir of funds.
This is a need that all of our clients, both existing and new, have. With Fund Wrap as our core product, we believe that sustainable expansion of asset-based revenue assets is possible. In fact, when we take a look at our existing clients' transactions, we have seen not only a shift from equities to Fund Wrap, but also a shift from deposits to Fund Wrap. The average contract amount of Fund Wrap is over JPY 20 million, and the ratio of new contracts is 40%. We are increasingly confident that we are making steady progress in capturing core assets. Please turn to page 15. This is the wholesale division. In global markets, we are working on cost reduction of JPY 5 billion as a first step. At this point, we have almost completed the accumulation of specific measures and are implementing them sequentially.
The cost reduction in FY 2022 was just short of JPY 1 billion. The remaining JPY 4 billion in cost reductions is expected to be realized by the end of FY 2023. The specific measures are reduction of the middle back function of the London office by transferring the trading book for FICC and CBs to Tokyo, closure of the Geneva branch, streamlining of research structure in and out of Japan, centered in Asia. We will continue to optimize capital and personnel, taking into account the return on capital and growth potential of each business, with the aim of improving ROE. As one of our symbolic efforts, we established a global market strategic planning department this fiscal year. Please turn to page 16. First, we will strengthen cooperation with the retail division and the overseas business.
We will promote the timely provision of products and information that precisely meet the potential needs of our customers. For example, foreign currency-denominated bonds are an area in which we have been weaker than our competitors, despite the existence of customer needs. We would like to leverage this area as soon as possible. With regard to our overseas business lines, we will conduct a multifaceted analysis of our competitive advantage, capital profitability, and future growth potential. We will restructure our overseas business lines to improve profitability. Please turn to page 17. Next is on global investment banking. We won a symbolic deal, the largest PO deal of the last fiscal year, serving as joint global coordinator for Japan Post Bank. We ranked second in the ECM league table with a market share of 25%.
We are also off to a good start this fiscal year, accumulating large lead manager deals such as the Rakuten Group's PO. We expect the ECM business to recover in the future as the need for corporate financing remains strong. In particular, demand for IPOs by startup companies is strong, and there is an abundant pipeline. We expect business to expand as investors' risk tolerance recovers. Please turn to page 18. An area where we expect significant growth without the use of capital is the M&A business. Our focus is on mid-cap deals with transaction values of $500 million or less. Looking at the trend over the past 10 years, it is a stable growth trend compared to large caps. Even when the global M&A market declined sharply, as it did last year, the rate of decline in fee pools remained low in this category.
Mid-cap deals account for 63% of the approximately JPY 7.6 trillion in M&A fee pools globally. We believe that there is no need to compete in the large cap sector, where the competition is intensifying due to the concentration of major players. Six years ago, when I became president, we acquired a mid-cap M&A house overseas and proceeded to develop our business structure. Since then, our top line has been steadily increasing, with M&A-related earnings for the last fiscal year reaching JPY 46.7 billion, 2.9x that of fiscal 2016. In the renewable energy sector, we took a 50% stake in Green Giraffe, the second-largest global advisory firm, in 2019. Including this investment, as of the end of last year, we have 650 employees globally in this sector, including Japan.
We are the only advisory firm that handles mainly mid caps with such a global network. In this field, we have established a high competitive advantage. In the mid to long term, we aim to increase revenues by 1.5x year-on-year to more than JPY 70 billion. We intend to boldly invest our management resources, mainly in the U.S., where the market size is large, including consideration of acquiring boutique M&A firms. Please turn to page 19. Our overseas business includes Japan-related business, US equity and fixed income business, and M&A business in Europe and the United States. We have continued our efforts to select and concentrate our business in areas where we have strengths and competitive advantage, while at the same time, continuing our cost reduction efforts. As a result, our overseas business segment has been profitable for seven consecutive years in FY 2022.
In terms of the scale of capital employed, there is a downward trend in the total of overseas business. At present, it is about 15% of the consolidated total. The challenge is that ROE has remained at an annual average of over 5% for the past 3 years. We need to optimize the number of personnel and capital employed in existing businesses. At the same time, we aim to improve the ROE of our overseas business by strengthening our gross business. We are now aiming to expand our business in India, a country that is expected to grow over the long term, and that we have positioned as strategically important. For this purpose, we plan to form a capital and business alliance with Ambit and make it an equity method affiliate of our company.
Ambit is one of the leading financial institutions in India, operating investment banking, asset management, equity business, and non-banking business. This capital and business alliance will expand profit-earning opportunities in the equity and ECM businesses in India. In addition, the alliance will enable the group to take in profits from Ambit, which is expanding in line with the growth of the Indian economy. In the Asia-Oceania region, which is expected to reap the fruits of economic growth toward 2030, we will expand our business, including business and capital alliances with leading financial institutions. Please turn to page 20. Next is the asset management division for securities asset management. In Daiwa Asset Management, assets under management are expanding. As of March 31, 2023, AUM totaled JPY 23.7 trillion.
From FY 2020 onward, in addition to expanding Fund Wrap, we have been diversifying sales channels and developing our flagship funds. As a result, fund inflows have been on an upward trend. The fund inflow ranking, which had been stagnant, rose to number three in FY 2022. Daiwa Asset Management strategy is to concentrate its management resources on the development and sales support of high value-added investment trusts, backed by its advanced management skills and marketing capabilities. As part of this strategy, Daiwa Blackstone Private Credit Fund was launched in May, or BCRED. As of the end of the offering period, we have received subscriptions in excess of JPY 40 billion, which is a strong start. Like BCRED, we are committed to providing high value-added products that accurately meet the needs of investors.
By doing so, we will strive to expand the balance and maintain and improve the trust fee ratio, which in turn will lead to increased profits. Please turn to page 21. I would like to explain about Global X, an asset management company specializing in ETFs. In February 2020, we invested $1.2 billion in Global X convertible bonds. Two years later, in February 2025, the bonds will be convertible into common stock. Thematic ETFs have expanded significantly in the U.S. as a relatively cost-effective and diversified investment product. Fund inflows into income ETF centered on covered calls have surged. The AUM of Global X in the U.S. totaled $38.5 billion, a 4.5-fold increase over the 3 years since the group invested in the fund.
If the convertible bonds are converted into common stock in the future, we will hold a certain amount of equity in Global X. This is expected to contribute to profits backed by the rapidly growing AUM. In Japan, we also hold a 50% stake in Global X Japan. The AUM of listed ETF has expanded 1.6 times year-on-year due to growing demand for ESG-conscious ETFs, especially among financial institution clients. Following the global trend, the ETF market is expected to expand in Japan as well. We will continue to expand our products with an edge to drive the shift from savings to asset and aim to increase the AUM. Please turn to page 22. Our real estate asset management division mainly consists of two asset management companies that operate REITs and the REITs that they manage.
The majority of the asset management company's revenues will increase in proportion to the growth of the REITs AUM. The revenues of the REITs are linked to the rent and occupancy rates of the properties they own. Our office REITs are mainly mid-size and Class B office buildings, which are less susceptible to working from home trend. The five major wards of Tokyo account for more than 80% of our REIT portfolio. In other REITs, we also manage mainly defensive asset classes, such as rental housing, healthcare, and logistics facilities. All of the group's REITs maintain high occupancy rates and earning stability. The AUM and real estate asset management has increased to approximately JPY 1.37 trillion as of the end of fiscal year 2022.
By the end of FY 2023, we are on track to reach our midterm plan target of JPY 1.5 trillion. If the steady pace of increase can be continued, the AUM in 2030s is expected to be JPY 1.8 trillion. If conditions such as favorable external environment and inorganic growth, which we have been working on, are met, we believe that a scale of even JPY 2 trillion is possible. This is a business in which revenues will grow in line with the expansion of AUM. Therefore, we will pursue an expansionary strategy that leverages the Group's unique strengths to further stabilize the Group's earning structure. Please turn to page 23. Next is the investment division. Up to now, Daiwa PI Partners and Daiwa Energy & Infrastructure have focused on the investment business using their own funds.
Our future direction is to make a gradual transition from self-funded investment model to an asset management business model centered on the fund business through introducing external funds. The bar graph on the left side of the slide shows the investment balance of Daiwa PI Partners. We intend to continue self-funded investment in monetary claims in real estate. The private equity investment shown in green will be expanded through the introduction of external funds. The self-funded AUM of Daiwa Energy & Infrastructure as of the end of FY 2022 was JPY 144 billion. By around 2030, the firm plans to increase the balance to JPY 300 billion in total, including its own funds and external funds.
In the domestic renewable energy field, we have established a solar private placement core fund in 2021, with investment from domestic institutional investors, including pension funds and life insurance companies. We are promoting cyclical expansion with an emphasis on capital efficiency by sequentially selling off already operated solar power plants to the fund. We aim to expand our investments with a focus on overseas renewable energy and infrastructure, where the market size is large. As an example, in March this year, we invested in Hornsea 1, one of the world's largest offshore wind farms, already in operation in the United Kingdom. Please turn to page 24. As I have explained, we have set a vision of where we want to be by 2030, we are continuing to backcast from that vision to make our current efforts.
In the current medium-term plan, we have also focused on promoting sustainability in our business domains and management foundation. Under these circumstances, in FY 2022, received the highest ESG rating from MSCI, which is AAA rating, and CDP A-List corporations, respectively. We were also named a supplier engagement leader by CDP for the second consecutive year. We are the only one of 53 companies in the global securities and investment banking sector to receive the AAA rating from MSCI. We are proud to have received this very high recognition. Companies are playing an increasingly important role in creating a sustainable society. While pursuing economic value through business growth, contributing to the resolution of social issues has become an essential element of corporate management. We will disclose highly transparent information about these efforts.
We believe that high-quality engagement with our stakeholders through opportunities like the one we have today, will lead to the sustainability of our company. Please turn to page 25. I would now like to discuss our approach to human capital, an area that has been the subject of increasingly public interest in recent years. One of our corporate philosophies is emphasis on human resources. We clearly state that the source of Daiwa Securities Group's competitiveness is its human resources. The driving force behind the enhancement of corporate value is intangible assets, the core element of which is human resources. Based on this concept, we have been promoting investment in human resources while linking it to our management strategy. We have been a pioneer in promoting diversity and inclusion. We are expanding our education and training programs, raising wages, and improving compensation for high performance.
In this way, we are working to improve employee engagement. We will aggressively make necessary human capital investments. At the same time, we will aim to maintain profitability and competitiveness by thoroughly controlling other costs. In closing, I would like to reiterate the direction of our strategy. Our strategy is to look to the future and strike a balance between what is right in the short term and what is important in the long term. In other words, we will work aggressively to build up our stock assets and expand our hybrid business while securing flow revenues that meet our customers' needs. At the same time, we will continue to reform our cost structure and build a stronger profit model that is less susceptible to market fluctuations. I believe this is the strategy we should adopt. This concludes my presentation. Thank you very much for your attention.