Nomura Holdings, Inc. · TSE:8604
Nomura — Q3 FY2019/20 Earnings Presentation
34 slides from Nomura's earnings presentation, January 2020
Slide 1: Third quarter results overview, CFO remarks
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our results for the third quarter of the year ending March 2020. Please turn to page two.
Slide 2: Presentation and Financial Supplement contents
Presentation Financial Supplement © Executive summary (p. 2-3) © Consolidated balance sheet (p. 17) © Overview of results (p. 4) © Value at risk (p. 18) © Business segment results (p. 5) © Consolidated financial highlights (p. 19) © Retail (p. 6-7) © Consolidated income (p. 20) © Asset Management (p
Slide 3: Nine-month results summary
First, let’s look at the nine months until the end of the third quarter. As you can see on the bottom left, net revenue was 1,050.4 billion yen, representing an increase of 29 percent compared to the same period last year. Income before income taxes was 273 billion yen and net income was 251.5 billi
Slide 4: Three-month results to December
For the three months to December, the easing of US-China trade friction and progress towards Brexit helped alleviate market uncertainties, leading to increased client activity during the quarter. Market direction also gained more clarity overall as the stock market reached a yearly high towards the
Slide 5: Highlights
Highlights (billions of yen, except EPS and ROE) ee =| 1 1 335.0 I -13% 29% 1,050.4 [ 29% 265.3 } 4% -21% 777.4 [ -11% 69.7 | 46% - 273.0 - 57.1 } 59% - 251.5 | - Y17.63 -57% - Y75.65 - 8.4% 12.6% x rs wns
Slide 6: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes (billions of yen) FY2019/20, ‘Unrealized gain (loss) on investments in equity 27 z 5 48 25 Income (loss) before income taxes | 697 46% - 273.0 [ "Additional information on “Other’ (3Q) Gain related to economic hedging (Y2.3bn) | '™ Gain on changes to
Slide 7: Retail results
Third quarter net revenue was 90 billion yen, up 17 percent quarter on quarter. Income before income taxes grew 3.4 times to 17.6 billion yen. Favorable market conditions led to an improvement in investor sentiment and, as shown on the bottom half of the page, total sales increased by 27 percent. By
Slide 8: Retail flows and recurring revenue
As shown on the top right, investment trusts reported net outflows of over 110 billion yen. Although sales increased, redemptions increased as investors looked to lock in profits on the market rally and as individuals aggregated calendar-year profits and losses. Discretionary investments reported ne
Slide 9: Asset Management results
As you can see on the top left, net revenue slipped 1 percent quarter on quarter to 25.4 billion yen and income before income taxes declined 7 percent to 9.3 billion yen. These declines are mainly due to a slight decline in gain/loss related to American Century Investments. Revenue excluding ACI inc
Slide 10: Asset Management inflows
The graph on the top left of page nine shows inflows of nearly 500 billion yen in the third quarter. The investment trust business reported approximately 300 billion yen of inflows mainly into ETFs, DC funds and MRFs which hold idle funds. The investment advisory business booked inflows totaling aro
Slide 11: Wholesale results
Net revenue increased 19 percent quarter on quarter to 186.5 billion yen and income before income taxes grew 128 percent to 43.2 billion yen. By business line, Fixed Income reported its strongest revenue quarter in three years driven by a robust performance in the Americas and EMEA. Equities also re
Slide 12: Global Markets
Global Markets net revenue increased 21 percent over the previous quarter to 160.1 billion yen. Fixed Income net revenue grew 29 percent to 99.7 billion yen. In particular, Agency Mortgages and other Rates businesses had a strong quarter, while spread products such as Credit and Securitized Products
Slide 13: Investment Banking
Net revenue increased by 11 percent to 26.4 billion yen as the international business offset lower revenues in Japan resulting from a decline in fee pools. The Japan ECM business reported lower revenues quarter on quarter. Although the Japan DCM business slowed from a strong previous quarter, we tap
Slide 14: Non-interest expenses
Third quarter firm-wide expenses were 265.3 billion yen, a 4 percent increase from last quarter. Compensation and benefits increased 7 percent due to higher bonus provisions following the increase in revenues. Other expenses increased by 9 percent due mainly to the decommissioning of a IT system in
Slide 15: Robust financial position
Page 14 shows our financial position. Our balance sheet at the end of December was 46.2 trillion yen, an increase of approximately 0.5 trillion yen from the end of September, due mainly to an increase in repo transactions. As shown on the bottom left, Tier 1 capital was 2.7 trillion yen and risk ass
Slide 16: Concluding remarks and outlook
To conclude, we had a strong quarter with each business division delivering higher revenues. Naturally, market support was a big factor, but we also saw the benefits of our ongoing efforts. In Wholesale, by realigning our business portfolio and deemphasizing low profit businesses we have been able t
Slide 17: Financial Supplement
Financial Supplement 16
Slide 18: Consolidated balance sheet
Consolidated balance sheet (billions of yen) Assets Liabilities Total cash and cash deposits 474 —_ Short-term borrowings Total payables and deposits 64 Total loans and receivables 25 Total collateralized financing 4,286 © Tradngliailties 406 Total collateralized agreements 2,248 Other liabilities 3
Slide 19: Value at risk
= Definition = From April 1, 2019, to December 31, 2019 (billions of yen) ~ 99% confidence level ~ Maximum: 6.9 — 1-day time horizon for outstanding portfolio = Minimum: 3.6 — Inter-product price fluctuations considered — Average: 5.4 (billions of yen) Equity Interest rate 34 28 35 28 34 40 48 Forei
Slide 20: Consolidated financial highlights
Full year Quarter (billions of yen) (billions of yen) 300 12% 150 ‘== Net income (loss) 14.6% attributable to Nomura Bad a Holdings, Inc. (NHI") 200 8% 100 8.4% shareholders 100 4% 50 08 ——ROE(%) 0+ Ha. 0% 0 100 50 -1004 -200 40 "963 cae hae i ee ee Net revenue 1,497.0 1,116.8 260.6 301.3 3320 383.4
Slide 21: Consolidated income
1 Full year Quarter omen rams eran Tg ga Revenue Commissions' 373.3 293.1 727 66.1 68.2 653 79.3 Fees from investment banking 101.7 101.5 33.1 3 27.3 223 26.8 Asset management and portfolio service fees 245.6 245.5 606 59.2 60.0 599 61.0 Net gain on trading 4429 43.0 96.9 84 112.8 105.6 109.3 Gain (
Slide 22: Main revenue items
1 Full year Quarter —Fy2ote19 FY 201920 (oilions of yen) Ez a Stock brokerage commissions' 243.8 192.0 50.5 43.9 426 425 48.1 Other brokerage commissions 17.0 14.4 43 25 27 28 3.0 Comms sions for distribution of investment trusts 857 56.6 11.5 11.7 16.4 126 19.0 Other 26.9 30.0 64 8.0 64 74 9.2 Tota
Slide 23: Income (loss) before income taxes by segment and region
Adjustment of consolidated results and segment results: Income (loss) before income taxes Full year Quarter “seem a Se oe ee Retail 103.1 49.5 14.0 33 81 53 17.6 Asset Management! 66.2 34.2 06 14.4 181 10.0 9.3 Wholesale 100.6 111.4 -95.9 13.0 20.0 189 43.2 Three business segments total 269.9 -27.7
Slide 24: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 100.0 93.4 80.0 60.0 56.4 40.0 20.0 154 17.8 i 00 —. = 28 -20.0 40.0 Net gain (loss) related to economic hedging transactions 65 18 7.0 Realized gain (loss) on investments in equity 08 02 43 securities held for operating purposes
Slide 25: Retail results detail
Full year Quarter (otons of yon) a ea ‘Commissions 1927 1428 341 31.0 345 2 422 35.5% 2B.™ Ofwhich, stock 822 0.2 158 122 125 126 17.0 35.1% 1% Ofwhich, tor of trusts 87.1 57.9 W7 124 165 126 19.2 51.7% 64.5% Sales credit 15 58 109 10.5 149 127 16.7 31.7% 52.5% Fees from investment banking and other
Slide 26: Retail client assets
Retail client assets (trillions of yen) = Other 140 ‘ae 23 120 177 4147 1100 M47 113.1 : ‘= Foreign investment IMS ‘= Domestic bonds "Foreign currency bonds = Equities Equities Foreign currency bonds 64 63 62 63 64 63 6.3 Domestic bonds" 11.9 12.5 123 125 124 125 12.6 Stock investment trusts 94 9.0
Slide 27: Net inflows of cash and securities
Net inflows of cash and securities* Full year Quarter (billions of yen) (billions of yen) 2,500 2,500 2,015 2,000 2,000 1,500 1,500 1,000 1,000 500 500 256 ; ; _ =. 121 -500 403 -500 Fy2oet9 20920 26 26
Slide 28: Number of accounts
Number of accounts ’ Foe Fyzoii9Fyzonei9 Fv2N20 Accounts with balance 5,318 5,338 5,354 5,338 5,335 5,326 6,328 Equity holding accounts 2,822 2,908 2,905 2,908 2,914 2,913 2,897 Online service accounts" 4,387 4,569 4,526 4,569 4,601 4,632 4,662 dual accounts / IT share? Full year Quarter (thousands)
Slide 29: Asset Management results and AuM
Full year’ Quarter’ —FY2018/19 FY 2019/20 (oalons of yen) ‘Praumie Fv2ow19, ee ee ae Revenue (excl, ACI-telated gain/loss) 105.3 102.9 24.5 26.0 25.8 25.0 26.0 4.0% 6.3% ‘ACL-elated gain/loss 22.41 5.0 83 49 87 07 0.6 : : Net revenue 127.3 97.8 16.2 309 34.5 25.7 25.4 A1% 57.0% Non.interest expenses
Slide 30: Asset inflows/outflows by business
Asset inflows/outflows by business Full year Quarter Fvz9 = FvROI20 (ottons of yen) [pais | | ane La | |< | | * Investment trusts business 3,131 2,187 1,141 503 672 259 296 of which ETFs 3,022 2,531 1,391 483 642 246 115 Investment advisory business 203 20 354 109 -164 121 198 Total net asset inflow
Slide 31: Wholesale results detail
Full year Quarter Cons of yen) | pvang rv201920 Net revenue 715.3 555.4 128.2 142.2 159.5 156.7 186.5 19.0% 45.5% Non-interest expenses 614.7 666.8 224.1 155.3 139.5 137.8 143.3 4.0% -B.0% Income (loss) before income taxes 100.6 111.4 5.9 -13.0 20.0 189 43.2 128.3% - Breakdown of Wholesale revenues‘
Slide 32: Number of employees
Japan 15,819 16,138 Europe 3,057 2,963 Americas 2,384 Asia and Oceania’ 6,796 Total 28,281 27,299 Includes Powai office in india
Slide 33: Disclaimer
NOMURA Disclaimer This document is produced by Nomura Holdings, Inc. (“Nomura”). Nothing in this document shall be considered as an offer to sell or solicitation of an offer to buy any security, commodity or other instrument, including securities issued by Nomura or any affiliate thereof. Offers to
Slide 34: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com