Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2020/21 Earnings Presentation
35 slides from Nomura's earnings presentation, October 2020
Slide 1: CFO overview of first half and second quarter results
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our financial results for the first half and second quarter of the fiscal year ending March 2021 using the document titled Consolidated Results of Operations. Please turn to page two.
Slide 2: Presentation and Financial Supplement contents
Presentation Financial Supplement © Executive summary (P2-4) © Overview of results (P5) © Business segment results (P6) © Retail (P7-8) © Asset Management (P9-10) © Wholesale (P11-13) © Non-interest expenses (P14) Robust financial position (P15) © Funding and liquidity (P16) © Consolidated balance s
Slide 3: Executive summary: first half market environment and results
The market environment settled down somewhat during the first half of our fiscal year from the turmoil following the initial spread of the virus. Stock market indices and bond prices recovered on expectations of an economic recovery and favorable sentiment around large-scale liquidity provision by c
Slide 4: Income before income taxes by region, first half
The bar graph on the left gives a breakdown of income before income taxes by region. As you can see, firm-wide income before income taxes for the first half was 265.4 billion yen, an increase of 62 billion yen from last year’s 203.3 billion yen. The main driver of this growth was our international b
Slide 5: Second quarter income before income taxes and net income
The graph on the top right shows firm-wide income before income taxes of 83.6 billion yen and net income of 67.6 billion yen. Second quarter performance remained strong, although lower than the first quarter which included record Fixed Income revenues and a one-off gain of 71.1 billion yen related t
Slide 6: Highlights
Highlights (bilions of yen, exceptEPS and ROE) 1 | -20% 4% 829.7 16% | 2% 12% 564.3 10% | 54% 35% 265.4 | 31% | 63% 51% 210.2 | 8% 1 1 | 53% 48% Y67.10 | 16% 15.6%
Slide 7: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes (bilions of yen) “Additional information on “Other” ® Loss relatedto economichedging (Y5.0bn) '® Loss on changes to own and counterparty credit spread relating to Derivatives (Y1.1bn)
Slide 8: Retail: second quarter net revenue and income
Net revenue in the second quarter increased 14 percent to 92.8 billion yen and income before income taxes grew 51 percent to 22.8 billion yen. As I mentioned last quarter, our approaches to clients is evolving into a hybrid model with not just face-to-face interactions but also using phone calls, em
Slide 9: Retail KPIs: recurring revenue, clients
On the top left, recurring revenue improved from the end of June due to market factors and stronger sales of investment trusts focused on global equities and ESG related products leading to positive net inflows into investment trusts of over 100 billion yen. Consulting-related revenue shown on the b
Slide 10: Asset Management: second quarter results
Net revenue declined 21 percent from last quarter to 26.8 billion yen and income before income taxes declined 40 percent to 11.4 billion yen. Last quarter, American Century Investment related gain/loss was high at 10.3 billion yen, so excluding ACI-related gain/loss actually increased 4 percent to 2
Slide 11: Asset Management: flow of funds and DC plan AuM
For the flow of funds shown on the top left, the investment trust business reported net inflows of 563 billion yen from inflows into ETFs and an ESG related fund launched in August. In the Investment Advisory business, alternatives such as private equity and infrastructure funds booked inflows as di
Slide 12: Wholesale: second quarter net revenue
Second quarter net revenue was 220.3 billion yen, down from the record last quarter but on a year-on-year basis all business lines and regions reported stronger revenues. 220.3 billion yen represents the fifth highest quarterly revenues and the best second quarter revenue performance. As you can see
Slide 13: Global Markets net revenue
Global Markets second quarter net revenue declined 17 percent to 192.3 billion yen. Fixed Income net revenue was 104.6 billion yen, down 32 percent compared to the record high last quarter, but performance remained strong at over 100 billion yen. Rates and Agency Mortgages had a good quarter and Cre
Slide 14: Investment Banking net revenue
Net revenue increased 74 percent to 28.1 billion yen. Revenues were at a six quarter high driven by Japan-related ECM transactions, cross-border M&A and several business reorganizations for Japanese companies. In Japan, of the ECM deals executed this quarter, we acted as lead manager on all of the t
Slide 15: Non-interest expenses
Firm-wide non-interest expenses were 285.4 billion yen, up 2 percent from last quarter. Compensation and benefits, commissions and floor brokerage, and information processing and communications were all roughly unchanged from last quarter. Occupancy and related depreciation increased 12 percent due
Slide 16: Balance sheet and capital ratios
Our balance sheet at the end of September was 42.7 trillion yen, up 1.1 trillion yen from the end of June due mainly to repo transactions. As shown on the bottom left, our tier 1 capital ratio at the end of September was 19.3 percent and our CET1 capital ratio was 17.2 percent, both up from the end
Slide 17: Closing remarks and outlook
In the second quarter, as market tailwinds eased compared to the first quarter we started to see results from our efforts to realign our business platform last year, which is leading to improved underlying profitability. For instance, in Wholesale, our business portfolio realignment and focus on are
Slide 18: Financial Supplement
Financial Supplement 17
Slide 19: Consolidated balance sheet
Consolidated balance sheet (billions of yen) Total cash and cash deposits Short-term borrowings Total payables and deposits Total loans and receivables Total collateralized financing Trading liabilities Total collateralized agreements Other liabilities Long-term borrowings Total other assets’ Equity
Slide 20: Value at risk
= Definition = FromApril 1, 2020, to September 30, 2020 (billions of yen) — 99% confidence level ~ Maximum: 27.0 ~ 1-day time horizon for outstanding portfolio - Minimum: 9.6 — Inter-product price fluctuations considered — Average. 16.1 ee ee Equity 141 89 18 14 89 16 34 Interest rate 28 224 40 48 2
Slide 21: Consolidated financial highlights
Full year (billions of yen) ‘== Net income (loss) attributable to Nomura Holdings, Inc. (NHI) 200 shareholders: 100 ROE) i -100 -200 rans Fvannszo — 2 QQ Net revenue 1.1168 1,287.8 3834 3350 «©2375 4607 =—369.0 Income (loss) before income taxes 3772483 1285 69771818 83.6 Net income Qos) seiitetabie
Slide 22: Consolidated income
Full year Quarter (billions of yen) “Pramas Fvani9zn — Fy2ong20Fv2020/00 Revenue Commissions 293.1 308.8 65.3 79.3 96.1 85.5 92.3 Fees from investment banking 101.5 103.2 223 26.8 26.8 10.8 27.0 Asset management and portfolio service fees 245.5 238.2 59.9 61.0 57.3 53.7 574 Net gain on trading 343.0
Slide 23: Main revenue items
Full year Quarter (billions of yen) ‘Stock brokerage commissions 192.0 196.5 425 48.1 63.3 62.9 61.0 Other isSit 14.4 14.4 28 3.0 59 43 29 Commissions for distribution of investment trusts 56.6 66.7 126 19.0 18.6 14.4 19.3 Other 30.0 1.2 74 92 82 42 91 Total 293.1 308.8 65.3 79.3 96.1 85.5 92.3 30.0
Slide 24: Income (loss) before income taxes by segment and region
Adjustment of consolidated results and segment results: Income (loss) before income taxes Full year Quarter a siatieaatae ‘Pens Frat mm 0 m a Retail 49.5 494 53 17.6 18.4 15.1 228 Asset Management 34.2 28.8 10.0 93 87 19.2 1.4 Wholesale 1114 92.2 18.9 43.2 10.1 87.9 65.5 Three business segments tota
Slide 25: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 160 120 992 80 40 i) 28 40 ‘Net gain (loss) related to economic i, sas saa 18 175 Realized gain (loss) on investments in equity sectnties beld for - oes 02 66 13 49 03 07 01 Equity in eamings of affiliates 32.5 35.0 8.0 48 13.9 66
Slide 26: Retail related data: results
Full year Quarter (billions of yen) Comerissions 1428 1532 312 422 4 08 468 143% orm Ot which, stock trokerage commission 02 12 128 170 134 27 m2 7.0% cr Ct which commissions for dst buton of imestmert 41s Ex) 8 128 192 38 39 196 40.6% 5.0% Soles credit os cy) 127 107 120 140 “4 3% or Fees frominves
Slide 27: Retail client assets
Retail clientassets (trillions of yen) "Other = Foreign investment sts ‘@Bond investment trusts = Stod investment trusts: » Domestic bonds ‘= Foreign cueng bond wEquites oss ees88 Equities 1147 4040 Foreign currency bonds Domestic bonds’ Stock investment trusts Bond trusts m9 62.7 63 58 12.5 12.6 9.
Slide 28: Net inflows of cash and securities
Net inflows of cash and securities’ Full year Quarter (billions of yen) (billions of yen) 2,400 2,400 2015 1,800 1,800 1,200 1,200 600 600 424 7 a © i ‘ = mm ° | 600 429 800 "560 Fyzg2oat “Pranns Fraisz0 Qt 1. (Cash and: outflows. financial: 27 27
Slide 29: Number of accounts
Number of accounts thousands) ea ee Accounts with balance 5,338 5,319 5,326 5,328 5,319 5,323 5,323 Equity holding accounts 2,908 2,920 2,913 2,897 2,920 2,935 2,952 NISA accounts opened (accumulated)" 1,702 1,737 1,719 1,728 1,737 1,746 4,153 Online service accounts 4,569 4,703 4,632 4,662 4,703 4,
Slide 30: Asset Management related data
Full year* Quarter’ (billions of yen) eee pom __ Revenue (excl ACl-retated airvioss) 1029 1002 250 260 24 27 27 4.0% A.M ACH-related gainvioss -50 76 07 -06 “164 103 22 TAM 3 Net revenue 978 926 257 4 70 m0 ws 2% 45% Non-interest 637 638 56 161 58 149 154 38% Ze Income (Joss) before income tares 342
Slide 31: Asset inflows/outflows by business
Asset inflows/outflows by business* Full year Quarter —Fyzong20 FORO (omens styen) | Prana Prana ea a ae Es aa Investment trusts business 2,187 1,788 259 296 560 1,210 563 of which ETFs 2,531 2,133 246 115 1,130 1,153 618 Investment advisory business 20 302 121 198 146 -163 640 Total net asset inflo
Slide 32: Wholesale related data
Full year Quarter (lions of yen ryaoiga0 vaz0et Net revenue 565.4 156.7 186.5 145.9 248.7 220.3 1.4% 40.6% Non-interest expenses 666.8 556.4 137.8 143.3 136.8 160.8 154.8 3.1% 12.4% Income (loss) before income taxes 111.4 92.2 18.9 43.2 10.1 87.9 65.5 25.5% 35x Breakdown of Wholesale revenues' Full
Slide 33: Number of employees
Japan 15,852 15,748 16,119 15,971 15,748 16,069 15,807 Europe 2,909 2,691 27h 2,658 2,691 2,728 2,765 Americas 2,357 2,120 2,167 2,116 2,120 2,164 2157 Asia and Oceania’ 6,746 6,070 6,692 6,554 6,070 6,118 6,140 Total 27,864 26,629 27712 27,299 26,629 27,079 26,869 1. Includes Powai office in India.
Slide 34: 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 sell, sales, solici
Slide 35: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com