Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2012/13 Earnings Presentation
38 slides from Nomura's earnings presentation, October 2012
Slide 1: Opening Remarks: Atsushi Yoshikawa, President and Group COO
Opening Remarks: Atsushi Yoshikawa, President and Group COO Thank you for joining us for Nomura Holdings„ second quarter earnings call. I will first say a few words before handing over to our CFO Junko Nakagawa to give you an overview of our financial results. At the investor day on September 6, we
Slide 2: Disclaimer
Disclaimer NOMURA 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 3: Outline
Outline Presentation NOMURA Financial Supplement Executive summary (p. 3) Overview of results (p. 4) Business segment results (p. 5) Retail (p. 6-7) Asset Management (p. 8-9) Wholesale (p. 10-13) Non-interest expenses (p. 14) Progress of cost reduction program (p. 15) Robust financial position (p. 1
Slide 4: Q2 Financial Results: Executive summary
Q2 Financial Results: Junko Nakagawa, CFO I will now give you an overview of our financial results for the second quarter of the fiscal year ending March 2013. Please turn to page three of the document titled “Consolidated Results of Operations”. Executive summary Net revenue for the second quarter
Slide 5: Overview of results
Page four gives you an overview of the results and page five shows business segment results. 4
Slide 6: Business segment results
Total income before income taxes from our three business segments was, as I said, 15.7 billion yen, and for the first half it was 24.7 billion yen. In the second quarter we also reported a 12.4 billion yen unrealized gain on investments in equity securities held for operating purposes, which include
Slide 7: Retail results
The market environment in Retail remained challenging in the second quarter with subdued investor risk appetite. Net revenue declined 2 percent from the prior quarter to 80.8 billion yen. Income before income taxes declined 10 percent to 11 billion yen. Sales of bonds slowed due to the low interest
Slide 8: Retail client assets and accounts
The graph on the bottom left of page seven shows a slight net outflow of client assets, but we continued to expand our client franchise and the number of client accounts exceeded 5 million as shown on the bottom right. While we expect the challenging market environment to continue for some time, we
Slide 9: Asset Management results
Asset Management reported net revenue of 15.4 billion yen and income before income taxes of 4.6 billion yen. Although revenues declined 6 percent quarter on quarter and pretax income was down 15 percent from last quarter when we booked revenues from dividends, Asset Management continued to control c
Slide 10: Asset Management: defined contribution pension
As shown on the bottom right of page nine, the defined contribution pension system is gaining popularity in Japan and the number of participants has increased by 4.4 million over the past 10 years. Nomura Asset Management has gained an industry-leading market share in the business by expanding its l
Slide 11: Wholesale results
Wholesale reported net revenue of 137.1 billion yen, an increase of 12 percent quarter on quarter. As I said, we booked a one-off charge during the quarter of approximately 6 billion for expenses related to our cost cutting program. Despite this, Wholesale returned to profit with income before incom
Slide 12: Fixed Income
Fixed Income net revenue increased 24 percent from last quarter to 88.6 billion yen, the highest level in nine quarters. Revenues were well balanced across all products and regions. The graph on the top right shows growth in both international revenues and our global client franchise. Please turn to
Slide 13: Equities
Equities reported net revenue of 32.1 billion yen, a sequential decline of 14 percent. Client revenues declined on the back of subdued trading activity globally. In trading revenues, lower liquidity and volatility on major markets affected revenues from derivatives businesses. Given this environment
Slide 14: Investment Banking
Investment Banking net revenue increased 24 percent quarter on quarter to 16.4 billion yen. Gross revenue was up 40 percent at 33.3 billion yen. ECM revenues increased primarily in Japan and EMEA and we won a number of mandates in our focus sectors and key products in each region. We continued to se
Slide 15: Non-interest expenses
Non-interest expenses increased 5 percent in the second quarter to 366.3 billion yen. The main factors behind the increase include: One-off expenses of 6.7 billion yen related to Wholesale cost reductions were booked in compensation and benefits. A goodwill impairment charge of 8.3 billion yen relat
Slide 16: Progress of cost reduction program
The 1 billion dollar cost reduction in Wholesale is allocated as 43 percent in personnel expenses and 57 percent in non-personnel expenses. Personnel expense reductions will be achieved through headcount reductions, postponing the replacement of leavers, curbing new hires, and business efficiencies.
Slide 17: Robust financial position
Total assets at the end of the quarter were 35.4 trillion yen. Gross leverage was 16.9 times and net leverage was 10.6 times. Our capital ratios at the end of September shown on the bottom left are roughly unchanged from the end of June. 16
Slide 18: Funding and liquidity
Page 17 shows our funding and liquidity. I will leave it for you to look through later, except to say that there are no significant changes from the end of June. 17
Slide 19: Exposure to European peripheral countries
Page 18 shows our exposure to European peripheral countries. Our net country exposure at the end of September was 3.19 billion dollars, representing an increase of 980 million dollars from our exposure of 2.21 billion dollars at the end of June. The increase is mainly attributable to a rise in sover
Slide 20: Financial Supplement
Financial Supplement NOMURA 19
Slide 21: Consolidated balance sheet
Consolidated balance sheet Total collateralized agreements 13,743 Total trading assets’ and private equity investments 14,124) Total other assets 3,666 Total assets & B 2 1. Including securities pledged as collateral (billions of yen) Assets Liabilities Total cash and cash deposits 1,954 (643) Short
Slide 22: Value at risk
Value at risk NOMURA = Definition 99% confidence level (billions of yen) 18 16 1.9 15 1.4 1.2 1.0 — 1-day time horizon for outstanding portfolio ~— Inter-product price fluctuations considered = From April 1, 2012 to September 28, 2012 (billions of yen) Maximum: 7.2 — Minimum: 4.3 — Average: 5.5 Equi
Slide 23: Consolidated financial highlights
Consolidated financial highlights NOMURA Full year Quarter (billions of yen) (billions of yen) 405 , 8% 5 4% 30 178 221 3% MEE Net income ( loss) 30. 287 | 6% ROE (%) 20 4% 11.6 10 4% 2% 10.69 0) 0% 50) 464 —FY201142FY2012/13 Fr2o1oev2041/2 — 2Q0—C QQ 12 Net revenue 1,130.7 1,535.9 301.6 404.9 499.0
Slide 24: Consolidated income
Consolidated income (billions of yen) Full year Quarter NOMURA Revenue Commissions 405.5 347.41 85.9 74.0 90.4 77.4 72.3 Fees from investment banking 107.0 59.6 13.8 17.2 14.8 10.4 17.1 Asset managementand portfolio service fees 143.9 144.3 36.7 33.4 35.1 33.8 33.4 Net gain on trading 336.5 272.6 26
Slide 25: Main revenue items
Main revenue items NOMURA Full year Quarter (billions of yen) Praotort1Fy2011/12 FY201112 0 FY 2012/13 — 2@00 3Q QQ 2 Stock brokerage commissions (retail) 51.4 36.0 9.2 7.0 11.4 74 7.0 Stock brokerage commissions (other) 144.6 132.7 34.4 32.3 31.8 28.4 25.3 Other brokerage commissions 11.5 94 3.2 2.
Slide 26: Adjustment of consolidated results and segment results
Adjustment of consolidated results and segment results: Income (loss) before income taxes NOMURA Full year Quarter (billions of yen) raron rao Fvao2 Fvzoraig 700 Qt Reta 101.2 63.1 10.7 10.1 20.3 12.2 11.0 125.3 46.0 55.2 51.4 36.3 9.0 15.7 ther 15.2 35.2 12.9 14.5 14.6 17.0 7.3 110.2 81.2 42.3 36.9
Slide 27: Segment Other
Segment “Other” Income (loss) before income taxes NOMURA (1) Due to @ reorganization in Apnil 2012, reported amounts for Wholesale and Other have been reclassified (2) Due to @ reorganization in Apnil 2011, reported amounts for Asset Management and Other have been reclassified Full year Quarter (bil
Slide 28: Retail related data (1)
Retail related data (1) (billions of yen) Full year Quarter NOMURA (1) _Nomura Securities. Commissions 2448 ©2015 «48.2 55.8 41.7 5.4% 13.4% Sales credit 528 590 130 152 156 151 168 14.2% -3.2% Fees from investmentbanking and other 423. 38.2 95 137 87 103 94 85% 0.9% Investment trust administration
Slide 29: Retail related data (2)
Retail related data (2) Full year NOMURA Stock brokerage commissions and commissions for distribution of investment trusts Quarter 180 150 mStock brokerage commissions 120 90 = Commissions for distribution of investment trusts * 30 Stock brokerage commissions trusts! (1) Nomura Securities (billions
Slide 30: Retail related data (3)
Retail related data (3) Retail client assets NOMURA (1) Includes CBs and warrants (2) _lincludes annuity insurance Full year Quarter (trillions of yen) 100 Other Overseas mutual 80 72. funds 70.6 2.0 66.1 72.0 68.2 673 Bond investment 2 65.0 trusts 60 ™Stock investment trusts ‘= Domestic bonds 40 Fo
Slide 31: Retail related data (4)
Retail related data (4) NOMURA Retail client assets: Net asset inflow’ Full year Quarter (billions of yen) (billions of yen) 6,000 5 1,400 1,107 + 1,100 4000, 3.942 800 647 2,400 500 2,000 260 185 | 200 0+ -100 Fy20ti2 F203 Prat evan — 2@ QQ 12 (1) Net asset inflow = asset inflow — asset outflow. Re
Slide 32: Retail related data (5)
Retail related data (5) Number of accounts NOMURA (Thousands ‘praoior Fvaowwn2 = raging rang Accounts with balance 4,936 4,985 4,954 4,966 4,985 4,997 5,003 Equity holding accounts 2,695 2,706 2,703 2,707 2,706 2,714 2,731 Nomura Home Trade / Net & Call accounts! 3,328 3,773 3,369 3,745 3,773 3,796
Slide 33: Asset Management related data (1)
Asset Management related data (1) (bllons of yen) “Praoiont pvaowita aa eae eae) Net revenue 66.5 65.8 16.0 15.3 15.7 16.4 15.4 Non-interest expenses 46.5 45.3 11.2 11.1 11.6 11.0 10.9 Income before income taxes 20.0 20.5 47 42 41 5.4 46 fo) Total assets under management ‘Due to @ reorganization in
Slide 34: Asset Management related data (2)
Asset Management related data (2) Assets under management (gross) by business’ NOMURA Asset inflows/outflows by business* Full year Quarter nos ten) AQ Yr Vameara =) re ae ie ee (billions of yen) Investment trust Investment trusts 4,778 2 8 business 24.3 23.0 21.2 21.0 23.0 215 21.7 business \ ad ET
Slide 35: Wholesale related data (1)
Wholesale related data (1) NOAURA Wholesale enn Fran eaoiit2 >} vor Net revenue 626.1 555.0 6 175.1 158.4 121.9 137.1 12.5% 68.1% Non-interestexpenses 622.0 592.7 152.2 138.1 146.5 130.4 136.9 5.0% 10.1% Income (Loss) before income taxes 41 37.7 -70.7 37.1 11.9 86 0.2 - - Breakdown of Wholesale reve
Slide 36: Wholesale related data (2)
Wholesale related data (2) NOMURA Private equity related investments Full year Quarter (billions of yen) 400 327.7 Terra Firma 300 286.4 wAsia 221.3 208.9 221-3 206.0 206.4 mEurope (excluding 200 Terra Firma) Japan 100 0 1 r _Mar.2011 Mar.2012 Sep.2011Dec.2011 Mar.2012 Jun.2012 Sep.2012_ Japan 165.9
Slide 37: Number of employees
Number of employees NOMURA Japan (excluding FA)' 12,829 20,263 20,105 19,882 19,598 20,197 20,039 Japan (FA) 2,089 2,096 2,078 2,048 2,011 2,014 1,981 Europe 4,353 4,436 4,492 4,143 4,014 3,975 3,940 Americas 2,348 2,383 2,537 2,466 2,420 2,423 2,425 Asia-Pacific” 5,252 6,452 6,485 6,394 6,352 6,454
Slide 38: Nomura Holdings, Inc.
NOMURA Nomura Holdings, Inc. www.nomura.com 37