Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2010/11 Earnings Presentation
41 slides from Nomura's earnings presentation, October 2010
Slide 1: Second quarter conference call opening remarks
Thank you for joining us for our second quarter conference call for the fiscal year ending March 2011. I am Masafumi Nakada, CFO of Nomura Holdings. I will first give you give an overview of highlights of our second quarter results using the presentation materials entitled: “Consolidated Results of
Slide 2: Disclaimer
Nomura ® This document is produced by Nomura Holdings, Inc. ("Nomura"). Copyright 2010 Nomura Holdings, Inc. All rights reserved. ® 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 is
Slide 3: Outline
ST Nomura Outline © Executive summary (p. 4) = Consolidated balance sheet (p. 25) © Overview of second quarter and first half results(p. 5) = Value at risk (p. 26) © Breakdown of net revenue(p. 6) = Consolidated financial highlights (p. 27) © Retail (p. 7-8) = Consolidated income (p. 28) © Asset Man
Slide 4: Executive summary: second quarter results
Net revenue for the quarter was 275.6 billion yen, an increase of 6.1 percent from the prior quarter. Income before income taxes was 21.6 billion yen and net income was 1.1 billion yen. Business segment income before income taxes was 35.6 billion yen and all three divisions were profitable in the qu
Slide 5: First half results overview
(Continue) Turning now to first half results, net revenue for the six month period was 535.4 billion yen, a decline of 10.5 percent compared to the same period last year. Income before income taxes was 28.1 billion yen and net income was 3.4 billion yen. During the first half of our fiscal year, mar
Slide 6: Breakdown of net revenue
The graph on the right gives a breakdown of revenues: 57 percent of second quarter revenues came from Japan and 43 percent from outside Japan. Next, I will outline the second quarter highlights for each division. Please turn to page 7. 6
Slide 7: Retail results
Retail net revenue was 87.8 billion yen and income before income taxes was 22.8 billion yen. Retail client assets declined slightly due to the stronger yen, but net asset inflows for the quarter were 458.3 billion yen. Please turn to the next page. 7
Slide 8: Retail: consulting services and system investment
We maintained our focus on providing consulting-based services and responded accurately to client needs to ensure ongoing inflows of new funds mainly into foreign bonds and overseas-focused investment trusts. Foreign currency denominated assets are increasing as a percentage of Retail client assets.
Slide 9: Asset Management results
Net revenue in Asset Management was 19.3 billion yen and income before income taxes was 5.2 billion yen. Assets under management grow 5 percent to 23.3 trillion yen. The graph on the bottom left of the next page shows net inflows into publicly offered stock investment trusts of 440 billion yen, repr
Slide 10: Asset Management and Wholesale overview
As you can see on the top right, in our investment advisory business we improved our offering of absolute return products and UCITS III funds while growing the business. Page 11 shows Wholesale net revenue of 163.4 billion yen and income before income taxes of 7.6 billion yen. The graphs on the righ
Slide 11: Wholesale
Wholesale Net and income (loss) befor income tax Market environment (billions of yen) North 190 American 170 FY2019/10 FY2010/11 corporate 150 h bond spread 130 10 | SQnet and COS 10 spreads for Sw Net revenue GuPS a countries f = = - - ‘te Non-interest expenses: 161.1 1616 1332 1496 156.8 Mar-09 lu
Slide 12: Global Markets client activity
Client activity in Global Markets was weak in July and August, but improved in September. In Fixed Income, revenues from Rates, Credit, Securitized Products, and FX increased, while in Equities an improvement in derivatives and convertible bonds contributed to revenues. Please turn to the next page.
Slide 13: Investment Banking rankings
In Investment Banking, we ranked number nine in the year-to-date EMC global league table and number 13 in the global M&A rankings, both up from our position at the same time last year. We have the leading market share in Japan in both ECM with a 35.7 percent share and M&A with a 43.9 percent share.
Slide 14: Segment Other
Segment “Other” Income (loss) before income taxes Includes ¥24.0bn related | (Dions of yen) ee, Credit value Reet ll Estate ed 4 a 158 20 = Rents 40 178 T || - Q2 loss before income taxes of Y9.1bn ° = 0 ~ “Other” includes fair value loss on own || | | | | debt of Y5.6bn -40 -20.9 -27.3 21 | 20 -80
Slide 15: Non-interest expenses
Non-interest expenses edged up 0.3 percent from the prior quarter to 254 billion yen, which represents a 6.9 percent year-on-year decline. Compensation and benefits rose 3.8 percent quarter on quarter but declined 13.6 percent year on year. In non-personnel expenses, information processing and commu
Slide 16: Robust financial position
Our financial position remains robust. Our Tier 1 ratio at the end of September was 16.5 percent and our Tier 1 common ratio was 16.4 percent. As shown on the bottom left, our ratios are among the highest in the industry. Total assets were 34.3 trillion yen, shareholders’ equity was 2.1 trillion yen
Slide 17: Basel III
Risk-weighted assets as of the end of September were 11 trillion 750 billion yen. Factoring in the increase under the Basel III framework and reductions in investment securities and unrated securitized products, we expect risk-weighted assets to be around 19 trillion yen at the end of March 2013. Ba
Slide 18: FY2010/11 key initiatives
The next page gives you an overview of growth in our client franchise. 18
Slide 19: Global Markets
In Global Markets, growth of our client franchise is a key factor in expanding our business. As the graphs show, we made significant progress in growing our client franchise during the first half across all regions. In Fixed Income we are well positioned as a global player in the core product areas
Slide 20: US business
Fixed Income was the first area we launched and we have seen trading volumes increase in our core product areas of Rates, Credit, Securitized Products, and FX. In Equities, we have a full product offering including US equities, program trading, convertibles, and derivatives. Trading volumes have bee
Slide 21: Investment Banking: cross-border M&A
In cross-border M&A, we are seeing an increase in high profile deals, advising on the GDF Suez and International Power deal among others. In addition to revenues from advisory services, we are increasing revenues from multi-product businesses that include financing and forex components. Please turn
Slide 22: Investment Banking: financing and closing remarks
Thanks to the growth of our global client franchise and added syndication capabilities, we executed a number of leveraged finance transactions during the first half and we were nominated as global bookrunner on dollar bond issues, extending our reach into new areas. Turning now to recent performance
Slide 23: Recent performance and outlook
Recent performance and outlook Global Markets ® Sales of foreign bonds and major public offerings in October contributing to revenues © Maximizing revenues by expanding client base ® Enhance consulting-based services to offer a broad range of products talfored to client needs and increase net asset
Slide 24: Financial Supplement
ST Nonurs Financial Supplement 24
Slide 25: Consolidated balance sheet
Consolidated balance sheet Consolidated b; Increase (Decrease) Assets Cash and cash deposits Loans and receivables Collateralzed agreements Trading assets and private equity investments* Other assets Total assets 1. Including securities pledged as collateral. lance sheet Liabilities Short-term borro
Slide 26: Value at risk
Value at risk = Definition = From April 1, 2010, to September 30, 2010 (billions of yen) — 99% confidence level (2.33 standard dev.) ~ Maximum: 13.6 ~ 1-day time horizon for outstanding portfolio ~ Minimum: 8.6 ~ Inter-product price fluctuations considered ~ Average: 10.4 (billions of yen) Equity In
Slide 27: Consolidated financial highlights
Consolidated financial highlights Full year (billions of yen) (billions of yen) 400 15.5% 20% 40 "=" Netincome (loss) ROE (%) 200 sob 27 ° +200 20 400 10 +600 -800 aus 4 ° [ioe 20 | 0 | [et |e Netrevenue 1,145.7 1,091.1 787.3 3126 1,150.8 300.0 2745 2779 2598 2766 Income (loss) before income taxes 4
Slide 28: Consolidated income
Consolidated income (ere cigs) ee ee ea Fe ee ec Revenue Commissions 3563 3375 ©4047 «= 3068 «= 3051 2395.4) 101.0si‘iStCi«éNBSTSCtD Fees from investment banking 108.8 99.3 85.1 55.0 121.3 15.6 445 314 204 24.9 ‘Asset management and portfolio service fees 1027 146.0 © 189.7 140.2 132.2 34.0 34.2 33.
Slide 29: Main revenue items
Main revenue items Commissions Fees from Investment Banking Asset Management and portfolio service fees Fy2006.3| FY2007.3] FY2008.3| FY2009.3 | FY2010.3 Fyani03 (otions of yen) EC Stock brokerage commissions (retail) 1536 983 754 508 553 147 123 125 137 a7 Stock brokerage commissions (other) 79.5 7
Slide 30: Adjustment of consolidated results and segment results
Adjustment of consolidated results and segment results: Income (loss) before income taxes rans (billions of yen) FY2006.3 | FY2007.3 | FY200) FY2009. FY2010.3 | Fr2oto.s | Pap a [on | 18.2 35.2 24.0 377 22.8 Ro 197.2 160.9 122.3 113.4 26.4 AssetManagement 23.8 39.4 34.0 74 18.6 45 44 49 49 5.2 Whole
Slide 31: Retail related data (1)
Retail related data (1) (billions of yen) = SS Commissions 269.4 2514 225.9 151.0 238.9 598 623 61.0 756 50.2 33.7% Sales credit 109.0 968 942 714 638 155 133 15.0 128 13.8 TAG 14% Fees from investment banking 264 24.0 49 134 33.6 5.1 18.1 61 o4 1.2 20.0% 119.3% Investment trust administration fees
Slide 32: Retail related data (2)
Retail related data (2) Stock brokerage commissions and commissions for distribution of investment trusts’ (billions of yen) (billions of yen) 180 70 150 2, 1) 120 * Stock brokerage commissions 40 90 * Commissions fordistribution of Investment rusts 30 60 20 oo 10 o ° F¥2006.3 | FY2007.3 754 Stock b
Slide 33: Retail related data (3)
Retail related data (3) Retail client assets {trillions of yen) 100 "Other "Overseas mutualfunds go ‘= Bond investmenttrusts Stock investmenttrusts 60 = Domestic bonds ™Foreigncurrency bonds a mequites 35 0 tara 706] war 1200] War 32000] War 31,708] War 3,201] Equities 493 485 372 286 39.2 354 344 F
Slide 34: Retail related data (4)
ST Nonurs Retail related data (4) Retail client assets: Net asset inflow’ Full year (billions of yen) (billions of yen) 8,000 6,000 5,000 5,975 6,000 5, 4,000 4,868 4,928 td 4,581 3,000 4,000 os 4,879 2,000 1,289 2,000 a 1,000 ° “213 g 4,000 FY2010.3 FY2011.3 FY2006.3 FY2007.3 FY2008.3 FY2009.3 FY20
Slide 35: Retail related data (5)
Retail related data (5) umber of accounts / IT share’ SS SS eS ee (thousands) Accounts with balance 3,780 3,953 4,165 4.467 4,883 4,894 4,923 Equity holding accounts 1,745 1,853 2,027 2,347 2,572 2,573 2,598 Nomura Home Trade (online trading accounts) 1,969 2,243 2,765 3,095 3,189 3,235 3,277 Full y
Slide 36: Asset Management related data (1)
Asset Management related data (1) - ; (bitions of yen) Pia {2a | Net revenue _ 64.1 88. 88.7 70.4 16.5 72 18.0 18.1 19.3 17.2% Non-interest expenses 403 487 548 52.4 518 12.0 13.2 13.4 13.2 144 174% Income before income taxes 23.8 39.4 34.0 74 18.6 45 41 49 49 62 16.7% ier i ss so (GE dl Sb ea A Ron
Slide 37: Asset Management related data (2)
Asset Management related data (2) Nomura Asset Management Domestic public investment trust market and assets under management Nomura Asset Management market share 2006 | 2007 | 2008 2010 ff 2010 | 2010 (trillions of yen) {triltions of yen) 20 Domestic publc stock investment trusts Market 45.0 59.4 5
Slide 38: Wholesale related data (1)
Wholesale related data (1) Wholesale aan Se Global Markets 658.4 144.4 49.7% 17.3% Investment Banking 64 131.1 248 462 35.5 122 19.0 56.3% 23.2% Net revenue 163.6 789.5 199.3 210.1 168.4 108.6 163.4 50.5% -18.0% Non-interest expenses 553.7 6143 161.1 1616 133.2 1498 166.8 4.0% 3.3% Income (Loss) bef
Slide 39: Wholesale related data (2)
Wholesale related data (2) Private equity related investments (billions of yen) 600 "Terra Firma 500 Asia 400 M74 356.1 "Europe (excluding Terra Firma) 300 "Japan 200 100 0 20a, 207] arse] ar 2202 20] Japan 599 195.5 169.5 191.7 186.9 186.0 Europe (excluding Terra Firma) 388 387 a4 600 604 465 450 A
Slide 40: Number of employees
Number of employees Mar.31,2006 | Mar.31,2007 | Mar.31,2008 | mer.3t.2008 | Mar.31,2010 Jun.30,2010 Sop.30,2010 Japan (excluding FA)’ 9618 10,667 11,561 12,929 12,857 13,370 13,269 Japan (FA)? 1,948 2.174 2.377 2,391 2,196 2,184 2,142 Europe 1,515 1,794 1,956 4.294 4,369 4499 4A71 Americas 1.073 1,3
Slide 41: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com 41