Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2019/20 Earnings Presentation
34 slides from Nomura's earnings presentation, October 2019
Slide 1: CFO remarks on first half and second quarter results
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. First, I would like to give my heartfelt condolences to those affected by Typhoon Hagibis and pray for a swift recovery. I will now give you an overview of our results for the first half and the second quarter of the year ending March 20
Slide 2: Presentation and Financial Supplement contents
Presentation Financial Supplement © Executive summary (p. 2-3) © Overview of results (p. 4) © Business segment results (p. 5) © Retail (p. 6-7) © Asset Management (p. 8-9) © Wholesale (p. 10-12) © Non-interest expenses (p. 13) © Robust financial position (p. 14) © Funding and liquidity (p. 15) © Con
Slide 3: First half results overview
For the first half of the year, net revenue increased 29 percent year on year to 715.4 billion yen, while income before income taxes jumped 14.4 times to 203.3 billion yen. Market activity remained muted throughout the period as US-China trade friction raised concerns of an economic slowdown and geo
Slide 4: Second quarter firm-wide results
Firm-wide net revenue for the quarter was 383.4 billion yen, up 15 percent quarter on quarter. Income before income taxes was 128.5 billion yen, an increase of 72 percent over last quarter. The biggest driver of this performance was the realized gain of 73.3 billion yen from the sale of Nomura Resea
Slide 5: Highlights
Highlights (billions of yen, except EPS and ROE) 36% 715.4 | 29% 10% 512.1 | 5% 275.1x 203.3 [ 14.4x - 194.4 | - - Y57.66 - 14.6%
Slide 6: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes Ree 0a Yor Gia Yor 76.9 5% 10% 157.5 12% 25.7 -26% 4% 2 19% 156.7 -2% 6% 316.2 11% Income (loss) befare income taxes {| 1285 12% 275.1 | gain (loss) on investments in equity 08 “Additional information on “Other" (2Q) = Gain from sale of Nomura Resear
Slide 7: Retail net revenue and income
Net revenue in Retail totaled 76.9 billion yen, down 5 percent quarter on quarter. Income before income taxes declined 35 percent to 5.3 billion yen. Retail investor sentiment was weaker due to factors such as US-China trade friction, resulting in softer sales of stocks and investment trusts. In add
Slide 8: Retail AuM and recurring revenue
As you can see on the bottom left, investment trust and discretionary investment AuM stood at 12.7 trillion yen, representing a decline from June due to weaker sales of investment trusts and fund wraps. Annualized recurring revenue, shown on the top left, was 88.8 billion yen, down slightly quarter
Slide 9: Asset Management results
As you can see on the top left, net revenue was 25.7 billion yen, down 26 percent from last quarter. Income before income taxes was 10 billion yen, down 45 percent quarter on quarter. This is due to a decline in gain/loss related to American Century Investments, which was 8.7 billion yen in the firs
Slide 10: Asset Management inflows and ACI collaboration
The top left of page nine shows inflows of 381 billion yen. The investment trust business reported inflows of 259 billion yen mainly from ETFs, funds distributed through banks and funds for defined contribution pension plans. The investment advisory business reported inflows of 121 billion yen, havi
Slide 11: Wholesale results
Second quarter net revenue in Wholesale was 156.7 billion yen, down 2 percent quarter on quarter. Income before income taxes declined 5 percent to 18.9 billion yen. Global Markets net revenue declined 2 percent. Equities reported higher revenues, but Fixed Income slowed from the strong previous quar
Slide 12: Global Markets net revenue by business line
Global Markets net revenue was 132.8 billion yen, down 2 percent from the prior quarter. Fixed Income net revenue was 77.2 billion yen, a decline of 6 percent from the strong previous quarter. Despite a challenging environment with interest rates fluctuating in Europe and the US, prudent risk manage
Slide 13: Investment Banking net revenue
Net revenue was 23.9 billion yen, roughly unchanged from the previous quarter despite a decline in global fee pools. In Japan, DCM had a solid quarter tapping into demand from issuers. Internationally, ALF revenues slowed in EMEA and the Americas, while M&A improved. Please turn to page 13 for an ov
Slide 14: Non-interest expenses
Second quarter non-interest expenses totaled 254.9 billion yen, down 1 percent quarter on quarter. Cost reduction initiatives contributed to a 4 percent decline in compensation and benefits. Occupancy and related depreciation declined 4 percent as a result of a decline in one-off expenses related to
Slide 15: Robust financial position
Our balance sheet at the end of September was 45.7 trillion yen, representing an increase of 3.2 trillion yen from 42.5 trillion yen at the end of June. This is due mainly to an increase in repo transactions and trading assets. As shown on the bottom left, Tier 1 capital was 2.7 trillion yen and ris
Slide 16: Concluding remarks on cost reduction and Retail reorganization
To conclude, our second quarter results were lifted significantly by changing our capital relationship with Nomura Research Institute. But looking just at our core business, we had a fairly good quarter given the challenging market environment and our structural reforms. The whole firm moved swiftly
Slide 17: Financial Supplement
Financial Supplement 16
Slide 18: Consolidated balance sheet
Consolidated balance sheet (billions of yen) Assets Total cash and cash deposits ‘Short-term borrowings Total loans and receivables Total payables and deposits Total collateralized financing Trading liabilities Total collateralized agreements: Other liabilities Total trading assets' and private oe L
Slide 19: Value at risk
= Definition = From April 1, 2019, to September 30, 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: 5.0 fren BSS | WA asa Equity 1.2 44 24 41 441 42 18 Interest rate 34
Slide 20: Consolidated financial highlights
Full year Quarter (pltons of yen) (billions of yen) 7.9% 10% 1450 mm Net income (loss) 200 ee attributable to Nomura 6% 100 Holdings, Inc. (NHI) 49 4% shareholders 2% 50 0 0% —ROE(%) 5100 9 100.4 200 60 -300 100 ‘Net revenue 1,497.0 1,116.8 Income (loss) before income taxes 328.2 37 05 16.2 244 748
Slide 21: Consolidated income
1 Full year Quarter oon aoe raat Revenue ‘Commissions' 373.3 203.1 748 727 66.1 682 65.3 Fees from investment banking 101.7 101.5 19.1 B41 33 273 22.3 Asset management and portfolio service fees 245.6 245.5, 62.7 60.6 59.2 600 59.9 Net gain on trading 4429 343.0 75.8 69 64 1128 105.6 Gain (loss) on
Slide 22: Main revenue items
1 Full year Quarter (oon of yor) eee Stock brokerage commissions' 243.8 192.0 414 50.5 4.9 426 42.5 Other brokerage commissions 17.0 14.4 34 43 25 27 28 Comms sions for distribution of investment trusts 857 56.6 15.6 11.5 11.7 16.4 12.6 Other 26.9 30.0 84 64 8.0 64 74 Total 3733 293.1 748 727 66.1 6
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 teins Ba PA oe oe eR [am | | te Retail 103.1 49.5 12.2 14.0 . 81 5.3 Asset Management! 66.2 34.2 8.9 06 18.4 10.0 Wholesale 100.6 111.4 49 -95.9 20.0 18.9 Three business segments total 269.9 2
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 31.5 20.0 15.1 178 a oo a _—@ 8 EE 28 -200 -245 -40.0 Net gain (loss) related to economic hedging transactions : 65 18 -16.0 25.1 66 128 7.0 Realized gain (loss) on investments in equity Securties he
Slide 25: Retail results
Full year Quarter mr cen Prams ree ag ge a Commissions 1927 1428 368 at 310 MS 312 86% 15.4% COtwhich. stock brokerage commission 822 2 153 158 122 125 126 1.0% 17.5% ‘Ofwhich, ‘or of ‘trusts 87.1 57.9 156 117 121 165 126 23.6% Sales credit 915 Ex) 155 109 105 149 127° 15.0% Fees from investment ban
Slide 26: Retail client assets
Retail client assets (trillions of yen) = Other 140 122.8 120 117.7 147 410.0 14.7 113.1 114.8 ‘= Foreign investment trusts 100 "Bond investment trusts 80 = Stock investment trusts Ca) ® Domestic bonds 40 —— currency 2 = Equities 0 para Equities 75.7 71.9 79.8 68.4 71.9 70.3 71.9 Foreign currency bo
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 4,762 1,500 1,500 1,000 1,000 682 500 500 : | 0 0 = 6 121 500 -500 26 26
Slide 28: Number of accounts
Number of accounts ((mousands) —Fy2oi718 Fy2owi9y2te9 20ND Accounts with balance 5,318 5,338 5,318 5,354 5,338 5,335 5,326 Equity holding accounts 2,822 2,908 2,829 2,905 2,908 2,914 2,913 Online service accounts" 4,387 4,569 4,470 4,526 4,569 4,601 4,632 New Individual accounts / IT share? Full yea
Slide 29: Asset Management results and AuM
Full year’ Quarter’ —" feat eee ges eee ee | | 2a saa ta Ravine (Ost. ACH-vahetid gairinons) 105.3 102.9 26.1 245 26.0 25.8 25.0 3. 43% ‘AQLielated gain/loss 24 5.0 15 83 49 87 07 = 92.3% : Net revenue 127.3 97.8 247 162 09 345 25.7 25.6% 4.0% Non-interest expenses 61.2 637 158 156 16.5 16.4 16.6 4.
Slide 30: Asset inflows/outflows by business
Asset inflows/outflows by business Full year Quarter (otons of yen) [Frans | rrawre ee | Investment trusts business 3,131 2,187 280 1,141 503 672 259 of which ETFs 3,022 2,531 510 1,391 483 642 246 Investment advsory business 203 20 156 -354 109 164 121 Total net asset inflow 3,334 2,207 436 787 612
Slide 31: Wholesale results and revenue breakdown
Full year Quarter = 2 a Seo oe oe ee | — 20 Qt Net revenue 715.3 555.4 147.7 128.2 142.2 159.5 156.7 1.7% 6.1% Non-interest expenses 614.7 666.8 142.7 224.1 155.3 139.5 137.8 1.2% 3.5% Income (loss) before income taxes 100.6 111.4 49 -95.9 -13.0 20.0 18.9 5.4% 38x Breakdown of Wholesale revenues! Fu
Slide 32: Number of employees
4. Includes Powai office in india Japan 15,819 15,852 16,296 §= 16,138 »= «15,852, 16,423. 16,119 Europe 3,057 2,909 3,020 2,963 2,909 2,775 2,734 Americas 2,362 2,357 2,390 2,384 2,357 2,230 2,167 Asia and Oceania’ 6,810 6,746 6,843 6,796 6,746 6,684 6,692 Total 28,048 27,864 28,549 28,281 «27,864
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