Nomura Holdings, Inc. · TSE:8604
Nomura — Q3 FY2011/12 Earnings Presentation
41 slides from Nomura's earnings presentation, 2012
Slide 1: Opening Remarks: Takumi Shibata
Opening Remarks: Takumi Shibata Before I hand over to our CFO to update you on our third quarter results, I would first like to say a few words. We will then be happy to take your questions. All business divisions were profitable in the third quarter on a pretax basis and we reported higher revenues
Slide 2: Opening Remarks (continued)
In anticipation of changing market conditions and tighter regulations, we reduced risk assets and enhanced our risk management. We will continue to expand our offering of products and services that add value to our clients, while maintaining our robust financial position and ample liquidity as Asia’
Slide 3: Outline
Outline Presentation NOMURA Financial Supplement © 3Q key points (p. 3) © Executive summary (p. 4) © Overview of results (p. 5) © Business segment results (p. 6) © Retail (p. 7-8) © Asset Management (p. 9-10) © Wholesale (p. 11-15) © Non-interest expenses (p. 16) © Progress of cost reduction program
Slide 4: Overview of Results: Junko Nakagawa
Overview of Results: Junko Nakagawa I will now give you an overview of our results for the third quarter of the fiscal year ending March 2012. Please turn to page three of the document entitled “Consolidated Results of Operations”. Both revenues and income increased during the third quarter and all
Slide 5: Net revenue and income overview
Please turn to page four. Net revenue increased 34 percent quarter on quarter to 404.9 billion yen. Income before income taxes was 34.5 billion yen and net income was 17.8 billion yen. For the fiscal year to date, net revenue was 1.04 trillion yen, an increase 25 percent compared to the same period
Slide 6: Firm-wide and business segment results
Pages five and six give you an overview of firm-wide and business segment results. I will now give you a brief overview of the performance at each division. Please turn to pages seven and eight for an overview of Retail. 5
Slide 7: Business segment results
Business segment results NOMURA Eee eee e rece eeeeeeeeee ee eee ee e ee eeeeeneeeeeeeeen eee eeey Net revenue and income (loss) before income taxes (billions of yen) FY2011/12 Q0Q YoY FY2011/12 YoY 3Q % % 1Q-3Q % Revenue Retail 797 -5% - 18% 257.9 -13% Asset Management 15.3 -4% =11% 50.1 42% Wholes
Slide 8: Retail results
Third quarter net revenue in Retail was 79.7 billion yen, a decline of 5 percent from the second quarter. Income before income taxes decreased 6 percent to 10.1 billion yen. Retail revenues declined only slightly from the previous quarter and we reported our seventh straight quarter of net client as
Slide 9: Retail: Client franchise continued to expand despite decline in sales
Total sales Retail: Client franchise continued to expand despite decline in sales NOMURA (billons of yen) mStocks Net asset cues Seventh —— quarter went inflows =Bonds sinvestmenttrusts = Others = Total sales: -9% QoQ . Investment trusts: Sales down QoQ but resilient compared to market Enhanced prod
Slide 10: Asset Management results
Please turn to pages nine and 10 for Asset Management. Net revenue in Asset Management was 15.3 billion yen, down 4 percent from last quarter. Income before income taxes declined 10 percent to 4.2 billion yen. While assets under management have remained flat since the second quarter, Asset Managemen
Slide 11: Asset Management: High market share in investment trusts
investment advisory assets Fund flows in public stock investment trusts’ 2 Asset Management: High market share in investment trusts, high level of NOMURA Investment advisory assets under management! > (billions of yen) 500 = Public stock investmenttrusts (exc. ETF) = ETF 400 ] 344 31 300 236 200 97
Slide 12: Wholesale results overview
Please turn to page 11 for an overview of Wholesale results. Wholesale net revenue more than doubled to 176.2 billion yen. Income before income taxes rebounded both quarter on quarter and year on year, jumping 3.5 times compared to last quarter to 37.8 billion yen. Revenues increased significantly i
Slide 13: Wholesale: Global Markets
Next, please turn to page 12 for a breakdown of Wholesale results. First, Global Markets. Net revenue in Global Markets jumped 63 percent quarter on quarter to 118.7 billion yen. Income before income taxes was 8.4 billion yen. In Fixed Income, most products posted quarterly gains. The international
Slide 14: Fixed Income and Equities by region
Page 13 gives a breakdown of Fixed Income and Equities performance by region. 13
Slide 15: Investment Banking results
Please turn to page 14 for Investment Banking results. Investment Banking gross revenue increased 90 percent quarter on quarter to 45.1 billion yen. Net revenue including the private equity business was 57.4 billion yen. Income before income taxes was 29.4 billion yen. Revenues were driven by Japan
Slide 16: Investment Banking gross revenue by region
Please turn to page 15. The graph on the left shows average gross revenue for the first two quarters as well as for the third quarter. As you can see, international revenues improved substantially and our domestic revenue base remained solid. 15
Slide 17: Non-interest expenses
Please turn to page 16 for an outline of third quarter non-interest expenses. Although non-interest expenses increased by 7 percent to 370.5 billion yen, they actually declined 4 percent when you exclude the effects from making Nomura Land and Building a subsidiary. Compensation and benefits decline
Slide 18: Progress of cost reduction program
Turning now to progress of our cost reduction program, the graph on page 17 shows we are on track to reach the targets of our $1.2 billion reduction announced in July and November last year. Wholesale, which accounts for 87 percent of the $1.2 billion, had achieved 66 percent progress by the end of
Slide 19: Robust financial position
Please turn to page 18 for an update of our financial position at the end of the quarter. Total assets were 33.5 trillion yen, gross leverage was 16.2 times and net leverage was 10.1 times, all of which are lower than at the end of the second quarter. The table on the bottom left shows that as a res
Slide 20: Tier 1 capital and risk-weighted assets
This page gives you a comparison of our risk-weighted assets and Tier 1 ratio as of the end of September and December. If we were to apply Basel 2.5 to our September-end balance sheet, market risk would have been 3.8 trillion yen higher, giving risk-weighted assets of 16.7 trillion yen. During the t
Slide 21: Funding and liquidity
Please turn to page 20 for an overview of funding and liquidity. The top left shows our balance sheet, 75 percent of which is composed of highly liquid trading related assets. On the bottom right you can see that 80 percent of our unsecured funding is in the form of long-term debt and is diversified
Slide 22: Exposure to European peripheral countries; Closing Remarks
Page 21 shows our exposure to peripheral Europe. Our net country exposure at the end of December was $1.52 billion, representing a 57 percent decline from $3.55 billion at the end of September. Exposure to Italy declined from $2.81 billion, or 71 percent of the total, at the end of September to $800
Slide 23: Closing Remarks: competitive advantages
Second, financial institutions in the developed world such as banks and insurers require solutions to help them overcome the eurozone crisis and comply with financial regulations. We are uniquely positioned to provide these solutions. And third, Japanese companies are increasingly going overseas. We
Slide 24: Consolidated balance sheet
Consolidated balance sheet (billions of yen) Assets Total cash and cash deposits Total loans and receivables Collateralized agreements Total trading assets’ and private equity investments Total other assets Total assets 1. Including secunties pledged as collateral. Liabilities Short-term borrowings
Slide 25: Value at risk
Value at risk NOMURA = Definition = From April 1 to December 31, 2011 (billions of yen) 99% confidence level (2.33 standard dev.) Maximum: 9.7 1-day time horizon for outstanding portfolio Minimum: 4.9 — Inter-product price fluctuations considered — Average: 6.5 47 42 3.8 26 18 16 1.9 1.5 Equity Inte
Slide 26: Consolidated financial highlights
Consolidated financial highlights NOMURA Full year Quarter (billions of yen) (billions of yen) 400 20% 8.3% m= Netincome ( 200 - | 10% loss) 678287 ° 37% 14% O% ROE (%) 678 -200 -400 | L -600 -800 708.2 Net revenue 40911 7873 3126 11508 1,130.7 2959 2094 3304 3016 4049 Income (loss) before income ta
Slide 27: Consolidated income
Consolidated income (billions of yen) Full year Quarter NOMURA Revenue Commissions 337.5 404.7 306.8 395.1 405.5 100.0 103.8 96.8 85.9 74.0 Fees from investment banking 99.3 85.1 55.0 121.3 107.0 34.0 278 13.8 13.8 17.2 Asset management and portfolio service fees 146.0 189.7 140.2 132.2 143.9 37.1 3
Slide 28: Main revenue items
Main revenue items NOAURA Full year Quarter ec a ee feat see commissions 983 751 508 553 514 127 1630-87) 8270 ona nerase commissions 732 1666 1447 1403 1446 369 377 «342 34.4 32.8 Other brokerage commissions 68 9.3 79 8.0 11.5 23 5.3 25 3.2 2.0 Commissions for distribution of investment trusts 120.
Slide 29: Adjustment of consolidated results and segment results
Adjustment of consolidated results and segment results: Income (loss) before income taxes NOMURA Full year Quarter (bilions of yen) “Frater Freres Frotee rea —Fyzoont Fvaont2 sa 4a ta aaa 160.9 122.3 18.2 113.4 101.2 23.0 17.7 22.0 10.7 10.1 36.3 31.4 41 15.2 20.0 5.6 63 74 47 4.2 156.0 -150.1 717.3
Slide 30: Segment “Other”
Segment “Other” Income (loss) before income taxes Net gain (loss) related to economic hedging transactions Realized gain on investments in equity securities held for operating purposes Equity in earnings of affiliates Corporate items Others Income (Loss) before income taxes NOMURA Full year Quarter
Slide 31: Retail related data (1)
Retail related data (1) (billions of yen) Full year Quarter NOMURA Commissions 251.4 225.9 151.0 2389 2448 60.2 587 48.2 19.7% -35.7% Sales credit 968 942 714 638 528 130 132 15.2 130 15.2 16.3% 16.7% Fees from investment banking 240 149 134 336 423 11.0 107 62 95 18.7 445% 24.7% Investment trust ad
Slide 32: Retail related data (2)
Retail related data (2) NOMURA Stock brokerage commissions and commissions for distribution of investment trusts’ Full year Quarter (billions of yen) (billions of yen) 80 70 5 150 120 = Stock brokerage commissions 90 = Commissions for distribution of investmenttrusts 60 30 0 Stock brokerage commissi
Slide 33: Retail related data (3)
Retail related data (3) NOMURA 1. 2 3s and warrants. 3__includes annutty insurance. Euroyen bonds have been moved from domestic bonds to foreign currency bonds from the third quarter of the fiscal year ended March 31, 2009, Includes Retail client assets Full year Quarter (trillions of yen) 100 Other
Slide 34: Retail related data (4)
Retail related data (4) NOMURA Retail client assets: Net asset inflow’ Full year Quarter (billions of yen) (billions of yen) 8,000 6,000 5,000 5,975 6,000 - 4,868 4,928 5278 4,000 4,000 3,042 3,000 2,122 2,000 2,000 847 1.107 4,000 _ ei - o- - : : : — mm) — Fyzoiott FR0NIZ BEES ae 1, Retell clent as
Slide 35: Retail related data (5)
Retail related data (5) NOMURA Number of accounts (Thousande) oe | eee | eet | a |e | ae [ae [ee Accounts with balance 3,953 4,165 4,467 4,883 4,936 4,945 4,954 4,966 Equity holding accounts 1,853 2,027 2,347 2,572 2,695 2,696 2,703 2,707 Nomura Home Trade / 2,243 2,765 3,095 3,189 3,328 3,348 3,369
Slide 36: Asset Management related data (1)
Asset Management related data (1) NOMURA Net revenue 80.7 81.4 51.9 62.1 66.5 17.3 17.3 18.8 16.0 15.3 41% 11.4% Non-interest expenses 44.4 50.0 478 46.8 46.5 11.7 11.0 11.4 11.2 11.4 1.6% 5.5% Income before income taxes 36.3 31.4 44 15.2 20.0 5.6 6.3 74 47 42 10.0% -23.9% 1. The defined contributio
Slide 37: Asset Management related data (2)
Asset Management related data (2) Nomura Asset Management assets under management Domestic public investment trust market and Nomura Asset Management market share? NOMURA Public stock investment trusts 10.8 Public bond investment 58 ‘trusts i Privately placed investment — 22 trusts = Investment trus
Slide 38: Wholesale related data (1)
Wholesale related data (1) NOMURA Wholesale i ae ae a (elions of yen) cere err 3a at QS Global Markets -157.3 518.8 141.0 137.0 130.1 72.6 118.7 63.4% 15.8% Investment Banking 6.4 tt 111.7 31.1 49.4 11.2 67 57.4 8.6x 84.5% Net revenue -163.6 789.5 630.5 172.2 186.3 141.2 79.3 176.2 2.2x 2.3% Non-int
Slide 39: Wholesale related data (2)
Wholesale related data (2) NOMURA Private equity related investments Full year Quarter (billions of yen) 600 543.4 = Terra Firma wAsia 313.7 286.4 ™mEurope (excluding Terra 208.9 Firma) = Japan Japan 195.5 169.5 191.7 186.9 165.9 159.7 146.0 71.2 Europe (excluding Terra 35.7 MA 60.0 60.4 33.5 29.2 2
Slide 40: Number of employees
Number of employees NOMURA Japan (excluding FA)" 10,667 11,561 12,929 12,857 12,829 20,263 20,105 19,882 Japan (FA)? 2,174 2,377 2,391 2,196 2,089 2,096 2,078 2,048 Europe 1,791 1,956 4,294 4,369 4,353 4,436 4,492 4,143 Americas 1,322 1,063 1,079 1,781 2,348 2,383 2,537 2,466 Asia-Pacific® 900 1,070
Slide 41: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com NOMURA 40