Nomura Holdings, Inc. · TSE:8604
Nomura — FY2011.3 Earnings Presentation
38 slides from Nomura's earnings presentation, April 2011
Slide 1: CFO opening remarks
Thank you for joining us today. I am Junko Nakagawa and I took over the role of CFO from Masafumi Nakada on April 1. Before I outline our financial results, I would first like to offer my thoughts and prayers for the victims of the recent earthquake and tsunami in the hope of a fast recovery from th
Slide 2: ® >This document is produced by Nomura Holdings, Inc. (‘Nomura”). Copyright 2011 Nomura Holdings,
® >This document is produced by Nomura Holdings, Inc. (‘Nomura”). Copyright 2011 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 issued b
Slide 3: Outline
Outline es | Presentation Financial Supplement i © Consolidated balance sheet (p. 21) : nnn © Value at risk (p. 22) : Overview of results (p. 7) © Consolidated financial highlights (p. 23) . . © Breakdown of net revenue (p. 8) © Consolidated income (p. 24) © Retail (p. 9-10) © Main revenue items (p.
Slide 4: Our thoughts and prayers are with the victims
Our thoughts and prayers are with the victims of Japan’s recent earthquake and tsunami
Slide 5: Full year highlights
First, the full year highlights. We had another profitable quarter in terms of both pretax income and net income. This marks our eighth consecutive quarterly profit. Also, all of our business divisions were profitable for the full year. Retail drove our firmwide earnings and Asset Management posted
Slide 6: Fourth quarter net revenue and income
Fourth quarter net revenue was 299.4 billion yen, an increase of 1% quarter on quarter. Income before income taxes increased 35% to 37.4 billion yen. Net revenue in Retail remained roughly unchanged from the prior quarter at 96.2 billion yen. Asset Management net revenue was 21.9 billion yen, up 2%
Slide 7: Full year net revenue and income
For the full year, net revenue totaled 1.13 trillion yen, and income before income taxes was 93.3 billion yen. Fourth quarter net income was 11.9 billion yen and annualized ROE was 2.3%. Full year net income was 28.7 billion yen and ROE was 1.4%. Our effective tax rate for the full year was 69% due
Slide 8: Breakdown of net revenue
This slide shows a breakdown of net revenue. As you can see from the outer circle in the pie graph on the right, Japan accounted for 58% of full year revenues and non-Japan 42%. Please turn to page 9 where I will outline the fourth quarter highlights for each division. 8
Slide 9: Retail results
In Retail, fourth quarter net revenue was 96.2 billion yen and income before income taxes was 17.7 billion yen. For the full year, net revenue was 392.4 billion yen and income before income taxes was 101.2 billion yen. Retail client assets continued to grow steadily until February, but declined slig
Slide 10: Retail sales
Total sales were up 10% quarter on quarter as we continued to provide consulting services to meet the needs of our retail clients. Sales of stocks were particularly strong, jumping 25% compared to the third quarter, the highest level in eight quarters. Sales of foreign bonds increased by 18%. Please
Slide 11: Asset Management results
Asset Management net revenue was 21.9 billion yen for the fourth quarter and income before income taxes was 7.9 billion yen. For the full year, net revenue was 80.7 billion yen and income before income taxes was 25.1 billion yen. Assets under management grew by 600 billion yen to 24.7 trillion yen a
Slide 12: Asset Management inflows and market share
As shown in the graph on the top left, inflows into public stock investment trusts remained high at 340 billion yen, driven primarily by new inflows into multi-currency funds and funds that invest in Japanese stocks. Our share of Japan’s publicly offered investment trust market trended upwards throu
Slide 13: Wholesale results
Wholesale fourth quarter net revenue was 186.3 billion yen and income before income taxes was 29.4 billion yen. For the full year period, net revenue was 630.5 billion yen and income before income taxes was 6.7 billion yen. The quarterly gains in net revenue and income before income taxes were drive
Slide 14: Global Markets
Global Markets net revenue was 137.0 billion yen, down 3% quarter on quarter. Fixed Income net revenue also declined by 3% to 69.4 billion yen. Revenues declined only slightly despite the elevated market volatility and sharp fall in liquidity, especially towards the end of the quarter. OTC derivativ
Slide 15: Global Markets revenue mix
The graphs on the left show how Fixed Income product composition is diversifying the revenue mix. In particular, FX and Securitized Products revenues grew from 17% of total Fixed Income revenues to 31% over the past year. US revenues jumped four-fold on the previous year and 70% of revenues were gen
Slide 16: Investment Banking
Gross revenues in Investment Banking totaled 54.4 billion yen in the fourth quarter, down 12% from the previous quarter. Net revenue jumped 59% to 49.4 billion yen. We executed a large number of ECM deals during the quarter, including a global offering by Resona Holdings. In Japan, we maintained com
Slide 17: Investment Banking diversification
Investment Banking diversified its revenue sources through a disciplined expansion of its product mix and coverage markets. In addition to securing large cross-border deals, we diversified our product mix by arranging leveraged finance for acquisitions and underwriting high-yield bonds. We also won
Slide 18: Non-interest expenses
Turning now to expenses, fourth quarter non-interest expenses declined 2% from the prior quarter to 262 billion yen. For the full year, non-interest expenses totaled 1.04 trillion yen, a decline of 1% from the prior year. We continued to invest, mainly in our international franchise, while also cont
Slide 19: Robust financial position
Our financial position remains robust. As of the end of March, both our Tier 1 and Tier 1 common ratios were 16.4%. Total assets were 36.7 trillion yen and shareholders’ equity was 2.1 trillion yen. Gross leverage was 17.6 times, while net leverage was 10.3 times. Level 3 assets totaled 700 billion
Slide 20: Financial Supplement
Nomura | Financial Supplement 20
Slide 21: Consolidated balance sheet
Consolidated balance sheet Consolidated balance sheet Increase (Decrease) Assets Liabilities Cash and cash deposits Short-term borrow ings Payables and deposits Loans and receivables Collateralized financing Trading liabilities Collateralized agreements Other liabilities Long-term borrow ings =e vos
Slide 22: Value at risk
Value at risk = Definition = From April 1, 2010 to March 31, 2011 (billions of yen) — 99% confidence level (2.33 standard dev.) — Maximum: 13.6 ~ 1-day time horizon for outstanding portfolio ~ Minimum: 6.0 ~ Inter-product price fluctuations considered ~ Average: 9.1 voce EES ee 2007 2008 2009 2010 2
Slide 23: Consolidated financial highlights
Consolidated financial highlights Full year (billions of yen) (billions of yen) 25 5% "== Netincome (loss) ROE (%) 200 20 4% ° 1s 3% 10 % 5 1% 8288 708.2 Net revenue 10911 7873-3126 1,1508 1,130.7 Income (loss) before income taxes 3185 = 649 = --7803 105.2 93.3 Net income (loss) attributable to Nomu
Slide 24: Consolidated income
Consolidated income iSiins clyeni es Revenue Commissions 337.5 404.7 306.8 395.1 405.5 96.6 118.1 83.5 100.0 103.8 Fees from investment banking 99.3 85.1 95.0 1213 107.0 31.4 204 24.9 34.0 278 Asset management and portfolio service fees 146.0 189.7 140.2 132.2 143.9 33.7 49 337 37.4 38.3 Net gain on
Slide 25: Main revenue items
Main revenue items (billions of yen) Stock brokerage commissions (retail) 983 751 508 553 125 137 87 127 16.3 Stock brokerage commissions (other) 732 1666 ©1447 © 140.3 330 403 307 359 377 PRMENEEEEEEEE Other brokerage commissions 68 93 79 8.0 26 22 18 23 5.3 Commissions for distribution of investme
Slide 26: Income (loss) before income taxes
Income (loss) before income taxes FY2009.3 | FY2010.3 | FY2011.3 . 18.2 (billions of yen) SS nomura | Adjustment of consolidated results and segment results: are as “Other” results outside in our 2. Certain reclassifications of previously reported amounts have been made to conform to the current yea
Slide 27: Segment Other
Segment “Other” Income (loss) before income taxes (baions of yen) {tilions of yen) 40 40 = —Q4 loss before income taxes of ¥14.6 bn. ° = — “Other” includes fair value gain on own debt 0 of Y13.4bn. -40 40 -80 80 120 120 -160 ~160 -200 +200 240 -240 sigan a Pe [oe De Te | sis tea pen oc “hedging tran
Slide 28: Retail related data (1)
Retail related data (1) Pine opel Pe [ee [ee] | Sernialin a aE me one Gea Ge TR sod Swen aah ee Sales credit 968 942 714 638 528 15.0 128 138 13.0 13.2 1.5% 11.9% Fees from investment banking 24.0 149 134 33.6 423 64 94 12 11.0 10.7 3.1% 74.3% Investment trust administration fees and other 475 59.7
Slide 29: 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 0 50 120 90 ‘= Commissions fordistribution of 30 — 60 20 30 40 ty) ‘Stock brokerage commissions 98.3 75.1 508 55.3 51.0 87 12.7 15.9 249% 27.0% Co
Slide 30: Retail related data (3)
Retail related data (3) Retail client assets (triltions of yen) © Other 100 = Overseas mutual funds = Bond investmenttrusts ™ Stock investmenttrusts = Domestic bonds "Foreigncurrencybonds 40 68.4 723 70.6 = Equities 20 0 Part, 200] Mart 708] Maro 209] War 3120 Equities 48.5 37.2 286 39.2 35.1 344 37
Slide 31: Retail related data (4)
Nomura | Retail related data (4) Retail client assets: Net asset inflow’ (billions of yen) (billions of yen) 8,000 6,000 6,000 4,000 2,000 41, Retail client assets exclude portion from regional financial institutions. Note: Net asset inflow = asset inflow ~ asset outflow. 31 31
Slide 32: Retail related data (5)
Retail related data (5) umber of accounts / IT share’ Mar. 31. 2007] Mar. 31. 2008 mar. 21 200] mar. 312010 Jun. 30. 2010] Sep. 30, 2010] Dec. 30,2010 | Mar. 30. 2011 Accounts with balance 3,953 4,165 4,467 4,883 4,894 Equity holding accounts 1,853 2,027 2,347 2,572 2,697 Nomura Home Trade (online t
Slide 33: Asset Management related data (1)
Asset Management related data (1) Fy2007.3 | Fy2008.3 | Fy2009.3 | Fy2010 YY (billions of yen) Net revenue 88.1 88.7 59.8 70.4 80.7 18.0 18.1 19.3 214 21.9 2.5% 21.8% Non-interest expenses 487 548 52.4 518 55.7 13.1 13.2 1441 144 14.0 3.0% 6.8% Income before income taxes 39.4 34.0 74 18.6 25.1 49 49
Slide 34: Asset Management related data (2)
Asset Management related data (2) Nomura Asset Management Domestic public investment trust market and net assets in investment trusts! Nomura Asset Management market share (talons of yen) AA Mar. 34, | Mar. 34, | Mar. 31, | Mar. 34, [| Jun. 20, | Sep. 30, | Dec. 31, | Mar. 34, a {trillions of yen) (
Slide 35: Wholesale related data (1)
Wholesale related data (1) Wholesale nomen Global Markets 1573 6584 8188 1330 964 1444 1410 Investment Banking 64 1311 111.7 35.5 122 19.0 wa ‘Netrevenue 1636 7695 6305 1684 1086 1634 1722 x Non-interest expenses 5537 6143 6238 1332 1498 1558 1614 i 17.8% Income (Loss) before income taxes 7173 1752
Slide 36: Wholesale related data (2)
Wholesale related data (2) Private equity related investments SC (billions of yen) 600 543.4 Total 500 "Terra Fima ws 356.1 "Asia ® Europe (excluding Terra Firma) "Japan 0 Sub Total 100 ° I Soo Japan 195.5 169.5 191.7 186.9 186.0 195.7 Europe (excluding Terra Firma) 35.7 414 60.0 60.4 465 45.0 323 3
Slide 37: Number of employees
Number of employees | mar.21,2007 | Mar. 31,2008 | Mar.31,2009 ]_ marss.20r0 | Jun.30,2010 Sep.30,2010 Dec.31,2010 | mar.atz011 | Japan (excluding FA)’ 10,667 11,561 12,929 12,857 13,370 13,259 13,021 12,829 Japan (FA)? 2,174 2.377 2391 2,196 2,184 2,142 2,113 2,089 Europe 1,791 1,956 4.294 4,369 44
Slide 38: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com 38