Nomura Holdings, Inc. · TSE:8604
Nomura — Q3 FY2017/18 Earnings Presentation
33 slides from Nomura's earnings presentation, January 2018
Slide 1: Third quarter results overview
I will now give you an overview of our results for the third quarter ended December 2017. Please turn to page two.
Slide 2: Outline
Outline Presentation NOMURA Financial Supplement Executive summary (p. 2) Overview of results (p. 3) Business segment results (p. 4) Retail (p. 5-6) Asset Management (p. 7-8) Wholesale (p. 9-11) Non-interest expenses (p. 12) Robust financial position (p. 13) Funding and liquidity (p. 14) Consolidate
Slide 3: Nine months to December results
First, let’s take a look at the nine months to December. Income before income taxes was 281.2 billion yen, an increase of 17 percent over the same period last year. Net income was 196.7 billion yen, up 10 percent year on year. ROE was 9.3 percent and EPS was 55.12. Last year, strong corporate earnin
Slide 4: Booking entity strategy and NCM gain
In 2012, we started to reconfigure our booking entity strategy, and in 2015 we decided to wind up Nomura Capital Markets, our subsidiary in EMEA that managed our derivatives positions and risk. Since that company was established, the yen has depreciated significantly and Nomura Holdings’ investment
Slide 5: Net revenue and income before income taxes
Net revenue and income before income taxes (billions of yen) Net revenue FY2017/18 FY2017/18 Bal 0a YoY Aa YoY 111.3 +9% +10% 314.8 +16% Net revenue | 406.6 +16% +10% 1,118.9 46% Income Retail 31.3 422% 421% 817 before 9, one Asset Management 20.8 +2% +49% 54.9 taxes Wholesale 14.0 17% -70% 56.4 Oth
Slide 6: Retail overview
Please turn to page five for an overview of Retail. Third quarter net revenue was 111.3 billion yen, up 9 percent quarter on quarter, and income before income taxes increased 22 percent to 31.3 billion yen. The market rally lifted investor sentiment and as you can see on the bottom, sales of stocks
Slide 7: Retail recurring revenue and flows
The graph on the top left of page six shows that annualized recurring revenue has grown to nearly 90 billion yen. Investment trust net inflows turned negative as investors sold mainly japan stock funds to lock in profits. However, discretionary investment net inflows improved to around 80 billion ye
Slide 8: Asset Management
Please turn to page seven for Asset Management. Net revenue was 36.5 billion yen, up 3 percent quarter on quarter. The market rally and inflows into ETFs lifted assets under management to over 50 trillion yen for the first time ever. This expansion led to a rise in asset management fees, which combi
Slide 9: Asset Management inflows and ETFs
Please turn to page eight. The top of the page shows inflows into the investment trust business of 770 billion yen, and Nomura Asset Management’s share of the public investment trust market increased to nearly 27 percent. Ongoing inflows into ETFs led to ETF AuM rising to 13.8 trillion yen, an incre
Slide 10: Wholesale
Please turn to page nine for Wholesale. Net revenue increased 4 percent quarter on quarter to 165.6 billion yen. The market rally supported a robust quarter in Equities in Japan and the Americas, while Investment Banking booked stronger revenues in Japan and AEJ. This quarter’s earnings include an u
Slide 11: Global Markets
Turning now to each business line, please see page 10 for Global Markets. Net revenue increased 3 percent from last quarter to 140.2 billion yen. Fixed Income remained roughly unchanged quarter on quarter at 79.4 billion yen. While low market volatility and subdued client activity had an impact in t
Slide 12: Investment Banking
Please turn to page 11 for Investment Banking. As shown on the top left, net revenue increased 11 percent to 25.5 billion yen. Gross revenue, which is before allocations to other divisions, was 38.9 billion yen, down 11 percent quarter on quarter. Roughly half of the margin loan unrealized loss, or
Slide 13: Non-interest expenses
Please turn to page 12 for an overview of costs. Firmwide non-interest expenses increased by 6 percent or around 17 billion yen from last quarter to 285.9 billion yen. The main reasons for the increase are higher compensation and benefits due to increased bonus provisions in line with pay for perfor
Slide 14: Robust financial position
Page 13 shows our financial position. At the end of December, our tier 1 capital ratio was 18.2 percent and our common equity tier 1 capital ratio was 17.3 percent, both of which are roughly unchanged from the end of September. That concludes the overview of our third quarter results. 13
Slide 15: Summary and outlook
To sum up, this quarter included a gain from NCM and Group net income was at the highest level since the January to March quarter in 2006. For the three segments that represent our core business, while we once again recognized the importance of stringent risk management, we were able to increase inc
Slide 16: Financial Supplement
Financial Supplement 15
Slide 17: Consolidated balance sheet
(billions of yen) Assets Total cash and cash deposits Total loans and receivables Total collateralized agreements: 18,730 Total trading assets’ and private equity investments 15,192 Total other assets 2,860 Total assets 42,852 = | 2 —: 518 Liabilities Short-term borrowings Total payables and deposit
Slide 18: Value at risk
= Definition = From April 1, 2017, to December 31, 2017 (billions of yen) — 99% confidence level — Maximum: 5.3 — 1-day time horizon for outstanding portfolio — Minimum: — 3.0 — Inter-product price fluctuations considered — Average: 3.8 (billions of yen) Equity Interest rate 3.8 27 2.9 27 25 3.0 27
Slide 19: Consolidated financial highlights
Full year Quarter (billions of yen) (billions of yen) 300 8.7% 10% 1) sey 87% 31% 93% . _—__~> sd 7.7% mmm Net income 8% 80 attributable to Nomura Holdings, 200 Inc. ("NHI") 6% 60 shareholders — ROE 4% 40 OE (%) 100 Gis 51.9 2% 20 0% 0 Net revenue 1,395.7, 1,403.2 368.6 349.1 360.8 351.5 406.6 Incom
Slide 20: Consolidated income
Full year Quarter (billions of yen) Revenue Commissions 432.0 327.1 86.3 90.0 91.0 85.3 101.7 Fees from investment banking 118.3 92.6 23.7 28.2 22.7 27.4 29.3 Asset management and portfolio service fees 229.0 216.5 55.1 56.6 58.3, 61.2 63.8 Net gain on trading 354.0 475.6 108.4 108.3 120.5 88.4 87.7
Slide 21: Main revenue items
(billions of yen) Full year Quarter Stock brokerage commissions 275.0 210.0 57.5 57.1 57.0 54.6 68.4 Other brokerage commissions 23.3 15.1 43 3.0 3.4 3.2 4.3 Comnissions for distribution of investment trusts 89.5 75.1 19.1 22.6 23.2 20.9 22.1 Other 44.2 26.9 5.4 7.3 7.3 6.6 6.9 Total 432.0 327.1 86.
Slide 22: Income before income taxes by segment and region
Adjustment of consolidated results and segment results: Income (loss) before income taxes Full year Quarter (billions of yen) Retail’ 127.6 74.8 25.9 25.8 24.9 25.5 31.3 Asset Management 36.7 42.3 14.0 87 13.6 20.5 20.8 Wholesale 15.4 161.4 474 28.1 25.4 17.0 14.0 Three business segments total 179.7
Slide 23: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 60.0 50.0 40.0 30.0 20.0 10.0 0.0 -10.0 37.6 17.3 50.4 Net gain (loss) related to economic 64 73 15.9 08 07 06 8.0 hedging transactions Realized gain (loss) on investments in equity 02 14 04 0.0 0.0 03 04 securities held for opera
Slide 24: Retail results
1. 2. (billions of yen) Full year Quarter Commissions 220.3 171.8 471 475 47.3 54.1 23.7% 15.0% Of which, stock brokerage commission 78.9 628 198 176 18.0 72 25.4 47.7% = 28.4% Of which, commissions for distribution of investment trusts 936 823 a4 236 27 213 226 60% 7.3% ‘Sales credit 86.4 85.3 23.0
Slide 25: Retail client assets
Retail client assets’ (trillions of yen) = Other 140 122.8 111.9 115.2 = Foreign investment 120 107.7 108.0 107.7 trusts 100 100.6 Bond investment trusts 80 = Stock investment trusts 60 = Domestic bonds 40 = Foreign currency bonds 20 = Equities 0 EE Ee Eo ee Equities 60.2 66.3 66.7 66.3 69.9 72.4 79
Slide 26: Net inflows of cash and securities
Net inflows of cash and securities’ Full year Quarter (billions of yen) 1,000 500 1. Cash and secunties inflows minus outflows, excluding regional financial institutions, (billions of yen) 1,000 500 25 25
Slide 27: Number of accounts
Number of accounts (thousands) LFyzotsne | Fy2oie7 | Fyzoe7 0 FY20NTIB EGE GE en oe ee Accounts with balance 5,389 5,363 5,383 5,363 5,342 5,328 5,326 Equity holding accounts 2,827 2,836 2,839 2,836 2,821 2,832 2,800 Nomura Home Trade’ / Net & Call accounts 4,350 4,456 4,427 4,456 4,361 4,301 4,342
Slide 28: Asset Management results and AuM
Full year Quarter — Fy2oieri7 —FY201718 sotven Pree Framer aga 2 ft Net revenue 95.4 99.4 28.9 23.3 28.1 35.4 36.5 3.1% 26.3% Non-interest expenses 58.7 87.1 14.9 14.6 14.5 15.0 15.7 4.8% 5.0% Income before income taxes 36.7 42.3 14.0 87 13.6 20.5 20.8 1.8% 48.9% Assets under management by company (
Slide 29: Asset inflows/outflows by business
Asset inflows/outflows by business’ Full year Quarter Investment trusts business 2,717 1,590 1,038 969 316 886 773 of which ETFs 2,339 1,934 279 1,203 183 906 193 Investment advisory business 2,038 584 95 315 86 96 55 Total net asset inflow 4,755 2,174 1,132 1,284 230 982 718 (trillions of yen) Dome
Slide 30: Wholesale results and revenue breakdown
Full year Quarter (billions of yen) Fy2018/16 FYzON6/I7 gg ag a gg = OY — 3Q0 QQ QQ Net revenue 720.3 739.3 197.3 171.2-«179.3,« 159.0 165.6 42% 16.0% Non-interest expenses 704.9 577.8 149.9 143.1 154.0 1420 184.6 6.8% 1.2% Income before income taxes 154 (1614 474 28.1 25.4 17.0 14.0 -A7.3% 70.4% Br
Slide 31: Number of employees
(dun Sep ee Japan 16,083 16,227 16,450 16,227 16,903 16,706 16,583 Europe 3,424 3,026 3,063 3,026 3,013 3,047 3,054 Americas 2,503 2,314 2,279 2,314 2,325 2,348 2,349 Asia and Oceania’ 6,855 6,619 6,606 6,619 6,673 6,756 6,786 Total 28,865 28,186 28,398 28,186 28,914 28,857 28,772 1. Includes Powai
Slide 32: Disclaimer
NOAURA 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 33: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com