Nomura Holdings, Inc. · TSE:8604
Nomura — Q1 FY2019/20 Earnings Presentation
33 slides from Nomura's earnings presentation, July 2019
Slide 1: First quarter results, year ending March 2020
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our results for the first quarter of the year ending March 2020. Please turn to page 2.
Slide 2: Presentation and Financial Supplement contents
Presentation Financial Supplement Executive summary (p. 2) © Consolidated balance sheet (p. 16) © Overview of results (p. 3) e Value at risk (p. 17) © Business segment results (p. 4) © Consolidated financial highlights (p. 18) © Retail (p. 5-6) © Consolidated income (p. 19) © Asset Management (p. 7-
Slide 3: Executive summary
The market environment remained challenging as heightened US-China trade friction and concerns over the economy led to monetary easing by central banks and market activity was generally muted throughout the quarter. Despite strong market activity in April, investors quickly turned cautious in May an
Slide 4: Highlights
Highlights 422% 04% 10.7x 11.0x 258.4 13.6 52 Y1.50 0.8% 7% 3.1x 66.2x T1.7x 301.3 24.4 os Y0.23 0.1% share. ‘Shareholders for each period “atnoutabi to hear Bbisnge | | inet income atinbutable io Nomure using annualted net income FE os ord
Slide 5: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes (bilions of yen) Net revenue Retail ‘Unrealized gain (loss) on investments in equity securities held for operating purposes Income before income taxes 315 29 74.8 24.4 31x *Additional information on “Other (1Q) ® Netgainrelatedto economichedging tran
Slide 6: Retail results
Net revenue increased 9 percent from last quarter to 80.6 billion yen. As you can see on the bottom half of this slide, total sales increased 21 percent quarter on quarter, driven by sales of investment trusts and bonds. As we announced last month, we plan to consolidate some of our Retail branch of
Slide 7: Retail recurring revenue and assets
As you can see on the top left, annualized recurring revenue was 90.4 billion yen and the cost coverage ratio was 31 percent. The top right shows discretionary investment net outflows of 40.5 billion yen, mainly in our Fund Wrap product. Wrap trusts aimed at meeting estate planning needs performed w
Slide 8: Asset Management results
Net revenue increased 12 percent to 34.5 billion yen and income before income taxes grew 26 percent to 18.1 billion yen. The table on the top left shows ACI-related revenue of 8.7 billion yen, up 77 percent quarter on quarter. Net revenue excluding ACI was 25.8 billion yen as asset management fees r
Slide 9: Asset Management inflows and DC funds
As you can see on the top left of page 8, total inflows in the quarter were 508 billion yen, of which 672 billion yen came from the investment trust business. This was driven by ETF inflows shown by the grey bar in the graph on the bottom left. The graph on the bottom right shows steady growth in de
Slide 10: Wholesale results
Net revenue was 159.5 billion yen, an increase of 12 percent quarter on quarter. Although Investment Banking revenues declined, Global Markets revenues increased by 20 percent with both Fixed Income and Equities reporting stronger revenues. Wholesale expenses declined by 10 percent as the 8.4 billio
Slide 11: Global Markets
Global Markets net revenue increased 20 percent quarter on quarter to 135.7 billion yen. Fixed Income revenues increased 21 percent to 82.5 billion yen. Rates products, particularly Agency Mortgages, had a strong quarter amid the declining rate environment in the US. Credit spread tightening led to
Slide 12: Investment Banking
Net revenue was 23.7 billion yen. This was down 17 percent from last quarter when we closed a number of high-profile M&A transactions. Although revenues were also down year on year, M&A and ALF reported stronger revenues amid declining global fee pools. Please turn to page 12 for an overview of non-
Slide 13: Non-interest expenses
Quarterly expenses totaled 257.2 billion yen, down 7 percent quarter on quarter. The biggest decline came from Other shown at the bottom. Last quarter included 12 billion yen in legal expenses related to legacy transactions. These expenses were mostly gone this quarter. In addition, fees paid to att
Slide 14: Robust financial position
Our balance sheet at the end of June was 42.5 trillion yen and shareholders’ equity was 2.7 trillion yen. As shown on the bottom left, we retain a robust financial position with a Tier 1 capital ratio of 18 percent and a CET 1 capital ratio of 16.8 percent. Our capital ratios declined compared to th
Slide 15: Closing remarks and outlook
As I said at the start, we faced challenging market conditions this quarter, but we have regained momentum after performance bottomed out in the fourth quarter. In our international business where we had to address profitability, all three regions returned to profit for the first time in two years.
Slide 16: Financial Supplement
Financial Supplement 15
Slide 17: Consolidated balance sheet
Consolidated balance sheet (billions of yen) ——. Total cash and cash deposits Short-term borrowings Total payables and deposits Total loans and receivables Total collateralized financing Trading liabilities Total collateralized agreements Other liabilities Long-term borrowings Pemba Leeoeal sl pala
Slide 18: Value at risk
= Definition = FromApril 1, 2019, to June 30, 2019 (billions of yen) — 99% confidence level — Maximum: 6.6 — 1-day time horizon for outstanding portfolio - Minimum: 36 — Inter-product price fluctuations considered - Average: 4.9 Equity Interest rate a4 28 29 29 35 28 34 Foreign exchange 32 19 23 22
Slide 19: Consolidated financial highlights
Full year Quarter (billions of yen) (billions of yen) 300 10% i a gam [ i samen Net income (loss) 200 sala attributable to Nomura. 6% so i a Holdings, Inc. CNHI") shareholders 100 a =~ 2% 0.8% - 2% 0 0% 80 82 0% —ROE(%) “400 “wz 100.4 50 -200 -300 aon 953 Net revenue 1,497.0 1,116.8 272.0 282.9 260.
Slide 20: Consolidated income
1 Full year Quarter (billions of yen) “Prange /FY2019/20° Revenue Commissions’ 373.3 293.1 79.5 748 72.7 66.1 68.2 Fees from investment banking 101.7 101.5 24.0 19.1 33.1 25.3 27.3 Asset management and portfolio service fees 245.6 245.5 63.0 62.7 60.6 69.2 60.0 Net gain on trading 442.9 343.0 71.9 7
Slide 21: Main revenue items
1 Full year Quarter a FY2019/20 (lions of yen 0 at Stock brokerage commissions’ 243.8 192.0 50.2 474 60.5 43.9 42.6 Other brokerage commissions 17.0 14.4 41 34 43 25 27 Commissions for distribution of investment trusts 85.7 56.6 178 15.6 11.5 11.7 16.4 Other 26.9 30.0 73 84 64 8.0 64 Total 373.3 293
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 brewer eee Retail 103.1 495 19.9 122 14.0 33 8.1 Asset Management’ 66.2 34.2 10.3 89 06 14.4 18.1 Wholesale 100.6 1114 74 49 -95.9 -13.0 20.0 Three business segments total 269.9 277 22.8 26.0
Slide 23: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 80.0 60.0 56.4 40.0 31.5 20.0 15.4 17.8 0.0 |_| |_| 28 “Ht -20.0 “a2 24.5 40.0 Prone evan eo Net gain (loss) related to economic F 3 Say ivi 65 18 13.8 16.0 25.1 66 12.8 Realized gain (loss) on investments in equity cecilia Wal Si
Slide 24: Retail results detail
Full year Quarter mow con Fs PR ee oe oe 1000 QQ At Commissions 1927 1428 40.8 368 344 31.0 M5 11.0% = -15.5% Ofwhich, stock brokerage commission 82.2 0.2 168 153 158 122 125 2.0% — -25.9% Ofihich: comiminalone tor diatibullon oflikesinent taste: 87.4 57.9 185 156 7 124 16.5 36.8% — -10.5% Sales cre
Slide 25: Retail client assets
Retail clientassets'’ = Other "Foreign investment trusts ‘= Bond investment trusts ‘= Stock investment trusts = Domestic bonds = Foreign currency bonds = Equities rillions of yen) « 140 yen 122.8 yo | M77 1147 Bue woo | MAT 443.4 7 I | 0 “Fyaome Fyzes = FvanBM9 2019720. (Mar Mar Jun Sep Dee Mar dun
Slide 26: 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 4 2,015 2000 2,000 | 4,762 1,500 1,500 + 1,000 1,000 ~ 682 500 500 4 jl 0 7 0 +—— = 37 121 -500 403 -500 + 393 —yzgtevig 2019/20 “Frans veo oo (Cash and secunties inflows minus outflows, excluding r
Slide 27: Number of accounts
Number of accounts mone) Foote Fyzoii9Fvzotetg FY 2019/20 Accounts with balance 5,318 5,338 5,318 5,318 5,354 5,338 5,335 Equity holding accounts 2,822 2,908 2,823 2,829 2,905 2,908 2,914 Online service accounts’ 4,387 4,569 4.427 4470 4,526 4,569 4,601 New Individual accounts / IT share* Full year
Slide 28: Asset Management results and AUM
Full year* Quarter (bilions ofyen) Prana Prana a ee Revenue (excl. ACLtelated) 105.3 102.9 24.5 AT% ‘Nbeaihad capabioes 22.4 5.0 0.2 15 83 49 87 08 S Net revenue 127.3 97.8 26.1 247 16.2 30.9 345 11.7% 32.2% Non-interest expenses 61.2 63.7 158 158 156 16.5 16.4 0.7% 3.5% Income before income taxes 6
Slide 29: Asset inflows/outflows by business
Asset inflows/outflows by business’ Full year Quarter vn __Fy2019/20 cottons ofyen) oo oo Investment trusts business 3,131 2,187 263 280 1,141 503 672 of which ETFs 3,022 2,531 147 510 1,391 483 642 Investment advisory business 203 20 109 156 354 109 164 Total net asset inflow 3,334 2,207 372 436 78
Slide 30: Wholesale results and revenue breakdown
Full year Quarter (lions of yer evant rvaot920. Net revenue 718.3 556.4 137.3 147.7 128.2 142.2 159.5 12.1% 16.2% Non-interest expenses 614.7 666.8 144.7 142.7 224.1 155.3 139.5 10.2% 3.6% Income (loss) before income taxes 100.6 111.4 74 49 95.9 -13.0 20.0 - - Breakdown of Wholesale revenues 1 2 Ful
Slide 31: Number of employees
Japan 15,819 15,852 16,474 16,296 16,138 15,852 16,423 Europe 3,057 2,909 3,030 3,020 2,963 2,909 2,775 Americas 2,362 2,357 2,364 2,390 2,384 2,357 2,230 Asia and Oceania’ 6,810 6,746 6,873 6,843 6,796 6,746 6,684 Total 28,048 27,864 28,741 28,549 28,281 27,864 28,112 1. Includes Powel office in in
Slide 32: 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 sell, sales, solic
Slide 33: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com