Nomura Holdings, Inc. · TSE:8604
Nomura — Q3 FY2011 Earnings Presentation
37 slides from Nomura's earnings presentation, January 2011
Slide 1: Third quarter financial results telephone conference
Thank you for taking the time to join us today for our third quarter financial results telephone conference. My name is Masafumi Nakada, CFO of Nomura Holdings. I will now outline the quarterly highlights. Please turn to page four of the document entitled “Consolidated Results of Operations”. 1
Slide 2: Disclaimer
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 by Nom
Slide 3: Outline
SS nomura | Outline ial supplem © Executive summary (p. 4) = Consolidated balance sheet (p. 21) © Overview of results (p. 5) = Value at risk (p. 22) © Breakdown of net revenue (p. 6) = Consolidated financial highlights (p. 23) © Retail (p. 7-8) = Consolidated income (p. 24) © Asset Management (p. 9-
Slide 4: Executive summary
Both net revenue and income before income taxes increased quarter on quarter. As the graph on the right shows, revenues and net income have continued to trend upwards each quarter. Net revenue was 295.9 billion yen, an increase of 7% over the prior quarter and 8% year on year. Income before income t
Slide 5: Executive summary (continued)
(From Page (F P 4) In Asset Management, assets under management increased primarily due to investment trusts and net revenue increased 11% to 21.4 billion yen. Income before income taxes increased 34% to 7 billion yen. Wholesale net revenue increased 5% to 172.2 billion yen, while income before inco
Slide 6: Breakdown of net revenue
This page gives a breakdown of net revenue by division. As the pie chart on the right shows, 57% of third quarter revenues were generated in Japan and 43% outside Japan. Next, I will outline the key points for each division. Please turn to page 7. 6
Slide 7: Retail
Retail reported higher quarterly net revenue on robust performance in the stock related business and distribution of a wide range of investment trusts. Retail client assets increased from 68.1 trillion yen to 72.3 trillion yen during the quarter on net asset inflows of 2.1 trillion yen and improved
Slide 8: Retail products and franchise
Our consulting based approach continued to meet the needs of retail investors and we expanded our Retail franchise across core products. We saw robust demand from retail investors for domestic and international equities and high yield and equity products led an expansion in distribution of investmen
Slide 9: Asset Management
An increase in assets under management and a contribution from performance-linked fees outside Japan led to higher quarterly net revenue in Asset Management. Fund inflows mostly into publicly offered stock investment trusts helped increase assets under management to 24.1 trillion yen. Please turn to
Slide 10: Asset Management market share
We maintained the top market share for publicly offered investment trusts in Japan at 21.7%. In the investment trust business, we enhanced our offering of Asia-focused funds. Our investment advisory business won mandates from international investors for Japanese and Asian products. The next page sho
Slide 11: Wholesale
The business environment in investment banking improved during the quarter, especially in equity capital markets. October’s favorable fixed income market conditions turned challenging in November when Europe’s sovereign crisis resurfaced in Ireland and US market rates started rising in December. Alt
Slide 12: Global Markets
Global Markets increased client revenues for the first time in two quarters despite challenging conditions marked by a decline in client activities. In contrast to the substantial slowdown in fixed income experienced by our competitors, our Fixed Income net revenue was down only 8% as we maintained
Slide 13: Global Markets revenue by region
Revenues in Global Markets are also becoming increasingly diversified across regions. The pie chart on the top right shows the breakdown of revenues by region last fiscal year, while the chart below gives the third quarter breakdown. As I said, the contribution from the US has increased due to Fixed
Slide 14: Investment Banking
In Investment Banking, we worked on large ECM deals in Japan such as TEPCO and Otsuka Holdings, maintaining a commanding lead in the Japan-related ECM league table. In Asia, we acted as joint global coordinator on the listing of Chongqing Rural Commercial Bank, the third largest Hong Kong IPO by a C
Slide 15: International expansion in the US and Asia
We are focusing on expanding our business in the US and Asia, particularly China, India, and Australia, given the huge revenue opportunities and growth potential of these markets. China in particular is the next biggest market in terms of fee pools after the US and it is a fast growing market. In ad
Slide 16: Recent momentum
In Retail, we are further enhancing our consulting services to respond to diverse demand for reinvestment of invested funds coming up for redemption or reaching maturity such as Japanese government bonds for individual investors. In Wholesale, we are focused globally on winning mandates for primary
Slide 17: Segment Other
Segment “Other” includes a fair value gain on own debt of 1.5 billion yen. in addition, although not shown in this segment, we booked a 1.7 billion yen gain on investment securities during the quarter. Please turn to the next page where I will briefly touch on expenses. 17
Slide 18: Non-interest expenses
Non-interest expenses were 268.1 billion yen, up 5.5% quarter on quarter. Compensation and benefits increased 13% and our compensation ratio for the nine months to December was 47.1%. Compensation increased mainly due to an increase in bonus payments in response to the increase in revenues and highe
Slide 19: Robust financial position
We maintain a robust financial position. Our Tier 1 ratio at the end of December was 17.3% and our Tier 1 common ratio was 17.1%. We had total assets of 33.3 trillion yen and shareholders’ equity of 2.1 trillion yen. g was 16.2 times and net leverage Gross leverage g was 10 times. Level 3 assets sto
Slide 20: Financial Supplement
SS nonurs Financial Supplement 20
Slide 21: Consolidated balance sheet
Consolidated balance sheet Consolidated balance sheet (billions of yen) Increase (Decrease) Assets Liabilties Cash and cash deposits ‘Short-term borrow ings Payables and deposits Loans and receivables Collateralized financing Trading liabilities Collateralized agreements ‘Other liabilities Long-term
Slide 22: Value at risk
Value at risk = Definition = From April 1 to December 31, 2010 (billions of yen) ~ 99% confidence level (2.33 standard dev.) ~ Maximum: 13.6 ~ 1-day time horizon for outstanding portfolio ~ Minimum: 7.4 ~ Inter-product price fluctuations considered ~ Average: 9.9 Mi 1 Mi 1 Mar. 31, Mi 1 Mar. 31 Jun.
Slide 23: Consolidated financial highlights
Consolidated financial highlights Full year {billions of yen) 400 15.5% "= Netincome (loss) P= ROE (%) 200 ae ora o 37% 478 -200 ~400 600 200 708.2 rane rranons | rracoas | rraotoa Net revenue 1.1457 1,091.1 7873 «3126 1,150.8 Income (loss) before income taxes 4520-3185. 649 © 7803 © 1052 Net income
Slide 24: Consolidated income
Consolidated income Revenue Commissions 356.3 337.5 404.7 306.8 395.1 101.0 96.6 118.1 83.5 100.0 Fees from investment banking 088 +4993 +651 «+4680 12139 «445° °«4514 ~ «+204 269° 940 Asset management and portfolio service fees 102.7 146.0 189.7 140.2 132.2 342 33.7 uo 33.7 37.4 Net gain on trading
Slide 25: Main revenue items
Main revenue items FY2006.3| FY2007.3) Fr200ea] Fr2009.3] FY2010.3 (billions of yen) Stock brokerage commissions (retail) 1536 ©9830 75.4 508 55.3 123 1250137 87 127 ‘Stock brokerage commissions (other) 795 732 1666 144.7 140.3 33.7 330 403 307 35.9 Commissions Other brokerage commissions. 143 68 9.
Slide 26: Adjustment of consolidated results and segment results
Adjustment of consolidated results and segment results: Income (loss) before income taxes — Sa eC 2 | ze | 197.2 160.9 122.3 18.2 113.4 35.2 24.0 77 228 23.0 238 39.4 34.0 74 18.6 44 49 49 5.2 7.0 264.7 156.0 -150.1 -717.3 175.2 48.5 35.2 41d 76 10.8 Three Busin: 4857 356.3 62 -691.7 307.1 87.8 64.1
Slide 27: Retail related data (1)
Retail related data (1) foons otyen) =e aoe eee el eo Commissions 269.4 2514 2259 151.0 238.9 623 610 758 502 60.2 20.0% 3.3% Sales credit 109.0 968 942 Ti4 638 13.3 15.0 128 13.8 13.0 5.5% 21% Fees from investment banking 264 24.0 14.9 13.4 33.6 15.4 641 94 12 11.0 20% 272% Investment trust adminis
Slide 28: Retail related data (2)
Retail related data (2) Stock brokerage commissio and commissions for distributio: f investment trusts! (billions af yen) (billions of yen) 180 70 150 60 50 120 Stock brokerage commissions 40 90 = Commissions fordistribution of investment trusts sa 60 20 30 10 0 0 F¥2006.3 | Fy2007.3 | Fv2008.3 | Fv
Slide 29: Retail related data (3)
Retail related data (3) tail client assets » Other (trillions of yen) 100 = Overseas mutual funds =Bondinvestmenttrusts 80 —— Stockinvestmenttrusts 6. = Domestic bonds ™Foreigncurrencybonds 40 = Equities 20 0 Equities 493 485 372 28.6 39.2 — — — Foreign currency bonds" 36 33 27 55 56 53 56 5.5 Domes
Slide 30: Retail related data (4)
SS Nomura Retail related data (4) Retail client assets: Net asset inflow’ Full year (billions of yen) (billions of yen) 8,000 6,000 5,000 5,975 5,279 {,_Retall client assets exclude portion from regional financial institutions, Note: Net asset inflow = asset inflow ~ asset outfl 30 30
Slide 31: Retail related data (5)
Retail related data (5) Number of accounts / IT share’ = (thousands) Accounts with balance 3,780 3,953 4,165 4,467 4883 4,894 4,923 4,930 Equity holding accounts 1,745 1,853 2,027 2,347 2,572 2,697 2,722 2,695 Nomura Home Trade (online trading accounts) 1,969 2.243 2.765 3,095 3,189 3.235 3.277 3,29
Slide 32: Asset Management related data (1)
Asset Management related data (1) ee tition yen) ae eee ee ee ee Be Ta Pa 72a sa oe Netrevenue 64.1 88.1 85.7 59.8 70.4 72 18.0 18.1 19.3 214 10.8% 24.1% Non-interest expenses 40.3 48.7 54.8 52.4 516 132 13.1 13.2 144 144 2.3% 94% income before income taxes 238 39.4 34.0 74 18.6 4a) 49 49 52 70 33.8
Slide 33: 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 Mar. 31, | Mar. 31, | Mar. 31, | Mar. 31, | Jun. 30, 2007 | 2008 | 2009 | 2010 ff 2010 Mar. 31, 2006 Sep. 30, | Dec. 31 2010 | 2010 246
Slide 34: Wholesale related data (1)
Wholesale related data (1) Fan aa a EIEa rns ee Global Markets 167.3 658.4 163.9 133.0 96.4 144.4 141.0 2.3% 13.9% Investment Banking 64 1314 462 355 122 190 344 63.5% -32.7% Net revenue 1636 7895 2101 1684 1086 1634 1722 5.4% -18.0% Non-interest expenses 553.7 614.3 161.6 133.2 149.8 155.8 161.4 3.
Slide 35: Wholesale related data (2)
Wholesale related data (2) Private equity related investments (billions of yen) 600 543.4 500 = Terra Firma mee 356.1 "Asia 337.7 300 ™ Europe (excluding Terra Firma) a8 "Japan 100 ) Japan 169.5 191.7 | 195.7 195.5 Europe (excluding Terra Firma) 414 60.0 45.0 32.3 Asia r Es = 32 29 2.8 Sub Total 98.
Slide 36: Number of employees
Number of employees Mar. 31,2008 mar.31,2008 | Mar.31,20 Jun302010 | sepa02010 | vec.31z010 Japan (excluding FA)’ 9.618 10,667 11,561 12,929 12,857 13,370 13,259 13,021 Japan (FA)? 1,948 2.174 2,377 2,301 2,196 2,184 2,142 2,113 Europe 1,515 1,791 1,956 4,294 4,369 4.499 4471 4,427 Americas 1,073 1,
Slide 37: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com 37