Nomura Holdings, Inc. · TSE:8604
Nomura — FY2019 Earnings Presentation
37 slides from Nomura's earnings presentation, 2020
Slide 1: CFO opening remarks
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. First, I would like to express my sincere condolences to those affected by the coronavirus outbreak and pray for a speedy recovery for those who are currently ill.
Slide 2: Presentation and Financial Supplement contents
Presentation Financial Supplement © Executive summary (p. 3-6) © Overview of results (p. 7) © Business segment results (p. 8) © Retail (p. 9-10) © Asset Management (p. 11-12) © Wholesale (p. 13-15) © Non-interest expenses (p. 16) © Robust financial position (p. 17) © Funding and liquidity (p. 18) ©
Slide 3: Initiatives in response to the coronavirus
This invisible enemy has forced us into a fight like no other. The social distancing measures and border closures implemented by governments around the world have shut us off physically, putting the brakes on economic activity and severely restricting our daily life. Our top priority has been the sa
Slide 4: Full-year results summary
For the full year, shown on the bottom left, net revenue was 1 trillion 287.8 billion yen, an increase of 15 percent compared to last year. Income before income taxes was 248.3 billion yen and net income was 217 billion yen, both of which represent a strong rebound from the challenging prior year. E
Slide 5: Pretax income change by division year on year
This slide shows changes at the pretax level from the year ended March 2019 to the year ended March 2020. As you can see on the left, in the year ended March 2019, we booked a loss before income taxes of 37.7 billion yen, with the breakdown by division shown on the far left. Retail remained roughly
Slide 6: Key market data for January-March quarter
This slide shows key market data for the January-March quarter. As you can see, all of these indicators remained relatively stable through to mid- February. But this changed dramatically in March as coronavirus spread around the world. The S&P 500 plunged by 34 percent from its February high, while
Slide 7: Results for each business
Amid this environment, the entire firm has worked together to ensure economic infrastructure like the markets continue to function, while placing the highest priority on the safety of our clients, communities, and employees. As shown by the graph on the bottom right, three segment income before inco
Slide 8: Highlights
Highlights (billions of yen, except EPS and ROE) -24.7 i - 248.3 | - 34.5 | - 217.0 | - -¥11.31 | - Y66.20 - 8.2%
Slide 9: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes Semees oth ee 0a Yor Apel alc Yor Net revenue Retail 88.8 1% 20% 336.4 -1% “39 Unrealized gain (loss) on investments. in equity — - - 5 - Income (loss) before income taxes 24.7 - - 248.3 - Main impacts on 4Qresuts from (1) Gairvloss of American Centu
Slide 10: Retail results
Fourth quarter net revenue was 88.8 billion yen, down 1 percent quarter on quarter. By controlling expenses, particularly compensation and benefits, income before income taxes increased 4 percent to 18.4 billion yen. As shown on the bottom half of the page, total sales increased 15 percent compared
Slide 11: Retail client assets and net inflows
The bottom left shows fee-based client assets, investment trusts and discretionary investments, declined by 2 trillion yen from December due to the March market downturn. As a result, annualized recurring revenue declined to 85.5 billion yen. On the top right, net inflows of cash and securities was
Slide 12: Asset Management results
Fourth quarter net revenue was 7 billion yen, down 72 percent compared to last quarter. The market downturn led to a significant unrealized loss on American Century Investments shares, and asset management fees dropped as assets under management declined by 6.3 trillion yen form the end of December.
Slide 13: Asset Management inflows and AUM
Inflows continued for the fifteenth straight quarter. As you can see on the top left of page 12, the investment trust and investment advisory businesses both reported inflows, which totaled over 700 billion yen. As you can see on the bottom left, the investment trust business reported 1.1 trillion y
Slide 14: Wholesale results
Net revenue was 145.9 billion yen, down 22 percent quarter on quarter. Income before income taxes declined 77 percent to 10.1 billion yen. Revenues declined compared to last quarter because, as I said earlier, the sharp credit spread widening in March led to an unrealized loss of approximately 35 bi
Slide 15: Global Markets results
Global Markets net revenue was 134.3 billion yen, down 16 percent quarter on quarter impacted by a 25 billion unrealized loss. Fixed Income net revenue declined 22 percent to 78 billion yen. Rates in Americas and Japan and FX&EM in AEJ all booked significantly higher revenues, but due to unrealized
Slide 16: Investment Banking results
Net revenue declined 56 percent to 11.6 billion yen. This reflects the cancellation or postponement of IPOs and equity financing transactions due to the market downturn, as well as a 10 billion yen unrealized loss mainly in ALF in the Americas and EMEA on the back of the sharp widening of credit spr
Slide 17: Non-interest expenses
Fourth quarter firmwide expenses totaled 262.2 billion yen, roughly unchanged from last quarter. Compensation and benefits declined 19 percent in line with bonus provisions. Commissions and floor brokerage increased 28 percent on higher trading volumes. Occupancy and related depreciation increased 1
Slide 18: Robust financial position
Our balance sheet at the end of March was 44 trillion yen, down 2.2 trillion yen compared to the end of December on a decline in repo transactions. As you can see on the bottom left, we had Tier 1 capital of 2,568 billion yen, down by just over 130 billion yen from the end of December. This is due m
Slide 19: Funding, liquidity and business continuity
This quarter was a challenging one with a loss due to unrealized losses on trading assets and securities following the sharp market downturn on March. Aside from that, our business remained resilient on the whole. The majority of our people continue to work from home as the current crisis continues.
Slide 20: Financial Supplement
Financial Supplement 19
Slide 21: Consolidated balance sheet
Consolidated balance sheet (billions of yen) Total cash and cash deposits 613 Short-term borrowings Total payables and deposits Total loans and receivables Total collateralized financing Trading liabilities Total collateralized agreements Other liabilities Long-term borrowings vod ood ot wacinets' T
Slide 22: Value at risk
= Definition = From April 1, 2019, to March 31, 2020 (billions of yen) — 99% confidence level ~ Maximum: 32.9 ~ 1-day time horizon for outstanding portfolio ~ Minimum: = 3.6 — Inter-product price fluctuations considered ~ Average: 67 (billions of yen) 41 89 aa 1.2 1.8 14 8.9 Equity Interest rate 28
Slide 23: Consolidated financial highlights
Full year Quarter (billions of yen) (billions of yen) 300 12% © 150 138.6 "== Net income (loss) 217 1% attributable to Nomura % » Haldings, Inc. ((NHI") 200 8% = 100 12% shareholders ai 50) 100 4% ae og ——ROE(%) ‘i ® 0 0% 4 50 345 -1004 200 100° rare Fva0n 40 100 Net revenue 1,116.8 1,287.8 301.3 33
Slide 24: Consolidated income
Full year Quarter cone rere eran gag tw Revenue Commissions 293.1 8.8 66.1 68.2 63 793 96.1 Fees from investment banking 101.5 103.2 25.3 273 23 268 26.8 Asset management and portfolio service fees 245.5 238.2 59.2 60.0 59.9 610 57.3 Net gain on trading 343.0 366.6 98.4 112.8 105.6 109.3 28.9 Gain (
Slide 25: Main revenue items
Full year Quarter Fai Fae om (oitlons of yen) 6 4g QQ Stock brokerage commissions 1920 196.5 43.9 426 425 48.1 63.3 Other brokerage commissions 14.4 14.4 25 27 28 30 5.9 Comms sions for distribution of investment trusts 56.6 66.7 17 16.4 126 19.0 18.6 Other 30.0 341.2 8.0 64 74 92 8.2 Total 293.1 30
Slide 26: Income before income taxes by segment and region
Adjustment of consolidated results and segment results: Income (loss) before income taxes Full year Quarter (tions of yen) rr Retail 84 5.3 a 18.4 Asset Management 18.1 10.0 8.7 Wholesale 20.0 18.9 10.1 Three business segments total 46.3 42 19.8 Other 315 3.4 27.9 Segments total 717 127.7 8.2 Unreal
Slide 27: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 160 120 99.2 934 80 40 31.5 178 22 i) 28 -279 ain pane me ef Net gain (loss) related to economic raion Hiancactons 18 17.6 66 128 7.0 23 4.6 Realized gain (loss) on investments in equity secufties held for operating purposes 02 66
Slide 28: Retail results data
Full year Quarter (omons of yen) oo, ‘Commissions 1428 153.2 310 M5 312 422 454 TA 46.1% ‘Ofwhich, stock 60.2 61.2 122 125 126 17.0 19.1 12.1% 56.1% Ofwhich, for of trusts 579 66.9 124 165 126 19.2 18.6 “28% 54.0% ‘Sales credit 558 6.8 105 149 127 167 126 246% 19.8% Fees from investment banking and
Slide 29: Retail client assets
Retail client assets = Other = Foreign investment tusts Bond investment tusts = Stock investment tusts ® Domestic bonds = Foreign currency bonds = Equities Equities ng Al Foreign currency bonds 63 Domestic bonds’ 12.5 Stock investment trusts 9.0 Bond investment trusts 68 Foreign investment trusts 4
Slide 30: Net inflows of cash and securities
Net inflows of cash and securities" Full year Quarter (billions of yen) (billions of yen) 2,400 2,400 4 2,015 1,800 1,800 + 1,200 1,200 + 600 600 5 256 o ° im | — ° | i 121 -600 429 -600 8 0 —-Fy2018/19 29 29
Slide 31: Number of accounts
Number of accounts (thousands) Accounts with balance 5,338 5,319 5,338 5,335 5,326 5,328 5,319 Equity holding accounts 2,908 2,920 2,908 2,914 2,913 2,897 2,920 Online service accounts 4,569 4,703 4,569 4,601 4,632 4,662 4,703 New Individual accounts / IT share’ Full year Quarter “om Datel ical ne l
Slide 32: Asset Management results data
Full year' Quarter’ (ottons of yen) Pranwe FraneaD, ae ee ee Revenue (excl. ACL-telated gain/loss) 1029 100.2 26.0 258 25.0 260 23.4 10.0% + -10.0% ‘ACL-related gain/loss 50 49 87 07 06 16.4 - - Net revenue 97.8 30.9 34.5 25.7 25.4 7.0 72.4% 1.3% Non-interest expenses 63.7 16.5 16.4 15.6 16.1 15.8 -
Slide 33: Asset inflows/outflows by business
Asset inflows/outflows by business Full year Quarter (otons of yen) | Prawn Fran [i | = |” Investment trusts business 2,187 1,788 503 672 259 296 560 of which ETFs 2,531 2,133 483 642 246 115 1,130 Investment advsory business 20 302 109 -164 121 198 146 Total net asset inflow 2,207 2,090 612 508 381
Slide 34: Wholesale results data
Full year Quarter Coons of yen) Fvait9 yao Net revenue 142.2 159.5 156.7 186.5 145.9 21.8% 2.6% Non-interest expenses 666.8 556.4 155.3 139.5 137.8 143.3 135.8 5.2% 12.5% Income (loss) before income taxes 111.4 922 -13.0 20.0 18.9 43.2 10.4 76.6% : Breakdown of Wholesale revenues' Full year Quarter
Slide 35: Number of employees
dn Sep Dee Mar Japan 15,852 15,748 15,852 16,423 16,119 15,971 15,748 Europe 2,909 2,691 2,909 2,775 2,734 2,658 2,691 Americas 2,357 2,120 2,357 2,230 2,167 2,116 2,120 Asia and Oceania’ 6,746 6,070 6,746 6,684 6692 6,554 6,070 Total 27,864 26,629 27,864 28,112 20.712 27,209 28,629 4. Includes Powa
Slide 36: Disclaimer
NOMURA 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 37: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com