Nomura Holdings, Inc. · TSE:8604
Nomura — FY2020/21 Earnings Presentation
36 slides from Nomura's earnings presentation, April 2021
Slide 1: CFO overview of fiscal year ended March 2021 results
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our financial results for the fiscal year ended March 2021. Please turn to page two.
Slide 2: Presentation and Financial Supplement contents
Presentation Financial Supplement © Executive summary (p. 2-6) © 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: Full year results summary
First, our full year results. As you can see on the bottom left, net revenue was 1,401.9 billion yen, up 9 percent year on year, and income before income taxes was 230.7 billion yen, a decline of 7 percent compared to last year. The decline in income before income taxes is due to segment Other. Thre
Slide 4: Loss from US client prime brokerage transactions
On March 26, an event occurred at US subsidiaries including Nomura Global Financial Products Inc. whereby we were subject to a potential significant loss due to prime brokerage transactions with a US client. The loss based on market prices at the time was estimated at 2 billion dollars. We take this
Slide 5: Change in income before income taxes from FY19/20 to FY20/21
This slide outlines the changes in income (loss) before income taxes from FY19/20 to FY20/21. The left hand side shows FY19/20 income before income taxes of 248.3 billion yen with a segment breakdown shown on the far left. Despite headwinds from the pandemic, Retail reported robust sales of stocks a
Slide 6: Wholesale and segment Other results
As shown on the next page, in Fixed Income, net revenue increase by 31 percent driven by strong performance in Rates, Credit and Securitized Products, while Investment Banking net revenue shown on the right grew 35 percent as we supported multiple M&A and ECM transactions. Equities, shown in the mid
Slide 7: Fourth quarter results
This quarter saw the impact from the loss arising from transactions with a US client and as shown on the top right, firmwide loss before income taxes was 166.1 billion yen and net loss was 155.4 billion yen. EPS was negative 50.78 yen. The graph on the bottom right shows a significant loss in Wholes
Slide 8: Highlights
Highlights (billions of yen, except EPS and ROE) 166.1 i - 230.7 | -7™% 155.4 | - 153.1 | -29% -Y50.78 Y48.63 5.7%
Slide 9: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes {billions of yen) ‘FY2020/21 QoQ YoY Fy2020/21 YoY Unrealized gain (loss) on investments in equity 46 76% - Income (loss) before income taxes | -166.1 : } E “Additional information on “Other” © Impairment charge on equity stake in affiliate Nomura Re
Slide 10: Retail fourth quarter results
Fourth quarter net revenue was 96.8 billion yen. Stronger sales of Japanese secondary stocks and higher recurring revenue offset a slowdown in primary transactions and net revenue remained roughly unchanged from the previous quarter. Income before income taxes remained solid although declined 8 perc
Slide 11: Retail recurring revenue assets and client assets
The graph on the top left shows recurring revenue assets such as investment trusts and discretionary investments grew to 18.2 trillion yen driven by the market rally and net inflows into investment trusts, contributing to higher recurring revenue. Consulting-related revenue was 4.4 billion yen, impr
Slide 12: Asset Management results
Net revenue was 36.6 billion yen and income before income taxes was 21.4 billion yen. This represents the second highest level after last quarter since the year ended March 2002 when comparisons are possible. The top left shows American Century Investments-related gain/loss remained high at 10.4 bil
Slide 13: Asset Management flows and ESG funds
The graph on the top left shows outflows of 765 billion yen in the investment advisory and international businesses shown in grey due to the impact from outflows by public pension funds in Japan. The investment trust business shown in red continued to book inflows into ETFs, and funds in MRFs increa
Slide 14: Wholesale results
As shown on the top left, net revenue was negative 800 million yen and net loss was 165.9 billion yen. As I said at the start of my presentation, the loss related to transactions with a US client impacted Americas Equities net revenue and Wholesale expenses. Net revenue by region shown on the bottom
Slide 15: Global Markets net revenue
Global Markets net revenue was negative 36.8 billion yen. Fixed Income declined 14 percent to 84.3 billion yen. As the heat map on the right shows, in the Americas, Securitized Products had a good quarter on an uptick in client flows, and EMEA revenues were driven by European government bonds. AEJ r
Slide 16: Investment Banking net revenue
Net revenue was 36.1 billion yen, representing another strong quarter. Our global M&A business had a particularly good quarter driven by Japan and Americas as well as contributions from announced deals that closed. Internationally, we supported multiple sustainability-related transactions and the Am
Slide 17: Non-interest expenses
Firmwide expenses for the quarter were 336.1 billion yen, an increase of 24 percent compared to the third quarter. Notably, Other expenses increased by 97 billion yen to 140 billion yen, due to the loan loss provision I mentioned and the impairment charge on our stake in Nomura Real Estate Holdings.
Slide 18: Robust financial position
At the end of March, our balance sheet was 42.5 trillion yen, declining by 2.1 trillion yen from the end of December due to a decline in repo transactions and trading assets. As the table on the bottom left shows, we had Tier 1 capital of approximately 2.8 trillion yen, a decline of over 110 billion
Slide 19: Conclusion and outlook
To conclude, management takes very seriously the concerns caused over the significant loss arising from transitions with a US client. We will implement the measures I discussed to benefit the firm in the future. Looking back on the full year, all our core businesses reported stronger net revenue. We
Slide 20: Financial Supplement
Financial Supplement 19
Slide 21: Consolidated balance sheet
Consolidated balance sheet (billions of yen) Assets Total cash and cash deposits Total loans and receivables Total collateralized agreements Total tracing assets and private equity investments’ Total other assets’ Total assets 1. Including securities pledyed as collateral 20 20
Slide 22: Value at risk
= Definition = From April 1, 2020, to March 31, 2021 (billions of yen) ~ 99% confidence level — Maximum: 93.4 — 1-day time horizon for outstanding portfolio — Minimum: 7.1 — Inter-product price fluctuations considered — Average: 13.6 21 21
Slide 23: Consolidated financial highlights
1. ‘ummm Net income (loss) attributable to Nomura Holdings, inc. ("NHI") shareholders ——ROE(%) Full year Quarter (billions of yen) (billions of yen) 300 300 217.0 8 Net revenue 1,287.8 1,401.9 170.0 Income (loss) before income taxes 248.3 230.7 -247 181.8 836 131.3 166.1 ‘Net income (loss) attributa
Slide 24: Consolidated income
Full year Quarter “ee ee eee Revenue ‘Commissions 308.8 376.9 96.1 85.5 2.3 967 102.4 Fees from investment banking 103.2 108.7 26.8 10.8 27.0 36.1 34.7 ‘Asset management and portfolio service fees 238.2 230.0 57.3 53.7 57.4 586 60.3 Net gain on trading 356.6 310.0 28.9 130.1 131.5 136.4 96.9 Gain (l
Slide 25: Main revenue items
Full year Quarter (billions of yen) ‘Stock Other brokerage commissions ‘Commis sions for distribution of investment trusts Other Total Equity underwriting and distribution 14.0 30.6 20 15 10.5 10.4 8.2 Bond underwriting and distribution 25.5 23.1 641 33 57 64 77 M&A / Financial advisory fees 41.6 37
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 _Fy2019/20 of fomons oven) (rece oom a Retail 49.4 92.3 18.4 164 228 283 26.41 Asset Management 28.8 74.2 87 492 14 223 21.4 Wholesale 22 64.3 704 879 655 769-1659 Three business segments tota
Slide 27: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 150 100 99.2 574 0 12 0 | = 29 -50 £23 -100 “Pray Fra ec Not gain (loss) related to economic sie 175 15 -46 56 50 14 13.5 Realized gain (loss) on investments in equity securities ‘halter coor 66 17 03 07 01 07 02 Equity in earings
Slide 28: Retail results
Full year Quarter (omens ofyen) rvaotezo) yazan ‘Commissions 153.2 187.7 454 408 46.6 49.3 51.0 3.5% 12.4% Of which, stock bro! connbssion 61.2 926 19.1 207 20.2 24.8 25.9 45% 35.5% Of which, c ofi a 669 68.4 186 13.9 196 189 16.0 15.6% — -14.3% Sales credit 568 584 126 140 144 15.8 14.41 10.4% 12.6
Slide 29: Retail client assets
Retail client assets lions of yen) = Other 126.6 121.0 ve 120 1122 115.2 = Foreign investment 104.0 104 trusts 100 = Bond investment trusts 80 = Stock investment trusts 60 = Domestic Bonds 40 = Foreign currency bonds 20 = Equities 0 Equities 62.7 823 627 70.2 728 77.2 82.3 Foreign currency bonds 58
Slide 30: Net inflows of cash and securities
Net inflows of cash and securities’ Full year Quarter (billions of yen) (billions of yen) 1,200 1,200 900 bic bones 600 600 424 ° | “195 -300 -300 -429 -560 29 29
Slide 31: Number of accounts
Number of accounts [Mar Mar Mar || dun || Sep | Dee Mar Accounts with balance 5319 5,329 5,319 5,323 5,323 5,333 5,329 Equity holding accounts 2,920 2,927 2,920 2,935 2,952 2,939 2,927 NISA accounts opened (accumulated)' 1,737 4,791 1,737 1,746 1,753 1,761 4,791 Online service accounts 4,703 4,895 4
Slide 32: Asset Management results and AUM
Full year’ Quarter' pam a pram emo ag TY 4a aa | Revenue (excl. ACL-telated gain/loss) 100.2 98.7 23.4 23.7 247 24.4 26.2 88% 12.1% ‘ACL-telated gain/loss 16 36.1 16.4 10.3 22 13.2 104 21.5% : Net revenue 92.6 134.8 7.0 34.0 26.8 73 36.6 1.9% 5.2 Nonnterest expenses 63.8 60.5 15.8 149 15.4 15.0 15.2
Slide 33: Asset inflows/outflows by business
Asset inflows/outflows by business Full year Quarter “ [Pramas | rrawwat en - - - ) Investment trusts business 1,788 2,753 560 1,210 563 588 393 of which ETFs 2,133 2,281 1,130 1,153 618 203 268 Investment advsory and international 302 890 446 163 640 678 765 businesses Total net asset inflow 2,090
Slide 34: Wholesale results and revenue breakdown
Full year Quarter (billions of yen) oe me Fra) raat 40 QQ QQ Net revenue 486 691.4 1459 248.7 2203 231 08 : : Non-interest expenses 566.4 627.1 1358 1608 1548 146.3 165.2 129% 21.6% Income (loss) before income taxes 922 643 101 879 655 769 165.9 : : Breakdown of Wholesale revenues! Full year Quarter
Slide 35: Number of employees
Japan 15,748 16,330 15,748 16,009 15,807 15,701 15,330 Europe 2,691 2771 2,691 2,728 2.765 2,751 2771 Americas 2,120 2,162 2,120 2,164 2.157 2,158 2,162 Asia and Oceania! 6,070 6,150 6,070 6,118 6.140 6,146 6,150 Total 26,629 26,403 26,629 27,079 26,869 26,756 28,403 1. Includes Powai office in indi
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