Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2018/19 Earnings Presentation
34 slides from Nomura's earnings presentation, October 2018
Slide 1: Overview of first half and second quarter results
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our results for the first half and second quarter of the year ending March 2019. Please turn to page two.
Slide 2: Outline
Outline Presentation NOMURA Financial Supplement Executive summary (p. 2-3) Overview of results (p. 4) Business segment results (p. 5) Retail (p. 6-7) Asset Management (p. 8-9) Wholesale (p. 10-12) Non-interest expenses (p. 13) Robust financial position (p. 14) Funding and liquidity (p. 15) Consolid
Slide 3: First half executive summary
During the first six months of our fiscal year, investors became markedly risk averse due to concerns over US-China trade friction and a fall in emerging markets currencies on the back of rising US interest rates. The Nikkei remained range-bound between 22,000 and 23,000. Market volumes were at thei
Slide 4: Second quarter executive summary
The graph on the bottom right shows three segment income before income taxes of 26 billion yen. This was up 14 percent quarter on quarter as Wholesale returned to profit after booking a loss in the first quarter. The top right shows firm-wide income before income taxes of 500 million yen, representi
Slide 5: Highlights
Highlights (billions of yen, except EPS and ROE) | a -20% 554.9 22% 282.5 | +9% +5% 540.8 2% 05 | 97% -99% 14.4 | -91% u | : : ° | : t 1 -¥3.32 | - - -Y1.78 | - 1. Net income (loss) attributable to Nomura Holdings shareholders. 2. Diluted net income (loss) attributable to Nomura Holdings shareholder
Slide 6: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes FY2018/19 FY2018/19 2a Q0Q YoY 4H YoY Net revenue — Retail 85.7 8% 16% 178.5 12% 24.7 5% -30% 50.8 -20% ‘Unrealized gain (loss) on investments in equity ‘securities held for operating purposes jl Unrealized gain loss) on investments in equity Income
Slide 7: Retail results
Net revenue was 85.7 billion yen, down 8 percent quarter on quarter. Income before income taxes declined 39 percent to 12.2 billion yen. A fall in emerging markets currencies and uncertain market conditions impacted retail investor sentiment. As you can see in the bottom half of this slide, total sa
Slide 8: Retail client assets and inflows
Turning now to page seven, the bottom left shows net inflows into discretionary investments of 83.8 billion yen, lifting client assets to over 2.8 trillion yen. Annualized recurring revenue was 90.9 billion yen and the recurring revenue cost coverage ratio was 31 percent. The bottom right shows net
Slide 9: Asset Management results
Net revenue declined 5 percent to 24.7 billion yen. Income before income taxes declined 13 percent to 8.9 billion yen. The decline was mainly because gain and loss related to American Century Investments negatively affected quarter on quarter results. Excluding that, the underlying business performe
Slide 10: Asset Management net inflows and AUM
As you can see on page nine, net inflows were 436 billion yen for the quarter. The investment trust business reported inflows into ETFs and privately placed funds for financial institutions. The investment advisory business won a mandate to manage Japanese equities for a domestic public pension fund
Slide 11: Wholesale results
From April this year, we changed our accounting policy so that revenues and expenses for certain Instinet transactions are now shown as net value rather than gross value. As a result, revenues and expenses both declined by 4.6 billion yen in the first quarter and 4.1 billion yen in the second quarte
Slide 12: Wholesale Global Markets
Global Markets net revenue increased 10 percent to 123.8 billion yen. Fixed Income net revenue grew 21 percent to 69.6 billion yen as challenged trading revenues rebounded driven by Japan, offsetting a slowdown in client revenues in the Americas and EMEA. As the heat map on the top right shows, in J
Slide 13: Investment Banking
Net revenue declined 5 percent to 23.9 billion yen. Amid a contraction in the global fee pool, Japan and AEJ delivered resilient performance, while EMEA and the Americas reported lower revenues. Transactions were delayed due to US-China trade friction and other factors, contributing to a decline in
Slide 14: Non-interest expenses
Firm-wide non-interest expenses totaled 282.5 billion yen, up 9 percent quarter on quarter. The sequential increase is due mainly to higher expenses in Other, which includes the 19.8 billion yen related to a settlement with the US Department of Justice and the 7 billion yen FX translation adjustment
Slide 15: Robust financial position
Our balance sheet at the end of September totaled 45.4 trillion yen, up 2.6 trillion yen from 42.8 trillion yen at the end of June. This increase is mainly attributable to yen depreciation and an increase in repurchase agreements. As shown on the bottom left, Tier 1 capital was 2.7 trillion yen, rou
Slide 16: Summary and outlook
To sum up, second quarter income before income taxes was impacted by over 40 billion yen due to one-off expenses and a loss related to economic hedging transactions. This resulted in a loss for the quarter and a very tough set of results. Although these one-off expenses will disappear from the third
Slide 17: Financial Supplement
Financial Supplement 16
Slide 18: Consolidated balance sheet
Consolidated balance sheet' (billions of yen) Liabilities Short-term borrowings Assets Total cash and cash deposits Total payables and deposits Total collateralized financing Total loans and receivables Trading liabilities Total collateralized agreements Other liabilities Long-term borrowings Teal r
Slide 19: Value at risk
= Definition = From April 1, 2018, to September 30, 2018 (billions of yen) — 99% confidence level — Maximum: 6.1 — 1-day time horizon for outstanding portfolio — Minimum: 3.1 — Inter-product price fluctuations considered — Average: 4.4 feitonsofyen) anne? pvzommne = rvgoumn@ amit EE EES eee Equity 0
Slide 20: Consolidated financial highlights
1 Full year Quarter billions of ‘bill f ! (i lions of yen) (billions of yen) 9.3% 10% 8.7% 79% 7. ot ee . . ‘== Net income rs 80 8% attributable to Nomura Holdings, 200 60 6% Inc. ("NHI") shareholders 40 4% T= ROE(%) 400 20 0.8% 2% te 52 0) 0% O -20 11.2 Net revenue 1,403.2 1,497.0 351.5 406.6 378.0
Slide 21: Consolidated income
Full year Quarter (ions of yen mre Frmie gg RB arene Revenue Commissions* 327.1 373.3 85.3 101.7 95.4 79.5 74.8 Fees from investment banking 92.6 101.7 27.1 29.3 22.6 24.0 19.1 Asset management and portfolio service fees 216.5 245.6 61.2 63.8 62.3 63.0 62.7 Net gain on trading 475.6 442.9 88.4 87.7
Slide 22: Main revenue items
Full year Quarter — FY2017/18 2018/19 (oions of yen ra rama ag ga Stock brokerage commissions' 210.0 243.8 54.6 68.4 63.8 50.2 47.4 Other brokerage commissions 15.1 17.0 3.2 4.3 6.0 44 3.4 ‘Commissions for distribution of investment trusts 75.1 85.7 20.9 22.1 19.5 17.8 15.6 Other 26.9 26.9 6.6 6.9 6
Slide 23: Income before income taxes by segment and region
Adjustment of consolidated results and segment results: Income (loss) before income taxes Full year Quarter (pitlons of yen) Prater Fraoie > Retail 74.8 103.1 25.5 31.3 21.4 19.9 12.2 Asset Management! 42.3 66.2 20.5 20.8 11.3 10.3 8.9 Wholesale 161.4 100.6 17.0 14.0 44.2 7.4 4.9 Three business segm
Slide 24: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 80.0 17.3 Net gain (loss) related to economic -24.5 hedging transactions 7.3 65 06 8.0 1.7 13.8 16.0 Realized gain (loss) on investments in equit aise ae flee aa ae 14 08 03 04 0.0 0.0 0.0 Equity in earnings of affiliates 32.3 34.
Slide 25: Retail related data
Full year Quarter (blions of yen) ‘Prme7 Fraow%8 ere owe ea) rr 43.8 54.1 9.7% Commissions 171.8 192.7 475 40.8 36.8 15.9% Of which, stock 628 82.2 17.2 25.4 217 168 15.3 9.4% 11.2% Of which, for of! trusts 82.3 87.4 21.3 22.6 195 18.5 15.6 15.4% © -26.6% Sales credit 85.3 91.5 25.7 23.8 17.5 18.9 1
Slide 26: Retail client assets
Retail client assets (trillions of yen) 140 = Other 120 107.7 = Foreign investment trusts 122. 100 = Bond investment trusts 80 ™ Stock investment trusts 60 = Domestic bonds 40 ™ Foreign currency bonds 20 = Equities 0 Equities 66.3 75.7 72.4 79.2 75.7 76.4 79.8 Foreign currency bonds 6.0 6.1 6.4 6.2
Slide 27: Net inflows of cash and securities
Net inflows of cash and securities’ Full year Quarter (billions of yen) (billions of yen) 1,000 1,000 682 500 500 0 Oo T | — — | ae -78 “14 196 -306 -500 403 -500 [ ene |r| a 1. Cash and securities inflows minus outflows, excluding regional financial institutions.
Slide 28: Number of accounts
Number of accounts (mowsane) —Fyzoie7 Fy2ow7e = Fv20I718 RON Accounts with balance 5,363 5,318 5,328 5,326 5,318 5,318 5,318 Equity holding accounts 2,836 2,822 2,832 2,800 2,822 2,823 2,829 Online senice accounts" * 4,456 4,387 4,301 4,342 4,387 4,427 4,470 New Individual accounts / IT share? Full
Slide 29: Asset Management related data
Full year Quarter tits) fae et eS ad a Le | Net revenue’ 127.3 35.4 36.5 273 26.1 27 Bb = 30.3% Non-interest expenses’ 87.4 61.2 16.0 16.7 16.0 15.8 158 0.2% «5.8% Income before income taxes" 42.3 66.2 20.5 208 11.3 10.3 89 13.3% 56.8% Assets under management by company Nomura Asset Management 474 5
Slide 30: Asset inflows/outflows by business
Asset inflows/outflows by business’ Full year Investment trusts business 1,590 3,131 886 773 1,156 263 280 of which ETFs 1,934 3,022 906 193 1,740 147 510 Investment advisory business 584 203 96 55 248 109 156 Total net asset inflow 2,174 3,334 982 718 1,404 372 436 Domestic public investment trust
Slide 31: Wholesale related data
Full year Quarter (bilfons of yen) yaoi74g yz Net revenue 739.3 716.3 159.0 165.6 211.4 137.3 147.7 7.1% Non-interest expenses 577.8 614.7 142.0 151.6 167.2 144.7 142.7 14% 0.5% Income before income taxes 161.4 100.6 17.0 14.0 44.2 74 49 - 1.1% Breakdown of Wholesale revenues’ Full year Quarter (bil
Slide 32: Number of employees
Japan 16,227 15,819 16,706 16,583 15,819 16,474 16,296 Europe 3,026 3,057 3,047 3,054 3,057 3,030 3,020 Americas 2,314 2,362 2,348 2,349 2,362 2,364 2,390 Asia and Oceania’ 6,619 6,810 6,756 6,786 6,810 6,873 6,843 Total 28,186 28,048 28,857 28,772 28,048 28,741 28,549 1. Includes Powai office in In
Slide 33: Disclaimer
WV 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
Slide 34: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com