Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2016/17 Earnings Presentation
34 slides from Nomura's earnings presentation, October 2016
Slide 1: Overview of results for first half and second quarter
I will now give you an overview of our results for the first half and second quarter using the document titled “Consolidated Results of Operations”. Please turn to page two.
Slide 2: Outline
LN 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) Conso
Slide 3: First half results overview
During the first half of the year, retail investors remained cautious due to monetary policy around the world, Brexit, and more recently the upcoming US election. Institutional investor activity was relatively solid in the fixed income markets, but volumes were muted in the equities market due to co
Slide 4: Second quarter results overview
Retail performance improved in the second quarter and non-business segment results improved significantly. As a result, as shown here in the graph on the top right, income before income taxes increased 30 percent to 81.8 billion yen and net income grew 31 percent to 61.2 billion yen. Our internation
Slide 5: Highlights
Highlights (bilions of yen, except EPS and ROE) FY2016/17 20 Q0Q YoY 1H YoY Net revenue 347.0 | 43% +3% 685.5 10% Non-interest expenses 265.2 | 4% -16% 540.9 -15% Giga Lr oe income 818 | +30% 41x 144.5 +15% Net income (loss)* 61.2 | 431% 431% 108.0 6% EPS? 16.68 +31% +32% 29.39 6% ROE? 9.3% 8.1% (1)
Slide 6: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes 7) (billions of yen) ‘FY2016/17 vay FY2016/17 Pe “20 0a YoY ty YoY 86.2 43% 26% 169.9 31% 21.3 18% Th 47.2 5% 13.1 76 - 3.0 - 81.8 +30% aim |) 144.5 +15% *Additional information on “Other (2Q) _ ™ Loss on changes to own and counterparty credit spread
Slide 7: Retail results
Net revenue increased 3 percent to 86.2 billion yen. Income before income taxes was 14.4 billion yen, which was up 66 percent quarter on quarter thanks partly to a decline in expenses. The market started to normalize in the second quarter. But clients continue to take a cautious stance with the US e
Slide 8: Retail client needs and investment trust sales
We are also seeing a change in client needs. As shown on the bottom right of page seven, funds seeking income gain continue to flow into REITs and high- yield bond funds amid the ongoing low interest rate environment. In addition, investors are looking at thematic funds such as Indian equities, whic
Slide 9: Asset Management results
Net revenue was 21.3 billion yen, down 18 percent quarter on quarter. Although the core business remained robust, the sequential decline was the result of last quarter including dividend income and a one-off gain. Income before income taxes was 7.4 billion yen, down 39 percent from the first quarter
Slide 10: Asset Management inflows and NCRAM
The graph on the bottom left shows inflows into the investment trust business. As a result of the negative interest rate environment, we have seen outflows from money market funds since the fourth quarter of last fiscal year. In the second quarter, we reported outflows of 580 billion yen, mainly fro
Slide 11: Wholesale results
Net revenue declined 6 percent to 179.9 billion yen. Income before income taxes decreased 16 percent to 39.3 billion yen. By business line, Global Markets revenues declined 8 percent quarter on quarter due to slower client activity and the effect of yen appreciation. Investment Banking revenues incr
Slide 12: Global Markets
Global Markets net revenue was 156.1 billion yen. Fixed Income net revenue was 99.6 billion yen, down 8 percent from last quarter. As the heat map on the top right shows, international revenues increased driven by Rates and Spread Products, while Japan slowed, particularly in Rates products, from th
Slide 13: Investment Banking
As shown on the top left, second quarter net revenue was 23.8 billion yen, up 17 percent quarter on quarter. Gross revenue before allocations to other divisions was 42.2 billion yen, up 25 percent from the first quarter. Japan revenues increased on large ECM and DCM deals and Solutions transactions.
Slide 14: Non-interest expenses
Second quarter non-interest expenses declined 4 percent to 265.2 billion yen. Personnel expenses increased by 2 percent due to higher bonus provisions in line with first half revenues. Other expenses all declined. Please turn to page 14. 13
Slide 15: Robust financial position
Total assets were 43 trillion yen, gross leverage was 16.3 times and net leverage was 9.8 times. Our Tier 1 ratio was 18.7 percent and our CET 1 ratio was 18.0 percent, both up significantly from June due to the denominator in the equation, risk assets, declining 1.3 trillion yen from 15 trillion ye
Slide 16: Closing remarks
Today we also announced that we are consolidating share of affiliate companies held by our subsidiaries into Nomura Holdings. Please see the press release for more details. This is to promote the efficiency of our equity holdings management. As this is a dividend in kind by wholly owned subsidiaries
Slide 17: Financial Supplement
Financial Supplement
Slide 18: Consolidated balance sheet
(billions of yen) Assets Total cash and cash deposits Total loans and receivables Total collateralized agreements: Total trading assets’ and private equity investments. Total other assets Total assets (1) Including securties pledged as collateral Liabilities ‘Short-term borrowings Total payables and
Slide 19: Value at risk
= Definition = From April 1, 2016, to September 30, 2016 (billions of yen) — 99% confidence level — Maximum: 6.7 — 1-day time horizon for outstanding portfolio — Minimum: 3.4 — Inter-product price fluctuations considered — Average: 47 (vitions otyen «IE 2OTAIAS) FV20HSITB) a ee ee eee Equity 1.0 09
Slide 20: Consolidated financial highlights
w Full year Quarter (billions of yen) (billions of yen) 300 5.0% 9% 400 80 mmm Net income (loss) 299 6% attributable to NHI 49% 60 shareholders ° 40 —— ROE(%) 100 3% 99 0 ° 0% 49 Net revenue 1,604.2 1,395.7 Income (loss) before income taxes 346.8 165.2 Net income (loss) attributable to Nomura . Hold
Slide 21: Consolidated income
Full year Quarter 7 Fy2ois/6 FY 2016/17 (ition of yen) -Frzows Fvanrst6 mene EE EE EE EE Commissions 453.4 432.0 111.5 102.3 87.8 76.3 74.6 Fees from investment banking 95.1 118.3 44.9 20.0 29.0 17.3 23.4 Asset management and portfolio service fees 203.4 229.0 58.2 57.8 53.1 52.6 52.1 Net gain on tr
Slide 22: Main revenue items
Full year Quarter (billions of yen) Stock brokerage commissions 2528 275.0 71.3 63.7 61.3 48.4 47.0 Other brokerage commissions 19.6 23.3 68 5.4 58 43 34 ‘Commissions for distribution of investment trusts 134.3 89.5 22.0 20.8 124 15.8 17.6 Other 46.8 442 1.3 124 83 77 6.6 Total 453.4 432.0 111.5 102
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 Retail 161.8 127.6 36.7 27.8 12.2 87 14.4 Asset Management 32.1 36.7 8.4 10.7 5.8 12.2 74 Wholesale 82.2 15.4 8.6 9.9 -22.8 46.6 39.3 ‘Three business segments total 276.1 179.7 53.8 48.5, 49 6
Slide 24: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 50.0 , 46.0 40.0 Net Galt (368) (elalda fiiecoriomic 184 64 1A 06 as 12.0 AA hedging transactions Realized gai i in it — Mechel Eateries, 47 02 0.0 0.0 00 06 of Equity in eamings of affiliates 42.2 32.7 a4 48 54 1 109 Corporate it
Slide 25: Retail financial data
Full year Quarter (oltions of yen) rote ‘Commissions (258.9 55.8 51.8 38.9 38.4 38.9 1.3% 30.3% Of which, 81.8 78.9 20.0 18.0 14.4 13.4 12.4 5.5% 38.3% Of which, jasions for distribution of i trusts 134.9 93.6 25 22.0 14.3 17.6 20.0 13.6% 11.1% Sales credit 106.4 86.4 19.7 23.2 17.5 18.6 19.9 6.9% 1
Slide 26: Retail client assets
Retail client assets (trillions of yen) 120 109.5 108.8 103.0 Other 100.6 100.6 0.1 100 95.3 Overseas mutual funds 80 = Bond investment trusts = Stock investment trusts 60 = Domestic bonds 40 "Foreign currency bonds 4 Equities 0 Equities 67.2 60.2 62.3 67.4 60.2 55.8 59.6 Foreign currency bonds 6.3
Slide 27: Net inflows of cash and securities
Net inflows of cash and securities’ Full year Quarter (billions of yen) (billions of yen) 1,500 1,000 997 1,000 500 319 95 500 i) | — * in 243 48 356 C) -500 Pras evant [2a sae tea (1) Cash and securities inflows minus outflows, excluding regional financial institutions, 26 26
Slide 28: Number of accounts
Number of accounts (thousands) —Fyzoiais FY201s6 —FY2ONS/IG FY 2016/7 Accounts with balance 5,294 5,389 5,366 5,384 5,389 5,390 5,384 Equity holding accounts 2,719 2,827 2,725 2,796 2,827 2,842 2,856 Nomura Home Trade / Net & Call accounts 4,216 4,412 4,337 4,384 4,412 4,443 4,470 New Individual acc
Slide 29: Asset Management financial data
Full year Quarter —FY2018/16 FRONT Ccne ot yon) ania i EE EE ee ee Net revenue 92.4 22.9 25.3 20.3 25.9 21.3 18.0% Non-interest expenses 60.3 58.7 14.4 14.6 14.5 13.7 13.8 1.1% AA Income before income taxes 32.1 36.7 84 10.7 5.8 122 7.4 -39.3% — -11.6% Assets under management by company O) of Nomura
Slide 30: Asset inflows/outflows by business
Asset inflows/outflows by business Full year Quarter F202 temons ehyen) Ezz (te sa a tea Investment trusts business 3,418 2,717 896 157 412 423 6 of which ETFs 843 2,339 1,294 -102 838 24 477 Investment advisory business 50 2,038 1,446 646 92 -169 344 Net asset inflow 3,469 4,755 2,342 803 320 592 3
Slide 31: Wholesale financial data
Full year Quarter (billions of yen) Net revenue 192.9 186.0 136.2 190.9 179.9 5.8% 6.8% Non-interest expenses 707.7 704.9 184.3 176.0 159.0 144.3 140.6 2.6% -23.7% Income (loss) before income taxes 82.2 15.4 86 99 22.8 46.6 39.3 15.8% 4.6x Breakdown of Wholesale revenues Full year Quarter (billions
Slide 32: Number of employees
Japan 15,973 16,083 16,381 16,282 16,083 16,792 16,543 Europe 3,485 3,424 3,494 3,433 3,424 3,170 3,147 ‘Americas 2,449 2,503 2,514 2,501 2,503 2,481 2,297 Asia and Oceania’ 6,765 6,855 6,862 6,853 6,855 6,769 6,667 Total 28,672 28,865 29,251 29,069 28,865 29,212 28,654 (1) Includes Powai office in
Slide 33: Disclaimer
y\Vv 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. Offer
Slide 34: Nomura Holdings, Inc.
NOMURA Nomura Holdings, Inc. www.nomura.com