Nomura Holdings, Inc. · TSE:8604
Nomura — FY2018/19 Earnings Presentation
35 slides from Nomura's earnings presentation, April 2019
Slide 1: Overview of results for year ended March 2019
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our results for the year ended March 2019. Please turn to page two for an overview of full year results.
Slide 2: Outline
VM Outline Presentation NOMURA Financial Supplement Executive summary (p. 2-4) Overview of results (p. 5) Business segment results (p. 6) Retail (p. 7-8) Asset Management (p. 9-10) Wholesale (p. 11-13) Non-interest expenses (p. 14) Robust financial position (p. 15) Funding and liquidity (p. 16) Cons
Slide 3: Executive summary: full year results
As you can see on the bottom left, it was a challenging year with net revenue of 1,116.8 billion yen, down 25 percent year on year, and loss before income taxes was 37.7 billion yen. Net loss was 100.4 billion yen. Throughout the year, the capital markets were clouded in political and economic uncer
Slide 4: Pretax income FY2017/18 vs FY2018/19
This slide compares pretax earnings in FY2017/18 and FY2018/19. As you can see on the left, in FY2017/18 we booked income before income taxes of 328.2 billion yen. Income before income taxes in Retail declined 53.6 billion yen as investor sentiment declined on market uncertainties, resulting in lowe
Slide 5: Fourth quarter results
Firmwide income before income taxes was 24.4 billion yen, marking a rebound from a loss in the previous quarter. Three segment income before income taxes was 4.7 billion yen as shown on the bottom right. With the absence of the goodwill impairment charge, this was an improvement from the loss last q
Slide 6: Highlights
Highlights (billions of yen, except EPS and ROE) 1. Net income (loss) attributable to Nomura Holdings shareholders. 2 Diluted net income (loss) atbutabe to Nomura Holdings shareholders per share 3 Calculated using to Holdings: ‘net income 301.3 +16% -20% 1,116.8 -25% TT 276.9 -18% 16% 1,154.5 1% 24.
Slide 7: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes FY2018/19 FY2018/19 4Q Q0Q YoY Full year YoY Netrevenue Retail 74.2 15% 24% 339.5 18% Asset Management 30.9 91% 13% 97.8 -23% Wholesale 142.2 11% -33% 555.4 -22% Other” 52.1 32% 13% 1313 ~45% Unrealized gain (loss) on investments in 18 . . 72 : equit
Slide 8: Retail results
Net revenue declined 15 percent quarter on quarter to 74.2 billion yen. Income before income taxes was 3.3 billion yen, down 77 percent. Share prices, which dropped significantly in the October to December quarter recovered to a degree, but clients remained in wait-and-see mode and as shown on the b
Slide 9: Retail recurring revenue and consulting
As you can see on the top left, annualized recurring revenue was 88 billion yen, down slightly from the previous quarter. Cost control also helped keep the recurring revenue cost coverage ratio at 31 percent. We also provided a wide range of solutions to corporates and high net worth clients in addi
Slide 10: Asset Management results
Net revenue was 30.9 billion yen, up 91 percent quarter on quarter. Income before income taxes improved significantly from last quarter to 14.4 billion yen. As the graph on the left shows, last quarter we reported a loss related to American Century Investments of 8.3 billion yen, which significantly
Slide 11: Asset Management: collaboration with ACI
The bottom right of page 10 shows how Nomura and ACI have leveraged our respective strengths to collaborate since our investment into ACI in 2016 in terms of product provision and client introductions. As of the end of March, assets under management through such collaboration stood at 5.4 billion do
Slide 12: Wholesale results
Net revenue was 142.2 billion yen, an increase of 11 percent over last quarter. Global Markets revenues increased driven by a rebound in Fixed Income, while Investment Banking reported stronger revenues in both Japan and internationally. That said, we are still not satisfied with the level of revenu
Slide 13: Global Markets
Net revenue increased 10 percent to 113.6 billion yen. Fixed Income increased 81 percent to 68 billion yen. Last quarter trading revenue dropped due to uncertain market conditions, but this quarter all products posted stronger results, particularly Rates and Credit. As you can see in the heat map on
Slide 14: Investment Banking
Net revenue increased 16 percent to 28.6 billion yen. As shown on the right, we had revenue contributions during the quarter from a number of M&A transaction closures such as Takeda Pharmaceutical’s acquisition of Shire. We booked higher revenues in both Japan and internationally. Internationally, A
Slide 15: Non-interest expenses
Firmwide expenses were 276.9 billion yen, down 18 percent quarter on quarter. The biggest decline came from Other shown at the bottom. This quarter we booked 12 billion yen in legal expenses related to legacy transactions, but because the goodwill impairment charge of 81.4 billion yen booked last ye
Slide 16: Robust financial position
Our balance sheet at the end of March was 41 trillion yen and shareholders’ equity was 2.6 trillion yen. As shown on the bottom left, our Tier 1 capital ratio at the end of March was 18.2 percent and our CET 1 capital ratio was 17.1 percent. We maintain a robust financial position. Our capital ratio
Slide 17: Closing remarks and outlook
Performance in our core business for the full year period was sluggish, particularly in Retail and Wholesale. This was compounded by a number of non-recurring items such as the goodwill impairment charge and legal expenses. We are clearly disappointed with this set of results. In line with this perf
Slide 18: Financial Supplement
Financial Supplement 17
Slide 19: Consolidated balance sheet
Consolidated balance sheet! (billions of yen) Assets Liabilities Total cash and cash deposits Short-term borrowings 98 Total payables and deposits 200 Total loans and receivables Total collateralized financing 13 Trading liabilities 17 Total collateralized agreements Other liabilities 92 Long-term b
Slide 20: Value at risk
= Definition = From April 1, 2018, to March 31, 2019 (billions of yen) ~— 99% confidence level — Maximum: 10.6 — 1-day time horizon for outstanding portfolio — Minimum: 3.1 — Inter-product price fluctuations considered — Average: 4.6 Equity 1.2 1.4 1.2 22 24 4.1 14 Interest rate 31 28 3.1 29 29 3.5
Slide 21: Consolidated financial highlights
Full year Quarter (billions of yen) 300) 7.9% * ‘=m Net income (loss) 200 attributable to Nomura Holdings, Inc. ("NHI") shareholders 100 ROE(%) 100 -100.4 10% (billions of yen) 100 7.9% Net revenue 1,497.0 1,116.8 Income (loss) before income taxes 328.2 37.7 46.9 13.6 Os -76.2 24.4 Net income (loss)
Slide 22: Consolidated income
Full year Quarter (billions of yen) “Praui7ie Fransaie Fy2oite F019 Revenue Commissions’ 373.3 293.1 95.4 79.5 74.8 72.7 66.1 Fees from investment banking 101.7 101.5 22.6 24.0 19.1 33.1 25.3 Asset management and portfolio service fees 245.6 245.5 62.3 63.0 627 60.6 59.2 Net gain on trading 442.9 34
Slide 23: Main revenue items
1 Full year Quarter AQ 10 QQ Stock brokerage commissions! 243.8 192.0 63.8 50.2 47.4 50.5 43.9 Other brokerage commissions 17.0 14.4 6.0 41 3.4 43 25 ‘Commissions for distribution of investment trusts 85.7 56.6 19.5 17.8 15.6 11.5 11.7 Other 26.9 30.0 6.2 7.3 8.4 64 8.0 Total 373.3 293.1 95.4 79.5 7
Slide 24: Income (loss) before income taxes by segment and region
Adjustment of consolidated results and segment results: Income (loss) before income taxes Full year Quarter cm 2S a 49.5 21.4 19.9 12.2 14.0 3.3 Retail 103.1 ‘Asset Management’ 66.2 34.2 113 103 89 06 14.4 Wholesale 100.6 111.4 44.2 74 49 95.9 -13.0 Three business segments total 269.9 27.7 76.9 22.8
Slide 25: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 80.0 60.0 56.4 40.0 20.0 154 17.8 00 | 28 Ll -20.0 11.2 -25.0 24.5 40.0 Fare Fae 4000 10 QQ Net gain (loss) related to economic . . hedging transactions 6.5 1.8 1.7 13.8 16.0 25.1 6.6 Realized gain (loss) on investments in equity
Slide 26: Retail results detail
1 Full year Quarter son Ss = pe a re Commissions 192.7 142.8 475 40.8 36.8 wl 31.0 9.1% 34.7% Ofwhich, stock brokerage commission 822 60.2 247 16.8 15.3 15.8 122 22.7% — 43.6% Ofwhich, commissions for distribution of investment trusts e741 87.9 19.5 18.5 156 11.7 12.4 3.7% 37.9% Sales credit 915 55.
Slide 27: Retail client assets
Retail client assets (trillions of yen) (! 0 yen) = Other 122.8 118.6 _ 120 117.7 114.7 117.7 1100 114.7 "Foreign investment trusts 100 "Bond investment trusts 80 ® Stock investment trusts 60 = Domestic bonds 40 = Foreign currency bonds 20 = Equities 0 Equities 75.7 71.9 75.7 76.4 79.8 68.4 71.9 For
Slide 28: Net inflows of cash and securities
1 Net inflows of cash and securities’ Full year Quarter (billions of yen) (billions of yen) 2,500 2,500 2,015 2,000 2,000 1,762 1,500 1,500 1,000 1,000 682 500 500 | | 0 i) = > i 196 500 -403 500 -393 a AQ 1 QQ Cash and secunties inflows minus outflows, excluding regional financial institutions. 27
Slide 29: Number of accounts
Number of accounts (thousands) — Fy20i718 Fy201'19FY2017/18 = FY2OIBID ee Ge Ea ce ee ee Accounts with balance 5,318 5,338 5,318 5,318 5,318 5,354 5,338 Equity holding accounts 2,822 2,908 2,822 2,823 2,829 2,905 2,908 Online senice accounts"? 4,387 4,569 4,387 4,427 4,470 4,526 4,569 New Individual
Slide 30: Asset Management results and assets under management
Full year’ Quarter* (billions of yen) (FY2017/18 = FY201819 Revenue (excl. ACI-related) 105.3 102.9 26.5 24.5 1.7% ‘AClelated revenue 22.1 6.0 09 0.2 15 83 49 : 5.7x Net revenue 127.3 97.8 27.3 26.1 247 16.2 30.9 91.0% 13.1% Non-interest expenses 61.2 63.7 16.0 15.8 15.8 15.6 16.5 5.5% 2.8% Income b
Slide 31: Asset inflows/outflows by business
Asset inflows/outflows by business! Full year Quarter Investment trusts business 3,131 2,187 1,156 263 280 1,141 503 of which ETFs 3,022 2,531 1,740 147 510 1,391 483 Investment advisory business 203 20 248 109 156 354 109 Total net asset inflow 3,334 2,207 1,404 372 436 787 612 Domestic public inve
Slide 32: Wholesale results and revenue breakdown
Full year Quarter (billions of yen) Eas I eS eae Seay ver 400 1Q 2 QQ Net revenue 715.3 21.4 137.3 147.7 = 128.2 1422 14.0% ©=— 32.7% Non-interest expenses 6147 666.8 167.2 © 144.70 142.7 = 224.1 185.3 30.7% = 7.1% Income (loss) before income taxes 1006 9 114.4 44.2 74 49-959 13.0 : - Breakdown of W
Slide 33: Number of employees
Japan 15,819 15,852 15,819 16,474 16,296 16,138 15,852 Europe 3,057 2,909 3,057 3,030 3,020 2,963 2,909 Americas 2,362 2,357 2,362 2,364 2,390 2,384 2,357 Asia and Oceania’ 6,810 6,746 6,810 6,873 6,843 6,796 6,746 Total 28,048 27,864 28,048 28,741 28,549 28,281 27,864 1. Includes Powai office in in
Slide 34: Disclaimer
VM 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 35: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com