Nomura Holdings, Inc. · TSE:8604
Nomura — Q3 FY2018/19 Earnings Presentation
35 slides from Nomura's earnings presentation, January 2019
Slide 1: Third quarter results overview
Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our results for the third quarter of the year ending March 2019. Please turn to page two for an overview of year-to-date results.
Slide 2: Outline
yWvV 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) Co
Slide 3: Nine-month results amid market turbulence
Market turbulence has continued to weigh on investor sentiment through factors including US-China trade friction, a plunge in emerging markets currencies on the back of rate hikes in the US, a bear market in global equities and the widening of credit spreads since October. Amid this environment, the
Slide 4: Year-to-date pretax income change by segment
It compares the first three quarters of last year and this year. As you can see on the left, income before income taxes last year totaled 281.2 billion yen. In Retail, commissions from stocks, investment trusts and bonds declined due to a drop in investor sentiment caused by market uncertainties. Al
Slide 5: Third quarter results summary
Turning now to the third quarter results, Retail net revenue was up quarter on quarter and in Wholesale Equities and Investment Banking reported stronger revenues. However, Fixed Income had a challenging quarter due to market uncertainties and the widening of credit spreads. As I said, we also booke
Slide 6: Highlights
Highlights (billions of yen, except EPS and ROE) FY2018/19 FY2018/19 FY2017/18 3a 20 Qoa 30 YoY Net revenue 260.6 | 282.9 8% 406.6 -36% 7 Non-interest expenses 336.8 | 282.5 +19% 285.9 +18% 1 Income (loss) before income 7 7 Free -76.2 | 05 120.8 Net income (loss)' -95.3 | 11.2 - 88.0 - iy EPS? -¥28.
Slide 7: Net revenue and income (loss) before income taxes
Net revenue and income (loss) before income taxes (billions of yen) Eee 0a Yor Ereue e yoy Net revenue Retail 86.8 1% 22% 265.3 16% Asset Management 16.2 34% 56% 66.9 -33% Wholesale 128.2 13% -23% 413.1 -18% Other 39.4 52% 56% 79.1 59% Unrealized gain (loss) on investments in equity 10.0 - - 9.0 s s
Slide 8: Retail results
Net revenue was 86.8 billion yen, roughly unchanged quarter on quarter. Income before income taxes increased 15 percent to 14 billion yen. Although the market dip in October spurred an uptick in contrarian buying, the further drop in share prices weighed on investor sentiment and sales of investment
Slide 9: Retail net inflows and client assets
The chart on the bottom left shows net inflows into discretionary investments of 44.2 billion yen. However, market factors caused AuM to drop to the 2.7 trillion yen level. Annualized recurring revenue was 89.9 billion yen and the recurring revenue cost coverage ratio was 31 percent. The chart on th
Slide 10: Asset Management results
Net revenue declined 34 percent to 16.2 billion yen and income before income taxes was 0.6 billion yen, down 94 percent over last quarter. The decline is mainly attributable to lower assets under management due to the market slump and a loss related to American Century Investments of 8.3 billion yen
Slide 11: Asset Management net inflows
That said, we continued to book inflows during the quarter. As the chart on the top left of page 10 shows, net inflows stood at 790 billion yen, with inflows into the investment trust business centered on ETFs up significantly from last quarter at 1.1 trillion yen. The investment advisory business r
Slide 12: Wholesale results
Equities had a strong quarter and Investment Banking reported revenue growth. But Fixed Income had a challenging quarter in Japan, the Americas, and AEJ. As a result, Wholesale net revenue declined 13 percent quarter on quarter to 128.2 billion yen. We also booked the goodwill impairment charge of 8
Slide 13: Global Markets
Net revenue was 103.5 billion yen, down 16 percent from the previous quarter. Fixed Income revenues declined 46 percent to 37.5 billion yen. Trading revenues dropped on the back of the uncertain market environment. By product, Rates and FX & EM were slow and Credit had a challenging quarter as credi
Slide 14: Investment Banking
Net revenue increased 4 percent to 24.7 billion yen even after sales commissions were paid out to Retail and others for the SoftBank IPO in which we played a leading role as joint global coordinator. Internationally, demand for hedging increased on the back of heightened volatility, but some mandate
Slide 15: Non-interest expenses
Third quarter firmwide non-interest expenses increased by 19 percent to 336.8 billion yen. The main reason behind the increase is the 81.4 billion yen of goodwill impairment charge in Other. The previous quarter included 26.8 billion yen in expenses related to settlements and FX adjustments from the
Slide 16: Robust financial position
At the end of December, our balance sheet stood at 45.1 trillion yen and shareholders’ equity was 2.7 trillion yen. As you can see on the bottom left, Tier 1 capital was 2.6 trillion yen, down by about 77 billion yen from the end of September. As risk assets declined 1.1 trillion yen mainly in credi
Slide 17: Closing remarks and business realignment
This turned out to be a disappointing quarter weighed down by a sluggish performance in Fixed Income, an unrealized loss on equity securities and the goodwill impairment charge in Wholesale. The limitations of the traditional balance sheet reliant trading business is evident and we must digitize our
Slide 18: Financial Supplement
Financial Supplement 17
Slide 19: Consolidated balance sheet
Consolidated balance sheet! (billions of yen) Assets Total cash and cash deposits Liabilities 121 Short-term borrowings Total payables and deposits Total loans and receivables 3 Total collateralized financing Trading liabilities Total collateralized agreements 2,385, Other liabilities Long-term borr
Slide 20: Value at risk
= Definition = From April 1, 2018, to December 31, 2018 (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: 46 07 1.2 1.2 1.2 2.2 21 14 Equity Interest rate 27 34 27 34 29 29 3
Slide 21: Consolidated financial highlights
1 Full year Quarter (billions of yen) (billions of yen) 9.3% 100 300 87% 10% Net i (loss) ° 79% m= Net income attributable to * 8% 50 Nomura Holdings, 200 Inc. ("NHI") 6% ‘shareholders ° 4% rm ROE(%) 400 2% 50 oO 0% -100 953 Net revenue 1,403.2 1,497.0 406.6 378.0 272.0 282.9 260.6 Income (loss) bef
Slide 22: Consolidated income
Full year Quarter (billions of yen) “Pram Franirie Fy2o7e Fvzotei@ Revenue Commissions‘ 327.1 373.3 101.7 95.4 79.5 74.8 72.7 Fees from investment banking 92.6 101.7 29.3 22.6 24.0 19.1 33.1 Asset management and portfolio service fees 216.5 245.6 63.8 62.3 63.0 62.7 60.6 Net gain on trading 475.6 44
Slide 23: Main revenue items
1. Full year Quarter tor en rao econ agg nga — 80 QQ 28 Stock brokerage commissions! 210.0 243.8 68.4 63.8 50.2 47.4 50.5 Other brokerage commissions 15.1 17.0 43 6.0 41 3.4 43 ‘Commissions for distribution of investment trusts 75.1 85.7 22.1 19.5 17.8 15.6 11.5 Other 26.9 26.9 6.9 6.2 7.3 84 64 Tot
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 tions of yer rave eve TmITIN amie Retail 74.8 103.1 31.3 21.4 19.9 12.2 14.0 Asset Management! 42.3 66.2 20.8 11.3 10.3 8.9 0.6 Wholesale 161.4 100.6 14.0 44.2 74 4.9 95.9 Three business segme
Slide 25: Segment Other income (loss) before income taxes
Income (loss) before income taxes Full year Quarter (billions of yen) 80.0 80.0 os 50.4 25.0 24.5 40.0 Net gain (loss) related to economic : 7 7 ing transactions 7.3 65 -8.0 1.7 13.8 16.0 25.1 Realized gain (loss) on investments in equity securities held for ing purposes 1.4 08 0.4 0.0 0.0 0.0 0.1 E
Slide 26: Retail financial data
Full year Quarter (bilions of yen) ‘Prana Fane em er 80 1 QQ Commissions 1718 © 1927 544 475 408 36.8 34.4 13% 37.0% Of which, stock brokerage commission 628 82.2 25.4 207 168 183 158 3.6% 37.7% Of which, commissions for of trusts 823 87.4 226 19.5 18.5 156 11.7 28.5% = 48.4% Sales credit 85.3 915 2
Slide 27: Retail client assets
Retail client assets 1 (trillions of yen) sOtner me 122.8 117.7 118.6 122.8 110.0 417.7 120 = Foreign investment 107.7 trusts 400 = Bond investment trusts 80 = Stock investment trusts 60 = Domestic bonds 40 = Foreign currency bonds 20 = Equities 0 Equities 66.3 75.7 79.2 75.7 76.4 79.8 68.4 Foreign
Slide 28: Net inflows of cash and securities
Net inflows of cash and securities' Full year Quarter (billions of yen) (billions of yen) 2,000 2,000 1,762 1,500 1,500 1,000 1,000 682 500 500 i i) 0 a4 = 237 196 -500 306 403 -500 1. Cash and securities inflows minus outtiows, excluding regional financial institutions. 27 27
Slide 29: Number of accounts
Number of accounts (thousands) “ryzowet7 Fyzor7ne = Fyzoimnig = ryzonartg (Mar Maree Mar un Sep ee Accounts with balance 5,363 5,318 5,326 5,318 5,318 5,318 5,384 Equity holding accounts 2,836 2,822 2,800 2,822 2,823 2,829 2,905 Online service accounts"? 4,456 4,387 4,342 4,387 4,427 4,470 4,526 New
Slide 30: Asset Management financial data
Full year Quarter (billons of yen) ramen erate i i i ee Net revenue! 99.4 127.3 36.5 273 26.1 24.7 16.2 55.7% Non-interest expenses! 57.4 61.2 15.7 16.0 15.8 158 15.6 1.0% 0.3% Income before income taxes* 42.3 66.2 20.8 11.3 10.3 8.9 06 93.7% 97.3% Assets under management by company eae Nomura Asset
Slide 31: Asset inflows/outflows by business
Asset inflows/outflows by business Full year Quarter (ollions of yen) | Praott | Prag ee a ee Investment trusts business 1,590 3,131 773 1,156 263 280 4,144 of which ETFs 1,934 3,022 193 1,740 147 510 1,391 Investment advisory business 584 203 -55 248 109 156 354 Total net asset inflow 2,174 3,334 7
Slide 32: Wholesale financial data
Full year Quarter © 89Q00 AQ 10 2 8 Net revenue 739.3 715.3 165.6 211.4 137.3 147.7 128.2 13.2% 22.6% Non-interest expenses 577.8 614.7 151.6 167.2 144.7 142.7 224.1 57.0% 47.8% Income before income taxes. 161.4 100.6 14.0 44.2 74 49 95.9 - - Breakdown of Wholesale revenues' Full year Quarter 80 QQ
Slide 33: Number of employees
Japan 16,227 15,819 16,583 15,819 16,474 16,296 16,137 Europe 3,026 3,057 3,054 3,057 3,030 3,020 2,963 Americas 2,314 2,362 2,349 2,362 2,364 2,390 2,384 Asia and Oceania’ 6,619 6,810 6,786 6,810 6,873 6,843 6,796 Total 28,186 28,048 28,772 28,048 28,741 28,549 28,280 Includes Powai office in India
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