Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2011/12 Earnings Presentation
39 slides from Nomura's earnings presentation, October 2011
Slide 1: Group COO opening remarks on management decisions
I am Takumi Shibata, Group COO of Nomura. I will start the presentation by outlining some management decisions. decisions Junko Nakagawa, our CFO, will then go over the key points of our second quarter performance and I will make a brief concluding remark. We will then open the lines to take your qu
Slide 2: Disclaimer
Disclaimer NOAURA = This document is produced by Nomura Holdings, Inc. (‘Nomura’). Copyright 2011 Nomura Holdings, Inc. All rights reserved. = 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 se
Slide 3: Outline
Outline Presentation NOMURA Financial Supplement Executive summary (P3) Recalibrating for a changing industry (p4) Overview of results (P5) Business segment results (P6) Retail (P7-8) Asset Management (P9-10) Wholesale (P11-15) Non-interest expenses (P16) Robust financial position (P17) Funding and
Slide 4: Executive summary
We faced a challenging quarter as market conditions deteriorated as a result of the eurozone debt crisis and further turmoil hit the financial markets. Second quarter net revenue was 301.6 billion yen, down 9 percent quarter on quarter, but up 9 percent from the same period last year due to the cons
Slide 5: Recalibrating for a changing industry
As mentioned earlier, we have announced a cost reduction program totaling 1.2 billion dollars. This includes the 400 million dollar reduction announced last quarter. The additional 800 million dollar reduction is a firm-wide initiative, primarily focused on Wholesale. We will reallocate a portion of
Slide 6: Overview of results
This slide gives you an overview of our financial results for the second quarter and the six months to September. Page 6 shows net revenue and income (loss) before income taxes by business segment. The results for each segment are shown from page 7 onwards. Please turn to p pages g 7 and 8 where I w
Slide 7: Business segment results
Business segment results Net revenue and income (loss) before income taxes NOMURA (billions of yen) FY2011/12 QoQ YoY FY2011/12 YoY 2Q % % 1H % Revenue Retail | 84.0 (11) (4) 178.2 (10) ‘Asset Management | 160 (15) ” 348 9 Wholesale 79.3 (44) 61) 220.6 (19) Segment total 179.3 (30) (33) 433.5 (14) O
Slide 8: Retail results
Total sales in Retail declined from the previous quarter as market conditions deteriorated globally. Net revenue declined 11 percent quarter on quarter to 84 billion yen. Income before income taxes was 10.7 billion yen, representing a decrease of 51 percent from the first quarter. Sales of stocks an
Slide 9: Retail: Consulting based approach
Retail: Consulting based approach NOMURA 3,000 » 2,000 | 4.000 | o 2000 38Q 2 Net asset inflows Total sales (billions of yen) ‘Sixth quarter of positive client asset inflows resulting from focus on consulting "Stocks Bonds sInvestmenttrusts = Others services and diversified product offering across a
Slide 10: Asset Management results
Asset Management reported net revenue of 16 billion yen, down 15 percent quarter on quarter. Income before income taxes declined 37 percent sequentially to 4.7 billion yen, but increased year on year. Although total assets under management declined due to the market downturn and strong yen, we saw i
Slide 11: Asset Management: Inflows into public stock investment trusts
Asset Management: Inflows into public stock investment trusts NOMURA Net inflow in public stock investment Share of Japan public investment trust Investment advisory assets under trusts'? market *:2 management'* (bilions of yen) (trtions of yen) 1,000 > neTF 23% 9 12.0 = Public stock investment trus
Slide 12: Wholesale results
Trading was impacted by market volatility and financing activities in the primary markets was sluggish. As a result, Wholesale reported net revenue of 79.3 billion yen, a decline of 44 percent from the prior quarter. Loss before income taxes was 73.1 billion yen A breakdown of Wholesale results by b
Slide 13: Global Markets results
In Global Markets, net revenue was 72.6 billion yen, down 44 percent from last quarter. Loss before income taxes was 48.6 billion yen. In Fixed Income, client activity increased and revenues were driven by solid performance in Japan FX and Rates. That said, Securitized Products and other trading bus
Slide 14: Global Markets: Robust domestic business driven by global franchise
Global Markets: Robust domestic business driven by global franchise NOMURA Continued growth in global client franchise Strengthened Japan business leveraging global platform Expanded product platform 250 Client revenue Fixed Income Indexed: FY2010/11 10 = 100 Indexed: FY2009/10 1H = 100 150 156 Sape
Slide 15: Investment Banking results
Investment Banking was hit by a 40 percent quarter on quarter decline in the global investment banking fee pool, the lowest figure since 2002. As a result, gross revenue fell 26 percent on the previous quarter to 23.8 billion yen. Loss before income taxes was 24.5 billion yen. While our global DCM b
Slide 16: Investment Banking: Expanding global franchise out from home market
Investment Banking: Expanding global franchise out from home market NOA\URA [1 maa c5ais closed in 20 Global M&A business expanding driven by Japan outbound M&A UZZ} Announced M&A deals due to close from 30 Bain Capital, Hellman & Friedman / Securitas Direct (SEK21.9bn) Jan-Oct, Jan-Oct, 2010 2011 M
Slide 17: Non-interest expenses
Non-interest expenses increased 17 percent on the previous quarter to 346.2 billion yen due to a full three months of expenses booked for newly consolidated entities as a result of converting Nomura Land and Building into a subsidiary. Excluding these effects, non-interest expenses declined quarter
Slide 18: Robust financial position
Total assets at the end of September were 36.9 trillion yen. Gross leverage was 18.1 times versus 18.9 times last quarter, while net leverage was 11 times, down from 11.6 times last quarter. Our financial position remains robust with shareholders’ equity of 2 trillion yen and liquidity of 5.6 trilli
Slide 19: Funding and liquidity
As shown on the left, approximately 80 percent of our balance sheet consists of highly liquid trading assets. Assets and liabilities are matched by raising funds in each region mostly through repo transactions. However, even under stress that could disrupt repo markets, we are able to maintain a liq
Slide 20: Exposure in European peripheral countries
Our net country exposure in European peripheral countries is 3.55 billion dollars. Of this, 83 percent matures within six months and is mostly short-term government bonds in countries where we hold Primary Dealer licenses; 74 percent is with sovereign counterparties and 20 percent is with financial
Slide 21: Concluding remarks
As stated earlier, by becoming leaner, and by optimizing the regional distribution of our resources, Nomura will be able to meet the needs of our clients better and more proactively. Many globally active financial institutions will have to cut expenses, raise capital and shrink balance sheet, reflec
Slide 22: Consolidated balance sheet
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 Liabilities Short-term borrowings Payables and deposits Collateralized fin
Slide 23: Value at risk
Value at risk = Definition — 99% confidence level (2.33 standard dev.) ~ 1-day time horizon for outstanding portfolio — Inter-product price fluctuations considered = From April 1 to September 30, 2011 (billions of yen) — Maximum: 7.7 ~ Minimum: 4.9 — Average: 61 ome ee 47 42 38 26 18 16 1.9 NOMURA E
Slide 24: Consolidated financial highlights
Full year Consolidated financial highlights (billions of yen) 400 3% 200 C) == Net income (loss) 200 —*—ROE (%) -400 -600 -800 Net revenue 1,091.1 Income (loss) before income taxes 318.5 Net income (loss) attributable to Nomura Holdings, Inc. ("NHI") shareholders 175.8 Total Nomura shareholders’ equ
Slide 25: Consolidated income
Consolidated income (billions of yen) Full year Quarter NOMURA Revenue Commissions 3375 4047 3068 395.1 4055 83.5 1000 1038 68 859 Fees from investment banking 993 85.1 $50 121.3 107.0 249-340 7B 138 13.8 Asset management and portfolio service fees 146.0 1897 140.2 1322 1439 337 (37.4 38.3 (39.1 36.
Slide 26: Main revenue items
Main revenue items NOMURA Full year Quarter pment Frama spranosarvanestvannesrra0i13 oq 20"? aq goa 202° 3Q QQ 1 2 a comiraiseions 983 751 508 553 514 87 127 «1630087 on commissions 732 1666 1447 140.3 1446 307 359 «(877342384 Other br. ssi 68 93 79 80 115 1823 53 25 32 Commissions for distribution
Slide 27: Adjustment of consolidated results and segment results
Adjustment of consolidated results and segment results: Income Full year Quarter (loss) before income taxes NOMURA (billions of yen) RII) tos ts tz tt. 1012 28 230 «= 177 107 [7 Assetivanagement 9) 3633.1 41 152-200 42 56 63 74 47 Wholesale 156.0 -150.1 717.3 175.2 67 7.6 10.8 29.4 14.9 734 353.2 33
Slide 28: Segment Other
27 7 9 Segment “Other NOAURA Income (loss) before income taxes Full year Quarter (billions of yen) (billions of yen) 40 240 21.0 154 40 = _—| = —— oo a 40 18.1 | 17.8 “8.0 213.3 12.9 -40 -80 62.1 _ 120 -120 ~160 -160 -200 -200 -240 -207.9 -240 Net gain (loss) related to economic -30.0 14 hedging tra
Slide 29: Retail related data (1)
Retail related data (1) (billions of yen) Full year Quarter NOMURA Nomura Secures Commissions 2514 2259 151.0 2389 2448 60.2 58.7 48.2 17.9% -3.9% Sales credit 96.8 94.2 714 63.8 52.8 13.8 13.0 13.2 15.2 13.0 -14.0% -5.2% Fees from investment banking 24.0 14.9 13.4 33.6 42.3 11.2 11.0 10.7 6.2 9.5 5
Slide 30: Retail related data (2)
Retail related data (2) Full year Stock brokerage commissions and commissions for distribution of investment trusts’ NOMURA Quarter (billions of yen) = Stock brokerage commissions 8 ‘= Commissions for distribution of investment trusts. 8 1. Nomura Secuntos, 180 150 60 120 50 40 30 20 30 10 ° Stock b
Slide 31: Retail related data (3)
® Stock investment trusts Retail related data (3) NOAURA Retail client assets Full year Quarter (trillions of yen) 100 85.2 = Other 80 72.2 = Overseas mutual funds '® Bond investment trusts. 60 73.5 70.6 70.4 66.1 . : : : ; Euroyen bonds have been moved from domestic bonds to foreign currency bonds
Slide 32: Retail related data (4)
Retail related data (4) Retail client assets: Net asset inflow’ NOMURA (Note: Net asset inflow = asset inflow ~ asset 1. Retail clent assets exclude portion from regional financial institutions. outflow. Full year Quarter (billions of yen) (billions of yen) 8.000 4,000 5,975 6,000 3,000 5,279 4,868
Slide 33: Retail related data (5)
Retail related data (5) Number of accounts NOMURA om ‘Mat 31,2007 Mat 91,2008 Mar.91,2008 Mar. 31,2010 Mar. 31,2011 un.30,2011 Sp, 30,2011 Accounts with balance 3,953 4,165 4,467 4,883 4,936 4,945 4,954 Equity holding accounts 1,853 2,027 2,347 2,572 2,695 2,696 2,703 Nomura Home Trade (online tradi
Slide 34: Asset Management related data (1)
Asset Management related data (1) NOMURA (billions of yen) 2007.3 FY2008:3FY20083 FY2010°3 FY2011.3 gS aoa eal Na — 2Q0 3Q QQ 2 Net revenue 80.7 61.1 51.9 62.1 66.5 16.2 17.3 17.3 18.8 16.0 15.3% 1.5% Non-interest expenses 444 50.0 478 46.8 46.5 12.0 117 11.0 114 11.2 AMG 6.5% Income before income t
Slide 35: Asset Management related data (2)
Asset Management related data (2) Nomura Asset Management assets under management! NOMURA Domestic public investment trust market and Nomura Asset Management market share? (trillions of yen) (trillions of yen) Public stock investment trusts 10.8 9.5 8.1 Domestic public stock investment trusts Public
Slide 36: Wholesale related data (1)
Wholesale related data (1) NOMURA Wholesale — 32 QQ OQ Global Markets -157.3 658.4 518.8 144.4 41.0 37.0 30.1 72.6 44.1% 49.7% Investment Banking 64 131.1 111.7 19.0 31.4 49.4 11.2 6.7 40.3% 65.0% Net revenue -163.6 789.5 630.5 163.4 172.2 186.3 141.2 79.3 43.8% 51.5% Non-interest expenses 553.7 614
Slide 37: Wholesale related data (2)
Wholesale related data (2) Private equity related investments Full year Quarter NOMURA cottons of yen) 543.4 Japan a }95.5 = 69.5 Europe (excluding Terra Firma) 35.7 414 "0 O So 3 : Asia - = 32 36 33 Sub Total 231.2 210.9 254.9 250.9 202.7 Tera Firma 312.2 170.5 111.4 119.2 125.0 Total 543.4 381.4 3
Slide 38: Number of employees
Number of employees NOMURA conform to the current presentaton, Japan (excluding FA) 10,667 11,561 12,929 12,857 12,829 20,263 20,105 Japan (FA)? 2,174 2,377 2,391 2,196 2,089 2,096 2,078 Europe 1,791 1,956 4,294 4,369 4,353 4436 4,492 Americas 1,322 1,063 1,079 1,781 2,348 2,383 2,537 Asia-Pacific®
Slide 39: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com NOMURA 38