Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2015/16 Earnings Presentation
35 slides from Nomura's earnings presentation, October 2015
Slide 1: Overview of first half and second quarter results
I will now give you an overview of our results for the first half and second quarter of the fiscal year ending March 2016 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: Six month results overview
For the six month period, net revenue increased 2 percent year on year to 760.6 billion yen, income before income taxes remained roughly unchanged at 125.9 billion yen, and net income increased 59 percent to 115.3 billion yen as a result of a decline in tax expenses which I will explain in more deta
Slide 4: Second quarter overview and market conditions
Market conditions proved to be challenging in the second quarter with concerns over an economic slowdown in China and uncertainty around monetary policy in major markets causing turmoil in the equity markets and driving credit spreads wider. Second quarter net revenue was 336.6 billion yen, down 21
Slide 5: Highlights
Highlights (billions of yen, except EPS and ROE) eae 00 YoY Pree’ YoY Net revenue 336.6 | -21% 10% 760.6 +2% Non-interest expenses 316.7 | 0.4% +6% 634.7 +3% d Income before income taxes 199 ; 81% 73% 1259 40.2% Net income’ 46.6" i -32% 12% 115.3 +59% EPS? Y12.63 | -32% -11% Y31.26 +62% ROE? 6.7% 8.
Slide 6: Net revenue and income before income taxes
Net revenue and income before income taxes (billions of yen) Regen 0a Yor tee YoY Net Retail 115.7 12% 2% 246.3 +10% revenue Asset Management 22.9 15% +5% 49.8 11% Net revenue il 336.6 21% “10% 760.6 42% Retail 36.7 -28% 5% 87.6 424% 84 28% +8% 20.2 425% : : 86 56% 61% 28.3 1% -23.0 -10.9 : 1.9 19.9
Slide 7: Retail net revenue and income
Net revenue declined 12 percent to 115.7 billion yen, while income before income taxes declined 28 percent to 36.7 billion yen. Sales of stocks increased significantly driven by contributions from primary deals, but investment trusts and secondary market stocks were sluggish as investors sat on the
Slide 8: Retail recurring revenue and client assets
As shown on the top left of page seven, second quarter annualized recurring revenue was 78.3 billion yen, roughly unchanged from the previous quarter despite the sharp market decline. By listening closely to the needs of our clients and providing them with asset planning and life planning services,
Slide 9: Asset Management net revenue and income
Net revenue declined 15 percent to 22.9 billion yen on a drop in assets under management in investment trusts due to market factors and as dividend income was not booked this quarter. Income before income taxes declined 28 percent to 8.4 billion yen. In the investment trust business, we saw ongoing
Slide 10: Asset Management inflows and ETFs
As you can see on the bottom left, the investment trust business booked outflows of about 400 billion yen, with about 670 billion yen of outflows from MRFs and other funds and inflows of about 270 billion yen into core investment trusts. Investor demand for ETFs is increasing, and in the second quar
Slide 11: Wholesale net revenue and income
Net revenue declined 6 percent to 192.9 billion yen and income before income taxes was down 56 percent at 8.6 billion yen. Equities slowed from a strong first quarter, while Fixed Income revenues remained roughly unchanged amid slowdown in Credit and Securitized Products. Investment Banking reported
Slide 12: Global Markets performance
Global Markets net revenue declined 10 percent to 158.7 billion yen. Fixed Income net revenue remained roughly unchanged at 83.2 billion yen as Rates and Emerging Markets FX offset a slowdown in Securitized Products and Credit. As shown in the heat map on the right, the arrow for Fixed Income in EME
Slide 13: Investment Banking revenue
As shown on the top left, second quarter net revenue was 34.2 billion yen, up 18 percent quarter on quarter. Gross revenue, which represents revenues before allocation to other divisions and businesses, was 63.1 billion yen, representing the strongest quarter since the three months to December 2009.
Slide 14: Non-interest expenses
Second quarter non-interest expenses were 316.7 billion yen. Compensation and benefits declined 4 percent thanks to cost reduction initiatives and lower bonus provisions in line with performance. Other expenses increased 11 percent compared to last quarter due to an increase in expenses at a consoli
Slide 15: Total assets, leverage and capital ratios
Total assets were 44 trillion yen, gross leverage was 15.9 times and net leverage was 9.7 times. Our Basel III Tier 1 and Tier 1 common ratios were both 13.1 percent, down 0.4 percentage points from 13.5 percent at the end of June. This is because Tier 1 capital, which is the numerator in the calcul
Slide 16: Summary and 2020 management targets
To sum up, I’d say client activity was impacted by the global market turmoil in the second quarter. More recently in October, while the market is recovering, client activity hasn’t returned to previous levels yet and we remain vigilant over the short term. Looking at our domestic business, we are se
Slide 17: Financial Supplement
Financial Supplement
Slide 18: Consolidated balance sheet
(billions of yen) Assets Total cash and cash deposits Liabilities ‘Short-term borrowings Total loans and receivables Total payables and deposits Total collateralized agreements Total collateralized financing Trading liabilities Other liabilities Total trading assets’ and private equity investments L
Slide 19: Value at risk
= Definition = From April 1, 2015 to September 30, 2015 (billions of yen) ~ 99% confidence level ~ Maximum: 9.1 — 1-day time horizon for outstanding portfolio — Minimum: 3.5 — Inter-product price fluctuations considered — Average: 5.2 (billions of yen) Equity Interest rate 3.9 42 42 45 42 3.9 5.2 Fo
Slide 20: Consolidated financial highlights
wo Full year Quarter (billions of yen) g 9% 300 + ‘Net income attributable 209 to NHI shareholders ROE(%) 100 (billions of yen) 9% Net revenue 1,557.1 1,604.2 373.8 425.0 434.5 424.0 336.6 Income before income taxes. 361.6 346.8 74.0 116.1 105.0 106.0 19.9 Net income attributable to Nomura Holdings,
Slide 21: Consolidated income
(billions of yen) Full year Quarter Revenue ‘Commissions 473.1 453.4 110.8 123.2 123.7 130.3 111.5 Fees from investment banking 91.3 95.1 20.6 28.8 25.8 24.5 44.9 Asset management and portfolio service fees 168.7 203.4 49.7 53.3 54.3 59.9 58.2 Net gain on trading 476.4 $31.3 129.0 109.5 134.3 124.7
Slide 22: Main revenue items
Full year Quarter (billions of yen) ‘Stock brokerage commissions 266.6 252.8 58.8 73.1 70.7 78.7 71.3 Other brokerage commissions 18.1 19.6 40 61 5.8 5.2 6.8 Commissions for distribution of investment trusts 157.8 134.3 37.5 32.6 33.6 34.3 22.0 Other 30.6 46.8 10.5 11.4 13.5 12.2 11.3 Total 473.1 45
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 (billions of yen) ‘Frm F205 Fyaotats FV2ONGIG Retail 192.0 161.8 38. . 40: 50. 36.7 Asset Management 27.1 32.1 78 8.4 Wholesale 111.8 82.2 22.2 8.6 Three Business segments total 330.9 276.1 68
Slide 24: Segment Other income (loss) before income taxes
Income (loss) before income taxes Full year Quarter (billions of yen) 50.0 46.0 44.8 40.0 30.0 20.0 20.0 14.7 10.0 25 0.0 -10.0 40 -20.0 -30.0 -23.0 Pemen mamie ag ee me Net gain related to economic hedging transactions 17.4 15.1 2.2 6.4 0.3 26 14 Realized gain on investments in equity ecules held f
Slide 25: Retail results
Full year Quarter Cilons of yen) rm rows 4, MMI Fre sar — tQ 0 9Q 1 ‘Commissions 297.2 258.9 667 69.8 677 73.8 55.8 24.3% = 16.3% Of which, brokerage commission 115.4 81.8 198 25.1 26 26.4 20.0 24.1% 1.5% Of which, commissions for distribution of investment trusts 155.4 134.9 37.6 32.8 337 34.9 25 (
Slide 26: Retail client assets
Retail client assets (trillions of yen) 120 109.5 = Other 99.3 100 91.7 = Overseas mutual funds 80 ‘Bond investment trusts Stock investment trusts 60 ® Domestic bonds. 40 "Foreign currency bonds 9 = Equities 0 Equities 53.2 67.2 58.1 62.2 67.2 70.2 62.3 Foreign currency bonds 63 63 65 6.7 6.3 61 5.6
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 1,076 997 (1) Cash and securities inflows minus outflows, excluding regional financial institutions. 26
Slide 28: Number of accounts
Number of accounts (Thousands) —Fyaoigi4 Fy2oiais F201 Accounts with balance 5,182 5,294 5,250 5,276 5,294 5,316 5,366 Equity holding accounts 2,718 2,719 2,720 2,723 2,719 2,700 2,725 Nomura Home Trade / Net & Call accounts 4,012 4,216 4,103, 4,154 4,216 4,270 4,337 New Individual accounts / IT sha
Slide 29: Asset Management results and AUM
Full year Quarter temens ofyen) Ld ee ee Net revenue 80.5 21.7 23.4 23.9 22.9 15.1% Non-interest expenses 53.4 60.3 13.9 14.1 17.2 15.2 14.4 AB% 4.0% Income before income taxes. 271 32.1 7.8 93 67 11.7 8.4 28.4% 7.7% Assets under management by company (trillions of yen) Nomura Asset Management! 33.8
Slide 30: Asset inflows/outflows by business
Asset inflows/outflows by business Full year Quarter (billons of yen) EX Ea FyzoIaIS FYQONSIG Investment trusts business 1,598 3,418 879 1,124 942 1,252 896 of which ETFs 882 843 90 298 477 308 1,294 Investment advisory business -520 50 4 46 113 38 1,446 Net asset inflow 1,078 3,469 835 1,078 1,055
Slide 31: Wholesale results and revenue breakdown
Wholesale Full year Quarter (billions of yen) Net revenue 765.1 789.9 190.6 178.9 231.5 205.2 192.9 6.0% 1.2% Non-interest expenses 653.3 707.7 168.4 178.5 177.7 185.5, 184.3 0.7% 9.5% Income before income taxes 111.8 82.2 22.2 0.5 53.8 19.7 8.6 56.1% 61.1% Breakdown of Wholesale revenues Full year
Slide 32: Private equity related investments
Private equity related investments (billions of yen) 70 60 = Terra Firma 84 87.2 56.4 58.6 58.7 56.4 50 45.6 BAsia 44.6 40 Europe (excluding Terra Firma) 30 mJapan 20 10 oO [Pvaoiaiva) Fr2oians| Fv2014NS | FvR01SB 10.8 10.6 9.5 Japan 10.6 13.2 14 Europe (excluding Terra Firma) 22.6 19.9 193 20.7 19.
Slide 33: Number of employees
Japan (excluding FA) 14,149 14,144 14,391 14,290 14,144 14,722 14,575 Japan (FA) 1,888 1,829 1,853 1,853 1,829 1,848 1,806 Europe 3,461 3,485 3,530 3,539 3,485 3,492 3,494 Americas 2,281 2,449 2,421 2,445, 2,449 2,439 2,514 Asia-Pacific’ 5,891 6,765 6,744 6,762 6,765 6,788 6,862 Total 27,670 28,672
Slide 34: Disclaimer
y\V 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 NOMURA