Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2017/18 Earnings Presentation
34 slides from Nomura's earnings presentation, October 2017
Slide 1: Overview of second quarter results ended September 2017
I will now give you an overview of our results for the second quarter ended September 2017. Please turn to page two.
Slide 2: Outline
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) Consolid
Slide 3: First half results overview
Compared to the same period last year, the first half had relatively fewer major market events, and client activity in the fixed income market slowed due mainly to historically low interest rate volatility. On the other hand, the Japanese stock market rallied supported by robust economic indicators
Slide 4: Second quarter results overview
Please turn to page three for an overview of our second quarter results. Net revenue declined 3 percent to 351.5 billion yen as an increase in Asset Management revenues was not enough to offset a significant decline in Fixed Income revenues. Stringent cost control, especially around personnel expens
Slide 5: Highlights
Highlights (billions of yen, except EPS and ROE) a Q0Q YoY Prams YoY Net revenue 351.5 | -3% +1% 712.3 +4% Non-interest expenses 268.5 5% +1% 551.8 +2% Income before income taxes 83.0 | +7% +2% 160.5 +11% Net incomet 51.9 | 9% -15% 108.7 +1% : EPs? Y14.45 | 8% 13% 30.20 +3% ROE? 7.3% 7.7% 4. Net inc
Slide 6: Net revenue and income
Net revenue and income before income taxes (billions of yen) Netrevenue Retail connec FY2017/18 FY2017/18 vay! 2a Q0Q YoY 41H YoY 101.8 40.1% +18% 203.5 +20% 35.4 +26% +66% 63.5 +35% 338.3 JI “Additional information on “Other” (2Q) = Gain on changes to own and counterparty credit spread relating to
Slide 7: Retail results
Please turn to page six for an overview of results in each business, starting with Retail. Second quarter net revenue in Retail was 101.8 billion yen and income before income taxes was 25.5 billion yen, roughly unchanged quarter on quarter. Sales of primary stocks increased along with bond trading,
Slide 8: Retail investment trusts and discretionary assets
The graph on the bottom left shows investment trust sales and assets under management. This quarter saw continued inflows into India stock funds and income-focused low risk products. Assets under management in investment trusts totaled 10.6 trillion yen at the end of September. As you can see on the
Slide 9: Asset Management results
Turning now to Asset Management on page eight, net revenue climbed 26 percent to 35.4 billion yen. On the bottom left, you can see assets under management reached 48 trillion yen, a record high for the fourth straight quarter, which helped lift asset management fees. We also booked around 9 billion
Slide 10: Asset Management market share and distribution
Please turn to page nine. The top left shows inflows of 980 billion yen, of which the investment trust business accounted for 890 billion yen with inflows primarily into ETFs and core investment trusts. Nomura Asset management’s share of the public investment trust market was 26.4 percent as shown o
Slide 11: Wholesale results
Next, please turn to page 10 for Wholesale. Net revenue declined by 11 percent to 159 billion yen. As I said earlier, low volatility and subdued client activity in the fixed income market led to sluggish performance in Fixed Income. Despite executing high- profile ECM transactions, Investment Bankin
Slide 12: Global Markets
Please turn to page 11 for Global Markets. Net revenue declined 12 percent from the first quarter to 136.1 billion yen. Fixed Income declined 18 percent to 78.3 billion yen on weak performance in Rates products in EMEA and the Americas. As you can see in the regional breakdown on the right, AEJ was
Slide 13: Investment Banking
Please turn to page 12 for Investment Banking. Net revenue declined 9 percent to 22.9 billion yen. Gross revenue, or revenues before allocation to other divisions, was 43.5 billion yen, down 4 percent quarter on quarter. Large ECM transactions such as the Japan Post offering and a euroyen convertibl
Slide 14: Non-interest expenses
Page 13 shows non-interest expenses. Firmwide costs were 268.5 billion yen, down 5 percent or 15 billion yen. Compensation and benefits declined by 10 percent, which is around 14 billion yen. This is due to the factors I mentioned earlier in relation to Wholesale: First, a technical factor whereby r
Slide 15: Robust financial position
Page 14 shows our financial position. As of the end of September, our Tier 1 ratio was 18.4 percent and our CET1 ratio was 17.4 percent. Applying the fully-loaded 2019 Basel III standard to our balance sheet at the end of September gives a CET1 ratio of 17.1 percent. While these ratios are down comp
Slide 16: Funding and liquidity
Funding and liquidity NOMURA Balance sheet structure = Highly liquid, healthy balance sheet structure —79% of assets are highly liquid trading and related assets that are marked-to-market and matched to trading and related liabilities through repos etc. (regionally and by currency) —Other assets are
Slide 17: Financial Supplement
Financial Supplement 16
Slide 18: Consolidated balance sheet
(billions of yen) Assets Liabilities Total cash and cash deposits Short-term borrowings Total payables and deposits Total loans and receivables Total collateralized financing Trading liabilities Total collateralized agreements Other liabilities Long-term borrowings Total trading assets’ and private
Slide 19: Value at risk
= Definition = From April 1, 2017, to September 30, 2017 (billions of yen) — 99% confidence level — Maximum: 4.3 — 1-day time horizon for outstanding portfolio — Minimum: 3.0 — Inter-product price fluctuations considered ~ Average: 3.7 (billions of yen) 0.9 07 09 14 07 09 08 Equity Interest rate 3.8
Slide 20: Consolidated financial highlights
Quarter Full year (billions of yen) 300 mms Net income attributable to Nomura Holdings, 209 Inc. ("NHI") 49% shareholders ° ——ROE(%) 100 8.7% 2 9% 6% 3% (billions of yen) 8.6% 8.7% 100 81% 80 60 40 Net revenue 1,395.7 1,403.2 Income before income taxes 165.2 322.8 81.8 95.9 82.3 774 83.0 Net income
Slide 21: Consolidated income
Full year Quarter (billions of yen) “Pram Fv201917 Fy2017 FY 2NTINB Revenue Commissions 432.0 327.1 74.6 86.3 90.0 91.0 85.3 Fees from investment banking 118.3 92.6 23.4 23.7 28.2 22.7 27.1 Asset management and portfolio service fees 229.0 216.5 52.1 55.1 56.6 58.3 61.2 Net gain on trading 354.0 475
Slide 22: Main revenue items
Full year Quarter ‘i So ryzotet7 rvzotrte (ptions of yen) Frame praia 4 Tg Stock brokerage commissions 275.0 210.0 47.0 57.5 57.1 57.0 54.6 Other brokerage commissions 23.3 15.1 34 43 3.0 34 3.2 Commissions for distribution of investment trusts 89.5 75.1 17.6 19.1 22.6 23.2 20.9 Other 44.2 26.9 66 5
Slide 23: Income by segment and region
Adjustment of consolidated results and segment results: Income (loss) before income taxes Full year Quarter 7 — FY201817 2017/18 (ptions ofyen) Praane eroir a 14.4 25.9 25.8 24.9 25.5 Retail 127.6 74.8 Asset Management 36.7 42.3 74 14.0 87 13.6 20.5 Wholesale 15.4 161.4 39.3 47.4 28.1 25.4 17.0 Thre
Slide 24: Segment Other
Income (loss) before income taxes Full year Quarter (billions of yen) 40.0 376 10.0 61 a | 0.0 = Net gain (loss) related to economic nesgng (iss) reae 64 73 44 15.9 08 07 0.6 Realized gain on it in equi Realized 92 se operating purpeces. 02 14 04 04 0.0 0.0 0.3 Equity in eamings of affliates 327 32.
Slide 25: Retail results detail
1. Full yea r Quarter (billions of yen) raise Frei eS eerie aa) oe Commissions 2203 171.8 38.9 474 47.5 473 43.8 Th = 12.5% Of which, brokerage commission 789 62.8 124 19.8 17.6 18.0 17.2 4.3% 38.9% Of which, commissions for distribution of investment trusts 93.6 82.3 20.0 204 23.6 23.7 21.3 9.9% 6.
Slide 26: Retail client assets
Retail client assets (trillions of yen) = Other 120 1077 408.0 4077 1119 115.2 100.6 99.1 = Foreign investment 100 trusts ™Bond investment 80 trusts ™ Stock investment 60 trusts = Domestic bonds 40 Foret Foreign currency 20 w Equities 0 [Fraime Lea Equities 60.2 66.3 59.6 66.7 66.3 69.9 72.4 Foreign
Slide 27: Net inflows of cash and securities
Net inflows of cash and securities’ Full year Quarter (billions of yen) (billions of yen) 1,000 1,000 500 500 319 48 0 0 a a 43 78 115 -306 338 -500 -500 FY2OITB 1. Cash and securities inflows minus outflows, excluding regional financial institutions, 26 26
Slide 28: Number of accounts
Number of accounts (thousands) (Me Ne) see ec Ma ny sel Accounts with balance 5,389 5,363 5,384 5,383 5,363 5,342 5,328 Equity holding accounts 2,827 2,836 2,856 2,839 2,836 2,821 2,832 Nomura Home Trade" / Net & Call accounts 4,350 4,456 4,403 4,427 4,456 4,361 4,295 New Individual accounts / IT sh
Slide 29: Asset Management results and AUM
Full year Quarter Net revenue 95.4 99.4 21.3 28.9 23.3 28.1 35.4 26.1% 66.5% Non-interest expenses 58.7 57.1 13.8 14.9 14.6 14.5 15.0 2.9% 8.0% Income before income taxes 36.7 42.3 7.4 14.0 87 13.6 20.5 50.8% 175.4% Assets under management by company Nomura Asset Management 43.5 474 a5 46.3 474 48.9
Slide 30: Asset inflows/outflows by business
Asset inflows/outflows by business! Full year Quarter FRONT YONG (mens ctven rene maw Investment trusts business 2.717 1,590 6 1,038 969 316 886 of which ETFs 2,339 1,934 477 279 1,203 183 906 Investment advisory business 2,038 584 344 95 315 86 96 Net asset inflow 4,755 2,174 349 1,132 1,284 230 98
Slide 31: Wholesale results and revenue breakdown
Full year Quarter ee ee ee Net revenue 720.3 179.9 197.3 171.2 179.3 159.0 11.4% 11.6% Non-interest expenses 704.9 577.8 140.6 149.9 143.1 154.0 142.0 7.8% 1.0% Income before income taxes 15.4 161.4 39.3 47.4 28.1 25.4 17.0 33.0% 56.7% Breakdown of Wholesale revenues Full year Quarter (billions of y
Slide 32: Number of employees
Japan 16,083 16,227 16,543 16,450 16,227 16,903 16,706 Europe 3,424 3,026 3,147 3,063 3,026 3,013, 3,047 Americas 2,503 2,314 2,297 2,279 2,314 2,325, 2,348 Asia and Oceania’ 6,855 6,619 6,667 6,606 6,619 6,673, 6,756 Total 28,865 28,186 28,654 28,398 28,186 28,914 28,857 Includes Powai office in in
Slide 33: Disclaimer
yV 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 34: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com