Nomura Holdings, Inc. · TSE:8604
Nomura — Q1 FY2011.3 Earnings Presentation
35 slides from Nomura's earnings presentation, August 2010
Slide 1: Thank you for taking the time to join us today
Thank you for taking the time to join us today. I will first give you a brief overview of our first quarter results using the document entitled “Consolidated Results of Operations”. I will then open the lines to questions. 1
Slide 2: Disclaimer
SS Nomura | ® This document is produced by Nomura Holdings, Inc. ("Nomura"). Copyright 2010 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 securiti
Slide 3: Outline
SS Nomura Outline © Executive summary (p. 4) = Consolidated balance sheet (p. 19) © Overview of first quarter results (p. 5) = Value at risk (p. 20) © Robust financial position (p. 6) = Consolidated financial highlights (p. 21) © Revenue breakdown (p. 7) = Consolidated income (p. 22) © Retail (p. 8-
Slide 4: Executive summary of highlights for the quarter
Page four provides you with an executive summary of highlights for the quarter. Net revenue was 259.8 billion yen, income before income taxes was 6.5 billion yen, and net income attributable to Nomura Holdings was 2.3 billion yen. So, although revenues declined due to adverse market conditions, we r
Slide 5: Overview of first quarter results
Overview of first quarter results First quarter results eyes Froy10 aca ae vey. Net revenue Y259.8bn Y277.9bn (6.5%) Y298.4bn (12.9%) Non-interest expenses Y253.4bn Y249.3bn 1.6% Y266.9bn (5.1%) Income before income taxes Y6.5bn Y28.6bn (77.4%) Y31.4bn (79.4%) Net income’) Y2.3bn Y18.4bn (87.4%) Y11
Slide 6: Robust financial position
The graph on the bottom left of page six shows that our capital ratios continue to be among the best in the industry. As of the end of June, our Tier 1 ratio was 16.9 percent and our Tier 1 common ratio was 16.8 percent. Our balance sheet is also strong. Total assets at the end of June were 33.9 tri
Slide 7: Revenue breakdown
The next page gives you a breakdown of net revenue. The graph on the right shows that during the first quarter, 62 percent of revenues were generated in Japan and 38 percent outside Japan. Now, I will give you an overview of the results for each business division. 7
Slide 8: Retail results
Please turn to page eight. Net revenue in Retail was 111 billion yen and income before income taxes was 37.7 billion yen. Retail client assets saw a substantial increase in new funds, but declined overall due to the drop in the Nikkei Average and the higher yen. 8
Slide 9: Retail inflows and client base
Please turn to the next page. As I said, our consulting-based approach is meeting the needs of retail investors and we recorded 1.289 trillion yen in new fund inflows. New asset inflows into investment trusts were 438 billion yen. Along with the appreciation of the yen starting in May, we saw robust
Slide 10: Asset Management results
Asset Management results are shown on the next page. Net revenue was 18.1 billion yen and income before income taxes was 4.9 billion yen. Although overall assets under management declined as a result of the market slump, we generated net asset inflows during the quarter. 10
Slide 11: Asset Management net inflows
The graph on the bottom left of the next page shows net asset inflows of 555 billion yen for the first quarter. This is higher than each quarter last fiscal year. Asset Management also saw steady growth in mandates from institutional investors outside Japan, primarily for Japanese and Asian equities
Slide 12: Wholesale results
The next page shows results for the Wholesale division, which was created at the start of the quarter by integrating the Global Markets, Investment Banking, and Merchant Banking divisions. Net revenue in Wholesale was 108.6 billion yen and loss before income taxes was 41.1 billion yen. 12
Slide 13: Global Markets
Please turn to the next page. Global Markets net revenue was 96.4 billion yen. The two graphs on the right show market volatility and changes to our risk levels in both Fixed Income and Equities. As you can see, we responded quickly to the sudden widening of credit spreads and the spike in volatilit
Slide 14: Investment Banking
The next page shows Investment Banking results. Gross revenues were 29.0 billion yen as some deals in the pipeline were postponed due to the adverse market conditions. We maintained the leading market share across products in Japan and worked on high- profile cross-border deals. Notably, we advised
Slide 15: Global expansion in the US and Asia
Please turn to the next page. In the US, our client platform is trending further upwards and client revenues are increasing. Headcount in the Americas was 1,455 at the end of June, an increase of 729 people compared to the same time last year. In research, we have hired analysts covering such sector
Slide 16: Segment Other
The next page shows the results of the segment “Others”. This includes a fair value gain on our own debt of 13.9 billion yen. Although not shown here, we also booked a 10.6 billion unrealized loss on investments in equity securities. 16
Slide 17: Non-interest expenses
Before finishing, I will give you a breakdown of expenses. Please turn to the next page. Our cost base peaked in the year ended March 2009 and has been declining since then. Although non-interest expenses increased by 1.6 percent from the prior quarter, they declined 5 percent year on year. Compensa
Slide 18: Closing remarks
The first quarter was marked by difficult conditions and we will need to keep a close eye on economic conditions and the regulatory environment going forward. That said, we will continue with our strategy of supplying our clients with liquidity in order to increase client businesses and further boos
Slide 19: Consolidated balance sheet
Consolidated balance sheet Increase (Decrease) Assets Cash and cash deposits Loans and receivables Collateralized agreements Trading assets and private equity investments’ Other assets Total asse: 1. Including securities pledged as collateral. Liabilities Short-term borrow ings Payables and deposits
Slide 20: Value at risk
Value at risk = Definition = From April 1, 2010, to June 30, 2010 (billions of yen) ~ 99% confidence level (2.33 standard dev.) ~ Maximum: 13.6 — 1-day time horizon for outstanding portfolio — Minimum: 9.4 — Inter-product price fluctuations considered — Average: 11.3 Mar. 31, Mar. 31, Mar. 3 Mar. Ma
Slide 21: Consolidated financial highlights
Consolidated financial highlights Full year (billions of yen) “ 15.5% —=Netincome (loss) ‘=O ROE (%) -708.2 Net revenue 11457 10911 7873-3126 «1,1508 Income (loss) before income taxes 452.0 318.5 649 -780.3 105.2 Net income (loss) attributable to Nomura Holdings, inc. (NHT) shareholders 3a: TH Shh T
Slide 22: Consolidated income
Consolidated income (billions of yen) manos FY2010.3 FY2011.3 Revenue ‘Commissions 3563 3375 «4087 ©«=S 3088 += «305.1 +—«1020:«Ss«5.4#SCSNOTOSC:C“iéiSC« A Fees from investment banking 1088 «©6993 © 65.1 550 1213 207 156 445 314 204 ‘Asset management and portfobo service fees 1027 1460 ©1897 1402 18
Slide 23: Main revenue items
Main revenue items Stock brokerage commissions (retail) 1536 © 98.3751 50.8 553 158 147123125 13.7 Stock brokerage commissions (ather) 795 732 1666 1447 1403 392 4345 «86337 «©6330 40.8 PERE Other brokerage commissions 143 68 93 79 80 29-00 26 26 22 Commissions for distribution of investment trusts
Slide 24: Adjustment of consolidated and segment results
Adjustment of consolidated results and segment results: Income (loss) before income taxes 1. FY2010.3 FY2011.3 meth 197.2 160.9 122.3 18.2 113.4 279 26.4 35.2 24.0 377 KssetManagement 23.8304 KTH 18 450° 4A 49°49 Wholesale 2647 1560 -1501 -7173 1752 533 382 485 352 -s14 4857 3563 62 6917 3071 863 69
Slide 25: Retail related data (1)
Retail related data (1) soos FY2 mess. etre) Bettie See eee ot | | Commissions 269.4 2514 225.9 151.0 238.9 55.9 598 623 610 756 24.1% 35.4% Sales credit 109.0 968 942 14 638 20.0 155 13.3 15.0 12.8 14.3% 35.8% Fees from investment banking 264 24.0 149 134 33.6 72 54 18.1 6.1 94 53.0% 30.3% Investme
Slide 26: Retail related data (2)
Retail related data (2) Stock brokerage commissions and commissions for distri on of investment trusts’ (billions of yen) (billions of yen) 180 70 150 % 50 120 "Stock brokerage commissions 40 90 * Commissions for distribution of investment rusts 30 60 20 30 a0 0 Stock brokerage commissions 1536 «983
Slide 27: Retail related data (3)
Retail related data (3) tail client assets (trillions of yen) 100 = Other "Overseas mutualfunds go 68.4 = Bond investmenttrusts mStockinvestmenttrusts 60 = Domestic bonds ™ Foreign currency bonds 0 mEquities 20 o Pitas 2006 war stron] war 1 700] har 3,209] Mar 312070] Equities 49.3 485 37.2 286 392
Slide 28: Retail related data (4)
SS Nomura | Retail related data (4) Retail client assets: Net asset inflow’ Full year Quarter {billions of yen) (billions of yen) 8.000 6,000 $,000 5975 6,000 5,279 4,000 4268 4,928 4581 3,000 4,000 2,003 4,879 4,610 2.000 1,269 _ [| i . — re 23 ° 1,000 FY2010.3 FY2011.3 1Q 4. Retail client assets e
Slide 29: Retail related data (5)
Retail related data (5) umber of accounts / IT share’ acai head meh mr, 20 | ar 31,200 pein (thousands) Accounts with balance 3,780 3,953 4,165 4,467 4,883 4,894 Equity holding accounts 1,745 1,853 2,027 2.347 2.572 2,600 ‘Nomura Home Trade (online trading accounts) 1,969 2,243 2,765 3,095 3,189 3,2
Slide 30: Asset Management related data (1)
Asset Management related data (1) YoY (billions of yen) Netre 1 4 88.1 887 598 E 18.7 5 17.2 18.0 18.4 0.7% Non-interest expenses 40.3 487 548 $2.4 518 135 12.0 13.2 13.4 13.2 1.0% Income before income taxes 238 394 340 74 186 34 45 44 49 49 0.2% Note: In January 2006, certain of Other were Into Ass
Slide 31: Asset Management related data (2)
Asset Management related data (2) Nomura Asset Management Domestic public investment trust market and assets under manageme Nomura Asset Management market share 2006 | 2007 | 2008 | 2009 2010 {trillions of yen) {tritions of yen) Market 450 594 577 404 526 486 Domestic public stock investment trusts
Slide 32: Wholesale related data (1)
Wholesale related data (1) Wholesale Yor Pia [2a fsa Tse fia | Global Markets 1873 6584 «= 187.1. «174.5 = 163.9 133.0 96.4 «27.5% © 48.5% Investment Banking 64 (134.1 246 248 462 355 122 -66.6% -60.5% Net revenue 163.6 789.5 2117 199.3 2104 168.4 108.6 35.5% 48.7% ‘Non-interest expenses 5537 6143 1
Slide 33: Wholesale related data (2)
Wholesale related data (2) Private equity related investments ST oo (billions of yen) 600 543.4 "Terra Firma "Asia ™ Europe (excluding Terra Firma) "Japan CE EE EN Japan 59.9 195.5 169.5 191.7 Europe (excluding Terra Firma) 388 387 414 60.0 Asia 2 * E 3.2 Sub Total 98.7 231.2 210.9 254.9 Terra Firma
Slide 34: Number of employees
Number of employees Mar. 31,2006 | M 2007 | Mar.31,2008 | Mar.31,2009 | Mar.31,2010 Jun.30,2010 Japan (excluding FA)! 9,618 10,667 11,561 12,929 12,857 13,370 Japan (FA)® 1,948 2,174 2,377 2,391 2,196 2,184 Europe 1,515 1,791 1,956 4,294 4,369 4499 Americas 1,073 1,322 1,063 1,079 1,781 1,941 Asia-P
Slide 35: Nomura Holdings, Inc.
Nomura Holdings, Inc. www.nomura.com 35