Nomura Holdings, Inc. · TSE:8604
Nomura — Q2 FY2014/15 Earnings Presentation
35 slides from Nomura's earnings presentation, October 2014
Slide 1: Consolidated Results of Operations, Second quarter, year ending March 2015
NOMURA Connecting Markets East & West Consolidated Results of Operations Second quarter, year ending March 2015 (US GAAP) Nomura Holdings, Inc. October 2014 ‘Nomura
Slide 2: Overview of Consolidated Results of Operations
I will now give you an overview of our financial results for the second quarter of the year ending March 2015 using the document titled “Consolidated Results of Operations”. 1
Slide 3: First-half and second quarter results overview
Please turn to page two. For the first half of the fiscal year, we reported net revenue of 744.7 billion yen and income before income taxes of 125.7 billion yen. First-half net income was 72.7 billion yen, the second highest level in 10 years following on from the high recorded in the first half las
Slide 4: Highlights
Highlights (bilions of yen, except EPS and ROE) 373.8 | +1% +5% 744.7 | 5% 299.8 | 6% +6% 619.0 | +3% 74.0 | +43% +1% 125.7 | 32% 52.9 | +166% +39% 72.7 | -30% 14.15 yen | +169% +42% 19.34 yen -29% 8.4% 5.7% {2} Baseanetincome sorts to Nomura ng saree per share Holdings: (3) Calculated using annuatz
Slide 5: Business segment results
Regarding our business segment results shown on page four, segment “Other” includes a 6.4 billion yen gain from changes to our own and our counterparties’ credit spreads as shown in the box at the bottom of the page. This compared to a 7.1 billion yen loss last quarter. Last quarter we also brought
Slide 6: Retail results
As shown on the bottom left, total sales were up 20 percent quarter on quarter on robust sales of equities, investment trusts, and discretionary investments. Net inflows of cash and securities were approximately 480 billion yen, which together with market factors drove Retail client assets to a reco
Slide 7: Transforming the Retail business model
We continue to transform our Retail business model and as you can see on page six the changes are becoming evident in discretionary investments and investment trust net inflows. Discretionary investment net inflows in the second quarter last year averaged 1.1 billion yen a month. That increased to a
Slide 8: Asset Management
Please turn to page seven for Asset Management. Net revenue was 21.7 billion yen, down 7 percent from the previous quarter which included dividend income. Income before income taxes slipped 6 percent to 7.8 billion yen, but remains at a solid level. Assets under management reached a record 34.8 tril
Slide 9: Asset Management progress
Please turn to page eight. In April, we converted ING’s Taiwan operations into a consolidated subsidiary and this month changed the company name to Nomura Asset Management Taiwan. During the second quarter, as shown on the bottom right, we saw progress in new businesses and worked to develop product
Slide 10: Wholesale results
Please turn to page nine for an overview of Wholesale results. Net revenue increased 1 percent quarter on quarter to 190.6 billion yen. Revenues remained resilient amid challenging market conditions as stronger revenues in Japan and AEJ offset a slowdown in EMEA and the Americas. As FCR related expe
Slide 11: Wholesale performance by business line
Please turn to page 10 for performance by business line. Global Markets posted net revenue of 168.1 billion yen, up 1 percent quarter on quarter. Fixed Income net revenue was 104.1 billion yen. Client revenues grew and robust performance in the FX business offset a slowdown in other products. Equiti
Slide 12: Investment Banking
Please turn to page 11 for Investment Banking. Net revenue increased 1 percent quarter on quarter to 22.5 billion yen. Gross revenue was 40.7 billion yen. Despite a smaller fee pool in Japan, we won a number of high-profile ECM and DCM mandates and revenues remained roughly unchanged quarter on quar
Slide 13: Expenses
Please turn to page 12 for an overview of expenses. Second quarter firm-wide expenses declined 6 percent quarter on quarter to 299.8 billion yen. Compensation and benefits declined significantly as the first quarter included FCR-related expenses. Commissions and floor brokerage increased in line wit
Slide 14: Balance sheet update
Please turn to page 13 for an update of our balance sheet. Total assets were 43.8 trillion yen. Gross leverage was 17.1 times and net leverage was 10.7 times. Our Basel III Tier 1 and Tier 1 common ratios were both 12.7 percent, down from 13.1 percent at the end of June. Previously, the risk weighti
Slide 15: Summary and current quarter outlook
To sum up, during the second quarter we continued to make progress in the direction set out by top management as we gained traction in transforming our Retail business model and grew assets under management in Asset Management. In October, Moody’s upgraded us by two notches. We have seen a bigger re
Slide 16: Financial Supplement
Financial Supplement
Slide 17: Consolidated balance sheets
(billions of yen) Assets Total cash and cash deposits Liabilities Short-term borrowings Total loans and receivables Total payables and deposits Total collateralized financing Total collateralized agreements Trading liabilities Other liabilities Total trading assets’ and private equity investments Lo
Slide 18: Value at Risk
= Definition = From April 1, 2014 to September 30, 2014 (billions of yen) — 99% confidence level ~ Maximum: 9.8 ~ 1-day time horizon for outstanding portfolio — Minimum: = 4.5 — Inter-product price fluctuations considered — Average: 6.9 cotons yen) EE es eee Equity 13 13 19 36 13 28 15 Interest rate
Slide 19: Financial summary
Full year Quarter (billions of yen) (billions of yen) 8.9% 250 9% 100 9% (ME Net income attributable 200 to NHI shareholders 150 —™ROE(%) 6% 3% 0% Net revenue 1,813.6 1,557.1 356.4 379.4 389.9 370.8 373.8 Income before income taxes 237.7 361.6 72.9 86.9 88.6 51.7 74.0 Net income attributable to Nomu
Slide 20: Consolidated income statements
(billions of yen) Full year Quarter Revenue Commissions 369.1 474.6 105.6 121.4 89.9 96.3 112.1 Fees from investment banking 62.4 91.3 23.0 15.8 27.2 19.8 20.6 Asset management and portfolio service fees 141.0 167.2 40.7 42.1 42.1 45.4 48.4 Net gain on trading 368.0 476.4 110.2 108.5 129.2 158.6 129
Slide 21: Breakdown of revenue
(billions of yen) Full year Quarter Stock brokerage commi: 51.8 126.7 25.4 36.3 22.6 15.8 21.9 Stock brokerage commissions (other) 112.9 139.8 31.6 34.9 35.6 34.3 36.9 Other brokerage commissions 11.7 18.1 4.2 44 4.3 3.8 4.0 ‘Commissions for distribution of investment trusts 150.1 157.8 37.0 37.7 19
Slide 22: Segment results reconciliation and geographic information
Adjustment of consolidated results and segment results: Income (loss) before income taxes Full year (billions of yen) Retail ‘Asset Management 212 274 62 39 53 a3 78 Wholesale mT 1118 25.3 278 33.5 87 22.2 Three Business segments total 193.5 330.9 714 84.4 62.1 45.6 68.9 Other 6.6 20.0 3.5 3.7 34.2
Slide 23: Other segment income before income taxes
Income (loss) before income taxes Full year Quarter (billions of yen) (billions of yen) 40 40 34.2 20.0 20 20 66 2.6 25 ° = = = ° 3.5 37 -20 -20 Net gain (loss) related to economic 7 hedging transactions 1.0 17.4 47 5.2 65 69 22 Realized gain on investments in equity securities held for operating pu
Slide 24: Retail results detail
Full year Quarter brerseten rama mam game — 2Q0 QQ 12 ‘Commissions 2259 301.7 65 783 48S. 688 227% = 3.8% Sales credit 809 106.1 243002878 20 25.9 36% 6.9% Fees from investment banking and other 368 40.3 134 80 ot ot 67 26.1% 49.8% Investment trust administration fees and other 497864 13.7 144 13.9
Slide 25: Stock brokerage and investment trust commissions
Stock brokerage commissions and commissions for distribution of investment trusts Full year Quarter (billions of yen) (billions of yen) 180 40 150 Stock brokerage 30 commissions 120 "Commissions for distribution of investment 90 20 trusts 60 10 30 0 0 Stock brokerage commissions 51.8 126.7 25.4 36.3
Slide 26: Retail client assets
Retail client assets (trillions of yen) 100 Other "Overseas mutual funds 80 Bond investment trusts 60 ™ Stock investment trusts Domestic bonds 40 Foreign currency bonds 29 Equities 0) [Sep | Dec Mar | Jun Sep Equities . . 53.4 56.5 53.2 55.6 58.1 Foreign currency bonds 66 63 64 64 63 64 6.5 Domestic
Slide 27: Net inflows of cash and securities
Net inflows of cash and securities" Full year Quarter (billions of yen) 1,500 1,000 500 (1) Cash and securities inflows minus outiows, excluding regional financial insttutions. 1,076 (billions of yen) 1,000 805 500 473 485 = i Cy) 366 -500 26 26
Slide 28: Number of accounts
Number of accounts (Thousands) “rvzowis | Fyzoians = vaotarns vata Accounts with balance 5,025 5,144 5,090 5,104 5,144 5,186 5,211 Equity holding accounts 2,717 2,718 2,722 2,674 2,718 2,721 2,720 Nomura Home Trade / Net & Call accounts 3,747 4,012 3,881 3,939 4,012 4,053 4,103 New Individual accoun
Slide 29: Asset Management results
Full year Quarter (billions of yen) ‘Fvzoras Fraoia4 Se se Net revenue 68.9 80.5 18.6 21.2 20.5 23.3 24.7 7.1% 16.5% Non-interest expenses. 47.8 53.4 12.5 123 15.1 15.1 13.9 7.8% 11.5% Income before income taxes 212 27.4 62 89 5.3 83 78 5.6% 26.5% Total assets under management (trillions of yen) 427
Slide 30: Assets under management by business
Assets under management (gross) by business* Asset inflows/outflows by business?’ Full year Quarter ee a Oe aa any Bly ate ag tage a Investment trust. Investment trusts. Hesiie 25 284 28 204 284 296 31.3 preinece 1099 1598 410 -962,-—«-319S «473879 Investment advisory 06 98 10S 109 98 110 14 of whic
Slide 31: Wholesale
Wholesale Full year Quarter (billions of yen) “Frzorats Fy201a4 SN SS (2a 3a 4a ta 2a Net revenue 644.9 765.1 183.3 188.7 198.5 188.9 190.6 0.9% 3.9% Non-interest expenses 573.2 653.3 158.1 160.9 165.0 183.1 168.4 8.1% 6.5% Income before income taxes 1.7 111.8 25.3 27.8 33.5 57 22.2 3.9x 12.2% Break
Slide 32: Private equity related investments
Private equity related investments (billions of yen) 150 Tera Firma 104.6 102.1 Asia ™ Europe (excluding Terra Firma) (esodaing 57.2 ei 87.2 58.8 58.6 ~ a a Cy) Japan J E 51.7 2 Europe (excluding Terra Firma) 21.8 22.6 22.9 23.9 22.6 21.8 19.3 Asia 20 19 18 19 19 18 19 Sub Total 765 32.6 76.4 36.3 3
Slide 33: Number of employees
Japan (excluding FA) 14,123 14,149 14,454 14,308 14,149 14,559 14,391 Japan (FA) 1,907 1,888 1,918 1,888 1,889 1,853 Europe 3,618 3,461 3,459 3,456 3,461 3,481 3,530 Americas 2271 2,281 2,243 2,248 2,281 2,335 2,421 Asia-Pacific’ 6,037 5,891 5,945 5,902 5,891 6,656 6,744 Total 27,956 27,670 28,024 2
Slide 34: Disclaimer
vv 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