investor presentation presentation material may 23, 2005 (pdf) · presentation overview ii review...

Investor Presentation

May 23, 2005

Nobuyuki Koga

President & CEONomura Holdings, Inc.

1

Presentation Overview

II Review of Operating ResultsReview of Operating Results

IIIIII Business StrategyBusiness Strategy

IIII Corporate Goals & ObjectivesCorporate Goals & Objectives

IVIV ConclusionConclusion

This document is produced by Nomura Holdings, Inc. ("Nomura"). Copyright 2005 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 otherinstrument, including securities issued by Nomura or any affiliate thereof. Offers to sell, sales, solicitations to buy, or purchases of any securities issued by Nomura or any affiliate thereof may only be made or entered into pursuant to appropriate offering materials or a prospectus prepared and distributed according to the laws, regulations, rules and market practices of the jurisdictions in which such offers or sales may be made.No part of this document shall be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of Nomura.This document contains statements that may constitute, and from time to time our management may make "forward-looking statements" within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Any such statements must be read in the context of the offering materials pursuant to which any securities may be offered or sold in the United States. These forward-looking statements are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. Important factors that could cause actual results to differ from those in specific forward-looking statements include, without limitation, economic and market conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, and the number and timing of transactions.

2

Income before Income Taxes for Three Business Segments, Consolidated Net Income, Consolidated ROE

I. Review of Operating Results

-50

0

50

100

150

200

250

FY02.3 FY03.3 FY04.3 FY05.30

50

100

150

200

250

FY02.3 FY03.3 FY04.3 FY05.30

2

4

6

8

10

12(%)

*Includes cumulative effects of accounting changes

221.9

129.9

217.0

168.0

119.9*

172.3

11.1

7.4

10.1

FY01 FY02 FY03 FY04

94.7

5.2

175.0

Asset Management

Domestic RetailROE (right axis)Net Income

Global Wholesale

(billions of yen)

3



IIII Group Vision & ObjectivesGroup Vision & Objectives



4

Become a globally competitive Japanese financial institutionAchieve an average Consolidated ROE between 10% and 15%

Corporate GoalsCorporate Goals

Broaden client base / increase assets under management (AUM)Expand business portfolioEnhance high value-added solutions business

ObjectivesObjectives

II. Corporate Goals & Objectives

5





Expand Business PortfolioGlobal Markets

Broaden Client Base & Increase AUM Domestic RetailAsset Management

Enhance High Value-added Solutions BusinessGlobal Investment BankingGlobal Merchant Banking

Business Segments’ GoalsBusiness Segments’ Points of Focus


6

Global Investment Banking

Global Merchant Banking

Global Markets

Domestic Retail Asset Management

III. Business Strategy 1. Business Segments’ Points of Focus

Enhance High Value-added

Solutions Business

Enhance High Value-added

Solutions Business

ExpandBusiness Portfolio

ExpandBusiness Portfolio

Broaden Client Base &

Increase AUM

Broaden Client Base &

Increase AUM

7






Domestic RetailAsset Management


Business Segments’ Points of Focus


Domestic RetailAsset Management

Broaden Client Base & Increase AUM

8

0

10

20

30

40

50

60

FY02 FY03 FY04 FY060

10

20

30

40

50

60

70

80

90

100(trillions of yen) (billions of yen)

(Note) Client Assets: Total assets in custody from retail clients and regional financial institutions

Target: 50 trillion yenby March 2007Target: 50 trillion yenby March 2007Income Before Income Taxes (right axis)

Client Assets (left axis)

Client Assets & Income before Income Taxes

Domestic Retail – Raise Profits by Increasing Client Assets2. Broaden Client Base

9

0

500

1,000

1,500

2,000

2,500

3,000

1 2 3 4 5 6 7 8 9 10

(billions of yen)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Dec.03

Mar.04

June.04

Sept.04

Dec.04

Mar.05

10 issues: 2.7 trillion yenin total sales 10 issues: 2.7 trillion yenin total sales

1 2 3 4 5 6 7 8 9 10

Sales of JGBs for Individual Investors (cumulative)

Domestic Retail – Diversify Products / Services2. Broaden Client Base

800

700

600

500

400

300

200

100

(Note) Multi-distribution investment trusts refer to investment trusts which pay out distributions at least four times per year

900

Assets in Main Multi-distribution Investment Trusts

Nomura US Loan Income

Global Attractive Dividend Stock FundNomura Fund Masters Global BondNomura U.S. High Yield Bond Income

(billions of yen)

(issue no.)

0

10

100

110

120

Mar.03

Sept.03

Mar.04

Sept.04

Mar.05 Lifestage

Asset Builders

WealthyInvestors

Affluent Investors

Entrepreneurs

SME owners

Corporate executives

Salary earners

Financial Assets

Customer Segment Matrix

Domestic Retail – Customer Segmentation 2. Broaden Client Base

Client Assets per Account (March 2003 = 100)

(Note) Index with March 2003 value assigned as 100

11

90

120

150

180

210

240

FY021H

FY022H

FY031H

FY032H

FY041H

FY042H

(Note) Index with September 2002 value assigned as 100

100

Consultation Visits to Branches

Branch Employee Count

(Sept. 2002 =100)

Domestic Retail – Improve Convenience for Clients 2. Broaden Client Base

Branch Employee Count & Consultation Visits to Branches

0

10

20

30

40

50

60

FY02 1H

FY02 2H

FY03 1H

FY03 2H

FY04 1H

FY04 2H

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000(%)

IT Share: The portion of Domestic Retail domestic stock trades and value executed through Nomura Home Trade or Nomura Telephone Answer (excl. odd lot transactions)

(thousands)

800

600

400

200

0

IT Share & Home Trade Accounts

Number of Orders (left axis)Transaction value (left axis)Home Trade accounts (right axis)

12

Partnerships with 44 financial institutionsin 30 prefectures38 of these have begun providing securitiesintermediary services

Regional FinancialInstitutions

Domestic Retail – Increase Access to Customers2. Broaden Client Base

Securities Intermediary Business

Dense branch network

Brand strength

High-quality productsSteadfast compliance

Infrastructure and expertise in

securities business

Strong client base

13

-5

0

5

10

15

20

25

2003 2004 2005 2006-5

0

5

10

15

20

25

AUM & Income before Income Taxes

Asset Management – Raise Profits by Increasing AUM2. Increase AUM

(trillions of yen) (billions of yen)Target: 22.4 trillion yenby March 2006 Target: 22.4 trillion yenby March 2006

FY03FY02 FY04 FY05

(Note) AUM refers to combined total of assets under management of each company

Income before Income Taxes (right axis)

Nomura Asset Management

NFR & TANFR & T

MATNCRAM

NBAM

14

0

2

4

6

8

10

12

Mar.03 Sept.03 Mar.04 Sept.04 Mar.05

(US$ billions)

Asset Management – Product Diversification2. Increase AUM

Main New Funds

Nomura Asset ManagementGlobal Attractive Dividend Stock FundInitial Sales: 68.1 billion yenNAV as of 4/30/05: 203.9 billion yenJapan Attractive Dividend Stock FundInitial Sales: 49.5 billion yenNAV as of 4/30/05: 113.8 billion yen

NFR&TNomura Fund Masters Global Bond FundInitial Sales: 41.0 billion yenNAV as of 4/30/05: 202.2 billion yen

NFR&TANomura W Strategy FundSales Amount: 49.3 billion yen(Unit investment trust established in April 2005)

NCRAM’s AUM

15

0

10

20

30

40

50

60

70

80

90

03.11 04.2 04.5 04.8 04.11 05.2

(billions of yen)

Nov. 03 Mar. 04 Sept. 04 Mar. 05

Net Assets in Funds for Bank Customers

Asset Management – Broaden Sales Channel2. Increase AUM

0

5

10

15

20

25

30

35

June02

Dec.02

June03

Dec.03

June04

Dec.04

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

(Source) The Investment Trusts Association, Japan

(trillions of yen)

Nomura’s market share (right)Public stock investment trust assets (left)

50

45

40

35

30

25

20

15

10

5

0

(%)Public Stock Investment Trust Assets

& Nomura’s Market Share

Mar.03

Sept.02

Mar.04

Sept.03

Mar.05

Sept.04

16





Global Markets





Global MarketsExpand Business Portfolio

17

New BusinessesNew Businesses

EquitiesEquitiesBondsBonds

Illiquid Assets

LoansLoans RealEstateReal

Estate

Traditional Securities

Deliver solutions Provide liquidity

Integrate diverse products Combine securitization and derivative technologies

Global MarketsGlobal Markets

Global Markets – Business Scope3. Expand Business Portfolio

Loan-related Business Asset Finance Business

Investment Trusts

Investment Trusts

18

(Note) Loan / Deposit Gap: The difference between the amount of deposits and loans at regional banks, 2nd tier regional banks, credit associations, and credit unions(Sources) Loan / Deposit Gap: Nomura, based on Bank of Japan data, Straight corporate bonds issued: Japan Association of Securities Dealers

Registered 58 branches asnon-banking moneylenders to engage in loan business

11

FY2004 Achievements22

CB Repackaged LoansStructured LoansReal Estate Non-recourse LoansPFI Loan Arrangements, etc.

Loan-related Businesses: 210 billion yen

Global Markets – Loan-related Business3. Expand Business Portfolio

0

50

100

150

200

250

300

350

400

450

500

Dec. 00 Dec. 01 Dec. 02 Dec. 03 Dec. 040

5

10(trillions of yen) (trillions of yen)

Gap = 115 trillion yenGap = 115 trillion yen

Loan / Deposit GapStraight corporate bonds issued (right axis)Deposits (left axis)Outstanding loans (left axis)

19

(Sources) USA: NA REIT, Japan: Nomura

Comparison of U.S.- Japan REIT Markets

USA

Japan

Urban Renaissance Agency Private Mezzanine Fund(increased capital to 30 billion yen)

Equity11J-REIT

FY2004 Underwriting share: 24%Private Funds

Secured Capital Japan Residential Fund I (80 billion yen)

Mezzanine22

Senior Loans33Provision of non-recourse loans (NCI)

Financial Advisor44Urawa Station East Exit AreaRedevelopment ProjectHouse of Representatives AkasakaResidence PFI Project

2001 2004

Global Markets – Asset Finance Business 3. Expand Business Portfolio

20.4 trillionyen

20.4 trillionyen

31.6 trillionyen

31.6 trillionyen

0.2trillion

yen

0.2trillion

yen

1.8trillion

yen

1.8trillion

yen

20

Global Markets – Overseas Business Development3. Expand Business Portfolio

Increased businessin 2001

FY2004: $13.1 billion

Increased businessin 2001


CMBS / RMBS

Hired Equity Derivatives Team in 2004 Collaboration between London -TokyoHired Equity Derivatives Team in 2004 Collaboration between London -Tokyo

Equity Derivatives

Established AssetFinance Group in 2002


Established AssetFinance Group in 2002


Asset Finance

21







Global Investment BankingGlobal Merchant Banking



Global Investment BankingGlobal Merchant Banking

Enhance High Value-added Solutions Business

22

(Sources) Japan Equity & Equity-related Ranking and Advisory Ranking from Thomson Financial, MPO/HPO Deal Ranking from Nomura, MPO/HPO Purchaser includes group companies

Equity Financing

CY2004 Japan Equity & Equity-related Ranking

2

Rank Bookrunner Proceeds (US$ mil.)

No. of Issues

Daiwa Securities SMBC 11,642 119 3 8,996 73 45 Mizuho Financial Group

4,849 3,275

UBS 10 47

1 16,026 161

Nikko Citigroup, Ltd.

Market Total 60,502 586

1 16,026 161

M&ACY2004 Any Japanese Involvement

Financial Advisors Ranking (announced deals)

2

Rank Advisor Rank Value(US$ mil.)

No. of Deals

Daiwa Securities SMBC 15,755 963 12,993 2345 Lehman Brothers

11,23510,195

Nikko Citigroup, Ltd. 2818

1 19,364 129

Goldman Sachs Group

Market Total 87,309 2,387

1 19,364 129

Global Investment Banking – Customized Solutions4. Enhance High-value Added Solutions Business

CY2004 MPO/HPO Deal Ranking

2

Rank Purchaser Proceeds(billions of yen)

Share(value base)

JP Morgan 21.9%3 8.5%45 Merrill Lynch

UBS 3.5%2.2%

1 58.0%

Daiwa Securities SMBC

Market Total 100.0%

No. of Deals

112

17

51

24126492013

575

3331 58.0%24333

23

Global Investment Banking – Cross-border Capabilities

ROTHSCHILD

TWP

Global Markets

Asset Management

4. Enhance High Value-added Solutions Business

Global IB

Global MB

China Business Planning & Promotion Dept.

Domestic Retail

KfW exchangeablebond into DeutschePost AG shares

24

19.266.0

265.7

291.2

0

50

100

150

200

250

300

350

400

450

Mar.03 Mar.04

Merchant Banking Business Exposure

(FY)

(billions of yen)

Terra FirmaNPF

284.9

357.2

Increase to 250-300 billion yen

IRR 20%+Investment Period 3-5 Years

NPF Target IRR &Investment Period22

NPF-focused Portfolio Development11

104.0

325.5

Mar.05

429.5

Global Merchant Banking – Portfolio Development4. Enhance High Value-added Solutions Business

(Note) Refers to total of NPF, NR&A, PEG, NPV (excl. Terra Firma)

25

Invest

NPFNPFNomura GroupNomura Group

Invest

Invest Invest Business SuccessionBusiness

Succession

Strategic PrivatizationStrategic

Privatization MBOMBO

Joint Investment

Joint InvestmentRevitalization

SponsorRevitalization

Sponsor

Capital IncreaseCapital Increase

Global Merchant Banking – Business Model4. Enhance High Value-added Solutions Business

DaikumaHuis Ten Bosch

Tungaloy

Millennium RetailingDowa Works

ExitedJanuary 2003

UHT

Exited May 2003

26




IVIV ConclusionConclusionIVIV ConclusionConclusion

27

“Going beyond the traditional bounds of the securities business to deliver clients

superior service and solutions”

“Going beyond the traditional bounds of the securities business to deliver clients

superior service and solutions”

IV. Conclusion

Appendix

Real GDP Breakdown (Japan) (p29)D/E Ratio & ROE (NOMURA400, excl. financials) (p30)Free Cash Flow (NOMURA400, excl. financials) (p31)Comparison of Individuals’ Financial Assets, Japan & U.S. (p32)M&A Deal Count (p33)Asset Prices (p34)Tax Reforms for Individual Investors (p35)

29

(Note) GDP figures through 1Q 2005 (area shaded yellow) represent figures released on May 17, 2005. GDP figures from 2Q 2005 onward (area shaded blue) are Nomura forecasts as of March 2005.

(Source) Nomura, based on Government data

Real GDP Breakdown (Japan)

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0(Q-o-Q Annualized%)

Nomura’s ForecastsNomura’s Forecasts

Real GDPOther ComponentsPrivate InventoryPrivate Capital InvestmentExports (Gross)Private Consumption

2003Q1

2004Q1

2005Q1Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 (CY)

30

D/E Ratio & ROE (NOMURA400, excl. financials)(%)

80100120140160180200

D/E ratio (%)D/E ratio (%)87%

02468

1012

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

ROE (%)ROE (%)

9.5%

(FY)( e ) ( f )

(Source) Nomura

31

(Note) FY80—FY84: non-consolidated base; from FY85: consolidated basisCashflow = Net income + depreciation costsCapex = Increase in tangible assets + depreciation costs (to FY99)

= On announced basis (FY00-FY01)= Nikkei Company Database (FY02-FY03)= Nomura estimate (FY04-FY05)

(Source) Nomura

-10

-5

0

5

10

15Free Cash Flow (NOMURA400, excl. financials)

-15

-10

-5

0

5

10

15

20

25

30

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04(e)

05(f)( e ) ( f )

5

0

-5

(trillions of yen)

Cashflow (left axis:A)

Capex (left axis: B)

Free Cash Flow (right axis: A-B)

(trillions of yen)

(FY)

32

(Sources) Bank of Japan “Flow of Funds Accounts”, FRB “Flow of funds accounts of the United States”

Comparison of Individuals’ Financial Assets, Japan & U.S.

Total: 1,424 trillion yen (Dec. 2004)

JapanJapanJapan

Insurance & Annuities

26%

InvestmentTrusts

Bonds 2%

Equities 8%Securities Total

13%Cash &

Deposits55%

Total: US$ 36.8 trillion (Dec. 2004)

U.S.A.U.S.A.U.S.A.

Cash & Deposits13%

Investment Trusts

Bonds 6%

Equities 34%Securities Total

52%Insurance &

Annuities29%

12%3%

33

0

500

1,000

1,500

2,000

2,500

95 96 97 98 99 00 01 02 03 04

(No. of Deals)

(CY)

M&A between Japanese companiesAcquisition of foreign company by Japanese companyAcquisition of Japanese company by foreign company

(Source) Nomura, based on newspapers, magazines, etc.

M&A Deals

34

0

50100

150

200

250300

350

400

450500

550

600

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

Asset Prices(1985=100)

Golf Club Membership Price Index

Urban Land Price Index – 6 Large Cities

Nikkei 225

Urban Land Price Index - Nationwide

(CY)

Nikkei 225, Golf Club Membership Price Index: Nikkei ShimbunUrban Land Price Indexes: Japan Real Estate Institute

(Sources)

35

Interest from Deposit/Savings

Accounts

Interest from Deposit/Savings

Accounts20%

January 2004

Stock Investment Trust DistributionsStock Investment

Trust Distributions 20% 10% Preferred Tax Rate (withheld at source) 20%

April 2008

April 2003

Listed Stock Dividends

Listed Stock Dividends

Up to 50% Maximum

10% Preferred Tax Rate(withheld at source) 20%

April 2008

January 2003

Capital Gains on Listed Stocks

Capital Gains on Listed Stocks 26% 10% Preferred Tax Rate 20%

January 2008

Tax Reforms for Individual Investors

Between January 2003 and December 2007, annual net capital gains are taxed at a preferable tax rate of 10%. Annual net capital losses may be carried over and netted against future capital gains for up to 3 years.Capital Gains on Listed Stocks

Listed Stock DividendsBetween April 2003 and March 2008, dividends on listed stocks are taxed at a rate of 10% regardless of amount, with taxes withheld at source and filing unnecessary (with the exception of major shareholders owning 5% or more of outstanding shares). From April 2008 onward, the withholding tax rate will increase to 20%, however filing will remain unnecessary.

Stock Investment Trust Distributions

Between January 2004 and March 2008, stock investment trust distributions are taxed at a rate of 10% regardless of amount, with taxes withheld at source and filing unnecessary. From January 2004 onwards capital gains/losses from the sale of stock investment trusts may be netted against capital gains from other stocks, etc.

investor presentation presentation material may 23, 2005 (pdf) · presentation overview ii review...

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