Nomura Holdings Inc ADR (NMR)

NMR 
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Nomura Holdings, Inc (NMR)

F3Q10 (Qtr End 12/31/09) Earnings Call

February 2, 2010 08:00 am ET

Executives

Masafumi Nakada - CFO

Analysts

Takamune Fujikawa - Boston Company

Presentation

Operator

Good day, everyone, and welcome to today's Nomura Holdings Third Quarter operating results for fiscal year ending March 2010 conference call. Please be reminded that today's conference call is being recorded at the request of hosting company. Should you have any objections, you may disconnect at this point in time. During the presentation, all the telephone lines are placed for listen-only mode. The questions-and-answer session will be held after the presentation.

Please note that this conference call contains certain forward-looking statements and other projected results, which involve known and unknown risks, delays and certainties and other factors not under the company's control which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these projections. Such factors include economic and market conditions, political events and other investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size , number, and timing of transactions.

With that, we would like to begin the conference. Mr. Masafumi Nakada, please go ahead.

Masafumi Nakada

Thank you very much. So thank you very much for joining us today. I will now give you a brief overview of Nomura Holdings third quarter results and then open the line to questions. So please turn to page four of the document entitled consolidated results of operations.

This page gives you an overview of our third quarter results. Nomura was profitable for the third straight quarter docking net revenue of ¥274.5 billion, income before income taxes of ¥18 billion and net income attributable to Nomura Holdings of ¥10.2 billion during the third quarter.

Please turn to the next page. Our two main revenue drivers, retail and wholesale, both posted increased revenues and income compared to the prior quarter as we continue to expand our business. The graph on the left shows our Retail operation in Japan which forecast on providing customers with the consulting services. Total processes for the third quarter were approximately ¥3.5 trillion and the net revenue was over well ¥100 billion. The highest level so far this fiscal year.

Wholesale made up of Global Markets and Investment Banking also booked increased revenue and income as the Investment Banking returned to profit for the first time in six quarters. This resulted in business segment pretax income of ¥77 billion an increase of 56% compared to the second quarter. However, as the next page shows we deducted ¥18 billion in credit value adjustments, ¥8 billion in expenses related to conversion of our convertible bonds, ¥4 billion in unrealized losses on the investment securities and ¥16 billion in fees related to Nomura Holdings global offering giving us pretax income of ¥18 billion.

The chart on the right that gives the same breakdown for the fiscal year-to-date. Pretax income from the businesses totaled ¥189 billion from which we deducted ¥64 billion in credits value adjustments, ¥17 billion in expenses related to the convertible bonds and ¥16 billion in fees for our global offering and added ¥4 billion in unrealized gains on investment securities giving us year-to-date pretax income of ¥77 billion. So excluding these are the estimates, pretax income from our core businesses for the first three quarters was ¥189 million which is a better return than [previous] in our profitability for the year-to-date.

I will now outline how we expanded our business platform during the third quarter. Please turn to page seven for an overview of results by the business division. In addition to our long standing revenue in retail in Japan, our wholesale operations are now another driver for growth with the revenues increasing in both global markets and investment banking.

The next page shows the break down of third quarter results by region. As you can see on page eight in addition to Japan revenues in our international operations are becoming increasingly well balanced.

Turning now to business division highlights for the quarter starting on the next page. We continue to focus on the consulting services and aside from November when market condition deteriorated, the total purchases of well over ¥1 trillion were booked in about October and December. Total purchases for the quarter were approximately ¥3.5 trillion.

Our page nine shows retail also made the most of opportunities arising from the string of public offerings by the Japanese corporates during the quarter. Looking ¥560 billion in stock sales in the retail channel alone. Debt revenue in retail was ¥14.3 billion the highest level so far, this fiscal year and for the past two years, income before income tax jumped 33% from the last quarter to ¥35.2 billion.

Please turn to the next page. In asset management, the Six Assets Diversified Fund was awarded the Morningstar Fund of the Year for the third straight year. And in the NEXT FUNDS, a product line-up, we added an Indian equity integer, improving the quality and the depths of our products offering.

Internationally, we won number of investment otherwise a mandate in Asia, Islamic markets and Europe and increased our overseas investment otherwise our assets under management. As a result, net revenue in asset management was ¥17.2 billion up 4.7% from the second quarter.

Turning to our wholesale business the next page shows, investment banking which returned to profit for the first time in six quarters. In the global markets, we continued to build up our US business, I am going to touch up on that later. Investment banking revenues in our international operations are growing significantly along with revenues in Japan, as you can see on the Page 11. In fact, the third quarter net revenue doubled quarter-on-quarter both in Japan and overseas.

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