Financial Data and Key Metrics Changes - For the fiscal year ended March 2020, net revenue was ¥1,287.8 billion, an increase of 15% compared to the previous year [3] - Income before income taxes was ¥248.3 billion, and net income was ¥217 billion, indicating a strong recovery from the previous year [3] - Earnings per share (EPS) for the year was ¥66.2, with a return on equity (ROE) of 8.2% [3] Business Line Data and Key Metrics Changes - Retail segment net revenue for Q4 was ¥88.8 billion, down 1% quarter-on-quarter, but income before income taxes increased by 4% to ¥18.4 billion [15] - Asset Management reported a net revenue of ¥7 billion for Q4, down 72% compared to the previous quarter, with a loss before income taxes of ¥8.7 billion [19] - Wholesale net revenue was ¥145.9 billion, down 22% quarter-on-quarter, with income before income taxes declining 77% to ¥10.1 billion [22] Market Data and Key Metrics Changes - The S&P 500 index fell by 34% from its February high, while the VIX index surged, indicating increased market volatility [11] - The firm-wide loss before income tax for Q4 was approximately ¥24.7 billion, with a net loss of ¥34.5 billion [14] - The market downturn in March led to significant unrealized losses across various segments, particularly in fixed income and equities [14][22] Company Strategy and Development Direction - The company is focused on rebuilding its business platform and delivering solutions to client needs in areas of competitive strength [5] - There is a strategic shift from secondary to primary business, with an emphasis on macro trading and flow-type businesses [55] - The firm aims to maintain a robust financial position while adapting to the changing market environment due to COVID-19 [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of COVID-19 on operations and market conditions, emphasizing the importance of business continuity [33] - The outlook remains uncertain, with management noting that the recovery will depend on the pace of economic reopening and potential future waves of COVID-19 [79] - April revenues showed a decline of only 20% compared to Q4, indicating some resilience in the business despite ongoing challenges [35] Other Important Information - The year-end dividend for shareholders was ¥20 per share, with a dividend of ¥5 per share for the year-end [4] - The company reported a Tier 1 capital of ¥2.568 trillion, down by over ¥130 billion from the end of December, primarily due to performance deterioration and shareholder returns [29] Q&A Session Summary Question: Regarding the significant loss numbers and market dislocation - Management explained that the losses were primarily due to market dislocation caused by COVID-19, with specific unrealized losses booked [36][38] Question: On the decline of CET1 ratio and its sensitivity to market conditions - Management acknowledged the decline in CET1 ratio and explained that it was influenced by increased risk-weighted assets and market volatility [42] Question: About the postponement of share buyback announcements - Management stated that the decision was influenced by global trends and guidance from authorities to control outflows from financial institutions [47][48] Question: On the potential for revenue opportunities in the financing business - Management indicated that there could be increased demand for financing as companies look to raise funds, particularly in the current economic climate [57][58] Question: Regarding the outlook for the fiscal year and budget considerations - Management noted that the budgeting process was impacted by COVID-19, and the focus remains on business continuity and adapting to the new environment [76][79]

[PART I](index=3&type=section&id=PART%20I) [Key Information](index=3&type=section&id=Item%203.%20Key%20Information) This section provides a five-year summary of Nomura's key financial data and principal risks, including a **¥100.4 billion net loss** and **(3.7)% ROE** in FY2019 Selected Financial Data (Fiscal Years 2017-2019) | Indicator | 2017 | 2018 | 2019 | | :--- | :--- | :--- | :--- | | Net revenue (¥ millions) | 1,403,197 | 1,496,969 | 1,116,770 | | Income (loss) before income taxes (¥ millions) | 322,795 | 328,158 | (37,701) | | Net income (loss) attributable to NHI shareholders (¥ millions) | 239,617 | 219,343 | (100,442) | | Total NHI shareholders' equity (¥ millions) | 2,789,916 | 2,749,320 | 2,631,061 | | Diluted EPS (¥) | 65.65 | 61.88 | (29.92) | | Return on equity (%) | 8.7% | 7.9% | (3.7)% | - The company faces significant risks from financial market volatility, economic conditions, and geopolitical events which can adversely affect business, revenues, and lead to substantial losses[25](index=25&type=chunk) - A one-notch or two-notch downgrade of credit ratings as of March 31, 2019, would have required posting additional collateral of approximately **¥6.2 billion** and **¥51.4 billion**, respectively[44](index=44&type=chunk) - During the fiscal year ended March 31, 2019, the company recognized a goodwill impairment loss of **¥81,372 million** in its Wholesale segment, attributable to previous overseas acquisitions[55](index=55&type=chunk)[74](index=74&type=chunk) - On May 28, 2019, the FSA issued a business improvement order to Nomura Holdings and Nomura Securities due to inappropriate information handling, which could damage the company's reputation and business[80](index=80&type=chunk) [Information on the Company](index=21&type=section&id=Item%204.%20Information%20on%20the%20Company) This section outlines Nomura's history, four-division business structure, competitive landscape, and extensive global regulatory environment, including TLAC requirements - Nomura operates through four primary business divisions: Retail, Asset Management, Wholesale, and Merchant Banking, serving a diverse client base including individuals, corporations, and governments[126](index=126&type=chunk) - The company faces intense competition from other financial services firms, driven by factors like deregulation in Japan, the rise of online firms, and consolidation of large financial groups[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - Nomura is subject to extensive regulation in Japan by the FSA under the FIEA and has been designated as a Final Designated Parent Company and a Domestic Systemically Important Bank (D-SIB)[151](index=151&type=chunk)[155](index=155&type=chunk)[204](index=204&type=chunk) - Overseas operations are regulated by authorities such as the SEC and CFTC in the U.S., and the PRA and FCA in the U.K. The company is adapting to major regulatory reforms like the Dodd-Frank Act and MiFID II[159](index=159&type=chunk)[160](index=160&type=chunk)[178](index=178&type=chunk) - Nomura will be subject to Total Loss-Absorbing Capacity (TLAC) requirements in Japan from March 31, 2021, requiring it to hold TLAC of at least **16% of risk-weighted assets**, increasing to **18% by 2024**[158](index=158&type=chunk) [Operating and Financial Review and Prospects](index=41&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes Nomura's operating results, financial condition, and liquidity, highlighting a **25.4% decrease in net revenue** and a **¥100.4 billion net loss** in FY2019 Consolidated Financial Performance (FY2019 vs FY2018) | Metric | FY ended Mar 31, 2018 (¥M) | FY ended Mar 31, 2019 (¥M) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | 1,496,969 | 1,116,770 | -25.4% | | Non-interest Expenses | 1,168,811 | 1,154,471 | -1.2% | | Income (Loss) Before Income Taxes | 328,158 | (37,701) | -111.5% | | Net Income (Loss) Attributable to NHI Shareholders | 219,343 | (100,442) | -145.8% | - The decrease in net revenue was primarily driven by lower commissions and net gain on trading in the Retail and Wholesale Divisions[262](index=262&type=chunk) - Non-interest expenses decreased slightly, as lower performance-based bonuses were offset by a goodwill impairment charge of **¥81,372 million** attributable to the Wholesale segment[267](index=267&type=chunk) - The company's liquidity portfolio stood at **¥4,870.5 billion** as of March 31, 2019, a decrease from **¥5,134.4 billion** in the prior year, but deemed sufficient to meet stress scenario requirements[362](index=362&type=chunk)[364](index=364&type=chunk) - The dividend for the fiscal year was **¥6.00 per share**, down from **¥20.00** in the previous year[254](index=254&type=chunk)[418](index=418&type=chunk) [Operating Results](index=41&type=section&id=5.A%20Operating%20Results) Nomura's operating performance declined significantly in FY2019, with Retail income down **52.0%**, Asset Management down **48.3%**, and Wholesale recording a **¥111.4 billion loss** Income (Loss) Before Income Taxes by Segment (FY2019 vs FY2018) | Business Segment | FY ended Mar 31, 2018 (¥B) | FY ended Mar 31, 2019 (¥B) | Change (%) | | :--- | :--- | :--- | :--- | | Retail | 103.1 | 49.5 | -52.0% | | Asset Management | 66.2 | 34.2 | -48.3% | | Wholesale | 100.6 | (111.4) | -210.7% | - Retail client assets decreased by **¥3.0 trillion** to **¥114.7 trillion** as of March 31, 2019, mainly due to market depreciation and net outflows in equities[287](index=287&type=chunk) - Assets under management in the Asset Management division increased to **¥51.4 trillion** as of March 31, 2019, driven by net inflows, despite market depreciation[296](index=296&type=chunk) - Wholesale non-interest expenses increased by **8%**, primarily due to the goodwill impairment and one-off expenses related to business portfolio revisions[303](index=303&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=5.B%20Liquidity%20and%20Capital%20Resources) Nomura maintains a robust liquidity and capital position, with a **¥4,870.5 billion liquidity portfolio** and a **17.11% Common Equity Tier 1 capital ratio** as of March 31, 2019 Liquidity and Capital Metrics (as of March 31, 2019) | Metric | Value | | :--- | :--- | | Liquidity Portfolio | ¥4,870.5 billion | | Total Unsecured Debt (maturing < 1 year) | ¥2,518.8 billion | | Total Long-Term Unsecured Debt | ¥6,483.5 billion | | Common Equity Tier 1 Capital Ratio | 17.11% | | Tier 1 Capital Ratio | 18.28% | | Consolidated Leverage Ratio | 5.03% | - The company's liquidity management framework is designed to ensure sufficient liquidity to meet all obligations for one year under a market-wide stress scenario without raising new unsecured funds[357](index=357&type=chunk) - Nomura has been identified as a Domestic Systemically Important Bank (D-SIB) by the FSA, requiring an additional capital charge[204](index=204&type=chunk) - Nomura will be required to meet a minimum TLAC requirement of **16% of risk-weighted assets** from March 31, 2021, increasing to **18% from March 31, 2024**[432](index=432&type=chunk) [Directors, Senior Management and Employees](index=77&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) This section details Nomura's 'Company with Three Board Committees' governance structure, executive compensation totaling **¥1,366 million** in FY2019, and global employee headcount of **27,864** - Nomura has adopted a 'Company with Three Board Committees' governance structure, separating management oversight (Board of Directors) from business execution (Executive Officers)[527](index=527&type=chunk) Aggregate Compensation for FY2019 | Category | Number of Officers | Basic Compensation (¥M) | Deferred Compensation (¥M) | Total (¥M) | | :--- | :--- | :--- | :--- | :--- | | Directors | 10 | 251 | 42 | 293 | | Executive Officers | 8 | 607 | 466 | 1,073 | | **Total** | **18** | **858** | **508** | **1,366** | - The primary type of deferred compensation is now Restricted Stock Units (RSUs), introduced in 2018 to align employee and shareholder interests[497](index=497&type=chunk) Employee Headcount by Region | Region | March 31, 2018 | March 31, 2019 | | :--- | :--- | :--- | | Japan | 15,819 | 15,852 | | Europe | 3,057 | 2,909 | | Americas | 2,362 | 2,357 | | Asia and Oceania | 6,810 | 6,746 | | **Total** | **28,048** | **27,864** | [Major Shareholders and Related Party Transactions](index=98&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section identifies BlackRock, Inc. as a major shareholder and details significant related party transactions with Nomura Research Institute (NRI), including **¥54.5 billion** in purchases in FY2019 - As of February 6, 2019, BlackRock, Inc. beneficially owned **6.10%** of the Company's issued common stock[544](index=544&type=chunk) - As of March 31, 2019, U.S. holders held **10.9%** of Nomura's outstanding common stock[545](index=545&type=chunk) - Nomura held a **39.3%** stake in its equity-method affiliate, Nomura Research Institute, Ltd. (NRI), as of March 31, 2019[548](index=548&type=chunk) - For the fiscal year ended March 31, 2019, Nomura purchased **¥13,515 million** in software/equipment and paid **¥40,965 million** for other services to NRI[548](index=548&type=chunk) [Financial Information](index=100&type=section&id=Item%208.%20Financial%20Information) This section details Nomura's global legal proceedings, including a **$480 million RMBS settlement** and an estimated **¥44 billion maximum loss** for certain cases - On October 15, 2018, Nomura's U.S. subsidiaries settled an investigation with the DOJ regarding RMBS activities, agreeing to pay **$480 million**[89](index=89&type=chunk)[1538](index=1538&type=chunk) - Nomura faces ongoing civil claims in Italy from Fondazione Monte dei Paschi di Siena (FMPS) and other investors seeking significant damages related to structured financial transactions with Banca Monte dei Paschi di Siena (MPS)[1515](index=1515&type=chunk)[1520](index=1520&type=chunk)[1521](index=1521&type=chunk) - As of June 25, 2019, the company estimates the aggregate reasonably possible maximum loss for certain legal proceedings, in excess of recognized liabilities, to be approximately **¥44 billion**[1505](index=1505&type=chunk) - In June 2018, a foreign subsidiary experienced a cybersecurity incident involving unauthorized network access, which may result in financial loss from reputational damage, legal liability, and remediation costs[99](index=99&type=chunk)[1545](index=1545&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=108&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details Nomura's comprehensive risk management framework, including market, credit, and operational risks, with a total VaR of **¥4.49 billion** as of March 31, 2019 - Nomura's risk management is governed by a Risk Appetite Statement approved by the Executive Management Board, covering capital, liquidity, market, credit, and operational risks[621](index=621&type=chunk)[622](index=622&type=chunk) Value at Risk (VaR) - 99% Confidence, 1-day Horizon | Risk Type | Mar 31, 2018 (¥B) | Mar 31, 2019 (¥B) | | :--- | :--- | :--- | | Equity | 1.21 | 1.07 | | Interest rate | 3.10 | 2.85 | | Foreign exchange | 3.20 | 1.88 | | **Total VaR (after diversification)** | **6.38** | **4.49** | - Credit risk from derivatives is concentrated with financial institutions. As of March 31, 2019, gross derivative assets were **¥13,332 billion**, with a net exposure of **¥223 billion** after netting and collateral[1095](index=1095&type=chunk) Top 5 Country Exposures (as of March 31, 2019) | Country | Exposure (¥B) | | :--- | :--- | | Japan | 2,867 | | United States | 2,562 | | United Kingdom | 500 | | India | 242 | | Germany | 217 | - Operational risk is managed using a 'Three Lines of Defense' model, and regulatory capital for this risk is calculated using the Standardized Approach[687](index=687&type=chunk)[692](index=692&type=chunk) [PART II](index=125&type=section&id=PART%20II) [Controls and Procedures](index=125&type=section&id=Item%2015.%20Controls%20and%20Procedures) This section confirms the effectiveness of Nomura's disclosure controls and internal control over financial reporting as of March 31, 2019, with no material changes reported - Management, including the Group CEO and CFO, evaluated and concluded that the company's disclosure controls and procedures were effective as of March 31, 2019[720](index=720&type=chunk) - Based on the COSO framework, management concluded that internal control over financial reporting was effective as of March 31, 2019. This assessment was attested to by the independent registered public accounting firm[721](index=721&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal year ended March 31, 2019, that have materially affected, or are reasonably likely to materially affect, these controls[722](index=722&type=chunk) [Principal Accountant Fees and Services](index=126&type=section&id=Item%2016C.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to Ernst & Young ShinNihon LLC, totaling **¥3,925 million** in FY2019, primarily for audit services, under the Audit Committee's pre-approval policy Principal Accountant Fees (Millions of yen) | Fee Category | FY ended Mar 31, 2018 (¥ million) | FY ended Mar 31, 2019 (¥ million) | | :--- | :--- | :--- | | Audit Fees | 3,173 | 3,414 | | Audit-Related Fees | 334 | 179 | | Tax Fees | 163 | 293 | | All Other Fees | 211 | 39 | | **Total** | **3,881** | **3,925** | - The Audit Committee has a pre-approval policy for all audit and non-audit services provided by the principal accountant, utilizing both 'General Pre-Approval' for routine services and 'Specific Pre-Approval' for other engagements[728](index=728&type=chunk)[729](index=729&type=chunk) [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=127&type=section&id=Item%2016E.%20Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) This section outlines Nomura's share repurchase activities, including **100 million shares** bought back for **¥51.7 billion** in FY2019, and a new program for up to **300 million shares** or **¥150 billion** - During the fiscal year ended March 31, 2019, Nomura purchased a total of **100,020,867 shares**, with **100,000,000 shares** being part of a publicly announced buyback program[732](index=732&type=chunk)[734](index=734&type=chunk) - The share buyback program authorized on April 26, 2018, for up to **100 million shares** or **¥70 billion**, was completed during the fiscal year[734](index=734&type=chunk) - On June 18, 2019, a new share buyback program was authorized to purchase up to **300 million shares** or a maximum of **¥150 billion**, effective until March 31, 2020[736](index=736&type=chunk) [Corporate Governance](index=128&type=section&id=Item%2016G.%20Corporate%20Governance) This section highlights differences between Nomura's Japanese corporate governance practices and NYSE standards, particularly regarding independent directors and shareholder approval for equity compensation - Nomura, as a foreign private issuer, follows Japanese corporate governance practices, which differ from NYSE standards in several areas[739](index=739&type=chunk) - Unlike NYSE rules, the Companies Act of Japan does not require a majority of independent directors on the Board, but does require a majority of outside directors on the Audit, Nomination, and Compensation committees, a requirement which Nomura meets[741](index=741&type=chunk) - Shareholder approval is generally not required for equity compensation plans like RSUs and SARs under the Companies Act; these are determined by the Compensation Committee[741](index=741&type=chunk) - In response to Japan's Corporate Governance Code, Nomura has established and publicly disclosed the 'Nomura Holdings Corporate Governance Guidelines'[742](index=742&type=chunk) [PART III](index=130&type=section&id=PART%20III) [Financial Statements](index=130&type=section&id=Item%2018.%20Financial%20Statements) This section presents Nomura's audited consolidated financial statements for FY2019 and prior years, prepared under U.S. GAAP, including balance sheets, income statements, and detailed notes - The consolidated financial statements are prepared in conformity with U.S. Generally Accepted Accounting Principles (U.S. GAAP)[756](index=756&type=chunk)[802](index=802&type=chunk) - The independent auditor, Ernst & Young ShinNihon LLC, issued an unqualified opinion on both the consolidated financial statements and the effectiveness of internal control over financial reporting as of March 31, 2019[756](index=756&type=chunk)[764](index=764&type=chunk) Consolidated Balance Sheet Summary (As of March 31) | (Billions of yen) | 2018 | 2019 | | :--- | :--- | :--- | | Total Assets | 40,343.9 | 40,969.4 | | Total Liabilities | 37,544.1 | 38,288.6 | | Total NHI Shareholders' Equity | 2,749.3 | 2,631.1 | Consolidated Statement of Income Summary (Year Ended March 31) | (Billions of yen) | 2017 | 2018 | 2019 | | :--- | :--- | :--- | :--- | | Net Revenue | 1,403.2 | 1,497.0 | 1,116.8 | | Income (Loss) Before Income Taxes | 322.8 | 328.2 | (37.7) | | Net Income (Loss) Attributable to NHI Shareholders | 239.6 | 219.3 | (100.4) |