☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Japan | 13-1, Nihonbashi1-chome Chuo-ku, Tokyo103-8645 Japan | |
(Jurisdiction of incorporation or organization) | (Address of principal executive offices) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange On Which Registered | ||
American Depositary Shares Common * | NMR | New York Stock Exchange |
* | Not for trading, but only in connection with the registration of the American Depositary Shares, each representing one share of Common Stock. |
Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Emerging growth company ☐ |
U.S. GAAP ☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
Page | ||||||||
PART I | ||||||||
Item 1. | 2 | |||||||
Item 2. | 2 | |||||||
Item 3. | 2 | |||||||
Item 4. | 22 | |||||||
Item 4A. | 54 | |||||||
Item 5. | 55 | |||||||
Item 6. | 94 | |||||||
Item 7. | 121 | |||||||
Item 8. | 122 | |||||||
Item 9. | 122 | |||||||
Item 10. | 123 | |||||||
Item 11. | 131 | |||||||
Item 12. | 150 | |||||||
PART II | ||||||||
Item 13. | 152 | |||||||
Item 14. | 152 | |||||||
Item 15. | 152 | |||||||
Item 16A. | 152 | |||||||
Item 16B. | 152 | |||||||
Item 16C. | 153 | |||||||
Item 16D. | 154 | |||||||
Item 16E. | 154 | |||||||
Item 16F. | 155 | |||||||
Item 16G. | 155 | |||||||
Item 16H. | 157 | |||||||
157 | ||||||||
PART III | ||||||||
Item 17. | 158 | |||||||
Item 18. | 158 | |||||||
Item 19. | 158 | |||||||
F-1 |
Millions of yen, except per share data and percentages | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||
Statement of income data: | ||||||||||||||||||||
Revenue | ¥ | 1,723,096 | ¥ | 1,715,516 | ¥ | 1,972,158 | ¥ | 1,835,118 | ¥ | 1,952,482 | ||||||||||
Interest expense | 327,415 | 312,319 | 475,189 | 718,348 | 664,653 | |||||||||||||||
Net revenue | 1,395,681 | 1,403,197 | 1,496,969 | 1,116,770 | 1,287,829 | |||||||||||||||
Non-interest expenses | 1,230,523 | 1,080,402 | 1,168,811 | 1,154,471 | 1,039,568 | |||||||||||||||
Income (loss) before income taxes | 165,158 | 322,795 | 328,158 | (37,701 | ) | 248,261 | ||||||||||||||
Income tax expense | 22,596 | 80,229 | 103,866 | 57,010 | 28,894 | |||||||||||||||
Net income (loss) | ¥ | 142,562 | ¥ | 242,566 | ¥ | 224,292 | ¥ | (94,711 | ) | ¥ | 219,367 | |||||||||
Less: Net income attributable to noncontrolling interests | 11,012 | 2,949 | 4,949 | 5,731 | 2,369 | |||||||||||||||
Net income (loss) attributable to Nomura Holdings, Inc. (“NHI”) shareholders | ¥ | 131,550 | ¥ | 239,617 | ¥ | 219,343 | ¥ | (100,442 | ) | ¥ | 216,998 | |||||||||
Balance sheet data (period end): | ||||||||||||||||||||
Total assets (1) | ¥ | 40,934,217 | ¥ | 42,531,972 | ¥ | 40,343,947 | ¥ | 40,969,439 | ¥ | 43,999,815 | ||||||||||
Total NHI shareholders’ equity | 2,700,239 | 2,789,916 | 2,749,320 | 2,631,061 | 2,653,467 | |||||||||||||||
Total equity | 2,743,015 | 2,843,791 | 2,799,824 | 2,680,793 | 2,731,264 | |||||||||||||||
Common stock | 594,493 | 594,493 | 594,493 | 594,493 | 594,493 | |||||||||||||||
Per share data: | ||||||||||||||||||||
Net income (loss) attributable to NHI shareholders — | ¥ | 36.53 | ¥ | 67.29 | ¥ | 63.13 | ¥ | (29.90 | ) | ¥ | 67.76 | |||||||||
Net income (loss) attributable to NHI shareholders — | 35.52 | 65.65 | 61.88 | (29.92 | ) | 66.20 | ||||||||||||||
Total NHI shareholders’ equity (2) | 748.32 | 790.70 | 810.31 | 794.69 | 873.26 | |||||||||||||||
Cash dividends (2) | 13.00 | 20.00 | 20.00 | 6.00 | 20.00 | |||||||||||||||
Cash dividends in USD (3) | $ | 0.12 | $ | 0.18 | $ | 0.19 | $ | 0.05 | $ | 0.19 | ||||||||||
Weighted average number of shares outstanding (in thousands) (4) | 3,600,701 | 3,560,776 | 3,474,593 | 3,359,565 | 3,202,370 | |||||||||||||||
Return on equity (5) : | 4.9 | % | 8.7 | % | 7.9 | % | (3.7 | %) | 8.2 | % |
· | Risks Relating to the Business Environment |
1 | Our business may be materially affected by financial markets, economic conditions and market fluctuations in Japan and elsewhere around the world |
(1) | Governmental fiscal and monetary policy changes in Japan, or in any other countries or regions where we conduct business may affect our business, financial condition and results of operations |
(2) | Extended market declines and decreases in market participants can reduce liquidity and lead to material losses |
(3) | Natural disaster, terrorism, military dispute and infectious disease could adversely affect our business |
(4) | The COVID-19 pandemic may affect our business |
(5) | Transition from U.S. Dollar LIBOR to alternative rate indices may adversely affect our business |
2 | The financial services industry faces intense competition |
(1) | Competition with other financial firms and financial services by non-financial companies is increasing |
(2) | Increased consolidation, business alliance and cooperation in the financial services industry mean increased competition for us |
(3) | Our global business continues to face intense competition and may require further revisions to its business model |
3 | Event risk may cause losses in our trading and investment assets as well as market and liquidity risk |
4 | Environmental, Social and Governance (“ESG”) factors including climate change and broader associated policy changes in each jurisdiction could adversely affect our business |
· | Risks Relating to Our Businesses |
5 | Our business may incur losses due to various factors in the conduct of its operations |
(1) | We may incur significant losses from our trading and investment activities |
(2) | Holding large and concentrated positions of securities and other assets may expose us to significant losses |
(3) | Our hedging strategies may not prevent losses |
(4) | Our risk management policies and procedures may not be fully effective in managing risk |
(5) | Market risk may increase other risks that we face |
(6) | Our brokerage and asset management revenues may decline |
(7) | Our investment banking revenues may decline |
(8) | Our electronic trading business revenues may decline |
6 | We may be exposed to losses when third parties do not perform their obligations to us |
(1) | Defaults by a large financial institution could adversely affect the financial markets generally and us specifically |
(2) | There can be no assurance as to the accuracy of the information about our credit risk, or the sufficiency of the collateral we use in managing it |
(3) | Our clients and counterparties may be unable to perform their obligations to us as a result of political or economic conditions |
7 | We are exposed to model risk, i.e., risk of financial loss, incorrect decision making, or damage to the firm’s credibility arising from model errors or incorrect or inappropriate model application |
8 | We are a holding company and depend on payments from our subsidiaries |
9 | We may not be able to realize gains we expect, and may even suffer losses, on our investments in equity securities and non-trading debt securities |
10 | We may face an outflow of clients’ assets due to losses of cash reserve funds or debt securities we offer |
· | Risks Relating to Our Financial Position |
11 | We may have to recognize impairment losses with regard to the amount of goodwill, tangible and intangible assets recognized on our consolidated balance sheets |
12 | Liquidity risk could impair our ability to fund operations and jeopardize our financial condition |
(1) | We may be unable to access unsecured or secured funding |
(2) | We may be unable to sell assets |
(3) | Lowering of our credit ratings could impact our funding |
13 | Equity investments in affiliates and other investees accounted for under the equity method in our consolidated financial statements may decline significantly over a period of time and result in us incurring impairment losses |
· | Risks Relating to Legal, Compliance and Other Operational Issues |
14 | Operational risk could adversely affect our business |
15 | Misconduct or fraud by an employee, director or officer, or any third party, could occur, and our reputation in the market and our relationships with clients could be harmed |
16 | A failure to identify and appropriately address conflicts of interest could adversely affect our business |
17 | Our business is subject to substantial legal, regulatory and reputational risks |
(1) | Legal liability may occur due to events such as market downturn and could adversely affect our business, financial condition and results of operations |
(2) | Extensive regulation of our businesses limits our activities and may subject us to significant penalties and losses |
(3) | Tightening of regulations applicable to the financial system and financial industry could adversely affect our business, financial condition and results of operations |
(4) | Deferred tax assets may be impacted due to a change in business condition or in laws and regulations, resulting in an adverse effect on our operating results and financial condition |
(5) | Defects in our anti-money laundering and counter-terrorism financing measures could have serious consequences such as, administrative penalties or punitive fines |
18 | Unauthorized disclosure or misuse of personal information held by us may adversely affect our business |
19 | System failure, the information leakage and the cost of maintaining sufficient cybersecurity could adversely affect our business, financial condition and results of operations |
20 | Our business may be adversely affected if we are unable to hire, retain and develop qualified personnel |
· | Risks Related to Holding or Trading of our Shares and ADSs |
21 | Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of the Company’s common stock at a particular price on any particular trading day, or at all |
22 | Under Japan’s unit share system, holders of the Company’s shares constituting less than one unit are subject to transfer, voting and other restrictions |
23 | As a holder of ADSs, you will have fewer rights than a shareholder has and you will have to act through the depositary to exercise these rights |
24 | Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions |
25 | The Company’s shareholders of record on a record date may not receive the dividend they anticipate |
26 | It may not be possible for investors to secure personal jurisdiction within the U.S. over the Company or the Company’s directors or executive officers, or to enforce against the Company or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the U.S. |
· | Special Note Regarding Forward-looking Statements |
· | Risks Relating to the Business Environment |
1. | Our business may be materially affected by financial markets, economic conditions and market fluctuations in Japan and elsewhere around the world |
2. | The financial services industry faces intense competition |
3. | Event risk may cause losses in our trading and investment assets as well as market and liquidity risk |
4. | Environmental, Social and Governance (“ESG”) factors including climate change and broader associated policy changes in each jurisdiction could adversely affect our business |
· | Risks Relating to Our Businesses |
5. | Our business may incur losses due to various factors in the conduct of its operations. |
6. | We may be exposed to losses when third parties do not perform their obligations to us |
7. | We are exposed to model risk, i.e., risk of financial loss, incorrect decision making, or damage to the firm’s credibility arising from model errors or incorrect or inappropriate model application |
8. | We are a holding company and depend on payments from our subsidiaries |
9. | We may not be able to realize gains we expect, and may even suffer losses, on our investments in equity securities and non-trading debt securities |
10. | We may face an outflow of |
· | Risks Relating to Our Financial Position |
11. | We may have to recognize impairment losses with regard to the amount of goodwill, tangible and intangible assets recognized on our consolidated balance sheets |
12. | Liquidity risk could impair our ability to fund operations and jeopardize our financial condition |
13. | Equity investments in affiliates and other investees accounted for under the equity method in our consolidated financial statements may decline significantly over a period of time and result in us incurring impairment losses |
· | Risks Relating to Legal, Compliance and Other Operational Issues |
14. | Operational risk could adversely affect our business |
15. | Misconduct or fraud by an employee, director or officer, or any third party, could occur, and our reputation in the market and our relationships with clients could be harmed |
16. | A failure to identify and appropriately address conflicts of interest could adversely affect our business |
17. | Our business is subject to substantial legal, regulatory and reputational risks |
18. | Unauthorized disclosure or misuse of personal information held by us may adversely affect our business |
19. | System failure, the information leakage and the cost of maintaining sufficient cybersecurity could adversely affect our business, financial condition and results of operations |
20. | Our business may be adversely affected if we are unable to hire, retain and develop qualified personnel |
· | Risks Related to Holding or Trading of our Shares and ADSs |
21. | Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of the Company’s common stock at a particular price on any particular trading day, or at all |
22. | Under Japan’s unit share system, holders of the Company’s shares constituting less than one unit are subject to transfer, voting and other restrictions |
23. | As a holder of ADSs, you will have fewer rights than a shareholder has and you will have to act through the depositary to exercise these rights |
24. | Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions |
25. | The Company’s shareholders of record on a record date may not receive the dividend they anticipate |
26. | It may not be possible for investors to secure personal jurisdiction within the U.S. over the Company or the Company’s directors or executive officers, or to enforce against the Company or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the U.S. |
· | Special Note Regarding Forward-looking Statements |
(1) | Absenteeism: The impact of absenteeism is measured by financial losses due to absence from work coursed by injury or illness, calculated as the ratio of number of sick leave days taken to total working days during a financial year, multiplied by the total compensation of employees for such financial year. |
(2) | Presenteeism: A condition in which individuals go to work despite being ill or experiencing symptoms of illness, with negative impacts on business execution and productivity. The figure is calculated based on responses to the SPQ (Single-Item Presenteeism Question, Tokyo University 1-Item Version). |
(3) | Work Engagement: A positive, fulfilling, work-related state of mind. This is measured based on deviation from the results of the national average of annual stress assessment, which is an annual mandatory workplace program in Japan to screen for mental health issues in workers. |
Name | Country/Region | Ownership Interest | ||||||
(%) | ||||||||
Nomura Holdings, Inc. | Japan | — | ||||||
Nomura Securities Co., Ltd. | Japan | 100 | ||||||
Nomura Asset Management Co., Ltd. | Japan | 100 | ||||||
The Nomura Trust & Banking Co., Ltd. | Japan | 100 | ||||||
Nomura Babcock & Brown Co., Ltd. | Japan | 100 | ||||||
Nomura Capital Investment Co., Ltd. | Japan | 100 | ||||||
Nomura Investor Relations Co., Ltd. | Japan | 100 | ||||||
Nomura | Japan | 100 | ||||||
Nomura Research & Advisory Co., Ltd. | Japan | 100 | ||||||
Nomura Business Services Co., Ltd. | Japan | 100 | ||||||
Nomura | Japan | 100 | ||||||
Nomura Institute of Capital Markets Research | Japan | 100 | ||||||
Nomura Healthcare Co., Ltd. | Japan | 100 | ||||||
Nomura Agri Planning & Advisory Co., Ltd. | Japan | 100 | ||||||
Nomura Financial Products & Services, Inc. | Japan | 100 | ||||||
Nomura Institute of Estate Planning | Japan | 100 | ||||||
Nomura Capital Partners Co., Ltd. | Japan | 100 | ||||||
Nomura Mezzanine Partners Co., Ltd. | Japan | 100 | ||||||
Corporate Design Partners Co., Ltd. | Japan | 100 | ||||||
Nomura Kagayaki Co., Ltd. | Japan | 100 | ||||||
Nomura Asia Pacific Holdings Co., Ltd. | Japan | 100 | ||||||
Nomura International (Hong Kong) Limited | Hong Kong | 100 | ||||||
Nomura Singapore Limited | Singapore | 100 | ||||||
Nomura Securities Singapore Pte. Ltd. | Singapore | 100 | ||||||
Nomura Australia Limited | Australia | 100 | ||||||
PT Nomura Sekuritas Indonesia | Indonesia | 96 | ||||||
Nomura Asia Investment (Fixed Income) Pte. Ltd. | Singapore | 100 | ||||||
Nomura Asia Investment (Singapore) Pte. Ltd. | Singapore | 100 | ||||||
Nomura Financial Advisory and Securities (India) Private Limited | India | 100 | ||||||
Nomura Holding America Inc. | U.S. | 100 | ||||||
Nomura Securities International, Inc. | U.S. | 100 | ||||||
Nomura Corporate Research and Asset Management Inc. | U.S. | 100 | ||||||
Nomura America Mortgage Finance, LLC | U.S. | 100 | ||||||
Nomura Global Financial Products, Inc. | U.S. | 100 | ||||||
Instinet Incorporated | U.S. | 100 | ||||||
Nomura Europe Holdings plc | U.K. | 100 | ||||||
Nomura International plc | U.K. | 100 | ||||||
Nomura Bank International plc | U.K. | 100 | ||||||
Nomura Financial Products Europe GmbH | Germany | 100 | ||||||
Banque Nomura France | France | 100 | ||||||
Nomura Bank (Luxembourg) S.A. | Luxemburg | 100 | ||||||
Nomura Bank (Switzerland) Ltd. | Switzerland | 100 |
Name | Ownership Interest | |||||||
Nomura Europe Finance N.V. | The Netherlands | 100 | ||||||
Nomura European Investment Limited | U.K. | 100 | ||||||
Switzerland | 100 | |||||||
Nomura Asia Investment (India Powai) Pte. Ltd. | Singapore | 100 | ||||||
Nomura Services India Private Limited | India | 100 | ||||||
Nomura International Funding Pte. Ltd. | Singapore | 100 | ||||||
Nomura Orient International Securities Co., Ltd. | China | 51 |
Name | Location | Segment | Nature of the plan | Estimate of the amount of expenditures (Millions of yen) | Amount of expenditures already paid (Millions of yen) | Method of financing | Date of start of the activity | Estimated date of completion of the activity | ||||||||||||
NHI | Tokyo | Other | Nihonbashi 1-Chome Naka Area Type 1 Urban Area Redevelopment Project | 120,000 | 8,531 | Own funds | December 2021 | March 2026 |
1. | Diluted net income attributable to NHI shareholders per share. |
Year ended March 31 (Trillions of Japanese Yen) | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Recurring revenue assets | ¥ | 18.2 | ¥ | 19.6 | 7.7 | % | ¥ | 18.7 | (4.6 | )% | ||||||||||
Year ended March 31 (Billions of Japanese Yen) | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Net inflows of recurring revenue assets | ¥ | (191.3 | ) | ¥ | 477.2 | — | % | ¥ | 333.7 | (30.1 | )% | |||||||||
Year ended March 31 (Thousands) | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Flow business clients | 1,534 | 1,505 | (1.9 | )% | 1,446 | (3.9 | )% | |||||||||||||
Services for salaried employees | 3,242 | 3,357 | 3.5 | % | 3,489 | 3.9 | % | |||||||||||||
Year ended March 31 (Trillions of Japanese Yen) | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
The balance of assets under management | ¥ | 64.7 | ¥ | 67.9 | 4.9 | % | ¥ | 67.3 | (0.9 | )% | ||||||||||
Year ended March 31 (Billions of Japanese Yen) | ||||||||||||
2022 | 2023 | % Change from previous year | ||||||||||
Net inflow | ¥ 2,066 | ¥ (760 | ) | — % | ||||||||
Year ended March 31 | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Cost-to-income | 91 | % | 89 | % | (2 | )% | 96 | % | 7 | % | ||||||||||
Revenue/modified RWA | 6.4 | % | 7.0 | % | 0.6 | % | 6.5 | % | (0.5 | )% | ||||||||||
Millions of yen, except percentages | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2018 | 2019 | % Change from previous year | 2020 | % Change from previous year | ||||||||||||||||
Non-interest revenues: | ||||||||||||||||||||
Commissions | ¥ | 373,313 | ¥ | 293,069 | (21.5 | )% | ¥ | 308,805 | 5.4 | % | ||||||||||
Fees from investment banking | 101,663 | 101,521 | (0.1 | ) | 103,222 | 1.7 | ||||||||||||||
Asset management and portfolio service fees | 245,616 | 245,519 | — | 238,202 | (3.0 | ) | ||||||||||||||
Net gain on trading | 442,885 | 342,964 | (22.6 | ) | 356,609 | 4.0 | ||||||||||||||
Gain (loss) on private equity and debt investments | (869 | ) | 1,007 | — | (93 | ) | — | |||||||||||||
Gain (loss) on investments in equity securities | 2,683 | (6,983 | ) | — | (14,726 | ) | — | |||||||||||||
Other | 221,192 | 81,057 | (63.4 | ) | 165,991 | 104.8 | ||||||||||||||
Total Non-interest revenues | 1,386,483 | 1,058,154 | (23.7 | ) | 1,158,010 | 9.4 | ||||||||||||||
Net interest revenue | 110,486 | 58,616 | (46.9 | ) | 129,819 | 121.5 | ||||||||||||||
Net revenue | 1,496,969 | 1,116,770 | (25.4 | ) | 1,287,829 | 15.3 | ||||||||||||||
Non-interest expenses | 1,168,811 | 1,154,471 | (1.2 | ) | 1,039,568 | (10.0 | ) | |||||||||||||
Income (loss) before income taxes | 328,158 | (37,701 | ) | — | 248,261 | — | ||||||||||||||
Income tax expense | 103,866 | 57,010 | (45.1 | ) | 28,894 | (49.3 | ) | |||||||||||||
Net income (loss) | ¥ | 224,292 | ¥ | (94,711 | ) | — | % | ¥ | 219,367 | — | % | |||||||||
Less: Net income attributable to noncontrolling interests | 4,949 | 5,731 | 15.8 | 2,369 | (58.7 | ) | ||||||||||||||
Net income (loss) attributable to NHI shareholders | ¥ | 219,343 | ¥ | (100,442 | ) | — | % | ¥ | 216,998 | — | % | |||||||||
Return on equity | 7.9 | % | (3.7 | ) % | 8.2 | % |
Millions of yen, except percentages | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Non-interest revenues: | ||||||||||||||||||||
Commissions | ¥ | 376,897 | ¥ | 332,344 | (11.8 | )% | ¥ | 279,857 | (15.8 | )% | ||||||||||
Fees from investment banking | 108,681 | 149,603 | 37.7 | 113,208 | (24.3 | ) | ||||||||||||||
Asset management and portfolio service fees | 230,047 | 269,985 | 17.4 | 271,684 | 0.6 | |||||||||||||||
Net gain on trading | 310,040 | 368,799 | 19.0 | 563,269 | 52.7 | |||||||||||||||
Gain on private equity and debt investments | 12,734 | 30,768 | 141.6 | 14,504 | (52.9 | ) | ||||||||||||||
Gain (loss) on investments in equity securities | 14,053 | 5,446 | (61.2 | ) | (1,426 | ) | — | |||||||||||||
Other | 208,317 | 152,832 | (26.6 | ) | 130,940 | (14.3 | ) | |||||||||||||
Total Non-interest revenues | 1,260,769 | 1,309,777 | 3.9 | 1,372,036 | 4.8 | |||||||||||||||
Net interest revenue | 141,103 | 54,113 | (61.7 | ) | (36,459 | ) | — | |||||||||||||
Net revenue | 1,401,872 | 1,363,890 | (2.7 | ) | 1,335,577 | (2.1 | ) | |||||||||||||
Non-interest expenses | 1,171,201 | 1,137,267 | (2.9 | ) | 1,186,103 | 4.3 | ||||||||||||||
Income before income taxes | 230,671 | 226,623 | (1.8 | ) | 149,474 | (34.0 | ) | |||||||||||||
Income tax expense | 70,274 | 80,090 | 14.0 | 57,798 | (27.8 | ) | ||||||||||||||
Net income | ¥ | 160,397 | ¥ | 146,533 | (8.6 | )% | ¥ | 91,676 | (37.4 | )% | ||||||||||
Less: Net income (loss) attributable to noncontrolling interests | 7,281 | 3,537 | (51.4 | ) | (1,110 | ) | — | |||||||||||||
Net income attributable to NHI shareholders | ¥ | 153,116 | ¥ | 142,996 | (6.6 | )% | ¥ | 92,786 | (35.1 | )% | ||||||||||
Return on equity | 5.7 | % | 5.1 | % | 3.1 | % |
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2018 | 2019 | % Change from previous year | 2020 | % Change from previous year | ||||||||||||||||
Non-interest revenue | ¥ | 406,295 | ¥ | 331,743 | (18.3 | )% | ¥ | 329,983 | (0.5 | )% | ||||||||||
Net interest revenue | 6,613 | 7,737 | 17.0 | 6,376 | (17.6 | ) | ||||||||||||||
Net revenue | 412,908 | 339,480 | (17.8 | ) | 336,359 | (0.9 | ) | |||||||||||||
Non-interest expenses | 309,771 | 289,990 | (6.4 | ) | 286,926 | (1.1 | ) | |||||||||||||
Income before income taxes | ¥ | 103,137 | ¥ | 49,490 | (52.0 | )% | ¥ | 49,433 | (0.1 | )% | ||||||||||
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Non-interest revenue | ¥ | 366,271 | ¥ | 324,642 | (11.4 | )% | ¥ | 297,496 | (8.4 | )% | ||||||||||
Net interest revenue | 2,538 | 3,343 | 31.7 | 2,695 | (19.4 | ) | ||||||||||||||
Net revenue | 368,809 | 327,985 | (11.1 | ) | 300,191 | (8.5 | ) | |||||||||||||
Non-interest expenses | 276,480 | 268,745 | (2.8 | ) | 266,695 | (0.8 | ) | |||||||||||||
Income before income taxes | ¥ | 92,329 | ¥ | 59,240 | (35.8 | )% | ¥ | 33,496 | (43.5 | )% | ||||||||||
Millions of yen | ||||||||||||
Year ended March 31 | ||||||||||||
2019 | 2020 | % Change from previous year | ||||||||||
Commissions | ¥ | 142,764 | ¥ | 153,170 | 7.3 | % | ||||||
Brokerage commissions | 60,167 | 61,207 | 1.7 | |||||||||
Commissions for distribution of investment trusts | 57,880 | 66,940 | 15.7 | |||||||||
Other commissions | 24,717 | 25,023 | 1.2 | |||||||||
Net gain on trading | 55,829 | 56,756 | 1.7 | |||||||||
Fees from investment banking | 33,981 | 23,239 | (31.6 | ) | ||||||||
Asset management fees | 95,384 | 92,139 | (3.4 | ) | ||||||||
Others | 3,785 | 4,679 | 23.6 | |||||||||
Non-interest revenues | ¥ | 331,743 | ¥ | 329,983 | (0.5 | )% | ||||||
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Commissions | ¥ | 187,678 | ¥ | 138,525 | (26.2 | )% | ¥ | 112,455 | (18.8 | )% | ||||||||||
Brokerage commissions | 92,589 | 67,419 | (27.2 | ) | 50,901 | (24.5 | ) | |||||||||||||
Commissions for distribution of investment trusts | 68,352 | 43,537 | (36.3 | ) | 30,183 | (30.7 | ) | |||||||||||||
Other commissions | 26,737 | 27,569 | 3.1 | 31,371 | 13.8 | |||||||||||||||
Net gain on trading | 58,357 | 43,981 | (24.6 | ) | 44,171 | 0.4 | ||||||||||||||
Fees from investment banking | 20,354 | 19,003 | (6.6 | ) | 16,184 | (14.8 | ) | |||||||||||||
Asset management fees | 88,996 | 109,300 | 22.8 | 108,085 | (1.1 | ) | ||||||||||||||
Others | 10,886 | 13,833 | 27.1 | 16,601 | 20.0 | |||||||||||||||
Non-interest revenues | ¥ | 366,271 | ¥ | 324,642 | (11.4 | )% | ¥ | 297,496 | (8.4 | )% | ||||||||||
Trillions of yen | ||||||||||||||||||||
Year ended March 31, 2019 | ||||||||||||||||||||
Balance at beginning of year | Gross inflows | Gross outflows | Market appreciation / (depreciation) | Balance at end of year | ||||||||||||||||
Equities | ¥ | 75.7 | ¥ | 22.5 | ¥ | (21.4 | ) | ¥ | (4.9 | ) | ¥ | 71.9 | ||||||||
Debt securities | 17.9 | 29.2 | (27.2 | ) | (1.1 | ) | 18.8 | |||||||||||||
Stock investment trusts | 9.1 | 2.9 | (2.7 | ) | (0.3 | ) | 9.0 | |||||||||||||
Bond investment trusts | 7.1 | 0.3 | (0.7 | ) | 0.1 | 6.8 | ||||||||||||||
Overseas mutual funds | 1.2 | — | (0.1 | ) | 0.0 | 1.1 | ||||||||||||||
Others | 6.7 | 0.9 | (0.6 | ) | 0.1 | 7.1 | ||||||||||||||
Total | ¥ | 117.7 | ¥ | 55.8 | ¥ | (52.7 | ) | ¥ | (6.1 | ) | ¥ | 114.7 | ||||||||
Trillions of yen | ||||||||||||||||||||
Year ended March 31, 2022 | ||||||||||||||||||||
Balance at beginning of year | Gross inflows | Gross outflows | Market appreciation / (depreciation) | Balance at end of year | ||||||||||||||||
Equities | ¥ | 82.3 | ¥ | 19.5 | ¥ | (19.8 | ) | ¥ | (4.5 | ) | ¥ | 77.5 | ||||||||
Debt securities | 18.1 | 15.5 | (13.3 | ) | (2.6 | ) | 17.7 | |||||||||||||
Equity investment trusts | 10.2 | 2.4 | (2.1 | ) | 0.3 | 10.8 | ||||||||||||||
Debt investment trusts | 8.0 | 0.3 | (0.6 | ) | (0.2 | ) | 7.5 | |||||||||||||
Overseas mutual funds | 1.1 | 0.2 | 0.0 | 0.0 | 1.3 | |||||||||||||||
Others | 6.9 | 1.1 | (0.5 | ) | (0.2 | ) | 7.3 | |||||||||||||
Total | ¥ | 126.6 | ¥ | 39.0 | ¥ | (36.3 | ) | ¥ | (7.2 | ) | ¥ | 122.1 | ||||||||
Trillions of yen | ||||||||||||||||||||
Year ended March 31, 2020 | ||||||||||||||||||||
Balance at beginning of year | Gross inflows | Gross outflows | Market appreciation / (depreciation) | Balance at end of year | ||||||||||||||||
Equities | ¥ | 71.9 | ¥ | 12.4 | ¥ | (13.4 | ) | ¥ | (8.2 | ) | ¥ | 62.7 | ||||||||
Debt securities | 18.8 | 29.3 | (27.3 | ) | (2.4 | ) | 18.4 | |||||||||||||
Stock investment trusts | 9.0 | 3.1 | (3.2 | ) | (1.3 | ) | 7.6 | |||||||||||||
Bond investment trusts | 6.8 | 0.9 | (0.5 | ) | 0.1 | 7.3 | ||||||||||||||
Overseas mutual funds | 1.1 | 0.1 | (0.1 | ) | (0.1 | ) | 1.0 | |||||||||||||
Others | 7.1 | 0.8 | (1.0 | ) | 0.1 | 7.0 | ||||||||||||||
Total | ¥ | 114.7 | ¥ | 46.6 | ¥ | (45.5 | ) | ¥ | (11.8 | ) | ¥ | 104.0 | ||||||||
Trillions of yen | ||||||||||||||||||||
Year ended March 31, 2023 | ||||||||||||||||||||
Balance at beginning of year | Gross inflows | Gross outflows | Market appreciation / (depreciation) | Balance at end of year | ||||||||||||||||
Equities | ¥ | 77.5 | ¥ | 21.4 | ¥ | (18.6 | ) | ¥ | (2.3 | ) | ¥ | 78.0 | ||||||||
Debt securities | 17.7 | 15.5 | (22.9 | ) | 8.2 | 18.5 | ||||||||||||||
Equity investment trusts | 10.8 | 2.8 | (2.6 | ) | (0.8 | ) | 10.2 | |||||||||||||
Debt investment trusts | 7.5 | 0.1 | (0.7 | ) | (0.1 | ) | 6.8 | |||||||||||||
Overseas mutual funds | 1.3 | 0.1 | (0.1 | ) | (0.1 | ) | 1.2 | |||||||||||||
Others | 7.3 | 1.0 | (0.5 | ) | (0.3 | ) | 7.5 | |||||||||||||
Total | ¥ | 122.1 | ¥ | 40.9 | ¥ | (45.4 | ) | ¥ | 4.6 | ¥ | 122.2 | |||||||||
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2018 | 2019 | % Change from previous year | 2020 | % Change from previous year | ||||||||||||||||
Non-interest revenue | ¥ | 118,545 | ¥ | 89,607 | (24.4 | )% | ¥ | 85,190 | (4.9 | )% | ||||||||||
Net interest revenue | 8,792 | 8,238 | (6.3 | ) | 7,415 | (10.0 | ) | |||||||||||||
Net revenue | 127,337 | 97,845 | (23.2 | ) | 92,605 | (5.4 | ) | |||||||||||||
Non-interest expenses | 61,167 | 63,660 | 4.1 | 63,833 | 0.3 | |||||||||||||||
Income before income taxes | ¥ | 66,170 | ¥ | 34,185 | (48.3 | )% | ¥ | 28,772 | (15.8 | )% | ||||||||||
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Non-interest revenue | ¥ | 153,523 | ¥ | 129,848 | (15.4 | )% | ¥ | 120,096 | (7.5 | )% | ||||||||||
Net interest revenue | 9,627 | 18,145 | 88.5 | 8,463 | (53.4 | ) | ||||||||||||||
Net revenue | 163,150 | 147,993 | (9.3 | ) | 128,559 | (13.1 | ) | |||||||||||||
Non-interest expenses | 72,142 | 76,478 | 6.0 | 85,064 | 11.2 | |||||||||||||||
Income before income taxes | ¥ | 91,008 | ¥ | 71,515 | (21.4 | )% | ¥ | 43,495 | (39.2 | )% | ||||||||||
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Business revenue (1) | ¥ | 111,946 | ¥ | 119,920 | 7.1 | % | ¥ | 120,664 | 0.6 | % | ||||||||||
Investment gain/ loss (2) | 51,204 | 28,073 | (45.2 | ) | 7,895 | (71.9 | ) | |||||||||||||
Net revenue | ¥ | 163,150 | ¥ | 147,993 | (9.3 | )% | ¥ | 128,559 | (13.1 | )% |
(1) | Consists of division revenue, other than investment gain/loss, including revenue generated by our asset management business (excluding gains and losses related to our investment in American Century Investments), revenues generated by Nomura Babcock & Brown Co., Ltd.’s aircraft leasing-related businesses and management fee revenues generated from our private equity and other investment businesses |
(2) | Consists of division revenue attributable to investments (including fair value fluctuations, funding cost and dividends), including gains and losses related to our investment in American Century Investments, our investments held in our private equity and other investment businesses. |
Billions of yen | ||||||||||||||||||||||||
Year ended March 31, 2019 | ||||||||||||||||||||||||
Balance at beginning of year | Adjustment in beginning balance | Gross inflows | Gross outflows | Market appreciation / (depreciation) | Balance at end of year | |||||||||||||||||||
Nomura Asset Management Co., Ltd . | ¥ | 52,381 | ¥ | — | ¥ | 24,988 | ¥ | (23,850 | ) | ¥ | (148 | ) | ¥ | 53,371 | ||||||||||
Nomura Funds Research and Technologies Co., Ltd. | 2,765 | (2,765 | ) | — | — | — | — | |||||||||||||||||
Nomura Corporate Research and Asset Management Inc. | 2,684 | — | 902 | (732 | ) | 157 | 3,011 | |||||||||||||||||
Combined total | 57,830 | (2,765 | ) | 25,890 | (24,582 | ) | 9 | 56,382 | ||||||||||||||||
Shared across group companies | (7,815 | ) | 2,649 | (1,187 | ) | 1,521 | (176 | ) | (5,008 | ) | ||||||||||||||
Total | ¥ | 50,015 | ¥ | (116 | ) | ¥ | 24,703 | ¥ | (23,061 | ) | ¥ | (167 | ) | ¥ | 51,374 | |||||||||
Billions of yen | ||||||||||||||||||||
Year ended March 31, 2022 | ||||||||||||||||||||
Balance at beginning of year | Gross inflows | Gross outflows | Market appreciation / (depreciation) | Balance at end of year | ||||||||||||||||
Nomura Asset Management Co., Ltd . | ¥ | 66,158 | ¥ | 26,883 | ¥ | (25,549 | ) | ¥ | 2,100 | ¥ | 69,592 | |||||||||
Nomura Corporate Research and Asset Management Inc. etc | 3,300 | 944 | (690 | ) | 313 | 3,867 | ||||||||||||||
Combined total | 69,458 | 27,827 | (26,239 | ) | 2,413 | 73,459 | ||||||||||||||
Shared across group companies | (4,792 | ) | (1,462 | ) | 1,163 | (455 | ) | (5,546 | ) | |||||||||||
Total | ¥ | 64,666 | ¥ | 26,365 | ¥ | (25,076 | ) | ¥ | 1,958 | ¥ | 67,913 | |||||||||
Billions of yen | ||||||||||||||||||||
Year ended March 31, 2023 | ||||||||||||||||||||
Balance at beginning of year | Gross inflows | Gross outflows | Market appreciation / (depreciation) | Balance at end of year | ||||||||||||||||
Nomura Asset Management Co., Ltd . | ¥ | 69,592 | ¥ | 23,168 | ¥ | (24,762 | ) | ¥ | 1,094 | ¥ | 69,092 | |||||||||
Nomura Corporate Research and Asset Management Inc. etc | 3,867 | 1,040 | (1,074 | ) | 35 | 3,868 | ||||||||||||||
Combined total | 73,459 | 24,208 | (25,836 | ) | 1,129 | 72,960 | ||||||||||||||
Shared across group companies | (5,546 | ) | (1,409 | ) | 1,382 | (115 | ) | (5,688 | ) | |||||||||||
Total | ¥ | 67,913 | ¥ | 22,799 | ¥ | (24,454 | ) | ¥ | 1,014 | ¥ | 67,272 | |||||||||
Billions of yen | ||||||||||||||||||||||||
Year ended March 31, 2020 | ||||||||||||||||||||||||
Balance at beginning of year | Adjustment in beginning balance | Gross inflows | Gross outflows | Market appreciation / (depreciation) | Balance at end of year | |||||||||||||||||||
Nomura Asset Management Co., Ltd . | ¥ | 53,371 | ¥ | — | ¥ | 26,098 | ¥ | (25,076 | ) | ¥ | (3,745 | ) | ¥ | 50,648 | ||||||||||
Nomura Corporate Research and Asset Management Inc. | 3,011 | — | 568 | (739 | ) | (351 | ) | 2,489 | ||||||||||||||||
Combined total | 56,382 | — | 26,666 | (25,815 | ) | (4,096 | ) | 53,137 | ||||||||||||||||
Shared across group companies | (5,008 | ) | — | (882 | ) | 1,501 | 577 | (3,812 | ) | |||||||||||||||
Total | 51,374 | — | 25,784 | (24,314 | ) | (3,519 | ) | 49,325 | ||||||||||||||||
March 31 | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Total of publicly offered investment trusts | 27 | % | 28 | % | 28 | % | ||||||
Stock investment trusts | 25 | % | 26 | % | 26 | % | ||||||
Bond investment trusts | 44 | % | 45 | % | 44 | % |
March 31 | ||||||||||||
2021 | 2022 | 2023 | ||||||||||
Total of publicly offered investment trusts | 28 | % | 27 | % | 27 | % | ||||||
Equity investment trusts | 26 | % | 25 | % | 25 | % | ||||||
Debt investment trusts | 44 | % | 44 | % | 44 | % |
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2018 | 2019 | % Change from previous year | 2020 | % Change from previous year | ||||||||||||||||
Non-interest revenue | ¥ | 587,474 | ¥ | 496,484 | (15.5 | )% | ¥ | 506,203 | 2.0 | % | ||||||||||
Net interest revenue | 127,859 | 58,904 | (53.9 | ) | 142,416 | 141.8 | ||||||||||||||
Net revenue | 715,333 | 555,388 | (22.4 | ) | 648,619 | 16.8 | ||||||||||||||
Non-interest expenses | 614,745 | 666,787 | 8.5 | 556,399 | (16.6 | ) | ||||||||||||||
Income (loss) before income taxes | ¥ | 100,588 | ¥ | (111,399 | ) | — | % | ¥ | 92,220 | — | % | |||||||||
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Non-interest revenue | ¥ | 524,019 | ¥ | 617,227 | 17.8 | % | ¥ | 809,681 | 31.2 | % | ||||||||||
Net interest revenue | 167,337 | 85,828 | (48.7 | ) | (37,301 | ) | — | |||||||||||||
Net revenue | 691,356 | 703,055 | 1.7 | 772,380 | 9.9 | |||||||||||||||
Non-interest expenses | 627,051 | 628,563 | 0.2 | 743,011 | 18.2 | |||||||||||||||
Income before income taxes | ¥ | 64,305 | ¥ | 74,492 | 15.8 | % | ¥ | 29,369 | (60.6 | )% | ||||||||||
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2018 | 2019 | % Change from previous year | 2020 | % Change from previous year | ||||||||||||||||
Wholesale net revenue: | ||||||||||||||||||||
Global Markets net revenue | ¥ | 603,197 | ¥ | 453,044 | (24.9 | )% | ¥ | 562,927 | 24.3 | % | ||||||||||
Investment Banking net revenue | 112,136 | 102,344 | (8.7 | ) | 85,692 | (16.3 | ) | |||||||||||||
Net revenue | ¥ | 715,333 | ¥ | 555,388 | (22.4 | )% | ¥ | 648,619 | 16.8 | % | ||||||||||
Millions of yen | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2021 | 2022 | % Change from previous year | 2023 | % Change from previous year | ||||||||||||||||
Wholesale net revenue: | ||||||||||||||||||||
Global Markets net revenue | ¥ | 575,533 | ¥ | 556,417 | (3.3 | )% | ¥ | 656,298 | 18.0 | % | ||||||||||
Investment Banking net revenue | 115,823 | 146,638 | 26.6 | 116,082 | (20.8 | ) | ||||||||||||||
Net revenue | ¥ | 691,356 | ¥ | 703,055 | 1.7 | % | ¥ | 772,380 | 9.9 | % | ||||||||||
Millions of yen, except per share data and percentages | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||
Statement of income data: | ||||||||||||||||||||
Revenue | ¥ | 1,835,118 | ¥ | 1,952,482 | ¥ | 1,617,235 | ¥ | 1,593,999 | ¥ | 2,486,726 | ||||||||||
Interest expense | 718,348 | 664,653 | 215,363 | 230,109 | 1,151,149 | |||||||||||||||
Net revenue | 1,116,770 | 1,287,829 | 1,401,872 | 1,363,890 | 1,335,577 | |||||||||||||||
Non-interest expenses | 1,154,471 | 1,039,568 | 1,171,201 | 1,137,267 | 1,186,103 | |||||||||||||||
Income (loss) before income taxes | (37,701 | ) | 248,261 | 230,671 | 226,623 | 149,474 | ||||||||||||||
Income tax expense | 57,010 | 28,894 | 70,274 | 80,090 | 57,798 | |||||||||||||||
Net income (loss) | ¥ | (94,711 | ) | ¥ | 219,367 | ¥ | 160,397 | ¥ | 146,533 | ¥ | 91,676 | |||||||||
Less: Net income (loss) attributable to noncontrolling interests | 5,731 | 2,369 | 7,281 | 3,537 | (1,110 | ) | ||||||||||||||
Net income (loss) attributable to NHI shareholders | ¥ | (100,442 | ) | ¥ | 216,998 | ¥ | 153,116 | ¥ | 142,996 | ¥ | 92,786 | |||||||||
Balance sheet data (period end): | ||||||||||||||||||||
Total assets | ¥ | 40,969,439 | ¥ | 43,999,815 | ¥ | 42,516,480 | ¥ | 43,412,156 | ¥ | 47,771,802 | ||||||||||
Total NHI shareholders’ equity | 2,631,061 | 2,653,467 | 2,694,938 | 2,914,605 | 3,148,567 | |||||||||||||||
Total equity | 2,680,793 | 2,731,264 | 2,756,451 | 2,972,803 | 3,224,142 | |||||||||||||||
Common stock | 594,493 | 594,493 | 594,493 | 594,493 | 594,493 | |||||||||||||||
Per share data: | ||||||||||||||||||||
Net income (loss) attributable to NHI shareholders—basic | ¥ | (29.90 | ) | ¥ | 67.76 | ¥ | 50.11 | ¥ | 46.68 | ¥ | 30.86 | |||||||||
Net income (loss) attributable to NHI shareholders—diluted | (29.92 | ) | 66.20 | 48.63 | 45.23 | 29.74 | ||||||||||||||
Total NHI shareholders’ equity (1) | 794.69 | 873.26 | 879.79 | 965.80 | 1,048.24 | |||||||||||||||
Cash dividends (1) | 6.00 | 20.00 | 35.00 | 22.00 | 17.00 | |||||||||||||||
Cash dividends in USD (2) | $ | 0.05 | $ | 0.19 | $ | 0.32 | $ | 0.18 | $ | 0.13 | ||||||||||
Weighted average number of shares outstanding (in thousands) (3) | 3,359,565 | 3,202,370 | 3,055,526 | 3,063,524 | 3,006,744 | |||||||||||||||
Return on equity (4) : | (3.7 | %) | 8.2 | % | 5.7 | % | 5.1 | % | 3.1 | % |
(1) | Calculated using the number of shares outstanding at year end. |
(2) | Calculated using the Japanese Yen—U.S. Dollar exchange rate as of the respective fiscal year end date, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. |
(3) | The number shown is used to calculate basic earnings per share. |
(4) | Calculated as net income (loss) attributable to NHI shareholders divided by total NHI shareholders’ equity. |
accounting policy | estimates | assumptions by management | ||||
accounting policy | estimates | assumptions by management | ||||
accounting policy | estimates | assumptions by management | ||||
Billions of yen | ||||||||||||||||||||
March 31, 2020 | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Counterparty and Cash Collateral Netting | Total | ||||||||||||||||
Financial assets measured at fair value (Excluding derivative assets) | ¥ | 6,855 | ¥ | 9,699 | ¥ | 751 | ¥ | — | ¥ | 17,305 | ||||||||||
Derivative assets | 71 | 20,921 | 198 | (19,248 | ) | 1,942 | ||||||||||||||
Total | ¥ | 6,926 | ¥ | 30,620 | ¥ | 949 | ¥ | (19,248 | ) | ¥ | 19,247 | |||||||||
Billions of yen | ||||||||
March 31, 2019 | ||||||||
Assets | Liabilities | |||||||
Listed derivatives | ¥ | 103 | ¥ | 241 | ||||
OTC derivatives | 749 | 574 | ||||||
¥ | 852 | ¥ | 815 | |||||
Billions of yen | ||||||||
March 31, 2020 | ||||||||
Assets | Liabilities | |||||||
Listed derivatives | ¥ | 559 | ¥ | 716 | ||||
OTC derivatives | 1,383 | 1,093 | ||||||
¥ | 1,942 | ¥ | 1,809 | |||||
Billions of yen | ||||||||||||||||||||||||||||
March 31, 2020 | ||||||||||||||||||||||||||||
Years to Maturity | ||||||||||||||||||||||||||||
Less than 1 year | 1 to 3 years | 3 to 5 years | 5 to 7 years | More than 7 years | Cross-maturity netting (1) | Total fair value | ||||||||||||||||||||||
OTC derivative assets | ¥ | 2,026 | ¥ | 1,319 | ¥ | 944 | ¥ | 617 | ¥ | 3,853 | ¥ | (7,376 | ) | ¥ | 1,383 | |||||||||||||
OTC derivative liabilities | 1,748 | 1,256 | 922 | 626 | 3,392 | (6,851 | ) | 1,093 |
Millions of yen | ||||||||||||
March 31, 2020 | ||||||||||||
Funded | Unfunded | Total | ||||||||||
Europe | ¥ | 120,362 | ¥ | 71,840 | ¥ | 192,202 | ||||||
Americas | 53,878 | 57,280 | 111,158 | |||||||||
Asia and Oceania | 7,761 | 5,166 | 12,927 | |||||||||
Total | ¥ | 182,001 | ¥ | 134,286 | ¥ | 316,287 | ||||||
Millions of yen | ||||||||||||
March 31, 2023 | ||||||||||||
Funded | Unfunded | Total | ||||||||||
Europe | ¥ | 14,654 | ¥ | 58,606 | ¥ | 73,260 | ||||||
Americas | 24,684 | 187,334 | 212,018 | |||||||||
Asia and Oceania | 6,230 | 3,718 | 9,948 | |||||||||
Total | ¥ | 45,568 | ¥ | 249,658 | ¥ | 295,226 | ||||||
Millions of yen | |||||
March 31, 2023 | |||||
Deferred tax assets | |||||
Depreciation, amortization and valuation of fixed assets | ¥ | ||||
Investments in subsidiaries and affiliates | |||||
Valuation of financial instruments | |||||
Accrued pension and severance costs | |||||
Other accrued expenses and provisions | |||||
Operating losses | |||||
Lease liabilities | |||||
Other | |||||
Gross deferred tax assets | |||||
( | ) | ||||
Total deferred tax assets | |||||
Deferred tax liabilities | |||||
Investments in subsidiaries and affiliates | |||||
Valuation of financial instruments | |||||
Undistributed earnings of foreign subsidiaries | |||||
Valuation of fixed assets | |||||
Right-of-use | |||||
Other | |||||
Total deferred tax liabilities | 299,424 | ||||
Net deferred tax assets (liabilities) | ¥ | ( | ) | ||
Billions of yen | ||||||||||||||||
Average for year ended March 31, 2019 | March 31, 2019 | Average for year ended March 31, 2020 | March 31, 2020 | |||||||||||||
Cash, cash equivalents and time deposits (1) | ¥ | 2,280.3 | ¥ | 2,113.1 | ¥ | 2,323.6 | ¥ | 2,540.4 | ||||||||
Government debt securities | 2,553.0 | 2,424.6 | 2,371.5 | 2,412.2 | ||||||||||||
Others (2) | 301.1 | 332.8 | 310.6 | 401.8 | ||||||||||||
Total liquidity portfolio | ¥ | 5,134.4 | ¥ | 4,870.5 | ¥ | 5,005.7 | ¥ | 5,354.4 | ||||||||
Billions of yen | ||||||||||||||||
Average for year ended March 31, 2022 | March 31, 2022 | Average for year ended March 31, 2023 | March 31, 2023 | |||||||||||||
Cash, cash equivalents and time deposits (1) | ¥ | 3,151.6 | ¥ | 2,997.5 | ¥ | 3,155.5 | ¥ | 3,229.3 | ||||||||
Government debt securities | 3,629.8 | 3,674.2 | 4,073.8 | 3,984.0 | ||||||||||||
Others (2) | 298.3 | 402.5 | 416.9 | 441.0 | ||||||||||||
Total liquidity portfolio | ¥ | 7,079.7 | ¥ | 7,074.2 | ¥ | 7,646.2 | ¥ | 7,654.3 | ||||||||
(1) | Cash, cash equivalents, and time deposits include nostro balances and deposits with both central banks and market counterparties that are readily available to support the liquidity position of Nomura. |
(2) | Others include other liquid financial assets such as money market funds and U.S. agency securities. |
Billions of yen | ||||||||||||||||
Average for year ended March 31, 2019 | March 31, 2019 | Average for year ended March 31, 2020 | March 31, 2020 | |||||||||||||
Japanese Yen | ¥ | 1,696.8 | ¥ | 1,570.7 | ¥ | 1,500.6 | ¥ | 1,341.9 | ||||||||
U.S. Dollar | 2,231.0 | 1,961.7 | 2,219.9 | 2,732.5 | ||||||||||||
Euro | 734.0 | 898.8 | 818.4 | 789.5 | ||||||||||||
British Pound | 325.2 | 265.7 | 310.5 | 315.5 | ||||||||||||
Others (1) | 147.4 | 173.6 | 156.3 | 175.0 | ||||||||||||
Total liquidity portfolio | ¥ | 5,134.4 | ¥ | 4,870.5 | ¥ | 5,005.7 | ¥ | 5,354.4 | ||||||||
Billions of yen | ||||||||||||||||
Average for year ended March 31, 2022 | March 31, 2022 | Average for year ended March 31, 2023 | March 31, 2023 | |||||||||||||
Japanese Yen | ¥ | 1,913.7 | ¥ | 1,409.8 | ¥ | 1,613.6 | ¥ | 1,852.0 | ||||||||
U.S. Dollar | 3,567.3 | 3,924.1 | 4,326.0 | 3,953.3 | ||||||||||||
Euro | 792.3 | 868.5 | 869.3 | 964.5 | ||||||||||||
British Pound | 578.3 | 597.5 | 505.7 | 522.4 | ||||||||||||
Others (1) | 228.1 | 274.3 | 331.6 | 362.1 | ||||||||||||
Total liquidity portfolio | ¥ | 7,079.7 | ¥ | 7,074.2 | ¥ | 7,646.2 | ¥ | 7,654.3 | ||||||||
(1) | Includes other currencies such as the Australian |
Billions of yen | ||||||||
March 31, 2019 | March 31, 2020 | |||||||
NHI and NSC (1) | ¥ | 1,142.9 | ¥ | 1,382.9 | ||||
Major broker-dealer subsidiaries | 2,473.5 | 2,645.8 | ||||||
Bank subsidiaries (2) | 799.4 | 775.8 | ||||||
Other affiliates | 454.7 | 549.9 | ||||||
Total liquidity portfolio | ¥ | 4,870.5 | ¥ | 5,354.4 | ||||
Billions of yen | ||||||||
March 31, 2022 | March 31, 2023 | |||||||
NHI and NSC (1) | ¥ | 1,395.4 | ¥ | 1,806.4 | ||||
Major broker-dealer subsidiaries | 3,118.5 | 3,012.6 | ||||||
Bank subsidiaries (2) | 1,008.5 | 1,178.6 | ||||||
Other affiliates | 1,551.8 | 1,656.7 | ||||||
Total liquidity portfolio | ¥ | 7,074.2 | ¥ | 7,654.3 | ||||
(1) | NSC, a broker-dealer located in Japan, holds an account with the Bank of Japan (“BOJ”) and has direct access to the BOJ Lombard facility through which same day funding is available for our securities pool. Any liquidity surplus at NHI is lent to NSC via short-term intercompany loans, which can be unwound immediately when needed. |
(2) | Includes Nomura Bank International plc (“NBI”), Nomura Singapore Limited and Nomura Bank Luxembourg S.A. |
Billions of yen | ||||||||
March 31, 2019 | March 31, 2020 | |||||||
Net liquidity value of other unencumbered assets | ¥ | 2,268.1 | ¥ | 2,573.6 | ||||
Liquidity portfolio | 4,870.5 | 5,354.4 | ||||||
Total | ¥ | 7,138.6 | ¥ | 7,928.0 | ||||
Billions of yen | ||||||||
March 31, 2022 | March 31, 2023 | |||||||
Net liquidity value of other unencumbered assets | ¥ | 2,665.7 | ¥ | 2,842.5 | ||||
Liquidity portfolio | 7,074.2 | 7,654.3 | ||||||
Total | ¥ | 9,739.9 | ¥ | 10,496.8 | ||||
Billions of yen | ||||||||
March 31, 2019 | March 31, 2020 | |||||||
Short-term bank borrowings | ¥ | 107.0 | ¥ | 572.1 | ||||
Other loans | 231.4 | 154.3 | ||||||
Commercial paper | 313.0 | 525.1 | ||||||
Deposits at banking entities | 1,149.1 | 1,116.2 | ||||||
Certificates of deposit | 11.1 | 12.1 | ||||||
Debt securities maturing within one year | 707.2 | 692.5 | ||||||
Total short-term unsecured debt | ¥ | 2,518.8 | ¥ | 3,072.3 | ||||
Billions of yen | ||||||||
March 31, 2022 | March 31, 2023 | |||||||
Short-term bank borrowings | ¥ | 148.0 | ¥ | 203.3 | ||||
Other loans | 228.1 | 256.8 | ||||||
Commercial paper | 131.9 | 300.0 | ||||||
Deposits at banking entities | 1,520.7 | 1,705.0 | ||||||
Certificates of deposit | 127.8 | 224.2 | ||||||
Debt securities maturing within one year | 775.6 | 721.9 | ||||||
Total short-term unsecured debt | ¥ | 2,932.1 | ¥ | 3,411.2 | ||||
Billions of yen | ||||||||
March 31, 2019 | March 31, 2020 | |||||||
Long-term deposits at banking entities | ¥ | 232.5 | ¥ | 147.9 | ||||
Long-term bank borrowings | 2,727.5 | 2,591.5 | ||||||
Other loans | 87.9 | 82.5 | ||||||
Debt securities (1) | 3,435.6 | 3,522.1 | ||||||
Total long-term unsecured debt | ¥ | 6,483.5 | ¥ | 6,344.0 | ||||
Billions of yen | ||||||||
March 31, 2022 | March 31, 2023 | |||||||
Long-term deposits at banking entities | ¥ | 112.3 | ¥ | 208.8 | ||||
Long-term bank borrowings | 2,820.5 | 3,004.9 | ||||||
Other loans | 219.5 | 265.5 | ||||||
Debt securities (1) | 4,745.8 | 5,291.5 | ||||||
Total long-term unsecured debt | ¥ | 7,898.1 | ¥ | 8,770.7 | ||||
(1) | Excludes long-term debt securities issued by consolidated special purpose entities and similar entities that meet the definition of variable interest entities under ASC 810 “ Consolidation Long-term borrowings Transfer and Servicing. |
Billions of yen | ||||||||
Year Ended March 31 | ||||||||
2019 | 2020 | |||||||
Net cash used in operating activities | ¥ | (361.2 | ) | ¥ | (15.9 | ) | ||
Net income (loss) | (94.7 | ) | 219.4 | |||||
Trading assets and private equity and debt investments | 925.4 | (2,754.7 | ) | |||||
Trading liabilities | (143.1 | ) | 429.0 | |||||
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase | (3,274.9 | ) | 2,224.4 | |||||
Securities borrowed, net of securities loaned | 1,987.3 | 291.8 | ||||||
Other, net | 238.8 | (425.7 | ) | |||||
Net cash provided by (used in) investing activities | (112.5 | ) | 216.3 | |||||
Net cash provided by financing activities | 761.2 | 332.1 | ||||||
Long-term borrowings, net | 516.7 | (38.4 | ) | |||||
Increase in short-term borrowings, net | 85.9 | 656.2 | ||||||
Increase (decrease) in deposits received at banks, net | 257.5 | (93.3 | ) | |||||
Other, net | (98.9 | ) | (192.5 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 44.7 | (27.3 | ) | |||||
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents | 332.3 | 505.2 | ||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of the year | 2,354.9 | 2,687.1 | ||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of the year | ¥ | 2,687.1 | ¥ | 3,192.3 | ||||
Billions of yen | ||||||||
Year Ended March 31 | ||||||||
2022 | 2023 | |||||||
Net cash provided by (used in) operating activities | ¥ | (1,368.7 | ) | ¥ | (974.8 | ) | ||
Net income | 146.5 | 91.7 | ||||||
Trading assets and private equity and debt investments | 1,254.3 | (1,576.5 | ) | |||||
Trading liabilities | (284.7 | ) | 467.3 | |||||
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase | (2,220.5 | ) | (590.4 | ) | ||||
Securities borrowed, net of securities loaned | 595.1 | 834.4 | ||||||
Other, net | (859.4 | ) | (201.3 | ) | ||||
Cash flows from investing activities: | (45.3 | ) | 38.9 | |||||
Cash flows from financing activities: | 1,070.7 | 1,291.7 | ||||||
Long-term borrowings, net | 1,225.0 | 1,107.2 | ||||||
Decrease in short-term borrowings, net | (475.5 | ) | (81.9 | ) | ||||
Increase in deposits received at banks, net | 448.1 | 326.3 | ||||||
Other, net | (126.9 | ) | (59.9 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 149.7 | 148.6 | ||||||
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents | (193.6 | ) | 504.4 | |||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of the year | 3,510.0 | 3,316.4 | ||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of the year | ¥ | 3,316.4 | ¥ | 3,820.9 | ||||
Billions of yen, except ratios | ||||||||
March 31 | ||||||||
2019 | 2020 | |||||||
NHI shareholders’ equity | ¥ | 2,631.1 | ¥ | 2,653.5 | ||||
Total assets | 40,969.4 | 43,999.8 | ||||||
Adjusted assets (1) | 23,662.5 | 28,092.7 | ||||||
Leverage ratio (2) | 15.6 x | 16.6 x | ||||||
Adjusted leverage ratio (3) | 9.0 x | 10.6 x |
Billions of yen, except ratios | ||||||||
March 31 | ||||||||
2022 | 2023 | |||||||
NHI shareholders’ equity | ¥ | 2,914.6 | ¥ | 3,148.6 | ||||
Total assets | 43,412.2 | 47,771.8 | ||||||
Adjusted assets (1) | 26,535.8 | 29,654.3 | ||||||
Leverage ratio (2) | 14.9 x | 15.2 x | ||||||
Adjusted leverage ratio (3) | 9.1 x | 9.4 x |
(1) | Represents total assets less Securities purchased under agreements to resell Securities borrowed non-GAAP financial measure and is calculated as follows: |
Billions of yen | ||||||||
March 31 | ||||||||
2019 | 2020 | |||||||
Total assets | ¥ | 40,969.4 | ¥ | 43,999.8 | ||||
Less: | ||||||||
Securities purchased under agreements to resell | 13,194.5 | 12,377.3 | ||||||
Securities borrowed | 4,112.4 | 3,529.8 | ||||||
Adjusted assets | ¥ | 23,662.5 | ¥ | 28,092.7 | ||||
(2) | Equals total assets divided by NHI shareholders’ equity. |
(3) | Equals adjusted assets divided by NHI shareholders’ equity. |
Billions of yen | ||||||||
March 31 | ||||||||
2022 | 2023 | |||||||
Total assets | ¥ | 43,412.2 | ¥ | 47,771.8 | ||||
Less: | ||||||||
Securities purchased under agreements to resell | 11,879.3 | 13,834.5 | ||||||
Securities borrowed | 4,997.1 | 4,283.0 | ||||||
Adjusted assets | ¥ | 26,535.8 | ¥ | 29,654.3 | ||||
Fiscal year ended or ending March 31, | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | |||||||||||||||
2015 | ¥ | — | ¥ | 6.00 | ¥ | — | ¥ | 13.00 | ¥ | 19.00 | ||||||||||
2016 | — | 10.00 | — | 3.00 | 13.00 | |||||||||||||||
2017 | — | 9.00 | — | 11.00 | 20.00 | |||||||||||||||
2018 | — | 9.00 | — | 11.00 | 20.00 | |||||||||||||||
2019 | — | 3.00 | — | 3.00 | 6.00 | |||||||||||||||
2020 | — | 15.00 | — | 5.00 | 20.00 |
Fiscal year ended or ending March 31, | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | |||||||||||||||
2018 | ¥ | — | ¥ | 9.00 | ¥ | — | ¥ | 11.00 | ¥ | 20.00 | ||||||||||
2019 | — | 3.00 | — | 3.00 | 6.00 | |||||||||||||||
2020 | — | 15.00 | — | 5.00 | 20.00 | |||||||||||||||
2021 | — | 20.00 | — | 15.00 | 35.00 | |||||||||||||||
2022 | — | 8.00 | — | 14.00 | 22.00 | |||||||||||||||
2023 | — | 5.00 | — | 12.00 | 17.00 |
Billions of yen, except ratios | ||||||||
March 31 | ||||||||
2019 | 2020 | |||||||
Common equity Tier 1 capital | ¥ | 2,439.7 | ¥ | 2,404.6 | ||||
Tier 1 capital | 2,605.9 | 2,571.5 | ||||||
Total capital | 2,651.9 | 2,602.4 | ||||||
Risk-Weighted Assets | ||||||||
Credit risk-weighted assets | 7,527.4 | 7,634.7 | ||||||
Market risk equivalent assets | 4,211.1 | 5,549.3 | ||||||
Operational risk equivalent assets | 2,513.1 | 2,490.5 | ||||||
Total risk-weighted assets | ¥ | 14,251.6 | ¥ | 15,674.5 | ||||
Consolidated Capital Adequacy Ratios | ||||||||
Common equity Tier 1 capital ratio | 17.11 | % | 15.34 | % | ||||
Tier 1 capital ratio | 18.28 | % | 16.40 | % | ||||
Consolidated capital adequacy ratio | 18.60 | % | 16.60 | % |
Billions of yen, except ratios | ||||||||
March 31 | ||||||||
2022 | 2023 | |||||||
Common equity Tier 1 capital | ¥ | 2,726.4 | ¥ | 2,828.8 | ||||
Tier 1 capital | 3,103.0 | 3,203.7 | ||||||
Total capital | 3,103.4 | 3,204.1 | ||||||
Risk-Weighted Assets | ||||||||
Credit risk-weighted assets | 8,301.2 | 8,385.8 | ||||||
Market risk equivalent assets | 4,899.0 | 6,270.6 | ||||||
Operational risk equivalent assets | 2,629.7 | 2,667.5 | ||||||
Total risk-weighted assets | ¥ | 15,829.9 | ¥ | 17,323.9 | ||||
Consolidated Capital Adequacy Ratios | ||||||||
Common equity Tier 1 capital ratio | 17.22 | % | 16.32 | % | ||||
Tier 1 capital ratio | 19.60 | % | 18.49 | % | ||||
Consolidated capital adequacy ratio | 19.60 | % | 18.49 | % | ||||
Consolidated Leverage Ratio | 5.98 | % | 5.63 | % | ||||
External TLAC Ratios | ||||||||
Risk-weighted assets basis | 30.72 | % | 31.78 | % | ||||
Leverage ratio exposure measure basis | 10.30 | % | 10.63 | % |
Nomura Holdings, Inc. | Short-term Debt | Long-term Debt | |||||||
S&P Global Ratings | A-2 | BBB+ (Stable) | |||||||
Moody’s Investors Service | — | Baa1 (Negative) | |||||||
Fitch Ratings | F1 | A- (Stable) | |||||||
Rating and Investment Information, Inc. | a-1 | ||||||||
Japan Credit Rating Agency, Ltd. | — | AA- (Stable) | |||||||
Nomura Securities Co., Ltd. | Short-term Debt | Long-term Debt | |||||||
S&P Global Ratings | A-2 | A- (Stable) | |||||||
Moody’s Investors Service | P-2 | A3 (Negative) | |||||||
Fitch Ratings | F1 | A- (Stable) | |||||||
Rating and Investment Information, Inc. | a-1 | A+ (Stable) | |||||||
Japan Credit Rating Agency, Ltd. | — | AA- (Stable) |
Millions of yen, except per share data and percentages | ||||||||||||||||||||
Year ended March 31 | ||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||
Statement of income data: | ||||||||||||||||||||
Revenue | ¥ | 1,835,118 | ¥ | 1,952,482 | ¥ | 1,617,235 | ¥ | 1,593,999 | ¥ | 2,486,726 | ||||||||||
Interest expense | 718,348 | 664,653 | 215,363 | 230,109 | 1,151,149 | |||||||||||||||
Net revenue | 1,116,770 | 1,287,829 | 1,401,872 | 1,363,890 | 1,335,577 | |||||||||||||||
Non-interest expenses | 1,154,471 | 1,039,568 | 1,171,201 | 1,137,267 | 1,186,103 | |||||||||||||||
Income (loss) before income taxes | (37,701 | ) | 248,261 | 230,671 | 226,623 | 149,474 | ||||||||||||||
Income tax expense | 57,010 | 28,894 | 70,274 | 80,090 | 57,798 | |||||||||||||||
Net income (loss) | ¥ | (94,711 | ) | ¥ | 219,367 | ¥ | 160,397 | ¥ | 146,533 | ¥ | 91,676 | |||||||||
Less: Net income (loss) attributable to noncontrolling interests | 5,731 | 2,369 | 7,281 | 3,537 | (1,110 | ) | ||||||||||||||
Net income (loss) attributable to NHI shareholders | ¥ | (100,442 | ) | ¥ | 216,998 | ¥ | 153,116 | ¥ | 142,996 | ¥ | 92,786 | |||||||||
Balance sheet data (period end): | ||||||||||||||||||||
Total assets | ¥ | 40,969,439 | ¥ | 43,999,815 | ¥ | 42,516,480 | ¥ | 43,412,156 | ¥ | 47,771,802 | ||||||||||
Total NHI shareholders’ equity | 2,631,061 | 2,653,467 | 2,694,938 | 2,914,605 | 3,148,567 | |||||||||||||||
Total equity | 2,680,793 | 2,731,264 | 2,756,451 | 2,972,803 | 3,224,142 | |||||||||||||||
Common stock | 594,493 | 594,493 | 594,493 | 594,493 | 594,493 | |||||||||||||||
Per share data: | ||||||||||||||||||||
Net income (loss) attributable to NHI shareholders—basic | ¥ | (29.90 | ) | ¥ | 67.76 | ¥ | 50.11 | ¥ | 46.68 | ¥ | 30.86 | |||||||||
Net income (loss) attributable to NHI shareholders—diluted | (29.92 | ) | 66.20 | 48.63 | 45.23 | 29.74 | ||||||||||||||
Total NHI shareholders’ equity (1) | 794.69 | 873.26 | 879.79 | 965.80 | 1,048.24 | |||||||||||||||
Cash dividends (1) | 6.00 | 20.00 | 35.00 | 22.00 | 17.00 | |||||||||||||||
Cash dividends in USD (2) | $ | 0.05 | $ | 0.19 | $ | 0.32 | $ | 0.18 | $ | 0.13 | ||||||||||
Weighted average number of shares outstanding (in thousands) (3) | 3,359,565 | 3,202,370 | 3,055,526 | 3,063,524 | 3,006,744 | |||||||||||||||
Return on equity (4) : | (3.7 | %) | 8.2 | % | 5.7 | % | 5.1 | % | 3.1 | % |
(1) | Calculated using the number of shares outstanding at year end. |
(2) | Calculated using the Japanese Yen—U.S. Dollar exchange rate as of the respective fiscal year end date, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. |
(3) | The number shown is used to calculate basic earnings per share. |
(4) | Calculated as net income (loss) attributable to NHI shareholders divided by total NHI shareholders’ equity. |
Millions of yen | ||||||||||||
March 31, 2023 | ||||||||||||
Funded | Unfunded | Total | ||||||||||
Europe | ¥ | 14,654 | ¥ | 58,606 | ¥ | 73,260 | ||||||
Americas | 24,684 | 187,334 | 212,018 | |||||||||
Asia and Oceania | 6,230 | 3,718 | 9,948 | |||||||||
Total | ¥ | 45,568 | ¥ | 249,658 | ¥ | 295,226 | ||||||
Millions of yen | ||||
March 31, 2023 | ||||
Deferred tax assets | ||||
Depreciation, amortization and valuation of fixed assets | ¥ | 38,596 | ||
Investments in subsidiaries and affiliates | 7,458 | |||
Valuation of financial instruments | 123,841 | |||
Accrued pension and severance costs | 17,308 | |||
Other accrued expenses and provisions | 74,043 | |||
Operating losses | 414,084 | |||
Lease liabilities | 48,329 | |||
Other | 19,645 | |||
Gross deferred tax assets | 743,304 | |||
Less—Valuation allowances | (515,068 | ) | ||
Total deferred tax assets | 228,236 | |||
Deferred tax liabilities | ||||
Investments in subsidiaries and affiliates | 100,335 | |||
Valuation of financial instruments | 118,314 | |||
Undistributed earnings of foreign subsidiaries | 2,936 | |||
Valuation of fixed assets | 22,540 | |||
Right-of-use | 47,775 | |||
Other | 7,524 | |||
Total deferred tax liabilities | 299,424 | |||
Net deferred tax assets (liabilities) | ¥ | (71,188 | ) | |
Millions of yen | ||||||||||||||||||||
Total contractual amount | Years to maturity | |||||||||||||||||||
Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | |||||||||||||||||
Standby letters of credit and other guarantees | ¥ | 2,351 | ¥ | 10 | ¥ | 1,184 | ¥ | 1,156 | ¥ | 1 | ||||||||||
Long-term borrowings (1) | 7,720,941 | 778,008 | 1,224,258 | 1,645,653 | 4,073,022 | |||||||||||||||
Contractual interest payments (2) | 458,021 | 74,270 | 125,210 | 91,478 | 167,063 | |||||||||||||||
Operating lease commitments (3) | 215,916 | 41,270 | 56,349 | 43,751 | 74,546 | |||||||||||||||
Purchase obligations (4) | 126,949 | 20,523 | 35,720 | 8,392 | 62,314 | |||||||||||||||
Commitments to extend credit (5) | 2,247,433 | 1,399,086 | 139,295 | 167,322 | 541,730 | |||||||||||||||
Commitments to invest | 15,278 | 491 | 4 | 5,628 | 9,155 | |||||||||||||||
Total | ¥ | 10,786,889 | ¥ | 2,313,658 | ¥ | 1,582,020 | ¥ | 1,963,380 | ¥ | 4,927,831 | ||||||||||
Billions of yen | ||||||||||||||||
Average for year ended March 31, 2022 | March 31, 2022 | Average for year ended March 31, 2023 | March 31, 2023 | |||||||||||||
Cash, cash equivalents and time deposits (1) | ¥ | 3,151.6 | ¥ | 2,997.5 | ¥ | 3,155.5 | ¥ | 3,229.3 | ||||||||
Government debt securities | 3,629.8 | 3,674.2 | 4,073.8 | 3,984.0 | ||||||||||||
Others (2) | 298.3 | 402.5 | 416.9 | 441.0 | ||||||||||||
Total liquidity portfolio | ¥ | 7,079.7 | ¥ | 7,074.2 | ¥ | 7,646.2 | ¥ | 7,654.3 | ||||||||
(1) | Cash, cash equivalents, and time deposits include nostro balances and deposits with both central banks and market counterparties that are readily available to support the liquidity position of Nomura. |
(2) | Others include other liquid financial assets such as money market funds and U.S. agency securities. |
Billions of yen | ||||||||||||||||
Average for year ended March 31, 2022 | March 31, 2022 | Average for year ended March 31, 2023 | March 31, 2023 | |||||||||||||
Japanese Yen | ¥ | 1,913.7 | ¥ | 1,409.8 | ¥ | 1,613.6 | ¥ | 1,852.0 | ||||||||
U.S. Dollar | 3,567.3 | 3,924.1 | 4,326.0 | 3,953.3 | ||||||||||||
Euro | 792.3 | 868.5 | 869.3 | 964.5 | ||||||||||||
British Pound | 578.3 | 597.5 | 505.7 | 522.4 | ||||||||||||
Others (1) | 228.1 | 274.3 | 331.6 | 362.1 | ||||||||||||
Total liquidity portfolio | ¥ | 7,079.7 | ¥ | 7,074.2 | ¥ | 7,646.2 | ¥ | 7,654.3 | ||||||||
(1) | Includes other currencies such as the Australian Dollar, the Canadian Dollar and the Swiss Franc. |
Billions of yen | ||||||||
March 31, 2022 | March 31, 2023 | |||||||
NHI and NSC (1) | ¥ | 1,395.4 | ¥ | 1,806.4 | ||||
Major broker-dealer subsidiaries | 3,118.5 | 3,012.6 | ||||||
Bank subsidiaries (2) | 1,008.5 | 1,178.6 | ||||||
Other affiliates | 1,551.8 | 1,656.7 | ||||||
Total liquidity portfolio | ¥ | 7,074.2 | ¥ | 7,654.3 | ||||
(1) | NSC, a broker-dealer located in Japan, holds an account with the Bank of Japan (“BOJ”) and has direct access to the BOJ Lombard facility through which same day funding is available for our securities pool. Any liquidity surplus at NHI is lent to NSC via short-term intercompany loans, which can be unwound immediately when needed. |
(2) | Includes Nomura Bank International plc (“NBI”), Nomura Singapore Limited and Nomura Bank Luxembourg S.A. |
Billions of yen | ||||||||
March 31, 2022 | March 31, 2023 | |||||||
Net liquidity value of other unencumbered assets | ¥ | 2,665.7 | ¥ | 2,842.5 | ||||
Liquidity portfolio | 7,074.2 | 7,654.3 | ||||||
Total | ¥ | 9,739.9 | ¥ | 10,496.8 | ||||
Billions of yen | ||||||||
March 31, 2022 | March 31, 2023 | |||||||
Short-term bank borrowings | ¥ | 148.0 | ¥ | 203.3 | ||||
Other loans | 228.1 | 256.8 | ||||||
Commercial paper | 131.9 | 300.0 | ||||||
Deposits at banking entities | 1,520.7 | 1,705.0 | ||||||
Certificates of deposit | 127.8 | 224.2 | ||||||
Debt securities maturing within one year | 775.6 | 721.9 | ||||||
Total short-term unsecured debt | ¥ | 2,932.1 | ¥ | 3,411.2 | ||||
Billions of yen | ||||||||
March 31, 2022 | March 31, 2023 | |||||||
Long-term deposits at banking entities | ¥ | 112.3 | ¥ | 208.8 | ||||
Long-term bank borrowings | 2,820.5 | 3,004.9 | ||||||
Other loans | 219.5 | 265.5 | ||||||
Debt securities (1) | 4,745.8 | 5,291.5 | ||||||
Total long-term unsecured debt | ¥ | 7,898.1 | ¥ | 8,770.7 | ||||
(1) | Excludes long-term Consolidation Long-term borrowings Transfer and |
As of March 31, 2023, our liquidity portfolio exceeded net cash outflows under the stress scenarios described above. We constantly evaluate and modify our liquidity risk assumptions based on regulatory and market changes. The model we use in order to simulate the impact of stress scenarios includes the following assumptions: No liquidation of assets; | ||||||
Billions of yen | ||||||||
Year Ended March 31 | ||||||||
2022 | 2023 | |||||||
Net cash provided by (used in) operating activities | ¥ | (1,368.7 | ) | ¥ | (974.8 | ) | ||
Net income | 146.5 | 91.7 | ||||||
Trading assets and private equity and debt investments | 1,254.3 | (1,576.5 | ) | |||||
Trading liabilities | (284.7 | ) | 467.3 | |||||
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase | (2,220.5 | ) | (590.4 | ) | ||||
Securities borrowed, net of securities loaned | 595.1 | 834.4 | ||||||
Other, net | (859.4 | ) | (201.3 | ) | ||||
Cash flows from investing activities: | (45.3 | ) | 38.9 | |||||
Cash flows from financing activities: | 1,070.7 | 1,291.7 | ||||||
Long-term borrowings, net | 1,225.0 | 1,107.2 | ||||||
Decrease in short-term borrowings, net | (475.5 | ) | (81.9 | ) | ||||
Increase in deposits received at banks, net | 448.1 | 326.3 | ||||||
Other, net | (126.9 | ) | (59.9 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 149.7 | 148.6 | ||||||
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents | (193.6 | ) | 504.4 | |||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of the year | 3,510.0 | 3,316.4 | ||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of the year | ¥ | 3,316.4 | ¥ | 3,820.9 | ||||
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Securities purchased under Accumulated other comprehensive income Adjusted assets increased primarily due to an increase in Cash and cash equivalents Capital Management Capital Management Policy We seek to enhance shareholder value and to capture growing business opportunities by maintaining sufficient levels of capital. We will continue to review our levels of capital as appropriate, taking into consideration the economic risks inherent to operating our businesses, the regulatory requirements, and maintaining our ratings necessary to operate businesses globally. Dividends We believe that raising corporate value over the long term and paying dividends is essential to rewarding shareholders. We will strive to pay dividends using a consolidated pay-out ratio of 30 percent of each semi-annual consolidated earnings as a key indicator.Dividend payments are determined taking into account a comprehensive range of factors such as the tightening of Basel regulations and Dividends will in principle be paid on a semi-annual basis with record dates of September 30 and March 31. Additionally we will aim for a total payout ratio, which includes dividends and share buybacks, of at least 50 percent. With respect to retained earnings, in order to implement measures to adapt to regulatory changes and to increase shareholder value, we seek to efficiently invest in business areas where high profitability and growth may reasonably be expected, including the development and expansion of infrastructure. Dividends for the Fiscal Year Based on our Capital Management Policy described above, we paid a dividend of ¥5 per share to shareholders of record as of September 30, 2022 and have decided to pay a dividend of ¥12 per share to shareholders of record as of March 31,
Consolidated Regulatory Capital Requirements The FSA established the “Guideline for Financial Conglomerates Supervision” (“Financial Conglomerates Guideline”) in June 2005 and set out the rules on consolidated regulatory capital. We started monitoring our consolidated capital adequacy ratio in accordance with the Financial Conglomerates Guideline from April 2005. The Company has been assigned by the FSA as a Final Designated Parent Company who must calculate a consolidated capital adequacy ratio according to III-based consolidated capital adequacy ratio from the end of March 2013. Basel 2.5 includes significant change in calculation method of market risk and Basel III includes redefinition of capital items for the purpose of requiring higher quality of capital and expansion of the scope of credit risk-weighted assets calculation.In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company, our consolidated capital adequacy ratio is currently calculated based on the amounts of common equity Tier 1 capital, Tier 1 capital (sum of common equity Tier 1 capital and additional Tier 1 capital), total capital (sum of Tier 1 capital and Tier 2 capital), credit risk-weighted assets, market risk and operational risk. As of March 31, 2023, our common equity Tier 1 capital ratio is 16.32%, Tier 1 capital ratio is 18.49% and consolidated capital adequacy ratio is 18.49% and we are in compliance with the requirement for each ratio set out in the Capital Adequacy Notice on Final Designated Parent Company, etc. (required level including applicable minimum consolidated capital buffers as of March 31, 2023 is 7.62% for the common equity Tier 1 capital ratio, 9.12% for the Tier 1 capital ratio and 11.12% for the consolidated capital adequacy ratio). In accordance with Article 2 of the “Notice of the Establishment of Standards that Indicate Soundness pertaining to Loss-absorbing and Recapitalisation Capacity, Established as Criteria by which the Highest Designated Parent Company is to Judge the Soundness in the Management of the Highest Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article 57 -17 of the Financial Instruments and Exchange Act” (the ”TLAC Notification”), we have started calculating our external TLAC ratio on a risk-weighted assets basis from March 2021. As of March 31, 2023, our external TLAC as a percentage of risk-weighted assets is 31.78% and we are in compliance with the requirement set out in the TLAC Notification.83 The following table presents the Company’s consolidated capital adequacy ratios and External TLAC as a percentage of risk-weighted assets as of March 31, 2022 and March 31, 2023.
Since the end of March 2011, we have been calculating credit risk-weighted assets and operational risk equivalent assets by using the foundation Internal Ratings-Based Approach and the Standardized Approach, respectively, with the approval of the FSA. Furthermore, market risk equivalent assets are calculated using the Internal Models Approach. We provide consolidated capital adequacy ratios not only to demonstrate that we are in compliance with the requirements set out in the Capital Adequacy Notice on Final Designated Parent Company but also for benchmarking purposes so that users of this annual report can compare our capital position against those of other financial groups to which Basel III is applied. Our management receives and reviews these capital ratios on a regular basis. Consolidated Leverage Ratio Requirements In March 2019, the FSA set out requirements for the calculation and disclosure and minimum requirement of 3% of a consolidated leverage ratio, and the publication of “Notice of the Establishment of Standards for Determining Whether the Adequacy of Leverage, the Supplementary Measure to the Adequacy of Equity Capital of a Final Designated Parent Company and its Subsidiary Corporations, etc. is Appropriate Compared to the Assets Held by the Final Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article 57-17 of the Financial Instruments and Exchange Act” (2019 FSA Regulatory Notice No. 13; “Notice on Consolidated Leverage Ratio”), through amendments to revising “Specification of items which a final designated parent company should disclose on documents to show the status of its sound management” (2010 FSA Regulatory Notice No. 132; “Notice on Pillar 3 Disclosure”). We started calculating and disclosing a consolidated leverage ratio from March 31, 2015 in accordance with these Notices. We have also started calculating a consolidated leverage ratio from March 31, 2019 in accordance with the Notice on Pillar 3 Disclosure, Notice on Consolidated Leverage Ratio and other related Notices. In coordination with the monetary policy of the Bank of Japan in response to the impact of theCOVID-19 pandemic, the FSA published amendments to the Notice on Consolidated Leverage Ratio on June 2020 and March 2021. Under these amendments, deposits with the Bank of Japan have been excluded from the total exposure measure used to calculate the leverage ratio during the period from June 30, 2020 to March 31, 2022. In March 2022, the FSA announced this measure will be extended to March 31, 2024. As of March 31, 2023, our consolidated leverage ratio is 5.63%.84 In accordance with Article 2 of the TLAC Notification we have started calculating our external TLAC ratio on a total exposure basis from March 2021. As of March 31, 2023, our external TLAC as a percentage of leverage ratio exposure measure is 10.63% and we are in compliance with the requirement set out in the TLAC Notification. Regulatory changes which affect us The Basel Committee has issued a series of announcements regarding a Basel III program designed to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises. The following is a summary of the proposals which are most relevant to us. On December 16, 2010, in an effort to promote a more resilient banking sector, the Basel Committee issued Basel III, that is, “International framework for liquidity risk measurement, standards and monitoring” and “A global regulatory framework for more resilient banks and banking systems”. They include raising the quality, consistency and transparency of the capital base; strengthening the risk coverage of the capital framework such as the implementation of a credit value adjustment (“CVA”) charge for OTC derivative trades; introducing a leverage ratio requirement as a supplemental measure to the risk-based framework; introducing a series of measures to address concerns over the “procyclicality” of the current framework; and introducing a liquidity standard including a 30-day liquidity coverage ratio as well as the net stable funding ratio to measure stability of financing structure. These standards were implemented from 2013, which includes transitional treatment, (i.e., they are phased in gradually from 2013). In addition, the Basel Committee has issued interim rules for the capitalization of bank exposures to central counterparties (“CCPs”) on July 25, 2012, which came into effect in 2013 as part of Basel III. Moreover, in addition to Basel III leverage ratio framework under which we started the calculation and disclosure of consolidated leverage ratio as above, a series of final standards on the regulatory frameworks such as capital requirements for banks’ equity investments in funds, the standardized approach for measuring counterparty credit risk exposures, capital requirements for bank exposures to CCPs, supervisory framework for measuring and controlling large exposures, and revisions to the securitization framework, and revised framework for market risk capital requirements have been published by the Basel Committee.At the G-20 summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committee announced the list of global systemically important banks(“G-SIBs”) and the additional requirements to theG-SIBs including the recovery and resolution plan. The group ofG-SIBs have been updated annually and published by the FSB each November. Since November 2011, we have not been designated as aG-SIBs. On the other hand, the FSB and the Basel Committee were asked to work on extending the framework forG-SIBs to domestic systemically important financial institutions(“D-SIBs”) and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement forD-SIBs. In December 2015, the FSA identified us as aD-SIB and required additional capital charge of 0.5% after March 2016, with3-year transitional arrangement.In November 2015, the FSB issued the final TLAC standard for G-SIBs. The TLAC standard has been designed so that failingG-SIBs will have sufficient loss-absorbing and recapitalization capacity available in resolution for authorities to implement an orderly resolution. In response to the FSB’s publication of the TLAC standard, in April 2016, the FSA published its policy to develop the TLAC framework in Japan applicable to JapaneseG-SIBs and, in April 2018, revised such policy to apply the TLAC requirements in Japan not only to JapaneseG-SIBs but also to JapaneseD-SIBs that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. In the revised policy, the JapaneseG-SIBs and Nomura (“TLAC Covered SIBs”) would be subject to the TLAC requirements in Japan. On March 2019, the FSA published the notices and revised the guidelines of TLAC regulations. Although Nomura is not identified as aG-SIB as of the date of this annual report, the TLAC Covered SIBs, including Nomura, will be required to meet the TLAC requirement alongside the minimum regulatory requirements set out in the Basel III framework. Specifically, Nomura will be required to meet a minimum TLAC requirement of holding TLAC in an amount at least 16% of our consolidated risk-weighted assets as from85 March 31, 2021 and at least 18% as from March 31, 2024 as well as at least 6% of the applicable Basel III leverage ratio denominator from March 31, 2021 and at least 6.75% from March 31, 2024 (which 6.75% will be increased, pursuant to recent amendment to the TLAC regulations in Japan, to 7.1% from April 1,2024). Furthermore, according to the FSA’s revised policy published in April 2018, which is subject to change based on future international discussions, the preferred resolution strategy for the TLAC Covered SIBs is Single Point of Entry (“SPE”) resolution, in which resolution powers are applied to the top of a group by a single national resolution authority (i.e., the FSA), although the actual measures to be taken will be determined on a case-by-case To implement this SPE resolution strategy effectively, the FSA requires holding companies of the TLAC Covered SIBs (“Domestic Resolution Entities”) to (i) meet the minimum external TLAC requirements and (ii) cause their material subsidiaries that are designated as systemically important by the FSA, including but not limited to certain material sub-groups as provided in the FSB’s TLAC standard, to maintain a certain level of capital and debt recognized by the FSA as having loss-absorbing and recapitalization capacity, or Internal TLAC.In addition, the TLAC Covered SIBs’ Domestic Resolution Entities will be allowed to count the amount equivalent to 2.5% of their consolidated risk-weighted assets from the implementation date of the TLAC requirements in Japan (March 31, 2021 for Nomura) and 3.5% of their consolidated risk-weighted assets from 3 years after the implementation date (March 31, 2024 for Nomura) as our external TLAC, considering the Japanese Deposit Insurance Fund Reserves. It is likely that the FSA’s regulation and notice will be revised further to be in line with a series of rules and standards proposed by the Basel Committee, FSB or International Organization of Securities Commissions. Credit Ratings The cost and availability of unsecured funding are generally dependent on credit ratings. Our long-term and short-term debt is rated by several recognized credit rating agencies. We believe that our credit ratings include the credit ratings agencies’ assessment of the general operating environment, our positions in the markets in which we operate, reputation, earnings structure, trend and volatility of our earnings, risk management framework, liquidity and capital management. An adverse change in any of these factors could result in a downgrade of our credit ratings, and that could, in turn, increase our borrowing costs and limit our access to the capital markets or require us to post additional collateral and permit counterparties to terminate transactions pursuant to certain contractual obligations. In addition, our credit ratings can have a significant impact on certain of our trading revenues, particularly in those businesses where longer term counterparty performance is critical, such as OTC derivative transactions. There were no significant rating actions during the fiscal year ending March 2023. As of May 22, 2023, the credit ratings of the Company and NSC were as follows.
86 Both Rating and Investment Information, Inc. and Japan Credit Rating Agency, Ltd. are credit rating agencies nationally recognized in Japan. We rely on, or utilize, credit ratings on our long-term and short-term debt provided by these Japanese credit rating agencies, as well as S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings for unsecured funding and other financing purposes and also for our trading and other business activities. Within the rating classification system of Rating and Investment Information, Inc., “a-1” is the highest of five categories for short-term debt and indicates “a strong degree of certainty regarding debt repayment”; and “A” is the third highest of nine categories for long-term debt and indicates “a high degree of certainty regarding debt repayment with excellence in specific component factors”, with a plus (+) or minus (-) sign added to a rating in that category to indicate its relative standing within that category. Within the rating classification system of Japan Credit Rating Agency, Ltd., “AA” is the second highest of eleven categories for long-term debt and indicates “a very high level of capacity to honor the financial commitment on the obligation”, with a plus (+) or minus (-) sign added to a rating in that category to indicate its relative standing within that category.There has been no change to the ratings in the above table since the date indicated. Selected Financial Data The following table presents selected financial information as of and for the
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Regulatory Capital Requirements Many of our business activities are subject to statutory capital requirements, including those of Japan, the U.S., the U.K. and certain other countries in which we operate. For further discussion on statutory capital requirements, see Note 17 “ Regulatory requirements Translation Exposure A significant portion of our business is conducted in currencies other than Japanese Yen—most significantly, U.S. Dollars, British pounds and Euros. We prepare financial statements of each of our consolidated subsidiaries in its functional currency, which is the currency of the primary economic environment in which the entity operates. Translation exposure is the risk arising from the effect of fluctuations in exchange rates on the net assets of our foreign subsidiaries. Translation exposure is not recognized in our consolidated statements of income unless and until we dispose of, or liquidate, the relevant foreign subsidiary. Assets and Liabilities Associated with Investment and Financial Services Business Exposure to Certain Financial Instruments and Counterparties Market conditions continue to impact numerous products to which we have certain exposures. We also have exposures to Special Purpose Entities (“SPEs”) and others in the normal course of business. Leveraged Finance We provide loans to clients in connection with leveraged buy-outs and leveragedbuy-ins. As this type of financing is usually initially provided through a commitment, we have both funded and unfunded exposures on these transactions.The following table sets forth our exposure to leveraged finance with unfunded commitments, presenting funded and unfunded portions by geographic location of the target company as of March 31, 2023.
Special Purpose Entities (“SPEs”) Our involvement with these entities includes structuring, underwriting, distributing and selling debt instruments and beneficial interests issued by these entities, subject to prevailing market conditions. In connection with our securitization and equity derivative activities, we also act as a transferor of financial assets to these entities, as well as, underwriter, distributor and seller of asset-repackaged financial instruments issued by 71 these entities. We retain, purchase and sell variable interests in SPEs in connection with our market-making, investing and structuring activities. Our other types of involvement with SPEs include guarantee agreements and derivative contracts. For further discussion on Nomura’s involvement with variable interest entities, see Note 6 “ Securitizations and Variable Interest Entities Accounting Developments See Note 1“ Summary of accounting policies: New accounting pronouncements adopted during the current year Deferred Tax Assets Details of deferred tax assets and liabilities The following table presents details of deferred tax assets and liabilities reported within Other assets —Other and Other liabilities
Calculation method of deferred tax assets In accordance with U.S. GAAP, we recognize deferred tax assets to the extent we believe that it is more likely than not that a benefit will be realized. A valuation allowance is provided for tax benefits available to us, which are not deemed more likely than not to be realized. 72 B. Liquidity and Capital Resources. Funding and Liquidity Management Overview We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding than normal levels due to deterioration of the Nomura Group’s creditworthiness or deterioration in market conditions. This risk could arise from Nomura-specific or market-wide events such as inability to access the secured or unsecured debt markets, a deterioration in our credit ratings, a failure to manage unplanned changes in funding requirements, a failure to liquidate assets quickly and with minimal loss in value, or changes in regulatory capital restrictions which may prevent the free flow of funds between different group entities. Our global liquidity risk management policy is based on liquidity risk appetite formulated by the Executive Management Board (“EMB”). Nomura’s liquidity risk management, under market-wide stress and in addition, under Nomura-specific stress, seeks to ensure enough continuous liquidity to meet all funding requirements and unsecured debt obligations across one year and 30-day periods, respectively, without raising funds through unsecured funding or through the liquidation of assets. We are required to meet regulatory notice on the liquidity coverage ratio and the net stable funding ratio issued by the FSA.We have in place a number of liquidity risk management frameworks that enable us to achieve our primary liquidity objective. These frameworks include (1) Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio; (2) Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio; (3) Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets; (4) Management of Credit Lines to Nomura Group Entities; (5) Implementation of Liquidity Stress Tests; and (6) Contingency Funding Plan. Our EMB has the authority to make decisions concerning group liquidity management. The Chief Financial Officer (“CFO”) has the operational authority and responsibility over our liquidity management based on decisions made by the EMB. 1. Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio. We centrally control residual cash held at Nomura Group entities for effective liquidity utilization purposes. As for the usage of funds, the CFO decides the maximum amount of available funds, provided without posting any collateral, for allocation within Nomura and the EMB allocates the funds to each business division. Global Treasury monitors usage by businesses and reports to the EMB. In order to enable us to transfer funds smoothly between group entities, we limit the issuance of securities by regulated broker-dealers or banking entities within the Nomura Group and seek to raise unsecured funding primarily through the Company or through unregulated subsidiaries. The primary benefits of this strategy include cost minimization, wider investor name recognition and greater flexibility in providing funding to various subsidiaries across the Nomura Group. To meet any potential liquidity requirement, we maintain a liquidity portfolio, managed by Global Treasury apart from other assets, in the form of cash and highly liquid, unencumbered securities that may be sold or pledged to provide liquidity. As of March 31, 2023, our liquidity portfolio was ¥7,654.3 billion which sufficiently met liquidity requirements under the stress scenarios. 73 The following table presents a breakdown of our liquidity portfolio by type of financial assets as of March 31, 2022 and 2023 and averages maintained for the years ended March 31, 2022 and 2023. Yearly averages are calculated using month-end amounts.
The following table presents a breakdown of our liquidity portfolio by currency as of March 31, 2022 and 2023 and averages maintained for the years ended March 31, 2022 and 2023. Yearly averages are calculated using month-end amounts.
We assess our liquidity portfolio requirements globally as well as by each major operating entity in the Nomura Group. We primarily maintain our liquidity portfolio at Nomura Holdings, Inc. (“NHI”) and Nomura Securities Co. Ltd. (“NSC”), our other major broker-dealer subsidiaries, our bank subsidiaries, and other group entities. In determining the amounts and entities which hold this liquidity portfolio, we consider legal, regulatory and tax restrictions which may impact our ability to freely transfer liquidity across different entities in the Nomura Group. For more information regarding regulatory restrictions, see Note 17 “ Regulatory requirements The following table presents a breakdown of our liquidity portfolio by entity as of March 31, 2022 and 2023.
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2. Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio. In addition to our liquidity portfolio, we had ¥2,842.5 billion of other unencumbered assets comprising mainly of unpledged trading assets that can be used as an additional source of secured funding. Global Treasury monitors other unencumbered assets and can, under a liquidity stress event when the contingency funding plan has been invoked, monetize and utilize the cash generated as a result. The aggregate of our liquidity portfolio and other unencumbered assets as of March 31, 2023 was ¥10,496.8 billion, which represented 307.7% of our total unsecured debt maturing within one year.
3. Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets We seek to maintain a surplus of long-term debt and equity above the cash capital requirements of our assets. We also seek to achieve diversification of our funding by market, instrument type, investors, currency, and staggered maturities in order to reduce unsecured refinancing risk. We diversify funding by issuing various types of debt instruments—these include both structured loans and structured notes with returns linked to interest rates, currencies, equities, commodities, or related indices. We issue structured loans and structured notes in order to increase the diversity of our debt instruments. We typically hedge the returns we are obliged to pay with derivatives and/or the underlying assets to obtain funding equivalent to our unsecured long-term debt. The proportion of our non-Japanese Yen denominated long-term debt increased to 55.9% of total long-term debt outstanding as of March 31, 2023 from 51.4% as of March 31, 2022.3.1 Short-Term Unsecured Debt Our short-term unsecured debt consists of short-term bank borrowings (including long-term bank borrowings maturing within one year), other loans, commercial paper, deposit at banking entities, certificates of deposit and debt securities maturing within one year. Deposits at banking entities and certificates of deposit comprise customer deposits and certificates of deposit of our banking subsidiaries. Short-term unsecured debt includes the current portion of long-term unsecured debt. 75 The following table presents an analysis of our short-term unsecured debt by type of financial liability as of March 31, 2022 and 2023.
3.2 Long-Term Unsecured Debt We meet our long-term capital requirements and also achieve both cost-effective funding and an appropriate maturity profile by routinely funding through long-term debt and diversifying across various maturities and currencies. Our long-term unsecured debt includes senior and subordinated debt issued through U.S. registered shelf offerings and our U.S. registered medium-term note programs, our Euro medium-term note programs, registered shelf offerings in Japan and various other debt programs. As a globally competitive financial services group in Japan, we have access to multiple global markets and major funding centers. The Company, NSC, Nomura Europe Finance N.V., NBI, Nomura International Funding Pte. Ltd. and Nomura Global Finance Co., LTD. are the main group entities that borrow externally, issue debt instruments and engage in other funding activities. By raising funds to match the currencies and liquidities of our assets or by using foreign exchange swaps as necessary, we pursue optimization of our funding structures. We use a wide range of products and currencies to ensure that our funding is efficient and well diversified across markets and investor types. Our unsecured senior debt is mostly issued without financial covenants, such as covenants related to adverse changes in our credit ratings, cash flows, results of operations or financial ratios, which could trigger an increase in our cost of financing or accelerate repayment of the debt. The following table presents an analysis of our long-term unsecured debt by type of financial liability as of March 31, 2022 and 2023.
76 3.3 Maturity Profile We also seek to maintain an average maturity for our plain vanilla debt securities and borrowings greater than or equal to three years. The average maturity for our plain vanilla debt securities and borrowings with maturities longer than one year was 3.9 years as of March 31, 2023. A significant amount of our structured loans and structured notes are linked to interest rates, currencies, equities, commodities, or related indices. These maturities are evaluated based on internal models and monitored by Global Treasury. Where there is a possibility that these may be called prior to their scheduled maturity date, maturities are based on our internal stress option adjusted model. The model values the embedded optionality under stress market conditions in order to determine when the debt securities or borrowing is likely to be called. The graph below shows the distribution of maturities of our outstanding long-term debt securities and borrowings by the model. On this basis, the average maturity of our structured loans and structured notes with maturities longer than one year was 8.3 years as of March 31, 2023. The average maturity of our entire long-term debt with maturities longer than one year including plain vanilla debt securities and borrowings, was 6.2 years as of March 31, 2023. 3.4 Secured Funding We typically fund our trading activities through secured borrowings, repurchase agreements and Japanese “Gensaki Repo” transactions. We believe such funding activities in the secured markets are more cost-efficient and less credit-rating sensitive than financing in the unsecured market. Our secured funding capabilities depend on the quality of the underlying collateral and market conditions. While we have shorter term secured financing for highly liquid assets, we seek longer terms for less liquid assets. We also seek to lower the refinancing risks of secured funding by transacting with a diverse group of global counterparties and delivering various types of securities collateral. In addition, we reserve an appropriate level of liquidity portfolio for the refinancing risks of secured funding maturing in the short term for less liquid assets. For more detail of secured borrowings and repurchase agreements, see Note 5 “ Collateralized transactions 77 4. Management of Credit Lines to Nomura Group Entities We maintain and expand credit lines to Nomura Group entities from other financial institutions to secure stable funding. We ensure that the maturity dates of borrowing agreements are distributed evenly throughout the year in order to prevent excessive maturities in any given period. 5. Implementation of Liquidity Stress Tests We maintain our liquidity portfolio and monitor the sufficiency of our liquidity based on an internal model which simulates changes in cash outflow under specified stress scenarios to comply with our above mentioned liquidity management policy. We assess the liquidity requirements of the Nomura Group under various stress scenarios with differing levels of severity over multiple time horizons. We evaluate these requirements under Nomura-specific and broad market-wide events, including potential credit rating downgrades at the Company and subsidiary levels. We call this risk analysis our Maximum Cumulative Outflow (“MCO”) framework. The MCO framework is designed to incorporate the primary liquidity risks for Nomura and models the relevant future cash flows in the following two primary scenarios: Stressed scenario—To maintain adequate liquidity during a severe market-wide liquidity event without raising funds through unsecured financing or through the liquidation of assets for a year; and Acute stress scenario—To maintain adequate liquidity during a severe market-wide liquidity event coupled with credit concerns regarding Nomura’s liquidity position, without raising funds through unsecured funding or through the liquidation of assets for 30 days. We assume that Nomura will not be able to liquidate assets or adjust its business model during the time horizons used in each of these scenarios. The MCO framework therefore defines the amount of liquidity required to be held in order to meet our expected liquidity needs in a stress event to a level we believe appropriate based on our liquidity risk appetite. As of March 31, 2023, our liquidity portfolio exceeded net cash outflows under the stress scenarios described above. We constantly evaluate and modify our liquidity risk assumptions based on regulatory and market changes. The model we use in order to simulate the impact of stress scenarios includes the following assumptions: No liquidation of assets; No ability to issue additional unsecured funding; Upcoming maturities of unsecured debt (maturities less than one year); Potential buybacks of our outstanding debt; Loss of secured funding lines particularly for less liquid assets; Fluctuation of funding needs under normal business circumstances; Cash deposits and free collateral roll-off in a stress event;Widening of haircuts on outstanding repo funding; Additional collateralization requirements of clearing banks and depositories; Drawdown on loan commitments; Loss of liquidity from market losses; 78 Assuming a two-notch downgrade of our credit ratings, the aggregate fair value of assets that we would be required to post as additional collateral in connection with our derivative contracts; andLegal and regulatory requirements that can restrict the flow of funds between entities in the Nomura Group. 6. Contingency Funding Plan We have developed a detailed contingency funding plan to integrate liquidity risk control into our comprehensive risk management strategy and to enhance the quantitative aspects of our liquidity risk control procedures. As a part of our Contingency Funding Plan (“CFP”), we have developed an approach for analyzing and quantifying the impact of any liquidity crisis. This allows us to estimate the likely impact of both Nomura-specific and market-wide events; and specifies the immediate action to be taken to mitigate any risk. The CFP lists details of key internal and external parties to be contacted and the processes by which information is to be disseminated. This has been developed at a legal entity level in order to capture specific cash requirements at the local level—it assumes that our parent company does not have access to cash that may be trapped at a subsidiary level due to regulatory, legal or tax constraints. We periodically test the effectiveness of our funding plans for different Nomura-specific and market-wide events. We also have access to central banks including, but not exclusively, the BOJ, which provide financing against various types of securities. These operations are accessed in the normal course of business and are an important tool in mitigating contingent risk from market disruptions. Liquidity Regulatory Framework In 2008, the Basel Committee published “Principles for Sound Liquidity Risk Management and Supervision”. To complement these principles, the Committee has further strengthened its liquidity framework by developing two minimum standards for funding liquidity. These standards have been developed to achieve two separate but complementary objectives. The first objective is to promote short-term resilience of a financial institution’s liquidity risk profile by ensuring that it has sufficient high-quality liquid assets to survive a significant stress scenario lasting for 30 days. The Committee developed the Liquidity Coverage Ratio (“LCR”) to achieve this objective. The second objective is to promote resilience over a longer time horizon by creating additional incentives for financial institutions to fund their activities with more stable sources of funding on an ongoing basis. The Net Stable Funding Ratio (“NSFR”) has a time horizon of one year and has been developed to provide a sustainable maturity structure of assets and liabilities. These two standards are comprised mainly of specific parameters which are internationally “harmonized” with prescribed values. Certain parameters, however, contain elements of national discretion to reflect jurisdiction-specific conditions. In Japan, the regulatory notice on the LCR, based on the international agreement issued by the Basel Committee with necessary national revisions, was published by Financial Services Agency (on October 31, 2014). The notices have been implemented since the end of March 2015 with phased-in minimum standards. Average of Nomura’s LCRs for the three months ended March 31, 2023 was 203.8%, and Nomura was compliant with requirements of the above notices. As for the NSFR, the revision of the liquidity regulatory notice was published by Financial Services Agency (on March 31, 2021) and it has been implemented from the end of September 2021. Nomura’s NSFR as of March 31, 2023 was compliant with the regulatory requirements.Cash Flows Nomura’s cash flows are primarily generated from operating activities undertaken in connection with our client flows and trading and from financing activities which are closely related to such activities. As a financial institution, growth in operations tends to result in cash outflows from operating activities as well as investing 79 activities. For the year ended March 2022, we recorded net cash outflows from operating activities and investing activities and net cash inflow from financing activities. For the year ended March 2023, we recorded net cash outflows from operating activities and net cash inflow from investing activities and financing activities as discussed in the comparative analysis below. The following table presents the summary information on our consolidated cash flows for the years ended March 31, 2022 and 2023.
See the consolidated statements of cash flows in our consolidated financial statements included within this annual report for more detailed information. For the year ended March 31, 2023, our cash, cash equivalents, restricted cash and restricted cash equivalents increased by ¥504.4 billion to ¥3,820.9 billion. Net cash of ¥1,291.7 billion was provided by financing activities due to net cash inflows of ¥1,107.2 billion from Long-term borrowings Trading assets and private equity and debt investments, Securities purchased under agreements to resell, Securities sold under agreements to repurchase Securities borrowed, net of Securities loaned. For the year ended March 31, 2022, our cash, cash equivalents, restricted cash and restricted cash equivalents decreased by ¥193.6 billion to ¥3,316.4 billion. Net cash of ¥1,070.7 billion was provided by financing activities due to net cash inflows of ¥1,225.0 billion from Long-term borrowings Trading assets and private equity and debt investments, Securities purchased under agreements to 80 resell, Securities sold under agreements to repurchase Securities borrowed, net of Securities loaned. Balance Sheet and Financial Leverage Total assets as of March 31, 2023, were ¥47,771.8 billion, an increase of ¥4,359.6 billion compared with ¥43,412.2 billion as of March 31, 2022, reflecting primarily an increase in Trading assets. Securities sold under agreements to repurchase Accumulated other comprehensive income. We seek to maintain sufficient capital at all times to withstand losses due to extreme market movements. The EMB is responsible for implementing and enforcing capital policies. This includes the determination of our balance sheet size and required capital levels. We continuously review our equity capital base to ensure that it can support the economic risk inherent in our business. There are also regulatory requirements for minimum capital of entities that operate in regulated securities or banking businesses. As leverage ratios are commonly used by other financial institutions similar to us, we voluntarily provide a leverage ratio and adjusted leverage ratio primarily for benchmarking purposes so that users of our annual report can compare our leverage against other financial institutions. Adjusted leverage ratio is a non-GAAP financial measure that Nomura considers to be a useful supplemental measure of leverage.The following table presents NHI shareholders’ equity, total assets, adjusted assets and leverage ratios as of March 31, 2022 and 2023.
81 Total assets increased by 10.0% reflecting primarily an increase in Securities purchased under agreements to resell. Accumulated other comprehensive income Adjusted assets increased primarily due to an increase in Cash and cash equivalents Capital Management Capital Management Policy We seek to enhance shareholder value and to capture growing business opportunities by maintaining sufficient levels of capital. We will continue to review our levels of capital as appropriate, taking into consideration the economic risks inherent to operating our businesses, the regulatory requirements, and maintaining our ratings necessary to operate businesses globally. Dividends We believe that raising corporate value over the long term and paying dividends is essential to rewarding shareholders. We will strive to pay dividends using a consolidated pay-out ratio of 30 percent of each semi-annual consolidated earnings as a key indicator.Dividend payments are determined taking into account a comprehensive range of factors such as the tightening of Basel regulations and other changes to the regulatory environment as well as the Company’s consolidated financial performance. Starting from FY2023/24, we will strive to pay dividends using a consolidated payout ratio of at least 40 percent of each semi-annual consolidated earnings as a key indicator. Dividends will in principle be paid on a semi-annual basis with record dates of September 30 and March 31. Additionally we will aim for a total payout ratio, which includes dividends and share buybacks, of at least 50 percent. With respect to retained earnings, in order to implement measures to adapt to regulatory changes and to increase shareholder value, we seek to efficiently invest in business areas where high profitability and growth may reasonably be expected, including the development and expansion of infrastructure. Dividends for the Fiscal Year Based on our Capital Management Policy described above, we paid a dividend of ¥5 per share to shareholders of record as of September 30, 2022 and have decided to pay a dividend of ¥12 per share to shareholders of record as of March 31, 2023. As a result, the total annual dividend will be ¥17 per share. The following table presented the amounts of dividends per share paid by us in respect of the periods indicated:
82 Consolidated Regulatory Capital Requirements The FSA established the “Guideline for Financial Conglomerates Supervision” (“Financial Conglomerates Guideline”) in June 2005 and set out the rules on consolidated regulatory capital. We started monitoring our consolidated capital adequacy ratio in accordance with the Financial Conglomerates Guideline from April 2005. The Company has been assigned by the FSA as a Final Designated Parent Company who must calculate a consolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company in April 2011. Since then, we have been calculating our consolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III since then. We have calculated a Basel III-based consolidated capital adequacy ratio from the end of March 2013. Basel 2.5 includes significant change in calculation method of market risk and Basel III includes redefinition of capital items for the purpose of requiring higher quality of capital and expansion of the scope of credit risk-weighted assets calculation.In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company, our consolidated capital adequacy ratio is currently calculated based on the amounts of common equity Tier 1 capital, Tier 1 capital (sum of common equity Tier 1 capital and additional Tier 1 capital), total capital (sum of Tier 1 capital and Tier 2 capital), credit risk-weighted assets, market risk and operational risk. As of March 31, 2023, our common equity Tier 1 capital ratio is 16.32%, Tier 1 capital ratio is 18.49% and consolidated capital adequacy ratio is 18.49% and we are in compliance with the requirement for each ratio set out in the Capital Adequacy Notice on Final Designated Parent Company, etc. (required level including applicable minimum consolidated capital buffers as of March 31, 2023 is 7.62% for the common equity Tier 1 capital ratio, 9.12% for the Tier 1 capital ratio and 11.12% for the consolidated capital adequacy ratio). In accordance with Article 2 of the “Notice of the Establishment of Standards that Indicate Soundness pertaining to Loss-absorbing and Recapitalisation Capacity, Established as Criteria by which the Highest Designated Parent Company is to Judge the Soundness in the Management of the Highest Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article 57 -17 of the Financial Instruments and Exchange Act” (the ”TLAC Notification”), we have started calculating our external TLAC ratio on a risk-weighted assets basis from March 2021. As of March 31, 2023, our external TLAC as a percentage of risk-weighted assets is 31.78% and we are in compliance with the requirement set out in the TLAC Notification.83 The following table presents the Company’s consolidated capital adequacy ratios and External TLAC as a percentage of risk-weighted assets as of March 31, 2022 and March 31, 2023.
Since the end of March 2011, we have been calculating credit risk-weighted assets and operational risk equivalent assets by using the foundation Internal Ratings-Based Approach and the Standardized Approach, respectively, with the approval of the FSA. Furthermore, market risk equivalent assets are calculated using the Internal Models Approach. We provide consolidated capital adequacy ratios not only to demonstrate that we are in compliance with the requirements set out in the Capital Adequacy Notice on Final Designated Parent Company but also for benchmarking purposes so that users of this annual report can compare our capital position against those of other financial groups to which Basel III is applied. Our management receives and reviews these capital ratios on a regular basis. Consolidated Leverage Ratio Requirements In March 2019, the FSA set out requirements for the calculation and disclosure and minimum requirement of 3% of a consolidated leverage ratio, and the publication of “Notice of the Establishment of Standards for Determining Whether the Adequacy of Leverage, the Supplementary Measure to the Adequacy of Equity Capital of a Final Designated Parent Company and its Subsidiary Corporations, etc. is Appropriate Compared to the Assets Held by the Final Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article 57-17 of the Financial Instruments and Exchange Act” (2019 FSA Regulatory Notice No. 13; “Notice on Consolidated Leverage Ratio”), through amendments to revising “Specification of items which a final designated parent company should disclose on documents to show the status of its sound management” (2010 FSA Regulatory Notice No. 132; “Notice on Pillar 3 Disclosure”). We started calculating and disclosing a consolidated leverage ratio from March 31, 2015 in accordance with these Notices. We have also started calculating a consolidated leverage ratio from March 31, 2019 in accordance with the Notice on Pillar 3 Disclosure, Notice on Consolidated Leverage Ratio and other related Notices. In coordination with the monetary policy of the Bank of Japan in response to the impact of theCOVID-19 pandemic, the FSA published amendments to the Notice on Consolidated Leverage Ratio on June 2020 and March 2021. Under these amendments, deposits with the Bank of Japan have been excluded from the total exposure measure used to calculate the leverage ratio during the period from June 30, 2020 to March 31, 2022. In March 2022, the FSA announced this measure will be extended to March 31, 2024. As of March 31, 2023, our consolidated leverage ratio is 5.63%.84 In accordance with Article 2 of the TLAC Notification we have started calculating our external TLAC ratio on a total exposure basis from March 2021. As of March 31, 2023, our external TLAC as a percentage of leverage ratio exposure measure is 10.63% and we are in compliance with the requirement set out in the TLAC Notification. Regulatory changes which affect us The Basel Committee has issued a series of announcements regarding a Basel III program designed to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises. The following is a summary of the proposals which are most relevant to us. On December 16, 2010, in an effort to promote a more resilient banking sector, the Basel Committee issued Basel III, that is, “International framework for liquidity risk measurement, standards and monitoring” and “A global regulatory framework for more resilient banks and banking systems”. They include raising the quality, consistency and transparency of the capital base; strengthening the risk coverage of the capital framework such as the implementation of a credit value adjustment (“CVA”) charge for OTC derivative trades; introducing a leverage ratio requirement as a supplemental measure to the risk-based framework; introducing a series of measures to address concerns over the “procyclicality” of the current framework; and introducing a liquidity standard including a 30-day liquidity coverage ratio as well as the net stable funding ratio to measure stability of financing structure. These standards were implemented from 2013, which includes transitional treatment, (i.e., they are phased in gradually from 2013). In addition, the Basel Committee has issued interim rules for the capitalization of bank exposures to central counterparties (“CCPs”) on July 25, 2012, which came into effect in 2013 as part of Basel III. Moreover, in addition to Basel III leverage ratio framework under which we started the calculation and disclosure of consolidated leverage ratio as above, a series of final standards on the regulatory frameworks such as capital requirements for banks’ equity investments in funds, the standardized approach for measuring counterparty credit risk exposures, capital requirements for bank exposures to CCPs, supervisory framework for measuring and controlling large exposures, and revisions to the securitization framework, and revised framework for market risk capital requirements have been published by the Basel Committee.At the G-20 summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committee announced the list of global systemically important banks(“G-SIBs”) and the additional requirements to theG-SIBs including the recovery and resolution plan. The group ofG-SIBs have been updated annually and published by the FSB each November. Since November 2011, we have not been designated as aG-SIBs. On the other hand, the FSB and the Basel Committee were asked to work on extending the framework forG-SIBs to domestic systemically important financial institutions(“D-SIBs”) and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement forD-SIBs. In December 2015, the FSA identified us as aD-SIB and required additional capital charge of 0.5% after March 2016, with3-year transitional arrangement.In November 2015, the FSB issued the final TLAC standard for G-SIBs. The TLAC standard has been designed so that failingG-SIBs will have sufficient loss-absorbing and recapitalization capacity available in resolution for authorities to implement an orderly resolution. In response to the FSB’s publication of the TLAC standard, in April 2016, the FSA published its policy to develop the TLAC framework in Japan applicable to JapaneseG-SIBs and, in April 2018, revised such policy to apply the TLAC requirements in Japan not only to JapaneseG-SIBs but also to JapaneseD-SIBs that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. In the revised policy, the JapaneseG-SIBs and Nomura (“TLAC Covered SIBs”) would be subject to the TLAC requirements in Japan. On March 2019, the FSA published the notices and revised the guidelines of TLAC regulations. Although Nomura is not identified as aG-SIB as of the date of this annual report, the TLAC Covered SIBs, including Nomura, will be required to meet the TLAC requirement alongside the minimum regulatory requirements set out in the Basel III framework. Specifically, Nomura will be required to meet a minimum TLAC requirement of holding TLAC in an amount at least 16% of our consolidated risk-weighted assets as from85 March 31, 2021 and at least 18% as from March 31, 2024 as well as at least 6% of the applicable Basel III leverage ratio denominator from March 31, 2021 and at least 6.75% from March 31, 2024 (which 6.75% will be increased, pursuant to recent amendment to the TLAC regulations in Japan, to 7.1% from April 1,2024). Furthermore, according to the FSA’s revised policy published in April 2018, which is subject to change based on future international discussions, the preferred resolution strategy for the TLAC Covered SIBs is Single Point of Entry (“SPE”) resolution, in which resolution powers are applied to the top of a group by a single national resolution authority (i.e., the FSA), although the actual measures to be taken will be determined on a case-by-case To implement this SPE resolution strategy effectively, the FSA requires holding companies of the TLAC Covered SIBs (“Domestic Resolution Entities”) to (i) meet the minimum external TLAC requirements and (ii) cause their material subsidiaries that are designated as systemically important by the FSA, including but not limited to certain material sub-groups as provided in the FSB’s TLAC standard, to maintain a certain level of capital and debt recognized by the FSA as having loss-absorbing and recapitalization capacity, or Internal TLAC.In addition, the TLAC Covered SIBs’ Domestic Resolution Entities will be allowed to count the amount equivalent to 2.5% of their consolidated risk-weighted assets from the implementation date of the TLAC requirements in Japan (March 31, 2021 for Nomura) and 3.5% of their consolidated risk-weighted assets from 3 years after the implementation date (March 31, 2024 for Nomura) as our external TLAC, considering the Japanese Deposit Insurance Fund Reserves. It is likely that the FSA’s regulation and notice will be revised further to be in line with a series of rules and standards proposed by the Basel Committee, FSB or International Organization of Securities Commissions. Credit Ratings The cost and availability of unsecured funding are generally dependent on credit ratings. Our long-term and short-term debt is rated by several recognized credit rating agencies. We believe that our credit ratings include the credit ratings agencies’ assessment of the general operating environment, our positions in the markets in which we operate, reputation, earnings structure, trend and volatility of our earnings, risk management framework, liquidity and capital management. An adverse change in any of these factors could result in a downgrade of our credit ratings, and that could, in turn, increase our borrowing costs and limit our access to the capital markets or require us to post additional collateral and permit counterparties to terminate transactions pursuant to certain contractual obligations. In addition, our credit ratings can have a significant impact on certain of our trading revenues, particularly in those businesses where longer term counterparty performance is critical, such as OTC derivative transactions. There were no significant rating actions during the fiscal year ending March 2023. As of May 22, 2023, the credit ratings of the Company and NSC were as follows.
86 Both Rating and Investment Information, Inc. and Japan Credit Rating Agency, Ltd. are credit rating agencies nationally recognized in Japan. We rely on, or utilize, credit ratings on our long-term and short-term debt provided by these Japanese credit rating agencies, as well as S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings for unsecured funding and other financing purposes and also for our trading and other business activities. Within the rating classification system of Rating and Investment Information, Inc., “a-1” is the highest of five categories for short-term debt and indicates “a strong degree of certainty regarding debt repayment”; and “A” is the third highest of nine categories for long-term debt and indicates “a high degree of certainty regarding debt repayment with excellence in specific component factors”, with a plus (+) or minus (-) sign added to a rating in that category to indicate its relative standing within that category. Within the rating classification system of Japan Credit Rating Agency, Ltd., “AA” is the second highest of eleven categories for long-term debt and indicates “a very high level of capacity to honor the financial commitment on the obligation”, with a plus (+) or minus (-) sign added to a rating in that category to indicate its relative standing within that category.There has been no change to the ratings in the above table since the date indicated. Off-Balance Sheet Arrangements.Off-balance sheet entitiesIn the normal course of business, we engage in a variety of off-balance sheet arrangements withoff-balance sheet entities which may have an impact on Nomura’s future financial position and performance.Off-balance sheet arrangements withoff-balance sheet entities include where Nomura has:an obligation under a guarantee contract; a retained or contingent interest in assets transferred to an off-balance sheet entity or similar arrangement that serves to provide credit, liquidity or market risk support to such entity;any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or any obligation, including a contingent obligation, arising out of a variable interest in an off-balance sheet entity that is held by, and material to, us, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, us.Off-balance sheet entities may take the form of a corporation, partnership, fund, trust or other legal vehicle which is designed to fulfill a limited, specific purpose by its sponsor. We both create or sponsor these entities and also enter into arrangements with entities created or sponsored by others.Our involvement with these entities includes structuring, underwriting, distributing and selling debt instruments and beneficial interests issued by these entities, subject to prevailing market conditions. In connection with our securitization and equity derivative activities, we also act as a transferor of financial assets to these entities, as well as, underwriter, distributor and seller of asset-repackaged financial instruments issued by these entities. We retain, purchase and sell variable interests in SPEs in connection with our market-making, investing and structuring activities. Our other types of off-balance sheet arrangements include guarantee agreements and derivative contracts. Significant involvement is assessed based on all of our arrangements with these entities, even if the probability of loss, as assessed at the balance sheet date, is remote.For further information about transactions with VIEs, see Note 6 “ Securitizations and Variable Interest Entities 87 Tabular Disclosure of Contractual Obligations. In the ordinary course of our business, we enter into a variety of contractual obligations and contingent commitments, which may require future payments. These arrangements include: Standby letters of credit and other guarantees: In connection with our banking and financing activities, we enter into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have fixed expiration dates. Long-term borrowings and contractual interest payments: In connection with our operating activities, we issue Japanese Yen and non-Japanese Yen denominated long-term borrowings which incur variable and fixed interest payments in accordance with our funding policy.Operating lease commitments: We lease office space, residential facilities for employees, motor vehicles, equipment and technology assets in the ordinary course of business both in Japan and overseas as lessee. These arrangements predominantly consist of operating leases. Separately we sublease certain real estate and equipment through operating lease arrangements. Finance lease commitments: We lease certain equipment and facilities in Japan and overseas which are classified as finance lease agreements. Purchase obligations: We have purchase obligations for goods and services which include payments for construction, advertising, and computer and telecommunications maintenance agreements. Commitments to extend credit: In connection with our banking and financing activities, we enter into contractual commitments to extend credit, which generally have fixed expiration dates. In connection with our investment banking activities, we enter into agreements with clients under which we commit to underwrite securities that may be issued by clients. As a member of certain central clearing counterparties, Nomura is committed to provide liquidity facilities through entering into reverse repo transactions backed by government and government agency debt securities with those counterparties in a situation where a default of another clearing member occurs. Commitments to invest in partnerships: We have commitments to invest in interests in various partnerships and other entities and commitments to provide financing for investments related to those partnerships. Note 8 “ Leases Borrowings Commitments, contingencies and guarantees 88 The contractual amounts of commitments to extend credit represent the maximum amounts at risk should the contracts be fully drawn upon, should the counterparties default, and assuming the value of any existing collateral becomes worthless. The total contractual amount of these commitments may not represent future cash requirements since the commitments may expire without being drawn upon. The credit risk associated with these commitments varies depending on our clients’ creditworthiness and the value of collateral held. We evaluate each client’s creditworthiness on a case-by-case The following table presents information regarding amounts and timing of our future contractual obligations and contingent commitments as of March 31, 2023.
Excluded from the above table are obligations that are generally short-term in nature, including short-term borrowings, deposits received at banks and other payables, collateralized agreements and financing transactions (such as reverse repurchase and repurchase agreements), and trading liabilities. In addition to amounts presented above, we have commitments under reverse repurchase and repurchase agreements including amounts in connection with collateralized agreements and collateralized financing. These commitments amount to ¥1,143 billion for reverse repurchase agreements and ¥2,146 billion for repurchase agreements as of March 31, 2023. C. Research and Development, Patents and Licenses, etc. Not applicable. 89 D. Trend Information. The information required by this item is set forth in Item 5.A of this annual report. E. Critical Accounting Policies and Estimates Critical accounting policies are the accounting policies which have the most significant impact on the preparation of our consolidated financial statements included within this annual report and which require the most difficult, subjective and complex judgments by our management to develop estimates used in the application of these policies. Estimates, by their nature, are based on underlying assumptions which require management judgment and depend on the extent of information available at the time. Actual results in future reporting periods may differ from these estimates, which could have a material impact on our consolidated financial statements. The following table summarizes the critical accounting policies which have the most significant impact on our consolidated financial statements for the year ended March 31, 2023. For each such critical accounting policy, the table also identifies the critical accounting estimates inherent within application of those policies, the nature of the estimates, the underlying assumptions and judgments made by our management during the year to derive those estimates and the financial impact had we applied different estimates or assumptions during the year. See Note 1 “Summary of Accounting Policies”
90
91
92
93 Item 6. Directors, Senior Management and Employees A. Directors and Senior Management. Directors The following table presents information about our Directors as of June 28, 2023.
94
95
96
97
98
99
100
101
Among the Directors listed above Noriaki Shimazaki, Kazuhiko Ishimura, Laura Simone Unger, Victor Chu, J.Christopher Giancarlo, Patricia Mosser, Takahisa Takahara, Miyuki Ishiguro and Masahiro Ishizuka satisfy the requirements for an “Outside Director” under the Companies Act. 102 Executive Officers The following table presents information about our Executive Officers as of June 28, 2023.
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104
105 B. Compensation of Statutory Officers Our compensation program for our Statutory Officers is outlined as following. ”Statutory Officers” refers to directors and any statutorily designated officers of an entity; Statutory designated officers refer to “Directors” and “Executive Officers.” 1. Compensation Program of Statutory Officers The following table presents a summary of the key elements of the compensation program provided to our Statutory Officers.
2. Compensation Policy and Compensation Scheme (1) Compensation policy Compensation for Statutory Officers of Nomura Holdings Inc.’s (“NHI”) is subject to two policies: the Nomura Group compensation policy that applies to our employees and Statutory Officers (the “Basic Policy”) and the Compensation Policy for Directors and Executive Officers of NHI (the “Policy for Statutory Officers”) that applies to Statutory Officers. We have developed these policies to enable us to achieve sustainable growth, deliver long-term growth in shareholder value, deliver excellence to our clients, enhance our competitive strength in the global markets and enhance our reputation. The Compensation Committee reviews and updates these policies at least annually. We have established a compensation policy for our officers and employees, including Senior Managing Directors of NHI and directors of our subsidiaries but exclude Directors and Executive Officers of NHI. This policy is referred as our “Employee Policy”. 106 The following picture presents relationship for three policies above. Basic Policy Compensation Governance As a company with three Board Committees, as defined under Japanese corporate law, NHI has established an independent statutory Compensation Committee. A majority of the Committee which comprises primarily Outside Directors as members. The Committee has established both our Basic Policy and our Compensation Policy for Statutory Officers, based on which compensation for Directors and Executive Officers of NHI is determined. With respect to the relevant policies and total compensation for our officers and employees other than NHI’s Statutory Officers, decisions regarding employment and remuneration matters are delegated to our “Human Resources Committee” (“HRC”) by the Executive Management Board of NHI. The HRC is chaired by the Group CEO and at a minimum, composed of the Chief Finance Officer and Chief Risk Management Officer. The HRC determines above matters with support from respective remuneration committees in each region. Compensation Policies and Practices for Nomura Group’s Talent We believe our employees are our key assets in contributing to society, as in line with our mission of “We help to enrich society through our expertise in capital markets”. Compensation for Nomura Group’s Talent is designed to support achieving sustainable corporate growth, increasing corporate value over the medium and long-term and maintaining sound and effective risk management, while contributing to the interest of our shareholders. In addition, to ensure that we attract, retain, motivate and develop talent, the level and structure of remuneration takes into account the roles and responsibilities of individuals as well as the market pay levels in Japan and overseas, and in line with any relevant laws and regulatory expectations. 1) Sustainable corporate growth and increasing corporate value over the medium and long-term Our employee compensation policies aims to reinforce our corporate philosophy, to promote healthy corporate culture and behavior in line with our “Code of Conduct” and to align to our commitment to Environmental, Social and Governance (“ESG”) considerations. Based on a pay-for-performance 107 2) Sound and effective risk management We seek to maintain sound and effective risk management with an appropriate risk appetite. We update performance measurement metrics and indicators which referred to determining compensation by considering both financial and non-financial risks underlying with each business. Qualitative factors such as conduct, compliance, professional ethics and corporate philosophy are also considered in determining the final amount of remuneration provided to each officer and employee, which may include a reduction in compensation as a result of disciplinary actions.3) Alignment of interests with shareholders Certain of our officers and employees’ remuneration package includes stock-based compensation awards linked to share price of NHI with an appropriate deferral period applied, in order to align with shareholders’ interests. In addition, when granting deferred stock-based compensation, in the event of a material revision of our consolidated financial statements or a material violation of applicable rules and policies, employees’ compensation may be subject to suspension, reduction or forfeiture or clawback. Approval and Revision of the Basic Policy The approval, amendment or repeal of the Basic Policy are governed by our Compensation Committee of NHI. Policy for Statutory Officers The compensation of our Statutory Officers consists of base salaries, annual cash bonuses and long-term incentive plans. 1) Base salary Base salary is determined based on factors such as professional background, career history, responsibilities and market compensation levels for similar roles at our competitors. With respect to our Executive Officers, a portion of base salary may be paid in deterred stock-based compensation awards with appropriate vesting periods to align with the medium to long-term interests of our shareholders. 2) Annual bonuses Annual bonuses of Directors and Executive Officers are determined considering both quantitative and qualitative factors. Quantitative factors include financial group and divisional performance. Qualitative factors include the achievement of individual goals and individual contribution. In principle, a certain portion of annual bonus payment are deferred. With respect to the Group CEO, given the overall group responsibilities for business execution, the basic amount of the annual bonus is calculated based on the level of achievement against KPI(s). In addition, competitor benchmarking is considered when determining final annual bonus amount. With respect to Statutory Officers other than the Group CEO, the annual bonus amount is determined in the same way as the CEO annual bonus, namely using a standard baseline and considering factors such as specific roles and responsibilities of individual, relevant local remuneration regulations and compensation levels in each jurisdiction, and individual performance. 108 Audit Committee members and Outside Directors are not eligible to receive a bonus in order to maintain their independence from business execution. Mid-term Incentive PlanIn principle, a certain portion of annual bonus may be granted through deferred stock-based compensation awards with appropriate vesting periods to align with the medium-term interests of shareholders. Clawback In specific circumstances, unvested bonuses may be subject to forfeitures. Any voluntary resignation, material modification of our consolidated financial statements or, material breaches of our internal policies and regulations, among others, may require such forfeiture. Additionally, clawback provisions may apply to paid and/or vested bonuses. 3) Long-term Incentive Plan Long-term incentive plans may be awarded to Directors and Executive Officers, depending on factors such as their individual responsibilities, and performance. Payments under long-term incentive plans are made when a certain level of achievements are accomplished. Payments are made in stock-based awards with appropriate vesting periods to align with the long-term interests of our shareholders. Employee Policy Based on our “Basic Policy”, we have established our Employee Policy which applies to our officers and employees, including Senior Managing Directors of NHI and directors of subsidiaries of NHI but excluding our Statutory Officers of NHI. Matters not provided for in our Employee Policy are governed by the provisions of our Basic Policy. Compensation Governance Supervised by the HRC, regional committees governing employee compensation are composed from representatives of Finance, Risk Management, Compliance, Human Resources, and other departments as appropriate. These regional committees implement our global compensation governance rules. The proposed compensation of control function departments (such as Risk Management, Compliance, and Internal Audit) is not permitted to be determined by our front office business and performance evaluation of employees in these departments is not permitted to be determined solely by performance of the business supported by the individuals. Compensation Policies and Practices We believe our employees are our key assets in contributing to society, as in line with our mission of “We help to enrich society through our expertise in capital markets”. Compensation for our employees is designed to support achieving sustainable corporate growth, increasing corporate value over the medium and long-term and maintaining sound and effective risk management, while at the same time positively contributing to the interest of our shareholders. In addition, to ensure that we attract, retain, motivate and develop talent, the level and structure of remuneration takes into account the roles and responsibilities of individuals as well as market pay levels in Japan and overseas, in line with any relevant laws and regulatory expectations. 109 1) Sustainable corporate growth and increasing corporate value over the medium and long-term The compensation policies for our employees aims to realize the Nomura Group corporate philosophy which underpins its “Mission of Contributing to Society” and its “Vision of being a Trusted Partner”, being based on the “Values of Entrepreneurial Leadership, Teamwork and Integrity”, to promote a healthy, diverse corporate culture and the right behavior in line with our “Code of Conduct” and to facilitate a greater alignment with ESG considerations. Based on a pay-for-performance 2) Sound and effective risk management We seek to maintain sound and effective risk management with an appropriate risk appetite. It applies its performance measurement standards and indicators when determining compensation in consideration both financial and non-financial risks in each business, taking a holistic approach. Qualitative factors such as conduct, compliance, professional ethics and corporate philosophy are considered in determining the final amount of remuneration provided to each officer and employee, which may include a reduction in compensation. Risk Management, Compliance and Finance divisions provide key inputs into the overall risk and performance assessment to ensure appropriate consideration of these factors.The compensation package offered to our employees comprises two key elements: Fixed compensation—reflects the role, responsibilities and experience of the employee; and Variable compensation—designed to incentivize performance, encourage the right behaviors and drive employee growth and development. For higher paid employees, a portion of variable compensation may be deferred, balancing short-term with our medium and long-term interests. We seek to balance the components of compensation between fixed and variable according to the employee’s role and seniority. In principle, the proportion of compensation that is deferred increases with employee’s compensation. Guaranteed compensation is allowed only in limited circumstances such as for new hires or, where allowed, strategic business needs. Multi-year guarantees are typically prohibited. 3) Alignment of interests with shareholders Deferred variable compensation intends to align the interests of employees and NHI shareholders, and to encourage a long-term, sustainable approach senior management and highly paid employees. For Nomura Group employees who receive a certain amount of remuneration, a portion of the remuneration is stock-related remuneration linked to shares of NHI with an appropriate deferral period applicable, in order to align with shareholders’ interests. In addition, when granting stock-related compensation, in the event of a material revision of Nomura Group financial statements or a material violation of Nomura Group rules and policies, employees’ compensation may be subject to suspension, reduction, forfeiture of rights, or, for some employees located in specific jurisdictions/regions even re-payment (so-called “clawbacks”).Approval and Revision of the Employee Policy The approval, amendment or repeal of the Employee Policy can be made by our HRC of NHI. 110 (2) Compensation for Statutory Officers 1) Scheme of Compensation for Statutory Officers. The following picture presents scheme of compensation for Statutory Officers. The following table presents total compensation (“TC”) awarded to our President and Group CEO for the year ended March 31, 2023 was as follows.
The percentage of base salary (fixed compensation) and annual bonus (variable compensation) as a percentage of TC is approximately 30% and 70%. Deferred stock-based payment awards granted during the year have future vesting requirements before they are settled in NHI common stock. As our President and Group CEO has overall responsibility for Nomura Group performance, approximately 40% of TC is awards through deferred stock-based compensation awards to align with the interests of our shareholders and medium-term incentives. 111 2) Calculation method of annual bonuses The calculation method for Annual Bonuses for the Statutory Officers, differs depending on the position. Based on ROE, which is our KPI, for the purpose of calculating the Annual Bonus in order to align with our management vision and business strategy. Specific calculation method for annual bonus by position, see the “Policy for Statutory Officers” 2) Annual bonus <Result of performance indicator used for the calculation of the Annual Bonus>
(1) Non-monetary Deferred Compensation (stock-based compensation) Under our Basic Policy and the Policy for Statutory Officers, basically half of the aggregate amount of the Annual Bonus of the Statutory Officers is paid in deferred compensation, other than for Audit Committee members and Outside Directors, who are not bonus eligible. In principle, stock-based compensation (Restricted Stock Units (“RSUs”)) is granted. (2) Outline of current Deferred Compensation Awards. The outline of current Deferred Compensation Awards is as follows.
(3) Effect of payment of deferred compensation in the form of equity-related compensation We expect following effects by delivering compensation in the form of deferred stock-based compensation which has vesting term and its economic value of the compensation is linked to the price of the Company’s common stock. Alignment of interests with shareholders. Clawbacks for voluntary resignation and material breach of our internal policies. Medium-term incentives (*) and retention by providing an opportunity for the economic value of Deferred Compensation at the time of grant to grow as a result of an increase in share prices during the period of time from grant to vesting. 112
Promotion of cross-divisional collaboration and cooperation by providing a common goal of increasing corporate value over the medium to long term. As a result of these benefits, deferred compensation awards are also recommended by regulators in key jurisdictions in which we operate. The vesting period over which our Deferred Compensation awards vest is generally three years or above. This is in line with the “Principles for Sound Compensation Practices” issued by the Financial Stability Board which recommends, among other things, a deferral period of three years or above. (4) Clawbacks Provisions in Deferred Compensation Arrangements Certain triggers such as voluntary resignation, material modification of the financial statements or, material breach of Nomura Group’s internal policies and regulations subject to forfeiture, reduction or clawback (where the individual contracts include a “clawback clause”). 3. Compensation for Statutory Officers Pursuant to the fundamental approach and framework of compensation as described above, and as a company which adopts a committee-based corporate governance system, the Compensation Committee of NHI determines the compensation of NHI’s Statutory Officers in accordance with our compensation policies. 3-1. Aggregate compensation1) Aggregate Compensation for Statutory Officers The following table presents a summary of aggregate compensation awarded to our Statutory Officers for the year ended March 31, 2023.
113
2) Compensation of Directors and Executive Officers receiving ¥100 million or above The following table presents details of the compensation paid to our Directors and Executive Officers for the year ended March 31, 2023 where such total amount given to the individual is ¥100 million or above.
114 3) Meetings of our Compensation Committee during the year The following table presents a summary of the meetings held by our Compensation Committee during the year ended March 31, 2023, attendance at such meeting and summary of key matters discussed.
Through discussions and resolutions of the above topics, our Compensation Committee confirmed that compensation for our Directors and Executive Officers in respect of the year ended March 31, 2023 is appropriate and consistent with our relevant compensation policies. A summary of these meetings have been reported to the Board of Directors. 115 Stock Acquisition Rights (“SARs”) The following table presents information regarding unexercised Stock Acquisition Rights as of March 31,
SARs Held by Directors and Executive Officers of Nomura The following table presents details of Stock Acquisition Rights held by Directors and Executive Officers as of March 31,
Pension, Retirement or Similar Benefits See Note Employee benefit plans C. Board Practices. Information Concerning Directors The Companies Act of Japan states that a Company with Three Board Committees (as defined below) must establish three committees; a nomination committee, an audit committee and a compensation committee. The members of each committee are chosen from the company’s directors, and the majority of the members of each committee must be outside directors. At a Company with Three Board Committees, the board of directors is entitled to establish the basic management policy for the company, has decision-making authority over certain prescribed matters, and supervises the execution by the executive officers of their duties. Executive officers and representative executive officers appointed by a resolution adopted by the board of directors manage the business affairs of the company, based on a delegation of authority by the board of directors. non-statutory committee that has the purpose of deepening the oversight of risk management by the Board of Directors.An outline of the Company’s Board of Directors, Nomination Committee, Audit Committee, Compensation Committee and Board of Directors The Company’s Board of Directors consists of Directors who are elected at a general meeting of shareholders and the Company’s Articles of Incorporation provide that the number of Directors shall not exceed twenty. The term of office of each Director expires upon the conclusion of the ordinary general meeting of shareholders with respect to the last fiscal year ending within one year after their appointment. Directors may serve any number of consecutive terms. From among its members, the Company’s Board of Directors elects the Chairman. The Company’s Board of Directors met eleven times during the fiscal year ended March 31, 117 The Board of Directors has the authority to determine the Company’s basic management policy and supervise the execution by the Executive Officers of their duties. Although the Board of Directors also has the authority to make decisions with regard to the Company’s business, most of this authority has been delegated to the Executive Officers by a resolution adopted by the Board of Directors. There are no Directors’ service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment. As of June 27, 2023, the members of the Board of Directors are Koji Nagai, Kentaro Okuda, Yutaka Nakajima, Shoji Ogawa, Noriaki Shimazaki, Kazuhiko Ishimura, Laura Simone Unger, Victor Chu, J. Christopher Giancarlo, Patricia Mosser, Takahisa Takahara, Miyuki Ishiguro, and Masahiro Ishizuka. Koji Nagai is the Chairman of the Board. Nomination Committee The Nomination Committee, in accordance with law and the Company’s Regulations of the Nomination Committee, determines the details of any proposals concerning the election and dismissal of Directors to be submitted to general meetings of shareholders by the Board of Directors. The Nomination Committee met Audit Committee The Audit Committee, in accordance with law and the Company’s Regulations of the Audit Committee, (i) audits the execution by the Directors and the Executive Officers of their duties and the preparation of audit reports and (ii) determines the details of proposals concerning the election, dismissal or non-reappointment of the accounting auditor to be submitted to general meetings of shareholders by the Board of Directors. With respect to financial reporting, the Audit Committee has the statutory duty to examine financial statements and business reports to be prepared by Executive Officers designated by the Board of Directors and is authorized to report its opinion to the ordinary general meeting of shareholders.The Audit Committee met Compensation Committee The Compensation Committee, in accordance with law and the Company’s Regulations of the Compensation Committee, determines the Company’s policy with respect to the determination of the details of each Director and Executive Officer’s compensation. The Compensation Committee also determines the details of each Director and Executive Officer’s actual compensation. The Compensation Committee met Board Risk Committee The Board Risk Committee is a non-statutory organ, in accordance with the Company’s Regulations of the Board Risk Committee, of which purpose is to assist the Board of Directors in supervising Nomura Group’s risk management and to contribute to sophistication of the risk management. At meetings of the Board Risk118 Committee, to further strengthen the risk management of Nomura Group, consent to the Risk Appetite Statement and the main design of the risk management framework, analysis of risk environment/verification results and future projections, supervision of overall execution of risk management and medium- to long-term risk strategies are mainly deliberated. The status of execution of the function in the Board Risk Committee is reported to the Board of Directors. The Board Risk Committee met five times during the fiscal year ended March 31, 2023. As a group, the member Directors attended 93% of the total number of the meetings of the Board Risk Committee during the year. As of June 27, 2023, the members of the Board Risk Committee are Outside Directors Limitation of Director Liability In accordance with Article 33, Paragraph 2 of the Company’s Articles of Incorporation and Article 426, Paragraph 1 of the Companies Act of Japan, the Company may execute agreements with Directors (excluding a person who serves as an executive director, etc.) that limit their liability to the Company for damages suffered by the Company if they acted in good faith and without gross negligence. Accordingly, the Company has entered into agreements to limit Companies Act of Japan Article 423 Paragraph 1 liability for damages (“Limitation of Liability Agreements”) with each of the following Directors: Directors and Officers Liability Insurance Contracts The Company has entered into directors and officers liability insurance contracts set forth in Article 430-3, Paragraph 1 of the Companies Act of Japan with insurance companies, which have persons such as directors, executive officers, senior managing directors, auditors, and senior employees of the Company and its subsidiaries, etc. as insured persons. Under such insurance contracts, there will be an indemnification of losses, such as compensation for damages and litigation costs, incurred by an insured person due to a claim for loss or damage caused by an act (including an omission) carried out on the basis of the position, such as director or officer, held by the insured at the Company, and all insurance premiums of insureds have been entirely borne by the Company. However, there are certain exclusions applicable to such insurance contracts such as losses caused by a deliberately fraudulent or dishonest act of individuals such as directors/officers.Information Concerning Executive Officers Executive Officers of the Company are appointed by the Board of Directors, and the Company’s Articles of Incorporation provide that the number of Executive Officers shall not exceed forty-five. The term of office of each Executive Officer expires upon the conclusion of the first meeting of the Board of Directors convened after the ordinary general meeting of shareholders for the last fiscal year ending within one year after each Executive Officer’s assumption of office. Executive Officers may serve any number of consecutive terms. Executive Officers have the authority to determine matters delegated to them by resolutions adopted by the Board of Directors and to execute business activities. 119 D. Employees. The following table shows the number of our employees as of the dates indicated:
As of March 31, As of March 31, We have not experienced any strikes or other labor disputes in Japan or overseas and consider our employee relations to be excellent. E. Share Ownership. The following table shows the number of shares owned by our Directors and Executive Officers as of May 31, Directors
120 Executive Officers
For information regarding stock options granted to our Directors and Executive Officers, see Item 6.B “ Compensation of Statutory Officers F. Disclosure of a registrant’s action to recover erroneously awarded compensation. Not applicable. Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders. According to a statement on Schedule 13G (Amendment According to a statement on Schedule 13G (Amendment No.3) filed by Sumitomo Mitsui Trust Holdings, Inc. with the SEC on February To our knowledge, we are not directly or indirectly owned or controlled by another corporation, by any government or by any other natural or legal person severally or jointly. We know of no arrangements the operation of which may at a later time result in a change of control of Nomura. Also as of March 31, 380,576,618 shares of the Company’s common stock, representing B. Related Party Transactions. Nomura Research Institute, Ltd. NRI develops and manages computer systems and provides research services and management consulting services. We are one of the major clients of NRI. We held 121 For the year ended March 31, Nomura has participated in a secondary offering at Nomura Research Institute as a seller on December 5, 2022, and sold 13,000,000 ordinary shares it held at ¥37,528 million to third parties. As a result of the transaction, a gain of ¥28.0 billion was recognized in earnings within Revenue—Other during the year ended March 31, 2023. NRI remains an equity method affiliate of NHI. See also Note Affiliated companies and other equity-method investees Directors C. Interests of Experts and Counsel. Not applicable. Item 8. Financial Information A. Consolidated Statements and Other Financial Information. Financial Statements The information required by this item is set forth in our consolidated financial statements included elsewhere in this annual report. Legal Proceedings For a discussion of our litigation and related matters, see Note Commitments, contingencies and guarantees Dividend Policy For our dividend policy, see Item 5.B “Liquidity and Capital Resources—Capital Management—Dividends” in B. Significant Changes. Except as disclosed in this annual report, there have been no significant changes since March 31, Item 9. The Offer and Listing A. Offer and Listing Details. See Item The Offer and Listing— B. Plan of Distribution. Not applicable. 122 C. Markets. The principal trading market for the Company’s common stock is the Tokyo Stock Exchange. The Company’s common stock has been listed on the Tokyo Stock Exchange and the Nagoya Stock Exchange since 1961. The trading symbol on those trading markets is Since December 2001, the Company’s common stock has been listed on the D. Selling Shareholders. Not applicable. E. Dilution. Not applicable. F. Expenses of the Issue. Not applicable. Item 10. Additional Information A. Share Capital. Not applicable. B. Memorandum and Articles of Association. Register, Objects and Purposes in the Company’s Articles of Incorporation Nomura Holdings, Inc. is incorporated in Japan and is registered in the Commercial Register ( Shogyo Tokibo Article 2 of the Company’s Articles of Incorporation, which is an exhibit to this annual report, states that the Company’s purpose is, by means of holding shares, to control and manage the business activities of domestic companies which engage in the following businesses and the business activities of foreign companies which engage in the businesses equivalent to the following businesses:
Provisions Regarding the Company’s Directors Although there is no provision in the Company’s Articles of Incorporation as to a Director’s power to vote on a proposal or arrangement in which the Director is materially interested, under the Companies Act and the Company’s Regulations of the Board of Directors, a Director must abstain from voting on such matters at meetings of the Board of Directors. 123 As a Company with Three Board Committees, the compensation of the Company’s Directors and Executive Officers is determined by the Compensation Committee (see Item 6.C. “Board Practices-Information Concerning Directors-Compensation Committee” With respect to borrowing powers, these as well as other powers relating to the management of the business (with the exception of certain exclusions specified under the Companies Act) have been delegated to the Executive Officers by the Board of Directors as a Company with Three Board Committees. There is no mandatory retirement age for the Company’s Directors under the Companies Act or the Company’s Articles of Incorporation. There is no requirement concerning the number of shares an individual must hold in order to qualify him or her to serve as a Director of the Company under the Companies Act or the Company’s Articles of Incorporation. Pursuant to the Companies Act and the Company’s Articles of Incorporation, the Company may, by a resolution adopted by the Company’s Board of Directors, release the liabilities of any Directors or Executive Officers to the Company for damages suffered by the Company due to their acts taken in good faith and without gross negligence, to the extent permitted by the Companies Act and the Company’s Articles of Incorporation. In addition, the Company may execute with Directors (excluding a person who serves as an executive director, etc.) agreements that limit their liabilities to the Company for damages suffered by the Company if they acted in good faith and without gross negligence, to the extent permitted by the Companies Act and the Company’s Articles of Incorporation. See Item 6.C. “Board Practices-Limitation of Director Liability” Other Matters For disclosures under the following items, see “Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934” C. Material Contracts. D. Exchange Controls. Acquisition of Shares The following summary is not intended to be a complete analysis of the prior notification or reporting requirements under Japanese foreign exchange regulations as a result of the acquisition by investors of shares of the Company. Potential investors should consult their own legal advisors on the consequences of the acquisition of shares of the Company, including specifically the applicable notification, reporting and other procedures and any available exemption therefrom under Japanese foreign exchange regulations. The Foreign Exchange and Foreign Trade Law of Japan and its related cabinet orders and ministerial ordinances (“Foreign Exchange Regulations”) governs certain aspects relating to the acquisition and holding of shares of the Company by “foreign investors,” as defined below. If a foreign investor acquires shares of the Company and as a result of this acquisition directly or indirectly holds 1% or more of the issued shares of the Company, together with its existing holdings and those of other parties who have a close relationship with that foreign investor (the “closely-related person”), the foreign 124 investor is, in general, required to report the acquisition to the Minister of Finance and any other competent ministers via the Bank of Japan within 45 days from the date of acquisition. If (i) the foreign investor or its closely-related person will not become a board member of the Company, (ii) the foreign investor will not propose, at a general shareholders meeting of the Company, a transfer or disposition of its business, and (iii) the foreign investor will not have access to any non-public information regarding the Company’s technologies in relation to its business, in general, a prior notification is exempted.“Foreign investors” are generally defined as (i) individuals who are not residents in Japan, (ii) corporations which are organized under the laws of foreign countries or whose principal offices are located outside Japan, (iii) corporations of which (a) 50% or more of the voting rights are held directly or indirectly by (i) and/or (ii) above, (b) a majority of officers consists of non-residents of Japan or (c) a majority of officers having the power of representation consists ofnon-residents of Japan, and (iv) partnerships or limited partnerships engaging in investment business, in which (a) 50% or more of the total amount of contributions are made directly or indirectly by (i) and/or (ii) above or (b) a majority of the managing partners are (i) and/or (ii) above.Dividends and Proceeds of Sale Under the Foreign Exchange Regulations, dividends paid on, and the proceeds of sales in Japan of, shares held by non-residents of Japan may in general be converted into any foreign currency and repatriated abroad. Under the terms of the deposit agreement pursuant to which ADSs of the Company will be issued, the depositary is required, to the extent that in its judgment it can convert yen on a reasonable basis into U.S. dollars and transfer the resulting U.S. dollars to the U.S., to convert all cash dividends that it receives in respect of deposited shares into U.S. dollars and to distribute the amount received (after deduction of applicable withholding taxes) to the holders of ADSs.“Non-residents of Japan” are generally defined as individuals who are not resident in Japan and corporations whose principal offices are located outside Japan. Branches and other offices of Japanese corporations located outside Japan are considerednon-residents of Japan, and branches and other offices located within Japan ofnon-resident corporations are considered residents of Japan.E. Taxation. U.S. Federal Income Taxation This section describes the material U.S. federal income tax consequences of owning shares or ADSs. It applies to you only if you are a U.S. holder (as defined below), you acquire your shares or ADSs in an offering and you hold your shares or ADSs as capital assets for tax purposes. This discussion addresses only U.S. federal income taxation and does not discuss all of the tax consequences that may be relevant to you in light of your individual circumstances, including foreign, state or local tax consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net investment income or the alternative minimum tax. This section does not apply to you if you are a member of a special class of holders subject to special rules, including: a dealer in securities, a trader in securities that elects to use a mark-to-market a tax-exempt organization,a life insurance company, a person that actually or constructively owns 10% or more of the combined voting power of our voting stock or of the total value of our stock, a person that holds shares or ADSs as part of a straddle or a hedging, conversion, integrated or constructive sale transaction, 125 a person that purchases or sells shares or ADSs as part of a wash sale for tax purposes, or a person whose functional currency is not the U.S. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect, as well as on the Income Tax Convention Between the U.S. and Japan (“Japan-U.S. Tax Treaty”). These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part uponIf a partnership holds the shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the shares or ADSs should consult its tax advisor with regard to the U.S. federal income tax treatment of an investment in the shares or ADSs. You are a U.S. holder if you are a beneficial owner of shares or ADSs and you are: a citizen or resident of the U.S., a corporation created or organized in or under the laws of the U.S. or any political subdivision thereof, an estate whose income is subject to U.S. federal income tax regardless of its source, or a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust. You should consult your own tax advisor regarding the U.S. federal, state, local and other tax consequences of owning and disposing of shares and ADSs in your particular circumstances. This discussion addresses only U.S. federal income taxation. In general, and taking into account the earlier assumptions, for U.S. federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares represented by those ADSs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to U.S. federal income tax. Taxation of Dividends non-corporate U.S. holder, dividends that constitute qualified dividend income will be taxable to you at the preferential rates applicable to long-term capital gains provided that you hold the shares or ADSs for more than 60 days during the121-day period beginning 60 days before theex-dividend date and meet other holding period requirements. Dividends we pay with respect to the shares or ADSs generally will be qualified dividend You must include any Japanese tax withheld from the dividend payment in this gross amount even though you do not in fact receive it. The dividend is taxable when you, in the case of shares, or the depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the “dividends-received deduction” generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. non-taxable return of capital to the extent of your basis in the shares or ADSs and thereafter as capital gain. However, we do not expect to calculate earnings and profits in accordance with United States federal income tax principles. Accordingly, you should expect generally to treat distributions we make as dividends.Subject to certain limitations, the Japanese tax withheld in accordance with the Japan-U.S. Tax Treaty and paid over to Japan will be creditable against your U.S. federal income tax liability. However, under United States Treasury regulations, it is possible that such withholding tax will not be creditable unless you are eligible to claim the benefits of theJapan-U.S. Tax Treaty and elect to apply theJapan-U.S. Tax Treaty. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates. To the extent a refund of the tax withheld is available under Japanese law or theJapan-U.S. Tax Treaty, the amount of tax withheld that is refundable will not be eligible for credit against your U.S. federal income tax liability.For foreign tax credit purposes, dividends will generally be income from sources outside the U.S. and will generally be “passive income” for purposes of computing the foreign tax credit allowable to you. Subject to the PFIC rules discussed below, if non-corporate U.S. holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the U.S. for foreign tax credit limitation purposes.PFIC Rules We do not expect our shares and ADSs to be treated as stock of a PFIC for U.S. federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change. Moreover, the application of the PFIC rules to a corporation, such as Nomura, that is primarily engaged in an active business as a securities dealer is not entirely clear. In general, if you are a U.S. holder, we will be a PFIC with respect to you if for any taxable year in which you held our ADSs or shares: at least 75% of our gross income for the taxable year is passive income, or at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable to assets that produce or are held for the production of passive income. 127 Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation’s income. If we are treated as a PFIC, and you mark-to-market any gain you realize on the sale or other disposition of your shares or ADSs, and any excess distribution that we make to you (generally, any distributions to you during a single taxable, other than distributions in the first taxable year that you hold the shares or ADSs, year that are greater than 125% of the average annual distributions received by you in respect of the shares or ADSs during the three preceding taxable years or, if shorter, your holding period for the shares or Under these rules: the gain or excess distribution will be allocated ratably over your holding period for the shares or ADSs, the amount allocated to the taxable year in which you realized the gain or excess distribution, or to prior years before the first year in which we were a PFIC with respect to you, will be taxed as ordinary income, the amount allocated to each other previous year will be taxed at the highest tax rate in effect for that year, and the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year. Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC. If you own shares or ADSs in a PFIC that are regularly traded on a qualified exchange, they will be treated as marketable stock, and you may elect to mark your shares or ADSs to market. If you make this election, you will not be subject to the PFIC rules described above. Instead, in general, you will include as ordinary income each year the excess, if any, of the fair market value of your shares or ADSs at the end of the taxable year over your adjusted basis in your shares or ADSs. These amounts of ordinary income will not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. You will also be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of your shares or ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market Your shares or ADSs will be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your shares or ADSs, even if we are not currently a PFIC. For purposes of this rule, if you make a mark-to-market mark-to-market In addition, notwithstanding any election you make with regard to the shares or ADSs, dividends that you receive from us will not constitute qualified dividend income to you if we are a PFIC (or treated as a PFIC with respect to you) either in the taxable year of the distribution or the preceding taxable year. Dividends that you receive that do not constitute qualified dividend income are not eligible for taxation at the preferential rates 128 applicable to qualified dividend income. Instead, you must include the gross amount of any such dividend paid by us out of our accumulated earnings and profits (as determined for U.S. federal income tax purposes) in your gross income, and it will be subject to tax at rates applicable to ordinary income. If you own shares or ADSs during any year that we are a PFIC with respect to you, you may be required to file Internal Revenue Service Form 8621. Japanese Taxation The following is a summary of the principal Japanese tax consequences to owners of shares of the Company who are non-resident individuals ornon-Japanese corporations(“non-resident shareholders”) without a permanent establishment in Japan to which the relevant income is attributable. As tax laws are frequently revised, the tax treatments described in this summary are also subject to changes in the applicable Japanese laws and/or double taxation conventions occurring in the future, if any. This summary is not exhaustive of all possible tax considerations which may apply to specific investors under particular circumstances. Potential investors should, by consulting with their own tax advisers, satisfy themselves as tothe overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law, the laws of the jurisdiction of which they are resident, and any tax treaty between Japan and their country of residence. Generally, a non-resident shareholder is subject to Japanese withholding tax on dividends on the shares paid by the Company. A stock split is not subject to Japanese income or corporation tax, as it is characterized merely as an increase of number of shares (as opposed to an increase of value of shares) from Japanese tax perspectives. Conversion of retained earnings or legal reserve (but other than additionalpaid-in capital, in general) into stated capital on anon-consolidated basis is not characterized as a deemed dividend for Japanese tax purposes, and therefore such a conversion does not trigger Japanese withholding taxation (Article 2(16) of the Japanese Corporation Tax Law and Article 8(1)(xiii) of the Japanese Corporation Tax Law Enforcement Order).Unless an applicable tax treaty, convention or agreement reducing the maximum rate of withholding tax applies, the rate of Japanese withholding tax applicable to dividends on listed shares such as those paid by the Company to non-resident shareholders is currently 15%, except for dividends paid to any individual shareholder who holds 3% or more of the issued shares for which the applicable rate is 20% (please refer to Article 170 and Article 213(1)(i) of the Japanese Income Tax Law andArticle 9-3(1)(i) of the Japanese Special Tax Measures Law).On December 2, 2011, the “Special measures act to secure the financial resources required to implement policy on restoration after the East Japan Earthquake” (Act No. 117 of 2011) was promulgated and special surtax measures on income tax were introduced to fund the restoration effort from the earthquake. Income tax and withholding tax payers will need to pay a surtax, calculated by multiplying the base income tax with 2.1% for 25 years starting from January 1, 2013. As a result of the fractional tax rate increase, 15.315% is applicable until December 31, 2037. If a non-resident taxpayer is a resident of a country that Japan has tax treaty with, as described below, suchnon-residents will not be subject to the surtax to the extent that the applicable rate agreed in the tax treaty is lower than the aggregate domestic rate.Japan has income tax treaties, conventions or agreements whereby the above-mentioned withholding tax rate is reduced, generally to 15% for portfolio investors, with, among others, Canada, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, New Zealand, Norway, Japan-U.S. Tax Treaty, the withholding tax rate on dividends is 10% for portfolio investors, provided that they do not have a permanent establishment in Japan, or if there is a permanent establishment, the shares with respect to which such dividends129 are paid are not effectively connected with such permanent establishment, and that they are qualified U.S. residents eligible to enjoy treaty benefits. It shall be noted that, under the Japan-U.S. Tax Treaty, withholding tax on dividends to be paid is exempt from Japanese taxation by way of withholding or otherwise for pension funds which are qualified U.S. residents eligible to enjoy treaty benefits unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension funds (please refer to Article 10(3)(b) of theJapan-U.S. Tax Treaty). In addition to theJapan-U.S. Tax Treaty, Japan currently has income tax treaties with, among others, the U.K., France, Australia, the Netherlands, Switzerland, Sweden and Belgium whereby the withholding tax rate on dividends is also reduced from 15% to 10% for portfolio investors.Non-resident shareholders who are entitled to a reduced treaty rate of Japanese withholding tax on payment of dividends on the shares by the Company are required to submit the “Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends” or the “Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends with respect to Foreign Depositary Receipt”, as the case may be, in advance through the Company, which is the case for ADS holders, or (in cases where the relevant withholding taxpayer for the dividend payment is not the Company but a financial institution in Japan) through the financial institution, to the relevant tax authority before payment of dividends.Non-resident shareholders who receive dividends through a financial institution may select a simplified procedure with respect to dividends payable on or after January 1, 2014. Under such procedure,non-resident shareholders who submit the “Special Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends of Listed Stocks” to the relevant tax authority through a financial institution are deemed to have submitted the “Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends” mentioned above with respect to any dividend which will be paid by the Company tonon-resident shareholders through the financial institution thereafter, provided that suchnon-resident shareholders shall notify the financial institution of certain information regarding the dividends before the payment of such dividends.Non-resident shareholders who do not submit an application in advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate of an applicable tax treaty from the relevant Japanese tax authority. For Japanese tax purpose, the treaty rate normally applies superseding the tax rate under the domestic law. However, due to theso-called “preservation doctrine” under Article3-2 of the Special Measures Law for the Income Tax Law, Corporation Tax Law and Local Taxes Law with respect to the Implementation of Tax Treaties, if the tax rate under the domestic tax law is lower than that promulgated under the applicable income tax treaty, then the domestic tax rate is still applicable. Consequently, if the domestic tax rate still applies, no treaty application is required to be filed.Gains derived from the sale of shares outside Japan by a non-resident shareholder without a permanent establishment in Japan as a portfolio investor, are, in general, not subject to Japanese income or corporation taxes.Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired shares as a legatee, heir or donee, even if the individual is not a Japanese resident. You should consult your own tax advisers regarding the Japanese tax consequences of the acquisition, ownership and disposition of the shares and ADSs in your particular circumstances. F. Dividends and Paying Agents. Not applicable. G. Statement by Experts. Not applicable. 130 H. Documents on Display. The Company is subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, the Company will file with the Securities and Exchange Commission annual reports on Form 20-F within four months of the Company’s fiscalyear-end and other reports and information onForm 6-K. You can access the documents filed via the Electronic Data Gathering, Analysis, and Retrieval system on the SEC’s website (http://www.sec.gov). I. Subsidiary Information. Not applicable. J. Annual Report to Security Holders If we are required to provide an annual report to security holders in response to the requirements of Form 6-K, Item 11. Quantitative and Qualitative Disclosures about Market, Credit and Other Risk Overview of Risk Management Business activities of Nomura Group are exposed to various risks such as market risk, credit risk, operational risk and other risks caused by external factors. Nomura Group has established a risk management framework to control, monitor and report those risks in a comprehensive manner in order to maintain financial soundness and to sustain and enhance its enterprise value. Risk Management Nomura defines risks as (i) the potential erosion of Nomura’s capital base due to unexpected losses arising from risks to which its business operations are exposed, such as market risk, credit risk, operational risk and model risk, (ii) liquidity risk, the potential lack of access to funds or higher cost of funding than normal levels due to a deterioration in Nomura’s creditworthiness or deterioration in market conditions, and (iii) strategic risk, the potential failure of revenues to cover costs due to a deterioration in the earnings environment or a deterioration in the efficiency or effectiveness of its business operations. A fundamental principle established by Nomura is that all employees shall regard themselves as principals of risk management and appropriately manage these risks. Nomura seeks to promote a culture of proactive risk management throughout all levels of the organization and to limit risks to the confines of its risk appetite. The risk management framework that Nomura uses to manage these risks consists of its risk appetite, risk management governance and oversight, the management of financial resources, the management of all risk classes, and processes to measure and control risks. Furthermore, in response to the U.S. Prime Brokerage Event, we are in the process of reviewing our risk management framework for considering improvements thereto. Each of these key components is explained in further detail As a part of the efforts to enhance the risk management governance, the Board Risk Committee (the “BRC”) was formally established on October 29, 2021 to discuss important risks independently of the execution side within the high-level governance structure. The BRC assists the Board of Directors (the “BoD”) in supervising such matters as (i) providing consent to Risk Appetite Statement, (ii) providing consent to the main design of the risk management framework, (iii) results of analysis and verification or future forecasts of risk environment, and (iv) supervision over execution state of the overall risk management and medium- to long-term risk strategies for contributing to the sophistication of the Group’s risk management. 131 Nomura engages in the risk management through the Three Lines of Defense framework. First Line of Defense: All executives and employees of the front office for Financial Risk and all executives and employees for Non-Financial Risk are primarily responsible for risk management and assume the consequences associated with business execution and to provide evidence and justify that the risk arising from their business activities is in line with risk appetite.Second Line of Defense: The department responsible for risk management supports and monitors management activities on the First Line of Defense and reports to boards and the senior management. In addition, the Second Line independently evaluates risk management governance established by the First Line. Third Line of Defense: The Internal Audit function examines and evaluates the risk management from an independent standpoint, provides advice for improvement, and reports the examination and evaluation are reported to the Audit Committee. Risk Appetite Nomura has determined the types and levels of risk that it will assume in pursuit of its strategic objectives and business plan and has articulated this in its Risk Appetite Statement. This document is jointly submitted by the Chief Risk Officer The Risk Appetite Statement provides an aggregated view of risk and includes capital adequacy, liquidity, financial risk and non-financial risk. It is subject to regular monitoring and breach escalation as appropriate by the owner of the relevant risk appetite statement.Nomura’s Risk Appetite Statement is required to be reviewed at least annually by the EMB but it is reviewed on an ad hoc basis if necessary, and must specifically be reviewed following any significant changes in Nomura’s strategy. Risk appetite underpins all additional aspects of Nomura’s risk management framework. Risk Management Governance and Oversight Committee Governance Nomura has established a committee structure to facilitate effective business operations and management of Nomura’s risks. The formal governance structure for risk management within Nomura is as follows: Board of Directors The BoD determines the policy for the execution of the business of Nomura and other matters prescribed in laws and regulations, supervises the execution of Directors’ and Executive Officers’ duties and has the authority to adopt, alter or abolish the regulations of the EMB. Board Risk Committee The BRC provides specialized oversight to deepen the oversight functions of the BoD. To ensure a high degree of independence, the BRC is chaired by an outside director. The BRC contributes to more sophisticated Group risk management mainly in the areas outlined below: Amendment and abolition of the Risk Appetite Statement Change in risk management framework Results of analysis and verification or future forecasts of risk environment Execution state of the overall risk management and medium- to long-term risk strategies 133 Executive Management Board The EMB deliberates on and determines management strategy, the allocation of management resources and important management matters of Nomura, and seeks to increase shareholder value by promoting effective use of management resources and unified decision-making with regard to the execution of business. The EMB delegates responsibility for deliberation of matters concerning risk management to the Resource Allocation—At the beginning of each financial year, the EMB determines the allocation of management resources and financial resources such as risk-weighted asset and unsecured funding to business units and establishes usage limits for these resources; Business Plan—At the beginning of each financial year, the EMB approves the business plan and budget of Nomura. Introduction of significant new businesses, changes to business plans, the budget and the allocation of management resources during the year are also approved by the EMB; and Reporting—The EMB reports the status of its deliberations to the BoD. Group Upon delegation from the EMB, the In addition, the (the “GRRC”) Upon delegation from the Transaction Profile Review Committee (the “TPC”) The TPC deliberates on and makes decisions on matters relating to transactions and/or clients/counterparties that require consideration of the Nomura Group’s reputational risk in view of the Nomura Group’s Code of Conduct and Risk Appetite Statement, thereby ensuring the sound and effective management of the businesses. Asset Liability Committee (the “ALCO”) Upon delegation from the EMB and the Global Transaction Committee (the “GTC”) Upon delegation from the 134 Electronic and Algorithmic Trading Risk Oversight Committee (the “EATROC”) The EATROC, upon delegation from the GRRC, shall be responsible for all matters relating to the development and implementation of a governance, risk and control management framework for Electronic and Algorithmic Trading Activity within the Nomura’s Wholesale Division. Other Committees re-use, limits and stress tests, provides direction on Nomura’s collateral strategy and ensures compliance with regulatory collateral requirements upon delegation from the CRO.Chief Risk Officer The CRO is responsible for setting the overall strategy and direction of the Risk Management Division. The CRO is responsible for supervising the Risk Management Division and maintaining the effectiveness of the risk management framework independently from the business units within Nomura. The CRO regularly reports on the status of Nomura’s risk management to the Chief Financial Officer The CFO is responsible for overall financial strategy of Nomura, and has operational authority and responsibility over Nomura’s liquidity management based on decisions made by the EMB. Other Responsible Officers Officers, who oversee the functions in charge of Operational Risks in accordance with the Risk Management Policy of Three Lines of Defense, are responsible for formulating the appropriate management framework and taking the lead in designing Risk Appetites for Operational Risks they cover. They also cooperate with CRO who is responsible for monitoring and maintaining of the effectiveness of the Risk Appetites. The Chief Compliance Officer (“CCO”) Risk Policy Framework Policies and procedures are essential tools of governance and define principles, rules and standards, and the specific processes that must be adhered to in order to effectively manage risk at Nomura. Risk management operations are Monitoring, Reporting and Data Integrity Development, consolidation, monitoring and reporting of risk management information (“ 135 decision-making, action and escalation as required. The Risk Management Division Risk Management Enhancement Program (“RMEP”) U.S. Prime Brokerage Event In March 2021, following the default of one of our prime brokerage clients in the United States on its obligations to post additional margin in respect of its positions with us, we issued a closeout notice to the client following which we began to wind down the positions held by us and liquidate hedges held against those positions. Due to fluctuations in the market values of the hedges against the positions and our expectation that we will not be able to recover those losses from the client, we recognized significant losses in the fourth quarter and fiscal year ended March 31, 2021, and recognized additional losses in the first quarter and fiscal year ended March 31, 2022. Our transactions with the client comprised (i) total return swaps (the “TRS transactions”), which are transactions that allow the client to obtain synthetic (i.e., derivative) long or short exposure to underlying individual equities or indices, as well as (ii) providing financing against a portfolio of securities in the client’s cash prime brokerage account. To manage credit risk in relation to prime brokerage clients, we require that prime brokerage clients deposit collateral (referred to as “margin”) in respect of their positions with us in accordance with the margin ratios applied to them. These margin ratios are determined based on the results of an internal risk assessment of the specific client and the composition of the client’s positions and may require that they post additional margin based on the effect of market movements on these ratios. TRS transactions are hedged from a market risk perspective by holding long or short positions in individual equities or indices and through derivative transactions, depending on the positions taken by the relevant client. For long equity positions taken by the client, we hold cash equity long positions in the underlying equities as well as derivative transactions. For short equity positions taken by the client, we hold cash equity short positions and derivative transactions. Lending transactions against cash prime brokerage portfolios are generally overcollateralized, and therefore not separately hedged, and we may enter into separate hedges if the value of the collateral falls. Between January and March 2021, transaction amounts and volumes with the client increased significantly as a result of changes in market prices as well as new positions entered into by the client. However, in March 2021, the market value of certain securities in which the client held a large synthetic position experienced a sharp decline, after which we requested that the client deposit additional margin with us pursuant to our contractual agreements with the client. The client defaulted on its obligation to post additional margin, and we issued a closeout notice to the client. It became clear that the client had similar large positions with other financial institutions, and that the client had also defaulted on margin calls with these financial institutions. Although we endeavored to take a disciplined approach to unwind the positions and liquidate the hedges for the TRS transactions, taking into account both market impact and our own trading losses, due to the significant volume of positions being closed by both us and the other affected financial institutions and the effect on market prices, we recognized ¥204.2 billion of losses in earnings reported within Net gain (loss) on trading in the fourth quarter and fiscal year ended March 31, 2021. We also recognized additional provisions for current expected credit losses of ¥41.6 billion in earnings reported within other expenses in the fourth quarter and the fiscal year ended March 31, 2021 against loans extended to the client collateralized by a cash portfolio of securities, reflecting the reduced likelihood of recovery on these lending transactions. All of the positions with the client were closed out and hedges liquidated by May 17, 2021, as a result of which we recognized losses of approximately ¥65.4 billion in the first quarter and the fiscal year ended March 31, 2022, of which ¥56.1 billion booked in Equities revenues as trading loss and ¥9.3 billion booked as loan loss provision in expenses. 136 RMEP Overview Following this incident, we conducted a comprehensive review of our risk management framework and considered a broad range of measures to further strengthen our risk management. As an important measure of risk management enhancement, we established the Board Risk Committee ( “BRC”) to provide specialized oversight to deepen the oversight functions of the Board of Directors. At the same time, the existing committee to deliberate risk management matters on the executive side was partially reorganized, from the GIRMC to the GRMC, in order to effectively coordinate with the BRC on the supervisory side. For details on the BRC and the GRMC, see ‘Risk Management Governance and Oversight’. In addition, the Steering Committee for Enhancement of Risk Management (Steering Committee), which is chaired by Group CEO, was established in 2021 to promote the implementation of measures to enhance risk management across the group. The Steering Committee deliberates on matters such as formulating and overseeing the execution of enhancement measures, securing necessary resources, and developing a global cooperation structure. Further, a Chief Transformation Officer (the “CTO”) leads efforts to advance group-wide initiatives, and foster collaboration and consistency across regions. To ensure supervision of the enhancement plan at the highest level, the Steering Committee updates the EMB on a regular basis as well as reports progress of the plan directly to the BoD. Under the leadership of the Steering Committee, detailed measures to enhance risk management have already been discussed and the RMEP initiatives are being implemented. These measures have been categorized into four areas: business strategy, oversight, risk management, and risk culture. We have assigned an executive officer or executive-level person to each area and have prioritized the resources necessary for implementation. The RMEP key achievements are as follows. Business Strategy We clarified our Global Markets business strategy and conducted regular reviews of the business portfolio. We also take the measures to maintain consistency between the risk profile, and other areas such as the firm’s strategic direction, risk appetite and allocation of resources. Oversight In order to build a more robust, global cross-border governance framework, we are taking measures related to the cross-border booking model and controls at local entities. We also set up functions which controls Financial and Non-Financial risk management in Wholesale Front Office. Through this initiative, we have built the framework to strengthen critical first-line risk management functions and enhance oversight of complex business activities carried out globally. In addition, we have introduced globally unified performance management for senior management in the Wholesale Division to better align individual compensation with our medium- and long-term strategic initiatives and Risk and Conduct related performance.Risk Management We have redesigned financial risk appetite to more explicitly describe the types and levels of risk that we accept in order to achieve the objectives of our management strategy and business plan and appetites are now expressed in more specific quantitative metrics. In addition, we reviewed our committees to strengthen the governance of portfolio risk management and transaction approvals. Further, in order to enhance the understanding and embeddedness of the roles and responsibilities related to risk management in the three lines of defense model, we clearly documented these roles and responsibilities at the group level and provided related training. 137 We are also enhancing various methods for measuring risks and exposures and are comprehensively reviewing risks based on multiple risk metrics, including newly developed metrics. Moreover, in order to manage risks appropriately, according to the size and complexity of the business, we have increased staff within the risk control function of the first line, the risk management function of the second line, and Internal Audit, which is the third line. Risk Culture As a firm that emphasizes the cultivation of a corporate culture, including a risk culture, we regularly incorporate our attitude into our various plans and publications and continue to communicate it both internally and externally. For example, we revised Nomura Group Code of Conduct in March 2022 to include a new section on “Managing risks appropriately.” In addition to further enhancing the understanding and embeddedness of risk culture through discussion-based workshops and other activities, we have developed a framework for measuring embeddedness over time by adding questions related to risk culture to the Nomura Group Employee Survey. Furthermore, we work to continuously foster our risk culture by incorporating risk culture elements into existing frameworks such as those related to hiring and performance reviews. Management of Financial Resources Nomura has established a framework for management of financial resources in order to adequately manage utilization of these resources. The EMB allocates financial resources to business units at the beginning of each financial year. These allocations are used to set revenue forecasts for each business Risk-weighted assets A key component used in the calculation of our consolidated capital adequacy ratios is risk-weighted assets. The EMB determines the risk appetite for our consolidated Tier 1 capital ratio on an annual basis and sets the limits for the usage of risk-weighted assets by each division and by additional lower levels of the division. In addition the EMB determines the risk appetite for the level of exposures under the leverage ratio framework which is a non-risk based measure to supplement risk-weighted assets. See Item 4.B. Business Overview—Regulatory Capital Form 20-F for the fiscal year ended March 31, 2023, and “Consolidated Regulatory Capital Consolidated Leverage Ratio Available Funds The CFO decides the maximum amount of available funds, provided without posting of any collateral, for allocation within Nomura and the EMB approves the allocation of the funds to each business division. Global Treasury monitors the usage by businesses and reports to the EMB. 138 Risk Category and Definition Nomura
Market Risk Management Market risk is the risk of loss arising from fluctuations in values of financial assets and liabilities (including off-balance sheet items) due to fluctuations in market risk factors (interest rates, foreign exchange rates, prices of securities and others).Market Risk Management Process Effective management of market risk requires the ability to analyze a complex and evolving portfolio in a constantly changing global market environment, identify problematic trends and ensure that appropriate action is taken in a timely manner. Nomura uses a variety of statistical risk measurement tools to assess and monitor market risk on an ongoing basis, including, but not limited to, Value at Risk (“VaR”), Stressed VaR (“SVaR”) and Incremental Risk non-linear behaviors and can be aggregated across risk factors at any level of the group hierarchy, from group level to business division, units or desk levels. Market risk is monitored against a set of approved limits, with daily reports and other management information provided to the business units and senior management.Value at Risk VaR is a measure of the potential loss due to adverse movements of market factors, such as equity prices, interest rates, credit, foreign exchange rates, and commodities with associated volatilities and correlations. VaR Methodology Assumptions Nomura uses a single VaR model which has been implemented globally in order to determine the total trading VaR. A historical simulation is implemented, where historical market moves over a two-year window are applied to current exposure in order to construct a profit and loss distribution. Potential losses can be estimated at required confidence levels or probabilities. For internal risk management purposes, VaR is calculated across Nomura using aOne-day time horizon; this data is presented below. A scenario weighting scheme is employed to ensure that the VaR model responds to changing market volatility. one-year window during a period of financial stress. The SVaR window is regularly calibrated and observations are equally weighted.Nomura’s VaR model uses exact time series for each individual risk factor. However, if good quality data is not available, a ‘proxy logic’ maps the exposure to an appropriate time series. The level of proxying taking place is carefully monitored through internal risk management processes and there is a continual effort to source new time series to use in the VaR calculation. VaR Backtesting The performance of Nomura’s VaR model is One-day trading losses Limitations and Advantages of VaR VaR aggregates risks from different asset classes in a transparent and intuitive way. However, there are limitations. VaR is a backward-looking measure: it implicitly assumes that distributions and correlations of recent factor moves are adequate to represent moves in the near future. VaR is appropriate for liquid markets and is not appropriate for risk factors that exhibit sudden jumps. Therefore it may understate the impact of severe events. Given these limitations, Nomura uses VaR only as one component of a diverse market risk management process. VaR One-day VaR data using the confidence level of 95% for the fiscal year ended March 31, 2023 is presented below.The following graph shows the daily VaR over the last six quarters for substantially all of Nomura’s trading positions: The following tables show the VaR as of each of the dates indicated for substantially all of Nomura’s trading positions:
141 Stress Testing Nomura conducts market risk stress testing since VaR and sensitivity analysis have limited ability to capture all portfolio risks or tail risks. Stress testing for market risk is conducted regularly, using various scenarios based upon features of trading strategies. Nomura conducts stress testing not only at Non-Trading RiskA major market risk in Nomura’s non-trading portfolio relates to equity investments held for operating purposes and on a long-term basis. Equity investments held for operating purposes are minority stakes in the equity securities of unaffiliated Japanese financial institutions and corporations held in order to promote existing and potential business relationships. Thisnon-trading portfolio is exposed mainly to volatility in the Japanese stock market. One method that can estimate the market risk in this portfolio is to analyze market sensitivity based on changes in the TOPIX, which is a leading index of prices of stocks on the Nomura uses regression analysis covering the previous 90 days which tracks and compares fluctuations in the TOPIX and the fair value of Nomura’s equity investments held for operating purposes, which allows to determine a correlation factor. Based on this analysis for each 10% change in the TOPIX, the fair value of Nomura’s operating equity investments held for operating purposes can be expected to change by Credit Risk Management Credit risk is the risk of loss arising from an obligor’s default, insolvency or administrative proceeding which results in the obligor’s failure to meet its contractual obligations in accordance with agreed terms. This includes both on and off-balance sheet exposures. It is also the risk of loss arising through Nomura manages credit risk on a global basis and on an individual Nomura legal entity basis. Credit Risk Management Framework The measurement, monitoring and management of credit risk at Nomura are governed by a set of global policies and procedures. Credit Risk Management (“CRM”), a global function within the Risk Management Division, is responsible for the implementation and maintenance of these policies and procedures. These policies are authorized by the Credit risk is managed by CRM together with various global and regional risk committees. This Credit Risk Management Process CRM operates as a credit risk control function within the Risk Management Division, reporting to the CRO. The process for managing credit risk at Nomura includes: Evaluation of likelihood that a counterparty defaults on its payments and obligations; 142 Assignment of internal ratings to all active counterparties; Approval of extensions of credit and establishment of credit limits; Measurement, monitoring and management of Nomura’s current and potential future credit exposures; Setting credit terms in legal documentation; and Use of appropriate credit risk mitigants including netting, collateral and hedging. The scope of credit risk management includes counterparty trading and various debt or equity instruments including loans, private equity investments, fund investments, investment securities and any other as deemed necessary from a credit risk management perspective. The evaluation of counterparties’ creditworthiness involves a thorough due diligence and analysis of the business environments in which they operate, their competitive positions, management and financial strength and flexibility. Credit analysts also take into account the corporate structure and any explicit or implicit credit support. CRM evaluates credit risk not only by counterparty, but also by counterparty group. Following the credit analysis, CRM estimates the probability of default of a given counterparty or obligor through an alphanumeric ratings scale similar to that used by rating agencies and a corresponding numeric scale. Credit analysts are responsible for assigning and maintaining the internal ratings, ensuring that each rating is reviewed and approved at least annually. Nomura’s internal rating system employs a range of ratings models to Establishing the amount of counterparty credit risk that Nomura is willing to take to an individual counterparty or counterparty group (setting of credit limits); Determining the level of delegated authority for setting credit limits (including tenor); The frequency of credit reviews (renewal of credit limits); Reporting counterparty credit risk to senior management within Nomura; and Reporting counterparty credit risk to stakeholders outside of Nomura. The Credit Risk Control Unit (“CRCU”) is a function within the Risk Model Validation Group For regulatory capital calculation purposes, Nomura has been applying the Foundation Internal Rating Based Approach in calculating credit risk-weighted assets since the end of March 2011. The Standardized Approach is applied to certain business units or asset types, which are considered immaterial to the calculation of credit risk-weighted assets. Internal ratings are mapped to the probabilities of default (“PD”) which in turn are used for calculating credit risk-weighted assets. PDs are estimated annually by the Risk Methodology Group and validated by the CRCU through testing of conservativeness and backtesting of PDs used in calculations. 143 Credit Limits and Risk Measures Internal ratings form an integral part in the assignment of credit limits to counterparties. Nomura’s credit limit framework is designed to ensure that Nomura takes appropriate credit risk in a manner that is consistent with its overall risk appetite. Global Credit policies define the delegated authority matrices that establish the maximum aggregated limit amounts and tenors that may be set for any single counterparty group based on their internal rating. Nomura’s main type of counterparty credit risk exposures arise from derivatives transactions or securities financing transactions. Credit exposures against counterparties are managed by means of setting credit limits based upon credit analysis of individual counterparty. Credit risk is managed daily through the monitoring of credit exposure against approved credit limits and the ongoing monitoring of the creditworthiness of Nomura’s counterparties. Nomura’s global credit risk management systems record For derivatives and securities financing transactions, Nomura measures credit risk primarily by way of a Monte Carlo-based simulation model that determines a Potential Exposure profile at a specified confidence level. The exposure calculation model used for counterparty credit risk management has also been used for the Internal Model Method based exposure calculation for regulatory capital reporting purposes since the end of December 2012. Loans and lending commitments are measured and monitored on both a funded and unfunded basis. Wrong Way Risk Wrong Way Risk (“WWR”) occurs when exposure to a counterparty is highly correlated with the deterioration of creditworthiness of that counterparty. Nomura has established global policies that govern the management of Stress Testing Stress Testing is an integral part of Nomura’s management of credit risk. Regular stress tests are used to support the assessment of credit risks by counterparties, sectors and regions. The stress tests include potential concentrations that are highlighted as a result of applying shocks to risk factors, probabilities of default or rating migrations. Risk Mitigation Nomura utilizes financial instruments, agreements and practices to assist in the management of credit risk. Nomura enters into legal agreements, such as the International Swap and Derivatives Association, Inc. of a counterparty default. Further reduction in credit risk is achieved through entering into collateral agreements that allow Nomura to obtain collateral from counterparties either upfront or contingent on exposure levels, changes in credit rating or other factors. 144 Credit Risk to Counterparties in Derivatives Transaction The credit exposures arising from Nomura’s trading-related derivatives as of March 31,
Country Risk At Nomura, country risk is defined as the risk of loss arising from country-specific events (such as political, economic, legal and other events) that affect counterparties and/or issuers within that country, causing those counterparties and/or issuers to be unable to meet financial obligations. Nomura’s country risk framework acts as a complement to other risk management areas and encompasses a number of tools including, but not limited to, country limits, which restrict credit exposure concentration to any given country. Other tools to manage country risk include country ratings as well as country risk policies and procedures that describe responsibilities and delegation for decision-making. Nomura’s credit portfolio remains well-diversified by country and concentrated towards highly-rated countries.
Russia and Ukraine war Since the war in Ukraine began in February 2022, Nomura has been actively monitoring the impact of the conflict on the Ukraine and Russian economies, as well as on other financial markets. As of March 31, 2023, the total direct exposure of Nomura to Ukraine and Russia was not significant. Operational Risk Management Operational risk is the risk of financial loss non-financial risks. An Operational Risk Management Framework has been established in order to allow Nomura to identify, assess, manage, monitor and report on operational risk. The 146 This framework is set out below: Policy framework: Sets standards for managing operational risk and details how to monitor adherence to these standards. Training and awareness: Action taken by ORM to improve business understanding of operational risk. Event Reporting: This process is used to identify and report any event which resulted in or had the potential to result in a loss or gain or other impact associated with inadequate or failed internal processes, people and systems, or from external events. Risk and Control Self-Assessment Key Risk Indicators Scenario Analysis: The process used to assess and quantify potential high impact, low likelihood operational risk events. During the process actions may be identified to enhance the control Outputs from the risk management activities Analysis and reporting: A key aspect of ORM’s role is to analyze, report, and challenge operational risk information provided by business units, and work with business units to develop action plans to mitigate risks. Operational risk capital calculation: Calculate operational risk capital as required under applicable Basel standards and local regulatory requirements. Regulatory Capital Calculation for Operational Risk Nomura uses the Standardized Approach for calculating regulatory capital for operational risk. This involves using a three-year average of gross income allocated to business lines, which is multiplied by a fixed percentage Nomura uses consolidated net revenue as gross income, however for certain consolidated subsidiaries, gross operating profit is used as gross income. Gross income allocation is performed by mapping the net revenue of each business segment as defined in Nomura’s management accounting data to each business line defined in the Standardized Approach as follows:
Nomura calculates the required amount of operational risk capital for each business line by multiplying the allocated annual gross income amount by the appropriate Beta Factor defined above. The operational risk capital for any gross income amount not allocated to a specific business line is determined by multiplying such unallocated gross income amount by a fixed percentage of 18%. The total operational risk capital for Nomura is calculated by aggregating the total amount of operational risk capital required for each business line and unallocated amount and by determining a three-year average. Where the aggregated amount for a given year is negative, then the total operational risk capital amount for that year will be calculated as zero. In any given year, negative amounts in any business line are offset against positive amounts in other business lines. However, negative unallocated amounts are not offset against positive amounts in other business lines and are calculated as zero. Operational risk capital is calculated at the end of September and March each year. Model Risk Management Model Risk is the risk of financial loss, incorrect decision making, or damage to the firm’s credibility arising from Model errors or incorrect or inappropriate Model application. To effectively manage the Firm’s Model Risk, Nomura has established a Model Risk Management Framework to govern the development, ownership, validation, approval, usage, ongoing monitoring, and periodic review of the Firm’s Models. The framework is supported by a set of policies and procedures that articulate process requirements for the various elements of the model lifecycle, including monitoring of model risk with respect to the Firm’s appetite. New models and material changes to approved models must be independently validated prior to official use. Thresholds to assess the materiality of model changes are defined in Model Risk Management’s procedures. During independent validation, validation teams analyze a number of factors to assess a model’s suitability, identify model limitations, and quantify the associated model risk, which is ultimately mitigated through the imposition of approval conditions, such as usage conditions, model reserves and capital adjustments. Approved models are subject to Model Risk Management’s Funding and Liquidity Risk Management For further information on funding and liquidity risk management, see Item 5.B. “ Liquidity and Capital Resources—Funding and Liquidity Management 148 Risk Measures and Controls Limit Frameworks The establishment of robust limit monitoring and management is central to appropriate monitoring and management of risk. The limit management frameworks incorporate day-to-day New Business Risk Management The new business approval process represents the starting point for new business in Nomura and exists to support management decision-making and ensure that risks associated with new products and transactions are identified and managed appropriately. The new business approval process consists of two components:
The new business approval process continues to seek assuring the sound and effective management to better meet the various changes observed in the market environment. Stress Testing Stress testing performed at the Nomura Group Stress tests are run on a regular basis or on an ad hoc basis as needed, for example, in response to material changes in the external environment and/or in the Nomura Group risk profile. The results of stress tests with supporting detailed analysis are reported to senior management and other stakeholders as appropriate for the stress test being performed. Stress testing is categorized either as sensitivity analysis or scenario analysis and may be performed on a Nomura Group-wide basis or at more granular levels. Sensitivity analysis is used to quantify the impact of a market move in one or two associated risk factors (for example, equity prices, equity volatilities) in order primarily to capture those risks which may not be readily identified by other risk models; Scenario analysis is used to quantify the impact of a specified event across multiple asset classes and risk classes. This is a primary approach used in performing stress testing at the different hierarchical levels of the Nomura Group; Scenario analysis includes following examples. Nomura Group establishes several stress scenarios to validate risk appetite for capital and liquidity soundness, taking into account the business environment, business’s risk profile, economic environment and forecasts. 149 Group-wide stress to assess the capital adequacy of the Nomura Group under severe but plausible market scenarios is conducted on a quarterly basis at a minimum; and Reverse stress testing, a process of considering the vulnerabilities of the firm and hence how it may react to situations where it becomes difficult to continue its business, and reviewing the results of that analysis, is conducted on an annual basis at a minimum. Stress testing is an integral part of the Nomura Group’s overall governance and is used as a tool for forward-looking risk management, decision-making and enhancing communication amongst Corporate Functions, Business Divisions, and senior management. Item 12. Description of Securities Other Than Equity Securities A. Debt Securities Not applicable. B. Warrants and Rights Not applicable. C. Other Securities Not applicable. D. American Depositary Shares Fees payable by ADR Holders The following table shows the fees and charges that a holder of the Company’s ADR may have to pay, either directly or indirectly:
Fees paid to Nomura by the depositary The Bank of New York Mellon, as depositary, has agreed to pay all its standard out-of-pocket non-registered shareholders of ADRs. From April 1, PART II Item 13. Defaults, Dividend Arrearages and Delinquencies None. Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds None. Item 15. Controls and Procedures Disclosure Controls and Procedures. Our Disclosure Committee is responsible for the establishment and maintenance of our disclosure controls and procedures. As of March 31, Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, our Group Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, Management’s Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and15d-15(f) under the Securities Exchange Act of 1934). Our management, with the participation of our Group Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting using the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, page Changes in Internal Control Over Financial Reporting. Our management also carried out an evaluation, with the participation of our Group Chief Executive Officer and Chief Financial Officer, of changes in our internal control over financial reporting during the year ended March 31, Item 16A. Audit Committee Financial Expert The Company’s Board of Directors has determined that each of that Mr. Noriaki Shimazaki and Mr. Masahiro Ishizuka, a member of the Audit Committee, qualifies as an “audit committee financial expert” as such term is defined by the General Instructions for Item 16A of Form 20-F. Additionally, Mr. Noriaki Shimazaki “Directors and Senior Management—Directors” Item 16B. Code of Ethics Form 20-F) consisting of the “Nomura Group Code of 152 replaced our prior code of ethics. The Code of Conduct is periodically reviewed to better respond to the changes in the social and economic conditions and to the expectations of our stakeholders. In March 2023, we revised the previous version of “Nomura Group Code of Conduct” to promote support for mutual growth and teamwork, while maintaining the overall structure of the previous version. A copy of the “Nomura Group Code of Conduct 2023” is attached to this annual report as Exhibit 11.1 and a copy of the “Nomura Group Code of Ethics for Financial Professionals” Item 16C. Principal Accountant Fees and Services Ernst & Young ShinNihon LLC has been our principal accountant for the last
Audit-Related Fees included fees for consultations on accounting issues relating to our business. Tax Fees included fees for services relating to tax planning and compliance. All Other Fees included fees for services relating to advice with respect to regulations and disclosures under the Financial Instruments and Exchange Act in connection with our underwriting business. In accordance with the regulations of the Securities and Exchange Commission issued pursuant to Sections 202 and 208 of the Sarbanes-Oxley Act of 2002, our Audit Committee has adopted a pre-approval policy regarding the engagements of our principal accountant. Under thepre-approval policy, there are two types ofpre-approval procedures, “GeneralPre-Approval” and “SpecificPre-Approval.” Under “General Pre-Approval,” our CFO in conjunction with our principal accountant must make a proposal to our Audit Committee for the types of services and estimated fee levels of each category of services to be generallypre-approved. Such a proposal must be made at least annually. The Audit Committee will discuss the proposal and if necessary, consult with outside professionals as to whether the proposed services would impair the independence of our principal accountant. If such proposal is accepted, the Audit Committee will inform our CFO and principal accountant of the services that have beenpre-approved and are included in a “GeneralPre-Approved List.” Our Audit Committee is informed of each such service that is provided.Under “Specific Pre-Approval,” if any proposed services are not on the GeneralPre-Approved List, our CFO is required to submit an application to the Audit Committee for such services. After reviewing the details and estimated fee levels for each engagement and if necessary, consulting with outside professionals as to whether the proposed services would impair the independence of the principal accountant, the Audit Committee may make a specificpre-approval decision on these services. Also, if any approved services in the General153 Pre-Approved List exceed the fee levels prescribed on the List, our CFO is required to submit an application to the Audit Committee for new fee levels for such services. The Audit Committee may make apre-approval decision after reviewing the details of the services and the estimated fee levels for each engagement.None of the services described in the first paragraph under this Item 16C were waived from the pre-approval requirement pursuant toRule 2-01(c)(7)(i)(C) ofRegulation S-X. Item 16D. Exemptions from the Listing Standards for Audit Committees Not applicable. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers During the year ended March 31, 459-1 of the Companies Act. For an explanation of the right of our shareholders to demand such repurchases by us, see “Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 The following table sets forth certain information with respect to our purchases of shares of our common stock during the year ended March 31,
On Nomura recognizes the need to set out flexible financial strategies that allow the Board of Directors to respond quickly to any changes in the business environment and is looking into implementing further share buybacks. Details will be announced when finalized. 154 On April 26, 2023, we announced a resolution of the Board of Directors to establish a share buyback program in accordance with Article 459-1 of the Companies Act. The period of repurchase under the program is from May 16, 2023 to March 29, 2024, and we are authorized to purchase up to 35,000,000 shares of our common stock or to a maximum of ¥20 billion.As of May 31, Item 16F. Change in Registrant’s Certifying Accountant Not applicable. Item 16G. Corporate Governance Companies listed on the NYSE must comply with certain standards regarding corporate governance under Section 303A of the NYSE Listed Company Manual. However, listed companies that are foreign private issuers, such as the Company, are permitted to follow home country practice in lieu of certain provisions of Section 303A. The following table shows the significant differences between the corporate governance practices followed by U.S. listed companies under Section 303A of the NYSE Listed Company Manual and those followed by the Company. The information set forth below is current as of the date of this annual report.
155
156 Item 16H. Mine Safety Disclosure Not applicable. Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 157 PART III Item 17. Financial Statements In lieu of responding to this item, we have responded to Item 18 of this annual report. Item 18. Financial Statements The information required by this item is set forth in our consolidated financial statements included in this annual report. Item 19. Exhibits
158
The Company has not included as exhibits certain instruments with respect to our long-term debt. The amount of debt authorized under each such debt instrument does not exceed 10% or our total assets. We will furnish a copy of any such instrument to the SEC upon request. NOMURA HOLDINGS, INC. INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-1 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Nomura Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Nomura Holdings, Inc. (the Company) as of March 31, We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F-2
F-3
/ / Ernst & Young ShinNihon LLC We have served as the Company’s auditor for SEC reporting purposes since 2002, and as its Japanese statutory auditor since 1973, which includes the years we served as joint auditors between 1978 and 2002. Tokyo, Japan June Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Nomura Holdings, Inc. Opinion on Internal Control over Financial Reporting We have audited Nomura Holdings, Inc.’s (the Company’s) internal control over financial reporting as of March 31, We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company, which comprise the consolidated balance sheets Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young ShinNihon LLC Tokyo, Japan June F-5 NOMURA HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of these consolidated financial statements. NOMURA HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS—(Continued)
The accompanying notes are an integral part of these consolidated financial statements. The following table presents the classification of consolidated variable interest entities’ (“VIEs”) assets and liabilities included in the consolidated balance sheets above. The assets of a consolidated VIE may only be used to settle obligations of that VIE. Creditors do not typically have any recourse to Nomura beyond the assets held in the VIEs. See Note 6 “ Securitizations and Variable Interest Entities
The accompanying notes are an integral part of these consolidated financial statements. F-8 NOMURA HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME
The accompanying notes are an integral part of these consolidated financial statements. F-9 NOMURA HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
The accompanying notes are an integral part of these consolidated financial statements. NOMURA HOLDINGS, INC. CONSOLIDATED STATEMENTS OF
F-11 NOMURA HOLDINGS, INC. CONSOLIDATED STATEMENTS OF
The accompanying notes are an integral part of these consolidated financial statements. NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table presents a reconciliation of cash and cash equivalents
Non-cash — Total amount of right-of-use assets recognized for the years ended March 31, 2021, 2022 and 2023 were ¥41,279 million, ¥32,208 million and ¥36,032 million, respectively.The accompanying notes are an integral part of these consolidated financial statements. NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of accounting policies: Description of business— Nomura Holdings, Inc. (“Company”) and its broker-dealer, banking and other financial services subsidiaries provide investment, financing and related services to individual, institutional and government clients on a global basis. The Company and other entities in which it has a controlling financial interest are collectively referred to as “Nomura” within these consolidated financial statements. Nomura operates its business through various divisions based upon the nature of specific products and services, its main client base and its management structure. On April 1, 2021, the Asset Management Division and the Merchant Banking Division were combined and the Investment Management Division was established. Nomura reports operating results through In its Retail segment, Nomura provides investment consultation services mainly to individual clients in Japan. In its Basis of presentation— The accounting and financial reporting policies of These consolidated financial statements include the financial statements of the Company and other entities in which it has a controlling financial interest. Nomura initially determines whether it has a controlling financial interest in an entity by evaluating whether the entity is a variable interest entity (“VIE”) under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810 “ Consolidation For entities other than VIEs, Nomura is generally determined to have a controlling financial interest in an entity when it owns a majority of the voting interests. Equity investments in entities in which Nomura has significant influence over operating and financial decisions (generally defined as a holding of 20 to 50 percent of the voting stock of a corporate entity, or at least 3 percent of a limited partnership) are accounted for under the equity method of accounting (“equity method investments”) and reported within Other assets — Investments in and advances to affiliated companies Financial Instruments Trading assets, Private equity and debt investments or Other assets F-15 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Equity investments Trading assets, Private equity and debt investments or Other assets — Other Certain consolidated entities Financial — Investment Companies The Company’s principal subsidiaries include Nomura Securities Co., Ltd. (“NSC”), Nomura Securities International, Inc. (“NSI”), Nomura International plc (“NIP”) and Nomura Financial Products & Services, Inc. (“NFPS”). All material intercompany transactions and balances have been eliminated on consolidation. Use of Various references are made throughout the notes to these consolidated financial statements where critical accounting estimates based on management judgment have been made, the nature of the estimates, the underlying assumptions made by management used to derive those estimates and how Fair value of financial A significant amount of Nomura’s financial assets and financial liabilities are carried at fair value, with changes in fair value recognized through the consolidated statements of income and/ or the consolidated statements of comprehensive income. Use of a fair value measurement is either specifically required under U.S. GAAP or Nomura makes an election to use a fair value measurement for certain eligible items under the fair value option. Other financial assets and financial liabilities are carried at fair value on a nonrecurring basis, where the primary measurement basis is not fair value. Fair value is only used in specific circumstances after initial recognition, such as to measure impairment. In both cases, fair value is generally determined in accordance with ASC 820 “ Fair Value Measurements and Disclosures Fair value measurements F-16 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The fair Allowance for current expected credit losses— Management recognizes allowance for current expected credit losses on financial assets not carried at fair value and certain off-balance sheet financial instruments including unfunded loan commitments not carried at fair value in accordance with ASC 326,“Financial Instruments – Credit Losses” Current expected credit losses are calculated over the expected life of the financial instruments in scope of the requirements on an individual or a portfolio basis, considering all relevant, reasonable and supportable information available about the collectability of cash flows, including information about past events, current conditions and future forecasts. Accrued interest receivables are excluded from the amortized cost basis of financing receivables when calculating current expected credit losses. The methodology used by Nomura to determine allowances for current expected credit losses in accordance with the current expected credit losses impairment model (“CECL impairment model”) primarily depends on the nature of the financial instrument and whether certain practical expedients permitted by ASC 326 are applied by Nomura. Allowances for current expected credit losses against recognized financial instruments are reported in the consolidated balance sheets within Allowance for credit losses off-balance sheet financial instruments are reported in the consolidated balance sheets withinOther liabilities Other expenses. See Note 7 “Financing receivables” Transfers of financial assets— Nomura accounts for the transfer of a financial asset as a sale when Nomura relinquishes control over the asset by meeting the following conditions: (a) the asset has been isolated from the transferor (even in bankruptcy or other receivership), (b) the transferee has the right to pledge or exchange the asset received, or if the transferee is an entity whose sole purpose is to engage in securitization or asset-backed financing activities, if, the holders of its beneficial interests have the right to pledge or exchange the beneficial interests held and (c) the transferor has not maintained effective control over the transferred asset. In connection with its securitization activities, Nomura utilizes special purpose entities (“SPEs”) to securitize commercial and residential mortgage loans, government and corporate securities Trading assets —Net gain on trading F-17 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Foreign currency translation— The financial statements of the Company’s subsidiaries and operations are measured using their functional currency which is the currency of the primary economic environment in which the entity operates. All assets and liabilities of subsidiaries and operations which have a functional currency other than Japanese Yen are translated into Japanese Yen at exchange rates Accumulated other comprehensive income (loss) Foreign currency assets and liabilities are translated at exchange rates Revenue from services provided to Nomura earns revenue through fees and commissions from providing financial services to customers across all three business divisions. These services primarily include trade execution and clearing services, distribution of fund unit services, financial advisory services, — Commissions, Revenue — Asset management and portfolio service fees Revenue — Fees from investment banking Costs to obtain or fulfill the underlying contract to provide services to a Other assets impaired .Trading assets and trading Trading assets Financial assets are classified as being held for trading when any of the following criteria are met: The financial assets are originated or acquired with the intention to generate profit through sale in the short-term; The financial assets are part of a portfolio of identified financial instruments that are managed together for the purposes of short-term profit or arbitrage profit-taking; or The financial assets are derivative assets. Trading liabilities — Net gain on trading F-18 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Certain nonderivative trading liabilities are held to economically hedge the price risk of specific investments in equity securities held for operating purposes. Changes in fair value of these trading liabilities are reported within Revenue—Gain (loss) on investments in equity securities the consolidated statements of income.Collateralized agreements and collateralized financing— Collateralized agreements Securities purchased under agreements to resell Securities borrowed Collateralized financing of repurchase agreements disclosed as Securities sold under agreements to repurchase Securities loaned Reverse repurchase and repurchase agreements principally involve the buying or selling of securities under agreements with clients to resell or repurchase these securities to or from those clients, respectively. These transactions are generally accounted for as collateralized agreements or collateralized financing transactions and are recognized in the consolidated balance sheets at the amount for which the securities were originally acquired or sold. Certain reverse repurchase and repurchase agreements are carried at fair value through election of the fair value option. Nomura also enters into Gensaki Repo transactions which are the standard type of repurchase agreement used in Japanese financial markets. Gensaki Repo transactions contain margin requirements, rights of security substitution, and certain restrictions on the client’s right to sell or repledge the transferred securities. Gensaki Repo transactions are accounted for as collateralized agreements or collateralized financing transactions and are recognized on the consolidated balance sheets at the amount that the securities were originally acquired or sold. Securities borrowing and lending transactions are generally accounted for as collateralized agreements and collateralized financing transactions, respectively. These transactions are generally cash collateralized and are recognized on the consolidated balance sheets at the amount of cash collateral advanced or received. Allowances for current expected credit losses recognized against securities borrowing transactions are not significant due to an ongoing monitoring of collateral and the short expected life of these transactions. Where Nomura acts as lenders in securities borrowing and lending transactions and receives securities that can be sold or pledged as collateral, Nomura recognizes the securities received at fair value within Other assets — Other Other liabilities. See Note 7 “Financing receivables” Offsetting of collateralized agreements and collateralized financings Reverse repurchase agreements and repurchase agreements (including Gensaki Repo transactions) accounted for as collateralized agreements and collateralized financing transactions, respectively, entered into with the same counterparty and documented under a master netting agreement are offset in the consolidated balance sheets where the specific criteria defined by ASC 210-20 “Balance —Offsetting 210-20”) are met. These criteria include requirements around the maturity of the transactions, the underlying systems on which the collateral is settled, associated banking arrangements and the legal enforceability ofclose-out and offsetting rights under the master netting agreement.210-20 are met.F-19 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Other secured borrowings Trading balances of secured borrowings Transfers and Servicing Long-term borrowings “Securitizations and Variable Interest All Nomura-owned Trading assets as See Note 5 “Collateralized Nomura uses a variety of non-trading purposes. Trading assets or Trading liabilities Short-term borrowings or Long-term borrowings Changes in fair value are recognized either through the consolidated statements of income or the consolidated statements of comprehensive income depending on the purpose for which the derivatives are used. Derivatives — Net gain on trading Derivatives held for In addition to its trading activities, Nomura uses non-trading purposes Derivatives and Hedging Fair value hedges Nomura designates certain derivative non-trading debt securities, respectively. These derivatives are effective in reducing the risk associated with the exposure being hedged and they are highly correlated with changes in the fair value of the underlying hedged items, both at inception and throughout the life of the hedging relationship. Changes in fair value of the hedging derivatives are reported together with those of the hedged financial assets and liabilities through the consolidated statements of income withinInterest expense Revenue — Other F-20 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Net investment hedges Nomura designates certain derivatives as hedges of the net investment in foreign operations related to specific subsidiaries with non-Japanese Yen functional currencies. When determining the effectiveness of net investment hedges, the effective portion of the change in fair value of the hedging derivative is determined by changes in spot exchange rates. Changes in fair value of the hedging derivatives attributable to changes in the difference between the forward rate and spot rate is excluded from the measurement of hedge effectiveness and are reported in the consolidated statements of income within— Other Accumulated other comprehensive income (loss) Economic expense hedges Nomura designates certain derivatives as economic expense hedges to manage equity price risk or foreign currency risk of certain expenses arising from forecasted transactions or firm commitments. Changes in fair value of these derivatives are reported in the same line item in the consolidated statements of income where expenses arising from the hedged transactions are reported. Offsetting of derivatives Derivative assets and liabilities with the same counterparty documented under a legally enforceable master netting agreement and the related cash collateral receivables and payables are presented on a net basis in the consolidated balance sheets where the specific criteria defined by ASC 210-20 and ASC 815 are met.Settlement-to-market Exchange traded and centrally cleared OTC derivatives typically involve daily variation margin payments and receipts which reflect changes in the fair value of the related derivatives. Such variation margin amounts are accounted for as either a partial settlement of the derivative or as a separate cash collateral receivable or payable depending on the legal form of the arrangement with the relevant central clearing counterparty. See Note 3 “ Loans receivable— Loans receivable are loans which management intends to hold for the foreseeable future. Loans receivable are either carried at fair value or at amortized cost. Interest earned on loans receivable is — Interest and dividends Loans receivable carried at fair value Certain loans which are risk managed on a fair value basis are carried at fair value through election of the fair value option. Nomura makes this election to mitigate volatility in the consolidated statements of income caused by the difference in measurement basis that would otherwise exist between the loans and the derivatives used to risk manage those loans. Changes in the fair value of loans receivable carried at fair value are reported in the consolidated statements of income within — Net gain on trading Loans receivable carried at amortized cost Loans receivable which are not carried at fair value are carried at amortized cost. Amortized cost represents cost adjusted for deferred fees and direct costs, unamortized premiums or discounts on purchased loans and after F-21 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) deducting Loan origination fees, net of direct origination costs, are amortized to — Interest and dividends Modifications of loans receivable where the borrower is in financial difficulty and Nomura has granted a financial concession are typically accounted for as troubled debt restructurings (“TDRs”) See Note 7 “ Financing receivables Other receivables— Receivables from customers on client securities transactions, amounts receivable from Receivables from other than customers These amounts are carried at contractual amounts due less any applicable allowance for current expected credit losses See Note 7 “ Financing receivables” under ASC 326 are determined. Loan commitments— Unfunded loan commitments written by Nomura are accounted for as eitheroff-balance sheet instruments, or are carried at fair value on a recurring basis either as trading instruments or through election of the fair value option.These loan commitments are generally accounted for in a manner consistent with the accounting for the loan receivable upon funding. Where the loan receivable will be classified as a trading asset or will be elected for the fair value option, the loan commitment is also generally — Net gain on trading For loan commitments where the loan will be held for the foreseeable future and will not be elected for the fair value option, Nomura recognizes accordance with ASC 326. Loan commitment fees are generally deferred and recognized over the term of the loan when funded as an adjustment to yield. If drawdown of the loan commitment is considered remote, loan commitment fees are recognized over the commitment period as service revenue.See Note 7 “Financing receivables” F-22 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Payables and deposits— Payables to customers Payables to other than customers failed-to-receive Deposits received at banks Office buildings, land, equipment and facilities— Office buildings, land, equipment and facilities, owned and held for use by Nomura are stated at cost, net of accumulated depreciation and amortization, except for land, which is stated at cost. Significant renewals and additions are capitalized at cost. Maintenance, repairs and minor renewals are expensed as incurred in the consolidated statements of income. Leases and subleases entered into by Nomura as either lessor or lessee are classified as either operating or finance leases on inception date in accordance with ASC 842 right-of-use Other assets—Office buildings, land, equipment and facilities Other liabilities Lease liabilities are initially measured at present value of the future minimum lease payments over the expected lease term. The future minimum lease payments are discounted using a relevant Nomura incremental borrowing rate as derived from information available at lease commencement date. The expected lease term is generally determined based on the contractual maturity of the lease, and adjusted for periods covered by options to extend or terminate the lease when Nomura is reasonably certain to exercise those options. ROU assets are initially measured at the amount of lease liabilities, and adjusted for any prepaid lease payments, initial direct costs incurred and any lease incentives received. After lease commencement date, for operating leases Nomura as lessee recognizes lease expense over the lease term generally on a straight-line basis within Occupancy and related depreciation Information processing and communications
Depreciation and amortization charges of owned assets are generally computed using the straight-line method and recognized over the estimated useful lives of each asset. The estimated useful life of an asset takes into consideration technological change, normal deterioration and actual physical usage by Nomura. Leasehold improvements are depreciated over the shorter of their useful life or the term of The estimated useful lives for significant asset classes are as follows:
F-23 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Long-lived assets, including ROU assets and software assets but excluding goodwill and indefinite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the estimated future undiscounted cash flows generated by the asset is less than the carrying amount of the asset, a loss is recognized to the extent that the carrying value exceeds its fair value.See Note 8 Leases Investments in equity securities— Nomura holds minority stakes in the equity securities of unaffiliated Japanese financial institutions and corporations in order to promote existing and potential business relationships. These companies often have similar investments in Nomura. Such cross-holdings are a customary business practice in Japan and provide a way for companies to manage shareholder relationships. These investments, which Nomura refers to as being held for operating purposes, are carried at fair value and reported within Other — Investments in equity securities — Gain (loss) on investments in equity securities Other Certain non-trading purposes.Non-trading securities held byOther — Non-trading debt securitiesOther — Other — Other non-trading securities are reported within— Other Short-term and long-term borrowings— Short-term borrowings are defined as borrowings which are due on demand, which have a contractual maturity of one year or less at issuance date, or which have a longer contractual maturity but which contain substantive features outside of Nomura’s control that allows the investor to demand redemption within one year from original issuance Structured notes are debt securities which contain embedded features (often meeting the accounting definition of a derivative) that alter the return to the investor from simply receiving a fixed or floating rate of interest to a return that depends upon some other variable(s) such as an equity or equity index, commodity price, foreign exchange rate, credit rating of a third party or more complex interest rate calculation. Structured borrowings are borrowings that have similar characteristics as structured notes. All structured notes F-24 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) structured borrowings are made primarily to mitigate the volatility in the consolidated statements of income caused by differences in the measurement basis for structured notes and the derivatives used to risk manage those positions and to generally simplify the accounting Nomura applies to these financial instruments. Changes in the fair value of structured notes elected for the fair value option — Net gain on trading Other comprehensive income See Note Borrowings Income taxes— Deferred tax assets and liabilities are recognized to reflect the expected future tax consequences of operating loss carryforwards, tax credit carryforwards and temporary differences between the carrying amounts for financial reporting purposes and the tax bases of assets and liabilities based upon enacted tax laws and tax rates. Nomura recognizes deferred tax assets to the extent it believes that it is more likely than not that a benefit will be realized. A valuation allowance is established against deferred tax assets for tax benefits available to Nomura that are not deemed more likely than not to be realized. Deferred tax assets and deferred tax liabilities that relate to the same tax-paying component within a particular tax jurisdiction are offset in the consolidated balance sheets. Net deferred tax assets and net deferred tax liabilities are reported withinOther — Other Other liabilities Nomura recognizes and measures unrecognized tax benefits based on Nomura’s estimate of the likelihood, based on technical merits, that tax positions will be sustained upon examination based on the facts and circumstances and information available at the end of each reporting period. Nomura adjusts the level of unrecognized tax benefits when there is more information available, or when an event occurs requiring a change. The reassessment of unrecognized tax benefits could have a material impact on Nomura’s effective tax rate in the period in which it occurs. Nomura tax-related interest and penalties withinIncome tax expense See Note 4 “Income taxes Stock-based and other compensation awards— Stock-based awards issued by Nomura to senior management and other employees are classified as either equity or liability awards depending on the terms of the award. Stock-based awards such as Stock Acquisition Rights (“SARs”) and Restricted Stock Units (“RSUs”) which are expected to be settled by the delivery of the Company’s common stock are classified as equity awards. For these awards, total compensation cost is generally fixed at the grant date and measured using the grant-date fair value of the award, net of any amount the employee is obligated to pay and estimated forfeitures. Stock-based awards such as Notional Stock Units (“NSUs”) and Collared Notional Stock Units (“CSUs”) which are expected to be settled in cash are F-25 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) For both equity and liability awards, fair value is determined either by using option pricing models, the market price of the Company’s common stock or the price of the third party index, as appropriate. Compensation cost is recognized in the consolidated statements of income over the requisite service period, which generally is equal to the contractual vesting period. Where an award has graded vesting, compensation expense is recognized using the accelerated recognition method. Certain deferred compensation awards pre-defined election window if certain criteria based on corporate title and length of service within Nomura are met. The requisite service period for these awards ends on the earlier of the contractual vesting date and the date that the recipients become eligible for or claim FCR.See Note 3 “Deferred compensation awards Earnings per share— The computation of basic earnings per share is based on the weighted average number of shares outstanding during the year. Diluted earnings per share reflects the assumed conversion of all dilutive securities based on the most advantageous conversion rate or exercise price available to the investors, and assuming conversion of convertible debt under the if-converted method.See Note 1 “Earnings per share Cash and cash equivalents— Nomura defines cash and cash equivalents as cash on hand and demand deposits with banks. Goodwill and intangible assets— Goodwill is recognized upon completion of a business combination as the difference between the purchase price and the fair value of the net assets acquired. Subsequent to initial recognition, goodwill is not amortized but is tested for impairment at a reporting unit level during the fourth quarter of each fiscal year, or more frequently during earlier interim periods if events or circumstances indicate there may be impairment. Nomura’s reporting units are at the same level as or one level below its business segments. Nomura tests goodwill of each separate reporting unit by initially qualitatively assessing whether events and circumstances indicate that it is more likely than not (i.e., greater than 50% allocated to the reporting unit. Intangible assets not subject to amortization (“indefinite-lived intangible assets”) are tested for impairment on an individual asset basis during the fourth quarter of each fiscal year, or more frequently during earlier interim periods if events or circumstances indicate there may be impairment. Similar to goodwill, Nomura tests an indefinite-lived intangible asset by initially qualitatively assessing whether events or circumstances indicate that it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If such assessment indicates fair value is not less than the carrying value, the intangible asset is F-26 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) deemed not to be impaired and no further analysis is required. If it is more likely than not that the fair value of the intangible asset is below its carrying value, the current estimated fair value of the intangible asset is compared with its carrying value. An impairment loss is recognized if the carrying value of the intangible asset exceeds its estimated fair value. Intangible assets with finite lives (“finite-lived intangible assets”) are amortized over their estimated useful lives and tested for impairment either individually or with other assets (“asset group”) when events and circumstances indicate that the carrying value of the intangible asset (or asset group) may not be recoverable. A finite-lived intangible asset is impaired when its carrying amount or the carrying amount of the asset group exceeds its fair value. An impairment loss is recognized only if the carrying amount of the intangible asset (or asset group) is not recoverable and exceeds its fair value. For both goodwill and intangible assets, to the extent an impairment loss is recognized, the loss establishes a new cost basis for the asset which cannot be subsequently reversed. See Note 9 “Other assets — Office buildings, land, equipment and facilities and Other / Other Equity method investments— Nomura’s equity method investments are tested in their entirety for other-than-temporary impairment when there is an indication of impairment. The underlying assets associated with the equity method investments, including goodwill, are not tested separately for impairment. Employee benefit plans— Nomura provides certain eligible employees with various benefit plans, including pensions and other post-retirement benefits. These benefit plans are classified as either defined benefit plans or defined contribution plans. Plan assets and benefit obligations, as well as the net periodic benefit cost of a defined benefit pension or post-retirement benefit plan, are recognized based on various actuarial assumptions such as discount rates, expected return on plan assets and future compensation levels at the balance sheet date. Actuarial gains and losses in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets and unrecognized prior service costs or credits are amortized to net periodic benefit cost on a straight-line basis over the average remaining service life of active employees expected to receive benefits. The overfunded or underfunded status of a plan is reported within Other — Other Other liabilities Other comprehensive income (loss) net-of-tax The net periodic pension and other benefit cost of defined contribution plans is recognized within Compensation and benefits See Note Employee benefit plans F-27 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) New accounting pronouncements adopted during the current year— No new accounting pronouncements relevant to Nomura
Future accounting developments— The following table presents a summary of new authoritative accounting pronouncements relevant to Nomura which will be adopted on or after April 1,
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2. Fair value measurements: The fair value of financial instruments A significant amount of Nomura’s financial instruments are Trading assets and private equity and debt investments, Loans and receivables, Collateralized agreements Other assets Trading liabilities, Short-term borrowings, Payables and deposits, Collateralized financing, Long-term borrowings Other liabilities. Other financial assets and financial liabilities are In all cases, fair value is determined in accordance with ASC 820 “ Fair Value Measurements and Disclosures Fair value is usually determined on an individual financial instrument basis consistent with the unit of account of the financial instrument. However, certain financial instruments managed on a portfolio basis are valued as a portfolio, namely based on the price that would be received to sell a net long position (i.e., a net financial asset) or transfer a net short position (i.e., a net financial liability) consistent with how market participants would price the net risk exposure at the measurement date. Financial assets Increases and decreases in the fair value of assets and liabilities COVID-19 pandemic in F-29 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) economic hedging strategies to mitigate Valuation methodology for financial instruments carried at fair value on a recurring basis The fair value of financial instruments is based on quoted market prices including market indices, broker or dealer quotations or an estimation by management of the expected exit price under current market conditions. Various financial instruments, including cash instruments and over-the-counter bid-offer range which best represents Nomura’s estimate of fair value. Where quoted market prices or broker or dealer quotations are not available, prices for similar instruments or valuation pricing models are considered in the determination of fair value.Where quoted prices are available in active markets, no valuation adjustments are taken to modify the fair value of assets or liabilities marked using such prices. Other instruments may be measured using valuation techniques, such as valuation pricing models incorporating observable valuation inputs, unobservable parameters or a combination of both. Valuation pricing models use valuation inputs which would be considered by market participants in valuing similar financial instruments. Valuation pricing models and their underlying assumptions impact the amount and timing of unrealized and realized gains and losses recognized, and the use of different valuation pricing models or underlying assumptions could produce different financial results. Valuation uncertainty results from a variety of factors, including the valuation technique or model selected, the quantitative assumptions used within the valuation model, the inputs into the model, as well as other factors. Valuation adjustments are used to reflect the assessment of this uncertainty. Common valuation adjustments include model reserves, credit adjustments, close-out adjustments, and other appropriate instrument-specific adjustments, such as those to reflect transfer or sale restrictions. Changes in these valuation adjustments may have a significant impact on our consolidated financial statements.The level of adjustments is largely judgmental and is based on an assessment of the factors that management believe other market participants would use in determining the fair value of similar financial instruments. The type of adjustments taken, the methodology for the calculation of these adjustments, and the valuation inputs for these calculations are reassessed periodically to reflect current market practice and the availability of new information. For example, the fair value of certain financial instruments includes adjustments for credit Such valuation pricing models are calibrated to the market on a regular basis and inputs used are adjusted for current market conditions and risks. The Valuation Model Validation Group As explained above, any changes in fixed income, equity, foreign exchange and commodity markets can impact Nomura’s estimates of fair value in the future, potentially affecting trading gains and losses. Where F-30 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) financial contracts have longer maturity dates, Nomura’s estimates of fair value may involve greater subjectivity due to the lack of transparent market data. Fair value hierarchy All financial instruments Level 1: Observable valuation inputs that reflect quoted prices (unadjusted) for identical financial instruments traded in active markets at the measurement date. Level 2: Valuation inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the financial instrument. Level 3: Unobservable valuation inputs which reflect Nomura assumptions and specific data. The availability of valuation inputs observable in the market varies by product and can be affected by a variety of factors. Significant factors include, but are not restricted to the prevalence of similar products in the market, especially for customized products, how established the product is in the market, for example, whether it is a new product or is relatively mature, and the reliability of information provided in the market which would depend, for example, on the frequency and volume of current data. A period of significant change in the market may reduce the availability of observable data. Under such circumstances, financial instruments may be reclassified into a lower level in the fair value hierarchy. Significant judgments used in determining the classification of financial instruments include the nature of the market in which the product would be traded, the underlying risks, the type and liquidity of market data inputs and the nature of observed transactions for similar instruments. Where valuation models include the use of valuation inputs which are less observable or unobservable in the market, significant management judgment is used in establishing fair value. The valuations for Level 3 financial instruments, therefore, involve a greater degree of judgment than those valuations for Level 1 or Level 2 financial instruments.Certain criteria NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following tables present the amounts of Nomura’s financial instruments
F-32 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-33 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Valuation techniques by major class of financial instrument The valuation techniques used by Nomura to estimate fair value for major classes of financial instruments, together with the significant inputs which determine classification in the fair value hierarchy, are as follows. Equities Other assets Other assets mid-market prices. Nomura determines whether the market is active depending on the sufficiency and frequency of trading activity. Where these securities are classified in Level 1 of the fair value hierarchy, no valuation adjustments are made to fair value. Listed equity securities traded in inactive markets are also generally valued using the exchange price and are classified in Level 2. Whilst rare in practice, Nomura may apply a discount or liquidity adjustment to the exchange price of a listed equity security traded in an inactive market if the exchange price is not considered to be an appropriate representation of fair value. These adjustments are determined by individual security and are not determined or influenced by the size of holding. The amount of such adjustments made to listed equity securities traded in inactive markets was ¥nil as of March 31, Private equity and debt investments F-34 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) are also made, in the absence of third-party transactions, if it is determined that the expected exit price of the investment is different from carrying value. In reaching that determination, Nomura primarily uses either a discounted cash flow (“DCF”) or market multiple valuation technique. A DCF valuation technique incorporates estimated future cash flows to be generated from the rate discounted at a weighted average cost of capital (“WACC”). Market multiple valuation techniques include comparables such as Enterprise Value/ Government, agency and municipal securities Non-G7 government securities, agency securities and municipal securities are valued using similar pricing sources but are generally classified in Level 2 as they are traded in inactive markets. Certainnon-G7 securities may be classified in Level 1 because they are traded in active markets. Certain securities may be classified in Level 3 because they are traded infrequently and there is not sufficient information from comparable securities to classify them in Level 2. These are valued using DCF valuation techniques which include significant unobservable valuation inputs such as credit spreads of the issuer.Bank and corporate debt securities The fair value of bank and corporate debt securities is primarily determined 2Commercial mortgage-backed securities (“CMBS”) Residential mortgage-backed securities (“RMBS”) F-35 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) comparable securities to classify them in Level 2, or one or more of the significant valuation inputs used in DCF valuations are unobservable. Real estate-backed securities given to the nature of the broker and dealer quotations, namely whether these are indicative or executable, the number of available quotations and how these quotations compare to any available recent market activity or alternative pricing sources. Where all significant inputs are observable, the securities will be classified in Level 2. For certain securities, no direct pricing sources or comparable securities or indices may be available. These securities are valued using DCF or valuation techniques and are classified in Level 3 as the valuation includes significant unobservable valuation inputs such as yields or loss severities. Collateralized debt obligations (“CDOs”) and other Investment trust funds and other Equity contracts Derivatives—Interest rate contracts F-36 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) interest rate derivatives which are traded in inactive markets or where the exchange price is not representative of fair value is determined using a model price and are classified in Level 2. The fair value of OTC interest rate derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes Derivatives—Credit contracts —Foreign exchange contracts Nomura includes valuation adjustments in its estimation of fair value of certain OTC derivatives relating to funding costs associated with these transactions to be consistent with how market participants in the principal market for these derivatives would determine fair value. Loans and receivables F-37 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Collateralized agreements and Collateralized financing techniques. The significant valuation inputs used include interest rates and collateral funding spreads such as general collateral or special rates. Reverse repurchase and repurchase agreements are generally classified in Level 2 of the fair value hierarchy because these valuation inputs are usually observable. Non-trading debt securitiesnon-trading subsidiaries in the group and are valued and classified in the fair value hierarchy using the same valuation techniques used for other debt securities classified asGovernment, agency and municipal securities Bank and corporate debt securities Short-term long-term borrowings (“Structured notes”) The fair value of structured notes is determined using Long-term borrowings (“Secured financing transactions”) Transfer and Servicing Level 3 financial instruments The valuation of Level 3 financial assets and liabilities is dependent on certain significant valuation inputs which are unobservable. Common characteristics of an inactive market include a low number of transactions of F-38 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) the financial instrument, stale or non-current price quotes, price quotes that vary substantially either over time or among market makers,non-executable broker quotes or little publicly released information.If corroborative evidence is not available to value Level 3 financial instruments, fair value may be measured using other equivalent products in the market. The level of correlation between the specific Level 3 financial instrument and the available benchmark instrument is considered as an unobservable valuation input. Other techniques for determining an appropriate value for unobservable valuation input may consider information such as consensus pricing data among certain market participants, historical trends, extrapolation from observable market data and other information Nomura would expect market participants to use in valuing similar instruments. Use of reasonably possible alternative valuation input assumptions to value Level 3 financial instruments will significantly influence fair value determination. Ultimately, the uncertainties described above about input assumptions imply that the fair value of Level 3 financial instruments is a judgmental estimate. The specific valuation for each instrument is based on management’s judgment of prevailing market conditions, in accordance with Nomura’s established valuation policies and procedures. Quantitative and qualitative information regarding significant unobservable valuation inputs The following tables present quantitative and qualitative information about the significant unobservable valuation inputs used by Nomura to measure the fair value of financial instruments classified in Level 3 as of March 31,
F-39 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-40 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-41 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-42 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Qualitative discussion of the ranges of significant unobservable valuation inputs The following comments present qualitative discussion about the significant unobservable valuation inputs used by Nomura for financial instruments classified in Level 3. — Equity contracts F-43 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) example due to a lack of profits or as a policy during a growth period, and hence have a zero dividend yield while others may pay high dividends, for example to return money to investors. The range of volatilities is wide as the volatilities of shorter-dated equity derivatives or those based on single equity securities can be higher than those of longer-dated instruments or those based on indices. Correlations represent the relationships between one input and another (“pairs”) and can either be positive or negative amounts. The range of correlations moves from positive to negative because the movement of some pairs is very closely related and in the same direction causing highly positive correlations while others generally move in opposite directions causing highly negative correlations with pairs that have differing relationships throughout the range. — Interest rate contracts — — Credit contracts — Derivatives — Foreign exchange contracts — currencies that trade in narrow ranges Short-term borrowings and Long-term borrowings — F-44 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Movements in Level 3 financial instruments The following tables present gains and losses as well as increases and decreases of financial instruments For the years ended March 31, F-45
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-46 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-47 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Unrealized gains and losses recognized for Level 3 financial instruments The following table presents the amounts of unrealized gains (losses) for the years ended March 31,
F-48 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investments in investment funds that calculate NAV per share In the normal course of business, Nomura invests in non-consolidated funds which meet the definition of investment companies or are similar in nature and which do not have readily determinable fair values. For certain of these investments, Nomura uses NAV per share as the basis for valuation as a practical expedient. Some of these investments are redeemable at different amounts from NAV per share.F-49 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following tables present information on these investments where NAV per share is calculated or disclosed as of March 31,
Hedge funds: These investments include funds of funds that invest in multiple asset classes. The fair values of these investments are determined using NAV per share. Although Venture capital funds: These investments include primarily start-up funds. The fair values of these investments are determined using NAV per share. Most of these funds cannot be redeemed within six months. The redemption period isunknown for certain suspended or liquidating funds. Some of these investments contain restrictions against transfers of the investments to third parties. Private equity funds: These investments are made mainly in various sectors in Europe, U.S. and Japan. The fair values of these investments are determined using NAV per share. Redemption is restricted for most of these investments. The F-50 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) redemption period is unknown for certain suspended or liquidating funds. Some of these investments contain restrictions against transfers of the investments to third parties. Real estate funds: These are investments in commercial and other types of real estate. The fair values of these investments are determined using NAV per share. Redemption is restricted for most of these investments. The redemption period is unknown for certain suspended or liquidating funds. Some of these investments contain restrictions against transfers of the investments to third parties. Fair value option for financial assets and financial liabilities Nomura measures certain eligible financial assets and liabilities at fair value through the election of the fair value option permitted by ASC 815 “ Derivatives and Hedging Financial The financial assets and financial liabilities primarily elected for the fair value option by Nomura, and the reasons for the election, are as follows: Equity method investments reported within Trading assets and private equity and debt investments Other assets Loans receivable Receivables from customers Loans and receivables Reverse repurchase and repurchase agreements reported within Collateralized agreements Collateralized financing All structured notes issued on or after April 1, 2008 reported within Short-term borrowings Long-term borrowings Certain structured deposit issuances reported within Deposits received at banks. Financial liabilities reported within Long-term borrowings F-51 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Financial reinsurance contracts reported within Other assets Interest and dividends arising from financial instruments for which the fair value option has been elected are recognized within Interest and dividends, Interest expense Revenue—Net gain on trading The following table presents gains (losses) due to changes in fair value for financial instruments
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) As of March 31, Other . For the years ended March 31, 2022 changes in gains and losses attributable to instrument-specific credit risk of loans and receivables elected for For the years ended March 31, 2023, changes in gains and losses attributable to instrument-specific credit risk of loans and receivables elected for the fair value option were primarily due to a recovery of the claims with the U.S. Prime Brokerage Event elected to be measured at fair value. Changes in gains and losses attributable to instrument-specific credit risk for other loans and receivables were not significant. See Note 20 “ Segment and geographic information Nomura calculates the impact of changes in its own creditworthiness on certain financial liabilities for which the fair value option is elected by The following table presents changes in the valuation adjustment for Nomura’s own
As of March 31, Loans and receivables Loans and receivables Loans and receivables Long-term borrowings ¥212 billion less than the principal balance of such Long-term borrowings As of March 31, Loans and receivables Loans and receivables Loans and receivables Long-term borrowings ¥451 billion less than the principal balance of such Long-term borrowings F-53 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Investment by Investment companies Nomura carries all of investments by investment companies under ASC 946 “ Financial Services—Investment Companies Concentrations of credit risk Concentrations of credit risk may arise from trading, securities financing transactions and underwriting activities, and may be impacted by changes in political or economic factors. Nomura has credit risk concentrations on Trading assets Securities pledged as collateral The following tables present geographic allocations of Nomura’s trading assets related to government, agency and municipal securities as of March 31, Derivative instruments and hedging activities
Estimated fair value of financial instruments not carried at fair value Certain financial instruments are not carried at fair value on a recurring basis in the consolidated balance sheets since they are neither held for trading purposes nor are elected for the fair value option. These are typically carried at contractual amounts due or amortized cost. The carrying value of the majority of the financial instruments detailed below Cash and cash equivalents, Time deposits, Deposits with stock exchanges and other segregated cash, Receivables from customers, Receivables from other than customers, Securities purchased under agreements to resell Securities borrowed Short-term borrowings, Payables to customers, Payables to other than customers, Deposits received at banks, Securities sold under agreements to repurchase, Securities loaned Other secured borrowings F-54 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The Loans receivable Long-term borrowings The following tables present carrying values, fair values and classification within the fair value hierarchy for certain classes of financial instrument
F-55 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Assets and liabilities measured at fair value on a nonrecurring basis In addition to financial instruments carried at fair value on a recurring basis, Nomura also measures other financial and non-financial assets and liabilities at fair value on a nonrecurring basis, where the primary measurement basis is not fair value. Fair value is only used in specific circumstances after initial recognition such as to measure impairment.As of March 31, As of March 31, 3. Derivative instruments and hedging activities: Nomura uses a variety of non-trading purposes.Derivatives used for trading purposes In the normal course of business, Nomura enters into transactions involving F-56 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Nomura maintains active trading positions in a variety of Futures and forward contracts are commitments to either purchase or sell securities, foreign Options are contracts that grant the purchaser, for a premium payment, the right to either purchase or sell a financial instrument at a specified price within a specified period of time or on a specified date from or to the writer of the option. The writer of options receives premiums and bears the risk of unfavorable changes in the market price of the financial instruments underlying the options. Swaps are contractual agreements in which two counterparties agree to exchange certain cash flows, at specified future dates, based on an agreed contract. Certain agreements may result in combined interest rate and foreign To the extent these Nomura seeks to minimize its exposure to market risk arising from its use of these Derivatives used for non-trading purposesNomura’s principal objectives in using derivatives for non-trading purposes are to manage interest rate risk, to modify Credit risk associated with derivatives utilized for non-trading purposes is controlled and managed in the same way as Fair value hedges Nomura designates certain F-57 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) These derivatives are effective in reducing the risk associated with the exposure being hedged and are highly correlated with changes in the fair value and foreign currency rates of the underlying hedged items, both at inception and throughout the life of the hedging relationship. Changes in fair value of the hedging derivatives are reported together with those of the hedged liabilities and assets through the consolidated statements of income within Interest expense — Other Net investment hedges non-Japanese Yen functional currencies. When determining the effectiveness of net investment hedges, the effective portion of the change in fair value of the hedging derivative is determined by changes in spot exchange rates. Changes in fair value of the hedging derivatives attributable to changes in the difference between the forward rate and spot rate are excluded from the measurement of hedge effectiveness and are reported in the consolidated statements of income withinAccumulated other comprehensive income (loss) Concentrations of credit risk for derivatives The following tables present Nomura’s significant concentration of exposures to credit risk in OTC derivatives with financial institutions including transactions cleared through central counterparties as of March 31,
F-58
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Derivative activities The following tables quantify
F-59 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
T
Offsetting of derivatives Counterparty credit risk associated with (“close-out and offsetting rights”).For certain OTC centrally-cleared and exchange-traded derivatives, the clearing or membership agreements entered into by Nomura provide similar rights to Nomura in the event of default of the relevant central clearing party or exchange. close-out and offsetting rights within these agreements. For certain documented under such agreements, Nomura may not have close-out and offsetting rights within such agreements are legally enforceable. This may be the case where the relevant local laws close-out and offsetting rights, or where the local laws are complex, ambiguous or silent on the enforceability of such rights. This may include derivative transactions executed with certain foreign governments, agencies, municipalities, central clearing counterparties, exchanges and pension funds.Nomura considers the enforceability of a master netting agreement in determining how credit risk arising from transactions with a specific counterparty is hedged, how counterparty credit exposures are calculated and applied to credit limits and the extent and nature of collateral requirements from the counterparty. Derivative assets and liabilities with the same counterparty and the related cash collateral receivables and payables documented under 210-20 The following table presents information about offsetting of derivatives and related cash collateral amounts 210-20 and ASC 815 are not met. Derivative transactions which are not documented under a master netting agreement or are documented under a masterF-60 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) netting agreement for which Nomura does not have sufficient evidence of enforceability of close-out and offsetting rights are not offset in the following table.
F-61 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For information on offsetting of collateralized transactions, see Note 5 “ Collateralized transactions Derivatives used for trading purposes Derivative financial instruments used for trading purposes, including bifurcated embedded derivatives, are carried at fair value with changes in fair value recognized through the consolidated statements of income within Revenue—Net gain on trading The following table presents amounts included in the consolidated statements of income for the years ended March 31, non-trading purposes by
Derivatives which contain multiple types of risk are classified in the table based on the primary risk type of instrument.
Fair value hedges Nomura issues Japanese Yen and foreign currency denominated debt with both fixed and floating interest rates. Nomura generally enters into swap agreements to convert fixed rate interest payments on its debt obligations to a floating rate and applies fair value hedge accounting to these instruments. The following table presents the carrying value of the hedged items that are currently designated in a hedging relationship F-62 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) cumulative amount of fair value hedging adjustment remaining for the liabilities which hedge accounting has been discontinued as of March 31,
Hedging derivatives designated as fair value hedges are carried at fair value attributable to the hedged risk, which is recognized in the consolidated statements of income within Interest expense Revenue-Other The following table s present amounts included in the consolidated statements of income for the years ended March 31,
Net investment hedges Nomura designates certain foreign currency non-derivative financial are recognized through the consolidated statements of comprehensive income withinOther comprehensive income (loss)—Change in cumulative translation adjustments F-63 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents gains (losses) from derivatives designated as net investment hedges included in the consolidated statements of comprehensive income for the years ended March 31,
The portion of gains (losses) representing the amount excluded from the assessment of hedge effectiveness are recognized within andRevenue—Other in the consolidated statements of income. The amount of gains (losses) was not significant during the years ended March 31, 2021, 2022 and 2023. Derivatives containing credit risk related contingent features Nomura enters into certain OTC derivatives and other agreements containing credit-risk-related contingent features. These features would require Nomura to post additional collateral or settle the instrument upon occurrence of a credit event, the most common of which would be a downgrade in the Company’s long-term credit rating. The aggregate fair value of all one-notch downgrade to Nomura’s long-term credit rating in effect as of March 31, The aggregate fair value of all one-notch downgrade to Nomura’s long-term credit rating in effect as of March 31, Credit derivatives Credit derivatives are Written credit derivatives are instruments or embedded features where Nomura assumes third party credit risk, either as guarantor in a guarantee-type contract, or as the party that provides credit protection in an option-type contract, credit default swap, or any other credit derivative contract. Nomura enters into credit derivatives as part of its normal trading activities as both purchaser The most F-64 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) writes credit derivatives linked to the performance of credit default indices and issues other credit risk related portfolio products. Nomura would have to perform under a credit derivative contract if a credit event as defined in the respective contract occurs. Typical credit events include bankruptcy, failure to pay and restructuring of obligations of the underlying reference asset. Credit Nomura actively monitors and manages its credit derivative exposures. Where protection is sold, risks may be mitigated by purchasing credit protection from assets or on underlying reference assets with the same issuer which would be expected to behave in a correlated fashion. The most common form of recourse provision to enable Nomura to recover from third parties any amounts paid under a written credit derivative is therefore not through the derivative itself but rather through the underlying reference assets.F-65 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following tables present information about Nomura’s written credit derivatives and purchased credit protection with identical
F-66 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following tables present information about Nomura’s written credit derivatives by external credit rating of the underlying asset.
Derivatives entered into in contemplation of sales of financial assets Nomura enters into transactions which involve both the transfer of financial assets to a in-substance total return swaps.These transactions are accounted for as sales of the securities with the derivative accounted for separately if the criteria for derecognition of the securities under ASC 860 are met. Where the derecognition criteria are not met, the transfer and separate derivative are accounted for as a single collateralized financing transaction which is reported within Long-term Nomura entered into certain contemporaneous transactions involving the transfer of F-67 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) through total return swaps but does not retain control over the assets transferred. There were no new contracts signed during the years ended March 31, 2023. The following table provides information about relevant transactions outstanding as of March 31, 2022 and March 31, 2023.
4. Revenue from services provided to customers Revenue by types of service The following table presents revenue earned by Nomura from providing services to customers by relevant line em in
Commissions Commissions
Fees from investment banking F-68 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Asset management and portfolio service fees The following table shows the breakdown of Asset management and portfolio service fees
The following table presents summary information regarding the key methodologies, assumptions and judgments used in recognizing revenue for each of the primary types of service provided to customers, including the nature of underlying performance obligations within each type of service and whether those performance obligations are satisfied at a point in time or over a period of time. For performance obligations recognized over time, information is also provided to explain the nature of the input or output method used to recognize revenue over time.
F-69 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Where revenue is recognized at a point F-71 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The underlying contracts entered into by Nomura in Revenue from Contracts with Customers Customer contract balances When Nomura or the customer performs in accordance with the terms of a customer contract, a contract asset, customer contract receivable or contract liability is recognized in Nomura’s consolidated balance sheet. A contract asset represents accrued revenue recognized by Nomura for Receivables from Customers Payables to Customers The following table presents the balances of customer contract receivables
The balance of contract liabilities as of March 31, Transaction price allocated to the remaining performance In the ordinary course of business, Nomura may enter into customer contracts where the performance obligations are wholly or partially unsatisfied as of fiscal year ends. The total transaction prices allocated to the remaining unsatisfied performance obligations within these customer contracts were ¥1,350 million as of March 31, 2022 and ¥1,189 million as of March 31, 2023. As permitted by ASC 606, Nomura has F-72 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Customer contract costs As permitted by ASC 340 “ Other Assets and Deferred Costs, 5. Collateralized transactions: Nomura enters into collateralized transactions, including reverse repurchase agreements, repurchase agreements, securities borrowing transactions, securities lending transactions, other secured borrowings and similar transactions mainly to meet clients’ financing needs, finance trading inventory positions and obtain securities for Reverse repurchase agreements, repurchase agreements, securities borrowing transactions and securities lending transactions are typically documented under industry standard master netting agreements which close-out and offsetting rights within these agreements.close-out and offsetting rights in the agreements are legally enforceable. This may be the case where relevant local laws close-out and offsetting rights, or where local laws are complex, ambiguous or silent on the enforceability of such rights. This may include reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions executed with certain foreign governments, agencies, municipalities, central clearing counterparties, agent banks and pension funds.Nomura considers the enforceability of a master netting agreement in determining how credit risk arising from transactions with a specific counterparty is hedged, how counterparty credit exposures are calculated and applied to credit limits and the extent and nature of collateral requirements from the counterparty. In all of these transactions, Nomura either receives or provides collateral, including Japanese and non-Japanese government, agency, mortgage-backed, bank and corporate debt securities and equities. In most cases, F-73 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Offsetting of certain collateralized transactions Reverse repurchase agreements and repurchase agreements, securities borrowing and lending transactions with the same counterparty documented under a master netting agreement are offset in the consolidated balance sheets where 210-20 are met. These criteria include requirements around close-out and offsetting rights under agreements. The following tables present information about offsetting of these transactions in the consolidated balance sheets as of March 31,
F-74 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For information on offsetting of derivatives, see Note 3 “ Derivative instruments and hedging activities F-75 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Maturity analysis of repurchase agreements and securities lending transactions The following table presents an analysis of the total carrying value of liabilities recognized in the consolidated balance sheets for repurchase agreements and securities lending transactions by remaining contractual maturity of the agreement as of March 31, 210-20.
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Securities transferred in repurchase agreements and securities lending transactions The following table presents an analysis of the total carrying value of liabilities recognized in the consolidated balance sheets for repurchase agreements and securities lending transactions by class of securities transferred by Nomura to counterparties as of March 31, 210-20.
F-77 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Collateral received by Nomura The following table presents the fair value of securities received as collateral, securities borrowed with collateral and securities borrowed without collateral, which Nomura is permitted to sell or repledge, and the portion that has been sold or repledged as of March 31,
Collateral is generally used for repurchased agreements and other securities financing agreements, to cover short sales and to collateralize derivatives. Nomura pledges Trading assets Non-trading debt securities, Investments in equity securitiesInvestments in and advances to affiliated companies The following table presents the carrying amounts of financial assets recognized in the consolidated balance sheets which have been pledged as collateral, primarily to stock exchanges and clearing organizations,
F-78 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents the carrying amount of financial and non-financial assets recognized in the consolidated balance sheets, other than those disclosed above, which are subject to lien as of March 31,
Assets in the above table were primarily pledged for secured borrowings, including other secured borrowings, collateralized borrowings of consolidated VIEs, trading balances of secured borrowings, and derivative transactions. See Note 0 “Borrowings trading balances of secured . 6. Securitizations and Variable Interest Entities: Securitizations Nomura utilizes special purpose entities (“SPEs”) to securitize commercial and residential mortgage loans, government agency and corporate securities and other types of financial assets. Those SPEs are incorporated as stock companies, Tokumei kumiai (silent partnerships), Cayman special purpose companies (“SPCs”) or trust accounts. Nomura’s Trading assets Revenue-Net gain on tradingAs noted above, Nomura may have continuing involvement with SPEs to which Nomura transferred assets. For the years ended March 31, F-79 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) respectively. For the years ended March 31, Nomura does not provide any financial support to SPEs beyond its contractual obligations as of March 31, The following tables present the fair value of retained interests which Nomura has continuing involvement in SPEs and their classification in the fair value hierarchy, categorized by the type of transferred assets as of March 31,
As of March 31, significant observableinputs . The initial fair value of these retained interests are mostly level 2 in the fair value hierarchy.F-80 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents the type and carrying value of financial assets included within Trading assets Loans receivable Long-term borrowings. non-recourse to Nomura.
Variable Interest Entities (“VIEs”) In the normal course of business, Nomura acts as a transferor of financial assets to VIEs, and underwriter, distributor, and seller of repackaged financial instruments issued by VIEs in connection with its securitization and equity derivative activities. Nomura retains, purchases and sells variable interests in VIEs in connection with its market-making, investing and structuring activities. If Nomura has The power to For many transactions, such as where VIEs are used for re-securitizations of residential mortgage-backed securities, there are no significant economic decisions made on an ongoing basis and no single investor has the unilateral ability to liquidate the VIE. In re-securitization transactions andF-81 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) in many cases has determined that it is not the primary beneficiary on the basis that The following table presents the classification of consolidated VIEs’ assets and liabilities in these consolidated financial statements as of March 31,
On a quarterly basis, Nomura Nomura also holds variable interests in VIEs where Nomura is not the primary beneficiary. Nomura’s variable interests in such VIEs include senior and subordinated debt, residual interests, and equity interests associated with commercial and residential mortgage-backed and other asset-backed securitizations and structured financings, equity interests in VIEs which were formed primarily to acquire high yield leveraged loans and other lower investment grade debt obligations, residual interests in operating leases for aircraft held by VIEs, and loans and investments in VIEs that acquire operating businesses. The following tables present the carrying amount of variable interests of unconsolidated VIEs and maximum exposure to loss associated with these variable interests as of March 31, F-82 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) nor does it reflect the economic hedges Nomura enters into to reduce its exposure. The risks associated with VIEs in which Nomura is involved are limited to the amount recorded in the consolidated balance sheets and the amount of any undrawn commitments and financial
The above does not include certain repurchase agreement financings provided to third parties or Nomura sponsored VIEs.
7. Financing receivables: In the normal course of business, Nomura extends financing to clients primarily in the form of F-83 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The carrying value of financing receivables measured on an amortized cost basis is adjusted for allowances for current expected credit losses defined by ASC326 “ Financial Instruments — Credit Losses Allowance for credit losses Collateralized agreements Collateralized agreements Securities purchased under agreements to resell Securities borrowed from customers under agreements that also require Nomura to resell these securities to those customers, or borrowing these securities with cash and non-cash collateral. Nomura monitors the value of the underlying securities on a daily basis to the related receivables, including accrued interest, and requests or returns additional collateral when appropriate. See Note 5 “ Collateralized transactions Loans receivable The key types of loans receivable recognized by Nomura are loans at banks, short-term secured margin loans, inter-bank money market loans and corporate loans. Loans at banks include both retail and commercial secured loans and traditional unsecured loans mainly extended by Short-term secured margin loans are margin loans provided to clients in connection with securities brokerage loan-to-value Inter-bank money market loans are loans to financial institutions in the inter-bank money market, where overnight and intra-day financings are traded through money market dealers. The risk to Nomura of making theseF-84 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) loans is Corporate loans are primarily commercial loans provided to corporate clients The following tables present a summary of loans receivable reported within Loans Investments in and advances to affiliated companies
There were no significant purchases , respectively . There were also no significant reclassifications of loans receivable to or from trading , respectively. not significant as of March 31, 2022 and March 31, 2023.F-85 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Allowances for current expected credit losses Management has established allowances for current expected credit losses using the current expected credit losses impairment model (“CECL impairment model”) against the following types of financial instruments, including financing receivables, which are not measured at fair value on a recurring basis, to reflect the net amount Nomura expects to collect: Loans receivable and written unfunded loan commitments; Cash deposits; Collateralized agreements such as reverse repos and securities borrowing transactions; Customer contract assets and receivables; and Other receivables including margin receivables, security deposits, default fund contributions to central clearing counterparties and net investments in finance leases. C The risk of loss is considered, even when that risk of loss is remote. While management has based its estimate of the allowances for current expected credit losses on the best information available, future adjustments to the allowances may be necessary as a result of changes in the economic environment or variances between actual results and original assumptions. Nomura has elected to exclude accrued interest receivable from the amortized cost basis of financial instruments used to measure expected credit losses. The amount of accrued interest receivable as of March 31, 2022 and March 31, 2023 was not significant. The methodology used by Nomura to determine allowances for current expected credit losses in accordance with the CECL impairment model primarily depends on the nature of the financial instrument and whether certain practical expedients permitted by ASC 326 are applied by Nomura. Financial instruments subject to the CECL impairment model are charged off when Nomura has deemed the loan or receivable as uncollectible, namely management believes there is no reasonable expectation of collecting future contractual cash flows and all commercially reasonable means of recovering outstanding principal and interest balances have been exhausted. The following table summarizes the methodology used for each significant type of financial instrument subject to the CECL impairment model and the key assumptions used which have impacted the measurement of current expected credit losses during the year ended March 31,
F-86 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents changes in the allowances for current expected credit losses for the year ended March 31, 2021 as determined using the CECL impairment model defined by ASC 326. See Note 20. “ Segment and geographic information
F-87 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents changes in the allowances for current expected credit losses for the years ended March 31, 2022 and 2023 as determined using the CECL impairment model defined by ASC 326. The allowances increased as of March 2022 when compared to March 2021 primarily as a result of additional provisions for credit losses arising in connection with the U.S. Prime Brokerage Event in March 2021. The allowances decreased as of March 2023 when compared to March 2022 primarily as a result of a charge-off of receivables in connection with the U.S. Prime Brokerage Event. See Note 20. “ Segment and geographic information
F-88 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In the ordinary course of business, Nomura may choose to The amounts of TDRs which occurred during the years ended March 31, Nonaccrual and past due loans Loans Where a Generally loans are As of March 31, ¥62,289 million of loans which were placed on a nonaccrual status, primarily secured non-accrual status as of March 31, 2022 include loans relating to the U.S. Prime Brokerage Event in March 2021. The amount of loans which were 90 days past due but were not on a nonaccrual status was not significant.As of March 31, 2023, there were ¥ 16,417 14,233 million of loans which didn’t recognize allowances for current expected credit losses due to fair value of the Credit quality indicators Nomura is exposed to credit risks pre-financing credit analysis of each individual loan and continuous post-financing monitoring of F-89 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following tables present an analysis of each class of loans not carried at fair value using Nomura’s internal ratings or equivalent credit quality indicators applied by subsidiaries by years of origination as of March 31,
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-91 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents a definition of each of the internal ratings used in the Nomura Group.
Nomura reviews internal ratings at least once a year by using available credit information of F-92 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 8. Leases: Nomura as lessor Nomura leases office buildings and aircrafts in Japan and overseas either as head lessor or through subleases. These leases and subleases are primarily classified as operating leases. The related assets are stated at cost, net of accumulated depreciation, except for land, which is stated at cost in the consolidated balance sheets and reported within .Other assets-Office buildings, land, equipment and The following table presents the types of assets which Nomura leases under operating leases:
Nomura recognized lease income of Revenue—Other The following table presents an analysis of future undiscounted lease payments
Nomura as lessee Nomura enters into leases of office space, residential facilities for employees, motor vehicles, equipment and technology assets in the ordinary course of business in both Japan and overseas as lessee. These NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) arrangements predominantly consist of operating leases. Separately Nomura subleases certain real estate and equipment through operating lease arrangements. 2022 and 2023 were ¥175,422 million and ¥170,993 million, respectively. The total carrying s recognized in connection with finance leases as of March 31, Other The following table presents income and expense amounts recognized through the consolidated statements of income for leases where Nomura is acting as lessee for the year ended March 31,
Lease cash flow information Lease payments made in cash in connection with operating leases are classified as operating activity in the consolidated statements of cash flows. The initial recognition of ROU assets and lease liabilities on lease commencement date represents noncash transactions. The following table presents cash payments made by Nomura as lessee which meet the definition of lease payments and therefore have been included in the measurement of operating lease liabilities recorded under operating cash flows and the total amount of ROU assets and lease liabilities recognized during the
Maturity analysis of lease liabilities The following table presents an analysis of future undiscounted lease payments under operating leases entered into by Nomura as lessee over the remaining lease term as of March 31, F-94 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) significant as of March 31, Other liabilities
The following table presents the weighted-average discount rate used to measure lease liabilities and the erage r emaining lease term of operating leases as of March 31,
9. Office buildings, land, equipment and facilities The following table presents a breakdown of owned and leased office buildings, land, equipment and facilities as of March 31, 2022 and 2023.
Depreciation and amortization charges of depreciable assets are reported within Non-interest expenses—Information processing and communications million, and F-95 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) ¥48,893 million, and in Non-interest expenses—Occupancy and related depreciation The following table presents components of Other assets—Other Other liabilities
2023.
Goodwill is recognized upon completion of a business combination as the difference between the purchase price and the fair value of the net assets acquired. Subsequent to initial recognition, goodwill is not amortized but is tested for impairment during the fourth quarter of each fiscal year, or more often if events or circumstances, such as adverse changes in the business climate, indicate there may be impairment. F-96 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Impairment testing of goodwill is inherently subjective and often requires management judgment to determine when to perform an impairment test, whether qualitatively the fair value of a reporting unit exceeds its carrying value and also to estimate the fair value of a reporting unit when a quantitative impairment test is required. An annual goodwill impairment test was performed in the The following table presents changes in goodwill, which are reported in the consolidated balance sheets within Other assets—Other
The following table presents finite-lived intangible assets by type as of March 31,
F-97 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Amortization expenses for the years ended March 31,
The ¥9,345 million and ¥10,068 million as of March 31, An annual impairment test was performed Nomura recognizes a liability in the consolidated balances within Other liabilities—Other
F-98 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 10. Borrowings: The following table presents short-term and long-term borrowings of Nomura as of March 31,
F-99 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Trading balances of secured borrowings These are liabilities recognized when a transfer of a financial asset does not meet the criteria for sales accounting under ASC 860 and therefore the transaction is accounted for as a secured borrowing. These borrowings are part of Nomura’s trading activities intended to generate profits from the distribution of financial products secured by those financial assets. Long-term borrowings consisted of the following:
As of March 31, with interest rates ranging from 0.00% to Floating-rate obligations, excluding perpetual subordinated 2022 and with interest rates ranging from 0.00% to with interest rates ranging from 0.00% to As of March 31, with interest rates ranging from 0.00% to Floating-rate obligations, excluding perpetual subordinated debts, 2023 and Tokyo Overnight Average rate andSecured Overnight Financing Rate , mature betweenwith interest rates ranging from 0.00% to with interest rates ranging from 0.00% to Certain borrowing agreements contain provisions whereby the borrowings are redeemable at the option of the borrower at specified dates prior to maturity and include various equity-linked or other index-linked instruments. Nomura enters into swap agreements to manage its exposure to interest rates and foreign exchange rates. F-100 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents the effective weighted-average interest rates of borrowings, including the effect of fair value hedges, as of March 31,
Maturities of long-term borrowings The following table presents the aggregate annual maturities of long-term borrowings, including adjustments related to fair value hedges and liabilities measured at fair value, as of March 31,
Borrowing facilities As of March 31, Subordinated borrowings As of March 31, 11. Earnings per share: Basic and diluted earnings per share (“EPS”) are presented on the face of the consolidated statements of income. Basic EPS is calculated by dividing net income NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents a reconciliation of the amounts and the numbers used in the calculation of net income
Net income The weighted average number of shares used in the calculation of diluted EPS reflects the increase in potential issuance of the Company’s common shares arising from stock-based compensation plans by the Company and affiliates, which would have minimal impact on EPS for the years ended March 31, Antidilutive stock options and other stock-based compensation plans to purchase Subsequent Events On April 26, 2023, the Company adopted a resolution to set up a share buyback program. See Note 1 6 “Shareholders’ equity On May 3 “Deferred compensation awards 2 . Employee benefit plans:Nomura provides various pension plans and other post-retirement benefits which cover certain eligible employees worldwide. In addition, Nomura provides health care benefits to certain active and retired employees through its Nomura Securities Health Insurance Society (“NSHIS”). F-102 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Defined benefit pension plans— The Company and certain subsidiaries in Japan (“Japanese entities”) have contributory funded benefit pension plans for eligible employees. The benefits are paid as annuity payments subsequent to retirement or as lump-sum payments at the time of retirement based on a combination of years of service, age at retirement and employee’s choice. The benefits under the plans are calculated based upon position, years of service and reason for retirement. In addition to the plans described above, certain Japanese entities also have unfundedlump-sum payment plans. Under these plans, employees with at least two years of service are generally entitled tolump-sum payments upon termination of employment. The benefits under the plans are calculated based upon position, years of service and the reason for retirement. Nomura’s funding policy is to contribute annually the amount necessary to satisfy local funding standards. In December 2008, certain contributory funded benefit pension plans and unfundedlump-sum payment plans were amended and “Cash balance pension plans” were introduced. Participants receive an annual benefit in their cash balance pension plan accounts, which is computed based on compensation of the participants, adjusted for the changes in market interest rate.In April defined benefit pension plans and unfundedlump-sum payment plans wereeither closed for additional funding or abolished. Defined contribution pension plans and cash balance pension plans have replaced them for future Certain overseas subsidiaries have various local defined benefit plans covering certain employees. Nomura recognized an asset for surplus pension benefits for these plans amounting to Net periodic benefit cost The following table presents the components of net periodic benefit cost for defined benefit plans of Japanese entities for the years ended March 31,
Prior service cost is amortized on a straight-line basis over the average remaining service period of active participants. Gains and losses in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets are amortized over the average remaining service period of active participants, which is 14 years. Benefit obligations and funded status The following table presents a reconciliation of changes in projected benefit obligation (“PBO”) and the fair value of plan assets, as well as a summary of the funded status of Japanese entities’ plans as of, and for the years ended March 31,
F-103 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The accumulated benefit obligation (“ABO”) was In April 2020, defined contribution pension plans and cash balance pension plans were adoptedfor future contributions following the amendments of pension benefit plans. Certain contributorydefined benefit pension plans were closed for additional funding and will be managed within the accumulated funds. Unfundedlump-sum payment plans were abolished and transferred to cash balance plans with the calculated amount oflump-sum retirement payment as of the amendment date.The following table presents the PBO, ABO and fair value of plan assets for Japanese entities’ plans with ABO and PBO in excess of plan assets as of March 31,
F-104 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents pre-tax amounts of Japanese entities’ plans deferred inAccumulated other comprehensive income (loss)
Pre-tax amounts of Japanese entities’ plans in accumulated other comprehensive income which are expected to be recognized as components of net periodic benefit cost over the next fiscal year are as follows.
Assumptions The following table presents the weighted-average assumptions used to determine projected benefit obligations of Japanese entities’ plans as of March 31,
The following table presents the weighted-average assumptions used to determine the net periodic benefit cost of Japanese entities’ plans as of March 31,
Nomura generally determines the discount rates for its defined benefit plans by referencing indices for long-term, high-quality debt securities and ensuring that the discount rate does not exceed the yield reported for those indices after adjustment for the duration of the plans’ liabilities. Nomura uses the expected long-term rate of return on plan assets to compute the expected return on assets. Nomura’s approach in determining the long-term rate of return on plan assets is primarily based on historical F-105 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) financial market relationships that have existed over time with the presumption that this trend will generally remain constant in the future. Plan assets Plan assets are managed with an objective to generate sufficient long-term value in order to enable future pension payouts. While targeting a long-term rate of return on plan assets, Nomura aims to minimize short-term volatility by managing the portfolio through diversifying risk. Based on this portfolio policy, the plan assets are invested diversely. The plan assets of domestic plans target to invest 15%in equities (including private equity investments), 44% in debt securities, 25% in life insurance company general accounts, and 16% in other investments. Investment allocations are generally reviewed and revised at the time of the actual revaluation that takes place every five years or when there is a significant change in the portfolio assumptions. For details of the levels of inputs used to measure the fair value of plan assets, see Note 2 “ Fair value The following tables present information about the fair value of plan assets of Japanese entities’ plans as of March 31,
F-106 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Within the measurement of plan assets ofnon-Japanese entities’ plans as of March 31, , ¥1,543 million, Within the fair valuemeasurement of plan assets ofnon-Japanese entities’ plans as of March 31, , ¥44 million, See Note 2 “ Fair value measurements The following tables present information about plan assets of Japanese entities’ plans for which Nomura has utilized significant Level 3 valuation inputs to estimate fair value.
The fair value measurement of plan assets of non-Japanese entities’ plans classified as Level 3 mainlyconsists of annuities,amounted to ¥36,129 million and amounted to ¥(4,060) million and million Cash Flows Following the amendments of pension benefit plans in Japanese entities, certain contributory funded benefit pension plans were closed for additional funding and will be managed within the accumulated funds. F-107 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents the expected benefit payments of Japanese entities’ plans during the next five fiscal years and in aggregate for the five fiscal years thereafter.
Defined contribution pension plans— In addition to defined benefit pension plans, the Company, NSC and other Japanese and non-Japanese subsidiaries have defined contribution pension plans.Nomura contributed The contributions to overseas defined contribution pension plans were Health care benefits— The Company and certain subsidiaries provide certain health care benefits to both active and retired employees through NSHIS. The Company and certain subsidiaries also sponsor certain health care benefits to retired employees (“Special Plan”) and who participate in the Special Plan on a pay-all basis, i.e., by requiring a retiree contribution based on the estimated per capita cost of coverage. The Special Plan is a multi-employer post-retirement plan because it is jointly administered by NSHIS and the Japanese government, and the funded status of it is not computed separately. Therefore, although the Company and certain subsidiaries contribute some portion of the cost of retiree health care benefits not covered through retiree contributions, the Company and certain subsidiaries do not reserve for future costs. The health care benefit costs, which are equivalent to the required contribution,were ¥9,463 million, 3 . Deferred compensation awards:Nomura issues deferred compensation awards to senior management and employees, These stock-based compensation awards comprise Restricted Stock Unit (“RSU”) awards, Plan A and Plan B Stock Acquisition Right (“SAR”) awards, Notional Stock Unit (“NSU”) awards, and Collared Notional Stock Unit (“CSU”) awards. SAR Plan A awards are awards of stock options while RSU awards, SAR Plan B awards, NSU awards and CSU awards are all analogous to awards of restricted common stock. Certain deferred compensation awards include “Full Career Retirement” (“FCR”) provisions which permit recipients of the awards to continue to vest in the awards upon voluntary termination of employment if certain criteria based on corporate title and length of service within Nomura are met. The requisite service period for these awards ends on the earlier of the contractual vesting date and the date that the recipients become eligible for or claim FCR. F-108 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Unless indicated below, deferred compensation awards are generally reduced, forfeited or clawed back in the event of termination of employment, material restatements of financial statements, material conduct issues, material damage to Nomura’s business or reputation, material downturns in the performance of the Nomura group and/or a material failure of risk management. one The grant date fair value per award is determined using the price of the Company’s common stock. The following table presents activity relating to RSU awards for the year ended March 31,
The weighted-average grant date fair value per award for the year ended March 31, 2021, 2022 and ¥418 ¥507 and , The total fair value of RSU awards was ¥10,327 million, ¥28,076 million and ¥ 26,642 million, respectively. The total intrinsic value of units delivered during the were delivered during the year ended March 31, with intrinsic valuea total of ¥ As of March 31,
SAR Plan B awards In prior years, the Company stock pursuant to several stock unit plans. These awards vest and are exercisable into the Company’s common stock, have an exercise price of ¥1 per share and graded vesting generally over three years with certain longer vesting or holding periods where required under local regulations. The grant date fair value of SAR Plan B awards is determined using the price of the Company’s common stock. NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents activity relating to SAR Plan B awards for the year ended March 31,
The total intrinsic value of SAR Plan B awards exercised during the years ended March 31, The aggregate intrinsic value of SAR Plan B awards outstanding and exercisable as of March 31, As of March 31, Total compensation expense recognized within Non-interest expenses—Compensation and benefits Cash received from the exercise of SAR Total related tax benefits recognized in the consolidated statements of income relating to for the years ended March 31, RSU and SAR were . The dilutive effect of outstanding deferred compensation plans is included in the weighted average number of shares outstanding used in diluted EPS computations. See Note 1 “Earnings per share” NSU and CSU awards NSU and CSU awards are cash-settled awards linked to the price of the Company’s common stock. NSU awards replicate the key features of SAR Plan B awards described above but are settled in cash rather than exercisable into the Company’s common stock. CSU awards are similar to NSU awards but exposure to movements in the price of the Company’s common stock is subject to a cap and floor. Both types of award have graded vesting periods generally over three years with certain longer vesting periods where required by local regulations. The fair value of NSU and CSU awards are determined using the price of the Company’s common stock. F-110 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents activity related to NSU and CSU awards for the year ended March 31,
Total compensation expense recognized within Non-interest expenses—Compensation and benefits Total unrecognized compensation cost relating to NSU awards, based on the fair value of these awards as of March 31, Total unrecognized compensation cost relating to CSU awards, based on the fair value of these awards as of March 31, was ¥576 million,
Total tax benefits recognized in the consolidated statements of income for compensation expense relating to NSU, Subsequent events On May RSU awards to certain senior management and employees.t otal of or with an extending vesting period of up to seven years for certain senior management and employees in order to meet local regulatory requirements based on the role they perform within Nomura.On May m ent and employees in countries where RSU awards are less favorably treated from tax or other perspectives. These NSU awards have a total grant date fair value of ¥6 billion and vesting periods of up to seven years.NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 4 . Income taxes:The following table presents components of Income tax expense
2023.
The income tax benefit recognized from operating losses for the years ended March 31, With effect from April 1, 2022, the Company and its wholly-owned domestic subsidiaries have Foreign subsidiaries are subject to income taxes of the countries in which they operate. The relationship between income tax expense and pretax accounting income (loss) is affected by a number of items, including various tax credits, certain revenues not subject to income taxes, certain expenses not deductible for income tax purposes, changes in deferred tax valuation allowance and different enacted tax rates applicable to foreign subsidiaries. F-112 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents a reconciliation of the effective income tax rate reflected in the consolidated statements of income to Nomura’s effective statutory tax rate for the years ended March 31, Income (loss) before income taxes
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents the significant components of deferred tax assets and liabilities as of March 31, tax-paying component within a particular tax jurisdiction.
After offsetting deferred tax assets and liabilities whichrelate to the same tax-paying component within a particular tax jurisdiction, net deferred tax assets reported withinOther assets—Other Other liabilities As of March 31, NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table presents changes in total valuation allowances
primar i ly
As of March 31, In determining the amount of valuation allowances to be While Nomura has considered certain future tax planning strategies as a potential source of future taxable income, no such strategies have been relied upon as positive evidence resulting in a reduction of valuation allowances in any major tax jurisdiction in which Nomura operates as of March 31, addition, valuation allowances have not been reduced in any of these periods as a result of changing the weighting applied to positive or negative evidence in any of the major tax jurisdictions in which Nomura operates. The determination of whether deferred tax assets will be realized, and therefore whether a valuation allowance is required, is inherently subjective and often requires management judgment around the future F-115 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) profitability of Nomura entities, an interpretation of tax rules by courts and regulatory authorities and tax examinations by taxing authorities, and the appropriate weighting of positive and negative evidence around the likelihood that sufficient future taxable income will be generated to realize deferred tax assets in the relevant tax jurisdiction. Nomura’s unrecognized tax 5,766 million, if recognized, would favorably impact the effective tax rate in the future periods. The remaining balance would not favorably impact the effective tax rate as it is expected to increase operating loss carryforwards and The movement of the gross amounts in unrecognized tax benefits during the year ended March 31, 2023 was a decrease of ¥1,011 million of which ¥504 million is presented as a reversal of a reduction in deferred tax assets for utilization of net operating loss carryforward. Out of the balance as of March 31, 2022, ¥6,273 million, if recognized, would favorably impact the effective tax rate in the future periods. The remaining balance would not favorably impact the effective tax rate as it is expected to increase operating loss carryforwards and corresponding valuation allowance. The movement of the gross amounts in unrecognized tax benefits during the year ended March 31, 2022 was an increase of ¥31,406 million of which ¥29,501 million is presented as a reduction to deferred tax assets for utilization of net operating loss carryforward. There were no significant movements in the gross amounts of unrecognized tax benefits for the years ended March 31, 2021. There were also no significant movements of the amount of interest and penalties recognized due to unrecognized tax benefits during the years ended March 31, Nomura operates in multiple tax jurisdictions, and faces audits from various taxing authorities regarding many issues including, but not limited to, transfer pricing, the deductibility of certain expenses, foreign tax credits and other matters. The table below presents information regarding the earliest year in which Nomura remains subject to examination in the major tax jurisdictions in which Nomura operates as of March 31,
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 5 . Other comprehensive income (loss):The following tables present changes in Accumulated other comprehensive income (loss)
2023.
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following tables present significant reclassifications out of Accumulated other comprehensive income (loss)
NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
6 . Shareholders’ equity:The following table presents changes in shares of the Company’s common stock outstanding for the years ended March 31,
The amount available for dividends and acquisition of treasury stock is subject to restrictions imposed by the Companies Act. Additional paid-in capital and retained earnings include amounts which the Companies Act prohibits for the use of dividends and acquisition of treasury stock. As of March 31, Dividends on the Company’s common stock per share for the years ended March 31, 2021, 2022 and 2023 were ¥35.0, ¥22.0 and ¥17.0, respectively. NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) During the year ended March 31, On 459-1 of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to On 459-1 of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to In addition to the above, the change in common stock held in treasury includes the change in common stock issued to employees under stock-based compensation plans, common stock held by affiliated companies, common stock sold to enable shareholders to hold round lots of the 100 share minimum tradable quantity (adding-to-holdings On April 26, 2023, the board of directors approved a resolution to set up a share buyback program, pursuant to the Company’s articles of incorporation set out in accordance with Article 459-1 of the Companies Act as follows: (a) total number of shares authorized for repurchase is up to 35,000,000 shares, (b) total value of shares authorized for repurchase is up to ¥20,000 million and (c) the share buyback program will run from May 16, 2023 to March 29, 2024 (excluding the ten business days following the announcement of quarterly operating results). On April 26, 2023, the board of directors approved a resolution to cancel a part of its own shares in accordance with Article 178 of the Companies Act of Japan. On June 1, 2023, the shares have been cancelled as follows. Outline of cancellation 1. Type of shares cancelled : Nomura Holdings, Inc. common shares 2. Number of shares cancelled : shares 3. Cancellation date : 1 7 . Regulatory requirements:In April 2011, the Company has been assigned as Final Designated Parent Company who must calculate a consolidated capital adequacy ratio and since then, our consolidated capital adequacy ratio has been cal culated based on Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final Designated Parent Company has been revised in line with Basel 2.5 and Basel III and Nomura has calculated a BaselIII-based consolidated capital adequacy ratio since March 2013.In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company, Nomura’s consolidated capital adequacy ratio is calculated based on the amounts of common equity Tier 1 F-120 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) capital, Tier 1 capital, total capital, credit risk-weighted assets, market risk and operational risk. As of March 31, 7.62% for the common equity Tier 1 capital ratio, 9.12% for the Tier 1 capital ratio and 11.12% for the ns olidated capital adequacy ratio. Under the Financial Instruments and Exchange Act (“FIEA”), NSC and NFPS are subject to the capital adequacy rules of the FSA. These rules In connection with providing brokerage, clearing, asset management and wealth management services to clients, Nomura maintains segregated accounts to hold financial assets such as cash and securities on behalf of its clients. These accounts are typically governed by stringent statutory or regulatory rules in the relevant jurisdiction where the accounts are maintained in order to protect the clients from loss. As of March 31, Deposits with stock exchanges and other segregated cash Trading assets Collateralized agreements In the U.S., Nomura Securities International, Inc. (“NSI”) is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a futures commission merchant with the Commodity Futures Trading Commission (“CFTC”). NSI is also regulated by self-regulatory organizations, such as the Financial Industry Regulatory Authority (“FINRA”) and the Chicago Mercantile Exchange Group. NSI is subject to the SEC’s Uniform Net Capital Rule (“Rule 15c3-1”) and other related rules, which require net capital, as defined under the alternative method, of not less than the greater of $1,000,000 or 2% of aggregate debit items arising from client transactions. NSI is also subject to CFTC Regulation 1.17 which requires the maintenance of net capital of 8% of the total risk margin requirement, as defined, for all positions carried in client accounts and nonclient accounts or $1,000,000, whichever is greater. NSI is required to maintain net capital in accordance with the SEC, CFTC, or other various exchange requirements, whichever is greater. Another U.S. subsidiary, Nomura Global Financial Products Inc. (“NGFP”) is registered as an OTC Derivatives Dealer under the Securities Exchange Act of 1934. NGFP 15c3-1 which requires the maintenance of minimum net capital, as defined under the alternative method, equal to the greater of $1,000,000, 2% of aggregate debit items arising from client transactions, or the CFTC minimum requirement. Under CFTC rules, ILLC is subject to the greater of the following when determiningits minimum net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the F-121 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) amount of adjusted net capital required by a futures association of which it is a member; and the amount of netcapital required by Rule 15c3-1(a). As of March 31, In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the Prudential Regulation Authority (“U.K. PRA”) non-U.S. swap dealer and securities based swap dealer NIP is also subject to the regulations of the CFTC and SEC under the Dodd Frank Act. In addition, Nomura Bank International plc (“NBI”), another subsidiary of NEHS, is also regulated by the U.K. PRA on a standalone In Asia, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Singapore Ltd (“NSL”) are regulated by their local respective regulatory authorities. NIHK is licensed by the Securities and Futures Commission in Hong Kong to carry out regulated activities including 1 8 . Affiliated companies and other equity-method investees:Nomura’s significant affiliated companies and other equity-methodinvestees include Nomura Research Institute, Ltd. (“NRI”) and Nomura Real Estate Holdings, Inc. (“NREH”). Also, Nomura invests in American Century Companies, Inc., that is measured at fair value on a recurring basis through election of the fair value option. See Note 2 “ Fair value measurements NRI NRI develops and manages computer systems and provides research services and management consulting services. One of the major clients of NRI is Nomura. Revenue—Other 2022. F-122 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Further k trades o n March 23, 2022. As a result of the transaction, a gain of Revenue—Other March 31, 2022. Nomura has participated in a secondary offering at Nomura Research Institute as a seller on December 5, 2022, and sold 13,000,000 ordinary shares it held at ¥37,528 million to third parties. As a result of the transaction, a gain of approximately ¥28.0 billion was recognized in earnings within Revenue—Other As of March 31, NREH NREH is the holding company of the Nomura Real Estate Group which is primarily involved in the residential property development, leasing, investment management as well as other real estate-related activities. As of March 31, As of ¥million and ¥23,640 million, Summary financial information— The following tables present summarized financial information for significant affiliated companies of Nomura (including hose elected r the fair value option) as of March 31,
The following tables present a summary of balances and transactions with affiliated companies and other equity-method investees as of March 31, nded March 31, Investments in affiliated companies
Other assets—Other in the consolidated balance sheets. In addition, dividends received for investments in affiliates for which F-123 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) fair value option was elected are not included in Revenues Interest and dividends
The following table presents the aggregate carrying amount and fair value of investments in affiliated companies and other equity-method investees for which a quoted market price is available as of March 31,
The following table presents uity in earnings of
F-124 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 19. Commitments, contingencies and guarantees: Commitments— Credit and investment commitments In connection with its banking and financing activities, Nomura provides commitments to extend credit which l y have fixed expiration dates. In connection with its investment banking activities, Nomura enters into agreements with clients under which Nomura commits to underwrite securities that may be issued by the clients. As a member of certain central clearing counterparties, Nomura is committed to provide liquidity facilities through entering into reverse repo transactions backed by government and government agency debt securities with those counterparties in a situation where a default of another clearing member occurs. The outstanding commitments under these agreements are included below Nomura has commitments to invest in various partnerships and other entities and also has commitments to provide financing for investments related to these partnerships. The outstanding commitments under these agreements are included The following table presents a summary of the key types of outstanding commitments provided by Nomura as of March 31,
Maturity profile of these com mitments as of March 31 , 2023:
The contractual amounts of these commitments to extend credit represent the maximum amounts at risk case-by-case counterparty. F-125 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Other commitments Purchase obligations for goods or services that include payments for construction-related, advertising, and computer and telecommunications maintenance agreements amounted to¥ million as of March 31, ¥ 99,134 million as of March 31, 2023. As of March 31,
Above table includes the commitment to purchase parts of the redeveloped real estate in Tokyo Nihonbashi district from the redevelopment Nomura has commitments under resale and repurchase agreements including amounts in connection with collateralized agreements and collateralized financing. These commitments amounted to Nomura has commitments to purchase notes held by our clients. These commitments amounted to ¥ 15 billion as of March 31, 2022 and ¥ 14 billion as of March 31, 2023. In Japan, there is a market in which participants lend and borrow debt and equity securities without collateral to and from financial institutions. Under these arrangements, Nomura had obligations to return debt and equity securities borrowed without collateral of As a member of various securities clearing houses and exchanges, Nomura may be required to assume a certain share of the financial obligations of another member who may default on its obligations to the clearing house or the exchange. These guarantees are generally required under the membership agreements. To mitigate these risks, exchanges and clearing houses often require members to post collateral. The potential for Nomura to make payments under such guarantees is deemed remote. Investigations, lawsuits and other legal proceedings In the normal course of business as a global financial services entity, Nomura is involved in investigations, lawsuits and other legal proceedings and, as a result, may suffer loss from any fines, penalties or damages awarded against Nomura, any settlements Nomura chooses to make to resolve a matter, and legal and other advisory costs incurred to support and formulate a defense. The ability to predict the outcome of these actions and proceedings is inherently difficult, particularly where claimants are seeking substantial or indeterminate damages, where investigations and legal proceedings are at an early stage, where the matters present novel legal theories or involve a large number of parties, or which take place in foreign jurisdictions with complex or unclear laws. F-126 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The Company regularly evaluates each legal proceeding and claim on acase-by-case Contingencies ” (“ASC 450”), the Company recognizes a liability for this risk of loss arising on each individual matter when a loss is probable and the amount of such loss or range of loss can be reasonably estimated. The amount recognized as a liability is reviewed at least quarterly and is revised when further information becomes available. If these criteria are not met for an individual matter, such as if an estimated loss is only reasonably possible rather than probable, no liability is recognized. However, where a material loss is reasonably possible, the Company will disclose details of the legal proceeding or claim below. Under ASC 450 an event is defined as reasonably possible if the chance of the loss to the Company is more than remote but less than probable. As of March 31, 2021, 2022 and 2023, a total liability of ¥62,889 million, ¥ 76,866 million and ¥42,459 million has been recognized, respectively, and reported within the consolidated balance sheets within 63,338Other liabilities million, respectively, which has been reported within the consolidated statements of income within Non-interest expenses— Other The most significant actions and proceedings against Nomura are summarized below. The Company believes that, based on current information available as of the date of these consolidated financial statements, the ultimate resolution of these actions and proceedings will not be material to the Company’s financial condition. However, an adverse outcome in certain of these matters could have a material adverse effect on the consolidated statements of income or cash flows in a particular quarter or annual period. For certain of the significant actions and proceedings, 51 billion. For certain other significant actions and proceedings, the Company is unable to provide an estimate of the reasonably possible loss or range of reasonably possible losses because, among other reasons, (i) the proceedings are at such an early stage there is not enough information available to assess whether the stated grounds for the claim are viable; (ii) damages have not been identified by the claimant; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant legal issues to be resolved that may be dispositive, such as the applicability of statutes of limitations; (vi) there are novel or unsettled legal theories underlying the claims and/or (vii) a judgment has been made against Nomura but detailed reasons for the basis for the judgment and how the amount of the judgment has been determined have not yet been received. Nomura will continue to cooperate with regulatory investigations and to vigorously defend its position in the ongoing actions and proceedings set out below, as appropriate. Claims for reimbursement of tax voluntary NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) liquidation since 2000. An Italian Supreme Court judgment in June 2019 confirmed that an amount of approximately EUR million (comprised of tax credit refunds In October 2010 and June 2012, two actions were brought against NIP, seeking recovery of payments allegedly made to NIP by Fairfield Sentry Ltd. and Fairfield Sigma Ltd. (collectively, “Fairfield Funds”), which are now in liquidation and were feeder funds to Bernard L. Madoff Investment Securities LLC (in liquidation pursuant to the Securities Investor Protection Act in the U.S. since December 2008) (“BLMIS”). The first suit was brought by the liquidators of the Fairfield Funds. It was filed on October 5, 2010 in the Supreme Court of the State of New York, but was subsequently removed to the United States Bankruptcy Court for the Southern District of New York. The second suit was brought by the Trustee for the liquidation of BLMIS (“Madoff Trustee”). NIP was added as a defendant in June 2012 when the Madoff Trustee filed an amended complaint in the United States Bankruptcy Court for the Southern District of New York. Both actions seek to recover approximately The loan level representations made in connection with the securitization of mortgage loans were generally detailed representations applicable to each loan and addressed characteristics of the borrowers and properties. The representations included, but were not limited to, information concerning the borrower’s credit status, the loan-to-value With respect to certain of the RMBS issued from 2005 to 2007, the relevant subsidiaries received claims demanding the repurchase of certain loans from trustees of various securitization trusts, made at the instance of one or more investors, or from certificate insurers. The total original principal amount of loans for which repurchase claims were received by the relevant subsidiaries within six years of each securitization is million. The relevant subsidiaries summarily rejected any demand for repurchase received after the expiration of the statute of limitations applicable to breach of representation claims. For those claims received within six years, the relevant subsidiaries reviewed each claim received, and rejected those claims believed to be without merit or agreed to repurchase certain loans for those claims that the relevant subsidiaries determined to have merit. In several instances, following the rejection of repurchase demands, investors instituted actions through the trustee alleging breach of contract from 2011 to 2014. The breach of contract claims that were brought within the six-year statute of limitations for breach of contract actions have survived motions to dismiss and discovery was completed and Notes of Issue were filed. The Company has been engaged in efforts to resolve the actions outside of Court; certificateholder approval has been obtained for five settlement agreements and the Court is currently reviewing the agreements for approval. A monoline insurer, Ambac Assurance Corp (“Ambac”), insurance F-128 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) contract based on misrepresentations concerning the In November 2011, NIP was served with a claim filed by the Madoff Trustee in the United States Bankruptcy Court for the Southern District of New York. This is a clawback action similar to claims filed by the Madoff Trustee against numerous other institutions. The Madoff Trustee alleges that NIP received redemptions from the BLMIS feeder fund, Harley International (Cayman) Limited in the six years prior to December 11, 2008 (the date proceedings were commenced against BLMIS) and that these are avoidable and recoverable under the U.S. Bankruptcy Code and New York law. The amount that the Madoff Trustee is currently seeking to recover from NIP is approximately In March 2013, Banca Monte dei Paschi di Siena SpA (“MPS”) issued a claim in the Italian Courts against (1) two former directors of MPS and (2) NIP. MPS alleged that the former directors improperly caused MPS to enter into certain structured financial transactions with NIP in 2009 (“Transactions”) and that NIP acted fraudulently and was jointly liable for the unlawful conduct of MPS’s former directors. MPS claimed damages of not less than EUR 1.1 billion. In March 2013, NIP commenced a claim against MPS in the English Courts. The claim was for declaratory relief confirming that the Transactions remained valid and contractually binding. MPS filed and served its defence and counterclaim to these proceedings in March 2014. MPS alleged in its counterclaim that NIP was liable to make restitution of a net amount of approximately EUR 1.5 billion, and sought declarations regarding the illegality and invalidity of the Transactions. On September 23, 2015, NIP entered into a settlement agreement with MPS to terminate the Transactions. NIP believes that the Transactions were conducted legally and appropriately, and does not accept the allegations made against it or admit any wrongdoing. Taking into account the views of relevant European financial authorities and the advice provided by external experts, NIP considered it to be in its best interests to reach a settlement in relation to this matter. As part of the agreement, the Transactions were unwound at a discount of EUR 440 million in favour of MPS and the civil proceedings between MPS and NIP in Italy and England, respectively, will no longer be pursued. Pursuant to the settlement agreement MPS and NIP applied to the Italian Courts to discontinue the proceedings brought by MPS against NIP. These proceedings have since been discontinued. In April 2013, an investigation was commenced by the Public Prosecutor’s office in Siena, Italy, into various allegations against MPS and certain of its former directors, including in relation to the Transactions. The investigation was subsequently transferred to the Public Prosecutor of Milan. On April 3, 2015, the Public Prosecutor’s office in Milan issued a notice concluding its preliminary investigation. The Public Prosecutor was seeking to indict MPS, three individuals from MPS’s former management, NIP and two former NIP employees for, among others, the offences of false accounting and market manipulation in relation to MPS’s previous accounts. The preliminary hearing at which the Milan criminal court considered whether or not to grant the indictment concluded on October 1, 2016, the Judge ordering the trial of all individuals and banks involved except for MPS (which entered into a plea bargaining agreement with the Public Prosecutor). The trial commenced in December 2016. As part of these proceedings, a number of civil claimants have been permitted to bring damages claims against a number of entities and individuals, including NIP. On November 8, 2019, the court delivered its oral verdict, finding two former employees of NIP guilty of false accounting, market manipulation and obstructing the supervisory activities of CONSOB and that NIP had F-129 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) breached Italian corporate liability legislation. In so doing it imposed a fine of EUR 3.45 million on NIP as well as ordering confiscation of EUR 88 million. On May 12, 2020, the court issued the detailed reasoning for the verdict (including the rationale for the penalties imposed). In addition, NIP is involved in a number of separate civil or administrative matters relating to the Transactions including those described further below. In January 2018, a claim before the Italian Courts brought by two claimants, Alken Fund Sicav (on behalf of two Luxembourg investment funds Alken Fund European Opportunities and Alken Fund Absolute Return Europe) and Virmont S.A. (formerly, Alken Luxembourg S.A, plus interest, as well as non-monetary damages in an amount left to be quantified by the Judge. In July 2021, the court rejected all of Alken’s claims. In February 2022, Alken appealed the decision to the Milan Court of Appeal.In May 2019, a claim before the Italian Courts brought by York Global Finance Offshore BDH (Luxembourg) Sàrl and a number of seemingly related funds was served on NIP. The claim is made against NIP, MPS, two MPS former directors and a member of MPS’s internal audit board, and seeks monetary damages of approximately EUR 186.7 million non-monetary damages in an amount left to be quantified bythe Judge. Additionally , NIP was served by the Commissione Nazionale per le Società e la Borsa (“CONSOB”, the Italian financial regulatory authority) with a notice commencing administrative sanction proceedings for market manipulation in connection with the Transactions. In relation to the Transactions, the notice named MPS, three individuals from MPS’s former management and two former NIP employees as defendants, whereas NIP was named only in its capacity as vicariously liable to pay any fines imposed on the former NIP employees. On May 22, 2018 CONSOB issued its decision in which it levied EUR 100,000 fines in relation to each of the two former NIP employees. In addition, CONSOB decided that the two employees Court. In June 2016 and August 2016, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Special Investments Singapore Pte Limited (“NSIS”) were respectively served with a complaint filed in the Taipei District Court against NIHK, NSIS and certain individuals by Cathay United Bank, Co., Ltd., Taiwan Cooperative Bank Ltd., Chang Hwa Commercial Bank Ltd., Taiwan Business Bank Ltd., KGI Bank and Hwatai Bank Ltd. (collectively, “Syndicate Banks”). The Syndicate Banks’ complaint relates to a $60 million syndicated term loan to a subsidiary of Ultrasonic AG that was arranged by NIHK, and made by the Syndicate Banks together with NSIS. The Syndicate Banks’ allegations in the complaint $48 million in damages, plus interest. By judgment dated June 2, 2022, the Taipei District F-130 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Court dismissed the Syndicate Banks’ claims in entirety. On July 4, 2022, a Statement of Appeal was filed by 5 of the 6 Syndicate Banks (Cathay United Bank Co., Ltd., Taiwan Cooperative Bank Ltd., Chang Hwa Commercial Bank Ltd., Taiwan Business Bank Ltd. and Hwatai Bank Ltd., together the “Appellants”), indicating the Appellants’ intention to appeal the Taipei District Court decision to the Taiwan High Court. The claim amount for the appeal was approximately $42.6 million in damages, plus interest. The Appellants’ appeal was dismissed on August 30, 2022. The Taipei District Court judgment dated June 2, 2022, dismissing the Syndicate Banks’ claims, became final and On NIP and Nomura Securities International, Inc. (“NSI”) were Additionally, NIP and NSI were named as defendants in a separate class action filed in the Toronto Registry Office of the Federal Court of Canada alleging violations of Canadian competition law relating to the alleged manipulation of the market for supranational, sub-sovereign and agency bonds. In October 2022, subject to approval by the Federal Court of Canada, NIP and NSI have agreed to settle the class action.Nomura is responding to requests for information from the U.S. Commodity Futures Trading Commission (“CFTC”) in relation to swap trading related to bond issuances. On February 1, 2021, the CFTC filed a civil enforcement action against a Nomura employee and charged him with violating the anti-fraud, price manipulation and false statements provisions of the Commodity Exchange Act in relation to a 2015 interest rate swap transaction. Nomura also responded to requests for information from the CFTC in relation to compliance with records preservation requirements relating to the use of non-Nomura approved messaging platforms for business communications a $50 million civil monetarypenalty and to comply with certainnon-monetary undertakings ordered by the CFTC.NSI also responded to requests for information from the Securities and Exchange Commission (“SEC”) in connection with an investigation of compliance with records preservation requirements relating to the use of non-Nomura approved messaging platforms for business communications. In September 2022, NSI agreed to pay a $50 million civil monetarypenalty and to comply with certainnon-monetary undertakings ordered by the SEC.The SEC and the United States Department of Justice (“DOJ”) investigated past activities of several former employees of NSI in respect of commercial and residential mortgage-backed securities transactions in the secondary market. In July 2019, NSI entered into settlements with the SEC concerning its supervision of certain former employees, and the investig ation has conc luded. The investigation by the DOJ has been ongoing and NSI has been cooperatingfully. F-131 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) In September 2017 and November 2017, NIHK and NSIS were respectively served with a complaint filed in the Taipei District Court against NIHK, NSIS, China Firstextile (Holdings) Limited (“FT”) and certain individuals by First Commercial Bank, Ltd., Land Bank of Taiwan Co., Ltd., Chang Hwa Commercial Bank Ltd., Taishin International Bank, E.Sun Commercial Bank, Ltd., CTBC Bank Co., Ltd., Hwatai Bank, Ltd. and Bank of Taiwan (collectively, “FT Syndicate Banks”). The FT Syndicate Banks’ complaint relates to a $100 million syndicated term loan facility to borrower FT that was arranged by NIHK, and made by the FT Syndicate Banks together with NSIS. The FT Syndicate Banks’ allegations in the complaint include tort claims under Taiwan law against the defendants. The FT Syndicate Banks seek to recover approximately $68 million in damages , plus interest.In August 2017, the Cologne public prosecutor in Germany notified NIP that it is investigating possible tax fraud by individuals who worked for the Nomura Group in relation to the historic planning and execution of trading strategies around dividend record dates in certain German equities (known as “cum/ex” trading) and in relation to filings of tax reclaims in 2007 to 2012. During the fiscal year ended March 31, 2020, Nomura Group became aware that certain of those individuals would be the subject of investigative proceedings in Germany. NIP and another entity in the Nomura Group are cooperating with the investigation, including by disclosing to the public prosecutor certain documents and trading EUR153.5 million plus interest in respect of those transactions. In December 2022, NIP, with no admission of liability or wrongdoing, entered into a confidential settlement agreement with Vestia pursuant to which the parties settled all claims relating to the Transactions. Guarantees— In the normal course of business, Nomura enters into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date. F-132 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) In addition, Nomura enters into certain derivative contracts that meet the accounting definition of a guarantee, namely derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity security held by a guaranteed party. Since Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura For information about the maximum potential amount of future payments that Nomura could be required to make under The notional amounts do not represent anticipated losses from these derivatives contracts. As Nomura The following table presents information on Nomura’s derivative contracts that could meet the accounting definition of a guarantee and standby letters of credit and other guarantees.
The following table presents maturity information on Nomura’s derivative contracts that could meet the accounting definition of a guarantee and standby letters of credit and other guarantees as of March 31,
F-133 NOMURA HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 20. Segment and geographic information: Operating segments— We established our Investment Management Division to replace our former Asset Management Division and the Merchant Banking Division on April 1, 2021. Accordingly, our operating management and management reporting are prepared based on The accounting policies for segment information generally follow U.S. GAAP, except for a part of the impact of unrealized gains/losses on certain investments in equity securities held for operating purposes, which under U.S. GAAP are included in Income (loss) before income taxes Revenues and expenses directly associated with each business segment are included in the operating results of each respective segment. Revenues and expenses that are not directly attributable to a particular segment are allocated to each respective business segment or included in “ Other performance. Business Net interest revenue information on total assets is not disclosed because management does not Certain comparative amounts have been reclassified to conform to the current year’s presentation, in accordance with the realignment in April 202 1 . |