0001163653 nmr:PrivateEquityInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-03-31 0001163653 us-gaap:CollateralizedDebtObligationsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:TradingLiabilitiesMember 2018-04-01 2019-03-31
nmr:InvestmentTrustFundsAndOtherMember 2022-03-31
Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM
20-F
 
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 20202023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number:
1-15270
 
Nomura Horudingusu Kabushiki Kaisha
(Exact name of registrant as specified in its chartercharter)
)
 
Nomura Holdings, Inc.Inc.
(Translation of registrant’s name into English)
 
Japan
 
9-1,
13-1,
Nihonbashi
1-chome
Chuo-ku,
Tokyo
103-8645
Japan
(Jurisdiction of incorporation or organization)
 
(Address of principal executive offices)
Takumi Kitamura,
81-3-5255-1000,
81-3-6746-7850
(Name, Telephone,
E-mail
and/or Facsimile number and Address of Company Contact Person)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange On Which Registered
American Depositary Shares
Common Stock*Stock
*
 
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.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
As of March 31, 2020, 3,038,587,4932023, 3,003,679,324 shares of Common Stock were outstanding, including
30,223,151
38,182,446 shares represented by
30,223,151
38,182,446 American Depositary Shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    
☒
  Yes    
☐
   No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    
☐
  Yes    
☒
  No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  
☒
    No  
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  
☒
    No  
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule
12b-2
of the Exchange Act. (Check one):
Large accelerated filer  
☒
  
Accelerated filer   
☐
  
Non-accelerated
filer  
☐
  
Emerging growth company  
☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  
☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b).  ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP  
☒
  
International Financial Reporting Standards as issued
by the International Accounting Standards Board  
☐
  
Other  
☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    
☐
  Item 17    
☐
  Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    
☐
  Yes    
☒
  No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    
☐
  Yes
☐
  No
 
 
Table of Contents
TABLE OF CONTENTS
Page
PART I
     
Page
 
PART I
Item 1.
 
Identity of Directors, Senior Management and Advisers
  
2
Item 2.
 
Offer Statistics and Expected Timetable
  
2
Item 3.
 
Key Information
  
2
Item 4.
 
Information on the Company
  
20
22
Item 4A.
 
Unresolved Staff Comments
  
43
54
Item 5.
 
Operating and Financial Review and Prospects
  
43
55
Item 6.
 
Directors, Senior Management and Employees
  
81
94
Item 7.
 
Major Shareholders and Related Party Transactions
  
102
121
Item 8.
 
Financial Information
  
103
122
Item 9.
 
The Offer and Listing
  
103
122
Item 10.
 
Additional Information
  
104
123
Item 11.
 
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
  
112
131
Item 12.
 
Description of Securities Other Than Equity Securities
  
127
150
 
PART II
  
Item 13.
 
Defaults, Dividend Arrearages and Delinquencies
  
129
152
Item 14.
 
Material Modifications to the Rights of Security Holders and Use of Proceeds
  
129
152
Item 15.
 
Controls and Procedures
  
129
152
Item 16A.
 
Audit Committee Financial Expert
  
129
152
Item 16B.
 
Code of Ethics
  
130
152
Item 16C.
 
Principal Accountant Fees and Services
  
130
153
Item 16D.
 
Exemptions from the Listing Standards for Audit Committees
  
131
154
Item 16E.
 
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  
131
154
Item 16F.
 
Change in Registrant’s Certifying Accountant
  
132
155
Item 16G.
 
Corporate Governance
  
132
155
Item 16H.
 
Mine Safety Disclosure
  157
133Item 16I.
 
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
  157
 
PART III
  
Item 17.
 
Financial Statements
  
134
158
Item 18.
 
Financial Statements
  
134
158
Item 19.
 
Exhibits
  
135
158
Index to the Consolidated Financial Statements
  
F-
1
F-1
__________________________
 
1
1
Table of Contents
As used in this annual report, references to th
e
“Company”
, “
Nomura
”
, the
“
Nomura Group
”
,
“
we
”
,
“
us
”
and “our
”
are to Nomura Holdings, Inc. and, except as the context otherwise requires, its consolidated subsidiaries. As part of certain line items in Nomura’s financial statements and information included in this annual report, references to “NHI” are to Nomura Holdings, Inc.
As used in this annual report, “yen” or “¥” means the lawful currency of Japan, “dollar” or “$” means the lawful currency of the United States of America (“U.S.”), and “EUR” means the lawful currency of the member states of the European Monetary Union.
As used in this annual report, “ADS” means an American Depositary Share, currently representing one share of the Company’s common stock, and “ADR” means an American Depositary Receipt evidencing one or more ADSs. See “Rights of ADR Holders” under Item 10.B of this annual report.
As used in this annual report, except as the context otherwise requires, the “Companies Act” means the Companies Act of Japan and the “FSA” means the Financial Services Agency of Japan.
Amounts shown in this annual report have been rounded to the nearest indicated digit unless otherwise specified. In tables and graphs with rounded figures, sums may not add up due to rounding.
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
A. Selected Financial Data
The following table presents selected financial information as of and for the years ended March 31, 2016, 2017, 2018, 2019 and 2020 which is derived from our consolidated financial statements. The consolidated balance sheets for the years ended March 31, 2019 and 2020, the consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the years ended March 31, 2018, 2019 and 2020, and notes thereto appear elsewhere in this annual report. These financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). Certain reclassifications of previously reported amounts have been made to conform to the current period presentation.
2
Table of Contents
The selected consolidated financial information set forth below should be read in conjunction withSee Item 5. “
Operating“Operating and Financial Review and ProspectsReview—A. Operating Results—Other operating results—Selected Financial Data.”
” in this annual report and our consolidated financial statements and notes thereto included in this annual report.
                     
 
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
—
basic
 ¥
36.53
  ¥
67.29
  ¥
63.13
  ¥
(29.90
) ¥
67.76
 
Net income (loss) attributable to NHI shareholders
—
diluted
  
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
%
(1)Due to Accounting Standards Update
2014-09,
“
Revenue from Contracts with Customers
” and the changes in our accounting policy which Nomura adopted on April 1, 2018, certain reclassifications of previously reported amounts have been made to conform to the current year presentation.
(2)Calculated using the number of shares outstanding at year end.
(3)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.
(4)The number shown is used to calculate basic earnings per share.
(5)Calculated as net income (loss) attributable to NHI shareholders divided by total NHI shareholders’ equity.
B. Capitalization and Indebtedness.
Not applicable.
C. Reasons for the Offer and Use of Proceeds.
Not applicable.
32
Table of Contents
D. Risk Factors.
Risk Factors
You should carefully consider the risks described below before making an investment decision. If any of the risks described below actually occurs, our business, financial condition, results of operations or cash flows could be adversely affected. In that event, the trading prices of our shares could decline, and you may lose all or part of your investment. In addition to the risks listed below, risks not currently known to us or that we now deem immaterial may also harm us and affect your investment.
INDEX
·
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
3
Table of Contents
(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
Table of Contents
(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
Our business and revenues may be affected by any adverse changes or volatility in the Japanese and global economic environments and financial markets. In addition, not only purely economic factors but also future wars, acts of terrorism, economic or political sanctions, pandemics, forecasts of geopolitical risks and geopolitical events which have actually occurred, natural disasters or other similar events could have an effect on the financial markets and economies of each country. If any adverse events including those discussed above were to occur, a market or economic downturn may last for a long period of time, which could adversely affect our business and can result in us incurring substantial losses. In particular, global turmoil and economicaddition to conditions caused by the coronavirus
(”COVID-19”)
pandemic could continue to negatively affect Nomura’s business, even after the pandemic itself has subsided. It is highly uncertain and difficult to predict how critically our business continuity and revenue will be affected if this situation continues for an extended period. Furthermore,in financial markets, social conditions such as the long-term trends of population aging and population decline faced by Japan are expected to continue to put downward pressure on demand in the businesses in which we operate, including, in particular, our retailRetail business. Even in the absence of a prolonged market or economic downturn, changes in market volatility and other changes in the environment may adversely affect our business, financial condition and results of operations. The following are certain risks related to the financial markets and economic conditions for our specific businesses.
5
Table of Contents
(1) Governmental fiscal and monetary policy changes in Japan, or in any other countrycountries or regionregions where we conduct business may affect our business, financial condition and results of operations
We engage in our business globally through domestic and international offices. Governmental fiscal, monetary and other policy changes in Japan, or in any other countrycountries or regionregions where we conduct business may affect our business, financial condition and results of operations. In addition, any changes to the monetary policy of the Bank of Japan or central banks in major economies worldwide, which could potentially be followed bylead to volatility of interest rate or yields may negatively affect our ability to provide asset management products to our clients as well as our and our clients’ trading and investment activities, as exemplified by decreased returns for fixed income productsactivities. For example, in the prolonged lowfiscal year ended March 31, 2023, the U.S. Federal Open Market Committee increased the federal funds rate multiple times as part of its strategy to combat inflation, leading to significant increases in U.S. Dollar interest rate environmentrates as well as turmoil in Japan.the banking sector in the United States and in other countries, causing significant market volatility widely affecting our business and the financial services industry.
(2) Extended market declines and decreases in market participants can reduce liquidity and lead to material losses
Extended market declines can reduce the level of market activity and the liquidity of the assets traded in those markets in which we operate. Market liquidity may also be affected by decreases in market participants, for example, if financial institutions scale back market-related businesses due to increasing regulation or other reasons. As a result, it may be difficult for us to sell, hedge or value such assets. In the event that a market fails in pricing such assets, it will be difficult to estimate their values. If we cannot properly close out or hedge our associated positions in a timely manner or in full, particularly with respect to
Over-The-Counter
(“OTC”) derivatives, we may incur substantial losses. Further, if the liquidity of a market significantly decreases and the market may become unable to price financial instruments held by us, this could lead to unanticipated losses.
(3) Natural disaster, terrorism, military dispute and infectious disease could adversely affect our business
We have developed a contingency plan for addressing unexpected situations and conduct crisis management exercises which include employee notification tests. We also continue to ensure we can maintain operational resilience (which refers to the ability to continue to provide critical services at a minimum level that should be maintained in the event of a system failure, cyberattacks or natural disaster). This includes the establishment of an emergency command center in the event of an actual disaster to account for the safety of our employees and their families. However, disaster, terrorism, military disputes or widespread infectious diseases afflicting our business, management and employees could exceed the assumptions of our plan and our framework, and we may not always be able to respond to every situation, afflicting our management and employees, facilities and systems, which could adversely affect our business. In addition, there is a possibility that unknown infectious diseases other than
COVID-19
pandemic may hinder the operational duties of our management and employees.
(4) The
COVID-19
pandemic may affect our business
The
COVID-19
pandemic has affected Nomura’s business, customersthat began in 2020, and employees and this may continue in the future
In 2020, the
COVID-19
pandemic and thegovernmental measures taken by governments to prevent its spread, had a severe impact on our businesshave significantly affected the operating environment, particularly in the capital markets, which are expected to see continued instability due to the ongoing turmoil including an extremefor example causing volatility in global equity prices, interest rates and elsewhere and a widening of credit spreads,spreads. While the spread or impact of the disease is gradually subsiding as well asvaccination efforts progress, ongoing negative effects on markets, economic activity or the possibility that uncertainty in the economic outlook will continue in the future.operating environment could further adversely affect our business, results of operations and financial condition.
Post-Transition Brexit(5) Transition from U.S. Dollar LIBOR to alternative rate indices may adversely affect our business on various fronts
On January 31, 2020, theThe United Kingdom (“U.K.”) withdrew from the European Union (“EU”) under the Withdrawal Agreement between the U.K.Financial Conduct Authority confirmed on March 5, 2021 that U.S. Dollar LIBOR settings will cease after June 30, 2023. All transaction agreements which refer to U.S. Dollar LIBOR and the EU (“Brexit”), which provides for a transition period duringremain after its cessation are expected to be amended to refer alternative reference rates; or to be altered by
46
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adding fallback provisions that are agreed between the contracting parties in advance. These changes could require us to incur additional costs and subject us to risks associated with systematic reform, operational application and client disclosure, or adversely impact the pricing, volatility and liquidity of financial products including derivatives, bonds and loans which the rulesreference U.S. Dollar LIBOR. Therefore, our business, financial condition and regulationsresults of the EU continueoperations could be materially and adversely affected and/or we could be subject to applydisputes, litigation or other actions with counterparties or relative participants.
2.
The financial services industry faces intense competition
Our businesses are intensely competitive, and are expected to the U.K. until December 31, 2020. The legal deadline for the U.K. and the EU to agree on whether to extend the transition period is currently June 30, 2020. If the transition period ends without the U.K. and the EU agreeing upon the terms of their relationship, such as a free trade arrangement, tariffs and other trade restrictions may come into force immediately, includingremain so. We compete on the provisionbasis of services such as ours.
Because we conduct a substantial level of business throughout Europe where London is our regional hub, the outcome of the negotiations following Brexit may adversely affect our business on various fronts. Currently, our regulated activities in the European region are carried out mainly through Nomura International plc (“NIP”), our broker-dealer arm established in London. NIP currently can provide the entire European Economic Area (“EEA”) cross-border services under the relevant EU single market legislation known as “passporting rights.” If the transition period ends without an agreement between the U.K. and the EU in respect to the continuation of access for financial services, including passporting rights, NIP may lose access to the EEA and, as a result, our revenue and profitability from business in the European region remaining in the NIP legal entity may be adversely affected. This situation would also similarly apply to other group entities operating in the European region.
In order to address the consequences of Brexit, we established a broker-dealer entity, Nomura Financial Products Europe GmbH (“NFPE”) as a licensed broker-dealer in the Federal Republic of Germany. As a German entity, NFPE will continue to hold passporting rights even if the transition period ends with no agreement. However, potential risks are associated with timely migration of European clients to NFPE and ability to provide the same level of service as the NIP entity. In addition as discussed below, a number of uncertainties affecting our business in the European region remain.
For example, agreements between the U.K. and the EU on financial services after the end of the transition period may adversely affect our business in the European region. Moreover, if no agreement is reached, financial stability both in the U.K. and the wider European region may be adversely affected. Any market turmoil and increased volatility may adversely affect our business, with potentially severe liquidity and operational pressures on our financial position, particularly in the short term. Even if the U.K. and the EU agree on extending the transition period to maintain the status quo until a final agreement for the future relationship becomes effective, this may affect the behavior of market participants. For example, market participants may postpone or cancel transactions or other activities that they would otherwise engage in, which may adversely affect our revenues and profitability.
Depending on the content of any future agreement between the U.K. and the EU, the wider financial system and regulatory and supervisory regime in the European region may also be substantially changed, which could adversely affect our business as well. Euro-denominated financial transactions in the market, which are currently centralized in London, in particular may be affected by any regulatory regime emerging after the transition period, in terms of the physical location for financial market infrastructure, liquidity provision and pricing. Operating conditions for financial institutions and financial market infrastructures may also become more stringent for all market participants depending on the content of any such new regulatory or supervisory regime.
These potential changes in the relevant regulatory or supervisory regimes in the wider financial system may accelerate fragmentation of the financial markets and, as a result, we may be adversely affected due to increasing operating costs, which could impact our profitability. Such increased operating costs may result from a number of factors, including transaction execution capability, our products and services, innovation, reputation and price. We have experienced intense price competition, particularly in brokerage, investment banking and other businesses.
(1) Competition with other financial firms and financial services by
non-financial
companies is increasing
We face intense competition in the introductionfinancial services sector from a wide variety of competitors. In Japan, we compete with other independent Japanese securities firms as well as securities firms affiliated with commercial banks and with overseas firms. As a result, our market shares in the sales and trading, investment banking and retail businesses in particular have been affected. In recent years, competition has intensified beyond the traditional financial sector based on the increasing digitalization of the industry, not only with the rise of online securities firms but also FinTech companies and the entry of
non-financial
companies into the financial services sector. In order to address such changes in the competitive landscape, we have already begun various efforts to these changes in the competitive environment. However, these measures may not be successful in growing or modificationmaintaining our market share in this increasingly fierce competitive environment, and we may lose business or transactions to our competitors, harming our business and results of regulatory requirementsoperations.
(2) Increased consolidation, business alliance and cooperation in the financial services industry mean increased competition for us
There has been substantial consolidation and convergence among companies in the financial services industry. In particular, a number of large commercial banks and other broad-based large financial services groups have established or acquired broker-dealers or have consolidated with other financial institutions. These large financial services groups have developed business linkage within their respective groups in order to provide comprehensive financial services to clients, offering a wide range of products, including loans, deposit-taking, insurance, brokerage, asset management and investment banking services within their group, which may enhance their competitive position compared with us. They also have the ability to supplement their investment banking and brokerage businesses with commercial banking and other financial services revenues in an effort to gain market share. In addition, the financial services industry has seen collaboration beyond the borders of businesses and industries, such as regulatory capital, liquidity, governance,alliances between commercial banks and securities companies outside of framework of existing corporate groups and recent alliances with
non-financial
companies including emerging companies. Our competitiveness may be adversely affected if our competitors are able to expand their businesses and improve their profitability through such business alliances. We also enter into strategic alliances, make investments and launch new businesses. However, if the development and implementation of these business strategies do not proceed as expected, we may not be able to achieve the expected synergies and other benefits or recoup related investments. These new business initiatives and acquisitions may subject us to increased risk management controlas we engage in new activities, transact with a broader array of clients and overall entity structure planning.counterparties and expose us to new asset classes and new markets.
(3) Our global business continues to face intense competition and may require further revisions to its business model
Overall, the final form that Brexit takes poses a high level of potentially prolonged uncertainties both politically and economically, mainlyWe continue to believe there are significant opportunities in the U.K. and the EU. There mayinternational markets, but there is also be certain extraterritorial effects in markets outsidesignificant competition associated with such opportunities. In order to take advantage of the region. These uncertainties, together with other potential developments such as rising trade tensions, may add further downward pressure to the world economic growth and global financial stabilitythese opportunities, we
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will have to compete successfully with financial services firms based in important
non-Japanese
markets, including the U.S., Europe and as a result,Asia. Despite our efforts facing competition, we recognized an impairment loss on goodwill attributable to previous overseas acquisitions of ¥81,372 million in the fiscal year ended March 31, 2019. Since April 2019, we have been working to rebuild our global business platform, under which we aim to transform our business portfolio and pivot towards client businesses and growth areas. The acquisition of Greentech Capital, LLC (“Greentech”) in 2020 and transfer of stake of Capital Nomura Securities Public Company Limited in 2023, are examples of reviewing our business platform both organically and inorganically. We will continue to review our entire business portfolio while looking at the competitive environment, and intend to implement our strategies in consideration of potential risks. However, the risk remains that we may see lower liquidity inbe required to incur greater expenses than expected, or to commit greater financial, markets, an unexpected increase in volatility across various asset classes, higher funding costs, a trend towards increasing risk averseness in investment activitiesmanagement and negative business sentiment, all ofother resources to the strategies than expected, which maycould adversely affect our business.business and results of operations. Moreover, the assumptions and expectations upon which the strategies are based may not be correct, which could lead to us realizing fewer benefits than expected or could even harm our business and results of operations overall. Furthermore, to the extent we reduce compensation or headcount as part of this strategy, our ability to attract and retain the employees needed to successfully run our businesses could be adversely affected. We may also be unsuccessful in designing a streamlined management structure, which could harm our ability to properly control or supervise our many businesses across the world.
3.
Event risk may cause losses in our trading and investment assets as well as market and liquidity risk
Event risk refers to potential losses we may suffer through unpredictable events that cause large unexpected market price movements such as natural or
man-made
disasters, epidemics, acts of terrorism, armed conflicts or political instability, as well as adverse events specifically affecting our business activities or counterparties. These events include not only significant events such as the Great East Japan Earthquake in March 2011, the increasing tensions on Korean Peninsula following North Korean nuclear tests in 2017, sudden and unexpected developments in global trade or security policies such as tensions between the United States and China since 2018 and ongoing geopolitical tensions in Asia overall, the
COVID-19
pandemic in 2020, and the invasion of Ukraine by the Russian Federation in 2022, but also more specifically the following types of events that could cause losses in our trading and investment assets:
Our brokeragesudden and asset management revenues may declinesignificant reductions in credit ratings with regard to financial instruments held by our trading and investment businesses by major rating agencies,
A market downturn could result in a decline in the revenues generated by our brokerage business because of a decline in the volume and value of securities that we broker for our clients. Also, within our asset management business, in most cases, we charge fees and commissions for managing our clients’ portfolios that are based on the market value of their portfolios. A market downturn that reduces the market value of our clients’ portfolios may increase the amount of withdrawals or reduce the amount of new investments in these portfolios, and would reduce the revenue we receive from our asset management business. Also, any changes in our clients’ investment preference on their asset portfolios, including shifting investment assets to stable assets such as deposits and/or passive funds, which bring relatively low commission rates, may reduce our revenue as well.
Our investment banking revenuessudden changes in trading, tax, accounting, regulatory requirements, laws and other related rules which may declinemake our trading strategy obsolete, less competitive or no longer viable, or
Changes
an unexpected failure in financial or economic conditions would likely affect the number and size of transactions for which we provide securities underwriting, financial advisory and other investment banking services. Our investment banking revenues, which include fees from these services, are directly related to the number and size of the transactionsa corporate transaction in which we participate resulting in our not receiving the consideration we should have received, as well as bankruptcy, deliberate acts of fraud, and would therefore decrease if there are financialadministrative penalty with respect to the issuers of our trading and market changes unfavorable to our investment banking business and our clients.assets.
The
COVID-19
pandemic
4.
Environmental, Social and Governance (“ESG”) factors including climate change and broader associated policy changes in each jurisdiction could adversely affect our business
Increasing attention to the management of Environmental, Social and Governance (“ESG”) factors in 2020 has increased uncertaintythe business makes it imperative that we continue to develop policies and capabilities in these areas, and that we act responsibly towards our stakeholders, including our shareholders, clients and society at large. Amid rapidly changing circumstances around ESG, a lack of sufficient focus on ESG matters such as the environment or human rights may impede our ability to maintain a sustainable business model and support clients facing trends such as the just transition to the low carbon economy or other
ESG-related
initiatives, and may also adversely affect our reputation, results of operations and financial condition. Reputational risks also include the risk associated with over-stating our credentials, or not delivering on commitments we have made (also known as “greenwashing”).
We consider climate change one of the most important global challenges facing society. The direct impact of climate change, and the resulting changes in the business environment for investment banking, negatively affecting investment banking revenues. A potential reduction in M&A activities and other investment banking is expectedcould cause us to continueincur losses. Climate
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risks are widely recognized to have negative impact on our revenuestwo aspects – physical and transition risks. Physical risk refers to the risk of loss or damage driven by extreme weather events, such as hurricane, flood, drought, heatwave or frost, or from the longer term shifts in climate patterns and rising sea levels. Transition risk is the future.risk associated with the transition to a
low-carbon
economy, and could result from changing government policies, technologies or changes to consumer demand.
·
Risks Relating to Our Businesses
5.
Our business may incur losses due to various factors in the conduct of its operations.
Our electronic trading business revenues may decline
Electronic trading is essential for our business in order to execute trades faster with fewer resources. Utilizing these systems allows us to provide an efficient execution platform and
on-line
content and tools to our clients via exchanges or other automated trading facilities. Revenue from our electronic trading, which includes trading commissions and
bid-offer
spreads is directly correlated with the number and size of the transactions in which we participate. Competition in electronic trading is intense and the introduction of highly discounted or
no-commission
trades at competitors has and will continue to exert pressure on our electronic and traditional trading revenue. Moreover, such revenue would decrease if there are financial market or economic changes that would cause our clients to trade less frequently or in a smaller amounts. Even if trade volumes increase due to the convenience of electronic trading, this may not be sufficient to offset margin erosion in our execution business, leading to a potential decline in revenue generated from this business. We continue to invest in developing technologies to provide an efficient trading platform; however, we may fail to maximize returns on these investments due to this increased pressure on lowering margins.
(1) We may incur significant losses from our trading and investment activities
We maintain trading and investment positions in fixed income, equity and other markets, both for proprietary purposes and for the purpose of facilitating our clients’ trades. Our positions consist of various types of assets, including securities, derivatives transactions with equity, interest rate, currency, credit and other underliers, as well as loans, and reverse repurchase agreements. Fluctuations in the markets where these assets are traded can adversely affect the value of our positions, in these assets, with downturns potentially negatively affecting long positions and upturns potentially negatively affecting short positions. Although we continue to
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mitigate these position risks with a variety of hedging techniques, we may also incur losses if the value of these assets fluctuatefluctuates or if the financial system is overly stressed and the markets move in a way we have not anticipated. In addition, prices of crypto-assets may fluctuate significantly due to various factors such as developments in the industry or in regulation of crypto assets.
Our businesses have been, and may continue to be, affected by changes in market volatility levels. Certain of our trading businesses such as those engaged in trading and arbitrage opportunities depend on market volatility to generate revenues. Lower volatility may lead to a decrease in business opportunities which may affect the results of operations of these businesses. On the other hand, while higher volatility can increase trading volumes, and spreads, it also increases risk as measured by
Value-at-Risk
(“VaR”). Higher volatility and wider bid offer spreads may expose us to higher risks in connection with our market-making and proprietary trading businesses. Higher volatility can also cause us to reduce the outstanding positions or size of these businesses where we consider necessary.
For example, in orderMarch 2021, following the default of a U.S. prime brokerage client in respect of a margin call, we issued a
close-out
event notice to avoid increasingsuch client, and proceeded to wind down positions held as hedges for transactions with the client, leading us to recognize significant trading losses on the unwinding of the underlying positions and a provision for expected credit losses to reflect a shortfall in the value of securities pledged by the client as collateral against financing provided to it. We refer to this event and the losses caused as the “U.S. Prime Brokerage Event.” See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event. Despite our VaR.actions in response to the U.S. Prime Brokerage Event, including to improve our risk management activities, our business model necessarily involves significant trading activity, and we may record significant losses as a result of such trading activity again in the future.
Furthermore, we commit capital to take relatively large positions for underwriting or warehousing assets to facilitate certain capital market transactions. We also structure and take positions in pilot funds for developing financial investment products and invest seed money to set up and support financial investment products. We may incur significant losses from these positions in the event of significant market fluctuations.
In addition, if we are the party providing collateral in a transaction, significant declines in the value of the collateral or a requirement to provide additional collateral due to a decline in our creditworthiness (by way of a lowered credit rating or otherwise) can increase our costs and reduce our profitability. On the other hand, if we are the party receiving collateral from our clients and counterparties, such declines may also affect our profitability due to decrease in client transactions. Assuming aSee also “
one-notch
and
two-notch
downgrade of our credit ratings on March 31, 2020, absent other changes, we estimate that the aggregate fair value of assets required—Risks Relating to be posted as additional collateral in connection with our derivative contracts would have been approximately ¥5.5 billion and ¥64.3 billion, respectively.
Transition from LIBOR to alternative rate indices may adversely affect our businessOur Financial Position—12.
We trade derivatives including interest rate swaps and underwrite bonds and loans which refer to Interbank Offered Rates (“IBORs”) such as the London Interbank Offered Rate (“LIBOR”). Following the LIBOR manipulation scandal in 2012, the Chief Executive of the U.K. Financial Conduct Authority (“FCA”), which regulates LIBOR, announced on July 27, 2017 that FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021, and indicated that the continuation of LIBOR cannot and will not be guaranteed after 2021. Since then, the regulators of each country including Japan have expressed their intention to request that financial transactions that refer to LIBOR be converted to alternative rate indices and that measures be taken in preparation for the permanent cessation of LIBOR. So, almost all the transaction agreements which refer to LIBOR are expected to be replaced or to be amended adding “fallback” clause by the end of 2021. But details of calculation methodologies of alternative rate indices are under discussion in each country currently, and such transfers will involve the development of new calculation methods for alternative rates, revisions to relevant contracts and modifications to the application of accounting principles to the relevant transactions. These changes could require us to incur additional costs and subject us to risks associated with systematic reform, operational application and client disclosure, or adversely impact the pricing, volatility and liquidity of financial products including derivatives, bonds and loans which refer IBORs as floating rate. Therefore, our business, financial condition and results of operations could be impacted materially adversely and/or we could be subject to disputes, litigation or other actions with counterparties or relative participants.
We have established a firmwide LIBOR transition program to manage the transition away from these LIBOR. However, the transactions referring to the alternative rate indices are not familiarized and fixed in the market yet since the details of calculation methods are still under discussion, so these developments are the subject of significant uncertainty, and we may not be successful in managing this transition without potentially serious disruption to our business.9
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Liquidity risk could impair our ability to fund operations and jeopardize our financial condition—(3) Lowering of our credit ratings could impact our funding
”.
(2) Holding large and concentrated positions of securities and other assets may expose us to largesignificant losses
HoldingWe regularly hold large and concentrated positions of certain securities can expose us to large losses in our businesses such as market-making, block trading, underwriting, asset securitization, prime brokerage, acquiring newly-issued convertible debt securities through third-partythird party allotment or providing business solutions to meet our clients’ needs. We have committed substantial amounts of capital to these businesses. This often requires us to take large positions in the securities of a particular issuer or issuers in a particular industry, country or region. Fluctuations in the prices of these securities can significantly affect the prices at which we are able to liquidate them when needed, resulting in us incurring significant trading losses, such as those incurred in connection with the U.S. Prime Brokerage Event. See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event. We generally have higher exposure to those issuers engaged in financial services businesses, including commercial banks, broker-dealers, clearing houses, exchanges and investment companies. There may also be cases where we hold relatively large amounts of securities by issuers in particular countries or regions due to the business we conduct with our clients or our counterparties. In addition, we may incur losses due to market fluctuations on asset-backed securities such as residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”).
Extended market declines and decreases in market participants can reduce liquidity and lead to material losses
Extended market declines can reduce the level of market activity and the liquidity of the assets traded in those markets in which we operate. Market liquidity may also be affected by decreases in market participants that could occur, for example, if financial institutions scale back market-related businesses due to increasing regulation or other reasons. As a result, it may be difficult for us to sell, hedge or value such assets held. Also, in the event that a market fails in pricing such assets, it will be difficult to estimate their value. If we cannot properly close out or hedge our associated positions in a timely manner or in full, particularly with respect to
Over-The-Counter
(“OTC”) derivatives, we may incur substantial losses. Further, if the liquidity of a market significantly decreases and the market may become unable to price financial instruments held by us, this could lead to unanticipated losses.
While the
COVID-19
pandemic in 2020 and the associated measures taken to prevent its spread led to a rapid contraction of the global economy, our trading business was active due to an increase in client activity driven by volatility in equity markets and interest rates and flight to risk-free assets. However in future, it is unclear how long this trend will continue.
(3) Our hedging strategies may not prevent losses
We use a variety of financial instruments and strategies to hedge our exposure to various types of risk.financial risks arising from the financial instruments we enter into for proprietary purposes or for our clients. If our hedging strategies are not effective, we may incur losses. We base many of our hedging strategies on historical trading patterns and correlations. For example, if we hold an asset, we may hedge this position by taking a position in another asset which has, historically, moved in a direction that would offset a change in value of the former asset. However, historical trading patterns and correlations may not continue, as seen in the case of past financial crises, and these hedging strategies may not be fully effective in mitigating our risk exposure because we are exposed to all types of risk in a variety of market environments. Moreover, not all hedging strategies are effective, and certain strategies may, if the risk is not otherwise appropriately managed, increase our risk. For example, many of the transactions leading to the U.S. Prime Brokerage Event entailed providing the client with “total return swap” derivatives exposure to certain equities. See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event. In order to hedge the total return payments we were obligated to make to the client, we held long positions in the underlying equities. However, this specific hedging strategy was not intended to hedge the risk of a default by the client and the potential need to liquidate the underlying positions in a volatile market environment. When such risk was realized, our hedging strategy of holding the underlying securities meant that we were exposed to such market fluctuations, contributing to the losses we incurred.
(4) Our risk management policies and procedures may not be fully effective in managing market riskrisks
Our policies and procedures to identify, monitor and manage risks may not be fully effective. Although some of our methods of managing risk are based upon observed historical market data, the future movements in the financial markets may not be the same as was observed in the past. As a result, we may suffer largesignificant losses through unexpected future risk exposures. Other risk management methods that we use also rely on our evaluation of information regarding markets, clients or other matters, which is publicly available or otherwise accessible by us. This information may not be accurate, complete,
up-to-date
or properly evaluated, and we may be unable to properly assess our risks, and thereby suffer large losses. Furthermore, certain factors, such as market volatility, may render our risk evaluation model unsuitable for a new market environment. In such event, we may become unable to evaluate or otherwise manage our risks adequately.
Moreover, regardless of how well policies and procedures are designed, they must be properly implemented and followed in order to be effective,
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which may not always occur despite our diligent efforts. Further, potential weaknesses in our organization structures and governance frameworks may lead to misunderstanding over roles and responsibilities.
For example, with respect to the U.S. Prime Brokerage Event, we incurred significant losses through exposures to the client’s counterparty risk and market risks relating to the securities underlying the prime brokerage transactions with the client. We have reviewed and are in the process of completing a number of actions to comprehensively review, revise and strengthen our risk management policies and procedures and the implementation thereof. See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature and status of these review procedures. Such actions remain ongoing, however, and when completed, may not be sufficient to prevent similar exposure to such risks in the future, including to identify and rectify potential shortcomings, whether within the same business or among our many other business units, impairing the ability of such policies and procedures to prevent future losses.
(5) Market risk may increase other risks that we face
In addition to the potentially adverse effects on our businesses described above, market risk could exacerbate other risks that we face. For example, the risks inherent in financial instruments developed through financial engineering and innovation may be increased by market risk.
Also, if we incur substantialsignificant trading losses caused by our exposure to market risk, our need for liquidity could rise sharply while our access to cash may be impaired as a result of market perception of our credit risk.
Furthermore, in a downturn in the market downturn,overall or for specific securities, our clients and counterparties could incur substantialsignificant losses or experience other adverse events of their own, thereby weakening their financial condition and, as a result, increasing ourthe credit risk they pose to them.us, such as occurred as part of the U.S. Prime Brokerage Event.
We(6) Our brokerage and asset management revenues may have to recognize impairment charges with regard todecline
A market downturn could result in a decline in the revenues generated by our brokerage business because of a decline in the volume and value of securities that we broker for our clients. Also, within our asset management and investment management business, in most cases, we charge fees for managing our clients’ portfolios that are based on the market value of their portfolios. A market downturn that reduces the market value of our clients’ portfolios may increase the amount of goodwill, tangible and intangible assets recognized on our consolidated balance sheets
We have purchased allwithdrawals or a part of the equity interests in, or operations from, certain other companies in order to pursue our business expansion, and expect to continue to do so when and as we deem appropriate. We account for certain of those and similar purchases and acquisitions as a business combination under U.S. GAAP by allocating our acquisition costs to the assets acquired and liabilities assumed and recognizing the remaining amount as goodwill. We also possess tangible and intangible assets other than those stated above.
We may have to recognize impairment charges, as well as other losses associated with subsequent transactions, with regard toreduce the amount of goodwill, tangiblenew investments in these portfolios, and intangiblewould reduce the revenue we receive from these businesses. Also, any changes in our clients’ investment preference on their asset portfolios, including shifting investment assets to stable assets such as deposits and/or passive funds, which bring us relatively low fee revenue, may reduce our revenue as well.
(7) Our investment banking revenues may decline
Changes in financial or economic conditions would likely affect the number and size of transactions for which we provide securities underwriting, financial advisory and other investment banking services. Our investment banking revenues, which include fees from these services, are directly related to the number and size of the transactions in which we participate and would therefore decrease if recognized, suchthere are financial and market changes may adversely affectunfavorable to our financial conditioninvestment banking business and results of operations. our clients.
For example, net revenue from our investment banking activities declined during the year ended March 31, 2019, we recognized an impairment loss on goodwill2023 compared to the years ended March 31, 2021 and 2022 primarily due to geopolitical developments and uncertainty regarding the economic outlook, and net revenues may decline further in our Wholesale segment attributable to previous overseas acquisitionslight of ¥81,372 million.a decrease in M&A activities and other investment banking activities.
Liquidity risk could impair our ability to fund operations and jeopardize our financial condition(8) Our electronic trading business revenues may decline
Liquidity, or having ready access to cash,Electronic trading is essential for our business in order to execute trades faster with fewer resources. Utilizing these systems allows us to provide an efficient execution platform and
on-line
content and tools to our business. 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 our creditworthiness or deterioration in market conditions. In addition to maintaining a readily available cash position, we seek to secure ample liquidity through repurchase agreements and securities lending transactions, long-term borrowings and the issuance of long-term debt securities, diversification of our short-term funding sources such as commercial paper, and by holding a portfolio of highly liquid assets. We bear the risk that we may lose liquidity under certain circumstances, including the following:
We may be unable to access unsecured or secured funding11
We continuously access unsecured funding from issuance of securities in the short-term credit markets and debt capital markets as well as bank borrowings to finance our
day-to-day
operations, including refinancing. We also enter into repurchase agreements and securities lending transactions to raise secured funding for our trading businesses. An inability to access unsecured or secured funding or funding at significantly higher cost than normal levels could have a substantial negative effect on our liquidity. For example, lenders could refuse to extend the credit necessary for us to conduct our business based on their assessment of our long-term or short-term financial prospects if:
we incur large trading losses,
the level of our business activity decreases due to a market downturn,
regulatory authorities take significant action against us, or
our credit rating is downgraded.
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In addition toclients via exchanges or other automated trading facilities. Revenue from our electronic trading, which includes trading commissions and
bid-offer
spreads is directly correlated with the above, our ability to borrow in the debt capital markets could also be adversely impacted by factors that are not specific to us, such as reductions in banks’ lending capacity, a severe disruptionnumber and size of the financial and credit markets, negative views about the general prospects for the investment banking, brokerage or financial services industries, or negative market perceptions of Japan’s financial soundness.
We may be unable to sell assets
If we are unable to raise funds or if our liquidity declines significantly, we will need to liquidate assets or take other actions in order to meet our maturing liabilities. In volatile or uncertain market environments, overall market liquidity may decline. In a time of reduced market liquidity, we may be unable to sell some of our assets, or we may have to sell at depressed prices, which could adversely affect our results of operations and financial condition. Our ability to sell assets may also be adversely impacted by other market participants seeking to sell similar assets into the market at the same time.
Lowering of our credit ratings could impact our funding
Our funding depends significantly on our credit ratings. Rating agencies may reduce or withdraw their ratings or place us on “credit watch” with negative implications. Future downgrades could increase our funding costs and limit our funding. This, in turn, could adversely affect our result of operations and our financial condition. In addition, other factors which are not specific to us may impact our funding, such as negative market perceptions of Japan’s financial soundness.
Event risk may cause losses in our trading and investment assets as well as market and liquidity risk
Event risk refers to potential losses we may suffer through unpredictable events that cause large unexpected market price movements such as natural or
man-made
disasters, epidemics, acts of terrorism, armed conflicts or political instability, as well as adverse events specifically affecting our business activities or counterparties. These events include not only significant events such as the Great East Japan Earthquake in March 2011, the increasing tensions on Korean Peninsula following North Korean nuclear tests in 2017, sudden and unexpected developments in global trade or security policies such as tensions between the United States and China in 2018 and 2019, and the
COVID-19
pandemic in 2020 but also more specifically the following types of events that could cause losses in our trading and investment assets:
sudden and significant reductions in credit ratings with regard to financial instruments held by our trading and investment businesses by major rating agencies,
sudden changes in trading, tax, accounting, regulatory requirements, laws and other related rules which may make our trading strategy obsolete, less competitive or no longer viable, or
an unexpected failure in a corporate transactiontransactions in which we participate resultingparticipate. Competition in electronic trading is intense and the introduction of highly discounted or
no-commission
trades at competitors has and will continue to exert pressure on our electronic and traditional trading revenue. Moreover, such revenue would decrease if there are financial market or economic changes that would cause our clients to trade less frequently or in a smaller amount. Even if trade volumes increase due to the convenience of electronic trading, this may not be sufficient to offset margin erosion in our not receiving the considerationexecution business, leading to a potential decline in revenue generated from this business. We continue to invest in developing technologies to provide an efficient trading platform, however, we should have received, as well as bankruptcy, deliberate acts of fraud, and administrative penalty with respectmay fail to the issuers of our trading and investment assets.
maximize returns on these investments due to this increased pressure on lowering margins.
We may be exposed to losses when third parties that are indebted to us do not perform their obligations
6.
We may be exposed to losses when third parties do not perform their obligations to us
Our counterparties are from time to time indebted or otherwise owe certain obligations (such as with regards to the posting of collateral) to us as a result of transactions or contracts, including loans, commitments to lend, other contingent liabilities and derivative transactions. We may incur material losses when our counterparties default or fail to perform on their obligations to us due to their filing for bankruptcy, a deterioration in their creditworthiness, lack of liquidity, operational failure, an economic or political event, repudiation of the transaction or for other reasons. In particular,The U.S. Prime Brokerage Event, during which a U.S. prime brokerage client defaulted on obligations to us to post additional margin in respect of trading activities as well as to repay amounts lent against collateral held by us, is an example. See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the effectsnature of the
COVID-19
pandemic, or governmental responses thereto, are felt, we may see an increase in defaults by counterparties.this event. Although we establish and maintain allowances for credit losses, such allowances reflect management judgments and assumptions based on information available to them. For example, our allowances as of March 31, 2020 reflect
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certain assumptions on short-us, which may provide incorrect or incomplete, and long-term effects of the
COVID-19
pandemic on the ability of our counterparties to perform their obligations to us. However, these judgments and assumptions may prove to be incorrect, potentially significantly so.
Credit risk may also arise from:
holding securities issued by third parties, or
the execution of securities, futures, currency or derivative transactions that fail to settle at the required time due to nondelivery
non-delivery
by the counterparty of Nomura, such as financial institutions and hedge funds, which are counterpartiesor to credit default swaps or systems failure by clearing agents, exchanges, clearing houses or other financial infrastructure.
Issues related to third party credit risk may include the following:
(1) Defaults by a large financial institution could adversely affect the financial markets generally and us specifically
The commercial soundness of many financial institutions is closely interrelated as a result of credit, trading, clearing or other relationships among the institutions. As a result, concern about the creditworthiness of or a default by, a certain financial institution could lead to significant liquidity problems or losses in, or defaults by, other financial institutions. This may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which we interact on a daily basis. Actual defaults, increases in perceived default risk and other similar events could arise in the future and could have an adverse effect on the financial markets and on us. Our funding operations may be adversely affected if major financial institutions, Japanese or otherwise, fail or experience severe liquidity or solvency problems.
(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 our credit riskit
We regularly review our credit exposure to specific clients or counterparties and to specific countries and regions that we believe may present credit concerns. Default risk, however, may arise from events or circumstances that are difficult towe do not detect, such as account-rigging and fraud. We may also fail to receive full
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information with respect to the risks of a counterparty.counterparty, or to accurately manage and assess such information internally. For example, our credit risk assessments with respect to the client whose default led to the U.S. Prime Brokerage Event did not reflect the full extent of the client’s relevant trading activity. In addition, in cases where we have extended credit against collateral, we may fall into a deficiency in value in the collateral if sudden declines in market values reduce the value of our collateral.collateral, as was the case with loans extended to the prime brokerage client leading in part to the U.S. Prime Brokerage Event. See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event.
(3) Our clients and counterparties may be unable to perform their obligations to us as a result of political or economic conditions
Country, regional and political risks are components of credit risk, as well as market risk. Political or economic pressures in a country or region, including those arising from local market disruptions or currency crises, may adversely affect the ability of clients or counterparties located in that country or region to obtain credit or foreign exchange, and therefore to perform their obligations owed 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
Environmental, Social
Models are widely used by Nomura for various purposes including valuation of low liquidity derivative transactions or estimation of credit worthiness of obligors. However, models are never perfect, and Governancetheir use subjects Nomura to model risk. Model errors or incorrect or inappropriate model applications could lead to incorrect decision making, financial losses or damage to the firm’s credibility.
8.
We are a holding company and depend on payments from our subsidiaries
We are a holding company and heavily depend on dividends, distributions and other payments from our subsidiaries to make payments on our obligations. Regulatory and other legal restrictions, such as those under the Companies Act, may limit our ability to transfer funds freely, either to or from our subsidiaries. In particular, many of our subsidiaries, including our broker-dealer subsidiaries, are subject to laws and regulations, including regulatory capital requirements, that authorize regulatory bodies to block or reduce the flow of funds to the parent holding company, or that prohibit such transfers altogether in certain circumstances. For example, Nomura Securities Co., Ltd. (“ESG”NSC”) factors including Climate change, Nomura Securities International, Inc., Nomura International plc and broader associated policyNomura International (Hong Kong) Limited, our main broker-dealer subsidiaries, are subject to regulatory capital requirements and changes in each jurisdictionsuch regulatory capital requirements and the required level could adversely affectlimit the transfer of funds to us. While we monitor and manage the transfer of funds among Nomura Group on the basis of the relevant laws and regulations on a daily basis, these laws and regulations may hinder our business
ability to access funds needed to make payments on our obligations.
Increasing attention
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
We hold substantial investments in equity securities including private equity investments and
non-trading
debt securities. Under U.S. GAAP, depending on market conditions, we may recognize significant unrealized gains or losses on our investments in equity securities and debt securities, which could have an adverse impact on our financial condition and results of operations. For example, in the fiscal year ended March 31, 2020, we recognized a loss of ¥16.4 billion related to our investment in American Century Investments and ¥16.6 billion on our investments in equity securities resulting from market declines arising from the
COVID-19
pandemic. Moreover, while we may decide to dispose of these equity securities and debt securities, depending on the management of Environmental, Social and Governance (“ESG”) factors in the business makes it imperative that Nomura continues to develop its policies in these areas, and positions itself in a positive light to its stakeholders including shareholders, customers and broader society. Lack of sufficient focus on ESG considerationsmarket conditions, we may not only impede Nomura’s abilitybe able to build a sustainable business model, butdispose of these equity securities and debt securities when we would like to do so, as quickly as we may also increase Nomura’s vulnerability to ESG related risks such as risks associated with climate change inwish or at the medium- to long-term.desired price.
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The direct impact of climate change, and the resulting changes in the business environment could cause losses to Nomura. The climate change related risk is broadly divided into two parts; Physical Risks and Transition Risks.
10.
-Physical Risk: The risk
We may face an outflow of physical damage or the impairment of the operating capability of theclients’ assets of Nomura Group, customers and business partners due to climate change. This includes the potential impactlosses of extreme weather events, fire and sea level flooding.cash reserve funds or debt securities we offer
-Transition Risk: The risks associated with accelerated policy and external changes associated with the move towards addressing Climate Risk. This includes changes in government policies, industrial policy or carbon based taxes, and rapid changes in technologies which have the potential to leave stranded assets that are no longer viable.
TheCash reserve funds, such as money market funds and money reserve funds are categorized as low risk financial services industry faces intense competition
Our businesses are intensely competitive, and are expected to remain so. We compete on the basis of a number of factors, including transaction execution capability, our products and services, innovation, reputation and price. We have experienced intense price competition, particularly in brokerage, investment banking and other businesses.
Competition with commercial banks, commercial bank-owned securities subsidiaries,
non-Japanese
firms and online securities firms in the Japanese market is increasing
Since the late 1990s, the financial services sector in Japan has undergone deregulation. Banks and certain other financial institutions became able to enter into the securities brokerage business in 2004 and firewalls between commercial banks and securities firms were deregulated in 2009, increasing the ability of securities firms with affiliated commercial banks to cooperate more closely them.products. As a result securities subsidiaries of commercial banks and
non-Japanese
firms with increased competitiveness have been affecting our market sharesa sudden rise in interest rates, such cash reserve funds may fall below par value due to losses resulting from price decreases of debt securities in the salesportfolio, defaults of debt securities in the portfolio or charges of negative interest. If we determine that a stable return cannot be achieved from the investment performance of cash reserve funds, we may accelerate the redemption of, or impose a deposit limit on, such cash reserve funds.
In addition, debt securities that we offer may default or experience delays in the payment of interest and/or principal.
These events above may result in the loss of client confidence and trading, investment banking and retail businesses. In recent years,lead to an outflow of client assets from our custody or preclude us from increasing such client assets.
·
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
We have purchased all or a part of the rise of online securities firms has further intensified the competition. Inequity interests in, or operations from, certain other companies in order to address such changes in the competitive landscape,pursue our business expansion, and expect to continue to do so when and as we have takendeem appropriate. We account for certain measures, including the establishment of those and similar purchases and acquisitions as a business alliancecombination under U.S. GAAP by allocating our acquisition costs to the assets acquired and liabilities assumed and recognizing the remaining amount as goodwill. On April 1, 2020, Nomura acquired 100% of Greentech and goodwill of ¥12,480 million is reported on our consolidated balance sheet. We also possess tangible and intangible assets other than those stated above.
We may have to recognize impairment losses, as well as other losses associated with subsequent transactions, with regard to the amount of goodwill, tangible and intangible assets and, recognized on our consolidated group balance sheet which may adversely affect our financial condition and results of operations. For example, during the year ended March 31, 2019, we recognized an impairment loss on goodwill in our Wholesale segment attributable to previous overseas acquisitions of ¥81,372 million.
12.
Liquidity risk could impair our ability to fund operations and jeopardize our financial condition
Liquidity, or having ready access to cash, is essential to our business. We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from a social networkingsignificantly higher cost of funding than normal levels due to deterioration of our creditworthiness or deterioration in market conditions. In addition to maintaining a readily available cash position, we seek to secure ample liquidity through repurchase agreements and messaging service provider. However, these measures may not be successful in growing or maintainingsecurities lending transactions, long-term borrowings and the issuance of long-term debt securities, diversification of our market share in this increasingly fierce competitive environment,short-term funding sources such as commercial paper, and by holding a portfolio of highly liquid assets. We bear the risk that we may lose businessliquidity under certain circumstances, including the following:
(1) We may be unable to access unsecured or secured funding
We continuously access unsecured funding from issuance of securities in the short-term credit markets and debt capital markets as well as bank borrowings to finance our
day-to-day
operations, including refinancing. We also enter into repurchase agreements and securities lending transactions to raise secured funding for our competitors, harmingtrading businesses. An inability to access unsecured or secured funding or funding at significantly higher cost than normal levels could have a substantial negative effect on our business and results of operations.liquidity. For example, lenders could refuse to
Increased consolidation, business alliance and cooperation in the financial services groups industry mean increased competition for us
There has been substantial consolidation and convergence among companies in the financial services industry. In particular, a number of large commercial banks and other broad-based large financial services groups have established or acquired broker-dealers or have consolidated with other financial institutions. Recently, these large financial services groups have been further developing business linkage within their respective groups in order to provide comprehensive financial services to clients. These financial services groups continue to offer a wide range of products, including loans, deposit-taking, insurance, brokerage, asset management and investment banking services within their group, which may enhance their competitive position compared with us. They also have the ability to supplement their investment banking and brokerage businesses with commercial banking and other financial services revenues in an effort to gain market share. In addition, the financial services industry has seen collaboration beyond the borders of businesses and industries, such as alliances between commercial banks and securities companies outside of framework of existing corporate groups and recent alliances with
non-financial14
companies including emerging companies. Our competitiveness may be adversely affected if our competitors are able to expand their businesses and improve their profitability through such business alliances.
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extend the credit necessary for us to conduct our business based on their assessment of our long-term or short-term financial prospects if:
We incur large trading losses,
The level of our business activity decreases due to a market downturn,
Regulatory authorities take significant action against us, or
Our global business strategies have not resultedcredit rating is downgraded.
In addition to the above, our ability to borrow in the anticipated outcomedebt capital markets could also be adversely impacted by factors that are not specific to date,us, such as increases in market interest rates, reductions in banks’ lending capacity, a severe disruption of the financial and credit markets, negative views about the general prospects for the investment banking, brokerage or financial services industries, or negative market perceptions of Japan’s financial soundness.
(2) We may be unable to sell assets
If we are unable to raise funds or if our liquidity declines significantly, we will need to liquidate assets or take other actions in order to meet our maturing liabilities. In volatile or uncertain market environments, overall market liquidity may decline. In a time of reduced market liquidity, we may be unable to sell some of our assets, or we may have to sell at depressed prices, which could adversely affect our results of operations and financial condition. Our ability to sell assets may also be adversely impacted by other market participants seeking to sell similar assets into the market at the same time.
(3) Lowering of our credit ratings could impact our funding
Our funding depends significantly on our credit ratings. Rating agencies may reduce or withdraw their ratings or place us on “credit watch” with negative implications. For example, following the U.S. Prime Brokerage Event, in March 2021, Fitch Ratings, Inc. placed our credit ratings on negative watch and Moody’s Investors Service, Inc. changed the outlook on our credit ratings to negative, which may lead either agency to downgrade our credit ratings in the future. See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event. Future downgrades could increase our funding costs and limit our funding. This, in turn, could adversely affect our result of operations and our financial condition. In addition, other factors which are not specific to us may impact our funding, such as negative market perceptions of Japan’s financial soundness.
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
We have affiliates and investees accounted for under the equity method in our consolidated financial statements and whose shares are publicly traded. If there is a decline in the market price, of the shares we hold in such affiliates over a period of time, and we determine that the decline is other-than-temporary, then we recognize an impairment loss for the applicable fiscal period which may not be able to successfully rebuild them
We continue to believe there are significant opportunities in the international markets, but there is also significant competition associated with such opportunities. In order to take advantagehave an adverse effect on our financial condition and results of these opportunities, we will have to compete successfully with financial services firms based in important
non-Japanese
markets, including the U.S., Europe and Asia.operations. For example, as a means to bolster our international operations, we acquired certain Lehman Brothers operations in Europe, the Middle East and Asia in 2008 After the acquisition, however, market structures have changed drastically due to the scaling back of market-related businesses by European financial institutions and the monetary easing policies by European central banks, resulting in decline in whole market liquidity. Although we endeavored to reallocate our management resources to optimize our global operations and thereby improve our profitability, due in part to the challenging environment facing these businesses, we recognized an impairment loss of ¥81,372¥47,661 million against its investment in Nomura Real Estate Holdings, Inc. during the fiscal year ended March 31, 2019.2021.
Accordingly, since April 2019, we have been working to rebuild our global business platform, under which we aim to simplify our operating model, transform our business portfolio
·
Risks Relating to Legal, Compliance and Other Operational Issues
14.
Operational risk could adversely affect our business
Operational risk is the risk of financial loss or
non-financial
impact arising from inadequate or failed internal processes and pivot towards client businesses systems, from a lack of appropriate personnel, from human errors, or from external events,
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and growth areas. However, we may be unable to successfully execute this strategy. Even if we are able to successfully execute this strategy, we may be required to incur greater expenses than expected, or to commit greater financial, managementincludes compliance, legal, IT and cyber security, fraud, third party, and other resources to this strategy than expected, which
non-financial
risks. We always face the potential of operational risk, and if materializes, it could adversely affect our business and results of operations. Moreover, the assumptions and expectations upon which this strategy is based may not be correct, which could leadbusiness.
Issues related to us realizing fewer benefits than expected or could even harm our business and results of operations overall. For example, we may not correctly select business lines to streamline, which could lead to us missing or otherwise being unable to take advantage of a potential opportunity. Furthermore, to the extent we reduce compensation or headcount as part of this strategy, our ability to attract and retain the employees needed to successfully run our businesses could be adversely affected. Weoperational risk may also be unsuccessfulinclude the risks listed in designing a streamlined management structure, which could harm our abilityitems 15 to properly control or supervise our many businesses across the world.20 below.
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
We always face the risk that our employees, directors or officers, or any third party, could engage in misconduct that may adversely affect our business. Misconduct by an employee, director or officer includes conduct such as entering into transactions in excess of authorized limits, acceptance of risks that exceed our limits, or concealment of unauthorized or unsuccessful activities. The misconduct could also involve the improper use or disclosure of
non-public
information relating to us or our clients, , such as insider trading, improper transmission of such information and the recommendation of trades based on such information, as well as other crimes, which could result in regulatory sanctions, legal liability and serious reputational or financial damage to us.
For example, on March 5, 2019, a researcher at Nomura Research Institute, Ltd. (“NRI”), our equity-method affiliate, revealed information that there was a high possibility that the standard for designating the top market of the Tokyo Stock Exchange (the “TSE”) would fall to ¥25 billion, which had been under review at the TSE, to a chief strategist (the “NSC Strategist”) in the research division of Nomura Securities Co., Ltd. (“NSC”).NSC. The researcher at NRI was a member of the Advisory Group to Review the TSE Equity Market Structure and received this information in such capacity. On the same day and the next day, the NSC Strategist communicated the information to certain people including members of Japanese stock sales team of NSC and Nomura International (Hong Kong) Limited, some of whom provided the information to their institutional investor clients. Although the provision of the information did not represent a violation of law, they were inappropriate conducts and impaired the implicit trust placed in us and our employees by other market participants. Following a special internal investigation conducted by external experts, on May 24, 2019, we announced a remediation plan and the reduction of compensation of certain of our executives and those of NSC. On May 28, 2019, the FSA issued a business improvement order to us and to NSC, requiring us to clarify responsibility for this
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incident, develop and submit a detailed improvement plan, and report periodically on the implementation and effectiveness of measures for improvement, and on August 28, 2019, a fine of ¥10 million was imposed by Tokyo Stock Exchange, Inc. as a penalty.
Although we have taken measures in line with the improvement plan to detect and prevent such misconduct in the future, including the establishment of the “Nomura Group Code of Conduct” on December 3, 2019, including ensuring its thorough dissemination throughout the group and ensuring thorough compliance with its terms, the measures we have implemented or may implement may not be effective in all cases, and we may not always be able to detect or deter misconduct by an employee, director or officer. If any administrative or judicial sanction is issued against us as a result of such misconduct, we may lose business opportunities for a period of time, even after the sanction is lifted, if and to the extent that our clients, especially public institutions, decide not to engage us for their financial transactions.
Third parties may also engage in fraudulent activities, including devising a fraudulent scheme to induce our investment, loans, guarantee or any other form of financial commitment, both direct and indirect. Because of the broad range of businesses that we engage in and the large number of third parties with whom we deal in our
day-to-day
business operations, such fraud or any other misconduct may be difficult to prevent or detect.detect, and our future reputation and financial condition could be adversely affected, which could result in serious reputational or financial damage to us in the future.
WeMeasures we have implemented or additional measures that may be implemented in the future may not be effective in preventing or managing the risk of misconduct or fraud in all cases, and we may not always be able to recover the financial losses causeddetect or deter misconduct or fraud by an employee, director, officers, or third parties. If any administrative or judicial sanction is issued against us as a result of such activitiesfraudulent or misconduct, we may lose business opportunities, and our reputationfuture revenue and results of operations may also be damaged by such activities.materially and adversely affected, even after the sanction is lifted, if and to the extent that our clients, especially public institutions, decide not to engage us for their financial transactions.
16.
A failure to identify and appropriately address conflicts of interest could adversely affect our business
We are a global financial institution that provides a wide range of products and services to a diverse group of clients, including individuals, corporations, other financial institutions and governmental institutions. As such, we face potential conflicts of interest in the ordinary course of our business. Conflicts of interests can arise when our services to a particular client conflict or compete, or are perceived to conflict or compete, with our own
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interests. In addition, where
non-public
information is not appropriately restricted or shared within the firm, conflicts of interest can also arise where a transaction within the Nomura Group and or a transaction with another client conflict or compete, or is perceived to conflict or compete, with a transaction with a particular client. While we have extensive internal procedures and controls designed to identify and address conflicts of interest on the basis of the Nomura Group Conflicts of Interest Management Policy, aA failure, or a perceived failure, to identify, disclose and appropriately address such conflicts could adversely affect our reputation, and the willingness of current or potential clients to do business with us.us and our revenues and results of operations. In addition, conflicts of interest could give rise to regulatory actions or litigation.
17.
Our business is subject to substantial legal, regulatory and reputational risks
Substantial legal liability or a significant regulatory action against us could have a material financialadverse effect on usour business, financial condition or results of operations, or cause reputational harm to us, which in turn could adversely affect our business prospects, financial condition and results of operations.us. Also, material changes in regulations applicable to us or to the markets in which we operate could adversely affect our business. See Note 2119.
“Commitments, contingencies and guarantees”
in our consolidated financial statements included in this annual report for further information regarding the significant investigations, lawsuits and other legal proceedings that we are currently facing.
Our exposure to legal liability is significant
We face significant legal risks in our businesses. These risks include liability under securities or other laws in connection with securities underwriting and offering transactions, liability arising from the purchase or sale of any securities or other financial products, disputes over the terms and conditions of complex trading arrangements or the validity of contracts for our transactions, disputes with our business alliance partners and legal claims concerning our other businesses.
14
(1) Legal liability may occur due to events such as market downturn and could adversely affect our business, financial condition and results of operations
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During a prolonged market downturn or upon the occurrence of an event that adversely affects the market, we would expect claims against us to increase. We may also face significant litigation. The cost of defending such litigation may be substantial and our involvement in litigation may damage our reputation. For example, during the fiscal year ended March 2022, approximately ¥62.0 billion related to legacy transactions in the U.S. from before the global financial crisis (2007 – 2008) was recognized including legal expenses as well as certain transactions intended to mitigate future losses. In addition, even legal transactions might be subject to adverse public reaction according to the particular details of such transactions. These risks may be difficult to assess or quantify and their existence and magnitude may remain unknown for substantial periods of time.
(2) Extensive regulation of our businesses limits our activities and may subject us to significant penalties and losses
The financial services industry is subject to extensive regulation. We are subject to increasing regulation by governmental and self-regulatory organizations in Japan and in virtually all other jurisdictions in which we operate, and such governmental and regulatory scrutiny may increase as our operations expand or as laws change. In addition, while regulatory complexities increase, possibilities of extra-territorial application of a regulation in one jurisdiction to business activities outside of such jurisdiction may also increase. These regulations are broadly designed to ensure the stability of financial systems and the integrity of the financial markets and financial institutions, and to protect clients and other third parties who deal with us, and often limit our activities and/or affect our profitability, through net capital, client protection and market conduct requirements. In addition, on top of traditional finance-related legislation, the scope of laws and regulations applying to, and/or impacting on, our operations may become wider depending on the situation of the wider international political and economic environment or policy approaches taken by governmental authorities in respect of regulatory application or law enforcement. In particular, the number of investigations and proceedings against the financial services industry by governmental and self-regulatory organizations has increased substantially and the consequences of such investigations and proceedings have become more severe in recent years, and we are subject to face the risk of such investigations and proceedings. For example, the U.S. Department of Justice (the “DOJ”) conducted an investigation regarding residential mortgage-backed securities
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securitized by some of our U.S. subsidiaries prior to 2009. On October 15, 2018, the U.S. subsidiaries settled the investigation with the DOJ and agreed to pay USD 480$480 million. Although we have policies in place to prevent violations of such laws and regulations, weWe may not always be able to prevent such violations, and we could be fined, prohibited from engaging in some of our business activities, ordered to improve our internal governance procedures or be subject to revocation of our license to conduct business. Our reputation could also suffer from the adverse publicity that any administrative or judicial sanction against us may create, which may negatively affect our business opportunities and ability to secure human resources. As a result of any such sanction, we may lose business opportunities for a period of time, even after the sanction is lifted, if and to the extent that our clients, especially public institutions, decide not to engage us for their financial transactions. In addition, certain market participants may refrain from investing in or entering into transactions with us if we engage in business activities in regions subject to international sanctions, even if our activities do not constitute violations of sanctions laws and regulations.
(3) Tightening of regulations applicable to the financial system and financial industry could adversely affect our business, financial condition and results of operations
If regulations that apply to our businesses are introduced, modified or removed, we could be adversely affected directly or through resulting changes in market conditions. The impact of such developments could make it economically unreasonable for us to continue to conduct all or certain of our businesses, or could cause us to incur significant costs to adjust to such changes.
Furthermore, the exact details of the implementation of proposals for regulatory change and its impact on us will depend on the final regulations as they become ultimately adopted by various governmental agencies and oversight boards. See Item 4.B “
Business Overview—Regulation
” in this annual report for more information about such regulations.
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New regulations or revisions to existing regulations relating to accounting standards, regulatory capital adequacy ratios, liquidity ratios and leverage ratios applicable to us could also have a material adverse effect on our business, financial condition and results of operations. Such new regulations or revisions to existing regulations include the
so-called
Basel III package formulated by the Basel Committee on Banking Supervision (“Basel Committee”) and the finalized Basel III reforms published in December 2017. Furthermore, in October 2012, the Basel Committee developed and published a set of principles on the assessment methodology and higher loss absorbency requirements for domestic systemically important banks
(“D-SIBs”),
and, in December 2015, the FSA identified us as a
D-SIB
and imposed a surcharge of 0.5% on our required capital ratio after March 2016 with
3-year
transitional arrangement. In addition, FSB published the final standard requiring global systemically important banks
(“G-SIBs”)
to maintain a certain level of total loss-absorbing capacity (“TLAC”) upon their failure in November 2015. Under the FSA’s policy implementing the TLAC framework in Japan as updated in April 2018, the TLAC requirements in Japan apply not only to Japanese
G-SIBs
but also to Japanese
D-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. Based on the revised policy, in March 2019, the FSA published the notices and guidelines of TLAC regulations in Japan. According to these notices and guidelines, Nomura will beis subject to the TLAC requirements in Japan from March 31, 2021 although Nomura is not identified as a
G-SIB
as of the date of this annual report. These changes in regulations may increase our funding costs or require us to liquidate financial instruments and other assets, raise additional capital or otherwise restrict our business activities in a manner that could adversely affect our operating or financing activities or the interests of our shareholders.
(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
We recognize deferred tax assets in our consolidated balance sheets as a possible benefit of tax relief in the future. If we experience or forecast future operating losses, if tax laws or enacted tax rates in the relevant tax jurisdictions in which we operate change, or if there is a change in accounting standards in the future, we may reduce the deferred tax assets recognized in our consolidated balance sheets. As a result, it could adversely affect our financial condition and results of operations. See Note 1614
“Income taxes”
in our consolidated financial statements included in this annual report for further information regarding the deferred tax assets that we currently recognize.
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(5) Defects in our anti-money laundering and counter-terrorism financing measures could have serious consequences such as, administrative penalties or punitive fines
In recent years, financial crimes have become more sophisticated, complex, and diverse. As the world faces growing threats of war, terrorism, and cyberattacks, it is highly important to counter the financing of crimes and terrorism. Financial institutions around the world are expected to take strong measures to combat money laundering and terrorist financing. Despite our efforts to improve our anti-money laundering and counter-terrorism financing measures, which we have implemented consistently across Nomura Group in accordance with the Recommendations provided by the Financial Action Task Force (FATF) and the FSA’s “Guidelines on Anti-Money Laundering and Terrorist Financing”, there remains a risk that such measures will not be fully effective in preventing or detecting all violations in a timely manner. As a consequence, we could be subject to administrative penalties or punitive fines. See
“17.Our business is subject to substantial legal, regulatory and reputational risks—(2) Extensive regulation of our businesses limits our activities and may subject us to significant penalties and losses”
for further information regarding regulatory actions and other legal proceedings as well as consequences thereof.
18.
Unauthorized disclosure or misuse of personal information held by us may adversely affect our business
We keep and manage personal information obtained from clients in connection with our business. In recent years, there have been many reported cases of personal information and records in the possession of corporations and institutions being improperly accessed disclosed or misused.
Although we exercise care to protect the confidentiality of personal information and have in place policies and procedures designed to safeguard such information and ensure that it is used in compliance with applicable laws, rules and regulations, were any unauthorized disclosure or misuse of personal information to occur, our business could be adversely affected. For example, we could be subject to government actions such as administrative actions or penalties in case there is any violation of applicable personal data protection laws, rules and regulations or be subject to complaints and lawsuits for damages from clients if they are adversely affected due to the unauthorized disclosure or misuse of their personal information (including leakage of such information by an external service provider). In addition, we could incur additional expenses associated with changing our security systems, either voluntarily or in response to administrative guidance or other regulatory initiatives. Moreover, restrictions on our ability to use personal information collected from clients may adversely affect our existing businesses or to develop new ones. Furthermore, any damage to our reputation caused by such unauthorized disclosure or misuse could lead to a decline in new clients and/or a loss of existing clients, as well as to increased costs and expenses incurred for public relations campaigns designed to prevent or mitigate damage to our corporate or brand image or reputation.
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System failure, the information leakage and the cost of maintaining sufficient cybersecurity could 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
Our businesses rely on secure processing, storage, transmission and reception of personal, confidential and proprietary information on our systems. We have been in the past and may again become the target of attempted unauthorized access, computer viruses or malware, and other cyber-attackscyberattacks designed to access and obtain information on our systems or to disrupt and cause other damage to our services. For example, in June 2018, one of our foreign subsidiaries experienced a spear phishing incident that resulted in the unauthorized access to the firm’s desktop network, requiring us to immediately launch an internal investigation to assess and remediate the incident, notify the appropriate authorities of its occurrence and communicate with clients and other individuals whose data may have been impacted. In response to the
COVID-19
pandemic, many of our employees now work remotely using networking or other technologies, and these technologies have become even more critical to our business. The implementation of remote work arrangements may also increase the possibility that we will be subject to cyber-attackscyberattacks and other information security breaches. Although these threats may originate from
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human error or technological failure, they may also originate from the malice or fraud of internal parties, such as employees, or third parties, including foreign
non-state
actors and extremist parties. Additionally, we could also be adversely impacted if any of the third-party vendors, exchanges, clearing houses or other financial institutions to whom we are interconnected are subject to cyber-attackscyberattacks or other informational security breaches. Such events could cause interruptions to our systems, reputational damage, client dissatisfaction, legal liability, enforcement actions or additional costs, any and all of which could adversely affect our financial condition and operations.
While we continue to devote significant resources to monitor and update our systems and implement information security measures to protect our systems, there can be no assurance that any controls and procedures we have in place will be sufficient to protect us from future security breaches. As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additional resources to modify or enhance our systems in the future.
20.
Our business may be adversely affected if we are unable to hire, retain and develop qualified personnel
Natural disaster, terrorism, military dispute
Nomura believe that our people are our greatest asset and infectious disease couldwe implement various talent management initiatives in a comprehensive manner. Any failure to hire, retain, and develop qualified personnel may materially and adversely affect our business,
We have developed a contingency plan for addressing unexpected situations. However, disaster, terrorism, military dispute or infectious disease afflicting our management and employees could exceed the assumptions of our plan, and could adversely affect our business. For example,
COVID-19
has spread globally in 2020 and was declared a pandemic by the World Health Organization. The
COVID-19
pandemic has led to successive widespread lockdowns,
shelter-in-place
orders and similar government action worldwide, including Japan, Europe, America and elsewhere. In response to the spread and lockdowns, we have activated contingency plans across global locations, and developed our capabilities for a remote working environment. In turn this increases potential unforeseen risk related to remote working including challenges in supervision. The continuation of such measures, even if limited to certain regions, will continue to impact societal and economic functions, which has and is expected to continue to adversely affect our business and results of operations.
The Company is a holding company and depends on payments from subsidiaries
The Company heavily depends on dividends, distributions and other payments from subsidiaries to make payments on the Company’s obligations. Regulatory and other legal restrictions, such as those under the Companies Act, may limit the Company’s ability to transfer funds freely, either to or from the Company’s subsidiaries. In particular, many of the Company’s subsidiaries, including the Company’s broker-dealer subsidiaries, are subject to laws and regulations, including regulatory capital requirements, that authorize regulatory bodies to block or reduce the flow of funds to the parent holding company, or that prohibit such transfers altogether in certain circumstances. For example, NSC, Nomura Securities International, Inc., Nomura International plc and Nomura International (Hong Kong) Limited, our main broker-dealer subsidiaries, are subject to regulatory capital requirements that could limit the transfer of funds to the Company. These laws and regulations may hinder the Company’s ability to access funds needed to make payments on the Company’s obligations.
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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
We hold substantial investments in equity securities including private equity investments and
non-trading
debt securities. Under U.S. GAAP, depending on market conditions, we may recognize significant unrealized gains or losses on our investments in equity securities and debt securities, which could have an adverse impact on our financial condition and results of operations. For example, inThere is significant competition for such personnel, based on factors such as compensation, the fiscal year ended March 31, 2020, we recognized a loss of ¥ 16.4 billion relatedworking environment, training and benefits available to employees and our investment in American Century Investments and ¥ 16.6 billionreputation as an employer. Spending on our investmentshuman resource initiatives may harm our profitability. Moreover, developing our human resources and instilling in equity securities resulting from market declines arising from the
COVID-19
pandemic. Depending on the market conditions,them a uniform corporate culture is a continuous, intensive process, and we may also not be able to dispose of these equity securities and debt securities when we would like to do so, as quickly as we may wish or at the desired price.
Equity investmentssuccessful 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
doing so.
We have affiliates and investees accounted for under the equity method in our consolidated financial statements and whose shares are publicly traded. Under U.S. GAAP, if there is a decline in the fair value, i.e., the market price, of the shares we hold in such affiliates over a period of time, and we determine that the decline is other-than-temporary, then we recognize an impairment loss for the applicable fiscal period which may have an adverse effect on our financial condition and results of operations.
·
Risks Related to Holding or Trading of our Shares and ADSs
We may face an outflow of clients’ assets due to losses of cash reserve funds or debt securities we offer
We offer many types of products to meet various needs of our clients with different risk profiles.
Cash reserve funds, such as money market funds and money reserve funds are categorized as low risk financial products. As a result of a sudden rise in interest rates, such cash reserve funds may fall below par value due to losses resulting from price decreases of debt securities in the portfolio, defaults of debt securities in the portfolio or charges of negative interest. If we determine that a stable return cannot be achieved from the investment performance of cash reserve funds, we may accelerate the redemption of, or impose a deposit limit on, such cash reserve funds. For example, Nomura Asset Management Co., Ltd., the Company’s subsidiary, ended its operation of money market funds in late August 2016 and executed an accelerated redemption of such funds in September 2016.
In addition, debt securities that we offer may default or experience delays in the payment of interest and/or principal.
Such losses, early redemption or deposit limit for the products we offer may result in the loss of client confidence and lead to an outflow of client assets from our custody or preclude us from increasing such client assets.
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
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. For the purpose of protecting investors from excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each stock, based on the previous day’s closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular trading day, or at all.
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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
The Company’s Articles of Incorporation, as permitted under the Companies Act, provide that 100 shares of the Company’s stock constitute one “unit.” The Companies Act imposes significant restrictions and limitations on holdings of shares that constitute less than a whole unit. Holders of shares constituting less than one unit do not have the right to vote or any other rights relating to voting. Under the unit share system, any holders of shares constituting less than a unit may at any time request the Company to purchase their shares. Also, holders of shares constituting less than a unit may request the Company to sell them such number of shares that the Company may have as may be necessary to raise such holder’s share ownership to a whole unit. Shares constituting less than a unit are transferable under the Companies Act, but may not be traded on any Japanese stock exchange.
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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
The rights of shareholders under Japanese law to take actions including voting their shares, receiving dividends and distributions, bringing derivative actions, examining the company’s accounting books and records and exercising appraisal rights are available only to holders of record. Because the depositary, through its custodian agent, is the record holder of the shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying your ADSs as instructed by you and will pay you the dividends and distributions collected from the Company. However, in your capacity as an ADS holder, you will not be able to bring a derivative action, examine the Company’s accounting books or records or exercise appraisal rights except through the depositary.
24.
Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions
The Companies Act and the Company’s Articles of Incorporation and Regulations of the Board of Directors govern the Company’s corporate affairs. Legal principles relating to such matters as the validity of corporate procedures, directors’ and executive officers’ fiduciary duties and shareholders’ rights may be different from those that would apply to a
non-Japanese
company. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the laws of other jurisdictions, including jurisdictions within the U.S. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in another jurisdiction.
25.
The Company’s shareholders of record on a record date may not receive the dividend they anticipate
The customary dividend payout practice of publicly listed companies in Japan may significantly differ from that widely followed or otherwise deemed necessary or fair in foreign markets. The Company’s dividend payout practice is no exception. The Company ultimately determines whether the Company will make any dividend payment to shareholders of record as of a record date and such determination is made only after such record date. For the foregoing reasons, the Company’s shareholders of record as of a record date may not receive the dividends they anticipate. Furthermore, the Company does not announce any dividend forecasts.
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.
The Company is a limited liability, joint-stock corporation incorporated under the laws of Japan. Most of the Company’s directors and executive officers reside in Japan. Many of the Company’s assets and the assets of these persons are located in Japan and elsewhere outside the U.S. It may not be possible, therefore, for U.S.
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investors to obtain personal jurisdiction over the Company or these persons within the U.S. or to enforce against the Company or these persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the U.S. The Company believes that there is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of U.S. court judgments, of liabilities predicated solely upon the federal securities laws of the U.S.
·
Special Note Regarding Forward-looking Statements
This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our business, our industry and capital markets around the world. These forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”
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“anticipate”, “estimate”, “plan” or similar words. These statements discuss future expectations, identify strategies, contain projections of our results of operations or financial condition, or state other forward-looking information.
Known and unknown risks including the
COVID-19
pandemic, uncertainties and other factors may cause our actual results, performance, achievements or financial position to differ materially from any future results, performance, achievements or financial position expressed or implied by any forward-looking statement contained in this annual report. Such risks, uncertainties and other factors are set forth in this Item 3.D and elsewhere in this annual report.
Item 4. Information on the Company
A. History and Development of the Company.
The Company (previously known as The Nomura Securities Co., Ltd.) was incorporated in Japan on December 25, 1925 under the Commercial Code of Japan when the securities division of The Osaka Nomura Bank, Ltd. became a separate entity specializing in the trading and distribution of debt securities in Japan. The Company was the first Japanese securities company to develop its business internationally with the opening in 1927 of a representative office in New York. In Japan, we broadened the scope of our business when we began trading in equity securities in 1938 and when we organized the first investment trust in Japan in 1941.
Since the end of World War II, weWe have played a leading role in most major developments in the Japanese securities market. These developments include the resumption of the investment trust business in the 1950s, the introduction of public stock offerings by Japanese companies in the 1960s, the development of the
over-the-counter
bond market in the 1970s, the introduction of new types of investment trusts such as the medium-term Japanese government bond investment trust in the 1980s, and the growth of the corporate bond and initial public offering markets in the 1990s.
Our expansion overseas accelerated in 1967, when the Company acquired a controlling interest in Nomura International (Hong Kong) Limited for the purpose of conducting broker-dealer activities in the Hong Kong capital markets. Subsequently, we established a number of other overseas subsidiaries, including Nomura Securities International, Inc. in the U.S. in 1969 as a broker-dealer and Nomura International Limited, now Nomura International plc, in the U.K. in 1981, which acts as an underwriter and a broker, as well as other overseas affiliates, branches and representative offices.
On October 1, 2001, we adopted a holding company structure. In connection with this reorganization, the Company changed its name from “The Nomura Securities Co., Ltd.” to “Nomura Holdings, Inc.” The Company continues to be listed on the Tokyo Stock Exchange and other stock exchanges. A wholly-owned subsidiary of the Company assumed the Company’s securities businesses and was named “Nomura Securities Co., Ltd.”
The Company has proactively engaged in establishing a governance framework to ensure transparency in the Company’s management. Among other endeavors, when the Company adopted a holding company structure
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and was listed on the New York Stock Exchange (“NYSE”) in 2001, the Company installed Outside Directors. In addition, in June 2003, the Company further strengthened and increased the transparency of the Company’s oversight functions by adopting the Company with Three Board Committees (previously known as the Committee System), a system in which management oversight and business execution functions are clearly separated.
In 2008, to pave the way for future growth, the Company acquired and integrated the operations of Lehman Brothers in Asia Pacific, Europe and the Middle East.
The address of the Company’s registered office is
9-1,13-1,
Nihonbashi
1-chome,
Chuo-ku,
Tokyo
103-8645,
Japan, telephone number:
+81-3-5255-1000.
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The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov. Our corporate website is https://www.nomuraholdings.com.
B. Business Overview.
Overview
We are one of the leading financial services groups in Japan and we operate offices in countries and regions worldwide including Japan, the U.S., the U.K., Singapore and Hong Kong Special Administrative Region (“Hong Kong”) through our subsidiaries.
Our clients include individuals, corporations, financial institutions, governments and governmental agencies.
Our business consists of Retail, AssetInvestment Management, Wholesale and Merchant BankingWholesale, which are described in further detail below. See also Note 2220 “
Segment and geographic information
” in our consolidated financial statements included in this annual report.
Corporate Goals and Principles
The ① Fundamental Management Policy
In Fundamental Management Policy formulated by the Board of Directors, our company has set the following Management Vision and Basic Vision of Group Management.
Fundamental Management Policy of Nomura Holdings, Inc.
(Management Vision)
Nomura Group’s management vision is to enhance its corporate value by deepening society’s trust in the firm and increasing satisfaction of stakeholders, including that of shareholders and clients.
As a global investment bank, the Company will provide high value-added solutions to clients globally, and recognizing its wider social responsibility, the Company will continue to contribute to the economic growth and development of society.
To enhance its corporate value, the Company places significance onutilizes return on equity (“ROE”) as a management indicator and will strive for sustainable business transformation.
(Basic Vision of Group Management)
(1) Nomura Group will establish its modernized growth model by itself through realizing expansion of its business in new domains. Nomura Group will also establish earning structure not subject to market condition with proper cost control and risk management.
(2) Nomura Group will aim to serve its customers at the highest level in every investment, by paying thorough attention to the needs of its customers and the market and by providing its customers with highly value-added solutions in financial and capital markets.
(3) Nomura Group will emphasize compliance with applicable laws and regulations and proper corporate behavior to carry out compliance and conduct risk management in daily business operations. Each company of Nomura Group shall respect customers’ interests and comply with applicable laws and regulations relating to the business.
(4) Nomura Group seeks to ensure effective management oversight and increase management transparency.
(5) Nomura Group will contribute to expanding securities markets through daily business and continuously engage in educational activities regarding investment in order to broaden participation in the securities market.
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We have established the following management vision based on the management goals.
② Management Vision
Our diverse businesses rely on the trust of our clients and all stakeholders. We recognize that raising our corporate value and ensuring sustainable growth of society as a whole are closely linked together. This is why our management vision is to achieve sustainable growth by helping resolve social issues.
Our Business Divisions
Retail
In our Retail Division, we conduct business activities by delivering a wide range of financial products and high quality investment services mainly for individuals and corporations in Japan primarily through a network of nationwide branches of Nomura Securities Co., Ltd. (“NSC”).NSC. The total number of local branches, including our head office, was 128116 as of the end of March 2020.2023. We offer investment consultation services to meet the medium and long-term needs of our clients. We discuss retail client assets in “
Retail Client Assets
” under Item 5.A of this annual report.
We will strengthen our operating model to provide solutions and services that enable us further flexible approaches to the entire balance sheet of our clients.
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We continue to focus on delivering
top-quality
solutions including our broad range of products and services through
face-to-face
meetings, online and call center channels, so that Nomura Group can sustainably be a trusted partner to our clients.
AssetInvestment Management
Our AssetInvestment Management Division which is led by its core entity, Nomura Asset Management Co., Ltd. (“NAM”), employs approximately 1,400 professionals in various countries and regions around the world, including Japan with ¥49.3 trillion total assets under management as of March 31, 2020.
We are committed to providing high-quality investment strategies, products, and services to a wide range of investors. Along with delivering investment trusts for individual investors through financial institutions in Japan, we provide various investment solutions, both in public and private market asset classes, to pension funds, and institutional investors, and financial intermediaries globally.
As an asset management firm practicing responsible investment, by accurately identifyingWe are expanding our product offerings and improving our services to meet the diversediversifying investment needs of our clients aroundin the world,broad asset management business. By combining our expertise in traditional assets such as stocks and bonds with alternative assets such as private equity, private debt, and real assets, we aimprovide added value and offer advanced services and solutions to meet the diverse needs of our clients. Within the Investment Management Division, Nomura Asset Management Co., Ltd. (NAM) and our other investment and asset management companies maintain their respective independence in their investing activity to fulfill applicable fiduciary duties while supported by common knowledge, infrastructure, and functions of Nomura Group.
Our revenues are mainly from the asset management fees we receive from our clients or funds we manage. Typically, our asset management fees are based on fixed annual rates calculated based on the amount of assets under our management. Also, we occasionally receive success or performance-linked fees depending on the investment performance we deliver not only superiorto our clients. We also seek to generate investment returns, butgains through our own investments. We often
co-invest
in private market funds we manage alongside external investors to contributedemonstrate our commitment to the growth and developmentunderlying investment strategies of capital markets through stewardship activities, including dialogue with the companies in which we invest.
those funds.
Wholesale
TheOur Wholesale Division consists of two businesses, Global Markets, which is engaged in the trading, sales and structuring of financial products, and Investment Banking providing our corporatewhich is engaged in financing and institutional clients with timely, high value-adding products and services tailored to their needs across primary and secondary markets.advisory businesses.
Global Markets
Global Markets provides research, sales, trading, agency execution, and market-making of fixed income and equity-related products.
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Our global fixed income offerings include, among other products, government securities, interest rate derivatives, investment-grade and high-yield corporate debt securities, credit derivatives,
G-10
and emerging markets foreign exchange, asset-backed securities and mortgage-related products, in
over-the-counter
(“OTC”) and listed markets. We are primary dealers in the Japanese government securities market as well as in theselected Asian, European and U.S. markets.
Our global equity-related products include equity securities, Exchange Traded Funds (“ETFs”), convertible securities, listed and OTC equity derivatives, and supported by prime services.services in selected markets. In addition, we offer execution services based on cutting-edge electronic trading technology to help clients navigate through the complex market structure and achieve best execution. In order to provide extensive market access to our clients, we are also a member of various exchanges around the world, with leading positions on the Tokyo Stock Exchange.
These product offerings are underpinnedsupported by electronic/digital technology, and our global structuring and quants function which provide tailored ideas and trading strategies for our institutional and corporate clients as well as our retail franchise.
Investment Banking
We offer a broad range of investment banking services to a diverse range of corporations, financial institutions, sovereigns, financial sponsors and others. We aim to establish and cultivate strong, long-term relationships with our clients by providing them with our extensive resources for each bespoke solution.
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Underwriting.
We underwrite offerings of a wide range of securities and other financial instruments, including various classes of shares, convertible and exchangeable securities, investment grade and high yield debt, sovereign and emerging market debt, structured securities and other securities in the Asian, European, U.S. and other financial markets. We also arrange private placements and engage in other capital raising activities.
Financial Advisory
 & Solutions Services.
We provide financial advisory services on business transactions including mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts and risk solutions. Our involvement in reorganizations and other corporate restructurings related to industry consolidation enhances our opportunities to offer clients other advisory and investment banking services.
On April 1, 2020, we completed the acquisition of Greentech Capital, LLC, an M&A boutique that is strong in sustainable technology and infrastructure. WeWhile we expand our global advisory business, we will contribute to the realization of a sustainable society through synergyfocus on broadening ESG related businesses with the franchise.
Merchant Banking
Our Merchant Banking Division have embarked on principal business to primarily provide equity to transactionsinitiatives such as business reorganizationfurther utilization of Nomura Greentech’s expertise and revitalization, business succession as well as management buyout. We will, under proper managementenhancement of risk, focus on support for improving the enterprise value of portfolio companies, and will contribute to expansion of the private equity market.our sustainable finance platform.
Our Research Activities
We have an extensive network of intellectual capital with key research offices in Tokyo, Hong Kong and other major markets in the Asia-Pacific region, as well as in London and New York. Nomura isWe are recognized as a leading content provider with an integrated global approach to providing capital markets research. Our analysts collaborate closely across regions and disciplines to track changes and spot future trends in politics, economics, foreign exchange, interest rates, equities, and credit, and also provide quantitative analysis.
Our Information Technology
We believe that information technology is one of the key success factors for our overall business and intend to maintain and enhance our solid technology platform to ensure that the Nomura Group iswe are able to fulfill and exceed the various
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needs of our clients. Accordingly, we will continue to invest, enhance and adapt our technology platform to ensure it remains suitable for each division and proactively seek and implement innovative financial technology to improve the operations of our business.
In our Retail Division, we continually invest and enhance our core system and related systems to improve efficiency onin our business operation.operations. We are also continuously working on improving our internet-based and smartphone platforms.
In our Investment Management Division, we continue to invest and enhance our technology platforms related to our core businesses leveraging third-party services to improve our capabilities and efficiency. We are also continuously working on digital marketing to expand business opportunities, and utilizing advanced technology to automate and sophisticate operations for investment management.
In our Wholesale Division, we continually invest and enhance our technology platforms to provide better risk management, improved data governance and also to increase trading capabilities through platforms allowing direct market access and algorithmic trading. In order to ensure the support level of our Wholesale operations, we will continue to maintain utilization of our offshore service entities in India and enhance our regional support based capabilities.
Furthermore, our digital transformation efforts are directly linked to the competitiveness of financial institutions in the future, and we will continue to promote a wide range of initiatives based on our strategy in order to provide highly convenient services to our clients and respond to diversifying needs. We also believe that our people are the source of added value created by the Nomura Group even in a world where digitization and digitalization are advanced. We will continue to strengthen the development of our human resources with the qualities required for the upcoming era, such as consulting capabilities that make full use of both
face-to-face
and virtual communications.
Competition
The financial services industry is intensely competitive and we expect it to continue remain so. We compete globally with other brokers and dealers, investment banking firms, commercial banks, investment advisors and
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other financial services firms. We also face competition on regional, product and niche bases from local and specialist firms. Increasingly, we face competition from online securities firms, FinTech companies and
non-financial
companies entering the financial services sector. A number of factors determine our competitive position against other firms, including:
the quality, range and prices of our products and services,
our ability to originate and develop innovative client solutions,
our ability to maintain and develop client relationships,
our ability to access and commit capital resources,
our ability to retain and attract qualified employees, and
our general reputation.
Our competitive position is also affected by the overall condition of the global financial markets, which are influenced by factors such as:
the monetary and fiscal policies of national governments and international economic organizations, and
economic, political and social developments both within and between Japan, the U.S., Europe and other major industrialized and developing countries and regions, such as the
COVID-19
pandemic in 2020.since 2020, and
increasing digitalization beyond the traditional financial sector
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In Japan, we compete with other Japanese and
non-Japanese
securities companies and other financial institutions. Competition has become more intense due to deregulation in the Japanese financial industry since the late 1990s and the increased presence of global securities companies and other financial institutions. In particular, major global firms have increased their presence in securities underwriting, corporate advisory services (particularly, mergers and acquisitions advisory) and secondary securities sales and trading.
There has also been substantial consolidation and convergence among financial institutions, both within Japan and globally and this trend accelerated further in recent yearscontinued as the credit crisis caused mergers and acquisitions and asset acquisitions in the industry. The growing presence and scale of financial groups which encompass commercial banking, securities brokerage, investment banking and other financial services has led to increased competition. Through their broadened offerings, these firms are able to create good client relationships and leverage their existing client base in the brokerage and investment banking business as well.
In addition to the breadth of their products and services, these firms have the ability to pursue greater market share in investment banking and securities products by reducing margins and relying on their commercial banking, asset management, insurance and other financial services activities. This has resulted in pricing pressure in our investment banking and trading businesses and could result in pricing pressure in other areas of our businesses. We have also competed, and expect to compete, with other financial institutions which commit capital to businesses or transactions for market share in investment banking activities. In particular, corporate clients may seek loans or commitments in connection with investment banking mandates and other assignments.
Moreover, the trend toward consolidation and convergence has significantly increased the capital base and geographic reach of some of our competitors, hastening the globalization of the securities and financial services markets. To accommodate this trend, we will have to compete successfully with financial institutions that are large and well-capitalized, and that may have a stronger local presence and longer operating history outside Japan.
Regulation
Japan
Regulation of the Securities Industry and Securities Companies
. Pursuant to the FIEA,Financial Instruments and Exchange Act (“FIEA”), the Prime Minister of Japan has the authority to supervise and regulate the securities industry and securities companies, and delegates
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its authority to the Commissioner of the FSA. The Company, as a holding company of a securities company, as well as subsidiaries such as NSC and Nomura Financial Products & Services, Inc. (“NFPS”), are subject to such supervision and regulation by the FSA. The Commissioner of the FSA delegates certain authority to the Director General of Local Finance Bureaus to inspect local securities companies and branches. Furthermore, the Securities and Exchange Surveillance Commission, an external agency of the FSA which is independent from the Agency’s other bureaus, is vested with authority to conduct
day-to-day
monitoring of the securities markets and to investigate irregular activities that hinder the fair trading of securities, including inspection of securities companies. Securities companies are also subject to the rules and regulations of the Japanese stock exchanges and the Japan Securities Dealers Association, a self-regulatory organization of the securities industry.
To enhance investor protection, each Japanese securities company is required to segregate client assets and to hold membership in an Investor Protection Fund approved by the government under the FIEA. The Investor Protection Fund is funded through assessments on its securities company members. In the event of failure of a securities company that is a member of the fund, the Investor Protection Fund provides protection of up to ¥10 million per client. The Investor Protection Fund covers claims related to securities deposited by clients with the failed securities company and certain other client claims.
Regulation of Other Financial Services
. Securities companies are not permitted to conduct banking or other financial services directly, except for those which are registered as money lenders and engaged in money lending
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business under the Money Lending Business Act or which hold permission to act as bank agents and conduct banking agency activities under the Banking Law. Among the subsidiaries of the Company in Japan, NSC is a securities company that is also registered as a money lender and holds permission to act as a bank agent. Another subsidiary of the Company, The Nomura Trust & Banking holds a banking license and trust business license.
Financial Instruments and Exchange Act
. The FIEA widely regulates financial products and services in Japan under the defined terms “financial instruments” and “financial instruments trading business”. It regulates most aspects of securities transactions and the securities industry, including public offerings, private placements and secondary trading of securities,
on-going
disclosure by securities issuers, tender offers for securities, organization and operation of securities exchanges and self-regulatory associations, and registration of securities companies. In addition, to enhance fairness and transparency in the financial markets and to protect investors, the FIEA provides for, among other things, penalties for misrepresentations in disclosure documents and unfair trading, strict reporting obligations for large shareholders and corporate information disclosure systems, including annual and quarterly report systems, submission of confirmation certificates concerning the descriptions in securities reports, and internal controls over financial reporting.
The FIEA also provides for corporate group regulations on securities companies the size of which exceeds specified parameters (Tokubetsu Kinyu Shouhin Torihiki Gyosha, “Special Financial Instruments Firm”) and on certain parent companies designated by the Prime Minister (Shitei Oyagaisha, “Designated Parent Companies”) and their subsidiaries (together, the “Designated Parent Company Group”). The FIEA aims to regulate and strengthen business management systems, compliance systems and risk management systems to ensure the protection of investors. The FIEA and its related guidelines also provide reporting requirements to the FSA on the Designated Parent Company Group’s business and capital adequacy ratios, enhanced public disclosures as well as restrictions on compensation all of which are designed to reduce excessive risk-taking by executives and employees of a Designated Parent Company Group. We were designated as the Designated Parent Company of NSC in April 2011 and were designated as the Designated Parent Company of NFPS in December 2013. As the Designated Parent Company and the final parent company within a corporate group (Saishu Shitei Oyagaisha, “a Final Designated Parent Company”), we are subject to these requirements. A violation of the FIEA may result in various administrative sanctions, including the revocation of registration or license, the suspension of business or an order to discharge any director or executive officer who has failed to comply with the FIEA.
Orderly Resolution Regime. On March 6, 2014, amendments to the FIEA and the Deposit Insurance Act, which included the establishment of an “Orderly Resolution Regime for Financial Institutions” to prevent a
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financial crisis that may spread across financial markets and may seriously impact the real economy, took effect. Under the Orderly Resolution Regime, the Financial Crisis Response Council, chaired by the Prime Minister, will take measures such as providing liquidity to ensure the performance of obligations for critical market transactions where it is considered necessary to prevent severe market disruption. Such measures will be funded by the financial industry, except in special cases where the government will provide financial support.
TLAC. In April 2016, the FSA published its policy describing its approach and framework for the introduction of the TLAC requirements in Japan applicable to Japanese
G-SIBs
and, in April 2018, released revisions to such policy that extended the coverage of the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-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. Based on the revised policy, in March 2019, the FSA finally published the notices and guidelines of TLAC regulations in Japan (including TLAC holding regulations). Although Nomura is not identified as a
G-SIB
as of the date of this annual report, Nomura is subject to the TLAC regulations in Japan, and will beis required to meet a minimum External TLAC requirement of holding TLAC in an amount at least 16% of our consolidated risk-weighted assets as from 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, 2024.2024 (which 6.75% will be increased, pursuant to the recent amendment to the TLAC regulations in Japan, to 7.1% from April 1, 2024).
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Regulatory Changes. On May 31, 2019, a bill to amend the FIEA and the Payment Services Act, etc. was passed by the Diet of Japan. The amendment to the FIEA includes establishing the concept of “electronically recorded transferable rights” (
denshi kiroku iten kenri
, “ERTRs”) and treating ERTRs as Securities defined in Paragraph 1 of the FIEA. As a result, ERTRs are subject to requirements of the Disclosure of Corporate Affairs and Other Related Matters, and regulations for Financial Instruments Business Operators Engaged in Type I Financial Instruments Business apply to institutions dealing in ERTRs. Additionally, “crypto assets” (
“angou shisan”
) are now included in the definition of “Financial Instruments”, and derivatives transactions related to crypto assets are subject to the provisions of the FIEA. As a result of the amendment, certain special provisions concerning the crypto asset-related business have been introduced, whereby Financial Instruments Business Operators, etc. must explain the nature of crypto assets and must not make any representation that may mislead their customers about the nature of crypto assets. Moreover, regulations governing unfair acts in respect of crypto asset and crypto asset derivative transactions are introduced. The amendment became effective on May 1, 2020.
Overseas
Our overseas offices and subsidiaries are also subject to various laws, rules and regulations applicable in the countries where they conduct their operations, including, but not limited to those promulgated and enforced by the U.S. Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission (“CFTC”), the U.S. Treasury, the Financial Stability Oversight Council (“FSOC”),NYSE, the New York StockChicago Mercantile Exchange and other exchanges and/or clearinghouses, the Financial Industry Regulatory Authority (“FINRA”) (a privateself-regulatory organization with quasi-governmental authority and a regulator(“SRO”) for allthe U.S. securities companies doing business in the U.S.)industry), the National Futures Association (“NFA”) (a self-regulatory organization(an SRO for the U.S. derivatives industry) in the U.S.; by the Prudential Regulation Authority (“U.K. PRA”) and the Financial Conduct Authority (“U.K. FCA”) in the U.K; and by a number of EU regulators including Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Autorité de Contrôle Prudentiel et de Résolution (ACPR) and Autorité des Marches Financiers (AMF). We are also subject to international money laundering and related regulations in various countries. For example, the USA PATRIOT Act of 2001 contains measures to prevent, detect and prosecute terrorism and international money laundering by imposing significant compliance and due diligence obligations and creating crimes and penalties. Failure to comply with such laws, rules or regulations could result in fines, suspension or expulsion, which could materially and adversely affect us.
Regulatory Changes.
Regulation in the United States
In responsethe U.S., the SEC is the federal agency responsible for the administration of the federal securities laws, and the CFTC is the federal agency responsible for the administration of laws relating to commodity futures, commodity options and swaps industry. In addition, FINRA and the financial markets crisis, governments and regulatory authoritiesNFA are SROs that are actively involved in various jurisdictions have made and continue to make numerous proposals to reform the regulatory framework for, or impose a tax or levy upon, theregulation of financial services industrybusinesses (securities businesses in the case of FINRA and commodities/futures businesses in the case of the NFA). In addition to enhance its resilience against future crises,
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contribute to the relevant economy generally or for other purposes. In July 2010, the U.S. enacted the Dodd-Frank Act and a multi-agency rulemaking process. The rulemakings include the following: (i) create a tighter regulatory framework for
over-the-counter
(“OTC”) derivatives to promote transparency and impose conduct rules in that marketplace; (ii) establish a process for designating nonbank financial firms as Systemically Important Financial Institutions (“SIFIs”),federal regulation, we are subject to increased (and sometimes new) prudential oversight including early remediation, capital standards, resolution authoritystate securities regulations in each state and new regulatory fees; (iii) prohibit material conflictsU.S. territory in which we conduct securities or investment advisory activities. The SEC, FINRA, CFTC, NFA and state securities regulators conduct periodic examinations of interest between firmsbroker-dealers, investment advisors, futures commission merchants (“FCMs”), swap dealers and security-based swap (“SBS”) dealers (“SBS dealers”). Financial services businesses are also subject to regulation and examination by state securities regulators and, in some cases, investigations and reviews by attorneys general in those states in which they do business. In addition, broker-dealers, investment advisors, FCMs, swap dealers and SBS dealers must also comply with the rules and regulation of clearing houses, exchanges, swap execution facilities and trading platforms of which they are a member.
Broker-dealers are subject to SEC, FINRA and state securities regulations that package and sell asset-backed securities (“ABS”) and firms that invest in ABS; (iv) establish risk retention requirements for ABS; (v) establish rules related to the orderly liquidation of certain broker dealers; (vi) create annual stress tests; and (vii) set forth a number of executive compensation mandates, including rules to curtail incentive compensation that promotes excessive risk taking and listing standards for recovery of erroneously awarded compensation. The new regulatory framework for OTC derivatives includes mandates for clearing transactions with designated clearing organizations, exchange trading, new capital requirements, bilateral and variation margin for
non-cleared
derivatives, reporting and recordkeeping, and internal and external business conduct rules. Some U.S. derivatives and executive compensation rules may be applied extraterritorially and therefore impact some
non-U.S.
Nomura entities.
Othercover all aspects of the Dodd-Frank Actsecurities business, including sales and related rulemakings include provisions that (i) prohibit deposit-taking bankstrading methods, publication of research reports, trade practices, among broker-dealers, risk management, use and their affiliates from engaging in proprietary trading and limit their ability to make investments in hedgesafekeeping of customers’ funds and private equity funds (thesecurities, capital structure and requirements, anti-money laundering efforts, recordkeeping and the conduct of broker-dealer personnel including officers and employees.
so-called
“Volcker Rule”
Our U.S. subsidiaries Nomura Securities International, Inc. (“NSI”); (ii) empower regulators to liquidate failing nonbank financial companies that and Instinet, LLC (“ILLC”) are systemically important; (iii) provide for new systemic risk oversight and increased capital requirements for both bank and
non-bank
SIFIs; (iv) provide for a broader regulatory oversight of hedge funds; and (v) establish new regulations regarding the role of credit rating agencies, investment advisors and others. The Economic Growth, Regulatory Relief, and Consumer Protection Act, which was enacted in May 2018, preserves the fundamental elements of the post-Dodd-Frank regulatory framework and,registered as to bank regulatory requirements, primarily focuses on revising certain aspects of the U.S. financial regulatory regime for small and
medium-sized
banking organizations. In connectionbroker-dealers with the implementation of the Dodd-Frank Act, theSEC. U.S. Federal financial regulatory agencies have released proposals to tailor the application of prudential requirements, including capital and liquidity requirements, for large U.S. banking organizations and foreign banking organizations with significant U.S. activities.
The CFTC has largely finalized its rulemakings that implement the OTC derivatives market reform aspects of the Dodd-Frank Act. Among other items, the CFTC Dodd-Frank rules now impose reporting, clearing, margin and trade execution requirements that will apply, to varying degrees, to commodity derivative transactions entered into by all U.S. and many
non-U.S.
subsidiary Nomura entities. These rules also require swap dealers that exceed a de minimis threshold of swap dealing activity to be registered with the CFTC and subject those registered swap dealers to internal and external conduct requirements. The U.S. derivatives rules are now being applied extraterritorially and are impacting some
non-U.S.
Nomura entities. The full extent of the extraterritorial application of the CFTC’s Dodd-Frank rules continues to evolve as the CFTC updates its own guidance, and these changes may result in more or fewer aspects of the rules impacting Nomura’s entities. In relevant part, on December 18, 2019, the CFTC approved proposed rules that address the cross-border application of registration thresholds and certain requirements relevant to swap dealers, as well as changes to existing terms and definitions and the CFTC’s treatment of transactions that have been arranged, negotiated or executed by Associated Persons (“APs”) in the U.S., and the availability of substituted compliance for the limited scope of the Title VII swap requirements addressed in the proposal. Separately, on March 5, 2019, the NFA issued rules that require certain APs of NFA member firms (e.g. swap dealers and Futures Commission Merchants) to satisfy certain swaps proficiency requirements to ensure that APs engaged in swaps activities meet a minimum proficiency standard that tests both their market knowledge and their knowledge of regulatory requirements relating to swaps activities. Swap dealer APs outside the U.S. that only transact swaps with
non-U.S.
persons or
non-U.S.
branches of U.S. swap dealers are exempt from the requirements. The compliance date for
in-scope
APs to complete the proficiency requirements is January 31, 2021.
Global Financial Products Inc.
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In addition, Title VII of the Dodd-Frank Act gives the SEC regulatory authority over “security-based swaps” which are defined under the act as swaps based on a single security or loan or a narrow-based group or index of securities. Security-based swaps are included within the definition of “security” under the U.S. Securities and Exchange Act of 1934 and the U.S. Securities Act of 1933. The SEC continues to issue final rules and interpretive guidance addressing cross-border security-based swap activities. On June 25, 2014, the SEC initially finalized a portion of its cross-border rules, namely key foundational definitions and registration calculations that will become operative once the SEC sets a timeframe for the security-based swap dealer registration process to begin. Since then, the SEC has issued a series of final rules that will apply certain Dodd-Frank Act requirements to security-based swaps between two
non-U.S.
person counterparties when the security-based swaps are arranged, negotiated or executed using personnel or personnel of agents located in the U.S. On February 10, 2016, the SEC issued final rules that require a
non-U.S.
person that uses personnel or personnel of agents located in the U.S. in connection with security-based swap dealing activity to include such security-based swaps in its security-based swap dealer registration de minimis calculation. On April 14, 2016, the SEC issued final rules that require a
non-U.S.
security-based swap dealer to comply with external business conduct standards rules when facing a
non-U.S.
person counterparty if the
non-U.S.
security-based swap dealer uses personnel or personnel of agents located in the U.S. to arrange, negotiate or execute the security-based swap. On July 14, 2016 the SEC issued final rules that subject a security-based swap between a
non-U.S.
security-based swap dealer and a
non-U.S.
person counterparty to public dissemination pursuant to SEC rules if the
non-U.S.
swap dealer uses personnel or personnel of agents located in the U.S. to arrange, negotiate or execute the security-based swap. On June 21, 2019, the SEC issued its final rules governing capital, margin and segregation requirements for security-based swap dealers, revised the capital and segregation requirements for broker-dealers that are not security-based swap dealers to the extent they engage in security-based swaps activities, and increased the minimum capital requirements for broker-dealers authorized to use internal models to compute net capital. On September 19, 2019, the SEC issued final rules governing recordkeeping and reporting for security-based swap dealers and amendments to existing recordkeeping and reporting requirements for broker-dealers. On December 18, 2019, the SEC adopted rules that would require security-based swap dealers to comply with certain risk mitigation techniques with respect to portfolios of uncleared security-based swaps. These risk mitigation techniques include, inter alia, requirements that a security-based swap dealer establish, maintain and follow written policies and procedures: (1) related to bilateral offsetting of security-based swaps and periodic portfolio compression exercises; and (2) that are reasonably designed to ensure that it executes written security-based swap trading relationship documentation with each of its counterparties prior to, and contemporaneously with, executing a security-based swap. Finally, on December 18, 2019, the SEC also adopted final supplemental guidance and rule amendments addressing the cross-border application of certain security-based swap requirements. Specifically, the rules provide guidance, subject to certain conditions, on the circumstances under which providing “market color” will not constitute “arranging” or “negotiating” a security-based swap for purposes of the of the SEC rules, guidance relating to the certification and opinion requirements for
non-U.S.
security-based swap dealer registration applicants, and
non-U.S.
AP requirements relevant to registered security-based swap dealers. In addition, the SEC adopted a conditional exception from the security-based swap dealer
de minimis
registration calculation that would otherwise require a
non-U.S.
security-based swap entity to count a security-based swap transaction with a
non-U.S.
counterparty that was arranged, negotiated or executed by personnel or personnel of agents in the U.S. These cross-border rules and amendments may impact some
non-U.S.
Nomura entities. Significantly, the SEC’s cross-border final guidance and rule amendments trigger the eighteen (18) month countdown for security-based swap dealer registration and compliance with all final security-based swap dealer requirements. Consequently, for those dealers and other market participants who breach the
de minimis
counting threshold, security-based swap dealer registration and compliance with all final security-swap dealer rules will be no later than November 1, 2021.
The exact details of the Dodd-Frank Act implementation and ultimate impact on Nomura’s operations will depend on the form and substance of the final regulations adopted by various governmental agencies and oversight boards. In addition to the rulemakings required by the Dodd-Frank Act, the SEC is considering other rulemakings that will impact Nomura’s U.S. entities. While these rules have not been formally proposed, they have been publicly reported in the U.S. Office of Management and Budget’s (“OMB”) “Current Regulatory Plan
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(“NGFP”) is an “OTC derivatives dealer,” which is a class of broker-dealer exempt from certain broker-dealer requirements, including membership in an SRO, regular broker-dealer margin rules and Unified Agendaapplication of Regulatorythe Securities Investor Protection Act of 1970, but are subject to special requirements, including limitations on the scope of their securities activities, specified internal risk management control systems, recordkeeping obligations and Deregulatory Actions.”reporting responsibilities. OTC derivatives dealers are also subject to alternative net capital treatment.
Registered investment advisors are subject to, among other requirements, SEC regulations concerning marketing, transactions with affiliates, custody of client assets, disclosures to clients, conflict of interest, insider trading and recordkeeping. Investment advisors that are also registered as commodity trading advisors or commodity pool operators are also subject to regulation by the CFTC and the NFA. Certain of our subsidiaries, including NSI as well as Nomura Asset Management Co., Ltd., Nomura Asset Management U.S.A. Inc. and other asset management subsidiaries, are registered as investment advisors with the SEC.
FCMs, introducing brokers and swap dealers that engage in commodity options, futures or swap transactions are subject to regulation by the CFTC and the NFA. CFTC rules require registration of swap dealers, mandatory clearing and execution of certain default swaps through regulated clearing houses and execution facilities, real-time public reporting and adherence to business conduct standards for all
in-scope
swaps. A number of these requirements, particularly those regarding recordkeeping and reporting, also apply to transactions that do not involve a registered swap dealer. CFTC rules establishing capital requirements for swap dealers that are not subject to the capital rules of a prudential regulator, such as the FRB, became effective in October 2021. The SEC’s DivisionCFTC has also adopted financial reporting requirements for covered swap entities and amended existing capital rules for CFTC-registered FCMs to provide explicit capital requirements for proprietary positions in swaps and security-based swaps that are not cleared by a clearing organization. Swap dealers that are not subject to the jurisdiction of Tradinga Prudential Regulator are subject to the margin rules issued by the CFTC (which covers
non-bank
swap dealers, such as our subsidiaries). The rules for variation margin have become effective, and Markets has announced that itthose for initial margin were phased in through September 2022, based on certain activity levels of the swap dealer and the relevant counterparty. Inter-affiliate transactions under the CFTC margin rules are generally exempt from initial margin requirements under certain conditions. NSI is considering recommending thatregistered as an FCM with the CFTC. NGFP and Nomura International plc, a U.K. subsidiary, are registered as swap dealers with the CFTC. ILLC is registered as an introducing broker with the CFTC.
SEC rules constituting its SBS regulatory regime, which set registration and other compliance dates for SBS dealers and major SBS participants, generally came into effect by November 1, 2021. Under these rules, SBS dealers are subject to regulation by the SEC, propose an amendmentincluding (i) capital, margin and segregation requirements; (ii) recordkeeping, financial reporting and notification requirements; (iii) business conduct standards; (iv) regulatory and public trade reporting; and (v) the application of risk mitigation techniques to its net capital rule that would prohibit a broker-dealer that carries customer accounts from having a ratiouncleared portfolios of total assets to regulatory capital in excessSBSs. In the fourth quarter of a2021, certain level. The SEC and the CFTC are also considering a number of changes to market structure rules. The SEC adopted Rule 613 to create a consolidated audit trail (“CAT”) intended to allow regulators to track all activity throughout the U.S. markets in National Markets Systems (“NMS”) securities. Self-regulatory organizations must jointly submit a NMS plan to create and implement the CAT, which will replace existing reporting systems OATS, TRACE and EBS. On June 15, 2016 the SEC approved amendments to FINRA Rule 4210, which require FINRA member broker-dealers to set risk limits on each counterparty transacting in specified forward-settling agency mortgage-backed securities (“covered agency transactions”) as of December 15, 2016, and to collect variation margin and/or maintenance margin from certain counterparties transacting in covered agency transactions as of June 25, 2018. A failure to collect required margin in a timely manner (T+1) results in an obligation for the FINRA member broker-dealer to take a capital charge, and ultimately (T+5) to liquidate the customer’s position in order to satisfy the margin deficiency. On October 25, 2019, FINRA filed a rule changeour subsidiaries registered with the SEC again extendingas SBS dealers and became subject to the effective dateSEC’s regulations regarding SBSs. NGFP is registered as an SBS dealer with the SEC, and Nomura International plc is registered as an SBS dealer with the SEC.
The CFTC and the SEC have adopted rules relating to cross-border regulation of swaps and SBSs. The CFTC and the Rule 4210SEC have entered into agreements with certain
non-U.S.
regulators regarding the cross-border regulation of derivatives and the mutual recognition of certain cross-border execution facilities and certain clearing houses, and have approved substituted compliance with certain
non-U.S.
regulations related to certain capital, margin, requirements to March 25, 2021, but has not yet issued proposed revisions to Rule 4210. On November 7, 2016,recordkeeping, financial reporting and business conduct requirements.
Additional legislation or rules promulgated by the SEC, FINRA, CFTC, approved a supplemental notice of proposed rulemaking modifying certainNFA, other SROs and state securities regulators, or changes in such legislation or rules proposedor in the CFTC’s December 17, 2015, noticeinterpretation or enforcement of proposed rulemaking regarding Regulation AT. Proposed Regulation AT would have, among other things, required firms engagedexisting legislation or rules may directly affect our operations and profitability. The SEC, CFTC, FINRA, NFA, state securities regulators and state attorneys general may conduct administrative proceedings or initiate civil litigation that can result in electronic algorithmic trading to (i) register with the CFTCadverse consequences for us, our subsidiaries and (ii) submitour and their trading source code to the CFTC. While the proposed Regulation AT has not been finalized, the CFTC continues to consider comments that were received in connection with the proposed rulemaking.respective officers and
On February 3, 2017, U.S. President Donald J. Trump signed Executive Order 13772 outlining core principles to regulate the U.S. financial system. The order directed the Secretary of the Treasury to consult with heads of member agencies of the FSOC and report within 120 days of the date of the order (and periodically thereafter) on the extent to which existing laws, treaties, regulations, guidance, reporting and recordkeeping requirements and other government policies promote the core principles. U.S. regulatory agencies may change financial regulations through administrative procedures and rulemakings, supervisory guidance or
no-action
relief as the result of recommendations by the Treasury Secretary in accordance with the core principles of the executive order. These may have a material impact on Nomura’s business.
The core principles are as follows: (i) empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth; (ii) prevent taxpayer-funded bailouts; (iii) foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry; (iv) enable American companies to be competitive with foreign firms in domestic and foreign markets; (v) advance American interests in international financial regulatory negotiations and meetings; (vi) make regulation efficient, effective, and appropriately tailored; and (vii) restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework. The Treasury Department divided its review of the financial system into a series of reports. The reports, all of which have been issued, cover the following subjects: (1) the depository system, covering banks, savings associations, and credit unions of all sizes, types and regulatory charters: (2) capital markets: covering debt, equity, commodities and derivatives markets, central clearing and other operational functions; (3) the asset management and insurance industries, and retail and institutional investment products and vehicles; and (4)
 non-bank
financial institutions, financial technology and financial innovation. In addition, President Trump issued two Presidential Memoranda to the Secretary of the Treasury. One calls for a review of the Orderly Liquidation Authority (“OLA”) established under Title II of the Dodd-Frank Act, which the Treasury Department released in February 2018, recommending reforms to the OLA and amendments to the U.S. Bankruptcy Code to make a bankruptcy proceeding a more effective solution method for large financial institutions. The other calls for Treasury to review the process by which the FSOC determines that a nonbank financial company could pose a threat to the financial stability of the U.S., subjecting such an entity to supervision by the Federal Reserve and enhanced prudential standards and
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capital requirements. In March 2019, the FSOC
employees (including, without limitation, injunctions, censures, fines, suspensions, directives that impact business operations (including proposed to revise its interpretive guidance relating to such designations (the “March Proposal”)expansions), membership expulsions, or revocations of licenses and registrations). In December 2019, the FSOC issued finalized amendments to its interpretative guidance, which adopts the March Proposal with some modifications.
On October 26, 2017, the Division of Investment Management and the Division of Trading and Markets of the SEC issued three related
no-action
letters to address certain issues raised by cross-border implementation of the European Union’s (“EU”) Markets in Financial Instruments Directive (“MiFID II”), which took effect on January 3, 2018. MiFID II will require the unbundling of execution and research payments made by investment managers to broker-dealers. Under the relief, a broker-dealer may, without becoming subject to the Advisers Act, provide research services to an investment manager that is required, either directly or by contractual obligation, to pay for such research services with MiFID
II-compliant
research payments. This
no-action
letter, which was set to expire on July 3, 2020, has been extended until July 3, 2023.
Further, The Foreign Account Tax Compliance Act (“FATCA”), which was enacted in 2010, requires foreign financial institutions (“FFIs”) to report to the U.S. Internal Revenue Service information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. As a result, Nomura is subject to certain reporting requirements consistent with a mutual agreement between Japanese governmental authorities and the U.S. Treasury Department.
In October 2022, the SEC adopted a final rule requiring securities exchanges to adopt listing standards mandating, in the case of a restatement, the recovery or “clawback” of excess incentive-based compensation paid to current or former executive officers and requiring listed issuers to disclose any recovery analysis where recovery is triggered by a restatement. Nomura will be required to adopt a clawback policy compliant with the NYSE listing standard implementing such rules within 60 days of the effectiveness of the listing standard, which is scheduled to occur in October 2023.
Proposed Changes to U.S. Regulation
In June 2016, the SEC approved amendments to FINRA Rule 4210, which require FINRA member broker-dealers to set risk limits on each counterparty transacting in specified forward-settling agency mortgage-backed securities (“covered agency transactions”) as of December 2016, and to collect variation margin and/or maintenance margin from certain counterparties transacting in covered agency transactions as of June 2018. A failure to collect required margin in a timely manner (T+1) results in an obligation for the FINRA member broker-dealer to take a capital charge, and ultimately (T+5) to liquidate the customer’s position in order to satisfy the margin deficiency. The effectiveness of the Rule 4210 margin requirements has been delayed a number of times. Most recently, on February 24, 2023 FINRA filed a Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Extend the Implementation Date of Certain Amendments to FINRA Rule 4210 to extend the date of effectiveness to October 25, 2023. On March 7, 2023 the SEC waived the 30 days waiting period and the October 25, 2023 date went into effect immediately.
In January 2021, CFTC adopted rules that limit the size of positions in physical commodity derivatives that can be held by any entity, or any group of affiliates or other parties trading under common ownership or control, or trading in coordination with each other. Swap dealers may currently claim an exemption from the position limits for the bona fide hedging of swap-related risks, but this exemption will be eliminated in 2023. The CFTC position limits apply to futures on specified physical commodities and options on such futures, and these limits apply to both physically and cash settled positions. In addition, in 2023, the position limit rules will become applicable to swaps that are economically equivalent to such futures and options. The position limit rules initially impose limits in the spot month only (i.e., during the delivery period for the physical commodities, which is typically a period of several days). CFTC spot and
non-
spot month limits will continue to apply to futures on certain legacy agricultural commodities, and it is possible that
non-spot
month limits will at some point be adopted for futures and swaps on other physical commodities.
In November 2021, the SEC published proposed Exchange Act Rule
10c-1,
which would require lenders of securities to provide the material terms of securities lending transactions to a registered national securities association, such as the Financial Industry Regulatory Authority. The registered national securities association would then make the material terms of the securities lending transaction available to the public.
In December 22, 2017, President Donald Trump signed2021, the Tax CutsSEC proposed rules to prevent fraud, manipulation and Jobs Act into law. Amongdeception in connection with security-based swaps, to prevent undue influence over the chief compliance officer (CCO) of SBS dealers and major SBS swap participants, and to require any person with a large security-based swap position to publicly report certain information related to the position.
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On March 21, 2022 the SEC proposed a comprehensive climate disclosure regime for public companies. The proposal would apply to both domestic company and foreign private registrants and would require them to provide certain climate-related information in their registration statements and annual reports. Registrants would need to, among other things, the legislation includes the Base Erosion and Anti-Abuse Tax (“BEAT”), effectivelyinclude information about climate-related risks that have had or would likely have a minimum tax on large corporations applied by adding back to taxable income certain deductible payments made to related foreign persons. These tax law changes are complex and raise significant interpretive issues and therefore we anticipate future guidance on these rules to address the areas of uncertainty which could also have an adversematerial impact on their business and consolidated financial statements, strategy, business models and outlook. Registrants would need to include information addressing their plans to manage climate-related risk within their risk management processes. Registrants would also need to disclose information about their own greenhouse gas emissions and, in some cases, upstream and downstream emissions along the tax liabilitiesregistrant’s entire value chain. The proposal would dramatically increase climate-risk-related information available to investors but would also, if adopted in its current proposed form, likely increase the cost, complexity, and liability risks associated with public reporting.
In December 2022, the SEC issued four proposals to reform the U.S. equity market structure. The SEC proposed establishing a broker-dealer best execution standard, which would require broker-dealers to use reasonable diligence to ascertain the best market for a customer order so that the resultant price to the customer is as favorable as possible under prevailing market conditions. The best execution standard applies to all securities and supplements, but does not replace, the existing FINRA best execution rules. The SEC also proposed, among other things, to require that individual investor orders routed through broker-dealers be exposed to
order-by-order
competition in qualified auctions; to update the minimum pricing increments, with variable price increments based on the trading characteristics of our U.S. entities.stocks; and to revise and expand reporting and disclosure requirements relating to execution quality.
In January 2023, the SEC proposed a rule that would prohibit participants involved in the creation of asset-backed securities, including any underwriter, placement agent, initial purchaser or sponsor of an asset-backed security (or any affiliate or subsidiary), from engaging in any transaction that would involve or result in a material conflict of interest between the securitization participant and an investor in an asset-backed security, including reducing its exposure to the asset-backed securities, subject to certain exceptions.
Regulation in the U.K. and Europe
As part of global efforts to establish a framework to improve authorities’ capacity to resolve failing SIFIs, the U.K. implemented the EU Bank Recovery and Resolution Directive (“BRRD”), which was published on June 12, 2014. The BRRD also aims to implement FSB recommendations on recovery and resolution regimes for financial institutions. The BRRD applies to banks and investment firms operating in EU member states, including EU branches and subsidiaries of third country firms. It includes requirements for the preparation of recovery and resolution plans (“RRPs”) by institutions and regulators. It also creates various powers for EU regulators to intervene to resolve institutions at risk of failure, including the ability to sell or transfer all or part of an institution and the introduction of a debt write down or
bail-in
tool.
As part of the
bail-in
rules, firms will be required to maintain capital resources sufficient to meet the stipulated minimum requirement for eligible liabilities (“MREL”). The MREL overlaps with the global capital standards on total loss absorbing capacity (“TLAC”) for
G-SIBs
issued by the FSB on November 9, 2015. As Nomura Group has adopted a single point of entry resolution strategy, European subsidiaries are subject to internal MREL. The internal MREL became applicable in the U.K. for all U.K. incorporated institutions from January 1, 2019 for firms whose failure would have a significant impact on the U.K. financial system and for certain overseas firms where the Bank of England (“BOE”BoE”) would support a home resolution authority in carrying out a cross-border resolution. From January 1, 2020, Nomura is required to hold internal MREL resources above the regulatory capital requirements for the material subsidiaries in the U.K., identified as Nomura Europe Holdings plc (“NEHS”) on a
sub-consolidated
basis and NIP.
In July 2019, the BOEBoE and U.K. PRA published a policy statement on the Resolvability Assessment Framework (“RAF”). The proposals for the RAF bring together existing policies such as MREL and Operational Continuity in Resolution (“OCIR”) as well as other new resolution policies in order to follow the resolution
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principles set out by the FSB. Under the policy, it is expected firms perform an assessment of their preparations for resolution and the BOEBoE provide a public statement concerning resolvability of each firm. The BOEBoE and U.K. PRA may consider, in consultation with Financial Services Agency (“FSA”), apply some or all of the requirements set out in the policy statement to NEHS.
30
TableIn May 2022, U.K. PRA published a policy statement, with accompanying supervisory statements on Trading Activity Wind-down (“TWD”). The statement sets out the requirements for firms to have capabilities that can be utilized for a full or partial wind-down of Contentstheir trading activities, either as part of their recovery or post-resolution restructuring. NEHS, as an
in-scope
firm, is expected to meet the policy requirements by 3 March 2025.
EU banks and investment firms including those located in the U.K. have been subject to the current prudential regulatory capital regime since the introduction of the Capital Requirements Regulation and Capital Requirements Directive (collectively, “CRD IV”) in January 2014. The aim of CRD IV was to strengthen the resilience of the EU banking sector so it would be better placed to absorb economic shocks while also ensuring that banks continued to finance economic activity and growth. CRD IV sets out regulations for minimum capital requirements for banks and investment firms and also introduced new capital and liquidity buffers.
In November 2016 the European Commission proposed amendments to this regulation in a “CRRII” package of reforms. Together with the updates to the Bank Recovery and Resolution Directive (“BRRD II”) and Single Resolution Mechanism Regulation (“SRMR”) this package is an important step towards the completion of the European post-crisis regulatory reforms and implements some of the outstanding global reforms agreed by the Basel Committee and the FSB. The EU views the amendments as essential to making its financial system more stable and resilient, and the financial institutions more resolvable. These updates entered into force in June 2019 with the majority of changes being introduced two years later in June 2021.
Among other things these proposed changes include the introduction of binding minimum leverage and net stable funding ratios, changes to the calculations for counterparty credit risk of derivatives, a tightening of large exposure limits, introduction of new reporting requirements for market risk and the introduction of a new EU intermediate parent undertaking requirement. These reforms are generally expected to lead to an increase in local capital and liquidity requirements and increased costs of compliance.
Subsequent to the finalization of work on the CRRII package in October 2021 the EU willintroduced a first draft of proposals to introduce a “CRRIII”“CRRIII/CRDVI” package of reforms to implement all outstanding elements of the Basel III3.1 framework including changes to the calculations for Operational Risk, CVA, Credit Risk, FRTB capital requirements and the introduction of an output floor to modelled calculations. The draft rules also include proposals to strengthen the resilience of the banking sector to environmental, social and governance (“ESG”) risks and to enhance the strength of supervision within the EU to better protect financial stability. The proposals are currently subject to the trilogue negotiation process before finalization and are currently planned for implementation in Jan 2025.
Since Brexit, the EU CRR and subsequent amendments are no longer applicable in the U.K. HM Treasury and as a result HM Treasury and U.K. PRA published updated rules for implementation of similar reforms to the CRRII in the U.K. which were implemented from Jan 2022. HM Treasury and U.K. PRA have further published consultations at the end of 2022 to implement the final elements of the Basel 3.1 framework, broadly equivalent to those in the EU CRRIII package, with a proposed implementation date of Jan 2025.
The majority of the new rules under the revised MiFID II, which is split into the Markets in Financial Instruments Directive (“MiFID”) and the Markets in Financial Instruments Regulation (“MiFIR”) was published in the EU Official Journal on June 12, 2014 and entered into force on July 2, 2014. The majority of the new rules under MiFID II and MiFIR took effect from January 3, 2018, with Member States required to implement MiFID II through national legislation by July 3, 2017.2018. The legislation sought to introduceintroduced wide-reaching changes to markets, including the extension of market transparency rules into
non-equities
and potentially reducing the sizescope of the OTC derivative market by mandating the clearing of standardized OTC transactions through central clearing counterparties and their trading through regulated trading venues. The new framework introduced a market structure which was intended to close certain loopholes and ensure that trading, wherever appropriate, takes place on regulated platforms. It has introduced rules on high frequency trading with a
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view to improving the transparency and oversight of financial markets. The revised MiFID also aimed to strengthen the protection of investors by introducing more robust organizational and conduct requirements and by strengthening the role of management bodies. The new framework also increased the role and supervisory powers of regulators and established powers to prohibit or restrict the marketing and distribution of certain products in well-defined circumstances. A harmonized regime for granting firms from third countries access to EU professional markets, based on an equivalence assessment of third-country jurisdictions by the Commission, was also introduced.
Certain amendments to support economic recovery from the
COVID-19
pandemic, including via relief from administrative requirements on firms, has been published in the EU Official Journal on February 26, 2021 (MiFID
‘Quick-Fix’).
EU Member States were required to transpose the quick fix amendments into their national frameworks by November 28, 2021 and apply them by February 28, 2022. Alongside this on November 25, 2021, the EU Commission published its legislative proposal for a review of MiFID II/MiFIR. Key proposals include refinements to the scope of the Securities Trading and Derivatives Trading Obligations, adjustments to the transparency regime and reporting requirements and considerations around establishment of a Consolidated Tape. The final text is expected to be published during 2023. Since Brexit, these amendments are not applicable in the U.K. and U.K. FCA has consulted on proposed changes to the conduct and organizational rules under the U.K. MiFID, specifically relating to research and best execution reporting. On November 30, 2021 U.K. FCA published the Policy Statement (“PS”) on changes to U.K. MiFID’s conduct and organizational requirements. The PS sets out changes to best execution reporting requirements and research inducement rules. Effective from December 1 2021, U.K. firms are no longer required to produce best execution reports. In addition, from March 1, 2022, asset managers and research firms will be able to exercise the options on exempting inducement rules on research. This means U.K. firms will be able to provide research on FICC instruments to clients without it being subject to
un-bundling.
FollowingOn July 1, 2021 the U.K. HM Treasury launched a Wholesale Market Review (“WMR”) Consultation. The consultation is part of the Government’s commitment to improving the competitiveness of the U.K. as a hub for capital markets, and is a central part of the Government’s post-Brexit strategy for financial services. It has a wide ranging focus, including the regulatory framework for trading venues, systematic internalizers, market data, and fixed income, equity, derivative and commodity markets. It proposes a number of amendments to the U.K.’s onshored MiFID regime and asks for industry input on a range of consultations and technical advice published byother topics.
As part of the European Securities and Markets Authority (“ESMA”), in April 2016 the European Commission adopted a MiFID Delegated Directive (“Directive”). The Directive contains provisions on investor protection, notably on safeguarding of clients. The Commission also adopted a delegated regulation supplementing MiFID II. This regulation was aimed at specifying, in particular, the rules relating to exemptions, the organizational requirements for investment firms, and conduct of business obligationschanges foreseen in the provisionWMR, U.K. FCA launched public consultations in 2022 in relation to equity markets and trading venue perimeter with further consultations expected to be launched in the course of investment services.2023 specifically in relation to U.K. consolidated tape, commodities (including position limits and ancillary activities) and on fixed income and derivatives.
On July 20, 2022 the U.K. Government introduced the Financial Services and Market Bill
2022-23
which gives the U.K. the opportunity to create a more competitive financial services sector post-Brexit, while preserving high regulatory standards tailored to its needs. Among other things, it includes changes to the framework within which financial services regulators operate and the reform of the regime for wholesale capital markets. In May 2016,addition, it gives broad powers to HM Treasury to make regulations saving and restating any revoked legislation (with or without amendments) and makes some immediate changes to retained EU law. The Bill will have to pass through the Commission adoptedParliamentary Houses before it is finalized with royal assent, which is anticipated to occur in the second half of 2023.
On July 27, 2022, the U.K. FCA published a further delegated regulation supplementing MiFIR. This regulation aims at specifying, in particular, the rules relating to determining liquidity for equity instruments, the rules on the provision of market datapolicy statement (PS22/9) and finalized guidance (FG22/5) on a reasonable commercial basis,new consumer duty for financial services firms. The new rules set higher standards of consumer protection with the rules on publication, order executionduty applying irrespective of whether there is a direct relationship with the retail clients therefore bringing
in-scope
wholesale firms that can determine or ‘materially influence’ retail customer outcomes. Due to the mainly wholesale activities of Nomura’s U.K. entities, where Nomura does not face Retail customers directly and transparency obligations for
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systematic internalisers, and the rules on supervisory measures on product intervention by the ESMA, the European Banking Authority (‘EBA’) and national authorities,
is not a Retail market business, as well as on position management powers by the ESMA.
After two years,existing Product Governance frameworks in the EU Commission is required to evaluatefirm, the overall functioningeffect of the MiFID II/ MiFIR regime, in particular, addressing those areas where challenges still exist, and present a reportintroduction of the new consumer duty is expected to the European Parliament and Council together with a legislative proposal to reform the regime if required (the so called ‘MiFID Refit’). As part of this process, ESMA has already launched a number of consultations on specific areas, which will feed into the Commission’s reports.be limited.
The European Market Infrastructure Regulation (“EMIR”) became effective on August 16, 2012, and applies to any entity established in the EU that is a legal counterparty to a derivative contract, even when trading with
non-EU
firms. EMIR was created with the intention of stabilizing OTC markets found within EU member states. Although the majority of EMIR regulations have already been implemented, on May 28, 2019, Regulation (EU) 2019/834 (EMIR REFIT) was published in the EU’s Official Journal, with the aim of amending EMIR to make some of its requirements simpler and more proportionate, particularly for
non-financial
counterparties (“NFCs”)., address compliance costs, transparency issues and insufficient access to clearing for certain counterparties. With a few exceptions, the majority of the provisions in the Regulation entered into force on June 17, 2019.
FollowingEMIR was transposed into U.K. domestic law by means of the announcement made by BCBS and the International Organization of Securities Commissions (‘IOSCO’) on April 3, 2020European Union (Withdrawal) Act 2018 (as amended), subject to defer by one year, the deadline for completingcertain transitional arrangements. Phase 6 represents the final two implementation phases stage of the
phase-in
of the bilateralrules and applied from September 1, 2022.
On October 7, 2022, various EMIR REFIT RTS (regulatory technical standards) and ITS (implementing technical standards) were published in the EU Official Journal. Among other things, they include important information regarding data reporting (procedure, formats, frequency, methods, etc.). They entered into force on October 27, 2022 at which point the 18 month implementation period will commence. This will give a reporting start date of April 29, 2024 for the EMIR REFIT rules.
Similar rules were published by the U.K. FCA and BoE on February 24, 2023 through a joint policy statement on changes to reporting requirements, procedures for data quality and registration of trade Repositories under the U.K. EMIR. It sets out the final amendments to technical standards and new rules for trade repositories in relation to the derivatives reporting framework under the U.K. EMIR. The requirements will come into effect on September 30, 2024, except for certain amendments which relate to the format and details of applications for registration of trade repositories, which come into force immediately.
On December 20, 2022, ESMA published its final report on guidelines for reporting under EMIR. The guidelines are intended to clarify the legal provisions on reporting and data management under the amended EMIR rules and to provide practical guidance on their implementation and are applicable from April 29, 2024.
On December 12, 2022 the EU Commission published its proposal on EMIR review, together with a Communication on a stronger EU clearing system. The core of the proposal includes ways to enhance and improve the attractiveness of the EU’s clearing space in view of reducing reliance on U.K. firms. Among other things, the existing third country equivalence regime for third countries benefiting from an exemption of intra-group transactions for the purpose of the clearing exemption and margining is replaced by a new regime that would grant an automatic exemption for jurisdictions that are not deemed high-risk jurisdictions for AML purposes.
On February 13, 2023 the EU Commission’s extension of clearing and margining exemptions for intragroup transactions until June 30, 2025 was made official thorough the publication of respective amending RTS in the EU Official Journal.
On December 15, 2022, in the U.K., U.K. FCA and U.K. PRA jointly published a policy statement on margin requirements the European Supervisory Authorities (ESMA, EBA and the European Insurance and Occupational Pensions Authority) have published joint draft Regulatory Technical Standards to amend the Delegated Regulation on the risk mitigation techniques for
non-centrally
cleared OTC derivatives (bilateral margining)derivatives. The policy statement makes amendments to the binding technical standards which supplement U.K. EMIR, namely by updating the list of eligible collateral to include funds from all third-countries that meet a set of principles and that only invest in otherwise eligible government securities and cash and by extending the transition provision for European Economic Area undertakings for collective investment in transferable securities by three months, i.e., until March 31, 2023. The types of collateral that are eligible are broadly consistent between U.K. and EU Uncleared Margin Rules (UMR),
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but there are now some divergences in relation to shares or units in collective investment schemes. EU UMR allow shares or units in UCITS as a form of eligible collateral. However, shares or units in a U.K. UCITS are no longer “UCITS” for these purposes and so are not eligible. U.K. UMR allow shares or units in U.K. UCITS as a form of eligible collateral, which excludes EEA UCITS. The
on-shoring
process introduced a transitional regime that temporarily allowed EEA UCITS, which has been extended until March 31, 2023.
NOTE: The FCA and the PRA amended U.K. UMR on December 12, 2022 to expand the range of eligible collateral types to include units and shares in
non-U.K.
funds that satisfy certain conditions. These conditions include:
(i) “the fund must be subject to supervision and regulation at least equivalent to that applicable to a U.K. UCITS (importantly, this “equivalence” assessment must be performed by each counterparty as part of its periodic review of its collateral arrangements; it will not be assessed via equivalence decisions);
(ii) the units or shares must have a daily public price quote; and
(iii) the fund is limited to investing in cash, cash-equivalent instruments and government (and similar) debt securities.
The fund can also invest in other funds which meet the above conditions. Once the transitional regime expires, EEA UCITS will need to meet these conditions to continue to be eligible as collateral under EMIR to incorporate in the EU, the one year deferral.U.K. UMR.
On January 12, 2016, the Securities Financing Transactions Regulation (“SFTR”), which forms part of the EU’s package of legislation targeted at reforming shadow banking and aims to improve transparency in the securities financing transactions (“SFTs”) market, came into force subject to a range of transitional provisions over a number of years. On April 11, 2019, the final regulatory technical standards entered into force and MiFID firms were due to commence their reporting one year later on April 11, 2020. However, due to the
COVID-19
pandemic, the reporting under the SFTR has beenwas extended until July 13, 2020. Other reporting counterparties arewere phased in over the following months, ending with NFCs on January 11, 2021.
In June 2015,On November 25, 2020, U.K. FCA issued a statement explaining what trade repositories, and the European Parliament and CouncilU.K. counterparties that use them, should do to ensure they are compliant with the EU members issuedU.K. SFTR reporting obligations from the final versionend of the Fourth Money Laundering Directive (“4MLD”).Brexit transition period. All EU member states, includingU.K. SFTR counterparties that enter into securities financing transactions that are in scope of the U.K., had until June 26, 2017 SFTR are required to transposereport details of those transactions to an
FCA-registered,
or recognised, trade repositories.
On September 17, 2014, the requirements of the directive into national law. In February 2016, the EU Commission, in an effort to bolster the fight against terrorist financing, proposed amendments to the 4MLD that would enable the tracing of terrorists through financial movements and disrupt the sources of revenue for terrorist organizations by targeting their capacity to raise funds. These proposed amendments were included in a final version of the 4MLD issued by the EU Parliament in July 2016. In September 2017, additional legislation was implemented in the U.K. designed to combat financial crime including the Criminal Finances Act. The Act functions as an enhancement and extension of the Proceeds of Crime Act 2002 and, in addition to increasing the powers of authorities in investigating tax evasion, is also designed to make failure by a commercial organization to prevent the facilitation of tax evasion a punishable offence.
The Fifth Money Laundering DirectiveCentral Securities Depositories Regulation (“5MLD”CSDR”), came into force, in the EU. It aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for Central Securities Depositories (“CSDs”) operating securities settlement systems across the EU.
On March 16, 2022 the EU Commission published a draft Regulation amending the CSDR along with FAQs and an impact assessment on April 26, 2018its proposal. Among other things, the EU Commission is looking to improve the passporting regime, banking type ancillary services, the oversight of third-country CSDs and settlement discipline (by proposing to improve the mandatory
buy-in
regime and refine its scope).
On June 13, 2022, ESMA published a final report on amending the RTS on settlement discipline by proposing to postpone the application of CSDR mandatory
buy-in
regime for implementation bythree years. On July 6, 2022, the EU Member States by January 10, 2020. Not all Member States have yet been ableCommission decided to implementendorse ESMA’s draft RTS. As a result, the changes. HoweverCommission Delegated Regulation suspends the U.K. government has enactedapplication of the regulations bringingprovisions relating to the mandatory
buy-in
regime of the RTS on settlement discipline for three years from the date of entry into force of the 5MLD andCommission Delegated Regulation. The Delegated Regulation also contains provisions of former Article 15(1) of the provisions are containedShort Selling Regulation in the Money Laundering and Terrorist Financing (Amendment) Regulations 2019. The changes impose additional obligations withinRTS on settlement discipline, to be applied for the financial services sector. 5MLD amends 4MLD, and includes provisions that enhanceduration of the required level of transparency around beneficial ownership of corporatesdeferral.
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and trusts, tightens some controlsOn July 6, 2022 the EU Commission adopted the delegated act suspending the application of the provisions relating to Politically-Exposed Personsthe mandatory
buy-in
regime of the RTS on settlement discipline for three years from the date of entry into force. The declared intention of the EU is to relocate Euro derivatives clearing from London to the EU.
In the U.K., on June 23, 2020, the Government confirmed that it will not implement the CSDR Settlement Discipline. U.K. firms will continue to apply the existing
industry-led
framework.
On February 8, 2022, the EU Commission announced a decision to extend equivalence for U.K. Central Counterparties (“CCPs”) until June 30, 2025. The equivalence will apply from July 1, 2022. At the same time, the EU Commission launched a targeted public consultation and high risk third countriesa call for evidence on ways to expand central clearing activities in the EU and improve the attractiveness of EU CCPs in order to reduce the EU’s overreliance on systemic third-country CCPs.
As mentioned above on December 12, 2022 the EU Commission published its proposal on EMIR review, together with a Communication on a stronger EU clearing system. The core of the proposal includes ways to enhance and improve the attractiveness of the EU’s clearing space in view of reducing relying on U.K. CCPs.
On October 2018 the 6th Money Laundering Directive (“6MLD”) was approved by the European Parliament and Council. EU member states had until December 3, 2020 to implement this upcoming Directive into national law, whilst regulated entities had a deadline of June 3, 2021.The U.K. has decided to opt out of complying with this further AML Directive as the Government assesses that the domestic legislation is already largely compliant with the Directive’s measures. The 6MLD complements the criminal aspects of the 5MLD and has been introduced to focus on the definition of these crimes and their sanctions. It also addresses risks associated with certain technological innovation, particularly virtual currencies.gives financial institutions more responsibility in the fight against financial crime and aims to promote the collaboration of member states when tackling money laundering.
In the U.K., on June 15, 2022, HM Treasury published the outcome of its consultation on amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and published the draft Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022. Among other things, it will expand the intelligence and information-sharing gateway; introduce a clear legal gateway for AML (anti-money laundering)/CTF (counter-terrorist financing) supervisors to access; view and consider the quality of the content of suspicious activity reports (“SARs”) submitted to them, provided they are necessary to fulfil supervisory functions, and allow U.K. FCA to publish notices where it has decided to not register an applicant.
The Senior Managers and Certification Regime (“SM&CR”) came into force on March 7, 2016 with the aim of reducing the risk of harm to consumers and strengthening market integrity by making firms, and individuals within those firms, more accountable for their conduct and competence. In July 2018, the U.K. FCA and U.K. PRA published near-final rules extending SM&CR to cover all financial services firms in the U.K. to apply from December 9, 2019. On March 8, 2019, the U.K. FCA announced its final rules on its proposed Directory—Directory – a new public register that will enable consumers, firms and other stakeholders to find information on key individuals working in financial services who are not otherwise appointed and publicly registered under the SM&CR. Firms were to submit data on Directory individuals in December 2019, and the Directory was expected to go live in March 2020. However, due to the
COVID-19
pandemic, the implementation date of the directory of certified and assessed persons had been delayed and the Directory is currently under review.now live since March 31, 2021.
On March 30, 2023 the U.K. HM Treasury published a Call for Evidence (CfE) on SM&CR, as part of the Edinburgh Reforms. Firms have raised some concerns over certain aspects of the regime, on topics including the compliance requirements for authorizing the appointment of new Senior Managers, the differing levels of scrutiny applied to different firms, and the interaction of the SM&CR with other regulatory regimes.
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The CfE has been published to ensure that HM Treasury, U.K. FCA and U.K. PRA can build a joint evidence base upon which to consider future reforms to the regime.
U.K. FCA and U.K. PRA have issued, in parallel, a Discussion Paper. Each organization will focus on their particular area of responsibility, with HM Treasury considering legislative aspects, while U.K. FCA and PRA consider operational aspects and rules. The Discussion Paper together with HM Treasury’s CfE, is the first full review of the SMCR. While there have been other evaluations in the past, these were more limited in scope. The consultations are open until June 1, 2023.
Since 2012, the European Commission sought to establish a modern and harmonized data protection framework across the EU to replace the existing Directive. On May 4, 2016, the official texts of the new EU General Data Protection Regulation (“GDPR”) were published in the EU Official Journal in all the official languages and it came into force on May 25, 2016. GDPR took effect across the EU member states on May 25, 2018. GDPR included a number of important changes to existing data protection legislation including new obligations on data processors, restrictions on the transfer of personal data outside the EEA and the introduction of new concepts such as “accountability” (and related record-keeping), the “right to be forgotten” and a requirement for data breach notifications to the relevant Regulators. Enforcement of GDPR is carried out by both national regulators (for the U.K., the Information Commissioner) and the European Commission, and the regulators also have the power to impose greater fines for any breaches of the data protection requirements of up to 4% of a firm’s global turnover.
The EU Benchmark Regulation (“BMR”) entered into force on June 30, 2016 and has applied in the U.K. since January 1, 2018. Global regulators have imposed fines on firms following attempted manipulation of the London Inter-bank Offered Rate (“LIBOR”), gold and foreign exchange benchmarks, and have taken action against individuals for misconduct related to benchmarks. The objectives of the EU BMR include, but are not limited to: (i)improving governance and controls over the benchmarking process to ensure that administrators avoid/manage conflicts of interest, (ii)improving the quality of input data and methodologies used by benchmark administrators, (iii)ensuring that contributors to benchmarks and the data they provide are subject to adequate controls, and (iv)protecting consumers and investors through greater transparency and adequate rights of redress.
Furthermore, in November 2019, the EU BMR was amended to include two new types of “climate benchmarks”—‘Paris-Aligned’ Benchmarks (“PABs”) and Climate Transition Benchmarks (“CTBs”). The
Low-Carbon
Benchmarks Regulation introduced the requirement (under Article 13 of the BMR) that administrators of benchmarks (save interest rate and foreign exchange benchmarks) must provide an explanation of how the key elements of their benchmark methodologies reflect ESG factors. The requirements are to be complied with by April 30, 2020. However, since the draft regulatory technical standards are currentlywere still subject to a public consultation and a number of important details are subject to these delegated acts, ESMA issued a ‘No Action Letter’ encouraging EU national regulators not to force these ‘Level 1’ requirements until these delegated acts are finalized. The Delegated Acts were finalized and published on December 3, 2021.
In addition, interest rate benchmarks including, among others, the London Interbank Offered Rate (“LIBOR”), the Euro Interbank Offered Rate (EURIBOR)(“EURIBOR”), the Euro Overnight Index Average (EONIA)(“EONIA”) and certain other Interbank Offered Rates (“IBORs”) are being reformed.
The U.K. iswas due to make the transition from LIBOR to Sterling Overnight Index Average (“SONIA”) by the end of 2021 although certain interim milestones have beenwere extended due to the
COVID-19
pandemic. To avoid disruption to legacy contracts that reference the
1-,
3-
and
6-month
sterling and Japanese Yen LIBOR settings, on September 30, 2021 the U.K. FCA announced that it will require the LIBOR benchmark administrator to publish these settings under a ‘synthetic’ methodology, based on term risk-free rates, for the duration of 2022. These six LIBOR settings were available only for use in some legacy contracts, and are not for use in new business.
On November 28, 2022, ESMA published a Final Report on the review of the RTS on the form and content of applications for recognition by
non-EU
benchmark administrators, and a consultation (closed on January 30,
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2023) on amendments to the RTS on the information that EU benchmark administrators need to provide in applications for authorisation and registration. The proposals in the consultation aim to safeguard equal treatment between EU and
non-EU
Benchmarks administrators by aligning the information requested in applications from EU administrators with the information requested in recognition applications from
non-EU
administrators.
The EU BMR rules are currently suspended to allow EU supervised entities to continue to use
non-EU
benchmarks until December 31, 2023. On November 8, 2022, the EU Commission published an initiative to extend this suspension until December 31, 2025. The
adoption of this extension is expected in the second quarter of 2023.
Under the BMR, when
non-EU
benchmark administrators apply for recognition in the EU, ESMA must first establish an MoU with the relevant authority. This extension should, therefore, not impact U.K.-based Benchmark Administrators considering that ESMA and the U.K. FCA signed a Memorandum of Understanding (MoU) in January 25, 2023 which allows ESMA to recognize benchmark administrators from the U.K.
On March 1, 2023 the EU Commission launched a call for evidence (open until March 29, 2023) to aid its review of the scope and third country regime of the EU BMR. The EU BMR contains rules on the use of
non-EU
benchmarks, which will apply from January 1, 2024. Under the rules,
non-EU
benchmarks can be used in the EU only if they comply with rules comparable to the BMR. However, very few jurisdictions have regulated benchmarks as extensively as the EU. Therefore, when the new rules on the use of
non-EU
benchmarks come into force, it would deprive firms in the EU of access to the majority of the world’s benchmarks.
On July 22, 2020, the U.K. Government published a policy statement extending the transitional period for third-country benchmarks under the U.K. BMR from December 31, 2022 to December 31, 2025, thus allowing U.K. firms to continue using benchmarks provided by administrators located outside the U.K. in new financial contracts and instruments without these benchmarks being registered with U.K. FCA until the end of 2025.
On October 21, 2020, the U.K. Government published a policy statement making amendments to BMR to allow for the orderly winding down of LIBOR, including providing new powers for the U.K. Financial Conduct Authority (“FCA”). The proposed framework in the policy document allows U.K. FCA to take an appropriate course of action to direct a change in the methodology of a critical benchmark and extend its publication, for a limited time period, for those contracts that face insurmountable barriers to transition from LIBOR (Tough Legacy Contracts). U.K. FCA consulted on its proposal to use two new powers relating to the use of critical benchmarks that are being wound down. The powers are part of a wider package of amendments to the BMR in the Financial Services Act 2021, intended to ensure that U.K. FCA has the appropriate regulatory powers to help reduce risk in the wind-down period before LIBOR ceases permanently. The final Statements of Policy were published in September 29, 2021 (Statement of Policy on U.K. FCA’s power under Article 23C BMR and Statement of Policy on U.K. FCA’s power under Article 21A BMR).
On November 23, 2022 U.K. FCA announced that it will continue to use its powers under the U.K. Benchmarks Regulation to compel LIBOR’s administrator, ICE Benchmark Administration (“IBA”) to publish three-month sterling LIBOR on a synthetic basis until the end of March 2024. After March 2024, the rate will be discontinued. U.K. FCA also launched a consultation on the wind-down of U.S. Dollar LIBOR, proposing that
one-month,
three-month and
six-month
U.S. Dollar LIBOR continue to be published on a synthetic basis until the end of September 2024. In April 3, 2023, the FCA announced its final decision, in line with the proposals consulted upon. The Feedback Statement was published in May 31, 2023, highlighting that the FCA will publish formal legal notices which will complete the implementation of the decision. In the Eurozone,
€
STR (Euro Short Term Rate) is setmeantime, firms should take all necessary steps to gradually replaceensure they understand how their contract terms interact with LIBOR’s wind-down and continue to actively transition contracts that reference U.S. Dollar LIBOR, and not rely on the Euro Overnight Index Average (EONIA) and serve as a fallback for the Euro Interbank Offered Rate (EURIBOR). EONIA will effectively be pegged against
€
STR until January 3, 2022, when EONIA ceases to apply.synthetic settings.
In the U.K. as a follow up to the Fair and Effective Markets Review (established by the Chancellor of the Exchequer), the Fixed Income, Currencies and Commodities (“FICC”) Markets Standards Board (“FMSB”) was
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established in 2015 as a private sector response to the conduct problems revealed in global wholesale FICC markets after the financial crisis. The FMSB has since been renamed the “Financial Markets Standards Board”. The function of the FMSB is to help raise standards of conduct in global wholesale markets by producing voluntary Standards and other guidance in areas of uncertainty that are developed by the membership and designed to illustrate best practices to all market participants. These Standards are intended to reduce the continuing uncertainty about acceptable practices in opaque and unregulated areas, which is a hazard for FMSB members, as well as other market participants. The Standards published to date cover topics including the new issue process, binary options for the commodities markets, reference price transactions for the fixed income markets and secondary market trading error compensation. The published Standards do not have legal or regulatory force and do not replace existing legislation; rather, they are intended to supplement the rules already in place. The Standards are implemented by way of FMSB member firms, including Nomura International plc, and Nomura Financial Products Europe GmbH, making an adherence statement on an annual basis.
TheFollowing Brexit, on March 26, 2021, the U.K.’s membership Government announced that technical negotiations on the text of the EU ended
U.K.-EU
memorandum of understanding (“MoU”) establishing a framework for regulatory cooperation in financial services have concluded. Among other things, the MoU, when formally signed and brought into force, will establish a Joint
U.K.-EU
Financial Regulatory Forum to serve as a platform to facilitate dialogue on January 31, 2020, commonly referredfinancial services issues. The MoU makes limited reference to as “access, saying that both sides will “jointly endeavor to pursue a robust and ambitious bilateral regulatory cooperation”.
Brexit
”, in accordance with the
AgreementIn response to heightened global focus on the withdrawalissues of climate change, and a growing demand for standards associated with ESG factors and reporting, a number of global regulatory initiatives are being developed. These regulations cover both prudential frameworks including assessment and management of climate risks associated with Nomura businesses, such as the United Kingdom of Great BritainU.K. PRA SS3/19 regulations; and Northern Ireland from the European Unionalso labelling, disclosure and the European Atomic Energy Communityreporting regulations.
(the “
Withdrawal Agreement
”). The Withdrawal Agreement providesDisclosure and reporting regulations includes but are not limited to mandatory Taskforce for a transition period until December 31, 2020 during which existing and new EU lawClimate Related Financial Disclosure (“TCFD”) reporting, that will apply to Nomura subsidiaries, such as under the Companies Act 2006 in the U.K., as updated in 2022, which will apply to Nomura International plc.
Nomura will also across multiple entities be subject to the International Sustainability Standards Board’s (“ISSB”) Reporting Standards on Sustainability, which will be finalized in 2023, and are expected to be effective from January 1, 2024. The transition period mayISSB rules will be extended onceimplemented over time across jurisdictions that Nomura entities operate in.
Climate-related disclosures by mutual consent of the parties by upNomura at a Group level (Nomura Holdings, Inc. on a consolidated basis) is expected to two years. However, the U.K. legislation ratifying the article 50 withdrawal agreement (the European Union (Withdrawal) Act 2018, as amendedbe covered by the European Union (Withdrawal Agreement) Act 2020 (as so amended,proposed U.S. SEC Rules to Enhance and Standardize Climate-Related Disclosures for Investors, once finalized.
Labelling, disclosure and reporting regulations further include the “
EUWA
”)) contains a prohibition on a Minister ofEU Taxonomy Regulation, the Crown agreeing any extension to the transition period. While this does not entirely remove the prospect that the transition period will be extended (as the U.K. Parliament could pass legislation that would override the effect of the prohibition in the EUWA), the likelihood of a further extension is reduced.
The U.K. governmentEU Sustainable Finance Disclosure Regulation and the EU are currently negotiating an equivalence arrangement for certain sectors of the financial services industry which, if agreed, would preserve some of the U.K.’s market access toCorporate Sustainability Reporting Directive. The latter was published in the EU Official Journal on December 16, 2022.
On February 23, 2022 the EU Commission adopted a proposal for a Directive on corporate sustainability due diligence. The aim of this Directive is to foster sustainable and responsible corporate behavior and to anchor human rights and environmental considerations in companies’ operations and corporate governance. The new rules will ensure that businesses address adverse impacts of their actions, including in their value chains inside and outside Europe.
In the U.K., U.K. FCA published a consultation paper (now closed) on the basissustainability disclosure requirements (SDR) regime and accompanying investment labels and is a key part of delivering the U.K. government’s roadmap to sustainable investing. Among other things, it introduces restrictions on how certain
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sustainability-related terms, such as ESG, green or sustainable, can be used in product names and marketing for products which do not qualify for the sustainable investment labels and introduces sustainable investment product labels with three categories underpinned by objective criteria. The SDR rules will also include a general anti-greenwashing provision. On March 29, 2023, U.K. FCA published a statement clarifying that the U.K.’s post-Brexit regulatory and supervisory frameworkfinal policy statement is equivalent to that of the EU. However, while the final form and substance of an equivalence arrangement is undetermined at this stage (and may not be determined prior to the end of the transition period), it is unlikelyexpected to be as comprehensive aspublished in the market access thatthird quarter of 2023.
In addition, the U.K. enjoyed throughTransition Plan Taskforce (launched by HM Treasury in April 2022 to develop the gold standard for private sector climate transition plans) consulted on its EU membership.proposals for mandatory transition plan reporting to accompany mandatory TCFD reporting.
Regulatory Capital Rules
Japan
The FSA and regulatory authorities have revised the current regulatory capital standards applicable to Nomura to alleviate some of the impact of the
COVID-19
pandemic. In March 2020, the Basel Committee’s oversight body, the Group of Central Bank Governors and Heads of Supervision (“GHOS”), approved a set of measures that provide additional operational capacity for banks and supervisors. These measures allow banks and supervisors to immediately focus on financial stability, and priorities that alleviate the impact of the
COVID-19
pandemic on the global banking system. GHOS also made changes to the implementation timeline of the outstanding Basel III standard by deferring the deadline by 1 year. After this announcement,2023, the FSA also announced a 1one more year defermentdelay of the implementation scheduledate of the finalised Basel III standards for final designated parent company, to March 31, 2025. Also, in Japan. In April 2020,March 2022, the FSA andannounced the exclusion of deposits with the Bank of Japan agreedfrom the total exposure used to develop necessary procedures toward a temporary exemption of the outstanding balance of financial institutions’ current accounts at the BOJ fromcalculate the leverage ratio exposure measure in order to facilitate the implementation of monetary policy. The FSA published the revised draft notice of the Leverage ratio requirement for implementation of the agreement, which will be effective from June 30, 2020 tountil March 31, 2021.
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The FIEA requires that all Financial Instruments Firms (Category I) (“Financial Instruments Firms I”), a category that includes NSC and NFPS, ensure that their capital adequacy ratios do not fall below 120% on a
non-consolidated
basis. The FIEA also requires Financial Instruments Firms I to file monthly reports regarding their capital adequacy ratios with the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau, and also to disclose their capital adequacy ratios to the public on a quarterly basis. In addition, if the capital adequacy ratio of a Financial Instruments Firm I falls below 140%, it must file a daily report with the authorities. The FIEA provides for actions which the Prime Minister, through the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau, may take if any Financial Instruments Firm I fails to meet the capital adequacy requirement. More specifically, if the capital adequacy ratio of any Financial Instruments Firms I falls below 120%, the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau may order the Financial Instruments Firm I to change its business conduct, to deposit its property in trust, or may issue any other supervisory order that such authorities deem necessary and appropriate to protect the interests of the general public or investors. If the capital adequacy ratio of a Financial Instruments Firm I falls below 100%, the authorities may take further action, including the issuance of orders to temporarily suspend its business and the revocation of its registration as a Financial Instruments Firm I under the FIEA.
Under the FIEA and regulations thereunder, the “capital adequacy ratio” means the ratio of adjusted capital to a quantified total of business risks. Adjusted capital is defined as net worth less illiquid assets. Net worth mainly consists of stated capital, additional
paid-in
capital, retained earnings, reserves for securities transactions, certain allowances for doubtful current accounts, net unrealized gains/losses in the market value of investment securities, and subordinated debt. Illiquid assets generally include
non-current
assets, certain deposits and advances and prepaid expenses. Business risks are divided into three categories: (i) market risks (i.e., risks of asset value changes due to decline in market values and other reasons), (ii) counterparty risks (i.e., risks of delinquency of counterparties and other reasons) and (iii) basic risks (i.e., risks in carrying out daily business activities, such as administrative problems with securities transactions and clerical mistakes), each quantified in the manner specified in a rule promulgated under the FIEA.
The FSA reviewed the FIEA and regulations thereunder in line with Basel 2.5 framework and the revised regulations for Basel 2.5 were implemented at the end of December 2011. Market risks increased significantly as a result of the Basel 2.5 rule implementation.
We closely monitor the capital adequacy ratio of NSC and NFPS on a continuous basis. Since the introduction of the capital adequacy requirement in Japan in 1989, we have at all times been in compliance with
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all appropriate requirements. We believe that we will continue to be in compliance with all applicable capital adequacy requirements for the foreseeable future.
As discussed above, the FSA amended the FIEA and introduced new rules on consolidated regulation and supervision of securities companies on a consolidated basis on April 1, 2011 to improve the stability and transparency of Japan’s financial system and ensure the protection of investors. Following introduction of these rules, NSC was designated as a Special Financial Instruments Firm, following which we have been designated as a Final Designated Parent Company. As such, we are required to calculate consolidated regulatory capital adequacy ratio according to the FSA’s “Establishment of standards on sufficiency of capital stock of a final designated parent company and its subsidiary entities, etc. compared to the assets held thereby” (2010(2010 FSA Regulatory Notice No. 130; “Capital Adequacy Notice on Final Designated Parent Company”). Accordingly, since our designation as a Final Designated Parent Company in April 2011, we now calculate our Basel rule-based consolidated regulatory capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company.
The FSA also amended the FIEA to include reporting on consolidated regulatory capital for the Final Designated Parent Companies, effective April 1, 2011. We are subject to this reporting requirements as well as the capital adequacy requirements described above.
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The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III, and we have calculated a Basel
III-based
consolidated capital adequacy ratio since the end of March 2013. Basel 2.5 includes significant changes in the method of calculating market risk and Basel III includes redefinition of capital items for the purpose of requiring higher levels of capital and expansion of the scope of credit risk-weighted assets calculation.
If our capital ratios fall to the minimum level required by the FSA, our business activities may be impacted. However, these ratios are currently at well capitalized levels. We have met all capital adequacy requirements to which we are subject and have consistently operated in excess of the FSA’s capital adequacy requirements. Subject to future developments in regulatory capital regulations and standards, there has been no significant change in our capital ratios which management believes would have material impact on our operations.
The Basel Committee has issued a series of announcements regarding a broader program to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises, as described in “
Consolidated Regulatory Capital Requirements
” under Item 5.B of this annual report. The Capital Adequacy Notice on Final Designated Parent Company is expected to incorporate the series of rules and standards in line with the schedule proposed 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 the
G-SIBs
including the recovery and resolution plan. The FSB also announced the group of
G-SIBs
will be updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIB.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-SIBs
to domestic systemically important banks
(“D-SIBs”)
and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
Overseas
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
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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 is subject to Ruleregistered with the Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer on October 6, 2021 and registered with the Securities and Exchange Commission (“SEC”) as a Security Based Swap Dealer on November 1, 2021. NGFP calculates capital under SEC rule
15c3-118a-1
and applies Appendix F. NGFP is required to maintain net capitalCFTC rule 23.101 and requires the greater of $20,000,000, in accordance with2% of the SEC.SEC risk margin amount or 2% of the CFTC risk margin amount. Another U.S. subsidiary, Instinet, LLC (“ILLC”) is a broker-dealer registered with the SEC and is a member of FINRA. Further, ILLC is an introducing broker registered with the CFTC and a member of the National Futures Association and various other exchanges. ILLC is subject to Rule
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 determining its minimum net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the amount of adjusted net capital required by a futures association of which it is a member; and the amount of net capital required by Rule
15c3-1(a).
As of March 31, 20192022 and 2020,2023, NSI, NGFP and ILLC were in compliance with relevant regulatory capital related requirements.
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In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the Prudential Regulation Authority (“U.K. PRA”). as a U.K. Parent Financial Holding Company. The regulatory consolidation is produced in accordance with the requirements established under the Financial Services and Markets Act 2000, U.K. Capital Requirements DirectiveRegulations and the Capital Requirements Regulation which came into effect on January 1, 2014.PRA Rulebook. Nomura International plc (“NIP”), the most significant of NEHS’ subsidiaries, acts as a securities brokerage and dealing business. NIP is also regulated by the U.K. PRA and has minimum capital adequacy requirements imposed on it on a standalone basis. As a
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 basis andbasis. NEHS also has a number of European domiciled subsidiaries including Nomura Financial Products Europe GmbH (“NFPE”), a Nomura subsidiary domiciled in Germany which is regulated by the German regulator (“BaFin”). and is subject to the EU Capital Requirements Regulation and local German regulations and Banque Nomura France (“BNF”), a Nomura subsidiary domiciled in France which is regulated by the French regulator (“ACPR”) and is also subject to the EU Capital Requirements Regulation and local French regulations. As of March 31, 20192021 and 2020,2022, NEHS, NIP, NBI, NFPE and NFPEBNF were in compliance with relevant regulatory capital related requirements.
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 dealingsales, trading and clearing in securities and futures contracts, advising on securities, futures contracts and corporate finance and wealth management. Activities of NIHK, including its branch in Taiwan, are subject to the Securities and Futures (Financial Resources) Rules which require it, at all times, to maintain liquid capital at a level not less than its required liquid capital. Liquid capital is the amount by which liquid assets exceed ranking liabilities. Required liquid capital is calculated in accordance with provisions laid down in the Securities and Futures (Financial Resources) Rules. NSL is a licensed merchant bank with an Asian Currency Unit (“ACU”) license governedregulated by the Monetary Authority of Singapore (“MAS”). NSL carries out its ACU regulated activities including, among others, fixed income and securities brokeragesales and dealing business.trading business, advising on securities, corporate finance and wealth management. NSL is regulated and has minimum capital adequacy requirements imposed on it, on a standalone basisincluding its branch in the Dubai International Financial Centre, by the MAS in Singapore. NIHK and NSL have always been compliant with relevant regulatory capital related requirements.
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In addition, certain of our other subsidiaries are subject to various securities and banking regulations, and the capital adequacy requirements established by the regulatory and exchange authorities of the countries in which those subsidiaries operate. We believe that each such subsidiary is, and will in the foreseeable future be, in compliance with these requirements in all material respects.
Management Challenges and Strategies
Management vision
Nomura Group’sOur business environment is undergoing significant changes. We will continue to respond to it flexibly while maintaining an appropriate financial standing and effectively utilizing management resources through improved capital efficiency. In addition, we are never satisfied with ourselves and will constantly implement new initiatives with the aim of expanding existing businesses and providing value-added services to clients.
(1)
Medium-to
Long-term Priority Issues
Our vision is to enhance its corporate value by deepening society’s trusttake Nomura to the next stage. To realize this, we launched a strategy of expanding into private markets to complement our businesses in the firmpublic markets. We are committed to strengthening the provision of bespoke services and increasing satisfaction of stakeholders, including that of shareholders and clients. Assolutions made for each specific client, through a global investment bank,three-pronged approach, namely the Company will provide high value-added solutions to clients globally, and recognizing its wider social responsibility, the Company will continue to contribute to the economic growth and development of society. To enhance its corporate value, the Company places significance on return on equity (“ROE”) and will strive for sustainable business transformation.
Addressing Urgent Priority Issues
The impact of the
COVID-19
pandemic has had, and will continue to have, significant impacts in global economy and financial markets. Nomura’s management priority is shifting to adjust to this situation and focusing on the following urgent challenges in the course of determining its overall impacts:
Continued to fulfill responsibility as capital market intermediary and liquidity provider in order to maintain the financing required by companies and trading activities by market participants.
Supported the recovery of the economy and corporate activities while ensuring the safetyexpansion of our clients, communities and employees and their families, Provided remote services to clients and strengthened the infrastructure to keep up business as usual during widespread work-from-home arrangements.
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Maintained robust financial position and ensured sufficient liquidity in a highly volatile and stressful market environment.
We carry out our business activities by recognizing those importance.
Priorities to respond to changed environment
Following the global outbreak of the
COVID-19
pandemic, it is likely that our future business platform including trends in real economy and capital markets will be dramatically changing while new types of client behavior and need will be generated. Workstyle of our employees will be also shifting. To adapt to these changes, Nomura is formulating a growth strategy to achieve sustainable enhancement in corporate value and revising its operating model.
Boost profitability and invest in growth areas to lift corporate value
As a part of our business strategy to improve corporate value, we are expanding and strengthening our scope of business from Public markets to Private markets. Specifically, we aim to further expand our capabilities in terms of “Products and services” “Customer base” and its “Delivery method”.
I. Products and services
In addition to our traditional strengths in financial products such as listed stocks and investment trusts, we will aggressively expand the scopebase, expansion of products and services, and delivery utilizing digital technology. Based on this strategy, for instance, we are starting to see results from the following efforts. For more information on the strategies in each division, please refer to the challenges and strategies in each division.
i Shifting to asset consulting business
We are shifting to an asset consulting business for domestic individual customers. We provide asset consulting services that we offerbelieve provide preferable
medium-to
long-term solutions for our clients. We support clients in increasing their assets, and we aim to our private clients (alternative investments, including commercialincrease the fee income we receive as a result by increasing assets under custody. The steady increase in income from stock assets such as investment trusts, for which fees such as management and administration expenses are charged for assets under management, contributes to additional revenue stability for us. In order to address the diversifying needs of our clients and provide personalized, private equity, private debtservices, we reallocated our partners (sales representatives) according to client segmentation based on attributes and infrastructure). needs of our clients, strengthening our segment approach. In addition, we aim to expand our customer base by strengthening business for salaried employees, and expanding our business through alliances with regional financial institutions.
ii Strengthening Investment Management Division
We will also strengthenestablished our approach to private offering as well as public offeringsInvestment Management Division, in April 2021, aiming to meet customer needs.
II. Clients
Targeted clients in providing solutions for financing and M&A business, will be also shifted to
start-up
companies (unlisted companies), not only to listed companies. We seek to further expand our business also with new typesclients’ diverse needs, as part of services by exploring needs through consultation and advisory services to existing and new clients.
III. Delivery method
The active use of digital technology will be further accelerated, in not only
non-face-to-face
but also
face-to-face
situations. Our capabilities will remain flexible to respond to the needs of individual clients not only by providing various information and products, but also by providing various contents.
our management strategy: Expanding our scope of business from public to private. This division aims not only to expand and strengthen traditional investment products but also to provide private
investment opportunities such as alternative assets.
Since the establishment of the division, we have expanded our private investment opportunities, including an investment corporation investing in unlisted stocks, an equity acquisition fund for business succession (Search Fund), a private real estate fund in Japan, and a private credit fund and forestry funds overseas. We have also established a publicly offered investment trust that invests in unlisted REITs (Real Estate Investment Trusts) in the U.S., which is also invested by individual investors in Japan. We believe that Nomura’s mission is to challenge a wide range of private asset areas and to create an environment in which investors can easily invest.
38iii Stabilizing and growing Wholesale business
In our Wholesale Division, we are diversifying our revenue sources while maintaining a high market share in core products. In addition, we will continue to provide liquidity and solutions to customers. Capital-light origination business, including M&A advisory, grow global business centered on Americas. Especially, in the U.S., we acquired Greentech Capital, LLC, a firm with a solid presence in sustainable technology and
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Improve operating modelinfrastructure, and launched Nomura Greentech in April 2020. We will seamlessly provide financial and other solutions to align to newour global customer base. In addition, regarding solutions business environment
To remain close engagement with and diligently serve our clients, we proceed with preparing for a variety of communication methods, for example to have a flexibility to choose either
face-to-face,
telephone,
e-mail,
or online the situation demands, so that we can maximize our ability to respondis less susceptible to changes in client behaviormarket environment, we build up experience in structured finance including infrastructure finance.
iv Strengthen Digital Financial Services
Our digital transformation efforts are directly linked to our competitiveness with other financial institutions in the future, and needs, despitewe will continue to promote a wide range of initiatives based on our strategy in order to provide highly convenient services to our clients and respond to diversifying needs. We also believe that our people are the long-lasting effectsource of the
COVID-19
pandemic.
added value created by the Nomura Group even in a world of increasing where digitization and digitalization are advanced. We will continue to strengthen the development of our human resources with the qualities required for the upcoming era, such as consulting capabilities that make full use of both
face-to-face
and virtual communications. In addition, we continueestablished “Digital Company” in April 2022, aiming to strengthen collaboration in the digital domain across group entities, including in our international operations, while also bolstering initiatives in focus areas. Our efforts to ensure ourpromote digitalization are as follows.
- Streamline and enhance internal productivityoperations
We are working to focus on high value-added analysis and advisory services by promoting the automation and efficiency of internal operations. We also aim to provide services through further investment in IT infrastructure, and digitalization, which should be effective even when working from home.
Management indicator
After the introduction of the Corporate Governance Code in Japan, the importance of management with an awareness of capital costs has increased among Japanese companies.highly satisfactory communication methods by improving existing services. In addition, since the financial industry is subject to financial capital regulations, more effective use of capital is required. As a result, our company believes that the optimal allocation of management resources will become even more important for the company in the future. Accordingly, beginning in the year ended March 31, 2020, we have adopted ROE as a key management indicator, which management useslaunched an internal Digital IQ learning program to track the progress of our sustainable business transformation. ROE is defined and calculated as net income attributable to NHI shareholders divided by total NHI shareholders’ equity. We believe that disclosure of ROE is useful to investors in that it helps them to assess our management and effective use of capital to enhance corporate value.support digital
e-learning
Our medium to long-term ROE target is a level of 8-10% for the fiscal year ended March 2025, reflecting the cost of capital demanded by our company. However, ROE may be of limited use in that it does not necessarily reflect financial soundness. In order to avoid the excessive pursuit of capital efficiency with the aim of improving ROE atlifting the expensebase-level knowledge of financial soundness,digital initiatives across the Group. Regarding the initiatives of employee development, please refer to Item 4.B. “
Views on Sustainability and efforts
”
(5)
Human Capital Initiatives
.
- Digitalization of client touchpoints
Our Retail Division utilizes “Remote Consulting” which is an original system supporting sales representatives. By expanding utilization of OneStock which is an asset management smartphone application, FINTOS! which is an investment information application etc. we attach importancewill develop a platform to deliver services for young people and the creation of corporate value, giving due consideration to financial soundness, and thereby improving ROE.
There are multiple global financial regulations that Nomura Group must comply with, and, among these, the capital regulations established by Basel Committee on Banking Supervision have a direct impact on the way we conduct business. For this reason,working generations, who we have set a target of maintaining a common equity Tier 1 ratio (CET1 ratio) of at least 11%. For a detailed description of our CET1 rationot provided with many products and its calculation, see under Item 5.B. “services.
Consolidated Regulatory Capital Requirements- Participation in Digital Asset Business
” While conducting business with an awareness of capital efficiency through the use of ROE described above, we
We are also mindful of our financial soundnessworking to create businesses in new areas. In September 2022, we established Laser Digital Holdings AG, a new entity in digital assets business, incorporated in Switzerland. The company will focus on three core areas: Secondary Trading, Venture Capital and is mindfulInvestor Products and will announce new services and product lines as it moves ahead with the staged launch of the bufferbusiness.
v Initiatives for Sustainability
Please refer to Item 4.B.“
Views on Sustainability and efforts
”.
(2) Issues in the event of severe market stress. At a meeting held in May 2020, the Board of Directors discussed certain aspects of our business strategies.Each Division
The challenges and strategies in each division are as follows:
Retail Division
Based on the basic concept of “Enriching clients by responding to their asset concerns”concerns about assets”, our Retail Division aims to become a financial institution that is required byfulfilling the needs of many people. We will continue working on improving the skills of our Partners,partners (sales representatives), and enhance our wide range of products and services in order to accurately respond to diversifying clients’ asset issues such as;as inheritance or anxiety about lack of funds after retirement. Furthermore, in order to deliver products and services to clients who have never used Nomura,In addition, we will expand ourenhance online services and strengthen our remote consulting structureservice through call centers and other functions.contact centers.
Asset Management Division45
In our investment trust business, we will pursue providing clients with a diverse range of investment opportunities to meet investors’ various needs, focusing on asset formation and retirement layers, where asset management needs are expected to increase further in the future. In our investment advisory business, we will aim to increase assets under management and expand our client base worldwide by providing value-added investment services.
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Through
Investment Management Division
Our Investment Management Division is responsible for providing products and services that meet the diversifying investment needs of our continued effortclients in the broad asset management business. By combining our expertise in traditional assets such as stocks and bonds with offerings in alternative assets such as private equity, we are able to deliver superior investment performance, as well as meeting various investmentadd value and offer advanced services and solutions to meet the diverse needs of our clients. In the public market business, we aim to become animprove investment performance, expand investment strategies with robust investment capabilities, and enhance the provision of investment solutions. In the private market business, we are scaling up our asset management company highly regarded by investors from aroundbusiness, expanding into real asset management, including real estate and infrastructure, and fully realizing our private asset management capabilities in the world.global market. Amid continued downward pressure on management fees, we are pursuing higher value-added businesses and appropriate cost controls, while expanding investments in growth areas, particularly in the private market area.
Wholesale Division
TheOur Wholesale divisionDivision faces challenges presented by increasingly sophisticated client needs of clients and technological advancement, coupled with challenged from uncertainuncertainty in the market environment and potential economic downturn recently on the back of the
COVID-19
pandemic.macroeconomic environment. To ensure continuity of service as well as added value to clients, we will continue to enhance collaboration across business lines, regions and divisions as well as ensurewhile ensuring tight risk control. We will continue efforts to further diversify our business portfolio through targeted growth in both existing and new businesses as well as deploy financial resources to selective, high growth opportunities.
Global Markets aims to provide uninterrupted liquidity to our clients while positioning portfolio to weather a possible economic downturn, keeping tightreinforcing risk control and discipline.governance. Additionally, opportunisticallywe aim to further diversify our business portfolio, reinforce global connectivity and cross-sell to leverage our global platform and client franchise, pursue growth opportunities in areas like asset-sidesuch as structured financing and solution business, / structured financeinternational wealth management business as well as client coverageGlobal Equities, and continue to make progress in digitizationbuild on the strength of our Flow business and improved efficiency, differentiation.Macro businesses.
In Investment Banking, we will continuebanking aims to support our clients’ cross-border M&A ambitions, facilitate their fundraising activities both in Japanprovide advisory services and other geographies,financing to domestic as well as provide the full product suite of our Solutions Business as our clients continue to pursue the globalization of their business activities.
Merchant Banking Division
The Merchant Banking Division will primarily provide equity as a new solution for business reorganizationscrossborder restructurings and revitalizations, business successionindustry-wide consolidations, as well as management buyoutsinterest rate and FX solutions related to cater to the increasingly diversifiedthese transactions as volatile business environments impact our clients’ businesses. While we expand our global advisory business, we will focus on broadening ESG related businesses with initiatives such as further utilization of Nomura Greentech’s expertise and sophisticated needsenhancement of our clients. The Merchant Banking Division will, under proper management of risk, focus on support for improving the enterprise value of portfolio companies, and will contribute to expansion of the private equity market.sustainable finance platform.
Risk Management and Compliance, etc.
AtWe have defined our risk appetite in our Risk Appetite Statement which includes the types and level of risk that the Nomura Group the types and levelsis willing to assume in pursuit of risks for the purpose of achievingour strategic objectives and business plans based on management philosophy is set forth as the Risk Appetite. We willplans. Further, we continue to develop aour risk management framework which ensures financial soundness, enhances corporate value, andin a way that is strategically aligned to theour business planplans and incorporated in decision makingincorporates decision-making by senior management.management, thereby securing capital soundness and enhancing our corporate value.
We have clearly defined in our Risk Appetite Statement that all executives and employees must actively engage in risk management through our Three Lines of Defense framework. Besides, we continuously provide trainings to all executives and employees including those in the group companies to increase our knowledge about risks as financial professionals and develop a corporate culture of correctly recognizing, assessing and managing risks. For more information, see Item 11 “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
.”
With regard to compliance, we will continue to focus on improving the management structure to comply with local laws and regulations in the countries where we operate. We also continue to review our internal systems and rules so that all executive management and employees can work autonomously with high ethical standards.
In March 2019, there was an incident that information related to the listing and delisting criteria for the upper market under review by the Tokyo Stock Exchange was handled improperly from the viewpoint
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Table of ensuring fair and sound markets in the course of communicating information at Nomura Securities Co., Ltd. Contents
In May the same year, Japan’s Financial Services Agency issued a business improvement order against Nomura Holdings and Nomura Securities for their management control framework relating to information management. We have taken this matter very seriously, and are reviewing our organizational structures and developing rules. In addition, in order to ensure not only compliance with laws and regulations, but also that all executive managementdirectors, officers and employees are able to act in accordance with social norms, Nomura Group haswe have established the “Nomura Group Code of Conduct” as guidelines for actionactions to be taken, and is developing an effective internal management systemthrough associated trainings and other measures, we are working to promote appropriate actions (Conduct)(“Conduct”) based on the Code of Conduct.
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In addition, Nomura Group established At the Nomura‘Nomura Founding Principles and Corporate Ethics DayDay’ held in 2015. Commemorated annually, this day aims to remind all of our executive officers and employees ofevery August, we reaffirm the lessons learned from the incidentpast incidents and to renew our determination to prevent similar incidents from recurring in the future and further improve public trust In this initiative, we strivethen to maintain and gain the trust society places in us; discussions are held regarding the proper way to conduct after looking back on past incidents, and a sound corporate culture through discussions on appropriate conduct,pledge is made to comply with the Code of Conduct. In order for us to be able to respond to the changing demands of society, the Code of Conduct is regularly reviewed to constantly examine ourselves and will make further efforts to enable all ofensure that our executive officers and employee to actthinking aligns with high ethical standards as professionals engaged in capital markets.society’s norms.
As describedBy addressing and resolving the above issues, we are working to achieve our management targets and devote our efforts towill strive for the stability and further developdevelopment of financial markets as well as the sustainable growth of the Nomura Group.
Views on Sustainability and efforts
(1) Nomura’s Basic Views on Sustainability
Our Mission is to enrich society through our expertise in capital markets. Also,This is a set of values (Corporate Philosophy) that we aimhold dear and have inherited since our founding as our company’s raison d’etre and our responsibility towards society. Based on these values, we consider sustainability to be a business activity, and have integrated sustainability into our management strategy. Nomura’s sustainability promotion efforts have value in two ways. One is to support the sustainability efforts of our clients and various stakeholders. The second is to promote sustainability efforts in our own operations such as reducing our environmental impact and enhancing our governance.
Supporting the sustainability efforts of our clients and stakeholders through business activities
Our core role as a financial services group that society needsis to support customers through the flow of funds and capital. We believe it is important to strengthen our functions to promote the sustainable circulation of capital by underwriting green bonds and social bonds issued by companies and financial institutions, providing strategic advisory services such as M&A advisory, and by developing
ESG-related
funds as investments and providing them to individual investors. In addition, we seek to take advantage of the Group’s comprehensive strengths in providing solutions to social issues by leveraging the functions we have cultivated over many years, including support for business succession, promoting innovation in the fields of regional revitalization, agriculture and medical care, and our clients trust.expertise and knowledge in the field of research and analysis.
Nomura has been providing financial education programs for people of all ages, ranging from children to adults for more than 20 years, dating back to the 1990s. In April 2022, Nomura established the Financial Well-being Dept. in order to strengthen our financial education capabilities. We will continue to strengthen initiatives to improve the financial literacy of society as a whole.
Our company’s own efforts to continue being a sustainable corporate group
Nomura has announced its goal of achieving net zero greenhouse gas (“GHG”) emissions for its own operations by 2030, and to seek to achieve net zero GHG emissions attributable to its lending and investment portfolios by 2050. To realize these efforts, Nomura joined the
Net-Zero
Banking Alliance (“NZBA”) in 2021. Nomura Group participates in and endorses a variety of initiatives besides NZBA to further promote the realization of a sustainable environment and society in cooperation with stakeholders regarding how we will address social issues. In addition, the evolution of human resource management strategies is essential for achieving sustainable growth and increasing corporate value through the resolution of social issues. For this reason, the Nomura Group is pursuing various
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initiatives to differentiate its human resources management cycle, promote diversity, equity & inclusion (DEI), our employees’ ways of working, wellbeing and create a sense of belonging. (For details, please refer to “(5) Human capital initiatives”.)
(2) Nomura’s Sustainability-Related Governance
Nomura is a Company with Three Board Committees under Japanese law, separating management oversight and business execution to strengthen corporate governance. The oversight function and the executive side play respective roles in recognizing climate change risks and opportunities, promoting various measures, and managing risks.
① Board of Directors
The Board of Directors offers advice on sustainability related reports prepared by executive officers, based on our basic sustainability policy which states: “Nomura will contribute to the creation of a truly enriched society through our business activities based on the principles embodied in the Nomura Group Corporate Philosophy, and actively pursue initiatives to resolve social issues and create a sustainable world.”
Exchange of opinions regarding sustainability also occur out meetings of our outside directors, which are held periodically in order for outside directors to discuss our business and our corporate governance. Such exchange also occurs at our Internal Controls Committee, which is consisted of multiple directors and executive officers, and at our Audit Committee.
② Sustainability Committee
Nomura has established the Sustainability Committee chaired by the Group CEO and which also consists of other persons designated by the Group CEO including the members of the Executive Management Board to deliberate and make decisions on strategies to promote sustainability. The Chief Sustainability Officer leads discussions in the Sustainability Committee to consolidate the company’s sustainability knowledge and accelerate the formulation and promotion of strategies.
③ Sustainability Forum
In order to ensure opportunities for more flexible and substantive discussions on sustainability, the Sustainability Council, which has been established and operated as a forum for discussion by executives from across departments and regions, has been divided into the Sustainability Business Forum, which deals with topics more closely related to business activities, and the Sustainability Corporate Forum, which deals with information disclosure and policy formulation, with operations beginning in fiscal 2023. Each forum will coordinate with the Sustainability Committee as appropriate to promote flexible approaches to sustainability.
(3) Nomura’s Risk Management on Sustainability
Increasing attention to the management of Sustainability matters makes it imperative that we continue to develop policies and capabilities in these areas, and that we position ourselves in a positive light to interested stakeholders including our shareholders, clients and society at large. Amid rapidly changing circumstances around Sustainability, lack of sufficient focus such as on environmental policies, human rights and diversity, equity & inclusion considerations may also adversely affect our reputation, results of operations and financial condition. In particular, we recognize that climate change risks are likely to have an impact over the medium to long term, and we seek to manage these risks under appropriate management systems.
① Recognition of the Risks Associated with Climate Change
Nomura recognizes risks arising from changes in the environment due to climate change and identifies the potential impact on our business. There are two types of risks associated with climate change: the
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risk of loss or damage due to extreme weather events such as large typhoons, droughts, and intense heat (physical risk), and the risks associated with decarbonization, such as the inability to respond to changes in government policies, or rapid technological innovations (transition risk). Nomura recognizes the following physical and transition risks associated with climate change.
Risk that clients will not adequately respond to climate change, resulting in financial damage, decline in creditworthiness and inability to fulfil their contractual obligations
Risk that climate change causes market fluctuations and losses are incurred due to fluctuations in the market price of Nomura’s financial assets
Risk of reputational damage if Nomura and counterparties fail to respond appropriately to climate change
Risk of financial losses or reputational damage due to inadequate or failed internal processes and employee response to climate change
Risk of inadequate strategies or failed execution of strategies as compared with competitors, and risk of gap between strategies and resources
② Our approach on Risks Associated with Climate Change
Climate risk is recognized as one of risks that are understood to potentially impact Nomura adversely if they materialize. Climate risk is not recognized as a standalone risk, but is understood to be a risk factor affecting various risk areas. Nomura has built an integrated risk management framework that manages the risks caused by climate change by adding new responses to the ones into the existing risk management frameworks.
(4) Metrics and Targets
Nomura has announced its goal of achieving net zero GHG emissions for its own operations by 2030, to seek to achieve net zero GHG emissions attributable to its lending and investment portfolios by 2050 and to be involved in sustainable financings totaling $125 billion over the 5 years ending March 2026(*). We post our progress towards each target on our company website (Our website and the information posted thereon do not constitute part of and are not incorporated by reference into this annual report on Form 20 F.).
*This target includes capital raised through Nomura’s debt and equity capital markets businesses, private placements of mezzanine debt and equity securities, and debt financing through its Infrastructure and Power Financing Group
(5) Human Capital Initiatives
① Evolution of Human Resources Management Strategy and Sustainable Growth
We
seek to achieve sustainable growth and to maximize our corporate value. In order to achieve this, we seek to improve our return on equity (ROE) through investing strategically for growth. We believe it is essential to enhance the competitive strength of our employees (human capital) in order to enhance productivity, build value to our clients and shareholders, and enrich our risk management culture by realizing the potential of our dedicated and professional workforce and through collaboration.
Through improving employee engagement with the long-term evolution of our human resources management strategy, we aim to differentiate the intellectual capital
(
*
)
that our human capital delivers as a team and further enhance the added value provided by the Nomura Group.
* Our intellectual capital refers to the intangibles that are the source of our competitiveness, including organizational capabilities,
know-how,
customer networks, and branding.
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We believe our employees are key assets to drive excellence and we seek to enhance the competitive strength of our human capital through differentiated initiatives and programs and to encourage collaboration within our workforce.
② Nomura Group’s Human Resources Management Strategy
Our human resources management strategy is based on the values of “Entrepreneurial Leadership”, “Teamwork,” and “Integrity” as defined in our corporate philosophy, and these core values set us apart from our competitors in our recruitment, talent development, performance appraisal, and mobility and advancement strategies, as well as our dedication to promoting “Diversity, Equity & Inclusion” (DEI), “Employees’ Ways of Working”, “Wellbeing” and a sense of belonging. This strategy forms the core of our recruitment, talent development and retention initiatives.
i Recruitment
We seek to recruit individuals who share our values of “Entrepreneurial Leadership”, “Teamwork”, and “Integrity” and are aligned with our strong risk management culture. In order to attract and develop such individuals who also can demonstrate strong expertise, we recruit individuals in all roles and at all career levels in all regions including Japan, through both new graduate programs and
mid-career
hiring.
To continue to attract individuals with diverse experience and strong capabilities, we have established alumni networks and recruitment strategies in Japan and India in order to stay connected and regularly
re-engage
with our pool of alumni who remain active in the industry and communities.
ii Talent development
In order to develop required competencies to deliver value to our clients, we offer a broad variety of training and development programs to our employees at all career levels across all departments and regions. For example:
Digital IQ learning program - we launched our Digital IQ learning program in 2021 to educate employees globally about digital transformation (DX), providing them with opportunities to learn a variety of digital skills, from basic through to advanced levels.
Nomura Business Academy (NBA) - In Japan, NBA is a platform to support our employees in obtaining professional qualifications relevant to our business such as Securities Analyst Licenses, Financial Planner Licenses and Real Estate Notary qualification, and to improve various key business skills such as management and language skills and financial accounting knowledge.
MBA and LLM - For more than 60 years, we have offered tuition assistance programs to employees in Japan in order to support their self-improvement goals study abroad and obtain Master of Business Administration (MBA) or Master of Law (LLM) degrees.
Venture company training program - We launched our venture company training program in the fiscal year ended March 31, 2023 in order to provide our employees with work experience at venture companies in Japan. Through this program, we encourage employees to gain experience outside of the Nomura Group and promote a culture of accepting diverse values when they return to the Nomura Group.
M&A University - In our Wholesale Division, our Investment Banking business management has established a knowledge management platform called “M&A University”, through which employees can build and share knowledge and expertise applicable to practical work such as M&A advisory.
iii Performance appraisal
In all regions including Japan, and across all departments and roles, we are making further efforts to enhance our performance-based compensation system, through ensuring the fairness of performance appraisal and benchmarking employee productivity against external market data. We also continue to place a strong importance on evaluating our employee performance through how they have demonstrated our core
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values of “Entrepreneurial Leadership”, “Teamwork,” and “Integrity”. Since the fiscal year ended March 31, 2021, we have introduced a standard global objective in the appraisal process for each employee to demonstrate ethics, risk management, compliance, and conduct (our “ERCC” performance objective). We aim to raise the awareness of our code of conduct (the “Code”) for each employee and to permeate the concept of the Code throughout our business, thereby creating an environment in which employees can speak up when they see something wrong. Since the fiscal year ended March 31, 2023, we have also incorporated fostering risk management culture into performance appraisal.
iv Mobility and Advancement
We actively encourage an entrepreneurial leadership mindset among our employees and their self-motivated career development. We continue to actively raise awareness of internal opportunities through promoting our global internal job posting system which was significantly enhanced in Japan during the fiscal year ended March 31, 2021. In the fiscal year ended March 31, 2023, more than 200 of our employees proactively found new opportunities which involve transfers across divisions, business or regions.
We also manage a global pool of talents identified as potential successors to key positions. Along with developing internal talent as our potential future management team, we also recruit external talent for those roles. We have various global programs to assess and develop talent, including Nomura Keiei-juku, which is our
in-house
senior management development program in Japan, as well as various other leadership development programs offered by external organizations both in Japan and overseas, such as the Nomura School of Advanced Management.
v DEI (Diversity, Equity & Inclusion)
We believe that diversity helps improve our competitiveness, innovation, and advanced risk management. In July 2016, we adopted our “Declaration on Diversity and Inclusion” initiative, in which we committed to create a work environment where all employees can demonstrate their capabilities and realize their full potential. In October 2022, we further updated it with the addition of the concept of equity to become our “Group Diversity, Equity and Inclusion Statement”. Equity from our perspective differs from equality, in that it is less about allocating the exact same resources and opportunities to everyone (equality), but more about providing the best resources and opportunities to each of our employees according to their different circumstances and needs, and therefore creating an equitable space where everyone can meet their objectives. We aim to create a workplace that provides fair and equitable opportunities for our diverse employees and which instills a strong sense of belonging.
Our Diversity, Equity & Inclusion Working Group, which consists of representative employees across all regions and businesses globally, aims to create such a work environment across the group through both
top-down
and
bottom-up
approaches.
vi Employees’ Ways of Working
We launched our global “Nomura Ways of Working” project, which aims to create a positive working environment where our employees can maximize their performance without time or location constraints, in the fiscal year ended in March 2023. We are promoting this project globally across regions based on four key pillars; culture, people, workplace and technology.
vii Wellbeing
We recognize the importance of our employees’ physical, emotional, mental and financial wellbeing so that they can realize their full potential, stay motivated and excel in the performance of their duties. We seek to improve its employee welfare programs, such as childcare and nursing care support, as well as to maintain and promote employee health, so that employees can continue to work with enthusiasm, including the development of appropriate working conditions and a comfortable working environment.
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We also recognize the need to reduce Absenteeism
(1)
 and Presenteeism
(2)
, and improve Work Engagement
(3)
 and have set the following measurements in order to monitor employee wellbeing:
(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.
For Absenteeism, we have not set a specific target because it is important to create an environment where our employees can be absent from work when they feel unwell. We will continuously evaluate and introduce new wellbeing initiatives to improve this metrics. We set our targets for Presenteeism and Work Engagement, 10 (i.e., no more than a 10% productivity loss rate) and 60 (with the national average being 50), respectively by the fiscal year ended March 31, 2026. At the moment these measurements are only applicable to employees of NSC but we will continue to evaluate our implementation plan and extend the initiatives to other subsidiaries, ultimately expanding the coverage to the Nomura Group as a whole.
We also support the financial wellbeing of our global employees globally by offering various programs and advices including the granting of compensation awards through employee share ownership plans, defined contribution pension plan and posting financial wellbeing information on our intranet to encourage employees to improve their knowledge.
viii Employee Survey
As part of our ongoing efforts to evaluate and improve our various human resource strategies, we have conducted our Nomura Group Employee Survey annually since the fiscal year ended March 31, 2014. We believe that the survey provides valuable insights regarding employee engagement and perceptions about Nomura. The results are reviewed by our senior management and used for refinement or planning of our human resource strategies, programs and practices. In the fiscal year ended March 31, 2023, 85% of our employees who participated in the Survey gave a positive response to the question “I am proud to work for the firm”.
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ix Retention
In 2022, the mobility of human resources increased globally in many industries, including in financial services, and our global employee turnover rate also increased. To enhance engagement, we have established a system to discuss and implement solutions for the issues identified in the Nomura Group Employee Survey on a departmental and organizational basis.
C. Organizational Structure.
The following table lists the Company and its significant subsidiaries and their respective countries of incorporation.incorporation as of March 31, 2023. Indentation indicates the principal parent of each subsidiary. Proportions of ownership interest include indirect ownership.
Name
  
Country/Region
Ownership

Interest
   
Ownership
Interest
(%)
 
Nomura Holdings, Inc.
  
Japan
   
—  
 
Nomura Securities Co., Ltd.
  
Japan
   
100
 
Nomura Asset Management Co., Ltd.
  Japan
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 FundsFiduciary Research and Technologies& Consulting Co., Ltd.
  
Japan
   
100
 
Nomura Research & Advisory Co., Ltd.
  
Japan
   
100
 
Nomura Business Services Co., Ltd.
  
Japan
   
100
 
Nomura Facilities,Properties, Inc.
  
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 Land and Building Co., Ltd.
Japan
100
 
Nomura Financial Products & Services, Inc.
  
Japan
   
100
 
Nomura Institute of Estate Planning
  
Japan
   
100
N-Village
Co., Ltd.
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
Capital Nomura Securities Public Co., Ltd.
Thailand
99
 
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 Derivative Products Inc.
U.S.
100
 
Nomura America Mortgage Finance, LLC
  
U.S.
   
100
 
Nomura Global Financial Products, Inc.
  
U.S.
   
100
NHI Acquisition Holding, 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.
  Switzerland100
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Name
  
SwitzerlandCountry/Region
Ownership

Interest
     
100(%)
 
Nomura Europe Finance N.V.
  
The Netherlands
   
100
 
Nomura European Investment Limited
  
U.K.
   100
100Laser Digital Group Holdings AG
Switzerland100 
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
 
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D. Property, Plants and Equipment.
Our Properties
As of March 31, 2020,2023, our principal head office is located in Tokyo, Japan and occupies 1,007,309815,531 square feet of office space. Our other major offices in Japan are our Osaka branch office, which occupies 125,184130,416 square feet, our Nagoya branch office, which occupies 82,91489,567 square feet, and the head office of NAM in Tokyo, which occupies 178,218128,715 square feet.
As of March 31, 2020,2023, our major offices outside Japan are the head offices of NIP located in London, which occupies 239,777291,591 square feet, the New York head office of Nomura Securities International, Inc., which occupies 194,770191,324 square feet, and the offices of Nomura International (Hong Kong) Limited located in Hong Kong which occupies 146,38983,506 square feet. We lease most of our overseas office space.
As of March 31, 2020,2023, the major office of Nomura Services India Private Limited, our specialized service company in Mumbai, India, occupies 562,038217,668 square feet.
As of March 31, 2020,2023, the aggregate book value of the land and buildings we owned was ¥121¥96 billion, and the aggregate book value of equipment we owned, including communications and data processing facilities, was ¥36¥72 billion.
As of March 31, 2023, we plan to construct a new facility as follows:
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
Item 4A. Unresolved Staff Comments
We are a large accelerated filer as defined in Rule
12b-2
under the Securities Exchange Act of 1934. There are no written comments which have been provided by the staff of the Securities and Exchange Commission regarding our periodic reports under that Act not less than 180 days before the end of the fiscal year ended March 31, 20202023 and which remain unresolved as of the date of the filing of this annual report with the Commission.
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Item 5. Operating and Financial Review and Prospects
A. Operating Results.
You should read the following discussion of our operating and financial review and prospects together with Item 3.A “Selected Financial Data” of this annual report and our consolidated financial statements included elsewhere in this annual report.
This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of factors, including, but not limited to, those under Item 3.D “Risk Factors” and elsewhere in this annual report.
Business Environment
Japan
The performance of Japan’s economy deteriorated substantially in the latter half ofIn the fiscal year ended March 31, 2020. Real gross domestic product (GDP)2023, inflation accelerated worldwide. Contributing factors included a sharp increase in commodity prices sparked by the conflict in Ukraine, as well as supply constraints, including semiconductor shortages, arising as Western economies reopened after emerging from pandemic conditions. The major central banks of the world, including the U.S. Federal Reserve Board (U.S. Fed), swiftly tightened monetary policy to address this accelerated and increasingly protracted inflation. Government bond yields rose in major developed economies on expectations for further inflation and monetary tightening measures. In addition, stock markets in major developed economies underwent corrections as the steep rise in market interest rates depressed valuations and as concerns grew by 2.1% on athat monetary policy tightening would blunt economic growth.
quarter-on-quarter
annualized basis in April-June 2019, but then flattened out with 0.0% growth in July-September. The country’s economy then saw two consecutive quarters of substantial contraction, with real GDP shrinking by 7.3% in October-December 2019 and by 3.4% in January-March 2020. Exports from Japan were weak sinceIn the startsecond half of the fiscal year, as global economic growth had already started slowing as a resultinflation showed signs of U.S.-China trade friction. Up throughleveling off in the July-September quarter, however, capital spending remained at a high level, buoyed by labor-saving investments
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pursued by companies dealing with labor shortages,major developed economies, and consumer spending and housing investment trended upward thanks in partexpectations for the U.S. Fed to rush demand ahead of the consumption taxend its rate hike that went into effect in October 2019. Once the consumption tax rate was raised, however, consumer spending slumped on the backlash from the last-minute demand ahead of the tax hike, and corporate capital spending followed consumer spending sharply downward. There were signs early in 2020 that the decline in economic activity was cominghikes led to a halt, but the global spread of
COVID-19
then started putting fresh downward pressure on economic activity. China intentionally suppressed economic activityrally in Wuhan and many other cities as a way to contain the pandemic, and European countries and the United States soon followed suit.stock markets. In Japan, the national government issued a call to the populace in February 2020 to minimize movements outside the home and to consider canceling events with a nationwide audience, and in March 2020, the Tokyo Metropolitan Government called on residents of the prefecture not to venture outside the home on
non-urgent
business. Restrictions on international arrivals and immigration were strengthened around the same time. The number of visitors to Japan dropped off steeply as a result, declining by more than 90%
year-on-year
on March, and exports, consumer spending, and various other sorts of economic activity all fell off sharply.
With respect to corporate earnings, recurring profits at major companies in the fiscal year ended March 31, 2019 declined steeply
year-on-year,
hit by both U.S.-China trade friction and the COVID-19 pandemic. The U.S.-China trade issues blunted global economic growth, and among manufacturers, earnings deteriorated in materials industries and processing industries alike. In a number of industry sectors, profits were also dragged down by the recording of unrealized valuation losses on equity securities, forced by changes in the market valuations of companies’ shareholdings. However, some industries did manage to achieve strong earnings performance, including the software industry, where the amusement
sub-sector
benefitted from strong sales of new game consoles and the system application
sub-sector
benefitted from corporate investment in labor-saving technology. Estimated recurring profits at major companies (those in the Russell/Nomura Large Cap Index) with fiscal years ending in March 2020 fell by 18.7%
year-on-year,
for the first profit decline in four years. Estimated return on equity (ROE) for the fiscal year ending in March 2020 came to 6.7%, significantly worse than the ROE result of 9.2% for the previous fiscal year.
In the equity market, Japanese stocks at one point touched highs not seen since 2018, as investors welcomed the news of progress in U.S.-China trade negotiations. However, Japan’s major stock indices ended up declining for the second fiscal year in a row due to worries over the impact that the spreading
COVID-19
pandemic would have on the economy, both at home and abroad. From the beginning of the fiscal year ending in March 2020 through August 2019, Japanese equities alternately advanced and retreated in response to the shifting outlook for the outcome of U.S.-China trade talks. Investor sentiment then improved starting in September 2019 on the combination of expectations for a resolution to the U.S.-China trade standoff and a swing back to monetary easing in Europe and the United States. A marked uptrend in Japanese equities ensued. The Nikkei Stock Average closed above 24,000 on December 13, 2019, doing so for the first time in roughly 14 months, and remained at a high level into the new year. Shortly thereafter, however, Japanese stocks turned downward as investors increasingly took to the view that the spreading
COVID-19
outbreak in China would cause a slump in Chinese manufacturing output and consumption. These concerns soon turned into worries over the negative impact on global economic growth from the growing number of reported new infections in Japan and elsewhere, and U.S. stocks led what turned into a deep correction in major stock markets worldwide. The Nikkei Stock Average even briefly dipped below 17,000 in March 2020, but U.S. stocks then rebounded on hopes for economic stimulus, and Japanese stocks pared their losses by the end of the month. The Tokyo Stock Price Index (“TOPIX”), a broadly representative index of Japanese stock performance, closed at 1,403.4government’s decision at the end of March 2020, down 11.8% from2022 to end its strict
end-Marchzero-COVID
2019 close of 1,591.64. The Nikkei Stock Average similarly finished the year down 10.8%, falling from 21,205.81 as of the end of March 2019 to 18,917.01 at the end of March 2020.
In the bond market, yields remained confined to a fairly tight range as a result of the BOJ keeping up its program of quantitative and qualitative easing (“QQE”) with yield curve control (“YCC”). Even so, yields drifted generally downward through early September 2019 and then started rising thereafter. The yield on newly issued
10-year
Japanese government debt securities started off April 2019 at roughly
-0.05%,
and from there moved
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generally downward as U.S.-China trade friction and other forces clouded thepolicy, expectations rose for improvement in global economic outlook, eventually falling to as low asgrowth supported by China’s reopening.
-0.295%
Inflation in Japan rose on September 4, 2019. The BOJ wasthe back of higher inflation overseas. As rising interest rates overseas also becoming increasingly concerned, and at its monetary policy meeting held on July 30, 2019, the Bank formalized its stance that it would “not hesitate to take additional easing measures” if needed. This change in language fueled market expectations that the BOJ would lower its policy interest rate further or adopt additional easing measures of some other sort, and the result was further downward pressure on yields. Subsequently, however, a U.S.-China trade agreement began to look more likely, spurring hopes that the global economy was on its way to bottoming out and sending the yield on newly issued
10-year
Japanese government debt securities upward again, to around 0% by
mid-January
2020. In the interim, the BOJ indicated at its September 19 meeting that it would reexamine economic and price developments when updating its outlook for economic activity and prices at its meeting in October 2019. Although this brought on heightened expectations in the market for additional monetary easing, the BOJ ultimately did not lower its policy interest rate. From late January 2020 onward, as the spreading
COVID-19
outbreak led to growing worry over the global economic outlook, the yield on newly issued
10-year
Japanese government debt securities turned downward again, falling to
-0.165%
on March 9, 2020. Thereafter, the
10-year
yield reversed course as dollar-buying demand surged on news of the virus spreading widely in the United States, and by March 23, 2020 it had climbed to 0.080%. Demand for the dollar then stabilized, and the yield on newly issued
10-year
Japanese government debt finished March 2020 back at approximately 0%. The BOJ held an extraordinary monetary policy meeting on March 16, 2020 at which it promised an ample supply of liquidity, and it increased the amount of its actual government debt security purchases in March. These actions seem to have helped to stabilize yields.
In foreign exchange markets, USD/JPY started the fiscal year above $1 = ¥110, but the yen then appreciated steeply starting in May 2019 on concerns over U.S.-China friction. The yen gained against the dollar over the course of the summer, with USD/JPY even falling below $1 = ¥105 in August 2019 after the Fed’s preemptive rate cut in July 2019. USD/JPY eventually recovered to above $1 = ¥112 in February 2020, after expectations for a U.S.-China trade agreement began building in September 2019 and the two countries actually reached a
phase-one
deal in January 2020. However, the spread of the
COVID-19
outbreak to Europe and the United States from China rattled markets starting in late February 2020, and the yen appreciated steeply enough to send USD/JPY briefly below $1 = ¥102 in early March 2020. The turbulence continued, with USD/JPY actually returning to above $1 = ¥111 in late March 2020 as global demand for dollar liquidity increased. USD/JPY ended up finishing March 2020 at $1 = ¥107.54 as the supply of dollar liquidity provided by the FRB and the BOJ late in the month eased what had been relentlessput upward pressure on the dollar.
Meanwhile, EUR/JPY started the fiscal of 2019 at around
€
1 = ¥125, but fell to below
€
1 = ¥116 during the summer as concern over the U.S.-China trade standoff caused the mood to turn more
risk-off
and investors increasingly came to expect that the European Central Bank (“ECB”) would resume monetary easing. EUR/JPY ultimately finished at
€
1 = ¥118.64, as the yen came under upward pressure against the euro again as the
COVID-19
pandemic spread to Europe.
Overseas
Global economic growth slowed during the summer of 2019. The heightened worry over U.S.-China trade tensions destabilized financial markets, prompting major central banks to resume monetary easing. In the United States, the Federal Reserve Board (“FRB”) began making preemptive rate cuts in July, while in the euro area, the ECB settled on an easing package in September that included taking the negative policy interest rate lower while
re-introducing
quantitative easing. The BOJ, despite also becoming the subject of expectations for further easing, chose not to go deeper with its negative policy interest rate. Beginning in late summer, expectations for a global economic recovery picked up as the manufacturing sector entered an up leg in the business cycle and a resolution to the U.S.-China trade standoff began to look more likely. Once 2020 got under way, the threat posed by the
COVID-19
outbreak began to weigh on the global economy. Economic growth in the world’s major economies fell off steeply in January-March 2020, with the four economic powerhouses of the United States, the euro area, Japan, and China all sinking into negative growth. Slowed economic growth became a worry for commodity countries and
oil-producing
countries as well, with the price of crude oil plummeting in March.
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In the United States, GDP for calendar year 2019 grew by 2.3%. While this was slower than the growth for calendar year 2018 at 2.9%, it nevertheless represented a gradual recovery. Up through the middle of 2019, the United States hiked tariffs on Chinese imports and broadened the scope of imports subject to the tariffs, andJapanese government bond yields, concerns mounted that the manufacturing sectorBank of Japan would become unable to maintain its yield curve control policy, under which it sets a target level and a tolerable fluctuation range for
10-year
Japanese government bond yields. In December 2022, the Bank of Japan widened the range at which yields on
10-year
JGBs are allowed to fluctuate, from
+/-0.25ppt
to
+/-0.50ppt.
Some market participants interpreted this move as signaling further policy changes. In the Japanese government bond market, yields continued to be subject to upward pressure, fueled by expectations for Bank of Japan policy changes amid persistent speculation that policy revisions would be enacted after the new Bank of Japan governor took charge in particular would suffer a slowdown.April 2023. The FRB executed a series of three 25bp rate cutsdisparities between inflation in response. Trade worries eased overJapan and abroad, and the coursedivergence in monetary policy that reflects these conditions, led to significant depreciation of the latter half of 2019 as the United States and China worked their way closer to an agreement. The United States and China ultimately signed a
phase-one
trade agreement in January 2020. Beginning in late February, however, social distancing measures and
stay-at-home
restrictions put in place to combat the
COVID-19
outbreak brought about a deep slump in the U.S. economy. Real GDP in the United States contracted by a steep 4.8% on a
quarter-on-quarter
annualized basis in January-March 2020. The FRB responded to the sharp
drop-off
in economic activity with a massive monetary easing package in March. In addition to a zero interest rate policy (with the target range for the federal funds rate set at
0.00%-0.25%),
the range of measures introduced to ease credit and provide liquidity included a promise to buy U.S. Treasury securities and agency mortgage-backed securities (“MBSs”) in the amounts needed to preserve market functioning (effectively a commitment to unlimited purchases) and the establishment of a new facility for purchases of corporate bonds. Also by the end of March, the United States enacted fiscal stimulus measures totaling more than $2 trillion. Consumer price inflation in the United States slowed from 1.9%
year-on-year
as of the end of March 2019 to 1.5% as of the end of March 2020. The Dow Jones Industrial Average closed at 21,917 at the end of March 2020, down 15% from its
end-March
2019 close of 25,929. The yield on
10-year
U.S. Treasury securities dropped by 1.74% over that span, falling from 2.41% as of the end of March 2019 to 0.67% as of the end of March 2020.
The euro area economy managed to keep up positive growth in 2019, but the pace of growth went slack, particularly in the manufacturing sector. Strengthened environmental regulations that the EU imposed on new vehicles in the autumn of 2018 had a negative impact on demand for new automobiles by way of the resulting rise in average new vehicle prices. The automotive sector thus ended up being at the center of a decline in manufacturing sector output. To address the economic sluggishness, the ECB announced a cut to its deposit facility interest rate (its primary policy interest rate) in September 2019 alongyen versus other currencies, with the resumption of quantitative easing. The risk of the bottom dropping out of the euro area economy subsequently receded with the U.K.’s relatively smooth departure from the EU at the end of January 2020 and the news that economic relations between the U.K. and the EU would remain unaltered through the end of 2020. In March, however, the number of reported
COVID-19dollar-yen
casesrate briefly exceeding 151 yen in Europe surged, and the economy rapidly deteriorated as national governments responded with
stay-at-home
restrictions. In the January-March 2020 quarter, the euro area’s real GDP suffered its worst
quarter-on-quarter
decline since the euro area’s inception in 1999, and the ECB announced an expansion of its quantitative easing measures in March.
In
ex-Japan
Asia, China’s real GDP grew by 6.1% in 2019, continuing the pattern of slowing growth that has taken shape in recent years. One major factor here is that Chinese authorities worked harder to control the hidden debts of regional and local governments; another is that U.S.-China trade friction did damage to private-sector appetite for capital spending. Monetary policy stayed on the easing track it has been on since late 2018, but fundraising by private-sector companies in capital markets stagnated. The Chinese government, for its part, ramped up economic stimulus measures in dealing with the spread of COVID-19. Already as of March 2020, growth in domestic infrastructure spending had picked up remarkably
year-on-year,
and credit expansion has accelerated again.
Ex-Japan
Asia managed to achieve solid economic growth in 2019 (excluding Hong Kong, which was hit with widespread demonstrations), although exports from the region and consumption within the region sharply declined in March as the COVID-19 pandemic took its toll.October 2022.
Executive Summary
As described in “—Business Environment” above, the business environment surrounding our company has changed significantly. Furthermore, from a regulatory perspective, in addition to the implementation«Overall results of Basel III requirements relating to capital ratio, liquidity ratio, and leverage ratio, Nomura has been identified as one of Domestic Systemically Important Banks. Nomura will continue to monitor closely and take necessary measures
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in responding to wide-ranging reforms as part of the global tightening of financial regulations. Also, amid the global economic downturn caused by the
COVID-19
pandemic and subsequent changes in monetary policies by central banks as well as uncertainty created by Brexit in January 2020, Nomura is contemplating and implementing appropriate measures by paying necessary attention to the changes in global operating environment.
In such a difficult environment, we made a company-wide effort to rebuild the business platform announced in April 2019, as a result of our ongoing initiatives and continuing focus on providing solutions to our clients in areas where we have a competitive advantage, pretax income rebounded strongly, while our environment is changing drastically.business»
We generatedrecognized net revenue of ¥1,287.8¥1,335.6 billion forduring the year ended March 31, 2020,2023, a 15.3% increasedecrease of 2.1% from the previous fiscal year.
Non-interest
expenses decreasedincreased by 10.0%4.3% to ¥1,039.6¥1,186.1 billion, income before income taxes was ¥248.3¥149.5 billion, and net income attributable to the shareholders of Nomura Holdings, Inc.NHI was ¥217.0¥92.8 billion. Return on equity (“ROE”) was 8.2%3.1%. Diluted EPSEarnings per Share
(1)
for the year ended March 31, 20202023 was ¥66.20, an increase¥29.74, a decrease from diluted loss per share of ¥29.92¥45.23 for the year ended March 31, 2019.
2022. We have decided to pay a dividend of ¥5¥12 per share to shareholders of record as of March 31, 2020.2023. As a result, the total annual dividend was ¥20will be ¥17 per share.share for the year ended March 31, 2023.
Based55
(Note):
1. 
Diluted net income attributable to NHI shareholders per share.
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«Management’s assessment of events that had a particular impact on our long-term management vision “Vision C & C” which targeted the results of the year»
The fiscal year ended March 2020,2023 was dominated by market uncertainties due to heightened geopolitical risks, inflation and central bank monetary policy tightening. Amid this environment, we have designatedfocused on developing new areas of business, bolstering our existing businesses and better positioning ourselves to meet the individual needs of our clients.
In the Retail Division, the flow revenue etc. (consisting of revenue from transactions such as brokerage revenue, consulting-related revenue and interest income, etc. other than from loans) decreased mainly in the first half amid market uncertainty. On the other hand, Retail continued to provide clients with detailed consulting services to adapt to the changing environment and our efforts to increase client assets gained traction. As a result, recurring revenue (which we define as revenue from client assets and ongoing revenue such as investment trusts, discretionary investments, insurance, loans, level fee assets, etc.) grew year on year by 2 % due to consecutive net income per share (EPS)inflows of recurring revenue assets. Our recurring revenue cost coverage ratio (the ratio of recurring revenue to
non-interest
expenses) increased from 49 percent to 51 percent.
In the Investment Management Division, Business revenue remained roughly unchanged year on year as improved performance in Nomura Babcock & Brown’s aircraft leasing business offset a decline in performance fees. The division also booked continued inflows into core investment trusts and alternative assets. On the other hand, divisional performance slowed from the previous year due to lower gain/loss related to investment.
In the Wholesale Division, Macro Products underpinned stronger Fixed Income revenues for the full year. Equities revenues increased as losses related to the U.S. Prime Brokerage Event were no longer present. In Investment Banking, Advisory revenues remained solid on contributions from equity private placement deals, in a challenging environment with a significant decline in global fee pools, mainly in ECM and M&A. On the other hand, Wholesale performance was impacted by higher fixed costs due to yen depreciation and inflation.
«Capital policy and shareholder returns»
We plan to maintain appropriate capital ratios and aim for sustainable growth through optimal capital allocation. As preparatory steps to achieve our management vision, while controlling cost levels, we are investing for growth to realize our management strategy of expanding the scope of our business from public into private markets, in order to balance investment and shareholder returns, and maximize shareholder value by improving productivity and expanding revenue sources.
We strive to pay dividends using a consolidated payout ratio of 30 % of each semi-annual consolidated earnings as a key management indicatorindicator. Additionally, we aim for a total payout ratio, which includes dividends and worked to continuously improve this indicator. However, withshare buybacks, of at least 50 %. The total amount of shareholder returns for each fiscal year is determined by comprehensively taking into account trends in the establishmentregulatory environment in Japan and overseas, including the strengthening of Basel regulations, as well as the new structure in April 2020,consolidated results of our business divisions. Also, we have decidedchanged our dividend policy to use return on equity (ROE)strive to pay dividends using a consolidated payout ratio of at least 40 percent of each semi-annual consolidated earnings as a managementkey indicator from the fiscal year ending March 31, 2024.
For further details of our dividend policy, refer to Item 5.B. “
Liquidity and to pursue sustainable business reforms. At the same time, we have set a pretax profit target of ¥280 billion for the Retail, Asset Management and Wholesale businesses in fiscal 2023.Capital Resources—Capital Management—Dividends
”.
«Summary by Segment»
In our Retail Division, net revenue for the year ended March 31, 20202023 decreased by 0.9%8.5% from the previous fiscal year to ¥336.4¥300.2 billion.
Non-interest
expenses decreased by 1.1%0.8% to ¥286.9¥266.7 billion. As a result, income before income taxes decreased by 0.1%43.5% to ¥49.4¥33.5 billion. Based on the basic concept of “Enriching clients by responding to their asset concerns”, our Retail Division has been working on shifting to asset consulting business in close cooperation with each customerclient with the aim of becoming “the most trusted partner”. InFlow revenue etc. was weak during the current fiscal year, as the market environment remained uncertain and sales of stocks and investment
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trusts and equities were sluggish dueremained at a low level. However, our initiatives to expand our recurring revenue assets are making progress by seeking to offer consulting services on the decline in customers’ investment mindset against the backdrop of the unstable market environment, which was exacerbated by the COVID-19 pandemic. However, signs of changes are beginning to appear, as we have made a transition to the sales structure that meets the needsentire asset bases of our clients. In addition, we are aiming to Asset Management,build a sustainable client base and expand our business over the medium to long term by achieving contact points through workplace financial services, and we have been able to successfully increase the number of clients we provide services to, including the working generation. Going forward, we will strengthen our initiatives in each channel, and in addition to asset management, we will strive to enhance our products and services such as; Real Estate, Inheritance, or Succession, which aims to provide various solutions for a variety of client issues, such as real estate and advices to clients’ entire asset. We are also taking digital approaches in addition to
face-to-faceinheritance.
approaches, to provide services to a wider range of clients. We will further strengthen our digital approach.
In our AssetInvestment Management Division, net revenue for the year ended March 31, 20202023 decreased by 5.4%13.1% from the previous fiscal year to ¥92.6¥128.6 billion.
Non-interest
expenses increased by 0.3%11.2% to ¥63.8¥85.1 billion. As a result, income before income taxes decreased by 15.8%39.2% to ¥28.8¥43.5 billion. InThe Investment Management Division has been engaged in the broad asset management business while expanding its product lineup and improving its services to meet the diversifying investment trustneeds of clients. Although the balance of assets under management decreased slightly overall, business revenues remained at the inflowsame level as the previous year, due in part to ETFs, funds that contribute to asset formation and funds for defined contribution pension plans foran improvement in the concept of “100 years of life” (the idea that Japanese individuals should prepare financially to live to 100 years of age) is continuing.revenues from aircraft leasing company Nomura Babcock & Brown. On the other hand, there was an outflow of funds such as emerging markets funds. In the investment advisory business, although we saw cash inflow mainly from public pension funds, there was an outflow mainly from high yield related products in overseas. As a result, revenue decreased as assets under managementprofit decreased from the end of the previous fiscal year as of March 31, 2020, and due to the valuation ofa decrease in gains related to American Century Investments and gains on valuation and sales of investee companies of Nomura Capital Partners. During the fiscal year under review, as part of our strategic partner.expansion into offering private investments, we established Nomura Real Asset Investment Co., Ltd., which invests in real estate and infrastructure, in a joint venture with Nomura Real Estate Holdings, Inc. We also acquired shares in New Forests Pty Limited, one of the world’s leading forestry asset management companies. In addition, we established Nomura Private Capital LLC to launch a private asset management business in the United States.
In our Wholesale Division, net revenue for the year ended March 31, 20202023 increased by 16.8%9.9% from the previous fiscal year to ¥648.6¥772.4 billion.
Non-interest
expenses decreasedincreased by 16.6%18.2% to ¥556.4¥743.0 billion. As a result, income before income taxes decreased by 60.6% to ¥29.4 billion. In Global Markets, we continued to reinforce our core strengths across regions, enhanced risk control and governance and focused on providing uninterrupted service and liquidity to our clients, as they rebalanced and hedged their portfolio in the highly volatile and uncertain markets which experienced a ‘paradigm shift’. We delivered resilient performance, deepened engagement with clients across flow as well as structured financing and solutions business. In Investment Banking, client activity was lower than the previous fiscal year due to increased caution among clients in light of geopolitical risks and uncertainty in the market environment surrounding monetary policy. As a result, earnings declined for the full year due to a decline in M&A, and particularly in Equity Capital Markets and ALF. However, the business continued to engage closely with clients and enhanced Equity Private Placements and Private Financing opportunities along with Solutions business to effectively help clients in hedging and managing risk.
Progress on Key Performance Indicators (KPIs)
«Management Indicators»
Return on Equity
One component of Nomura’s management vision is “achieving sustainable growth by solving social issues” and we have set Return on Equity (ROE) as one of our most important indicators towards the fiscal year ending March 31, 2025. After the introduction of the Corporate Governance Code in Japan, the importance of management having an awareness of capital costs has increased among Japanese companies. In addition, under the framework of global financial regulations, more effective use of capital is required. As a result, we believe that the optimal allocation of management resources will become even more important for our company in the future. Accordingly, beginning in the year ended March 31, 2021, we adopted ROE as a key management indicator, which management uses to track the progress of our sustainable business transformation, along with the revision of “Fundamental Management Policy” based on the approval at the Board of Directors meeting held in May 2020.
 
(1)Diluted net income attributable to Nomura Holdings’ shareholders per share (loss).
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ROE is defined and calculated as net income before income taxes was ¥92.2 billion.attributable to NHI shareholders divided by total NHI shareholders’ equity. We believe that disclosure of ROE is useful to investors in that it helps them to assess business conditions and our effective use of capital to enhance corporate value.
We have set a target ROE of
8-10%
for the fiscal year ending March 31, 2025, reflecting the cost of capital demanded by our company. However, ROE may be of limited use in that it does not necessarily reflect financial soundness. In Global Markets,order to avoid the excessive pursuit of capital efficiency with the aim of improving ROE at the expense of financial soundness, we attach importance to the creation of corporate value, giving due consideration to financial soundness, and thereby improving ROE. ROE for the year ended March 2020,31, 2023 decreased to 3.1% from 5.1% for the prior fiscal year.
Common equity Tier1 capital ratio
There are multiple global financial regulations that we focusedmust comply with, including capital regulations established by Basel Committee on core strengths in each regionBanking Supervision as interpreted and stabilizingimplemented by the FSA which have a direct impact on the way we conduct business. For this reason, we have set a target of maintaining a common equity Tier 1 capital ratio of at least 11%, so that we will take into consideration the financial soundness including certain buffer against severe market stress. Our common equity Tier 1 capital ratio decreased to 16.32% as of March 31, 2023 from 17.22% as of March 31, 2022. For further details, on the key capital requirements we must follow, see Item 5.B. “
Liquidity and Capital Resources—Consolidated Regulatory Capital Requirements
”.
«Indicators by Business Segment»
In addition to the Group KPIs, our performance, following strategic repositioning of business undertaken in April 2019. As a result, we delivered steady performance in both Fixed Incomemanagement also uses certain divisional specific KPIs to monitor and Equities and continued to remain engaged with our clients, despite geopolitical uncertainties leading to challenging market environment for most partassess performance of the year. For Investment Banking,divisions.
Retail
We have adopted the global IB business performed stably until the third quarter, but the decline in customer activity andfollowing key indicators in the market causedRetail Division to quantify the outcomes of our efforts and monitor our business: Recurring revenue assets; Net inflows of recurring revenue assets; Flow business clients; and Services for salaried employees; so that our management will be able to monitor the progress of our businesses and target sustainable and further business growth. We believe that disclosure of those indicators is useful to investors in that it helps them to assess the progress of the division’s client-facing activities as well as digest and understand our growth potential.
   
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% 
  
 
 
  
 
 
   
 
 
  
 
 
   
 
 
 
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Recurring Revenue Assets
Recurring revenue assets are defined by adding related loans to the spreadtotal amount of
COVID-19
assets, such as investment trusts and discretionary investments, for which management fees and other recurring fees are charged. The amount of loans totaled approximately ¥721.9 billion within Loans receivable in the fourth quarter affectedconsolidated balance sheets as of March 31, 2023. Total recurring revenue assets as of March 31, 2023 were ¥18.7 trillion, and has dropped from March 31, 2022 due to market factors.
Net Inflows of Recurring Revenue Assets
Net inflows of recurring revenue assets are defined and calculated by subtracting the amount of sell-offs and outflows from the amount of purchase and inflows of recurring revenue assets, and is an index used to measure the expansion of recurring revenue assets excluding changes in market value. The total net inflows of recurring revenue assets for the fiscal year ended March 31, 2023 was ¥333.7 billion, and we have achieved a net increase in recurring revenue assets, mainly in services such as investment trusts, discretionary investment.
Flow Business Clients
The number of flow business results.clients is defined as the total number of clients to whom we provide flow business, businesses that generate flow revenues, and is a measure of the growth in the client base that is critical to realizing the growth in flow revenue, etc. The number of flow business clients as of March 31, 2023 was approximately 1,446 thousand, which is lower than that of March 31, 2022, and the growth of client base is a continuous challenge.
Services for Salaried Employees
Services for salaried employees are defined as the sum of the number of workplace financial services provided, such as the number of members of the employee stock ownership, accounts derived from the employee stock ownership (excluding current members) and corporate DC pension plan subscribers, and is an index used to measure the expansion of the client base through workplace financial businesses. As of March 31, 2023, the number of workplace services provided stood at 3,489 thousand. We have achieved expansion at levels exceeding our targets, mainly in terms of the increase in number of members of the employee stock ownership, and have expanded our client base which will lead to sustainable growth.
Investment Management Division
We have set the balance of assets under management as a key performance indicator for the Investment Management Division. The businesses in the Investment Management Division generally earn management or similar fees based on the amount of assets under management, meaning that revenue trends for these businesses tend to follow trends in the amount of assets under management, and our management considers this measure to be effective in monitoring the progress of these businesses. We also believe that it is an important indicator of how well investment products are received by investors. Beginning in the fiscal year ending March 31, 2022, we have also set net inflows as a key performance indicator in the Investment Management Division. We believe that net inflows is an effective measure in monitoring the progress of the division’s asset management businesses, excluding market factors from fluctuations in the balance of assets under management. It is an important indicator for ascertaining the effectiveness of the division’s measures to expand assets under management and thereby achieve its profit expansion target.
   
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)       —  % 
  
 
 
   
 
 
  
 
 
 
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The balance of assets under management includes the net balance (after deducting duplications) of assets under management (gross) of Nomura Asset Management Co., Ltd., Nomura Corporate Research and Asset Management Inc. and Wealth Square., Ltd., as well as third-party investments in funds managed by Nomura SPARX Investment, Inc., Nomura Mezzanine Partners., Ltd., Nomura Capital Partners Co., Ltd. and Nomura Research & Advisory Co., Ltd. Net inflows are calculated by subtracting cash outflows from cash inflows. For these purposes, cash outflows do not include outflows from distributions.
During the fiscal year ended March 31, 2023, the balance of assets under management slightly decreased due to net outflows and market factors, etc. In the investment trust business, although ETFs experienced outflows of funds, the balance of publicly offered investment trusts increased, driven by inflows into Japanese equity funds, balanced funds, and defined contribution pension products. On the other hand, the diversificationinvestment advisory business had marked net outflows, due to a significant outflow of funds from Japanese pension institutions as well as from investors taking a risk averse stance in response to global monetary tightening.
Wholesale
We have adopted a
cost-to-income
ratio and a revenue opportunitiesto modified RWA ratio as additional key performance indicators in our Wholesale Division. We believe that disclosure of these indicators would be useful for investors to assess progress in terms of cost and resource efficiency. Additionally, we have workeduse these indicators to evaluate our business based on mainly overseas has progressed. Europe, Middle Eastprogress on cost savings initiatives and Africa (“EMEA”) and Asiareturn on resources.
ex-Japan
(“AEJ”) revenues from M&A and DCM (debt-related fundraising business) exceeded
   
Year ended March 31
 
   
2021
  
2022
  
% Change from
previous year
  
2023
  
% Change from

previous year
 
Cost-to-income
ratio
   91%   89%   (2)%   96%   7% 
Revenue/modified RWA
   6.4%   7.0%   0.6%   6.5%   (0.5)% 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Cost-to-income
ratio
The
cost-to-income
ratio for the Wholesale Division is calculated by dividing
non-interest
expenses for the division for a given reporting period by net revenue generated by the division for the same period, calculated consistently, in each case, with our segment presentation for the division. It is monitored at a divisional level to track operating margins for the business. The ratio increased during the year ended March 31, 2023 compared to the previous fiscal year’syear as Wholesale costs rose faster than overall revenues. Cost growth was underpinned by yen depreciation and inflation while the revenue respectively. We provide custom-made solutionsincrease was driven by carefully graspingstrength in Fixed Income and absence of losses related to the needsU.S. Prime Brokerage event in Equities. This revenue increase was partially offset by a decline in Investment Banking revenue in line with overall market slowdown. The ratio decreased during the year ended March 31, 2022 compared to the previous fiscal year primarily due to less impact from the U.S. Prime Brokerage Event on revenue and cost during the year. However, there was some effect on costs due to hiring in line with strategic initiatives and market-driven base salary adjustments.
Revenue to modified Risk Weighted Asset (RWA) ratio
The revenue to modified RWA ratio for the Wholesale division is calculated by dividing net revenue generated by our Wholesale Division for a given reporting period (in the case of net revenue for the Wholesale Division for periods shorter than a full fiscal year, on an annualized basis) by the average balance of modified RWA used by the Wholesale Division for the same period. The Revenue to modified RWA ratio is monitored to track our clients.revenue earning capacity against risk resources deployed. Modified RWA is the total of (i) average daily risk-weighted assets as calculated and presented under Basel regulations as interpreted and implemented by the FSA and (ii) an adjustment equal to the regulatory adjustment to common equity tier1 (CET1) capital calculated and presented under Basel regulations as interpreted and implemented by the FSA divided by our internal minimum capital ratio target of 12.5%. (daily average for the accounting period), which we use to estimate the amount of deductions to RWA generated by the division. The revenue to modified RWA as we
On April 1, 2020, we completed
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Table of Contents
calculate and present it may differ from similarly titled measures presented by our competitors due to the acquisitionapproach and methodologies used for calculation. Our credit risk-weighted assets and operational risk equivalent assets are calculated by using the foundation Internal Ratings-Based Approach and the Standardized Approach, respectively, with the approval of Greentech Capital, LLC,the FSA. Furthermore, Market risk equivalent assets are calculated by using the Internal Models Approach for market risk. The conversion of Wholesale RWA to modified RWA is based on adjustments reflecting our internal minimum capital ratio target. Moreover, the usefulness of this ratio may be limited in that the adjustment applied to RWA, which is intended to capture the appropriate amount of RWA to attribute to our businesses (as opposed to RWA as calculated for regulatory capital purposes), is an M&A boutiqueestimate incorporating our internal risk tolerance; however, this adjustment may not appropriately reflect the actual regulatory capital impact of the charged assets that is strongare used by our business. Revenue to modified RWA decreased for the year ended March 31, 2023 compared to the previous fiscal year, with increase in sustainable technology and infrastructure.RWA mainly from yen depreciation more than offsetting the impact of increase in overall revenues. The ratio increased for the year ended March 31, 2022 compared to the previous fiscal year primarily because of less impact from the U.S. Prime Brokerage Event on revenue as well as increased Investment Banking revenue.
Results of Operations
Overview
The following table provides selected consolidated statements of income information for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
                     
 
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%  
Net revenue
increased from the year ended March 31, 2019 to the year ended March 31, 2020. This increase is primarily driven by
Commissions
and
Net gain on trading
in Retail and Wholesale Division.
Commissions
61
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increased from the year ended March 31, 2019 to the year ended March 31, 2020 primarily due to an increase in commissions received from the distribution of investment trusts and brokerage commissions received from equity and equity-related products.
Fees from investment banking
increased from the year ended March 31, 2019 to the year ended March 31, 2020 primarily due to an increase in
Net revenue from M&A advisory services and our solution services associated with fund raising.
Asset management and portfolio service fees
decreased from the year ended March 31, 20192022 to the year ended March 31, 2020 in response to the2023. This decrease was primarily driven by
Commissions
from our Retail Division and
Net interest revenue
. The decrease in assets under management.
Commissions
was primarily due to a decrease in commissions received from brokerage for equity and equity-related products and distribution of investment trusts.
Fees from investment banking
decreased during the year ended March 31, 2023 primarily due to a decrease in revenue from underwriting and sales commission.
Asset management and portfolio service fees
increased slightly but remained generally flat during the year ended March 31, 2023.
Net gain on trading
increased fromduring the year ended March 31, 20192023, primarily due to losses related to the year ended March 31, 2020, primarily driven by an increase in revenue from the Fixed Income business.U.S. Prime Brokerage Event disappeared.
Net gain on trading
also included total gainslosses of ¥17.5¥3.4 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a wideningtightening of Nomura’s credit spreads particularly as a result of the
COVID-19
pandemic during the fiscal year.spread.
OtherGain (loss) on investments in equity securities
increased fromdecreased during the year ended March 31, 20192023, primarily due to a result of market correction during the year ended March 31, 2020, primarily due to the realized gain of ¥73,293 million by the partial sale of Nomura’s investment in ordinary shares of Nomura Research Institute, Ltd.
Net revenue
decreased from the year ended March 31, 2018 to the year ended March 31, 2019. This decrease is primarily driven by
Commissions
and
Net gain on trading
in Retail and Wholesale Division.
Commissions
decreased from the year ended March 31, 2018 to the year ended March 31, 2019 primarily due to a decrease in commissions received from the distribution of investment trusts and brokerage commissions received from equity and equity-related products.
Fees from investment banking
primarily led by M&A and ECM, such as acquisition of Shire Plc by Takeda Pharmaceutical Co. and IPO of Softbank Corp was largely unchanged the year ended March 31, 2018 to the year ended March 31, 2019.
Asset management and portfolio service fees
was largely unchanged from the year ended March 31, 2018 to the year ended March 31, 2019, although assets under management increased by positive net inflows into private placement trust for financial institutions and investment trusts for discretionary investments.
Net gain on trading
decreased from the year ended March 31, 2018 to the year ended March 31, 2019, driven by decreases in both Fixed Income and Equity business.
Net gain on trading
also included total gains of ¥0.2 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a widening of Nomura’s credit spreads during the fiscal year.
Other
decreased from for the year ended March 31, 2018 to the year ended March 31, 2019, primarily driven by a decrease in American Century Investments related revenue and the absence of gains from the liquidation of an investment in a foreign entity and the sale of our controlling financial interest in Asahi Fire and Marine Insurance Co., Ltd recognized in the previous year.
Net interest revenue
is a function of the level and mix of total assets and liabilities, which includes trading assets and financing and lending transactions, and the level, term structure and volatility of interest rates.
Net interest revenue
is an integral component of trading activity. In assessing the profitability of our overall business and of our Global Markets business in particular, we view
Net interest revenue
and
Non-interest revenues
in aggregate. For the year ended March 31, 2020, interest revenue, including a dividend from our investment in American Century Investments increased by 2%, and interest expense decreased by 8% from the year ended March 31, 2019. As a result,
Net
interest revenue
for the year ended March 31, 2020 increased from the year ended March 31, 2019. For the year ended March 31, 2019, interest revenue, including a dividend from our investment in American Century Investments increased by 33%, and interest expense increased by 51% from the year ended March 31, 2018. As a result,
Net interest revenue
for the year ended March 31, 2019 decreased from the year ended March 31, 2018.
2023.
Gain (loss) on investments in equity securities
includes both realized and unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a long-term basis in order to promote existing and potential business relationships. Losses
Other
decreased during the year ended March 31, 2023, primarily due to less gain from sale of affiliated companies.
Net revenue
decreased from the year ended March 31, 2021 to the year ended March 31, 2022. This decrease is primarily driven by
Commissions
earned by Retail Division.
Commissions
decreased from the year ended March 31, 2021 to the year ended March 31, 2022 primarily due to a decrease in commissions received from the brokerage commissions from equity and equity-related products and the distribution of investment trusts.
Fees from investment banking
increased from the year ended March 31, 2021 to the year ended March 31, 2022 primarily due to an increase in revenue from advisory services.
Asset management and portfolio service fees
increased from the year ended March 31, 2021 to the year ended March 31, 2022 mainly due to increases in recurring revenue in Retail Division and in revenue from high level of asset under management in Investment Management Division.
Net gain on trading
increased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to the U.S. Prime Brokerage Event subsided.
Net gain on trading
also included total gains of ¥8.2 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a widening of Nomura’s credit spread.
Gain (loss) on investments in equity securities increased significantly due to market downturns as a result of the
COVID-19
pandemic in
decreased from the year ended March 31, 2020.2021 to the year ended March 31, 2022, primarily due to a result of market appreciation during the year ended March 31, 2021, not repeated in March 31, 2022.
Gain (loss) on investments in equity securities
includes both realized and unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a long-term basis in order to promote existing and potential business relationships.
Other
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to American Century Investments related gain/loss.
Net interest revenue
fluctuates by the balance and structure of total assets and liabilities, which includes trading assets and financing and lending transactions, and term structure and volatility of interest rates.
Net interest revenue
is an integral component of trading activity. In assessing the profitability of our overall business and of our Global Markets business in particular, we view
Net interest revenue
and
Non-interest
revenues
in aggregate. For the year ended March 31, 2023, interest revenue, including a dividend from our investment in American Century Investments increased by 292%, and interest expense increased by 400% from the year ended March 31, 2022. As a result,
Net
interest revenue
for the year ended March 31, 2023 decreased from the year ended March 31, 2022. For the year ended March 31, 2022, interest revenue, including a dividend from our investment in American Century Investments decreased by 20%, and interest expense increased by 7% from the year ended March 31, 2021. As a result,
Net interest revenue
for the year ended March 31, 2022 decreased from the year ended March 31, 2021.
Non-interest
expenses
for the year ended March 31, 2020 decreased2023 increased from the year ended March 31, 2019,2022, primarily due to increase in
Compensation and benefits
even though the absence of the goodwill impairment charge of ¥81,372 million attributablecredit losses related to the Wholesale Division.
U.S. Prime Brokerage Event disappeared compared to previous fiscal year.
49
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Non-interest
expenses
for the year ended March 31, 20192022 decreased from the year ended March 31, 2018,2021, primarily due to the credit losses related to the U.S. Prime Brokerage Event subsiding compared to previous fiscal year and the absence of provisionsan impairment loss of ¥47.7 billion on our equity method investments in connection with legacy transactions in the Americas recorded slightly over ¥30.0 billion in the previous year and lower bonus due to pay for performance offset by goodwill impairment charge mentioned above.Nomura Real Estate Holdings.
We are subject to a number of differentvarious taxes in Japan and with effect from April 1, 2022 we have adoptedapplied the consolidated tax filingGroup Tax Sharing system. The Group Tax Sharing system permitted under Japanese tax law. The consolidated tax filing systemis only imposesavailable for a national tax. Nomura’sOur domestic effective statutory tax rate was approximately 31% for the fiscal year ended March 31, 2018, 20192021, 2022 and 2020,2023, respectively. Our foreign subsidiaries are subject to the income taxes of the countriesjurisdictions in which they operate, which are generally lower than those in Japan. The Company’s effective statutory tax rate in any one year is therefore dependent on our geographic mix of profits and losses and also on the specific tax treatment applicable in each location.jurisdiction.
Income tax expense
for the year ended March 31, 2020,2023, represented an effective tax rate of 11.6%38.7%. The significant factors causing the difference between the effective tax rate of 11.6%38.7% and the effective statutory tax rate of 31% was the effect ofchanges in deferred tax valuation allowances which increased the effective tax rate by 11.3%, partially offset by the
Non-taxablenon-taxable
income which decreased the effective tax rate by 23.5%, partially offset by
Non-deductible
expenses which increased the effective tax rate by 2.9%4.7%.
Income tax expense
for the year ended March 31, 2019,2022, represented an effective tax rate of a negative 151.2%35.3%. The significant factors causing the difference between the effective tax rate of a negative 151.2%35.3% and the effective statutory tax rate of 31% was the changes in deferred tax valuation allowances which increased the effective tax rate by 18.0%, partially offset by the effect of
Non-deductible
expenses changes in foreign tax laws which decreased the effective tax rate by 110.3%, partially offset by
Non-taxable
income which increased the effective tax rate by 16.8%14.4%.
Income tax expense
for the year ended March 31, 2018,2021, represented an effective tax rate of 31.7%30.5%. The significant factors causing the difference between the effective tax rate of 31.7%30.5% and the effective statutory tax rate of 31% was the effect of changesthe tax benefit recognized on the outside basis differences for investment in foreign tax lawssubsidiaries and affiliates which increaseddecreased the effective tax rate by 23.5%8.7%, partially offset by changes in deferred tax valuation allowances which decreasedincreased the effective tax rate by 22.8%8.7%.
Results by Business Segment
OurWe 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 isare prepared based on our Retail, AssetInvestment Management and Wholesale divisions and we discloseDivisions. We have disclosed business segment information in accordance with this structure. Our Merchant Banking division is reported as
Net gain (loss) related to economic hedging transactions, a part of our Other segment.
Realizedrealized gain (loss) on investments in equity securities held for operating purposes, our share of equity in the earnings of affiliates, corporate items and other financial adjustments (including the operating results of our Merchant Banking division) are included as “Other” operating results outside of business segments in our segment information. UnrealizedA part of unrealized gain (loss) on certain investments in equity securities held for operating purposes is classified as a reconciling item outside of our segment information. The following segment information should be read in conjunction with Item 4.B “
Business Overview
” of this annual report and Note 2220 “
Segment and geographic information
” in our consolidated financial statements included in this annual report. The reconciliation of our segment results of operations and consolidated financial statements is provided in Note 2220 “
Segment and geographic information
” in our consolidated financial statements included in this annual report.
Retail
In our Retail division, our sales activities focus on providing consultation services and investment proposals to clients for which we receive commissions and fees. Additionally, we receive fees from asset management companies in connection with administration services we provide in connection with investment trust certificates that we distribute. We also receive agent commissions from insurance companies for the insurance products we sell as an agent.63
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Retail
Operating Results of Retail
                     
 
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)% 
  
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Net revenue
decreased from the year ended March 31, 20192022 to the year ended March 31, 20202023 primarily due to a decrease in feescommissions earned from investment banking services, offset in part by increasedbrokerage commissions forand the distribution of investment trusts.
Net revenue
decreased from the year ended March 31, 20182021 to the year ended March 31, 2019 as a result of2022 primarily due to a decrease in retail investors’ transactionscommissions earned from brokerage commissions and the distribution of stocks and investment trusts under the uncertain market condition weighed on investor sentiment.trusts.
Non-interest
expenses
decreased from the year ended March 31, 20192022 to the year ended March 31, 2020,2023 primarily due to a decrease in business development expenses including advertising costs.bonus expense driven by a decrease in revenue.
Non-interest
expenses
decreased from the year ended March 31, 20182021 to the year ended March 31, 2019,2022 primarily due to a decrease in compensation and benefit and system-related expenses with the termination of system depreciation.bonus expense driven by a decrease in revenue.
The following table shows the breakdown of Retail
non-interest
revenues for the year ended March 31, 20192021, 2022 and 2020.2023.
             
 
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)% 
  
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Commissions
increased from the year ended March 31, 2019 to the year ended March 31, 2020, primarily due to increases in commissions received from the distribution of investment trusts and brokerage commissions received from equity and equity-related products.
Net gain on trading
increased from the year ended March 31, 2019 to the year ended March 31, 2020, primarily due to an increase in income related to debt securities.
Fees from investment banking
decreased from the year ended March 31, 20192022 to the year ended March 31, 2020,2023, primarily due to decrease in brokerage commissions received from equity and equity-related products and in commissions for distribution of investment trusts.
Net gain on trading
slightly increased from the absence of large IPO deals as comparedyear ended March 31, 2022 to the previous year.
year ended March 31, 2023, but remained mainly unchanged.
51Commissions
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to decrease in brokerage commissions received from equity and equity-related products and in commissions for distribution of investment trusts.
Net gain on trading
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to a decrease in income related to debt securities.
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Retail Client Assets
The following table presents amounts and details regarding the composition of Retail client assets as of March 31, 20192022 and 2020.2023. Retail client assets consist of clients’ assets held in our custodyunder management and assets relating to variable annuity insurance products.
                     
 
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 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Retail client assets increased from March 31, 2022 to March 31, 2023. The balances of our clients’ equity and equity-related products increased ¥0.5 trillion from March 31, 2022 to ¥78.0 trillion as of March 31, 2023, mainly due to increase of inflows during the year. The balances of our clients’ investment trusts decreased by ¥1.4 trillion from ¥19.6 trillion as of March 31, 2022 to ¥18.2 trillion as of March 31, 2023.
Retail client assets decreased from March 31, 20192021 to March 31, 2020.2022. The balances of our clients’ equity and equity-related products decreased by ¥9.2 trillion from ¥71.9March 31, 2021 to ¥77.5 trillion as of March 31, 2019 to ¥62.7 trillion as of March 31, 2020,2022, mainly due to market depreciation during the disruptions in the Japanese equity market from February 2020 reflecting the effect of the COVID-19 pandemic and increase of net outflows.year. The balances of our clients’ investment trusts decreasedincreased by ¥1.1¥0.3 trillion from ¥16.9¥19.3 trillion as of March 31, 20192021 to ¥15.8¥19.6 trillion as of March 31, 2020.2022.
Retail client assets decreased from March 31, 2018 to March 31, 2019. The balances of our clients’ equity and equity-related products decreased by ¥3.8 trillion from ¥75.7 trillion as of March 31, 2018 to ¥71.9 trillion as of March 31, 2019, mainly due to the deterioration of Japanese equity market and increase of net outflows. The balances of our clients’ investment trusts decreased by ¥0.5 trillion from ¥17.4 trillion as of March 31, 2018 to ¥16.9 trillion as of March 31, 2019.
Asset Management65
Our Asset Management Division is conducted principally through Nomura Asset Management Co., Ltd. (“NAM”). We earn portfolio management fees through the development and management of investment trusts, which are distributed through Nomura Securities Co., Ltd. (“NSC”), other brokers and banks. We also provide investment advisory services for pension funds and other institutional clients. Net revenue generally consist of asset management and portfolio service fees that are attributable to Asset Management.
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Table of Contents
Investment Management
Operating Results of AssetInvestment Management
                     
 
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)% 
  
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
Net revenue
decreased from the year ended March 31, 20192022 to the year ended March 31, 2020,2023, primarily due to decrease in unrealized gains recognized in respect of our investment in American Century Investments related losses and the decrease in asset management and portfolio service fees.Investments.
Net revenue
decreased from the year ended March 31, 20182021 to the year ended March 31, 2019,2022, primarily due to decrease in unrealized gains recognized in respect of our investment in American Century Investments related losses, while cash inflow in the investment trust business and investment advisory business contributed to the increase in assets under management and business performance improved.Investments.
Non-interest expenses
increased slightly from the year ended March 31, 2019 to the year ended March 31, 2020.
Non-interest
expenses
increased from the year ended March 31, 20182022 to the year ended March 31, 2019, mainly2023, primarily due to increases in
non-personnel
expenses driven by change in foreign exchange rates and inflation.
Non-interest
expenses
increased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to an increases in personnel expenses driven by an increase in system-related expenses.business revenue.
The breakdown of net revenue for Investment Management is as follows.
   
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)% 
Note: Prior period amounts have been reclassified to conform to the current year presentation.
(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.
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Table of Contents
The following table presents assets under management of each principal Nomura entity within the Assetour Investment Management Division as of March 31, 20192022 and 2020.2023.
                         
 
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 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
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Table of Contents
                         
 
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
 
                         
Notes:
Nomura Funds Research and Technologies Co. , Ltd. was reclassified to Other segment as a result of our organizational structure change in April 2018.
In our investment trust business, assetAsset under management decreased primary duewas largely unchanged the year ended March 31, 2022 to market depreciation, partially offset by continuous inflow to ETF.the year ended March 31, 2023.
The following table presents NAM’s market share, in terms of net asset value, of the Japanese publicly offered investment trusts market as of March 31, 2021, 2022 and 2023.
 31, 2018, 2019 and 2020.
             
 
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% 
(Source) Nomura’s own calculation based on data published by the Investment Trusts Association, Japan.
The investment
Investment trust assets included in assets under management by NAM were ¥34.0¥48.0 trillion as of March 31, 2020, a ¥1.6 trillion, 4% decrease from2023 and were largely unchanged the year ended March 31, 2019. This decrease is due2022 to positive net inflows of ¥1.4 trillion and market depreciation of ¥3.0 trillion. Despite the market depreciation, the balances of certain investment trusts, such as TOPIX Exchange Traded Fund increased.year ended March 31, 2023.
The investment
Investment trust assets included in assets under management by NAM were ¥35.6¥47.9 trillion as of March 31, 2019,2022, a ¥1.5¥1.3 trillion, 4% increase3% increased from March 31, 2018.2021. This increase iswas due to positive net inflows of ¥2.2¥1.0 trillion and market depreciationappreciation of ¥0.7¥0.3 trillion. The balances of certain investment trusts, such asincluding TOPIX Exchange Traded Fund and Nikkei 225 Exchange Traded Fund increased.
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Table of Contents
Wholesale
Operating Results of Wholesale
The operating results of our Wholesale Division comprise the combined results of our Global Markets and Investment Banking businesses. Our Global Markets business comprises our Fixed Income and Equities businesses.
                     
 
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)% 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Net revenue
increased from the year ended March 31, 20192022 to the year ended March 31, 2020.2023. Fixed Income revenues in Global Markets increased year on year due to a strong performance in foreign currency and emerging market products, andmacro products. Equities revenues alsoin Global Markets increased primarily due to higher client activities in responsedisappearance of the losses related to the higher market volatilities. Income before income taxes forU.S. Prime Brokerage Event recognized during the previous year. Investment Banking revenues decreased primarily due to decreases in commissions from underwriting and sales during the year ended March 31, 2020 includes approximately ¥35 billion mark down mainly on our loan-related positions due to market dislocation in March.2023.
Net revenue
decreasedincreased from the year ended March 31, 20182021 to the year ended March 31, 2019.2022. Fixed Income revenues decreased year on year due to lower performance mainly in rates products because of uncertain markets, also Equities revenuesGlobal Markets decreased due to lower client activities and Investment Banking revenues decreased year on year despite the contribution from M&A and ECM, such as acquisitiona slowdown of Shire Plc by Takeda Pharmaceutical Co. and IPO of Softbank Corp.
Non-interest expenses
decreased fromstrong performance in macro products in the year ended March 31, 20192021. Equities revenues in Global Markets decreased primarily due to losses related to the U.S. Prime Brokerage Event. Investment Banking revenues increased primarily due to increases in advisory business deals during the year
ended March 31, 2020, primarily due to the absence of the goodwill impairment recognized in December 2018.2022.
Non-interest
expenses
increased from the year ended March 31, 20182022 to the year ended March 31, 2019,2023, primarily due to the goodwill impairment recognizedimpact of a weaker yen on the translation of
non-yen
denominated oversea expenses and an increase in December 2018, andcompensation expenses compared to previous year.
one-off
Non-interest
expenses
slightly increased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to increases in
yen-denominated
expenses at overseas driven by the weaker yen, partially offset with credit losses related to revision of business portfolio.the U.S. Prime Brokerage Event subsiding compared to the year ended March 31, 2021.
The following table presents a breakdown of net revenue for Wholesale for the year ended March 31, 2018, 20192021, 2022 and 2020.2023.
                     
 
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
%
                     
Nomura established Client Financing and Solutions (“CFS”) in April, 2018. In CFS, Global Markets and Investment Banking
co-work
and revenue generated from CFS is allocated to Global Markets and Investment Banking in a certain manner. Accordingly, certain net revenue which was previously allocated to Global Markets has been reclassified to Investment Banking.
   
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% 
  
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
55
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Table of Contents
Global Markets
We have a proven track record in sales and trading of debt securities, equity securities, and foreign exchange, as well as derivative products based onreferencing these financial instruments mainly to domestic and overseas institutional investors. In response to the increasingly diverse and complex needs of our clients, we continue to enhance our trading and product origination capabilities to offer superior products not only to domestic and overseas institutional investors, but also to our Retail and AssetInvestment Management Divisions. This cross-divisional approach also extends to Investment Banking, where close collaboration leads to high value-adding solutions for our clients. These ties enable us to identify the types of product of interest for investors and develop and deliver products that meet their needs. We continue to develop extensive ties with institutional investors in Japan and international markets, as well as wealthy investors, public-sector agencies, and regional financial institutions in Japan, and government agencies, financial institutions, and corporations around the world.
Net
reve
nue
increased from the year ended March 31, 20192022 to the year ended March 31, 2020.2023. In our Fixed Income businesses,
Net revenue
increased from ¥232,835¥326,918 million for the year ended March 31, 20192022 to ¥337,480¥402,435 million for the year ended March 31, 20202023 primarily due to a strong performance mainly in foreign currency and emerging marketmacro products compared to the previous fiscal year. In our Equities business,
Net revenue
increased from ¥229,499 million for the year ended March 31, 2022 to ¥253,863 million for the year ended March 31, 2023, primarily due to disappearance of the losses related to the U.S. Prime Brokerage Event compared to the previous fiscal year.
Net
reve
nue
decreased from the year ended March 31, 2021 to the year ended March 31, 2022. In our Fixed Income businesses,
Net revenue
decreased from ¥441,893 million for the year ended March 31, 2021 to ¥326,918 million for the year ended March 31, 2022 primarily due to a slowdown from last year’s strong performance in macro products. In our Equities business,
Net revenue
increased from ¥220,209¥133,640 million for the year ended March 31, 20192021 to ¥225,447¥229,499 million for the year ended March 31, 20202022, primarily due to higher client activities duelosses related to market volatilities.
Net revenue
decreased from the year ended March 31, 2018U.S. Prime Brokerage Event subsiding compared to the year ended March 31, 2019. In our Fixed Income businesses,
Net revenue
decreased from ¥341,594 million for the year ended March 31, 2018 to ¥232,835 million for the year ended March 31, 2019 primarily due to lower performance mainly in rates products because of uncertain markets. In our Equities business,
Net revenue
decreased from ¥261,603 million for the year ended March 31, 2018 to ¥220,209 million for the year ended March 31, 2019 due to lower client activities under uncertain markets.
The net revenue figures in Global Markets discussed are
non-GAAP
financial measures prepared on a management accounting basis that are a useful supplement to financial information of our Wholesale segment. We disclose these measures to show the performance of Global Markets as an individual business line, which we believe can help enhance the understanding of underlying trends in Global Markets.2021.
Investment Banking
We provide a broad range of investment banking services, such as underwriting and advisory activities. We underwrite offerings of debt, equity and other financial instruments in major financial markets, such as Asia, Europe and the U.S. We have been enhancing our M&A and financial advisory expertise to secure more
high-profile
deals both across and within regions. We develop and forge solid relationships with clients on a long-term basis by providing extensive resources in a seamless fashion to facilitate bespoke solutions.
Net revenue
decreased from the year ended March 31, 2019 to the year ended March 31, 2020 primarily due to market downturn from February 2020 resulting from the effect of the COVID-19 pandemic.
Net revenue
decreased from the year ended March 31, 20182022 to the year ended March 31, 2019, despite2023, primarily due to decreases in underwriting and sales commission during the contribution from M&A and ECM, such as acquisition of Shire Plc by Takeda Pharmaceutical Co. and IPO of Softbank Corp on the back of successful collaboration across regions and divisions.
The net revenue figures in Investment Banking discussed are
non-GAAP
financial measures prepared on a management accounting basis that we believe are a useful supplement to financial information of our Wholesale segment. We disclose these measures to show the performance of Investment Banking as an individual business line, which we believe can help enhance the understanding of underlying trends in Investment Banking.
year.
56Net revenue
increased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to increases in advisory business during the year.
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Other Operating Results
Other operating results include net gain (loss) related to economic hedging transactions, a part of realized gain (loss) on investments in equity securities held for operating purposes, equity in earnings of affiliates, operating results of the Merchant Banking Division, corporate items, and other financial adjustments. See Note 2220 “
Segment and geographic information
” in our consolidated financial statements included within this annual report.
Income (loss) before income taxes
in Other operating results were ¥56,365¥(28,516) million for the year ended March 31, 2018, ¥(2,773)2021, ¥15,753 million for the year ended March 31, 20192022 and ¥99,163¥73,385 million for the year ended March 31, 2020,2023, primarily due to the realized gainrecognizing income of ¥73,293 million resultingapproximately ¥28.0 billion from the partial sale of Nomura’s investmentsa part of its shares held in ordinary shares of Nomura Research Institute, Ltd. and disappearance of loss of approximately ¥62.0 billion related to legacy transactions in the U.S. from before the global financial crisis (2007 – 2008) that was recognized including legal expenses as well as certain transactions intended to mitigate future losses in previous year.
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Other operating results for the year ended March 31, 20202023 include the negative impact of our own creditworthiness on derivative liabilities which resulted in gainslosses of ¥16,333¥5,385 million and lossesgains from changes in counterparty credit spreads of ¥12,056¥4,671 million.
Other operating results for the year ended March 31, 20192022 include the positive impact of our own creditworthiness on derivative liabilities which resulted in gains of ¥6,731 million and losses from changes in counterparty credit spreads of ¥1,249 million.
Other operating results for the year ended March 31, 2021 include the negative impact of our own creditworthiness on derivative liabilities which resulted in gains of ¥183 million and losses from changes in counterparty credit spreads of ¥725 million.
Other operating results for the year ended March 31, 2018 include the positive impact of our own creditworthiness on derivative liabilities which resulted in losses of ¥630¥12,052 million and gains from changes in counterparty credit spreads of ¥6,846¥11,988 million.
Summary of Regional Contribution
For a summary of our
net revenue, income (loss) before income taxes
and long-lived assets by geographic region, see Note 2220 “
Segment and geographic information
” in our consolidated financial statements included in this annual report.
Selected Financial Data
The following table presents selected financial information as of and for the years ended March 31, 2019, 2020, 2021, 2022 and 2023 which is derived from our consolidated financial statements.
   
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% 
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(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.
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 1917 “
Regulatory requirements
” in our consolidated financial statements included in this annual report.
Translation Exposure
A significant portion of our business is conducted in currencies other than Japanese Yen—most significantly, U.S. dollars,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.
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 management to develop estimates used in the application of these policies. Such estimates determined by management include estimates regarding the fair value of financial
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instruments, the outcome of litigation and tax examinations, the recovery of the carrying value of goodwill, the allowance for doubtful accounts, the realization of deferred tax assets, the impairment of equity method investments and other non-financial assets and other matters that affect the reported amounts of assets and liabilities as well as the disclosures in the consolidated financial statements. Estimates, by their nature, are based on underlying assumptions which require management judgment and depend on the extent of available information. Actual results in future periods may differ from current estimates, which could have a material impact on the consolidated financial statements.
The COVID-19 pandemic has impacted some of the critical accounting estimates used in these consolidated financial statements during the year ended March 31, 2020 and is expected to continue to impact these estimates in future periods. Assumptions around how long the COVID-19 pandemic will last and how long the economies and financial markets in the key jurisdictions in which Nomura and its clients operate will take to recover has, and will continue to, affect these estimates. The key assumptions and estimates impacted by COVID-19 include:
The ability of clients to perform on their contractual obligations to Nomura arising from financial instruments for determination of fair value measurements or allowances for doubtful accounts;
The volatility and dislocation in global financial markets for determination of fair value measurements;
The expected duration of declines in global equity markets for determination of fair value measurements and impairment of equity method investments;
The future use of non-financial assets within Nomura for determination of whether impairments are required; and
The future profitability of Nomura to realize deferred tax assets.
The following table summarizes critical accounting policies within our consolidated financial statements, the critical accounting estimates inherent within application of those policies, the nature of the estimates, the underlying assumptions made by management used to derive those estimates and how the
COVID-19
pandemic, has and is expected to continue to impact these estimates and therefore amounts reported in the consolidated financial statements. See Note 1
“Summary of Accounting Policies”
for more information on the critical accounting policies we apply for all of these areas and the relevant additional footnotes referred to in the table for more information around how these critical accounting policies and critical accounting estimates have been applied.
Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Impact of
COVID-19
pandemic
Fair value of financial instruments
Note 2
“Fair value measurements”
Estimating fair value for financial instruments
•
Election of appropriate valuation techniques
•
Principal markets are active or inactive
•
Significance of level 3 inputs
•
Dislocated financial markets as a result of the
COVID-19
pandemic has increased market volatility and reduced price transparency for certain financial instruments
•
Updates to inputs used to determine fair value of financial instruments
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Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Impact of
COVID-19
pandemic
Allowances for doubtful accounts
Note 7
“Financing receivables”
Determination of whether loans, other receivables and loan commitments are impaired and measurement of impairment losses
•
Ability of borrowers to pay in accordance with contractual terms of the financial instruments
•
Future cash flows for impaired loans where impairment measurement using a discounted cash flow method.
•
Fair value of collateral in impaired collateral dependent loans.
•
Ability of borrowers to pay increasingly subjective as has required consideration both to pay in the short-term while governments imposed lockdowns and similar restrictions on trading, and in the longer-term once the restrictions were lifted and economies were expected to improve.
•
Estimating future cash flows increasingly subjective due to uncertainty in future performance of borrowers
•
Estimating fair value increasingly subjective due to dislocated financial and
non-financial
markets
•
Allowances for credit losses increased to ¥13,012 m as of March 31, 2020 from ¥4,169 m as of March 31, 2019 primarily due to additional impairments identified in the fourth quarter due to the
COVID-19.
Goodwill and intangible assets
Note 10
“Other assets—Other/Other liabilities”
Determination of whether goodwill and intangible assets are impaired and measurement of any impairment loss.
•
Identifying impairment indicators which trigger an impairment test
•
Inputs to the fair value of reporting units which include goodwill and fair value of indefinite-life intangibles.
•
Future cash flows for recoverability of finite-lived intangible assets.
•
Annual goodwill impairment test performed in the fourth quarter. No impairment loss recognized as estimated fair value of reporting units exceeded carrying value.
•
Annual impairment test of indefinite-lived intangibles performed in the fourth quarter. No impairment loss recognized as estimated fair value exceeded carrying value.
•
The COVID
-19
pandemic was not considered an impairment indicator for finite-lived intangible assets during the fourth quarter. No impairment testing of the relevant asset groups including these intangible assets was required.
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Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Impact of
COVID-19
pandemic
Equity method investees
Note 20
“Affiliated companies and other equity-method investees”
Determination of whether equity method investees are impaired.
•
When a decline in the share price of listed equity method investees below carrying value is other-than-temporary.
•
As a result of significant declines in global equity markets during the fourth quarter due to the
COVID-19
pandemic, we assessed and concluded no other-than-temporary impairment losses were required to be recognized.
Litigation provisions
Note 21
“Commitments, contingencies and guarantees”
Determination of whether a loss is probable and measurement of provisions
•
Likelihood of eventual loss and ability to appeal or recover the loss from other parties
•
Management appetite to settle the matter
•
Loss amounts when claims are substantial, indeterminate or at an early stage
•
While the
COVID-19
pandemic has delayed the potential resolution of certain litigation matters, it has not had a direct significant impact on our litigation provisions as of March 31, 2020.
Income taxes
Note 16
“Income taxes”
Realization of deferred tax assets
•
Future profitability of Nomura entities
•
Interpretation of tax rules by courts and regulatory authorities and tax examinations by taxing authorities.
•
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
•
Although estimating future taxable income was increasingly subjective due to uncertainty in future profitability of Nomura, it did not result in a significant impact on our determination of realization of deferred tax assets as of March 31, 2020.
Level 3 financial assets as a proportion of total financial assets, carried at fair value on a recurring basis were 5% as of March 31, 2020 (5% as of March 31, 2019) as listed below:
                     
 
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
 
                     
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See Note 2 “
Fair value measurements
” in our consolidated financial statements included in this annual report.
Derivative contracts
We use a variety of derivative financial instruments including futures, forwards, swaps and options, for trading and
non-trading
purposes. All derivatives are carried at fair value, with changes in fair value 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.
Derivative assets and liabilities with the same counterparty documented under a master netting agreement are offset in the consolidated balance sheets where the specific criteria defined by ASC
210-20
“
Balance Sheet—Offsetting
” and ASC 815 “
Derivatives and Hedging
” are met. These criteria include requirements around the legal enforceability of such
close-out
and offset rights under the master netting agreement. In addition, fair value amounts recognized for the right to reclaim cash collateral (a receivable) and the obligation to return cash collateral (a payable) are also offset against net derivative liabilities and net derivative assets, respectively, where certain additional criteria are met.
Derivative contracts consist of listed derivatives and OTC derivatives. The fair value of listed derivatives are determined based on quoted market prices or valuation models. OTC derivatives are valued using valuation models. Listed derivative and OTC derivative assets and liabilities after netting are shown below:
         
 
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
 
         
The following table presents the fair value of OTC derivative assets and liabilities as of March 31, 2020 by remaining contractual maturity.
                             
 
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
 
(1)Represents the impact of netting derivative assets with derivative liabilities for the same counterparty across maturity band categories. Derivative assets and derivative liabilities with the same counterparty in the same maturity category are netted within the maturity category. This column also includes cash collateral netting with the same counterparty.
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The fair value of derivative contracts includes adjustments for credit risk, both with regards to counterparty credit risk on positions held and our own creditworthiness on positions issued. We realize gains or losses relating to changes in credit risk on our derivative contracts together with the movements of trading positions, which include derivatives that are expected to mitigate the above mentioned impact of changes in credit risk.
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 leveraged
buy-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, 2020.2023.
             
 
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 
  
 
 
   
 
 
   
 
 
 
Special Purpose Entities (“SPEs”)
Our involvement with these entities includes structuring, underwriting, as well as, subject to prevailing market conditions, distributing and selling debt instruments and beneficial interests issued by these entities.entities, subject to prevailing market conditions. In the normal course ofconnection with our securitization and equity derivative activities, business, we also act as a transferor of financial assets to andthese entities, as well as, underwriter, distributor and seller of repackagedasset-repackaged financial instruments issued by
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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
” in our consolidated financial statements included in this annual report.
Accounting Developments
See Note 1 “1“
Summary of accounting policies: New accounting pronouncements adopted during the current year
” in our consolidated financial statements included in this annual report.
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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—assets
—Other and Other liabilities
, respectively, in the consolidated balance sheets as of March 31, 2020.2023.
   
Millions of yen
 
  
March 31, 2020
2023
 
Deferred tax assets
  
Depreciation, amortization and valuation of fixed assets
  ¥
19,932
38,596		 
Investments in subsidiaries and affiliates
   
1,209
7,458		 
Valuation of financial instruments
   
77,054
123,841		 
Accrued pension and severance costs
   
24,356
17,308		 
Other accrued expenses and provisions
   
51,566
74,043		 
Operating losses
   
308,504
414,084		 
Lease liabilities
   
47,680
48,329		 
Other
   
9,394
19,645		 
  
 
Gross deferred tax assets
   
539,695
743,304		 
Less
—
Less—Valuation allowances
   
(388,411
515,068		)
  
 
Total deferred tax assets
   
151,284
228,236		 
  
 
Deferred tax liabilities
  
Investments in subsidiaries and affiliates
   
89,630
100,335		 
Valuation of financial instruments
   
52,780
118,314		 
Undistributed earnings of foreign subsidiaries
   
2,423
2,936		 
Valuation of fixed assets
   
9,497
22,540		 
Right-of-use
assets
   
47,438
47,775		 
Other
   
2,992
7,524		 
  
 
Total deferred tax liabilities
   299,424
204,760
 
Net deferred tax assets (liabilities)
  ¥
(53,476
71,188		)
  
 
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.
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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
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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, 2020,2023, our liquidity portfolio was ¥5,354.4¥7,654.3 billion which sufficiently met liquidity requirements under the stress scenarios even amid the highly volatile financial market due to the pandemicscenarios.
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COVID-19
pandemic.
The following table presents a breakdown of our liquidity portfolio by type of financial assets as of March 31, 20192022 and 20202023 and averages maintained for the years ended March 31, 20192022 and 2020.2023. Yearly averages are calculated using
month-end
amounts.
                 
 
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.
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The following table presents a breakdown of our liquidity portfolio by currency as of March 31, 20192022 and 20202023 and averages maintained for the years ended March 31, 20192022 and 2020.2023. Yearly averages are calculated using
month-end
amounts.
                 
 
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 dollar,Dollar, the Canadian dollarDollar and the Swiss franc.Franc.
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 1917 “
Regulatory requirements
” in our consolidated financial statements included within this annual report.
The following table presents a breakdown of our liquidity portfolio by entity as of March 31, 20192022 and 2020.2023.
         
 
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 
  
 
 
   
 
 
 
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(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.
2.    Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio.
In addition to our liquidity portfolio, we had ¥2,573.6¥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, 20202023 was ¥7,928.0¥10,496.8 billion, which represented 258.0%307.7% of our total unsecured debt maturing within one year.
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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 
  
 
 
   
 
 
 
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 46.1%55.9% of total long-term debt outstanding as of March 31, 20202023 from 43.6%51.4% as of March 31, 2019.2022.
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.
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The following table presents an analysis of our short-term unsecured debt by type of financial liability as of March 31, 20192022 and 2020.2023.
         
 
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 
  
 
 
   
 
 
 
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.
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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, 20192022 and 2020.2023.
         
 
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
” and secured financing transactions recognized within
Long-term borrowings
as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860 “
Transfer and Servicing.
”
 
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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 4.53.9 years as of March 31, 2020.2023. 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 6.48.3 years as of March 31, 2020.2023. The average maturity of our entire long-term debt with maturities longer than one year including plain vanilla debt securities and borrowings, was 5.56.2 years as of March 31, 2020.2023.
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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
” in our consolidated financial statements.
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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.
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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, 2020,2023, 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;
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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; and
Legal 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
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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, 20202023 was 201.1%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 is not yethas been implemented in Japan.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
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activities. For the yearsyear ended March 2019,2022, we recorded net cash outflows from operating activities and investing activities and net cash inflow from financing activities. For the yearsyear ended March 2020,2023, 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.
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The following table presents the summary information on our consolidated cash flows for the years ended March 31, 20192022 and 2020.2023.
         
 
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 
  
 
 
  
 
 
 
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, 2020,2023, our cash, cash equivalents, restricted cash and restricted cash equivalents increased by ¥505.2¥504.4 billion to ¥3,192.3¥3,820.9 billion. Net cash of ¥332.1¥1,291.7 billion was provided by financing activities due to net cash inflows of ¥656.2¥1,107.2 billion from
Short-termLong-term borrowings
. As part of trading activities, while there were net cash outflows of ¥2,325.7¥1,109.2 billion mainly due to an increase in
Trading assets and Privateprivate equity and debt investments,
in combination with cash inflows due to an increase in
Trading liabilities,
they were offset by net cash inflows of ¥2,516.1¥244.0 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥15.9¥974.8 billion was used in operating activities.
For the year ended March 31, 2019,2022, our cash, cash equivalents, restricted cash and restricted cash equivalents increaseddecreased by ¥332.3¥193.6 billion to ¥2,687.1¥3,316.4 billion. Net cash of ¥761.2¥1,070.7 billion was provided by financing activities due to net cash inflows of ¥516.7¥1,225.0 billion from
Long-term borrowings
. As part of trading activities, while there were net cash inflows of ¥782.2¥969.6 billion mainly due to a decrease in
Trading assets and Private
private equity and debt investments,
in combination with cash outflows due to a decrease in
Trading liabilities,
they were offset by net cash outflows of ¥1,287.5¥1,625.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to
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resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥361.2¥1,368.7 billion was used in operating activities.
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Balance Sheet and Financial Leverage
Total assets as of March 31, 2020,2023, were ¥43,999.8¥47,771.8 billion, an increase of ¥3,030.4¥4,359.6 billion compared with ¥40,969.4¥43,412.2 billion as of March 31, 2019,2022, reflecting primarily an increase in
Trading assetsassets.
. Total liabilities as of March 31, 2020,2023, were ¥41,268.6¥44,547.7 billion, an increase of ¥2,979.9¥4,108.3 billion compared with ¥38,288.6¥40,439.4 billion as of March 31, 2019,2022, reflecting primarily an increase in
Securities sold under agreements to repurchase
. NHI shareholders’ equity as of March 31, 20202023 was ¥2,653.5¥3,148.6 billion, an increase of ¥22.4¥234.0 billion compared with ¥2,631.1¥2,914.6 billion as of March 31, 2019,2022, primarily due to an increase in
Retained earnings.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, 20192022 and 2020.2023.
         
 
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
and
Securities borrowed
. Adjusted assets is a
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 
  
 
 
   
 
 
 
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Total assets increased by 7.4%10.0% reflecting primarily an increase in
Trading assetsSecurities purchased under agreements to resell.
. Total NHI shareholders’ equity increased by 0.9%8.0% reflecting primarily an increase in
Retained earningsAccumulated other comprehensive income
. As a result, our leverage ratio increased from 15.6ratios were 14.9 times as of March 31, 2019 to 16.62022 and 15.2 times as of March 31, 2020.2023.
Adjusted assets increased primarily due to an increase in
Trading assetsCash and cash equivalents
. As a result, our adjusted leverage ratio was 9.0ratios were 9.1 times as of March 31, 20192022 and 10.69.4 times as of March 31, 2020.2023.
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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 ¥15¥5 per share to shareholders of record as of September 30, 20192022 and have decided to pay a dividend of ¥5¥12 per share to shareholders of record as of March 31, 2020.2023. As a result, the total annual dividend will be ¥20¥17 per share.
The following table sets forthpresented the amounts of dividends per share paid by us in respect of the periods indicated:
                     
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 
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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
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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, 2020,2023, our common equity Tier 1 capital ratio (common equity Tier 1 capital divided by risk-weighted assets) is 15.34%16.32%, Tier 1 capital ratio (Tier 1 capital divided by risk-weighted assets) is 16.40%18.49% and consolidated capital adequacy ratio (total capital divided by risk-weighted assets) is 16.60%18.49% and we wereare 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, 20202023 is 7.51%7.62% for the common equity Tier 1 capital ratio, 9.01%9.12% for the Tier 1 capital ratio and 11.01%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.
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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, 20192022 and March 31, 2020.2023.
         
 
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% 
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, Marketmarket risk equivalent assets are calculated by using the Internal Models Approach for market risk.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. ManagementOur management receives and reviews these capital ratios on a regular basis.
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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 thethese Notices. And weWe 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. Management receivesIn coordination with the monetary policy of the Bank of Japan in response to the impact of the
COVID-19
pandemic, the FSA published amendments to the Notice on Consolidated Leverage Ratio on June 2020 and reviews this consolidatedMarch 2021. Under these amendments, deposits with the Bank of Japan have been excluded from the total exposure measure used to calculate the leverage ratio on a regular basis.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, 2020,2023, our consolidated leverage ratio was 4.83%is 5.63%.
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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.
Results of operations and financial condition have been impacted by economic dislocations caused by the
COVID-19
pandemic; risk weighted assets grew by ¥1.6 trillion to ¥16 trillion, common equity Tier 1 capital ratio was 15.34%, Tier 1 capital ratio was 16.40%, and Leverage Ratio was 4.83% for the March 2020
quarter-end.
These figures were influenced by increased market volatility, and widening credit spread caused by
COVID-19.
Nomura Group has been dedicated to supporting our clients through the extremely challenging economic and financial market conditions that developed during the quarter.
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 minimum liquidity standard including a
30-day
liquidity coverage ratio as well as a longer-term structural liquidity ratio.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, Basel III: The Net Stable Funding Ratio 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 the
G-SIBs
including the recovery and resolution plan. The group of
G-SIBs
have been updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIBs.
On the
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other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-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 for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
In November 2015, the FSB issued the final TLAC standard for
G-SIBs.
The TLAC standard has been designed so that failing
G-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 Japanese
G-SIBs
and, in April 2018, revised such policy to apply the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-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 Japanese
G-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 a
G-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 from
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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, 2024.2024 (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
basis considering the actual condition of the relevant the TLAC Covered SIBs in crisis.
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
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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.
On August 2, 2019, S&P Global Ratings downgraded
There were no significant rating actions during the long-term issuer credit rating of the Company to BBB+ from
A-.fiscal year ending March 2023.
S&P Global Ratings also downgraded the long-term issuer credit rating of Nomura Securities Co., Ltd. (“NSC”) to
A-
from A, and the short-term credit rating of NSC to
A-2
from
A-1.
On May 13, 2020, Fitch Ratings placed the bbb+ viability ratings of the Company and NSC on negative watch. Fitch Ratings affirmed the Issuer Default Rating at
A-
and the Outlook at Stable.
As of May 28, 2020,22, 2023, the credit ratings of the Company and NSC were as follows.
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
  
A+A (Stable)
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)
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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.
C. Research and Development, Patents and Licenses, etc.
Not applicable.
D. Trend Information.
The information required by this item is set forth in Item 5.A of this annual report.
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E.
Off-BalanceSelected Financial Data
Sheet Arrangements.
The following table presents selected financial information as of and for the years ended March 31, 2019, 2020, 2021, 2022 and 2023 which is derived from our consolidated financial statements.
   
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% 
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(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.
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
” in our consolidated financial statements included in this annual report.
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.
Off-balanceAssets and Liabilities Associated with Investment and Financial Services Business
sheet entities
In
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,business.
Leveraged Finance
We provide loans to clients in connection with leveraged
buy-outs
and leveraged
buy-ins.
As this type of financing is usually initially provided through a commitment, we engage in a variety of
off-balance
sheet arrangements with
off-balance
sheet entities which may have an impactboth funded and unfunded exposures on Nomura’s future financial position and performance.these transactions.
Off-balanceThe 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.
sheet arrangements with
off-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.
   
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 
  
 
 
   
 
 
   
 
 
 
Off-balance
Special Purpose Entities (“SPEs”)
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
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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 involvement with SPEs 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 transactionsdiscussion on Nomura’s involvement with VIEs,variable interest entities, see Note 6 “
Securitizations and Variable Interest Entities
” in our consolidated financial statements included in this annual report.
F. Tabular Disclosure of Contractual Obligations.Accounting Developments
See Note 1“
In
Summary of accounting policies: New accounting pronouncements adopted during 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.
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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
” in our consolidated financial statements contains further detail on our operating leases and finance leases. Note 11 “
Borrowings
” in our consolidated financial statements contains further detail on our short-term and long-term borrowing obligations and Note 21 “
Commitments, contingencies and guaranteescurrent year
” in our consolidated financial statements included in this annual report contains further detail on our other commitments, contingenciesreport.
Deferred Tax Assets
Details of deferred tax assets and guarantees.liabilities
The contractual amountsfollowing table presents details of commitmentsdeferred tax assets and liabilities reported within
Other assets
—Other and Other liabilities
, respectively, in the consolidated balance sheets as of March 31, 2023.
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
assets
47,775
Other
7,524
Total deferred tax liabilities
299,424
Net deferred tax assets (liabilities)
¥(71,188) 
Calculation method of deferred tax assets
In accordance with U.S. GAAP, we recognize deferred tax assets to extendthe 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.
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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 representratings, 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 maximum amounts atfree flow of funds between different group entities. Our global liquidity 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
basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit,management policy is based on management’s credit evaluationliquidity 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 counterparty.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.
791.    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.
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The following table presents information regarding amounts and timinga breakdown of our future contractual obligations and contingent commitmentsliquidity portfolio by type of financial assets as of March 31, 2020.2022 and 2023 and averages maintained for the years ended March 31, 2022 and 2023. Yearly averages are calculated using
month-end
amounts.
                     
 
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)The amounts disclosed
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.
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.
   
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.
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
” in our consolidated financial statements included within this annual report.
The following table presents a breakdown of our liquidity portfolio by entity as of March 31, 2022 and 2023.
   
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 
  
 
 
   
 
 
 
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Table of Contents
(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.
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.
   
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 
  
 
 
   
 
 
 
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.
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Table of Contents
The following table presents an analysis of our short-term unsecured debt by type of financial liability as of March 31, 2022 and 2023.
   
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 
  
 
 
   
 
 
 
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.
   
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 borrowings exclude financial liabilitiesdebt securities issued by consolidated special purpose entities and similar entities that meet the definition of variable interest entities under ASC 810 “
Consolidation
” and secured financing transactions recognized within long-term
Long-term borrowings
as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860. These are not borrowings issued for our own funding purposes860 “
Transfer and therefore do not represent actual contractual obligations by us to deliver cash.Servicing.
”
(2)The amounts represent estimated future interest payments related to long-time borrowings based on the period through to their maturity and applicable interest rates as of March 31, 2020.
(3)The amounts of operating lease commitments are undiscounted future minimum lease payments. The amounts of finance lease contracts were immaterial.
(4)The minimum contractual obligations under enforceable and legally binding contracts that specify all significant terms. Amounts exclude obligations that are already reflected on our consolidated balance sheets as liabilities or payables. Includes the commitment to purchase parts of the redeveloped real estate in Tokyo Nihonbashi district from the redevelopment partnership. See Note 23 “
Significant subsequent events
” for further information.
(5)Contingent liquidity facilities to central clearing counterparties are included.
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 ¥1,969 billion for reverse repurchase agreements and ¥677 billion for repurchase agreements as of March 31, 2020.76
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Item 6. Directors, Senior Management
3.3    Maturity Profile
We also seek to maintain an average maturity for our plain vanilla debt securities and Employeesborrowings 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.
A. Directors and Senior Management.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 “
DirectorsCollateralized transactions
” in our consolidated financial statements.
The following table provides information about Directors of the Company as of June 30, 2020.77
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Koji Nagai
(Jan. 25, 1959)
Director
Chairman of Board Directors
Member of the Nomination Committee
Member of the Compensation Committee
Director and Chairman of Nomura Securities Co., Ltd.
Apr. 1981
Joined the Company
Apr. 2003
Director of Nomura Securities Co., Ltd.
Jun. 2003
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2007
Executive Managing Director of Nomura Securities Co., Ltd.
Oct. 2008
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2009
Executive Managing Director and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2011
Co-COO
and Deputy President of Nomura Securities Co., Ltd.
Apr. 2012
Senior Managing Director of the Company
Director and President of Nomura Securities Co., Ltd.
Aug. 2012
Representative Executive Officer & Group CEO of the Company
Director and President of Nomura Securities Co., Ltd.
Jun. 2013
Director, Representative Executive Officer & Group CEO of the Company
Director and President of Nomura Securities Co., Ltd.
Apr. 2017
Director, Representative Executive Officer, President & Group CEO of the Company
Director and Chairman of Nomura Securities Co., Ltd.
Apr. 2020
Director and Chairman of the Company (Current)
Director and Chairman of Nomura Securities Co., Ltd. (Current)
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Table of Contents
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kentaro Okuda
(Nov. 7, 1963)
Director, Representative Executive Officer, President and Group CEO
Representative Director of Nomura Securities Co., Ltd.
Apr. 1987
Joined the Company
Apr. 2010
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2012
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Aug. 2012
Senior Corporate Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2013
Senior Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2015
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director of the Company
Executive Managing Director and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2017
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2018
Executive Managing Director, and Group
Co-COO
and Head of Americas (based in New York) of the Company
Director, Executive Managing Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 2019
Executive Managing Director and Deputy President, Group
Co-COO
of the Company
Apr. 2020
Representative Executive Officer and President, Group CEO of the Company
Representative Director of Nomura Securities Co., Ltd.
Jun. 2020
Director, Representative Executive Officer, President & Group CEO of the Company (Current)
Representative Director of Nomura Securities Co., Ltd. (Current)
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Table of Contents
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Toshio Morita
(Apr. 17, 1961)
Director, Representative Executive Officer
Representative Director and President of Nomura Securities Co., Ltd.
Apr. 1985
Joined the Company
Apr. 2008
Executive Managing Director of Nomura Securities Co., Ltd.
Oct. 2008
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2010
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2011
Senior Corporate Managing Director of the Company
Apr. 2012
Senior Corporate Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Aug. 2012
Executive Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2015
Executive Managing Director of the Company
Representative Executive Officer and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2016
Representative Executive Officer and Deputy President of Nomura Securities Co., Ltd.
Apr. 2017
Executive Managing Director of the Company
Director, Representative Executive Officer and President of Nomura Securities Co., Ltd.
Apr. 2018
Executive Managing Director and Group
Co-COO
of the Company
Director, Representative Executive Officer and President of Nomura Securities Co., Ltd.
Apr. 2019
Executive Managing Director and Group
Co-COO
of the Company
Representative Director and President of Nomura Securities Co., Ltd.
Apr. 2020
Representative Executive Officer of the Company
Representative Director and President of Nomura Securities Co., Ltd.
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Table of Contents
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Jun. 2020
Director, Representative Executive Officer of the Company (Current)
Representative Director and President of Nomura Securities Co., Ltd. (Current)
Hisato Miyashita
(Dec. 26, 1958)
Director
Member of the Audit Committee
(full-time)
Statutory Auditor of Nomura Financial Products & Services, Inc.
Jul. 1987
Joined the Company
Jun. 1993
Joined Union Bank of Switzerland (currently, UBS)
Aug. 1996
Joined Bankers Trust Asia Securities Ltd.
Apr. 1998
Joined Credit Suisse First Boston Securities (Japan) Limited
Dec. 1999
Joined Nikko Citigroup Limited (currently, Citigroup Global Markets Japan Inc.)
Mar. 2005
Executive Officer of Nikko Citigroup Limited, Internal Control Supervisory Manager
Jul. 2009
Managing Director of Group Compliance Department of the Company
Apr. 2012
Senior Managing Director of the Company, Head of Wholesale Compliance
Jun. 2012
Senior Managing Director of the Company, Group Compliance Head Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2013
Senior Managing Director of the Company, Group Compliance Head Representative Executive Officer of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
Apr. 2015
Senior Managing Director of the Company, Deputy Chief of Staff and Group Compliance Head
Representative Executive Officer and Senior Corporate Managing Director of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
Apr. 2016
Advisor of the Company
Jun. 2016
Director of the Company (Current)
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Table of Contents
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Hiroshi Kimura
(Apr. 23, 1953)
Outside Director
Chairman of the Nomination Committee
Chairman of the Compensation Committee
Honorary Company Fellow of Japan Tobacco Inc.
Apr. 1976
Joined Japan Tobacco and Salt Public Corporation (currently, Japan Tobacco Inc.) (“JT”)
Jun. 1999
Director of JT
Jun. 2001
Resigned as Director of JT
Jun. 2005
Director of JT
Jun. 2006
President and CEO and Representative Director of JT
Jun. 2012
Chairman of the Board of JT
Jun. 2014
Special Advisor of JT
Jun. 2015
Outside Director of the Company (Current)
Jul. 2016
Advisor of JT
Mar. 2018
Honorary Company Fellow of JT (Current)
Kazuhiko Ishimura
(Sep. 18, 1954)
Outside Director
Member of the Nomination Committee
Member of the Compensation Committee
Director of AGC Inc.
Outside Director of TDK Corporation
Outside Director of IHI Corporation
President of the National Institute of Advanced Industrial Science and Technology
Apr. 1979
Joined Asahi Glass Co., Ltd. (currently, AGC Inc.) (“AGC”)
Jan. 2006
Executive Officer and GM of Kansai Plant of AGC
Jan. 2007
Senior Executive Officer and GM of Electronics & Energy General Division of AGC
Mar. 2008
Representative Director and President & COO of AGC
Jan. 2010
Representative Director and President & CEO of AGC
Jan. 2015
Representative Director & Chairman of AGC
Jan. 2018
Director & Chairman of AGC
Jun. 2018
Outside Director of the Company (Current)
Mar. 2020
Director of AGC (Current)
Apr. 2020
President of the National Institute of Advanced Industrial Science and
Technology (Current)
Noriaki Shimazaki
(Aug. 19, 1946)
Outside Director
Chairman of the Audit Committee
Director of Nomura Securities Co., Ltd.
Outside Director of Loginet Japan Co., Ltd.
Apr. 1969
Joined Sumitomo Corporation
Jun. 1998
Director of Sumitomo Corporation
Apr. 2002
Representative Director and Managing Director of Sumitomo Corporation
Jan. 2003
Member of the Business Accounting Council of the Financial Services Agency
Apr. 2004
Representative Director and Senior Managing Executive Officer of Sumitomo Corporation
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2005
Representative Director and Executive Vice President of Sumitomo Corporation
Jan. 2009
Trustee of the IASC (currently, IFRS Foundation)
Jul. 2009
Special Advisor of Sumitomo Corporation
Jun. 2011
Director of the Financial Accounting Standards Foundation
Chairman of Self-regulation Board and Public Governor of the Japan Securities Dealers Association
Sep. 2013
Advisor of the IFRS Foundation Asia-Oceania Office (Current)
Advisor of the Japanese Institute of Certified Public Accountants (Current)
Jun. 2016
Outside Director of the Company (Current)
Director of Nomura Securities Co., Ltd. (Current)
Mari Sono
(Feb. 20, 1952)
Outside Director
Member of the Audit Committee
Oct. 1976
Joined NISSHIN Audit Corporation(*)
Mar. 1979
Registered as Certified Public Accountant
Nov. 1988
Partner of CENTURY Audit Corporation(*)
Nov. 1990
Member of “Certified Public Accountant Examination System Subcommittee”, Certified Public Accountant Examination and Investigation Board, Ministry of Finance
Apr. 1992
Member of “Business Accounting Council”, Ministry of Finance
Dec. 1994
Senior Partner, CENTURY Audit Corporation(*)
Oct. 2002
Member of Secretariat of the Information Disclosure, Cabinet Office (currently, Secretariat of the Information Disclosure and Personal Information Protection Review Board, Ministry of Internal Affairs and Communications)
Apr. 2005
External Comprehensive Auditor, Tokyo
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Table of Contents
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Jul. 2008
Senior Partner of Ernst & Young ShinNihon LLC
Aug. 2012
Retired Ernst & Young ShinNihon LLC
Dec. 2013
Commissioner of the Securities and Exchange Surveillance Commission
Jun. 2017
Outside Director of the Company (Current)
* Each of the corporation is currently Ernst & Young ShinNihon LLC
Michael Lim Choo
San
(Sep. 10, 1946)
Outside Director
Non-Executive
Chairman of Fullerton Healthcare Corporation Limited
Non-Executive
Chairman of Nomura Singapore Ltd.
Aug. 1972
Joined Price Waterhouse, Singapore
Jan. 1992
Managing Partner of Price Waterhouse, Singapore
Oct. 1998
Member of the Singapore Public Service Commission (Current)
Jul. 1999
Executive Chairman of PricewaterhouseCoopers, Singapore
Sep. 2002
Chairman of the Land Transport Authority of Singapore
Sep. 2004
Independent Director of Olam International Limited
Jun. 2011
Outside Director of the Company (Current)
Nov. 2011
Chairman of the Accounting Standards Council, Singapore
Apr. 2013
Chairman of the Singapore Accountancy Commission
Sep. 2016
Non-Executive
Chairman of Fullerton Healthcare Corporation Limited (Current)
Laura Simone Unger
(Jan. 8, 1961)
Outside Director
Independent Director of CIT Group Inc.
Independent Director of Navient Corporation
Independent Director of Nomura Securities International, Inc.
Jan. 1988
Enforcement Attorney of U.S. Securities and Exchange Commission (SEC)
Oct. 1990
Counsel of U.S. Senate Committee on Banking, Housing, and Urban Affairs
Nov. 1997
Commissioner of SEC
Feb. 2001
Acting Chairperson of SEC
Jul. 2002
Regulatory Expert of CNBC
May 2003
Independent Consultant of JPMorgan Chase & Co.
Aug. 2004
Independent Director of CA Inc.
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Table of Contents
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Jan. 2010
Special Advisor of Promontory Financial Group
Dec. 2010
Independent Director of CIT Group Inc. (Current)
Nov. 2014
Independent Director of Navient Corporation (Current)
Jun. 2018
Outside Director of the Company (Current)
Among the Directors listed above, Hiroshi Kimura, Kazuhiko Ishimura, Noriaki Shimazaki, Mari Sono, Michael Lim Choo San and Laura Simone Unger satisfy the requirements for an “Outside Director” under the Companies Act.
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Executive Officers
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 table provides information abouttwo primary scenarios:
Stressed scenario—To maintain adequate liquidity during a severe market-wide liquidity event without raising funds through unsecured financing or through the Company’s Executive Officers asliquidation of June 30, 2020.assets for a year; and
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kentaro Okuda
(Nov. 7, 1963)
See “
Directors
” under this Item 6.A.
See “
Directors
” under this Item 6.A.
Toshio Morita
(Apr. 17, 1961)
See “
Directors
” under this Item 6.A.
See “
Directors
” under this Item 6.A.
Junko Nakagawa
(Jul. 26, 1965)
Executive Managing Director
Head of Asset Management
Representative Director, President and CEO of Nomura Asset Management Co., Ltd.
Apr. 1988
Joined the Company
Mar. 2004
Retired Nomura Securities Co., Ltd.
Jan. 2008
Joined Nomura Healthcare Co., Ltd.
Apr. 2008
Representative Director and President of Nomura Healthcare Co., Ltd.
Jun. 2010
Director of Nomura Healthcare Co., Ltd.
Rejoined Nomura Securities Co., Ltd.
Apr. 2011
Executive Managing Director and Chief Financial Officer of the Company
Executive Managing Director and Financial Officer of Nomura Securities Co., Ltd.
Apr. 2013
Senior Managing Director of the Company
Apr. 2016
Senior Managing Director of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2017
Executive Managing Director and Executive Vice President of Nomura Asset Management Co., Ltd.
Apr. 2019
Executive Managing Director and Head of Asset Management of the Company (Current)
Representative Director, President and CEO of Nomura Asset Management Co., Ltd. (Current)
89
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.
Table
We assume that Nomura will not be able to liquidate assets or adjust its business model during the time horizons used in each of Contentsthese 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.
Name
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;
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Tomoyuki Teraguchi
(Aug. 4, 1962)
Executive Managing Director
Chief of Staff and Chief Compliance Officer
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 1986
Joined the Company
Apr. 2009
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director of the Company
Representative Executive Officer of Nomura Securities Co., Ltd.
Apr. 2017
Senior Managing Director of the Company
Representative Executive Officer and Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2019
Executive Managing Director and Chief Compliance Officer of the Company
Representative Director and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2020
Executive Managing Director, Chief of Staff and Chief Compliance Officer of the Company (Current)
Representative Director and Deputy President of Nomura Securities Co., Ltd. (Current)
Takumi Kitamura
(Nov. 26, 1966)
Executive Managing Director
Chief Financial Officer
Director and Senior Corporate Managing
Director of Nomura Securities Co., Ltd.
Apr. 1990
Joined the Company
Apr. 2016
Executive Managing Director and Chief Financial Officer of the Company
Executive Managing Director and Financial Officer of Nomura Securities Co., Ltd.
Apr. 2019
Executive Managing Director and Chief Financial Officer of the Company (Current)
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
Sotaro Kato
(Oct. 9, 1969)
Executive Managing Director
Chief Risk Officer
Director and Senior Corporate Managing
Director of Nomura Securities Co., Ltd.
Sep. 2002
Joined the Company
Apr. 2020
Executive Managing Director and Chief Risk Officer of the Company (based in New York) (Current)
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
90
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;
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B. CompensationAssuming a
two-notch
downgrade of Statutory Officers
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; and
Nomura’s compensation program for statutory officers is outlined as following.
1.    Compensation program
Legal and regulatory requirements that can restrict the flow of funds between entities in the Nomura Group.
(1) Compensation policy
6.    Contingency Funding Plan
We have developed a detailed contingency funding plan to integrate liquidity risk control into our compensation policycomprehensive 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 senior managementNomura-specific and employeesmarket-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 Nomura Group to enable us to achieve sustainable growth, realize a long-term increase in shareholder value, deliver client excellence, compete in a global marketabove notices. As for the NSFR, the revision of the liquidity regulatory notice was published by Financial Services Agency (on March 31, 2021) and enhance our reputation.
Our compensation policy is based aroundit has been implemented from the following six key themes. It aims to:
1.align with Nomura values and strategies;
2.reflect group, divisional and individual performance;
3.establish appropriate performance measurement with a focus on risk;
4.align employee and shareholder interests;
5.establish appropriate compensation structures; and
6.ensure robust governance and control processes.
end of September 2021. Nomura’s NSFR as of March 31, 2023 was compliant with the regulatory requirements.
(2) Nomura’s compensation frameworkCash Flows
Nomura delivers compensationNomura’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 senior management and employees through fixed and variable components. The key objectives of these components are provided below, together with the specific elements of each component.such activities. As a financial institution, growth in operations tends to result in cash outflows from operating activities as well as investing
.
Compensation
Components
Objectives
Specific Elements
Fixed Compensation
•
Rewards individuals for their knowledge, skills, competencies and experiences
•
Base salary
•
Reflects local labor market standards
•
Reflects practices of local labor markets to deliver allowances as a part of fixed compensation to individuals
•
•
Housing allowances
Overtime pay
Variable Compensation
•
Rewards team and individual performances, and their contribution to results as well as the Company’s strategic and future value
•
•
Cash bonuses
Deferred compensation
•
Reflects appropriate internal and market-based peer comparisons
•
Reflects broad views on compensation, including individual performances, approaches to risk, compliance and cross-divisional cooperation
Note: Benefits driven by local market regulations and practices are not included in the above.79
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(3) Determination process for fixedactivities. For the year ended March 2022, we recorded net cash outflows from operating activities and variable compensations
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.
FixedThe following table presents the summary information on our consolidated cash flows for the years ended March 31, 2022 and variable compensations are determined based on various aspects such as internal and market-based peer comparisons, local and regional labor market standards and practices, besides some KPIs listed below sections. The total compensation amount determined here makes the percentage of variable compensation which is linked to organizational and individual performance.2023.
(a) Fixed compensation
   
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 
  
 
 
  
 
 
 
Fixed compensation is primarily consisted of base salary and other allowances.
Base salary is determined by reflecting individual role, responsibility, knowledge, skills, competencies, experience, etc. Other allowances are determined by reflectingSee the local labor market standards and practices.
(b) Variable compensation
Variable compensation is consistedconsolidated statements of cash bonusesflows 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 deferred compensation, which are performance-linked compensations.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
In determining performance-linked compensation, following indicators are referred: Income before income taxes, Net income attributable to NHI shareholders (Diluted), Cash dividends, and share prices. In addition to referring these financial indicators, the total compensation is determined by comprehensively considering individual responsibility and performance, as well as trends of global competitors and industry-wide compensation movements.
(b
-1)
Cash Bonuses
A proportion of variable compensation is delivered in the form of a cash payment following the end of the fiscal year. Individuals with higher levels of compensation receive a lower proportion in cash. This is in line with regulatory guidance, and while the policy is global in application, specific local regulatory requirements are adhered to when deciding on proportions of cash bonuses.
(b
-2)
Deferred Compensation
Certain senior management and employees whose compensation is above a certain level receive a portion of their variable compensation through deferred compensation awards. By linking the economic value of a. As part of compensationtrading activities, while there were net cash outflows of ¥1,109.2 billion mainly due to the pricean increase in
Trading assets and private equity and debt investments,
they were offset by net cash inflows of the Company’s stock¥244.0 billion from repo transactions and imposing certain vesting conditions,securities borrowed and loaned transactions such plans will:as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
align employee interest with thatSecurities borrowed, net of shareholders;Securities loaned.
increase employee retention through providing opportunities to grow personal wealth over the period from grant to vesting; and
encourage cross-divisional and cross-regional collaboration by focusing individuals on a common goal of long-term increase in corporate value.
As a result, net cash of these benefits, deferred compensation awards are also recommended¥974.8 billion was used in operating activities.
For the year ended March 31, 2022, our cash, cash equivalents, restricted cash and restricted cash equivalents decreased by regulators¥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
. As part of trading activities, while there were net cash inflows of ¥969.6 billion mainly due to a decrease in the key jurisdictions in which we operate.
Trading assets and
The deferral period over which our deferred compensation awards vest is generally three or more years. This is in line with the “Principles for Sound Compensation Practices” issuedprivate equity and debt investments,
they were offset by the Japanese Financial Stability Board which recommends, among other things, a deferral periodnet cash outflows of three or more years.¥1,625.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to
All current deferred compensation awards except Plan A awards include “Full Career Retirement” (“FCR”) provisions which permit recipients of the awards to continue to vest in the awards upon voluntary termination if certain criteria are met.
80
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resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥1,368.7 billion was used in operating activities.
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.
Total liabilities as of March 31, 2023, were ¥44,547.7 billion, an increase of ¥4,108.3 billion compared with ¥40,439.4 billion as of March 31, 2022, reflecting primarily an increase in
Securities sold under agreements to repurchase
. NHI shareholders’ equity as of March 31, 2023 was ¥3,148.6 billion, an increase of ¥234.0 billion compared with ¥2,914.6 billion as of March 31, 2022, primarily due to an increase in
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 summarizes the main featurespresents NHI shareholders’ equity, total assets, adjusted assets and leverage ratios as of the key types of deferred compensation awards currently granted by Nomura to senior managementMarch 31, 2022 and employees. Unless otherwise stated, deferred compensation awards are generally reduced, forfeited or clawed back in the event of termination of employment, material conduct issues, material downturns in performance of the Nomura Group and/or a material failure of risk management.2023.
   
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 
Type of award
Key features
Restricted Stock Unit (“RSU”) awards
•
Settled in the Company’s common stock.
 
(1)
Represents total assets less
Securities purchased under agreements to resell
and
Securities borrowed
. Adjusted assets is a
non-GAAP
financial measure and is calculated as follows:
•
(2)
Graded vesting period generally over three years.
•
Extended 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 in Nomura.
•
New type of award introduced in 2018 as the primary type of deferred compensation award in Nomura. Granted in May 2018 in respect of the prior fiscal year.
Notional Stock Unit
(“NSU”) awards
•
Linked to the price of Company’s common stock and cash-settled.
•
Graded vesting period generally over three years. Extended vesting period of up to seven years for certain senior management and employees based on the role they perform in Nomura in order to meet local regulatory requirements.
•
Used in countries where equity-settled RSU awards are less favorably treated from a tax or other perspective.
•
Following the introduction of RSU awards, NSU awards are less commonly used in Nomura.
•
Granted in May each year in respect of the prior fiscal year and also quarterly to new employees as a recruitment incentive to replace awards forfeited from prior employers.
Stock Acquisition Right (“SAR”) Plan A awards
•
Exercisable into 100 of the Company’s common stock.
•
Exercise price not less than the fair value of the Company’s common stock on grant date.
•
Cliff vesting period of two years.
•
Expire approximately seven years after grant date.
•
Not subject to claw back.
•
Granted in November each year in respect of various performance periods.
Equals total assets divided by NHI shareholders’ equity.
(3)
Equals adjusted assets divided by NHI shareholders’ equity.
Following the introduction of Restricted Stock Unit (“RSU”) awards in 2018 as the primary type of deferred compensation award to be used by Nomura, certain core deferral awards and all supplemental awards are no longer used by Nomura.
   
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 
  
 
 
   
 
 
 
For fiscal years ended March 31, 2017 and prior fiscal years, we granted SAR Plan B awards as a type of core deferral award to certain senior management which are stock unit awards linked to price of the Company’s common stock pursuant to several stock unit plans designed to replicate the structure of restricted stock awards commonly used in the United States and Europe. These awards are physically-settled upon exercise into the Company’s common stock, have an exercise price of ¥1 per share and graded vesting generally over three years81
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with certain longer vesting or holding periods where requiredTotal assets increased by 10.0% reflecting primarily an increase in
Securities purchased under localagreements to resell.
Total NHI shareholders’ equity increased by 8.0% reflecting primarily an increase in
Accumulated other comprehensive income
. As a result, our leverage ratios were 14.9 times as of March 31, 2022 and 15.2 times as of March 31, 2023.
Adjusted assets increased primarily due to an increase in
Cash and cash equivalents
. As a result, our adjusted leverage ratios were 9.1 times as of March 31, 2022 and 9.4 times as of March 31, 2023.
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 are subjectother changes to forfeiture, reduction or clawback in the same wayregulatory environment as well as the above awards.Company’s consolidated financial performance.
For fiscal years endedStarting 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, 2011 through to March 31, 2017, we granted supplemental deferral awards comprising Collared Notional Stock Unit (“CSU”) awards and Notional Index Unit (“NIU”) awards. CSU awards are linked to2023. As a result, the price of the Company’s stock subject to a cap and a floor and NIU awards are linked to a world stock index quoted by Morgan Stanley Capital International. Both types of award are cash-settled with graded vesting generally over three years with certain longer vesting periods where required by local regulations, and are subject to forfeiture, reduction or clawback in the same way as the above awards.total annual dividend will be ¥17 per share.
FollowingThe following table presented the introductionamounts of RSU awards, no new SAR Plan B, CSU or NIU awards were granted in May 2018dividends per share paid by us in respect of the fiscal year ended March 31, 2018. However, existing unvested awards continue to vest in accordance with their original contractual terms.periods indicated:
(b
-3)
Consistency with risk management and linkage to performance
In determining aggregate compensation, Nomura considers the ratio of compensation and benefit expenses to adjusted net income (defined as net income before income taxes and before deduction of compensation and benefits expenses followed by a specific risk adjustment). The risk adjustment to income is determined by deducting a certain proportion of economic capital from each division’s revenue. Such economic capital comprehensively recognizes quantitatively assessed risks, and reflects various risks including market, credit, liquidity, and operational risks.
Nomura recognizes that its aggregate compensation should maintain consistency with the current financial soundness and future prospects of Nomura, and that it should not have significant impact on capital adequacy in the future.
2.    Compensation for Directors and Executive 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, a Compensation Committee of Nomura determines compensation of its Directors and Executive Officers in accordance with our applicable compensation policy.
2-1.     Aggregate compensation
                     
 
Number of
Directors or
Executive
Officers
(1)
  
Millions of yen
 
Year ended March 31, 2020
 
Basic Compensation
(2)(3)
  
Bonus
  
Deferred Compensation
(4)
  
Total
 
Directors
  
8
  ¥
253
  ¥
100
  ¥
15
  ¥
368
 
(Outside Directors included in above)
  
(6
)  
(129
)  
(  —  
)  
(  —  
)  
(129
) 
Executive Officers
  
8
   
560
   
538
   
203
   
1,301
 
                     
Total
  
16
  ¥
813
  ¥
638
  ¥
218
  ¥
1,669
 
                     
 
(1)Compensation to Directors who were concurrently serving as Executive Officers is included in that of Executive Officers.
(2)Basic compensation of ¥813 million includes other compensation (such as commuter pass allowances) of ¥750 thousand.
(3)In addition to basic compensation of Executive Officers, ¥27 million of corporate housing costs, such as housing allowance and related tax adjustments, were provided.
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 
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(4)Deferred compensation (such as RSU, SAR Plan A and B) granted during and prior to the fiscal year ended March 31, 2020 is recognized as expense in the financial statements for the fiscal year ended March 31, 2020.
(5)Subsidiaries of the Company paid ¥61 million to Outside Directors as compensation etc. for their directorship at those subsidiaries for the year ended March 31, 2020.
(6)The Company abolished retirement bonuses to Directors in 2001.
2-2. Individual compensation of Directors and Executive Officers receiving
¥100 million or more
                                     
     
Millions of yen
 
     
Fixed Remuneration
(Basic Compensation)
  
Variable Compensation
(1)
   
Name
 
Company
  
Category
  
Base Salary
  
Equity
Compensation
(RSUs)
  
Total
  
Cash
Bonus
  
Deferred
Compensation
(RSUs, etc.)
  
Total
  
Total
 
Nobuyuki Koga
  
Nomura
   
Chairman of the Board of Directors
  ¥
87
  ¥
—  
  ¥
87
  ¥
83
  ¥
83
  ¥
167
  ¥
254
 
Koji Nagai(2)(3)
  
Nomura
   
Director,
Representative
Executive
Officer
(Group CEO)
  ¥
94
  ¥
17
  ¥
112
  ¥
155
  ¥
155
  ¥
311
  ¥
422
 
Syoichi Nagamatsu(2)
  
Nomura
   
Director,
Representative Executive Officer,
Deputy President
  ¥
72
  ¥
14
  ¥
86
  ¥
106
  ¥
106
  ¥
211
  ¥
297
 
Kentaro Okuda(2)(4)
  
Nomura
   
Executive Managing Director, Deputy President
(Group
Co-COO)
  ¥
82
  ¥
15
  ¥
97
  ¥
90
  ¥
90
  ¥
181
  ¥
277
 
Toshio Morita(2)
  
Nomura
   
Executive Managing Director
(Group
Co-COO)
  ¥
80
  ¥
15
  ¥
95
  ¥
90
  ¥
90
  ¥
181
  ¥
275
 
Yuji Nakata
  
Nomura
   
Executive Managing Director
  ¥
66
  ¥
13
  ¥
79
  ¥
46
  ¥
46
  ¥
93
  ¥
172
 
Tomoyuki Teraguchi(2)
  
Nomura
   
Executive Managing Director
  ¥
59
  ¥
13
  ¥
72
  ¥
18
  ¥
18
  ¥
37
  ¥
109
 
(1)Variable Compensation indicates the amount determined as remuneration based on the performance during the fiscal year ended March 31, 2020.
(2)The amount reflects voluntary salary cut, conducted in May 2019.
(3)In addition to basic compensation, ¥24 million of corporate housing costs, such as housing allowance and related tax adjustments, were provided.
(4)In addition to basic compensation, ¥3 million of corporate housing costs, such as housing allowance and related tax adjustments, were provided.
2-3.
    Status of indicators referred in determining performance-linked compensation
Performance-linked compensation has been determined based on the mechanism described in above sections and certain indicators. Changes of the indicators between actuals of previous fiscal year and current year are referred in determining the performance-linked compensation as well as other qualitative information, compensation trends among competitors and industry.82
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Please refer
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 Item 3.A. 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.
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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.
   
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% 
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 the
COVID-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%.
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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 the
G-SIBs
including the recovery and resolution plan. The group of
G-SIBs
have been updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIBs.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-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 for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
In November 2015, the FSB issued the final TLAC standard for
G-SIBs.
The TLAC standard has been designed so that failing
G-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 Japanese
G-SIBs
and, in April 2018, revised such policy to apply the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-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 Japanese
G-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 a
G-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 from
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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
basis considering the actual condition of the relevant the TLAC Covered SIBs in crisis.
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.
Nomura Holdings, Inc.
Short-term Debt
Long-term Debt
S&P Global Ratings
A-2BBB+ (Stable)
Moody’s Investors Service
—  Baa1 (Negative)
Fitch Ratings
F1A- (Stable)
Rating and Investment Information, Inc.
a-1A (Stable)
Japan Credit Rating Agency, Ltd.
—  AA- (Stable)
Nomura Securities Co., Ltd.
Short-term Debt
Long-term Debt
S&P Global Ratings
A-2A- (Stable)
Moody’s Investors Service
P-2A3 (Negative)
Fitch Ratings
F1A- (Stable)
Rating and Investment Information, Inc.
a-1A+ (Stable)
Japan Credit Rating Agency, Ltd.
—  AA- (Stable)
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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 actual values of the referring indicators.
3.    Compensation governanceyears ended March 31, 2019, 2020, 2021, 2022 and control
2023 which is derived from our consolidated financial statements.
The Compensation Committee of Nomura, which is a statutory committee, is responsible for approving our overall compensation policy and for ensuring that the Nomura Group’s compensation framework supports our business strategy.
The Compensation Committee was held 8 times during the fiscal year to review and determine policies, framework, and individual compensation of directors and executive officers. To ensure effective discussion and determination at the Compensation Committee, executive officers are invited. Regarding the members of the Compensation Committee, please refer to Item 6.A. “
Directors and Senior Management.
”
The Compensation Committee’s activities during the fiscal year are following, variable compensation were discussed and determined on April 25, 2019. In addition, voluntary salary cut was reported on May 24, 2019. On June 24, 2019, after the appointment of directors at the annual shareholder meeting, the Compensation Committee reviewed and confirmed our compensation policy and determined fixed compensation for new directors. Also, checked and confirmed a partial amendment of the Nomura Group Compensation Policy. Furthermore, held 3 consequtive meetings since August 26, 2019, for discussing compensation control of directors and executive officers, which resulted to a resolution for a few sections on March 3, 2020, aiming to apply from the performance period ending March 31, 2021. On March 30, 2020, the fixed remuneration was determined for newly appointed executive officers as of April 1.
   
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% 
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(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.
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
” in our consolidated financial statements included in this annual report.
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 leveraged
buy-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.
   
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 
  
 
 
   
 
 
   
 
 
 
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
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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
” in our consolidated financial statements included in this annual report.
Accounting Developments
See Note 1“
Summary of accounting policies: New accounting pronouncements adopted during the current year
” in our consolidated financial statements included in this annual report.
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
, respectively, in the consolidated balance sheets as of March 31, 2023.
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
assets
47,775
Other
7,524
Total deferred tax liabilities
299,424
Net deferred tax assets (liabilities)
¥(71,188) 
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.
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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.
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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.
   
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.
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.
   
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.
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
” in our consolidated financial statements included within this annual report.
The following table presents a breakdown of our liquidity portfolio by entity as of March 31, 2022 and 2023.
   
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 
  
 
 
   
 
 
 
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(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.
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.
   
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 
  
 
 
   
 
 
 
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.
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The following table presents an analysis of our short-term unsecured debt by type of financial liability as of March 31, 2022 and 2023.
   
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 
  
 
 
   
 
 
 
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.
   
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
” and secured financing transactions recognized within
Long-term borrowings
as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860 “
Transfer and Servicing.
”
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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
” in our consolidated financial statements.
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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;
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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; and
Legal 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
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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.
   
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 
  
 
 
  
 
 
 
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
. As part of trading activities, while there were net cash outflows of ¥1,109.2 billion mainly due to an increase in
Trading assets and private equity and debt investments,
they were offset by net cash inflows of ¥244.0 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥974.8 billion was used in operating activities.
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
. As part of trading activities, while there were net cash inflows of ¥969.6 billion mainly due to a decrease in
Trading assets and
private equity and debt investments,
they were offset by net cash outflows of ¥1,625.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to
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resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥1,368.7 billion was used in operating activities.
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.
Total liabilities as of March 31, 2023, were ¥44,547.7 billion, an increase of ¥4,108.3 billion compared with ¥40,439.4 billion as of March 31, 2022, reflecting primarily an increase in
Securities sold under agreements to repurchase
. NHI shareholders’ equity as of March 31, 2023 was ¥3,148.6 billion, an increase of ¥234.0 billion compared with ¥2,914.6 billion as of March 31, 2022, primarily due to an increase in
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.
   
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
and
Securities borrowed
. Adjusted assets is a
non-GAAP
financial measure and is calculated as follows:
(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 
  
 
 
   
 
 
 
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Total assets increased by 10.0% reflecting primarily an increase in
Securities purchased under agreements to resell.
Total NHI shareholders’ equity increased by 8.0% reflecting primarily an increase in
Accumulated other comprehensive income
. As a result, our leverage ratios were 14.9 times as of March 31, 2022 and 15.2 times as of March 31, 2023.
Adjusted assets increased primarily due to an increase in
Cash and cash equivalents
. As a result, our adjusted leverage ratios were 9.1 times as of March 31, 2022 and 9.4 times as of March 31, 2023.
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:
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 
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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.
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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.
   
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% 
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 the
COVID-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%.
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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 the
G-SIBs
including the recovery and resolution plan. The group of
G-SIBs
have been updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIBs.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-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 for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
In November 2015, the FSB issued the final TLAC standard for
G-SIBs.
The TLAC standard has been designed so that failing
G-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 Japanese
G-SIBs
and, in April 2018, revised such policy to apply the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-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 Japanese
G-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 a
G-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 from
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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
basis considering the actual condition of the relevant the TLAC Covered SIBs in crisis.
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.
Nomura Holdings, Inc.
Short-term Debt
Long-term Debt
S&P Global Ratings
A-2BBB+ (Stable)
Moody’s Investors Service
—  Baa1 (Negative)
Fitch Ratings
F1A- (Stable)
Rating and Investment Information, Inc.
a-1A (Stable)
Japan Credit Rating Agency, Ltd.
—  AA- (Stable)
Nomura Securities Co., Ltd.
Short-term Debt
Long-term Debt
S&P Global Ratings
A-2A- (Stable)
Moody’s Investors Service
P-2A3 (Negative)
Fitch Ratings
F1A- (Stable)
Rating and Investment Information, Inc.
a-1A+ (Stable)
Japan Credit Rating Agency, Ltd.
—  AA- (Stable)
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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 entities
In the normal course of business, we engage in a variety of
off-balance
sheet arrangements with
off-balance
sheet entities which may have an impact on Nomura’s future financial position and performance.
Off-balance
sheet arrangements with
off-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
” in our consolidated financial statements included in this annual report.
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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
” in our consolidated financial statements contains further detail on our operating leases and finance leases. Note 10 “
Borrowings
” in our consolidated financial statements contains further detail on our short-term and long-term borrowing obligations and Note 19 “
Commitments, contingencies and guarantees
” in our consolidated financial statements included in this annual report contains further detail on our other commitments, contingencies and guarantees.
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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
basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on management’s credit evaluation of the counterparty.
The following table presents information regarding amounts and timing of our future contractual obligations and contingent commitments as of March 31, 2023.
   
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
  ¥1,544,159   ¥1,517,287   ¥15,903   ¥10,258   ¥711 
Long-term borrowings
(1)
   9,985,597    619,672    3,605,633    1,614,747    4,145,545 
Contractual interest payments
(2)
   1,623,599    238,543    379,912    245,268    759,876 
Operating lease commitments
(3)
   203,898    44,455    64,222    42,474    52,747 
Purchase obligations
(4)
   99,134    21,501    10,886    64,806    1,941 
Commitments to extend credit
(5)
   2,634,229    1,823,017    289,991    338,978    182,243 
Commitments to invest
   21,994    195    1,292    5,003    15,504 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥16,112,610   ¥4,264,670   ¥4,367,839   ¥2,321,534   ¥5,158,567 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
(1)
The amounts disclosed within long-term borrowings exclude financial liabilities recognized within long-term borrowings as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860. These are not borrowings issued for our own funding purposes and therefore do not represent actual contractual obligations by us to deliver cash.
(2)
The amounts represent estimated future interest payments related to long-time borrowings based on the period through to their maturity and applicable interest rates as of March 31, 2023.
(3)
The amounts of operating lease commitments are undiscounted future minimum lease payments. The amounts of finance lease contracts were immaterial.
(4)
The minimum contractual obligations under enforceable and legally binding contracts that specify all significant terms. Amounts exclude obligations that are already reflected on our consolidated balance sheets as liabilities or payables. Includes the commitment to purchase parts of the redeveloped real estate in Tokyo Nihonbashi district from the redevelopment association.
(5)
Contingent liquidity facilities to central clearing counterparties are included.
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.
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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”
in our consolidated financial statements included in this annual report for more information on the critical accounting policies we apply in these areas and the relevant footnote disclosures referred to in the table for more information around how these critical accounting policies and critical accounting estimates have been applied.
Critical
accounting
policy
Critical accounting
estimates
Key subjective assumptions or
judgments by management
Effect of changes in estimates and
assumptions during year ended March 31,
2023
Fair value of financial instruments
Note 2
“Fair value measurements”
Estimating fair value for financial instruments
A significant portion of our financial instruments are carried at fair value. The fair values of these financial instruments may not only be measured at quoted prices but also impacted by other factors, including selection of valuation techniques/ models and other assumptions that require judgment.
This may affect the amount and timing of unrealized gains or losses recognized in the consolidated statements of income for a particular financial instrument.
Selection of appropriate valuation techniques
•  For financial instruments measured at fair values where quoted prices are available in active markets, we typically use quoted prices as level 1 inputs for determining the fair values of these financial instruments.
•  For financial instruments where such quoted prices are not available, fair values of these
See Note 2
“Fair value measurements”
for further information around our valuation methodologies and our policy for classification of financial instruments within the fair value hierarchy.
Level 3 financial assets (net of derivative liabilities) during the year increased from ¥792 billion as of March 2022 to ¥868 billion as of March 2023. Total level 3 financial assets to total financial assets carried at fair value on a recurring basis ratio was 5 % as of March 31, 2023 (6% as of March 31, 2022.)
See Note 2
“Fair Value measurement”
for further quantitative and qualitative information regarding level 3 inputs, including the sensitivity of fair values of the underlying financial instruments to changes in level 3 inputs.
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Critical
accounting
policy
Critical accounting
estimates
Key subjective assumptions or
judgments by management
Effect of changes in estimates and
assumptions during year ended March 31,
2023
financial instruments are measured using level 2 or level 3 inputs. Significant judgment is involved in selection of appropriate valuation techniques and validation of assumptions applied in models because the estimated fair values measured could vary depending on which models and assumptions are used. When selecting valuation techniques, various factors such as the particular circumstances and markets where these financial instruments are traded, the availability of reliable inputs, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs are considered.
Significance of level 3 inputs
•  Fair values are more judgmental when we use level 3 inputs, which are based on significant
non-market
based unobservable inputs.
•  For these instruments, fair value is determined based on management’s judgment about the assumption that market participant would use in pricing the instruments, including perception of liquidity, economic environment and the risks affecting the specific instruments.
Litigation provisions
Note 19
“Commitments, contingencies and guarantees”
Determination of whether a loss is probable and measurement of provisions and reasonably possible lossIn the normal course of business, we may be involved in investigations, lawsuits and other legal proceedings (“legal matters”) and, as a result, may suffer losses from any fines, penalties or settlements we choose to make to resolve the matters. The losses could be significant to our consolidated results of operations. Various judgments and assumptions are required by management around the likelihood of loss in respect of a
See Note 19
“Commitments, contingencies and guarantees”
for details of the various legal matters we are currently involved with, including those where legal provisions have been recognized or where a loss is considered reasonably possible.
If we concluded as of June 28, 2023 that for those legal matters where an estimate of reasonably possible loss can be made, where the risk of loss
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Critical
accounting
policy
Critical accounting
estimates
Key subjective assumptions or
judgments by management
Effect of changes in estimates and
assumptions during year ended March 31,
2023
legal matter and the eventual amount of such loss.
Determination if a loss is probable
•  Recognition of legal provisions are only required if a loss is probable and can be reasonably estimated.
•  Significant judgment required in deciding the likelihood of whether a loss from a legal matter is probable, reasonably possible or remote.
•  Such judgment usually involves consideration of external legal counsel opinion, our own historical experiences in court and similar matters, progress of regulatory investigation or litigation proceedings, and the appetite of management or the counterparty to settle the matter.
•  If a loss is only considered to be reasonably possible or remote, no legal provision is required.
Measurement of a probable or reasonably possible loss
•  Once a loss in respect of a legal matter has been determined as being probable of occurring, a legal provision is recognized when the amount of such loss or a range of loss can be reasonably estimated.
•  Where a loss is reasonably possible rather than probable of occurring, and such loss or range of reasonably possible loss can be reasonably estimated, the reasonably possible maximum loss in excess of any amounts recognized as a legal provision is disclosed.
•  All of the above determination is often inherently difficult, especially for legal claims or
was considered probable rather than just reasonably possible, we would recognize additional legal provisions through earnings of approximately ¥51 billion.
However, this estimate does not include the impact of probable losses where we cannot reasonably estimate such losses.
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Critical
accounting
policy
Critical accounting
estimates
Key subjective assumptions or
judgments by management
Effect of changes in estimates and
assumptions during year ended March 31,
2023
regulatory investigations that are indeterminate or still at an early stage.
•  In exceptional circumstances, where we believe a loss is probable or reasonably possible, but we are unable to reasonably estimate the amount of such loss, due to inherent complexities or other reasons surrounding the legal matter, we are unable to recognize a legal provision or disclose the relevant amount of reasonably possible loss and disclose this fact.
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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.
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Koji Nagai
(Jan. 25, 1959)
Director
Chairman of the Board Directors
Member of the Nomination Committee
Member of the Compensation Committee
Director and Chairman of Nomura Securities Co., Ltd.
Apr. 1981Joined the Company
Apr. 2003Director of Nomura Securities Co., Ltd.
Jun. 2003Executive Officer of Nomura Securities Co., Ltd.
Apr. 2007Executive Officer (Executive Managing Director) of Nomura Securities Co., Ltd.
Oct. 2008Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2009Executive Officer and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2011
Co-COO
and Deputy President of Nomura Securities Co., Ltd.
Apr. 2012
Senior Managing Director of the Company
Director, Representative Executive Officer and President of Nomura Securities Co., Ltd.
Aug. 2012
Representative Executive Officer & Group CEO of the Company
Director, Representative Executive Officer and President of Nomura Securities Co., Ltd.
Jun. 2013
Director, Representative Executive Officer & Group CEO of the Company
Director, Representative Executive Officer and President of Nomura Securities Co., Ltd.
Apr. 2017
Director, Representative Executive Officer, President & Group CEO of the Company
Director and Chairman of Nomura Securities Co., Ltd.
Apr. 2020
Director and Chairman of the Company (Current)
Director and Chairman of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kentaro Okuda
(Nov. 7, 1963)
Director, Representative Executive Officer, President and Group CEO
Representative Director and President of Nomura Securities Co., Ltd.
Apr. 1987Joined the Company
Apr. 2010Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2012Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Aug. 2012
Senior Corporate Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2013
Senior Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2015
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director of the Company
Executive Officer and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2017
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2018
Executive Officer and Group
Co-COO
of the Company
Director, Executive Officer and Deputy President of Nomura Securities Co., Ltd.
Apr. 2019Executive Officer, Deputy President and Group
Co-COO
of the Company
Apr. 2020
Representative Executive Officer, President & Group CEO of the Company
Representative Director of Nomura Securities Co., Ltd.
Jun. 2020
Director, Representative Executive Officer, President & Group CEO of the Company
Representative Director of Nomura Securities Co., Ltd.
Jun. 2021
Director, Representative Executive Officer, President & Group CEO of the Company (Current)
Representative Director and President of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Yutaka Nakajima
(Aug. 2, 1965)
Director, Representative Executive Officer and Deputy President
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 1988Joined the Company
Apr. 2011Senior Managing Director of Nomura Securities Co., Ltd.
May. 2015Senior Managing Director of the Company
Apr. 2016
Senior Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2017
Senior Managing Director of the Company
Executive Managing Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2018
Senior Managing Director of the Company
Executive Managing Director and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2019
Senior Managing Director of the Company
Director and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2021
Senior Managing Director of the Company
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 2023
Representative Executive Officer and Deputy President of the Company
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Jun. 2023
Director, Representative Executive Officer and Deputy President of the Company (Current)
Representative Director and Deputy President of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Shoji Ogawa
(Aug. 9, 1964)
Director
Member of the Audit Committee (full-time)
Member of the Board Risk Committee
Corporate Auditor of Nomura Asia Pacific Holdings Co., Ltd
Non-Executive
Director of Nomura Holding America Inc.
Non-Executive
Director of Instinet Incorporated
Apr. 1987Joined the Company
Apr. 2007Head of Investment Banking Strategic Planning Dept of Nomura Securities Co., Ltd.
Oct. 2008Head of Capital Markets Dept. and Capital Solutions Dept. of Nomura Securities Co., Ltd.
Jul. 2009Head of Capital Markets Dept. of Nomura Securities Co., Ltd.
Apr. 2012Head of Investment Banking Strategic Planning Dept. of Nomura Securities Co., Ltd.
Jul. 2013
Head of Office of Audit Committee of the Company
Head of Office of Audit Committee of Nomura Securities Co., Ltd.
Aug. 2016
Head of Office of
Non-Executive
Directors and Audit Committee of the
Company
Head of Office of
Non-Executive
Directors and Audit Committee of Nomura Securities Co., Ltd.
Apr. 2017
Senior Managing Director and Group Internal Audit of the Company
Senior Managing Director and Internal Audit of Nomura Securities Co., Ltd.
Apr. 2021Advisor of the Company
Jun. 2021Director of the Company (Current)
Noriaki Shimazaki
(Aug. 19, 1946)
Outside Director
Chairman of the Audit Committee
Member of the Board Risk Committee
Director of Nomura Securities Co., Ltd.
Outside Director of Loginet Japan Co., Ltd.
Apr. 1969Joined Sumitomo Corporation
Jun. 1998Director of Sumitomo Corporation
Apr. 2002Representative Director and Managing Director of Sumitomo Corporation
Jan. 2003Member of the Business Accounting Council of the Financial Services Agency
Apr. 2004Representative Director and Senior Managing Executive Officer of Sumitomo Corporation
Apr. 2005Representative Director and Executive Vice President of Sumitomo Corporation
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Jan. 2009Trustee of the IASC Foundation (currently, IFRS Foundation)
Jul. 2009Special Advisor of Sumitomo Corporation
Jun. 2011
Director of the Financial Accounting Standards Foundation
Chairman of Self-regulation Board and Public Governor of the Japan Securities Dealers Association
Sep. 2013
Advisor of the IFRS Foundation Asia-Oceania Office
Advisor of the Japanese Institute of Certified Public Accountants (Current)
Jun. 2016
Outside Director of the Company (Current)
Director of Nomura Securities Co., Ltd. (Current)
Aug. 2019Senior Advisor of the IFRS Foundation Asia-Oceania Office (Current)
Kazuhiko Ishimura
(Sep. 18, 1954)
Outside Director
Chairman of the Nomination Committee
Chairman of the Compensation Committee
President and CEO of the National Institute of Advanced Industrial Science and Technology
Outside Director of Ricoh Company, Ltd.
Apr. 1979Joined Asahi Glass Co., Ltd. (currently, AGC Inc.) (“AGC”)
Jan. 2006Executive Officer and GM of Kansai Plant of AGC
Jan. 2007Senior Executive Officer and GM of Electronics & Energy General Division of AGC
Mar. 2008Representative Director and President & COO of AGC
Jan. 2010Representative Director and President & CEO of AGC
Jan. 2015Representative Director & Chairman of AGC
Jan. 2018Director & Chairman of AGC
Jun. 2018Outside Director of the Company (Current)
Mar. 2020Director of AGC
Apr. 2020President of the National Institute of Advanced Industrial Science and Technology
Apr. 2021President and CEO of the National Institute of Advanced Industrial Science and Technology (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Laura Simone Unger
(Jan. 8, 1961)
Outside Director
Chairperson of the Board Risk Committee
Independent Director of Navient Corporation
Independent Director of Nomura Holding America Inc.
Independent Director of Nomura Securities International, Inc.
Independent Director of Nomura Global Financial Products Inc.
Independent Director of Instinet Holdings Incorporated
Jan. 1988Enforcement Attorney of the U.S. Securities and Exchange Commission (SEC)
Oct. 1990Counsel of the U.S. Senate Committee on Banking, Housing, and Urban Affairs
Nov. 1997Commissioner of the SEC
Feb. 2001Acting Chairperson of the SEC
Jul. 2002Regulatory Expert of CNBC
May 2003Independent Consultant of JPMorgan Chase & Co.
Aug. 2004Independent Director of CA Inc.
Jan. 2010Special Advisor of Promontory Financial Group
Dec. 2010Independent Director of CIT Group Inc.
Nov. 2014Independent Director of Navient Corporation (Current)
Jun. 2018Outside Director of the Company (Current)
Victor Chu
(Jun. 20, 1957)
Outside Director
Member of the Audit Committee
Member of the Board Risk Committee
Chairman and Chief Executive Officer of First Eastern Investment Group
Non-Executive
Director of Grand Harbour Marina PLC
Chair of Council, University College London
Co-Chair,
International Business Council of the World Economic Forum
Independent Director of Airbus SE
Dec. 1982Solicitor of the Supreme Court, Hong Kong
Jan. 1988Chairman and Chief Executive Officer of First Eastern Investment Group (Current)
Oct. 1988Director and Council Member of the Hong Kong Stock Exchange
Jun. 1992Advisory Committee Member of the Securities and Futures Commission, Hong Kong
Aug. 2003Foundation Board Member of the World Economic Forum
Apr. 2018Independent Director of Airbus SE (Current)
Jun. 2021Outside Director of the Company (Current)
J.Christopher Giancarlo
(May 12, 1959)
Outside Director
Member of the Board Risk Committee
Senior Counsel of Willkie Farr & Gallagher LLP
Independent Director of the American Financial Exchange
Principal of Digital Dollar Project
Independent Director of Nomura Securities International, Inc.
Independent Director of Nomura Global Financial Products Inc.
Sep. 1984Associate Attorney of Mudge Rose Guthrie Alexander & Ferdon
Oct. 1985Associate Attorney of Curtis, Mallet-Prevost, Colt & Mosle
Jan. 1992Attorney, Founding Partner of Giancarlo & Gleiberman
Sep. 1997
Attorney, (Equity) Partner of Thelen Reid Brown Raysman & Steiner
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2000Vice President and Legal Counsel of Fenics Software
Apr. 2001Executive Vice President of GFI Group Inc.
Jun. 2014Commissioner of the U.S. Commodity Futures Trading Commission
Jan. 2017Chairman of the U.S. Commodity Futures Trading Commission
Oct. 2019Independent Director of the American Financial Exchange (Current)
Jan. 2020Senior Counsel of Willkie Farr & Gallagher LLP (Current)
Jun. 2021Outside Director of the Company (Current)
Patricia Mosser
(Feb. 14, 1956)
Outside Director
Member of the Board Risk Committee
Senior Research Scholar*
Director of the MPA Program in Economic Policy Management*
Director of Central Banking and Financial Policy*
*Positions at Columbia University, School of International and Public Affairs
Independent Director of Nomura Holding America Inc.
Jul. 1986Assistant Professor, Economics Department, Columbia University
Jan. 1991Economist and Vice President of the Federal Reserve Bank of New York (FRBNY)
Nov. 2006Senior Vice President, FRBNY, Member of the FX Forum, Executive Meeting of East Asia and Pacific (EMEAP) Central Banks, Bank for International Settlements
Jan. 2007Board Member of the American Economic Association’s Committee on the Status of Women in the Economics Profession
Jun. 2007Member of the Markets Committee, Bank for International Settlements
Jan 2009Acting Systemic Open Market Account Manager for the Federal Open Market Committee (FOMC)
Oct. 2013Deputy Director of the Office of Financial Research (OFR), U.S. Treasury Department
Oct. 2013Member of the Deputies Committee of the Financial Stability Oversight Council (FSOC)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Jun. 2015Senior Research Scholar and Director of Central Banking and Financial Policy at Columbia University’s School of International and Public Affairs (Current)
Jun. 2021Outside Director of the Company (Current)
Takahisa Takahara
(Jul. 12, 1961)
Outside Director
Member of the Nomination Committee
Member of the Compensation Committee
Representative Director, President & CEO of Unicharm Corporation
Outside Director of Sumitomo Corporation
Apr. 1991Joined Unicharm Corporation
Jun. 1995Director of Unicharm Corporation
Apr. 1996Director, General Manager of Procurement Division and Deputy General Manager of International Division of Unicharm Corporation
Jun. 1997Senior Director of Unicharm Corporation
Apr. 1998Senior Director, General Manager of Feminine Hygiene Business Division of Unicharm Corporation
Oct. 2000Senior Director, Responsible for Management Strategy of Unicharm Corporation
Jun. 2001Representative Director, President of Unicharm Corporation
Jun. 2004Representative Director, President & CEO of Unicharm Corporation (Current)
Jun. 2021Outside Director of the Company (Current)
Miyuki Ishiguro
(Oct. 26, 1964)
Outside Director
Member of the Board Risk Committee
Partner of Nagashima Ohno & Tsunematsu
President-Elect of the Inter-Pacific Bar Association (IPBA)
Outside Audit & Supervisory Board Member, Lasertec Corporation
Outside Audit & Supervisory Board Member, Benesse Holdings, Inc.
Apr. 1991Registered as an
Attorney-at-Law
and Joined Tsunematsu Yanase & Sekine (currently Nagashima Ohno & Tsunematsu)
Jan. 1999Partner of Tsunematsu Yanase & Sekine
Jan. 2000Partner of Nagashima Ohno & Tsunematsu(Current)
Oct. 2004Visiting Professor, Columbia Law School
May. 2015Secretary General of the Inter-Pacific Bar Association (IPBA)
Feb. 2016Council Member of the Radio Regulatory Council (Ministry of Internal Affairs and Communications)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2016Council Member of the Management Council of Hitotsubashi University
Apr. 2018Vice President of the Tokyo Bar Association
Apr. 2019Vice President of the Inter-Pacific Bar Association (IPBA)
Mar. 2020President-Elect of the Inter-Pacific Bar Association (IPBA) (Current)
Jun. 2023Outside Director of the Company (Current)
Masahiro Ishizuka
(Apr. 21, 1960)
Outside Director
Member of the Audit Committee
Oct. 1984Joined Deloitte Haskins and Sells International (*)
Apr. 1988Registered as a Certified Public Accountant
Jun. 1997Partner of Tohmatsu & Co. (*)
Jan. 1998Deloitte & Touche LLP based in New York
Oct. 2007Head of Audit and Technology Dept. of Business Administrative Division, of Tohmatsu & Co. (*)
Oct. 2010Head of Office of Manual, of Quality Administrative Division, of Deloitte Touche Tohmatsu LLC
Oct. 2010Vice Chairman of the Audit Standards Committee of the Japanese Institute of Certified Public Accountants
Nov. 2015The Board Member of Deloitte Tohmatsu LLC
Jun. 2017Executive Officer, General Manager of the Reputation Quality Risk Management Division of Deloitte Tohmatsu LLC and Deloitte Touche Tohmatsu LLC
Jun. 2022Ethics Officer of Deloitte Tohmatsu Group
Jun. 2023Outside Director of the Company (Current)
*Each of the corporations is currently Deloitte Touche Tohmatsu LLC
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.
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Executive Officers
The following table presents information about our Executive Officers as of June 28, 2023.
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kentaro Okuda
(Nov. 7, 1963)
See “
Directors
” under this Item 6.A.
See “
Directors
” under this Item 6.A.
Yutaka Nakajima
(Aug. 2, 1965)
See “
Directors
” under this Item 6.A.
See “
Directors
” under this Item 6.A.
Toshiyasu Iiyama
(Feb. 24, 1965)
Executive Officer and Deputy President
Chief of Staff
Representative Director and Deputy
President of Nomura Securities Co., Ltd.
Apr. 1987Joined the Company
Apr. 2012Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2015
Senior Managing Director of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2018
Senior Managing Director of the Company
Executive Officer and Executive Vice
President of Nomura Securities
Co., Ltd.
Apr. 2019
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2020
Senior Managing Director of the Company
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 2021
Executive Officer and Chief Health Officer of the Company
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 2023
Executive Officer, Deputy President and Chief of Staff of the Company (Current)
Representative Director and Deputy President of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Takumi Kitamura
(Nov. 26, 1966)
Executive Officer
Chief Financial Officer
Director, Executive Vice President of Nomura Securities Co., Ltd.
Director of Nomura Asia Pacific Holdings Co., Ltd
Apr. 1990Joined the Company
Apr. 2016
Executive Officer and Chief Financial Officer of the Company
Executive Officer and Financial Officer of Nomura Securities Co., Ltd.
Apr. 2019
Executive Officer and Chief Financial Officer of the Company
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2021
Executive Officer and Chief Financial Officer of the Company
Director, Executive Vice President of Nomura Securities Co., Ltd.
Oct. 2021
Executive Officer, Chief Financial Officer and Chief Administrative Officer of the Company
Director, Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2022
Executive Officer and Chief Financial Officer of the Company (Current)
Director, Executive Vice President of Nomura Securities Co., Ltd. (Current)
Sotaro Kato
(Oct. 9, 1969)
Executive Officer
Chief Risk Officer
Director and Senior Corporate Managing
Director of Nomura Securities Co., Ltd.
Director of Nomura Holding America Inc.
Sep. 2002Joined the Company
Apr. 2020
Executive Officer and Chief Risk Officer of the Company (based in New York) (Current)
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
Yosuke Inaida
(Oct. 6, 1967)
Executive Officer
Chief Compliance Officer
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Director of Nomura Asia Pacific Holdings Co., Ltd
Apr. 1991Joined the Company
Apr. 2015Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2020Senior Corporate Managing Director of Nomura Securities Co., Ltd.
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2022
Executive Officer and Chief Compliance Officer of the Company (Current)
Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
Toru Otsuka
(Jun. 5, 1967)
Executive Officer
Strategy and Regulatory Affairs
Director and Senior Corporate Managing
Director of Nomura Securities Co., Ltd.
Apr. 1991Joined the Company
Apr. 2018
Senior Managing Director of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
May. 2019
Senior Managing Director and Chief Strategy Officer of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2021
Executive Officer and Chief Strategy Officer of the Company
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2023
Executive Officer and Strategy and Regulatory Affairs (Current)
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
Christopher Willcox
(Feb. 25, 1968)
Executive Officer
Head of Wholesale
Director of Nomura Holding America Inc.
May. 2014CEO of J.P. Morgan Asset Management Inc.
May. 2021
Director and
Co-CEO
of Nomura Holding America Inc.
Director, President and CEO of Nomura Securities International, Inc.
Director, President and CEO of Nomura Global Financial Products Inc.
Apr. 2022
Director, President and CEO of Nomura Holding America Inc.
Director, President and CEO of Nomura Securities International, Inc.
Director, President and CEO of Nomura Global Financial Products Inc.
Oct. 2022
Executive Officer and Head of Wholesale of the Company (based in New York) (Current)
Director of Nomura Holding America Inc. (Current)
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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.
Items
Overview of our Compensation Program of Statutory Officers
Key performance indicator (KPI) used for
Performance-Linked
Compensation
Return on Equity (ROE).
Please see
“Item 5. Operating and Financial Review and Prospects
-A.
Operating Results-progress on Key Performance Indicators”
for calculation methodology.
Basis of Performance-Linked CompensationDetermined through consideration of factors such as quantitative evaluation based on the actual results for the KPI against the target values, and qualitative benchmarking against competitor compensation programs by the Compensation Committee.
Basis of compensation of each Statutory OfficersDetermined by factors such as individual roles and responsibilities, respective jurisdiction’s regulations and compensation level in addition to other qualitative elements.
Nominating Committee and Compensation Committee
Chairman: Kazuhiko Ishimura (Outside Director)
Member: Takahisa Takahara (Outside Director)
Member: Koji Nagai (Chairman of Board of Directors,
non-executive
director)
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”.
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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
principle, our employee compensation programs are designed to be competitive in the market and aligned to our strategic objectives and the goal of sustainable growth and increasing corporate value over the medium and long-term.
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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.
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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 Plan
In 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.
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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
principle, our compensation programs are designed to be competitive in the market and aligned to our strategic objectives and the goal of sustainable growth and increasing corporate value over the medium and long-term. Compensation at Nomura reflects and aligns with the performance of Nomura Group as a whole, its divisions, as well as individual employees, taking into account both the business strategy and market considerations.
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.
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(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.
   
(Millions of yen, except percentages)
 
Base salary (Fixed compensation)
  
Annual bonus (Variable compensation)
  
Total
compensation
(TC)
 
Cash
  
Deferred stock-
based

payment awards
  
Total fixed
compensation
  
Cash
  
Deferred stock-
based compensation
awards
  
Total variable
compensation
 
 102.0   17.4   119.4   132.9   132.9   265.8   385.2 
 26.5%   4.5%   31.0%   34.5%   34.5%   69.0%   100.0% 
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.
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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>
Performance Indicator
  
Target value
  
Actual value for the Fiscal Year
 
ROE
   8.0%   3.1% 
3)
Matters relating to Deferred Compensation
(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.
Type of award
Key features
RSU awards
•  Introduced as the main form of deferred stock-based compensation award since the year ended March 31, 2018.
•  Settled in the Company’s common stock.
•  Graded vesting period requiring service to Nomura typically over three years.
NSU awards
•  Linked to the price of the Company’s common stock Cash-settled in local currency.
•  Graded vesting period requiring service to Nomura typically over three years.
(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.
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*
With the introduction of RSUs, as the main form of Deferred Compensation, in principle, payments in respect of Deferred Compensation will consist of share of NHI’s common stock instead of cash over the three year vesting period beginning from the fiscal year following the fiscal year in which the deferred compensation was granted. Since the number of shares to be paid is determined based on the price of NHI’s share at the time of grant, increases in NHI’s share price will increase the economic value of Deferred Compensation at the time of vesting. Since the increase in share prices reflects the increase in corporate value, this form of Deferred Compensation allows for the alignment of interests with those of shareholders, in addition to the medium-term incentive effects achieved for the Statutory Officers.
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 compensation
1) 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.
   
Number of
People
(1)
  
Millions of yen
 
  
Year ended March 31, 2023
 
  
Base salary
(2,3)
  
Performance-
linked
compensation
(4)
  
Non-monetary

compensation

(Deferred
Compensation)
(5)
  
Total
 
Directors
   10  ¥354  ¥80  ¥65  ¥499 
(Outside Directors included in above)
   (8)   (197)   (  —  )   (  —  )   (197) 
Executive Officers
   8   516   688   577   1,781 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
   18  ¥871  ¥768  ¥641  ¥2,280 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Includes 1 Executive Officer appointed in October 2022. There were 10 Directors and 8 Executive Officers as of March 31, 2023. Compensation to Directors who were concurrently serving as Executive Officers is included “Executive Officers.”
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(2)
Base salary of ¥871 million includes other compensation (commuter pass allowance) of ¥0.25 million.
(3)
In addition to base salary, ¥16 million of corporate housing benefits, including housing allowance and related tax adjustments, were provided to Executive Officers.
(4)
Represents the annual cash bonus paid for the year ended March 31, 2023.
(5)
Represents deferred sock-based compensation awards such as RSU and share options granted in current and prior years recognized as expense in the consolidated financial statement of income for the year ended March 31, 2023.
(6)
Total compensation paid to Outside Directors for their services to subsidiaries of the Company was ¥68 million for the year ended March 31, 2023.
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.
      
Millions of yen
 
      
Fixed Remuneration

(Basic Compensation)
  
Variable Compensation
    
Name
 
Company
 
Role
 
Base salary
  
Deferred
stock-based

payment
  
Total
fixed
compen-
sation
  
Cash

bonus
  
Deferred
stock-based

compensation
  
Total
variable
compen-
sation
  
Total
compen-
sation(TC)
 
Koji Nagai
 Nomura Chairman of
the Board of
Directors		 ¥91.2  ¥0.0  ¥91.2  ¥79.8  ¥79.8  ¥159.5  ¥250.7 
Kentaro Okuda
(1)
 Nomura Director,
Representative
Executive
Officer
(Group CEO)
 ¥102.0  ¥17.4  ¥119.4  ¥132.9  ¥132.9  ¥265.8  ¥385.2 
Tomoyuki Teraguchi
 Nomura Director,
Representative
Executive
Officer
 ¥75.6  ¥14.4  ¥90.0  ¥73.1  ¥73.1  ¥146.2  ¥236.2 
Toshiyasu Iiyama
 Nomura Executive
Officer
 ¥66.0  ¥13.2  ¥79.2  ¥53.2  ¥53.2  ¥106.3  ¥185.5 
Takumi Kitamura
 Nomura Executive
Officer
 ¥60.0  ¥13.2  ¥73.2  ¥39.9  ¥39.9  ¥79.7  ¥152.9 
Sotaro Kato
 Nomura Executive
Officer
 ¥54.0  ¥9.6  ¥63.6  ¥33.3  ¥33.3  ¥66.5  ¥130.1 
Yosuke Inaida
 Nomura Executive
Officer
 ¥54.0  ¥9.6  ¥63.6  ¥33.3  ¥33.3  ¥66.5  ¥130.1 
Toru Otsuka
 Nomura Executive
Officer
 ¥54.0  ¥9.6  ¥63.6  ¥33.3  ¥33.3  ¥66.5  ¥130.1 
Willcox, Christopher
(2)
 Nomura Executive
Officer
 ¥50.8  ¥4.8  ¥55.6  ¥289.5  ¥399.8  ¥689.3  ¥744.9 
(1)
In addition to fixed compensation, ¥16 million of corporate housing costs, including housing allowance and related tax adjustments, were provided.
(2)
Appointed as an Executive Officer since October 2022.
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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.
Date
Summary of the discussion and the resolution
Attendance records
of the member
April 26, 2022
Resolution:
•  Annual bonus in respect of the year ended March 31, 2022.
All members attended
June 20, 2022
Resolution:
•  Appointment of the Director with the right to convoke the board of directors meetings.
•  The Director who reports the executions of the committee’s duties to the board of the directors meetings.
•  The Compensation Policy of Nomura Group and base salary of the Directors and Executive Officers.
•  Base salary of Statutory Officers.
•  Granting of deferred stock-based compensation awards (RSUs) to Directors and Executive Officers.
All members attended
September 26, 2022
Resolution:
Discussion:
•  Individual base salary of the Directors and Executive Officers.
•  Group CEO compensation.
All members attended
December 6, 2022
Discussion:
•  Director Pay compensation.
All members attended
February 15, 2023
Discussion:
•  Review of policies governing compensation for Directors and Executive Officers.
All members attended
March 1, 2023
Reporting:
•  Appointment of an Outside Director as an advisor to a subsidiary of the Company.
All members attended
March 31, 2023
Resolution:
•  Annual base salary of Statutory Officers the year ended March 31, 2024.
All members attended
Discussion:
•  Review of policies governing compensation for Directors and Executive Officers.
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.
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Stock Acquisition Rights (“SARs”)
The following table presents information regarding unexercised Stock Acquisition Rights as of March 31, 2020.2023.
                 
 
March 31, 2020
 
Series of SARs
 
Allotment Date
 
Number of
Shares under
SARs
  
Exercise Period
of SARs
 
Exercise
Price per
Share under
SARs
  
Paid-in
Amount for
SARs
 
Stock Acquisition Rights No.46
 
June 5, 2012
  
115,300
  
From April 20, 2015
to April 19, 2020
 ¥
1
  ¥
0
 
Stock Acquisition Rights No.47
 
June 5, 2012
  
372,000
  
From April 20, 2016
to April 19, 2021
  
1
   
0
 
Stock Acquisition Rights No.48
 
June 5, 2012
  
526,800
  
From April 20, 2017
to April 19, 2022
  
1
   
0
 
Stock Acquisition Rights No.49
 
June 5, 2012
  
39,800
  
From October 20, 2015
to April 19, 2021
  
1
   
0
 
Stock Acquisition Rights No.50
 
June 5, 2012
  
39,700
  
From October 20, 2016
to April 19, 2022
  
1
   
0
 
Stock Acquisition Rights No.53
 
June 5, 2013
  
93,700
  
From April 20, 2015
to April 19, 2020
  
1
   
0
 
Stock Acquisition Rights No.54
 
June 5, 2013
  
456,300
  
From April 20, 2016
to April 19, 2021
  
1
   
0
 
Stock Acquisition Rights No.55
 
November 19, 2013
  
2,678,200
  
From November 19, 2015
to November 18, 2020
  
821
   
0
 
Stock Acquisition Rights No.56
 
June 5, 2014
  
189,200
  
From April 20, 2015
to April 19, 2020
  
1
   
0
 
Stock Acquisition Rights No.57
 
June 5, 2014
  
652,400
  
From April 20, 2016
to April 19, 2021
  
1
   
0
 
Stock Acquisition Rights No.58
 
June 5, 2014
  
1,014,500
  
From April 20, 2017
to April 19, 2022
  
1
   
0
 
Stock Acquisition Rights No.60
 
June 5, 2014
  
375,400
  
From March 31, 2016
to March 30, 2021
  
1
   
0
 
Stock Acquisition Rights No.61
 
June 5, 2014
  
1,374,600
  
From March 31, 2017
to March 30, 2022
  
1
   
0
 
Stock Acquisition Rights No.62
 
November 18, 2014
  
2,673,700
  
From November 18, 2016
to November 17, 2021
  
738
   
0
 
Stock Acquisition Rights No.63
 
June 5, 2015
  
546,100
  
From April 20, 2016
to April 19, 2021
  
1
   
0
 
Stock Acquisition Rights No.64
 
June 5, 2015
  
928,200
  
From April 20, 2017
to April 19, 2022
  
1
   
0
 
Stock Acquisition Rights No.65
 
June 5, 2015
  
1,497,500
  
From April 20, 2018
to April 19, 2023
  
1
   
0
 
Stock Acquisition Rights No.68
 
November 18, 2015
  
2,568,800
  
From November 18, 2017
to November 17, 2022
  
802
   
0
 
Stock Acquisition Rights No.69
 
June 7, 2016
  
1,034,100
  
From April 20, 2017
to April 19, 2022
  
1
   
0
 
Stock Acquisition Rights No.70
 
June 7, 2016
  
1,552,200
  
From April 20, 2018
to April 19, 2023
  
1
   
0
 
Stock Acquisition Rights No.71
 
June 7, 2016
  
2,028,300
  
From April 20, 2019
to April 19, 2024
  
1
   
0
 
 
  
March 31, 2023
 
Series of SARs
 
Allotment Date
 
Number of

Shares under

SARs
  
Exercise Period
of SARs
 
Exercise

Price per

Share under

SARs
  
Paid-in

Amount for

SARs
 
Stock Acquisition Rights No.65
 June 5, 2015  111,600  
From April 20, 2018
to April 19, 2023
 ¥1  ¥352 
Stock Acquisition Rights No.70
 June 7, 2016  173,900  
From April 20, 2018
to April 19, 2023
 ¥1  ¥208 
Stock Acquisition Rights No.71
 June 7, 2016  936,200  
From April 20, 2019
to April 19, 2024
 ¥1  ¥198 
Stock Acquisition Rights No.74
 November 11, 2016  2,364,400  
From November 11, 2018
to November 10, 2023
 ¥593  ¥360 
Stock Acquisition Rights No.75
 June 9, 2017  189,200  
From April 20, 2018
to April 19, 2023
 ¥1  ¥342 
Stock Acquisition Rights No.76
 June 9, 2017  697,000  
From April 20, 2019
to April 19, 2024
 ¥1  ¥334 
Stock Acquisition Rights No.77
 June 9, 2017  1,005,900  
From April 20, 2020
to April 19, 2025
 ¥1  ¥325 
Stock Acquisition Rights No.78
 June 9, 2017  262,500  
From April 20, 2021
to April 19, 2026
 ¥1  ¥312 
Stock Acquisition Rights No.79
 June 9, 2017  374,300  
From April 20, 2022
to April 19, 2027
 ¥1  ¥303 
Stock Acquisition Rights No.80
 June 9, 2017  136,200  
From April 20, 2023
to April 19, 2028
 ¥1  ¥282 
Stock Acquisition Rights No.81
 June 9, 2017  136,200  
From April 20, 2024
to April 19, 2029
 ¥1  ¥273 
Stock Acquisition Rights No.84
 November 17, 2017  2,474,300  
From November 17, 2019
to November 16, 2024
 ¥684  ¥398 
Stock Acquisition Rights No.85
 November 20, 2018  2,308,300  
From November 20, 2020
to November 19, 2025
 ¥573  ¥329 
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March 31, 2020
 
Series of SARs
 
Allotment Date
 
Number of
Shares under
SARs
  
Exercise Period
of SARs
 
Exercise
Price per
Share under
SARs
  
Paid-in
Amount for
SARs
 
Stock Acquisition Rights No.72
 
June 7, 2016
  
259,200
  
From October 30, 2016
to October 29, 2021
 ¥
1
  ¥
0
 
Stock Acquisition Rights No.73
 
June 7, 2016
  
105,400
  
From April 30, 2017
to April 29, 2022
  
1
   
0
 
Stock Acquisition Rights No.74
 
November 11, 2016
  
2,535,400
  
From November 11, 2018
to November 10, 2023
  
593
   
0
 
Stock Acquisition Rights No.75
 
June 9, 2017
  
1,188,600
  
From April 20, 2018
to April 19, 2023
  
1
   
0
 
Stock Acquisition Rights No.76
 
June 9, 2017
  
1,456,900
  
From April 20, 2019
to April 19, 2024
  
1
   
0
 
Stock Acquisition Rights No.77
 
June 9, 2017
  
4,258,000
  
From April 20, 2020
to April 19, 2025
  
1
   
0
 
Stock Acquisition Rights No.78
 
June 9, 2017
  
811,800
  
From April 20, 2021
to April 19, 2026
  
1
   
0
 
Stock Acquisition Rights No.79
 
June 9, 2017
  
809,900
  
From April 20, 2022
to April 19, 2027
  
1
   
  0
 
Stock Acquisition Rights No.80
 
June 9, 2017
  
136,200
  
From April 20, 2023
to April 19, 2028
  
1
   
0
 
Stock Acquisition Rights No.81
 
June 9, 2017
  
136,200
  
From April 20, 2024
to April 19, 2029
  
1
   
0
 
Stock Acquisition Rights No.82
 
June 9, 2017
  
276,700
  
From October 30, 2017
to October 29, 2022
  
1
   
0
 
Stock Acquisition Rights No.83
 
June 9, 2017
  
63,900
  
From April 30, 2018
to April 29, 2023
  
1
   
0
 
Stock Acquisition Rights No.84
 
November 17, 2017
  
2,488,900
  
From November 17, 2019
to November 16, 2024
  
684
   
0
 
Stock Acquisition Rights No.85
 
November 20, 2018
  
2,507,900
  
From November 20, 2020
to November 19, 2025
  
573
   
0
 
(1)
SARs (including those granted to Directors and Executive Officers of Nomura which are stated in the table below) are issued in conjunction with deferred compensation plan.
(2)
The number of shares issuable under SARs is subject to adjustments under certain circumstances including stock splits.
 
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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, 2020.2023.
         
 
March 31, 2020
 
   
Numbers of Holders
 
Series of SARs
 
Number of
Shares under
SARs
  
Directors and
Executive Officers
(excluding
Outside Directors)
 
Stock Acquisition Rights No.47
  
1,700
   
1
 
Stock Acquisition Rights No.48
  
7,600
   
2
 
Stock Acquisition Rights No.54
  
4,900
   
1
 
Stock Acquisition Rights No.58
  
26,400
   
2
 
Stock Acquisition Rights No.60
  
9,500
   
2
 
Stock Acquisition Rights No.61
  
41,400
   
3
 
Stock Acquisition Rights No.63
  
6,900
   
1
 
Stock Acquisition Rights No.64
  
20,600
   
2
 
Stock Acquisition Rights No.65
  
57,400
   
3
 
Stock Acquisition Rights No.69
  
45,100
   
3
 
Stock Acquisition Rights No.70
  
93,800
   
5
 
Stock Acquisition Rights No.71
  
113,000
   
6
 
Stock Acquisition Rights No.75
  
88,900
   
5
 
Stock Acquisition Rights No.76
  
88,700
   
5
 
Stock Acquisition Rights No.77
  
109,900
   
7
 
 
   
March 31, 2023
 
       
Numbers of Holders
 
Series of SARs
  
Number of

Shares under

SARs
   
Directors and

Executive Officers

(excluding

Outside Directors)
 
Stock Acquisition Rights No.71
   764    4 
Stock Acquisition Rights No.75
   300    1 
Stock Acquisition Rights No.76
   812    4 
Stock Acquisition Rights No.77
   808    4 
Pension, Retirement or Similar Benefits
See Note 1312 “
Employee benefit plans
” in our consolidated financial statements included in this annual report.
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.
Since June 2003, theThe Company has adopted a corporate governance structure that separates management oversight functions from business execution functions (“Company with Three Board Committees”). Through this governance structure, the Company aims to strengthen management oversight, increase the transparency of the Company’s management and expedite the decision-making process within the Nomura Group. The Company has, in addition to the Board of Directors and the Nomination/Audit/Compensation committees, established the “Board Risk Committee”, which is a
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 CompensationBoard Risk Committee is provided below.
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
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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, 2020.2023. As a group, the Directors attended 100%98% of the total number of meetings of the Board of Directors during the year.
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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 nineeight times during the fiscal year ended March 31, 2020.2023. As a group, the member Directors attended all of the meetings of the Nomination Committee during the year. As of June 24, 2020,27, 2023, the members of the Nomination Committee are Outside Directors Kazuhiko Ishimura and Takahisa Takahara, and Koji Nagai, a Director not concurrently serving as an Executive Officer, and Outside Directors Hiroshi Kimura andOfficer. Kazuhiko Ishimura. Hiroshi KimuraIshimura is the Chairman of this Committee.
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 sixteenfifteen times during the fiscal year ended March 31, 2020.2023. As a group, the member Directors attended all of the meetings of the Audit Committee during the year. As of June 24, 2020,27, 2023, the members of the Audit Committee are Hisato MiyashitaOutside Directors Noriaki Shimazaki, Victor Chu and Masahiro Ishizuka, and Shoji Ogawa (a full-time member of the Audit Committee) and Outside Directors, Noriaki Shimazaki and Mari Sono., a Director not concurrently serving as an Executive Officer. Noriaki Shimazaki is the Chairman of this Committee.
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 eightseven times during the fiscal year ended March 31, 2020.2023. As a group, the member Directors attended all of the meetings of the Compensation Committee during the year. As of June 24, 2020,27, 2023, the members of the Compensation Committee are Outside Directors Kazuhiko Ishimura and Takahisa Takahara, and Koji Nagai, a Director not concurrently serving as an Executive Officer,Officer. Kazuhiko Ishimura is the Chairman of this Committee.
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 Risk
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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 Hiroshi KimuraLaura Simone Unger, Noriaki Shimazaki, Victor Chu, J. Christopher Giancarlo, Patricia Mosser and Kazuhiko Ishimura. Hiroshi KimuraMiyuki Ishiguro, and Shoji Ogawa, a Director not concurrently serving as an Executive Officer. Laura Simone Unger is the ChairmanChairperson of this Committee.
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
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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: Hisato Miyashita, Hiroshi Kimura,Shoji Ogawa, Noriaki Shimazaki, Kazuhiko Ishimura, Noriaki Shimazaki, Mari Sono, Michael Lim Choo San and Laura Simone Unger.Unger, Victor Chu, J. Christopher Giancarlo, Patricia Mosser, Takahisa Takahara, Miyuki Ishiguro, and Masahiro Ishizuka. Liability under each such agreement is limited to either ¥20 million or the amount prescribed by laws and regulations, whichever is greater.
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.
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D. Employees.
The following table shows the number of our employees as of the dates indicated:
             
 
March 31,
 
 
2018
  
2019
  
2020
 
Japan
  
15,819
   
15,852
   
15,748
 
Europe
  
3,057
   
2,909
   
2,691
 
Americas
  
2,362
   
2,357
   
2,120
 
Asia and Oceania
  
6,810
   
6,746
   
6,070
 
             
Total
  
28,048
   
27,864
   
26,629
 
             
   
March 31,
 
   
2021
   
2022
   
2023
 
Japan
   15,330    15,213    15,131 
Europe
   2,769    2,820    2,937 
Americas
   2,152    2,257    2,387 
Asia and Oceania
   6,151    6,295    6,320 
  
 
 
   
 
 
   
 
 
 
Total
   26,402    26,585    26,775 
  
 
 
   
 
 
   
 
 
 
As of March 31, 2020,2023, we had 15,74815,131 employees in Japan, including 9,2157,799 in our Retail Division, 1,6301,093 in our WholesaleInvestment Management Division and 8371,646 in our Asset ManagementWholesale Division. In overseas, we had 10,88111,644 employees, of which 2,6912,937 were located in Europe, 2,1202,387 in the Americas, and 6,0706,320 in Asia and Oceania.
As of March 31, 2020, 8,8562023, 8,095 of Nomura Securities’ employees in Japan were members of the Nomura employees’ union, with which we have a labor contract. The Company and labor union communicate frequently in order to resolve labor-related matters.
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, 2020.2023. As of that date, none of them owned 1% or more of our issued and outstanding shares. None of the shares referred to below have different voting rights.
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Directors
Name
  
Number of

Shareholdings
 
Koji Nagai
   492,942
382,001Kentaro Okuda
359,747
Yutaka Nakajima
652,919
Shoji Ogawa
45,498
Noriaki Shimazaki
30,339
Kazuhiko Ishimura
—  
Laura Simone Unger
(1,000ADR)
(1)
Victor Chu
—  
J.Christopher Giancarlo
—  
Patricia Mosser
(100ADR)
(1)
Takahisa Takahara
881
Miyuki Ishiguro
—  
Masahiro Ishizuka
—  
Total
1,582,326
(1)
ADRs are not included in the total.
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Executive Officers
Name
Number of

Shareholdings
 
Kentaro Okuda
   
103,125
See above		 
Toshio MoritaYutaka Nakajima
   
283,642
See above		 
Hisato MiyashitaToshiyasu Iiyama
   
84,200
Hiroshi Kimura
359
Kazuhiko Ishimura
—  
Noriaki Shimazaki
16,808
Mari Sono
—  
Michael Lim Choo San
—  
Laura Simone Unger
(1,000ADR
)
(1)
Total
      870,135
(1)ADRs are not included in the total.
Executive Officers
Name
Number of
Shareholdings
Kentaro Okuda
See above
Toshio Morita
See above
Junko Nakagawa
138,558
Tomoyuki Teraguchi
135,910
131,133		 
Takumi Kitamura
   
46,749
89,886		 
Sotaro Kato
   
3,840
13,911		 
Yosuke Inaida
   147,809
Toru Otsuka
42,265
Christopher Willcox
—  
 
Total
         425,004
 325,057
 
For information regarding stock options granted to our Directors and Executive Officers, see Item 6.B “
Compensation of Statutory Officers
” of this annual report.
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 No.5)No.8) filed by BlackRock, Inc. with the SEC on February 5, 2020,1, 2023, BlackRock, Inc. owned 201,152,010219,073,596 shares, representing 5.80%6.8% of the issued shares of the Company’s common stock. However, the Company has not confirmed the status of these shareholdings as of March 31, 2020.2023.
According to a statement on Schedule 13G (Amendment No.3) filed by Sumitomo Mitsui Trust Holdings, Inc. with the SEC on February 12, 2020,3, 2023, Sumitomo Mitsui Trust Holdings, Inc. owned 176,742,300200,521,900 shares, representing 5.10%6.2% of the issued shares of the Company’s common stock. However, the Company has not confirmed the status of these shareholdings as of March 31, 2020.2023.
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, 2020,2023, there were 273 Nomura shareholders of record with addresses in the U.S., and those U.S. holders held 350,494,286
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380,576,618 shares of the Company’s common stock, representing 10.0%11.8% of Nomura’s then outstandingissued common stock. As of March 31, 2020,2023, there were 30,223,15138,182,446 ADSs outstanding, representing 30,223,15138,182,446 shares of the Company’s common stock or 0.8%1.2% of Nomura’s then outstandingissued common stock. Our major shareholders above do not have different voting rights.
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 28.8%22.3% of NRI’s outstanding share capital as of March 31, 2020.2023.
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For the year ended March 31, 2020,2023, we purchased ¥17,716¥19,602 million worth of software and computer equipment and paid ¥45,911¥45,046 million for other services to NRI, while received ¥642¥770 million from NRI.
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 2018 “
Affiliated companies and other equity-method investees
” in the consolidated financial statements included in this annual report.
Directors
ThereDuring the fiscal year ended March 31, 2023, no loans that were outstanding were made to our directors other than in the normal course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers, involving no significant transactions.more than the normal risk of collectability and presenting no other unfavorable features.
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 2119 “
Commitments, contingencies and guarantees
” in the consolidated financial statements included in this annual report.
Dividend Policy
For our dividend policy, see Item 5.B
“Liquidity and Capital Resources—Capital Management—Dividends” in
this annual report.
B. Significant Changes.
Except as disclosed in this annual report, there have been no significant changes since March 31, 2020.2023.
Item 9. The Offer and Listing
A. Offer and Listing Details.
See Item 9. C. “The9.C. “
The Offer and Listing—Markets”Markets
”.
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B. Plan of Distribution.
Not applicable.
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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 “8604”.“8604.”
Since December 2001, the Company’s common stock has been listed on the New York Stock ExchangeNYSE in the form of ADSs evidenced by ADRs. Each ADS represents one share of common stock. The trading symbol is “NMR”.“NMR.” The Company’s common stock has been listed on the Singapore Stock Exchange since 1994. The trading symbol is “N33”.“N33.”
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
in Japanese) maintained by the Tokyo Legal Affairs Bureau.
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:
 (1)
Financial instruments business prescribed in the Financial Instruments and Exchange Law;
 (2)
Banking business prescribed in the Banking Law and trust business prescribed in the Trust Business Law; and
 (3)
Any other financial services and any business incidental or related to such financial services.
 (4)
Other than as prescribed in the items above, any other business ancillary or related to survey and research in connection with the economy, financial or capital markets, or infrastructure or undertaking the outsourcing thereof.
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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.
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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”
in this annual report). The Compensation Committee establishes the policy with respect to the determination of the individual compensation (including variable compensation) of each of the Company’s Directors and Executive Officers and makes determinations in accordance with that compensation policy.
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”
in this annual report.
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”
which is an exhibit to this annual report: Item 10.B.3, B.4, B.5, B.6, B.7, B.8, B.9 and B.10.
C. Material Contracts.
In addition to the items disclosed in Item 6.C “Board Practices” of this annual report, Nomura tendered to the self-tender offer made by Nomura Research Institute, Ltd. (“NRI”) conducted between July 1, 2019 and July 29, 2019. Upon the settlement on August 21, 2019, Nomura sold ¥101,889,300 ordinary shares it held at ¥159,966,201,000 (¥1,570 per share) to NRI. NRI remains an equity method affiliate of NHI.Not applicable.
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.
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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
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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 of
non-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 considered
non-residents
of Japan, and branches and other offices located within Japan of
non-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
method of accounting for your securities holdings,
a
tax-exempt
organization,
a life insurance company,
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a person liable for alternative minimum tax,
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,
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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. dollar.Dollar.
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 upon the representations of The Bank of New York Mellon (“depositary”) and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.
If 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
Under the U.S. federal income tax laws, and subjectSubject to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of any dividenddistribution that we pay out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) is treated as a dividend that is subject to U.S. federal income taxation. If you are a
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 the
121-day
period beginning 60 days before the
ex-dividend
date and meet other holding period requirements. Dividends we pay with respect to the shares or ADSs generally will be qualified dividend income.income provided that, in the year that you receive the dividend, the shares or ADSs are either readily tradable on an established securities market in the United States or we are eligible for the benefits under the Japan-U.S. Tax Treaty. Our ADSs are listed on the NYSE which is considered an established securities market in the U.S. We therefore expect that dividends that we distribute on our ADSs will be qualified dividend income (provided that you satisfy the aforementioned holding period requirements). In addition, we believe that we are currently eligible for the benefits of the Japan-U.S. Tax Treaty and we therefore expect that dividends on the shares will be qualified dividend income (provided that you satisfy the aforementioned holding period requirements), but there can be no assurance that we will continue to be eligible for the benefits of the Treaty.
You must include any Japanese tax withheld from the dividend payment in this gross amount even though you do not in fact receive it.
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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. dollarDollar value of the Japanese yenYen payments made, determined at the spot Japanese yen/Yen/U.S. dollarDollar rate on the date the dividend distribution is includible in your income,distributed, regardless of whether the payment is in fact converted into U.S. dollars.Dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in incomeis distributed to the date you, or the depositary on your behalf, convert the payment into U.S. dollarsDollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the U.S. for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a
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 the
Japan-U.S.
Tax Treaty and elect to apply the
Japan-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 the
Japan-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.
TaxationSale or Disposition of Capital GainsShares or ADSs
Subject to the PFIC rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of your shares or ADSs, you will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollarDollar value of the amount that you realize and your tax basis, determined in U.S. dollars,Dollars, in your shares or ADSs. Capital gain of a
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.
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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.
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If we are treated as a PFIC, and you are a U.S. holder that did not make a
mark-to-market
election, as described below, you will be subject to special rules with respect to:
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 ADSs)ADSs that preceded the taxable year in which you receive the distribution).
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
election). Your basis in the shares or ADSs will be adjusted to reflect any such income or loss amounts.
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
election with respect to your shares or ADSs, you will be treated as having a new holding period in your shares or ADSs beginning on the first day of the first taxable year beginning after the last taxable year for which the
mark-to-market
election applies.
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
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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.
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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 or
non-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 to
the 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 additional
paid-in
capital, in general) into stated capital on a
non-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 and
Article
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, such
non-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, Singapore and Spain.Singapore. Under the
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 dividends
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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 the
Japan-U.S.
Tax Treaty). In addition to the
Japan-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.
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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 to
non-resident
shareholders through the financial institution thereafter, provided that such
non-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 the
so-called
“preservation doctrine” under Article
3-2
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.
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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 fiscal
year-end
and other reports and information on
Form
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.
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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,
Table of Contentswe will submit the annual report to security holders in electronic format in accordance with the EDGAR Filer Manual.
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 below.in this Item 11.
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.
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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 (“CRO”(the “CRO”), and the Chief Financial Officer (“CFO”) and the Chief Compliance Officer (“CCO”(the “CFO”) to the Executive Management Board (“EMB”(the “EMB”) for approval. It will then be further reviewed at the BRC through the authority to consent to the relevant proposal raised by the executive side.
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.
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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 (
“
BoD
”
)
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
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Executive Management Board (
“
EMB
”
)
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 Group Integrated Risk Management Committee (“GIRMC”).GRMC. Key responsibilities of the EMB include the following:
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 Integrated Risk Management Committee (
“
GIRMC
”
)
Upon delegation from the EMB, the GIRMCGRMC deliberates on or determines important matters concerning integrated risk management of Nomura to assure the sound and effective management of its businesses. The GIRMCGRMC establishes a framework of integrated risk management consistent with Nomura’s risk appetite. The GIRMCGRMC supervises Nomura’s risk management by establishing and operating its risk management framework. The GIRMCGRMC reports the status of key risk management issues and any other matters deemed necessary by the committee chairman to the BoD and the EMB.
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In addition, the GIRMC,GRMC, upon delegation from the EMB, has established the Risk Management Policy, describing Nomura’s overall risk management framework including the fundamental risk management principles followed by Nomura.
Global PortfolioGroup Risk Review Committee (
“
GPC
”
(the “GRRC”)
Upon delegation from the GIRMC,GRMC, the GPCGRRC deliberates on or determines all matters in relation toconcerning the enterprise risk management of Nomura Group from a specific portfolio, forpractical point of view and thereby assuring the purpose of achieving a risk profile consistent with the risk allocationsound and risk appetite of Nomura. The portfolio consists of businesses and products that fall within at least oneeffective management of the three following categories: event financing, term financing and asset-based financingbusinesses.
.
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 (
“
ALCO
”
(the “ALCO”)
Upon delegation from the EMB and the GIRMC,GRMC, the ALCO deliberates on, based on Nomura’s risk appetite determined by the EMB, balance sheet management, financial resource allocation, liquidity management and related matters. The ALCO reports to the GIRMCGRMC the status of discussions at its meetings and any other matters as deemed necessary by the committee chairman.
Global Transaction Committee (
“
GTC
”
(the “GTC”)
Upon delegation from the GPC,GRRC, the GTC deliberates on or determines individual transactions in line with Nomura’s risk appetite determined by the EMB and thereby assuresseeks to assure the sound and effective management of Nomura’s businesses.
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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
The Global Risk Analytics Committee and the Model Risk Analytics Committee deliberate on or determine matters concerning the development, management and strategy of risk models and valuation models upon delegation from the CRO, respectively. The primary responsibility of these committees is to govern and provide oversight of model management, including the approval of new models and significant model changes. Both committees report all significant matters and material decisions taken to the CRO on a regular basis. The Global Collateral Steering Committee deliberates on or determines Nomura’s collateral risk management, including concentrations, liquidity, collateral
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 (
“
CRO
”
)
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 GIRMC,GRMC, and reports to and seeks the approval of the GIRMCGRMC on measures required for risk management.
Chief Financial Officer (
“
CFO
”
)
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”)
The CCO is responsible for supervisingtaking the Legal, Compliancelead in the coordination for formulating the appropriate management framework and Controls Division (“LCC Division”)designing Risk Appetite for Reputational Risk, with the cooperation of CRO. The CCO also cooperates with CRO who is responsible for monitoring and maintaining of the effectiveness of the
non-financial
risk management framework (operational risk and reputational risk).
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Table of Contents
Risk Management Division, Finance Division and LCC Division
The Risk Management Division, the Finance Division and the LCC Division comprise various departments or units established independently from Nomura’s business units. These three divisions are responsible for establishing and operating risk management processes, establishing and enforcing risk management policies and regulations, verifying the effectiveness of risk management methods, gathering reports from Nomura Group entities, reporting to Executive Officers/Senior Managing Directors and the GIRMC and others, as well as reporting to regulatory bodies and handling regulatory applications concerning risk management methods and other items as necessary. Important risk management issues are closely communicated between these three divisions and the CRO, CFO and CCO. The CRO, CFO and CCO regularly attend the EMB and GIRMC meetings to report specific risk issues.
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 rundesigned to function in accordance with these policies and procedures.
Monitoring, Reporting and Data Integrity
Development, consolidation, monitoring and reporting of risk management information (“risk MI”) are fundamental to the appropriate management of risk. The aim of all risk MI is to provide a basis for sound
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decision-making, action and escalation as required. The Risk Management Division the Finance Division and the LCCFinance Division are responsible for producing regular risk MI, which reflects the position of Nomura relative to stated risk appetite. Risk MI includes information from across the risk classes defined in the risk management framework and reflect the use of the various risk tools used to identify and assess those risks. These three divisions are responsible for implementing appropriate controls over data integrity for risk MI.
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.
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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.
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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 units.unit. Key components are set out below:
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“
Business Overview—Regulatory Capital Rules”, Item 5.B. “ConsolidatedRules
” of our annual report on
Form 20-F
for the fiscal year ended March 31, 2023, and “
Consolidated Regulatory Capital Requirements”Requirements
” and “Consolidated“
Consolidated Leverage Ratio Requirements”Requirements
” in this annual report for further information on our consolidated capital adequacy ratios and risk-weighted assets.
Economic Capital
Nomura’s internal measure of the capital required to support its business is the Nomura Capital Allocation Target (“NCAT”). NCAT is measured as the amount of capital required to absorb maximum potential losses over a
one-year
time horizon, computed by the risk model at the 99.95th percentile, or the equivalent Expected Shortfall. NCAT consists of Portfolio NCAT and
Non-Portfolio
NCAT. Portfolio NCAT consists of market risk,
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credit risk, event risk, principal finance risk, private equity risk and investment securities risk.
Non-Portfolio
NCAT consists of business risk and operational risk. NCAT is aggregated by taking into account the correlation among its various components. Nomura’s NCAT limit is initially set by the EMB, and the EMB subsequently allocates it to each business division and additional lower levels of the organization. (Please note the management by NCAT was abolished on March 31, 2020 and the management with risk-weighted asset is solely in place since April 1, 2020.)
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.
Classification
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Risk Category and Definition of Risk
Nomura classifiescategories and defines risks as follows and has established departments or units to manage each risk type.
Risk Category
  
Definition
Financial Risk
Market risk
  
Risk of loss arising from fluctuations in values of financial assets and liabilitiesor debts (including
off-balance
sheet items) due to fluctuations in market risk factors (interest rates, foreign exchange rates, prices of securities and others).
Credit risk
  
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 a credit valuation adjustment (“CVA”(the “CVA”) associated with deterioration in the creditworthiness of a counterparty.
Model risk
  Risk of financial loss, incorrect decision making, or damage to the firm’s credibility arising from model errors or incorrect or inappropriate model application.
Non-financial
Risk
Operational risk
  
Risk of financial loss or
non-financial
impact arising from inadequate or failed internal processes, people and systems, or from external events. Operational risk includes in its definition Compliance, Legal, IT and Cyber Security, Fraud, Third Party and other
non-financial
risks. Operational risk does not include strategic risk and reputational risk, however, some operational risks can lead to reputational issues and as such operational and reputational risks may be closely linked.
ModelReputational risk
  
Risk of financial loss, incorrect decision making, orPossible damage to the firm’s credibilityNomura’s reputation and associated risk to earnings, capital or liquidity arising from model errorsany association, action or incorrectinaction which could be perceived by stakeholders to be inappropriate, unethical or inappropriate model application.
inconsistent with Nomura Group’s values and corporate philosophy.
Funding and
Liquidity risk
Liquidity risk
  
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 Nomura’sthe Nomura Group’s creditworthiness or deterioration in market conditions.
Business
Other Risks
ESG: Environmental,
Social and
Governance
(*)
ESG is a collective term for Environmental (E), Social (S) and Governance (G) factors. “Environmental” includes issues related to impacts on the natural environment, including climate change. “Social” includes interactions with stakeholders and communities, for example the approach to human rights, workplace related issues and engagement on social issues. Governance includes issues related to corporate governance, corporate behaviour and the approach to transparent reporting.
Strategic risk
  
Risk of failure of revenues to cover costs due to deterioration ofcurrent or anticipated earning, capital, liquidity, enterprise value, or the earnings environment or deterioration of the efficiency or effectivenessNomura Group’s reputation arising from adverse business decisions, poor implementation of business operations. Business risk is managed bydecisions, or lack of responsiveness to change in the senior management at Nomura.
industry or external environment.
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).
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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 Charge (“IRC”).Charge. In addition, Nomura uses sensitivity analysis and stress testing to measure and analyze its market risk. Sensitivities are measures used to show the potential changes to a portfolio due to standard moves in market risk factors. They are specific to each asset class and cannot usually be aggregated across risk factors. Stress testing enables the analysis of portfolio risks or tail risks, including
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 a
One-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. Nomura uses the same VaR model for both internal risk management purposes and for regulatory reporting. For internal risk management purposes, VaR is calculated across Nomura at a 99% confidence level and using a
1-day
time horizon. For regulatory reporting purposes, Nomura uses the same confidence level but a
10-dayTen-day
time horizon, calculated using actual
10-dayTen-day
historical market moves.moves and employ an equal weight scheme to ensure VaR is not overly sensitive to changing market volatility. To complement VaR under Basel 2.5 regulations, Nomura also computes SVaR, which samples from a
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 constantlyclosely monitored to help ensure that it remains fit for purpose. The main approach for validating VaR is to compare actual
1-dayOne-day
trading losses with the corresponding VaR estimate. Nomura’s VaR model is backtested at different hierarchy levels. Backtesting results are reviewed on a monthly basis by Nomura’s Risk Management Division.
One-day
trading losses did not exceedexceeded the 99% VaR estimate (the currently required regulatory backtesting level) at the Nomura Group level on any occasiononce for the twelve12 months ended March 31, 2020.2023.
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
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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 metricsmetrics: 95% Confidence Interval
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:
             
 
Billions of yen
 
 
As of
 
 
March 31,
2018
  
March 31,
2019
  
March 31,
2020
 
Equity
 ¥
1.21
  ¥
1.07
  ¥
8.88
 
Interest rate
  
3.10
   
2.85
   
22.35
 
Foreign exchange
  
3.20
   
1.88
   
5.08
 
             
Subtotal
  
7.52
   
5.79
   
36.31
 
Less: Diversification Benefit
  
(1.13
)  
(1.30
)  
(11.00
)
             
VaR
 ¥
6.38
  ¥
4.49
  ¥
25.31
 
             
    
 
Billions of yen
 
 
For the twelve months ended
 
 
March 31,
2018
  
March 31,
2019
  
March 31,
2020
 
Maximum daily VaR
(1)
 ¥
8.98
  ¥
10.61
  ¥
32.89
 
Average daily VaR
(1)
  
4.25
   
4.58
   
6.67
 
Minimum daily VaR
(1)
  
3.05
   
3.05
   
3.62
 
 
   
Billions of yen
 
   
                    As of                    
 
   
March 31,
2022
  
March 31,
2023
 
Equity
  ¥1.4  ¥3.3 
Interest rate
   2.3   4.7 
Foreign exchange
   0.9   1.4 
  
 
 
  
 
 
 
Subtotal
   4.6   9.4 
Less: Diversification Benefit
   (1.9)   (3.2) 
  
 
 
  
 
 
 
VaR
  ¥2.7  ¥6.2 
  
 
 
  
 
 
 
   
Billions of yen
 
   
For the twelve months ended
 
   
March 31,
2022
   
March 31,
2023
 
Maximum daily VaR
(1)
  ¥23.2   ¥6.8 
Average daily VaR
(1)
   4.5    4.8 
Minimum daily VaR
(1)
   2.7    2.7 
 
(1)
Represents the maximum, average and minimum VaR based on all daily calculations for the twelve monthsfiscal year ended March 31, 2018, March 31, 2019, and March 31, 2020.2023.
Total VaR increased to ¥253.12 billion as of March 31, 2020 from ¥4.49 billion as of March 31, 2019. VaR relating to foreign exchange risk increased to ¥50.83 billion as of March 31, 2020, compared to ¥1.88 billion as
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of March 31, 2019. VaR relating to equity risk increased to ¥88.82 billion as of March 31, 2020, compared to ¥1.07 billion as of March 31, 2019. VaR relating to interest rate risk increased to ¥223.54 billion as of March 31, 2020, compared to ¥2.85 billion as of March 31, 2019.
Total VaR decreased to ¥4.49 billion as of March 31, 2019 from ¥6.38 billion as of March 31, 2018. VaR relating to foreign exchange risk decreased to ¥1.88 billion as of March 31, 2019, compared to ¥3.20 billion as of March 31, 2018. VaR relating to equity risk decreased to ¥1.07 billion as of March 31, 2019, compared to ¥1.21 billion as of March 31, 2018. VaR relating to interest rate risk decreased to ¥2.85 billion as of March 31, 2019, compared to ¥3.10 billion as of March 31, 2018.
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 eachthe desk level, but also at the Nomura Group level with a set of common global scenarios in order to capturereflect the impact of market fluctuations on the entire Nomura Group.
Non-Trading
Risk
A 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. This
non-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 First Section of the Tokyo Stock Exchange.
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 10,043¥10,912 million at the end of March 20192022 and 7,658¥6,871 million at the end of March 2020.2023. The TOPIX closed at 1,591.641,946.40 points at the end of March 20192022 and at 1,403.042,003.50 points at the end of March 2020.2023. This simulation analyzes data for the entire portfolio of equity investments held for operating purposes at Nomura and therefore actual results may differ from Nomura’s expectations because of price fluctuations of individual equities.
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 a CVA associated with deterioration in the creditworthiness of a counterparty.
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 GIRMCGRMC and/or Global Risk Strategic Committee, (“GRSC”), prescribe the basic principles of credit risk management and set delegated authority limits, which enables CRM personnel to set credit limits.
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Credit risk is managed by CRM together with various global and regional risk committees. This ensureshelps to ensure transparency of material credit risks and compliance with established credit limits, the approval of material extensions of credit and the escalation of risk concentrations to appropriate senior management.
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;
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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 ensureachieve global consistency and accuracy. These models are developed and maintained by the Risk Methodology Group. Internal ratings represent a critical component of Nomura’s approach to managing counterparty credit risk. They are frequently used as key factors in:
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 (“MVG”) which is independent of CRM. It ensuresseeks to ensure that Nomura’s internal rating system is properly reviewed and validated, reporting anyand that breaks or issues are reported to senior management for timely resolution. The unit is responsible for ensuring that the system remains accurate and predictive of risk and provides periodic reporting on the system to senior management.
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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.
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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. Any changeChanges in circumstancecircumstances that altersalter Nomura’s risk appetite for any particular counterparty, sector, industry or country isare reflected in changes to the internal rating and credit limit as appropriate.
Nomura’s global credit risk management systems record all credit limits and capture credit exposures to Nomura’s counterparties allowing CRM to measure, monitor and manage utilization of credit limits, ensure appropriate reporting and escalation of any limit breaches.
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 any WWR exposures. Stress testing is used to support the assessment of any WWR embedded within existing portfolios and adjustments are made to credit exposures and regulatory capital, as appropriate.
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. (“ISDA”) agreements or equivalent (referred to as “Master Netting Agreements”), with many of its counterparties. Master Netting Agreements allow netting of receivables and payables and reduce losses potentially incurred as a result
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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.
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Credit Risk to Counterparties in Derivatives Transaction
The credit exposures arising from Nomura’s trading-related derivatives as of March 31, 20202023 are summarized in the table below, showing the positive fair value of derivative assets by counterparty credit rating and by remaining contractual maturity. The credit ratings are internally determined by Nomura’s CRM.
                                     
 
Billions of yen
 
 
Years to Maturity
  
Cross-
Maturity
Netting
(1)
  
Total
Fair Value
  
Collateral
obtained
  
Replacement
cost
(3)
 
Credit Rating
 
Less than
1 year
  
1 to 3
years
  
3 to 5
years
  
5 to 7
years
  
More than
7 years
 
             
(a)
  
(b)
  
(a)-(b)
 
AAA
 ¥
41
  ¥
33
  ¥
12
  ¥
4
  ¥
65
  ¥
(134)
  ¥
21
  ¥
20
  ¥
1
 
AA
  
704
   
318
   
144
   
108
   
686
   
(1,528
)  
432
   
48
   
384
 
A
  
785
   
511
   
416
   
185
   
1,280
   
(2,873
)  
304
   
126
   
178
 
BBB
  
282
   
224
   
185
   
134
   
761
   
(1,206
)  
380
   
79
   
301
 
BB and lower
  
136
   
147
   
52
   
34
   
108
   
(216
)  
261
   
243
   
18
 
Other
(2)
  
78
   
86
   
135
   
152
   
953
   
(1,419
)  
(15
)  
60
   
0
 
                                     
Sub-total
 ¥
2,026
  ¥
1,319
  ¥
944
  ¥
617
  ¥
3,853
  ¥
(7,376
) ¥
1,383
  ¥
576
  ¥
882
 
Listed
  
1,027
   
88
   
6
   
—  
   
—  
   
(562
)  
559
   
194
   
365
 
                                     
Total
 ¥
3,053
  ¥
1,407
  ¥
950
  ¥
617
  ¥
3,853
  ¥
(7,938
) ¥
1,942
  ¥
770
  ¥
1,247
 
                                     
 
  
Billions of yen
 
  
Years to Maturity
  
Cross-
Maturity
Netting
(1)
  
Total
Fair Value
  
Collateral
obtained
  
Replacement
cost
(3)
 
Credit Rating
 
Less than
1 year
  
1 to 3
years
  
3 to 5
years
  
5 to 7
years
  
More
than
7 years
 
                    
(a)
  
(b)
  
(a)-(b)
 
AAA
 ¥41  ¥38  ¥3  ¥4  ¥50  ¥(107)  ¥29  ¥2  ¥27 
AA
  260   362   224   55   626   (1,212)   315   47   268 
A
  425   437   233   149   808   (1,678)   374   101   273 
BBB
  193   123   79   51   342   (395)   393   134   259 
BB and lower
  68   135   26   24   41   (217)   77   384   —   
Other
(2)
  37   103   82   101   723   (1,121)   (75)   103   —   
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Sub-total
 ¥1,024  ¥1,198  ¥647  ¥384  ¥2,590  ¥(4,730)  ¥1,113  ¥771  ¥827 
Listed
  435   63   1   —     —     (192)   307   230   77 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥1,459  ¥1,261  ¥648  ¥384  ¥2,590  ¥(4,922)  ¥1,420  ¥1,001  ¥904 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Represents netting of derivative liabilities against derivatives assets entered into with the same counterparty across different maturity bands. Derivative assets and derivative liabilities with the same counterparty in the same maturity band are net within the relevant maturity band. Cash collateral netting against net derivative assets in accordance with ASC
210-20
“
Balance Sheet—Sheet
—Offsetting
” and ASC 815 “
Derivatives and Hedging
” is also included.
(2)
“Other” comprises unrated counterparties and certain portfolio level valuation adjustments not allocated to specific counterparties.
(3)
Zero balances represent instances where total collateral received is in excess of the total fair value; therefore, Nomura’s credit exposure is zero.
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.
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Nomura’s credit portfolio remains well-diversified by country and concentrated towards highly-rated countries. Over 95% of the exposure was from investment-grade rated countries. The breakdown of top 10 country exposures is as follows:
Billions of Yen
Top 10 Country Exposures
(1)
Billions of yen
  
(As of March 31, 2020)
2023)
 
United States
   
4,880
4,876		 
Japan
   
2,713
2,610		 
United Kingdom
   1,158
710Singapore
277
Switzerland
235
Luxembourg
220
Canada
204 
India
   
210
200		 
SingaporeHong Kong
   
207
139		 
France
   
144
South Korea
130
China
116
Hong Kong S.A.R.
113
Saudi Arabia
106
137		 
(1)
The table represents the Top 10 country exposures as of March 31, 20202023 based on country of risk, combining counterparty and inventory exposures
 -
Counterparty exposures include cash and cash equivalents held at banks; the outstanding default fund and initial margin balances posted by Nomura to central clearing counterparties as legally required under its direct and affiliate clearing memberships; the aggregate
marked-to-market
exposure by counterparty of derivative transactions and securities financing transactions (net of collateral where the collateral is held under a legally enforceable margin agreement); and the fair value of total commitment amount less any applicable reserves
 -
Inventory exposures are the market value of debt and equity securities, and equity and credit derivatives, using the net of long versus short positions.
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 or
non-financial
impact arisingresulting from inadequate or failed internal processes, people, and systems or from external events.events, or non-financial impacts such as violations of laws and regulations or deterioration of the reputation of Nomura. Operational risk includes in its definition Compliance, Legal, IT, and Cyber Security, Fraud, Third Party and other
non-financial
risks. OperationalIt excludes strategic risk does not include(the risk of loss as a result of poor strategic riskbusiness decisions), and reputational risk, however, some operational risks can lead to reputational issues and as such operational and reputational risks may be closely linked.
The Three Lines of Defense
Nomura adopts the industry standard “Three Lines of Defense” for the management of operational risk, comprising the following elements:
1)1st Line of Defense: The business which owns and manages its risks
2)2nd Line of Defense: The Operational Risk Management (“ORM”) function, which
co-ordinates
the Operational Risk Management Framework and its implementation
3)3rd Line of Defense: Internal Audit, who provide independent assurance
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Operational Risk Management Framework
An Operational Risk Management Framework has been established in order to allow Nomura to identify, assess, manage, monitor and report on operational risk. The GIRMC,GRMC, with delegated authority from the EMB has formal oversight over the management of operational risk.
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This framework is set out below:
InfrastructureFoundation of the risk management framework
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.
Products and ServicesKey risk management activities
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 (“RCSA”(the “RCSA”): This process is used to identify the inherent risks the business faces, the key controls associated with those risks and relevant actions to mitigate the residual risks. Global ORM are responsible for developing the RCSA process and supporting the business in its implementation.
Key Risk Indicators (“KRI”(the “KRI”): KRIs are metrics used to monitor the business’ exposure to operational risk and trigger appropriate responses as thresholds are breached.
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 environment which are then tracked via the Operational Risk Management Framework.environment.
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 (“Beta(the “Beta Factor”) determined by the FSA, to establish the amount of required operational risk capital.
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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:
Business Line
  
Description
  
Beta Factor
 
Retail Banking
  
Retail deposit and loan-related services
   
12%
 
Commercial Banking
  
Deposit and loan-related services except for Retail Banking business
   
15%
 
Payment and Settlement
  
Payment and settlement services for clients’ transactions
   
18%
 
Retail Brokerage
  
Securities-related services mainly for individuals
   
12%
 
Trading and Sales
  
Market-related business
   
18%
 
Corporate Finance
  
M&A, underwriting, secondary and private offerings, and other funding services for clients
   
18%
 
Agency Services
  
Agency services for clients such as custody
   
15%
 
Asset Management
  
Fund management services for clients
   
12%
 
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 annual
re-approval
periodic review process and ongoing performance monitoring to assess their continued suitability. Appropriately delegated Model Risk Management Committees provide oversight, challenge, governance, and ultimate approval of validated Models.
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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
” in this annual report.
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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 clear escalation policies to ensurefacilitate approval of limits at appropriate levels of seniority. The Risk Management Division the Finance Division and the LCCFinance Division are responsible for
day-to-day
operation of these limit frameworks including approval, monitoring, and reporting as required. Business units are responsible for complying with the agreed limits. Limits apply across a range of quantitative measures of risk and across market and credit risks.
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:
 1)(1)
Transaction committees are in place to provide formal governance over the review and decision-making process for individual transactions. The liability for non-compliance is also clarified.
 2)(2)
The new product approval process allows business unit sponsors to submit applications for new products and obtain approval from relevant departments prior to execution of the new products. The process is designed to capture and assess risks across various risk classes as a result of the new product or business.
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 providesseeks to provide comprehensive coverage of risks across different hierarchical levels, and covers different time horizons, severities, plausibilities and stress testing methodologies. The results of stress tests are used in capital planning processes, capital adequacy assessments, liquidity adequacy assessments, recovery and resolution planning, assessments of whether risk appetite is appropriate, and in routine risk management.
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;
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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.
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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.
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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:
Type of Services:
  
Amount of Fee (U.S. Dollars)
Taxes and other governmental charges
  
As applicable. The depositary may offset any taxes or governmental charges it is obligated to withhold, if applicable, against the proceeds from sale of the property received.
Transfers of the Company’s shares to or from the name of the depositary (or its nominee) or the Custodian (or its nominee) in connection with deposits or withdrawals
  
Such registration fees as may be in effect for the registration of transfers of the Company’s shares on the Company’s share register (or any entity that presently carries out the duties of registrar).
Cable, telex and facsimile transmission expenses
  
As applicable.
Expenses incurred by the depositary in the conversion of foreign currency
  
As applicable.
Execution and delivery of Receipts in connection with deposits, stock splits or exercise of subscription rights
  
$5.00 or less per 100 ADSs (or portion thereof).
Surrender of Receipts in connection with a withdrawal or termination of the Deposit Agreement
  
$5.00 or less per 100 ADSs (or portion thereof).
Any cash distribution pursuant to the Deposit Agreement, including, but not limited to, cash distribution(s) made in connection with cash dividends; distributions in securities, property or subscription rights; and stock splits.
  
$.02 or less per ADS (or portion thereof). Only the cash amounts net of this fee, if applicable, are distributed.
Distribution by the depositary of securities (other than common shares of the Company) that accrued on the underlying shares to owners of the Receipts
  
Treating for the purpose of this fee all such securities as if they were common shares of the Company, $5.00 or less per 100 ADSs (or portion thereof).
General depositary services  
General depositary services
$.02 or less per ADS (or portion thereof), accruing on the last day of each calendar year, except where the fee for cash distribution described above was assessed during that calendar year.
Any other charge payable by the depositary, any of the depositary’s agents, including the Custodian, or the agents of the depositary’s agents in connection with the servicing of the Company’s shares or other deposited securities
  
As applicable.
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
administration and maintenance expenses for providing services to the registered shareholders and up to 100,000
non-registered
shareholders of ADRs. From April 1, 20192022 to March 31, 2020,2023, the Bank of New York Mellon has waived a total of $159,315.68$185,325.96 in fees (including $28,435.84$54,751.07 in connection with the expenses related to the Annual General Meeting of Shareholders) associated with the administration of the ADR program and administrative fees for routine corporate actions and for providing investor relations information services.
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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, 2020,2023, an evaluation was carried out under the supervision and with the participation of our management, including our Group Chief Executive Officer and Chief Financial Officer, and the Disclosure Committee, of the effectiveness of the disclosure controls and procedures (as defined in
Rules
13a-15(e)
and
15d-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, 2020,2023, our disclosure controls and procedures were effective.
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)
and
15d-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, 2020.2023. Our independent registered public accounting firm, Ernst & Young ShinNihon LLC, has issued an attestation report on the effectiveness of our internal control over financial reporting, which appears on
page
F-6 F-5
of this annual report.
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, 2020.2023. Based upon that evaluation, there was no change in our internal control over financial reporting during the year ended March 31, 20202023 that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.
We have implemented remote work arrangements over a significant portion of our workforce in response to the
COVID-19
pandemic and announced a delay in the announcement of our results for the fiscal year ended March 31, 2020 due to a delay in the necessary procedures caused by the pandemic. Nevertheless, we completed such procedures and announced our results well within the timeframes applicable to us by law and/or stock exchange rule, and we do not believe that the shift to remote work has had or is likely to have a material affect on our internal control over financial reporting, although we are continually monitoring and assessing the impact of the pandemic on our internal control over financial reporting.
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
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for Item 16A of
Form
20-F.
Additionally, Mr. Noriaki Shimazaki meetsand Mr. Masahiro Ishizuka meet the independence requirements applicable to him under Section 303A.06 of the NYSE Listed Company Manual. For a description of histheir business experience, see Item 6.A
“Directors and Senior Management—Directors”
in this annual report.
Item 16B. Code of Ethics
We adopted onIn December 2019, we adopted a new code of ethics (as defined in Item 16B of
Form
20-F)
consisting of the “Nomura Group Code of Conduct 2020”Conduct” and the “Nomura Group Code of Ethics for Financial Professionals”, which
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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” to replace the prior code of ethics. The new code of ethics presents ethics rules and requirements with more visual aids than the previous code of ethics without substantively altering the rules and requirements. A copy of the code of ethics is attached as Exhibit 11.1 and Exhibit 11.2 to this annual report.report as Exhibit 11.2.
Item 16C. Principal Accountant Fees and Services
Ernst & Young ShinNihon LLC has been our principal accountant for the last eighteentwenty fiscal years. The table set forth below contains the aggregate fees billed for each of the last two fiscal years by our principal accountant in each of the following categories: (i) Audit Fees, which are fees for professional services for the audit or review of our financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, (ii) Audit-Related Fees, which are fees for assurance and related services that are related to the performance of the audit or review of our financial statements and are not reported as Audit Fees, (iii) Tax Fees, which are fees for professional services provided for tax compliance, tax advice and tax planning, and (iv) All Other Fees, which are fees for products and services other than Audit Fees, Audit-Related Fees and Tax Fees, such as advisory services concerning risk management and regulatory matters.
         
 
Millions of yen
 
 
Year ended March 31
 
 
2019
  
2020
 
Audit Fees
 ¥
3,414
  ¥
3,409
 
Audit-Related Fees
  
179
   
136
 
Tax Fees
  
293
   
113
 
All Other Fees
  
39
   
7
 
         
Total
 ¥
3,925
  ¥
3,665
 
         
 
   
Millions of yen
 
   
Year ended March 31
 
   
2022
   
2023
 
Audit Fees
  ¥3,915   ¥4,138 
Audit-Related Fees
   103    224 
Tax Fees
   143    330 
All Other Fees
   106    264 
  
 
 
   
 
 
 
Total
  ¥4,267   ¥4,956 
  
 
 
   
 
 
 
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 the
pre-approval
policy, there are two types of
pre-approval
procedures, “General
Pre-Approval”
and “Specific
Pre-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 generally
pre-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 been
pre-approved
and are included in a “General
Pre-Approved
List.” Our Audit Committee is informed of each such service that is provided.
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Under “Specific
Pre-Approval,”
if any proposed services are not on the General
Pre-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 specific
pre-approval
decision on these services. Also, if any approved services in the General
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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 a
pre-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 to
Rule
2-01(c)(7)(i)(C)
of
Regulation
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, 2020,2023, we acquired 19,48116,744 shares of the Company’s common stock by means of repurchase of shares constituting less than one unit upon the request of the holders of those shares and 300,000,00050,000,000 shares under a share buyback program in accordance with Article
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
” which is an exhibit to this annual report. As of March 31, 2020,2023, we had 3,038,937,4933,004,051,773 outstanding shares of our common stock excluding 454,625,108229,510,828 shares held as treasury stock.
The following table sets forth certain information with respect to our purchases of shares of our common stock during the year ended March 31, 2020.2023.
                 
Month
 
Total
Number of
Shares
Purchased
  
Average Price
Paid per
Share
(in yen)
  
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Program
  
Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Program
 
April 1 to 30, 2019
  
937
  ¥
416
   
—  
   
—  
 
May 1 to 31, 2019
  
1,049
   
387
   
—  
   
—  
 
June 1 to 30, 2019
  
1,203
   
354
   
—  
   
300,000,000
 
July 1 to 31, 2019
  
1,724
   
378
   
—  
   
300,000,000
 
August 1 to 31, 2019
  
45,819,214
   
404
   
45,817,600
   
254,182,400
 
September 1 to 30, 2019
  
50,074,124
   
456
   
50,072,700
   
204,109,700
 
October 1 to 31, 2019
  
63,977,892
   
481
   
63,976,200
   
140,133,500
 
November 1 to 30, 2019
  
34,922,851
   
544
   
34,921,100
   
105,212,400
 
December 1 to 31, 2019
  
47,518,385
   
561
   
47,515,800
   
57,696,600
 
January 1 to 31, 2020
  
45,000,953
   
567
   
44,998,000
   
12,698,600
 
February 1 to 29, 2020
  
12,062,257
   
562
   
12,060,900
   
637,700
 
March 1 to 31, 2020
  
1,192
   
442
   
—  
   
—  
 
                 
Total
  
299,381,781
  ¥
501
   
299,362,300
   
—  
 
                 
 
Month
  
Total

Number of

Shares

Purchased
   
Average Price
Paid per
Share

(in yen)
   
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Program
   
Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Program
 
April 1 to 30, 2022
   1,364   ¥513    —      —   
May 1 to 31, 2022
   19,552,388    489    19,551,600    30,448,400 
June 1 to 30, 2022
   27,407,571    498    27,406,600    3,041,800 
July 1 to 31, 2022
   3,043,753    497    3,041,800    —   
August 1 to 31, 2022
   1,594    506    —      —   
September 1 to 30, 2022
   963    499    —      —   
October 1 to 31, 2022
   1,245    480    —      —   
November 1 to 30, 2022
   980    485    —      —   
December 1 to 31, 2022
   1,573    486    —      —   
January 1 to 31, 2023
   2,134    501    —      —   
February 1 to 28, 2023
   1,645    541    —      —   
March 1 to 31, 2023
   1,534    534    —      —   
  
 
 
   
 
 
   
 
 
   
 
 
 
Total
   50,016,744   ¥494    50,000,000    —   
  
 
 
   
 
 
   
 
 
   
 
 
 
On June 18, 2019,April 26, 2022, a resolution of the Board of Directors authorized the Company to purchase up to 300,000,00050,000,000 shares of our common stock or to a maximum of ¥150¥30 billion during the period from June 19, 2019May 17, 2022 through March 31, 2020.2023.
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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.
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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, 2020, 3,055,764,3702023, 3,048,229,697 shares of common stock were outstanding, excluding 437,798,231185,332,904 shares held as treasury stock.
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.
Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
  
Corporate Governance Practices Followed by the Company
A NYSE-listed U.S. company must have a majority of Directors meeting the independence requirements under Section 303A of the NYSE Listed Company Manual.
  
Under the Companies Act, a company which adopts the Company with Three Board Committees structure is not required to have a majority of outside directors, but is required to have a majority of outside directors on each of the audit, nomination and compensation committees.
 
The Company currently has sixnine outside directors among its tenthirteen Directors.
A NYSE-listed U.S. company must have an audit committee that satisfies the requirements under Section 303A of the NYSE Listed Company Manual, including those imposed by Rule
10A-3
under the U.S. Securities Exchange Act of 1934. The audit committee must be composed entirely of independent directors and have at least three members.
  
The Company has an Audit Committee consisting of threefour Directors, twothree of whom are outside directors in compliance with the requirements under the Companies Act. All threefour Audit Committee members are independent directors under Rule
10A-3
under the U.S. Securities Exchange Act of 1934 with one membertwo members qualified as audit committee financial expert.
A NYSE-listed U.S. company must have a nominating/corporate governance committee with responsibilities described under Section 303A of the NYSE Listed Company Manual. The nominating/corporate governance committee must be composed entirely of independent directors.
  
The Company has a Nomination Committee consisting of three Directors, two of whom are outside directors and the chairman is an outside director in compliance with the requirements under the Companies Act.
A NYSE-listed U.S. company must have a compensation committee composed entirely of independent directors. Compensation committee members must satisfy the additional independence
  
The Company has a Compensation Committee consisting of three Directors, two of whom are outside directors and the chairman is an outside
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Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
  
Corporate Governance Practices Followed by the Company
members must satisfy the additional independence requirements under Section 303A.02(a)(ii) of the NYSE Listed Company Manual. A compensation committee must also have authority to retain or obtain the advice of compensation and other advisers, subject to prescribed independence criteria that the committee must consider prior to engaging any such adviser.
  
director in compliance with the requirements under the Companies Act.
A NYSE-listed U.S. company must generally obtain shareholder approval with respect to any equity compensation plan.
  
Under the Companies Act, Restricted Stock Unit (“RSU”) and Stock Acquisition Right (“SAR”) awards are deemed to be compensation for the services performed by the Company’s Directors and Executive Officers and do not require shareholders’ approval. The Compensation Committee establishes the policy with respect to the determination of the individual compensation of each of the Company’s Directors and Executive Officers (including RSU and SAR awards as equity compensation) and makes determinations in accordance with that compensation policy.
A NYSE-listed U.S. company must adopt and disclose corporate governance guidelines.
  
Under the Companies Act, the Company is not required to adopt and disclose corporate governance guidelines. However, in response to Japan’s Corporate Governance Code, which was incorporated into the Tokyo Stock Exchange’s Securities Listing Regulations, the Company has established and publicly disclosed the “Nomura Holdings Corporate Governance Guidelines.”
The
non-management
directors of a NYSE-listed U.S. company must meet at regularly scheduled executive sessions without management.
  
Under the Companies Act, outside directors of the Company are not required to meet at regularly scheduled executive sessions without management. However, in accordance with the “Nomura Holdings Corporate Governance Guidelines,” outside directors hold meetings consisting solely of outside directors in order to discuss matters such as the business and corporate governance of the Company.
A NYSE-listed U.S. company must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.
  
Under the Companies Act, the Company is not required to adopt and disclose a code of business conduct and ethics for directors, officers or employees. However, the Company has adopted the “Nomura Group Code of Conduct”. Please see Item 16B of this annual report for further information regarding the “Nomura Group Code of Conduct.”
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Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
133Not applicable.
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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.
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Item 19. Exhibits
Exhibit
Number
  
Description
        1.1
  
Articles of Incorporation of Nomura Holdings, Inc. (English translation) (filed on June 25, 201524, 2022 as an exhibit to the Annual Report on
Form
20-F
(File
No.
 001-15270)
and incorporated herein by reference)
        1.2  
        1.2
Share Handling Regulations of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as an exhibit to the Annual Report on Form
20-F
(File No.
 001-15270)
and incorporated herein by reference)
        1.3  
        1.3
Regulations of the Board of Directors of Nomura Holdings, Inc. (English translation) (filed on June 24, 2022 as an exhibit to the Annual Report on
Form 20-F
(File
No. 001-15270)
and incorporated herein by reference)
        1.4
  
Regulations of the Nomination Committee of Nomura Holdings, Inc. (English translation) (filed on June 23, 2016 as an exhibit to the Annual Report on
Form
20-F
(File
No.
 001-15270)
and incorporated herein by reference)
        1.5  
        1.5
Regulations of the Audit Committee of Nomura Holdings, Inc. (English translation) (filed on June 24, 2022 as an exhibit to the Annual Report on
Form 20-F
(File
No. 001-15270)
and incorporated herein by reference)
        1.6
  
Regulations of the Compensation Committee of Nomura Holdings, Inc. (English translation) (filed on June 27, 2012 as an exhibit to the Annual Report on
Form
20-F
(File
No.
 001-15270)
and incorporated herein by reference)
        2.1
  
Form of Deposit Agreement among Nomura Holdings, Inc., The Bank of New York Mellon as depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt (filed on April 28, 2010 as an exhibit to the Registration Statement on
Form
F-6
(File
No.
 333-166346)
and incorporated herein by reference)
        2.2
  
Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 (filed on June 25, 201924, 2022 as an exhibit to the Annual Report on
Form
20-F
(File
No.
 001-15270)
and incorporated herein by reference)
        4.1
  
Form of Limitation of Liability Agreement (filed on June 30, 2011 as an exhibit to the Annual Report on Form
20-F
(File No.
 001-15270)
and incorporated herein by reference)
(1)
        4.2
Limitation of Liability Agreement (English translation) (filed on June 25, 2015 as an exhibit to the Annual Report on Form
20-F
(File No.
 001-15270)
and incorporated herein by reference)
(2)
        
        4.3
Limitation of Liability Agreement (filed on June 25, 2015 as an exhibit to the Annual Report on Form
20-F
(File No.
 001-15270)
and incorporated herein by reference)
(3)
8.1
  
Subsidiaries of Nomura Holdings, Inc.—See Item 4.C. “
Organizational Structure
” in this annual report.
      11.1
  
Nomura Group Code of Conduct 20202023 (English translation)
      11.2  
      11.2
Nomura Group Code of Ethics for Financial Professionals (English translation) (filed on June 30, 2020 as an exhibit to the Annual Report on
Form 20-F
(File
No. 001-15270)
and incorporated herein by reference)
      12.1
  
Certification of the principal executive officer required by 17 C.F.R. 240.
13a-14(a)
      12.2
  
Certification of the principal financial officer required by 17 C.F.R. 240.
13a-14(a)
      13.1
  
Certification of the chief executive officer required by 18 U.S.C. Section 1350
      13.2
  
Certification of the chief financial officer required by 18 U.S.C. Section 1350
      15.1
  
Consent of Ernst & Young ShinNihon LLC, with respect to its report on the audit of the financial statements included in this annual reportan independent registered public accounting firm
      17.1  
Subsidiary Issuer of Registered Guaranteed Securities
158
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Exhibit
Number
Description
    101.INS  
Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
    101.SCH
  
Inline XBRL Taxonomy Extension Schema Document
    101.CAL
  
Inline XBRL Taxonomy Extension Calculation Linkbase Document
    101.DEF
  
Inline XBRL Taxonomy Extension Definition Linkbase Document
    101.LAB
  
Inline XBRL Taxonomy Extension Label Linkbase Document
    101.PRE
  
Inline XBRL Taxonomy Extension Presentation Linkbase Document
        104
  
The cover page for the Company’s Annual Report on Form
20-F
for the year ended March 31, 2020,2023, has been formatted in Inline XBRL
135
Table of Contents
(1)
The Company and Michael Lim Choo Sanhas entered into a Limitation of Liability AgreementAgreements substantially in the form of this exhibit.exhibit with all of its outside directors and director Shoji Ogawa.
(2)The Company and each of Hiroshi Kimura, Noriaki Shimazaki, Hisato Miyashita, Mari Sono and Kazuhiko Ishimura entered into a Limitation of Liability Agreement substantially in the form of this exhibit.
(3)The Company and Laura Simone Unger entered into a Limitation of Liability Agreement substantially in the form of this exhibit.
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.
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NOMURA HOLDINGS, INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
  
Page
 
Consolidated Financial Statements of Nomura Holdings, Inc.:
  
ReportReports of Independent Registered Public Accounting Firm (PCAOB ID: 789)
   
F-F-2
2
 
Consolidated Balance Sheets as of March 31, 20192022 and 20202023
   
F-F-6
7
 
Consolidated Statements of Income for the Years Ended March 31, 2018, 20192021, 2022 and 20202023
   
F-F-9
10
 
Consolidated Statements of Comprehensive Income for the Years Ended March 31, 2018, 20192021, 2022 and 20202023
   
F-F-10
11
 
Consolidated Statements of Changes in Equity for the Years Ended March 31, 2018, 20192021, 2022 and 20202023
   
F-F-11
12
 
Consolidated Statements of Cash Flows for the Years Ended March 31, 2018, 20192021, 2022 and 20202023
   
F-F-13
14
 
Notes to the Consolidated Financial Statements
   
F-F-15
16
 
 
F-1
Table of Contents
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, 20202023 and 2019,2022, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended March 31, 2020,2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at March 31, 20202023 and 2019,2022, and the consolidated results of its operations, and its cash flows for each of the three years in the period ended March 31, 2020,2023, in conformity with U.S. generally accepted accounting principles.
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, 2020,2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated June 30, 202028, 2023 expressed an unqualified opinion thereon.
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
Table of Contents
  
Valuation—Less Liquid Financial InstrumentsFair value of less liquid financial instruments
Description of the Matter
  
The Company holds investment positions in the fixed income and equity markets bothfinancial instruments for trading, customer facilitation and customer facilitation. Theinvestment purposes. As disclosed in Note 2 to the consolidated financial statements as of March 31, 2023, the Company had JPY 949¥1,093 billion and JPY 668¥790 billion of financial instruments assets and liabilities, respectively, categorized within Level 3 of the fair value hierarchy. In determining the fair value of these financial instruments, the Company used valuation models and unobservable valuation inputs which reflect theirits assumptions and specific data. These inputs are significant to the fair value of the financial instruments and are supported by little or no market activity as of March 31, 2020.2023. The methodologiesvaluation techniques applied by management to determine the fair value of such instruments are described in Note 2 to the consolidated financial statements.
 
Auditing the fair value of the Company’s Level 3 financial instruments was complex and highly judgmental due to the subjectivity of the judgments used and estimations made by management in determining the fair value for these financial instruments especially considering the impact of
COVID-19
on global financial markets.instruments. In particular, to value certain financial instruments, management used a variety of valuation techniques which involved certain underlying valuation assumptions and significant unobservable valuation inputs, including weighted average cost of capital (WACC),WACC, growth rates, liquidity discounts, market multiples including enterprise value over earnings before interest, taxes, depreciation,volatilities, correlations, credit spreads, recovery rates, loss severities, prepayment rates, default probabilities and amortization (EV/ EBITDA) ratios, volatilities and correlations which are significant to the value of these investments.yields.
How We Addressed the Matter in Our Audit
  
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risk of material misstatement relating to management’s assessment of the valuation models and significant unobservable inputs and estimates includedused in fair value measurement. This included the testing of model validation controls by various departments within the Company. It also included the testing of model performance and suitability controls as a result of significant market volatility due to the impact of
COVID-19.
 
Our audit procedures to evaluate the valuation methodologiestechniques used by the Company included, among others, testing valuation models and significant unobservable inputs, estimates and the mathematical accuracy of the Company’s valuation models.inputs. We independently developed fair value estimates and compared them to the Company’s results, andfor which we involved our valuation specialists to assist with the application of these procedures and compared them to the Company’s results, on a sample basis. We also agreed significant unobservable inputs and underlying data used in the Company’s valuationsvaluation models to agreements, information available from third party sources and market data, where available. We evaluated subsequent events and transactions and considered whether they corroborate or contradict the Company’s
year-end
valuations.
  
Income Taxes—Valuation AllowanceContingencies for investigations, lawsuits and other legal proceedings
Description of the Matter
  
As disclosed in Note 16 to the consolidated financial statements at March 31, 2020, the Company had deferred tax assets of JPY 151 billion, net of a JPY 388 billion valuation allowance.
The gross deferred tax assets are reduced by a valuation allowance if, based upon the weight of all available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
Auditing management’s analysis of the assessment for realizing the deferred tax asset was complex and highly judgmental because the assessment process involves significant judgment. For example, assumptions used may be affected by future market events, economic conditions and decisions made by the management, including the impact associated with rebuilding the business platform and
COVID-19.
These assumptions feed into the revenue and cost projections used to assess whether the deferred tax assets will be realized.
F-3
Table of Contents
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to management’s assessment for realizing the deferred tax assets. This included controls over management’s projections of future taxable income, that included the impact of rebuilding the business platform and
COVID-19,
and the future reversal of existing taxable temporary differences, and management’s identification and use of available tax planning strategies.
Our audit procedures to evaluate the realizability of deferred tax assets included, among others, inspecting the supporting documents and meeting minutes of the Board of Directors and Executive Management Board, and assessing whether management’s estimate of future taxable income and schedule of future deductible temporary differences to be reversed are consistent with the business plan. We evaluated the reasonableness of assumptions used by the Company to develop the projections of future taxable income and tested the completeness and accuracy of the underlying data used in its projections. For example, we compared the projections of future taxable income with the actual results of prior periods, as well as management’s consideration of current industry and economic trends with the corresponding actual results and evaluated the sensitivity of the outcomes by making reasonably possible changes in the assumptions of the projections.
Provisions for conduct and litigation
Description of the Matter
As disclosed in Note 21 to the consolidated financial statements, the Company is involved in investigations, lawsuits and other legal proceedings. As disclosed in Note 19 to the consolidated financial statements as of March 31, 2023, the Company has recorded litigation provision of ¥42,459 million in respect of outstanding and unsettled investigations, lawsuits and other legal proceedings and for those cases where the loss is considered probable and an estimate of the range of reasonably possible losses can be made, the Company estimates that the total aggregate reasonably possible maximum loss in excess of amounts recognized as a liability (if any) against these cases is approximately ¥51 billion.
The Company recognizes a liability for those contingencies for which it is probable that a liability hashad been incurred at the date of the consolidated financial statements and the amount is reasonably estimable. As part of this, management performs an assessment of the materiality of contingencies where a loss is either reasonably possible or it is reasonably possible that an exposure to loss exists in excess of the amount accrued. This includes the amounts at which the Company is willing to settle for any loss contingency. If it is reasonably possible that such a loss or an additional loss may have been incurred and the effect on the consolidated financial statements is material, the Company discloses the nature of the loss contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the consolidated financial statements.
 
F-3
Table of Contents
Auditing management’s determination of whether a loss contingency is probable and reasonably estimable, reasonably possible or remote, and the related disclosures, is highly subjective, complex and requires significant judgment. Management judgment is needed to determine whether an obligation exists and a loss contingency should be recorded at March 31, 2020.2023. This includes judgment in the determination of whether an outflow in respect of identified loss contingency is probable and can be estimated reliably. In addition, management judgment is needed to determine if an estimated loss is only reasonably possible rather than probable.
How We Addressed the Matter in Our Audit
  
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to management’s assessment for timely identification of contingencies that may arise out of lawsuits and regulatory investigations including the Company’s assessment of whether they are probable or reasonably possible and the associated measurement of the best estimate.
Our audit procedures to test the assessment of the probability of incurrence of a loss and whether the loss was reasonably estimable included, among others, reading the minutes of the meetings of the Board of Directors and Executive Management Board, and reading relevant regulatory and legal correspondence to assess developments in significant matters, requesting and receiving internal and external legal counsel confirmation letters, meeting with internal and external legal counsel to discuss the allegations and obtaining a representation letter fromevaluating management’s assessment regarding whether an unfavorable outcome is probable or reasonably possible and the Company’s management.associated measurement of the best estimate. In addition, our audit procedures to test the measurement of the loss contingency and the disclosure of the reasonably possible additionalmaximum loss in excess of amounts
F-4
Table of Contents
recognized as a liability included, among others, evaluating the method of measuring the contingency, testing the accuracy and completeness of the data, reading correspondence received from internal and external counsel and inspecting evidence of approval from the individuals with the authority to determine the amount the Company is willing to settle that are used to determine a provision or a range of reasonably possible lossloss. We evaluated subsequent events and performing a search for newconsidered whether they corroborate or contrary evidence affectingcontradict the estimate.Company’s
year-end
assessments.
/s/s
/ 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 30, 202028, 2023
F-5F-4
Table of Contents
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, 2020,2023, based on criteria established in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Nomura Holdings, Inc. (the Company)the Company maintained, in all material respects, effective internal control over financial reporting as ofat March 31, 2020,2023, based on the COSO criteria.
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 of Nomura Holdings, Inc. (the Company) as of March 31, 20202023 and 2019,2022, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the periodthen ended, March 31, 2020, and the related notes (collectively referred to as the “financial statements”), and our report dated June 30, 202028, 2023 expressed an unqualified opinion thereon.
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 30, 202028, 2023
F-6
F-5
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
         
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
ASSETS
  
   
 
Cash and cash deposits:
  
   
 
Cash and cash equivalents
 ¥
2,686,659
  ¥
3,191,889
 
Time deposits
  
289,753
   
309,373
 
Deposits with stock exchanges and other segregated cash
  
285,457
   
373,686
 
         
Total cash and cash deposits
  
3,261,869
   
3,874,948
 
         
Loans and receivables:
  
   
 
Loans receivable (including ¥664,585 million and ¥805,141 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
2,544,218
   
2,857,405
 
Receivables from customers (including ¥8,318 million and ¥11 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
449,706
   
541,284
 
Receivables from other than customers
  
892,283
   
1,731,236
 
Allowance for doubtful accounts
  
(4,169
)  
(13,012
)
         
Total loans and receivables
  
3,882,038
   
5,116,913
 
         
Collateralized agreements:
  
   
 
Securities purchased under agreements to resell (including ¥647,545 million and ¥548,043 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
13,194,543
   
12,377,315
 
Securities borrowed
  
4,112,416
   
3,529,797
 
         
Total collateralized agreements
  
17,306,959
   
15,907,112
 
         
Trading assets and private equity and debt investments:
  
   
 
Trading assets (including securities pledged as collateral of ¥5,200,360 million and ¥5,332,640 million as of March 31, 2019 and March 31, 2020, respectively; including ¥10,273 million and ¥12,407 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
14,355,712
   
16,853,822
 
Private equity and debt investments (including ¥4,047 million and ¥6,395 million measured at fair value by applying the fair value option in March 31, 2019 and March 31, 2020, respectively)
  
30,077
   
44,278
 
         
Total trading assets and private equity and debt investments
  
14,385,789
   
16,898,100
 
         
Other assets:
  
   
 
Office buildings, land, equipment and facilities (net of accumulated depreciation and amortization of ¥416,052 million and ¥397,114 million as of March 31, 2019 and March 31, 2020, respectively)
  
349,365
   
440,512
 
Non-trading
debt securities
  
460,661
   
455,392
 
Investments in equity securities
  
138,447
   
112,175
 
Investments in and advances to affiliated companies
  
436,220
   
367,641
 
Other (including ¥151,233 million and ¥144,756 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
748,091
   
827,022
 
         
Total other assets
  
2,132,784
   
2,202,742
 
         
Total assets
 ¥
40,969,439
  ¥
43,999,815
 
         
 
   
Millions of yen
 
   
March 31
 
   
2022
  
2023
 
ASSETS
         
Cash and cash deposits:
         
Cash and cash equivalents
  ¥3,316,238  ¥3,820,685 
Time deposits
   320,754   409,082 
Deposits with stock exchanges and other segregated cash
   426,519   291,480 
   
 
 
  
 
 
 
Total cash and cash deposits
   4,063,511   4,521,247 
   
 
 
  
 
 
 
Loans and receivables:
         
Loans receivable (includes ¥1,210,590 and ¥1,650,115 at fair value)
   3,579,727   4,013,852 
Receivables from customers (includes ¥86,839 and ¥39,107 at fair value)
   417,661   379,911 
Receivables from other than customers (includes ¥10,362 and ¥ nil at fair value)
   1,069,660   819,263 
Allowance for credit losses
   (66,346)   (5,832) 
   
 
 
  
 
 
 
Total loans and receivables
   5,000,702   5,207,194 
   
 
 
  
 
 
 
Collateralized agreements:
         
Securities purchased under agreements to resell (includes ¥297,653 and ¥303,499 at fair value)
   11,879,312   13,834,460 
Securities borrowed
   4,997,129   4,283,039 
   
 
 
  
 
 
 
Total collateralized agreements
   16,876,441   18,117,499 
   
 
 
  
 
 
 
Trading assets and private equity and debt investments:
         
Trading assets (includes assets pledged of ¥4,643,412 and ¥5,656,626; includes ¥14,328 and ¥7,043 at fair value)
   15,230,817   17,509,934 
Private equity and debt investments (includes ¥10,770 and ¥18,033 at fair value)
   65,193   99,399 
   
 
 
  
 
 
 
Total trading assets and private equity and debt investments
   15,296,010   17,609,333 
   
 
 
  
 
 
 
Other assets:
         
Office buildings, land, equipment and facilities (net of accumulated depreciation and amortization of ¥426,081 and ¥459,954)
   419,047   464,316 
Non-trading
debt securities (includes assets pledged of ¥17,823 and ¥0)
   484,681   337,361 
Investments in equity securities (includes assets pledged of ¥606 and ¥953)
   133,897   97,660 
Investments in and advances to affiliated companies (includes assets pledged of ¥5,038 and ¥5,658)
   364,281   402,485 
Other (includes ¥169,080 and ¥168,780 at fair value)
   773,586   1,014,707 
   
 
 
  
 
 
 
Total other assets
   2,175,492   2,316,529 
   
 
 
  
 
 
 
Total assets
  ¥43,412,156  ¥47,771,802 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
F-
7F-6
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS—(Continued)
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
LIABILITIES AND EQUITY
  
   
 
Short-term borrowings (including ¥362,612 million and ¥376,910 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
 ¥
841,758
  ¥
1,486,733
 
Payables and deposits:
  
   
 
Payables to customers
  
1,229,083
   
1,467,434
 
Payables to other than customers
  
1,146,336
   
1,653,495
 
Deposits received at banks (including ¥—million and ¥14,392 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
1,392,619
   
1,276,153
 
         
Total payables and deposits
  
3,768,038
   
4,397,082
 
         
Collateralized financing:
  
   
 
Securities sold under agreements to repurchase (including ¥159,430 million and ¥111,609 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
15,036,503
   
16,349,182
 
Securities loaned (including ¥131,677 million and ¥105,968 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
1,229,595
   
961,446
 
Other secured borrowings
  
418,305
   
717,711
 
         
Total collateralized financing
  
16,684,403
   
18,028,339
 
         
Trading liabilities
  
8,219,811
   
8,546,284
 
Other liabilities (including ¥15,011 million and ¥9,183 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
858,867
   
1,034,448
 
Long-term borrowings (including ¥3,576,293 million and ¥3,707,643 million measured at fair value by applying the fair value option as of March 31, 2019 and March 31, 2020, respectively)
  
7,915,769
   
7,775,665
 
         
Total liabilities
  
38,288,646
   
41,268,551
 
         
Commitments and contingencies (Note 21)
  
   
 
Equity:
  
   
 
Nomura Holdings, Inc. (“NHI”) shareholders’ equity:
  
   
 
Common stock
  
   
 
No par value shares;
Authorized—6,000,000,000 shares as of March 31, 2019 and March 31, 2020
Issued—3,493,562,601 shares as of March 31, 2019 and March 31, 2020
Outstanding
—
3,310,800,799 shares as of March 31, 2019 and 3,038,587,493 shares as of
March 31, 2020
  
594,493
   
594,493
 
Additional
paid-in
capital
  
687,761
   
683,232
 
Retained earnings
  
1,486,825
   
1,645,451
 
Accumulated other comprehensive income
  
(29,050
)  
(26,105
)
         
Total NHI
shareholders’
 equity before treasury stock
  
2,740,029
   
2,897,071
 
Common stock held in treasury, at cost
—
182,761,802 shares as of March 31, 2019 and 454,975,108 shares as of March 31, 2020
  
(108,968
)  
(243,604
)
         
Total NHI shareholders’ equity
  
2,631,061
   
2,653,467
 
         
Noncontrolling interests
  
49,732
   
77,797
 
Total equity
  
2,680,793
   
2,731,264
 
         
Total liabilities and equity
 ¥
40,969,439
  ¥
43,999,815
 
         
   
Millions of yen
 
   
March 31
 
   
2022
  
2023
 
LIABILITIES AND EQUITY
         
Short-term borrowings (includes ¥710,629 and ¥476,212 at fair value)
  ¥1,050,141  ¥1,008,541 
Payables and deposits:
         
Payables to customers
   1,522,961   1,359,948 
Payables to other than customers
   1,636,725   1,799,585 
Deposits received at banks (includes ¥71,156 and ¥159,505 at fair value)
   1,760,679   2,137,936 
   
 
 
  
 
 
 
Total payables and deposits
   4,920,365   5,297,469 
   
 
 
  
 
 
 
Collateralized financing:
         
Securities sold under agreements to repurchase (includes ¥411,847 and ¥666,985 at fair value)
   12,574,556   14,217,966 
Securities loaned (includes ¥104,606 and ¥82,136 at fair value)
   1,567,351   1,556,663 
Other secured borrowings
   396,291   334,319 
   
 
 
  
 
 
 
Total collateralized financing
   14,538,198   16,108,948 
   
 
 
  
 
 
 
Trading liabilities
   9,652,118   10,557,971 
Other liabilities (includes ¥52,110 and ¥34,984 at fair value)
   1,020,225   1,175,521 
Long-term borrowings (includes ¥4,557,326 and ¥4,957,581 at fair value)
   9,258,306   10,399,210 
   
 
 
  
 
 
 
Total liabilities
   40,439,353   44,547,660 
   
 
 
  
 
 
 
Commitments and contingencies (Note
19
)
         
Equity:
         
Nomura Holdings, Inc. (“NHI”) shareholders’ equity:
         
Common stock
         
No par value shares;
Authorized
—
6,000,000,000 shares
Issued
—
3,233,562,601 shares
Outstanding
—
3,017,804,012 and 3,003,679,324 shares
   594,493   594,493 
Additional
paid-in
capital
   697,507   707,189 
Retained earnings
   1,606,987   1,647,005 
Accumulated other comprehensive income
   127,973   318,454 
   
 
 
  
 
 
 
Total NHI shareholders’ equity before treasury stock
   3,026,960   3,267,141 
Common stock held in treasury, at cost
—
215,758,589 and 229,883,277 shares
   (112,355)   (118,574) 
   
 
 
  
 
 
 
Total NHI shareholders’ equity
   2,914,605   3,148,567 
   
 
 
  
 
 
 
Noncontrolling interests
   58,198   75,575 
Total equity
   2,972,803   3,224,142 
   
 
 
  
 
 
 
Total liabilities and equity
  ¥43,412,156  ¥47,771,802 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
F-
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Table of Contents
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
” for further information.
 
Billions of yen
   
Billions of yen
 
 
March 31
   
March 31
 
 
2019
  
2020
   
2022
   
2023
 
Cash and cash deposits
 ¥
20
  ¥
10
   ¥            62   ¥            23 
Trading assets and private equity and debt investments
  
1,273
   
1,172
    1,024    1,044 
Other assets
  
126
   
39
    125    127 
        
 
   
 
 
Total assets
 ¥
1,419
  ¥
1,221
   ¥1,211   ¥1,194 
        
 
   
 
 
Trading liabilities
 ¥
23
  ¥
19
   ¥0   ¥0 
Other liabilities
  
3
   
4
    6    5 
Borrowings
  
1,035
   
947
    892    887 
        
 
   
 
 
Total liabilities
 ¥
1,061
  ¥
970
   ¥898   ¥892 
        
 
   
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-8
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
   
Millions of yen
 
  
Year ended March 31
 
  
2021
  
2022
  
2023
 
Revenue:
             
Commissions
  ¥376,897  ¥332,344  ¥279,857 
Fees from investment banking
   108,681   149,603   113,208 
Asset management and portfolio service fees
   230,047   269,985   271,684 
Net gain on trading
   310,040   368,799   563,269 
Gain on private equity and debt investments
   12,734   30,768   14,504 
Interest and dividends
   356,466   284,222   1,114,690 
Gain (loss) on investments in equity securities
   14,053   5,446   (1,426) 
Other
   208,317   152,832   130,940 
   
 
 
  
 
 
  
 
 
 
Total revenue
   1,617,235   1,593,999   2,486,726 
Interest expense
   215,363   230,109   1,151,149 
   
 
 
  
 
 
  
 
 
 
Net revenue
   1,401,872   1,363,890   1,335,577 
   
 
 
  
 
 
  
 
 
 
Non-interest
expenses:
             
Compensation and benefits
   507,906   529,506   605,787 
Commissions and floor brokerage
   111,550   105,204   119,237 
Information processing and communications
   178,835   184,319   209,537 
Occupancy and related depreciation
   72,367   69,742   66,857 
Business development expenses
   13,520   15,641   22,636 
Other
    287,023     232,855    162,049 
   
 
 
  
 
 
  
 
 
 
Total
non-interest
expenses
   1,171,201   1,137,267   1,186,103 
   
 
 
  
 
 
  
 
 
 
Income before income taxes
   230,671   226,623   149,474 
   
 
 
  
 
 
  
 
 
 
Income tax expense
   70,274   80,090   57,798 
   
 
 
  
 
 
  
 
 
 
Net income
  ¥160,397  ¥146,533  ¥91,676 
   
 
 
  
 
 
  
 
 
 
Less: Net income (loss) attributable to noncontrolling interests
   7,281   3,537   (1,110) 
   
 
 
  
 
 
  
 
 
 
Net income attributable to NHI shareholders
  ¥153,116  ¥142,996  ¥92,786 
   
 
 
  
 
 
  
 
 
 
  
   
Yen
 
Per share of common stock:
             
Basic
—
             
Net income attributable to NHI shareholders per share
  ¥50.11  ¥46.68  ¥30.86 
   
 
 
  
 
 
  
 
 
 
Diluted
—
             
Net income attributable to NHI shareholders per share
  ¥48.63  ¥45.23  ¥29.74 
   
 
 
  
 
 
  
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
F-9
Table of Contents

NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
   
Millions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Net income
  ¥160,397  ¥146,533  ¥91,676 
Other comprehensive income (loss):
             
Change in cumulative translation adjustments:
             
Change in cumulative translation adjustments
   46,821   122,468   107,058 
Deferred income taxes
   (1,287)   (946)   (145) 
   
 
 
  
 
 
  
 
 
 
Total
   45,534   121,522   106,913 
   
 
 
  
 
 
  
 
 
 
Defined benefit pension plans:
             
Pension liability adjustment
   20,720   (404)   16,422 
Deferred income taxes
   (1,626)   78   (4,793) 
   
 
 
  
 
 
  
 
 
 
Total
   19,094   (326)   11,629 
   
 
 
  
 
 
  
 
 
 
Own credit adjustments:
             
Own credit adjustments
   (91,666)   60,777   95,047 
Deferred income taxes
   15,943   (12,930)   (22,050) 
   
 
 
  
 
 
  
 
 
 
Total
   (75,723)   47,847   72,997 
   
 
 
  
 
 
  
 
 
 
Total other comprehensive income (loss)
   (11,095)   169,043   191,539 
   
 
 
  
 
 
  
 
 
 
Comprehensive income
   149,302   315,576   283,215 
Less: Comprehensive income (loss) attributable to noncontrolling interests
   8,225   6,463   (52) 
   
 
 
  
 
 
  
 
 
 
Comprehensive income attributable to NHI shareholders
  ¥141,077  ¥309,113  ¥283,267 
   
 
 
  
 
 
  
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
F-
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NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOMECHANGES IN EQUITY
             
 
Millions of yen
 
Year ended March 31
 
2018
  
2019
  
2020
 
Revenue:
  
   
   
 
Commissions
 ¥
373,313
  ¥
293,069
  ¥
308,805
 
Fees from investment banking
  
101,663
   
101,521
   
103,222
 
Asset management and portfolio service fees
  
245,616
   
245,519
   
238,202
 
Net gain on trading
  
442,885
   
342,964
   
356,609
 
Gain (loss) on private equity and debt investments
  
(869
)  
1,007
   
(93
)
Interest and dividends
  
585,675
   
776,964
   
794,472
 
Gain (loss) on investments in equity securities
  
2,683
   
(6,983
)  
(14,726
)
Other
  
221,192
   
81,057
   
165,991
 
             
Total revenue
  
1,972,158
   
1,835,118
   
1,952,482
 
Interest expense
  
475,189
   
718,348
   
664,653
 
             
Net revenue
  
1,496,969
   
1,116,770
   
1,287,829
 
             
Non-interest
expenses:
  
   
   
 
Compensation and benefits
  
530,641
   
497,065
   
479,420
 
Commissions and floor brokerage
  
99,868
   
82,637
   
106,123
 
Information processing and communications
  
184,781
   
166,865
   
170,317
 
Occupancy and related depreciation
  
67,895
   
64,940
   
72,986
 
Business development expenses
  
36,762
   
36,915
   
31,885
 
Other
  
248,864
   
306,049
   
178,837
 
             
Total
non-interest
expenses
  
1,168,811
   
1,154,471
   
1,039,568
 
             
Income (loss) before income taxes
  
328,158
   
(37,701
)  
248,261
 
             
Income tax expense
  
103,866
   
57,010
   
28,894
 
             
Net income (loss)
 ¥
224,292
  ¥
(94,711
) ¥
219,367
 
             
Less: Net income attributable to noncontrolling interests
  
4,949
   
5,731
   
2,369
 
             
Net income (loss) attributable to NHI shareholders
 ¥
219,343
  ¥
(100,442
) ¥
216,998
 
             
    
 
Yen
 
Per share of common stock:
  
   
   
 
Basic—
  
   
   
 
Net income (loss) attributable to NHI shareholders per share
 ¥
63.13
  ¥
(29.90
) ¥
67.76
 
             
Diluted—
  
   
   
 
Net income (loss) attributable to NHI shareholders per share
 ¥
61.88
  ¥
(29.92
) ¥
66.20
 
             
 
   
Millions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Common stock
             
Balance at beginning of year
  ¥594,493  ¥594,493  ¥594,493 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   594,493   594,493   594,493 
   
 
 
  
 
 
  
 
 
 
Additional
paid-in
capital
             
Balance at beginning of year
   683,232   696,122   697,507 
Stock-based compensation awards
   11,775   1,421   9,411 
Changes in ownership interests in subsidiaries
   
—  
   
—  
   287 
Changes in an affiliated company’s interests in its subsidiary
   1,115   
—  
   
—  
 
Changes in an affiliated company’s interests
   
—  
   (36)   (16) 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   696,122   697,507   707,189 
   
 
 
  
 
 
  
 
 
 
Retained earnings
             
Balance at beginning of year
   1,645,451   1,533,713   1,606,987 
Cumulative effect of change in accounting principle (1)
   (18,200)   
—  
   
—  
 
Net income attributable to NHI shareholders
   153,116   142,996   92,786 
Cash dividends
   (107,104)   (67,007)   (51,050) 
Gain (loss) on sales of treasury stock
   (346)   (2,715)   (1,718) 
Cancellation of treasury stock
   (139,204)   
—  
   
—  
 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   1,533,713   1,606,987   1,647,005 
   
 
 
  
 
 
  
 
 
 
Accumulated other comprehensive income (loss)
             
Cumulative translation adjustments
             
Balance at beginning of year
   (26,274)   18,316   136,912 
Net change during the year
   44,590   118,596   105,855 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   18,316   136,912   242,767 
   
 
 
  
 
 
  
 
 
 
Defined benefit pension plans
             
Balance at beginning of year
   (62,571)   (43,477)   (43,803) 
Pension liability adjustment
   19,094   (326)   11,629 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   (43,477)   (43,803)   (32,174) 
   
 
 
  
 
 
  
 
 
 
Own credit adjustments
             
Balance at beginning of year
   62,740   (12,983)   34,864 
Own credit adjustments
   (75,723)   47,847   72,997 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   (12,983)   34,864   107,861 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   (38,144)   127,973   318,454 
   
 
 
  
 
 
  
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
(1)
Represents the adjustments to initially apply Accounting Standards Update ASU 2016-13, “
Measurement of Credit Losses on Financial Instruments
” for the year ended March 31, 2021.
F-
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Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMECHANGES IN EQUITY—(Continued)
             
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Net income (loss)
 ¥
224,292
  ¥
(94,711
) ¥
219,367
 
Other comprehensive income (loss):
  
   
   
 
Change in cumulative translation adjustments:
  
   
   
 
Change in cumulative translation adjustments
  
(77,067
)  
36,031
   
(45,000
)
Deferred income taxes
  
14,263
   
(1,852
)  
591
 
             
Total
  
(62,804
)  
34,179
   
(44,409
)
             
Defined benefit pension plans:
  
   
   
 
Pension liability adjustment
  
(10,124
)  
(23,431
)  
7,843
 
Deferred income taxes
  
3,307
   
161
   
693
 
             
Total
  
(6,817
)  
(23,270
)  
8,536
 
             
Non-trading
securities:
  
   
   
 
Net unrealized gain (loss) on
non-trading
securities
  
(38,717
)  
—
   
—
 
Deferred income taxes
  
12,216
   
—
   
—
 
             
Total
  
(26,501
)  
—
   
—
 
             
Own credit adjustments:
  
   
   
 
Own credit adjustments
  
(2,867
)  
25,135
   
48,295
 
Deferred income taxes
  
383
   
(4,988
)  
(9,779
)
             
Total
  
(2,484
)  
20,147
   
38,516
 
             
Total other comprehensive income (loss)
  
(98,606
)  
31,056
   
2,643
 
             
Comprehensive income (loss)
  
125,686
   
(63,655
)  
222,010
 
Less: Comprehensive income (loss) attributable to noncontrolling interests
  
(649
)  
6,481
   
2,067
 
             
Comprehensive income (loss) attributable to NHI shareholders
 ¥
126,335
  ¥
(70,136
) ¥
219,943
 
             
 
   
Millions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Common stock held in treasury
             
Balance at beginning of year
   (243,604)   (91,246)   (112,355) 
Repurchases of common stock
   (11)   (39,650)   (24,728) 
Sales of common stock
   0   0   0 
Common stock issued to employees
   13,165   18,541   18,509 
Cancellation of treasury stock
   139,204   
—  
   
—  
 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   (91,246)   (112,355)   (118,574) 
   
 
 
  
 
 
  
 
 
 
Total NHI shareholders’ equity
             
Balance at end of year
   2,694,938   2,914,605   3,148,567 
   
 
 
  
 
 
  
 
 
 
Noncontrolling interests
             
Balance at beginning of year
   77,797   61,513   58,198 
Cash dividends
   (1,416)   (1,421)   (3,277) 
Net income
(loss) 
attributable to noncontrolling interests
   7,281   3,537   (1,110) 
Accumulated other comprehensive income attributable to noncontrolling interests
             
Cumulative translation adjustments
   944   2,926   1,058 
Purchase/sale (disposition) of subsidiary shares, etc., net
   673   1,307   (301) 
Other net change in noncontrolling interests
   (23,766)   (9,664)   21,007 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   61,513   58,198   75,575 
   
 
 
  
 
 
  
 
 
 
Total equity
             
Balance at end of year
  ¥2,756,451  ¥2,972,803  ¥3,224,142 
   
 
 
  
 
 
  
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
F-
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Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
             
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Common stock
  
   
   
 
Balance at beginning of year
 ¥
594,493
  ¥
594,493
  ¥
594,493
 
             
Balance at end of year
  
594,493
   
594,493
   
594,493
 
             
Additional
paid-in
capital
  
   
   
 
Balance at beginning of year
  
681,329
   
675,280
   
687,761
 
Stock-based compensation awards
  
(5,465
)  
12,481
   
(4,326
)
Changes in ownership interests in subsidiaries
  
(584
)  
—  
   
(203
)
             
Balance at end of year
  
675,280
   
687,761
   
683,232
 
             
Retained earnings
  
   
   
 
Balance at beginning of year
  
1,663,234
   
1,696,890
   
1,486,825
 
Cumulative effect of change in accounting principle
(1)
  
—  
   
1,564
   
5,592
 
Net income (loss) attributable to NHI shareholders
  
219,343
   
(100,442
)  
216,998
 
Cash dividends
  
(68,703
)  
(20,080
)  
(63,670
)
Gain (loss) on sales of treasury stock
  
(5,043
)  
(1,191
)  
(294
)
Cancellation of treasury stock
  
(111,941
)  
(89,916
)  
—  
 
             
Balance at end of year
  
1,696,890
   
1,486,825
   
1,645,451
 
             
Accumulated other comprehensive income (loss)
  
   
   
 
Cumulative translation adjustments
  
   
   
 
Balance at beginning of year
  
47,767
   
(15,596
)  
17,833
 
Net change during the year
  
(63,363
)  
33,429
   
(44,107
)
             
Balance at end of year
  
(15,596
)  
17,833
   
(26,274
)
             
Defined benefit pension plans
  
   
   
 
Balance at beginning of year
  
(41,020
)  
(47,837
)  
(71,107
)
Pension liability adjustment
  
(6,817
)  
(23,270
)  
8,536
 
             
Balance at end of year
  
(47,837
)  
(71,107
)  
(62,571
)
             
Own credit adjustments
  
   
   
 
Balance at beginning of year
  
6,561
   
4,077
   
24,224
 
Own credit adjustments
  
(2,484
)  
20,147
   
38,516
 
             
Balance at end of year
  
4,077
   
24,224
   
62,740
 
             
Balance at end of year
  
(59,356
)  
(29,050
)  
(26,105
)
             
(1)
Represents the adjustment to initially apply Accounting Standards Update (“ASU”) 2014-09, “
Revenue from Contracts with Customers
” for the year ended March 31, 2019 and ASU 2016-02, “
Leases
” for the year ended March 31, 2020.
F-
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Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)
             
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Common stock held in treasury
  
   
   
 
Balance at beginning of year
  
(182,792
)  
(157,987
)  
(108,968
)
Repurchases of common stock
  
(109,096
)  
(51,714
)  
(150,009
)
Sales of common stock
  
0
   
0
   
0
 
Common stock issued to employees
  
21,398
   
10,817
   
15,373
 
Cancellation of treasury stock
  
111,941
   
89,916
   
—  
 
Other net change in treasury stock
  
562
   
—  
   
—  
 
             
Balance at end of year
  
(157,987
)  
(108,968
)  
(243,604
)
             
Total NHI shareholders’ equity
  
   
   
 
Balance at end of year
  
2,749,320
   
2,631,061
   
2,653,467
 
             
Noncontrolling interests
  
   
   
 
Balance at beginning of year
  
53,875
   
50,504
   
49,732
 
Cash dividends
  
(1,955
)  
(2,685
)  
(1,483
)
Net income attributable to noncontrolling interests
  
4,949
   
5,731
   
2,369
 
Accumulated other comprehensive income (loss) attributable to noncontrolling interests
  
   
   
 
Cumulative translation adjustments
  
559
   
750
   
(302
)
Net unrealized gain (loss) on
non-trading
securities
  
(6,157
)  
—  
   
—  
 
Purchase/sale (disposition) of subsidiary shares, etc., net
  
(9,392
)  
1,183
   
18,264
 
Other net change in noncontrolling interests
  
8,625
   
(5,751
)  
9,217
 
             
Balance at end of year
  
50,504
   
49,732
   
77,797
 
             
Total equity
  
   
   
 
Balance at end of year
 ¥
2,799,824
  ¥
2,680,793
  ¥
2,731,264
 
             

The accompanying notes are an integral part of these consolidated financial statements.
F-1
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Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Millions of yen
 
  
Year ended March 31
 
 
2018
  
2019
  
2020
 
Cash flows from operating activities:
  
   
   
 
Net income (loss)
 ¥
224,292
  ¥
(94,711
) ¥
219,367
 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
  
   
   
 
Depreciation and amortization
  
71,579
   
57,924
   
63,583
 
Impairment of goodwill
  
—
   
81,372
   
—
 
Stock-based compensation
  
9,650
   
21,814
   
12,694
 
(Gain) loss on investments in equity securities
  
(2,683
)  
6,983
   
14,726
 
(Gain) loss on investments in subsidiaries and affiliates
  
(66,982
)  
5,719
   
(72,841
)
Equity in earnings of affiliates, net of dividends received
  
(21,226
)  
(19,043
)  
(20,342
)
Loss on disposal of office buildings, land, equipment and facilities
  
3,747
   
2,455
   
(3,957
)
Deferred income taxes
  
60,259
   
21,565
   
(23,911
)
Changes in operating assets and liabilities:
  
   
   
 
Time deposits
  
(100,642
)  
21,832
   
(33,029
)
Deposits with stock exchanges and other segregated cash
(2)
  
(72,069
)  
13,752
   
(97,424
)
Trading assets and private equity and debt investments
(1)
  
(239,331
)  
925,384
   
(2,754,743
)
Trading liabilities
(1)
  
227,302
   
(143,141
)  
428,997
 
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase
  
(453,239
)  
(3,274,866
)  
2,224,371
 
Securities borrowed, net of securities loaned
  
763,297
   
1,987,331
   
291,777
 
Other secured borrowings
  
79,121
   
1,198
   
301,019
 
Loans and receivables, net of allowance for doubtful accounts
(1)
  
(1,006,580
)  
157,599
   
(1,358,242
)
Payables
(1)
  
209,460
   
(63,683
)  
788,007
 
Bonus accrual
  
(2,957
)  
(46,602
)  
16,202
 
Accrued income taxes, net
  
(5,842
)  
8,241
   
(2,787
)
Other, net
  
(122,846
)  
(32,288
)  
(9,410
)
             
Net cash used in operating activities
(2)
  
(445,690
)  
(361,165
)  
(15,943
)
             
Cash flows from investing activities:
  
   
   
 
Payments for purchases of office buildings, land, equipment and facilities
  
(285,161
)  
(319,090
)  
(206,745
)
Proceeds from sales of office buildings, land, equipment and facilities
  
224,220
   
262,908
   
209,197
 
Payments for purchases of investments in equity securities
  
(61
)  
—
   
—
 
Proceeds from sales of investments in equity securities
  
932
   
519
   
13,323
 
Decrease (increase) in loans receivable at banks, net
  
(105,387
)  
(74,048
)  
43,920
 
Decrease (increase) in
non-trading
debt securities, net
  
80,634
   
29,452
   
(2,359
)
Business combinations or disposals, net
  
(13,125
)  
—
   
(2,484
)
Decrease (increase) in investments in affiliated companies, net
  
43,849
   
(8,290
)  
160,799
 
Other, net
  
(2,073
)  
(3,954
)  
685
 
             
Net cash provided by (used in) investing activities
  
(56,172
)  
(112,503
)  
216,336
 
             
Cash flows from financing activities:
  
   
   
 
Increase in long-term borrowings
  
2,314,609
   
2,142,212
   
2,364,260
 
Decrease in long-term borrowings
  
(1,964,657
)  
(1,625,516
)  
(2,402,621
)
Increase in short-term borrowings, net
  
215,001
   
85,900
   
656,205
 
Increase (decrease) in deposits received at banks, net
  
(13,254
)  
257,471
   
(93,260
)
Proceeds from sales of common stock held in treasury
  
764
   
313
   
285
 
Payments for repurchases of common stock held in treasury
  
(109,096
)  
(51,714
)  
(150,009
)
Payments for cash dividends
  
(70,199
)  
(47,475
)  
(58,416
)
Contribution from noncontrolling interests
  
—
   
—
   
15,618
 
             
Net cash provided by
 
financing activities
  
373,168
   
761,191
   
332,062
 
             
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
(2)
  
(53,504
)   
44,741
   
(27,277
)
             
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
(2)
  
(182,198
)  
332,264
   
505,178
 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year
(2)
  
2,537,066
   
2,354,868
   
2,687,132
 
             
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year
(2)
 ¥
2,354,868
  ¥
2,687,132
  ¥
3,192,310
 
             
Supplemental information:
  
   
   
 
Cash paid during the year for
—
  
   
   
 
Interest
 ¥
473,758
  ¥
700,855
  ¥
677,160
 
             
Income tax payments, net
 ¥
49,449
  ¥
27,204
  ¥
55,592
 
             
   
Millions of yen
 
  
Year ended March 31
 
  
2021
  
2022
  
2023
 
Cash flows from operating activities:
             
Net income
  ¥160,397  ¥146,533  ¥91,676 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
             
Depreciation and amortization
   63,846   59,524   61,424 
Stock-based compensation
   28,251   27,941   35,216 
(Gain) loss on investments in equity securities
   (14,053)   (5,446)   1,426 
(Gain) loss on investments in subsidiaries and affiliates
   45,086   (79,396)   (23,889) 
Equity in earnings of affiliates, net of dividends received
   (15,716)   (20,235)   (34,127) 
(Gain) loss on disposal of office buildings, land, equipment and facilities
   (64,730)   (3,490)   344 
Deferred income taxes
   (21,113)   3,106   6,137 
Changes in operating assets and liabilities:
             
Time deposits
   43,560   (23,064)   (70,532) 
Deposits with stock exchanges and other segregated cash
   13,878   (18,408)   170,632 
Trading assets and private equity and debt investments
   1,468,357   1,254,261   (1,576,531) 
Trading liabilities
   777,741   (284,747)   467,257 
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase
   (1,453,871)   (2,220,493)   (590,424) 
Securities borrowed, net of securities loaned
   (1,242,489)   595,116   834,438 
Other secured borrowings
   (326,450)   2,120   (62,416) 
Loans and receivables, net of allowance for credit losses
   1,145,429   (412,429)   178,254 
Payables
   (33,994)   (247,980)   (139,417) 
Bonus accrual
   15,840   (1,865)   (3,319) 
Accrued income taxes, net
   55,712   (37,639)   (42,603) 
Other, net
   20,089   (102,119)   (278,296) 
   
 
 
  
 
 
  
 
 
 
Net cash provided by (used in) operating activities
   665,770   (1,368,710)   (974,750) 
   
 
 
  
 
 
  
 
 
 
Cash flows from investing activities:
             
Payments for purchases of office buildings, land, equipment and facilities
   (119,875)   (111,331)   (171,165) 
Proceeds from sales of office buildings, land, equipment and facilities
   49,642   94,985   63,648 
Payments for purchases of investments in equity securities
   —     (300)   (100) 
Proceeds from sales of investments in equity securities
   6,502   2,502   35,499 
Increase in loans receivable at banks, net
   (83,412)   (112,782)   (84,570) 
Decrease (increase) in
non-trading
debt securities, net
   38,409   (51,065)   159,558 
Business combinations or disposals, net
   (11,152)   —     16,950 
Decrease (increase) in investments in affiliated companies, net
   (9,182)   103,437   18,180 
Other, net
   (9,958)   29,253   945 
   
 
 
  
 
 
  
 
 
 
Net cash provided by (used in) investing activities
   (139,026)   (45,301)   38,945 
   
 
 
  
 
 
  
 
 
 
Cash flows from financing activities:
             
Increase in long-term borrowings
   2,067,725   3,895,059   2,337,586 
Decrease in long-term borrowings
   (2,068,695)   (2,670,106)   (1,230,365) 
Decrease in short-term borrowings, net
   (325,237)   (475,509)   (81,925) 
Increase in deposits received at banks, net
   126,177   448,099   326,299 
Proceeds from sales of common stock held in treasury
   215   11   4 
Payments for repurchases of common stock held in treasury
   (11)   (39,650)   (24,728) 
Payments for cash dividends
   (76,358)   (70,714)   (57,262) 
Contributions from noncontrolling interests
   6,257   —    59,718 
Distributions to noncontrolling interests
   —     (16,475)  (37,630) 
   
 
 
  
 
 
  
 
 
 
Net cash provided by (used in) financing activities
   (269,927)   1,070,715   1,291,697 
   
 
 
  
 
 
  
 
 
 
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
   60,884   149,693   148,552 
   
 
 
  
 
 
  
 
 
 
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
   317,701   (193,603)   504,444 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year
   3,192,310   3,510,011   3,316,408 
   
 
 
  
 
 
  
 
 
 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year
  ¥3,510,011  ¥3,316,408  ¥3,820,852 
   
 
 
  
 
 
  
 
 
 
Supplemental information:
             
Cash paid during the year for—
             
Interest
  ¥222,024  ¥225,679  ¥1,098,815 
   
 
 
  
 
 
  
 
 
 
Income tax payments, net
  ¥35,675  ¥114,623  ¥94,263 
   
 
 
  
 
 
  
 
 
 
 
(1)Due to changes in accounting policy which Nomura adopted on April 1, 2018, certain reclassifications of amounts previously reported have been made to conform to the current year presentation. See Note 1
“Summary of accounting policies: New accounting pronouncements adopted during the current year”
in our consolidated financial statements included in this annual report.
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Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
(2)In accordance with ASU
2016-18
“Restricted Cash”
which Nomura adopted on April 1, 2018, certain reclassification of amounts previously reported as cash, cash equivalents, restricted cash and restricted cash equivalents for the years ended March 31, 2018 have been made to conform to the current year presentation.
The following table presents a reconciliation of
cash and cash equivalents
, and restricted cash and restricted cash equivalents reported in
depositsDeposits with stock exchanges and other segregated cash
within the consolidated balance sheets to the total of the same such amounts shown in the statements of cash flows above. Restricted cash and restricted cash equivalents are amounts where access, withdrawal or usage by Nomura is substantively prohibited by a third party entity outside of the Nomura group.
             
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Cash and cash equivalents reported in
Cash and cash equivalents
 ¥
2,354,639
  ¥
2,686,659
  ¥
3,191,889
 
Restricted cash and restricted cash equivalents reported in
Deposits with stock exchanges and other segregated cash
  
229
   
473
   
421
 
             
Total cash, cash equivalent, restricted cash and restricted cash equivalents
 ¥
2,354,868
  ¥
2,687,132
  ¥
3,192,310
 
             
 
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Cash and cash equivalents reported in
Cash and cash equivalents
  ¥3,509,754   ¥3,316,238   ¥3,820,685 
Restricted cash and restricted cash equivalents reported in
Deposits with stock exchanges and other segregated cash
   257    170    167 
   
 
 
   
 
 
   
 
 
 
Total cash, cash equivalent, restricted cash and restricted cash equivalents
  ¥3,510,011   ¥3,316,408   ¥3,820,852 
   
 
 
   
 
 
   
 
 
 
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.
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5F-14
Table of Contents
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 3three business segments: Retail, AssetInvestment Management, and Wholesale.
In its Retail segment, Nomura provides investment consultation services mainly to individual clients in Japan. In its AssetInvestment Management segment, Nomura developsmainly provides various investment management services and managesinvestment solutions such as establishing and managing investment trusts, discretionary investment services for domestic and providesoverseas investors, investment advisory services.and management for investment corporation and for funds for institutional investors, and management of Tokumei kumiai (silent partnerships). In its Wholesale segment, Nomura engages in the sales and trading of debt and equity securities, foreign exchange contracts and derivatives and currencies on a global basis,globally, and provides investment banking services such as the underwriting and distribution of debt and equity securities as well as mergers and acquisitions and financial advice.advisory.
Basis of presentation—
The accounting and financial reporting policies of the Nomura conform to accounting principles generally accepted in the United States (“U.S. GAAP”) as applicable to broker-dealers.
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
” (“ASC 810”). VIEs are entities in which equity investors do not have the characteristics of a controlling financial interest or which do not have sufficient equity at risk for the entityentities to finance itstheir activities without additional subordinated financial support. Nomura consolidates VIEs where Nomura is the primary beneficiary, which is where (1) Nomura holds variable interests that providehas power overto direct the most significant activities of the VIE that is most significantly impact the VIE’s economic performance; and (2) through Nomura’s interest in the VIE, the right to receive benefits or the obligation to absorb losses meeting a significance test,that could potentially be significant to the VIE, provided that Nomura is not acting as a fiduciary for other interest holders.
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
or at fair value by electing the fair value option permitted by ASC 825 “825“
Financial Instruments
” (“(“ASC 825”) and reported within
Trading assets,
,
Private equity and debt investments or Other assets
or Other assets—Other.—
Other financial investments are generally reported within
Trading assetsOther
.in consolidated balance sheets, depending on the nature and purpose of the investments.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Equity investments
in which Nomura has neither control nor significant influence are carried at fair value, with changes in fair value recognized through the consolidated statements of income and reported within
Trading assets, Private equity and debt investments or Other assets
—
Other
in consolidated balance sheets depending on the consolidated statementsnature or purpose of comprehensive income.
the investments.
Certain consolidated entities in which Nomura has a financial interest are investment companies under ASC 946 “
Financial Services—Services
—
Investment Companies
” (“ASC 946”). These entities carryNomura carries all of their investments at fair value, with changes in fair value recognized through the consolidated statements of income.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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. Certain reclassifications of previously reported amounts have been made to conform to the current year presentation.
Use of estimates
—
estimates—
CriticalNomura uses accounting estimates are those that are the most important accounting estimates used to prepare these consolidated financial statements and whichthey require the most difficult, subjective and complex judgments by management. Such estimates determined by management to be material include estimates regarding the fair value of financial instruments the outcome ofand litigation and tax examinations, the recovery of the carrying value of goodwill, the allowance for doubtful accounts, the realization of deferred tax assets, the impairment of equity method investments and other non-financial assets and other matters that affect the reported amounts of assets and liabilities as well as the disclosures in these consolidated financial statements.provisions. Estimates, by their nature, are based on underlying assumptions which require management judgment and depend on the extent of available information. Actual results in future periods may differ from current estimates, which could have a material impact on these consolidated financial statements.
The COVID-19 pandemic has impacted some of the critical accounting estimates used in these consolidated financial statements during the year ended March 31, 2020 and is expected to continue to impact these estimates in future periods. Assumptions around how long the COVID-19 pandemic will last and how long the economies and financial markets in the key jurisdictions in which Nomura and its clients operate will take to recover has, and will continue to, affect these estimates. The key assumptions and estimates impacted by COVID-19 include:
The ability of clients to perform on their contractual obligations to Nomura arising from financial instruments for determination of fair value measurements or allowances for doubtful accounts;
The volatility and dislocation in global financial markets for determination of fair value measurements;
The expected duration of declines in global equity markets for determination of fair value measurements and impairment of equity method investments;
The future use of non-financial assets within Nomura for determination of whether impairments are required; and
The future profitability of Nomura to realize deferred tax assets.
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 the COVID-19 pandemic, has and is expected to continue to impact these estimates and thereforeaffect the amounts reported in these consolidated financial statements.
Fair value of financial instruments
—instruments—
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.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
” (“ASC 820”) which defines fair value as the amount that would be exchanged to sell a financial asset or transfer a financial liability in an orderly transaction between market participants at the measurement date. It assumes that the transaction occurs in Nomura’s principal market, or in the absence of a principal market, the most advantageous market for the relevant financial asset or financial liability. See Note 2 “
Fair value measurements
” for further information regarding how Nomura estimates fair value for specific types of financial instruments used in the ordinary course of business.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair valuevalues of financial assets and financial liabilities of consolidated VIEs which meet the definition of collateralized financing entities are both measured using the more observable fair value of the financial assets and financial liabilities.
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”
(“ASC 326”).
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
while allowances for current expected credit losses against
off-balance
sheet financial instruments are reported in the consolidated balance sheets within
Other liabilities
. All movements in the allowances are reported in the consolidated statements of income within
Other expenses.
See Note 7
“Financing receivables”
for further information including how allowances for current expected credit losses are calculated.
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 andor other types of financial assets. Nomura’s involvement with SPEs includes structuring and underwriting, distributing and selling debt instruments and beneficial interests issued by SPEs to investors. Nomura derecognizes financial assets transferred in securitizations provided that Nomura has relinquished control over such assets and does not consolidate the SPE. Nomura may obtain or retain an interest in the financial assets, including residual interests in the SPEs dependent upon prevailing market conditions. Any such interests are accounted forcarried at fair value and reported within
Trading assets
in the consolidated balance sheets with the change in fair value reported within
Revenue—Revenue
—Net gain on trading
in the consolidated statements of income.
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Table of Contents
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 in effect at the balance sheet date, and all revenue and expenses are translated at the average exchange rates for the respective years and the resulting translation adjustments are accumulated and reported within
Accumulated other comprehensive income
(loss)
in NHI shareholders’ equity.
Foreign currency assets and liabilities are translated at exchange rates in effect at the balance sheet date and the resulting translation gains or losses are credited or charged to the consolidated statements of income.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Revenue from services provided to clients—customers—
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, asset management services, underwriting services, syndicationand distribution services and distributionasset management services.
Revenues areRevenue is recognized when or as the customerclient obtains control of the service provided by Nomura which depends on when each of the key distinct substantive promises made by Nomura within the contract with the customerclient (“performance obligations”) are satisfied. Such performance obligations are generally satisfied at a particularly point in time or, if certain criteria are met, over a period of time.
RevenuesRevenue from providing trade executiondistribution of fund units and clearing services areis reported in the consolidated statements of income within
Revenue—Revenue
—
Commissions,
revenues from financial advisory services, underwriting services and syndication services are reported in
Revenue—Fees from investment banking
and
revenuesrevenue from asset management services areis reported in
Revenue
—
Asset management and portfolio service fees
.and revenue from financial advisory services, underwriting and distribution services is reported in
Revenue
—
Fees from investment banking
.
Costs to obtain or fulfill the underlying contract to provide services to a customerclient are deferred as assets if certain criteria are met. These deferred costs, which are reported in the consolidated balance sheets within
Other
assets
are released to the consolidated statements of income when the related revenue from providing the service is also recognized or earlier if there is evidence that the costs are not recoverable and therefore impaired.
impaired
.
Trading assets and trading liabilities
—liabilities—
Trading assets and Trading liabilities
primarily comprise debt securities, equity securities and derivativesderivative assets which are recognized on the consolidated balance sheets on a trade date basis and loans which are recognized on the consolidated balance sheets on a settlement date basis.
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
primarily comprise short sales of securities and derivative liabilities, which are recognized on the consolidated balance sheets on a trade date basis. Trading assets and liabilities are carried at fair value and changes in fair value are generally reported within
Revenue—Revenue
—
Net gain on trading
in the consolidated statements of income.
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Table of Contents
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
in
the
consolidated statements of income.
Collateralized agreements and collateralized financing—
Collateralized agreements
consist of reverse repurchase agreements disclosed as
Securities purchased under agreements to resell
and securities borrowing transactions disclosed as
Securities borrowed
.
Collateralized financing
consists
of repurchase agreements disclosed as
Securities sold under agreements to repurchase
, securities lending transactions disclosed as
Securities loaned
and certain other secured borrowings.
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. No allowance for credit losses is generally recognized against reverse repurchase agreements due to the strict collateralization requirements.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
and the obligation to return those securities as a liability within
Other liabilities.
See Note 7
“Financing receivables”
for further information including how allowances for current expected credit losses under ASC 326 are determined.
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 Sheet—Sheet
—Offsetting
” (“ASC
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 of
close-out
and offsetting rights under the master netting agreement.
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. No allowance for credit losses is generally recognized against Similarly, securities borrowing transactions due to the strict collateralization requirements.
Securities borrowing and lending 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 also offset in the consolidated balance sheets where the specific criteria defined by ASC
210-20
are met.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other secured borrowings
consist primarily of secured borrowings from financial institutions and central banks in the inter-bank money market, and are carried at contractual amounts due.
Trading balances of secured borrowings
consist of liabilities related to transfers of financial assets that are accounted for as secured financing transactions rather than sales under ASC 860 “
Transfers and Servicing
” (“ASC 860”) and are reported in the consolidated balance sheets within
Long-term borrowings
. The fair value option is generally elected for these transactions, which are carried at fair value on a recurring basis. See Note 7 “6
“Securitizations and Variable Interest EntitiesEntities”
” and Note 11 “10
Borrowings“Borrowings”
” for further information regarding these transactions.
All Nomura-owned securitiesassets pledged to counterparties where the counterparty has the right to sell or repledge the securities, including collateral transferred under Gensaki Repo transactions, are reported parenthetically within
Trading assets as SecuritiesAssets pledged as collateral
in the consolidated balance sheets.
See Note 5 “
“Collateralized transactionstransactions”
” for further information.
Derivatives
—Derivatives—
Nomura uses a variety of derivative financial instruments,derivatives, including futures, forwards, swaps and options, for both trading and
non-trading
purposes. All freestandingFreestanding financial instruments which meet the accounting definition of derivatives are carried at fair value in the consolidated balance sheets and reported within
Trading assets or Trading liabilities
depending on whether fair value at the balance sheet date is positive or negative, respectively. Certain derivatives embedded in hybrid financial instruments such as structured notes and certificates of deposit are bifurcated from the host contract and are also carried at fair value in the consolidated balance sheets and reported within
Short-term borrowings or Long-term borrowings
depending on the maturity of the underlying host contract.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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.
Derivative assets and liabilities with the same counterparty documented under a master netting agreement are offset in the consolidated balance sheets where the specific criteria defined by ASC
210-20
and ASC 815 “
Derivatives and Hedging
” (“ASC 815”) are met. These criteria include requirements around the legal enforceability of such
close-out
and offset rights under the master netting agreement. In addition, fair value amounts recognizedused for the right to reclaim cash collateral (a receivable) and the obligation to return cash collateral (a payable) are also offset against net derivative liabilities and net derivative assets, respectively, where certain additional criteria are met.
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 derivative. 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.trading purposes
Trading
Derivative financial instrumentsDerivatives used for trading purposes, including bifurcated embedded derivatives, are carried at fair value with changes in fair value reported in the consolidated statements of income within
Revenue—Revenue
—
Net gain on trading
.
Derivatives held for
Non-tradingnon-trading
purposes
In addition to its trading activities, Nomura uses derivative financial instrumentsderivatives for other than trading purposes such as to manage risk exposures arising from recognized assets and liabilities, forecasted transactions and firm commitments. Certain derivatives usedDerivatives held for
non-trading
purposes arecomprise derivatives formally designated as fair value andor net investment hedges under ASC 815.815 “
Derivatives and Hedging
” (“ASC 815”) or economic expense hedges as follows:
Fair value hedges
Nomura designates certain derivative financial instruments as fair value hedges of interest rate risk and foreign exchange risk arising from specific financial liabilities and foreign currency denominated
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 within
Interest expense
and
Revenue
—
Other
, respectively.
Derivative financial instruments designated
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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
Revenue—Revenue
—
Other
. All other movements in fair value of highly effective net investment hedging derivatives are reported through NHI shareholders’ equity within
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
derivatives
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 “
Derivative instrumentsDerivatives and hedging activities
” for further information.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 generally reported in the consolidated statements of income within
Revenue—Revenue
—
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
Revenue—Revenue
—
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
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
deducting any applicable allowanceallowances for current expected credit losses when loans receivable are identified as impaired.under ASC 326 which Nomura initially adopted from April 1, 2020.
Loan origination fees, net of direct origination costs, are amortized to
Revenue—Revenue
—
Interest and dividends
as an adjustment to yield over the life of the loan. Net unamortized deferred fees and costs were immaterial as of March 31, 2019 and March 31, 2020.
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”) and the loan receivable classified as impaired with recognition of an appropriate allowance for credit losses. However, consistent with guidance issued by U.S. banking regulators in March 2020 as a result of the COVID-19 pandemic, certain modifications of loans receivable which meet the above criteria have not been accounted for TDRs nor the loan classified as impaired provider the borrower was current with payments prior to the COVID-19 pandemic, the nature of the concession is short-term and only permits a payment delay, waiver of fees or extension of repayment terms..
See Note 7 “
Financing receivables
” for further information including how allowances for current expected credit losses under ASC 326 are determined and the impact of the COVID-19 pandemic on the approach.determined.
Other receivables—
Receivables from customers
include amounts receivable
on client securities transactions, amounts receivable from
customers
clients for securities failed to deliver securities and receivables for commissions.commissions receivable.
Receivables from other than customers
customers
include amounts receivable from brokers and dealers for securities failed to deliver securities, margin deposits, cash collateral receivables for derivative transactions, and net receivables arising from unsettled securities transactions. The net receivable arising from unsettled securities transactions reported within
Receivables from other than customers
was
¥345,850 million and ¥680,727 million as of March 31, 2019 and March 31, 2020, respectively.
These amounts are carried at contractual amounts due less any applicable allowance for current expected credit losses which reflects management’s best estimate of probable losses incurred within these receivables which have been specifically identified as impaired. The allowance recognized under ASC 326.
See Note 7 “
Financing receivables”
for further information including how allowances for current expected credit losses is reported in the consolidated balance sheets within
Allowance for doubtful accounts
.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
under ASC 326 are determined.
Loan commitments—
Unfunded loan commitments written by Nomura are
accounted
for as either
off-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 heldcarried at fair value, with changes in fair value reported in the consolidated statements of income within
Revenue—Revenue
—
Net gain on trading
. Loan commitment fees integral to the loan commitment are recognized as part of the fair value of the commitment.
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 an allowanceallowances for current expected credit losses which is reported within
Other liabilities—other
in the consolidated balance sheets which reflects management’s best estimate of probable losses incurred within the loan commitments which have been specifically classified as impaired.
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”
for further information including how allowances for current expected credit losses under ASC 326 are determined.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Payables and deposits—
Payables to customers
include amounts payable on client securities transactions and are generally measured at contractual amounts due.
Payables to other than customers
include payables to brokers and dealers for
failed-to-receive
securities, failed to receive, cash collateral payable for derivative transactions, certain collateralized agreements and financing transactions and net payables arising from unsettled securities transactions. Amounts are measured at contractual amounts due.
Deposits received at banks
represent amounts held on deposit within Nomura’s banking subsidiaries and are measured at contractual amounts due.
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 “
Leases“Leases”.
” (“ASC842”) which Nomura adopted from April 1, 2019. On lease commencement date, Nomura as lessee recognizes
right-of-use
(“ROU”) assets and lease liabilities which are reported within
Other assets—Office buildings, land, equipment and facilities
and
Other liabilities
, respectively in the consolidated balance sheets.
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
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
or
Information processing and communications
in the consolidated statements of income. While for finance leases, Nomura recognizes amortization charges of ROU assets over the lease term and interest expense on finance lease liabilities.
The following table presents a breakdown of owned and leased office buildings, land,
equipment
and facilities as of March 31, 2019 and 2020.
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Land
 ¥
49,474
  ¥
49,214
 
Office buildings
  
103,423
   
71,468
 
Equipment and facilities
  
75,206
   
36,279
 
Software
  
121,245
   
111,031
 
Construction in progress
  
17
   
1,738
 
Operating lease ROU assets
  
—  
   
170,782
 
         
Total
 ¥
349,365
  ¥
440,512
 
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 thecorresponding lease.
The estimated useful lives for significant asset classes are as follows:
Office buildings
   
3 to 50 years
 
Equipment and facilities
   
23 to 20 years
 
Software
   
3 to 10 years
 
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Depreciation and amortization charges of depreciable assets are reported within
Non-interest expenses—Information processing and communications
NOMURA HOLDINGS, INC.
in the amount of
¥58,300 million, ¥45,818 million,
and
¥47,653 
million, and in
Non-interest expenses—Occupancy and related depreciation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
in the amount of
¥13,279 million, ¥12,106 million, and ¥15,930 million for the years ended March 31, 2018, 2019 and 2020, respectively.
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.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
See Note 8 “Leases”“
Leases
” for further information.
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 assets—assets
—
Investments in equity securities
in the consolidated balance sheets, with changes in fair value reported within
Revenue—Revenue
—
Gain (loss) on investments in equity securities
in the consolidated statements of income. These investments comprise listed and unlisted equity securities in the amounts of ¥97,904 million and ¥40,543 million, respectively, as of March 31, 2019 and ¥74,755 million and ¥37,420 million, respectively, as of March 31, 2020.
Other
Other non-trading
debt and equity securities—
Certain
non-trading
subsidiaries within Nomura hold debt securities and minority stakes in equity securities for
non-trading
purposes.
Non-trading
securities held by
non-trading
these subsidiaries are carried at fair value and reported within
Other assets—assets
—
Non-trading
debt securities
and
Other assets—assets
—
Other
in the consolidated balance sheets with changes in fair value reported within
Revenue—Revenue
—
Other
in the consolidated statements of income. Realized gains and losses on
non-trading
securities are reported within
Revenue—Revenue
—
Other
in the consolidated statements of income.
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 date.date, provided exercise of such features are not considered to be remote. Short-term and long-term borrowings primarily consist of commercial paper, bank borrowings, and certain structured notes issued by Nomura and SPEs consolidated by Nomura, and financial liabilities recognized in transfers of financial assets which are accounted for as financings rather than sales under ASC 860 (“secured financing transactions”). Of these financial liabilities, certain structured notes and secured financing transactions are accounted for at fair value on a recurring basis through election of the fair value option. Other short and long-term borrowings are carried at amortized cost.
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 issued by Nomura and certain structured borrowings issued by Nomura on or after April 1, 2018 are carried at fair value on a recurring basis through election of the fair value option. This blanket election for structured notes and certain
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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.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Changes in the fair value of structured notes elected for the fair value option except for those related to structured notes and attributable to Nomura’s own creditworthiness, are reported within
Revenue—Revenue
—
Net gain on trading
in the consolidated statements of income.income, except for those attributable to Nomura’s own creditworthiness which are reported within
Other comprehensive income
in the consolidated balance sheets.
See Note 1110 “
Borrowings
” for further information.
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 within
Other assets—assets
—
Other
and
Other liabilities
in the consolidated balance sheets.
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 recognizesreports income
tax-related
interest and penalties within
Income tax expense
in the consolidated statements of income.
See Note 16 1
4
“
Income taxes
” for further information.
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 classified as liability awards. Other awards such as Notional Index Units (“NIUs”) which are linked to a world stock index quoted by Morgan Stanley Capital International and which are expected to be cash settled are also effectively classified as liability awards. Liability awards are remeasured to fair value at each balance sheet date, net of estimated forfeitures with the final measurement of cumulative compensation cost equal to the settlement amount.
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Table of Contents
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 granted since May 2013 include “Full Career Retirement” (“FCR”) provisions which permit recipients of the awards to continue to vest in the awards upon voluntary termination or by claiming FCR during a
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 14 1
3
“
Deferred compensation awards
” for further information.
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 12 1
1
“
Earnings per share
” for further information.
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%) likelihood) that a reporting unit’s fair value is less than its carrying amount. If such assessment indicates fair value is not less than the carrying value, the reporting unit is deemed not to be impaired and no further analysis is required. If it is more likely than not that the fair value of the reporting unit is below its carrying value, a quantitative
two-step
impairment test is then performed.
In the first step, the current estimated fair value of the reporting unit is compared with its carrying value, including goodwill. If the fair value is less than the carrying value, then a second step is performed. In the second step, the implied current fair value of the reporting unit’s A goodwill is determined by comparing the fair value of the reporting unit to the fair value of the net assets of the reporting unit, as if the reporting unit were being acquired in a business combination. An impairment loss is recognized ifthrough the consolidated statements of income as the excess of the carrying amount of a reporting unit, including goodwill, over its fair value but limited to the total amount of goodwill exceeds its implied current fair
value.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
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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 10
9
“
Other assets
—
—
Office buildings, land, equipment and facilities and Other / Other liabilitiesliabilities”
” for further information.
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.
Restructuring costs—
Costs associated with If we conclude that an exit activity are recognized atother-than-temporary impairment exists, the investment is written down to its fair value, in the period in which the liability is incurred. Such costs include
one-time
termination benefits providedestablishes a new cost basis to employees, costs to terminate certain contracts and costs to relocate employees. Termination benefits provided to employees as part of ongoing benefit arrangements are recognized as liabilities at the earlierbe used prospectively for application of the date an appropriately detailed restructuring plan is approved by regional executive management or the terms of the involuntary terminations are communicated to employees potentially affected. Contractual termination benefits included in an employee’s contract of employment that is triggered by the occurrence of a specific event are recognized during the period in which it is probable that Nomura has incurred a liability and the amount of the liability can be reasonably estimated. A
one-time
termination benefit is established by a plan of termination that applies to a specified termination event and is recognized when an appropriately detailed restructuring plan is approved by regional executive management and the terms of the involuntary terminations are communicated to those employees potentially affected by the restructuring.
See Note 15
“Restructuring initiativesequity method investments.
” for further information.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 assets—assets
—
Other
or
Other liabilities
in the consolidated balance sheets, and changes in funded status are reflected in net periodic benefit cost and
Other comprehensive income (loss)
on a
net-of-tax
basis in the consolidated statements of comprehensive income.
The net periodic pension and other benefit cost of defined contribution plans is recognized within
Compensation and benefits
in the consolidated statements of income when the employee renders service to Nomura, which generally coincides with when contributions to the plan are made.
See Note 1312 “
Employee benefit plans
” for further information.
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9
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
New accounting pronouncements adopted during the current year—
The following table presents a summary of
No new accounting pronouncements relevant to Nomura which have beenwere adopted during the year ended March 31, 2020:
2023
Pronouncement.
Summary of new guidance
Expected adoption
date and method of
adoption
Effect on these
consolidated
statements
ASU
2016-02,
“
Leases
”
(1)
•
Replaces ASC 840 “
Leases
”, the current guidance on lease accounting, and revised the definition of a lease.
•
Requires all lessees to recognize a right of use asset and corresponding lease liability on balance sheet.
•
Lessor accounting is largely unchanged from current guidance.
•
Simplifies the accounting for sale leaseback and
“build-to-suit”
leases.
•
Requires extensive new qualitative and quantitative footnote disclosures on lease arrangements.
Modified retrospective adoption from April 1, 2019.
(2)
¥169,277 million increase in
Other Asset—Office buildings, land, equipment, and facilities
, and ¥163,685 million increase in
Other liabilities
as a result of recognizing operating leases on the consolidated balance sheet as of April 1, 2019.
¥5,592 million increase in
Retained earnings
as of April 1, 2019 mainly due to changes in certain lease classifications.
See Note 8 “Leases” where the amended disclosures have been made.
(1)
As subsequently amended by ASU
2018-01
“
Land Easement Practical Expedient for Transition to Topic 842
”, ASU
2018-10
“
Codification Improvements to Topic 842, Leases
”, ASU
2018-11
“
Leases (Topic 842): Targeted Improvements
”, ASU
2018-20
“
Leases (Topic 842): Narrow-Scope Improvements for Lessors
”, and ASU
2019-01
“
Leases (Topic 842): Codification Improvements.
”
(2)Nomura used certain practical expedients permitted by ASC 842 including adopting the new requirements through a cumulative-effect adjustment to retained earnings on adoption date.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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, 20202023, the expected date of adoption by Nomura and whichwhether the new accounting pronouncement may have a material impact on these consolidated financial statements:
Pronouncement
 
Summary of new guidance
 
Expected adoption

date and method of

adoption
 
Effect on these
consolidated
statements
ASU
2016-13,
2022-02
“
Measurement ofFinancial instruments – Credit Losses on Financial Instruments
”
(3)losses (Topic 326): Troubled debt restructurings and vintage disclosures”
 
•
Introduces a new model for  Eliminates specific recognition and measurement guidance for troubled debt restructurings (“TDRs”). Single guidance to be applied to all modifications when determining whether a modification results in a new receivable or a continuation of credit losses against certain financial instruments such as loans, debt securities and receivables which are not carried at fair value with changes in fair value recognized through earnings. The model also applies to off balance sheet credit exposures such as written loan commitments, standby letters of credit and issued financial guarantees not accounted for as insurance, which are not carried at fair value through earnings.an existing receivable;
 
•
The new model based on lifetime  Requires to use a discounted cash flow (“DCF”) or reconcilable method for measurement of current expected credit losses (CECL)for modified receivables is removed; where a DCF method is used for the measurement, toan effective interest rate (EIR) derived from the modified contractual terms should be recognized at the time anapplied;
in-scope
instrument is originated, acquired or issued.
 
•  Enhances disclosures by creditors for modifications of receivables from debtors experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, other-than-insignificant payment delay or term extension;
Replaces existing incurred credit losses model under current GAAP.
 
•
Permits electing  Augments the fair value optioncurrent requirements for certainpublic business entity creditors to disclose current-period gross write-offs by year of origination (i.e., the vintage year) for financing receivables and net investments in leases.
Nomura will adopt the amendments from April 1, 2023.
No material financial instruments on adoption date.impact expected unless a significant number of TDRs occur in the future.
 
•
Requires enhanced qualitativeCertain disclosures about modification of receivables and quantitative disclosures around credit risk, the methodology used to estimate and monitor expected credit losses and changes in estimates of expected credit losses.
Modified retrospective adoption from April 1, 2020.
For financial instruments subject to CECL,  ¥1,972 million
increase in
Allowance for doubtful accounts
, ¥638 million increase in
Other liabilities
, ¥72 million increase of
Deferred tax assets
and cumulative effect adjustment to decrease
Retained
earnings
, net of tax, of ¥2,538 million as of April 1, 2020.
For financial instruments elected for the FVO, ¥9,774 million decrease in
Loans receivable
, ¥5,888 million
increase in
Other
liabilities
and cumulative effect adjustment to decrease
Retained
earnings
,
net of tax, of ¥15,662 million as of April 1, 2020.
Allowances for credit losses as determined on adoption date under the new model increased as a result of the COVID-19 pandemic because of the increased credit risk caused by the impact of the pandemic on borrowers. Fair value measurements used write-offs will be updated or removed.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Pronouncement
 
Summary of new guidance
 
Expected adoption

date and method of

adoption
 
Effect on these
consolidated
statements
on adoption date were also lower because of increased credit risk
and impact on financial markets caused by the pandemic.
    
ASU
2019-12,
2022-03
“
Simplifying the Accounting for Income TaxesFair value measurement (Topic 820)”
”
 
•
Simplifies  Clarifies that a contractual sale restriction is an entity-specific characteristic and therefore should not be considered in the accounting for income taxes by removing certain exceptions to the general principles in ASC 740
“Income Taxes”
, such as the exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomesfair value measurement of an equity method investment and the exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary.
•
Requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a
non-income—
based tax.
•
Makes other minor amendments for simplification and clarification of income taxes accounting.
Effective from April 1, 2021.
(4)
security.
 
•
Modified retrospective adoption  Enhances disclosures for fair value of investments in equity securities subject to contractual sale restrictions, nature and remaining duration of the amendments related to changesrestrictions and circumstances that could cause a lapse in ownership of foreign equity method investments or foreign subsidiaries.
•
Full or modified retrospective adoption for the amendments related to franchise taxes that are partially based on income.restrictions.
•
Prospective adoption for all other amendments.
 
Currently evaluatingNomura currently plans to adopt the potential impact.
amendments from April 1, 2024.		No material financial impact expected.
(3)
As subsequently amended by ASU
2018-19
“
Codification Improvements to Topic 326, Financial Instruments—Credit Losses
”, ASU
2019-04
“
Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments
”, ASU
2019-05
“
Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.
” and ASU
 2019-09
“Codification Improvements to Topic 326, Financial Instruments—Credit Losses”
and
ASU2019-10
“Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates”.
(4)Unless Nomura early adopts which is under evaluation.
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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 measuredcarried at fair value. Financial assets measuredcarried at fair value on a recurring basis are reported in the consolidated balance sheets within
Trading assets and private equity and debt investments, Loans and receivables, Collateralized agreements
and
Other assets
. Financial liabilities measuredcarried at fair value on a recurring basis are reported within
Trading liabilities, Short-term borrowings, Payables and deposits, Collateralized financing, Long-term borrowings
and
Other liabilities.
Other financial assets and financial liabilities are measuredcarried at fair value on a nonrecurring basis, where the primary measurement basis is not fair value but where fair value is used in specific circumstances after initial recognition, such as to measure impairment.
In all cases, fair value is determined in accordance with ASC 820 “
Fair Value Measurements and Disclosures
” (“ASC 820”) which defines fair value as the amount that would be exchanged to sell a financial asset or transfer a financial liability in an orderly transaction between market participants at the measurement date. It assumes that the transaction occurs in the principal market for the relevant financial assets or financial liabilities, or in the absence of a principal market, the most advantageous market.
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 measuredcarried at fair value also include investments in certain funds where, as a practical expedient, fair value is determined on the basis of net asset value per share (“NAV per share”) if the NAV per share is calculated in accordance with certain industry standard principles.
Increases and decreases in the fair value of assets and liabilities willmay significantly impact Nomura’s position, performance, liquidity and capital resources. As explained below, valuation techniques applied contain inherent uncertainties and Nomura is unable to predict the accurate impact of future developments in the market. The valuation of financial instruments is more difficult during periods of market stress as a result of greater volatility and reduced price transparency, which has been the casesuch as during the
COVID-19
pandemic in 2020,2021 and may therefore require the greater use of judgement in the determination of fair value. Where appropriate, Nomura uses
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
economic hedging strategies to mitigate its risk, although these hedges are also subject to unpredictable movements in the market.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
(“OTC”) contracts, have bid and offer prices that are observable in the market. These are measured at the point within the
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 risk;risk, both with regards to counterparty credit risk on positions held and Nomura’s own creditworthiness on positions issued. Credit risk on financial assets is significantly mitigated by credit enhancements such as collateral and netting arrangements. Any net credit exposure is measured using available and applicable valuation inputs for the relevant counterparty. The same approach is used to measure the credit exposure on Nomura’s financial liabilities as is used to measure counterparty credit risk on Nomura’s financial assets.
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 (“VMVG”) within Nomura’s Risk Management Department reviews pricing models and assesses model appropriateness and consistency independently of the front office. The model reviews consider a number of factors about a model’s suitability for valuation and sensitivity of a particular product. Valuation models are calibrated to the market on a periodic basis by comparison to observable market pricing, comparison with alternative models and analysis of risk profiles.
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
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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.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair value hierarchy
All financial instruments measuredcarried at fair value, including those measuredcarried at fair value using the fair value option, have been categorized into a three-level hierarchy (“fair value hierarchy”) based on the transparency of valuation inputs used by Nomura to estimate fair value. A financial instrument is classified in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement of the financial instrument. The three levels of the fair value hierarchy are defined as follows, with Level 1 representing the most transparent inputs and Level 3 representing the least transparent inputs:
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 and has become more prevalent during the COVID-19 pandemic.
instruments.
Certain criteria management useused to determine whether a market is active or inactive include the number of transactions, the frequency that pricing is updated by other market participants, the variability of price quotes among market participants, and the amount of publicly available information.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present the amounts of Nomura’s financial instruments measuredcarried at fair value on a recurring basis as of March 31, 20192022 and 20202023 within the fair value hierarchy.
 
Billions of yen
 
March 31, 2019
 
Level 1
  
Level 2
  
Level 3
  
Counterparty
and
Cash Collateral
Netting
(1)
  
Balance as of
March 31, 2019
 
Assets:
  
   
   
   
   
 
Trading assets and private equity and debt investments
(2)
  
   
   
   
   
 
Equities
(3)
 ¥
1,392
  ¥
1,065
  ¥
13
  ¥
—
  ¥
2,470
 
Private equity and debt investments
(4)
  
—
   
—
   
26
   
—
   
26
 
Japanese government securities
  
1,987
   
—
   
—
   
—
   
1,987
 
Japanese agency and municipal securities
  
—
   
214
   
1
   
—
   
215
 
Foreign government, agency and municipal securities
  
2,650
   
1,544
   
5
   
—
   
4,199
 
Bank and corporate debt securities and loans for trading purposes
  
—
   
1,128
   
160
   
—
   
1,288
 
Commercial mortgage-backed securities (“CMBS”)
  
—
   
1
   
2
   
—
   
3
 
Residential mortgage-backed securities (“RMBS”)
  
—
   
2,761
   
3
   
—
   
2,764
 
Issued/Guaranteed by government sponsored entity
  
—
   
2,706
   
—
   
—
   
2,706
 
Other
  
—
   
55
   
3
   
—
   
58
 
Real estate-backed securities
  
—
   
—
   
69
   
—
   
69
 
Collateralized debt obligations (“CDOs”) and other
(5)
  
—
   
55
   
19
   
—
   
74
 
Investment trust funds and other
  
349
   
53
   
1
   
—
   
403
 
                     
Total trading assets and private equity and debt investments
  
6,378
   
6,821
   
299
   
—
   
13,498
 
                     
Derivative assets
(6)
  
   
   
   
   
 
Equity contracts
  
1
   
806
   
44
   
—
   
851
 
Interest rate contracts
  
12
   
8,610
   
10
   
—
   
8,632
 
Credit contracts
  
2
   
500
   
31
   
—
   
533
 
Foreign exchange contracts
  
0
   
4,870
   
42
   
—
   
4,912
 
Commodity contracts
  
1
   
0
   
—
   
—
   
1
 
Netting
  
—
   
—
   
—
   
(14,077
)  
(14,077
)
                     
Total derivative assets
  
16
   
14,786
   
127
   
(14,077
)  
852
 
                     
Subtotal
 ¥
6,394
  ¥
21,607
  ¥
426
  ¥
(14,077
) ¥
14,350
 
                     
Loans and receivables
(7)
  
—
   
544
   
129
   
—
   
673
 
Collateralized agreements
(8)
  
—
   
615
   
33
   
—
   
648
 
Other assets
  
   
   
   
   
 
Non-trading
debt securities
  
138
   
323
   
—
   
—
   
461
 
Other
(2)(3)
  
416
   
10
   
166
   
—
   
592
 
                     
Total
 ¥
6,948
  ¥
23,099
  ¥
754
  ¥
(14,077
) ¥
16,724
 
                     
Liabilities:
  
   
   
   
   
 
Trading liabilities
  
   
   
   
   
 
Equities
 ¥
1,622
  ¥
198
  ¥
0
  ¥
—
  ¥
1,820
 
Japanese government securities
  
1,264
   
—
   
—
   
—
   
1,264
 
Japanese agency and municipal securities
  
—
   
3
   
—
   
—
   
3
 
Foreign government, agency and municipal securities
  
2,906
   
927
   
0
   
—
   
3,833
 
Bank and corporate debt securities
  
—
   
319
   
0
   
—
   
319
 
Residential mortgage-backed securities (“RMBS”)
  
—
   
0
   
—
   
—
   
0
 
Collateralized debt obligations (“CDOs”) and other
(5)
  
—
   
3
   
—
   
—
   
3
 
Investment trust funds and other
  
121
   
42
   
—
   
—
   
163
 
                     
Total trading liabilities
  
5,913
   
1,492
   
0
   
—
   
7,405
 
                     
Derivative liabilities
(6)
  
   
   
   
   
 
Equity contracts
  
1
   
867
   
52
   
—
   
920
 
Interest rate contracts
  
6
   
8,228
   
64
   
—
   
8,298
 
Credit contracts
  
3
   
422
   
39
   
—
   
464
 
Foreign exchange contracts
  
—
   
4,820
   
22
   
—
   
4,842
 
Commodity contracts
  
1
   
0
   
0
   
—
   
1
 
Netting
  
—
   
—
   
—
   
(13,710
)  
(13,710
)
                     
Total derivative liabilities
  
11
   
14,337
   
177
   
(13,710
)  
815
 
                     
Subtotal
 ¥
5,924
  ¥
15,829
  ¥
177
  ¥
(13,710
) ¥
8,220
 
                     
Short-term borrowings
(9)
 ¥
—
  ¥
332
  ¥
31
  ¥
—
  ¥
363
 
Payables and deposits
(10)
  
—
   
0
   
0
   
—
   
0
 
Collateralized financing
(8)
  
—
   
291
   
—
   
—
   
291
 
Long-term borrowings
(9)(11)(12)
  
11
   
3,024
   
535
   
—
   
3,570
 
Other liabilities
(13)
  
276
   
22
   
0
   
—
   
298
 
                     
Total
 ¥
6,211
  ¥
19,498
  ¥
743
  ¥
(13,710
) ¥
12,742
 
                     
  
Billions of yen
 
 
March 31, 2022
 
 
Level 1
  
Level 2
  
Level 3
  
Counterparty

and

Cash Collateral

Netting
(1)
  
Balance as of

March 31, 2022
 
Assets:
                    
Trading assets and private equity and debt investments
(2)
                    
Equities
(3)
 ¥2,100  ¥1,041  ¥14  ¥—    ¥3,155 
Private equity and debt investments
(5)
  22   —     32   —     54 
Japanese government securities
  1,730   —     —     —     1,730 
Japanese agency and municipal securities
  —     184   2   —     186 
Foreign government, agency and municipal securities
  3,220   2,010   10   —     5,240 
Bank and corporate debt securities and loans for trading purposes
  —     1,134   220   —     1,354 
Commercial mortgage-backed securities (“CMBS”)
  —     0   7   —     7 
Residential mortgage-backed securities (“RMBS”)
  —     1,450   8   —     1,458 
Issued/Guaranteed by government sponsored entity
  —     1,376   —     —     1,376 
Other
  —     74   8   —     82 
Real estate-backed securities
  —     58   79   —     137 
Collateralized debt obligations (“CDOs”) and other
(6)
  —     34   26   —     60 
Investment trust funds and other
  293   23   0   —     316 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading assets and private equity and debt investments
  7,365   5,934   398   —     13,697 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Derivative assets
(7)
                    
Equity contracts
  3   874   97   —     974 
Interest rate contracts
  120   11,755   63   —     11,938 
Credit contracts
  12   398   33   —     443 
Foreign exchange contracts
  —     4,777   29   —     4,806 
Commodity contracts
  1   0   —     —     1 
Netting
  —     —     —     (16,608)   (16,608) 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total derivative assets
  136   17,804   222   (16,608)   1,554 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Subtotal
 ¥7,501  ¥23,738  ¥620  ¥(16,608)  ¥15,251 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Loans and receivables
(8)
  —     1,103   205   —     1,308 
Collateralized agreements
(9)
  —     282   16   —     298 
Other assets
(2)
                    
Non-trading
debt securities
  117   367   —     —     484 
Other
(3)(4)
  146   136   197   —     479 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥7,764  ¥25,626  ¥1,038  ¥(16,608)  ¥17,820 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                    
Trading liabilities
                    
Equities
 ¥1,796  ¥8  ¥0  ¥—    ¥1,804 
Japanese government securities
  1,098   —     —     —     1,098 
Japanese agency and municipal securities
  —     0   —     —     0 
Foreign government, agency and municipal securities
  3,451   1,328   0   —     4,779 
Bank and corporate debt securities
  —     222   3   —     225 
Residential mortgage-backed securities (“RMBS”)
  —     0   —     —     0 
Collateralized debt obligations (“CDOs”) and other
(6)
  —     3   0   —     3 
Investment trust funds and other
  76   0   0   —     76 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading liabilities
  6,421   1,561   3   —     7,985 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Derivative liabilities
(7)
                    
Equity contracts
  2   1,368   87   —     1,457 
Interest rate contracts
  60   10,826   74   —     10,960 
Credit contracts
  14   434   66   —     514 
Foreign exchange contracts
  0   4,795   19   —     4,814 
Commodity contracts
  0   1   —     —     1 
Netting
  —     —     —     (16,079)   (16,079) 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total derivative liabilities
  76   17,424   246   (16,079)   1,667 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Subtotal
 ¥6,497  ¥18,985  ¥249  ¥(16,079)  ¥9,652 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Short-term borrowings
(11)
 ¥—    ¥653  ¥58  ¥—    ¥711 
Payables and deposits
(10)(12)
  —     63   8   —     71 
Collateralized financing
(9)
  —     516   —     —     516 
Long-term borrowings
(11)(13)(14)
  23   4,055   479   —     4,557 
Other liabilities
(15)
  32   155   32   —     219 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥6,552  ¥24,427  ¥826  ¥(16,079)  ¥15,726 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
F-3
6
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Billions of yen
 
March 31, 2020
 
Level 1
  
Level 2
  
Level 3
  
Counterparty
and
Cash Collateral
Netting
(1)
  
Balance as of
March 31, 2020
 
Assets:
  
   
   
   
   
 
Trading assets and private equity and debt investments
(2)
  
   
   
   
   
 
Equities
(3)
 ¥
1,193
  ¥
908
  ¥
14
  ¥
—
  ¥
2,115
 
Private equity and debt investments
(4)
  
—
   
7
   
31
   
—
   
38
 
Japanese government securities
  
1,826
   
—
   
—
   
—
   
1,826
 
Japanese agency and municipal securities
  
—
   
106
   
2
   
—
   
108
 
Foreign government, agency and municipal securities
  
3,257
   
2,000
   
8
   
—
   
5,265
 
Bank and corporate debt securities and loans for trading purposes
  
—
   
1,266
   
228
   
—
   
1,494
 
Commercial mortgage-backed securities (“CMBS”)
  
—
   
0
   
1
   
—
   
1
 
Residential mortgage-backed securities (“RMBS”)
  
—
   
3,626
   
62
   
—
   
3,688
 
Issued/Guaranteed by government sponsored entity
  
—
   
3,602
   
14
   
—
   
3,616
 
Other
  
—
   
24
   
48
   
—
   
72
 
Real estate-backed securities
  
—
   
—
   
94
   
—
   
94
 
Collateralized debt obligations (“CDOs”) and other
(5)
  
—
   
21
   
32
   
—
   
53
 
Investment trust funds and other
  
204
   
44
   
0
   
—
   
248
 
                     
Total trading assets and private equity and debt investments
  
6,480
   
7,978
   
472
   
—
   
14,930
 
                     
Derivative assets
(6)
  
   
   
   
   
 
Equity contracts
  
4
   
1,869
   
48
   
—
   
1,921
 
Interest rate contracts
  
55
   
13,551
   
23
   
—
   
13,629
 
Credit contracts
  
3
   
318
   
86
   
—
   
407
 
Foreign exchange contracts
  
0
   
5,183
   
41
   
—
   
5,224
 
Commodity contracts
  
9
   
0
   
—
   
—
   
9
 
Netting
  
—
   
—
   
—
   
(19,248
)  
(19,248
)
                     
Total derivative assets
  
71
   
20,921
   
198
   
(19,248
)  
1,942
 
                     
Subtotal
 ¥
6,551
  ¥
28,899
  ¥
670
  ¥
(19,248
) ¥
16,872
 
                     
Loans and receivables
(7)
  
—
   
709
   
96
   
—
   
805
 
Collateralized agreements
(8)
  
—
   
534
   
15
   
—
   
549
 
Other assets
  
   
   
   
   
 
Non-trading
debt securities
  
123
   
332
   
—
   
—
   
455
 
Other
(2)(3)
  
252
   
146
   
168
   
—
   
566
 
                     
Total
 ¥
6,926
  ¥
30,620
  ¥
949
  ¥
(19,248
) ¥
19,247
 
                     
Liabilities:
  
   
   
   
   
 
Trading liabilities
  
   
   
   
   
 
Equities
 ¥
1,412
  ¥
152
  ¥
0
  ¥
—
  ¥
1,564
 
Japanese government securities
  
1,108
   
—
   
—
   
—
   
1,108
 
Japanese agency and municipal securities
  
—
   
0
   
—
   
—
   
0
 
Foreign government, agency and municipal securities
  
2,116
   
1,114
   
0
   
—
   
3,230
 
Bank and corporate debt securities
  
—
   
272
   
1
   
—
   
273
 
Residential mortgage-backed securities (“RMBS”)
  
—
   
3
   
—
   
—
   
3
 
Collateralized debt obligations (“CDOs”) and other
(5)
  
—
   
1
   
1
   
—
   
2
 
Investment trust funds and other
  
409
   
148
   
0
   
—
   
557
 
                     
Total trading liabilities
  
5,045
   
1,690
   
2
   
—
   
6,737
 
                     
Derivative liabilities
(6)
  
   
   
   
   
 
Equity contracts
  
7
   
1,972
   
29
   
—
   
2,008
 
Interest rate contracts
  
18
   
13,125
   
77
   
—
   
13,220
 
Credit contracts
  
14
   
356
   
87
   
—
   
457
 
Foreign exchange contracts
  
0
   
5,071
   
34
   
—
   
5,105
 
Commodity contracts
  
5
   
1
   
—
   
—
   
6
 
Netting
  
—
   
—
   
—
   
(18,987
)  
(18,987
)
                     
Total derivative liabilities
  
44
   
20,525
   
227
   
(18,987
)  
1,809
 
                     
Subtotal
 ¥
5,089
  ¥
22,215
  ¥
229
  ¥
(18,987
) ¥
8,546
 
                     
Short-term borrowings
(9)
 ¥
—
  ¥
348
  ¥
29
  ¥
—
  ¥
377
 
Payables and deposits
(10)
  
—
   
14
   
1
   
—
   
15
 
Collateralized financing
(8)
  
—
   
247
   
—
   
—
   
247
 
Long-term borrowings
(9)(11)(12)
  
2
   
3,291
   
409
   
—
   
3,702
 
Other liabilities
(13)
  
170
   
129
   
0
   
—
   
299
 
                     
Total
 ¥
5,261
  ¥
26,244
  ¥
668
  ¥
(18,987
) ¥
13,186
 
                     
  
Billions of yen
 
 
March 31, 2023
 
 
Level 1
  
Level 2
  
Level 3
  
Counterparty

and

Cash Collateral

Netting
(1)
  
Balance as of

March 31, 2023
 
Assets:
                    
Trading assets and private equity and debt investments
(2)
                    
Equities
(3)
 ¥1,906  ¥1,111  ¥4  ¥—    ¥3,021 
Private equity and debt investments
(5)
  25   —     52   —     77 
Japanese government securities
  1,627   —     —     —     1,627 
Japanese agency and municipal securities
  —     157   2   —     159 
Foreign government, agency and municipal securities
  3,566   2,221   8   —     5,795 
Bank and corporate debt securities and loans for trading purposes
  —   1,268   258   —     1,526 
Commercial mortgage-backed securities (“CMBS”)
  —     —     0   —     0 
Residential mortgage-backed securities (“RMBS”)
  —     3,402   8   —     3,410 
Issued/Guaranteed by government sponsored entity
  —     3,265   —     —     3,265 
Other
  —     137   8   —     145 
Real estate-backed securities
  —     58   95   —     153 
Collateralized debt obligations (“CDOs”) and other
(6)
  —     35   28   —     63 
Investment trust funds and other
  307   3   2   —     312 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading assets and private equity and debt investments
  7,431   8,255   457   —     16,143 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Derivative assets
(7)
                    
Equity contracts
  2   1,052   11   —     1,065 
Interest rate contracts
  73   12,593   133   —     12,799 
Credit contracts
  8   232   36   —     276 
Foreign exchange contracts
  0   4,171   49   —     4,220 
Commodity contracts
  1   2   —     —     3 
Netting
  —     —     —     (16,943)   (16,943) 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total derivative assets
  84   18,050   229   (16,943)   1,420 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Subtotal
 ¥7,515  ¥26,305  ¥686  ¥(16,943)  ¥17,563 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Loans and receivables
(8)
  —     1,498   191   —     1,689 
Collateralized agreements
(9)
  —     286   17   —     303 
Other assets
(2)
                    
Non-trading
debt securities
  87   247   3   —     337 
Other
(3)(4)
  188   164   196   —     548 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥7,790  ¥28,500  ¥1,093  ¥(16,943)  ¥20,440 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                    
Trading liabilities
                    
Equities
 ¥2,068  ¥13  ¥1  ¥—    ¥2,082 
Japanese government securities
  1,469   —     —     —     1,469 
Japanese agency and municipal securities
  —     5   —     —     5 
Foreign government, agency and municipal securities
  3,579   1,021   0   —     4,600 
Bank and corporate debt securities
  —     232   3   —     235 
Residential mortgage-backed securities (“RMBS”)
  —     0   —     —     0 
Investment trust funds and other
  158   —     0   —     158 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading liabilities
  7,274   1,271   4   —     8,549 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Derivative liabilities
(7)
                    
Equity contracts
  3   1,602   5   —     1,610 
Interest rate contracts
  45   12,080   122   —     12,247 
Credit contracts
  14   276   68   —     358 
Foreign exchange contracts
  0   4,090   30   —     4,120 
Commodity contracts
  —     3   —     —     3 
Netting
  —     —     —     (16,329)   (16,329) 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total derivative liabilities
  62   18,051   225   (16,329)   2,009 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Subtotal
 ¥7,336  ¥19,322  ¥229  ¥(16,329)  ¥10,558 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Short-term borrowings
(11)
 ¥—    ¥446  ¥30  ¥—    ¥476 
Payables and deposits
(10)(12)
  —     142   17   —     159 
Collateralized financing
(9)
  —     749   —     —     749 
Long-term borrowings
(11)(13)(14)
  27   4,437   493   —     4,957 
Other liabilities
(15)
  108   175   21   —     304 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥7,471  ¥25,271  ¥790  ¥(16,329)  ¥17,203 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
F-33
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
(1)
Represents the amount offset under counterparty netting of derivative assets and liabilities as well as cash collateral netting against net derivatives.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(2)Certain investments
Investments that are measuredcarried at fair value using net asset valueNAV per share as a practical expedient have not been classified in the fair value hierarchy. As of March 31, 20192022 and March 31, 2020,2023, the fair values of these investments which are included in
Trading assets and private equity and debt investments
were ¥36¥45 billion and ¥26¥47 billion, respectively. As of March 31, 20192022 and March 31, 2020,2023, the fair values of these investments which are included in
Other assets—Others
were ¥2¥3 billion and ¥6¥3 billion, respectively.
(3)
Includes equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value option.
(4)
Includes equity investments which comprise listed and unlisted equity securities held for operating purposes in the amounts of ¥101,503 million and ¥32,394 million, respectively, as of March 31, 2022 and ¥69,475 million and ¥28,185 million, respectively, as of March 31, 2023.
(5)
Private equity and debt investments
are typicallyinclude private
non-traded
financial instruments including ownership orminority private equity and venture capital equity investments and other forms of junior capital (suchdebt investments such as mezzanine loan). Includesdebt held for
non-trading
purposes, and
post-IPO
investments. These investments also include minority equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value option.
(5)(6)
Includes collateralized loan obligations (“CLOs”) and asset-backed securities (“ABS”) such as those secured on credit card loans, auto loans and student loans.
(6)Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rate contracts include complex derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government debt securities.
(7)
Derivatives which contain multiple types of risk are classified based on the primary risk type of the instrument.
(8)
Includes loans and receivables for which the fair value option has been elected.
(8)(9)
Includes collateralized agreements or collateralized financing for which the fair value option has been elected.
(10)
Includes deposits received at banks for which the fair value option has been elected.
(9)(11)
Includes structured notes for which the fair value option has been elected.
(10)(12)
Includes embedded derivatives bifurcated from deposits received at banks. If unrealized gainsDeposits are greater than unrealized losses, deposits are reduced byadjusted for fair value changes in corresponding embedded derivatives for presentation in the excess amount.consolidated balance sheets.
(11)(13)
Includes embedded derivatives bifurcated from issued structured notes. If unrealized gainsStructured notes are greater than unrealized losses, borrowings are reduced byadjusted for fair value changes in corresponding embedded derivatives for presentation in the excess amount.consolidated balance sheets
(12)(14)
Includes liabilities recognized from secured financing transactions that are accounted for as financings rather than sales. Nomura elected the fair value option for these liabilities.
(13)(15)
Includes loan commitments for which the fair value option has been elected.
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
and equity securities reported within
Other assets
—Equities and equity securities reported within
Other assets
include direct holdings of both listed and unlisted equity securities, and fund investments. The fair value of listed equity securities is determined using quoted prices for identical securities from active markets where available. These valuations should be in line with market practice and therefore can be based on bid prices or
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, 20192022 and 2020,2023, respectively. The fair value of unlisted equity securities is determined using the same methodologyvaluation technique as private equity and debt investments described below and are usually classified in Level 3 because significant valuation inputs such as liquidity discounts and credit spreads are unobservable.
Private equity and debt investments
—The determination of fair value of unlisted private equity and debt investments requires significant management judgment because the investments, by their nature, have little or no price transparency. Private equity and debt investments are initially carried at cost as an approximation of fair value. Adjustments to carrying value are made if there is third-party evidence of a change in value. Adjustments
F-34
Table of Contents
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 underlying investee, as adjusted for an appropriate growth
F-3
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
rate discounted at a weighted average cost of capital (“WACC”). Market multiple valuation techniques include comparables such as Enterprise Value/earningsEarnings before interest, taxes, depreciation and amortization (“EV/EBITDA”) ratios, Price/Earnings (“PE”) ratios, Price/Book ratios, Price/Embedded Value ratios and other multiples based on relationships between numbers reported in the financial statements of the investee and the price of comparable companies. A liquidity discount may also be applied to either a DCF or market multiple valuation to reflect the specific characteristics of the investee. The liquidity discount includes considerations for various uncertainties in the model and inputs to valuation. Where possible these valuations are compared with the operating cash flows and financial performance of the investee or properties relative to budgets or projections, price/earningsPE data for similar quoted companies, trends within sectors and/or regions and any specific rights or terms associated with the investment, such as conversion features and liquidation preferences. Private equity and debt investments are generally classified in Level 3 since the valuation inputs such as those mentioned above are usually unobservable.
Government, agency and municipal securities
—The fair value of Japanese and other G7 government securities is primarily determined using quoted market prices, executable broker or dealer quotations, or alternative pricing sources. These securities are traded in active markets and therefore are classified within Level 1 of the fair value hierarchy.
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. Certain
non-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 using DCF valuation techniques but also using broker or dealer quotations and recent market transactions of identical or similar debt securities if available.available, but also using DCF valuation techniques. Consideration is 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. The significant valuation inputs used for DCF valuations are yield curves, asset swap spreads, recovery rates and credit spreads of the issuer. Bank and corporate debt securities are generally classified in Level
 2 of the fair value hierarchy because these valuation inputs are usually observable or market-corroborated. Certain bank and corporate debt securities will be classified in Level 3 because they are traded infrequently and there is insufficient information from comparable securities to classify them in Level 2, or credit spreads or recovery rates of the issuer used in DCF valuations are unobservable.
Commercial mortgage-backed securities (“CMBS”)
and
Residential mortgage-backed securities (“RMBS”)
—The fair value of CMBS and RMBS are primarily determined using DCF valuation techniques but also using broker or dealer quotations and recent market transactions of identical or similar securities, if available. Consideration is 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. The significant valuation inputs include yields, prepayment rates, default probabilities and loss severities. CMBS and RMBS securities are generally classified in Level 2 because these valuation inputs are observable or market-corroborated. Certain CMBS and RMBS positions will be classified in Level 3 because they are traded infrequently and there is insufficient information from
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Table of Contents
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
—The fair value of real estate-backed securities is determined using broker or dealer quotations, recent market transactions or by reference to a comparable market index. Consideration is
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
—The fair value of CDOs is primarily determined using DCF valuation techniques but also using broker or dealer quotations and recent market transactions of identical or similar securities, if available. Consideration is 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. The significant valuation inputs used include market spread data for each credit rating, yields, prepayment rates, default probabilities and loss severities. CDOs are generally classified in Level 2 of the fair value hierarchy because these valuation inputs are observable or market-corroborated. CDOs will be classified in Level 3 where one or more of the significant valuation inputs used in the DCF valuations are unobservable.
Investment trust funds and other
—The fair value of investment trust funds is primarily determined using NAV per share. Publicly traded funds which are valued using a daily NAV per sharebased on quoted prices in active markets are classified in Level 1 of the fair value hierarchy. ForInvestments in funds that are not publicly traded but Nomura has the ability to redeem its investment with the investee at NAV per share on the balance sheet date or within the near term, the investments are valued at NAV and classified in Level 2. Investments where Nomura does not have the ability to redeem in the near term or does not know when it can redeemfunds which are classified in Level 3. The fair value of certain other investments reported within
Investment trust funds and other
is determinedvalued using DCF valuation techniques. These investments are classified in Level 3 as the valuation includes significant unobservable valuation inputs such as credit spreads of issuer and correlation.correlation are classified in Level 3. Investment in funds that are carried at fair value using NAV per share as a practical expedient are not classified in the fair value hierarchy.
Derivatives—Derivatives
—
Equity contracts
—Nomura enters into both exchange-traded and OTC equity derivative transactions such as index and equity options, equity basket options and index and equity swaps. Where these derivatives are traded in active markets and the exchange price is representative of fair value, the fair value of exchange-traded equity derivatives is determined using an unadjusted exchange price and classified in Level 1 of the fair value hierarchy. The fair value of exchange-traded equity 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 equity derivatives is determined through option models such as Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include equity prices, dividend yields, volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura‘sNomura’s own creditworthiness on derivative liabilities. OTC equity derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments are observable or market-corroborated. Certain less liquid vanilla or more complex equity derivatives are classified in Level 3 where dividend yield, volatility or correlation valuation inputs are significant and unobservable.
Derivatives—Interest rate contracts
—Nomura enters into both exchange-traded and OTC interest rate derivative transactions such as interest rate swaps, currency swaps, interest rate options, forward rate agreements, swaptions, caps and floors. Where these derivatives are traded in active markets and the exchange price is representative of fair value, the fair value of exchange-traded interest rate derivatives is determined using an unadjusted exchange price and classified in Level 1 of the fair value hierarchy. The fair value of exchange-traded
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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
F-
40
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes andor Monte Carlo simulation. The significant valuation inputs used include interest rates, forward foreign exchange (“FX”) rates, volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura‘sNomura’s own creditworthiness on derivative liabilities. OTC interest rate derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments are observable or market-corroborated. Certain less liquid vanilla or more complex OTC interest rate derivatives are classified in Level 3 where interest rate, volatility or correlation valuation inputs are significant and unobservable.
Derivatives—Credit contracts
—Nomura enters into OTC credit derivative transactions such as credit default swaps and credit options on single names, indices or baskets of assets. The fair value of OTC credit derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes andor Monte Carlo simulation. The significant valuation inputs used include interest rates, credit spreads, recovery rates, default probabilities, volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura’s own creditworthiness on derivative liabilities. OTC credit derivatives are generally classified in Level 2 of the fair value hierarchy because all significant valuation inputs and adjustments are observable or market-corroborated. Certain less liquid vanilla or more complex OTC credit derivatives are classified in Level 3 where credit spread, recovery rate, volatility or correlation valuation inputs are significant and unobservable.
Derivatives—Derivatives
—Foreign exchange contracts
—Nomura enters into both exchange-traded and OTC foreign exchange derivative transactions such as foreign exchange forwards and currency options. The fair value of exchange-traded foreign exchange 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 foreign exchange derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes andor Monte Carlo simulation. The significant valuation inputs used include interest rates, forward FX rates, spot FX rates and volatilities. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura’s own creditworthiness on derivative liabilities. OTC foreign exchange derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments are observable or market-corroborated. Certain foreign exchange derivatives are classified in Level 3 where interest rates, volatility or correlation valuation inputs are significant and unobservable.
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
—The fair value of loans and receivables carried at fair value either as trading assets or through election of the fair value option is primarily determined using DCF valuation techniques as quoted prices are typically not available. The significant valuation inputs used are similar to those used in the valuation of corporate debt securities described above. Loans and receivables are generally classified in Level 2 of the fair value hierarchy because all significant valuation inputs are observable. Certain loans and receivables, however, are classified in Level 3 because they are traded infrequently and there is not sufficient information from comparable securities to classify them in Level 2 or credit spreads of the issuer or recovery rates used in DCF valuations are significant and unobservable.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Collateralized agreements
and
Collateralized financing
—The primary types of collateralized agreement and financing transactions carried at fair value are reverse repurchase and repurchase agreements elected for the fair value option. The fair value of these financial instruments is primarily determined using DCF valuation
F-
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 securities
—These are debt securities held by certain
non-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 as
Government, agency and municipal securities
and
Bank and corporate debt securities
described above.
Short-term
and
long-term borrowings (“Structured notes”)
—Structured notes are debt securities issued by Nomura or by consolidated variable interest entities (“VIEs”) which contain embedded features 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 variables, such as an equity or equity index, commodity price, foreign exchange rate, credit rating of a third party or a more complex interest rate (i.e., an embedded derivative).
The fair value of structured notes is determined using a quoted priceprices in an active marketmarkets for the identical liabilityinstrument if available, and where not available, using a mixture of valuation techniques that use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, similar liabilities when traded as assets, or an internal model which combines DCF valuation techniques and option pricing models, depending on the nature of the embedded features within the structured note. Where an internal model is used, Nomura estimates the fair value of both the underlying debt instrument and the embedded derivative components. The significant valuation inputs used to estimate the fair value of the debt instrument component include yield curves, prepayment rates, default probabilities and loss severities. The significant valuation inputs used to estimate the fair value of the embedded derivative component are the same as those used for the relevant type of freestanding OTC derivative discussed above. A valuation adjustment is also made to the entire structured note in order to reflect Nomura’s own creditworthiness. This adjustment is determined based on recent observable secondary market transactions and executable broker quotes involving Nomura debt instruments and is therefore typically treated as a Level 2 valuation input. Structured notes are generally classified in Level 2 of the fair value hierarchy as all significant valuation inputs and adjustments are observable. Where any unobservable valuation inputs are significant, such as yields, prepayment rates, default probabilities, loss severities, volatilities and correlations used to estimate the fair value of the embedded derivative component, structured notes are classified in Level 3.
Long-term borrowings (“Secured financing transactions”)
—Secured financing transactions are liabilities recognized when a transfer of a financial asset does not meet the criteria for sales accounting under ASC 860 “
Transfer and Servicing
” (“ASC 860”) and therefore the transaction is accounted for as a secured borrowing. These liabilities are valued using the same valuation techniques that are applied to the transferred financial assets which remain on the consolidated balance sheets and are therefore classified in the same level in the fair value hierarchy as the transferred financial assets. These liabilities do not provide general recourse to Nomura and therefore, no adjustment is made to reflect Nomura’s own creditworthiness.
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
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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
F-
42
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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.
F-
43
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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, 20192022 and 2020.2023. These financial instruments will also typically include observable valuation inputs (i.e., Level 1 or Level 2 valuation inputs) which are not included in the table and are also often hedged using financial instruments which are classified in Level 1 or Level 2 of the fair value hierarchy. Changes in each of these significant unobservable valuation inputs used by Nomura will impact upon the fair value measurement of the financial instrument. The following tables also thereforeillustrate qualitatively summarize how an increase in those significant unobservable valuation inputs to a different amount might result in a higher or lower fair value measurement at the reporting date and summarize the interrelationship between significant unobservable valuation inputs where more than one is used to measuredetermine fair value. The impactvalue measurement of the COVID-19 pandemic on financial markets has been considered in determining which valuation inputs are used to measure fair value.instruments.
 
March 31, 2019
Financial Instrument
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(3)(4)
 
Interrelationships
between valuation
inputs
(5)
Assets:
       
Trading assets and private equity and debt investments
       
Equities
 
¥      13 
 
DCF
 
Liquidity discounts
 
75.0%
 
75.0%
 
Lower fair value
 
Not applicable
               
Private equity and debt investments
 
        26 
 
Market
multiples
 
EV/EBITDA ratios
 
7.7 x
 
7.7 x
 
Higher fair value
 
Not applicable
               
Foreign government, agency and municipal securities
 
        5 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 9.1%
4.0 – 36.0%
 
0.6%
31.6%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
               
Bank and corporate debt securities and loans for trading purposes
 
     160 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 15.0%
0.0 – 99.1%
 
4.1%
72.2%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
               
Residential mortgage backed securities (“RMBS”)
 
          3 
 
DCF
 
Yields
 Prepayment rates
 Loss severities
 
0.0 – 78.4%
6.5 – 15.0%
9.1 – 100.0%
 
13.2%
10.5%
81.1%
 
Lower fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
               
Real estate-backed securities
 
        69 
 
DCF
 
Yields
Loss severities
 
5.5 – 19.7%
0.0 – 55.2%
 
12.5%
6.6%
 
Lower fair value
 Lower fair value
 
No predictable interrelationship
               
Collateralized debt obligations (“CDOs”) and other
 
        19 
 
DCF
 
Yields
Prepayment rates Default probabilities
 Loss severities
 
2.7 – 19.0%
 20.0%
1.0 – 2.0%
31.5 – 100.0%
 
13.1%
 20.0%
 2.0%
 83.7%
 
Lower fair value
 Lower fair value
 Lower fair value
 Lower fair value
 
Change in default probabilities typically accompanied by directionally similar change in loss severities and opposite change in prepayment rates
               
  
March 31, 2022
Financial Instrument
 
Fair
value in
billions of
yen
  
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
      Interrelationships      
between valuation
inputs
(6)
Assets:
                
Trading assets and private equity and debt investments
                
Equities
  ¥     14    DCF Liquidity discounts 75.0
%		 75.0%
 Lower fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Private equity and debt investments
 
 
     32  
 
 
DCF
 
WACC
Growth rates
Liquidity discounts
 
7.1 – 13.0
%
0.0
 – 2.0
%
5
.0
 
– 30.0
%
 
10.2%
0.7%
18.5%
 
Lower fair value
Higher fair value
Lower fair value
 
No predictable interrelationship
 
 
      
 
 
 
 
 
 
 
 
 
 
 
      Market multiples EV/EBITDA ratios 2.0
 – 11.2 x		 6.9 x Higher fair value No predictable interrelationship
      PE Ratios 10.7 – 12.6 x 11.6 x Higher fair value
        Liquidity discounts 5.0
 – 20.0
%		 11.9% Lower fair value  
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Foreign government, agency and municipal securities
 
 
     10  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0
 – 1.3%
6.0
%
 
0.7%
6.0
%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
F-4
4
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
  
March 31,
2022
Financial Instrument
 
Fair
value in
billions of
yen
  
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
      Interrelationships      
between valuation
inputs
(6)
Bank and corporate debt securities and loans for trading purposes
 
 
   220  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.1 – 114.7%
0.0
 – 100.0%
 
7.2%
84.4%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Commercial mortgage backed securities (“CMBS”)
 
 
       7  
 
 
DCF
 
Yields
Loss severities
 
4.3 – 11.1%
28.3 – 73.0%
 
4.6%
40.8%
 
Lower fair value
Lower fair value
 
No predictable interrelationship
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage backed securities (“RMBS”)
 
 
       8  
 
 
DCF
 
Yields
Prepayment rates
Loss severities
 
0.0
 – 22.2%
6.9 – 15.0%
0.0
 – 99.9%
 
8.4%
9.5%
6.9%
 
Lower fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Real estate-backed securities
 
 
       79  
 
 
DCF
 
Loss severities
 
0.0
 – 21.2%
 
2.9%
 
Lower fair value
 
Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Collateralized debt obligations (“CDOs”) and other
 
 
    26  
 
 
DCF
 
Yields
Prepayment rates
Default probabilities
Loss severities
 
5.5 – 27.5%
18.0
 – 20.0%
2.0%
0.0
 – 100.0
%
 
13.1%
19.5%
2.0%
44.0%
 
Lower fair value
Lower fair value
Lower fair value
Lower fair value
 
Change in default probabilities typically accompanied by directionally similar change in loss severities and opposite change in prepayment rates
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Derivatives, net:
                
Equity contracts
  ¥10    Option models 
Dividend yield
Volatilities
Correlations
 
0.0
 – 12.6%
0.0
 – 109.7%
(0.80
) – 0.97
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
(11) 
 
 
DCF/
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
0.3 – 3.3%
9.2 – 13.9%
34.8 – 128.3 bp
(1.00
) – 0.98
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Credit contracts
  (33)   
DCF/
Option models
 
Credit spreads
Recovery rates
Volatilities
Correlations
 
0.0
 – 428.7%
0.0
 – 90.0
%
50.0
 – 67.6%
0.00
 – 0.90
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
 
 
10  
 
 
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
0.3 – 2.9%
2.4 – 39.3%
13.9 – 24.0 bp
(0.25) – 0.84
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Loans and receivables
 
 
205  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0
 – 21.5%
44.0
 – 100.0
%
 
6.0
%
98.2%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Collateralized agreements
 
 
16  
 
 
DCF
 
Repo rate
 
2.8 – 6.0
%
 
3.6%
 
Lower fair value
 
Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
F-40
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
  
March 31, 2022
Financial Instrument
 
Fair
value in
billions of
yen
  
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
      Interrelationships      
between valuation
inputs
(6)
Other assets                
Other
(7)
  197    DCF 
WACC
Growth rates
Liquidity discounts
 
10.1%
2.0%
10.0%
 
10.1%
2.0%
10.0%
 
Lower fair value
Higher fair value
Lower fair value
 No predictable interrelationship
      
 
 
 
 
 
 
 
 
 
 
 
      Market multiples 
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts
 
3.6 – 5.9 x
6.7 – 30.8 x
0.3 – 1.7 x
25.0
 – 40.0%
 
4.4 x
13.1 x
0.9 x
30.6%
 
Higher fair value
Higher fair value
Higher fair value
Lower fair value
 Generally changes in multiples result in a corresponding similar directional change in a fair value measurement, assuming earnings levels remain constant.
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
                
Trading Liabilities
                
Bank and corporate debt securities
 
 
3  
 
 
DCF
 
Recovery rates
 
3.9 – 97.0
%
 
84.1%
 
Higher fair value
 
Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
 
 
58
 
 
 
 
DCF/
Option models
 
Volatilities
Correlations
 
5.0
 – 97.0%
(0.80)
 – 0.93
 
 —  
—  
 
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Payable and deposits
  8    
DCF/
Option models
 
Volatilities
Volatilities
Correlations
 
9.2 – 11.3%
41.2 – 69.6 bp
0.34 – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Long-term borrowings
 
 
      479  
 
 
DCF
 Loss severities 0.0%
 0.0%
 Lower fair value Not applicable
      
 
 
 
 
 
 
 
 
 
 
 
      
DCF/
Option models
 
Volatilities
Volatilities
Correlations
 
5.0
 – 97.0%
41.2 – 69.6 bp
(1.00)
 – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Other liabilities
  32    DCF Recovery rates 90.0%
 90.0%
 Higher fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
March 31, 2023
Financial Instrument
 
Fair

value in
billions of
yen
  
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
Interrelationships
between valuation
inputs
(6)
Assets:
                
Trading assets and private equity and debt investments
                
Equities
  ¥       4    DCF Liquidity discounts 75.0%
 75.0%
 Lower fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Private equity and debt investments
 
 
52  
 
 
DCF
 
WACC
Growth rates
Credit spreads
Liquidity discounts
 
5.5 – 17.5%
0.0
 – 2.0%
7.5 – 10.9%
5.0
– 30.0%
 
10.1%
0.7%
9.8%
17.1%
 
Lower fair value
Higher fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
      
 
 
 
 
 
 
 
 
 
 
 
      Market multiples 
EV/EBITDA ratios
PE Ratios
Liquidity discounts
 
2.0
 – 11.7 x
11.3 – 24.3 x
5.0
– 20.0%
 
8.4 x
14.4 x
11.0%
 
Higher fair value
Higher fair value
Lower fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Foreign government, agency and municipal securities
 
 
8  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0
 – 1.7%
6.3 – 18.0%
 
0.7%
8.1%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
F-41
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
  
March 31, 2023
Financial Instrument
 
Fair

value in
billions of
yen
  
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
Interrelationships
between valuation
inputs
(6)
Bank and corporate debt securities and loans for trading purposes
 
 
258  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 21.8%
0.0 – 100.0%
 
5.7%
83.1%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage backed securities (“RMBS”)
 
 
8  
 
 
DCF
 
Yields
Prepayment rates
Loss severities
 
17.7 – 28.6%
12.0 – 15.0%
0.4 – 99.6%
 
24.3%
13.2%
20.3%
 
Lower fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Real estate-backed securities
 
 
95  
 
 
DCF
 
Loss severities
 
1.3 – 70.0%
 
9.2
%
 
Lower fair value
 
Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Collateralized debt obligations (“CDOs”) and other
 
 
28  
 
 
DCF
 
Yields
Prepayment rates
Default probabilities
Loss severities
 
6.0 – 38.9%
18.0 – 20.0%
2.0%
50.0 – 100.0%
 
13.9%
19.0%
2.0%
52.6%
 
Lower fair value
Lower fair value
Lower fair value
Lower fair value
 
Change in default probabilities typically accompanied by directionally similar change in loss severities and opposite change in prepayment rates
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Investment trust funds and other
 
 
2  
 
 
DCF
 
Liquidity discounts
 
0.0 – 2.0%
 
1.0%
 
Lower fair value
 
Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Derivatives, net:
                
Equity contracts
  ¥       6    Option models 
Dividend yield
Volatilities
Correlations
 
0.0
 - 
25.1%
15.4
 – 
108.6%
(0.85
) - 
0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
11  
 
 
DCF/ Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
1.0 - 4.4%
10.7 - 14.1%
38.5 - 147.4 bp
(1.00) - 1.00
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Credit contracts
  (32)   DCF/ Option models 
Credit spreads
Recovery rates
Volatilities
Correlations
 
0.1 - 348.3%
0.0 - 90.0%
55.5 - 61.1%
0.23 - 0.90
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
 
 
19  
 
 
Option models
 
Volatilities
Correlations
 
1.0 - 23.6%
0.18 - 0.74
 
—  
—  
 
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Loans and receivables
 
 
191  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 - 25.8%
22.1 - 100.0%
 
7.1%
74.5%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Collateralized agreements
 
 
17  
 
 
DCF
 
Repo rate
 
2.8 - 6.0%
 
3.4%
 
Lower fair value
 
Not applicable
                 
Other assets
                
Non-trading
debt securities
 
 
3  
 
 
DCF
 
Credit spreads
 
0.0%
 
0.0%
 
Lower fair value
 
Not applicable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
(7)
  196    DCF 
WACC
Growth rates
 
11.2%
3.0%
 
11.2%
3.0%
 
Lower fair value
Higher fair value
 No predictable interrelationship
      
 
 
 
 
 
 
 
 
 
 
 
F-42
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
March 31, 2019
Financial Instrument
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(3)(4)
 
Interrelationships
between valuation
inputs
(5)
Derivatives, net:
       
Equity contracts
 
¥        (8) 
 
Option models
 
Dividend yield
Volatilities
Correlations
 
0.0 – 8.0%
6.7 – 74.2% (0.80) – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Interest rate contracts
 
(54) 
 
DCF/
Option models
 
Interest rates
 Volatilities
 Volatilities
 Correlations
 
0.0 – 2.4%
10.6 – 15.2% 24.2 – 66.8 bp (0.76) – 1.00
 
—  
—  
—  
—  
 
Higher fair value
 Higher fair value
 Higher fair value
 Higher fair value
 
No predictable interrelationship
               
Credit contracts
 
(8) 
 
DCF/
Option models
 
Credit spreads
Recovery rates
Volatilities
Correlations
 
0.0 – 21.4%
0.0 – 100.6% 16.2 – 83.0% 0.27 – 0.75
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Foreign exchange contracts
 
20 
 
Option models
 
Interest rates
 Volatilities
 Volatilities
 Correlations
 
(0.4) – 2.4% 1.7 – 35.5% 209.0 – 245.0 bp (0.25) – 0.80
 
—  
—  
—  
—  
 
Higher fair value
 Higher fair value
 Higher fair value
 Higher fair value
 
No predictable interrelationship
               
Loans and receivables
 
129 
 
DCF
 
Credit spreads
 
0.0 – 12.3%
 
3.6%
 
Lower fair value
 
Not applicable
               
Collateralized agreements
 
33 
 
DCF
 
Repo rate
 
3.5 – 8.4%
 
7.0%
 
Lower fair value
 
Not applicable
               
Other assets
       
Other
(6)
 
166 
 
DCF
 
WACC
Growth rates
Liquidity discounts
 
10.2%
2.5%
10.0%
 
10.2%
2.5%
10.0%
 
Lower fair value
Higher fair value
Lower fair value
 
No predictable interrelationship
               
  
Market multiples
 
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts
 
4.7 – 13.8 x
8.9 – 32.4 x
0.3 – 2.7 x
10.0 – 50.0%
 
8.2 x
15.5 x
0.8 x
30.6%
 
Higher fair value
 Higher fair value
 Higher fair value
Lower fair value
 
Generally changes in multiples result in a corresponding similar directional change in a fair value measurement, assuming earnings levels remain constant.
               
Liabilities:
       
Short-term borrowings
 
31 
 
DCF/
Option models
 
Volatilities
Correlations
 
6.7 – 54.5% (0.75) – 0.91
 
—  
—  
 
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Long-term borrowings
 
535 
 
DCF/
Option models
 
Volatilities
Volatilities
Correlations
 
6.7 – 54.5%
32.5 – 60.9 bp
(0.75) – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
  
March 31, 2023
Financial Instrument
 
Fair

value in
billions of
yen
  
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
Interrelationships
between valuation
inputs
(6)
      Market multiples 
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts
 
4.0 - 5.4 x
7.4 - 30.8 x
0.3 - 1.6 x
25.0 - 30.0%
 
4.4 x
10.3 x
0.8 x
29.8%
 
Higher fair value
Higher fair value
Higher fair value
Lower fair value
 Generally changes in multiples result in a corresponding similar directional change in a fair value measurement, assuming earnings levels remain constant.
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
                
Trading Liabilities
                
Bank and corporate debt securities
  3    DCF Recovery rates 4.5 - 95.0% 65.5% Higher fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
 
 
30  
 
 
DCF/
Option models
 
Volatilities
Correlations
 
15.4 - 100.6%
(0.80) - 0.95
 
—  
—  
 
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Payable and deposits
  17    
DCF/
Option models
 
Volatilities
Correlations
 
10.7 - 11.3%
0.40 - 0.98
 
—  
—  
 
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Long-term borrowings
 
 
493  
 
 
DCF
 Loss severities 0.0 - 30.0% 9.0% Lower fair value 
Not applicable
      
 
 
 
 
 
 
 
 
 
 
 
      
DCF/
Option models
 Volatilities 10.5 - 100.6% —   Higher fair value No predictable interrelationship
      
Volatilities
Correlations
 
51.9 - 63.6 bp
(1.00) - 0.98
 
—  
—  
 
Higher fair value
Higher fair value
  
 
 
  
 
 
 
 
 
 
 
 
 
  
Other liabilities
  21    DCF Recovery rates 40.0 - 98.5% 89.9% Higher fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
F-45
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
March 31, 2020
Financial Instrument
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(3)(4)
 
Interrelationships
between valuation
inputs
(5)
Assets:
       
Trading assets and private equity and debt investments
       
Equities
 
¥      14 
 
DCF
 
Liquidity discounts
 
75.0%
 
75.0%
 
Lower fair value
 
Not applicable
               
  
Market multiples
 
Liquidity discounts
 
20.0%
 
20.0%
 
Lower fair value
 
Not applicable
               
Private equity and debt investments
 
        31 
 
DCF
 
WACC
Growth rates
 Liquidity discounts
 
7.0 – 13.5%
 0.0 – 1.0%
 5.0 – 30.0%
 
10.0%
 0.6%
 9.9%
 
Lower fair value
 Higher fair value
 Lower fair value
 
No predictable interrelationship
               
  
Market multiples
 
EV/EBITDA ratios
PE Ratios
Liquidity discounts
 
1.0 – 11.0x
9.6 x
5.0 – 30.0%
 
8.9x
9.6x
9.8%
 
Higher fair value
Higher fair value
Lower fair value
 
No predictable interrelationship
               
Foreign government, agency and municipal securities
 
          8 
 
DCF
 
Credit spreads
 Recovery rates
 
0.0 – 1.4%
 4.0 – 18.0%
 
0.5%
 10.8%
 
Lower fair value
 Higher fair value
 
No predictable interrelationship
               
Bank and corporate debt securities and loans for trading purposes
 
      228 
 
DCF
 
Credit spreads
 Recovery rates
 
0.0 – 17.9%
 0.0 – 80.7%
 
5.8%
 43.8%
 
Lower fair value
 Higher fair value
 
No predictable interrelationship
               
Residential mortgage backed securities (“RMBS”)
 
        62 
 
DCF
 
Yields
 Prepayment rates
 Loss severities
 
0.0 – 30.8%
 7.1 – 15.0%
 0.0 – 100.0%
 
6.7%
 8.9%
 40.6%
 
Lower fair value
 Lower fair value
 Lower fair value
 
No predictable interrelationship
               
Real estate-backed securities
 
        94 
 
DCF
 
Loss severities
 
0.0 – 8.1%
 
3.4%
 
Lower fair value
 
Not applicable
               
Collateralized debt obligations (“CDOs”) and other
 
        32 
 
DCF
 
Yields
 Prepayment rates
 Default probabilities
 Loss severities
 
6.4 – 56.8%
 20.0%
 2.0%
 0.0 – 100.0%
 
21.6%
 20.0%
 2.0%
 73.0%
 
Lower fair value
 Lower fair value
 Lower fair value
 Lower fair value
 
Change in default probabilities typically accompanied by directionally similar change in loss severities and opposite change in prepayment rates
               
F-46
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
March 31, 2020
Financial Instrument
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(3)(4)
 
Interrelationships
between valuation
inputs
(5)
Derivatives, net:
       
Equity contracts
 
¥      19 
 
Option models
 
Dividend yield
Volatilities
Correlations
 
0.0 – 18.7%
12.2 – 144.7%
(0.85) – 0.97
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Interest rate contracts
 
     (54)
 
DCF/
Option models
 
Interest rates
 Volatilities
 Volatilities
 Correlations
 
(0.1) – 2.0%
 8.8 – 13.8%
 24.6 – 119.4 bp
 (1.00) – 0.98
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Credit contracts
 
      (1)
 
DCF/
Option models
 
Credit spreads
 Recovery rates
Volatilities
 Correlations
 
0.1 – 28.4%
0.0 – 105.4%
50.0 – 83.0% 0.16 – 0.82
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Foreign exchange contracts
 
          7 
 
Option models
 
Interest rates
 Volatilities
 Volatilities
 Correlations
 
(0.1) – 0.8%
 2.0 – 23.9%
 19.2 – 50.7 bp
 (0.25) – 0.80
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Loans and receivables
 
        96 
 
DCF
 
Credit spreads
 Recovery rates
 
0.0 – 20.5%
 57.5 – 98.0%
 
4.2%
 85.0%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
               
Collateralized agreements
 
        15 
 
DCF
 
Repo rate
 
3.8 – 5.6%
 
4.9%
 
Lower fair value
 
Not applicable
               
Other assets
       
Other
(6)
 
      168 
 
DCF
 
WACC
Growth rates
Liquidity discounts
 
10.1%
2.0%
10.0%
 
10.1%
2.0%
10.0%
 
Lower fair value
Higher fair value
Lower fair value
 
No predictable interrelationship
               
  
Market multiples
 
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts
 
3.9 – 10.3 x
6.3 – 20.7 x
0.3 – 1.3 x
10.0 – 40.0%
 
4.6 x
11.4 x
0.8 x
28.6%
 
Higher fair value
Higher fair value
Higher fair value
Lower fair value
 
Generally changes in multiples result in a corresponding similar directional change in a fair value measurement, assuming earnings levels remain constant.
               
Liabilities:
       
Short-term borrowings
 
        29 
 
DCF/
Option models
 
Volatilities
 Correlations
 
12.6 – 76.4% (0.72) – 0.94
 
—  
—  
 
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Long-term borrowings
 
      409 
 
DCF/
Option models
 
Volatilities
 Volatilities
 Correlations
 
8.6 – 76.4% 30.0 – 103.2 bp (1.00) – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
(1)
Range information is provided in percentages, coefficients and multiples and represents the highest and lowest level significant unobservable valuation input used to value that type of financial instrument. A wide dispersion in the range does not necessarily reflect increased uncertainty or subjectivity in the valuation input and is typically just a consequence of the different characteristics of the financial instruments themselves.
(2)
Weighted average information for
non-derivativenon-derivatives
instruments is calculated by weighting each valuation input by the fair value of the financial instrument.
(3)
Nomura has not provided weighted average information for derivatives as unlike cash products the risk on such products is distinct from the balance sheet value and is subject to netting.
(4)
The above table only considers the impact of an increase in each significant unobservable valuation input on the fair value measurement of the financial instrument. However, a decrease in the significant unobservable valuation input would have the opposite effect on the fair value measurement of the financial instrument. For example, if an increase in a significant unobservable valuation input would result in a lower fair value measurement, a decrease in the significant unobservable valuation input would result in a higher fair value measurement.
F-4
7
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(4)(5)
The impact of an increase in the significant unobservable valuation input on the fair value measurement for a derivative assumes Nomura is long risk to the input e.g., long volatility. Where Nomura is short such risk, the impact of an increase would have a converse effect on the fair value measurement of the derivative.
(5)(6)
Consideration of the interrelationships between significant unobservable valuation inputs is only relevant where more than one unobservable valuation input is used to determine the fair value measurement of the financial instrument.
(6)(7)
Valuation technique(s)techniques and unobservable valuation inputs in respect of equity securities reported within
Other assets
in the consolidated balance sheets.
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.
Derivatives—Derivatives
—
Equity contracts
—The significant unobservable valuation inputs are dividend yield, volatilities and correlations. The range of dividend yields varies as some companies do not pay any dividends, for
F-43
Table of Contents
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.
Derivatives—Derivatives
—
Interest rate contracts
—
The significant unobservable valuation inputs are interest rates, volatilities and correlations. The range of interest rates is due to interest rates in different countries/currencies being at different levels with some countries having extremely low levels and others being at levels that while still relatively low are less so.levels. The range of volatilities is wide as volatilities can be higher when interest rates are at extremely low levels, and also because volatilities of shorter-dated interest rate derivatives are typically higher than those of longer-dated instruments. 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 through the range. All significant unobservable valuation inputs are spread across the ranges.
Derivatives—Derivatives
—
Credit contracts
—
The significant unobservable valuation inputs are credit spreads, recovery rates, volatilities and correlations. The range of credit spreads reflects the different risk of default present within the portfolio. At the low end of the range, underlying reference names have a very limited risk of default whereas at the high end of the range, underlying reference names have a much greater risk of default. The range of recovery rates varies primarily due to the seniority of the underlying exposure with senior exposures having a higher recovery than subordinated exposures. The range of volatilities is wide as the volatilities of shorter-dated credit contracts are typically higher than those of longer-dated instruments. The correlation range is positive since credit spread moves are generally in the same direction. Highly positive correlations are those for which the movement is very closely related and in the same direction, with correlation falling as the relationship becomes less strong.
Derivatives—
Derivatives
—
Foreign exchange contracts
—
The significant unobservable valuation inputs are interest rates, volatilities and correlations. The range of interest rates is due to interest rates in different countries/currencies being at different levels with some countries having extremely low levels and others being at levels that while still relatively low are less so. The range of volatilities is mainly due to the lower end of the range arising from
F-4
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
currencies that trade in narrow ranges e.g.(e.g., versus the U.S. DollarDollar) while the higher end comes from currencies with a greater range of movement such as emerging market currencies. 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 through the range.
Short-term borrowings and Long-term borrowings
—
The significant unobservable valuation inputs are yields, prepayment rates, default probabilities, loss severities, volatilities and correlations. The range of volatilities is wide as the volatilities of shorter-dated instruments are typically higher than those in longer-dated instruments. 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 through the range.
F-44
Table of Contents
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 measuredcarried at fair value on a recurring basis which Nomura classified in Level 3 of the fair value hierarchy for the years ended March 31, 20192022 and 2020.2023. Financial instruments classified in Level 3 are often hedged with instruments within Level 1 or Level 2 of the fair value hierarchy. The gains or losses presented below do not reflect the offsetting gains or losses for these hedging instruments. Level 3 financial instruments are also measured using both observable and unobservable valuation inputs. Fair value changes presented below, therefore, reflect realized and unrealized gains and losses resulting from movements in both observable and unobservable valuation inputs.
F-4
9
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For the years ended March 31, 20192022 and 2020,2023, gains and losses related to Level 3 assets and liabilities did not have a material impact on Nomura’s liquidity and capital resources management.
F-45
 
 
 
Billions of yen
 
 
 
 
Year ended March 31, 2019
 
 
Balance
as of
April 1,
2018
 
 
Total gains
(losses)
recognized
in net revenue
(1)
 
 
Total gains
(losses)
recognized in
other
comprehensive
income
 
 
Purchases
/ issues
(2)
 
 
Sales /
redemptions
(2)
 
 
Settlements
 
 
Foreign
exchange
movements
 
 
Transfers
into
Level 3
(4)(5)
 
 
Transfers
out of
Level 3
(5)
 
 
Balance
as of
March 31,
2019
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trading assets and private equity and debt investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
 
¥
21
 
 
¥
(3
)
 
¥
—
 
 
¥
5
 
 
¥
(13
)
 
¥
—
 
 
¥
1
 
 
¥
5
 
 
¥
(3
)
 
¥
13
 
Private equity and debt investments
 
 
3
 
 
 
(1
)
 
 
—
 
 
 
24
 
 
 
(2
)
 
 
—
 
 
 
0
 
 
 
2
 
 
 
—
 
 
 
26
 
Japanese agency and municipal securities
 
 
1
 
 
 
0
 
 
 
—
 
 
 
1
 
 
 
(1
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
1
 
Foreign government, agency and municipal securities
 
 
6
 
 
 
0
 
 
 
—
 
 
 
15
 
 
 
(16
)
 
 
—
 
 
 
0
 
 
 
3
 
 
 
(3
)
 
 
5
 
Bank and corporate debt securities and loans for trading
purposes
 
 
139
 
 
 
8
 
 
 
—
 
 
 
99
 
 
 
(100
)
 
 
—
 
 
 
4
 
 
 
63
 
 
 
(53
)
 
 
160
 
Commercial mortgage-backed securities (“CMBS”)
 
 
2
 
 
 
0
 
 
 
—
 
 
 
1
 
 
 
(2
)
 
 
—
 
 
 
0
 
 
 
1
 
 
 
—
 
 
 
2
 
Residential mortgage-backed securities (“RMBS”)
 
 
0
 
 
 
0
 
 
 
—
 
 
 
9
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
—
 
 
 
(6
)
 
 
3
 
Real estate-backed securities
 
 
63
 
 
 
(2
)
 
 
—
 
 
 
217
 
 
 
(212
)
 
 
—
 
 
 
3
 
 
 
—
 
 
 
—
 
 
 
69
 
Collateralized debt obligations (“CDOs”) and other
 
 
24
 
 
 
4
 
 
 
—
 
 
 
56
 
 
 
(68
)
 
 
—
 
 
 
1
 
 
 
7
 
 
 
(5
)
 
 
19
 
Investment trust funds and other
 
 
1
 
 
 
0
 
 
 
—
 
 
 
4
 
 
 
(4
)
 
 
—
 
 
 
0
 
 
 
—
 
 
 
—
 
 
 
1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total trading assets and private equity and debt investments
 
 
260
 
 
 
6
 
 
 
—
 
 
 
431
 
 
 
(418
)
 
 
—
 
 
 
9
 
 
 
81
 
 
 
(70
)
 
 
299
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives, net
(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity contracts
 
 
(1
)
 
 
(2
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(2
)
 
 
0
 
 
 
(7
)
 
 
4
 
 
 
(8
)
Interest rate contracts
 
 
(53
)
 
 
(25
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
0
 
 
 
0
 
 
 
10
 
 
 
14
 
 
 
(54
)
Credit contracts
 
 
2
 
 
 
(6
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(4
)
 
 
0
 
 
 
(1
)
 
 
1
 
 
 
(8
)
Foreign exchange contracts
 
 
27
 
 
 
(13
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
3
 
 
 
1
 
 
 
(1
)
 
 
3
 
 
 
20
 
Commodity contracts
 
 
—
 
 
 
0
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
0
 
 
 
0
 
 
 
—
 
 
 
—
 
 
 
0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivatives, net
 
 
(25
)
 
 
(46
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(3
)
 
 
1
 
 
 
1
 
 
 
22
 
 
 
(50
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subtotal
 
¥
235
 
 
¥
(40
)
 
¥
—
 
 
¥
431
 
 
¥
(418
)
 
¥
(3
)
 
¥
10
 
 
¥
82
 
 
¥
(48
)
 
¥
249
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and receivables
 
¥
70
 
 
¥
0
 
 
¥
—
 
 
¥
53
 
 
¥
(27
)
 
¥
—
 
 
¥
3
 
 
¥
37
 
 
¥
(7
)
 
¥
129
 
Collateralized agreements
 
 
5
 
 
 
0
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
0
 
 
 
28
 
 
 
—
 
 
 
33
 
Other assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
169
 
 
 
(11
)
 
 
—
 
 
 
6
 
 
 
(3
)
 
 
—
 
 
 
5
 
 
 
0
 
 
 
—
 
 
 
166
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
¥
479
 
 
¥
(51
)
 
¥
—
 
 
¥
490
 
 
¥
(448
)
 
¥
(3
)
 
¥
18
 
 
¥
147
 
 
¥
(55
)
 
¥
577
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trading liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
 
¥
1
 
 
¥
0
 
 
¥
—
 
 
¥
20
 
 
¥
(20
)
 
¥
—
 
 
¥
0
 
 
¥
0
 
 
¥
(1
)
 
¥
0
 
Foreign government, agency and municipal securities
 
 
—
 
 
 
0
 
 
 
—
 
 
 
1
 
 
 
(1
)
 
 
—
 
 
 
0
 
 
 
0
 
 
 
—
 
 
 
0
 
Bank and corporate debt securities
 
 
0
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
Collateralized debt obligations (“CDOs”) and other
 
 
0
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
—
 
 
 
—
 
 
 
—
 
Investment trust funds and other
 
 
0
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
—
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total trading liabilities
 
¥
1
 
 
¥
0
 
 
¥
—
 
 
¥
21
 
 
¥
(21
)
 
¥
—
 
 
¥
0
 
 
¥
0
 
 
¥
(1
)
 
¥
0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
 
 
17
 
 
 
(2
)
 
 
0
 
 
 
39
 
 
 
(27
)
 
 
—
 
 
 
0
 
 
 
25
 
 
 
(25
)
 
 
31
 
Payables
and
deposits
 
 
(1
)
 
 
(1
)
 
 
—
 
 
 
0
 
 
 
0
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
0
 
Collateralized financing
 
 
3
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(3
)
 
 
—
 
 
 
0
 
 
 
—
 
 
 
—
 
 
 
—
 
Long-term borrowings
 
 
429
 
 
 
(23
)
 
 
2
 
 
 
194
 
 
 
(99
)
 
 
—
 
 
 
0
 
 
 
75
 
 
 
(85
)
 
 
535
 
Other liabilities
 
 
1
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
(1
)
 
 
—
 
 
 
0
 
 
 
0
 
 
 
—
 
 
 
0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
¥
450
 
 
¥
(26
)
 
¥
2
 
 
¥
254
 
 
¥
(151
)
 
¥
—
 
 
¥
0
 
 
¥
100
 
 
¥
(111
)
 
¥
566
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-
50
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
                                         
   
Billions of yen
 
   
Year ended March 31, 2020
 
 
Balance
as of
April 1,
2019
  
Total gains
(losses)
recognized
in net revenue
(1)
  
Total gains
(losses)
recognized in
other
comprehensive
income
  
Purchases
/ issues
(2)
  
Sales /
redemptions
(2)
  
Settlements
  
Foreign
exchange
movements
  
Transfers
into
Level 3
(4)(5)
  
Transfers
out of
Level 3
(5)
  
Balance
as of
March 31,
2020
 
Assets:
  
   
   
   
   
   
   
   
   
   
 
Trading assets and private equity and debt investments
  
   
   
   
   
   
   
   
   
   
 
Equities
 ¥
13
  ¥
(1
) ¥
—
  ¥
8
  ¥
(4
) ¥
—
  ¥
0
  ¥
1
  ¥
(3
) ¥
14
 
Private equity and debt investments
  
26
   
1
   
—
   
8
   
(3
)  
—
   
(1
)  
—
   
—
   
31
 
Japanese agency and municipal securities
  
1
   
0
   
—
   
1
   
0
   
—
   
—
   
—
   
—
   
2
 
Foreign government, agency and municipal securities
  
5
   
0
   
—
   
27
   
(26
)  
—
   
0
   
5
   
(3
)  
8
 
Bank and corporate debt securities and loans for
 
trading purposes
  
160
   
(2
)  
—
   
158
   
(154
)  
—
   
(7
)  
113
   
(40
)  
228
 
Commercial mortgage-backed securities (“CMBS”)
  
2
   
(1
)  
—
   
1
   
(1
)  
—
   
—
   
0
   
0
   
1
 
Residential mortgage-backed securities (“RMBS”)
  
3
   
(8
)  
—
   
93
   
(53
)  
—
   
0
   
28
   
(1
)  
62
 
Real estate-backed securities
  
69
   
4
   
—
   
197
   
(175
)  
—
   
(1
)  
—
   
—
   
94
 
Collateralized debt obligations (“CDOs”) and other
  
19
   
(21
)  
—
   
184
   
(167
)  
—
   
(1
)  
25
   
(7
)  
32
 
Investment trust funds and other
  
1
   
0
   
—
   
13
   
(14
)  
—
   
0
   
0
   
0
   
0
 
                                         
Total trading assets and private equity and debt investments
  
299
   
(28
)  
—
   
690
   
(597
)  
—
   
(10
)  
172
   
(54
)  
472
 
                                         
Derivatives, net
(3)
  
   
   
   
   
   
   
   
   
   
 
Equity contracts
  
(8
)  
29
   
—
   
—
   
—
   
(6
)  
0
   
16
   
(12
)  
19
 
Interest rate contracts
  
(54
)  
9
   
—
   
—
   
—
   
(9
)  
0
   
(1
)  
1
   
(54
)
Credit contracts
  
(8
)  
7
   
—
   
—
   
—
   
2
   
0
   
(12
)  
10
   
(1
)
Foreign exchange contracts
  
20
   
(22
)  
—
   
—
   
—
   
8
   
(1
)  
0
   
2
   
7
 
Commodity contracts
  
0
   
0
   
—
   
—
   
—
   
0
   
0
   
—
   
—
   
—
 
                                         
Total derivatives, net
  
(50
)  
23
   
—
   
—
   
—
   
(5
)  
(1
)  
3
   
1
   
(29
)
                                         
Subtotal
 ¥
249
  ¥
(5
) ¥
—
  ¥
690
  ¥
(597
) ¥
(5
) ¥
(11
) ¥
175
  ¥
(53
) ¥
443
 
                                         
Loans and receivables
 ¥
129
  ¥
0
  ¥
—
  ¥
163
  ¥
(117
) ¥
—
  ¥
(3
) ¥
93
  ¥
(169
) ¥
96
 
Collateralized agreements
  
33
   
0
   
—
   
—
   
(27
)  
—
   
(1
)  
10
   
—
   
15
 
Other assets
  
   
   
   
   
   
   
   
   
   
 
Other
  
166
   
(31
)  
0
   
43
   
(7
)  
—
   
(3
)  
0
   
—
   
168
 
                                         
Total
 ¥
577
  ¥
(36
) ¥
0
  ¥
896
  ¥
(748
) ¥
(5
) ¥
(18
) ¥
278
  ¥
(222
) ¥
722
 
                                         
Liabilities:
  
   
   
   
   
   
   
   
   
   
 
Trading liabilities
  
   
   
   
   
   
   
   
   
   
 
Equities
 ¥
0
  ¥
0
  ¥
—
  ¥
0
  ¥
0
  ¥
—
  ¥
0
  ¥
0
  ¥
0
  ¥
0
 
Foreign government, agency and municipal securities
  
0
   
0
   
—
   
—
   
—
   
—
   
0
   
—
   
—
   
0
 
Bank and corporate debt securities
  
0
   
(1
)  
—
   
1
   
(1
)  
—
   
0
   
0
   
—
   
1
 
Collateralized debt obligations (“CDOs”) and other
  
—
   
0
   
—
   
4
   
(3
)  
—
   
0
   
—
   
—
   
1
 
Investment trust funds and other
  
—
   
—
   
—
   
0
   
0
   
—
   
0
   
0
   
—
   
0
 
                                         
Total trading liabilities
 ¥
0
  ¥
(1
) ¥
—
  ¥
5
  ¥
(4
) ¥
—
  ¥
0
  ¥
0
  ¥
0
  ¥
2
 
                                         
Short-term borrowings
  
31
   
0
   
0
   
65
   
(58
)  
—
   
0
   
7
   
(16
)  
29
 
Payables and deposits
  
0
   
0
   
—
   
6
   
0
   
—
   
0
   
0
   
(5
)  
1
 
Long-term borrowings
  
535
   
6
   
0
   
254
   
(291
)  
—
   
(1
)  
56
   
(138
)  
409
 
Other liabilities
  
0
   
(8
)  
—
   
2
   
(10
)  
—
   
0
   
—
   
—
   
0
 
                                         
Total
 ¥
566
  ¥
(3
) ¥
0
  ¥
332
  ¥
(363
) ¥
—
  ¥
(1
) ¥
63
  ¥
(159
) ¥
441
 
                                         
 
     
Billions of yen
 
     
Year ended March 31, 2022
 
  
Balance

as of

April 1,

2021
  
Total gains

(losses)

recognized

in net
revenue
(1)
  
Total gains

(losses)

recognized in

other

comprehensive

income
  
Purchases /
issues
(2)
  
Sales /

redemptions
(2)
  
Settlements
  
Foreign

exchange

movements
  
Transfers

into

Level 3
(4)(5)
  
Transfers

out of

Level 3
(5)
  
Balance

as of

March 31,

2022
 
Assets:
                                        
Trading assets and private equity and debt investments
                                        
Equities
 ¥16  ¥3  ¥—    ¥2  ¥(9)  ¥—    ¥1  ¥3  ¥(2)  ¥14 
Private equity and debt investments
  58   2   —     14   (30)   —     1   —     (13)   32 
Japanese agency and municipal securities
  2   0   —     0   0   —     —     —     —     2 
Foreign government, agency and municipal securities
  12   1   —     13   (16)   —     0   2   (2)   10 
Bank and corporate debt securities and loans for trading purposes
  135   (3)   —     207   (194)   —     16   89   (30)   220 
Commercial mortgage-backed securities (“CMBS”)
  8   0   —     0   (1)   —     0   —     0   7 
Residential mortgage-backed securities (“RMBS”)
  6   0   —     5   (4)   —     1   0   —     8 
Real estate-backed securities
  106   4   —     370   (395)   —     10   —     (16)   79 
Collateralized debt obligations (“CDOs”) and other
  23   (4)   —     96   (89)   —     1   —     (1)   26 
Investment trust funds and other
  0   0   —     16   (16)   —     0   0   —     0 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading assets and private equity and debt investments
  366   3   —     723   (754)   —     30   94   (64)   398 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Derivatives, net
(3)
                                        
Equity contracts
  (41)   43   —     —     —     3   (1)   (31)   37   10 
Interest rate contracts
  (43)   (7)   —     —     —     13   0   14   12   (11) 
Credit contracts
  (38)   6   —     —     —     2   (2)   (2)   1   (33) 
Foreign exchange contracts
  15   (1)   —     —     —     (4)   1   0   (1)   10 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total derivatives, net
  (107)   41   —     —     —     14   (2)   (19)   49   (24) 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Subtotal
 ¥259  ¥44  ¥—    ¥723  ¥(754)  ¥14  ¥28  ¥75  ¥(15)  ¥374 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Loans and receivables
 ¥104  ¥18  ¥—    ¥95  ¥(89)  ¥—    ¥16  ¥73  ¥(12)  ¥205 
Collateralized agreements
  18   (1)   —     2   (5)   —     2   —     —     16 
Other assets
                                        
Other
  185   (2)   0   2   (1)   —     14   0   (1)   197 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥566  ¥59  ¥0  ¥822  ¥(849)  ¥14  ¥60  ¥148  ¥(28)  ¥792 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                                        
Trading liabilities
                                        
Equities
 ¥0  ¥0  ¥—    ¥0  ¥0  ¥—    ¥0  ¥—    ¥0  ¥0 
Foreign government, agency and municipal securities
  1   0   —     0   (1)   —     0   —     —     0 
Bank and corporate debt securities
  5   0   —     5   (6)   —     (1)   8   (8)   3 
Collateralized debt obligations (“CDOs”) and other
  1   0   —     2   (3)   —     0   0   —     0 
Investment trust funds and other
  0   0   —     0   0   —     0   —     —     0 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading liabilities
 ¥7  ¥0  ¥—    ¥7  ¥(10)  ¥—    ¥(1)  ¥8  ¥(8)  ¥3 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Short-term borrowings
  103   (8)   0   152   (136)   —     1   15   (85)   58 
Payables and deposits
  1   0   0   2   —     —     —     7   (2)   8 
Collateralized financing
  1   —     —     —     —     —     —     —     (1)   —   
Long-term borrowings
  547   (6)   2   487   (409)   —     1   41   (192)   479 
Other liabilities
  35   (26)   —     1   (36)   —     6   0   0   32 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥694  ¥(40)  ¥2  ¥649  ¥(591)  ¥—    ¥7  ¥71  ¥(288)  ¥580 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
F-46
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
     
Billions of yen
 
     
Year ended March 31, 2023
 
  
Balance

as of

April 1,

2022
  
Total gains

(losses)

recognized

in net
revenue
(1)
  
Total gains

(losses)

recognized in

other

comprehensive

income
  
Purchases /
issues
(2)
  
Sales /

redemptions
(2)
  
Settlements
  
Foreign

exchange

movements
  
Transfers

into

Level 3
(4)(5)
  
Transfers

out of

Level 3
(5)
  
Balance

as of

March 31,

2023
 
Assets:
          
Trading assets and private equity and debt investments
          
Equities
 ¥14  ¥(2)  ¥—    ¥11  ¥(13)  ¥—    ¥1  ¥1  ¥(8)  ¥4 
Private equity and debt investments
  32   11   —     27   (18)   —     0   —     —     52 
Japanese agency and municipal securities
  2   0   —     0   0   —     —     —     —     2 
Foreign government, agency and municipal securities
  10   0   —     15   (17)   —     0   1   (1)   8 
Bank and corporate debt securities and loans for trading purposes
  220   (3)   —     273   (266)   —     13   100   (79)   258 
Commercial mortgage-backed securities (“CMBS”)
  7   0   —     0   0   —     —     0   (7)   0 
Residential mortgage-backed securities (“RMBS”)
  8   (1)   —     3   (12)   —     0   10   0   8 
Real estate-backed securities
  79   (10)   —     160   (141)   —     7   —     —     95 
Collateralized debt obligations (“CDOs”) and other
  26   (6)   —     69   (69)   —     2   10   (4)   28 
Investment trust funds and other
  0   0   —     64   (62)   —     0   0   —     2 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading assets and private equity and debt investments
  398   (11)   —     622   (598)   —     23   122   (99)   457 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Derivatives, net
(3)
                                        
Equity contracts
  10   (4)   —     —     —     (23)   (4)   11   16   6 
Interest rate contracts
  (11)   (6)   —     —     —   14   1   9   4   11 
Credit contracts
  (33)   24   —     —     —     (5)   (3)   0   (15)   (32) 
Foreign exchange contracts
  10   2   —     —     —     5   2   0   0   19 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total derivatives, net
  (24)   16   —     —     —   (9)   (4)   20   5   4 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Subtotal
 ¥374  ¥5  ¥—    ¥622  ¥(598)  ¥(9)  ¥19  ¥142  ¥(94)  ¥461 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Loans and receivables
 ¥205  ¥21  ¥—    ¥85  ¥(123)  ¥—    ¥12  ¥65  ¥(74)  ¥191 
Collateralized agreements
  16   0   —     —     —     —     1   —     —     17 
Other assets
                                        
Non-trading
debt securities
  —     0   —     0   —     —     1   2   —     3 
Other
  197   (12)   0   10   (14)   —     14   1   —     196 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥792  ¥14  ¥0  ¥717  ¥(735)  ¥(9)  ¥47  ¥210  ¥(168)  ¥868 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                                        
Trading liabilities
                                        
Equities
 ¥0  ¥(1)  ¥—    ¥0  ¥(2)  ¥—    ¥0  ¥2  ¥—    ¥1 
Foreign government, agency and municipal securities
  0   0   —     —     —     —     0   —     —     0 
Bank and corporate debt securities
  3   0   —     2   (6)   —     0   7   (3)   3 
Collateralized debt obligations (“CDOs”) and other
  0   —     —     1   (1)   —     0   —     —     —   
Investment trust funds and other
  0   0   —     0   0   —     0   —     —     0 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading liabilities
 ¥3  ¥(1)  ¥—    ¥3  ¥(9)  ¥—    ¥0  ¥9  ¥(3)  ¥4 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Short-term borrowings
  58   (4)   0   43   (32)   —     0   10   (53)   30 
Payables and deposits
  8   1   0   17   0   —     —     8   (15)   17 
Long-term borrowings
  479   4   7   238   (152)   —     2   114   (177)   493 
Other liabilities
  32   16   —     5   (2)   —     3   0   (1)   21 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥580  ¥16  ¥7  ¥306  ¥(195)  ¥—    ¥5  ¥141  ¥(249)  ¥565 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Includes gains and losses reported primarily within
Net gain on trading, Gain on private equity and debt investments,
and also within
Gain (loss) on investments in equity securities, Revenue—Revenue
—
Other
and
Non-interest expenses—
expenses
—
Other, Interest and dividends
and
Interest expense
in the consolidated statements of income.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(2)
Amounts reported in
Purchases / issues
include increases in trading liabilities while
Sales / redemptions
include decreases in trading liabilities.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
(3)Each derivative classification includes derivatives with
Derivatives which contain multiple types of risk underlyings. For example, interest rate contracts include complex derivatives referencing interest rateare classified based on the primary risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government debt securities.type of the instrument.
(4)
Amounts of gains and losses on these transfers which were recognized in the period when the
Transfers into Level
 3
occurred were not significant for the years year
s
ended March 31, 20192022 and 2020.March 31, 2023.
(5)
Transfers into Level
 3
indicate certain valuation inputs of a financial instrument become unobservable or significant.
Transfers out of Level
 3
indicate certain valuation inputs of a financial instrument become observable or insignificant. See
“
Quantitative and qualitative information regarding significant unobservable valuation inputs
”
above for the valuation inputs of each financial instruments.
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, 20192022 and 2020,2023, relating to those financial instruments which Nomura classified in Level 3 within the fair value hierarchy and that were still held by Nomura at the relevant consolidated balance sheet date.
         
 
Billions of yen
 
March 31
 
2019
  
2020
 
Unrealized gains/(losses)
(1)
 
Assets:
  
   
 
Trading assets and private equity and debt investments
  
   
 
Equities
 ¥
(4
) ¥
(2
)
Private equity and debt investments
  
(1
)  
1
 
Japanese agency and municipal securities
  
0
   
0
 
Foreign government, agency and municipal securities
  
0
   
(1
)
Bank and corporate debt securities and loans for trading purposes
  
1
   
(5
)
Commercial mortgage-backed securities (“CMBS”)
  
0
   
(1
)
Residential mortgage-backed securities (“RMBS”)
  
0
   
(7
)
Real estate-backed securities
  
0
   
0
 
Collateralized debt obligations (“CDOs”) and other
  
(4
)  
(19
)
Investment trust funds and other
  
0
   
0
 
         
Total trading assets and private equity and debt investments
  
(8
)  
(34
)
         
Derivatives, net
(2)
  
   
 
Equity contracts
  
(11
)  
36
 
Interest rate contracts
  
(18
)  
(19
)
Credit contracts
  
(12
)  
2
 
Foreign exchange contracts
  
(10
)  
(24
)
Commodity contracts
  
0
   
—  
 
         
Total derivatives, net
  
(51
)  
(5
)
         
Subtotal
 ¥
(59
) ¥
(39
)
         
Loans and receivables
  
0
   
(1
)
Collateralized agreements
  
0
   
0
 
Other assets
  
   
 
Other
  
(12
)  
(20
)
         
Total
 ¥
(71
) ¥
(60
)
         
 
   
Billions of yen
 
   
March 31
 
   
2022
  
2023
 
        
   
Unrealized gains / (losses)
(1)
 
Assets:
         
Trading assets and private equity and debt investments
         
Equities
  ¥2  ¥(2) 
Private equity and debt investments
   1   9 
Japanese agency and municipal securities
   0   0 
Foreign government, agency and municipal securities
   0   (1) 
Bank and corporate debt securities and loans for trading purposes
   (2)   13 
Commercial mortgage-backed securities (“CMBS”)
   0   0 
Residential mortgage-backed securities (“RMBS”)
   0   0 
Real estate-backed securities
   1   2 
Collateralized debt obligations (“CDOs”) and other
   (7)   (6) 
Investment trust funds and other
   0   0 
   
 
 
  
 
 
 
Total trading assets and private equity and debt investments
   (5)   15 
   
 
 
  
 
 
 
Derivatives, net
(2)
         
Equity contracts
   46   7 
Interest rate contracts
   0   (8) 
Credit contracts
   5   1 
Foreign exchange contracts
   (13)   0 
   
 
 
  
 
 
 
Total derivatives, net
   38   0 
   
 
 
  
 
 
 
Subtotal
  ¥33  ¥   15 
   
 
 
  
 
 
 
Loans and receivables
   16   14 
Collateralized agreements
   0   0 
Other assets
         
Non-Trading
debt Securities
   —     0 
Other
   (2)   (7) 
   
 
 
  
 
 
 
Total
  ¥47  ¥22 
   
 
 
  
 
 
 
F-
52
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Billions of yen
 
March 31
 
2019
  
2020
 
Unrealized gains/(losses)
(1)
 
Liabilities
:
  
   
 
Trading liabilities
  
   
 
Equities
 ¥
0
  ¥
0
 
Foreign government, agency and municipal securities
  
0
   
0
 
Bank and corporate debt securities
  
0
   
(1
)
Collateralized debt obligations (“CDOs”) and other
  
—  
   
0
 
         
Total trading liabilities
 ¥
0
  ¥
(1
)
         
Short-term borrowings
  
(1
)  
1
 
Payables and deposits
  
(1
)  
0
 
Long-term borrowings
  
(18
)  
19
 
         
Total
 ¥
(20
) ¥
19
 
         
   
Billions of yen
 
   
March 31
 
   
2022
  
2023
 
        
   
Unrealized gains / (losses)
(1)
 
Liabilities:
         
Trading liabilities
         
Equities
  ¥0  ¥0 
Foreign government, agency and municipal securities
   0   0 
Bank and corporate debt securities
   0   0 
Collateralized debt obligations (“CDOs”) and other
   0   —   
   
 
 
  
 
 
 
Total trading liabilities
  ¥0  ¥0 
   
 
 
  
 
 
 
Short-term borrowings
(3)
   2   (3) 
Payables and deposits
(3)
   0   1 
Long-term borrowings
(3)
   18   22 
Other liabilities
   (7)   0 
   
 
 
  
 
 
 
Total
  ¥13  ¥   20 
   
 
 
  
 
 
 
(1)
Includes gains and losses reported within
Net gain on trading, Gain on private equity and debt investments
, and also within
Gain
(loss) 
on investments in equity securities, Revenue—Other
and
Non-interest expenses—
expenses
—Other, Interest and dividends
and
Interest expense
in the consolidated statements of income.
(2)Each derivative classification includes derivatives with
Derivatives which contain multiple types of risk underlyings. For example, interest rate contracts include complex derivatives referencing interest rateare classified based on the primary risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government debt securities.type of the instrument.
F-
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(3)
Includes unrealized gains and losses of ¥5 billion and ¥7 billion for the years ended March 31, 2022 and 2023 recognized in
Other comprehensive income (loss)
for recurring Level 3 fair value measurements held at the end of the reporting period. 
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.
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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, 20192022 and 2020.2023. Investments are presented by major category relevant to the nature of Nomura’s business and risks.
 
Billions of yen
 
 
March 31, 2019
 
 
Fair value
  
Unfunded
commitments
(1)
  
Redemption frequency
(if currently eligible)
(2)
  
Redemption notice
(3)
 
Hedge funds
 ¥
16
  ¥
—  
   
Monthly
   
Same
 day-90
 days
 
Venture capital funds
  
2
   
2
   
—  
   
—  
 
Private equity funds
  
17
   
10
   
—  
   
—  
 
Real estate funds
  
3
   
1
   
—  
   
—  
 
                 
Total
 ¥
    38
  ¥
    13
   
   
 
                 
    
 
Billions of yen
 
 
March 31, 2020
 
 
Fair value
  
Unfunded
commitments
(1)
  
Redemption frequency
(if currently eligible)
(2)
  
Redemption notice
(3)
 
Hedge funds
 ¥
2
  ¥
—  
   
Monthly
   
Same
day-90
days
 
Venture capital funds
  
3
   
3
   
—  
   
—  
 
Private equity funds
  
21
   
9
   
—  
   
—  
 
Real estate funds
  
6
   
1
   
—  
   
—  
 
                 
Total
 ¥
32
  ¥
13
   
   
 
                 
   
Billions of yen
 
   
March 31, 2022
 
   
Fair
value
   
Unfunded

commitments
(1)
   
Redemption frequency

(if currently eligible)
(2)
   
Redemption notice
(3)
 
Hedge funds
  ¥12   ¥1    Monthly    
Same day-30 days
 
Venture capital funds
   10    10    —      —    
Private equity funds
   22    19    —      —    
Real estate funds
   4    1    —      —    
   
 
 
   
 
 
           
Total
  ¥48   ¥31           
   
 
 
   
 
 
           
  
   
Billions of yen
 
   
March 31, 2023
 
   
Fair
value
   
Unfunded

commitments
(1)
   
Redemption frequency

(if currently eligible)
(2)
   
Redemption notice
(3)
 
Hedge funds
  ¥12   ¥1    Monthly    Same
day-30
days		 
Venture capital funds
   11    9    —      
—   
 
Private equity funds
   24    10    —      —    
Real estate funds
   3    1    —      —    
   
 
 
   
 
 
           
Total
  ¥    50   ¥    21           
   
 
 
   
 
 
           
(1)
The contractual amount of any unfunded commitments Nomura is required to make to the entities in which the investment is held.
(2)
The range in frequency with which Nomura canis permitted to redeem investments.
(3)
The range in notice period required to be provided before redemption is possible.
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 mostmajority of these funds can be redeemed within six months,are redeemable monthly, certain funds cannot be redeemed within six monthsone month due to contractual, liquidity or gating issues. 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.
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 is
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4
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NOMURA
HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
unknown 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
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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
” and ASC 825 “
Financial InstrumentsInstruments.
.
” When Nomura elects the fair value option for an eligible item, changes in that item’s fair value are recognized through earnings. Election of the fair value option is generally irrevocable unless an event occurs that gives rise to a new basis of accounting for that instrument.
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
and
Other assets
held for capital appreciation or current income purposes which Nomura generally has an intention to exit rather than hold indefinitely. Nomura elects the fair value option to more appropriately represent the purpose of these investments in these consolidated financial statements.
Loans receivable
and
Receivables from customers
reported within
Loans and receivables
which are risk managed on a fair value basis and loan commitments related to loans receivable for which the fair value option will be elected upon funding. Nomura elects the fair value option to mitigate volatility through earnings caused by the difference in measurement basis that otherwise would arise between loans and the derivatives used to risk manage those instruments.
Reverse repurchase and repurchase agreements reported within
Collateralized agreements
and
Collateralized financing
which are risk managed on a fair value basis. Nomura elects the fair value option to mitigate volatility through earnings caused by the difference in measurement basis that otherwise would arise between the reverse repurchase and repurchase agreements and the derivatives used to risk manage those instruments.
All structured notes issued on or after April 1, 2008 reported within
Short-term borrowings
or
Long-term borrowings
. Nomura elects the fair value option for those structured notes primarily to mitigate the volatility through earnings caused by differences in the measurement basis for structured notes and the derivatives Nomura uses to risk manage those positions. Nomura also elects the fair value option for certain notes issued by consolidated VIEs for the same purpose and for certain structured notes issued prior to April 1, 2008. Certain subsidiaries elect the fair value option for structured loans and straight bonds.
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5
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NOMURA HOLDINGS,
INC
.
vanilla debt securities issued by those subsidiaries.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Certain structured deposit issuances reported within
Deposits received at banks.
Nomura elects the fair value option for those structured deposits primarily to mitigate the volatility through earnings caused by differences in the measurement basis for structured deposits and the derivatives Nomura uses to risk manage those positions.
Financial liabilities reported within
Long-term borrowings
recognized in transactions which are accounted for as secured financing transactions under ASC 860. Nomura elects the fair value option for these financial liabilities to mitigate volatility through earnings that otherwise would arise had this election not been made. Even though Nomura usually has little or no continuing economic exposure to the transferred financial assets, they remain on the consolidated balance sheets and continue to be carried at fair value, with changes in fair value recognized through earnings.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
these financial liabilities to mitigate volatility through earnings that otherwise would arise had this election not been made. Even though Nomura usually has little or no continuing economic exposure to the transferred financial assets, they remain on the consolidated balance sheets and continue to be carried at fair value, with changes in fair value recognized through earnings.
Financial reinsurance contracts reported within
Other assets
. Nomura elects the fair value option to mitigate income volatility caused by the difference in measurement basis that would otherwise exist. Changes in the fair value of the reinsurance contracts carried at fair value are reported in the consolidated statements of income.
Interest and dividends arising from financial instruments for which the fair value option has been elected are recognized within
Interest and dividends, Interest expense
or
Revenue—Net gain on trading
.
The following table presents gains (losses) due to changes in fair value for financial instruments measuredcarried at fair value using the fair value option for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
 
Billions of yen
 
 
Year ended March 31
 
 
  2018  
  
  2019  
  
  2020  
 
 
Gains/(Losses)
(1)
 
Assets:
  
   
   
 
Trading assets and private equity and debt investments
(2)
  
   
   
 
Trading assets
 ¥
0
  ¥
0
  ¥
1
 
Private equity and debt investments
  
(1
)  
1
   
(1
)
Loans and receivables
  
(14
)  
(2
)  
2
 
Collateralized agreements
(3)
  
1
   
2
   
4
 
Other assets
(2)
  
11
   
(26
)  
(16
)
             
Total
 ¥
(3
) ¥
(25
) ¥
(10
)
             
Liabilities:
  
   
   
 
Short-term borrowings
(4)
 ¥
(1
) ¥
28
  ¥
64
 
Collateralized financing
(3)
  
0
   
0
   
(2
)
Long-term borrowings
(4)(5)
  
(39
)  
(38
)  
58
 
Other liabilities
(6)
  
(4
)  
3
   
2
 
             
Total
 ¥
(44
) ¥
(7
) ¥
122
 
             
   
Billions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
           
   
Gains/(Losses)
(1)
 
Assets:
             
Trading assets and private equity and debt investments
(2)
             
Trading assets
  ¥2  ¥1  ¥(1) 
Private equity and debt investments
   0   6   2 
Loans and receivables
   7   39   35 
Collateralized agreements
(3)
   5   (1)   0 
Other assets
(2)
   51   (3)   (12) 
   
 
 
  
 
 
  
 
 
 
Total
  ¥65  ¥42  ¥24 
   
 
 
  
 
 
  
 
 
 
Liabilities:
             
Short-term borrowings
(4)
  ¥(83)  ¥60  ¥208 
Payables and deposits
   3   4   7 
Collateralized financing
(3)
   9   3   (5) 
Long-term borrowings
(4)(5)
   (194)   275   298 
Other liabilities
(6)
   3   4   7 
   
 
 
  
 
 
  
 
 
 
Total
  ¥(262)  ¥346  ¥515 
   
 
 
  
 
 
  
 
 
 
(1)
Includes gains and losses reported primarily within
Revenue—Net gain on trading
and
Revenue—Revenue
—
Other
in the consolidated statements of income.
(2)
Includes equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value option.
(3)
Includes reverse repurchase and repurchase agreements.
(4)
Includes structured notes and other financial liabilities.
(5)
Includes secured financing transactions arising from transfers of financial assets which did not meet the criteria for sales accounting.
(6)
Includes unfunded written loan commitments.
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6F-52
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of March 31, 20192022 and 2020,2023, Nomura held an economic interest of 39.52%39.21% and 39.19%39.32% in American Century Companies, Inc., respectively. The investment is measuredcarried at fair value on a recurring basis through election of the fair value option and is reported within
Other assets—assets – Other
in the consolidated balance sheets
.
There was no significant impact on financial assets
For the years ended March 31, 2022 changes in gains and losses attributable to instrument-specific credit risk of loans and receivables elected for which the fair value option waswere primarily due to an increase in the estimated fair value of receivables recognized for claims in connection 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.risk from other loans and receivables were not significant.
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
” for further information on this recovery of the claims.
Nomura calculates the impact of changes in its own creditworthiness on certain financial liabilities for which the fair value option is elected by DCF valuationrevaluation techniques using a rate which incorporates observable changes in its credit spread.
The following table presents changes in the valuation adjustment for Nomura’s own credit worthiness applied to certaincreditworthiness recognized in the consolidated statements of comprehensive income during the years ended March 31, 2022 and 2023 in respect of financial liabilities elected for which the fair value option has been elected recognized in other comprehensive income during the years and cumulatively, andyears. The following table also presents amounts reclassified to earningsthe consolidated statements of income from accumulated other comprehensive income on early settlement of such financial liabilities during the years ended March 31, 20192022 and 2020. In2023 and the year ended March 31, 2020, the credit balancecumulative amounts recognized in accumulated other comprehensive income related to Nomura’s own credit on certain financial liabilities increased, primarily due to a significant wideningas of spreads driven by the financial market turmoil
as
aMarch 31, 2022 and 2023.
r
e
sult
 
of the
COVID-19
global pandemic.
 
Billions of Yen
 
 
Year ended March 31
 
 
  2019  
  
  2020  
 
Changes recognized as a credit (debit) to other comprehensive income 
 ¥
25
  ¥
49
 
Credit (debit) amounts reclassified to earnings 
  
(1
)  
(1
)
Cumulative credit (debit) balance recognized in accumulated other comprehensive income
  
32
   
80
 
   
Billions of
y
en
 
   
Year ended March 31
 
   
  2022  
   
  2023  
 
Changes recognized as a credit to other comprehensive income  ¥60   ¥95 
Credit (debit) amounts reclassified to earnings   1    0 
Cumulative credit balance recognized in accumulated other comprehensive income   49    145 
As of March 31, 2019,2022, the fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Loans and receivables
for which the fair value option was elected was ¥0¥267 billion moreless than the principal balance of such
Loans and receivables
. A significant portion of the principal balance relates to receivables recognized for claims in connection with the U.S. prime brokerage event in March 2021. The unpaid principal balance of
Loans and receivables
for which the fair value option was elected that were 90 days or more past due was ¥278 billion. The fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Long-term borrowings
for which the fair value option was elected was ¥50 
¥212 billion less than the principal balance of such
Long-term borrowings
. There were no
Loans and receivables
for which the fair value option was elected that
were 90 days or more past due.
As of March 31, 2020,2023, the fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Loans and receivables
for which the fair value option was elected was ¥8¥45 billion less than the principal balance of such
Loans and receivables
. There were no
Loans and receivables
for which the fair value option was elected that were 90 days or more past due. The fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Long-term borrowings
for which the fair value option was elected was ¥27 
¥451 billion less than the principal balance of such
Long-term borrowings
. There were no
Loans and receivables
for which the fair value option was elected that
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were 90 days or more past due.
Table of Contents
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
” (“ASC 946”) at fair value, with changes in fair value recognized through the consolidated statements of income. During the year ended March 31, 2020, N-MEZ Investment Business Limited Partnership 1 was added as an investment company under ASC 946.
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7
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 bondsdebt securities issued by the Japanese Government, U.S. Government, British Government (“U.K.”), Governments within the European Union (“EU”), their states and municipalities, and their agencies. These concentrations generally arise from taking trading positions and are reported within
Trading assets
in the consolidated balance sheets. Government, agency and municipal securities, including
Securities pledged as collateral
, represented 16% of total assets as of March 31, 20192022 and 16% as of March 31, 2020.2023.
The following tables present geographic allocations of Nomura’s trading assets related to government, agency and municipal securities as of March 31, 20192022 and 2020.2023. See Note 3 “
Derivative instruments and hedging activities
” for further information regarding the concentration of credit risk for derivatives.
 
Billions of yen
 
March 31, 2019
 
Japan
  
U.S.
  
EU & U
.
K
.
  
Other
  
Total
(1)
 
Government, agency and municipal securities
 ¥
2,202
  ¥
1,723
  ¥
1,897
  ¥
579
  ¥
6,401
 
 
Billions of yen
 
March 31, 2020
 
Japan
  
U.S.
  
EU & U
.
K
.
  
Other
  
Total
(1)
 
Government, agency and municipal securities
 ¥
1,934
  ¥
1,889
  ¥
2,704
  ¥
672
  ¥
7,199
 
   
Billions of yen
 
   
March 31, 2022
 
   
Japan
   
U.S.
   
EU & U.K.
   
Other
   
Total
(1)
 
Government, agency and municipal securities
  ¥1,916   ¥2,368   ¥2,151   ¥721   ¥7,156 
   
Billions of yen
 
   
March 31, 2023
 
   
Japan
   
U.S.
   
EU & U.K.
   
Other
   
Total
(1)
 
Government, agency and municipal securities
  ¥1,786   ¥2,561   ¥2,309   ¥925   ¥7,581 
 
(1)
Other than above, there were ¥318¥331 billion and ¥321¥324 billion of government, agency and municipal securities reported within
Other assets—assets
—
Non-trading
debt securities
in the consolidated balance sheets as of March 31, 20192022 and 2020,2023, respectively. These securities are primarily Japanese government, agency and municipal securities.
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 will approximateapproximates their fair value since they are short-term in nature and contain minimal credit risk. These financial instruments include financial assets reported within
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
and
Securities borrowed
and financial liabilities reported within
Short-term borrowings, Payables to customers, Payables to other than customers, Deposits received at banks, Securities sold under agreements to repurchase, Securities loaned
and
Other secured borrowings
in the consolidated balance sheets.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The estimated fair values of other financial instruments which are longer-term in nature or may contain more than minimal credit risk may be different to their carrying value. Financial assets of this type primarily include certain loans which are reported within
Loans receivable
while financial liabilities primarily include long-term borrowings which are reported within
Long-term borrowings
.
F-5
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present carrying values, fair values and classification within the fair value hierarchy for certain classes of financial instrument of which a portion of the ending balance wasnot carried at fair value on a recurring basis in the consolidated balance sheets as of March 31, 20192022 and 2020.2023.
 
Billions of yen
 
 
March 31, 2019
(1)
 
     
Fair value by level
 
 
Carrying
value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Assets:
  
   
   
   
   
 
Cash and cash equivalents
 ¥
2,687
  ¥
2,687
  ¥
2,687
  ¥
—  
  ¥
—  
 
Time deposits
  
290
   
290
   
—  
   
290
   
—  
 
Deposits with stock exchanges and other segregated cash
  
285
   
285
   
—  
   
285
   
—  
 
Loans receivable
(2)
  
2,542
   
2,541
   
—  
   
1,941
   
600
 
Securities purchased under agreements to resell
  
13,195
   
13,195
   
—  
   
13,162
   
33
 
Securities borrowed
  
4,112
   
4,111
   
—  
   
4,111
   
—  
 
                     
Total
 ¥
23,111
  ¥
23,109
  ¥
2,687
  ¥
19,789
  ¥
633
 
                     
Liabilities:
  
   
   
   
   
 
Short-term borrowings
 ¥
841
  ¥
841
  ¥
—  
  ¥
811
  ¥
30
 
Deposits received at banks
  
1,393
   
1,393
   
—  
   
1,393
   
—  
 
Securities sold under agreements to repurchase
  
15,037
   
15,037
   
—  
   
15,037
   
—  
 
Securities loaned
  
1,230
   
1,230
   
—  
   
1,230
   
—  
 
Long-term borrowings
  
7,916
   
7,931
   
12
   
7,353
   
566
 
                     
Total
 ¥
26,417
  ¥
26,432
  ¥
12
  ¥
25,824
  ¥
596
 
                     
    
 
Billions of yen
 
 
March 31, 2020
(1)
 
     
Fair value by level
 
 
Carrying
value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Assets:
  
   
   
   
   
 
Cash and cash equivalents
 ¥
3,192
  ¥
3,192
  ¥
3,192
  ¥
—
  ¥
—
 
Time deposits
  
309
   
309
   
—
   
309
   
—
 
Deposits with stock exchanges and other segregated cash
  
374
   
374
   
—
   
374
   
—
 
Loans receivable
(2)
  
2,848
   
2,842
   
—
   
2,201
   
641
 
Securities purchased under agreements to resell
  
12,377
   
12,377
   
—
   
12,362
   
15
 
Securities borrowed
  
3,530
   
3,529
   
—
   
3,529
   
—
 
                     
Total
 ¥
22,630
  ¥
22,623
  ¥
3,192
  ¥
18,775
  ¥
656
 
                     
Liabilities:
  
   
   
   
   
 
Short-term borrowings
 ¥
1,487
  ¥
1,487
  ¥
—
  ¥
1,458
  ¥
29
 
Deposits received at banks
  
1,276
   
1,276
   
—
   
1,275
   
1
 
Securities sold under agreements to repurchase
  
16,349
   
16,349
   
—
   
16,349
   
—
 
Securities loaned
  
961
   
962
   
—
   
962
   
—
 
Other secured borrowings
  
718
   
718
   
—
   
718
   
—
 
Long-term borrowings
  
7,776
   
7,733
   
2
   
7,263
   
468
 
                     
Total
 ¥
28,567
  ¥
28,525
  ¥
2
  ¥
28,025
  ¥
      498
 
                     
  
Billions of yen
 
  
March 31, 2022
(1)
 
        
Fair value by level
 
  
Carrying

value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Assets:
                    
Cash and cash equivalents
 ¥3,316  ¥3,316  ¥3,316  ¥—    ¥—   
Time deposits
  321   321   —     321   —   
Deposits with stock exchanges and other segregated cash
  427   427   —     427   —   
Loans receivable
(2)
  3,515   3,515   —     2,461   1,054 
Securities purchased under agreements to resell
  11,879   11,879   —     11,863   16 
Securities borrowed
  4,997   4,994   —     4,994   —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥24,455  ¥24,452  ¥3,316  ¥20,066  ¥1,070 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                    
Short-term borrowings
 ¥1,050  ¥1,050  ¥—    ¥993  ¥57 
Deposits received at banks
  1,761   1,761   —     1,752   9 
Securities sold under agreements to repurchase
  12,575   12,575   —     12,575   0 
Securities loaned
  1,567   1,568   —     1,568   —   
Other secured borrowings
  396   396   —     396   —   
Long-term borrowings
  9,258   9,236   23   8,688   525 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥26,607  ¥26,586  ¥23  ¥25,972  ¥591 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
F-5
9
F-55
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
  
Billions of yen
 
  
March 31, 2023
(1)
 
        
Fair value by level
 
  
Carrying

value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Assets:
                    
Cash and cash equivalents
 ¥3,821  ¥3,821  ¥3,821  ¥—    ¥—   
Time deposits
  409   409   —     409   —   
Deposits with stock exchanges and other segregated cash
  291   291   —     291   —   
Loans receivable
(2)
  4,010   4,009   —     2,855   1,154 
Securities purchased under agreements to resell
  13,834   13,834   —     13,817   17 
Securities borrowed
  4,283   4,283   —     4,283   —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥26,648  ¥26,647  ¥3,821  ¥21,655  ¥1,171 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                    
Short-term borrowings
 ¥1,009  ¥1,009  ¥—    ¥978  ¥31 
Deposits received at banks
  2,138   2,138   —     2,121   17 
Securities sold under agreements to repurchase
  14,218   14,218   —     14,218   —   
Securities loaned
  1,557   1,557   —     1,557   —   
Other secured borrowings
  334   334   —     334   —   
Long-term borrowings
  10,399   10,350   27   9,795   528 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥29,655  ¥29,606  ¥27  ¥29,003  ¥576 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Includes financial instruments which are carried at fair value on a recurring basis.
(2)
Carrying values are shown after deducting relevant allowances for credit losses.
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, 2019, goodwill allocated to the Wholesale segment was2022, there were no significant amount of assets or liabilities which were measured at fair value on a nonrecurring basis. The relevant goodwill, which is reported within
Other assets—Other
in the consolidated balance sheets, was wholly impaired. Fair value was determined using a DCF valuation technique and consequently, this nonrecurring fair value measurement was determined using valuation inputs which would be classified in Level 3 of the fair value hierarchy. See Note 10 “
Other assets—Other/Other liabilities
” for further information.
As of March 31, 2020,2023, there were no significant amount of assets andor liabilities which were measured at fair value on a nonrecurring basis.
3. Derivative instruments and hedging activities:
Nomura uses a variety of derivative financial instruments,derivatives, including futures, forwards, options and swaps, for both trading and
non-trading
purposes.
Derivatives used for trading purposes
In the normal course of business, Nomura enters into transactions involving derivative financial instrumentsderivatives to meet client needs, for trading purposes, and to reduce its own exposure to loss due to adverse fluctuations in interest rates, currency exchange rates and market prices of securities. These financial instruments include contractual agreements such as commitments to swap interest payment streams, exchange currencies or purchase or sell securities and other financial instruments on specific terms at specific future dates.
F-56
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Nomura maintains active trading positions in a variety of derivative financial instruments.derivatives. Most of Nomura’s trading activities are client oriented. Nomura utilizes a variety of derivative financial instrumentsderivatives as a means of bridging clients’ specific financial needs and investors’ demands in the securities markets. Nomura also actively trades securities and various derivatives to assistfacilitate its clients in adjusting their risk profiles as markets change. In performing these activities, Nomura carries an inventory of capital markets instruments and maintains its access to market liquidity by quoting bid and offer prices to and trading with other market makers. These activities are essential to provide clients with securities and other capital market products at competitive prices.
Futures and forward contracts are commitments to either purchase or sell securities, foreign currencyexchange contracts or other capital market instruments at a specific future date for a specified price and may be settled in cash or through delivery. Foreign exchange contracts include spot and forward contracts and involve the exchange of two currencies at a rate agreed by the contracting parties. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in market prices. Futures contracts are executed through regulated exchanges which clear and guarantee performance of counterparties. Accordingly, credit risk associated with futures contracts is considered minimal. In contrast, forward contracts are generally negotiated between two counterparties and, therefore, are subject to the performance of the related counterparties.counterparty risks.
F-
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 currencyexchange exposures. Entering into swap agreements may involve the risk of credit losses in the event of counterparty default.
To the extent these derivative financial instrumentsderivatives are economically hedging financial instruments or securities positions of Nomura, the overall risk of loss may be fully or partly mitigated by the hedged position.
Nomura seeks to minimize its exposure to market risk arising from its use of these derivative financial instrumentsderivatives through various control policies and procedures, including position limits, monitoring procedures and hedging strategies whereby Nomura enters into offsetting or other positions in a variety of financial instruments.
Derivatives used for
non-trading
purposes
Nomura’s principal objectives in using derivatives for
non-trading
purposes are to manage interest rate risk, to modify the interest rate characteristicsrisk profile of certain financial liabilities, to manage foreign exchange risk of certain foreign currency denominated debt securities, to manage net investment exposure to fluctuations in foreign exchange rates arising from certain foreign operations and to mitigate equity price risk arising from certain stock-based compensation awards given to employees.
Credit risk associated with derivatives utilized for
non-trading
purposes is controlled and managed in the same way as credit riskthat associated with derivatives utilizedused for trading purposes.
Fair value hedges
Nomura designates certain derivative financial instrumentsderivatives as fair value hedges of interest rate risk arising from specific financial liabilities and foreign currency risk arising from specific foreign currency denominated debt securities.
F-57
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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
and
Revenue—Revenue
—
Other
, respectivelyrespectively.
Net investment hedges
Derivative financial instrumentsNomura designates certain derivatives designated as hedges of theits net investment in foreign operations relaterelating to specific subsidiaries withwhich have
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 within
Revenue—OtherRevenue-Other
. All other movements in the fair value of highly effective net investment hedging derivatives are reported through NHI shareholders’ equity within
Accumulated 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
F-
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
March 31, 20192022 and 2020.2023. The gross fair value of derivative assets represents the maximum amount of loss due to credit risk that Nomura would incur if the counterparties of Nomura failed to perform in accordance with the terms of the instruments and any collateral or other security Nomura held in relation to those instruments proved to be of no value.
 
Billions of yen
 
 
March 31, 2019
 
 
Gross fair value of
derivative assets
  
Impact of
master netting
agreements
  
Impact of
collateral
  
Net exposure to
credit risk
 
Financial institutions
 ¥
13,332
  ¥
(11,602
) ¥
(1,507
) ¥
223
 
   
Billions of yen
 
   
March 31, 2022
 
   
Gross fair value of

derivative assets
   
Impact of

master netting

agreements
   
Impact of

collateral
   
Net exposure to

credit risk
 
Financial institutions
  ¥15,667   ¥(13,193)   ¥(1,669)   ¥805 
   
Billions of yen
 
   
March 31, 2023
 
   
Gross fair value of

derivative assets
   
Impact of

master netting

agreements
   
Impact of

collateral
   
Net exposure to

credit risk
 
Financial institutions
  ¥15,296   ¥(12,885)   ¥(1,855)   ¥556 
F-58
 
Billions of yen
 
 
March 31, 2020
 
 
Gross fair value of
derivative assets
  
Impact of 
master netting
agreements
  
Impact of
collateral
  
Net exposure to
credit risk
 
Financial institutions
 ¥
17,711
  ¥
(15,479
) ¥
(1,707
) ¥
525
 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Derivative activities
The following tables quantify the volume of Nomura’s derivative activitypositions as of March 31, 20192022 and 20202023 through a disclosure of notional amounts, in comparison with the fair value of those derivatives. All amounts are disclosed on a gross basis, prior to counterparty nettingoffsetting of derivative assets and liabilities and cash collateral nettingoffsetting against net derivatives. Derivatives which contain multiple types of risk are classified in the table based on the primary risk type of the instrument. Changes in the fair value of derivatives 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.
   
Billions of yen
 
   
March 31, 2019
 
   
Derivative
assets
  
Derivative
liabilities
 
 
Total Notional
(1)
  
Fair value
  
Fair value
(1)
 
Derivatives used for trading and
non-trading
purposes
(2)(3)
:
  
   
   
 
Equity contracts
 ¥
45,721
  ¥
851
  ¥
920
 
Interest rate contracts
  
2,243,179
   
8,612
   
8,290
 
Credit contracts
  
35,343
   
533
   
464
 
Foreign exchange contracts
  
310,677
   
4,912
   
4,842
 
Commodity contracts
  
241
   
1
   
1
 
             
Total
 ¥
2,635,161
  ¥
14,909
  ¥
14,517
 
             
Derivatives designated as hedging instruments:
  
   
   
 
Interest rate contracts
 ¥
1,002
  ¥
20
  ¥
—  
 
Foreign exchange contracts
  
146
   
0
   
—  
 
             
Total
 ¥
1,148
  ¥
20
  ¥
—  
 
             
Total derivatives
 ¥
2,636,309
  ¥
14,929
  ¥
14,517
 
             
       
Billions of yen
 
       
March 31, 2022
 
       
Derivative

assets
   
Derivative

liabilities
 
   
Total notional
(1)
   
Fair value
   
Fair value
(1)
 
Derivatives used for trading and
non-trading
purposes
(2)
:
               
Equity contracts
  ¥34,526   ¥974   ¥1,457 
Interest rate contracts
   2,769,546    11,938    10,865 
Credit contracts
   37,572    443    514 
Foreign exchange contracts
   314,763    4,804    4,814 
Commodity contracts
   300    1    1 
   
 
 
   
 
 
   
 
 
 
Total
  ¥3,156,707   ¥18,160   ¥17,651 
   
 
 
   
 
 
   
 
 
 
Derivatives designated as formal fair value or net investment accounting hedges:
               
Interest rate contracts
  ¥2,166   ¥—     ¥88 
Foreign exchange contracts
   145    2    —   
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,311   ¥2   ¥88 
   
 
 
   
 
 
   
 
 
 
Total derivatives
  ¥3,159,018   ¥18,162   ¥17,739 
   
 
 
   
 
 
   
 
 
 
       
Billions of yen
 
       
March 31, 2023
 
       
Derivative

assets
   
Derivative

liabilities
 
   
Total notional
(1)
   
Fair value
   
Fair value
(1)
 
Derivatives used for trading and
non-trading
purposes
(2)
:
               
Equity contracts
  ¥39,203   ¥1,065   ¥1,610 
Interest rate contracts
   3,423,357    12,799    12,065 
Credit contracts
   35,007    276    358 
Foreign exchange contracts
   337,616    4,219    4,120 
Commodity contracts
   257    3    3 
   
 
 
   
 
 
   
 
 
 
Total
  ¥3,835,440   ¥18,362   ¥18,156 
   
 
 
   
 
 
   
 
 
 
Derivatives designated as formal fair value or net investment accounting hedges:
               
Interest rate contracts
  ¥2,828   ¥0   ¥180 
Foreign exchange contracts
   164    1    0 
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,992   ¥1   ¥180 
   
 
 
   
 
 
   
 
 
 
Total derivatives
  ¥3,838,432   ¥18,363   ¥18,336 
   
 
 
   
 
 
   
 
 
 
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
Billions of yen
 
   
March 31, 2020
 
   
Derivative
assets
  
Derivative
liabilities
 
 
Total Notional
(1)
  
Fair value
  
Fair value
(1)
 
Derivatives used for trading and
non-trading
purposes
(2)(3)
:
  
   
   
 
Equity contracts
 ¥
47,976
  ¥
1,921
  ¥
2,008
 
Interest rate contracts
  
2,522,172
   
13,590
   
13,214
 
Credit contracts
  
36,155
   
407
   
457
 
Foreign exchange contracts
  
267,313
   
5,224
   
5,104
 
Commodity contracts
  
601
   
9
   
6
 
             
Total
 ¥
2,874,217
  ¥
21,151
  ¥
20,789
 
             
Derivatives designated as hedging instruments:
  
   
   
 
Interest rate contracts
 ¥
1,064
  ¥
39
  ¥
0
 
Foreign exchange contracts
  
115
   
—
   
1
 
             
Total
 ¥
1,179
  ¥
39
  ¥
1
 
             
Total derivatives
 ¥
2,875,396
  ¥
21,190
  ¥
20,790
 
             
(1)
Includes the amount of embedded derivatives bifurcated in accordance with ASC 815.
(2)Each derivative classification includes derivatives referencing multiple risk components. For example, interest rate contracts include complex derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government securities.
T
(3)As of March 31, 2019 and 2020, thehe amounts reported include derivatives used for
non-trading
purposes which are notother than those designated as fair value or net investment accounting hedges. These amounts have not been separately presented since such amounts were not significant.significant
 as of March 31, 2022 and March 31, 2023.
Changes in fair value are recognized either through earnings or other comprehensive income depending on the purpose for which the derivatives are used.
Offsetting of derivatives
Counterparty credit risk associated with derivative financial instrumentsderivatives is controlled by Nomura through credit approvals, limits and monitoring procedures. To reduce the risk of loss, Nomura requires collateral, principally cash collateral and government securities, for certain derivative transactions. In certain cases, Nomura may agree for such collateral to be posted to a third-party custodian under a control agreement that enables Nomura to take control of such collateral in the event of counterparty default. From an economic standpoint, Nomura evaluates default risk exposure net of related collateral. Furthermore, OTC derivative transactions are typically documented under industry standard master netting agreements which reducemitigate Nomura’s credit exposure to counterparties as they permit the
close-out
counterparties. A master netting agreement is a single agreement with a counterparty that permits multiple transactions governed by that agreement to be terminated or accelerated and offset of transactions and collateral amountssettled through a single payment in a single currency in the event of a default of the counterparty. counterparty
(“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. In order to support the enforceability of the
close-out
and offsetting rights within these agreements, Nomura generally seeks to obtain an external legal opinion.opinion in order to ascertain the enforceability of such
close-out
and offsetting rights within these agreements.
For certain types of counterparties andand/ or in certain jurisdictions, Nomura may enter into derivative transactions which are not documented under a master netting agreement. Similarly, evenEven when derivatives are
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
documented under such agreements, Nomura may not have yet sought evidence,obtained, or may not be able to obtain evidence to determine with sufficient certainty that
close-out
and offsetting rights within such agreements are legally enforceable. This may be the case where the relevant local laws specificallyexplicitly prohibit the enforceability of such
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 aan enforceable master netting agreement are offset inpresented on a net basis on the consolidated balance sheets where the specific criteria defined by ASC
210-20
“
Balance Sheet—Offsetting
” (“ASC
210-20”)
and ASC 815 are met. These criteria include requirements around the legal enforceability of such
close-out
and offset rights under the master netting agreement. In addition, fair value amounts recognized for the right to reclaim cash collateral (a receivable) and the obligation to return cash collateral (a payable) are also offset against net derivative liabilities and net derivative assets, respectively where certain additional criteria are met.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents information about offsetting of derivatives and related cash collateral amounts inon the consolidated balance sheets as of March 31, 20192022 and 20202023 by type of derivative contract, together with the extentand additional amounts permitted to whichbe offset legally by Nomura under enforceable master netting agreements, entered into with counterparties, central clearing counterparties or exchanges permit additional offsetting of derivatives and collateralexchange rules in the event of counterparty default.default but not offset on the consolidated balance sheets due to one or more of the criteria defined by ASC
210-20
and ASC 815 are not met. Derivative transactions which are not documented under a master netting agreement or are documented under a master
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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.
 
Billions of yen
  
Billions of yen
 
 
March 31, 2019
  
March 31, 2020
 
 
Derivative
assets
  
Derivative
liabilities
(1)
  
Derivative
assets
  
Derivative
liabilities
(1)
 
Equity contracts
  
   
   
   
 
OTC settled bilaterally
 ¥
636
  ¥
611
  ¥
869
  ¥
875
 
Exchange-traded
  
215
   
309
   
1,052
   
1,133
 
Interest rate contracts
  
   
   
   
 
OTC settled bilaterally
  
7,295
   
6,946
   
11,881
   
11,438
 
OTC centrally-cleared
  
1,327
   
1,341
   
1,692
   
1,758
 
Exchange-traded
  
10
   
3
   
56
   
18
 
Credit contracts
  
   
   
   
 
OTC settled bilaterally
  
355
   
283
   
278
   
311
 
OTC centrally-cleared
  
176
   
178
   
126
   
132
 
Exchange-traded
  
2
   
3
   
3
   
14
 
Foreign exchange contracts
  
   
   
   
 
OTC settled bilaterally
  
4,912
   
4,842
   
5,224
   
5,105
 
Commodity contracts
  
   
   
   
 
OTC settled bilaterally
  
—  
   
—  
   
1
   
1
 
Exchange-traded
  
1
   
1
   
8
   
5
 
                 
Total gross derivative balances
(2)
 ¥
14,929
  ¥
14,517
  ¥
21,190
  ¥
20,790
 
Less: Amounts offset in the consolidated balance sheets
(3)
  
(14,077
)  
(13,710
)  
(19,248
)  
(18,987
)
                 
Total net amounts reported on the face of the consolidated balance sheets
(4)
 ¥
852
  ¥
807
  ¥
1,942
  ¥
1,803
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Billions of yen
  
Billions of yen
 
 
March 31, 2019
  
March 31, 2020
 
 
Derivative
assets
  
Derivative
liabilities
(1)
  
Derivative
assets
  
Derivative
liabilities
(1)
 
Less: Additional amounts not offset in the consolidated balance sheets
(5)
  
   
   
   
 
Financial instruments and
non-cash
collateral
 ¥
(115)
  ¥
(86)
  ¥
(182
) ¥
(125
)
                 
Net amount
 ¥
737
  ¥
721
  ¥
1,760
  ¥
1,678
 
                 
 
   
Billions of yen
  
Billions of yen
 
   
March 31, 2022
  
March 31, 2023
 
   
Derivative

assets
  
Derivative

liabilities
(1)
  
Derivative

assets
  
Derivative

liabilities
(1)
 
Equity contracts
                 
OTC settled bilaterally
  ¥709  ¥1,054  ¥649  ¥880 
Exchange-traded
   265   403   416   730 
Interest rate contracts
                 
OTC settled bilaterally
   9,486   8,584   11,535   10,976 
OTC centrally-cleared
   2,332   2,309   1,191   1,226 
Exchange-traded
   120   60   73   45 
Credit contracts
                 
OTC settled bilaterally
   208   276   182   252 
OTC centrally-cleared
   223   224   86   92 
Exchange-traded
   12   14   8   14 
Foreign exchange contracts
                 
OTC settled bilaterally
   4,806   4,814   4,220   4,120 
Commodity contracts
                 
OTC settled bilaterally
   1   1   2   3 
Exchange-traded
   0   0   1   
—  
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Total gross derivative balances
(2)
  ¥18,162  ¥17,739  ¥18,363  ¥18,338 
Less: Amounts offset in the consolidated balance sheets
(3)
   (16,608)   (16,079)   (16,943)   (16,329) 
   
 
 
  
 
 
  
 
 
  
 
 
 
Total net amounts reported on the face of the consolidated balance sheets
(4)
  ¥1,554  ¥1,660  ¥1,420  ¥2,009 
   
 
 
  
 
 
  
 
 
  
 
 
 
Less: Additional amounts not offset in the consolidated balance sheets
(5)
                 
Financial instruments and
non-cash
collateral
  ¥(432)  ¥(134)  ¥(394)  ¥(315) 
   
 
 
  
 
 
  
 
 
  
 
 
 
Net amount
  ¥1,122  ¥1,526  ¥1,026  ¥1,694 
   
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Includes the amount of embedded derivatives bifurcated in accordance with ASC 815.
(2)
Includes all gross derivative asset and liability balances irrespective of whether they are transacted under a master netting agreement or whether Nomura has obtained sufficient evidence of enforceability of the master netting agreement. As of March 31, 2019,2022, the gross balance of derivative assets and derivative liabilities which are not documented under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was
¥277 ¥458 billion and ¥374¥671 billion, respectively. As of March 31, 2020,2023, the gross balance of such derivative assets and derivative liabilities was ¥1,013¥479 billion and ¥1,046¥753 billion, respectively.
(3)
Represents amounts offset through counterparty nettingoffsetting of derivative assets and liabilities as well as cash collateral nettingoffsetting against net derivatives under master netting and similar agreements for which Nomura has obtained sufficient evidence of enforceability in accordance with ASC 815. As of March 31, 2019,2022, Nomura offset a total of ¥1,259¥1,431 billion of cash collateral receivables against net derivative liabilities and ¥1,626¥1,960 billion of cash collateral payables against net derivative assets. As of March 31, 2020,2023, Nomura offset a total of ¥1,679¥1,591 billion of cash collateral receivables against net derivative liabilities and ¥1,940¥2,205 billion of cash collateral payables against net derivative assets.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(4)
Net derivative assets and net derivative liabilities are generally reported within
Trading assets and private equity investments—and debt investments
—
Trading assets
and
Trading liabilities
, respectively in the consolidated balance sheet. Bifurcated embedded derivatives are reported within
Short-term borrowings
or
Long-term borrowings
depending on the maturity of the underlying host contract.
(5)
Represents amounts which are not permitted to be offset on the face of the consolidated balance sheets in accordance with ASC
210-20
and ASC 815 but which provide Nomura with a legally enforceable right of offset in the event of counterparty default. Amounts relating to derivative and collateral agreements where Nomura has not yet obtained sufficient evidence of enforceability of such offsetting rights are excluded. As of March 31, 2019,2022, a total of ¥140¥359 billion of cash collateral receivables and ¥407¥652 billion of cash collateral payables, including amounts reported in the table, have not been offset against net derivatives. As of March 31, 2020,2023, a total of ¥374¥298 billion of cash collateral receivables and ¥540¥673 billion of cash collateral payables, including amounts reported in the table, have not been offset against net derivatives.
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
.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents amounts included in the consolidated statements of income for the years ended March 31, 2018, 2019, 20202021, 2022 and 2023 related to derivatives used for trading and
non-trading
purposes by typetypes of underlying derivative contract.
 
Billions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Derivatives used for trading and
non-trading
purposes
(1)(2)
:
  
            
   
            
   
            
 
Equity contracts
 ¥
106
  ¥
(32
) ¥
93
 
Interest rate contracts
  
(257
)  
104
   
(192
)
Credit contracts
  
129
   
(19
)  
(118
)
Foreign exchange contracts
  
49
   
(50
)  
57
 
Commodity contracts
  
22
   
10
   
(1
)
             
Total
 ¥
49
  ¥
13
  ¥
(161
)
             
Derivatives which contain multiple types of risk are classified in the table based on the primary risk type of instrument.
   
Billions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Derivatives used for trading and
non-trading
purposes
(1)
:
                                              
Equity contracts
  ¥26  ¥(36)  ¥88 
Interest rate contracts
   254   198   76 
Credit contracts
   (90)   (118)   45 
Foreign exchange contracts
   (11)   27   434 
Commodity contracts
   50   87   (4) 
   
 
 
  
 
 
  
 
 
 
Total
  ¥229  ¥158  ¥639 
   
 
 
  
 
 
  
 
 
 
(1)Each derivative classification includes derivatives referencing multiple risk components. For example, interest rates contracts include complex derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government securities.
(2)Includes net gains (losses) on derivatives used for
non-trading
purposes which are not designated as fair value or net investment hedges. For the yearsyear ended March 31, 2018, 20192021, net losses for these non-trading derivatives were ¥3 billion. For the year ended March 31, 2022 and 2020, these amounts have not been separately presented as2023, net gains (losses) for these
non-trading
derivatives were not significant.
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 andby line items in the relatedconsolidated balance sheets where the hedged item is reported, the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items and the
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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, 20192022 and 2020.2023.
Line items in the statement of financial
position in which the hedged item is
included:
 
Billions of yen
 
Carrying amount of the hedged liabilities
  
Cumulative gains/(losses) of fair value hedging
adjustment included in the carrying amount of the
hedged liabilities
 
March 31, 2019
  
March 31, 2020
  
March 31, 2019
  
March 31, 2020
 
Long-term borrowings
 ¥
1,019
  ¥
1,098
  ¥
    (13)
  ¥
    (36)
 
                 
Total
 ¥
1,019
  ¥
1,098
  ¥
    (13)
  ¥
    (36)
 
                 
   
Billions of yen
 
Balance sheet line
item in which the
hedged item is
included:
  
Carrying amount of the hedged
liabilities
   
Cumulative gains of fair value
hedging adjustment included in
the carrying amount of the
hedged liabilities
   
Cumulative amount of fair value
hedging adjustment remaining
for the liabilities which hedge
accounting has been discontinued
 
   
March 31, 2022
   
March 31, 2023
   
March 31, 2022
   
March 31, 2023
   
March 31, 2022
   
March 31, 2023
 
Long-term borrowings
  ¥2,075   ¥2,659   ¥90   ¥168   ¥0   ¥2 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,075   ¥2,659   ¥90   ¥168   ¥0   ¥2 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
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
and
Revenue-Other
, respectively together with the change in fair value of the hedged items.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents
s
present amounts included in the consolidated statements of income for the years ended March 31, 2018, 20192021, 2022 and 20202023 related to derivatives designated as fair value hedges by type of underlying derivative contract and the nature of the hedged item.
 
Billions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Derivatives designated as hedging instruments:
  
            
   
            
   
            
 
Interest rate contracts
 ¥
(1
) ¥
6
  ¥
(26
)
Foreign exchange contracts
  
9
   
—  
   
—  
 
             
Total
 ¥
8
  ¥
6
  ¥
(26
)
             
 
Billions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Hedged items:
  
            
   
            
   
            
 
Long-term borrowings
 ¥
1
  ¥
(6
) ¥
26
 
Non-trading
debt securities
  
(9
)  
—  
   
—  
 
             
Total
 ¥
(8
) ¥
(6
) ¥
26
 
             
   
Billions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Derivatives designated as hedging instruments:
                                              
Interest rate contracts
  ¥29  ¥85  ¥92 
   
 
 
  
 
 
  
 
 
 
Total
  ¥29  ¥85  ¥92 
   
 
 
  
 
 
  
 
 
 
  
   
Billions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Hedged items :
             
Long-term borrowings
  ¥(29)  ¥(85)  ¥(92) 
   
 
 
  
 
 
  
 
 
 
Total
  ¥(29)  ¥(85)  ¥(92) 
   
 
 
  
 
 
  
 
 
 
Net investment hedges
Nomura designates certain foreign currency forwards, etc.,derivatives, as hedges of net investments in certain subsidiariesforeign operations with significant foreign exchange risks and applies hedge accounting to these instruments. Accordingly, foreign exchange gains (losses)and losses arising from the derivative contractsderivatives and
non-derivative
financial productsinstruments designated as hedges, except for the portion excluded from effectiveness assessment,
are
recognized through the consolidated statements of comprehensive income within
Other comprehensive income (loss)—Change in cumulative translation adjustments net of tax
. This is offset by the foreign exchange adjustments arising from consolidation of the relevant foreign subsidiaries.
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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, 2018, 20192021, 2022 and 2020.2023.
 
Billions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Hedging instruments:
  
            
   
            
   
            
 
Foreign exchange contracts
 ¥
(11
) ¥
7
  ¥
2
 
             
Total
 ¥
(11
) ¥
7
  ¥
2
 
             
 
(1)The portion of gains (losses) representing the amount of hedge ineffectiveness and the amount excluded from the assessment of hedge effectiveness are recognized within
Revenue—Other
in the consolidated statements of income. The amount of gains (losses) was not significant during the years ended March 31, 2018, 2019 and 2020.
   
Billions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Hedging instruments:
                                              
Foreign exchange contracts
  ¥(7)  ¥7   ¥3  
   
 
 
  
 
 
  
 
 
 
Total
  ¥(7)  ¥7  ¥3 
   
 
 
  
 
 
  
 
 
 
The portion of gains (losses) representing the amount excluded from the assessment of hedge effectiveness are recognized within
F-6
8Revenue—Net gain on trading
and
Revenue—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.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 derivative instrumentsderivatives with credit-risk-related contingent features that are in a liability position as of March 31, 2019,2022 was ¥486¥638 billion with related collateral pledged of ¥410¥421 billion. In the event of a
one-notch
downgrade to Nomura’s long-term credit rating in effect as of March 31, 2019,2022, the aggregate fair value of assets that would have been required to be posted as additional collateral or that would have been needed to settle the instruments immediately was ¥3approximately ¥1 billion.
The aggregate fair value of all derivative instrumentsderivatives with credit-risk-related contingent features that are in a liability position as of March 31, 2020,2023 was ¥750¥574 billion with related collateral pledged of ¥635¥403 billion. In the event of a
one-notch
downgrade to Nomura’s long-term credit rating in effect as of March 31, 2020,2023, the aggregate fair value of assets that would have been required to be posted as additional collateral or that would have been needed to settle the instruments immediately was ¥3approximately ¥11 billion.
Credit derivatives
Credit derivatives are derivative instrumentsderivatives in which one or more of their underlyingsunderlying reference assets of the instrument are related to the credit risk of a specified entity (or group of entities) or an index based on the credit risk of a group of entities that expose the seller of credit protection to potential loss from credit risk related events specified in the contract.
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 andand/ or seller of protection for credit risk mitigation, proprietary trading positions and for client transactions.
The most significantcommon type of credit derivatives used by Nomura are single-name credit default swaps where settlement of the derivative is based on the credit risk of a single third party.reference entity or obligation. Nomura also
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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 derivative contractsderivatives written by Nomura are either cash or physically settled. In cash-settled instruments, once payment is made upon an event of a default, the contract usually terminates with no further payments due. Nomura generally has no right to assume the reference assets of the counterparty in exchange for payment, nor does Nomura usually have any direct recourse to the actual issuers of the reference assets to recover the amount paid. In physically settled contracts, upon a default event, Nomura takes delivery of the reference asset in return for payment of the full notional amount of the contract.
Nomura actively monitors and manages its credit derivative exposures. Where protection is sold, risks may be mitigated by purchasing credit protection from other third parties either on identical underlying reference
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 separate purchase of separate credit derivativesderivative protection with identical or correlated underlyings.
underlying reference assets.
Nomura quantifies the valueThe extent of these purchased credit protection contracts is quantified in the following tables inunder the column titled “Purchased Credit Protection”.Protection.” These amounts represent purchased credit protection with identical underlyingsunderlying reference assets to the written credit derivative contractsderivatives which act as a hedge against Nomura’s exposure.exposures. To the extent Nomura is required to pay out under the written credit derivative, a similar amount would generally become due to Nomura under the purchased hedge.
credit protection.
CreditWritten credit derivatives have a stated notional amount which represents the maximum payment Nomura may be required to make under the contract.written credit derivative. However, this is generally not a true representation of the amount Nomura will actually pay under these contracts as in addition to purchased credit protection,there are other risk mitigating factors reducethat affect the likelihood and amount of any payment obligations under the contracts, including:
The probabilityProbability of default
: Nomura values credit derivatives by taking into account of the probability that the underlying reference asset will default and that Nomura will be required to make payments under the contract. Based on historical experience and Nomura’s assessment of the market, Nomura believes that the probability that all reference assets on which Nomura provides protection will default in a single period is remote. The disclosed notional amount,amounts are therefore, significantly overstateshigher than Nomura’s realistic exposure onactual exposures to these contracts.
contracts as a whole.
The recoveryRecovery value on the underlying asset
: In the case of athe occurrence of an event of default, Nomura’s liability on a contractwritten credit derivative is limited to the difference between the notional amount and the recovery value of the underlying reference asset.asset under default. While the recovery value on a defaulted asset may be minimal in certain cases, this does reduce amounts paid on these contracts.
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Nomura holds assets as collateral in relation to written credit derivatives. However, these amounts do not enable Nomura to recover any amounts paid under the credit derivative but rather mitigate the risk of economic loss arising from a counterparty defaulting against amounts due to Nomura under the contract. Collateral requirements are determined on a counterparty level rather than individual contract, and also generally cover all types of derivative contracts rather than just credit derivatives.
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 underlyingsunderlying reference assets as of March 31, 20192022 and 2020.2023.
 
Billions of yen
 
 
March 31, 2019
 
   
Maximum potential payout/Notional
  
Notional
 
     
Years to maturity
  
Purchased
credit
protection
 
 
Carrying value
(Asset) / Liability
(1)
  
Total
  
Less than
1 year
  
1 to 3
years
  
3 to 5
years
  
More than
5 years
 
Single-name credit default swaps
 ¥
(47
) ¥
9,206
  ¥
2,346
  ¥
3,402
  ¥
2,469
  ¥
989
  ¥
6,555
 
Credit default indices
  
(117
)  
5,735
   
612
   
1,644
   
2,849
   
630
   
4,330
 
Other credit risk related portfolio products
  
14
   
231
   
31
   
82
   
115
   
3
   
165
 
Credit-risk related options and swaptions
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
 
                             
Total
 ¥
(150
) ¥
15,172
  ¥
2,989
  ¥
5,128
  ¥
5,433
  ¥
1,622
  ¥
11,050
 
                             
   
Billions of yen
 
   
March 31, 2022
 
   
Carrying value

(Asset) / Liability
(1)
  
Maximum potential payout/Notional
   
Notional
 
      
Years to maturity
   
Purchased

credit

protection
 
  
Total
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Single-name credit default swaps
  ¥19  ¥7,708   ¥1,339   ¥2,915   ¥2,448   ¥1,006   ¥5,688 
Credit default swap indices
   (140)   10,015    2,045    4,189    3,257    524    7,494 
Other credit risk related portfolio products
   19   419    56    286    63    14    293 
Credit-risk related options and swaptions
   0   115    —      —      88    27    68 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥(102)  ¥18,257   ¥3,440   ¥7,390   ¥5,856   ¥1,571   ¥13,543 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
  
   
Billions of yen
 
   
March 31, 2023
 
   
Carrying value

(Asset) / Liability
(1)
  
Maximum potential payout/Notional
   
Notional
 
      
Years to maturity
   
Purchased

credit

protection
 
  
Total
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Single-name credit default swaps
  ¥(29)  ¥8,121   ¥1,263   ¥3,095   ¥2,579   ¥1,184   ¥5,708 
Credit default swap indices
   (47)   6,839    1,339    2,601    2,284    615    3,886 
Other credit risk related portfolio products
   38   624    166    216    210    32    341 
Credit-risk related options and swaptions
   0   51    —      —      37    14    51 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥  (38)  ¥15,635   ¥2,768   ¥5,912   ¥5,110   ¥1,845   ¥9,986 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Billions of yen
 
 
March 31, 2020
 
   
Maximum potential payout/Notional
  
Notional
 
     
Years to maturity
  
Purchased
credit
protection
 
 
Carrying value
(Asset) / Liability
(1)
  
Total
  
Less than
1 year
  
1 to 3
years
  
3 to 5
years
  
More than
5 years
 
Single-name credit default swaps
 ¥
96
  ¥
8,018
  ¥
2,323
  ¥
2,238
  ¥
2,552
  ¥
905
  ¥
5,836
 
Credit default indices
  
18
   
8,064
   
721
   
2,455
   
4,179
   
709
   
6,364
 
Other credit risk related portfolio products
  
65
   
357
   
39
   
130
   
175
   
13
   
274
 
Credit-risk related options and swaptions
  
1
   
16
   
—  
   
—  
   
16
   
—  
   
16
 
                             
Total
 ¥
180
  ¥
16,455
  ¥
3,083
  ¥
4,823
  ¥
6,922
  ¥
1,627
  ¥
12,490
 
                             
(1)
Carrying value amounts are shown on a gross basis prior to cash collateral or counterparty netting.offsetting. Asset balances represent positive fair value amounts caused by tightening of credit spreads of underlyings since inception of the credit derivative contracts.derivatives.
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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. RatingsCredit ratings are based on S&P Global Ratings (“S&P”), or if not rated by S&P, based on Moody’s Investors Service. If credit ratings from either of these agencies are not available, the credit ratings are based on Fitch Ratings Ltd. or Japan Credit Rating Agency, Ltd. For credit default indices, the credit rating is determined by taking the weighted average of the external credit ratings given for each of the underlying reference entities comprising the portfolio or index.
 
Billions of yen
 
 
March 31, 2019
 
 
Maximum potential payout/Notional
 
 
AAA
  
AA
  
A
  
BBB
  
BB
  
Other
(1)
  
Total
 
Single-name credit default swaps
 ¥
520
  ¥
915
  ¥
2,537
  ¥
3,411
  ¥
1,439
  ¥
384
  ¥
9,206
 
Credit default indices
  
35
   
72
   
1,582
   
2,663
   
1,068
   
315
   
5,735
 
Other credit risk related portfolio products
  
—  
   
—  
   
1
   
139
   
25
   
66
   
231
 
Credit-risk related options and swaptions
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
   
—  
 
                             
Total
 ¥
555
  ¥
987
  ¥
4,120
  ¥
6,213
  ¥
2,532
  ¥
765
  ¥
15,172
 
                             
    
 
Billions of yen
 
 
March 31, 2020
 
 
Maximum potential payout/Notional
 
 
AAA
  
AA
  
A
  
BBB
  
BB
  
Other
(1)
  
Total
 
Single-name credit default swaps
 ¥
122
  ¥
1,683
  ¥
1,935
  ¥
2,643
  ¥
1,198
  ¥
437
  ¥
8,018
 
Credit default indices
  
24
   
153
   
2,211
   
4,027
   
1,318
   
331
   
8,064
 
Other credit risk related portfolio products
  
—  
   
—  
   
2
   
191
   
73
   
91
   
357
 
Credit-risk related options and swaptions
  
—  
   
—  
   
—  
   
—  
   
16
   
—  
   
16
 
                             
Total
 ¥
146
  ¥
1,836
  ¥
4,148
  ¥
6,861
  ¥
2,605
  ¥
859
  ¥
16,455
 
                             
   
Billions of yen
 
   
March 31, 2022
 
   
Maximum potential payout/Notional
 
   
AAA
   
AA
   
A
   
BBB
   
BB
   
Other
(1)
   
Total
 
Single-name credit default swaps
  ¥192   ¥1,485   ¥2,164   ¥2,057   ¥869   ¥941   ¥7,708 
Credit default swap indices
   105    215    3,369    5,012    988    326    10,015 
Other credit risk-related portfolio products
   —      —      28    226    47    118    419 
Credit risk-related options and swaptions
   —      —      61    27    27    —      115 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥297   ¥1,700   ¥5,622   ¥7,322   ¥1,931   ¥1,385   ¥18,257 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
  
   
Billions of yen
 
   
March 31, 2023
 
   
Maximum potential payout/Notional
 
   
AAA
   
AA
   
A
   
BBB
   
BB
   
Other
(1)
   
Total
 
Single-name credit default swaps
  ¥227   ¥1,405   ¥2,378   ¥2,530   ¥781   ¥800   ¥8,121 
Credit default swap indices
   185    180    2,924    2,844    299    407    6,839 
Other credit risk-related portfolio products
   —      —      21    325    53    225    624 
Credit risk-related options and swaptions
   —      —      —      29    22    —      51 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥412   ¥1,585   ¥5,323   ¥5,728   ¥1,155   ¥1,432   ¥15,635 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
(1)“Other”
Other includes credit derivatives where the credit rating of the underlying reference asset is below investment grade or where a credit rating is unavailable.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Derivatives entered into in contemplation of sales of financial assets
Nomura enters into transactions which involve both the transfer of financial assets to a third party counterparty and a separate agreement entered contemporaneously with the same counterparty entered into in contemplation of the initial transfer through which Nomura retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. These transactions primarily include sales of securities with bilateral OTC total return swaps or other derivative agreements which are
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 borrowings—Trading balances of secured borrowingsborrowing
in the consolidated balance sheets.
As
Nomura entered into certain contemporaneous transactions involving the transfer of March 31, 2020 there were no outstanding sales with total return swap or
in-substance
total return swap transactionssecurities that are accounted for as sales, rather than collateralized financing transactions.where substantially all of the economic exposures to the transferred securities are retained
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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.
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Gross cash proceeds received at transfer dates
  ¥    69,535   ¥    69,535 
Fair value of transferred securities at transfer dates
  ¥69,405   ¥69,405 
Fair value of transferred
securities
at reporting dates
  ¥63,994   ¥59,199 
Gross derivative liabilities arising from the transactions at reporting
dates
(1)
  ¥5,319   ¥10,119 
(1)
Amounts presented on gross basis, before the application of counterparty offsetting are included in
Trading liabilities
in the consolidated balance sheets as of March 31, 2022 and March 31, 2023. Of which ¥5,319 million and ¥10,119 million are included in interest rate contracts used for trading purpose as of March 31, 2022 and March 31, 2023 respectively as disclosed in present Note 3 “
Derivative instruments and hedging activities
”.
4. Revenue from services provided to customers
Revenues
Revenue by types of service
The following table presents revenue earned by Nomura from providing services to customers by relevant line item it
em
in Nomura’sthe consolidated statementstatements of income for the yearyears ended March 31, 20192021, 2022 and 2020.2023.
 
Millions of yen
 
 
Year ended March 31
 
 
2019
  
2020
 
Commissions
 ¥
293,069
  ¥
308,805
 
Fees from investment banking
  
101,521
   
103,222
 
Asset management and portfolio service fees
  
245,519
   
238,202
 
Other revenue
  
54,284
   
49,901
 
         
Total
 ¥
694,393
  ¥
700,130
 
         
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Commissions
  ¥376,897   ¥332,344   ¥279,857 
Fees from investment banking
   108,681    149,603    113,208 
Asset management and portfolio service fees
   230,047    269,985    271,684 
Other revenue
   44,235    38,863    43,190 
   
 
 
   
 
 
   
 
 
 
Total
  ¥759,860   ¥790,795   ¥707,939 
   
 
 
   
 
 
   
 
 
 
Commissions
represent revenue principally from trade execution, and clearing services and distribution of fund units provided by both the Wholesale and Retail Divisions generated approximately equally across the divisions. The following table shows a breakdown of
Commissions
for the years ended March 31, 2021, 2022 and Wholesale Divisions.2023.
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Brokerage commissions
  ¥262,286   ¥236,353   ¥190,778 
Commissions for distribution of investment trust
   68,794    43,695    30,268 
Other commissions
   45,817    52,296    58,811 
   
 
 
   
 
 
   
 
 
 
Total
  ¥376,897   ¥332,344   ¥279,857 
   
 
 
   
 
 
   
 
 
 
Fees from investment banking
represent revenuesrevenue from financial advisory, underwriting and syndication services primarily from Wholesale followed by Retail.
Asset management and portfolio service fees
represent revenues from asset management servicesdistribution primarily from the Asset ManagementWholesale Division, followed by Retail.and to a lesser extent, the Retail Division. The following table shows the breakdown of
OtherFees from investment banking
represents sundry revenues allocated to Other in Nomura’s segmental reportingfor the years ended March 31, 2021, 2022 and 2023.
.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Equity underwriting and distribution fees
  ¥30,647   ¥33,113   ¥18,862 
Debt underwriting and distribution fees
   23,120    29,812    21,145 
Financial advisory fees
   37,760    64,240    53,946 
Other fees
   17,154    22,438    19,255 
   
 
 
   
 
 
   
 
 
 
Total
  ¥108,681   ¥149,603   ¥113,208 
   
 
 
   
 
 
   
 
 
 
Asset management and portfolio service fees
represent revenue from asset management services primarily from the Investment Management Division, and to a lesser extent, the Retail Division.
The following table shows the breakdown of
Asset management and portfolio service fees
for the years ended March 31, 2021, 2022 and 2023.
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Asset management fees
  ¥150,218   ¥171,056   ¥171,327 
Administration fees
   63,215    79,572    76,157 
Custodial fees
   16,614    19,357    24,200 
   
 
 
   
 
 
   
 
 
 
Total
  ¥230,047   ¥269,985   ¥271,684 
   
 
 
   
 
 
   
 
 
 
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.
Type of service provided to
customers
 
Overview of key services provided
 
Key revenue recognition policies,
assumptions and
significant judgments
Trade execution, and clearing services
and distribution of fund units		 
•
Buying and selling of securities on behalf of customers
•  Distribution of fund units
 
•
Clearing of securities and derivatives on behalf of customers
 
•
Execution  Trade execution and clearing commissions recognized at a point in time, namely trade date.
•  Distribution fees are recognized at a point in time when the fund units have been sold to third party investors.
 
•
Commissions recognized net of soft dollar credits provided to customers where Nomura is acting as agent in providing investment
research and similar services to the customer.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Type of service provided to
customers
Overview of key services provided
Key revenue recognition policies,
assumptions and
judgments
   
Financial advisory services
 
•
Provision of financial advice to customers in connection with a specific forecasted transaction or transactions such as mergers and acquisitions
 
•
Provision of financial advice not in connection with a specific forecasted transaction or transactions such as general corporate intelligence and similar research
•
Issuance of fairness opinions
•
Structuring complex financial instruments for customers
 
•
Fees contingent on the success of an underlying transaction are variable consideration recognized when the underlying transaction has been completed since only at such point is it probable that a significant reversal of revenue will not occur.
•
Retainer and milestone fees are recognized either over the period to which they relate or are deferred until consummation of the underlying transaction depending on whether the underlying performance obligation is satisfied at a point in time or over time.
•
Judgment is required to make this determination with factors influencing this determination including, but not limited to, whether the fee is in connection with an engagement designed to
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Type of service provided to
customers
Overview of key services provided
Key revenue recognition policies,
assumptions and
significant judgments
achieve a specific transaction or outcome for the customer (such as the purchase or sale of a business), the nature and extent of benefit to be provided to the customer prior to, and in addition to such specific transaction or outcome and the fee structure for the engagement.
 
•
Retainer and milestone fees recognized over time are normally recognized on a straight-line basis over the term of the contract based on time elapsed.
Asset management services
•
Management of funds, investment trusts and other investment vehicles
•
Provision of investment advisory services
•
Distribution of fund units
•
Providing custodial and administrative services to customers
•
Management fees earned by Nomura in connection with managing a fund, investment trust or other vehicle generally recognized on a straight-line basis based on time elapsed.
•
Performance-based fees are variable consideration recognized when the performance metric has been determined since only at such point is it probable that a significant reversal of revenue will not occur.
•
Distribution fees are recognized at a point in time when the fund units have been sold to third party investors.
•
Custodial and administrative fees recognized on a straight-line basis over time based on time elapsed.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Type of service provided to
customers
 
Overview of key services provided
 
Key revenue recognition policies,
assumptions and
significant judgments
   
Underwriting and syndication services
 
•
Underwriting of debt, equity and other financial instruments on behalf of customers
•
Distributing securities on behalf of issuers
•
Arranging loan financing for customers
•
Syndicating loan financing on behalf of customerscustomer
 
•
Underwriting and syndication revenuesfees are recognized at a point in time when the underlying transaction is complete.
•
Commitment fees where drawndraw down of the facility is deemed remote recognized on a straight-line basis over the life of the facility based on time elapsed.
•
Underwriting and syndication costs recognized either as a reduction of revenue or on a gross basis depending on whether Nomura is acting as principal or agent for such amounts.
Asset management services
•  Management of funds, investment trusts and other investment vehicles
•  Provision of investment advisory services
•  Provision of custodial and administrative services to customers
•  Management fees earned by Nomura in connection with managing a fund, investment trust or other vehicle generally are recognized on a straight-line basis based on time elapsed.
•  Performance-based fees are variable consideration recognized when the performance metric has been determined since only at such point is it probable that a significant reversal of revenue will not occur.
•  Custodial and administrative fees are recognized on a straight-line basis over time based on time elapsed.
Where revenue is recognized at a point onin time, payments of fees are typically received at the same time as when the performance obligation is satisfied, or within several days or months after satisfying a performance obligation. In relation to revenue recognized over time, payments of fees are typically received every month, three monthssettled monthly, quarterly or six months.semi-annually.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The underlying contracts entered into by Nomura in order to provideconnection with the services described above typically do not have significant financing components within the contracts either provided to or from Nomura.components. If such components did not exist in a contract, Nomura has made an accounting policy permitted by ASC 606 “
Revenue from Contracts with Customers
” (“ASC 606”) not to adjust for the effects of a significant financing component where the financing is effectively for a period of one year or less. Such contracts also typically do not contain any rights of return or similar features for the customer.customer
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 completingcompletion or partially completingcompletion of a performance obligation, namely a right of Nomura to receive consideration for providing the service to the customer, which is conditionedconditional on somethingfactors or events other than the passage of time. A customer contract receivable is an unconditional right of Nomura to receive consideration in exchange for providing the service.services provided. Both contract assets and customer contract receivables are reported in
Receivables from Customers
within Nomura’s consolidated balance sheet. A contract liability is any liability recognized in connection with a customer contract, including obligations to provide refunds andrefund or obligations to provide a service in the future for which consideration has already been received or is due to be received. Contract liabilities are reported in
Payables to Customers
within Nomura’s consolidated balance sheet.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the balances of customer contract receivables contract assets and contract liabilities in scope of ASC 606 as of March 31, 2019 and 2020.606. The amount of contract assets as of March 31, 20192022 and 2020 were immaterial.2023 was not significant.
 
Millions of yen
 
 
March 31, 2019
  
March 31, 2020
 
Customer contract receivables
 ¥
78,226
  ¥
103,557
 
Contract liabilities
(1)
  
4,971
   
3,444
 
   
Millions of yen
 
   
March 31, 2022
   
March 31, 2023
 
Customer contract receivables
  ¥       88,621   ¥       85,100 
Contract liabilities
(1)
   3,834    5,226 
(1)
Contract liabilities primarily rise from investment advisory services and are recognized in connection withover the term of the contract based on time elapsed.
The balance of contract liabilities as of March 31, 20182021 and 2022 were recognized as revenue for the year ended March 31, 2019.2022 and 2023, respectively. Nomura recognized ¥1,334 million of revenue from performance obligations satisfied in previous periods for the year end
ed
 March 31, 2019.
The balance of contract liabilities as of March 31, 2019 were recognized as revenue for the year ended March 31, 2020. Nomura recognized ¥744¥8,108 million of revenue from performance obligations satisfied in previous periods for the year ended March 31, 2020.2022. The balance of contract liabilities as of March 31, 2022 were recognized as revenue for the year ended March 31, 2023. Nomura recognized ¥4,876 million of revenue from performance obligations satisfied in previous periods for the year ended March 31, 2023.
Transaction price allocated to the remaining performance obligatio
ns
obligations
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 chosenelected not to disclose information about remaining performance obligations that have original expected durationsan individual estimated contract period of one year or less as of March 31, 2019 and 2020.
Nomura retains no significant transactions for which individual estimated contract period exceeds one year.less. In addition, considerations arising from contracts with customers do not comprise any significant amount that is not included in transaction price.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Customer contract costs
As permitted by ASC 340 “
Other Assets and Deferred Costs,
” Nomura has elected to expense all costs to obtain customer contracts where such amounts would be otherwise expensed within one year or less. As a result, the amount of deferred costs to obtain or fulfill customer contracts as of March 31, 20192022 and 2020 were2023 was not significant.
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 settlements.settlement.
Reverse repurchase agreements, repurchase agreements, securities borrowing transactions and securities lending transactions are typically documented under industry standard master netting agreements which reducemitigate Nomura’s credit exposure to counterparties as they permit the
close-out
and offset of transactions and collateral amounts in the event of default of the counterparty.counterparties. For certain centrally-cleared reverse repurchase and repurchase agreements, the clearing or membership agreements entered into by Nomura provide similar rights to Nomura in the event of default of the relevant central clearing counterparty. In order to support the enforceability of the
close-out
and offsetting rights within these agreements, Nomura generally seeks to obtain an external legal opinion.opinion in order to ascertain the enforceability of such
close-out
and offsetting rights within these agreements.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For certain types of counterparty and in certain jurisdictions, Nomura may enter into reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions with certain types of counterparty and in certain jurisdictions which are not documented under a master netting agreement. Similarly, evenEven when these transactions are documented under such master netting agreements, Nomura may not have yet sought evidence,obtained, or may not be able to obtain, evidence to determine with sufficient certainty that the
close-out
and offsetting rights in the agreements are legally enforceable. This may be the case where relevant local laws specificallyexplicitly prohibit such
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, Nomurathe party receiving the collateral is permittedfree to usesell or repledge the securities received to enter intothrough repurchase agreements, enter into securities lending transactions or to cover short positions with counterparties.positions. In repurchase and reverse repurchase agreements, the value of collateral typically exceeds the amount of cash transferred. Collateraltransferred, where collateral is generally in the form of securities. Securities borrowing transactions generally require Nomura to provide the counterparty with collateral in the form of cash or other securities. For securities lending transactions, Nomura generally receives collateral in the form of cash or other securities. Nomura monitors the market value of the securities either received from or provided to the counterparty. Additional cash or securities are exchanged as necessary, to ensure that such transactions are adequately collateralized throughout the life of the transactions.
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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 the specific criteria as defined by ASC
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 of
close-out
and offsetting rights under therelevant master netting agreement.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
agreements.
The following tables present information about offsetting of these transactions in the consolidated balance sheets as of March 31, 20192022 and 2020,2023, together with the extent to which master netting agreements entered into with counterparties and central clearing parties permit additional offsetting in the event of counterparty default. Transactions which are not documented under a master netting agreement or are documented under a master netting agreement for which Nomura does not have sufficient evidence of enforceability are not offset in the following tables.
 
Billions of yen
 
 
March 31, 2019
 
 
Assets
  
Liabilities
 
 
Reverse
repurchase
agreements
  
Securities
borrowing
transactions
  
Repurchase
agreements
  
Securities
lending
transactions
 
Total gross balance
(1)
 ¥
32,312
  ¥
4,087
  ¥
34,154
  ¥
1,512
 
Less: Amounts offset in the consolidated balance sheets
(2)
  
(19,117
)  
—  
   
(19,117
)  
—  
 
                 
Total net amounts of reported on the face of the consolidated balance sheets
(3)
 ¥
13,195
  ¥
4,087
  ¥
15,037
  ¥
1,512
 
                 
Less: Additional amounts not offset in the consolidated balance sheets
(4)
  
   
   
   
 
Financial instruments and
non-cash
collateral
  
(11,445
)  
(2,580
)  
(10,443
)  
(1,198
)
Cash collateral
  
(26
)  
—  
   
—  
   
—  
 
                 
Net amount
 ¥
1,724
  ¥
1,507
  ¥
4,594
  ¥
314
 
                 
 
Billions of yen
 
 
March 31, 2020
 
 
Assets
  
Liabilities
 
 
Reverse
repurchase
agreements
  
Securities
borrowing
transactions
  
Repurchase
agreements
  
Securities
lending
transactions
 
Total gross balance
(1)
 ¥
32,425
  ¥
3,508
  ¥
36,397
  ¥
1,252
 
Less: Amounts offset in the consolidated balance sheets
(2)
  
(20,048
)  
—  
   
(20,048
)  
—  
 
                 
Total net amounts of reported on the face of the consolidated balance sheets
(3)
 ¥
12,377
  ¥
3,508
  ¥
16,349
  ¥
1,252
 
                 
Less: Additional amounts not offset in the consolidated balance sheets
(4)
  
   
   
   
 
Financial instruments and
non-cash
collateral
  
(10,507
)  
(2,381
)  
(8,980
)  
(1,067
)
Cash collateral
  
(5
)  
—  
   
(40
)  
—  
 
                 
Net amount
 ¥
1,865
  ¥
1,127
  ¥
7,329
  ¥
185
 
                 
   
Billions of yen
 
   
March 31, 2022
 
   
Assets
  
Liabilities
 
   
Reverse

repurchase

agreements
  
Securities

borrowing

transactions
  
Repurchase

agreements
  
Securities

lending

transactions
 
Total gross balance
(1)
  ¥31,365  ¥4,994  ¥32,061  ¥1,734 
Less: Amounts offset in the consolidated balance sheets
(2)
   (19,486)   —     (19,486)   —   
   
 
 
  
 
 
  
 
 
  
 
 
 
Total net amounts of reported on the face of the consolidated balance sheets
(3)
  ¥11,879  ¥4,994  ¥12,575  ¥1,734 
   
 
 
  
 
 
  
 
 
  
 
 
 
Less: Additional amounts not offset in the consolidated balance sheets
(4)
                 
Financial instruments and
non-cash
collateral
   (9,370)   (3,372)   (9,114)   (1,524) 
Cash collateral
   (8)   —     (12)   —   
   
 
 
  
 
 
  
 
 
  
 
 
 
Net amount
  ¥2,501  ¥1,622  ¥3,449  ¥210 
   
 
 
  
 
 
  
 
 
  
 
 
 
   
Billions of yen
 
   
March 31, 2023
 
   
Assets
  
Liabilities
 
   
Reverse

repurchase

agreements
  
Securities

borrowing

transactions
  
Repurchase

agreements
  
Securities

lending

transactions
 
Total gross balance
(1)
  ¥35,030  ¥4,280  ¥35,414  ¥1,825 
Less: Amounts offset in the consolidated balance sheets
(2)
   (21,196)   —     (21,196)   —   
   
 
 
  
 
 
  
 
 
  
 
 
 
Total net amounts of reported on the face of the consolidated balance sheets
(3)
  ¥13,834  ¥4,280  ¥14,218  ¥1,825 
   
 
 
  
 
 
  
 
 
  
 
 
 
Less: Additional amounts not offset in the consolidated balance sheets
(4)
                 
Financial instruments and
non-cash
collateral
   (11,938)   (2,690)   (11,550)   (1,617) 
Cash collateral
   (14)   —     (1)   —   
   
 
 
  
 
 
  
 
 
  
 
 
 
Net amount
  ¥1,882  ¥1,590  ¥2,667  ¥208 
   
 
 
  
 
 
  
 
 
  
 
 
 
 
F-74
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(1)Includes
Include all recognized balances irrespective of whether they are transacted under a master netting agreement or whether Nomura has obtained sufficient evidence of enforceability of the master netting agreement. Amounts include transactions carried at fair value through election of the fair value option. As of March 31, 2019,2022, the gross balance of reverse repurchase agreements and repurchase agreements which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was ¥749amounted to ¥793 billion and ¥3,575¥2,453 billion, respectively. As of March 31, 2019,2022, the gross balance of securities borrowing transactions and securities lending transactions which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was ¥1,398amounted to ¥1,511 billion and ¥209¥158 billion, respectively. As of March 31, 2020,2023, the gross balance of
F-
78
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
reverse repurchase agreements and repurchase agreements which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was ¥627amounted to ¥883 billion and ¥6,356¥2,394 billion, respectively. As of March 31, 2020,2023, the gross balance of securities borrowing transactions and securities lending transactions which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was ¥998amounted to ¥1,449 billion and ¥138¥137 billion, respectively.
(2)Represents
Represent amounts offset through counterparty netting under master netting andor similar agreements for which Nomura has obtained sufficient evidence of enforceability in accordance with ASC
210-20.
Amounts offset include transactions carried at fair value through election of the fair value option.
(3)
Reverse repurchase agreements and securities borrowing transactions are reported within
Collateralized agreements—agreements
—
Securities purchased under agreements to resell
and
Collateralized agreements—agreements
—
Securities borrowed
in the consolidated balance sheets, respectively. Repurchase agreements and securities lending transactions are reported within
Collateralized financing—financing
—
Securities sold under agreements to repurchase
and
Collateralized financing—financing
—
Securities loaned
in the consolidated balance sheets, respectively. Amounts reported under securities lending transactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral. Nomura recognizes the securities received at fair value and a liability for the same amount, representing the obligation to return those securities. The liability is reported within
Other liabilities
in the consolidated balance sheets.
(4)
RepresentsRepresent amounts which are not permitted to be offset on the face of the balance sheet in accordance with ASC
210-20
but which provide Nomura with the right of offset in the event of counterparty default. Amounts relating to agreements where Nomura has not yet obtained sufficient evidence of enforceability of such offsetting rights are excluded.
For information on offsetting of derivatives, see Note 3 “
Derivative instruments and hedging activities
”.
F-75
Table of Contents
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, 2020.2022 and 2023. Amounts reported are shown prior to counterparty netting in accordance with ASC
210-20.
 
Billions of yen
 
 
March 31, 2020
 
 
Overnight
and open
(1)
  
Up to
30 days
  
30 - 90
days
  
90 days
 -

1 year
  
Greater
than 1 year
  
Total
 
Repurchase agreements
 ¥
11,004
  ¥
21,505
  ¥
2,570
  ¥
983
  ¥
335
  ¥
36,397
 
Securities lending transactions
  
650
   
144
   
227
   
231
   
0
   
1,252
 
                         
Total gross recognized liabilities
(2)
 ¥
11,654
  ¥
21,649
  ¥
2,797
  ¥
1,214
  ¥
335
  ¥
37,649
 
                         
   
Billions of yen
 
   
March 31, 2022
 
   
Overnight

and open
(1)
   
Up to

30 days
   
30 - 90

days
   
90 days -

1 year
   
Greater

than 1 year
   
Total
 
Repurchase agreements
  ¥12,266   ¥15,454   ¥2,220   ¥1,611   ¥510   ¥32,061 
Securities lending transactions
   992    242    200    277    23    1,734 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total gross recognized liabilities
(2)
  ¥13,258   ¥15,696   ¥2,420   ¥1,888   ¥533   ¥33,795 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   
Billions of yen
 
   
March 31, 2023
 
   
Overnight

and open
(1)
   
Up to

30 days
   
30 - 90

days
   
90 days -

1 year
   
Greater

than 1 year
   
Total
 
Repurchase agreements
  ¥14,017   ¥16,597   ¥2,663   ¥1,357   ¥780   ¥35,414 
Securities lending transactions
   1,002    243    55    498    27    1,825 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total gross recognized liabilities
(2)
  ¥15,019   ¥16,840   ¥2,718   ¥1,855   ¥807   ¥37,239 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Open transactions do not have an explicit contractual maturity date and are terminable on demand by Nomura or the counterparty.
(2)
Repurchase agreements and securities lending transactions are reported within
Collateralized financing—financing
—
Securities sold under agreements to repurchase
and
Collateralized financing—financing
—
Securities loaned
in the consolidated balance sheets, respectively. Amounts reported for securities lending transactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral. Nomura recognizes the securities received at fair value and a liability for the same amount, representing the obligation to return those securities. The liability is reported within
Other liabilities
in the consolidated balance sheets. The total gross recognized liabilities reported for repurchase agreements and securities lending transactions are consistent with the total gross balances reported in the offsetting disclosures above.
F-
79F-76
Table of Contents
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, 2020.2022 and 2023. Amounts reported are shown prior to counterparty netting in accordance with ASC
210-20.
 
Billions of yen
 
 
March 31, 2020
 
 
Repurchase
agreements
  
Securities
lending
transactions
  
Total
 
Equities and convertible securities
 ¥
132
  ¥
1,032
  ¥
1,164
 
Japanese government, agency and municipal securities
  
607
   
—  
   
607
 
Foreign government, agency and municipal securities
  
29,378
   
5
   
29,383
 
Bank and corporate debt securities
  
1,821
   
178
   
1,999
 
Commercial mortgage-backed securities (“CMBS”)
  
26
   
—  
   
26
 
Residential mortgage-backed securities (“RMBS”)
(1)
  
4,162
   
—
   
4,162
 
Collateralized debt obligations (“CDOs”) and other
  
265
   
—  
   
265
 
Investment trust funds and other
  
6
   
37
   
43
 
             
Total gross recognized liabilities
(2)
 ¥
36,397
  ¥
1,252
  ¥
37,649
 
             
   
Billions of yen
 
   
March 31, 2022
 
   
Repurchase

agreements
   
Securities

lending

transactions
   
Total
 
Equities and convertible securities
  ¥384   ¥1,508   ¥1,892 
Japanese government, agency and municipal securities
   879    1    880 
Foreign government, agency and municipal securities
   26,436    17    26,453 
Bank and corporate debt securities
   2,322    175    2,497 
Commercial mortgage-backed securities (“CMBS”)
   1    —      1 
Residential mortgage-backed securities (“RMBS”)
(1)
   1,846    —      1,846 
Collateralized debt obligations (“CDOs”) and other
   157    —      157 
Investment trust funds and other
   36    33    69 
   
 
 
   
 
 
   
 
 
 
Total gross recognized liabilities
(2)
  ¥32,061   ¥1,734   ¥33,795 
   
 
 
   
 
 
   
 
 
 
   
Billions of yen
 
   
March 31, 2023
 
   
Repurchase

agreements
   
Securities

lending

transactions
   
Total
 
Equities and convertible securities
  ¥251   ¥1,598   ¥1,849 
Japanese government, agency and municipal securities
   1,651    0    1,651 
Foreign government, agency and municipal securities
   28,039    74    28,113 
Bank and corporate debt securities
   2,639    128    2,767 
Commercial mortgage-backed securities (“CMBS”)
   —      —      —   
Residential mortgage-backed securities (“RMBS”)
(1)
   2,657    —      2,657 
Collateralized debt obligations (“CDOs”) and other
   168    —      168 
Investment trust funds and other
   9    25    34 
   
 
 
   
 
 
   
 
 
 
Total gross recognized liabilities
(2)
  ¥35,414   ¥1,825   ¥37,239 
   
 
 
   
 
 
   
 
 
 
 
(1)
Includes ¥4,021¥1,404 billion of U.S. government sponsored agency mortgage pass through securities and collateralized mortgage obligations.obligations as of March 31, 2022. Includes ¥2,080 billion of U.S. government sponsored agency mortgage pass through securities and collateralized mortgage obligations as of March 31, 2023.
(2)
Repurchase agreements and securities lending transactions are reported within
Collateralized financing—financing
—
Securities sold under agreements to repurchase
and
Collateralized financing—financing
—
Securities loaned
in the consolidated balance sheets, respectively. Amounts reported for securities lending transactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral. Nomura recognizes the securities received at fair value and a liability for the same amount, representing the obligation to return those securities. The liability is reported within
Other liabilities
in the consolidated balance sheets. The total gross recognized liabilities reported for repurchase agreements and securities lending transactions are consistent with the total gross balances reported in the offsetting disclosures above.
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Table of Contents
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, 20192022 and 2020.2023.
 
Billions of yen
 
 
March 31
 
 
2019
  
2020
 
The fair value of securities received as collateral, securities borrowed as collateral and securities borrowed without collateral where Nomura is permitted by contract or custom to sell or repledge the securities
 ¥
46,924
  ¥
46,439
 
The portion of the above that has been sold (reported within
Trading liabilities
in the consolidated balance sheets) or repledged
  
38,551
   
38,054
 
   
Billions of yen
 
   
March 31
 
   
2022
   
2023
 
The fair value of securities accepted as collateral, primarily through securities borrowed or purchased under agreement to resell  ¥     48,234   ¥              53,857 
The portion of the above that has been sold (as reported within
Trading liabilities
in the consolidated balance sheets) or repledged
   36,146    38,417 
F-
80
Collateral is generally used for repurchased agreements and other securities financing agreements, to cover short sales and to collateralize derivatives.
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
CollateralAssets pledged by Nomura
Nomura pledges firm-ownedowned securities and other financial assets to collateralize repurchase transactions, other secured financings and derivative transactions. Pledged securities that can be sold or repledged by the transferee, including Gensaki Repo transactions, are reported in parentheses as
SecuritiesAssets pledged as collateral
within
Trading assets
,
Non-trading
debt securities, Investments in equity securities
and
Investments in and advances to affiliated companies
in the consolidated balance sheets.
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, without allowing the secured party does not have the right to sell or repledge them by type of asset as of March 31, 20192022 and 2020.2023.
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Trading assets:
  
   
 
Equities and convertible securities
 ¥
135,927
  ¥
133,066
 
Government and government agency securities
  
984,429
   
1,183,457
 
Bank and corporate debt securities
  
61,547
   
59,734
 
Commercial mortgage-backed securities (“CMBS”)
  
0
   
0
 
Residential mortgage-backed securities (“RMBS”)
  
2,535,244
   
2,826,613
 
Collateralized debt obligations (“CDOs”) and other
(1)
  
42,607
   
12,406
 
Investment trust funds and other
  
14,926
   
6,439
 
         
 ¥
3,774,680
  ¥
4,221,715
 
         
Non-trading
debt securities
  
1,031
   
29
 
Investments in and advances to affiliated companies
 ¥
501
  ¥
2,760
 
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Trading assets:
          
Equities and convertible securities
  ¥368,235   ¥194,486 
Government and government agency securities
   1,178,011    1,017,843 
Bank and corporate debt securities
   27,899    55,532 
Residential mortgage-backed securities (“RMBS”)
   868,183    2,527,124 
Collateralized debt obligations (“CDOs”) and other
(1)
   9,548    12,383 
Investment trust funds and other
   36,661    10,411 
   
 
 
   
 
 
 
   ¥2,488,537   ¥3,817,779 
   
 
 
   
 
 
 
Non-trading
debt securities
(2)
   163,445    106,319 
Investments in and advances to affiliated companies
(3)
  ¥12,832   ¥14,023 
(1)
Includes CLOs and ABS such as those secured on credit card loans, auto loans and student loans.
(2)
Non-trading
debt securities are primarily Japanese municipal securities
issued by prefectures or ordinance-designated city
.
(3)
Investments in and advances to affiliated companies comprise shares in Nomura Research Institute, Ltd.
F-78
Table of Contents
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, 20192022 and 2020.2023.
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Loans and receivables
 ¥
42,544
  ¥
55,051
 
Trading assets and private equity
 
and debt investments
  
1,589,483
   
1,393,517
 
Office buildings, land, equipment and facilities
  
5,371
   
5,258
 
Non-trading
debt securities
  
142,092
   
149,991
 
Other
  
151
   
77
 
         
 ¥
1,779,641
  ¥
1,603,894
 
         
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Loans and receivables
  ¥235,875   ¥354,508 
Trading assets and private equity and debt investments
   1,416,279    1,397,669 
Office buildings, land, equipment and facilities
   4,841    3,323 
Non-trading
debt securities
   2,827    107,852 
Investments in and advances to affiliated companies
   3    3 
Other
   497    773 
   
 
 
   
 
 
 
   ¥1,660,322   ¥1,864,128 
   
 
 
   
 
 
 
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 111
0
 “
Borrowings
” for further information regarding
trading balances of secured borrowings.
F-
81borrowings
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
.
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 involvementinvolvements with these SPEs includes structuring SPEs, underwriting, distributing and selling debt instruments and beneficial interests issued by SPEs to investors. Nomura accounts for the transfer of financial assets in accordance with ASC 860. This statement requires that Nomura accounts for the transfer of financial assets as a sale when Nomura relinquishes control over the assets. ASC 860 deems control to be relinquished when the following conditions are met: (a) the assets have been isolated from the transferor (even in bankruptcy or other receivership), (b) the transferee has the right to pledge or exchange the assets received, or if the transferee is an entity whose sole purpose is to engage in securitization or asset-backed financing activities, the holders of its beneficial interests have the right to pledge or exchange the beneficial interests, and (c) the transferor has not maintained effective control over the transferred assets. Where Nomura may retainretains an interest in the financial assets, including residual interests in the SPEs. AnySPEs, any such interests are accounted formeasured at fair value and reported within
Trading assets
in Nomura’s consolidated balance sheets, with the change in fair value reported within
Revenue-Net
gain on trading
. Fair value for retained interests in securitized financial assets is determined by using observable prices; or in cases where observable prices are not available for certain retained interests, Nomura estimates fair value generally based on the present value of expected future cash flows using its best estimates of the key assumptions, including forecasted credit losses, prepayment rates, forward yield curves and discount rates commensurate with the risks involved. Nomura may also enter into derivative transactions in relation to the assets transferred to an SPE.
As noted above, Nomura may have continuing involvement with SPEs to which Nomura transferred assets. For the years ended March 31, 20192022 and 2020,2023, Nomura received cash proceeds from SPEs in new securitizations of ¥174¥464 billion and ¥202¥285 billion, respectively, and the associated gain (loss) on sale was not significant.¥9 billion and ¥1 billion,
F-79
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
respectively. For the years ended March 31, 20192022 and 2020,2023, Nomura received debt securities issued by these SPEs with an initial fair value of ¥1,308¥1,890 billion and ¥1,769¥458 billion, respectively, and cash inflows from third parties primarily on the sale of those debt securities of ¥991¥1,759 billion and ¥1,245¥436 billion, respectively. The cumulative balance of financial assets transferred to SPEs with which Nomura has continuing involvement was ¥4,488¥5,829 billion and ¥4,177¥5,745 billion as of March 31, 20192022 and 2020,2023, respectively. Those transferred financial assets are substantially government, agency and municipal securities. Nomura’s retained interests were ¥138¥131 billion and ¥163¥168 billion as of March 31, 20192022 and 2020,2023, respectively. For the years ended March 31, 20192022 and 2020,2023, Nomura received cash flows of ¥20¥39 billion and ¥24¥26 billion, respectively, from the SPEs on thesuch retained interests held in the SPEs.
Nomura does not provide any financial support to SPEs beyond its contractual obligations as of March 31, 20192022 and 2020.2023.
F-
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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, 20192022 and 2020.2023.
 
Billions of yen
 
 
March 31, 2019
 
 
Level 1
  
Level 2
  
Level 3
  
Total
  
Investment
grade
  
Other
 
Government, agency and municipal securities
 ¥
—  
  ¥
138
  ¥
—  
  ¥
138
  ¥
138
  ¥
0
 
Bank and corporate debt securities
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
 
CMBS and RMBS
  
—  
   
0
   
0
   
0
   
0
   
0
 
                         
Total
 ¥
—  
  ¥
138
  ¥
0
  ¥
138
  ¥
138
  ¥
0
 
                         
    
 
Billions of yen
 
 
March 31, 2020
 
 
Level 1
  
Level 2
  
Level 3
  
Total
  
Investment
grade
  
Other
 
Government, agency and municipal securities
 ¥
—  
  ¥
158
  ¥
—  
  ¥
158
  ¥
158
  ¥
—  
 
Bank and corporate debt securities
  
—  
   
—  
   
—  
   
—  
   
—  
   
—  
 
CMBS and RMBS
  
—  
   
—  
   
5
   
5
   
0
   
5
 
                         
Total
 ¥
—  
  ¥
158
  ¥
5
  ¥
163
  ¥
158
  ¥
5
 
                         
   
Billions of yen
 
   
March 31, 2022
 
   
Level 1
   
Level 2
   
Level 3
   
Total
   
Investment

grade
   
Other
 
Government, agency and municipal securities
  ¥—     ¥124   ¥—     ¥124   ¥124   ¥—   
Bank and corporate debt securities
   —      —      —      —      —      —   
CMBS and RMBS
   —      —      7    7    2    5 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥ —     ¥124   ¥7   ¥131   ¥126   ¥5 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
   
Billions of yen
 
   
March 31, 2023
 
   
Level 1
   
Level 2
   
Level 3
   
Total
   
Investment

grade
   
Other
 
Government, agency and municipal securities
  ¥—     ¥161   ¥—     ¥161   ¥161   ¥—   
Bank and corporate debt securities
   —      —      —      —      —      —   
CMBS and RMBS
   —      —      7    7    2    5 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥ —     ¥161   ¥7   ¥168   ¥163   ¥5 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
As of March 31, 2020,2022 and 2023, predominantly all of the retained interests held by Nomura were valued using
significant 
observable prices.
inputs
. The initial fair value of these retained interests are mostly level 2 in the fair value hierarchy.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the type and carrying value of financial assets included within
Trading assets
and
Loans receivable
which have been transferred to SPEs but which do not meet the criteria for derecognition under ASC 860 as of March 31, 20192022 and 2020.2023. These transfers are accounted for as secured financing transactions and generally reported within
Long-term borrowings.
The assets are pledged as collateral of the associated liabilities and cannot be removed unilaterally by Nomura and the liabilities are
non-recourse
to Nomura.
 
Billions of yen
 
 
March 31
 
 
2019
  
2020
 
Assets
  
   
 
Trading assets
  
   
 
Loans
 ¥
15
  ¥
45
 
         
Liabilities
  
   
 
Long-term borrowings
 ¥
    15
  ¥
    45
 
         
   
Billions of yen
 
  
March 31
 
   
2022
   
2023
 
Assets
          
Trading assets
          
Japanese government securities
  ¥—     ¥1 
Loans for trading purposes
   19    25 
Loans receivable
   203    328 
   
 
 
   
 
 
 
Total
  ¥   222   ¥   354 
   
 
 
   
 
 
 
Liabilities
          
Long-term borrowings
  ¥222   ¥354 
   
 
 
   
 
 
 
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.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
If Nomura has an interest inpower to direct the activities of a VIE that provides Nomura with control overmost significantly impact the most significant activities ofVIE’s economic performance, and through Nomura’s interest in the VIE, andNomura has the right to receive benefits or the obligation to absorb losses that could be potentially significant to the VIE, Nomura is the primary beneficiary of the VIE and must consolidate the entity, provided that Nomura does not meet separate tests confirming that it is actingact as a fiduciary for other interest holders. Nomura’s consolidated VIEs include those that were created to market structured securities to investors by repackaging corporate convertible securities, mortgages and mortgage-backed securities. Certain VIEs used in connection with Nomura’s aircraft leasing business as well as other purposes are consolidated. Nomura also consolidates certain investment funds which are VIEs, and for which Nomura is the primary beneficiary.
The power to makedirect the most significant decisionsactivities may take a number of different forms in different types of VIEs. For transactions such as securitizations, investment funds, and CDOs, Nomura generally considers collateral management and servicing to represent the power to make the most significant decisions.decisions, unless such roles are deemed to be a fiduciary relationship. Accordingly, Nomura does not consolidate such types of VIEs for which it does not act as collateral manager or servicer unless Nomura has the unilateral right to replace the collateral manager or servicer or to require liquidation of the entity.
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 thesethose cases, Nomura focuses its analysis on decisions made prior tothe party who has the sole discretion in the initial closingdesign of the transaction,VIE, and considers factors such as the nature of the underlying assets held by the VIE, the involvementextent of third party investorsinvestors’ involvement in the design of the VIE, the size of initial third party investment and the amount and level of any subordination of beneficial interests issued by the VIE which will be held by Nomura and any third party investors. Nomura has sponsored numerous
re-securitization
transactions and
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
in many cases has determined that it is not the primary beneficiary on the basis that control overpower to direct the most significant decisionsactivities relating to these entities are shared with third party investors. In some cases, however, Nomura has consolidated suchcertain VIEs for example, where it was determined that third party investors were not involved in the design of the VIEs, including where the size of third party investment was not significantinsignificant at inception of the transaction.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the classification of consolidated VIEs’ assets and liabilities in these consolidated financial statements as of March 31, 20192022 and 2020.2023. Most of these assets and liabilities are related to consolidated SPEsVIEs which securitize corporate convertible securities, mortgages and mortgage-backed securities. 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.Nomura.
 
Billions of yen
 
 
March 31
 
 
2019
  
2020
 
Consolidated VIE assets
  
   
 
Cash and cash equivalents
 ¥
20
  ¥
10
 
Trading assets
  
   
 
Equities
  
780
   
645
 
Debt securities
  
426
   
454
 
CMBS and RMBS
  
43
   
43
 
Investment trust funds and other
  
5
   
0
 
Derivatives
  
17
   
19
 
Private equity and debt investments
  
2
   
11
 
Office buildings, land, equipment and facilities
  
55
   
15
 
Other
  
71
   
24
 
         
Total
 ¥
1,419
  ¥
1,221
 
         
Consolidated VIE liabilities
  
   
 
Trading liabilities
  
   
 
Derivatives
  
23
   
19
 
Borrowings
  
   
 
Short-term borrowings
  
151
   
117
 
Long-term borrowings
  
884
   
830
 
Other
  
3
   
4
 
         
Total
 ¥
1,061
  ¥
970
 
         
   
Billions of yen
 
   
March 31
 
   
2022
   
2023
 
Consolidated VIE assets
          
Cash and cash equivalents
  ¥62   ¥23 
Trading assets
          
Equities
   555    491 
Debt securities
   443    491 
CMBS and RMBS
   21    27 
Derivatives
   1    0 
Private equity and debt investments
   4    35 
Office buildings, land, equipment and facilities
   10    49 
Other
   115    78 
   
 
 
   
 
 
 
Total
  ¥1,211   ¥1,194 
   
 
 
   
 
 
 
Consolidated VIE liabilities
          
Trading liabilities
          
Derivatives
   0    0 
Borrowings
          
Short-term borrowings
   95    94 
Long-term borrowings
   797    793 
Other
   6    5 
   
 
 
   
 
 
 
Total
  ¥898   ¥892 
   
 
 
   
 
 
 
On a quarterly basis, Nomura continuously reassesses its initial evaluation of whether it is the primary beneficiary of a VIE based on current facts and circumstances as long as it has any continuing involvement with the VIE. This determination is based upon an analysisVIEs and evaluates the impact of the design of the VIE, including the VIE’s structure and activities, the power to make significant economic decisions held by Nomura and by other parties, and theany changes in governing documents and/or variable interests ownedheld by Nomura and other parties.
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, 20192022 and 2020.2023. Maximum exposure to loss does not reflect Nomura’s estimate of the actual losses that could result from adverse changes,
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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
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 guarantees.guarantees issued.
 
Billions of yen
 
 
March 31, 2019
 
 
Carrying amount of variable interests
  
Maximum exposure
to loss to
unconsolidated VIEs
 
 
Assets
  
Liabilities
 
Trading assets and liabilities
  
   
   
 
Equities
 ¥
29
  ¥
—  
  ¥
29
 
Debt securities
  
109
   
—  
   
109
 
CMBS and RMBS
  
2,654
   
—  
   
2,654
 
Investment trust funds and other
  
153
   
—  
   
153
 
Private equity and debt investments
  
12
   
—  
   
12
 
Loans
  
593
   
—  
   
593
 
Other
  
11
   
—  
   
11
 
Commitments to extend credit and other guarantees
  
—  
   
—  
   
84
 
             
Total
 ¥
3,561
  ¥
—  
  ¥
3,645
 
             
   
Billions of yen
 
   
March 31, 2022
 
   
Carrying amount of variable interests
  
Maximum exposure

to loss to

unconsolidated VIEs
 
   
Assets
   
Liabilities
 
Trading assets and liabilities
              
Equities
  ¥26   ¥
—  
   ¥26 
Debt securities
   61    —      61 
CMBS and RMBS
   1,432    —      1,432 
Investment trust funds and other
   191    —      191 
Private equity and debt investments
   22    —      22 
Loans
   940    —      940 
Other
   10    —      10 
Commitments to extend credit and other guarantees
   —      —      256 
   
 
 
   
 
 
  
 
 
 
Total
  ¥2,682   ¥    —     ¥2,938 
   
 
 
   
 
 
  
 
 
 
   
Billions of yen
 
   
March 31, 2023
 
   
Carrying amount of variable interests
  
Maximum exposure

to loss to

unconsolidated VIEs
 
   
Assets
   
Liabilities
 
Trading assets and liabilities
              
Equities
  ¥18   ¥
—  
   ¥18 
Debt securities
   64    —      64 
CMBS and RMBS
   3,376    —      3,376 
Investment trust funds and other
   164    —      164 
Private equity and debt investments
   21    —      21 
Loans
   936    —      936 
Other
   3    —      3 
Commitments to extend credit and other guarantees
   —      —      196 
   
 
 
   
 
 
  
 
 
 
Total
  ¥4,582   ¥    —     ¥4,778 
   
 
 
   
 
 
  
 
 
 
The above does not include certain repurchase agreement financings provided to third parties or Nomura sponsored VIEs.
 
Billions of yen
 
 
March 31, 2020
 
 
Carrying amount of variable interests
  
Maximum exposure
to loss to
unconsolidated VIEs
 
 
Assets
  
Liabilities
 
Trading assets and liabilities
  
   
   
 
Equities
 ¥
35
  ¥
—  
  ¥
35
 
Debt securities
  
73
   
—  
   
73
 
CMBS and RMBS
  
3,631
   
—  
   
3,631
 
Investment trust funds and other
  
170
   
—  
   
170
 
Private equity and debt investments
  
11
   
—
   
11
 
Loans
  
835
   
—  
   
835
 
Other
  
11
   
—  
   
11
 
Commitments to extend credit and other guarantees
  
—  
   
—  
   
84
 
             
Total
 ¥
4,766
  ¥
—  
  ¥
4,850
 
             
7. Financing receivables:
In the normal course of business, Nomura extends financing to clients primarily in the form of loansloan receivables, loan commitments and collateralized agreements such as reverse repurchase agreements and securities borrowing transactions. These financing receivables are recognized as assets on Nomura’s consolidated balance sheets at fair value or on amortized cost basis and provide a contractual right to receive money either on demand or on future fixed or determinable dates.
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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
” (“ASC 326”) where appropriate. Allowances for current expected credit losses against recognized financial instruments are reported in the consolidated balance sheets within
Allowance for credit losses
.
Collateralized agreements
Collateralized agreements
consist of reverse repurchase agreements reported as
Securities purchased under agreements to resell
and securities borrowing transactions reported as
Securities borrowed
in the consolidated balance sheets, including those executed under Gensaki Repo agreements. Reverse repurchase agreements and securities borrowing transactions principally involve the buying of government and government agency securities
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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. ReverseExcept for those where we apply the fair value option, reverse repurchase agreements are generally recognized in the consolidated balance sheets at the amount for whichpurchase price of the securities were originally acquired with applicable accrued interest. Securities borrowing transactions are generally recognized in the consolidated balance sheets at the amount of cash collateral advanced. No allowanceAllowances for current expected credit losses is generally recognized against thesecollateralized agreements are not significant either because of application of practical expedients permitted by ASC 326 based on the collateralization requirements and ongoing monitoring of the collateral levels or the short expected life of the financial instruments.
See Note 5 “
Collateralized transactions due to
” for more information about the strict collateralization requirements.financial instruments.
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 licensed banking entities within Nomura such as The Nomura Trust & Banking Co., Ltd. and Nomura Bank International plc. For bothWhere retail and commercial loans are secured by real estate or securities, Nomura is exposed to the risk of a decline in the value of the underlying collateral. Loans at banks also include unsecured commercial loans provided to investment banking clients for relationship purposes. For unsecured commercial loans, Nomura is exposed to risk of default of the counterparty, although these counterparties usually have high or good credit ratings. Where loans are secured by guarantees, Nomura is also exposed to the risk of default by the guarantor.
Short-term secured margin loans are margin loans provided to clients in connection with securities brokerage business.business in retail and wealth management services. These loans provide funding for clients in order to purchase securities. Nomura requests initial margin in the form of acceptable collateral securities or deposits against these loans and holds the purchased securities as collateral through the life of the loans. If the value of the securities declines by more than specified amounts, Nomura can make additional frequent margin calls in order to maintain a specified ratio of
loan-to-value
(“LTV”) ratio. For these reasons,These clients are required and reasonably expected to continue to replenish the risk to Nomuraamount of providing thesecollateral as required by Nomura. Allowances for current expected credit losses against short-term secured margin loans is limited.are therefore usually not significant.
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 these
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
loans is not significantlimited as only qualified financial institutions can participate in these markets and these loans are usually overnight or short-term in nature. Allowances for current expected credit losses against inter-bank money market loans are therefore usually not significant.
Corporate loans are primarily commercial loans provided to corporate clients extended by
non-licensed
banking entities within Nomura.excluding those classified as Loans at banks. Corporate loans include loans secured by real estate or securities, as well as unsecured commercial loans provided to investment banking clients for relationship purposes. The risk to Nomura of making these loans is similar to those risks arising from commercial loans reported in loans at banks.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present a summary of loans receivable reported within
Loans receivable
and receivables or
Investments in and advances to affiliated companies
in the consolidated balance sheets as of March 31, 2019,2022, and 20202023 by portfolio segment.
 
Millions of yen
 
 
March 31, 2019
 
 
Carried at
amortized cost
  
Carried at
fair value
(1)
  
Total
 
Loans receivable
  
   
   
 
Loans at banks
 ¥
565,603
  ¥
—  
  ¥
565,603
 
Short-term secured margin loans
  
334,389
   
5,088
   
339,477
 
Inter-bank money market loans
  
1,699
   
—  
   
1,699
 
Corporate loans
  
977,942
   
659,497
   
1,637,439
 
             
Total loans receivable
 ¥
1,879,633
  ¥
664,585
  ¥
2,544,218
 
             
Total
 ¥
1,879,633
  ¥
664,585
  ¥
2,544,218
 
             
 
Millions of yen
 
 
March 31, 2020
 
 
Carried at
amortized cost
  
Carried at
fair value
(1)
  
Total
 
Loans receivable
  
   
   
 
Loans at banks
 ¥
521,715
  ¥
—  
  ¥
521,715
 
Short-term secured margin loans
  
296,833
   
8,905
   
305,738
 
Inter-bank money market loans
  
865
   
—  
   
865
 
Corporate loans
  
1,232,851
   
796,236
   
2,029,087
 
             
Total loans receivable
 ¥
2,052,264
  ¥
805,141
  ¥
2,857,405
 
             
Total
 ¥
2,052,264
  ¥
805,141
  ¥
2,857,405
 
             
   
Millions of yen
 
   
March 31, 2022
 
   
Carried at

amortized cost
   
Carried at

fair value
(1)
   
Total
 
Loans receivables
               
Loans at banks
  ¥717,992   ¥—     ¥717,992 
Short-term secured margin loans
   442,600    —      442,600 
Inter-bank money market loans
   2,196    —      2,196 
Corporate loans
   1,206,349    1,210,590    2,416,939 
   
 
 
   
 
 
   
 
 
 
Total loans receivables
  ¥2,369,137   ¥1,210,590   ¥3,579,727 
   
 
 
   
 
 
   
 
 
 
Advances
to affiliated companies
   1,000    —      1,000 
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,370,137   ¥1,210,590   ¥3,580,727 
   
 
 
   
 
 
   
 
 
 
   
Millions of yen
 
   
March 31, 2023
 
   
Carried at

amortized cost
   
Carried at

fair value
(1)
   
Total
 
Loans receivables
               
Loans at banks
  ¥802,595   ¥—     ¥802,595 
Short-term secured margin loans
   457,273    —      457,273 
Inter-bank money market loans
   —      —      —   
Corporate loans
   1,103,869    1,650,115    2,753,984 
   
 
 
   
 
 
   
 
 
 
Total loans receivables
  ¥2,363,737   ¥1,650,115   ¥4,013,852 
   
 
 
   
 
 
   
 
 
 
Advances
to affiliated companies
   4,000    —      4,000 
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,367,737   ¥1,650,115   ¥4,017,852 
   
 
 
   
 
 
   
 
 
 
 
(1)
Includes loans receivable and loan commitments carried at fair value through election of the fair value option.
There were no significant purchases noror sales of loans receivable during the yearyears ended March 31, 2019. During the same period, there2022 and 2023
, respectively
. There were also no significant reclassifications of loans receivable to or from trading assets.assets during the years ended March 31, 2022 and 2023
, respectively.
There were no significant purchases nor sales ofNet unamortized deferred fees and costs related to loans receivable carried at amortized cost were
not significant
as of March 31, 2022 and March 31, 2023.
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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
urrent expected credit losses for an individual or portfolio of financial instrument are measured at each Nomura reporting date based on expected credit losses over the remaining expected life of the financial instruments that consider forecast of future economic conditions in addition to information about past events and current conditions. Key macroeconomic inputs to our weighted average forecasts of three years include GDP and credit spreads.
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, 2020. During the same period, there were no significant reclassifications of loans receivable to trading assets.2023.
Allowance for credit losses
Management establishes an allowance for credit losses against loans carried at amortized cost which reflects management’s best estimate of probable losses incurred. The allowance for credit losses against loans, which is reported in the consolidated balance sheets within
Allowance for doubtful accounts
, comprises two components:
A specific component for loans which have been individually evaluated for impairment; and
A general component for loans which, while not individually evaluated for impairment, have been collectively evaluated for impairment based on historical loss experience.
Financial instrument
Methodology to determine current expected credit losses
Loans, written loan commitments and certain deposits
•  Full loss rate model developed by Nomura’s Risk department
•  Measures expected credit losses based on probability of default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) inputs.
•  PD inputs incorporate forward-looking scenarios used by Nomura for internal risk management and capital purposes.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Financial instrument
Methodology to determine current expected credit losses
•  Immediate reversion method used for periods beyond which reasonable and supportable forecast is not available.
•  For financial instruments which have defaulted or are probable of defaulting, expected credit losses measured using discounted cash flow analyses or, where the financial instrument is collateral dependent, based on any shortfall of fair value of the underlying collateral.
Collateralized agreements, short-term secured margin loans and cash prime brokerage loans
•  For reverse repos and short-term secured margin loans and cash prime brokerage loans where frequent margining is required and the counterparty has ability to replenish margin, as permitted by a practical expedient provided by ASC 326 expected credit losses are limited to difference between carrying value of the reverse repo or margin loan and fair value of underlying collateral.
•  Securities borrowing transactions typically have very short expected lives and are collateralized and therefore expected credit losses are generally determined qualitatively to be insignificant based on historical experience and consistent monitoring of collateral.
Customer contract assets and receivables
•  Expected credit losses typically based on aging analysis where loss rates are applied to the carrying value based on historical experience, the current economic climate and specific information about the ability of the client to pay.
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
” for further information on this event.
   
Millions of yen
 
   
Year ended March 31, 2021
 
   
Allowances for current expected credit losses
against loans
  
Allowances
against

receivables

other than

loans
(3)
  
Total
allowances
for current
expected
credit losses
 
   
Loans

at banks
  
Short-term

secured

margin

loans
  
Corporate

loans
  
Subtotal
 
Opening balance prior to CECL adoption
(1)
   1,564   352   7,944   9,860   3,152   13,012 
Impact of CECL adoption
(2)
   232   —     1,738   1,970   2   1,972 
Opening balance after CECL adoption
   1,796   352   9,682   11,830   3,154   14,984 
Provision for credit losses
(4)
   (196)   —     38,211   38,015   1,060   39,075 
Charge-offs
   (318)   (363)   (0)   (681)   (1,600)   (2,281) 
Other
(5)
   —     11   92   103   1,903   2,006 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Ending balance
  ¥1,282  ¥—    ¥47,985  ¥49,267  ¥4,517  ¥53,784 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Closing balance recognized on March 31, 2020 as determined using legacy U.S. GAAP guidance in effect prior to the adoption of ASC 326.
(2)
The adjusted opening balance recognized on April 1, 2020 on adoption of the CECL impairment model under ASC 326.
(3)
Includes amounts recognized against collateralized agreements, customer contract assets and receivables and other receivables.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(4)
Following default by a U.S. client in connection with the U.S. Prime Brokerage Event in March 2021, a provision for credit losses of ¥
41,561 million was recognized.
(5)
Primarily includes the effect of
recoveries collected and
 foreign exchange movements.
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
” for further information.
   
Millions of yen
 
   
Year ended March 31, 2022
 
   
Allowances for current expected credit losses
against loans
  
Allowances
against

receivables

other than

loans
(1)
  
Total
allowances
for current
expected
credit losses
 
   
Loans

at banks
  
Short-term

secured

margin

loans
   
Corporate

loans
  
Subtotal
 
Opening balance
   1,282   
—  
    47,985    49,267    4,517   53,784 
Provision for
credit 
losses
(2)
   1,161   
—  
    11,079    12,240    113   12,353 
Charge-offs
   
—  
   —      
—  
    —      (1,231)   (1,231) 
Other
(4)(5)
   (9)   —      3,289    3,280    (1,840)   1,440 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Ending balance
  ¥2,434  ¥
 —  
   ¥62,353   ¥64,787   ¥1,559  ¥66,346 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
   
Millions of yen
 
   
Year ended March 31, 2023
 
   
Allowances for current expected credit losses
against loans
  
Allowances
against

receivables

other than

loans
(1)
  
Total
allowances
for current
expected
credit losses
 
   
Loans

at banks
  
Short-term

secured

margin

loans
   
Corporate

loans
  
Subtotal
 
Opening balance
   2,434   
—  
    62,353   64,787   1,559    66,346 
Provision for
credit 
losses
   672   —      898   1,570   4    1,574 
Charge-offs
(3)
   (1,523)   —      (61,604)   (63,127)   
—  
    (63,127) 
Other
(4)(5)
   (457)   —      1,283   826   213    1,039 
   
 
 
  
 
 
   
 
 
  
 
 
  
 
 
   
 
 
 
Ending balance
  ¥1,126  ¥
 —  
   ¥2,930  ¥4,056  ¥1,776   ¥5,832 
   
 
 
  
 
 
   
 
 
  
 
 
  
 
 
   
 
 
 
(1)
Includes amounts recognized against collateralized agreements, customer contract assets and receivables and other receivables.
(2)
Following default by a U.S. client in connection with the U.S. Prime Brokerage Event in March 2021, an additional provision for
credit 
losses of ¥9,289 million was recognized during the year ended March 31, 2022.
(3)
Includes 
¥59,025 
million of charge-offs in connection with the U.S. Prime Brokerage Event during the year ended March 31, 2023. 
(4)
Includes a reduction in the allowances for current expected credit losses of
¥2,535 million and ¥2,071 
million in connection with the U.S. Prime Brokerage Event during the years ended March 31, 2022 and 2023. 
(5)
Primarily includes the effect of recoveries collected and foreign exchange movements.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The specific component of the allowance reflects probable losses incurred within loans which have been individually evaluated for impairment. A loan is defined as being impaired when, based on current information and events, it is probable that all amounts according to the contractual terms of the loan agreement will not be collected. Factors considered by management in determining impairment include an assessment of the ability of borrowers to pay by considering various factors such as the nature of the loan, prior credit loss experience, current economic conditions, the current financial situation of the borrower and the fair value of any underlying collateral. Loans that experience insignificant payment delays or insignificant payment shortfalls are not classified as impaired. Impairment is measured on a loan by loan basis by adjusting the carrying value of the loan to either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.
The general component of the allowance is for loans not individually evaluated for impairment and includes judgment about collectability based on available information at the balance sheet date and the uncertainties inherent in those underlying assumptions. The allowance is based on historical loss experience adjusted for qualitative factors such as current economic conditions.
As a result of the COVID-19 pandemic, determination of whether certain loans were impaired as of March 31, 2020 was increasingly judgmental when compared to prior years. When applying the factors discussed above to make this determination, additional consideration was given to how the COVID-19 pandemic would affect a borrower’s ability both to pay in the short-term while governments imposed lockdowns and similar restrictions on trading, and in the longer-term once the restrictions were lifted and economies were expected to improve. Various assumptions were made around the length and severity of the impact of the pandemic and the ability and timing of borrowers to recover.
As of April 1, 2020 Nomura will adopt new guidance for determination of allowances for credit losses defined by ASC 326 “
Financial Instruments—Credit Losses
” (“ASC 326”) which requires recognition of allowances for current expected credit losses rather than incurred losses. Specific determination of whether a loan is impaired to trigger recognition of an allowance for credit losses will no longer be required but the same factors will still be used to determine the appropriate allowance as required under the new guidance. See Note 1 “Summary accounting policies—Future accounting developments” in these consolidated financial statements for further guidance on the expected impact of ASC 326 on Nomura.
Loans are
charged-off
when Nomura determines that the loans are uncollectible. This determination is based on factors such as the occurrence of significant changes in the borrower’s financial position such that the borrower can no longer pay the obligation or that the proceeds from collateral will not be sufficient to pay the loans.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present changes in the total allowance for credit losses for the years ended March 31, 2018, 2019 and 2020. The allowance for credit losses increased as of March 31, 2020 when compared to March 31, 2019 primarily as a result of specific impairments identified in March 2020 as a result of the
COVID-19
pandemic.
                         
 
Millions of yen
 
 
Year ended March 31, 2018
 
 
Allowance for credit losses against loans
  
Allowance
for credit
losses
against
receivables
other than
loans
  
Total
allowance
for doubtful
accounts
 
 
Loans
at banks
  
Short-term
secured
margin
loans
  
Corporate
loans
  
Subtotal
 
Opening balance
 ¥
968
  ¥
—  
  ¥
473
  ¥
1,441
  ¥
2,110
  ¥
3,551
 
Provision for credit losses
  
172
   
—  
   
(26
)  
146
   
24
   
170
 
Charge-offs
  
0
   
—  
   
—  
   
0
   
—  
   
0
 
Other
(1)
  
—  
   
—  
   
(30
)  
(30
)  
(177
)  
(207
)
                         
Ending balance
 ¥
1,140
  ¥
—  
  ¥
417
  ¥
1,557
  ¥
1,957
  ¥
3,514
 
                         
                         
 
Millions of yen
 
 
Year ended March 31, 2019
 
 
Allowance for credit losses against loans
  
Allowance
for credit
losses
against
receivables
other than
loans
  
Total
allowance
for doubtful
accounts
 
 
Loans
at banks
  
Short-term
secured
margin
loans
  
Corporate
loans
  
Subtotal
 
Opening balance
 ¥
1,140
  ¥
—  
  ¥
417
  ¥
1,557
  ¥
1,957
  ¥
3,514
 
Provision for credit
  
   
   
   
   
   
 
losses
  
7
   
364
   
434
   
805
   
30
   
835
 
Charge-offs
  
(95
)  
—  
   
(0
)  
(95
)  
(102
)  
(197
)
Other
(1)
  
—  
   
6
   
17
   
23
   
(6
)  
17
 
                         
Ending balance
 ¥
1,052
  ¥
370
  ¥
868
  ¥
2,290
  ¥
1,879
  ¥
4,169
 
                         
    
 
Millions of yen
 
 
Year ended March 31, 2020
 
 
Allowance for credit losses against loans
  
Allowance
for credit
losses
against
receivables
other than
loans
  
Total
allowance
for doubtful
accounts
 
 
Loans
at banks
  
Short-term
secured
margin
loans
  
Corporate
loans
  
Subtotal
 
Opening balance
 ¥
1,052
  ¥
370
  ¥
868
  ¥
2,290
  ¥
1,879
  ¥
4,169
 
Provision for credit
  
   
   
   
   
   
 
losses
  
512
   
—
   
7,125
   
7,637
   
1,451
   
9,088
 
Charge-offs
  
—  
   
—  
   
—  
   
—  
   
(162
)  
(162
)
Other
(1)
  
—  
   
(18
)  
(49
)  
(67
)  
(16
)  
(83
)
                         
Ending balance
 ¥
1,564
  ¥
352
  ¥
7,944
  ¥
9,860
  ¥
3,152
  ¥
13,012
 
                         
(1)Includes the effect of foreign exchange movements.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present the allowance for credit losses against loans and loans by impairment methodology and type of loans as of March 31, 2019 and 2020.
                     
 
Millions of yen
 
 
March 31, 2019
 
 
Loans at
banks
  
Short-term
secured margin
loans
  
Inter-bank
money
market loans
  
Corporate
loans
  
Total
 
Allowance by impairment methodology
  
   
   
   
   
 
Evaluated individually
 ¥
—  
  ¥
370
  ¥
—  
  ¥
868
  ¥
1,238
 
Evaluated collectively
  
1,052
   
—  
   
—  
   
—  
   
1,052
 
                     
Total allowance for credit losses
 ¥
1,052
  ¥
370
  ¥
—  
  ¥
868
  ¥
2,290
 
                     
                     
Loans by impairment methodology
  
   
   
   
   
 
Evaluated individually
 ¥
2,792
  ¥
166,148
  ¥
1,699
  ¥
976,096
  ¥
1,146,735
 
Evaluated collectively
  
562,811
   
168,241
   
—  
   
1,846
   
732,898
 
                     
Total loans
 ¥
565,603
  ¥
334,389
  ¥
1,699
  ¥
977,942
  ¥
1,879,633
 
                     
 
Millions of yen
 
 
March 31, 2020
 
 
Loans at
banks
  
Short-term
secured margin
loans
  
Inter-bank
money
market loans
  
Corporate
loans
  
Total
 
Allowance by impairment methodology
  
   
   
   
   
 
Evaluated individually
 ¥
—  
  ¥
352
  ¥
—  
  ¥
7,944
  ¥
8,296
 
Evaluated collectively
  
1,564
   
—  
   
—  
   
—  
   
1,564
 
                     
Total allowance for credit losses
 ¥
1,564
  ¥
352
  ¥
—  
  ¥
7,944
  ¥
9,860
 
                     
                     
Loans by impairment methodology
  
   
   
   
   
 
Evaluated individually
 ¥
3,120
  ¥
147,364
  ¥
865
  ¥
1,232,681
  ¥
1,384,030
 
Evaluated collectively
  
518,595
   
149,469
   
—  
   
170
   
668,234
 
                     
Total loans
 ¥
521,715
  ¥
296,833
  ¥
865
  ¥
1,232,851
  ¥
2,052,264
 
                     
Loan impairment and troubledTroubled debt restructurings
In the ordinary course of business, Nomura may choose to modifyrestructure a loan classified as held for investment either because of financial difficulties of the borrower, or simply as a result of market conditions or relationship reasons. TDRA troubled debt restructuring (“TDR”) occurs when Nomura as lender,(as lender) for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that Nomura would not otherwise consider.
Any loan being modified under a TDR will generally already be identified as impaired with an applicable allowance forExpected credit losses recognized. If not (for example if the loan is collectively assessed for impairment with other loans), the modification of the loan under a TDR will immediately result in the loan as being classified as impaired. An impairment loss for a loan modificationbeing restructured under a TDR which only involvesinvolve modification of the loan’s terms (rather than receipt of assets in full or partial settlement) is calculated in the same way as any other impaired loan.typically determined using a discounted cash flow analysis. Assets received in full or partial satisfaction of a loan in a TDR are recognized at fair value.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of March 31, 2020 and since such date, discussionsDiscussions continue with various borrowers to modify the existing contractual terms of certain loans. These modifications where the borrower is deemed to be in financial difficulty and Nomura has, or expects to, grant a financial concession would typically be accounted for and reported as a TDR and the loan classified as impaired. However, consistent with guidance issued by US banking regulators in March 2020 as a result of the COVID-19 pandemic, modifications which meet the above criteria have not been accounted for TDRs nor the loan classified as impaired as of March 31, 2020 provided the borrower was current with payments prior to the COVID-19 pandemic, the nature of the concession is short-term and only permits a payment delay, waiver of fees or extension of repayment terms.TDR.
As of March 31, 2019, the amount of loans which were classified as impaired but against which no allowance for credit losses had been recognized was not significant. For impaired loans with a related allowance, the amount of recorded investment, the total unpaid principal balance and the related allowance was not significant.
As of March 31, 2020, the amount of loans which were classified as impaired but against which no allowance for credit losses had been recognized was not significant. For impaired loans with a related allowance, the amount of recorded investment and the total unpaid principal balance were ¥14,678 million. The related allowance was ¥8,282 million.
The amounts of TDRs which occurred during the years ended March 31, 20192022 and 20202023 were not significant.
Nonaccrual and past due loans
Loans which are individually evaluated as impaired are also placed on a nonaccrual status. When itstatus if interest is deemed uncollectible. Nomura policy is to define interest as being uncollectible if the borrower is determined to suspendbe in financial difficulty or an interest accrual asor principal payment on the loans is 90 days or more past due.
Where a result of an assessment,loan is placed on a nonaccrual status, any accrued but unpaid interest receivable reversed and no further accrual of interest is reversed. Loanspermitted. Interest income is subsequent recognized when a cash payment is received from the borrower using the cash basis method.
Generally loans are generally only returned to an accrual status if the loan is brought contractually current, i.e., all overdue principal and interest amounts are paid. In limited circumstances, a loan which has not been brought contractually current will also be returned to an accrual status if all principal and interest amounts contractually due are reasonably assured of repayment within a reasonable period of time or there has been a sustained period of repayment performance by the borrower.
Loans which have been modified, or are in the process of being modified, through modifications which do not meet the definition of a TDR through application of the interagency guidance referred to above have not been placed on a non-accrual status as of March 31, 2020.
As of March 31, 2019, the amount of loans which were placed on a nonaccrual status was not significant. The amount of loans which were 90 days past due was not significant.
As of March 31, 2020,2022, there were ¥14,658
¥62,289 
million of loans which were placed on a nonaccrual status, primarily secured and unsecured corporate loans. Corporate loans on a
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
Once a loan is impaired and million of loans which were placed on a nonaccrual status, interest income is subsequently recognized usingprimarily secured corporate loans. Corporate loans on a non-accrual status as of March 31, 2023 include ¥
14,233
 million of loans which didn’t recognize allowances for current expected credit losses due to fair value of the cash basis method.
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NOMURA HOLDINGS, INC.the loan. The amount of loans which were 90 days past due but were not on a nonaccrual status was not significant. 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Credit quality indicators
Nomura is exposed to credit risks deriving fromdue to a decline in the value of loans or a default caused by deterioration of creditworthiness or bankruptcy of the obligor.borrower. Nomura’s risk management framework for such credit risks is based on a risk assessment through an internal rating process, in depth
pre-financing
credit analysis of each individual loan and continuous post-financing monitoring of obligor’sthe borrower’s creditworthiness.
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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, 20192022 and 2020.2023.
 
Millions of yen
 
 
March 31, 2019
 
 
AAA-BBB
  
BB-CCC
  
CC-D
  
Others
(1)
  
Total
 
Secured loans at banks
 ¥
149,048
  ¥
127,309
  ¥
—  
  ¥
54,545
  ¥
330,902
 
Unsecured loans at banks
  
233,201
   
1,500
   
—  
   
—  
   
234,701
 
Short-term secured margin loans
  
—  
   
—  
   
—  
   
334,389
   
334,389
 
Unsecured inter-bank money market loans
  
1,699
   
—  
   
—  
   
—  
   
1,699
 
Secured corporate loans
  
474,305
   
439,156
   
—  
   
4,025
   
917,486
 
Unsecured corporate loans
  
16,467
   
311
   
—  
   
43,678
   
60,456
 
                     
Total
 ¥
874,720
  ¥
568,276
  ¥
—  
  ¥
436,637
  ¥
1,879,633
 
                     
    
 
Millions of yen
 
 
March 31, 2020
 
 
AAA-BBB
  
BB-CCC
  
CC-D
  
Others
(1)
  
Total
 
Secured loans at banks
 ¥
167,886
  ¥
169,335
  ¥
—  
  ¥
52,392
  ¥
389,613
 
Unsecured loans at banks
  
130,649
   
1,453
   
—  
   
—  
   
132,102
 
Short-term secured margin loans
  
—  
   
—  
   
—  
   
296,833
   
296,833
 
Unsecured inter-bank money market loans
  
865
   
—  
   
—  
   
—  
   
865
 
Secured corporate loans
  
689,801
   
415,742
   
—  
   
17,537
   
1,123,080
 
Unsecured corporate loans
  
6,176
   
18,434
   
—  
   
85,161
   
109,771
 
                     
Total
 ¥
995,377
  ¥
604,964
  ¥
—  
  ¥
451,923
  ¥
2,052,264
 
                     
  Millions of yen 
  March 31, 2022 
  2022  2021  2020  2019  2018  2017 or
earlier		  Revolving  Total 
Secured loans at banks:
                                
AAA-BBB
 ¥106,554  ¥126,834  ¥8,325  ¥17,308  ¥9,213  ¥12,729  ¥—    ¥280,963 
BB-CCC
  80,167   169,655   1,693   638   587   6,779   —     259,519 
CC-D
  —     —     —     —     —     —     —     —   
Others
(1)
  —     82,304   —     —     —     —     —     82,304 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total secured loans at banks
 ¥186,721  ¥378,793  ¥10,018  ¥17,946  ¥9,800  ¥19,508  ¥—    ¥622,786 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured loans at banks:
                                
AAA-BBB
 ¥6,000  ¥18,175  ¥12,703  ¥20,565  ¥9,982  ¥25,841  ¥—    ¥93,266 
BB-CCC
  —     —     —     —     —     —     —     —   
CC-D
  —     —     —     1,940   —     —     —     1,940 
Others
  —     —     —     —     —     —     —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured loans at banks
 ¥6,000  ¥18,175  ¥12,703  ¥22,505  ¥9,982  ¥25,841  ¥—    ¥95,206 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Short-term secured margin loans:
                                
AAA-BBB
 ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—   
BB-CCC
  —     —     —     —     —     —     —     —   
CC-D
  —     —     —     —     —     —     —     —   
Others
(1)
  169,195   23,238   —     —     —     —     250,167   442,600 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total short-term secured margin loans
 ¥169,195  ¥23,238  ¥—    ¥—    ¥—    ¥—    ¥250,167  ¥442,600 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured inter-bank money market loans:
                                
AAA-BBB
 ¥2,196  ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥2,196 
BB-CCC
  —     —     —     —     —     —     —     —   
CC-D
  —     —     —     —     —     —     —     —   
Others
  —     —     —     —     —     —     —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured inter-bank money market loans
 ¥2,196  ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥2,196 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Secured corporate loans:
                                
AAA-BBB
 ¥—    ¥52,545  ¥86,910  ¥20,710  ¥3,258  ¥52,496  ¥9,916  ¥225,835 
BB-CCC
  86,300   307,636   14,718   131,266   115,494   30,085   92,039   777,538 
CC-D
(2)
  —     57,524   —     —     —     —     —     57,524 
Others
(1)
  455   20   25   26   10   101   96   733 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total secured corporate loans
 ¥86,755  ¥417,725  ¥101,653  ¥152,002  ¥118,762  ¥82,682  ¥102,051  ¥1,061,630 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured corporate loans:
                                
AAA-BBB
 ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—   
BB-CCC
  11,621   20,516   —     1,989   —     —     —     34,126 
CC-D
  —     —     —     —     —     —     —     —   
Others
  —     438   191   —     109,959   5   —     110,593 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured corporate loans
 ¥11,621  ¥20,954  ¥191  ¥1,989  ¥109,959  ¥5  ¥—    ¥144,719 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Advances to affiliated companies
                                
AAA-BBB
 ¥—    ¥1,000  ¥—    ¥—    ¥—    ¥—    ¥—    ¥1,000 
BB-CCC
  —     —     —     —     —     —     —     —   
CC-D
  —     —     —     —     —     —     —     —   
Others
  —     —     —     —     —     —     —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total advances to affiliated companies
 ¥—    ¥1,000  ¥—    ¥—    ¥—    ¥—    ¥—    ¥1,000 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥462,488  ¥859,885  ¥124,565  ¥194,442  ¥248,503  ¥128,036  ¥352,218  ¥2,370,137 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Relate to collateralized exposures where a specified ratio of LTV is maintained.
(2)
Includes loans of ¥57,524 million in connection with the U.S. Prime Brokerage Event.
See Note 20 “
Segment and
geographic information
”
for further information on this event.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
  Millions of yen 
  March 31, 2023 
  2023  2022  2021  2020  2019  2018 or
earlier		  Revolving  Total 
Secured loans at banks:
                                
AAA-BBB
 ¥104,543  ¥152,888  ¥5,960  ¥8,050  ¥14,817  ¥16,047  ¥—    ¥302,305 
BB-CCC
  117,680   199,696   —     1,642   415   2,395   —     321,828 
CC-D
  —     —     —     —     —     —     —     —   
Others
(1)
  55,842   45,404   —   —     —     —     —     101,246 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total secured loans at banks
 ¥278,065  ¥397,988  ¥5,960  ¥9,692  ¥15,232  ¥18,442  ¥—    ¥725,379 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured loans at banks:
                                
AAA-BBB
 ¥4,673  ¥9,297  ¥9,169  ¥9,513  ¥11,036  ¥25,806  ¥—    ¥69,494 
BB-CCC
  —     —     1,000   3,370   1,692   1,660   —     7,722 
CC-D
  —     —     —     —     —     —     —     —   
Others
  —     —     —     —     —     —     —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured loans at banks
 ¥4,673  ¥9,297  ¥10,169  ¥12,883  ¥12,728  ¥27,466  ¥—    ¥77,216 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Short-term secured margin loans:
                                
AAA-BBB
 ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—   
BB-CCC
  —     —     —     —     —     —     —     —   
CC-D
  —     —     —     —     —     —     —     —   
Others
(1)
  217,767   2,081   —     —     —     —     237,425   457,273 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total short-term secured margin loans
 ¥217,767  ¥2,081  ¥—    ¥—    ¥—    ¥—    ¥237,425  ¥457,273 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured inter-bank money market loans:
                                
AAA-BBB
 ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—   
BB-CCC
  —     —     —     —     —     —     —     —   
CC-D
  —     —     —     —     —     —     —     —   
Others
  —     —     —     —     —     —     —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured inter-bank money market loans
 ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Secured corporate loans:
                                
AAA-BBB
 ¥9,132  ¥433,330  ¥184,579  ¥169,393  ¥20,423  ¥—    ¥10,392  ¥827,249 
BB-CCC
  598   8,242   7,322   14,954   23,811   20,791   69,260   144,978 
CC-D
  —     —     —     —     —     —     —     —   
Others
(1)
  1,550   458   —     —     2   —     119   2,129 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total secured corporate loans
 ¥11,280  ¥442,030  ¥191,901  ¥184,347  ¥44,236  ¥20,791  ¥79,771  ¥974,356 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured corporate loans:
                                
AAA-BBB
 ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—    ¥—   
BB-CCC
  —     —     —     —     —     —     —     —   
CC-D
  —     —     —     —     2,184   —     —     2,184 
Others
  200   3   472   166   —     126,488   —     127,329 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured corporate loans
 ¥200  ¥3  ¥472  ¥166  ¥2,184  ¥126,488  ¥—    ¥129,513 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Advances to affiliated companies
                                
AAA-BBB
 ¥—    ¥3,000  ¥1,000  ¥—    ¥—    ¥—    ¥—    ¥4,000 
BB-CCC
  —     —     —     —     —     —     —     —   
CC-D
  —     —     —     —     —     —     —     —   
Others
  —     —     —     —     —     —     —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total advances to affiliated companies
 ¥—    ¥3,000  ¥1,000  ¥—    ¥—    ¥—    ¥—    ¥4,000 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥511,985  ¥854,399  ¥209,502  ¥207,088  ¥74,380  ¥193,187  ¥317,196  ¥2,367,737 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Relate to collateralized exposures where a specified ratio of LTV is maintained.
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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.
Rating Range
  
Definition
AAA
  
Highest credit quality. An obligor or facility has extremely strong capacity to meet its financial commitments. ‘AAA range’ is the highest credit rating assigned by Nomura. Extremely low probability of default.
AA  
AA
Very high credit quality category. An obligor or facility has very strong capacity to meet its financial commitments. Very low probability of default but above that of ‘AAA range.’
A  
A
High credit quality category. An obligor or facility has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than those in higher-rated categories. Low probability of default but higher than that of ‘AA range.’
BBB  
BBB
Good credit quality category. An obligor or facility has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to meet its financial commitments. Medium probability of default but higher than that of ‘A range.’
BB  
BB
Speculative credit quality category. An obligor or facility is less vulnerable in the near term than other lower-ratings. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions which could lead to the inadequate capacity to meet its financial commitments. Medium to high probability of default but higher than that of ‘BBB range.’
B  
B
Highly speculative credit quality category. An obligor or facility is more vulnerable than those rated ‘BB range’, but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the issuer’s or obligor’s capacity or willingness to meet its financial commitments. High probability of default—more than that of ‘BB range.’
CCC  
CCC
Substantial credit risk. An obligor or facility is currently vulnerable, and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments. Strong probability of default—default – more than that of ‘B range.’
CC  
CC
Default category. An obligor or facility is currently highly vulnerable to nonpayment (default category).
nonpayment.
C  
C
Default category. An obligor or facility is currently extremely vulnerable to nonpayment (default category).
nonpayment.
D  
D
Failure of an obligor to make payments in full and on time of any financial obligations, markedly disadvantageous modification to a contractual term compared with the existing obligation, bankruptcy filings, administration, receivership, liquidation or other
winding-up
or cessation of business of an obligor or other similar situations.
Nomura reviews internal ratings at least once a year by using available credit information of borrowers (obligors)obligors including financial statements and other information. Internal ratings are also reviewed more frequently for high-risk obligors or problematic exposures and upon the occurrence ofany significant regional or global credit events. As a result of the COVID-19 pandemic, the internal ratingsevent of obligors in particular jurisdictions and sectors impacted by the pandemic were reviewed and updated in March and April 2020.
will trigger an immediate credit review process.
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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 facilities.facilities
.
The following table presents the types of assets which Nomura leases under operating leases:
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
 
Cost
  
Accumulated
depreciation
  
Net carrying
amount
  
Cost
  
Accumulated
depreciation
  
Net carrying
amount
 
Real estate
(1)
 ¥
2,771
  ¥
(1,498
) ¥
1,273
  ¥
354
  ¥
(285
) ¥
69
 
Aircraft
  
55,130
   
(310
)  
54,820
   
16,071
   
(648
)  
15,423
 
                         
Total
 ¥
57,901
  ¥
(1,808
) ¥
56,093
  ¥
16,425
  ¥
(933
) ¥
15,492
 
                         
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
   
Cost
   
Accumulated

depreciation
  
Net carrying

amount
   
Cost
   
Accumulated

depreciation
  
Net carrying

amount
 
Real estate
(1)
  ¥354   ¥(292)  ¥62   ¥21   ¥
—  
  ¥21 
Aircraft
   10,373    (688)   9,685    49,472    (741)   48,731 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
 
Total
  ¥10,727   ¥(980)  ¥9,747   ¥49,493   ¥(741)  ¥48,752 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
 
(1)
Cost, accumulated depreciation and net carrying amounts include amounts relating to real estate utilized by Nomura.
Nomura recognized lease income of ¥1,377¥1,878 million, ¥2,292¥3,653 million and ¥2,732¥1,795 million for the years ended March 31, 2018, 20192021, 2022 and 2020,2023, respectively. These are included in the consolidated statements of income within
Revenue—Other
.
The following table presents an analysis of future undiscounted lease payments to be receivedreceivable in connection with noncancellable operating leases entered into by Nomura as lessor over the remaining lease term as of March 31, 2020.2023. Amounts in connection with finance leases were not significant.
  
Millions of yen
 
March 31, 2020
2023
 
  
Minimum lease payments

to be received
 
Years of receipt
   
 
Less than 1 year
  ¥
1,308
                            3,830		 
1 to 2 years
   
1,308
3,830		 
2 to 3 years
   
1,270
3,830		 
3 to 4 years
   
1,243
3,830		 
4 to 5 years
   
1,243
3,830		 
More than 5 years
   
7,638
26,193		 
   
 
Total
  ¥
14,010
45,343		 
   
 
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
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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. Nomura has adopted ASC 842 “
Leases
” with effect from April 1, 2019. The total carrying valuevalues of
r
ight-of-use
right-of-use (“ROU”) assets recognized in connection with operating leases as of March 31, 2020 was
¥170,782 million.
2022 and 2023 were ¥175,422 million and ¥170,993 million, respectively. The total carrying valuevalues of ROU asset
s
recognized in connection with finance leases as of March 31, 2020 was2022 and 2023 were not significant. These lease assets are reported within
Other assets—Officeassets-Office buildings, land, equipment and facilities
in the consolidated balance sheets.
Rental expenses, net of sublease rental income, for the years ended March 31, 2018 and 2019 under noncancellable operating lease agreements were ¥44,202 million and ¥44,564 million, respectively. The amount of capital lease assets as of March 31, 2019 was ¥26,561 million and accumulated depreciations on such capital lease assets as of March 31, 2019 was ¥8,272
million, which were reported within
Other Assets—Office buildings, land, equipment and facilities
in the consolidated balance sheets. Certain leases contain renewal options or escalation clauses providing for increased rental payments based upon maintenance, utilities and tax increases.
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, 2020.2021, 2022 and 2023. Amounts forrecognized in the consolidated statements of income in respect of finance lease cost, short-term lease cost, variable lease cost and net gains (losses) on qualifying sale and leaseback transactions were not significant toduring the consolidated statements of income for the yearyears ended March 31, 20202021, 2022 and 2023.
.
Millions of yen
Year ended
March 31, 2020
Lease expense:
Operating lease
costs
¥
48,475
Other income and expenses:
Gross sublease income
(1)
¥
5,377
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Lease expense:
               
Operating lease costs
  ¥49,168   ¥47,643   ¥47,268 
    
Other income and expenses:
               
Gross sublease income
(1)
  ¥4,638   ¥3,464   ¥1,658 
(1)
Gross sublease income represents income from subleases separate from lease payments made by Nomura on the head lease as lessee.
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 yearyears ended March 31, 20202021, 2022 and 2023.
.
Millions of yen
Year ended 
March 31, 2020
Operating cash
flows
for operating leases
¥
47,212
ROU assets recognized in connection with new operating leases
¥
18,026
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Operating cash flows for operating leases
  ¥47,584   ¥46,565   ¥44,689 
ROU assets recognized in connection with new operating leases
  ¥41,279   ¥32,208   ¥36,032 
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, 20202023 and also represents a reconciliation between total of such lease payments and the discounted carrying value of operating lease liabilities recognized in the consolidated balance sheets as of March 31, 2020.2023. Finance lease liabilities were not
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
significant as of March 31, 2020.2023. These lease liabilities are reported within
Other liabilities
in the consolidated balance sheetssheets.
.
  
Millions of yen
 
  
March 31, 2020
2023
 
  
Operating leases
 
Years of payment
   
 
Less than 1 year
  ¥
41,270
44,455		 
1 to 2 years
   
31,087
35,801		 
2 to 3 years
   
25,262
28,421		 
3 to 4 years
   
23,081
22,986		 
4 to 5 years
   
20,670
19,488		 
More than 5 years
   
74,546
52,747		 
   
 
Total undiscounted lease payments
  ¥
215,916
203,898		 
Less: Impact of discounting
   
(23,756
10,015		)
   
 
Lease liabilities as reported in the consolidated balance sheets
  ¥
192,160
193,883		 
   
 
The following table presents the weighted-average discount rate used to measure lease liabilities and the weighted-average remainingweighted-av
erage r
emaining lease term of operating leases as of March 31, 2020.2022 and 2023.
March
 31, 
2020
Operati
ng leases
Weighted-average discount rate used to measure lease liabilities
2.2%
Weighted-average remaining lease term
7.7 years
   
Year ended March 31
   
2022
  
2023
   
Operating leases
  
Operating leases
Weighted-average discount rate used to measure lease liabilities
  1.4%  1.5%
Weighted-average remaining lease term
  7.2 years  6.5 years
9. Business combinations:
On April 1, 2020, Nomura acquired 100% of Greentech Capital, LLC (“Greentech”), a leading M&A advisory boutique in sustainable technologyOther assets—Office buildings, land, equipment and infrastructure in the United States.
The acquisition of Greentech comprises an initial cash paymentfacilities and additional contingent payments based on future performance of the company. The transaction has been accounted for as a business combination under ASC 805 and consideration for the purchase as used to determine goodwill was
¥
12,389
million which includes the estimated fair value of contingent payments accounted for as contingent consideration on acquisition date. Changes in the fair value of contingent consideration are recognized in the consolidated statements of income until the contingency is resolved. Contingent payments linked to future employment of employees of Greentech are recognized in the consolidated statements of income as compensation expense over the relevant service period and when payment of those amounts becomes
probable
.
F-
9
7Other / Other liabilities:
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.
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Land
  ¥39,118   ¥38,752 
Office buildings
   60,025    56,802 
Equipment and facilities
   31,895    71,981 
Software
   104,609    117,780 
Construction in progress
   7,978    8,008 
Operating lease ROU assets
   175,422    170,993 
   
 
 
   
 
 
 
Total
  ¥  419,047   ¥  464,316 
   
 
 
   
 
 
 
Depreciation and amortization charges of depreciable assets are reported within
Non-interest expenses—Information processing and communications
in the amount of ¥49,343 million, ¥46,111 
million, and
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
¥48,893 million, and in
Non-interest expenses—Occupancy and related depreciation
in the amount of ¥14,503 million, ¥13,412 million, and ¥12,531 million for the years ended March 31, 2021, 2022 and 2023, respectively.
10. Other assets—Other / Other liabilities:liabilities
The following table presents components of
Other assets—Other
and
Other liabilities
in the consolidated balance sheets as of March 31, 20192022 and 2020.
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Other assets—Other:
  
   
 
Securities received as collateral
 ¥
282,656
  ¥
290,269
 
Goodwill and other intangible assets
  
19,792
   
17,783
 
Deferred tax assets
 net
  
15,026
   
13,431
 
Investments in equity securities for other than operating purposes
(1)
  
175,015
   
141,855
 
Prepaid expenses
  
14,544
   
16,262
 
Other
  
241,058
   
347,422
 
         
Total
 ¥
748,091
  ¥
827,022
 
         
Other liabilities:
  
   
 
Obligation to return securities received as collateral
 ¥
282,656
  ¥
290,269
 
Accrued income taxes
  
11,898
   
16,362
 
Other accrued expenses and provisions
  
401,408
   
396,560
 
Other
(2)
  
162,905
   
331,257
 
         
Total
 ¥
858,867
  ¥
1,034,448
 
         
2023.
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Other assets
—
Other:
          
Securities received as collateral
  ¥166,352   ¥268,591 
Goodwill and other intangible assets
   30,007    36,194 
Deferred tax assets net
   15,562    22,645 
Investments in equity securities for other than operating purposes
(1)
   249,448    249,865 
Deposit receivables
(2)(4)
   227,777    298,705 
Prepaid expenses
   17,165    19,727 
Other
(2)
   67,275    118,980 
   
 
 
   
 
 
 
Total
  ¥773,586   ¥1,014,707 
   
 
 
   
 
 
 
Other liabilities:
          
Obligation to return securities received as collateral
  ¥166,352   ¥268,591 
Accrued income taxes
   34,158    42,254 
Other accrued expenses and provisions
(3)
   457,511    479,491 
Operating lease liabilities
(2)
   198,131    193,883 
Other
(2)
   164,073    191,302 
   
 
 
   
 
 
 
Total
  ¥1,020,225   ¥1,175,521 
   
 
 
   
 
 
 
 
(1)
Includes marketable and
non-marketable
equity securities held for other than trading or operating purposes. These investments
comprise
of listed equity securities and unlisted equity

securities of ¥45,712¥
13,572
 million and ¥129,303¥
235,877
 million respectively, as of March 31, 2019,2022, and ¥32,545¥
13,174
 million and ¥109,310¥
236,691
 million respectively, as

of March 31, 2020.2023. These securities are generally carried at fair value, with changes in fair value recognized and reported within
Revenue—Other

in the consolidated statements of income. Also includes equity securities without a readily determinable fair value of ¥
65,365
 million as of

March 31, 2022 and 2023 respectively. 
(2)
As
Certain reclassifications of previously reported amounts have been made to conform to the current period presentation.
(3)
Includes a resultliability of adopting ASU 2016-02¥76,866 million and ¥42,459 million as of April 1, 2019, operating lease liabilities are presented through
Other liabilities—Other
.March 31, 2022 and 2023 respectively, in respect of outstanding and unsettled investigations, lawsuits and other legal proceedings where loss is considered probable and the amount of such loss can be reasonably estimated. See Note 8 “Leases”
19
 “
Commitments, contingencies and guarantees
” for further information.
(4)Includes Japan Securities Clearing Corporation’s clearing fund.
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.
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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 fourth quarter. Whilst determination of fair value of the reporting unit was more subjective because of the impact of the COVID-19 pandemic, thequarter ended March 31, 2022 and 2023. The estimated fair value of the reporting unit exceededis expected to exceed carrying value and therefore no impairment loss was recognized.
F-
9
8
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents changes in goodwill, which are reported in the consolidated balance sheets within
Other assets—Other
for the years ended March 31, 20192022 and 2020.
 
Millions of yen
 
 
Year ended March 31, 2019
 
 
Beginning of year
  
Changes during year
  
End of year
 
 
Gross
carrying
amount
  
Accumulated
Impairment
  
Net
carrying
amount
  
Acquisition
  
Impairment
(2)
  
Other
(1)
  
Gross
carrying
amount
  
Accumulated
Impairment
  
Net
carrying
amount
 
Wholesale
 ¥
89,492
  ¥
(11,442
) ¥
78,050
  ¥
—  
  ¥
(81,372
) ¥
3,322
  ¥
92,814
  ¥
(92,814
) ¥
—  
 
Other
  
473
   
—  
   
473
   
—  
   
—
   
1
   
474
   
—  
   
474
 
                                     
Total
 ¥
89,965
  ¥
(11,442
) ¥
78,523
  ¥
—  
  ¥
(81,372
) ¥
3,323
  ¥
93,288
  ¥
(92,814
) ¥
474
 
                                     
2023.
 
Millions of yen
 
 
Year ended March 31, 2020
 
 
Beginning of year
  
Changes during year
  
End of year
 
 
Gross
carrying
amount
  
Accumulated
Impairment
  
Net
carrying
amount
  
Acquisition
  
Impairment
  
Other
(1)
  
Gross
carrying
amount
  
Accumulated
Impairment
  
Net
carrying
amount
 
Wholesale
 ¥
92,814
  ¥
(92,814
) ¥
—  
  ¥
—  
  ¥
—  
  ¥
—  
  ¥
92,814
  ¥
(92,814
) ¥
—  
 
Other
  
474
   
—  
   
474
   
—  
   
—  
   
(2
)  
472
   
—  
   
472
 
                                     
Total
 ¥
93,288
  ¥
(92,814
) ¥
474
  ¥
—  
  ¥
—  
  ¥
(2
) ¥
93,286
  ¥
(92,814
) ¥
472
 
                                     
   
Millions of yen
 
   
Year ended March 31, 2022
 
   
Beginning of year
   
Changes during year
   
End of year
 
   
Gross

carrying

amount
   
Accumulated

Impairment
  
Net
carrying

amount
   
Acquisition
   
Impairment
   
Other
(1)
   
Gross

carrying

amount
   
Accumulated

Impairment
  
Net
carrying

amount
 
Wholesale
  ¥105,294   ¥(92,814)  ¥12,480   ¥—     ¥
—  
   ¥1,260   ¥106,554   ¥(92,814)  ¥13,740 
Other
   665    
—  
   665    
—  
    —      2    667    
—  
   667 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Total
  ¥105,959   ¥(92,814)  ¥13,145   ¥
—  
   ¥
—  
   ¥1,262   ¥107,221   ¥(92,814)  ¥14,407 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
   
Millions of yen
 
   
Year ended March 31, 2023
 
   
Beginning of year
   
Changes during year
  
End of year
 
   
Gross

carrying

amount
   
Accumulated

Impairment
  
Net
carrying

amount
   
Acquisition
   
Impairment
   
Other
(1)
  
Gross

carrying

amount
   
Accumulated

Impairment
  
Net
carrying

amount
 
Wholesale
  ¥106,554   ¥(92,814)  ¥13,740   ¥2,289   ¥
—  
   ¥1,191  ¥110,034   ¥(92,814)  ¥17,220 
Other
   667    
—  
   667    
—  
    —      (249)   418    
—  
   418 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
  
 
 
 
Total
  ¥107,221   ¥(92,814)  ¥14,407   ¥2,289   ¥
—  
   ¥942  ¥110,452   ¥(92,814)  ¥17,638 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
  
 
 
 
 
(1)
Includes currency translation adjustments.
(2)For the year ended March 31, 2019, Nomura recognized impairment losses on goodwill of ¥81,372 million within the Wholesale segment. Nomura performed an impairment test based on Wholesale performance and changes in the operating environment, and impaired goodwill within the Wholesale segment. As a result, the balance of goodwill within the Wholesale segment as of March 31, 2019 was ¥nil. These impairment losses were recorded within
Non-interest expense—Other
in the consolidated statements of income. The fair values were determined based on a DCF method.
During the fourth quarter, management considered but determined the COVID-19 pandemic did not indicate that certain finite-lived intangible assets were impaired. As a result, a formal impairment test over the relevant asset groups which include these intangible assets was not required.
The following table presents finite-lived intangible assets by type as of March 31, 20192022 and 2020.2023.
 
Millions of yen
 
 
March 31, 2019
  
March 31, 2020
 
 
Gross
carrying
amount
  
Accumulated
amortization
  
Net carrying
amount
  
Gross
carrying
amount
  
Accumulated
amortization
  
Net carrying
amount
 
Client relationships
 ¥
64,381
  ¥
(54,686
) ¥
9,695
  ¥
63,331
  ¥
(55,342
) ¥
7,989
 
Other
  
1,050
   
(280
)  
770
   
999
   
(373
)  
626
 
                         
Total
 ¥
65,431
  ¥
(54,966
) ¥
10,465
  ¥
64,330
  ¥
(55,715
) ¥
8,615
 
                         
F
-9
9
   
Millions of yen
 
   
March 31, 2022
   
March 31, 2023
 
   
Gross

carrying

amount
   
Accumulated

amortization
  
Net
carrying

amount
   
Gross

carrying

amount
   
Accumulated

amortization
  
Net
carrying

amount
 
Client relationships
  ¥67,492   ¥(61,715)  ¥5,777   ¥74,550   ¥(66,465)  ¥8,085 
Other
   2,000    (1,522)   478    2,239    (1,836)   403 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
 
Total
  ¥69,492   ¥(63,237)  ¥6,255   ¥76,789   ¥(68,301)  ¥8,488 
   
 
 
   
 
 
  
 
 
   
 
 
   
 
 
  
 
 
 
F-97
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Amortization expenses for the years ended March 31, 2018, 20192021, 2022 and 20202023 were ¥3,324¥2,296 million, ¥2,504¥1,717 million and ¥1,662¥1,589 million, respectively. Estimated amortization expenses for the next five years are shown below.
 
Millions of yen
 
Year ending March 31
 
Estimated
amortization expense
 
2021
 ¥
4,050
 
2022
  
3,296
 
2023
  
181
 
2024
  
177
 
2025
  
174
 
   
Millions of yen
 
Year ending March 31
  
Estimated

amortization expense
 
2024
  ¥              302 
2025
   215 
2026
   126 
2027
   80 
2028
   80 
The am
ountsamounts of indefinite-lived intangibles, which primarily includes trademarks, were ¥
8,853
¥9,345 million and ¥
8,696
¥10,068 million as of March 31, 20192022 and 2020,2023, respectively.
An annual impairment test was performed induring the fourth quarteryear ended March 31,2022 and 2023 against these intangibles. Whilst determination of fair value of these intangibles was more subjective because of the impact of the COVID-19 pandemic, theThe estimated fair value of each intangible exceeded carrying value and therefore no impairment loss was recognized.
Nomura recognizes a liability in the consolidated balances within
Other liabilities—Other
in respect of legal obligations incurred in connection with the restoration of leased property to their original condition at the end of the lease term. These asset retirement obligations (“AROs”) are recognized in the period when the legal obligation is incurred and are measured at the present value of the expected cost of the obligation.
F-100The following table presents changes in ARO during the years ended March 31, 2022 and 2023.
   
Millions of yen
 
   
March 31
 
   
2022
  
2023
 
Balance at beginning of year
  ¥14,485  ¥14,240 
Provision for the year   319   453 
Settled during the year   (564)   (497) 
   
 
 
  
 
 
 
Balance at end of
year
  ¥     14,240  ¥14,196 
   
 
 
  
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
11.
10. Borrowings:
The following table presents short-term and long-term borrowings of Nomura as of March 31, 20192022 and 2020.2023.
         
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Short-term borrowings
(1)
:
  
   
 
Commercial paper
 ¥
313,000
  ¥
525,124
 
Bank borrowings
  
77,101
   
565,130
 
Other
  
451,657
   
396,479
 
         
Total
 ¥
841,758
  ¥
1,486,733
 
         
Long-term borrowings:
  
   
 
Long-term borrowings from banks and other financial institutions
(2)
 ¥
3,109,606
  ¥
2,929,313
 
Bonds and notes issued
(3)
:
  
   
 
Fixed-rate obligations:
  
   
 
Japanese yen denominated
  
925,215
   
832,589
 
Non-Japanese
yen denominated
  
1,048,497
   
1,376,346
 
Floating-rate obligations:
  
   
 
Japanese yen denominated
  
848,470
   
744,275
 
Non-Japanese
yen denominated
  
265,154
   
242,612
 
Index / Equity-linked obligations:
  
   
 
Japanese yen denominated
  
978,438
   
899,765
 
Non-Japanese
yen denominated
  
715,891
   
696,041
 
         
  
4,781,665
   
4,791,628
 
         
Subtotal
  
7,891,271
   
7,720,941
 
         
Trading balances of secured borrowings
  
24,498
   
54,724
 
         
Total
 ¥
7,915,769
  ¥
7,775,665
 
         
 
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Short-term borrowings
(1)
:
          
Commercial paper
  ¥131,915   ¥299,993 
Bank borrowings
   205,857    176,708 
Other
   712,369    531,840 
   
 
 
   
 
 
 
Total
  ¥1,050,141   ¥1,008,541 
   
 
 
   
 
 
 
Long-term borrowings:
          
Long-term borrowings from banks and other financial institutions
(2)
  ¥3,196,144   ¥3,502,383 
Bonds and notes issued
(3)
:
          
Fixed-rate obligations:
          
Japanese
Yen
denominated
   765,412    872,588 
Non-Japanese
Yen
denominated
   2,486,305    3,042,649 
Floating-rate obligations:
          
Japanese
Yen
denominated
   917,362    893,832 
Non-Japanese
Yen
denominated
   329,876    409,160 
Index / Equity-linked obligations:
          
Japanese
Yen
denominated
   942,585    918,693 
Non-Japanese
Yen
denominated
   350,672    346,292 
   
 
 
   
 
 
 
    5,792,212    6,483,214 
   
 
 
   
 
 
 
Subtotal
   8,988,356    9,985,597 
   
 
 
   
 
 
 
Trading balances of secured borrowings
   269,950    413,613 
   
 
 
   
 
 
 
Total
  ¥9,258,306   ¥10,399,210 
   
 
 
   
 
 
 
 
(1)
Includes secured borrowings of ¥173,690 ¥92,580 
million and
 ¥97,481 
million as of March 31, 20192022 and ¥170,290 March 31, 2023 respectively. 
(2)
Includes secured borrowings of ¥79,843 
million and
 ¥84,999 
million as of March 31, 2020.2022 and March 31, 2023 respectively. 
(2)(3)
Includes secured borrowings of ¥65,517 ¥761,620 
million and
 ¥742,267 
million as of March 31, 20192022 and ¥72,543 million as of March 31, 2020.2023 respectively. 
 
F-99
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
(3)Includes secured borrowings of ¥910,224 million as of March 31, 2019 and ¥774,319 million as of March 31, 2020.
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.
F-
10
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-term borrowings consisted of the following:
         
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Debt issued by the Company
 ¥
2,869,376
  ¥
2,873,634
 
Debt issued by subsidiaries—guaranteed by the Company
  
2,590,768
   
2,541,554
 
Debt issued by subsidiaries—not guaranteed by the Company
(1)
  
2,455,625
   
2,360,477
 
         
Total
 ¥
7,915,769
  ¥
7,775,665
 
         
 
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Debt issued by the Company
  ¥3,679,955   ¥4,154,579 
Debt issued by subsidiaries
—
guaranteed by the Company
   2,124,904    2,026,071 
Debt issued by subsidiaries
—
not guaranteed by the Company
(1)
   3,453,447    4,218,560 
   
 
 
   
 
 
 
Total
  ¥9,258,306   ¥10,399,210 
   
 
 
   
 
 
 
(1)
Includes trading balances of secured borrowings.
As of March 31, 2019,2022, fixed-rate long-term borrowings mature between 20192022 and 2067 at
with
interest rates ranging from 0.00% to 24.40%30.09%. Excluding
Floating-rate obligations, excluding perpetual subordinated debts, floating-rate obligations,debt, which are generally based on TIBOR and LIBOR, mature between 2019
 2022 and 2049 at 2051
with
interest rates ranging from 0.00% to 6.78%7.74%. Index / Equity-linked obligations mature between 20192022 and 2049 at 2052
with
interest rates ranging from 0.00% to 30.30%42.30%.
As of March 31, 2020,2023, fixed-rate long-term borrowings mature between 20202023 and 2067 at
with
interest rates ranging from 0.00% to 24.40%42.44%. Excluding
Floating-rate obligations, excluding perpetual subordinated debts, floating-rate obligations, which are generally based on LIBOR,TIBOR,
Tokyo Overnight Average rate
and
Secured Overnight Financing Rate
, mature between 2020
 2023 and 2050 at 2061
with
interest rates ranging from 0.00% to 5.00%12.90%. Index / Equity-linked obligations mature between 20202023 and 2050 at 2053
with
interest rates ranging from 0.00% to 39.90%28.20%.
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. Principally, debtDebt securities and notes issued are effectivelytypically converted to LIBOR-basedTokyo Overnight Average rate and Secured Overnight Financing Rate-based floating rate obligations through such swap agreements. The carrying value of the long-term borrowings includes adjustments to reflect fair value hedges.
Following
F-100
Table of Contents
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, 20192022 and 2020.
         
 
March 31
 
 
2019
  
2020
 
Short-term borrowings
  
1.00
%  
0.72
%
Long-term borrowings
  
1.33
%  
1.17
%
Fixed-rate obligations
  
1.28
%  
1.11
%
Floating-rate obligations
  
1.57
%  
1.37
%
Index / Equity-linked obligations
  
0.86
%  
0.80
%
F-
10
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Table of Contents
NOMURA HOLDINGS, INC.2023.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
March 31
 
   
2022
  
2023
 
Short-term borrowings
   1.26%   1.23% 
Long-term borrowings
   1.09%   2.09% 
Fixed-rate obligations
   1.25%   2.40% 
Floating-rate obligations
   1.04%   2.08% 
Index / Equity-linked obligations
   0.79%   1.09% 
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, 2020:2023:
Year ending March 31
 
Millions of yen
 
2021
 ¥
778,008
 
2022
  
560,085
 
2023
  
664,173
 
2024
  
618,905
 
2025
  
1,026,748
 
2026 and thereafter
  
4,073,022
 
     
Subtotal
  
7,720,941
 
     
Trading balances of secured borrowings
  
54,724
 
     
Total
 ¥
7,775,665
 
     
Year ending March 31
  
Millions of yen
 
2024
  ¥619,672 
2025
   1,875,517 
2026
   1,730,116 
2027
   884,123 
2028
   730,624 
2029 and thereafter
   4,145,545 
   
 
 
 
Subtotal
   9,985,597 
   
 
 
 
Trading balances of secured borrowings
   413,613 
   
 
 
 
Total
  ¥10,399,210 
   
 
 
 
Borrowing facilities
As of March 31, 20192022 and 2020,2023, Nomura had unutilized borrowing facilities of ¥nil and ¥nil, respectively.
Subordinated borrowings
As of March 31, 20192022 and 2020,2023, subordinated borrowings were ¥418,200¥414,500 million and ¥318,200¥414,500 million, respectively.
12.
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 (loss) attributable to NHI shareholders by the weighted average number of the Company’s common shares outstanding during the year. The calculation of diluted EPS is similar to basic EPS, except that the weighted average number of the Company’s common shares is adjusted to reflect all dilutive instruments where the Company’s common shares are potentially deliverable during the year. In addition, net income (loss) attributable to NHI shareholders is adjusted for any change in income or loss that would result from the assumed conversion of dilutive instruments issued by subsidiaries and affiliates.
F-
10
3F-101
Table of Contents
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 (loss) attributable to NHI shareholders per share (basic and diluted) for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
 
Millions of yen
except per share data presented in yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Basic—
  
   
   
 
Net income (loss) attributable to NHI shareholders
 ¥
219,343
  ¥
(100,442
) ¥
216,998
 
             
Weighted average number of shares outstanding
  
3,474,593,441
   
3,359,564,840
   
3,202,369,845
 
             
Net income (loss) attributable to NHI shareholders per share
 ¥
63.13
  ¥
(29.90
) ¥
67.76
 
             
Diluted
—
  
   
   
 
Net income (loss) attributable to NHI shareholders
 ¥
219,266
  ¥
(100,525
) ¥
216,890
 
             
Weighted average number of shares outstanding
  
3,543,602,532
   
3,359,566,740
   
3,276,510,404
 
             
Net income (loss) attributable to NHI shareholders per share
 ¥
61.88
  ¥
(29.92
) ¥
66.20
 
             
   
Millions of yen

except per share data presented in yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Basic—               
Net income attributable to NHI shareholders
  ¥153,116   ¥142,996   ¥92,786 
   
 
 
   
 
 
   
 
 
 
Weighted average number of shares outstanding
   3,055,525,640    3,063,524,091    3,006,744,201 
   
 
 
   
 
 
   
 
 
 
Net income attributable to NHI shareholders per share
  ¥50.11   ¥46.68   ¥30.86 
   
 
 
   
 
 
   
 
 
 
Diluted—               
Net income attributable to NHI shareholders
  ¥153,064   ¥142,861   ¥92,606 
   
 
 
   
 
 
   
 
 
 
Weighted average number of shares outstanding
   3,147,338,609    3,158,708,013    3,114,313,612 
   
 
 
   
 
 
   
 
 
 
Net income attributable to NHI shareholders per share
  ¥48.63   ¥45.23   ¥29.74 
   
 
 
   
 
 
   
 
 
 
Net income (loss) attributable to NHI shareholders was adjusted to reflect the decline in Nomura’s equity share of earnings of subsidiaries and affiliates for the years ended March 31, 2018, 20192021, 2022 and 20202023 arising from options to purchase common shares issued by subsidiaries and affiliates.
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, 2018, 20192021, 2022 and 2020.2023.
Antidilutive stock options and other stock-based compensation plans to purchase or deliver 13,035,600, 104,496,00012,398,500, 9,716,800 and 15,452,9007,147,000 of the Company’s common shares were not included in the computation of diluted EPS for the years ended March 31, 2018, 20192021, 2022 and 2020,2023, respectively.
Subsequent Events
On April 26, 2023, the Company adopted a resolution to set up a share buyback program. See Note 1
6
 “
Shareholders’ equity
” for further information.
On May 
27
, 2020,15, 2023, the Company adopted a resolution to grant Restricted Stock Units (“RSUs”). See Note 141
3
 “
Deferred compensation awards
” for further information.
13.1
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
Table of Contents
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
F-
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4
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 unfunded
lump-sum
payment plans. Under these plans, employees with at least two years of service are generally entitled to
lump-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 unfunded
lump-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.
Interest rate applicable to cash balance pension plans is set in
In April of each fiscal year based on Japanese Yen LIBOR 12 months. The interest rate which was applied to the year ended March 31, 2020 was 0.09033%.
In
April
2020, certain Japanese entities amended their pension plans. Certain
defined
benefit pension plans and unfunded
lump-sum
payment plans were
either closed for additional funding or
abolished. Defined contribution pension plans and cash balance pension plans have replaced them
for future contributionscontributions.
.
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 ¥12,762¥7,911 million and ¥13,949¥5,795 million as of March 31, 20192022 and 2020,2023, respectively.
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, 2018, 20192021, 2022 and 2020.2023. Nomura’s measurement date is March 31 for defined benefit plans of Japanese entities.
             
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Service cost
 ¥
9,565
  ¥
11,270
  ¥
12,079
 
Interest cost
  
2,258
   
2,180
   
1,766
 
Expected return on plan assets
  
(6,066
)  
(6,068
)  
(6,038
)
Amortization of net actuarial losses
  
2,979
   
3,831
   
5,654
 
Amortization of prior service cost
  
(1,061
)  
(1,059
)  
(1,137
)
             
Net periodic benefit cost
 ¥
7,675
  ¥
10,154
  ¥
12,324
 
             
 
   
Millions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Service cost
  ¥6,721  ¥6,452  ¥6,398 
Interest cost
   1,786   2,042   2,432 
Expected return on plan assets
   (5,826)   (6,055)   (5,968) 
Amortization of net actuarial losses
   5,519   3,955   3,818 
Amortization of prior service cost
   (1,521)   (1,599)   (1,607) 
   
 
 
  
 
 
  
 
 
 
Net periodic benefit cost
  ¥6,679  ¥4,795  ¥5,073 
   
 
 
  
 
 
  
 
 
 
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.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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, 20192022 and 2020.2023.
         
 
Millions of yen
 
 
As of or for the year
ended March 31
 
 
2019
  
2020
 
Change in projected benefit obligation:
  
   
 
Projected benefit obligation at beginning of year
 ¥
287,983
  ¥
315,423
 
Service cost
  
11,270
   
12,079
 
Interest cost
  
2,180
   
1,766
 
Actuarial gain
  
25,855
   
(5,642
)
Benefits paid
  
(11,953
)  
(13,301
)
Amendments of pension benefit plans
  
—  
   
(6,818
)
Acquisition, divestitures and other
  
88
   
16
 
         
Projected benefit obligation at end of year
 ¥
315,423
  ¥
303,523
 
         
Change in plan assets:
  
   
 
Fair value of plan assets at beginning of year
 ¥
234,050
  ¥
232,885
 
Actual return on plan assets
  
3,574
   
(2,934
)
Employer contributions
  
4,484
   
5,584
 
Benefits paid
  
(9,223
)  
(9,791
)
         
Fair value of plan assets at end of year
 ¥
232,885
  ¥
225,744
 
         
Funded status at end of year
  
(82,538
)  
(77,779
)
         
Amounts recognized in the consolidated balance sheets
 ¥
(82,538
) ¥
(77,779
)
         
 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
Millions of yen
 
   
As of or for the

year ended March 31
 
   
2022
  
2023
 
Change in projected benefit obligation:
         
Projected benefit obligation at beginning of year
  ¥295,810  ¥293,039 
Service cost
   6,452   6,398 
Interest cost
   2,042   2,432 
Actuarial gain
   1,433   (22,749) 
Benefits paid
   (12,683)   (13,893) 
Acquisition, divestitures and other
   (15)   (84) 
   
 
 
  
 
 
 
Projected benefit obligation at end of year
  ¥293,039  ¥265,143 
   
 
 
  
 
 
 
Change in plan assets:
         
Fair value of plan assets at beginning of year
  ¥234,747  ¥231,461 
Actual return on plan assets
   5,464   (2,416) 
Employer contributions
   815   820 
Benefits paid
   (9,565)   (10,403) 
   
 
 
  
 
 
 
Fair value of plan assets at end of year
  ¥231,461  ¥219,462 
   
 
 
  
 
 
 
Funded status at end of year
   (61,578)   (45,681) 
   
 
 
  
 
 
 
Amounts recognized in the consolidated balance sheets
  ¥(61,578)  ¥(45,681) 
   
 
 
  
 
 
 
The accumulated benefit obligation (“ABO”) was ¥315,423¥293,039 million and ¥303,523¥265,143 million as of March 31, 20192022 and 2020,2023, respectively.
In
April
2020, defined contribution pension plans and cash balance pension plans were adopted
for future contributions
following the amendments of pension benefit plans. Certain contributory
defined
benefit pension plans were closed for additional funding and will be managed within the accumulated funds. Unfunded
lump-sum
payment plans were abolished and transferred to cash balance plans with the calculated amount of
lump-sum
retirement payment as of the amendment date.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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, 20192022 and 2020.2023.
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Plans with ABO in excess of plan assets:
  
   
 
PBO
 ¥
82,538
  ¥
77,779
 
ABO
  
82,538
   
77,779
 
Fair value of plan assets
  
—  
   
—  
 
Plans with PBO in excess of plan assets:
  
   
 
PBO
 ¥
82,538
  ¥
77,779
 
ABO
  
82,538
   
77,779
 
Fair value of plan assets
  
—  
   
—  
 
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Plans with ABO in excess of plan assets:
          
PBO
  ¥62,457   ¥47,672 
ABO
   62,457    47,672 
Fair value of plan assets
   —      —   
Plans with PBO in excess of plan assets:
          
PBO
  ¥62,457   ¥47,672 
ABO
   62,457    47,672 
Fair value of plan assets
   —      —   
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents
pre-tax
amounts of Japanese entities’ plans deferred in
Accumulated other comprehensive income (loss)
that have not yet been recognized as components of net periodic benefit cost during the year ended March 31, 2020.2023.
  
Millions of yen
 
  
For the year ended

March 31, 2020
2023
 
Net actuarial loss
  ¥
107,098
                64,551		 
Net prior service cost
   
(11,281
6,507		)
   
 
Total
  ¥
95,817
58,044		 
   
 
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.
  
Millions of yen
 
  
For the year ending

March 31, 2021
2024
 
Net actuarial loss
  ¥
5,486
                  2,805		 
Net prior service cost
   
(1,601
1,665		)
   
 
Total
  ¥
3,885
1,140		 
   
 
Assumptions
The following table presents the weighted-average assumptions used to determine projected benefit obligations of Japanese entities’ plans as of March 31, 20192022 and 2020.2023.
 
March 31
 
 
2019
  
2020
 
Discount rate
  
0.6
%  
0.6
%
Rate of increase in compensation levels
  
1.6
%  
0.3
%
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
March 31
 
   
2022
  
2023
 
Discount rate
   0.8%   1.3% 
Rate of increase in compensation levels
   0.3%   0.4% 
Interest crediting rate
   2.9%   2.8% 
The following table presents the weighted-average assumptions used to determine the net periodic benefit cost of Japanese entities’ plans as of March 31, 2018, 20192021, 2022 and 2020.2023.
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Discount rate
  
0.9
%  
0.8
%  
0.6
%
Rate of increase in compensation levels
  
2.5
%  
1.7
%  
1.6
%
Expected long-term rate of return on plan assets
  
2.6
%  
2.6
%  
2.6
%
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Discount rate
   0.6%   0.7%   0.8% 
Rate of increase in compensation levels
   0.3%   0.3%   0.3% 
Expected long-term rate of return on plan assets
   2.6%   2.6%   2.6% 
Interest crediting rate
   3.0%   2.9%   2.9% 
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
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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 measurementsmeasurements.
”.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present information about the fair value of plan assets of Japanese entities’ plans as of March 31, 20192022 and March 31, 20202023 within the fair value hierarchy.
 
Millions of yen
 
 
March 31, 2019
 
 
Level 1
  
Level 2
  
Level 3
  
Balance as of
March 31,
2019
 
Pension plan assets:
  
   
   
   
 
Equities
 ¥
21,991
  ¥
—  
  ¥
—  
  ¥
21,991
 
Private equity and pooled investments
(1)
  
—  
   
9,145
   
3,823
   
12,968
 
Japanese government securities
  
25,980
   
—  
   
—  
   
25,980
 
Foreign government, agency and municipal securities
  
—  
   
22
   
—  
   
22
 
Bank and corporate debt securities
  
2,566
   
2,082
   
—  
   
4,648
 
Investment trust funds and other
(2)(3)
  
—  
   
6,070
   
50,560
   
56,630
 
Life insurance company general accounts
  
—  
   
64,437
   
—  
   
64,437
 
Other assets
  
—  
   
39,748
   
—  
   
39,748
 
                 
Total
 ¥
50,537
  ¥
121,504
  ¥
54,383
  ¥
226,424
 
                 
    
 
Millions of yen
 
 
March 31, 2020
 
 
Level 1
  
Level 2
  
Level 3
  
Balance as of
March 31,
2020
 
Pension plan assets:
  
   
   
   
 
Equities
 ¥
—  
  ¥
—  
  ¥
—  
  ¥
—  
 
Private equity and pooled investments
(1)
  
—  
   
1,901
   
23,465
   
25,366
 
Japanese government securities
  
23,464
   
—  
   
—  
   
23,464
 
Foreign government, agency and municipal securities
  
—  
   
—  
   
—  
   
—  
 
Bank and corporate debt securities
  
—  
   
—  
   
—  
   
—  
 
Investment trust funds and other
(2)(3)
  
—  
   
22,027
   
41,616
   
63,643
 
Life insurance company general accounts
  
—  
   
66,363
   
—  
   
66,363
 
Other assets
  
—  
   
40,508
   
—  
   
40,508
 
                 
Total
 ¥
23,464
  ¥
130,799
  ¥
65,081
  ¥
219,344
 
                 
   
Millions of yen
 
   
March 31, 2022
 
   
Level 1
   
Level 2
   
Level 3
   
Balance as of

March 31,
2022
 
Pension plan assets:
                    
Private equity and pooled investments
(1)
  ¥—     ¥740   ¥29,081   ¥29,821 
Japanese government securities
   20,469    —      —      20,469 
Investment trust funds and other
(2)(3)
   —      19,842    27,575    47,417 
Life insurance company general accounts
   —      73,314    —      73,314 
Other assets
   —      33,575    —      33,575 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥20,469   ¥127,471   ¥56,656   ¥204,596 
   
 
 
   
 
 
   
 
 
   
 
 
 
   
Millions of yen
 
   
March 31, 2023
 
   
Level 1
   
Level 2
   
Level 3
   
Balance as of

March 31,
2023
 
Pension plan assets:
                    
Private equity and pooled investments
(1)
  ¥—     ¥1,718   ¥23,078   ¥24,796 
Japanese government securities
   21,704    —      —      21,704 
Investment trust funds and other
(2)(3)
   —      19,918    26,328    46,246 
Life insurance company general accounts
   —      74,033    —      74,033 
Other assets
   —      24,334    —      24,334 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥21,704   ¥120,003   ¥49,406   ¥191,113 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Includes corporate type equity investments.
(2)
Includes mainlyprimarily debt investment funds. Hedge funds and real estate funds are also included.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(
3
)(3)
Certain assets that are measured at fair value using net asset value per share as a practical expedient have not been classified in the fair value hierarchy. As of March 31,
2019
2022 and March 31,
2020
,2023, the fair values of these assets were ¥6,462¥26,865 million and ¥6,401¥28,349 million, respectively.
Within the
The fair value
measurement
of plan assets of
non-Japanese
entities’ plans as of March 31, 2019 was ¥3,7112022
,
 ¥1,543 million, ¥167¥2,181 million and ¥38,991¥36,129 million which were classified in Level 1, Level 2 and Level 3 of the fair value hierarchy, respectively. The
Within the
fair value
measurement
 of plan assets of
non-Japanese
entities’ plans as of March 31, 2020 was ¥1,7662023
,
 ¥44 million, ¥1,522¥3,149 million and ¥37,703¥26,497 million which were classified in Level 1, Level 2 and Level 3 of the fair value hierarchy, respectively.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
See Note 2 “
Fair value measurements
” for further information regarding how Nomura estimates fair value for specific types of financial instruments.
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.
 
Millions of yen
 
 
Year ended March 31, 2019
   
 
Balance
as of
April 1,
2018
  
Unrealized
and realized
gains / loss
  
Purchases /
sales and
other
settlement
  
Balance
as of
March 31,
2019
 
Private equity and pooled investments
 ¥
3,639
  ¥
(349
) ¥
533
  ¥
3,823
 
Investment trust funds and other
  
48,088
   
937
   
1,535
   
50,560
 
      ��          
Total
 ¥
51,727
  ¥
588
  ¥
2,068
  ¥
54,383
 
                 
    
 
Millions of yen
 
 
Year ended March 31, 2020
   
 
Balance
as of
April 1,
2019
  
Unrealized
and realized
gains / loss
  
Purchases /
sales and
other
settlement
  
Balance
as of
March 31,
2020
 
Private equity and pooled investments
 ¥
3,823
  ¥
(4,403
) ¥
24,045
  ¥
23,465
 
Investment trust funds and other
  
50,560
   
(3,262
)  
(5,682
)  
41,616
 
                 
Total
 ¥
54,383
  ¥
(7,665
) ¥
18,363
  ¥
65,081
 
                 
   
Millions of yen
 
   
Year ended March 31, 2022
    
   
Balance

as of
April 1,

2021
   
Unrealized

and realized

gains / (loss)
  
Purchases /

sales and

other

settlement
  
Balance

as of

March 31,

2022
 
Private equity and pooled investments
  ¥33,384   ¥1,374  ¥(5,677)  ¥29,081 
Investment trust funds and other
   36,335    (532)   (8,228)   27,575 
   
 
 
   
 
 
  
 
 
  
 
 
 
Total
  ¥69,719   ¥842  ¥(13,905)  ¥56,656 
   
 
 
   
 
 
  
 
 
  
 
 
 
   
Millions of yen
 
   
Year ended March 31, 2023
    
   
Balance

as of
April 1,

2022
   
Unrealized

and realized

gains / (loss)
  
Purchases /

sales and

other

settlement
  
Balance

as of

March 31,

2023
 
Private equity and pooled investments
  ¥29,081   ¥(1,990)  ¥(4,013)  ¥23,078 
Investment trust funds and other
   27,575    2,211   (3,458)   26,328 
   
 
 
   
 
 
  
 
 
  
 
 
 
Total
  ¥56,656   ¥221  ¥(7,471)  ¥49,406 
   
 
 
   
 
 
  
 
 
  
 
 
 
The fair value measurement of Level 3
plan assets of
non-Japanese
entities’ plans
 classified as Level 3
 mainly consisting
consists
of annuities, was ¥38,991
amounted to
¥36,129 million and ¥37,703¥26,497 million as of March 31, 20192022 and 2020,2023, respectively. The amount of unrealized profit (loss) of Level 3 assets was ¥4,358
amounted to
¥(4,060) million and ¥2,509 ¥(9,705) 
million as offor the years ended March 31, 20192022 and 2020,2023, respectively. The amounts of gains and losses other than above, purchases and sales, other than above,and transfers between Level 1 or Level 2 and Level 3 relating to these assets during the years ended March 31, 20192022 and 20202023 were not significant.
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.
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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.
Year ending March 31
 
Millions of yen
 
2021
 ¥
13,167
 
2022
  
12,231
 
2023
  
12,733
 
2024
  
13,276
 
2025
  
14,049
 
2026-2030
  
63,956
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Year ending March 31
  
Millions of yen
 
2024
  ¥  16,237 
2025
   15,753 
2026
   15,135 
2027
   14,373 
2028
   15,048 
2029-2033
   59,580 
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 ¥3,627¥6,478 million, ¥3,614¥6,709 million and ¥3,585¥6,675 million to defined contribution pension plans for Japanese entities’ plans for the years ended March 31, 2018, 20192021, 2022 and 2020,2023, respectively.
The contributions to overseas defined contribution pension plans were ¥9,265¥8,035 million, ¥9,293¥9,215 million and ¥8,497¥11,964 million for the years ended March 31, 2018, 20192021, 2022 and 2020,2023, respectively.
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, amounted to ¥8,082
were
¥9,463 million, ¥9,828¥10,035 million and ¥9,308¥9,586 million for the years ended March 31, 2018, 20192021, 2022 and 2020,2023, respectively.
14.1
3
. Deferred compensation awards:
Nomura issues deferred compensation awards to senior management and employees, certain of which are linked to the price of the Company’s common stock, in order to retain and motivate key staff.
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. The Company also issues other deferred compensation awards, namely Notional Indexed Unit (“NIU”) awards which are linked to a world stock index quoted by Morgan Stanley Capital International.
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.
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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.
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NOMURA HOLDINGS, INC.RSU awards
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For
RSU awards
The Company introduced RSU awards in the fiscal year ended March 31, 2018, and granted the first RSU awards in May 2018. For each RSU award, one common stock of the Company is delivered. The awards generally have a graded vesting period from
one
overto three years 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.
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, 2020.2023.
 
Outstanding
(number of Nomura
shares)
  
Weighted-average
grant date fair
value per share
  
Weighted-average
remaining life
until expiry
(years)
 
Outstanding as of March 31, 2019
  
48,518,200
  ¥
530
   
1.3
 
Granted
  
33,786,200
   
365
   
 
Forfeited
  
(3,734,800
)  
441
   
 
Delivered
  
(15,230,000
)  
530
   
 
             
Outstanding as of March 31, 2020
  
63,339,600
  ¥
447
   
1.0
 
             
   
Outstanding

(number of Nomura

shares)
  
Weighted-average

grant date fair

value per share
   
Weighted-average

remaining life

until expiry

(years)
 
Outstanding as of March 31, 2022
   122,119,390  ¥            466    1.0 
Granted
   100,057,000   442      
Forfeited
   (13,325,712)   456      
Delivered
   (50,090,803)   466      
   
 
 
  
 
 
      
Outstanding as of March 31, 2023
   158,759,875  ¥451    1.0 
   
 
 
  
 
 
      
The weighted-average grant date fair value per award for the year ended March 31, 2019
2021,
 2022 and 20202023 was ¥530
¥418
,
¥507 and ¥365,¥442, respectively.
There were no vested
The total fair value of RSU awards nor delivered sharesvested during the yearyears ended March 31, 2019.2021, 2022 and 2023
was ¥
10,327 million, ¥28,076 million and ¥
26,642 million
, respectively. The total intrinsic value of RSU awards vested
units delivered during the yearyears ended March 31, 20202021 and 2022 was ¥10,360 million and ¥28,704 million, respectively.
was ¥6,613 million. The A
total of 9,926,38532,050,787 shares was
were
delivered during the year ended March 31, 2020 and its 2023
with
a total
intrinsic value was
of
¥ 6,23123,978 million. The aggregate intrinsic value of RSU awards outstanding as of March 31, 20202023 was ¥28,997¥80,920 million.
As of March 31, 2020,2023, total unrecognized compensation cost relating to RSU awards was ¥3,681
¥11,786 million which is expected to be recognized over a weighted average period of 1.6
1.8 years.
SAR Plan A awards
The Company issues SAR Plan A awards linked to the price of the Company’s common stock pursuant to several stock option plans. These awards vest and are exercisable into the Company’s common stock approximately two years after grant date and expire approximately seven years after grant date. The exercise price is generally not less than the fair value of the Company’s common stock on grant date. These awards are subject to the above reduction and forfeiture provisions but are not subject to claw back.
The grant date fair value of SAR Plan A awards is estimated using a Black-Scholes option-pricing model and using the following assumptions:
Expected volatilities based on historical volatility of the Company’s common stock;
Expected dividend yield based on the current dividend rate at the time of grant;
Expected lives of the awards determined based on historical experience; and
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Expected risk-free interest rate based on Japanese Yen swap rate with a maturity equal to the expected lives of the options.
The weighted-average grant date fair value of SAR Plan A awards granted during the years ended March 31, 2018 and 2019 was ¥110 and ¥79 per share, respectively. There was 0 SAR Plan A award granted during the year ended March 31, 2020. The weighted-average assumptions used in each of these years were as follows.
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Expected volatility
  
35.30
%  
33.30
%  
—  
%
Expected dividends yield
  
3.07
%  
3.67
%  
—  
%
Expected lives (in years)
  
4.5
   
4.5
   
—  
 
Risk-free interest rate
  
0.10
%  
0.10
%  
—  
%
The following table presents activity relating to SAR Plan A awards for the year ended March 31, 2020.
 
Outstanding
(number of Nomura
shares)
  
Weighted-average
exercise price
  
Weighted-average
remaining life
until expiry
(years)
 
Outstanding as of March 31, 2019
  
16,539,300
  ¥
679
   
3.9
 
Granted
  
—  
   
—  
   
 
Exercised
  
(900,800
)  
298
   
 
Forfeited
  
(89,900
)  
630
   
 
Expired
  
(95,700
)  
298
   
 
             
Outstanding as of March 31, 2020
  
15,452,900
  ¥
704
   
3.1
 
             
Exercisable as of March 31, 2020
  
12,945,000
  ¥
729
   
2.6
 
             
The total intrinsic value of SAR Plan A awards exercised during the years ended March 31, 2018, 2019 and 2020 was ¥450 million, ¥241 million and ¥139 million, respectively.
The aggregate intrinsic value of SAR Plan A awards outstanding and exercisable as of March 31, 2020 was both ¥nil, respectively.
As of March 31, 2020, total unrecognized compensation cost relating to SAR Plan A awards was ¥62 million which is expected to be recognized over a weighted average period of 0.6 years. The total fair value of SAR Plan A awards which vested during the years ended March 31, 2018, 2019 and 2020 was ¥nil, respectively.
SAR Plan B awards
The
In prior years, the Company issuesissued SAR Plan B awards linked to the price of the Company’s common
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.
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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, 2020.2023. No new SAR Plan B awards have been granted since April 1, 2018.
 
Outstanding
(number of Nomura
shares)
  
Weighted-average
grant date fair
value per share
  
Weighted-average
remaining life
until expiry
(years)
 
Outstanding as of March 31, 2019
  
39,392,900
  ¥
508
   
4.1
 
Granted
  
—  
   
—  
   
 
Exercised
  
(16,340,900
)  
497
   
 
Forfeited
  
(399,900
)  
531
   
 
Expired
  
(313,200
)  
425
   
 
             
Outstanding as of March 31, 2020
  
22,338,900
  ¥
517
   
3.4
 
             
Exercisable as of March 31, 2020
  
16,186,800
  ¥
512
   
2.5
 
             
The weighted-average grant date fair value per share for the years ended March 31, 2018 was ¥588. No SAR Plan B award was granted for the year ended March 31, 2019 and 2020.
   
Outstanding

(number of Nomura

shares)
  
Weighted-average

grant date fair

value per share
   
Weighted-average

remaining life

until expiry

(years)
 
Outstanding as of March 31, 2022
   7,913,800  ¥            516    2.3 
Granted
   
—
  		   —        
Exercised
   (3,339,000)   541      
Forfeited
   (3,800)   469      
Expired
   (548,000)   564      
   
 
 
  
 
 
      
Outstanding as of March 31, 2023
   4,023,000  ¥490    1.9 
   
 
 
  
 
 
      
Exercisable as of March 31, 2023
   3,750,600  ¥494    1.6 
   
 
 
  
 
 
      
The total intrinsic value of SAR Plan B awards exercised during the years ended March 31, 2018, 20192021, 2022 and 2020 was ¥21,7402023 were ¥4,878 million, ¥8,896¥2,547 million and ¥7,640¥1,965 million, respectively.
The aggregate intrinsic value of SAR Plan B awards outstanding and exercisable as of March 31, 2020 was ¥10,2042023 were ¥2,047 million and ¥7,394¥1,908 million, respectively.
As of March 31, 2020,2023, total unrecognized compensation cost relating to SAR Plan B awards was ¥30¥0 million which is expected to be recognized over a weighted average period of 1.71.1 years. The total fair value of SAR Plan B awards which vested during the years ended March 31, 2018, 20192021, 2022 and 2020 was ¥17,5392023 were ¥1,784 million, ¥10,757¥467 million and ¥4,309¥415 million, respectively.
Total compensation expense recognized within
Non-interest expenses—Compensation and benefits
in the consolidated statements of income relating to RSU SAR Plan A, and SAR Plan B awards for the years ended March 31, 2018, 20192021, 2022 and 2020 was ¥9,6502023 were ¥28,251 million, ¥21,814¥27,941 million and ¥12,694¥35,216 million, respectively.
Cash received from the exercise of SAR Plan A and SAR Plan B awards during the year ended March 31, 20202023 was ¥285¥4 million and the tax benefit realized from exercise of these awards was ¥785¥87 million.
Total related tax benefits recognized in the consolidated statements of income relating to
RSU
and SAR Plan Aawards
and
SAR Plan B awards
for the years ended March 31, 2018, 20192021, 2022 and 20202023
 were ¥566 million, ¥90¥nil million and ¥13¥nil million respectively.and ¥0 million, respectively
. 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 121
1
“Earnings per share”
for further information.
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.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value of NSU and CSU awards are determined using the price of the Company’s common stock.
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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, 2020. No new CSU awards have been granted since April 1, 2018.2023.
 
NSUs
  
CSUs
 
 
Outstanding
(number of units)
  
Stock
price
  
Outstanding
(number of units)
  
Stock
price
 
Outstanding as of March 31, 2019
  
31,036,558
  ¥
389
   
8,760,439
  ¥
603
 
Granted
  
13,203,853
   
405
(1)   
—
   
—
 
Vested
  
(22,762,553
)  
438
(2)   
(5,728,731
)  
601
(2) 
Forfeited
  
(379,029
)  
   
(230,052
)  
 
                 
Outstanding as of March 31, 2020
  
21,098,829
  ¥
445
(3)   
2,801,656
  ¥
611
(3) 
                 
   
NSUs
  
CSUs
 
   
Outstanding

(number of units)
  
Stock

price
  
Outstanding

(number of units)
  
Stock

price
 
Outstanding as of March 31, 2022
   17,998,325  ¥            445   937,156  ¥            606 
Granted
   15,228,667   494(1)   15,061,452   494 
Vested
   (12,281,557)   503(2)   (2,775,837)   497(2) 
Forfeited
   (348,893)       (627,484)     
   
 
 
  
 
 
  
 
 
  
 
 
 
Outstanding as of March 31, 2023
   20,596,542  ¥484(3)   12,595,287  ¥509(3) 
   
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Weighted-average price of the Company’s common stock used to determine number of awards granted.
(2)
Weighted-average price of the Company’s common stock used to determine the final cash settlement amount of the awards.
(3)
The price of the Company’s common stock used to remeasure the fair value of the remaining outstanding unvested awards as of March 31, 2020.2023.
Total compensation expense recognized within
Non-interest expenses—Compensation and benefits
in the consolidated statements of income relating to NSU and CSU awards for the years ended March 31, 2018, 20192021, 2022 and 2020 was ¥24,2862023 were ¥8,043 million, ¥5,077¥4,566 million and ¥4,639¥11,544 million, respectively.
Total unrecognized compensation cost relating to NSU awards, based on the fair value of these awards as of March 31, 2020,2023, was ¥613¥1,006 million, which is expected to be recognized through the consolidated statements of income over a remaining weighted-average period of 0.91.0 years. The total fair value of NSU awards which vested during the years ended March 31, 2018, 20192021, 2022 and 2020 was ¥17,1032023 were ¥8,426 million, ¥11,481¥7,247 million and ¥9,980¥6,174 million, respectively.
Total unrecognized compensation cost relating to CSU awards, based on the fair value of these awards as of March 31, 2020,2023, was ¥37 million, which is expected to be recognized through the consolidated statements of income over a remaining weighted-average period of 2.0 years.¥1,126 million. The total fair value of CSU awards which vested during the years ended March 31, 2018, 20192021, 2022 and 2020 2023
was ¥11,871
¥576 million, ¥6,282¥559 million and ¥3,445 million, respectively.
NIU awards
In addition to the stock-based compensation awards described above, Nomura also grants NIU awards to senior management and employees. NIU awards are cash-settled awards linked to a world stock index quoted by Morgan Stanley Capital International, with graded vesting periods generally over three years with certain longer vesting periods where required by local regulations.
The fair value of NIU awards is determined using the price of the index.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents activity relating to NIU awards for the year ended March 31, 2020. No new NIU awards have been granted since April 1, 2018.
 
Outstanding
(number of units)
  
Index price
(1)
 
Outstanding as of March 31, 2019
  
5,165,744
  $
6,043
 
Granted
  
—  
   
—  
 
Vested
  
(4,127,154
)  
6,233
(2) 
Forfeited
  
(198,636
)  
 
         
Outstanding as of March 31, 2020
  
839,954
  $
5,339
(3) 
         
(1)The price of each unit is determined using 1/1000th of the index price.
(2)Weighted-average index price used to determine the final cash settlement amount of the awards.
(3)Index price used to remeasure the total fair value of the remaining outstanding unvested awards as of March 31, 2020.
Total compensation expense recognized within
Non-interest expenses—Compensation and benefits
in the consolidated statements of income relating to NIU awards for the year ended March 31, 2018, 2019 and 2020 was ¥8,697 million, ¥1,731 million and ¥237 million, respectively.
Total unrecognized compensation cost relating to NIU awards, based on the fair value of these awards as of March 31, 2020, was ¥10 million which is expected to be recognized through the consolidated statements of income over a remaining weighted-average period of 2.0 years. The total fair value of NIU awards which vested during the years ended March 31, 2018, 2019 and 2020 was ¥7,669 million, ¥5,091 million and ¥2,795¥1,380 million, respectively.
Total tax benefits recognized in the consolidated statements of income for compensation expense relating to NSU, CSU and NIUCSU awards for the years ended March 31, 2018, 20192021, 2022 and 20202023 were ¥779¥205 million, ¥220¥125 million and ¥168¥164 million, respectively.
Subsequent events
On May 27, 2020,15, 2023, the Company passed a resolution to grant
RSU
awards to certain senior management and employees.
TA
t
otal of 78,054,80084,295,700 RSU awards have been granted which generally have a graded vesting period from one to three years
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
In June
202025
, 2023, Nomura also granted NSU awards to senior managementmanage
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.
15. Restructuring initiatives:
Nomura continues to experience a major structural shift such as a breakdown of the traditional investment banking business model, advances in digitization, and demographic shifts due to the shrinking population and aging society in Japan. To respond to the changing environment created by these shifts, Nomura implemented various restructuring initiatives during the year ended March 31, 2019 to swiftly reengineer its business platforms and change its business approach in order to achieve sustainable growth in any business environment. In particular, Nomura has restructured its management reporting framework to eliminate the concept of regions to
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
minimize duplication between businesses and region, reduce the number of corporate functions, downscale unprofitable and low growth businesses and reduce its activities in EMEA. During the year ended March 31, 2020, this restructuring initiative is almost completed.
As a result of these initiatives, Nomura recognized ¥10,348 million of severance costs reported within
Non-interest expenses—Compensation and benefits
in the consolidated statements of income during the year ended March 31, 2019 and within Nomura’s Wholesale and Other segments. As of March 31, 2019, these costs were reported as liabilities within
Other liabilities
in the consolidated statements of financial position. Liabilities relating to these restructuring costs (including currency translation adjustments) were ¥507 million as of March 31, 2020 and ¥9,305 million were settled during the year ended March
 31
, 2020.
Nomura also recognized ¥4,390 million of branch consolidation costs reported within
Non-interest expenses—Occupancy and related depreciation
in the consolidated statements of income during the year ended March 31, 2020 and within Nomura’s Retail and Other segments. As of March 31, 2020, ¥813 million were reported as liabilities within
Other liabilities.
16.1
4
. Income taxes:
The following table presents components of
Income tax expense
reported in the consolidated statements of income for the years ended March 31, 2018, 20192021, 2022 and 2020.
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Current:
  
   
   
 
Domestic
 ¥
35,018
  ¥
26,725
  ¥
42,099
 
Foreign
  
8,589
   
8,720
   
10,706
 
             
Subtotal
  
43,607
   
35,445
   
52,805
 
             
Deferred:
  
   
   
 
Domestic
  
64,340
   
28,183
   
(23,512
)
Foreign
  
(4,081
)  
(6,618
)  
(399
)
             
Subtotal
  
60,259
   
21,565
   
(23,911
)
             
Total
 ¥
103,866
  ¥
57,010
  ¥
28,894
 
             
2023.
   
Millions of yen
 
   
Year ended March 31
 
   
2021
  
2022
   
2023
 
Current:
              
Domestic
  ¥73,534  ¥69,661   ¥35,107 
Foreign
   17,853   7,323    16,554 
   
 
 
  
 
 
   
 
 
 
Subtotal
   91,387   76,984    51,661 
   
 
 
  
 
 
   
 
 
 
Deferred:
              
Domestic
   (19,567)   1,561    14,356 
Foreign
   (1,546)   1,545    (8,219) 
   
 
 
  
 
 
   
 
 
 
Subtotal
   (21,113)   3,106    6,137 
   
 
 
  
 
 
   
 
 
 
Total
  ¥70,274  ¥80,090   ¥57,798 
   
 
 
  
 
 
   
 
 
 
The income tax benefit recognized from operating losses for the years ended March 31, 2018, 20192021, 2022 and 20202023 was ¥4,653¥97 million, ¥246¥6,007 million and ¥1,195¥1,787 million, respectively, which is included within deferred income tax expense above.
The
With effect from April 1, 2022, the Company and its wholly-owned domestic subsidiaries have adopted the consolidated tax filing system permitted under Japanese tax law. The consolidated tax filing system only imposes a national tax.
The
effective statutory tax rate applicable to Nomura in Japan
was
approximately 31%
 as of March 31, 2018, March 31, 2019 and March 31, 2020.
On March 27, 2020, the “Act to partially revise the Income Tax Act and Others ”(Act No.8 of 2020) was enacted, effective for fiscal years beginning on or after April 1, 2022. As a result of the Act, the existing Consolidated Taxation system in Japan will be replaced withapplied the Group Tax Sharing system. The Group Tax Sharing system is only available for a national tax. The Company does not expecthave any significant impact on its net deferred tax liabilities on adoption of the Act.Group Tax Sharing system.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On December 22, 2017, the Tax Cuts and Jobs Act (“the Act”) was enacted in the United States which significantly changes U.S. income tax law, including reducing the U.S. federal corporate incomeThe effective statutory tax rate applicable to 21%, broadening the U.S. tax base, introducing a territorial tax system and one time repatriation tax on U.S. entities for previously deferred earningsNomura in Japan was approximately 31% as of
non-U.S.
investees, allowing full expensing of certain property assets and imposing certain additional taxes on payments made from U.S. entities to foreign related parties. As a result, Nomura recognized a reduction of ¥2,776 million in deferred tax liabilities and deferred tax expense during the
fiscal year ended March 31, 2018. As a result of finalizing calculations around the impact from changes in certain assumptions2021, 2022 and interpretations made by Nomura, certain actions to be taken by Nomura and additional guidance released by the U.S. tax authorities and other bodies after April 1, 2018, Nomura did not make any material adjustments to this estimate during the fiscal year ended March 31, 2019.2023, respectively.
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.
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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, 2018, 20192021, 2022 and 2020.2023. The effective tax rate presented in the following table represents total income tax expense for the year as a percentage of
Income (loss) before income taxes
. For the years ended March 31, 2018 and 2020, where Nomura recognized
Income before income taxes
for the years, reconciling items which increase
Income tax expense
and therefore increase Nomura’s effective tax rate are shown as positive amounts. Conversely, reconciling items which reduce
Income tax expense
and reduce Nomura’s effective tax rate are shown as negative amounts. For the year ended March 31, 2019, Nomura recognized
Loss before income taxes
and consequently, reconciling items shown in the table which increase
Income tax expense
are presented as negative amounts and reconciling items which reduce
Income tax expense
are presented as positive amounts.
 
Year ended March 31
 
 
    2018    
  
    2019    
  
    2020    
 
Nomura’s effective statutory tax rate
  
31.0
%  
31.0
%  
31.0
%
Impact of:
  
   
   
 
Changes in deferred tax valuation allowances
  
(22.8
)  
(58.3
)  
(0.3
) 
Additional taxable income
  
0.1
   
(2.9
)  
0.6
 
Non-deductible
expenses
(1)
  
1.9
   
(110.3
)  
2.9
 
Non-taxable
income
(2)
  
(3.6
)  
16.8
   
(23.5
)
Dividends from foreign subsidiaries
  
0.0
   
0.0
   
0.1
 
Tax effect of undistributed earnings of foreign subsidiaries
  
0.0
   
(2.8
)  
0.2
 
Different tax rate applicable to income (loss) of foreign subsidiaries
  
0.8
   
(19.8
)  
(0.9
)
Effect of changes in foreign tax laws
  
23.5
   
0.5
   
(0.9
) 
Effect of changes in domestic tax laws
  
—  
   
—  
   
—   
 
Tax benefit recognized on the devaluation of investment in subsidiaries and affiliates
  
1.7
   
5.4
   
(0.1
) 
Other
  
(0.9
)  
(10.8
)  
2.5
 
             
Effective tax rate
  
31.7
%  
(151.2
)%  
11.6
%
             
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Nomura’s effective statutory tax rate
   31.0%    31.0%    31.0% 
Impact of:
               
Changes in deferred tax valuation allowances
(2)
   8.7    18.0    11.3 
Additional taxable income
   0.7    1.0    0.7 
Non-deductible expenses
   7.1    5.1    7.8 
Non-taxable income
   (4.5)    (2.9)    (4.7) 
Dividends from foreign subsidiaries
   0.0    0.0    0.1 
Tax effect of undistributed earnings of foreign subsidiaries
   0.0    0.1    0.3 
Different tax rate applicable to income (loss) of foreign subsidiaries
   (4.0)    0.0    (0.9) 
Effect of changes in foreign tax laws
(2)
   1.1    (14.4)    (1.9) 
Tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates
(1)
   (8.7)    0.0    (2.3) 
Other
   (0.9)    (2.6)    (2.7) 
   
 
 
   
 
 
   
 
 
 
Effective tax rate
   30.5%    35.3%    38.7% 
   
 
 
   
 
 
   
 
 
 
(1)
Non-deductible expenses
Tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates
during the year ended March 31, 2019 included2021 of approximately ¥21 billion relating(which decreased Nomura’s effective tax rate by 9.1%) arises from the recognition of deferred tax assets from the decision and commitment of Nomura management to goodwill impairment lossesliquidate a certain wholly-owned subsidiary within Nomura in the foreseeable future. The valuation allowances of ¥3 billion have been recognized against these deferred tax assets, the impact of which are reported in
Changes in deferred tax valuation allowances
for the same period.
(2)
The
U.K.
Finance Act 2021, enacted on June 10, 2021, increases the headline U.K. corporation tax rate from 19% to 25% on April 1, 2023. Deferred tax assets and liabilities as of the balance sheet date are calculated by reference to the most appropriate enacted rates as of March 31, 2022. As a result of the change in closing deferred tax rate, Nomura recognized a movement in
Effect of changes in foreign tax laws
of ¥36 billion (which decreased Nomura’s effective tax rate by 16.0%), which was offset by a movement in
Changes in deferred tax valuation allowances
of ¥36 billion (which increased Nomura’s effective tax rate by 56.3%16.0% ) and approximately ¥13 billion relating to litigation provisions and settlements (which increased Nomura’s effective tax rate by 34.0%).during the year ended March 31, 2022.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(2)
Non-taxable income
during the year ended March 31, 2020 includes approximately
¥53 
billion of the tax effect from non-taxable dividend income from affiliated Nomura companies, including deemed dividend, (which decreased Nomura’s effective tax rate by
21.2%
)
.
The following table presents the significant components of deferred tax assets and liabilities as of March 31, 20192022 and 2020,2023, before offsetting of amounts which relate to the same
tax-paying
component within a particular tax jurisdiction.
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Deferred tax assets
  
   
 
Depreciation, amortization and valuation of fixed assets
 ¥
20,008
  ¥
19,932
 
Investments in subsidiaries and affiliates
  
25,243
   
1,209
 
Valuation of financial instruments
  
71,806
   
77,054
 
Accrued pension and severance costs
  
29,711
   
24,356
 
Other accrued expenses and provisions
  
44,803
   
51,566
 
Operating losses
  
369,286
   
308,504
 
Lease liabilities
  
—  
   
47,680
 
Other
  
9,213
   
9,394
 
         
Gross deferred tax assets
  
570,070
   
539,695
 
Less
—
Valuation allowances
  
(444,916
)  
(388,411
)
         
Total deferred tax assets
  
125,154
   
151,284
 
         
Deferred tax liabilities
  
   
 
Investments in subsidiaries and affiliates
  
133,936
   
89,630
 
Valuation of financial instruments
  
41,770
   
52,780
 
Undistributed earnings of foreign subsidiaries
  
2,039
   
2,423
 
Valuation of fixed assets
  
10,109
   
9,497
 
Right-of-use
assets
  
—  
   
47,438
 
Other
  
6,843
   
2,992
 
         
Total deferred tax liabilities
  
194,697
   
204,760
 
         
Net deferred tax assets (liabilities)
 ¥
(69,543
) ¥
(53,476
)
         
   
Millions of yen
 
   
March 31
 
   
2022
  
2023
 
Deferred tax assets
         
Depreciation, amortization and valuation of fixed assets
  ¥30,441  ¥38,596 
Investments in subsidiaries and affiliates
   21,390   7,458 
Valuation of financial instruments
   102,021   123,841 
Accrued pension and severance costs
   20,492   17,308 
Other accrued expenses and provisions
   79,061   74,043 
Operating losses
   370,481   414,084 
Lease liabilities
   49,060   48,329 
Other
   15,425   19,645 
   
 
 
  
 
 
 
Gross deferred tax assets
   688,371   743,304 
Less
—
Valuation allowances
   (466,145)   (515,068) 
   
 
 
  
 
 
 
Total deferred tax assets
   222,226   228,236 
   
 
 
  
 
 
 
Deferred tax liabilities
         
Investments in subsidiaries and affiliates
   91,040   100,335 
Valuation of financial instruments
   85,301   118,314 
Undistributed earnings of foreign subsidiaries
   2,745   2,936 
Valuation of fixed assets
   23,962   22,540 
Right-of-use assets
   48,519   47,775 
Other
   7,044   7,524 
   
 
 
  
 
 
 
Total deferred tax liabilities
   258,611   299,424 
   
 
 
  
 
 
 
Net deferred tax assets (liabilities)
  ¥(36,385)  ¥(71,188) 
   
 
 
  
 
 
 
After offsetting deferred tax assets and liabilities which
relate to the same
tax-paying
component within a particular tax jurisdiction, net deferred tax assets reported within
Other assets—Other
in the consolidated balance sheets were ¥15,026¥15,562 million and ¥13,431¥22,645 million as of March 31, 20192022 and 2020,2023, respectively and net deferred tax liabilities reported within
Other liabilities
in the consolidated balance sheets were ¥84,569¥51,947 million and ¥66,907¥93,833 million as of March 31, 20192022 and 2020,2023, respectively.
As of March 31, 2020,2023, no deferred tax liabilities have been recognized for undistributed earnings of foreign subsidiaries totaling ¥19,171¥22,417 million which are not expected to be remitted in the foreseeable future. It is not practicable to determine the amount of income taxes payable in the event all such foreign earnings are repatriated.
F-
11
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents changes in total valuation allowances establishedrecognized against deferred tax assets for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Balance at beginning of year
 ¥
519,492
  ¥
422,280
  ¥
444,916
 
Net change during the year
  
(97,212
)
(1)
  
22,636
(2)   
(56,505
)
(3)
             
Balance at end of year
 ¥
422,280
  ¥
444,916
  ¥
388,411
 
             
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Balance at beginning of year
  ¥388,411   ¥428,014   ¥466,145 
Net change during the year
   39,603(1)    38,131(2)    48,923(3) 
   
 
 
   
 
 
   
 
 
 
Balance at end of year
  ¥428,014   ¥466,145   ¥515,068 
   
 
 
   
 
 
   
 
 
 
 
(1)
Primarily includes a reductionan increase of ¥80,459¥48,883 million of valuation allowances of certain foreign subsidiaries mainly due to changes in tax laws in the U.S., an increase of ¥17,340 million related to Japanese subsidiaries and the Company because of an increase in valuation allowances related to operating loss carryforwards, and a reduction of ¥34,093 million of valuation allowances related to Japanese subsidiaries and the Company as a result of changes in the expected realization of deferred tax assets. In total, ¥97,212 million of allowances decreased for the year ended March 31, 2018.
primar
i
ly
(2)Primarily includes an increase of ¥11,843 million of valuation allowances of certain foreign subsidiaries mainly due to an increase in valuation allowances related to operating loss carryforwards, partially offset by a decreasereduction of ¥5,871 million of valuation allowances related
primarily
due to accrued expenses and provisions, an increase of ¥6,265 million related to Japanese subsidiaries and the Company because of an increase in valuation allowances related to operating loss carryforwards recognized in the current year, an increase of ¥14,976financial instruments, and a reduction of ¥3,409 million of valuation allowances related to Japanese subsidiaries and the Company as a result
primarily
due to an increase of changes in the expected realizationvaluation of deferred tax assets,financial instruments and a reductiondecrease of ¥10,448 million of valuation allowances related to expiration of operating loss carryforwards.accrued pension and severance costs. In total, ¥22,636¥39,603 million of allowances increased for the year ended March 31, 2019.increased.
(3)(2)
Primarily includes a reductionan increase of ¥59,330¥51,706 million of valuation allowances of certain foreign subsidiaries mainly by
expirationprimarily
ofdue to an increase in operating loss carryforwards, an increaseand a reduction of ¥11,462¥13,575 million of valuation allowances mainly due to a decrease of Valuation of financial instruments,
and
a
r
eduction of ¥8,637
million
related to Japanese subsidiaries and the Company mainly by utilization
primarily
due to a decrease of operating loss carryforwards. In total, ¥56,505¥38,131 million of allowances decreased for the year ended March 31, 2020.increased.
(3)
Primarily includes an increase of ¥53,851 million of valuation allowances of certain foreign subsidiaries
primarily
due to an increase in operating loss carryforwards, and a reduction of ¥4,928 million of valuation allowances related to Japanese subsidiaries and the Company
primarily
due to a decrease of valuation allowances of Investments in subsidiaries and affiliates. In total, ¥48,923 million of allowances increased.
As of March 31, 2020,2023, total operating loss carryforwards were ¥1,770,629¥2,134,580 million, which included ¥511,293¥440,983 million relating to the Company and domestic subsidiaries, ¥548,544¥663,578 million relating to foreign subsidiaries in the United Kingdom, ¥416,254U.K., ¥663,629 million relating to foreign subsidiaries in the United States, ¥225,108U.S., ¥332,488 million relating to foreign subsidiaries in Hong Kong, and ¥69,430¥33,902 million relating to foreign subsidiaries in other tax jurisdictions. Of this total amount, ¥901,463¥1,265,887 million can be carried forward indefinitely, ¥728,859¥759,573 million expires by March 31, 20292033 and ¥140,307¥109,120 million expires in later fiscal years. These numbers are presented before offset with any uncertain tax position discussed later.
In determining the amount of valuation allowances to be establishedrecognized as of March 31, 2020,2023, Nomura considered all available positive and negative evidence around the likelihood that sufficient future taxable income will be generated to realize the deferred tax assets in the relevant tax jurisdiction of the Company, its domestic subsidiaries and foreign subsidiaries. In Japan and other tax jurisdictions where domestic and foreign subsidiaries have experienced cumulative operating losses in recent years, these losses providedprovide the most verifiable negative evidence available and outweigh positive evidence.
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, 2018, 20192021, 2022 and 2020.2023. In
F-
1
20
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
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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. Although estimating future taxable income was increasingly subjective due to uncertainty in future profitability of Nomura as a result of the COVID-19 pandemic, it did not result in a significant impact on the determination of realization of deferred
Nomura’s unrecognized tax assetsbenefits were ¥4,367 million, ¥35,774 million and ¥34,763 million as of March 31, 2020.
The total amount2021, 2022 and 2023 respectively. Out of unrecognized tax benefits was not significantthe balance as of March 31, 2018, 20192023, ¥
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 2020. There were also no significant movementscorresponding valuation allowance.
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, 2018, 20192021, 2022 and 2020.2023. Nomura is under continuousregular examination by the Japanese National Tax Agency and other taxing authorities in the major tax jurisdictions in which Nomura operates. Nomura regularly assesses the likelihood of additional assessments in each tax jurisdiction and the impact on the consolidated financial statements. It is reasonably possible that there may be a significantan increase or decrease in unrecognized tax benefits within 12 months of March 31, 2020.2023 depending on the outcome of the examinations. Quantification of an estimated range cannot be made at this time due to the uncertainty of the potential outcomes. However, Nomura does not expect that any change in the gross balance of unrecognized tax benefits would have a material effect on its financial condition.
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, 2020. Under Hong Kong Special Administrative Region tax law, the statute of limitation does not apply if an entity incurs taxable losses and is therefore not included in the table.2023.
Jurisdiction
 
Year
 
Japan
  
2015
(1) 
United Kingdom
  
2016
 
United States
  
2017
 

Jurisdiction
  
Fiscal year ended March 31,
 
Japan
   2018(1) 
United Kingdom
   2016
(
2
)
 
United States
   2019 
(1)
The earliest year in which Nomura remains subject to examination for transfer pricing issues is
2014the fiscal year ended March 31, 2017
.
(2)
The earliest year in which Nomura remains subject to examination for transfer pricing issues is the fiscal year ended March 31, 2016.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
17.1
5
. Other comprehensive income (loss):
The following tables present changes in
Accumulated other comprehensive income (loss)
for the years ended March 31, 20192022 and 2020.
 
Millions of yen
 
 
For the year ended March 31, 2019
 
 
Balance at
beginning
of year
  
Other
comprehensive
income (loss)
before
reclassifications
  
Reclassifications out of
accumulated other
comprehensive
income (loss)
  
Net change
during the
year
  
Balance at
end of year
 
Cumulative translation adjustments
(1)
 ¥
(15,596
) ¥
28,248
  ¥
5,181
  ¥
33,429
  ¥
17,833
 
Pension liability adjustment
(2)
  
(47,837
)  
(25,182
)  
1,912
   
(23,270
)  
(71,107
)
Own credit adjustments
  
4,077
   
20,944
   
(797
)  
20,147
   
24,224
 
                     
Total
 ¥
(59,356
) ¥
24,010
  ¥
6,296
  ¥
30,306
  ¥
(29,050
)
                     
2023.
   
Millions of yen
 
   
For the year ended March 31, 2022
 
   
Balance at

beginning

of year
  
Other

comprehensive

income (loss)

before

reclassifications
  
Reclassifications out of

accumulated other

comprehensive

income (loss)
  
Net change

during the

year
  
Balance at

end of year
 
Cumulative translation adjustments
  ¥18,316  ¥118,574  ¥22  ¥118,596  ¥136,912 
Pension liability adjustment
(1)
   (43,477)   (2,156)   1,830   (326)   (43,803) 
Own credit adjustments
(2)
   (12,983)   46,816   1,031   47,847   34,864 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
  ¥(38,144)  ¥163,234  ¥2,883  ¥166,117  ¥127,973 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
   
Millions of yen
 
   
For the year ended March 31, 2023
 
   
Balance at

beginning

of year
  
Other

comprehensive

income (loss)

before

reclassifications
  
Reclassifications out of

accumulated other

comprehensive

income (loss)
  
Net change

during the

year
  
Balance at

end of year
 
Cumulative translation adjustments
  ¥136,912  ¥109,801  ¥(3,946)  ¥105,855  ¥242,767 
Pension liability adjustment
(1)
   (43,803)   8,615   3,014   11,629   (32,174) 
Own credit adjustments
(2)
   34,864   73,193   (196)   72,997   107,861 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
  ¥127,973  ¥191,609  ¥(1,128)  ¥190,481  ¥318,454 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)Change in cumulative translation adjustments, net of tax in other comprehensive income (loss) for the year ended March 31, 2019 includes reclassification adjustment of ¥6,956 
million for loss due to substantially complete liquidation of an investment in a foreign entity. The adjustment is recognized in
Non-interest expenses-Other
.
(2)
See Note 131
2
 “
Employee benefit plans
” for further information.
 
Millions of yen
 
 
For the year ended March 31, 2020
 
 
Balance at
beginning
of year
  
Other
comprehensive
income (loss)
before
reclassifications
  
Reclassifications out of
accumulated other
comprehensive
income (loss)
  
Net change
during the
year
  
Balance at
end of year
 
Cumulative translation adjustments
 ¥
17,833
  ¥
(44,730
) ¥
623
  ¥
(44,107
) ¥
(26,274
)
Pension liability adjustment
(1)
  
(71,107
)  
4,528
   
4,008
   
8,536
   
(62,571
)
Own credit adjustments
  
24,224
   
39,517
   
(1,001
)  
38,516
   
62,740
 
                     
Total
 ¥
(29,050
) ¥
(685
) ¥
3,630
  ¥
2,945
  ¥
(26,105
)
                     
(1)(2)
See Note 132 “
Employee benefit plans
Fair value measurements
” for further information.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present significant reclassifications out of
Accumulated other comprehensive income (loss)
for the years ended March 31, 20192022 and 2020.2023.
 
Millions of yen
 
For the year ended March 31
 
2019
  
2020
  
Affected line items in consolidated
statements of income
 
Reclassifications out of
accumulated other
comprehensive income (loss)
  
Reclassifications out of
accumulated other
comprehensive income (loss)
 
Cumulative translation adjustments:
  
   
  
 ¥
(5,181
) ¥
(886
) 
Revenue
—
Other /
Non-interest
expenses
—
Other
  
—  
   
263
  
Income tax expense
           
  
(5,181
)  
(623
) 
Net income (loss)
           
  
—  
   
—  
  
Net income attributable to noncontrolling interests
           
 ¥
(5,181
) ¥
(623
) 
Net income (loss) attributable to NHI shareholders
           
   
Millions of yen
   
For the year ended March 31
   
2022
  
2023
  
Affected line items in consolidated
statements of income
   
Reclassifications out of

accumulated other

comprehensive income (loss)
  
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Cumulative translation adjustments:
                         
   ¥(21)  ¥4,033  
Revenue—Other /
Non-interest
expenses—Other
    (1)   (87)  
Income tax expense
   
 
 
  
 
 
   
    (22)   3,946  
Net income (loss)
   
 
 
  
 
 
   
    
—
  		   
—
  		  
Net income attributable to noncontrolling interests
   
 
 
  
 
 
   
   ¥(22)  ¥3,946  
Net income (loss) attributable to NHI shareholders
   
 
 
  
 
 
   
  
   
Millions of yen
   
For the year ended March 31
   
2022
  
2023
  
Affected line items in consolidated
statements of income
   
Reclassifications out of

accumulated other

comprehensive income (loss)
  
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Pension liability adjustment:
                         
   ¥(2,585)  ¥(3,372)  
Non-interest
expenses—Compensation and benefits /
Revenue—Other
    755   358  
Income tax expense
   
 
 
  
 
 
   
    (1,830)   (3,014)  
Net income (loss)
   
 
 
  
 
 
   
    
—  
   
—  
  
Net income attributable to noncontrolling interests
   
 
 
  
 
 
   
   ¥(1,830)  ¥(3,014)  
Net income (loss) attributable to NHI shareholders
   
 
 
  
 
 
   
 
Millions of yen
 
For the year ended March 31
 
2019
  
2020
  
Affected line items in consolidated
statements of income
 
Reclassifications out of
accumulated other
comprehensive income (loss)
  
Reclassifications out of
accumulated other
comprehensive income (loss)
 
Pension liability adjustment:
  
   
  
 ¥
(2,771
) ¥
(5,792
) 
Non-interest
 

expenses
—
Compensation
and benefits
 
/
Revenue—Other
  
859
   
1,784
  
Income tax expense
           
  
(1,912
)  
(4,008
) 
Net income (loss)
           
  
—  
   
—  
  
Net income attributable to noncontrolling interests
           
 ¥
(1,912
) ¥
(4,008
) 
Net income (loss)
attributable to NHI shareholders
           
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Millions of yen
 
For the year ended March 31
 
2019
  
2020
  
Affected line items in consolidated
statements of income
 
Reclassifications out of
accumulated other
comprehensive income (loss)
  
Reclassifications out of
accumulated other
comprehensive income (loss)
 
Own credit adjustments:
  
   
  
 ¥
804
  ¥
1,132
  
Revenue
—
Net gain on trading
  
(7
)  
(131
) 
Income tax expense
           
  
797
   
1,001
  
Net income (loss)
           
  
—  
   
—  
  
Net income attributable to noncontrolling interests
           
 ¥
797
  ¥
1,001
  
Net income (loss) attributable to NHI shareholders
           
   
Millions of yen
   
For the year ended March 31
   
2022
  
2023
  
Affected line items in consolidated
statements of income
   
Reclassifications out of

accumulated other

comprehensive income (loss)
  
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Own credit adjustments:
                         
   ¥(1,161)  ¥334  
Revenue—Net gain on trading
    130   (138)  
Income tax expense
   
 
 
  
 
 
   
    (1,031)   196  
Net income (loss)
   
 
 
  
 
 
   
    
—
  		   
—  
  
Net income attributable to noncontrolling interests
   
 
 
  
 
 
   
   ¥(1,031)  ¥196  
Net income (loss) attributable to NHI shareholders
   
 
 
  
 
 
   
18.1
6
. Shareholders’ equity:
The following table presents changes in shares of the Company’s common stock outstanding for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
 
Number of Shares
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Common stock outstanding at beginning of year
  
3,528,429,451
   
3,392,937,486
   
3,310,800,799
 
Decrease of common stock by cancellation of treasury stock
  
(179,000,000
)  
(150,000,000
)  
—  
 
Common stock held in treasury:
  
   
   
 
Repurchases of common stock
  
(170,027,391
)  
(100,020,867
)  
(299,381,781
)
Sales of common stock
  
201
   
180
   
390
 
Common stock issued to employees
  
34,115,500
   
17,894,000
   
27,168,085
 
Cancellation of treasury stock
  
179,000,000
   
150,000,000
   
—  
 
Other net change in treasury stock
  
419,725
   
(10,000
)  
—  
 
             
Common stock outstanding at end of year
  
3,392,937,486
   
3,310,800,799
   
3,038,587,493
 
             
  
Number of Shares
 
  
Year ended March 31
 
  
2021
  
2022
  
2023
 
Common stock outstanding at beginning of year
  3,038,587,493   3,063,155,434   3,017,804,012 
Decrease of common stock by cancellation of treasury stock
  (260,000,000)   
—  
   
—  
 
Common stock held in treasury:
            
Repurchases of common stock
  (20,129)   (80,020,237)   (50,016,744) 
Sales of common stock
  353   345   296 
Common stock issued to employees
  24,587,717   34,682,592   35,900,087 
Cancellation of treasury stock
  260,000,000   
—  
   
—  
 
Other net change in treasury stock
  
—  
   (14,122)   (8,327) 
  
 
 
  
 
 
  
 
 
 
Common stock outstanding at end of year
  3,063,155,434   3,017,804,012   3,003,679,324 
  
 
 
  
 
 
  
 
 
 
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, 2018, 20192021, 2022 and 2020,2023, the amounts available for distributions were ¥1,311,894¥1,232,753 million, ¥1,209,861¥1,315,738 million and ¥1,297,560¥1,425,642 million, respectively. These amounts are based on the amounts recorded in the Company’s unconsolidated financial statements maintained in accordance with accounting principles and practices prevailing in Japan. U.S. GAAP adjustments incorporated in these consolidated financial statements but not recorded in the Company’s unconsolidated financial statements have no effect on the determination of the amounts available for distributions under the Companies Act.
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.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Dividends on the Company’s common stock per share were ¥20.0 for the year ended March 31, 2018, ¥6.0 for the year ended March 31, 2019 and ¥20.0 for the year ended March 31, 2020.
During the year ended March 31, 2018,2021, due to the cancellation of treasury stock on December 18, 2017,1, 2020, total number of issued shares and treasury stock decreased by 179,000,000 shares, respectively.
During the year ended March 31, 2019, due to the cancellation of treasury stock on December 17, 2018, total number of issued shares and treasury stock decreased by 150,000,000260,000,000 shares, respectively.
On April 27, 2017,October 29, 2021, the board of directors approved a repurchase program of Nomura Holdings common stock in accordance with Article
459-1
of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to 100,000,00080,000,000 shares, (b) total value of shares authorized for repurchase is up to ¥80,000¥50,000 million and (c) the share buyback will run from May 17, 2017November 16, 2021 to March 30, 2018.31, 2022. Under this repurchase program, the Company repurchased 100,000,00080,000,000 shares of common stock at a cost of ¥62,349¥39,639 million.
On October 30, 2017,April 26, 2022, the board of directors approved a repurchase program of Nomura Holdings common stock in accordance with Article
459-1
of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to 70,000,00050,000,000 shares, (b) total value of shares authorized for repurchase is up to ¥50,000 million and (c) the share buyback will run from November 15, 2017 to March 30, 2018. Under this repurchase program, the Company repurchased 70,000,000 shares of common stock at a cost of ¥
46,729
 million.
On April 26, 2018, the board of directors approved a repurchase program of Nomura Holdings common stock in accordance with Article
459-1
of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to 100,000,000 shares, (b) total value of shares authorized for repurchase is up to ¥70,000¥30,000 million and (c) the share buyback will run from May 16, 201817, 2022 to March 29, 2019.31, 2023. Under this repurchase program, the Company repurchased 100,000,00050,000,000 shares of common stock at a cost of ¥51,703 million.
On June 18, 2019, the board of directors approved a repurchase program of Nomura Holdings common stock in accordance with Article
459-1
of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to 300,000,000 shares, (b) total value of shares authorized for repurchase is up to ¥150,000 million and (c) the share buyback will run from June 19, 2019 to March 31, 2020. Under this repurchase program, the Company repurchased 299,362,300 shares of common stock at a cost of ¥150,000¥24,719 million.
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
requests) or common stock acquired to create round lots or eliminate odd lots.
19.Subsequent Events
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 res
ults).
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 :
70,000,000
shares
3. Cancellation date :
June 1, 2023
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 calculated
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 Basel
III-based
consolidated capital adequacy ratio since March 2013.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
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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, 20192022 and March 31, 2020,2023, the Company was in compliance with common equity Tier1Tier 1 capital ratio, Tier 1 capital ratio and consolidated capital adequacy ratio requirements set out in the Capital Adequacy Notice on Final Designated Parent Company, etc. The required level (including applicable minimum consolidated capital buffer) as of March 31, 20202023 was 7.51%
7.62
% for the common equity Tier 1 capital ratio, 9.01%
9.12
% for the Tier 1 capital ratio and 11.01%
11.12
% for the consolidatedco
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 requiresrequire the maintenance of a capital adequacy ratio, which is defined as the ratio of adjusted capital to a quantified total of business risk, of not less than 120%. Adjusted capital is defined as net worth (which includes shareholders’ equity, net unrealized gains and losses on securities held, reserves and subordinated debt) less illiquid assets. Business risks are divided into three categories: (1) market risks, (2) counterparty risks, and (3) basic risks. Under these rules, there are no restrictions on the operations of the companies provided that the resulting net capital adequacy ratio exceeds 120%. As of March 31, 20192022 and 2020,2023, the capital adequacy ratio of NSC exceeded 120%. Also, as of March 31, 20192022 and 2020,2023, the capital adequacy ratio of NFPS also exceeded 120
%120%.
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, 20192022 and 2020,2023, the total amount of segregated client cash recognized as an asset in
Deposits with stock exchanges and other segregated cash
in the consolidated balance sheets was ¥145,325¥113,052 million and ¥112,245¥53,970 million, respectively. As of March 31, 20192022 and 2020,2023, the total amount of segregated securities recognized as assets in
Trading assets
and
Collateralized agreements
in the consolidated balance sheets was ¥693,192¥1,103,395 million and ¥901,180¥1,082,049 million, respectively.
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 is subject to Ruleregistered with CFTC as a Swap Dealer on October 6, 2021 and registered with the Securities and Exchange Commission (“SEC”) as a Security Based Swap Dealer on November 1, 2021. NGFP calculates capital under SEC rule
15c3-118a-1
and applies Appendix F. NGFP is required to maintain net capitalCFTC rule 23.101 and requires the greater of $20,000,000, in accordance with2% of the SEC.SEC risk margin amount or 2% of the CFTC risk margin amount. Another U.S. subsidiary, Instinet, LLC (“ILLC”) is a broker-dealer registered with the SEC and is a member of FINRA. Further, ILLC is an introducing broker registered with the CFTC and a member of the National Futures Association and various other exchanges. ILLC is subject to Rule
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 determining
its minimum net capital requirement: $45,000
minimum
net capital required as a CFTC introducing broker; the
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6
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the
amount of adjusted net capital required by a futures association of which it is a member; and the amount of net
capital required by Rule
15c3-1(a).
As of March 31, 20192022 and 2020,2023, NSI, NGFP and ILLC were in compliance with relevant regulatory capital related requirements.
In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the Prudential Regulation Authority (“U.K. PRA”). as a U.K. Parent Financial Holding Company. The regulatory consolidation is produced in accordance with the requirements established under the Financial Services and Markets Act 2000, U.K. Capital Requirements DirectiveRegulations and the Capital Requirements Regulation which came into effect on January 1, 2014.PRA Rulebook. Nomura International plc (“NIP”), the most significant of NEHS’ subsidiaries, acts as a securities brokerage and dealing business. NIP is also regulated by the U.K. PRA and has minimum capital adequacy requirements imposed on it on a standalone basis. As a
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 basis andbasis. NEHS also has a number of European domiciled subsidiaries including Nomura Financial Products Europe GmbH (“NFPE”), a Nomura subsidiary domiciled in Germany which is regulated by the German regulator (“BaFin”). and is subject to the EU Capital Requirements Regulation and local German regulations and Banque Nomura France (“BNF”), a Nomura subsidiary domiciled in France which is regulated by the French regulator (“ACPR”) and is also subject to the EU Capital Requirements Regulation and local French regulations. As of March 31, 20192022 and 2020,2023, NEHS, NIP, NBI, NFPE and NFPEBNF were in compliance with relevant regulatory capital related requirements.
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 dealingsales, trading and clearing in securities and futures contracts, advising on securities, futures contracts and corporate finance and wealth management. Activities of NIHK, including its branch in Taiwan, are subject to the Securities and Futures (Financial Resources) Rules which require it, at all times, to maintain liquid capital at a level not less than its required liquid capital. Liquid capital is the amount by which liquid assets exceed ranking liabilities. Required liquid capital is calculated in accordance with provisions laid down in the Securities and Futures (Financial Resources) Rules. NSL is a licensed merchant bank with an Asian Currency Unit (“ACU”) license governedregulated by the Monetary Authority of Singapore (“MAS”). NSL carries out its ACU regulated activities including, among others, fixed income and securities brokeragesales and dealing business.trading business, advising on securities, corporate finance and wealth management. NSL is regulated and has minimum capital adequacy requirements imposed on it, on a standalone basisincluding its branch in the Dubai International Financial Centre, by the MAS in Singapore. NIHK and NSL have been compliant with relevant regulatory capital related requirements.
20.
1
8
. Affiliated companies and other equity-method investees:
Nomura’s significant affiliated companies and other equity-method
investees 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
” for further information.
JAFCO
JAFCO Co. Ltd. (“JAFCO”), which is a listed company in Japan, manages various venture capital funds and provides private equity-related investment services to portfolio companies. Nomura accounted for JAFCO using the equity method because Nomura had the ability to exercise significant influence over operating and financial decisions of JAFCO.
On July 28, 2017, Nomura disposed of its entire shareholding of 8,488,200 shares of JAFCO as part of a share
buy-back
program by the company. As a result, JAFCO is no longer an equity-method affiliate of Nomura.
NRI
NRI develops and manages computer systems and provides research services and management consulting services. One of the major clients of NRI is
Nomura.
F-Nomura
has sold 14,105,000 ordinary shares it held at ¥50,002 million to NRI in response to its own share repurchase through
12off-floor
trading
7(ToSTNeT-3)
on June 22, 2021. As a result of the transaction, a gain of ¥36,249 million was recognized in earnings within
Revenue—Other
during the year ended March 31,
2022.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Nomura has tendered to the self-tender offer made by NRI. Upon the
Further
settlement on August 21, 2019,
, Nomura has sold 101,889,30015,000,000 ordinary shares it held at ¥159,966¥57,870 million to NRI. NRI remains an equity method affiliate of NHI.third parties, through bloc
k trades o
n March 23, 2022. As a result of the transaction, a gain of ¥73,293¥42,798 million was recognized in earnings within
Revenue—Other
during the year endingended
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
during the year ended March 31, 2020.2023. NRI remains an equity method affiliate of NHI.
As of March 31, 2020,2022 and 2023, Nomura’s ownership of NRI was 28.8%24.5% and the remaining balance of equity method goodwill included in the carrying value of the investment was ¥61,310 million.22.3% respectively.
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, 2020,
Nomura
’s2022 and 2023, Nomura’s ownership of NREH was
35.9
% 36.6% and the remaining balance37.5% respectively.
As of equity method goodwill included inMarch 31, 2022 and 2023, the carrying value of the investment was investments in equity method investees in the aggregate exceeded Nomura’s equity in the underlying net assets of these equity method investees by
¥
11,01220,393
 million.
million and
¥23,640 
million,
As a resultrespectively, and such excess primarily represented equity method goodwill for each significant equity method investee, except for certain equity method investees including NREH for which Nomura’s carrying value was below Nomura’s equity in the underlying net assets of significant declines in global equity markets during the fourth quarter due to the COVID-19 pandemic, we assessed and concluded no other-than-temporary impairment losses were required to be recognized.investees.
Summary financial information—
The following tables present summarized financial information for significant affiliated companies of Nomura (including thoset
hose elected forfo
r the fair value option) as of March 31, 20192022 and 2020,2023, and for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
         
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Total assets
 ¥
2,535,825
  ¥
2,559,985
 
Total liabilities
  
1,538,231
   
1,669,132
 
 
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Total assets
  ¥3,009,394   ¥3,135,710 
Total liabilities
   1,984,043    2,006,590 
             
 
Millions of yen
 
 
Year ended March 31
 
 
2018
(1)
  
2019
  
2020
 
Net revenues
 ¥
949,055
  ¥
963,824
  ¥
1,017,860
 
Non-interest
expenses
  
768,419
   
794,264
   
791,403
 
Net income attributable to the companies
  
122,623
   
122,440
   
155,567
 
 
(1)For JAFCO, financial information while it was an affiliated company of Nomura is included.
                    
                    
                    
   
Millions of yen
 
   
Year ended March 31
 
   
        2021        
   
        2022        
   
        2023        
 
                    
                    
                    
Net revenues
  ¥   909,616   ¥1,041,000   ¥1,079,609 
Non-interest
expenses
   737,200    786,391    838,005 
Net income attributable to affiliated companies   124,163    179,706    179,073 
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12
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present a summary of balances and transactions with affiliated companies and other equity-method investees as of March 31, 20192022 and 2020,2023, and forduring the years ended e
nded
March 31, 2018, 20192021, 2022 and 2020.2023. Investments in American Century Companies, Inc., for which fair value option was elected, are not included in
Investments in affiliated companies
         
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Investments in affiliated companies
 ¥
436,220
  ¥
367,641
 
Other receivables from affiliated companies
(1)
  
1,425
   
25,074
 
Other payables to affiliated companies
(1)
  
2,998
   
27,648
 
in the following table and are reported within
Other assets—Other
in the consolidated balance sheets. In addition, dividends received for investments in affiliates for which
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
fair value option was elected are not included in
Revenues
in the following table and are reported within
Interest and dividends
in the consolidated statements of income.
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Investments in affiliated companies
  ¥   363,281   ¥   398,485 
Advances to affiliated companies
   1,000    4,000 
Other receivables from affiliated companies
(1)
   24,754    25,415 
Other payables to affiliated companies
(2)
   30,617    31,074 
(1)
As a result
Includes ROU assets of adopting ASU 2016-02
 ¥23,899 million and ¥23,311 million
as of April 1, 2019, ROUMarch 31, 2022 and 2023
assets,
andrespectively. 
(2)
Includes operating lease liabilities are included by ¥23,733mil of ¥23,899 million and ¥23,311 million as of March 31, 2022 and 2023
,
respectively.
 
             
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Revenues
 ¥
1,677
  ¥
1,986
  ¥
3,833
 
Non-interest
expenses
  
46,632
   
44,073
   
46,335
 
Purchase of software, securities and tangible assets
  
26,830
   
13,515
   
17,716
 
                    
                    
                    
   
Millions of yen
 
   
Year ended March 31
 
   
        2021        
   
        2022        
   
        2023        
 
Revenues
  ¥2,240   ¥2,660   ¥2,795 
Non-interest
expenses
        50,753         50,004         50,966 
Purchase of software, securities and tangible assets
   14,407    12,760    19,602 
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, 20192022 and 2020.
         
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
Carrying amount
 ¥
423,885
  ¥
357,751
 
Fair value
  
600,132
   
511,667
 
2023.
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
Carrying amount
  ¥   341,935   ¥   363,792 
Fair value
   772,243    593,883 
The following table presents equity eq
uity
in earnings of equity-method investees, including those above and dividends from equity-method investees, for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
             
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Equity in earnings of equity-method investees
(1)
 ¥
34,516
  ¥
32,014
  ¥
32,109
 
Dividends from equity-method investees
  
13,290
   
12,971
   
11,767
 
 
                    
                    
                    
   
Millions of yen
 
   
Year ended March 31
 
   
        2021        
   
        2022        
   
        2023        
 
Equity in earnings of equity-method investees
(1)
  ¥     26,812   ¥     32,083   ¥     47,480 
Dividends from equity-method investees
   11,096    11,848    13,354 
(1)
Equity in earnings of equity-method investees is reported within
Revenue-Other
in the consolidated statements of income.
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12
9
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
21.
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 generallygeneral
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 inas commitments to extend credit.
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 inbelow as commitments to invest.
The following table presents a summary of the key types of outstanding commitments provided by Nomura as of March 31, 20192022 and 2020.2023.
         
 
Millions of yen
 
 
March 31, 2019
  
March 31, 2020
 
Commitments to extend credit
  
   
 
Liquidity facilities to central clearing counterparties
 ¥
1,593,439
  ¥
1,288,774
 
Other commitments to extend credit
  
1,100,929
   
958,659
 
         
Total
 ¥
2,694,368
  ¥
2,247,433
 
         
Commitments to invest
 ¥
14,413
  ¥
15,278
 
 
   
Millions of yen
 
   
March 31, 2022
   
March 31, 2023
 
Commitments to extend credit
          
Liquidity facilities to central clearing counterparties
  ¥1,135,695   ¥1,623,897 
Other commitments to extend credit
   877,156    1,010,332 
   
 
 
   
 
 
 
Total
  ¥2,012,851   ¥2,634,229 
   
 
 
   
 
 
 
Commitments to invest
  ¥32,286   ¥21,994 
Maturity profile
of these com
mitments as of Ma
rch 31
, 2023:
 
   
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
 
Commitments to extend credit
                         
Liquidity facilities to central clearing counterparties
  ¥1,623,897   ¥1,623,897   ¥
—  
   ¥
—  
   ¥
—  
 
Other commitments to extend credit
   1,010,332    199,120    289,991    338,978    182,243 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,634,229   ¥1,823,017   ¥289,991   ¥338,978   ¥182,243 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Commitments to invest
  ¥21,994   ¥195   ¥1,292   ¥5,003   ¥15,504 
As of March 31, 2020, these commitments had the following maturities:
                     
 
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
 
Commitments to extend credit
  
   
   
   
   
 
Liquidity facilities to central clearing counterparties
 ¥
1,288,774
  ¥
1,288,774
  ¥
—  
  ¥
—  
  ¥
—  
 
Other commitments to extend credit
  
958,659
   
110,312
   
139,295
   
167,322
   
541,730
 
                     
Total
 ¥
2,247,433
  ¥
1,399,086
  ¥
139,295
  ¥
167,322
  ¥
541,730
 
                     
Commitments to invest
 ¥
15,278
  ¥
491
  ¥
4
  ¥
5,628
  ¥
9,155
 
The contractual amounts of these commitments to extend credit represent the maximum amounts at risk but only ifassuming the contracts are fully drawn upon, should all the counterparties default, and assuming the value of any existingall collateral or credit mitigations becomes worthless. The total contractual amount of these commitments may not represent actual future cash requirementsoutflows since the commitments may expire without being drawn upon. The credit risk associated with these commitments varies depending on the clients’ creditworthiness and the value and quality of collateral held. Nomura evaluates each client’s creditworthiness on a
case-by-case
basis. The amount of collateral obtained, if deemed necessary by Nomura upon extension of credit, is based on credit evaluation of the
counterparty.
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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 ¥69,003 million as of March 31, 2019 and
 
¥
126,94998,214
 
million as of March 31, 2020.2022 and
¥
99,134
 million
as of March 31, 2023.
As of March 31, 2020,2023, these purchase obligations had the following maturities:
                             
 
Millions of yen
 
 
Total
  
Years of payment
 
Less than
1 year
  
1 to 2
years
  
2 to 3
years
  
3 to 4
years
  
4 to 5
years
  
More than
5 years
 
Purchase obligations
 ¥
126,949
  ¥
20,523
  ¥
24,206
  ¥
11,514
  ¥
8,280
  ¥
112
   
¥62,314
 
 
   
Millions of yen
 
   
Total
   
Years of payment
 
   
Less than

1 year
   
1 to 2

years
   
2 to 3

years
   
3 to 4

years
   
4 to 5

years
   
More than

5 years
 
Purchase obligations
  ¥99,134   ¥21,501   ¥7,767   ¥3,119   ¥63,879   ¥927   ¥1,941 
Above table includes the commitment to purchase parts of the redeveloped real estate in Tokyo Nihonbashi district from the redevelopment partnership. See Note 23 “
Significant subsequent events
” for further information.association.
Nomura has commitments under resale and repurchase agreements including amounts in connection with collateralized agreements and collateralized financing. These commitments amounted to ¥1,071¥1,565 billion for resale agreements and ¥719¥2,673 billion for repurchase agreements as of March 31, 20192022 and ¥1,969¥1,143 billion for resale agreements and ¥677¥2,146 billion for repurchase agreements as of March 31, 2020.2023.
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 ¥441¥1,219 billion and ¥928¥952 billion as of March 31, 20192022 and 2020,2023, respectively.
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.
ContingenciesContingencies—
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.
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The
Company regularly evaluates each legal
proceeding
and claim on a
case-by-case
basis in consultation with external legal counsel to assess whether an estimate of possible loss or range of loss can be made, if recognition of a liability is not appropriate. In accordance with ASC 450 “
Contingencies
” (“ASC 450”), the
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
Other liabilities
in respect of outstanding and unsettled investigations, lawsuits and other legal proceedings where loss is considered probable and the amount of such loss can be reasonably estimated. Total expenses recognized through earnings during the year ended March 31, 2021 and 2022 were ¥41,131 million and ¥
63,338
 million, respectively, which has been reported within the consolidated statements of income within
Non-interest
expenses
—
Other
. Total expenses recognized through earnings during the year ended March 31, 2023 was immaterial.
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, described below, the Company is currently able to estimate the amount of reasonably possible loss, or range of reasonably possible losses, in excess of amounts recognized as a liability (if any) against such cases. These estimates are based on current information available as of the date of these consolidated financial statements and include, but are not limited to, the specific amount of damages or claims against Nomura in each case. As of June 30, 2020,28, 2023, for those cases where an estimate of the range of reasonably possible losses can be made, the Company estimates that the total aggregate reasonably possible maximum loss in excess of amounts recognized as a liability (if any) against these cases is approximately ¥53¥
51 billion.
While the COVID-19 pandemic has delayed the potential resolution of certain actions and proceedings, it has not had a direct significant impact on the amount of liabilities recognized in respect of these matters as of June 30, 2020 nor the total aggregate reasonably possible maximum loss disclosed above.
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.
In January 2008, Nomura International plc (“NIP”) was served with a
Claims for reimbursement of tax notice issuedcredits paid on dividends on Italian shares have been made by the tax authorities in Pescara, Italy alleging breaches by NIP of the U.K.-Italy Double Taxation Treaty of 1998 (“Tax Notice”). The alleged breaches relate to payments to NIP of tax credits on dividends on Italian shares. The Tax Notice not only denies certain payments to which NIP claims to be entitled but also seeks reimbursement of approximately EUR 33.8 million, plus interest, already refunded. NIP continues vigorously to challenge the Pescara Tax Court’s decisions in favor of the local tax authorities.
Similar claims have been made by the tax authorities against IBJ Nomura Financial Products (UK) PLC (“IBJN”) a group company which has been in members’
voluntary liquidation since 2000. An Italian Supreme
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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
38
million (comprised of tax credit refunds of approximately EUR 38 million, plus accrued interest), plus further interest, werewas payable by IBJN to the Italian tax authorities. NIP continues to assess the position.
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
 $
35
 million. $34 million plus interest.
In April 2011,Certain of the Federal Home Loan Bank of Boston (“FHLB-Boston”) commenced proceedingsCompany’s subsidiaries in the Superior Court of Massachusetts against numerous issuers, sponsors and underwritersU.S. securitized residential mortgage loans in the form of residential mortgage-backed securities (“RMBS”). These subsidiaries did not generally originate mortgage loans, but purchased mortgage loans from third-party loan originators (“originators”). In connection with such purchases, these subsidiaries received loan level representations from the originators. In connection with the securitizations, the relevant subsidiaries provided loan level representations and warranties of the type generally described below, which mirror the representations the subsidiaries received from the originators.
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
ratio, the owner occupancy status of the property, the lien position, the fact that the loan was originated in accordance with the originator’s guidelines, and the fact that the loan was originated in compliance with applicable laws. Certain of the RMBS issued by the subsidiaries were structured with credit protection provided to specified classes of certificates by monoline insurers.
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
$3,203 
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”), and their controlling persons, including Nomura Asset Acceptance Corporation (“NAAC”),brought an action in April 2013 against Nomura Credit & Capital, Inc., Nomura Securities International, Inc. (“NSI”NCCI”) and Nomura Holding America Inc. The action alleged that FHLB-Boston purchased RMBS certificates in four offerings issued by NAAC(“NHA”) alleging breach of contract with respect to representations concerning specific loan characteristics and fraud in the original principal amountinducement of approximately $406 million, for which the offering materials contained untrue statements or omitted material facts
insurance
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
contract
based on misrepresentations concerning the underwriting standards usedloans for two trusts insured by the original lendersAmbac. The court dismissed all claims against NHA. Ambac and the characteristics of the loans underlying the securities. On December 16, 2019, the parties settled the matter for $34 millionNCCI resolved all claims and the action has been dismissed.was dismissed pursuant to a stipulation filed January 3, 2023.
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 $21 million.$24.4 million plus interest.
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
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
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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). AsNIP appealed the decision to the Milan Court of Appeal. On May 6, 2022, the dateMilan Court of these consolidated financial statements,Appeal delivered its oral verdict, overturning the first instance judgment and acquitting the two former employees of NIP continuesof all charges. The court also overturned the first instance judgment in respect of NIP and quashed the EUR 3.45 million fine and EUR 88 million confiscation order imposed on NIP. The detailed reasoning for the verdict was made available on October 3, 2022. In November 2022, the Public Prosecutor appealed the decision to analyze the contents of the written reasoning to determine all of its options, including any appeal. The penalties will not be enforceable until all appeals have been concluded.Supreme Court.
In addition, NIP is involved in a number of separate civil or administrative matters relating to the Transactions including those described
further below.
In July 2013, a claim was issued against former directors of MPS, and NIP, by the shareholder group Fondazione Monte dei Paschi di Siena (“FMPS”). The grounds of the FMPS claim are similar to those on which the MPS claim was founded. The level of damages sought by FMPS is not less than EUR 315.2 million.
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, (thethe funds’ management company) (collectively referred to as “Alken”) was served on NIP. The claim iswas made against NIP, MPS, four MPS former directors and a member of MPS’s internal audit board, and seekssought monetary damages of approximately EUR
434 million on the basis of allegations similar to those made in the MPS and FMPS claims,
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 on grounds similar to those in the MPS and FMPS claims,plus interest, as well as
non-monetary
damages in an amount left to be quantified by
the 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
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 dodid not meet the necessary Italian law integrity requirements to perform certain senior corporate functions, for a period of three months and six months respectively. NIP iswas vicariously liable to pay the fines imposed on its former employees. NIP has paid the fines and appealed the decision to the Milan Court of Appeal. In December 2020, the Court of Appeal annulled the CONSOB decision against NIP. CONSOB has appealed the Court of Appeal’s decision to the Italian Supreme
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 
$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 includeincluded allegations that NIHK failed to comply with its fiduciary duties to the lenders as the arranger of the loan and the Syndicate Banks seeksought to recover approximately $48 
$48 million
in damages, plus interest. By judgment dated June 2, 2022, the Taipei
District
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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 interest.binding on September 19, 2022.
In March 2017, certain subsidiaries of American International Group, Inc. (“AIG”) commenced proceedings in the District Court of Harris County, Texas against certain entities and individuals, including NSI, in connection with a 2012 offering of $750 million of certain project finance notes, of which $92 million allegedly were purchased by AIG. AIG alleges violations of the Texas Securities Act based on material misrepresentations and omissions in connection with the marketing, offering, issuance and sale of the notes and seeks rescission of the purchases or compensatory damages.
On
Various authorities continue to conduct investigations concerning the activities of NIP, other entities in the Nomura Group and other third parties in respect of government, supranational,
sub-sovereign
and agency debt securities trading. These investigations relate to various matters including certain activities of NIP in Europe for whichMay 20, 2021, NIP and the Company have receivedwere named as addressees in a Statement of Objections fromdecision issued by the European Commission (“Commission”)in which reflectsNIP, the Commission’s initial views around certain historical conduct.Company and various other third party banks have been found to have infringed EU competition law in connection with their activity in the primary and secondary markets for European Government Bonds (“EGB”). The European Commission found that the infringement consisted of anticompetitive agreements and/or concerted practices in the EGB sector in breach of EU competition law and fined NIP and NSIthe Company approximately EUR 129.6 million. In August 2021, NIP and the Company appealed the decision. The fine has been provisionally paid, as is required, pending the outcome of NIP and the Company’s appeal.
NIP and Nomura Securities International, Inc. (“NSI”) were also named as defendants in a class action complaints filed in the United States District Court for the Southern District of New York alleging violations of U.S. antitrust law relating to the alleged manipulation of the secondary trading market for supranational,
sub-sovereign
and agency bonds. NIP and NSI are also defendants in a similar class action complaint filed in the Toronto Registry Office of the Federal Court of Canada alleging violations of Canadian competition law. Additionally, NIP and NSI have been served with a separate class action complaint filed in the United States Court for the Southern District of New York alleging violations of U.S. antitrust law in relation to the alleged manipulation of the primary and secondary markets for European governmentEGB. NSI has been dismissed from the action.
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
. In September 2022, Nomura agreed to pay
a
$50 million civil monetary
penalty
and to comply with certain
non-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 monetary
penalty
and to comply with certain
non-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 cooperating
fully.
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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 and
,
plus interest.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In July 2018, a former Italian counterparty filed a claim against NIP in the Civil Court of Rome relating to a derivative transaction entered into by the parties in 2006, and terminated in 2009. The claim alleges that payments by the counterparty to NIP of approximately EUR 165 million were made in breach of Italian insolvency law, and seeks reimbursement of those payments.
The United States Securities and Exchange Commission (“SEC”) and the United States Department of Justice investigated past activities of several former employees of NSI in respect of commercial and residential mortgage-backed securities transactions. NSI entered into settlements with the SEC on July 15, 2019, concerning its supervision of certain former employees. Pursuant to the settlements, NSI paid penalties of $1.5 million to the SEC and deposited $25 million in a segregated account which will be used to reimburse certain customers in connection with the related cases.
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 data.data, and Nomura Group premises in Frankfurt were raided by the public prosecutor in April 2023 for the purpose of obtaining additional data and documents. It appears that the investigation has expanded including to also now encompass cum/cum trading strategies in certain German equities. If the investigation involving Nomura Group entities and former individuals proceeds to trial, the individuals could face criminal sanctions and Nomura Group entities could face administrative sanctions such as administrative fines or profit confiscation orders. It is not yet possible to reasonably estimate the potential losses which may arise from any administrative sanction imposed on a Nomura Group entity.
Other mortgage-related contingencies in the U.S.
Certain of the Company’s subsidiaries in the U.S. securitized residential mortgage loans in the form of RMBS. These subsidiaries did not generally originate mortgage loans, but purchased mortgage loans from third-party loan originators (“originators”). In connection with such purchases, these subsidiaries received loan level representations from the originators. In connection with the securitizations, the relevant subsidiaries provided loan level representations and warranties of the type generally described below, which mirror the representations the subsidiaries received from the originators.
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
ratio, the owner occupancy status of the property, the lien position, the fact that the loan was originated in accordance with the originator’s guidelines, and the fact that the loan was originated in compliance with applicable laws. Certain of the RMBS issued by the subsidiaries were structured with credit protection provided to specified classes of certificates by monoline insurers.
The relevant subsidiaries have 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 $3,203 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 
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Stichting Vestia, a Dutch housing association and former counterparty, asserted a claim against NIP relating to derivative transactions entered into between Vestia and NIP between 2009 and 2011. On February 1, 2022, Vestia commenced proceedings against NIP in the English Courts. The proceedings alleged that the transactions were void because Vestia lacked the capacity and/or the authority to enter into them. Vestia sought
Tablerestitution of Contentsa
NOMURA HOLDINGS, INC.
net amount of approximately
EUR
153.5 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
subsidiaries determined to have merit. In several instances, following the rejectioncontext of repurchase demands, investors instituted actions through the trustee alleging breach of contract. 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. These claims involve substantial legal, as well as factual, uncertaintya secured financing and the Company cannot provide an estimate of reasonably possible loss at this time, in excessenforcement of the existing reserve.
Administrative action by Financial Services Agencyrelated pledge agreements following events of Japan
default attributable to the counterparty, on February 8, 2022, two former pledgors served a formal notice stating their intention to commence legal proceedings against Nomura European Investment Limited (“NEI”) as lender and NIP as security agent. The pledgors alleged that there had been certain valuation errors in relation to enforcement of the related pledge agreements and sought compensation from NEI or, alternatively, from NIP. On November 9, 2022, NEI and NIP entered into a settlement agreement with the pledgors to resolve the potential claim with no admission of liability or wrongdoing.
On May 28, 2019,In August and October 2022, Nomura Financial Advisory and Securities Co., Ltd.(India) Private Limited (“NSC”NFASI”) received an administrative action (a business improvement order) from Financial Services Agency of Japan (“FSA”) in accordancewas served with Article 51two commercial suits filed with the Bombay High Court against NFASI and other parties. The lawsuits relate to the same equity disposal where the plaintiffs were two of the Financial Instrumentssellers and Exchange Act of Japan (“FIEA”) due to NSC’s improper communication of information. On the same day, for the same reason, the Company also received an administrative action (a business improvement order) from FSA in accordance with Article
57-19
(1) of the FIEA. Because of such administrative action, NSC has lost some of business opportunities. On June 3, 2019, the Company and NSC submitted reports on their business improvement measures to FSA and the reports were accepted by FSA. However, there is a possibility that Nomura will continue to lose business opportunities dueNFASI acted as financial advisor to the damagesellers, and include allegations that NFASI failed to our reputation and other causes, andcomply with its duties as financial advisor. The total claim amounts in the Company’s financial condition and business performance may be affected onward. However, it is difficult for the Company to reasonably estimate the financial impact at this moment.suits are approximately INR
2.6 billion in damages, plus interest.
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.
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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 has disclosed belowincludes relevant information about these derivative contracts that could meet the accounting definition of guarantees.guarantees in the disclosure below.
For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives,these derivative contracts, the notional amount of contracts has been disclosed. However, the maximum potential payoutdisclosed, except for certain derivative contracts, such as written interest rate caps and written currency options, the maximum potential payout amount cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.
The notional amounts do not represent anticipated losses from these derivatives contracts. As Nomura recordsmeasures all derivative contracts at fair value on its consolidated balance sheets. Nomura believes the notional amounts generally overstate its risk exposure. Since the derivative contracts are accounted for at fair value, carrying value is considered the best indication of probability of payment and performance riskrisks for individualthese derivative contracts.
F-137
Nomura may also reduce net exposures to certain of these contracts by entering into offsetting transactions or by entering into contracts that hedge the market risks related to these derivative contracts.
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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.
 
Millions of yen
 
 
March 31
 
 
2019
  
2020
 
 
Carrying
value
  
Maximum
potential
payout /
Notional total
  
Carrying
value
  
Maximum
potential
payout /
Notional total
 
Derivative contracts
(1)(2)
 ¥
4,315,743
  ¥
281,605,308
  ¥
7,197,647
  ¥
279,734,884
 
Standby letters of credit and other guarantees
(3)
  
80
   
5,764
   
—  
   
2,351
 
   
Millions of yen
 
   
March 31
 
   
2022
   
2023
 
   
Carrying

value
   
Maximum

potential

payout /

Notional total
   
Carrying

value
   
Maximum

potential

payout /

Notional total
 
Derivative contracts
(1)(2)
  ¥6,151,646   ¥393,709,887   ¥8,983,145   ¥514,420,432 
Standby letters of credit and other guarantees
(3)
   
—  
    1,698,193    
—  
    1,544,159 
(1)
Credit derivatives are disclosed in Note 3 “
Derivative instruments and hedging activities
” and are excluded from derivative contracts.above.
(2)
Derivative contracts primarily consist of equity, interest rate and foreign exchange contracts.
(3)The amounts of collaterals held
Primarily related to a certain sponsored repo program where Nomura guarantees to a third party clearing house in connection with standby letters ofrelation to its clients’ payment obligations. Our credit and other guarantees as of March 31, 2019 and March 31, 2020 was ¥2,481 million and ¥nil, respectively.exposures under this guarantee is minimized by obtaining collateral from clients at amount approximately the maximum potential payout under the guarantee.
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, 2020.2023.
 
Millions of yen
 
 
Carrying
value
  
Maximum potential payout/Notional
 
Total
  
Years to Maturity
 
Less than
1 year
  
1 to 3 years
  
3 to 5 years
  
More than
5 years
 
Derivative contracts
 ¥
7,197,647
  ¥
279,734,884
  ¥
71,355,150
  ¥
77,870,884
  ¥
35,538,204
  ¥
94,970,646
 
Standby letters of credit and other guarantees
  
—  
   
2,351
   
10
   
1,184
   
1,156
   
1
 
  
Millions of yen
 
  
Carrying

value
  
Maximum potential payout/Notional
 
  
Total
  
Years to Maturity
 
  
Less than

1 year
  
1 to 3 years
  
3 to 5 years
  
More than

5 years
 
Derivative contracts
 ¥8,983,145  ¥514,420,432  ¥100,153,216  ¥197,535,388  ¥66,032,944  ¥150,698,884 
Standby letters of credit and other guarantees
  
—  
   1,544,159   1,517,287   15,903   10,258   711 
22.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
20. Segment and geographic information:
Operating segments—
Nomura’s
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 theour Retail, the AssetInvestment Management and the Wholesale segments. Nomura structures itsDivisions. We have disclosed business segments based upon the nature of its main products and services, its client base and its managementsegment information in accordance with this structure. The operating results of the Merchant Banking division are included in “
Other
.
”
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
, but excluded from segment information.
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
,” based upon Nomura’s allocation methodologies as used by management to assess each segment’s
performance.
Business
segments’ results are shown in the following tables.
Net interest revenue
is disclosed because management viewsmonitors interest revenue net of interest expense for its operating decisions. Business segments’
F-
13
8
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
information on total assets is not disclosed because management does not utilizeconsider such information for its operating decisions and therefore, it is not reported to management.
Certain comparative amounts have been reclassified to conform to the current year’s presentation, in accordance with the realignment in April 202
1
.
   
Millions of yen
 
   
Retail
   
Investment
Management
   
Wholesale
(1)(2)
(3)(4)
  
Other

(Incl. elimination)
  
Total
 
Year ended March 31, 2021
                       
Non-interest
revenue
  ¥366,271   ¥153,523   ¥524,019  ¥205,411  ¥1,249,224 
Net interest revenue
   2,538    9,627    167,337   (38,399)   141,103 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Net revenue
   368,809    163,150    691,356   167,012   1,390,327 
Non-interest
expenses
   276,480    72,142    627,051   195,528   1,171,201 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes
  ¥92,329   ¥91,008   ¥64,305  ¥(28,516)  ¥219,126 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Year ended March 31, 2022
                       
Non-interest
revenue
  ¥324,642   ¥129,848   ¥617,227  ¥232,437  ¥1,304,154 
Net interest revenue
   3,343    18,145    85,828   (53,203)   54,113 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Net revenue
   327,985    147,993    703,055   179,234   1,358,267 
Non-interest
expenses
   268,745    76,478    628,563   163,481   1,137,267 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes
  ¥59,240   ¥71,515   ¥74,492  ¥15,753  ¥221,000 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Year ended March 31, 2023
                       
Non-interest
revenue
  ¥297,496   ¥120,096   ¥809,681  ¥175,034  ¥1,402,307 
Net interest revenue
   2,695    8,463    (37,301)   (10,316)   (36,459) 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Net revenue
   300,191    128,559    772,380   164,718   1,365,848 
Non-interest
expenses
   266,695    85,064    743,011   91,333   1,186,103 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes
  ¥33,496   ¥43,495   ¥29,369  ¥73,385  ¥179,745 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
F-134
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Millions of yen
 
 
Retail
  
Asset
Management
  
Wholesale
  
Other
(Incl. elimination)
  
Total
 
Year ended March 31, 2018
  
   
   
   
   
 
Non-interest
revenue
 ¥
406,295
  ¥
118,545
  ¥
587,474
  ¥
272,271
  ¥
1,384,585
 
Net interest revenue
  
6,613
   
8,792
   
127,859
   
(32,778
)  
110,486
 
                     
Net revenue
  
412,908
   
127,337
   
715,333
   
239,493
   
1,495,071
 
Non-interest
expenses
  
309,771
   
61,167
   
614,745
   
183,128
   
1,168,811
 
                     
Income before income taxes
 ¥
103,137
  ¥
66,170
  ¥
100,588
  ¥
56,365
  ¥
326,260
 
                     
Year ended March 31, 2019
  
   
   
   
   
 
Non-interest
revenue
 ¥
331,743
  ¥
89,607
  ¥
496,484
  ¥
147,524
  ¥
1,065,358
 
Net interest revenue
  
7,737
   
8,238
   
58,904
   
(16,263
)  
58,616
 
                     
Net revenue
  
339,480
   
97,845
   
555,388
   
131,261
   
1,123,974
 
Non-interest
expenses
  
289,990
   
63,660
   
666,787
   
134,034
   
1,154,471
 
                     
Income (loss) before income taxes
 ¥
49,490
  ¥
34,185
  ¥
(111,399
) ¥
(2,773
) ¥
(30,497
)
                     
Year ended March 31, 2020
  
   
   
   
   
 
Non-interest
revenue
 ¥
329,983
  ¥
85,190
  ¥
506,203
  ¥
257,961
  ¥
1,179,337
 
Net interest revenue
  
6,376
   
7,415
   
142,416
   
(26,388
)  
129,819
 
                     
Net revenue
  
336,359
   
92,605
   
648,619
   
231,573
   
1,309,156
 
Non-interest
expenses
  
286,926
   
63,833
   
556,399
   
132,410
   
1,039,568
 
                     
Income (loss) before income taxes
 ¥
49,433
  ¥
28,772
  ¥
92,220
  ¥
99,163
  ¥
269,588
 
                     
(1)
Non-interest
revenue
and
Non-interest
expense
for the year ended March 31, 2021 include losses of ¥245,749 million arising from the U.S. Prime Brokerage Event. The losses are reported within
Net gain on trading
in the amount of ¥(204,188) million and in
Non-interest
expenses
—
Other
in the amount of ¥41,561 million in the consolidated statements of income
(2)
Non-interest
revenue
and
Non-interest
expense
for the year ended March 31, 2022 include losses of ¥65,362 million arising from the U.S. Prime Brokerage Event. The losses are reported within
Net gain on trading
in the amount of ¥(56,073) million and in
Non-interest
expenses
—
Other
in the amount of ¥9,289 million in the consolidated statements of income.
(3)
Non-interest
revenue
and
Non-interest
expense
for the year ended March 31, 2022 include gains of ¥14,696 million, as the recoverable amount for a part of the claim related to the loss arising from the U.S. Prime Brokerage Event
was
reasonably estimated. The gains are reported within
Net gain on trading
in the amount of ¥12,161 million and in
Non-interest
expenses
—
Other
in the amount of ¥(2,535) million in the consolidated statements of income.
(4)
Non-interest
revenue
and
Non-interest
expense
for the year ended March 31, 2023 include gains of ¥ 12,025 
million, as the recoverable amount for a part of the claim related to the loss arising from the U.S. Prime Brokerage Event was reasonably estimated and collected. The gains are reported within
Net gain on trading
in the amount of ¥9,954 million and in
Non-interest
expenses—Other
in the amount of ¥(2,071) million in the consolidated statements of income.

Transactions
between operating segments are recorded within segment results based on commercial terms and conditions and are eliminated in “
Other
.”
The following table presents the major components of
Income (loss) before income taxes
in
“Other”
for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Net gain (loss) related to economic hedging transactions
 ¥
(6,461
) ¥
1,800
  ¥
17,548
 
Realized gain on investments in equity securities held for operating purposes
  
785
   
221
   
6,601
 
Equity in earnings of affiliates
  
     34,248
   
     32,532
   
     34,990
 
Corporate items
  
(41,884
)  
(35,996
)  
(22,240
)
Other
(1)
(2)
  
69,677
   
(1,330
)  
62,264
 
             
Total
 ¥
56,365
  ¥
(2,773
) ¥
99,163
 
             
 
   
Millions of yen
 
   
Year ended March 31
 
   
2021
  
2022
  
2023
 
Net gain (loss) related to economic hedging transactions
  ¥(11,450)  ¥(9,937)  ¥(4,846) 
Realized gain on investments in equity securities held for operating purposes
          1,731          1,355        28,385 
Equity in earnings of affiliates
(1)
   (16,410)   36,790   47,744 
Corporate items
(2)
   4,956   (91,073)   (12,590) 
Other
(3)(4)(5)(6)
   (7,343)   78,618   14,692 
   
 
 
  
 
 
  
 
 
 
Total
  ¥(28,516)  ¥15,753  ¥73,385 
   
 
 
  
 
 
  
 
 
 
(1)
AmountsIncludes an impairment loss of ¥47,661 million recognized in respect of Nomura’s investment in Nomura Real Estate holdings, Inc. during the year ended March 31, 2021. Based on the period and extent to which the share price of the investee (and therefore its estimated fair value) was below the carrying value of the investment, Nomura determined the impairment was other-than-temporary and an impairment loss was recognized through earnings. The loss was reported within
Non-interest
expenses—Other
in the consolidated statements of income.
(2)
Income before income taxes for the year ended March 31, 2018 include2022 includes a loss of approximately ¥62.0 billion related to legacy transactions in the gainU.S. from before the global financial crisis (2007 – 2008) that was recognized in earnings in connection with the liquidation of a
non-Japaneseincluding legal expenses as well as certain transactions intended to mitigate future losses.
subsidiary during the year.
(2)Includes gain of ¥73,293 million from the partial sale of Nomura’s investment in ordinary shares of Nomura Research Institute, Ltd. for the year ended March 31, 2020.
F-139F-135
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(3)
Loss before income taxes for the year ended March 31, 2021 includes a gain of ¥ 71,075 million which represents the difference between the fair value of the assets acquired and the carrying value of the assets transferred by Nomura as a result of the rights conversion of the Tokyo Nihonbashi district redevelopment project.
(4)
Income before income taxes for the year ended March 31, 2022 includes a gain of approximately ¥79.0 billion from the partial sale of Nomura’s investment in the ordinary shares of Nomura Research Institute, Ltd.
(5)
Income before income taxes for the year ended March 31, 2023 includes a gain of
approximately
¥28.0 billion from the sale of Nomura Research Institute, Ltd. ordinary shares.
(6)
Includes the impact of Nomura’s own creditworthiness.
The
table below presents reconciliations of the combined business segments’ results included in the preceding table to Nomura’s reported
Net revenue,
Non-interest
expenses
and
Income (loss) before income taxes
in the consolidated statements of income for the years ended March 31, 2018, 20192021, 2022 and 2020.2023.
 
Millions of yen
 
 
Year ended March 31
 
 
2018
  
2019
  
2020
 
Net revenue
 ¥
1,495,071
  ¥
1,123,974
  ¥
1,309,156
 
Unrealized gain (loss) on investments in equity securities held for operating purposes
  
1,898
   
(7,204
)  
(21,327
)
             
Consolidated net revenue
 ¥
1,496,969
  ¥
1,116,770
  ¥
1,287,829
 
             
Non-interest
expenses
 ¥
1,168,811
  ¥
1,154,471
  ¥
1,039,568
 
Unrealized gain (loss) on investments in equity securities held for operating purposes
  
—  
   
—  
   
—  
 
             
Consolidated
non-interest
expenses
 ¥
1,168,811
  ¥
1,154,471
  ¥
1,039,568
 
             
Income (loss) before income taxes
 ¥
326,260
  ¥
(30,497
) ¥
269,588
 
Unrealized gain (loss) on investments in equity securities held for operating purposes
  
1,898
   
(7,204
)  
(21,327
)
             
Consolidated income (loss) before income taxes
 ¥
328,158
  ¥
(37,701
) ¥
248,261
 
             
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Net revenue
  ¥1,390,327   ¥1,358,267   ¥1,365,848 
Unrealized gain (loss) on investments in equity securities held for operating purposes
   11,545    5,623    (30,271) 
   
 
 
   
 
 
   
 
 
 
Consolidated net revenue
  ¥1,401,872   ¥1,363,890   ¥1,335,577 
   
 
 
   
 
 
   
 
 
 
Non-interest
expenses
  ¥1,171,201   ¥1,137,267   ¥1,186,103 
Unrealized gain (loss) on investments in equity securities held for operating purposes
   
—
  		    
—
  		    
—
  		 
   
 
 
   
 
 
   
 
 
 
Consolidated
non-interest
expenses
  ¥1,171,201   ¥1,137,267   ¥1,186,103 
   
 
 
   
 
 
   
 
 
 
Income (loss) before income taxes
  ¥219,126   ¥221,000   ¥179,745 
Unrealized gain (loss) on investments in equity securities held for operating purposes
   11,545    5,623    (30,271) 
   
 
 
   
 
 
   
 
 
 
Consolidated income (loss) before income taxes
  ¥230,671   ¥226,623   ¥149,474 
   
 
 
   
 
 
   
 
 
 
(1)
Includes a reversal of unrealized gain (loss) on investments in equity securities held for operating purposes that were sold in the years ended March 31, 2021, 2022 and 2023.
Geographic information—
Nomura’s identifiable assets, revenues and expenses are generally allocated based on the country of domicile of the legal entity providing the service. However, because of the integration of the global capital markets and the corresponding global nature of Nomura’s activities and services, it is not always possible to make a precise separation by location. As a result, various assumptions, which are consistent among years, have been made in presenting the following geographic
data.
F-
140
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The tables below present a geographic allocation of
Net revenue
and
Income (loss)
before income taxes
from operations by geographic areas for the years ended March 31, 2018, 20192021, 2022 and 20202023 and Long-lived assets
associated with Nomura’s operations as of March 31, 2018, 20192021, 2022 and 2020.2023.
Net revenue
in “Americas”Americas and “Europe”Europe in the table substantially represents Nomura’s operations in the U.S. and the U.K., respectively.
Net revenue
and
F-13
6
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-lived assets have been allocated based on transactions with external customers while
Income (loss)
before income taxes
has been allocated based on the inclusion of intersegment transactions.
 
Millions of yen
 
Year ended March 31
 
2018
  
2019
  
2020
 
Net revenue
(1)
:
  
   
   
 
Americas
 ¥
268,653
  ¥
169,581
  ¥
229,265
 
Europe
  
168,186
   
131,175
   
115,483
 
Asia and Oceania
  
68,011
   
47,977
   
42,571
 
             
Subtotal
  
504,850
   
348,733
   
387,319
 
Japan
  
992,119
   
768,037
   
900,510
 
             
Consolidated
 ¥
1,496,969
  ¥
1,116,770
  ¥
1,287,829
 
             
Income (loss) before income taxes:
  
   
   
 
Americas
 ¥
(8,771
) ¥
(114,081
) ¥
7,354
 
Europe
  
(14,654
)  
(56,851
)  
(14,067
)
Asia and Oceania
  
22,751
   
5,014
   
19,817
 
             
Subtotal
  
(674
)  
(165,918
)  
13,104
 
Japan
  
328,832
   
128,217
   
235,157
 
             
Consolidated
 ¥
328,158
  ¥
(37,701
) ¥
248,261
 
             
    
 
March 31
 
2018
  
2019
  
2020
 
Long-lived assets:
  
   
   
 
Americas
 ¥
117,323
  ¥
50,829
  ¥
84,904
 
Europe
  
67,010
   
56,821
   
52,179
 
Asia and Oceania
  
8,613
   
9,588
   
29,618
 
             
Subtotal
  
192,946
   
117,238
   
166,701
 
Japan
  
231,003
   
252,420
   
292,212
 
             
Consolidated
 ¥
423,949
  ¥
369,658
  ¥
458,913
 
             

   
Millions of yen
 
   
Year ended March 31
 
   
2021
(2)
  
2022
(2)
  
2023
(3)
 
Net revenue
(1)(3)
:
             
Americas
  ¥226,741  ¥289,571  ¥290,036 
Europe
   142,941   131,393   163,977 
Asia and Oceania
   66,985   85,081   68,817 
   
 
 
  
 
 
  
 
 
 
Subtotal
   436,667   506,045   522,830 
Japan
   965,205   857,845   812,747 
   
 
 
  
 
 
  
 
 
 
Consolidated
  ¥1,401,872  ¥1,363,890  ¥1,335,577 
   
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes
(3)
:
             
Americas
  ¥(76,963)  ¥(40,950)  ¥(51,743) 
Europe
   14,283   (21,774)   9,206 
Asia and Oceania
   49,205   28,586   31,003 
   
 
 
  
 
 
  
 
 
 
Subtotal
   (13,475)   (34,138)   (11,534) 
Japan
   244,146   260,761   161,008 
   
 
 
  
 
 
  
 
 
 
Consolidated
  ¥230,671  ¥226,623  ¥149,474 
   
 
 
  
 
 
  
 
 
 
(1)
There is no revenue derived from transactions with a single major external customer.
(2)Includes losses arising from the U.S. Prime Brokerage Event.
(3)
Includes gains from the estimated recoverable amounts and collected amounts for a part of the claim related to the loss arising from the U.S. Prime Brokerage Event. 
   
Millions of yen
 
   
Year ended March 31
 
   
2021
   
2022
   
2023
 
Long-lived assets:
               
Americas
  ¥98,611   ¥103,045   ¥114,946 
Europe
   65,165    53,643    53,161 
Asia and Oceania
   26,690    23,600    23,839 
   
 
 
   
 
 
   
 
 
 
Subtotal
   190,466    180,288    191,946 
Japan
   303,355    269,135    308,941 
   
 
 
   
 
 
   
 
 
 
Consolidated
  ¥493,821   ¥449,423   ¥500,887 
   
 
 
   
 
 
   
 
 
 
2
23. Significant subsequent events:1
. Related party transactions
Rights conversionNomura makes loans to certain of its directors and other related parties. Outstanding loans to the Tokyo Nihonbashi district
redevelopment
projectits directors and other related parties were not considered significant.
On May 20, 2020, the rights conversion plan of the Tokyo Nihonbashi district redevelopment project in which Nomura participate as members of the redevelopment partnership was approved by Tokyo Metropolitan Government. The rights conversion became effective on May 29, 2020.
F-
137
141
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As a result, Nomura is entitled to receive ownership in the redeveloped real estate in the future and cash representing compensation for loss of rental income and other related expenses, in exchange for the assets it held in that area.
Nomura will record
an
income before income taxes of approximately ¥70 billion as the difference between the carrying value of the transferred assets and the fair value of the acquired assets during the first quarter of the fiscal year ending March 31, 2021. In addition, Nomura has committed to purchase other parts of the redeveloped real estate from the partnership upon its completion, and the amount of the commitment is included in Note 21 “
Commitments, contingencies and guarantees
.”
24.2
2
. Supplementary subsidiary guarantee information required under SEC rules:
The Company provides several guarantees of debtdebts of its subsidiaries.
The Company has fully and unconditionally guaranteed the securities issued by Nomura America Finance LLC (“NAFL”), which is an indirect, wholly owned finance subsidiary of the Company. NAFL operates as a special purpose entity. It was formed for the purpose of issuing debt securities to repay existing credit facilities, refinance indebtedness, and for acquisition purposes. The guarantee will remain in effect until the entire principal, if any, of, and interest and premium, if any, on, the securities has been paid in full or discharged in accordance with the provisions of the indenture, or otherwise fully defeased by the Company.
F-13
F-
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Table of Contents
INDEX OF EXHIBITS
Exhibit
Exhibit
Number
  
Description
        1.1
  
Articles of Incorporation of Nomura Holdings, Inc. (English translation) (filed on June 25, 201524, 2022 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        1.2  
Share Handling Regulations of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        1.3  
Regulations of the Board of Directors of Nomura Holdings, Inc. (English translation) (filed on June 24, 2022 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        1.4  
Regulations of the Nomination Committee of Nomura Holdings, Inc. (English translation) (filed on June 23, 2016 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        1.5  
Regulations of the Audit Committee of Nomura Holdings, Inc. (English translation) (filed on June 24, 2022 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        1.6  
Regulations of the Compensation Committee of Nomura Holdings, Inc. (English translation) (filed on June 27, 2012 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        2.1  
Form of Deposit Agreement among Nomura Holdings, Inc., The Bank of New York Mellon as depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt (filed on April 28, 2010 as an exhibit to the Registration Statement on Form F-6 (File No. 333-166346) and incorporated herein by reference)
        2.2  
Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 (filed on June 25, 201924, 2022 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        4.1  
        4.2
        8.1  
        4.3
        8.1
Subsidiaries of Nomura Holdings, Inc.—See Item 4.C. “Organizational Structure” in this annual report.
        11.1  
Nomura Group Code of Conduct 20202023 (English translation)
        11.2  
Nomura Group Code of Ethics for Financial Professionals (English translation) (filed on June 30,2020 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        12.1  
Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)
        12.2  
Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)
        13.1  
Certification of the chief executive officer required by 18 U.S.C. Section 1350
        13.2  
Certification of the chief financial officer required by 18 U.S.C. Section 1350
        15.1  
Consent of Ernst & Young ShinNihon LLC, with respect to its report on the audit of the financial statements included in this annual reportan independent registered public accounting firm
    101.INS
        17.1  
Subsidiary Issuer of Registered Guaranteed Securities
    101.INS
Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
    101.SCH  
Inline XBRL Taxonomy Extension Schema Document
    101.CAL  
Inline XBRL Taxonomy Extension Calculation Linkbase Document
    101.DEF  
Inline XBRL Taxonomy Extension Definition Linkbase Document
    101.LAB  
Inline XBRL Taxonomy Extension Label Linkbase Document
    101.PRE  
Inline XBRL Taxonomy Extension Presentation Linkbase Document
    104  
The cover page for the Company’s Annual Report on
Form
20-F
for the year ended March 31, 2020,2023, has been formatted in Inline XBRL
 
(1)
The Company and Michael Lim Choo Sanhas entered into a Limitation of Liability AgreementAgreements substantially in the form of this exhibit.exhibit with all of its outside directors and director Shoji Ogawa.
(2)The Company and each of Hiroshi Kimura, Noriaki Shimazaki, Hisato Miyashita, Mari Sono and Kazuhiko Ishimura entered into a Limitation of Liability Agreement substantially in the form of this exhibit.
(3)The Company and Laura Simone Unger entered into a Limitation of Liability Agreement substantially in the form of this exhibit.
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.
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on
Form
20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
NOMURA HOLDINGS, INC.
By:
 
/s/    K
Kentaro OkudaENTARO
O
KUDA
 
Name:
 
Kentaro Okuda
 
Title:
 
Representative Executive Officer,
President and Group Chief Executive Officer
Date: June 30, 202028, 2023