N o m u r a R e p o r t 2 0 1 6 The start of a new future Nomura Holdings, Inc. Nomura Report 2016 This report was produced using non VOC inks. All electricity to print this booklet was generated by green energy. (3,932 kWh) About the Cover Photo To visually express the title of this report, “The start of a new future” the cover photograph captures the stillness of the morning air as the sun rises behind our Nihonbashi Head Office building. The photograph evokes our determination to embark on a new future as we celebrate our 90th founding anniversary and look back on 90 years in the securities business. Printed in Japan N o m u r a H o d n g s , i l I n c . About Nomura Report 2016 < Additional Information > Please visit the Nomura websites if you require more detailed information than has been included in this Nomura Report. In FY2012/13, we began publishing the Nomura Report, an integrated version of our annual report and our citizenship report, which detailed our CSR initiatives. We hope that this integrated report helps readers gain a broader understanding of our activities to support sustainable development and aim to grow and develop together with our stakeholders, including our clients and shareholders, as Asia’s global investment bank. Forward-Looking Statements This Nomura Report contains forward-looking statements about the future plans, strategies, beliefs, and performance of Nomura Group. These forward-looking statements are not historical facts. They are expectations, estimates, forecasts, and projections based on information currently available to the Company and are subject to a number of risks, uncertainties, and assumptions, which, without limitation, include market trends, economic trends, competition in the financial industry, laws and regulations, and tax systems. As such, actual results may differ materially from those projected. P. 2 〜 P. 12 〜 P. 17 〜 Nomura Today Leadership Actions for Shaping Our Future A look at the current state of Nomura Group. Insights into management’s thinking and the current status of the Executive Officers and Senior Managing Directors. Message from the Group CEO Executive Officers and Senior Managing Directors 12 16 Nomura Today Financial and Non-Financial Highlights The Principles Established by Nomura’s Founder and the Current Corporate Culture Nomura Group Businesses Underpin Our Founder’s Principles 2 4 6 8 At a Glance / Business Segments 10 Based on our philosophy of “placing our clients at the heart of everything we do,” Nomura Group continues to innovate and take up new challenges to drive sustainable growth, along with undertaking a variety of activities to fulfill our corporate social responsibility (CSR). We hope that this section will increase your understanding of these and other actions. Message from the Group COO Shaping Our Future with Actions in Each Division 18 20 Actions Across the Regions 28 Advisory Board Directors Outside Director’s Message 31 34 37 • Nomura Holdings Website http://www.nomura.com/ • CSR Website • Investor Relations Website http://www.nomuraholdings.com/csr/ http://www.nomuraholdings.com/investor/ Basic Information in the Report Period Covered Entities Covered Reference Guidelines April 1, 2015 to March 31, 2016 (Some content may be outside this time frame.) Nomura Holdings, Inc. and its major subsidiaries and affiliates http://www.nomuraholdings.com/company/group/ Numerical data are presented alongside infor- mation on the scope of companies covered. • Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) This report contains information regarding the standard disclosure items contained in the fourth edition of the GRI Sustainability Reporting Guidelines. Please access the following URL on our corporate website for our GRI Guidelines Index. http://www.nomuraholdings.com/csr/gri/index.html • Environmental Reporting Guidelines (2012 Version) of Japan’s Ministry of the Environment • Charter of Corporate Behavior of Keidanren P. 63 〜 Performance Review & Data Section In this section, we present the basic information needed to under- stand Nomura Group, beginning with our performance history, in addition to our Company-wide and business segment results for the fiscal year ended March 31, 2016 and Nomura Holdings’ financial strategies. Corporate Governance Compliance Risk Management CSR Management Contributing to Sound and Sustainable Capital Markets 39 45 48 50 52 Contributing to Sustainable Communities 54 Fostering Human Resources with a Respect for Diversity Our Environment 58 61 Key Financial Data Message from the CFO Performance Review of Divisions Eight-Year Consolidated Financial Summary (US GAAP) 64 66 69 72 CSR Key Facts Independent Assurance History Global Network Nomura Securities Domestic Network 74 78 79 80 81 Share Data / Credit Rating 82 Corporate Data 83 1 Nomura Report 2016 Nomura Today Overview of Nomura Group Presence of Nomura Group Nomura Group is Asia’s global investment bank with an integrated network spanning over 30 countries and regions. By connecting markets East and West, we service the needs of individuals, institutions, corporates and governments through our three business divisions: Retail, Asset Management, and Wholesale (Global Markets and Investment Banking). Nomura Holdings Retail Division Asset Management Division Wholesale Division Wealth Management Global Markets Investment Banking (1,214 consolidated subsidiaries and consolidated variable interest entities as of March 31, 2016) Assessments from Third Parties Inclusion in SRI Indices Nomura’s CSR initiatives and environment, social, and governance (ESG) information disclosure practices have been widely recognized outside the Company. Nomura Holdings has been selected for inclusion in the Dow Jones Sustainability Indices, the FTSE4Good Index, and, as of January 2016, • Dow Jones Sustainability Indices The world’s first sustainability equity indices, Dow Jones & Company and RobecoSAM, jointly choose the companies to be included in these benchmarks • FTSE4Good Index FTSE, a subsidiary of the London Stock exchange, has created a socially responsible investment index by selecting excellent companies from around the world the Morningstar Socially Responsible Investment • MS-SRI Index (MS-SRI), all of which are socially responsible investment (SRI) indexes. Furthermore, in November 2015, Nomura was selected for inclusion in “100 Morningstar, Inc. selected 150 companies that were assessed as excellent socially aware companies from among companies listed in Japan, and created Japan’s first socially responsible investment index by indexing their stock prices Most Sustainable Companies in Asia” announced by Channel NewsAsia, the CSR think-tank CSR Asia, and the ESG assessment organization Sustainalytics. • 100 Most Sustainable Companies in Asia Channel NewsAsia and other ESG organizations rank companies in Asia with the best ESG indicators Credit Rating Nomura Securities, which is the core operating Rating and Investment Information, Inc. (R&I) A+ Standard & Poor's A– company within Nomura Group, has received ratings of A rank or higher from five Japanese and overseas Japan Credit Rating Agency, Ltd. (JCR) AA– Fitch Ratings A– rating agencies. Moody's A3 (As of June 30, 2016) Group-wide 28,865 Number of employees As of March 31, 2016, 28,865 employees were working in Nomura Group in Japan and the rest of the world. Of these, 44% were working outside Japan. More than 70 countries Number of nationalities among Group personnel Executives and employees working in Nomura Group are citizens of more than 70 countries. The goal of the Group is to create a corporate culture where staff with diversified backgrounds can mutually respect each other’s values and work together. Retail Division ¥100.6 trillion 159 branches Retail client assets Retail client assets, a sign of the trust placed in us by our clients, was ¥100.6 trillion as of March 31, 2016. This was twice the size of the balance of client assets of the second largest company, which was ¥51.0 trillion. Number of Nomura Securities Branches in Japan Through 159 branches nationwide, Nomura Securities provides meticulous products and services that suit each individual client’s needs. Asset Management Division ¥40.1trillion Assets under management The total balance of assets, including investment trusts and exchange-traded funds, from Japanese and overseas individual and institutional investors that have been entrusted to us for management as of March 31, 2016 was ¥40.1 trillion. 24.8 % Share of public investment trust market in Japan Nomura Asset Management’s share of the public investment trust market in Japan was 24.8%. We are maintaining our leadership, by far outstripping the second largest asset management company in Japan, which has a 14.5% share. (Source: The Investment Trusts Association, Japan) Wholesale Division 63.1% 64.0 % Percentage of Japanese listed companies which name Nomura as lead / deputy underwriter Percentage of revenues from overseas Over the years, Nomura Group has built a relationship of trust with its clients. We have been named as the lead underwriter by 38.8% of Japanese listed companies and 63.1% of Japanese listed companies, including roles as deputy underwriter (on a market capitalization basis). We support a wide range of clients as regards their financing and financial affairs. Wholesale revenues for the fiscal year ended March 31, 2016 totaled ¥720.3 billion, of which 64.0% was contributed from overseas. Through a network covering more than 30 countries and regions, we offer global products and services to a wide range of clients. 2 3 Nomura Report 2016Nomura Report 2016Nomura Today Financial and Non-Financial Highlights Net revenue Income before income taxes, Net income* Members of the board 2,000 1,500 1,000 500 0 (Yen) 80 60 40 20 0 (Billions of yen) (Billions of yen) 1,814 1,536 1,557 1,604 1,396 2012 2013 2014 2015 2016 (Fiscal years ended March) 400 300 200 100 0 225 214 107 132 12 2012 2013 2014 2015 2016 (Fiscal years ended March) ■ Income before income taxes * Net income attributable to Nomura Holdings shareholders. Net income* EPS* 60.03 55.81 28.37 35.52 3.14 2012 2013 2014 2015 2016 (%) 10 8 6 4 2 0 ROE 8.9 8.6 4.9 0.6 4.9 2012 2013 2014 2015 2016 (Fiscal years ended March) (Fiscal years ended March) * Diluted net income attributable to Nomura Holdings shareholders per share. Percentage of Outside Directors 55% Percentage of non-Japanese Directors 27% Number of Outside Directors 6 of 11 Number of non-Japanese Directors 3 of 11 (End of June 2016) (End of June 2016) Women in managerial positions Ratio of employees by region (Employees) 1,500 1,000 500 0 16 15 13 13 13 2012 2013 2014 2015 2016 (%) 20 15 10 5 0 (%) 100 80 60 40 20 0 20 9 15 20 9 14 20 9 13 23 9 12 24 8 12 56 57 58 56 56 2012 2013 2014 2015 2016 ■ Number of women in managerial positions (lhs) Percentage of women in managerial positions (rhs) ■ Japan ■ EMEA ■ Americas ■ AEJ (End of March) (End of March) Total assets RWA, Tier 1 capital ratio* Education and training expenses Social contribution-type bonds (Trillions of yen) 50 40 30 20 10 0 43.5 41.8 41.1 35.7 37.9 2012 2013 2014 2015 2016 (Billions of yen) 20,000 15,000 10,000 5,000 0 16.1 14.2 13.2 11.9 12.9 2012 2013 2014 2015 2016 (%) 20 15 10 5 0 2,972 2,880 (Millions of yen) 200,000 24 (Millions of yen) 3,000 2,033 2,000 2,441 2,515 1,000 0 2012 2013 2014 2015 2016 150,000 19 100,000 14 11 50,000 0 2013 2014 2015 2016 (Bonds) 25 20 15 10 5 0 (End of March) (End of March) (Fiscal years ended March) (Fiscal years ended March) ■■ RWA (lhs) ■ * Figures for March 2012 were prepared under Basel 2.5 standards. Tier 1 capital ratio* (rhs) Figures for March 2013 to March 2016 were prepared under Basel 3 standards. ■ Proceeds (lhs) Bonds issued (rhs) 4 Nomura Report 2016 5 Nomura Report 2016Nomura Today The Principles Established by Nomura’s Founder and the Current Corporate Culture Our Founder's Principles Are the Cornerstone of Our Business Activities Ten principles set out by our founder We remain committed to enriching society by delivering superior services and solutions to our clients that meet all their investment needs. This has been our unwavering spirit since our founding. It is our social mission and our raison d’être. Our History & Founder's Principles http://www.nomuraholdings.com/company/basic/ Founder Tokushichi Nomura 1. Nomura’s raison d’être “Nomura’s mission is to enrich the nation through the securities business. This is something we must absolutely see though.” 2. Principle of putting the customer first “We must place our customers’ interests before our own.” 3. Global ambition “Nomura is destined to become an active player on the international stage.” 4. Emphasis on rigorous research and analysis “We have a duty to research scientifically the intrinsic nature of all securities.” 5. Staying one step ahead “Always strive to stay one step ahead. Standing still is retrogressive.” 6. Entrepreneurial spirit “If, as an entrepreneur, you can determine something to a 70% certitude, you must have the courage to take up the challenge even though some uncertainty remains.” 7. Human resources “Nomura underscores the fact that the development of human resources, acquisition of talented personnel and ability to match the right talent with the most appropriate position are more formidable assets than sheer capital strength.” 8. Emphasis on team work “It is the management’s task to see that Nomura employees take responsibility and pride in their work and to form a unified team under the control of branch office managers.” 9. Business development frame of mind “We must have the courage to boldly follow the path of our convictions.” 10. Customer service mindset “If you conduct your work in a mechanical manner, believing simply that your role is over once the deal is done, there is no use in drawing on the strengths of those around you.” Carrying Forward Our Founder’s Principles To this day, Nomura Group employees draw on the ten principles handed down from the founder for inspiration in their business activities. We introduce some examples of the principles here. 5. Staying one step ahead 7. Human resources Shohei Goto Deputy Manager Financial Consulting Section, Namba Branch, Nomura Securities Co., Ltd. Philipp de Cassan Managing Director, Head of Euro Flow Rates Trading, Nomura International plc I make comprehensive proposals on business succession, reorganization and M&As to corporate customers, as well as inheritance strategies for individual customers. Through counseling customers, I try to find out their various needs such as a real estate transaction or an M&A. I then work with our specialized Head Office departments and affiliate companies to come up with forward-looking solutions. When a certain customer was having difficulty trying to sell an apartment building, we went a step further to propose the sale of the corporation that nominally owned the building instead. As a result, the customer invested the proceeds to other financial products through us. The customer was very pleased and surprised by the reach of our financial consulting services. Apart from our investment capabilities, I also draw on the Group’s organizational strengths to come up with new ideas for customers. Here at Nomura in London, I oversee our group’s risk and trading decisions, where we show liquidity in financial assets to our clients from across Nomura's broad franchise. We are always working very closely with our international client base, in order to help them achieve the best possible outcome for their investment or hedging needs. We constantly strive to come up with innovative and strategic solutions for our clients, often working closely with our colleagues in Asia. This approach ensures that our clients know that we are fully committed to delivering best-in-class solutions for them and reinforces how we are linking markets East and West. 8. Emphasis on team work 10. Customer service mindset Keishi Nobukuni Deputy Head, Equity Capital Markets Dept./Capital Markets Dept., Nomura Securities Co., Ltd. Mizuho Sugiura Deputy Manager Financial Consulting Section, Okazaki Branch, Nomura Securities Co., Ltd. In 2015, three companies of the Japan Post Group held their initial public offering (IPO) at once. To guide this IPO to success in coordination with the client and many divisions within the Company, it was important for each member of the team to demonstrate their abilities as a professional. To make sure that we maintained smooth interaction between all parts of the project, we strove to keep the team organization compact so as to remain in close communication with the client and to centralize the management of the IPO. We had to take on many initiatives for the first time, including a briefing for individual investors at 12 locations throughout Japan, but the Company worked together as a team to make the project a success. To further the depth of our customer consultations, we are using tools developed by the Company to run lifelong financial planning and inheritance simulations and make tailored proposals. In the process, we often listen to the daily worries of our customers in addition to their asset management needs. My job is to suggest the best products in anticipation of changes in the market. But I also think that it’s my job to understand what customers plan to do with their lives and what they’re trying to accomplish with their investments. I’m always ready to listen because I want to be of assistance when customers are willing to open up their hearts. 6 Nomura Report 2016 7 Nomura Report 2016Nomura Today Nomura Group Businesses Underpin Our Founder’s Principles Based on our philosophy of “placing our clients at the heart of everything we do,” Nomura Group leverages our high-quality management resources to develop creative solutions for our stakeholders. We deliver value-added services to our clients through our core businesses while also engaging in key CSR initiatives that will help Nomura establish a solid position as Asia’s global investment bank. Input Management resources Financial capital • Robust financial position • Efficient allocation of management resources Human capital • Diversified talents • High sense of ethics and professional and social norms Intellectual capital • Knowledge of financial products • High-quality research Social capital • Mission to provide products and services to the public markets Wide range of stakeholders Shareholders and investors Governments and central banks Environment Clients Creditors Suppliers Employees Capital exchange, payment for services, constructive dialogue, etc. Deliver value through core business functions Community Provide creative solutions Sales of secondary products Underwriting, syndi- cation and distribution of primary deals and M&A advisory Asset management and investment advisory services Provide liquidity Retail Asset Management Collaborate across divisions and regions Wholesale Corporate governance Nurture human resources with a respect for diversity Compliance Dialogue with stakeholders Risk management Contribute to sound and sustainable capital markets Key CSR Initiatives of Nomura Group Looking Ahead Establish solid position as “Asia’s global investment bank” Create value required by our global stakeholders Output Value creation Economic value • Deliver stable profitability • FY2019/20 management target: EPS of ¥100 • Invest in areas of growth and generate appropriate shareholder returns Corporate value, brand-building • Win clients’ trust • Develop a unique corporate culture Added value, innovative services • Deliver competitive products, services and solutions • Create financial innovation Social value • Contribute to society through our core businesses • Coexist and coprosper with regional societies 8 9 Nomura Report 2016Nomura Report 2016Nomura Today At a Glance / Business Segments Retail Retail Division provides a broad range of financial products and services through its head office and its nationwide network of 159 branches, as well as Nomura Net & Call (online- based platform and call centers), to individual and corporate clients. Nomura also develops its Wealth Management Business in Japan and Asia ex-Japan. Highlights Nomura Securities 22.7% 5,389 thousand accounts Income before income taxes: ¥127.6 billion Retail client assets: ¥100.6 trillion Number of branches: 159 All accounts held at securities companies in Japan: 23,737 thousand accounts Source: Japan Securities Dealers Association Asset Management Asset Management Division operates globally, with Nomura Asset Management playing a central role. Investment trusts business offers a wide lineup of products through a broad range of channels such as securities companies (including Nomura Securities), banks, post offices and insurance companies. Investment advisory and overseas business provide high-quality products and asset management services to a broad spectrum of institutional investors, including pension funds in Japan and overseas, government organizations, central banks, commercial banks and insurance companies. Income before income taxes: ¥36.7 billion Assets under management: ¥40.1 trillion Nomura Asset Management 24.8% ¥23.0 trillion Total net assets of publicly offered investment trusts in Japan: ¥92.4 trillion Share of ETFs in Japan: 48% (Source: The Investment Trusts Association, Japan) Source: The Investment Trusts Association, Japan Wholesale Wholesale Division consists of two businesses: Global Markets providing financial products and solutions and secondary market liquidity, and Investment Banking offering capital-raising transac- tions and advisory services. Nomura Group provides diverse services to a broad range of clients including corporates, government entities and financial institutions in Japan and overseas. Income before income taxes: ¥15.4 billion Countries possessing the Primary Dealer qualification World's major markets 15 countries Nomura 27.9% Ranked No.1 Total transactions of the Japan ECM League Table: $ 45.1 billion (April 2015 to March 2016) Source: Thomson Reuters Clients Our Services Channels Our Focus • Individual investors • Regional government agencies • Regional financial institutions • Corporates • Educational institutions • Other legal entities • Equities • Bonds • Investment trusts • Insurance • Discretionary investments • M&A advisory • Real estate (agency services) • Inheritance and business succession services • 159 branches nationwide • Call centers and websites • Enhancing in-depth identification of client needs • Expanding recurring revenue by increasing client assets • Individual investors • Domestic and overseas pension funds • Governments and central banks • Institutional investors, etc. • Domestic investment trusts: Securities companies, banks, Japan Post Bank, insurance companies, and other intermediary sales companies • Domestic investment advisory: Direct sale of services to pension funds, institutional investors, etc. • Overseas business: Intermediary sales companies and direct sales of services to pension funds, institutional investors, etc. • Domestic equities and bonds • Further improving fund performance • Asian equities and bonds • Global equities and bonds • Balanced funds • Strengthening capabilities for providing products and solutions matching client needs • Establishing a highly transparent corporate governance • Absolute profit-type investments structure » P.20 » P.22 » P.25 • Financial institutions • Institutional investors • Corporates • Governments and government entities • Network covering more than 30 countries and regions • Underwriting of bonds and stocks • M&A advisory • Syndication of financial products, provision of liquidity • Proposals for investment, high-level execution • Offering solutions that match client needs and regional characteristics • Strengthening cross-divisional and cross-regional collaboration • Connecting markets East and West 10 11 * Income before income taxes is for FY2015/16, and the remaining figures are as of March 31, 2016, unless otherwise defined. Nomura Report 2016Nomura Report 2016Nomura Today Message from the Group CEO We continue to transform ourselves and take on new challenges to improve satisfaction among clients, shareholders, and employees. Looking Back can feel excited about their job. We have kept refreshing our organization by promoting It is now four years since I took over as Group younger managers and have proactively rotated CEO in August 2012. people between divisions. In addition, we are At that time, Nomura faced an unprece- conducting regular employee surveys that target dented number of complaints from our clients our entire population in order to gauge the and dissatisfaction about our slumping share current understanding of the firm. We have also price in the wake of a scandal. Our internal focused on promoting a risk culture by having culture had become restrictive and our organi- all employees understand and follow the firm’s zation was outdated. This caused satisfaction stance towards risk. levels of our stakeholders to drop dramatically. I For shareholders, although we could not made it my first mission to raise the satisfaction make a commitment regarding our share price, levels of clients, shareholders, and employees, we committed to returning our EPS to ¥50 by while rebuilding the firm from the ground up. March 2016, the end of the range it was at To improve client satisfaction, I announced before we conducted two capital raisings and that our underlying approach would be to put our earnings slumped. We achieved this target clients at the heart of everything we do. This two years ahead of schedule. meant moving away from a product-driven sales approach where we pushed products to the clients. Instead, we would have to listen closely to what they had to say and work to be chosen Our Founder’s Principles and Nomura’s Corporate Culture by our clients as a true partner. For instance, Nomura celebrated its 90th anniversary in the needs of retail clients extend beyond just December 2015. Although Nomura was estab- financial products. They require services for all lished in 1925, we can trace our roots back their assets, including real estate. To respond to further to 1872 when Nomura Shoten was these needs, we established new organizations established as a moneychanger. and introduced more training programs so our Nomura grew from a moneychanger to a employees can improve their consulting skills. huge conglomerate before the end of World To improve employee satisfaction, we War II when it as was dismantled. Nomura then changed our corporate culture to an open one embarked on an extensive international push by bringing down the walls between divisions on the back of the rapidly expanding Japanese and creating a workplace where everyone economy. Driven by the shift to financial Koji Nagai Group CEO deregulation, Nomura then transformed itself principles: “Principle of putting the customer from a securities firm to a financial services first.” Based on this philosophy, it is critical that group. In this way, Nomura has continued to we continue to transform ourselves. transform itself in line with the changing times We also place great importance on corporate and take on new challenges. ethics. In 2015, we established Nomura We have been able to survive for 90 years Founding Principles and Corporate Ethics Day so thanks to our ability to transform ourselves to that employees never forget the fact that we lost adapt to the unpredictable markets in which we the trust of society and learned many lessons from operate. the insider trading incidents related to capital Nomura has ten principles that we follow raisings in 2012. This is an opportunity to reflect called Our Founder’s Principles (see p.6 ). Our on our founding principles and for all officers and philosophy of putting clients at the heart of employees to understand our past and recognize everything we do comes from one of these the heavy social responsibility we bear. 12 13 Nomura Report 2016Nomura Report 2016Leadership Message from the Group CEO Towards Further Growth Investments announced in December 2015, we are accelerating our growth to become a global Achieving Continued Growth raising stakeholder satisfaction levels. In the year ended March 2016, we estab- In August 2014, we outlined a long-term asset manager. Nomura’s social mission is to contribute to lished our Corporate Governance Guidelines management vision targeted at the fiscal year To improve profitability in Wholesale, we have economic growth and social development as a way to ensure transparent, fair, swift, and ending March 2020. We expect our operating stringently managed costs and taken a number through the securities business by promoting the decisive decision-making. environment to change more than ever. But of steps to raise our global market share to the we see this as the perfect chance to change high 3% range. ourselves. That is why we named this Vision C&C. However, in the current environment, we are There are two main themes for this vision: seeing the impact of monetary policies around appropriate flow of funds in the capital markets. Aside from our core business, we are actively involved in contributing to society by providing opportunities for people all around Japan to Transforming Ourselves and Taking on Challenges 1. Transforming our domestic business model the world coupled with heightened geopolitical learn about economics and finance in order to Our operating environment will continue to 2. Further improving the profitability of our uncertainties. At the same time, U.S. and expand Japan’s financial markets and enhance change not only until 2020 but through to our international operations European firms that played the role of liquidity financial literacy. 100th anniversary in 2025. Nomura will transform In addressing these issues, we are laying providers have significantly reduced their opera- Internationally, we have participated in the itself to deliver continued growth under any the ground for all divisions to achieve continued tions due to regulatory requirements. This has UN Global Compact since 2015. We support the environment and contribute to economic growth growth in any market environment. resulted in volatile markets and a deeper than voluntary actions advocated by the UN and are and social development by promoting the shift In Retail, we aim to gain client trust and expected drop in market liquidity. working to ensure sustainable growth based on from savings to investment for Japan’s more expand our business, focusing on deliv- Based on a conservative assumption that Our Founder’s Principles and the Code of Ethics than ¥1,700 trillion in personal financial assets. ering products and services matched to the this environment will continue in the foreseeable of Nomura Group. individual needs of each client. Our Retail key future, we decided to step up our focus on core Communication with all stakeholders is We look forward to your continued support performance indicators (KPIs) are Retail client businesses and significantly reduce our cost becoming increasingly important. Transparent as we transform ourselves and take on new assets of ¥150 trillion and a recurring revenue base. Specifically, while we will maintain our corporate governance is a critical factor in challenges. cost coverage ratio*1 of approx. 50% by 2020. current business lineup in Japan and the rest As of March 2016, we had Retail client assets of Asia, we have decided to close or streamline of ¥100.6 trillion and our recurring revenue certain businesses in EMEA and the Americas. cost coverage ratio was 25%. We remain focused on improving profitability Asset Management is making steady to deliver consistent earnings under any progress to achieving its target of assets environment. under management of over ¥50 trillion. With our strategic alliance with American Century *1 Total Retail expenses divided by recurring revenue. Recurring revenue refers to revenue received from ongoing services related to client assets such as investment trust administration fees. FY2019/20 management target EPS ¥100 Key Performance Indicators (KPI) to reach our FY2019/20 management target Income from three Segments before income taxes Division Retail Income before income taxes Client assets Recurring revenue cost coverage ratio Asset Management Income before income taxes Assets under management FY2019/20 ¥450-470 billion ¥195-205 billion ¥150 trillion Approx. 50% ¥55-60 billion*2 ¥50 trillion +α*2 Wholesale Income before income taxes Fee pool market share ¥200-220 billion*2 3% plus *2 Revised in December 2015 in line with the changed environment August 2016 Koji Nagai Group CEO 14 15 Nomura Report 2016Nomura Report 2016Leadership Executive Officers and Senior Managing Directors (As of June 1, 2016) • • • • • • Group CEO Group COO Koji Nagai Tetsu Ozaki Retail Head of Retail Division Eiichiro Yamaguchi Asset Management Head of Asset Management Division Kunio Watanabe Wholesale Joint Heads of Wholesale Division Head of Global Markets Global Markets Global Markets Co-Head Head of Global Markets EMEA Investment Banking Head of Investment Banking Americas EMEA Asia ex-Japan Banking Head of Americas Co-Head of Americas Executive Chairman, EMEA Head of EMEA Head of Asia ex-Japan Co-Head of Asia ex-Japan Banking Chief of Staff Chief Financial Officer (CFO) Steven Ashley Kentaro Okuda Steven Ashley Yasuo Kashiwagi Yutaka Nakajima Kentaro Okuda David Findlay Tsutomu Takemura Minoru Shinohara Jonathan Lewis Toshiyasu Iiyama Takeo Aoki Chie Toriumi Shoichi Nagamatsu Takumi Kitamura Group Entity Structure and Co-CRO Yuji Nakata Chief Risk Officer (CRO) Chief Information Officer (CIO) Group CAO (Wholesale IT, Global Operations, Facility Management) Lewis O’Donald Kaoru Numata Paul Spanswick Corporate Head of Group Compliance and Operations Tomoyuki Teraguchi Chief Legal Officer (CLO) Yasushi Takayama Deputy Chief of Staff and Group Strategy Yo Akatsuka Group Corporate Communications, Corporate Citizenship and Tokyo 2020 Olympic and Paralympic Hajime Ikeda Global Head of Human Resources Kenji Kimura General Services Asia Strategy (China) Internal Audit Group Internal Audit Rikiya Nonomura Toshihiro Iwasaki Junko Nakagawa • indicates an Executive Officer 16 Actions for Shaping Our Future Based on our philosophy of “placing our clients at the heart of everything we do,” Nomura Group continues to innovate and take up new challenges to drive sustainable growth, along with undertaking a variety of activities to fulfill our corporate social responsibility (CSR). We hope that this section will increase your understanding of these and other actions. Nomura Report 2016 Message from the Group COO “Our long-standing commitment to building relationships of trust with clients underpins the competitive advantage of the Nomura brand.” Tetsu Ozaki Group COO Koji Nagai Group CEO Tetsu Ozaki Group COO Retail Eiichiro Yamaguchi Head of Retail Division Asset Manage- ment Kunio Watanabe Head of Asset Management Division Whole- sale Steven Ashley Kentaro Okuda Joint Heads of Wholesale Division Japan AEJ EMEA Americas Koji Nagai Tetsu Ozaki Toshiyasu Iiyama Head of Asia ex-Japan Minoru Shinohara Executive Chairman, EMEA David Findlay Head of Americas Takeo Aoki Co-Head of Asia ex-Japan Jonathan Lewis Head of EMEA Tsutomu Takemura Co-Head of Americas Cooperation with business infrastructure division heads Our operating environment is at a crucial point debate over the state of capitalism and financial medium to long term. For over 90 years, Nomura Driven by this corporate culture, senior for two reasons. services. Regulations have been tightened, has met the needs of our clients and faced management has a strong commitment to First, our clients’ needs are increasing placing downward pressure on the earnings market fluctuations together with our clients. implement change and take on new challenges dramatically and becoming more diverse. It has of financial institutions. As FinTech and other During that time we have built up an organi- together with the strong leadership we have in been difficult to forecast the recent significant financial innovation accelerate, business models zation that is speedy and responsive, focuses on our management matrix across divisions and moves in interest rates and currencies, which could also be completely transformed. innovation by developing new schemes, and has regions. We have delegated appropriate authority have impacted the economic activity of govern- the people and organizational strength to make to division heads, business infrastructure division ments and corporates as well as investment Amid this environment, we will take the time all that happen. Nomura’s corporate culture heads, and regional heads in order to improve results for investors. As a result, our clients to understand the issues our clients face and is founded on listening closely to our clients’ the expertise in each area and ensure close require diverse solutions. In Europe and Japan proactively provide solutions in a timely way, needs and not shying away from change or new collaboration centered on each head. With this where interest rates have entered negative working hard for our clients at this historical challenges. vertical and horizontal management approach, territory, many financial institutions, investors, turning point by placing them at the heart of This corporate culture based on relationships we can cooperate together and maintain a and corporates require new solutions. In Japan, everything we do. As a partner to our clients, of trust with clients runs through all of us and stable management structure globally. for example, many industries and companies we will further differentiate ourselves and provides a solid foundation for differentiation and of different sizes are working to improve capital continue to achieve efficiencies to ensure profits will give us a significant competitive advantage Our global clients place high expectations on efficiency and setting out their growth strategies and continue to transform and take on new under the Nomura brand. We have over 70 us every day. Each of our clients is in the midst for the next generation. This is an area where challenges for the next generation. client needs are growing. nationalities working for us. Our corporate of historical changes and faces new challenges. culture is based on mutual respect of diverse Nomura will focus on meeting the expectations Second, the financial services industry is in Corporate culture is critical when it comes views across divisions and regions and this is of our clients and delivering results while trans- the middle of a historical transformation. Since to addressing the next generation and ensuring something we work to develop globally in all forming ourselves and taking on new challenges. the global financial crisis, there has been much competitiveness that sets us apart over the regions. 18 19 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Shaping Our Future with Actions in Each Division Retail Division Responding to Clients’ Diversifying Needs and Concerns Along with Era’s Changes. Eiichiro Yamaguchi Head of Retail Division Strengths of the Division Recent Business Conditions and Risks Actions to Shape Our Future advisory for small- to medium-sized enterprises, completing 37 transactions in FY2015/16, up Retail Division provides a broad range of financial Amid a greying of the population, client needs Aiming towards “winning client trust” and from 13 in the previous year. products and services through its nationwide are diversifying into addressing such risks as “business expansion,” our Retail Division has In July 2015, we invited preeminent network of 159 branches as well as Nomura Net preparing for longer life and succession of been working to transform its business model leaders of the regions to become members of & Call (online-based platform and call centers). assets to the next generation. With the Bank since August 2012. The Division is targeting Branch version of Advisory Board, and receive As of March 31, 2016, Nomura held 5.389 of Japan's introduction of the negative interest to achieve Retail client assets of ¥150 trillion, advice and suggestions on our initiatives and million client accounts (excluding those without rate policy, our individual and corporate clients a sign of trust placed in us by our clients, and businesses so we could provide better service balances), with client assets totaling ¥100.6 are concerned about how to safeguard their a recurring revenue cost coverage ratio* of to the clients. trillion. This represents 23% of the securities money, and are waiting for a variety of asset approximately 50% by FY2019/20. We also focus on proposing solutions for accounts in Japan. management solutions. On the other hand, this With an eye on transforming the business the entire families of our customers through One of Retail Division’s strengths is its policy could encourage individuals to move their model, Retail Division has been taking various Junior NISA, a junior version of Nippon Individual sophisticated consulting services. For individual money out of savings accounts into investments. actions to correspond to clients’ needs. These Savings Account which started this year, and investors, we provide tailored services to each Risk factors include changes in the global efforts have begun to show steady results. For Estate Planning Reports, a comprehensive client by listening to their life plans, family economy such as weak crude oil, slowdown example, the volume of real estate transactions service for customers taking action regarding structure and goals. Consulting services and in the Chinese economy and uncertain exceeded ¥80 billion in FY2015/16. In addition, inheritance matters. periodic follow-up advice are provided through monetary policies. Risks also entail potential we have seen a steady increase in M&A * Recurring revenue is revenue from ongoing services linked to assets under custody, such as fees from investment trusts. Nomura Financial Tools, which include advice adverse effects on Retail Division's operating based on the future life plans, assets and environment such as expansion of FinTech in inheritance matters of each client, as well as the financial sector and the declining population Asset Portfolio Reports, which include advice of Japan. and analysis of entire portfolio, even assets held outside Nomura. Another major strength is to provide high-quality products and services by lever- aging our expertise within the Group, including Wholesale and Asset Management Divisions. Initiatives to Improve Products and Services Efforts to Improve Customer Satisfaction Retail Division is redoubling efforts to improve customer satisfaction. With members including the Head of Retail Division and other senior managers of the division, the Customer Satisfaction Improvement Liaison Committee meets once a month to discuss how to improve products, services and systems based on customer feedback. The Branch Customer Satisfaction Survey was conducted for the five times, asking approx. 250,000 customers in total about their experience visiting our branch offices (details on results of the survey may be found on page 74). In addition, we conducted customer satisfaction surveys for sales repre- sentatives. On our website, we show the 20 sales representatives who received the best assessments from customers as financial consultants chosen by customers. 20 21 SOWTStrengthsOpportunitiesWeaknessesThreatsNomura Report 2016Nomura Report 2016Actions for Shaping Our Future•Insufficiency of engaging clients’ core assets•Level of recurring revenue, earnings structure exposed to market environment•Acquisition of younger clients•Largest branch network in Japan’s securities sector and client base centered on wealthy individuals•Sophisticated consulting services•Differentiation from other securities firms by collaborating with various Group functions and creation of new business•Rise of online securities firms•Close relationship between mega banks and clients•Trends in FinTech and impact of new technologies•Challenges of asset management in a low interest rate environment•Actualizing needs of inheritance Shaping Our Future with Actions in Each Division Asset Management Division To better meet the needs of our clients, we are strengthening our investment capabilities while focusing on product development and the proposal of solutions. Kunio Watanabe Head of Asset Management Division Strengths of the Division Recent Business Conditions and Risks Management Division is making every effort to which an Outside Director also participates, has latch onto these trends in the development of formulated company-wide policies to address In addition to sophisticated in-house research Reforms being advanced by the Japanese new products. and investment expertise, Asset Management government have provided a tailwind for the Division’s strengths include its ability to select asset management industry, such as raising tax external managers through its multi-manager fund exempt amounts in the Nippon Individual Savings Actions to Shape Our Future issues relating to the environment, social, and governance (ESG). With proxy voting and engagement through investee companies for increasing their enterprise values, we encourage management system, which works with excellent Account (NISA) program, introducing a Junior Asset Management Division is focusing on growth them to strengthen their governance structures to fund managers outside the Company to augment NISA program, and expanding the range of people in overseas operations. By leveraging UCITS*2, achieve sustainable growth and aim to increase in-house investment capabilities. qualified to contribute to defined contribution the European criteria for investment trusts, we returns on investments for beneficiaries over the Asset Management Division has been expanding pension plans. aim to expand overseas business by offering such medium term. Furthermore, we established the into differentiated investment products such as Moreover, the asset management reforms by products to global institutional investors, private Fund Management Council, of which the majority high-yield bonds, absolute profit-type investment the Government Pension Investment Fund (GPIF), banks, and retail channels. of members are independent Outside Directors, funds, smart beta indexes, and exchange traded one of the largest pension funds in the world, are Moreover, we are reinforcing our business in order to verify that our fund management funds (ETFs) in addition to our traditional foothold bringing about significant changes in the industry. foundation in North America through a strategic activities, such as investment trust product devel- in Japanese and Asian equities, where we have These changes have presented Asset Management business partnership with American Century opment, redemption and consolidation and policy extensive experience and track records. Also we Division with many business opportunities. Investments (ACI), an investment management firm of investment trust fee level, meet the fiduciary promote research and development by pilot funds However, conditions in the industry have in the U.S. duty standards so that our clients’ interests are and mergers and alliances with other companies for become more challenging as a result of industry Our Responsible Investment Committee, in adequately protected. complementary global investments. consolidation, such as moves by major banks and Another strength is our ability to propose regional financial institutions to strengthen their solutions tailored to the various needs of our asset management businesses. Nomura’s Asset clients, combining a variety of investment products Management Division aims to reinforce its in-house *2 UCITS stands for “Undertakings for Collective Investment in Transferable Securities” and is a general term referring to funds that meet certain criteria established in European Union Directives. UCITS is part of a basic investment trust framework focused on the EU, but has also been adopted in some countries in Asia and Latin America. and services. Not only do we offer investment investment capabilities and its sales network in Initiatives to Improve Products and Services products to customers including individual order to enhance its competitiveness. investors, institutional investors, intermediary The introduction of a negative interest rate sales companies and financial institutions, we also policy has had negative consequences as bond provide evaluations and analytical information about funds are losing attractiveness due to declining external asset management companies, a fund yields in the money market, but it could have the wrap management platform, and various consulting considerably positive effect of accelerating the services related to asset management. shift from savings accounts to investments. Asset *1 Absolute profit-type investment funds employ an asset management method that seeks to realize profits on investment principal. These funds do not necessarily guarantee a positive return. Absolute profit type investment funds are generally shielded from market trends, but their performance largely depends on the investment capabilities of the fund managers. Telephone Support Service Nomura Asset Management has set up a dedicated telephone support service to field inquiries about investment trusts from individual investors and intermediary sales companies. In the fiscal year ended March 2016, the service responded to 36,922 inquiries. In addition to using this support service to carefully explain our products to clients, the opinions and requests obtained through this channel are a precious information resource that is used to develop new products and services that better fit the needs of our clients, as well as to further raise service quality. 22 23 SOWTStrengthsOpportunitiesWeaknessesThreatsNomura Report 2016Nomura Report 2016Actions for Shaping Our Future•Room for improvement in our presence outside Nomura Group •Different stages of progress in retail development in Japan versus overseas •Business expenses need to be reduced through greater efficiency•Sophisticated in-house research and investment capabilities, and multi-manager fund management systems•Capabilities for global product devel-opment and supply•Ability to propose and provide solutions tailored to diverse needs of clients•Global stiff competition•Tougher regulatory environment after the financial crisis•Pressure of reducing fee level•Growing needs for asset management around the world, tailwinds from system reforms•Global business expansion from business partnership with American Century Investments•Further address diversifying client needs Fe at ure Shaping Our Future with Actions in Each Division Wholesale Division A Strategic Partnership with American Century Investments ACI’s logo is the oak tree which is symbolic of continued growth and stability. To honor our partnership, ACI presented Nomura with the bronze statue pictured above. East and West, and delivering competitive services to our clients. By leveraging Nomura’s strength in Asia-Pacific, we are effectively connecting markets A Partnership with Advantages for Both Companies A Common Founding Spirit and Corporate Culture Founded in 1958, ACI is an independent investment management firm based in the U.S., with offices in the U.K. and Hong Kong. ACI has a strong presence in the U.S. mutual fund market, which is about 22 times the size of Japan’s, and has particular expertise actively managing U.S. and global equity funds. In addition, ACI has strong connections to key distribution channels including leading global advisors, banks, and insurance companies. Given the minimal overlap between Nomura’s and ACI’s investment strategies, products and regional coverage, both companies expect the strategic partnership will bring value to its organization. To date, ACI has had limited business development opportunities outside of the U.S., making Nomura Group’s strength in Japan and Asia extremely attractive. Nomura Asset Management plans to access and leverage ACI’s expertise to offer a wider range of investment management solutions to our individual and institutional clients in Japan and the rest of the world. The founder of ACI believed that “if we help others become successful, they, in turn, will make us successful.” This saying, similar to Nomura’s founder’s principle of “putting the customer first,” illustrates ACI’s and Nomura’s common values. Nomura was also attracted to ACI because of its corporate culture and practice of appreci- ating and praising employees who work enthusiastically to help their clients succeed. > For information about Nomura’s founder’s principles and our current corporate culture, please refer to page 6. Regular Management Meetings Will Enhance Strategic Direction Jonathan S. Thomas, CEO of ACI, and Kunio Watanabe, Head of Asset Management Division, jointly chair the Business Opportunity Committee that will be held twice a year. During its first meeting on April 19, 2016, the committee outlined concrete strategies that will shape Nomura’s partnership with ACI and contribute to the growth of the two companies. Strengths of the Division position for U.S. Agency Securities*3 (Fannie Mae, Freddie Mac, etc.). We were also ranked At Nomura, all the divisions and regions work #7 in the Global SSA*4 underwriting league table. collaboratively to provide best-of-breed products As our clients globalize their businesses, and solutions to meet the diverse needs of our we have strengthened our cross-regional and clients globally. For example, we have a robust cross-divisional collaboration in Wholesale to underwriting and distribution capability, with offer holistic support to clients encompassing shares and bonds underwritten by Investment cross-border M&A, capital-raising, and currency Banking and distributed to a broad investor base and interest rates hedging. globally by Global Markets and Retail branches. Global Markets also provides secondary Recent Business Conditions and Risks market liquidity, market and macro insights, and investment ideas to help clients effectively FY2015/16 was a challenging year, with manage their portfolios. macroeconomic headwinds emerging from the Nomura positions Asia-Pacific as our resurgence of the Greek debt crisis, the slowdown “mother-market.” We have an unparalleled in the Chinese economy, diverging central bank presence in Japan, as evidenced by our #1 rank policies, and a sharp decline in commodity prices, in the Japan ECM underwriting league table*1, especially crude oil. Secondary market liquidity and a top-tier market share of volumes traded in including stock, bond and loan markets declined Tokyo Stock Exchange and a high market share further during the year, impacting client activity in JGB auctions. and the fee pool for the industry. Nomura’s international network spans more In primary markets, the issuance of equities than 30 countries and regions including the and bonds decreased on the back of volatile Americas, EMEA and Asia ex-Japan, and we markets and global economic uncertainty. The support clients globally. This is complemented M&A market was very active with an increase in by 15 primary dealerships in major markets companies looking to expand their businesses around the globe, a Top-10 U.S. Fixed Income through industry consolidation or strategic franchise*2 including a Top-3 market maker acquisition of companies. From the left: Kunio Watanabe, Head of Asset Management Division; Koji Nagai, Group CEO of Nomura Holdings; Jonathan S. Thomas, CEO of ACI; Michael Green, Senior Vice President of ACI; and Mark Killen, Senior Vice President of ACI *1 Source: Thomson Reuter (April 2015 to March 2016) *3 Source: U.S. Federal Reserve *2 Source: Greenwich Associates, 2015 *4 Sovereign, Supranational and Agency. Source: Dealogic (Jan to Dec 2015) 24 25 Global MarketsInvestment BankingNomura Report 2016Nomura Report 2016Actions for Shaping Our FutureOn May 19, 2016, Nomura Holdings acquired a non-controlling approx. 41% economic interest (voting rights of 10.1%) in American Century Investments (ACI), an independent investment management firm in the U.S. Looking ahead, Nomura and ACI intend to work together as strategic partners. Joint Heads of Wholesale Division Kentaro Okuda Steven Ashley In FY2016/17, we expect the market expertise and competitive advantages, and on the back of medium- to long-term growth in October 2015, we arranged and sold Education, environment to continue to be challenging. On position our business to deliver sustainable profit the region. We will continue to deliver compet- Youth and Employment (EYE) Bonds to retail the regulatory front, we continue to pay close across market cycles. itive products and services to our clients by investors in Japan. Also, our continuous efforts attention to the pace of reform. The purpose of In detail, we continue to strengthen our connecting markets East and West, leveraging resulted in a total sale of over ¥56 billion in these regulations is to ensure the stability of the Global Macro business including Rates products our strengths in Asia-Pacific as well as our broad World Bank Sustainable Development Bonds, broader financial system, the health of relevant and our Emerging Markets platform, building client base and strong product capabilities in making it this product’s largest distributor in entities and the protection of clients. However, on our success in the past few years. We also EMEA and the Americas. required changes to comply with upcoming remain focused on reinforcing our agency rules may lead to a reduction in capacity and execution business, Instinet, which includes liquidity provided by market participants. It is expanding our product offering to position the our mission to play a role as a liquidity provider business as a multi-asset agency platform. Promoting Socially Responsible Investment (SRI) the Uridashi market. We will continue to offer investment products that contribute to the resolution of social issues and help create a more affluent society by serving as an interme- diary between individuals who are interested in and respond to the various needs of our clients, In the M&A advisory business where we see Nomura has been promoting SRI as an participating in providing solutions to social and while maintaining a resilient risk culture as well increasing client demand, we continue to investment strategy for Japanese retail investors, environmental issues, and projects or funding as flexible resource allocation. provide high-quality services while also seeking and established a track record in this field. In needs in developing countries. Furthermore, the Corporate Governance to provide clients with ancillary financing and risk Code went into effect in June 2015 in Japan. As solutions including interest rates and FX hedges. our corporate clients look to improve their ROE, The new Wholesale structure has reinforced we will provide tailor-made solutions to meet the partnership between Global Markets and the specific requirements of each of our clients. Investment Banking, which should encourage For example, we have supported many clients in product innovation and improve ‘time to market,’ Initiatives to Improve Products and Services unwinding their cross shareholdings and share especially for our Solutions businesses. buybacks using derivative solutions. Such strategic review of the businesses in Global Research Portal Actions to Shape Our Future EMEA and the Americas will enable us to have a stronger focus on our areas of strength, which should support our transition to a more profitable In April 2016, Wholesale conducted a strategic and sustainable business model. In Asia-Pacific, review of the business portfolio in EMEA and the our business will not be negatively affected by Americas. The purpose of this exercise was to these changes. We will maintain and seek to reallocate our managerial resources to further further grow the existing full-service platform, to focus on selected businesses where we have tap into various business opportunities that arise Nomura’s global research team collaborates across regions and products to provide clients with insightful opinions and investment recommendations in core areas including the economy, equities, quantitative strategies, foreign exchange, interest rates and credit. Our team has achieved high acclaim from our clients. They are easily able to access our research online at the Global Research Portal (GRP), where they have the option to automatically receive the latest reports of their choosing through GRP’s mail delivery service. Research reports are provided online in Japanese and English. 26 27 SOWTStrengthsOpportunitiesWeaknessesThreatsNomura Report 2016Nomura Report 2016Actions for Shaping Our Future•Seeking efficient usage of resources to improve international productivity•Relatively high sensitivity to market fluctuation•Asia-Pacific leadership, particularly in Japan•Global client base through an interna-tional network that covers more than 30 countries•Leading facilitator of cross-border transactions globally•Macroeconomic uncertainty and geopo-litical risks•Further impact from tightening regula-tions on financial institutions•Increased competition from domestic and global peers / mega banks•Increase in globalization of Japanese / APAC corporates•Tailor-made products and innovative solutions to meet specific client needs•Connecting “West” to Asia growth and Asia to develop market products Actions Across the Regions Americas Actions Across the Regions EMEA David Findlay Head of Americas Jonathan Lewis Head of EMEA The Americas represents the largest financial Americas region. To do so, we will emphasize the market in the world. Over time, the market has importance of working across regions and across grown dynamically while adapting to change divisions to leverage our diversified franchise and and promoting financial innovation. We started play a key role for our global clients. to organically rebuild our business in the region Our ability to adjust to evolving markets is in 2009 and, as markets evolve, we continue to critically important and our management team take the steps required to grow stronger, build our remains focused on how the macro environment franchise and use our advantage in Japan and Asia and financial regulations may affect our businesses. to connect markets East and West. We remain flexible and nimble and will optimize Our Wholesale business provides differentiated resources and improve efficiencies to enhance our services that meet each of our client’s individual value proposition to our clients. Our commitment needs. In Global Markets, we offer a full range to our clients remains steadfast and we will of products across Equities and Fixed Income, continue to deliver value-added services to meet focusing on our areas of strength. In Investment our long-term goals by achieving sustainable Banking, we continue to deliver superior service to profitability. our clients across M&A, ECM, DCM and Solutions. Our Asset Management business, Nomura Corporate Research and Asset Management (NCRAM), complements the Americas Wholesale franchise. With high-yield investment as its core competency, NCRAM continues to win large institutional mandates and grow assets under management. In addition, we recently entered into a strategic alliance with American Century Investments, which could expand our presence in the U.S. and also allow Nomura to access American Century’s asset management capabilities for our retail and institutional clients around the world. We believe it is imperative that we work together to deliver the superior products and innovative solutions that are expected of the The key priorities in EMEA (Europe, the Middle and efficiently across businesses, ensuring they East and Africa) are aligned with Nomura’s are targeted to our most valued clients. underlying approach to our international business. This year, we have both enhanced and refined We will continue to strengthen our global our regional corporate governance, most notably client franchise, focus on areas of competitive with the appointment of Jim Leng as Chairman advantage and improve profitability. of NEHS, who brings a wealth of boardroom EMEA is dedicated to serving a diverse experience from a wide range of international range of important clients including institutional companies. We also aim to develop a culture that investors, financial institutions, corporates, promotes proper conduct and accountability, financial sponsors and government entities. This empowers colleagues and embeds a collaborative means that the region is critical to Nomura’s environment. global business vision of connecting markets East All of these changes will not only provide more and West. value to our clients but also improve Nomura’s However, Nomura’s regional strategy is EMEA and international profitability. We have a selective model. In light of the challenging taken steps to significantly reduce both our cost business environment, we have recently refined base and risk-weighted assets over the last few our proposition to a more focused product offering years, and this vigilance on costs and return on that plays to our strengths. resources will remain. EMEA now has a strong For example, we have a strong Rates business foundation to further strengthen our franchise and and have been developing our G10 Foreign drive sustainable regional profitability. Exchange and Emerging Markets’ franchise. Our Solutions business builds on our intellectual capital to provide bespoke structured solutions to financial institutions, corporates and sovereign clients. In Equities, we recently made strategic choices to exit certain product lines. Our business is now centered on equity sales of Japanese and Asian stocks, as well as ECM for Japanese issuers. We deliver these services and solutions through a globally integrated Wholesale structure. This enables us to allocate our resources flexibly 28 29 Nomura Report 2016Nomura Report 2016Actions for Shaping Our FutureOur focus is to support Nomura’s global vision to connect markets East and West, and to improve EMEA’s sustainable profitability.The Americas commitment to sustainable profitability is unwavering. Actions Across the Regions AEJ Toshiyasu Iiyama Head of Asia ex-Japan The fast-growing region of Asia ex-Japan (AEJ) needs for funding and investing. While tougher is a critical part of Nomura’s core strategy competition is anticipated in the long run, we to establish a solid position as Asia’s global will continue to establish a solid operating investment bank. The scale of the financial platform that can generate profits sustainably by markets and the number of high-net-worth leveraging our strengths to capture client needs individuals in the region are both expected to and continuing to transform ourselves and take expand rapidly. Nomura has been committed on new challenges. to AEJ for 50 years. Over this time, we have We intend to continue to invest strategically built up an extensive presence across twelve in talent to enhance key business areas and countries and regions. We offer a diverse range countries where we see the greatest long-term of services to a broad client base that includes opportunities and potential with the view to governments, central banks, corporates, institu- meeting clients’ needs. Also, our philosophy of tional investors and retail clients. placing clients at the heart of everything we do As the market matures, we expect to see a will remain central to our core values, and we rapid increase in the number of high-net-worth will continue to further enhance communication individuals and an expansion in direct financing. with clients. In line with this, our clients’ needs are becoming In Asia, Retail and Wholesale can work increasingly sophisticated and diverse. For together to create synergies using our instance, in infrastructure space, we believe we two-pronged approach that has been successful can play a significant role in response to client in Japan for many years. With Nomura’s global vision of connecting markets East and West, we will collaborate within the Group and integrate our products and coverage teams further to deliver seamless solutions across divisions and regions. In FY2015/16, AEJ reported its second consecutive profitable year despite the difficult operating environment. We will continue to capture the opportunities in Asia and focus on future growth going forward. Advisory Board Nomura Holdings formed its Advisory Board in 2001 to advise the firm’s Executive Management Board, which is responsible for making decisions on business executions. In 2015, Nomura newly appointed four preeminent Asian leaders as its eighth Advisory Board members and held its second meeting in Tokyo in February 2016. The meeting was held over two days with executives in attendance and opinions were exchanged from a variety of perspectives on matters including Nomura’s business development in Asia, social infrastructure needed to bring about growth in Asian countries and the type of support that capital markets can provide. Advisory Board members also visited the Head Office Sales Department in Nomura Securities, where they received an explanation and watched on an iPad how Retail Division provides clients with consulting services. “We were impressed with Nomura’s people and their consulting skills. Nomura will prove to have a strong competitive edge overseas,” some of the Advisory Board members commented. Front row, from the left: Mr. Deepak Parekh, Mr. Goh Chok Tong, Mr. Sofjan Wanandi, and Mr. Kan Trakulhoon Back row: Nomura Group management Mr. Deepak Parekh (India) Mr. Goh Chok Tong (Singapore) Mr. Sofjan Wanandi (Indonesia) Mr. Kan Trakulhoon (Thailand) Chairman of HDFC Group Chairman of HDFC since 1993. He has successively filled roles on various high-powered economic groups, govern- ment-appointed advisory committees, and task forces. Emeritus Senior Minister of Singapore Prime Minister of Singapore from 1990 to 2004 and Senior Minister from 2004 to 2011. He has been Emeritus Senior Minister of Singapore and Senior Advisor to the Monetary Authority of Singapore since 2011. Senior Advisor to the Vice President of Indonesia Former Chairman of APINDO (Indonesian Employers Association) and founder of the Santini Group. He has been Senior Advisor to the Vice President of Indonesia since November 2014. Director and Chairman of the Management Advisory Committee of SCG Former President and CEO of SCG, one of Thailand’s most reputable industrial conglomerates established in 1913. Chairman of the Management Advisory Committee from 2016. He was recently awarded the 2014 Deming Distinguished Service Award for Dissemination and Promotion (Overseas). 30 31 Nomura Report 2016Nomura Report 2016Actions for Shaping Our FutureFully committed to Asia ex-Japan. Message from an Advisory Board Member Discussing Nomura’s Growth from a Global Perspective The Nomura Group Has Great Growth Potential in Asia Please give us your view of the global with and invest in other economies in the region. economic situation, including the uncertainty in There are areas, such as robotics or infrastructure financial markets. technology, that Japanese companies have an advantage in, and Japanese companies will do The current slowdown in the developed economies, well to export their expertise, in particular to the and to some extent the emerging economies, emerging economies. will continue to lead to uncertainty in the financial Asia ex-Japan needs immense investments in markets. Slower global growth rates are a struc- infrastructure such as for transport and energy. The tural issue. For the developed economies generally, Asian Infrastructure Investment Bank (AIIB) has been we see a continued decline in productivity growth. set up, although Japan is not involved, so we are Advisory Board Member Goh Chok Tong Emeritus Senior Minister of Singapore Prime Minister of Singapore from 1990 to 2004 and Senior Minister from 2004 to 2011. He has been Emeritus Senior Minister of Singapore and Senior Advisor to the Monetary Authority of Singapore since 2011. There is no easy way to achieve sustained on the verge of having a global system for estab- I suggest that Nomura increase its brand Nomura’s aim to look beyond Japanese markets growth in the future, and countries will have to lishing infrastructure. Japan has also expanded awareness in these markets, and establish itself as and explore new ideas with non-Japanese advisors. raise productivity through long-term measures of its Partnership for Quality Infrastructure program, a trusted partner in the emerging markets. It also To me, this is an enlightened approach as I under- investment in new technologies, education and under which Japanese agencies would partner with can draw on its wide networks in the Japanese stand that most Japanese companies tend not to continuing re-training of workers. the Asian Development Bank (ADB) in providing up market, pick up detailed messages from customers, have foreign directors and advisors. Looking at the Asian region, the Chinese to $200 billion in funding for infrastructure projects and seek to link Japanese companies with other The Nomura Advisory Board comprises economy is currently in a transition phase. As their over the next 5 years. With funding available for partners that are looking for advice in addition to preeminent persons from throughout Asia. The labor force ages and growth slows, moderation infrastructure from the ADB and AIIB, Japanese investment funds. in the economic growth rate is expected. The companies which have expertise and experience in Advisory Board’s current members, Mr. Wanandi from Indonesia, Mr. Parekh from India and Mr. Chinese government is also looking at rebalancing executing major projects will benefit. What is your impression of Nomura’s Trakulhoon from Thailand all have expertise and the Chinese economy away from exports toward Even for China’s proposed One Belt One Road management team? How should the Nomura fine track records, and we are capable of providing internal consumption and services. There will be (1B1R), there will be opportunities for Japanese management team make the best use of the Nomura with appropriate opinions from various some short-term adjustment costs. companies. The Maritime Silk Road, for example, Advisory Board? I am optimistic about the longer-term prospects will benefit Japan, given that Japan is a major different perspectives. It is my desire to play a role ensuring the Advisory Board will be actively utilized of the regional economies, in particular China, commercial maritime nation. I think Nomura’s management team is prepared to as an advisory organ by Mr. Nagai and the Nomura India and ASEAN. The number of middle income listen, ask questions and learn. These are positive management team. consumers continues to grow. If they manage to What is your view of Nomura’s initiatives attributes for growth. When we first met in June last The management team should continue to successfully reform and make the transition, the aiming to contribute to the development of Asian year, the management team sought the views of challenge the Advisory Board by asking good potential is immense. capital markets? Geopolitically, there are areas of disputes the Advisory Board on Nomura’s business in Asia. questions and seeking more in-depth knowledge The Advisory Board members were also learning from us. over sovereignty of islands and seas. They get The Nomura Group has great growth potential in about Nomura and its business. Nevertheless, they I think before future meetings, the management head-lined. But I believe these disputes will be Asia. Having firmly established itself in the Japanese shared some areas where Nomura could explore. team can pose specific questions or areas which managed. Put these disputes in the multi dimen- market, Nomura can build on its strong working This February, when we had our second meeting they want the individual advisors to comment on. sional and long-term context of relations between relationships with Japanese firms and existing in Tokyo, the management team had prepared a Advisors are not “all-knowing." But they can do the disputing countries, and it is clear that there is networks in its Asian offices, and work as a bridge very detailed brief on the areas we had discussed some research and thinking on these issues before too much to lose for all if they get out of hand. for Japanese companies to invest their funds in in June. We then had two days of meetings where they meet the management team. other countries. In particular, I see Southeast Asia the management team asked deeper questions to For me, I hope to contribute to Nomura’s growth What role do you think Japan and globally and India as regions where Nomura can expand glean more insights from the Advisory Board. We by sharing my insights on the global and regional active Japanese companies should play amid the its reach and invest even more resources. This is a even had a working discussion during lunch! political and economic landscapes. Personally, current environment? particularly good window for Nomura as traditional investment banks from the West are looking to Not only is the management team hardworking I have also learnt from sharing with the Nomura but it is also very much on the ball. As I under- management team and the other board members. Japan and its companies should find ways to work reduce their roles in emerging markets. stand it, the setup of the Advisory Board is part of 32 33 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Directors of Nomura Holdings (As of July 1, 2016) Nomura Holdings’ organizational design is the Company with Three Board Committees structure, where the oversight function is strengthened by separating the management oversight and business execution functions, enabling the Company to realize an expedited decision-making process through the Board of Directors delegating considerable authority for the execution of business functions to Executive Officers, and to realize increased transparency through establishing three (Nomination, Audit, and Compensation) board committees, each comprised of a majority of Outside Directors. Nobuyuki Koga Chairman of the Board of Directors, Chairman of the Nomination Committee, Chairman of the Compensation Committee Apr. 1974 Joined the Company Jun. 1995 Director of the Company Apr. 1999 Managing Director of the Company Jun. 2000 Director and Deputy President of the Company Oct. 2001 Director and Deputy President of the Company (concurrently Director and Deputy President of Nomura Securities Co., Ltd.) Apr. 2003 Director and President of the Company (concurrently Director and President of Nomura Securities Co., Ltd.) Jun. 2003 Director, President & CEO of the Company (concurrently Director and Executive Officer and President of Nomura Securities Co., Ltd.) Apr. 2008 Director and Representative Executive Officer of the Company (concurrently Director and Chairman of Nomura Securities Co., Ltd.) Jun. 2008 Director and Chairman of Nomura Securities Co., Ltd. Jun. 2011 Director and Chairman of the Company (concurrently Director and Chairman of Nomura Securities Co., Ltd.) (Current) Mr. Koga, who has held a number of significant positions, including Director and President of Nomura Holdings and Director and President of Nomura Securities, and currently holds the positions of Vice Chairman of Nippon Keidanren (Japan Business Federation) and Vice Chairman of the Japan Securities Dealers Association, is well-versed not only in the business of Nomura Group but also in the customs of the securities industry, and contributes to the smooth operation of the meeting of the Board of Directors, acting as chairman. Takao Kusakari Outside Director, Member of the Nomination Committee, Member of the Compensation Committee; Special Advisor of NYK Line Apr. 1964 Joined Nippon Yusen Kabushiki Kaisha (NYK Line) Aug. 1999 President of NYK Line Apr. 2002 President, Corporate Officer of NYK Line Apr. 2004 Chairman, Corporate Officer of NYK Line Apr. 2006 Chairman, Chairman Corporate Officer of NYK Line Apr. 2009 Director and Corporate Advisor of NYK Line Jun. 2010 Corporate Advisor of NYK Line Jun. 2011 Outside Director of the Company (Current) Apr. 2015 Special Advisor of NYK Line (Current) Mr. Kusakari has held a number of significant positions, including President of NYK Line and Vice Chairman of Nippon Keidanren (Japan Business Federation), and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his extensive experience with respect to management, Mr. Kusakari contributes to the Company as an Outside Director. Hiroshi Kimura Outside Director, Member of the Nomination Committee, Member of the Compensation Committee; Advisor of Japan Tobacco Inc. Apr. 1976 Joined Japan Tobacco and Salt Public Corporation Jun. 2006 President and CEO and Representative Director of (currently, Japan Tobacco Inc.) Jun. 1999 Director of Japan Tobacco Inc. Jun. 2001 Resigned as Director of Japan Tobacco Inc. Jun. 2005 Director of Japan Tobacco Inc. Japan Tobacco Inc. Jun. 2012 Chairman of the Board of Japan Tobacco Inc. Jun. 2014 Special Advisor of Japan Tobacco Inc. Jun. 2015 Outside Director of the Company (Current) Jul. 2016 Advisor of Japan Tobacco Inc. (Current) Mr. Kimura has held a number of significant positions, including President, CEO and Representative Director of Japan Tobacco Inc., and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his extensive experience with respect to management, Mr. Kimura contributes to the Company as an Outside Director. Noriaki Shimazaki Outside Director, Chairman of the Audit Committee; Advisor of the IFRS Foundation Asia-Oceania Office; Former Executive Vice President of Sumitomo Corporation Apr. 1969 Joined Sumitomo Corporation Jun. 1998 Director of Sumitomo Corporation Apr. 2002 Representative Director and Managing Director of Jan. 2009 Trustee of the IFRS Foundation Jul. 2009 Special Advisor of Sumitomo Corporation Jun. 2011 Director of the Financial Accounting Standards Foundation; 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 Apr. 2005 Representative Director and Executive Vice President of Sumitomo Corporation Chairman of Self-regulation Board; 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) Mr. Shimazaki has held a number of significant positions, including Representative Director and Executive Vice President of Sumitomo Corporation, and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his abundant experience in corporate management and high degree of expertise with regard to international accounting systems corresponding to a Sarbanes-Oxley Act of 2002 financial expert, he contributes to the Company as an Outside Director. Toshinori Kanemoto Outside Director, Member of the Audit Committee Of-Counsel, City-Yuwa Partners Apr. 1968 Joined National Police Agency Apr. 1992 Kumamoto Prefecture Police Headquarters, Director- Apr. 2001 Director of Cabinet Intelligence, Cabinet Secretariat, Government of Japan General Jan. 2007 Registered as Attorney-at-Law (Dai-ichi Tokyo Bar Aug. 1995 Director General of the International Affairs Department, National Police Agency Oct. 1996 President of ICPO-INTERPOL Aug. 2000 President, National Police Academy Association) Feb. 2007 Of-Counsel, City-Yuwa Partners (Current) Jun. 2011 Outside Director of the Company (Current) Mr. Kanemoto has held a number of significant positions, including President of ICPO-INTERPOL, and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his sophisticated expertise and extensive experience as a currently active attorney, Mr. Kanemoto contributes to the Company as an Outside Director. Hisato Miyashita Director, Member of the Audit Committee (Full-time member) 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 Management 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 (concurrently Senior Managing Director of Nomura Securities Co., Ltd.) Apr. 2013 Senior Managing Director of the Company, Group Compliance Head (concurrently 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 (concurrently Representative Executive Officer and Senior Corporate Managing Director of Nomura Securities Co., Ltd., Internal Control Supervisory Manager) Apr. 2016 Advisor of the Company (Current) Jun. 2016 Director of the Company (Current) Mr. Miyashita has engaged in legal and compliance work for many years at a number of securities companies, including the Company, and by working in positions such as the Group Compliance Head of the Nomura Group, he has extensive experience and knowledge in the compliance field. As a full-time member of the Audit Committee, he contributes to enhancing the effectiveness of audits by the Audit Committee. Dame Clara Furse Outside Director; External Member of the Bank of England’s Financial Policy Committee Feb. 1983 Joined Phillips & Drew (currently UBS) Jun. 1990 Non-Executive Director of the London International Financial Futures Exchange (LIFFE) Jun. 1997 Deputy Chairman of LIFFE May 1998 Group Chief Executive of Credit Lyonnais Rouse Jan. 2001 Chief Executive of the London Stock Exchange Group Jun. 2010 Outside Director of the Company (Current) Apr. 2013 External Member of the Bank of England's Financial Policy Committee (Current) Dame Clara Furse has held a number of significant positions, including Chief Executive of the London Stock Exchange Group, and she was also made Dame Commander of the Order of the British Empire. Her achievements and insights have been evaluated highly both within and outside of the Company. Applying her global and extensive experience with respect to financial businesses, Dame Clara Furse contributes to the Company as an Outside Director. Michael Lim Choo San Outside Director; Former Executive Chairman of PricewaterhouseCoopers, Singapore 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 Independent Director of Olan International Limited Sep. 2002 Chairman of the Land Transport Authority of Singapore Sep. 2004 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 Mr. Lim has held a number of significant positions, including Executive Chairman of PricewaterhouseCoopers, Singapore and was also awarded with national honors by the Government of Singapore three times. His achievements and insights have been evaluated highly both within and outside of the Company. Applying his global and extensive experience and his high degree of expertise with respect to international accounting systems, Mr. Lim contributes to the Company as an Outside Director. David Benson Director Feb. 1997 Joined Nomura International plc Jul. 1999 Head of Risk Management, Nomura International plc Mar. 2005 Chief Operating Officer (COO) of Nomura International plc Aug. 2007 Resigned from Nomura International plc Nov. 2008 Chief Risk Officer (CRO), Senior Managing Director of the Company Jan. 2011 Senior Managing Director of the Company, Vice Chairman, Risk and Regulatory Affairs Apr. 2011 Vice Chairman of the Company (Senior Managing Director) Jun. 2011 Director of the Company (Current) Mr. Benson has held a number of significant positions, including Vice Chairman (Senior Managing Director) and Chief Risk Officer (CRO) of the Company. Applying his experience and expertise, Mr. Benson contributes to strengthening the oversight functions of the Board of Directors in relation to risk management.Koji Nagai Director, Representative Executive Officer, Group CEO 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 (concurrently Director and President of Nomura Securities Co., Ltd.) Aug. 2012 Representative Executive Officer and Group CEO of the Company (concurrently Director and President of Nomura Securities Co., Ltd.) Jun. 2013 Director, Representative Executive Officer and Group CEO of the Company (concurrently Director and President of Nomura Securities Co., Ltd.) (Current) Mr. Nagai has held a number of significant positions, including Director and President of Nomura Securities Co., Ltd. By having Mr. Nagai, who serves as Representative Executive Officer and Group CEO of the Company, the Board of Directors will be able to easily understand the business execution status and internal affairs of the Company, and he contributes to the effectiveness of the oversight functions of the Board. Tetsu Ozaki Director, Representative Executive Officer, Group COO Apr. 1982 Joined the Company Apr. 2004 Senior Managing Director of the Company (concurrently Senior Managing Director of Nomura Securities Co., Ltd.) Apr. 2008 Executive Managing Director of Nomura Securities Co., Ltd. Oct. 2008 Senior Corporate Managing Director of Nomura Securities Co., Ltd. Aug. 2012 Deputy President of Nomura Securities Co., Ltd. Apr. 2013 Director and Deputy President of Nomura Securities Co., Ltd. Apr. 2014 Executive Managing Director of the Company (concurrently Deputy President of Nomura Securities Co., Ltd.) Jun. 2016 Representative Executive Officer and Group COO of the Company (concurrently Director and Deputy President of Nomura Securities Co., Ltd.) (Current) Mr. Ozaki has held a number of significant positions including CEO of the Wholesale Division (Executive Managing Director) of the Company and Deputy President of Nomura Securities Co., Ltd. By having Mr. Ozaki, who serves as Representative Executive Officer and Group COO serve concurrently as a Director, the Board of Directors will be able to easily understand the business execution status and the status of the Company, and he contributes to more-effective oversight functions of the Board. 34 35 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Outside Directors of Major Subsidiaries in Japan (Nomura Securities Co., Ltd. / Nomura Asset Management Co., Ltd.) Outside Director’s Message Nomura Securities Co., Ltd. Toshiaki Hiwatari Outside Director; Advisor Attorney of TMI Associates Former Superintending Prosecutor Apr. 1970 Public Prosecutor Jun. 1997 Public Prosecutor, the Supreme Public Prosecutors’ Jul. 2008 Prosecutor General Sep. 2010 Registered as Attorney-at-Law (Dai-ichi Tokyo Bar Office Aug. 2002 Detective Superintendent, Ministry of Justice Jun. 2004 Administrative Vice-Minister of the Ministry of Justice Dec. 2006 Superintending Prosecutor, Tokyo High Public Prosecutors’ Office Association); Advisor Attorney of TMI Associates (Current) Oct. 2012 Outside Director of Nomura Securities Co., Ltd. (Current) Mr. Hiwatari has held a number of significant positions, including Administrative Vice-Minister of the Ministry of Justice and Prosecutor General, and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his sophisticated expertise and extensive experience as a currently active attorney, Mr. Hiwatari contributes to Nomura Securities as an Outside Director. Motoki Ozaki Outside Director; Former Chairman of the Board of Directors of Kao Corporation Apr. 1972 Joined Kao Corporation (formerly Kao Soap Co., Ltd.) Apr. 2000 President, Prestige Cosmetics of Kao Corporation Apr. 2002 President, Global Fabric and Home Care of Kao Corporation Jun. 2002 Board of Director, Executive Officer of Kao Corporation Jun. 2004 Representative Director, President and Chief Executive Officer of Kao Corporation Jun. 2012 President and Representative Director of the Kao Foundation for Arts and Sciences (Current) Jun. 2015 Outside Director of Nomura Securities Co., Ltd. (Current) Mr. Ozaki has held a number of significant positions, including Representative Director, President and Chief Executive Officer of Kao Corporation, and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his extensive experience with respect to management, Mr. Ozaki contributes to Nomura Securities as an Outside Director. Nomura Asset Management Co., Ltd. Rikio Nagahama Outside Director; Board Chairperson of NPO Triton Arts Network Apr. 1967 Joined Dai-ichi Life Insurance Company Apr. 2003 Representative Director and Executive Vice President of Dai-ichi Life Insurance Company Jun. 2009 Councilor of DIAM Co., Ltd. Jun. 2010 Board Chairperson of NPO Triton Arts Network (Current) Jun. 2015 Outside Director of Nomura Asset Management Co., Jun. 2004 Representative Director and President of DLIBJ Asset Ltd. (Current) Management Co., Ltd. Jan. 2008 Representative Director and President of DIAM Co., Ltd. (company name changed) Mr. Nagahama has held a number of significant positions, including Representative Director and President of DIAM Co., Ltd., and his achievements and insights have been evaluated highly both within and outside of the Company. Applying his extensive experience with respect to management of an asset management company, Mr. Nagahama contributes to Nomura Asset Management Co., Ltd. as an Outside Director. Akiko Kimura Outside Director; Of-Counsel, Anderson Môri & Tomotsune Apr. 1973 Registered as Attorney-at-Law (Dai-ichi Tokyo Apr. 2013 Member of the Certified Public Accountants and Bar Association) and joined Nishimura Komatsu & Tomotsune (currently Anderson Môri & Tomotsune) Jan. 1977 Partner of Nishimura Komatsu & Tomotsune Jan. 2011 Of-Counsel, Anderson Môri & Tomotsune (Current) Jun. 2012 Outside Corporate Auditor of Fuji Electric Co., Ltd. (Current) Auditing Oversight Board (Current) Jun. 2014 Outside Corporate Auditor of Daiichi Sankyo Co, Ltd. (Current) Jun. 2015 Outside Director of Nomura Asset Management Co., Ltd. (Current) Ms. Kimura has held a number of significant positions, including many years of service in fields such as finance as Of-Counsel of Anderson Môri & Tomotsune, and her achievements and insights have been evaluated highly both within and outside of the Company. Applying her advanced expertise and extensive experience with respect to the law, Ms. Kimura contributes to Nomura Asset Management Co., Ltd. as an Outside Director. Nomura has a good board culture that is open and invites commentary and challenge Dame Clara Furse — Outside Director Dame Clara Furse has held a number of significant positions, including Chief Executive of the London Stock Exchange Group, and she was also made Dame Commander of the Order of the British Empire. Her achievements and insights have been evaluated highly both within and outside of the Company. Applying her global and extensive experience with respect to financial businesses, Dame Clara Furse contributes to the Company as an Outside Director. What are your thoughts on your mission as As an Outside Director of Nomura Holdings, an Outside Director? could you please share with us your evaluation of Nomura’s corporate governance system and the I was delighted to be asked to join the board of effectiveness of the Board of Directors? Nomura Holdings in 2010, a year after I stepped down as Chief Executive of the London Stock Our board completed a self-evaluation of its Exchange. My time at the Exchange pulled together effectiveness this year. This supports the aims a career in global markets with the challenge of of the Corporate Governance Code recently running a complex organization and listed company issued by Japan’s financial authorities. I believe that entered the FTSE-100. The Exchange was this important exercise showed that Nomura almost constantly in the public eye, valued as a has a good board culture that is open and national institution, but also subjected to critical invites commentary and challenge. Suggestions media attention. to management are met with a prompt and It was a period of immense change for the satisfactory response. The Nomura board is Exchange, as it navigated its way through a number already very diverse with a broad range of of strategic, technological, corporate, reputational, experience, nationalities and perspectives. anti-trust and shareholder challenges. Moreover, independent Outside Directors are in Prior to joining the Exchange, I had managed the majority. global business lines, mainly for UBS, covering A committee system has been in place commodity, currency, fixed income and derivatives since 2003 and I have a high regard for the markets. At that time, I was also on the boards Audit Committee, which does a thorough job of of the LIFFE and critical parts of the financial evaluating and overseeing the Company’s risks. I infrastructure, notably LCH.Clearnet and Euroclear. am also pleased with the increasingly detailed and This brought wider experience in the areas of informative Risk Report presented at each board financial networks and global inter-connectedness meeting; a sharp focus on risk has become vital as well as counterparty and operational risk. in this more difficult, post-2008-crisis world where My mission as an Outside Director is to bring political risk has also increased in some important this financial services and corporate experience developed economies. to the board table in a way that helps Nomura to More recently, regular meetings for Outside deliver its global strategy and create shareholder Directors were introduced in order for us to value, by putting clients at the heart of everything exchange views and share our understanding of it does. rapidly changing issues outside the boardroom. 36 37 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Outside Director’s Message Corporate Governance Corporate Governance http://www.nomuraholdings.com/company/cg/ Could you please share your thoughts on What role do you think diversity should play Nomura’s strategy of establishing a dominant in global management? position as Asia’s global investment bank? One of my first invitations to speak within Nomura I believe Nomura rightly sees many opportunities as was from WIN (Women in Nomura) in London. I Asia’s global investment bank. While transforming was inspired by their businesslike and inclusive the business model in Japan, Nomura pursues approach, which welcomes all employees to regular opportunities for growth across Asia, but is also events and open discussions. I discovered that in a unique position to support global clients as Nomura has an impressive program to assist and the most solid financial bridge between East and support employees, with generous and sensitive West. The recent strategic changes in EMEA and initiatives during maternity and parental leave. the Americas are important initiatives in this regard, More recently, the Group COO has established as they are geared to stabilizing the profitability of a Diversity and Inclusion Committee, chaired the global franchise, thereby improving the strength by himself, to promote more active and diverse and resilience of the bridge. participation across the Company, consistent with As regulatory authorities in all global centers one of the three arrows of the Abenomics Growth endeavor to secure a strong financial system, Strategy. Nomura management has worked hard to build As more than 70 nationalities work for Nomura, constructive relationships, in EMEA, for example, I am pleased to see that diversity is embedded where regulatory reform has been particularly within the Company. Management is aware that ambitious and demanding. this will help Nomura to deliver financial solutions I believe and expect that this strategic bridge to clients around the world. Nomura is committed will sustain and invite increasing amounts of ‘traffic’ to employee networks that support career over the coming years and decades, delivering opportunities across a wide range of nationalities, important financial services to Nomura’s clients cultures, ages and levels of experience and for around the world. female employees and LGBT staff. I believe this is a source of strength that will help to drive future growth for the Company. Nomura Group is progressively working to enhance corporate governance. Fundamental Approach Nomura Holdings recognizes that the enhancement of corporate governance is one of the most important issues in terms of achieving management’s goal of enhancing corporate value by deepening society’s trust in the firm and increasing the satisfaction of stakeholders beginning with clients. We are working to make the Group’s decision- making process speedy and efficient, in conjunction with ensuring effective oversight of management and management transparency through the enhancement of corporate governance. Addressing Japan’s Corporate Governance Code • Implemented all principles of Japan’s Corporate Governance Code In anticipation of the enforcement of Japan’s nominee” for all internal director nominees in the Corporate Governance Code to all publicly listed Notice of Convocation of the 111th Annual Meeting companies from June 2015, Nomura Holdings has of Shareholders (held in June 2015), along with been taking various initiatives to reinforce corporate undertaking an evaluation of the effectiveness of the governance. Board of Directors as a whole. As a result, Nomura Additionally, we took new actions such as Holdings has implemented all principles of Japan’s disclosing the “Reasons for designation as a director Corporate Governance Code at this time. Establishing Corporate Governance Guidelines • Structure for transparent/fair and timely/decisive decision-making In November 2015, the Board of Directors of Nomura An outline of the Corporate Governance Guidelines is Holdings, recognizing the perspectives of various provided on the next page. stakeholders beginning with shareholders and Please visit our website to view the full text of the clients, established the Nomura Holdings Corporate Corporate Governance Guidelines and the Corporate Governance Guidelines, with the aim of defining Governance Report, which discloses the status and contributing to the realization of a framework of our measures to address Japan’s Corporate of effective corporate governance as a structure for Governance Code. transparent/fair and timely/decisive decision-making. Corporate Governance http://www.nomuraholdings.com/company/cg/ 38 39 Meetings attended only by Outside Directors are periodically held. Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Corporate Governance Outline of the Nomura Holdings Corporate Governance Guidelines Board of Directors ( »p.42) Internal Controls System ( »p.43) • The Board of Directors shall, as a general rule, delegate its authority to execute business to the Executive Officers. The main role of the Board of Directors shall be management oversight. • The composition of the Board of Directors shall have a diversity that enables active discussions from diverse perspectives. • As a general rule, the majority of the Board of Directors shall be Outside Directors, and Directors shall include experts in accounting, corporate management, and law, etc. • Three (Nomination, Audit and Compensation) board committees shall be established, each comprised of a majority of Outside Directors. • The Board of Directors shall, based on the evaluation by each Director, analyze and evaluate the effectiveness of the Board of Directors as a whole and disclose a summary of the results. » Nomination Committee • The Nomination Committee shall decide director nominees based on certain appointment standards, including personality, insight, ethics, in-depth knowledge and experience in his/her field of expertise. • The Nomination Committee shall establish Independence Criteria for Outside Directors and shall, as a general rule, nominate Outside Director nominees who satisfy such criteria. • In light of the responsibilities of the Nomination Committee, the Chairman of the Nomination Committee shall be a Director who is well-versed in the business of the Nomura Group and the practices of the securities industry. » Compensation Committee • On the basis of the general rule of paying compensation commensurate with business performance, the Compensation Committee shall decide the compensation of Directors and Executive Officers while seeking to enhance objectivity and transparency based on analysis performed by external evaluation institutions, etc. • The Compensation Committee shall utilize deferred compensation, to seek alignment with the interests of shareholders and increase long-term incentives. • In light of the responsibilities of the Compensation Committee, the Chairman of the Compensation Committee shall be a Director who is well-versed in the business of the Nomura Group and the practices of the securities industry. » Audit Committee • All members of the Audit Committee must satisfy the criteria for independence in accordance with the Sarbanes-Oxley Act of 2002. • As a general rule, at least one member shall be a financial expert. • As a general rule, the Chairman of the Audit Committee shall be an Outside Director in order to strengthen the independence of the Audit Committee from execution functions and to enhance the transparency of audit activities. • In order to enhance the effectiveness of audits, the Board of Directors shall appoint an internal Director who does not concurrently serve as an Executive Officer and who is well-versed in the Nomura Group’s business as a full- time member of the Audit Committee or an Audit Mission Director. • The Board of Directors shall oversee the status of the maintenance and operation of internal controls through audits by the Audit Committee and activities by the Internal Audit division, which is independent from the business execution functions. • An Internal Controls Committee attended by the Group CEO and the members of the Audit Committee shall be established for the purpose of further strengthening and enhancing the Internal Controls System. • The involvement of the Audit Committee in the implementation plans of the Internal Audit Division as well as in the election and dismissal of the Head of the Internal Audit Division shall be assured. Risk Management ( »p.48) • To ensure financial soundness and to maintain and improve corporate value, management shall establish a risk management framework and the Board of Directors shall oversee the effectiveness of the framework. Dialogue with Shareholders • The Company shall treat shareholders equally based on their shareholdings, and shall disclose information appropriately and timely to avoid information disparity. • The Company, based on the importance of shareholder rights, shall take necessary measures to ensure that shareholders are not unfairly precluded from exercising their rights. • The Company shall engage in a constructive dialogue with major shareholders for the purpose of sustainable growth of the Company and the mid- to long-term enhancement of corporate value. • Regarding dialogue with stakeholders, the Company shall endeavor to enhance methods of dialogue and also provide explanations on general policies for the allocation of management resources. • An officer in charge of IR shall endeavor to share the outcomes of such dialogue with the Board of Directors. Basic Policy for Strategic Shareholdings • Regarding strategic shareholdings, the Company and its core subsidiaries shall consider perspectives of business strategy, and shall hold such shares only if such shareholdings will contribute to maintaining/enhancing the corporate value of the Nomura Group. Fulfillment of Corporate Responsibilities ( »p.50-62) • The Company established the “Code of Ethics of Nomura Group” as a code of conduct for each director, officer, and employee of the Nomura Group to comply with. • The Company shall enhance corporate value in the long- term by respecting the diversity and different values among the directors, officers and employees of the Nomura Group, and establishing a sound workplace to enable all directors, officers, and employees to perform at their full potential. • The Company shall actively engage in CSR activities, including educational activities in economics and finance, in addition to contributing to expanding securities markets through daily business. Measures for Reinforcing Governance • Establishment of the Advisory Board • Adoption of the “Company with Three Board Committees” structure Since 2001, when we adopted a holding company information disclosure system. structure and listed on the New York Stock Moreover, in 2003, we further strengthened and Exchange (NYSE), we have taken steps to ensure increased the transparency of our oversight functions the transparency of management, including installing and expedited Nomura Group’s decision-making Outside Directors and establishing an Internal process by adopting the “Company with Committees, Controls Committee, a Compensation Committee etc.” structure (now the “Company with Three Board (the majority of the members are Outside Directors), Committees” structure), a governance structure and an Advisory Board of distinguished persons under which management oversight and business from outside the Company, and further improved our execution functions are clearly separated. Chronological Table 1994 Company with Board of Auditors Appointed one Outside Statutory Auditor 1998 2001 2003 2004 Established the Compensation Committee (voluntary) Company with Committees, etc Established the Nomination, Audit and Compensation Committees Established the whistle-blowing system “Compliance Hotline” Appointed two Outside Directors Adopted a holding company structure and changed the Company’s name to Nomura Holdings, Inc. (1) Strengthen corporate governance and ensure transparency (2) Election of two Outside Directors and two Outside Statutory Auditors (3) Established the Internal Controls Committee (4) Established the Executive Compensation Committee (one Representative Director and two Outside Directors) Listed on the New York Stock Exchange (NYSE) Adopted a “Company with Committees, etc.” structure Passed resolution on the Internal Controls System Formulated the Code of Ethics of Nomura Group 2006 Company with Committees Passed resolution on amending the Internal Controls System Began making pledges to abide by the Code of Ethics of Nomura Group 2010 2012 2013 2015 Company with Three Board Committees 2016 Diversification of the composition of Directors (appointed two non-Japanese Directors and one female Director) Outside Directors became the majority of Directors Appointed an Outside Director who does not serve concurrently at Nomura Holdings to Nomura Securities Co., Ltd. Passed a resolution on amending the Internal Controls System Published the Independence Criteria for Outside Directors of Nomura Holdings, Inc. Passed a resolution on amending the Internal Controls System Appointed an Outside Director from outside the Nomura Group to Nomura Asset Management Co., Ltd. Established the Nomura Holdings Corporate Governance Guidelines Established August 3 as Nomura Founding Principles and Corporate Ethics Day Established “office of Non-Executive Directors and Audit Committee” as an organization to support Directors’ execution of duties by ensuring full provision of information to Outside Directors and so forth. Passed a resolution on amending the Internal Controls System 40 41 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Corporate Governance Board of Directors Business Execution • Outside Directors comprise a majority of the Board of Directors • Emphasis on diversity within the Board of Directors to oversight from diverse perspectives • Emphasis on the independence of Outside Directors Nomura Holdings has made management oversight We emphasize the independence of Outside the main role of the Board of Directors. Based Directors from the Nomura Group, and in order to on supervision with an emphasis on an external maintain such independence, we have established perspective, we are aspiring to put in practice Independence Criteria for Outside Directors within management with a high level of transparency, the Nomination Committee. As none of the Outside through such means as structuring the Board of Directors of Nomura Holdings fall under the Directors with a majority of Outside Directors. categories for which independence is considered Moreover, in order to achieve effective oversight suspect, and since none of the Outside Directors of business execution functions from multiple have any conflicts of interests with the shareholders, perspectives, we place importance on diversity within we have reported that each of the six Outside the Board of Directors. Each Director of Nomura Directors are independent Directors in our submission Holdings has a diverse background in terms of to the Tokyo Stock Exchange. nationality, gender, professional experience, etc., and by utilizing their extensive experience in their respective fields, such as accounting, corporate Board of Directors (As of July 1, 2016) Outside Directors management and law, the Directors assist with the Non-Japanese Directors 55% (6 of 11) 27% (3 of 11) 9% (1 of 11) Female Directors More information on the Company’s Independence Criteria for Outside Directors http://www.nomuraholdings.com/company/cg/data/ criteria.pdf determination of important managerial matters and oversee business execution. Additionally, 6 of the 11 Directors making up our Board of Directors are Outside Directors. Management Structure Shareholders’ Meeting Board of Directors Nomination Committee • Three Directors, including two Outside Directors • Determines the details of proposals on the election and dismissal of Directors for submission to a meeting of shareholders in accordance with a set criteria for character, insight, corporate management experience and specialization, and independence • Directors concurrently serving as Executive Officers are not members Audit Committee • Three Directors, including two Outside Directors, one full-time member of the Audit Committee • Audits the execution of duties by the Directors and Executive Officers, prepares audit reports, and determines details of proposals regarding the election, dismissal and non-reelection of the Independent Auditor for submission to a meeting of shareholders • All committee members satisfy requirements for independent Directors as defined in the Sarbanes-Oxley Act of 2002 Compensation Committee • Three Directors, including two Outside Directors • Determines policy with respect to the particulars of compensation for each Director and Executive Officer, as well as individual compensation • Directors concurrently serving as Executive Officers are not members Group CEO Executive Management Board Advisory Board Established as a consulting body to the Executive Management Board, with the aim of bringing an external perspective to the formation of our management strategy Deliberates on and determines important management formation of our management strategy matters, such as the management strategy for the Nomura Group, business plans, budgets, and allocation of management resources Group Integrated Risk Management Committee Deliberates on and determines important matters concerning the integrated risk management of the Nomura Group Internal Controls Committee Deliberates on and determines matters concerning the establishment and assessment of internal control of the Nomura Group and promoting proper corporate behavior • Broadly delegate decision-making authority to the Executive Officers to ensure speedy and efficient business execution The Board of Directors has broadly delegated decision- the Internal Controls Committee. These management making authority for business execution functions to bodies report to the Board of Directors on the status of the Executive Officers to ensure that they can execute their deliberations at least once every three months. business with speed and efficiency. Furthermore, among In order to further bolster our business execution the matters of business delegated to the Executive framework for financial operations that are becoming Officers by resolutions adopted by the Board of increasingly sophisticated and specialized, we utilize a Directors, certain important matters must be deliberated system whereby the Executive Officers delegate a part and decided by specific management bodies within the of their authority for business execution decisions to Company, including the Executive Management Board, Senior Managing Directors, whose role is to focus on the Group Integrated Risk Management Committee, and individual business and operations. Internal Controls • Established the Group Internal Audit Department, which is independent from the business execution functions, and other similar audit sections in major subsidiaries We are committed to strengthening and improving our and its subsidiaries, in addition to the audits carried internal controls system to promote proper corporate out by the Audit Committee. The implementation behavior throughout the Nomura Group, from the status of internal audits is also reported to the Board viewpoints of ensuring management transparency of Directors and the Audit Committee. and efficiency, complying with laws and regulations, In addition, to strengthen the independence of the controlling risks, ensuring the reliability of business internal audit sections from the business execution and financial reports, and fostering the timely and functions, implementation plans and the formulation appropriate disclosure of information. Furthermore, of the budget of the Internal Audit Division, as well in order to ensure effective and adequate internal as the election and dismissal of the Head of the controls, the Group Internal Audit Department, which Internal Audit Division require the consent of the is independent from the business execution functions, Audit Committee. Audit Committee members may and other similar audit sections placed in major recommend changes to the implementation plan, subsidiaries conduct internal audits of the Company etc., to Executive Officers. Internal Controls System Internal Controls Committee • Deliberates on and determines matters concerning the establishment and assessment of internal control, along with promoting proper corporate behavior • Made up of the Group CEO, the Group COO, two Audit Committee members, and persons appointed by the Group CEO • Internal audit plan and budget approval • Appointment and dismissal of IA head Report Agrees on IA’s audit plan, human resources, and budget Report Report Audit Committee • Consists of two Outside Directors and one Director not concurrently serving as an Executive Officer Assists the Audit Committee with its duties Office of Non-Executive Directors and Audit Committee Internal Audit (IA) Internal audit Business Management Risk Management Compliance 42 43 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Corporate Governance Compliance Compliance http://www.nomuraholdings.com/company/compliance/ Compensation for Directors and Executive Officers As Nomura has adopted the “Company with Three 1. Base Salary Board Committees” structure, the Compensation Committee has prepared and approved the Compensation Policy of Nomura Group and Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc. Compensation for Directors and Executive Officers http://www.nomuraholdings.com/company/cg/ compensation.html Base salary is determined based on factors such as professional background, career history, responsibilities, and compensation standards of related business fields. A portion of base salary may be paid in the form of equity-based compensation with a certain non-exercise period to ensure that the interests of Directors and Executive Officers are closely aligned with those of shareholders. Compensation Policy of Nomura Group 2. Annual Bonus To enable us to achieve sustainable growth, realize a long-term increase in shareholder value, deliver added value to our clients, compete in the global market, and enhance our reputation, Nomura has developed the Compensation Policy of Nomura Group applicable to regular employees, including senior management. The policy is broadly divided into six key themes. 1. Align with Nomura values and strategies 2. Reflect firm, division, and individual performance 3. Establish appropriate performance measurement with a focus on risk 4. Align with employee and shareholder interests 5. Establish appropriate compensation structures 6. Ensure robust governance and control processes Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc. The compensation of Directors and Executive Officers comprises base salary, an annual bonus, and a long- term incentive plan. The Compensation Committee has approved the following matters related to the compensation of Directors and Executive Officers: Annual bonuses of Directors and Executive Officers are determined by taking into account both quantitative and qualitative factors. Quantitative factors include performance of the Group and the division results, while qualitative factors include achievement of individual goals and subjective assessment of individual contributions. Depending on the level of bonus payment, a portion of payment in cash may be deferred. In addition, a portion of deferred bonus may be paid in equity-based compensation with a certain non- exercise period in lieu of cash. Such deferred bonus may be unpaid or forfeited under specific circumstances. 3. Long-Term Incentive Plans Long-term incentive plans may be awarded to Directors and Executive Officers, depending on their individual responsibilities and performance. Payments under long-term incentive plans are made when a certain degree of achievements is accomplished. Payments are made in equity-linked awards with appropriate vesting periods to ensure that medium- to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders. Form 20-F http://www.nomuraholdings.com/investor/library/sec/ Nomura Group has established an appropriate compliance framework, and insists on compliance with all applicable laws, rules and regulations in all Group companies and departments. Fundamental Approach Compliance is a top management priority for Nomura year. Also, we have established Nomura Founding Group, and the Code of Ethics of Nomura Group Principles and Corporate Ethics Day, as a day for defines our fundamental policy on compliance. The management and employees to annually reaffirm our management and employees of the Group pledge corporate culture and corporate ethics, underpinned to abide by the rules stated in this code once each by Our Founder’s Principles. Compliance Framework We have appointed a Group Compliance Head to structures of each Group company, including oversee compliance for the Group as a whole along overseas offices. with a Group Compliance Department that provides In addition to Group-wide initiatives, Nomura support. In addition, Compliance Officers have been Securities has established a Compliance Program assigned to each Group company to strengthen our as a detailed action plan, and put into place a internal controls in response to global business, and compliance framework based on this program. to develop and maintain the respective compliance Nomura Securities’ Compliance Structure • A Compliance Committee chaired by the President oversees Company-wide initiatives and is in charge of establishing and deliberating on important issues related to internal controls. • The Company has established the post of Internal Administration Supervisor to monitor compliance issues in line with Japan Securities Dealers Association’s rule • The Company has established the posts of Sales Officers, Internal Controls Officers and Compliance Officers • The Compliance Division strengthens and improves legal and regulatory compliance as well as the internal controls system by formulating internal rules and disseminating them throughout the Company. Nomura Holdings Board of Directors Audit Committee Executive Management Board Group Compliance Head Direction Report Group Compliance Department Direction Report Nomura Group companies Compliance Officers Direction Report Departments 44 45 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Compliance Legal Compliance Measures • Insistence on legal compliance and enhancement of management systems • Establishment of a Compliance Hotline • Carrying out compliance training Ensuring Fair Financial Business Practices • Prohibition of transactions with anti-social forces • Prevention of acceptance or giving of bribes • Management of conflicts of interest and prevention of insider trading In all Group companies and departments, Nomura by Nomura Holdings, including Outside Directors, Nomura Group works to prohibit transactions with business practices to prevent the acceptance or Group insists on compliance with laws and through the Compliance Hotline (persons reporting anti-social forces and to prevent money laundering. giving of bribes. regulations and endeavors to prevent the occurrence have the option of remaining anonymous). In Nomura Group has established guidelines We manage conflicts of interest and insider of activities that may be construed as illegal by FY2015/16, there were 19 calls received via the related to gifts and entertainment of public officials information from a global perspective by structuring the necessary administrative systems. In Compliance Hotline, and the status of related matters and private-sector groups, and by disseminating concentrating information in the Group Compliance the event that such issues arise, they are reported in was confirmed, and appropriate measures were them throughout the Company, works to ensure fair Department. full to management-level officers without delay, and processed. organizations and systems are structured to respond We conduct comprehensive compliance training appropriately. for all Executive Officers and employees on topics Nomura employees who have become aware such as the prevention of money laundering and of potential legal or regulatory violations are able insider trading, firewall regulations, and guidelines for to report their concerns to persons designated managing customer information. Offering High-Quality Financial Services Customer Protection and Information Security • Appropriate segregation of customer assets • Effective protection of clients’ personal information and other information assets of the Group Under various applicable laws and regulations, relevant U.S. standards as regards the segregation of including the Financial Instruments and Exchange Act customer assets by Ernst & Young ShinNihon LLC. and the Personal Information Protection Act, Nomura Nomura Group Information Security Policy is the Nomura Securities seeks to enhance the quality of financial products and services offered to customers Group works to properly protect customers’ assets basic document governing the effective protection of through the following initiatives under the Guidelines for Supervision of Financial Instruments Business and information. clients’ personal information and other information Operators, etc. Nomura Securities’ Primary Initiatives • Appointing officers to oversee internal controls, compliance, etc., and developing systems to ensure compliance and the appropriateness of operations • Thoroughly screening account openings and conducting proper examinations when underwriting securities • Carefully reviewing product details and taking action to provide accurate and comprehensive information • Conducting sales and solicitation activities in compliance with the Financial Instruments and Exchange Act and applicable laws and regulations governing each operation with an overall understanding of the customer’s needs and knowledge of financial instruments and financial status • Structuring systems that establish guidelines for sales to senior customers and requiring compliance with these guidelines • Ensuring compliance with laws, regulations, and internal rules through compliance training In accord with various applicable laws and assets. Customer-related personal information is regulations, including the Financial Instruments handled under stringent standards set out in Nomura and Exchange Act, Nomura Securities properly Group Privacy Policy and other information security- segregates the assets of its customers from the related rules, and in full compliance with personal assets of Nomura Securities itself. Nomura Securities information-related laws and regulations. For further has received a report certifying its compliance with information, please refer to our website. all material aspects of the criteria in effect under Privacy Policy http://www.nomuraholdings.com/policy/privacy_hd.html TO PI CS Nomura Founding Principles and Corporate Ethics Day Nomura Group, which celebrated its 90th anniversary in 2015, has established Nomura Founding Principles and Corporate Ethics Day. This provides an opportunity each year for all of us to reflect on our corporate culture and corporate ethics based on Our Founder’s Principles and remind ourselves of the actions that have brought scrutiny upon the firm. Every year on Nomura Founding Principles and Corporate Ethics Day, we take measures for everyone in each Group company, including overseas offices, to think about Nomura’s founding principles and corporate ethics to ensure we never repeat the mistakes of the past. 46 47 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Risk Management Risk Management http://www.nomuraholdings.com/company/risk/ Nomura Group implements processes to properly identify the possibility Ensuring Financial Soundness and Transparency of potential losses arising from various operations and transactions, • Calculate risk factors on a daily basis • Utilize risk measurement models and seeks to establish a framework for assessing all risks and enforcing • Periodically conduct stress tests appropriate controls. Fundamental Approach The business activities of Nomura Group are exposed Risk Appetite Statement. This statement sets forth to various risks such as market risk, credit risk, the content of risks that the Group can undertake, operational risk, model risk, and other risks caused and it takes account of the Group’s business strategy by external factors. We are working constantly to and business targets, including the amount of capital further upgrade and strengthen our risk management and liquidity required under regulations, and the systems. In parallel, Nomura Group has prepared its business environment. Risk Management Systems The Risk Appetite Statement is proposed by the risk appetite, the Group Integrated Risk Management Chief Risk Officer (CRO) and the Chief Financial Committee, which has been delegated responsibility Officer (CFO), and submitted for final approval to the by the Executive Management Board, is responsible Executive Management Board. With a basic policy for deliberating and determining all important matters of controlling risks that arise in the course of the pertaining to risk management. Group’s operations within the limits of the Group’s Internal Controls Committee Report Board of Directors Executive Management Board Group Integrated Risk Management Committee Group Internal Audit Department CFO CRO Risk Management Departments Report Check Individual Business Units Audit Form 20-F http://www.nomuraholdings.com/investor/library/sec/ • Market risk management • Credit risk management • Operational risk management • Other Nomura Group calculates vast amounts of risk factors on a daily basis using cutting-edge risk management methodologies for measuring increasingly complex and diverse risks. Based on periodic verification of risk measurement models, and with the approval of the authorities, the Group uses risk measurement models to compute its capital adequacy ratio, thus ensuring a high degree of reliability and transparency regarding the soundness of Nomura Group’s financial position. Furthermore, Nomura Group periodically conducts stress tests to monitor the amount of losses that may emerge under assumptions of extremely difficult economic conditions. Business Resilience* • Established the Crisis Management Committee • Strengthen systems for dealing with major earthquake disasters • Strengthen and enhance cyber security Nomura Group has established the Crisis Management Committee, comprised of officers who concurrently serve as the Crisis Management Manager in each Nomura Group company worldwide, to address any crisis that may occur. Chaired by an Executive Officer appointed by the Group CEO, this committee has established a system for managing crises and ensuring business continuity in the event of an emergency. Under the crisis management system, the Crisis Management Committee reports to the Executive Management Board regarding matters related to crisis management. In addition, this committee’s secretariat regularly conducts employee safety verification drills, disaster prevention drills, and business continuity drills, in order to respond immediately during an emergency. As part of these efforts, the secretariat is also tasked with fostering greater awareness of crisis management as well as maintaining and strengthening our ability to respond to emergencies. This system and these measures are stipulated in Nomura Group Crisis Management Policy. In addition, Nomura Group is using the lessons learned at the time of the Great East Japan Earthquake to develop systems toward natural and other disasters. Moreover, in view of the release of studies by Japan’s Central Disaster Prevention Council in 2013, regarding the impact of earthquakes that might occur directly beneath the Tokyo metropolitan area and along the Nankai Trough off the coast of Nagoya, we reviewed our disaster risk scenarios to take account of the impact of such major earthquakes. Key issues identified were how to deal with these disasters and how to secure business continuity, and, as part of addressing these issues, we are working to strengthen and upgrade our collaboration with Nomura Group companies in Japan and overseas. To deal with the increasing number of cyber attacks, Nomura is taking further measures to enhance system security, and, by forming a specialized unit, is working to strengthen its organizational response. Nomura is also endeavoring to further improve the capabilities of its management and employees to handle cyber attacks through training and practice drills, along with enhancing cooperation on information sharing with external organizations. For further details, please refer to our website. *Ability of an organization to anticipate, prepare for, and respond and adapt to incremental change and sudden disruptions in order to survive and prosper. Social and Environmental Risk Management • Identify social and environmental risk in the assessment process and other business operations We believe that considering the social and environmental risks that may arise from various transactions is key to managing our reputational risk. As such, in executing our business operations, we focus on these risks in the same cautious manner as legal compliance. 48 49 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future CSR Management Nomura Group's CSR http://www.nomuraholdings.com/csr/group/ Nomura Group’s CSR Identification of Material CSR Issues Fundamental Approach Framework for Promoting CSR Activities Nomura Group actively engages in initiatives to The CSR Committee has been formed as the address social issues to fulfill its social responsibilities management-level decision-making entity for as a corporate citizen. The Group believes promoting Group-wide CSR programs. Chaired by that promoting and managing corporate social the chairperson appointed by the Group CEO, the responsibility (CSR) activities properly is an important committee comprises seven Executive Officers, factor to maintain and increase its corporate value. including the chairperson. The responsibilities of The basic policy concerning CSR is set forth in the committee include formulating policies for CSR the Code of Ethics of Nomura Group and its Basic initiatives as well as approving and monitoring Management Policy. Moreover, Nomura Holdings progress of these activities. The activities of the Corporate Governance Guidelines formulated in committee are reported to the Board of Directors and November 2015 stated Nomura shall actively engage the Executive Management Board accordingly. During in CSR activities, including educational activities in FY2015/16, the CSR Committee held two meetings. economics and finance, in addition to contributing to expanding securities markets through daily business. Code of Ethics of Nomura Group http://www.nomuraholdings.com/company/ basic/ethics.html CSR Framework Board of Directors Japan EMEA Executive Management Board Report Approve CSR Committee Report Approve Cooperation Americas Secretariat: Corporate Citizenship Department AEJ Identification of Material CSR Issues in Nomura Group Clients Shareholders Investors Employees Communities Government organizations NGOs/NPOs Economic and business groups • Key non-financial indicators, such as GRI and SASB • Dialogue with socially responsible investment (SRI) organizations • Trends among financial institutions Our Founder’s Principles » Code of Ethics • Contribute to economic growth and social development • Draw on the capabilities of personnel and respect for diversity » Basic management policy • Maintain the spirit of putting the customer first, etc. In 2014, Nomura Group reassessed its material CSR CSR. Based on these, we identified the issues for issues through reflecting the opinions of third parties, the Group. Next, we assessed the “stakeholders’ hearings conducted across internal departments, and materiality” of the identified issues based on the receiving confirmations on our reassessment by the evaluations of representative SRI institutions in Japan CSR Committee. and overseas. We then assessed and prioritized the In the reassessment process, we first looked issues as regards “the Group’s materiality” based at the external elements. We analyzed the GRI on hearings conducted across internal departments Guidelines (G4), the criteria for information disclosure and reflecting the Group’s Basic Management Policy. on sustainability, such as those of the Sustainability We formed a “materiality matrix” of the issues based Accounting Standard Board (SASB), and Japan’s on these two assessments to identify issues of high Stewardship Code. Turning to the internal elements, importance to both stakeholders and the Group as we analyzed elements such as the Code of Ethics material CSR issues. of Nomura Group and our fundamental approach to Material CSR Issues Corporate Governance Strengthening corporate governance CSR management Compliance Legal compliance and reporting of violations Ensuring fair financial business practices Preventing bribery Preventing money laundering Risk management Enhancing and strengthening risk management systems Ensuring financial soundness and transparency Business resilience Social and environmental risk management Contributing to sound and sustainable capital markets Offering high-quality financial services Products and services responding to environmental and social issues Customer protection and information security Improving financial literacy Contributing to sustainable communities Global CSR initiatives Communication with stakeholders Fostering human resources with a respect for diversity Fostering human resources Diversity and inclusion Employee-friendly work environments Respecting human rights » P.41 » P.50 » P.46 » P.47 » P.47 » P.47 » P.48 » P.49 » P.49 » P.49 » P.46 » P.27 » P.47 » P.52 » P.54 » P.54 » P.58 » P.58 » P.60 » P.60 50 51 Nomura Report 2016Nomura Report 2016Actions for Shaping Our FutureBases of Nomura GroupImpact on stakeholders Contributing to Sound and Sustainable Capital Markets Nomura’s social mission is to contribute to economic growth and social development through the securities business by promoting the appropriate flow of funds in the capital markets. Fundamental Approach One of the highest-priority issues for Nomura Group financial and capital markets, and providing high- is contributing to sound and sustainable capital quality financial services. Moreover, Nomura is taking markets. The Group is listening intently to the active initiatives to contribute to society, principally opinions of its customers and the market, offering through providing opportunities for financial and high-value-added solutions to its customers through economic education. Offering High-Quality Financial Services • Working to offer high-quality and appropriate financial services to contribute to economic growth and social development For further details, please refer to the following sections of this report. Retail Division: Pages 20-21 / Asset Management Division: Pages 22-24 / Wholesale Division: Pages 25-27 / Compliance: Pages 46-47. Customer Protection and Information Security • Appropriate segregation of customer assets • Effective protection of clients’ personal information and other information assets of the Group For further details, please refer to page 47. Products and Services Responding to Environmental and Social Issues • Underwriting and sale of social contribution-type bonds • Promoting ESG investment within the Group For further details, please refer to the following sections of this report. Asset Management Division: Page 23 / Wholesale Division: Page 27 / CSR Key Facts: Page 74. Improving Financial Literacy • Providing more than 100 financial education lectures to universities annually • Conducting off-site lectures by Nomura employees at elementary, junior high, and senior high schools nationwide • Developing educational programs according to contemporary needs Knowledge and understanding of finance and markets and appropriate flows of funds. Since the economics are important for leading self-reliant, 1990s, Nomura Group has been providing financial secure, and prosperous lives. We trust that having and economic education targeting a wide range of each and every citizen improve their financial literacy age groups, from Japanese elementary and junior leads to promoting the development of sound capital high school students to adults. TO PI CS Perspectives on Broadening Access to Financial and Economic Education Expanding Financial and Economic Education http://www.nomuraholdings.com/csr/society/education.html Contributing to Social Development since Our Foundation Actions Ahead In step with changes in Japan’s economy and society Our Founder’s Principles contain the phrase “Nomura’s including the creation of a Junior NISA program which mission is to enrich the nation through the securities is a tax-free, small-sum investment system for minors business.” In essence, this means that Nomura will help to and a lowering of the voting age to 18, there has been create a fulfilling society through its business activities. This growing interest in finance and economic education. In spirit has been carefully handed down to the present day. response, Nomura Group provides programs according Under our Fundamental Management Policy, we to society’s needs, through actions including teaming up have set out to engage in educational activities regarding with schools to develop textbooks focused on the theme economics and investments. Every year, we send around of fostering life skills. In addition, the Group will also work 400 Nomura Group employees to universities to serve to nurture personnel who will become the next generation as lecturers, along with conducting off-site lectures at of leaders in the capital markets, and foster entrepreneurs elementary, junior high and senior high schools across who support new businesses. Nomura is working to Japan. Initiatives and Accomplishments in Review make it possible for everyone, including people in remote areas and economically disadvantaged children, to have equal access to opportunities for financial and economic The number of participants in all programs provided by education. Similarly, for adult members of society, the Nomura Group since 2000 has reached a cumulative Group offers its Lifelong Learning Venues program in total of around 720,000. Our financial education courses regional communities and workplaces. The aim of this for university students are attended by more than 10,000 program is to provide participants with knowledge of students annually. Off-site lectures for elementary, finance and investments that will enable them to live junior high and senior high school students are carried affluent “second lives.” out more than 150 times a year, and more than 4,700 students have participated. In other activities, the Group provides a wide range of educational content through initiatives including lectures for adult members of society, distribution of textbooks, the Nikkei Stock League stock education contest and special support for the Nikkei Future Investment Program. 2000 Nikkei Stock League stock education contest 2001 Financial education courses for universities 2004 Lectures on securities for adult members of society 2006 Provided textbooks to junior high schools nationwide 2008 Provided textbooks to elementary schools nationwide “Let’s Learn Classes” off-site lectures for elementary school students 2010 Financial education seminars for instructors 2011 Actual working experience and off-site lectures for junior and senior high school students “What is Investing?” “A Talk on Your Future and Money” 2014 Nikkei Future Investment Program Development of new textbooks with instructors Participation in Saturday school initiatives with Japan’s Ministry of Education, Culture, Sports, Science and Technology 2015 Renewal of a program for junior high school students Provided “Dreams, Support, Company,” a finance and economic education TV program for parents and their children Growing Demand for Financial Knowledge I believe that allowing students to come into contact with professionals in their respective fields is the key to nurturing students who think and act independently. Talks given by businesspeople active on the front lines have inspired many students to give serious thought to their future educational and career planning. Financial knowledge is crucial to surviving in our increasingly complex and specialized society. Therefore, I believe that demand and expectations for Nomura’s program, which was developed based on extensive specialized knowledge and experience, will only continue to grow in the years ahead. Isao Hirano Principal, Komaba Toho Junior and Senior High School 52 53 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Contributing to Sustainable Communities Dialogue with Stakeholders http://www.nomuraholdings.com/ csr/stakeholder/ We believe that dialogue with stakeholders inside and outside the Group Dialogue with Stakeholders (Selected Examples) is important to understand the expectations and requests of society and reflect these in our business and CSR activities. Fundamental Approach Through continuing communication with a range FY2015/16 Community Contribution Expenditure of stakeholders, from customers to shareholders, the community and employees, we are working to contribute to finding solutions to social and environmental issues. Nomura Holdings Corporate Governance Guidelines, formulated in November 2015, laid out the principle that the Company shall endeavor to contribute to the development of society at all times and shall fulfill Nomura Group’s corporate social responsibility as a corporate citizen through the implementation of Our Founder’s Principles that have been inherited since the foundation of the Company. 13.3% I H 4.2% 3.0% 2.2% G F 6.0% E D 12.2% Total Approx. ¥1.33 billion C B 9.0% 7.7% A 42.4% A: Education & young people C: Science and Academia E: Healthcare and Welfare G: People H: Emergency relief B: Art and Culture, Sport D: Community Contribution F: Environment I: Others Note: The total includes approximately ¥0.14 billion from Nomura Foundation and ¥0.05 billion from The Nomura Charitable Trust. Global CSR Initiatives • Share the basic CSR theme of “For Future Generations” • Conduct activities in line with regional needs In the regions around the world where Nomura These activities will be focused on nurturing future Group conducts its business activities, we will generations, including activities aimed at eradicating carry out activities in line with regional needs while disparities that may be carried forward to future forming partnerships with NGOs and other entities. generations. Themes External Organization Outline Human rights, labor, environment, anti-corruption United Nations (UN) Global Compact Participation in the Global Compact Network Japan UN Principles for Responsible Investment Participation in the Japan network Principles for Financial Action for the 21st Century Climate Bonds Initiative CSR Asia Participation in a working group on asset management, securities, and investment banking businesses Participation as a partner in activities to promote green bonds Exchanges of opinions on ESG issues in Asia Promotion, as a signatory, of the climate change and water programs Environment The Carbon Disclosure Project (CDP) ESG ESG ESG ESG TO PI CS Dialogue with Communities Urgent Humanitarian Assistance through Partnerships with NGOs Japan Platform (JPF) was formed in 2000 to provide his expectations for JPF’s future, noting that JPF’s a new framework for humanitarian assistance by activities have enhanced Japan’s presence on the linking NGOs in Japan with political and business international stage as a nation offering humanitarian circles. Today, JPF is undertaking humanitarian support and have led to the formation of stronger assistance activities in the international community relationships of trust between NGOs and corporations. in cooperation with various institutions, including the Nomura Group sees NGOs as important United Nations. Nomura Group has been working in stakeholders. Accordingly, Nomura will continue collaboration with JPF since its establishment and to work closely with NGOs and other stakeholders For further details, please refer to page 56-57. offering humanitarian aid. as it pushes ahead with its corporate citizenship In January 2016, a symposium was held to mark activities. Communication with Stakeholders • Participate in initiatives in Japan and overseas to fulfill corporate social responsibility as a corporate citizen One of the ways Nomura Group interacts with with stakeholders, we carefully examine and review stakeholders is through participation in activities the activities and information disclosure we undertake with various initiatives in Japan and overseas that that are related to the economy, society (human have the objective of contributing to society and the rights and labor), and environmental issues. We also environment. Through dialogue and collaboration report to the CSR Committee when needed. the 15th anniversary of the establishment of JPF. While Nobuyuki Koga, Chairman of of the Board of Directors of Nomura Holdings, Inc., gave a speech as a representative of the business community, reviewing JPF’s accomplishments from its founding to the present day. He noted that JPF’s cooperative framework, linking NGOs with political and business circles, is functioning effectively and fostering cooperation toward the goal of implementing timely and effective humanitarian assistance. He shared his perspectives on the significance of JPF and Nobuyuki Koga, Chairman of the Board of Directors of Nomura Holdings, Inc., delivers a greeting at the 15th anniversary of the establishment of JPF. 54 55 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Contributing to Sustainable Communities JAPAN Gl ob al CSR Ini tia tives Support for Tokyo 2020 Olympic and Paralympic Games The Road to 2020 http://www.nomuraholdings.com/tokyo2020/ Support for Para-Sports Recognizing that support for para-sports is crucial, the Nomura Group is committed to supporting para-sports as an official partner of Japanese Para-Sports Association. Nomura Group also supports Japan Para-Volleyball Association as a special partner. This association is working to popularize sitting volleyball, an official event of the Tokyo 2020 Paralympic Games. The Nomura Group will support para-sports by taking steps such as broadening the appeal of these Although public awareness of para-sports still remains low in Japan, in the run-up to 2020, I would like to see the paralympic games and para-sports become an integral part of people’s lives, and to create a society where all people can enjoy sports together, regardless of physical disability. Sitting volleyball is a sport that is accessible to a wide range of age groups, from elementary school children to the elderly. I believe that enabling all participants to truly enjoy and understand sitting volleyball will ultimately lead to the advancement of this sport. sports, training athletes, and encouraging general Yoshihisa Mano, Chairman, Japan Para-Volleyball Association understanding of para-sports. EMEA Americas Nomura’s UK Community Affairs program is split into three key areas: Two-Year London Charity Partnership, The Nomura Charitable Trust, and Employee Engagement. In 2015, we signed a two-year agreement with Rays of Sunshine, a charity that grants wishes for seriously ill children. In one year, we have raised over US$500,000 through a variety of fundraising activities—from runs, walks and challenge events to a talent competition, raffles and quizzes. The partnership has been an incredible success and this contribution will provide over 200 wish experiences. The CSR program in the Americas focuses on benefiting the younger generation and local community. Nomura works to help children study and learn in an effort to positively impact their lifestyles. Nomura partners with Read Ahead and the Covenant House New York to provide mentorship and literacy support for children and teens in the community. Nomura has held career sessions, book drives and backpack drives to support local students participating in these programs. Instinet’s* CSR activities aim to reduce income disparities among young people by motivating them to study in addition to providing support for life planning. Instinet partners with Elevate New York and Operation Backpack. * Instinet, a Nomura subsidiary Powai, India AEJ Nomura Powai continues to focus on supporting the lesser privileged communities across India by delivering quality education and healthcare. We partner with various NGO’s and fund projects in these focused areas, thereby creating significant impact to the lives of children and youth from these communities. One of the objectives of Powai CSR is to integrate employee volunteering initiatives with ongoing CSR projects. This provides every employee an opportunity to contribute towards the CSR efforts of the firm. Over the past year, 4,550 volunteer hours were put in by a total of 2,668 volunteers through 158 unique volunteering initiatives, fund raisers, and drives conducted collaboratively with our NGO partners. In Asia ex-Japan, a group of employee volunteers established the Nomura CARES network to be the focal point for CSR initiatives across the region. We now have charity partnerships with local NGOs in Hong Kong, Singapore and China that our employees support via various fundraising and volunteering events throughout the calendar year. We also have local CSR initiatives in Australia, Korea and India. Nomura CARES focuses on four main streams: our local charity partnerships, green/environmental initiatives including annual beach cleanup events, small grant donations to NGOs that our employees are actively involved with, and the Interbank Not-For-Profit Director Training Program in Hong Kong and Singapore that Nomura helps to organize along with four other industry peers. Japan women’s national sitting volleyball team seeks to deliver a strong performance at Tokyo 2020 Paralympic Games. Nomura Holdings supports the Tokyo 2020 Olympic and Paralympic Games as the Gold Securities Partner. 56 57 Nomura Report 2016Nomura Report 2016Actions for Shaping Our FutureNomura Holdings will sponsor Tokyo 2020 Olympic and Paralympic Games (Tokyo 2020 Games) as the exclusive Gold Partner in the Securities category. Nomura Holdings sees the Tokyo 2020 Games as not just a sports event, but also a perfect opportunity for Japan to emphasize its commitment to embracing “Change and Challenge” on the world stage as it seeks to revitalize the Japanese economy and achieve sustainable growth by overcoming challenges such as deflation, low economic growth, and an aging population with a low birth rate. With this in mind, Nomura Holdings has decided to support the Tokyo 2020 Games as a sponsor in the highest domestic tier of the Tokyo 2020 Sponsorship Program. Eyeing 2020, all employees of the Nomura Group will make a concerted effort to contribute to the success of the Tokyo 2020 Games while fostering economic growth and social development in Japan. Fostering Human Resources with a Respect for Diversity Our People http://www.nomuraholdings.com/csr/employee/ Developing a diverse workforce is Nomura Group’s greatest asset and is one of the highest priority issues in continuing to create new added value. Fundamental Approach Today, persons of more than 70 nationalities work orientation, gender identity, age, religion, beliefs, in the Group and this diverse workforce is the social standing, physical impairments, or any other Group’s greatest asset. Each and every employee criteria. In addition, the Nomura Holdings Corporate is given an equal opportunity to be active and Governance Guidelines formulated in November 2015 successful, utilizing her/his capability and personal promotes establishment of a sound workplace to strengths. The Code of Ethics of Nomura Group enable all employees to perform at their full potential forbids discrimination in any way on the basis and strive to enhance corporate value. of nationality, race, ethnic origin, gender, sexual Diversity and Inclusion at Nomura Nomura Group employees come from various Diversity and Inclusion Committees respectively as backgrounds and have different sets of values, but an organization to hold firm-wide discussions on we believe that by showing mutual respect and by promoting such active participation. The Nomura working together we will be able to provide high Group Diversity and Inclusion Committee will be value-added services to fulfill customers’ diverse chaired by the Group COO and members include needs. In December 2015, Nomura Holdings and representatives of each division. Through these Nomura Securities established the Nomura Group measures, we have established a system in which Diversity and Inclusion Department as an organization all employees are enabled to demonstrate their to promote active participation of diverse employees. individual character and capabilities. In April 2016, the two companies established Supporting Women through Their Career In May 2015, Nomura Securities set a quantitative other measures to establish an equal employment target of 550 female managers by 2020 (384 as of environment in which women can fully exert their June 1, 2016). In March 2016, an action plan was abilities. announced to promote the active participation of Initiatives to support women in improving their women in the workplace. careers include a mentoring program for management The action plan outlines initiatives to achieve candidates and a sponsorship program supported by quantitative targets, including support for female senior management, among other efforts to further employees' career formation and support for aid women's active participation. balancing their careers with life events, among Employee Networks Nomura has three autonomously operated employee networks that provide a range of events with information related to diversity in the workplace and provide opportunities to share both internally and externally. • Women’s career advancement Women in Nomura (WIN) • Health, childcare and senior care Life & Family Network considering work-life management • Multicultural, disability, LGBTA Promote understanding of diverse value systems Multicultural value Employment of People with Disabilities Nomura Group motivates employees with disabilities work and aim to provide them with a stable work life. by deciding their job tasks (job description) At Nomura Securities, each year, the employment assignments flexibly through ongoing discussions rate people with disabilities continues to exceed the with the workplaces where they will be assigned. By legal requirements, and they are contributing actively placing them in positions suited to their capabilities, in a wide range of departments. Nomura encourages them to be autonomous in their 58 59 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Fostering Human Resources with a Respect for Diversity Our Environment Our Environment http://www.nomuraholdings.com/csr/environment/ Employee-Friendly Work Environments • Provide work environments enabling each employee to fully concentrate on work in a physically and mentally healthy condition • Build healthy labor-management relationships • Realizing work practices that allow flexibility and diversity Mental Healthcare To safeguard the mental health of employees, we Realizing Work Practices that Allow Flexibility and Diversity provide access to psychiatrists and an employee Management and labor are monitoring employees’ counseling room staffed by a dedicated professional. working hours to maintain physical and mental health of Since May 2016, we have conducted stress checks employees and enable them to conduct work efficiently. to promote employee awareness of their own stress, Also, in some departments, Nomura works to optimize and aim to prevent mental health issues from arising total hours worked by giving consideration to the actual by creating workplaces that are easy to work in. conditions in each department and having managerial Furthermore, we are committed to helping employees staff exercise flexibility regarding hours worked, who have taken leave to recover from mental illness including such measures as adopting a work shift return to the workplace. Relationships with Labor Unions system and encouraging employees to use their allotted vacation days. Moreover, Nomura’s flexible work styles provide employees with work security for the long term. More than half of the employees of Nomura In specific terms, Nomura has endeavored to provide Securities are members of the Nomura Securities improved arrangements that allow employees to take Employees Union, and Nomura Securities has standing labor agreements with the union. To half-day paid vacation time and leave for childbirth and child-rearing, and has enhanced the system for nursing maintain sound and healthy relationships between care. In fact, all of the benefits provided by Nomura are labor and management, discussions are conducted above the legal requirement minimum, including leave with the union on a wide range of topics on day-to- before and after childbirth, leave for child-rearing, leave day issues, including respect for employee rights for nursing for sick children, subsidies for nurseries, and management issues. Through these discussions, nursing care leave and long-term leave for senior care. management and labor share views, and employees Nomura has also started a corporate contract to use in the workplace have the opportunity to make their nurseries to improve the level of support for those views known. engaged in both child-rearing and work. Respecting Human Rights • Established various mechanisms to prevent discrimination and harassment • Continue to conduct human rights training • Bolstered Sexual Harassment/Power Harassment Hotline The Nomura Group has set up Nomura Group awareness about human rights issues. The Group Human Rights Committee to have discussions over has established consultation contacts both within various human rights issues and determine human and outside the Company and provides similar rights initiatives. In addition, we continue to hold advisory functions for all harassment issues. human rights training for all Nomura people, including members of the Board of Directors, to create greater In 2009, Nomura Group created both its Environmental Statement and Environmental Policy and, with the Environmental Activities Working Group as the core, the Group is proactively working to reduce the environmental impact of its business activities. Fundamental Approach and Environmental Management The Code of Ethics of Nomura Group states, “Nomura activities. Also, to make sure the plan, do, check, Group is committed to acting in an environmentally action (PDCA) management approach is functioning, responsible manner and should, therefore, approach internal environmental audits are conducted environmental issues positively.” periodically. In Japan, we have established an environmental Our offices around the world are implementing management system (EMS) and are implementing environmental initiatives. For example, our London comprehensive environmental preservation activities headquarters building obtained ISO 14001 to deal with environmental risks and issues. Our certification in 2007 following an audit performed by Environmental Activities Working Group, which is a a local accreditation body and has maintained its Group-wide organization, meets once a month to certification to the present. monitor the progress of environmental preservation Nomura Group Environmental Management Framework Board of Directors Executive Management Board Report Approve CSR Committee Report The Head of Environmental Affairs Environmental Activities Working Group Cooperation Approve Nomura Group companies Nomura Securities head office/branch offices Asia Europe Americas Environmental Targets We set environmental goals for each year and To deepen the understanding of environmental closely manage the progress of our environmental issues and conduct related educational programs, we preservation activities. In Japan, in line with the target have held an annual environmental training program to cut electricity consumption per square meter in for all Nomura Group employees since 2009. In FY2030/31 by 20% or more from FY2009/10, the FY2015/16, 94% of employees in Japan participated Group is working to conserve resources and energy. in this program. 60 61 Nomura Report 2016Nomura Report 2016Actions for Shaping Our Future Our Environment Nomura Group Environmental Objectives and Progress (Japan) FY2015/16 targets Reduction of greenhouse gas emissions Reduce domestic Nomura Group CO2 emissions per square meter of floor space by 20% or more from FY2009/10 Assessments 〇 Reduction: 31.3% Shift and maintain the percentage of fuel- efficient, low pollution leased vehicles of Nomura Securities at 95% 〇 Switchover ratio: 99.9% FY2016/17 targets Reduce domestic Nomura Group CO2 emissions per square meter of floor space by 20% or more from FY2009/10 Reduce the CO2 emissions per mileage driven of leased vehicles of Nomura Securities from the previous year Raise the wastepaper recycling rate at principal offices to 95% 〇 Recycling ratio: 99% Reduce the waste emissions volume at principal offices from FY2013/14 Effective use of resources Have green products account for 85% of supplies request system items Reduction of paper usage Reduce use of copy paper (as measured by the annual volume purchased) from the previous year 〇 Purchase ratio: 88.65% × 3.9% increase year on year Encourage electronic document delivery service 〇 Accounts accepting electronic document delivery: 1.35 million Have green products account for 85% of supplies request system items Reduce use of copy paper (as measured by the annual volume purchased) from the previous year Encourage electronic document delivery service Contribution to environment through Nomura’s main businesses Increase the number of financial products and services that help resolve social issues 〇 Pursued underwriting and sales of sustainable development bonds to promote “social contribution-type investments” Increase the number of financial products and services that help resolve social issues Note: For further information on environmental objectives, please visit: http://www.nomuraholdings.com/csr/environment/management Efforts to Address Climate Change The proper management of climate change risk Nomura Group is working to lighten the impact of and the promotion of measures to deal with global its activities on the environment through the purchase warming will lead to solutions to social problems of green power. Our purchases of green power began and will contribute to maintaining and increasing domestically in 2006, and these reached a cumulative corporate value. Nomura Group, as a multinational total of 60.76 million kWh. Beginning in 2014, we have corporation with offices around the world, is making set a goal of continuing these purchases of green every effort to help resolve climate change issues power (from biomass power generation and other through its business activities and to reduce the green sources) for three consecutive years, and it will impact of its business activities on the natural be allocated to our principal domestic offices (located in environment. Nihonbashi in Tokyo, Osaka, and Nagoya). In addition, We collect and disclose environmental at our offices in London and elsewhere in Europe, we information, and, since FY2009/10, we have make use of electric power generated by renewable introduced third-party assurance verifications to energy sources, including hydroelectric power. ensure the reliability of this information (refer to page 78 for the third-party verification). Going Paperless and Promoting Recycling We are making efforts to more effectively use limited reduce paper usage. We also use these devices for natural resources and reduce the environmental training and internal meetings. impact of our activities and assist in the creation of a We are also continuing to expand the range of recycling-oriented society. As part of our commitment documents that are distributed electronically for our to reducing paper usage, we continue to digitize Nomura Home Trade service. prospectuses, reports, forms, and other documents. During FY2015/16, approximately 11.13 million Beginning in 2012, our initiatives have included documents were delivered electronically. providing all of our sales staff with tablet devices In our offices, we are working to raise employee featuring digitized sales and marketing tools to awareness of the amount of paper they use as part enhance the quality of our services and further of our campaign to reduce paper consumption. 62 Performance Review & Data Section In this section, we present the basic information needed to understand the Nomura Group, beginning with our performance history, in addition to our Company-wide and business segment results for the fiscal year ended March 31, 2016 and Nomura Holdings’ financial strategies. Nomura Report 2016 Key Financial Data P/L Net revenue Income before income taxes Net income* *Net income attributable to Nomura Holdings shareholders Segment information Net revenue Retail Asset Management Wholesale Subtotal Other Unrealized gain (loss) on investments in equity securities held for operating purposes Income (loss) before income taxes Net revenue Retail Asset Management Wholesale Subtotal Other Unrealized gain (loss) on investments in equity securities held for operating purposes Income before income taxes Geographic information* Income (loss) before income taxes by region Japan Americas Europe Asia and Oceania Subtotal Consolidated (billions of yen) FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 1,535.9 1,813.6 1,557.1 1,604.2 1,395.7 85.0 11.6 237.7 107.2 361.6 213.6 346.8 224.8 165.2 131.6 Funding and liquidity Liquidity portfolio* Short-term unsecured debt Long-term unsecured debt (billions of yen) March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016 5,427.7 5,883.5 6,127.2 6,064.0 5,947.1 3,009.1 2,293.3 2,969.3 2,557.0 3,303.8 6,373.0 6,457.3 6,218.6 6,509.4 6,593.6 *Definition differs from financial disclosures reflecting Liquidity Management’s view. Cash and cash deposits portion of liquidity portfolio excludes funds on deposit at exchanges and segregated client funds. FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Per share data (billions of yen) 350.3 65.8 555.0 971.1 560.9 397.9 68.9 644.9 511.9 80.5 765.1 476.5 92.4 789.9 435.6 95.4 720.3 1,111.7 1,357.5 1,358.7 1,251.3 664.2 188.8 220.8 165.1 3.8 37.7 10.7 24.7 (20.7) 1,535.9 1,813.6 1,557.1 1,604.2 1,395.7 63.1 20.5 (37.7) 46.0 35.2 3.8 85.0 100.6 21.2 71.7 193.5 6.6 37.7 237.7 192.0 27.1 111.8 330.9 20.0 10.7 361.6 161.8 127.6 32.1 82.2 276.1 46.0 24.7 346.8 36.7 15.4 179.7 6.1 (20.7) 165.2 (billions of yen) FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 214.1 317.2 386.3 363.2 244.8 (24.6) (91.5) (12.9) (129.1) 25.7 (93.1) (12.1) (79.4) 29.5 (48.9) (5.2) (24.7) (27.6) (23.5) 34.6 (16.4) (32.0) (67.4) 19.8 (79.6) Basic-net income attributable to Nomura Holdings shareholders per share (EPS) Diluted-net income attributable to Nomura Holdings shareholders per share (EPS) FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 3.18 29.04 57.57 61.66 36.53 (yen) 3.14 28.37 55.81 60.03 35.52 Nomura Holdings shareholders’ equity per share (BPS) 575.20 618.27 676.15 752.40 748.32 Dividends per share (DPS) Dividend payout ratio (%) 6.0 8.0 188.7% 27.5% 17.0 29.5% 19.0 13.0 30.8% 35.6% Consolidated capital adequacy, etc.*1 March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016 Tier 1 capital Tier 2 capital Total capital RWA Tier 1 capital ratio CET 1 capital ratio*2 Consolidated capital adequacy ratio Consolidated leverage ratio*3 HQLA*4 LCR*4 (billions of yen) 2,090.2 2,092.9 2,314.2 2,459.2 2,577.5 319.6 359.2 401.5 361.2 323.1 2,427.0 2,452.1 2,715.7 2,820.4 2,900.6 14,681.0 17,546.7 17,425.9 18,929.2 15,970.5 14.2% 14.2% 16.5% — — — 11.9% 11.9% 13.9% — — — 13.2% 13.2% 15.5% — — — 12.9% 12.9% 14.8% 3.82% 16.1% 15.4% 18.1% 4.28% (trillions of yen) — — 6.2 175.8% *1 Figures for March 2012 were prepared under Basel 2.5 standards. Figures for March 2013 to March 2016 were prepared under Basel 3 standards. *2 CET 1 capital ratio is defined as Tier 1 capital minus minority interests divided by risk-weighted assets. *3 Tier 1 capital divided by exposure (sum of on-balance sheet exposures and off-balance sheet items). *4 Monthly average of 4Q. 85.0 237.7 361.6 346.8 165.2 Number of shares outstanding, share price, etc. March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016 *Region information is based on US GAAP. Revenues and expenses are allocated based on the country of domicile of the legal entity providing the service. This information is not used for business management purposes. Number of shares outstanding (thousands) 3,822,563 3,822,563 3,822,563 3,822,563 3,822,563 ROE ROE B/S Total assets FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 0.6% 4.9% 8.9% 8.6% 4.9% Share price (fiscal year-end) (yen) Market capitalization (trillions of yen)* PBR (times)* PER (times)* March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016 35,697.3 37,942.4 43,520.3 41,783.2 41,090.2 (billions of yen) *Figures based on the fiscal year-end share price. Total Nomura Holdings shareholders’ equity 2,107.2 2,294.4 2,513.7 2,707.8 2,700.2 Gross leverage (times) Net leverage* (times) 16.9 10.4 16.5 10.4 17.3 10.4 15.4 9.3 15.2 9.6 *Total assets minus securities purchased under agreements to resell and securities borrowed, divided by Nomura Holdings shareholders’ equity. 366 1.4 0.64 577 2.2 0.93 662 2.5 0.98 706.2 502.9 2.7 0.94 1.9 0.67 13.77 115.09 19.87 11.50 11.45 64 65 Nomura Report 2016Nomura Report 2016Performance Review & Data Section Net income*1 and EPS*2 Net revenue in FY2015/16 Wholesale costs*1 Aiming at reducing costs by approximately 20% compared to FY2014/15 Message from the CFO I was appointed as CFO in April 2016. Prior to that, I spent around 20 years working in finance-related roles that supported our businesses. Based on this background, I have set myself two key missions to carry out as CFO. My first mission is to improve profitability and enhance the firm’s capital efficiency. For instance, I will track the progress of our recently announced cost reductions to ensure they are properly carried out. I will also allocate resources appropriately and evaluate the return on resources to ensure that our limited management resources are put to the best use. My second mission is to maintain our appro- priate financial position. Nomura’s core business is to provide financial products in the volatile capital markets. Amid the trend to apply tighter regulations to global financial institutions, it is critical to have abundant liquidity and a solid financial position. Indeed, at times these can also be a competitive advantage. Takumi Kitamura Chief Financial Officer (CFO) (Billions of yen) 250 200 150 100 50 0 60.03 55.81 35.52 28.37 3.14 2012 2013 2014 2015 2016 (Yen) 100 80 60 40 20 0 ■ Net income*1 (lhs) *1 Net income attributable to Nomura Holdings shareholders. *2 Diluted net income attributable to Nomura Holdings shareholders per share. EPS*2 (rhs) (Fiscal years ended March) Other Net revenue ¥ 165.1billion Income before income taxes ¥ 6.1 billion Wholesale Net revenue ¥ 720.3 billion Income before income taxes ¥ 15.4 billion Segment total ¥1,416.4 billion Retail Net revenue ¥ 435.6 billion Income before income taxes ¥ 127.6 billion Asset Management Net revenue ¥ 95.4 billion Income before income taxes ¥ 36.7 billion 66 8,000 7,519 6,879 6,511 6,419 5,871 6,000 4,000 2,000 0 20,000 15,000 10,000 5,000 0 14.2 13.2 11.9 12.9 16.1 5.9 6.1 6.1 5.9 5.4 20 15 10 5 0 8 6 4 2 0 FY2015/16 Financial Results Improving Profitability and Capital Efficiency The year ended March 2016 started off relatively smoothly. However, the second half of the Our first priority must be to create a lean year proved to be challenging as client activity structure capable of delivering profits amid weakened on the back of fears over a slowdown challenging market conditions. We are focused in China from August onwards and uncertainty on the future, investing in IT systems to increase surrounding the direction of monetary policy in the efficiency of our work processes, and major countries. Asset Management reported intensifying our focus on areas where we can stronger earnings as it continued to grow its compete. assets under management. However, Retail Our Wholesale has started to review its and Wholesale both booked a decline in pretax businesses in EMEA and the Americas with the income compared to the previous year. As a aim of improving international profitability. We result, income before income taxes from our are lowering our breakeven point by closing three business segments totaled ¥179.7 billion, some businesses and streamlining others. We representing a decline of 35% year on year. 250 Aside from the three segments, there was 100 downward pressure on earnings from unrealized 200 80 losses on securities held due to the decline in stock prices and expenses related to the 150 60.03 60 settlement of legal proceedings. Group income 100 40 before income taxes was ¥165.2 billion, net 35.52 55.81 28.37 income was ¥131.6 billion, and earnings per 50 share (diluted) was ¥35.52. 3.14 0 20 0 (Millions of dollars) 8,000 7,519 −15% 6,879 6,511 6,419 Approx. −20% 5,871 6,000 4,000 2,000 0 are also focusing our management resources on profitable areas that require a high-level of expertise. We have made significant cost reduc- tions in the past. This time, by closing certain businesses, we are taking an even sharper approach to refining our business portfolio. We are working to ensure the optimal allocation of financial resources across businesses and regions in order to meet the needs of our clients and move swiftly to capture business opportunities as they arise. We are regularly monitoring whether the resources allocated to each business are generating sufficient returns. We are making the necessary decisions and reallocating management resources flexibly, taking into account a compre- hensive range of factors for each business including the earnings outlook, the relevance to our franchise, and our position within the industry. 2012 2013 2014 2015 2016 Future run rate costs*2 (Fiscal years ended March) ■Fixed costs ■Variable costs *1 Converted into USD using average month-end spot rate for each period. *2 Cost base assuming FY2015/16 business environment continues. 20,000 15,000 10,000 5,000 0 16.1 14.2 13.2 11.9 12.9 20 15 10 5 0 8 6 4 2 0 67 5.9 6.1 6.1 5.9 5.4 Nomura Report 2016Nomura Report 2016Performance Review & Data Section Message from the CFO Performance Review of Divisions / Retail Financial Position 250 Shareholder Returns 100 One of our strengths is our robust financial 200 position. Since the global financial crisis in 2008, 80 Our main approach to shareholder returns is to consistently improve shareholder value while also 150 there has been much discussion about tight- 60.03 60 providing returns in the form of dividends. A key ening regulations for global financial institutions. 100 40 Several key regulations are yet to be finalized, so 35.52 55.81 at the moment, we are not sure of the full impact 50 20 of these regulations on our business. That said, 0 as of the end of March 2016, our Tier 1 capital 3.14 0 28.37 indicator for dividends is a consolidated dividend payout ratio of 30% based on half-yearly consolidated earnings. In determining dividends, we also take into account a range of factors including the regulatory environment globally and ratio remained high at 16.1%. Our liquidity our operating environment. For the year ended portfolio was ¥5.9 trillion, which positions us March 2016, we paid an annual dividend of ¥13 as being able to continue operating for one per share, representing a consolidated dividend year under liquidity stressed market conditions payout ratio of 35.6%. without the need for additional funding. As part of our flexible capital policy, we also Nomura has a broad range of stakeholders conducted a share buyback program to improve 8,000 including clients, shareholders, creditors, 7,519 6,879 counterparties, financial and taxation authorities 6,000 in various countries, and credit rating agencies. 6,511 6,419 5,871 capital efficiency. Working towards our 2020 target of EPS of ¥100, we will invest in business areas with strong profitability and high growth I believe it is essential to listen closely to what potential while delivering appropriate shareholder 4,000 our stakeholders have to say and implement returns, taking into account our share price and the best financial strategy and capital policy in regulatory capital requirements. such a way that allows us to achieve sustainable 2,000 growth into the future. 0 RWA and Tier 1 capital ratio* Liquidity portfolio* (Billions of yen) 20,000 15,000 10,000 5,000 0 16.1 14.2 13.2 11.9 12.9 2012 2013 2014 2015 2016 (%) 20 15 10 5 0 (Trillions of yen) 8 6 4 2 0 5.9 6.1 6.1 5.9 5.4 2012 2013 2014 2015 2016 (End of March) (End of March) Tier 1 capital ratio* (rhs) ■■ R WA (lhs) ■ * Figures for March 2012 were prepared under Basel 2.5 standards, and figures for March 2013 to March 2016 were prepared under Basel 3 standards. * Definition differs from financial disclosures reflecting Liquidity Management’s view. The cash and cash deposits portion of liquidity portfolio excludes funds on deposit at exchanges and segregated client funds. FY2015/16 Financial Results At the start of FY2015/16, stock markets were relatively calm, with the Nikkei Stock Average hovering around ¥20,000. In August however, concerns about the Chinese economy and the impact of global monetary policies resulted in a dramatic decline in stock prices and meaningful yen appreciation. In addition, the beginning of calendar year 2016 also saw some turbulent price movements as the Nikkei Stock Average declined for six consecutive days and the yen’s exchange rate against the U.S. dollar again reached the ¥110 range. The challenging market environment, particu- larly in the second half of the year, had a negative impact on Retail investor sentiment. Sales of stocks and investment trusts slowed and as a result, Retail net revenue was ¥435.6 billion, down 9% from last year, and income before income taxes was ¥127.6 billion, down 21% year on year. Initiatives to Transform Our Business Model and Expand Our Client Base Are Ongoing Aiming towards “winning client trust” and “business expansion,” our Retail Division has been working to transform its business model since August 2012. The Division is targeting to achieve Retail client assets of ¥150 trillion, a sign of trust placed in us by our clients, and a recurring revenue cost coverage ratio*1 of approximately 50% by FY2019/20. We made progress on this initiative in FY2015/16. While Retail brokerage commissions from securities transactions declined, approxi- mately ¥1.2 trillion flowed into investment trusts and discretionary investment products*2, thereby increasing our recurring revenue by 20% from the prior year. Retail Division continues to develop existing and new client relationships and last year, we were able to offer clients access to several large primary transactions, including the initial public offering of three companies of the Japan Post Group. In addition, the Nippon Individual Savings Account (NISA) program, which started in 2014, continues to expand. As of March 31, 2016, 1.55 million NISA accounts were opened at Nomura, with accumu- lated investments of nearly ¥1.2 trillion. As of March 31, 2016, total client accounts (excluding those with empty balances) amounted to 5.389 million, representing an increase of approx. 95,000 accounts from the prior year. Retail client assets remained at a high level of ¥100.6 trillion, although it was down from ¥109.5 trillion at the end of the previous fiscal year. *1 Recurring revenue represents revenue received from ongoing services linked to assets under custody, such as management fees from investment trusts, etc. *2 The amount obtained after deducting the redemptions from subscriptions. Net revenue and income before income taxes Recurring revenue and recurring revenue cost coverage ratio (Billions of yen) (Billions of yen) (Billions of yen) 600 450 300 150 0 192.0 200 100 161.8 127.6 100.6 63.1 2012 2013 2014 2015 2016 150 100 50 0 80 60 40 20 0 25 20 17 15 2013 2014 2015 2016 (%) 25 20 15 10 5 0 ■ Net revenue (lhs) Income before income taxes (rhs) ■ Recurring revenue (lhs) Recurring revenue cost coverage ratio (rhs) (Fiscal years ended March) (Fiscal years ended March) 68 69 100 75 50 25 0 800 600 400 200 0 36.7 32.1 27.1 30.8 27.9 24.6 39.3 40.1 21.2 20.5 40 30 20 10 0 40 30 20 10 0 150 800 100 600 555.0 644.9 789.9 765.1 720.3 111.8 71.7 82.2 -37.7 50 0 15.4 400 200 −50 0 Nomura Report 2016Nomura Report 2016Performance Review & Data Section Performance Review of Divisions / Asset Management Performance Review of Divisions / Wholesale FY2015/16 Financial Results bond mandates. Overseas, Nomura Corporate Research and Asset Management, whose In FY2015/16, Asset Management Division core competency is high-yield bonds, received reported record net revenue of ¥95.4 billion, up favorable evaluations for its medium- to 3% from the prior year. Income before income long-term performance and also saw inflows taxes increased 14% year on year to ¥36.7 from pension funds and other institutional billion, its highest level since FY2006/07. investors. As a result, inflows for the entire At year-end, assets under management investment advisory business were approxi- (AUM) were ¥40.1 trillion, an increase of approx- mately ¥2 trillion during the year. imately ¥800 billion from last year. Despite the impact market factors such as declining stock market indices and ongoing yen appreciation had on AUM, net inflows during the year were Initiatives Aimed at Expanding Our Investment Footprint in North America ¥4.8 trillion, largely due to our efforts to provide In December 2015, we formed a strategic clients with investment trusts and investment partnership and acquired a non-controlling advisory services that matched their specific approx. 41% economic interest (voting rights needs. of 10.1%) in American Century Investments In the investment trust business, we offered (ACI), an independent investment management funds to meet clients’ needs and worked to 192.0 600 200 increase AUM of existing funds. Net cash inflows continued into discretionary investments and 161.8 450 privately placed funds for regional financial insti- 150 127.6 tutions. ETF products with unique characteristics, such as leveraged ETFs, drew investor attention 300 100.6 100 as did conventional index-linked ETFs. As a result, 63.1 inflows for the entire investment trust business 150 amounted to ¥2.7 trillion during the year. 0 In the investment advisory business, 50 0 firm in the U.S. ACI is an active manager of 25 25 100 U.S. and global equities for its large client base throughout North America. When coupled with 80 Asset Management Division, with its expertise 17 20 20 15 in Japanese and Asian equities and high-yield 60 bonds and its broad client base in Japan, 40 we believe both companies will benefit from 15 10 the other’s know-how and will deliver broad 20 investment solutions to a wider range of global retail and institutional clients. The acquisition 0 5 0 Nomura was selected by the largest Japanese was completed in May 2016. public pension fund to manage four foreign FY2015/16 Financial Results 161.8 The start of FY2015/16 ushered in a period of higher volatility driven by concerns surrounding 192.0 the fiscal sustainability of Greece. In the latter part 600 200 of the year, market conditions deteriorated further and client activity plummeted as the economic 450 127.6 slowdown in China, widening credit spreads, plunging oil prices and monetary policy uncer- 300 100 tainties drove market participants to the sidelines. In this challenging market environment, Wholesale 150 50 Division delivered net revenue of ¥720.3 billion, 9% lower than in the previous year, and income before income taxes of ¥15.4 billion, 81% lower than in the previous year. 100.6 63.1 150 0 0 Global Markets recorded net revenue of ¥600.3 billion, a decline of 12% over the previous year. Equities remained resilient amid difficult market conditions, but Fixed Income net revenues declined significantly, particularly in the second half of the fiscal year when volatility 100 40 heightened and liquidity dried up. 36.7 32.1 27.1 21.2 20.5 Investment Banking enhanced cross-regional 30 75 and cross-divisional collaboration, producing a number of notable M&A transactions and multi- 50 product deals across all regions. As a result, Investment Banking net revenue was ¥120 25 billion, 13% higher than in the previous year. In Japan, revenues increased year on year, driven by the participation in key landmark financing transactions, industry consolidation and cross-border M&A deals, as well as Solutions 20 10 0 0 businesses such as foreign exchange and interest rate hedges to corporates and financial institutions. Among overseas regions, we saw solid performance in EMEA and Asia ex-Japan, while the Americas experienced a slowdown due 100 25 to significant market headwinds. 80 20 20 25 17 Initiatives to Improve Profitability 60 15 15 0 Wholesale Division has lowered its cost base by 40 10 $2 billion since 2011, including taking strategic actions to align the Fixed Income business 20 portfolio to the evolving market environment during FY2015/16. At the start of FY2016/17, another strategic review of the business portfolio was conducted in view of the challenging market outlook, and a number of actions were taken particularly in EMEA and the Americas. 5 0 Our mother-market platform in the 40.1 39.3 27.9 24.6 Asia-Pacific region was not affected by these changes. In EMEA, we closed down certain 40 businesses with structural disadvantages to focus on areas of our strength. In the Americas, 30.8 30 we streamlined some of our businesses to refocus on our core businesses and pursue 20 selective growth opportunities to expand our share of the world’s largest fee pool. Through 10 these actions, we have lowered the breakeven point of the Division, and positioned the interna- tional Wholesale platform to deliver sustainable 0 performance across market cycles. Net revenue and income before income taxes Assets under management* Net revenue and income (loss) before income taxes Net revenues by region (Billions of yen) (Trillions of yen) (Billions of yen) (Billions of yen) (Billions of yen) (Billions of yen) 100 36.7 32.1 27.1 21.2 20.5 2012 2013 2014 2015 2016 75 50 25 0 40 30 20 10 0 40 30 20 10 0 39.3 40.1 30.8 27.9 24.6 2012 2013 2014 2015 2016 800 600 400 200 0 150 800 100 600 555.0 644.9 789.9 765.1 720.3 111.8 71.7 82.2 50 0 15.4 400 200 -37.7 2012 2013 2014 2015 2016 −50 0 2012 2013 2014 2015 2016 ■ Net revenue (lhs) Income before income taxes (rhs) * Net after deducting duplications from assets under management of companies that belong to Asset Management Division. ■ Net revenue (lhs) Income (loss) before income taxes (rhs) ■ Japan ■ AEJ ■ EMEA ■ Americas (Fiscal years ended March) (End of March) (Fiscal years ended March) (Fiscal years ended March) 70 71 150 800 100 600 555.0 644.9 789.9 765.1 720.3 111.8 71.7 82.2 800 600 400 200 0 -37.7 50 0 15.4 400 200 −50 0 Nomura Report 2016Nomura Report 2016Performance Review & Data Section Eight-Year Consolidated Financial Summary (US GAAP) For the fiscal years beginning April 1 and ending March 31 of the following year Note: This financial summary is prepared solely for convenience. Readers are recommended to refer to Form 20-F. Operating Results: Revenue: Commission Fees from investment banking Asset management and portfolio service fees Net gain (loss) on trading Gain (loss) on private equity investments Interest and dividends Gain (loss) on investments in equity securities Other Total revenue Interest expense Net revenue Non-interest expenses: Compensation and benefits Commissions and floor brokerage Information processing and communications Occupancy and related depreciation Business development expenses Other Total non-interest expenses Income (loss) before income taxes Income tax expense (benefit) Net income (loss) Less: Net income (loss) attributable to noncontrolling interests FY2008/09 FY2009/10 FY2010/11 FY2011/12 FY2012/13 FY2013/14 FY2014/15 ¥ 306,803 ¥ 395,083 ¥ 405,463 ¥ 347,135 ¥ 359,069 ¥ 473,121 ¥ 54,953 140,166 (128,339) (54,791) 331,356 (25,500) 39,863 664,511 351,884 312,627 491,555 73,681 154,980 78,480 31,638 262,558 1,092,892 (780,265) (70,854) (709,411) (1,219) 121,254 132,249 417,424 11,906 235,310 6,042 37,483 1,356,751 205,929 1,150,822 526,238 86,129 175,575 87,806 27,333 142,494 1,045,575 105,247 37,161 68,086 288 107,005 143,939 336,503 19,292 346,103 (16,677) 43,864 1,385,492 254,794 1,130,698 518,993 92,088 182,918 87,843 30,153 125,448 1,037,443 93,255 61,330 31,925 3,264 59,638 144,251 272,557 25,098 435,890 4,005 563,186 1,851,760 315,901 1,535,859 534,648 93,500 177,148 100,891 48,488 496,227 1,450,902 84,957 58,903 26,054 14,471 62,353 141,029 367,979 8,053 394,007 38,686 708,767 2,079,943 266,312 1,813,631 547,591 91,388 179,904 91,545 49,010 616,463 1,575,901 237,730 132,039 105,691 (1,543) 91,301 168,683 476,356 11,392 416,350 15,156 179,485 1,831,844 274,774 1,557,070 570,058 111,849 192,168 80,142 38,485 202,754 1,195,456 361,614 145,165 216,449 2,858 453,401 95,083 203,387 531,337 5,502 436,766 29,410 175,702 1,930,588 326,412 1,604,176 596,593 129,977 192,300 76,112 35,230 227,205 1,257,417 346,759 120,780 225,979 1,194 (Millions of yen) FY2015/16 ¥ 431,959 118,333 229,006 354,031 13,761 440,050 (20,504) 156,460 1,723,096 327,415 1,395,681 574,191 123,881 189,910 78,411 35,892 228,238 1,230,523 165,158 22,596 142,562 11,012 Net income (loss) attributable to NHI shareholders ¥ (708,192) ¥ 67,798 ¥ 28,661 ¥ 11,583 ¥ 107,234 ¥ 213,591 ¥ 224,785 ¥ 131,550 Balance Sheets (Period End): Cash and cash deposits Loans and receivables Collateralized agreements Trading assets and private equity investments Other assets Total assets Short-term borrowings Payables and deposits Collateralized financing Trading liabilities Other liabilities Long-term borrowings Total liabilities Total NHI shareholders’ equity Noncontrolling interests Total equity Total liabilities and equity Cash Flows: ¥ 1,422,709 ¥ 1,352,244 ¥ 2,150,453 ¥ 1,953,677 ¥ 1,652,752 ¥ 2,189,310 1,643,007 8,412,618 11,672,612 1,686,902 ¥ 24,837,848 ¥ 1,183,374 1,242,318 10,157,954 4,752,054 467,574 5,483,028 23,286,302 1,539,396 12,150 1,551,546 2,071,714 12,467,213 14,700,282 1,638,975 ¥ 32,230,428 ¥ 1,301,664 1,528,419 11,216,481 8,356,806 494,983 7,199,061 30,097,414 2,126,929 6,085 2,133,014 2,227,822 15,156,318 15,241,931 1,916,466 ¥ 36,692,990 ¥ 1,167,077 2,103,608 13,686,438 8,688,998 552,316 8,402,917 34,601,354 2,082,754 8,882 2,091,636 2,211,423 13,742,646 14,123,594 3,665,972 ¥ 35,697,312 ¥ 1,185,613 2,437,370 12,519,274 7,495,177 1,165,901 8,504,840 33,308,175 2,107,241 281,896 2,389,137 2,629,875 14,115,257 17,124,349 2,420,206 ¥ 37,942,439 ¥ 738,445 2,413,801 15,409,383 8,491,296 978,163 7,592,368 35,623,456 2,294,371 24,612 2,318,983 2,570,678 17,347,001 18,714,314 2,699,011 ¥ 43,520,314 ¥ 602,131 2,836,873 17,111,999 11,047,285 1,141,750 8,227,063 40,967,101 2,513,680 39,533 2,553,213 ¥ 2,096,596 2,948,424 16,719,520 17,308,848 2,709,848 ¥ 41,783,236 662,256 ¥ 3,398,600 15,379,803 10,044,236 1,217,099 8,336,296 39,038,290 2,707,774 37,172 2,744,946 ¥ 3,898,843 2,969,578 15,077,660 16,410,002 2,734,084 ¥ 41,090,167 ¥ 662,902 4,249,118 16,605,591 7,499,335 1,200,647 8,129,559 38,347,152 2,700,239 42,776 2,743,015 ¥ 24,837,848 ¥ 32,230,428 ¥ 36,692,990 ¥ 35,697,312 ¥ 37,942,439 ¥ 43,520,314 ¥ 41,783,236 ¥ 41,090,167 Net cash provided by (used in) operating activities ¥ (712,629) ¥ (1,500,770) ¥ (235,090) ¥ 290,863 ¥ 549,501 ¥ 457,426 ¥ Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents (98,905) 999,760 (81,896) (269,643) 2,176,530 964 (423,214) 1,284,243 (26,246) 9,942 (844,311) (6,314) (160,486) (701,623) 47,175 (103,195) 289,385 41,089 (77,028) 12,337 (178,206) 68,513 ¥ 1,238,372 (23,711) 986,387 (40,195) Net increase (decrease) in cash and cash equivalents ¥ 106,330 ¥ 407,081 ¥ 599,693 ¥ (549,820) ¥ (265,433) ¥ 684,705 ¥ (174,384) ¥ 2,160,853 72 73 Nomura Report 2016Nomura Report 2016Performance Review & Data Section Unit June 30, 2012 June 30, 2013 June 30, 2014 June 30, 2015 June 30, 2016 Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Dialogue with Stakeholders Data for FY2015/16 items marked with have undergone assurance verification by a third party. CSR Key Facts Corporate Governance Members of the board Board of Directors Outside Directors Non-Japanese Directors Female Directors No. of people No. of people Ratio (%) No. of people Ratio (%) No. of people Ratio (%) 11 7 64 3 27 1 9 11 6 55 3 27 1 9 11 6 55 3 27 1 9 12 7 58 3 25 1 8 11 6 55 3 27 1 9 Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Officers (Executive Officers and Senior Managing Directors) Men Women Ratio of women No. of people No. of people % 41 2 4 23 2 8 27 2 6 26 2 7 27 2 7 Board of Directors meetings No. of times held Average attendance rate Client Focused Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 No. of times % 10 95 11 97 10 98 10 99 10 100 Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Caseload at Customer Help Desk Department (Nomura Securities) Total No. of cases Complaints Inquiries Opinions and requests Other No. of cases No. of cases No. of cases No. of cases 5,005 3,012 1,836 13 144 5,693 3,409 2,119 23 142 *1 *2 7,010 4,023 2,730 55 202 5,540 2,537 2,766 81 156 5,767 2,771 2,749 128 119 *1 The increase in the caseload in FY2013/14 was due to a rise in the number of incoming calls and heavy demand on telephone circuits. *2 Of the total, 69 calls were related to the handling of customer information. Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Branches that are barrier-free and have AEDs (Nomura Securities) Certified universally accessible Wheelchair-accessible toilets Wheelchair-accessible elevators With steps removed from entrances and exits (with ramps, elevators, or no steps) With installations to mitigate entrance and exit steps (railings or reduced step heights) No. of branch offices No. of branch offices No. of branch offices No. of branch offices No. of branch offices Percentage of branches equipped with AEDs (automated external defibrillators) Percentage of branches with personnel designated to provide assistance to seniors % % 30 80 54 140 14 — — 30 81 57 139 13 — — 30 78 66 129 13 100 80 30 78 66 130 14 100 80 33 83 68 128 14 100 80 Unit January 2012 December 2013 August 2014 January 2015 February 2016 Results of customer satisfaction surveys at branch offices (Nomura Securities) Extremely satisfied/satisfied Neither satisfied nor dissatisfied % % Extremely dissatisfied/dissatisfied % — — — 81.6 15.7 2.7 81.4 16.3 2.2 80.9 16.3 2.8 82.1 15.1 2.8 Unit FY2012/13 FY2013/14 FY2014/15 FY2015/16 Social contribution-type bonds (Nomura Securities) Name of bonds issued ADB Clean Energy Bonds/ IFC Bonds ADB Clean Energy Bonds/ ADB Water Bonds/AfDB Education Support Bond/ IFC Bonds/IFC Green Bonds/ EIB Bonds ADB Bonds/ADB Water Bond/ AfDB Food Safety and Security Bond/IADB Bonds/IBRD Bonds/IBRD Green Bonds/ IFC Bond/IFC Green Bond ADB Bonds/IADB EYE Bonds/ IBRD Bonds/IFC Bonds/ NIB Bonds Bonds issued Proceeds Number Millions of yen 14 76,883 11 95,960 19 159,145 24 72,310 Community contribution expenditures Total Millions of yen Millions of yen Millions of yen Education Arts, culture, and sports Science and academic achievement Millions of yen Community contribution Welfare and health Environment Human rights and labor Disaster relief Other Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen Millions of yen 1,235 582 106 83 200 49 43 3 71 103 1,348 556 81 129 199 79 47 4 88 171 1,323 604 66 117 190 39 84 20 78 129 1,457 530 333 114 161 85 34 19 68 113 1,325 562 102 120 162 79 29 39 56 176 Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Cumulative total Participants and materials in financial and economics education 22 No. of schools Visiting classes (elementary, junior, senior high schools, universities, teachers) Since 2008 No. of participants 1,087 1,865 2,825 9,836 9,637 28,470 No. of schools 115 114 112 108 106 1,654 31 56 265 304 731 Financial courses for universities Since 2001 No. of participants 12,000 11,000 11,000 11,000 11,000 217,000 Financial courses for the general public Since 2003 Nikkei Stock League Since 2000 Teaching material for elementary schools (The Economics Classroom,“The Framework of Society and the Role of Money”)* Since 2008 No. of courses 536 444 531 566 412 7,546 No. of participants No. of teams No. of members 27,839 21,696 23,897 24,712 14,958 380,724 1,420 1,287 1,484 1,361 1,429 24,500 5,741 5,120 5,699 5,167 5,587 97,066 No. of schools 120 396 227 366 361 3,670 No. of copies 5,000 17,422 14,639 24,170 21,377 282,608 Teaching material for junior high schools (The t-shirt shop)* Since 2006 No. of schools No. of copies 180 17,200 387 17,326 215 12,162 161 15,380 79 5,928 4,722 447,996 *The total volume of learning materials donated to elementary and junior high schools by Nomura Holdings Developing Human Resources Who Respect Diversity Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Education and training expenses Total Japan Europe Americas Asia-Pacific Millions of yen Millions of yen Millions of yen Millions of yen Participation in education and training* Total Japan Europe Americas Asia-Pacific Aggregate no. of hours Aggregate no. of participants Aggregate no. of hours Aggregate no. of participants Aggregate no. of hours Aggregate no. of participants Aggregate no. of hours Aggregate no. of participants Aggregate no. of hours Aggregate no. of participants 2,033 1,468 133 280 153 225,184 21,928 169,385 11,965 2,766 977 7,390 1,182 45,643 7,804 2,441 1,907 108 233 193 254,117 22,048 208,087 12,081 1,732 647 7,204 1,794 37,094 7,526 2,515 1,978 81 262 194 406,602 89,657 284,920 12,325 26,117 21,822 7,811 5,598 87,754 49,912 2,972 2,076 115 573 208 507,639 132,672 333,305 14,398 48,434 41,654 15,439 12,255 110,461 64,365 2,880 2,020 225 426 209 589,242 211,014 307,295 16,294 137,565 62,077 17,589 25,122 126,793 107,521 * Certain subsidiaries and affiliates were excluded from the number of participants in internal education and training in Europe, the Americas and Asia as the data was compiled based on persons registered through the Wholesale Division’s internal training system. 74 75 Nomura Report 2016Nomura Report 2016Performance Review & Data Section CSR Key Facts Data for FY2015/16 items marked with have undergone assurance verification by a third party. Developing Human Resources Who Respect Diversity Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Composition of employees*1 Total Japan Europe Americas Asia-Pacific No. of employees Ratio of male employees (%) Ratio of female employees (%) No. of employees Ratio of male employees (%) Ratio of female employees (%) No. of employees Ratio of male employees (%) Ratio of female employees (%) No. of employees Ratio of male employees (%) Ratio of female employees (%) No. of employees Ratio of male employees (%) Ratio of female employees (%) Ratio of employees by region Total % Japan Europe Americas Asia-Pacific % % % % Number of new hires*2 Total No. of employees Japan (Nomura Holdings, Nomura Securities) Men (No. of employees) Women (No. of employees) Europe Americas Asia-Pacific Men (No. of employees) Women (No. of employees) Men (No. of employees) Women (No. of employees) Men (No. of employees) Women (No. of employees) Composition of managers Total Japan (Nomura Holdings, Nomura Securities) Europe Americas Asia-Pacific Men Women Ratio of women (%) Men Women Ratio of women (%) Men Women Ratio of women (%) Men Women Ratio of women (%) Men Women Ratio of women (%) 27,168 62 38 15,145 56 44 4,014 70 30 2,420 74 26 5,589 66 34 100 56 15 9 20 3,359 573 495 663 478 1,150 7,299 1,064 13 3,623 205 5 1,693 325 16 1,060 243 19 923 291 24 26,242 62 38 15,004 57 43 3,618 70 30 2,271 74 26 5,349 65 35 100 57 14 9 20 2,554 446 581 307 361 859 7,024 1,055 13 3,549 219 6 1,557 315 17 1,016 234 19 902 287 24 26,019 62 38 15,062 56 44 3,461 71 29 2,281 74 26 5,215 64 36 100 58 13 9 20 2,920 507 522 503 418 970 6,913 1,031 13 3,480 218 6 1,507 290 16 1,028 234 19 898 289 24 28,672 62 38 15,973 58 42 3,485 71 29 2,449 74 26 6,765 61 39 100 56 12 9 23 2,934 482 363 389 121 382 128 718 351 7,095 1,234 15 3,437 236 6 1,479 311 17 1,093 250 19 1,086 437 29 28,865 62 38 16,083 58 42 3,424 71 29 2,503 74 26 6,855 61 39 100 56 12 8 24 2,868 537 395 286 119 313 111 714 393 7,165 1,370 16 3,345 270 7 1,503 335 18 1,123 276 20 1,194 489 29 *1 Composition of employees: The figures cover Nomura Group on a consolidated basis. In FY2013/14 and prior years, some subsidiaries were not included in the scope of the calculations. *2 Number of new hires: In Asia-Pacific, certain subsidiaries were not covered in the data for FY2014/15. Those not covered included Capital Nomura Securities Public Company Limited (CNS) and Nomura Asset Management Taiwan Ltd. Please refer to standards for calculation (http://www.nomuraholdings.com/csr/data/). Unit FY2011/12 FY2012/13 FY2013/14 FY2014/15 FY2015/16 Our Environment GHG Emissions Scope 1: Direct emissions*1 Scope 2: Indirect emissions*1 Scope 1, 2 Emissions per employee Scope 3 Emissions from employee travel*2 (Air, rail, and automobile travel) Energy Consumption Direct energy consumption (Natural gas, etc.)*4 Indirect energy consumption (Purchased electric power)*4 Including, Green electric purchase power*5 (Purchased cooling and heating power) Japan Europe Americas Asia-Pacific Japan Europe Americas Asia-Pacific Japan Europe Americas Asia-Pacific Japan Europe Americas Asia-Pacific*3 Japan Europe Americas Asia-Pacific Japan Europe Americas Asia-Pacific Japan Europe Americas Asia-Pacific t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 t-CO2 MWh MWh MWh MWh MWh MWh MWh MWh MWh MWh MWh MWh MWh Environmental Resource Efficiency Water consumption*6 Copy paper consumption*7 Amount of waste generated*8 Japan Europe Americas Asia-Pacific Thousand m3 Thousand m3 Thousand m3 Thousand m3 Ton Ton 2,373 1,299 0 76 34,214 21,629 12,208 24,357 2.4 6.9 5.0 5.0 18,505 9,446 6,060 11,883 12,664 6,981 0 272 74,648 50,091 16,194 27,474 2,247 1,318 0 76 38,988 16,842 11,672 24,323 2.8 6.2 5.1 5.4 17,919 9,728 5,124 11,057 11,948 7,025 0 800 74,293 38,679 16,104 28,012 2,207 1,131 46 143 42,300 17,334 10,143 21,601 3.0 6.0 4.5 4.9 18,729 9,253 5,561 9,552 11,729 6,210 225 608 74,117 41,164 15,896 26,942 2,107 797 69 143 40,965 14,164 13,486 22,007 2.9 4.6 5.5 4.3 20,823 8,127 4,349 10,575 11,229 4,438 340 611 72,780 30,836 22,148 27,862 1,986 752 72 169 39,065 12,822 11,975 21,892 2.7 4.3 4.8 4.2 22,013 7,651 4,966 11,587 10,573 4,201 355 732 70,520 30,133 21,882 26,720 7,424 6,329 6,317 32,626 34,652 20,550 0 10,047 2,352 188 136 4 33 820 1,223 17,523 0 7,924 1,907 178 124 4 45 759 1,904 15,258 0 2,220 1,731 177 124 13 45 746 2,659 12,400 0 238 1,694 171 97 26 48 1,041 2,281 11,971 0 140 1,617 170 115 30 36 1,083 2,540 The scope 1, 2, and 3 classifications follow The Greenhouse Gas Protocol (GHG Protocol): http://www.ghgprotocol.org/ The coverage by region is as follows: Japan: The Group companies located in Japan (http://www.nomuraholdings.com/company/group/) Europe: Offices in London, Paris, Frankfurt, Zurich, Madrid, Milan, and Luxembourg Americas: Offices in New York and Instinet offices Asia-Pacific: Offices in Hong Kong, Singapore, India, Dalian, and Bangkok However, data on air transportation in scope 3 are compiled based on corporate data *1. The Bangkok office was included in the scope for Asia from FY2014/2015 *2. Data based on airline and long-distance railway travel in Japan and overseas purchased from specified travel agencies. Data for Japan, Europe, and the India, Hong Kong and Bangkok office components of Asia include emissions from automobiles in regular use. *3. Assurance-verified data for Asia totaled 10,275 t-CO2 in FY2015/16 (Two offices in Hong Kong and one office each in Singapore, India and Bangkok) *4. As a result of improvements in data collection precision, figures on direct energy consumption in Japan for FY2014/15 were revised. *5. Data for FY2011/12 and FY2012/13 were comprised of Japan and the Frankfurt and Zurich offices for Europe. Additions to the scope for Europe were the Milan office from FY2013/14, the London office from FY2014/15, and the Luxembourg and Paris offices from FY2015/16. *6. Only the India office was included in the scope for Asia in FY2011/12. *7. Data for FY2011/12 and FY2013/14 were compiled based on paper purchased from specified suppliers by Nomura Securities for Japan, paper consumed by the London office for Europe, and paper consumed by the India and Hong Kong offices for Asia. From FY2014/15, the scope was expanded to include the Bangkok office for Asia, and from A4 paper to all copy paper purchased by Nomura Securities for Japan. *8. Data for FY2011/12 and FY2012/13 were compiled based on the Nihonbashi Head Office building and Dai-ni Edobashi Building in Tokyo, the Osaka Branch, and the Nagoya Branch for Japan, the London, Paris, Frankfurt, and Zurich offices for Europe, and the India office for Asia. Additions to the scope were the Urbannet Otemachi Building in Tokyo, the Kyoto Branch, and the Okayama Branch for Japan, and the Hong Kong office for Asia from FY2013/14, the Luxembourg office for Europe from FY2014/15, and the Nomura Asset Management Head Office building in Tokyo for Japan from FY2015/16. 76 77 Nomura Report 2016Nomura Report 2016Performance Review & Data Section Independent Assurance History "Nomura’s continuous commitment to society has been demonstrated throughout its 90 year history" 1925 — Supported Japan’s securities market at the dawn of its development 1925 • The Securities Department of Osaka Nomura Bank split off into a separate company, Nomura Securities Co., Ltd. Major Issue of New Companies’ Stocks Marks the First Step toward Recovery 1927 1949 1953 1959 • Opened the representative office in New York • Became a full member of the Tokyo Stock Exchange • Head Office moved to the Nihonbashi Nomura Building • Founded Nomura Securities Investment Trust Co., Ltd. Nomura Securities was established in 1925 and, following World War II, became prominent in Japan’s securities business. Between 1947-1948, many Japanese companies, including electric power distri- bution companies (today’s electric power generation companies), banks and textile companies, sought to raise capital from investors. It was at this time that Nomura, as a key underwriter and distributor of such transactions, had the opportunity to contribute to the post-war recovery while also building a leading position in the securities market. 1960 — Provided fund-raising support during the era of high economic growth in Japan 1961 1967 1969 1972 1980 — 1980 1981 1993 1997 • • • • • • • • Nomura Securities listed its shares on the Tokyo Stock Exchange, Osaka Securities Exchange, and Nagoya Stock Exchange Established Nomura International (Hong Kong) Limited Established Nomura Securities International, Inc. (NSI), a U.S. subsidiary Established Nomura Europe N.V. in the Netherlands, Nomura’s first subsidiary in Europe Growing Influence in the Movement of Capital between Japan and Overseas Over time, a gradual easing of trade restrictions has enabled the movement of capital between foreign and domestic investors. Japanese companies were more frequently interested in issuing securities in international markets, and the number of interna- tional investment trusts incorporating overseas securities increased. Also, new channels opened for domestic investors to buy investment overseas. Nomura Group has responded to the evolving needs of its clients by establishing overseas branches and building foundation for today’s global business. Offered products and services in response to Japan’s “financial Big Bang” Began sales of the Medium-Term Japanese Government Bond Fund Moving toward Comprehensive Financial Business Operations Established Nomura Investment Management Co., Ltd. Established Nomura International Limited, a U.K. subsidiary Established The Nomura Trust and Banking Co., Ltd. • Nomura Securities Investment Trust and Nomura Investment Management merged to form Nomura Asset Management Co., Ltd. Nomura Group continued to expand its business capabilities to meet clients’ demands as a compre- hensive financial services company. This has included the establishment of Nomura Investment Management Co., Ltd., The Nomura Trust and Banking Co., Ltd., and other affiliated companies. In addition, in response to Japan’s financial Big Bang, Nomura expanded its offering of products and services. Lastly, to meet the needs of corporate clients with evolving business operations outside of Japan, Nomura has established several overseas subsidiaries. 2000 — Began providing solutions to meet the increasingly diverse needs of clients 2001 • Separated the roles of Nomura Holdings and Nomura Securities to form a holding company structure • Nomura Holdings listed its shares on the New York Stock Exchange 2008 • Absorbed the personnel of Lehman Brothers Asia Pacific and its European and Middle Eastern divisions 2009 2016 • Nomura Holdings completed two public equity offerings • Entered into a strategic alliance with American Century Investments, a U.S. based investment management firm Strengthening Global Competitiveness and Improving the Business Operation System Japan’s financial Big Bang in the late 1990s was characterized by financial deregulation and the expectation that financial assets would flow from bank deposits to investments. Nomura believed it was essential to strengthen its global competi- tiveness and in 2001, created a holding company structure that ensures compatibility between each business unit. Looking ahead, Nomura remains committed to offering optimal solutions and working together across divisions and regions. Aiming to establish ourselves as Asia’s global investment bank 78 79 Nomura Report 2016Nomura Report 2016Performance Review & Data Section Global Network (As of June 30, 2016) Nomura Securities Domestic Network (As of June 30, 2016) Europe, the Middle East and Africa Nomura Europe Holdings plc (London) Nomura International plc (London) • Vienna Representative Office • Helsinki Branch • Frankfurt Branch • Qatar Branch • Stockholm Branch • South Africa Branch • Milan Branch • Madrid Branch • Dubai Branch Nomura Bank International plc (London) Nomura Asset Management U.K. Ltd. (London) Nomura Investment Banking (Middle East) B.S.C. (Bahrain) Banque Nomura France (Paris) Nomura Asset Management Deutschland KAG mbH (Frankfurt) Nomura Bank (Luxembourg) S.A. Nomura Nederland N.V. (Amsterdam) Nomura Saudi Arabia (Riyadh) Nomura Bank (Switzerland) Ltd. (Zurich) Americas Nomura Holding America Inc. (New York) • Washington, D.C. Office Nomura Securities International, Inc. (New York) • Boston Office • Chicago Office • Manhattan Beach Office • São Paulo Representative Office • Colombia Representative Office • San Francisco Office Nomura America Services, LLC (New York) • Chicago Office • New Jersey Office Nomura America Mortgage Finance, LLC (New York) Nomura Asset Capital Corporation (New York) Nomura Asset Depositor Company, LLC (New York) Nomura Asset Management U.S.A., Inc. (New York) Nomura Corporate Funding Americas, LLC (New York) Nomura Corporate Research And Asset Management Inc. (New York) Nomura Credit & Capital, Inc. (New York) Nomura Derivative Products Inc. (New York) Nomura Funds Research And Technologies America, Inc. (New York) Nomura Global Alpha LLC (New York) Nomura Global Financial Products Inc. (New York) Nomura International Trust Company (New Jersey) Nomura Investment Company (Bermuda) Ltd. Nomura Reinsurance Intermediary Inc. (New York) Nomura Securities (Bermuda) Ltd. NWL Company, LLC (New York) The Capital Company Of America LLC (New York) Instinet Instinet Incorporated (New York) (Based in the Americas, Europe and Asia) Japan Nomura Securities Co., Ltd. • Beijing Representative Office • Shanghai Representative Office Nomura Asset Management Co., Ltd. • Seoul Representative Office The Nomura Trust and Banking Co., Ltd. Nomura Babcock & Brown Co., Ltd. Nomura Capital Investment Co., Ltd. Nomura Investor Relations Co., Ltd. Nomura Funds Research And Technologies Co., Ltd. Nomura Research & Advisory Co., Ltd. Nomura Business Services Co., Ltd. Nomura Facilities, Inc. Nomura Institute of Capital Markets Research Nomura Healthcare Co., Ltd. Nomura Agri Planning & Advisory Co., Ltd. Nomura Financial Products & Services, Inc. Nomura Institute of Estate Planning Asia ex-Japan Nomura International (Hong Kong) Ltd. • Taipei Branch Office • Hanoi Representative Office Nomura Asia Holding N.V. (Hong Kong) Nomura Securities (Hong Kong) Ltd. Nomura Asia Ltd. (Hong Kong) Nomura Asset Management Hong Kong Ltd. Nomura Australia Ltd. (Sydney and Melbourne) Nomura Asset Management Australia Pty Ltd. (Sydney) Nomura Financial Advisory and Securities (India) Private Ltd. (Mumbai) Nomura Fixed Income Securities Private Ltd. (Mumbai) Nomura Capital (India) Private Ltd. (Mumbai) Nomura Services India Private Ltd. (Mumbai) Nomura Structured Finance Services Private Ltd. (Mumbai) Nomura Fin Services (India) Private Ltd. (Mumbai) PT Nomura Indonesia (Jakarta) Nomura Securities Malaysia Sdn. Bhd. (Kuala Lumpur) Nomura Asset Management Malaysia Sdn. Bhd. (Kuala Lumpur) Nomura Islamic Asset Management Sdn. Bhd. (Kuala Lumpur) Nomura Corporate Advisory (Shanghai) Co., Ltd. Nomura Securities Philippines Inc. (Makati) Nomura Singapore Ltd. Nomura Securities Singapore Pte. Ltd. Nomura Investments (Singapore) Pte. Ltd. Nomura Special Investments Singapore Pte. Ltd. Nomura Asset Management Singapore Ltd. Nomura Trust Company (Singapore) Ltd. Nomura Financial Investment (Korea) Co., Ltd. (Seoul) Capital Nomura Securities Public Company Ltd. (Bangkok) Nomura Asia Holding N.V. (Amsterdam) Hokuriku Fukui Branch Kanazawa Branch Niigata Branch Toyama Branch Chubu Gifu Branch Hamamatsu Branch Kanayama Branch Kariya Branch Kasugai Branch Matsumoto Branch Nagano Branch Nagoya Branch Nagoya-ekimae Branch Numazu Branch Okazaki Branch Shizuoka Branch Toyohashi Branch Toyota Branch Tsu Branch Yokkaichi Branch Hokkaido Asahikawa Branch Hakodate Branch Kushiro Branch Sapporo Branch Tokachi Obihiro Office Tohoku Akita Branch Aomori Branch Fukushima Branch Hachinohe Branch Iwaki Office Koriyama Branch Morioka Branch Sendai Branch Yamagata Branch Kinki Akashi Branch Daito Branch Gakuenmae Branch Higashiosaka Branch Himeji Branch Hirakata Branch Ibaraki Branch Kawanishi Branch Kishiwada Branch Kobe Branch Kyoto Branch Namba Branch Nara Branch Nishinomiya Branch Okamoto Branch Osaka Branch Otsu Branch Private Banking Kyoto Office Sakai Branch Senri Branch Takarazuka Branch Takatsuki Branch Tennoji Branch Toyonaka Branch Tsukaguchi Branch Uehonmachi Branch Umeda Branch Wakayama Branch Chugoku Fukuyama Branch Hiroshima Branch Kurashiki Branch Matsue Branch Okayama Branch Shimonoseki Branch Tokuyama Branch Tottori Office Yonago Branch Shikoku Kochi Branch Matsuyama Branch Takamatsu Branch Tokushima Branch Kyushu Fukuoka Branch Fukuoka Branch, Amu Plaza Hakata Office Kagoshima Branch Okinawa Naha Branch Kitakyushu Branch Kumamoto Branch Kurume Branch Miyazaki Branch Nagasaki Branch Oita Branch Saga Branch Sasebo Branch Tokyo metropolitan area Chofu Branch Denenchofu Branch Fuchu Branch Gotanda Branch Hachioji Branch Head Office Ikebukuro Branch Ikebukuro Metropolitan Plaza Branch Jiyugaoka Branch Kamata Branch Keio Shinjuku Branch Kichijoji Branch Koiwa Branch Kokubunji Branch Machida Branch Nakameguro Branch Nakano Branch Nerima Branch Ogikubo Branch Omori Branch Private Banking Ginza Office Seijo Branch Senju Branch Shibuya Branch Kanto Aeon Mall Funabashi Office Aobadai Branch Atsugi Branch Chiba Branch Fujisawa Branch Funabashi Branch Hiratsuka Branch Ichikawa Branch Kamakura Branch Kashiwa Branch Kawagoe Branch Kawaguchi Branch Kawasaki Branch Kofu Branch Koshigaya Branch Kumagaya Branch Matsudo Branch Mito Branch Musashikosugi Branch Odawara Branch Omiya Nishiguchi Branch Ota Branch Sagamihara Branch Saitama Branch Saitama Branch, Omiya Higashiguchi Office Shinyurigaoka Branch Takasaki Branch Tama Plaza Branch Shinagawa Branch Shinbashi Branch Shinjuku Branch Shinjuku Nomura Building Branch Shinjuku-eki Nishiguchi Branch Tachikawa Branch Tamagawa Branch Tanashi Branch Tokyo Branch Toranomon Branch Ueno Branch Tokorozawa Branch Totsuka Branch Tsukuba Branch Tsurumi Branch Urawa Branch Utsunomiya Branch Yokohama Bashamichi Branch Yokohama Branch Yokosuka Branch 80 81 Nomura Report 2016Nomura Report 2016Performance Review & Data Section Share Data / Credit Rating Corporate Data Share Data (As of March 31, 2016) Common stock issued 3,822,562,601 shares Listing The common shares of Nomura Holdings, Inc. are listed on the Tokyo, Nagoya, and Singapore stock exchanges. The shares are also listed on the NYSE in the form of American Depositary Shares (ADSs) evidenced by American Depositary Receipts (ADRs). Each ADS represents one share of common stock. Securities code 8604 (Tokyo Stock Exchange) NMR (New York Stock Exchange) Number of shareholders 415,706 (Unit shareholders: 393,674) Transfer agent and registrar Mitsubishi UFJ Trust and Banking Corporation Corporate Agency Department: +81 (3) 5391-1900 Depositary for American Depositary Receipts (ADRs) The Bank of New York Mellon Depositary Receipts Division: +1 (866) 680-6825 http://www.adrbnymellon.com Ratio: 1 ADR = 1 ordinary share Date of record for dividend payments Second quarter-end: September 30 ／ Year-end: March 31 Major shareholders (Top 10)* Component ratio of shareholders (%) 100 80 60 40 20 0 2012 2013 2014 2015 2016 (End of March) ■ ■ Financial institutions Foreign legal entities ■ ■ Other legal entities Individuals and others Name of shareholder Number of shares owned (thousands) Ownership (%) State Street Bank and Trust Company 505223 Japan Trustee Services Bank, Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) Japan Trustee Services Bank, Ltd. (Trust Account 9) State Street Bank West Client-Treaty 505234 Japan Trustee Services Bank, Ltd. (Trust Account 7) The Bank of New York Mellon SA/NV 10 The Bank of New York Mellon as Depositary Bank for DR Holders Barclays Securities Japan Limited Japan Trustee Services Bank, Ltd. (Trust Account 1) 246,648 135,640 124,589 52,439 52,055 50,608 47,067 43,528 42,000 39,075 6.8 3.8 3.5 1.5 1.4 1.4 1.3 1.2 1.2 1.1 * The Company has 213,040 thousand shares of treasury stock as of March 31, 2016, which is not included in the major shareholders list above. * Figures for “number of shares owned” are rounded down to the nearest thousand and figures for “ownership” are calculated excluding treasury stock. Credit Rating (As of June 30, 2016) R&I JCR Moody's Standard & Poor's Fitch Ratings Nomura Securities Nomura Holdings Long-term Short-term Long-term Short-term A+ AA− A3 A− A− a-1 — P-2 A-2 F1 A+ AA− Baa1 BBB+ A− a-1 — — A-2 F1 Corporate Data (As of March 31, 2016) Company name Group CEO Date of incorporation Business description Paid-in capital Head office Group employees Nomura Holdings, Inc. Koji Nagai December 25, 1925 Investment and financial services ¥594.5 billion 1-9-1, Nihonbashi, Chuo-ku, Tokyo 103-8645, Japan 28,865 Inquiries Nomura Holdings, Inc. • Investor Relations Urbannet Otemachi Building, 2-2-2, Otemachi, Chiyoda-ku, Tokyo 100-8130, Japan Tel. +81 (3) 5255-1000 (Main switchboard) • Corporate Citizenship Department Otemachi Nomura Building, 2-1-1, Otemachi, Chiyoda-ku, Tokyo 100-8170, Japan Tel. +81 (3) 5255-1000 (Main switchboard) e-mail: csr@jp.nomura.com Editing Nomura Report 2016 Nomura has tried to accurately convey the connections between Nomura Group’s business activities and its CSR activities Hajime Ikeda Group Corporate Communications, Corporate Citizenship and Tokyo 2020 Olympic and Paralympic Nomura Group began publishing the Nomura Report, integrating its annual report and Citizenship report, in the fiscal year ended March 31, 2013. We aim to express the relationships between our business activities, governance, and CSR activities to enable all our stakeholders, including clients, shareholders, suppliers, NGOs, and the communities, as well as employees, to understand Nomura Group’s economic and social value. Nomura Group marked its 90th anniversary in December 2015. In this report, we have focused on how we will grow sustainably together with our stakeholders over the next 10 years by presenting our corporate philosophy and vision and our strategy to increase our medium- to long-term corporate value through various perspectives. In creating this report, we have referred to the International Integrated Reporting Framework proposed by the International Integrated Reporting Council, the GRI Guidelines (G4), and other guidelines and global integrated reporting trends. In addition, some of our CSR data has been verified by an independent third-party organization to enhance reliability. This report and the Group’s website are intended to contribute to deeper dialogue with stakeholders. To this end, we have made an effort to enhance the content even further. 82 83 Nomura Report 2016Nomura Report 2016Performance Review & Data Section N o m u r a R e p o r t 2 0 1 6 The start of a new future Nomura Holdings, Inc. Nomura Report 2016 This report was produced using non VOC inks. All electricity to print this booklet was generated by green energy. (3,932 kWh) About the Cover Photo To visually express the title of this report, “The start of a new future” the cover photograph captures the stillness of the morning air as the sun rises behind our Nihonbashi Head Office building. The photograph evokes our determination to embark on a new future as we celebrate our 90th founding anniversary and look back on 90 years in the securities business. Printed in Japan N o m u r a H o d n g s , l i I n c .