FORM 6-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Commission File Number: 1-15270
For the month of February 2020

NOMURA HOLDINGS, INC.
(Translation of registrant’s name into English)

9-1, Nihonbashi 1-chome
Chuo-ku, Tokyo 103-8645
Japan(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F

X

Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Information furnished on this form:

EXHIBITS
Exhibit Number

1.

(English Translation) Quarterly Securities Report Pursuant to the Financial Instruments and Exchange Act for the Nine Months Ended
December 31, 2019.

2.

(English Translation) Confirmation Letter.

The registrant hereby incorporates Exhibits 1 and 2 to this report on Form 6-K by reference in the prospectus that is part of the Registration
Statement on Form F-3 (Registration No. 333-229191) of the registrant, filed with the SEC on January 11, 2019.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.
NOMURA HOLDINGS, INC.
Date: February 20, 2020

By:/s/ Go Sugiyama
Go Sugiyama
Senior Managing Director

Exhibit 1
Quarterly Securities Report Pursuant to the Financial Instruments and Exchange Act for the Nine Months Ended December 31, 2019
Items included in the Quarterly Securities Report
Page

Part I Corporate Information

1

Item 1. Information on Company and Its Subsidiaries and Affiliates

1

1. Selected Financial Data
2. Business Overview
Item 2. Operating and Financial Review
1. Risk Factors
2. Operating, Financial and Cash Flow Analyses by Management
3. Significant Contracts
Item 3. Company Information
1. Share Capital Information
2. Directors and Executive Officers

1
1
2
2
2
17
18
18

Item 4. Financial Information20

Preparation Method of Consolidated Financial Statements and Quarterly Review Certificate

20

1. Consolidated Financial Statements

21(1) Consolidated Balance Sheets (UNAUDITED)(2) Consolidated Statements of Income (UNAUDITED)(3) Consolidated Statements of Comprehensive Income (UNAUDITED)(4) Consolidated Statements of Changes in Equity (UNAUDITED)(5) Consolidated Statements of Cash Flows (UNAUDITED)
Notes to the Consolidated Financial Statements (UNAUDITED)
2. OtherPart II

21
24
26
27
29
31
108

Information on Guarantor of the Company

Quarterly Review Report of Independent Auditor
Note: Translations for the underlined items are attached to this form as below.

109

Part I

Corporate Information

Item 1. Information on Company and Its Subsidiaries and Affiliates
1. Selected Financial Data

Total revenue
Net revenue
Income (loss) before income taxes
Net income (loss) attributable to Nomura Holdings, Inc. (“NHI”)
shareholders
Comprehensive income (loss) attributable to NHI shareholders
Total equity
Total assets
Net income (loss) attributable to NHI shareholders per share—basic
Net income (loss) attributable to NHI shareholders per share—diluted
Total NHI shareholders’ equity as a percentage of total assets
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Cash, cash equivalents, restricted cash and restricted cash
equivalents at end of period
123Nine months
ended
December 31,
2018

Nine months
ended
December 31,
2019

Three months
ended
December 31,
2018

Three months
ended
December 31,
2019

1,336,766
815,516(62,054)

1,582,733
1,050,359
272,979

457,400
260,597(76,164)

497,450
334,978
69,687

1,835,118
1,116,770(37,701)(Mil yen)(101,286)(Mil yen)(42,280)(Mil yen) 2,706,011(Mil yen) 45,113,023

251,473
222,119
2,789,623
46,242,334(95,276)(101,999)——

57,066
66,105——(100,442)(70,136)2,680,793
40,969,439(Mil yen)(Mil yen)(Mil yen)

Year ended
March 31,
2019

(Yen)

(30.01)

77.36(28.52)

18.07(29.90)(Yen)(%)(Mil yen)(Mil yen)(Mil yen)(30.03)5.9(440,760)(2,872)483,20775.65
5.8
419,277
217,804(159,920)(28.52)
—
—
—
—

17.63
—
—
—
—

(29.92)
6.4(361,165)(112,503)
761,191(Mil yen)

2,439,146

3,152,558——

2,687,132

The selected financial data of Nomura Holdings, Inc. (the “Company”) and other entities in which it has a controlling financial interest(collectively referred to as “Nomura”, “we”, “our”, or “us”) are stated in accordance with the accounting principles generally accepted in the
United States of America (“U.S. GAAP”).
Taxable transactions do not include consumption taxes and local consumption taxes.
As the consolidated financial statements have been prepared, selected financial data on the Company are not disclosed.

2. Business Overview
There were no significant changes to the businesses of the Company and its 1,363 consolidated subsidiaries for the nine months ended
December 31, 2019.
There were 14 affiliated companies which were accounted for by the equity method as of December 31, 2019.
1

Item 2. Operating and Financial Review
1. Risk Factors
There is no significant change in our Risk Factors for the nine months ended December 31, 2019 and until the submission date of this report.
2. Operating, Financial and Cash Flow Analysis by Management(1) Operating Results
Nomura reported net revenue of ¥1,050.4 billion, non-interest expenses of ¥777.4 billion, income before income taxes of ¥273.0 billion, and net
income attributable to NHI shareholders of ¥251.5 billion for the nine months ended December 31, 2019.
The breakdown of net revenue and non-interest expenses on the consolidated statements of income are as follows:
Millions of yen
Nine months ended December 31
2018
2019

Commissions
Brokerage commissions
Commissions for distribution of investment trust
Other
Fees from investment banking
Underwriting and distribution
M&A / financial advisory fees
Other
Asset management and portfolio service fees
Asset management fees
Other
Net gain on trading
Gain (loss) on private equity investments
Net interest
Gain (loss) on investments in equity securities
Other
Net revenue¥¥

226,954 ¥ 212,743
159,971
141,70344,90648,03622,07723,00476,20776,37946,24635,067
20,21929,467
9,742
11,845
186,312
180,909174,345
168,853
11,967
12,056
244,586
327,700
1,335
3,275
51,58586,030(8,864)
1,488
37,401
161,835
815,516 ¥ 1,050,359

Millions of yen
Nine months ended December 31
2018
2019

Compensation and benefits
Commissions and floor brokerage
Information processing and communications
Occupancy and related depreciation
Business development expenses
Other
Non-interest expenses¥¥
2

372,428
64,335
123,232
48,692
27,354
241,529
877,570¥¥

374,51474,565
126,939
53,75624,243
123,363
777,380

Business Segment Information
Results by business segment are noted below.
Reconciliations of Net revenue and Income (loss) before income taxes on segment results of operations and the consolidated statements of income
are set forth in Item 4. Financial Information, 1. Consolidated Financial Statements, Note 16. “Segment and geographic information.”
Net revenue
Millions of yen
Nine months ended December 31
2018
2019

RetailAsset Management
Wholesale
Other (Incl. elimination)
Total

¥

¥

265,325
66,948413,148
79,117
824,538¥

247,565
85,581
502,711219,279¥ 1,055,136

Non-interest expenses
Millions of yen
Nine months ended December 31
2018
2019

RetailAsset Management
Wholesale
Other (Incl. elimination)
Total

¥

¥

219,136
47,191
511,532
99,711
877,570¥¥

216,546
48,073
420,580
92,181
777,380

Income (loss) before income taxes
Millions of yen
Nine months ended December 31
2018
2019

RetailAsset Management
Wholesale
Other (Incl. elimination)
Total

¥

¥

46,189 ¥19,757(98,384)(20,594)(53,032) ¥31,01937,50882,131
127,098
277,756

RetailNet revenue was ¥247.6 billion, a decline from the same period in the relevant year primarily due to a decrease of sales of stocks and investment
trusts although market confidence has been recovered lately. Non-interest expenses were ¥216.5 billion and income before income taxes was¥31.0 billion. Retail client assets were ¥122.3 trillion as of December 31, 2019, a ¥7.6 trillion increase from March 31, 2019.
Asset Management
Net revenue was ¥85.6 billion, an increase from the same period in the relevant year resulted from AuM increase. Non-interest expenses were¥48.1 billion and income before income taxes was ¥37.5 billion. Assets under management were ¥55.6 trillion as of December 31, 2019, a ¥4.2 trillion
increase from March 31, 2019, primarily due to decline in the market.
3Wholesale
Net revenue was ¥502.7 billion. Non-interest expenses were ¥420.6 billion and income before income taxes was ¥82.1 billion.
The breakdown of net revenue for Wholesale is as follows.
Millions of yen
Nine months ended December 31
2018
2019

Global Markets
Investment Banking
Net revenue¥¥

339,441
73,707413,148¥ 428,642
74,069¥ 502,711

Global Markets net revenue was ¥428.6 billion. Fixed Income net revenue decreased from ¥164.8 billion in the relevant year to ¥259.4 billion
because of the high market volatility, which led to a favorable environment for the trading business. Equities net revenue slightly decreased from¥174.7 billion in the relevant year to ¥169.2 billion due to lower performance in Asia. Investment banking net revenue was ¥74.1 billion.
Other Operating Results
Other operating results include net gain (loss) related to economic hedging transactions, realized gain (loss) on investments in equity securities
held for operating purposes, equity in earnings of affiliates, corporate items, and other financial adjustments. Other operating results for the nine months
ended December 31, 2019 include losses from changes in the fair value of derivative liabilities of ¥0.7 billion attributable to the change in Nomura’s
own creditworthiness and gains from changes in counterparty credit spread of ¥2.7 billion. Net revenue was ¥219.3 billion, primarily due to the realized
gain of ¥73,293 million by the partial sale of Nomura’s investment in ordinary shares of Nomura Research Institute, Ltd. Non-interest expenses were
¥92.2 billion and income before income taxes was ¥127.1 billion for the nine months ended December 31, 2019.
Cyber Security Incident
In June 2018, one of our foreign subsidiaries recently experienced a cyber incident that resulted in the unauthorized access to certain of its systems
including client information. We may suffer financial loss through reputational damage, legal liability and enforcement actions against us, and expect toincur increased costs for our operations generally, resulting from and in connection with the remediation of this incident and to strengthen and enhancecyber security within other Nomura group companies.
Geographic Information
Please refer to Item 4. Financial Information, 1. Consolidated Financial Statements, Note 16. “Segment and geographic information” for net
revenue and income (loss) before income taxes by geographic allocation.
Cash Flow Information
Please refer to “(6) Liquidity and Capital Resources.”(2) Assets and Liabilities Associated with Investment and Financial Services Business
1) Exposure to Certain Financial Instruments and Counterparties
Market conditions continue to impact numerous products to which we have certain exposures. We also have exposures to Special Purpose Entities(“SPEs”) and others in the normal course of business.
4

Leveraged Finance
We provide loans to clients in connection with leveraged buy-outs and leveraged buy-ins. As this type of financing is usually initially provided
through a commitment, we have both funded and unfunded exposures on these transactions.
The following table sets forth our exposure to leveraged finance by geographic location of the target company as of December 31, 2019.
Millions of yen
December 31, 2019
FundedUnfunded
Total

EuropeAmericas
Asia and Oceania
Total¥ 76,217 ¥255,041 ¥331,258
40,879 154,114 194,993
268
42,46742,735¥117,364 ¥451,622 ¥568,986

Special Purpose Entities
Our involvement with these entities includes structuring, underwriting, as well as, subject to prevailing market conditions, distributing and sellingdebt instruments and beneficial interests issued by these entities. In the normal course of securitization and equity derivative activities business, we also
act as a transferor of financial assets to, and underwriter, distributor and seller of repackaged financial instruments issued by these entities. We retain,
purchase and sell variable interests in SPEs in connection with our market-making, investing and structuring activities. Our other types of involvementwith SPEs include guarantee agreements and derivative contracts.
For further discussion on Nomura’s involvement with variable interest entities (“VIEs”), see Item 4. Financial Information, 1. Consolidated
Financial Statements, Note 6. “Securitizations and Variable Interest Entities.”
2) Fair Value of Financial Instruments
A significant amount of our financial instruments are carried at fair value, with changes in fair value recognized through the consolidated
statements of income or the consolidated statements of comprehensive income on a recurring basis. Use of fair value is either specifically required under
U.S. GAAP or we make an election to use fair value for certain eligible items under the fair value option.
Other financial assets and financial liabilities are carried at fair value on a nonrecurring basis, where the primary measurement basis is not fairvalue. Fair value is only used in specific circumstances after initial recognition, such as to measure impairment.
In accordance with Accounting Standard Codification (“ASC”) 820 “Fair Value Measurements and Disclosures”, all financial instruments
measured at fair value have been categorized into a three-level hierarchy based on the transparency of inputs used to establish fair value.
Level 3 financial assets as a proportion of total financial assets, carried at fair value on a recurring basis was 5% as of December 31, 2019 as listed
below:

Financial assets measured at fair value(Excluding derivative assets)
Derivative assets
Total

Level 1

Level 2

Billions of yen
December 31, 2019
Counterparty
andCash Collateral
Level 3
Netting¥8,01719¥8,036¥ 9,542
13,937¥23,479

¥ 759
130
¥ 889

¥
¥

—
(13,145)(13,145)

Total¥18,318941¥19,259

Please refer to Item 4. Financial Information, 1. Consolidated Financial Statements, Note 2. “Fair value measurements” for further information.
5(3) Trading Activities
Assets and liabilities for trading purposes
Please refer to Item 4. Financial Information, 1. Consolidated Financial Statements, Note 2. “Fair value measurements” and Note 3. “Derivative
instruments and hedging activities” regarding the balances of assets and liabilities for trading purposes.
Risk management of trading activity
We adopt Value at Risk (“VaR”) for measurement of market risk arising from trading activity.
1) Assumptions on VaR•

Confidence Level: 99%•

Holding period: One day•

Consideration of price movement among the products

2) Records of VaRMarch 31, 2019

EquityInterest rate
Foreign exchange
Subtotal
Diversification benefit
VaR¥

Billions of yen
December 31, 2019

1.1
2.8
1.9
5.8
(1.3)
4.5

¥

¥

1.4
4.8
2.5
8.7
(2.3)
6.3

¥

Billions of yen
Nine months ended December 31, 2019
Maximum(1)Minimum(1)Average(1)

VaR
(1)

¥

6.9

Represents the maximum, average and minimum VaR based on all daily calculations over the nine-month period.
6

¥

3.6

¥

5.4

(4) Deferred Tax Assets Information
Details of deferred tax assets and liabilities
The following table presents details of deferred tax assets and liabilities reported within Other assets—Other and Other liabilities, respectively, inthe consolidated balance sheets as of December 31, 2019.
Millions of yen
December 31, 2019

Deferred tax assets
Depreciation, amortization and valuation of fixed assets
Investments in subsidiaries and affiliates
Valuation of financial instruments
Accrued pension and severance costs
Other accrued expenses and provisions
Operating losses
Lease liabilities
Other
Gross deferred tax assets
Less—Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Investments in subsidiaries and affiliates
Valuation of financial instruments
Undistributed earnings of foreign subsidiaries
Valuation of fixed assets
Right-of-use assets
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)¥¥

17,447
2,768
57,60529,51850,190343,102
49,001
8,075
557,706(414,716)
142,990
86,931
43,294
2,376
8,758
48,817
1,976
192,152(49,162)

Calculation method of deferred tax assets
In accordance with U.S. GAAP, we recognize deferred tax assets to the extent we believe that it is more likely than not that a benefit will be
realized. A valuation allowance is provided for tax benefits available to us, which are not deemed more likely than not to be realized.
7

(5) Qualitative Disclosures about Market Risk
1) Risk Management
Nomura defines risks as (i) the potential erosion of Nomura’s capital base due to unexpected losses arising from risks to which its business
operations are exposed, such as market risk, credit risk, operational risk and model risk, (ii) liquidity risk, the potential lack of access to funds or higher
cost of funding than normal levels due to a deterioration in Nomura’s creditworthiness or deterioration in market conditions, and (iii) business risk, thepotential failure of revenues to cover costs due to a deterioration in the earnings environment or a deterioration in the efficiency or effectiveness of its
business operations.
A fundamental principle established by Nomura is that all employees shall regard themselves as principals of risk management and appropriately
manage these risks. Nomura seeks to promote a culture of proactive risk management throughout all levels of the organization and to limit risks to theconfines of its risk appetite. The risk management framework that Nomura uses to manage these risks consists of its risk appetite, risk management
governance and oversight, the management of financial resources, the management of all risk classes, and processes to measure and control risks.
2) Global Risk Management Structure
The Board of Directors has established the “Structure for Ensuring Appropriate Business of Nomura Holdings, Inc.” as the Company’s basic
principle and set up a framework for managing the risk of loss based on this. In addition, they are continuously making efforts to improve, strengthen
and build up our risk management capabilities under this framework. Moreover, the Group Integrated Risk Management Committee (“GIRMC”), upondelegation from the Executive Management Board (“EMB”), has established the Risk Management Policy, describing Nomura’s overall risk
management framework including the fundamental risk management principles followed by Nomura.
Market Risk Management
Market risk is the risk of loss arising from fluctuations in the value of financial assets and liabilities (including off-balance sheet items) due tofluctuations in market factors (interest rates, foreign exchange rates, prices of securities and others). Effective management of market risk requires theability to analyze a complex and evolving portfolio in a constantly changing global market environment, identify problematic trends and ensure thatappropriate action is taken in a timely manner.
Nomura uses a variety of statistical risk measurement tools to assess and monitor market risk on an ongoing basis, including, but not limited to,
VaR, Stressed VaR (“SVaR”) and Incremental Risk Charge (“IRC”). In addition, Nomura uses sensitivity analysis and stress testing to measure andanalyze its market risk. Sensitivities are measures used to show the potential changes to a portfolio due to standard moves in market risk factors. They
are specific to each asset class and cannot usually be aggregated across risk factors. Stress testing enables the analysis of portfolio risks or tail risks,
including non-linear behaviors and can be aggregated across risk factors at any level of the group hierarchy, from group level to business division, units
or desk levels. Market risk is monitored against a set of approved limits, with daily reports and other management information provided to the business
units and senior management.
Credit Risk Management
Credit risk is the risk of loss arising from an obligor’s default, insolvency or administrative proceeding which results in the obligor’s failure tomeet its contractual obligations in accordance with agreed terms. This includes both on and off-balance sheet exposures. It is also the risk of loss arisingthrough a credit valuation adjustment (“CVA”) associated with deterioration in the creditworthiness of a counterparty.
Nomura manages credit risk on a global basis and on an individual Nomura legal entity basis.
The measurement, monitoring and management of credit risk at Nomura are governed by a set of global policies and procedures. Credit Risk
Management (“CRM”), a global function within the Risk Management Division, is responsible for the implementation and maintenance of these policies
and procedures. These policies are authorized by the GIRMC and/or Global Risk Strategic Committee (“GRSC”), prescribe the basic principles of credit
risk management and set delegated authority which enables CRM personnel to set Credit limits.
Credit risk is managed by CRM together with various global and regional risk committees. This ensures transparency of material credit risks andcompliance with established credit limits, the approval of material extensions of credit and the escalation of risk concentrations to appropriate senior
management.
8

CRM operates as a credit risk control function within the Risk Management Division, reporting to the Chief Risk Officer. The process for
managing credit risk at Nomura includes:•

Evaluation of likelihood that a counterparty defaults on its payments and obligations;•

Assignment of internal credit ratings to all active counterparties;•

Approval of extensions of credit and establishment of credit limits;•

Measurement, monitoring and management of Nomura’s current and potential future credit exposures;•

Setting credit terms in legal documentation;•

Use of appropriate credit risk mitigants including netting, collateral and hedging.

For regulatory capital calculation purposes, Nomura has been applying the Foundation Internal Rating Based Approach in calculating credit risk
weighted asset since the end of March 2011. The Standardized Approach is applied to certain business units or asset types, which are considered
immaterial to the calculation of credit risk weighted assets.
The exposure calculation model used for counterparty credit risk management has also been used for the Internal Model Method based exposure
calculation for regulatory capital reporting purposes since the end of December 2012.
Operational Risk Management
Operational risk is the risk of loss arising from inadequate or failed internal processes, people, and systems or from external events. It excludes
strategic risk (the risk of loss as a result of poor strategic business decisions), but includes the risk of breach of legal and regulatory requirements, andthe risk of damage to Nomura’s reputation if caused by an operational risk.
Nomura adopts the industry standard “Three Lines of Defence” for the management of operational risk, comprising the following elements:
1)

1st Line of Defence: The business which owns and manages its risks

2)

2nd Line of Defence: The Operational Risk Management (“ORM”) function, which co-ordinates Nomura’s operational risk frameworkand its implementation, and provides challenge to the 1st Line of Defence

3)

3rd Line of Defence: Internal Audit, who provide independent assurance

An Operational Risk Management Framework has been established in order to allow Nomura to identify, assess, manage, monitor and report on
operational risk. The GIRMC, with delegated authority from the EMB has formal oversight over the management of operational risk.
Nomura uses the Standardized Approach for calculating regulatory capital for operational risk. This involves using a three-year average of grossincome allocated to business lines, which is multiplied by a fixed percentage (“Beta Factor”) determined by the Financial Services Agency of Japan(“FSA”), to establish the amount of required operational risk capital.
Model Risk Management
Nomura uses risk models for regulatory and economic capital calculations and valuation models for pricing and sensitivity calculations ofpositions. Model risk is the risk of loss arising from model errors or incorrect or inappropriate model application with regard to valuation models andrisk models. Errors can occur at any point from model assumptions through to implementation. In addition, the quality of model outputs depends on thequality of model parameters and any input data. Even a fundamentally sound model producing accurate outputs consistent with the design objective of
the model may exhibit high model risk if it is misapplied or misused. To address these risks, Nomura has established its model risk appetite, which
includes a qualitative statement and a quantitative measure. The qualitative statement for model risk specifies that it is expected that models are usedcorrectly and appropriately. The quantitative risk appetite measure is based on Nomura’s assessment of the potential loss arising from model risk.
Nomura has documented policies and procedures in place, approved by the GIRMC and/or GRSC, which define the process and validation
requirements for implementing changes to valuation and risk models. Before these models are put into official use, the Model Validation Group(“MVG”) is responsible for validating their integrity and comprehensiveness independently from those who design and build them. All models are also
subject to an annual re-approval process by MVG to ensure they remain suitable.
In addition, a Model Performance Monitoring process has been established to identify and assess specific events, that can indicate that a Model is
not performing as it should or is potentially unsuitable and to determine what actions (for example, additional validation work) might be necessary. Forchanges with an impact above certain materiality thresholds, model approval is required.
9(6) Liquidity and Capital Resources
Funding and Liquidity Management
Overview
We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding
than normal levels due to deterioration of the Nomura Group’s creditworthiness or deterioration in market conditions. This risk could arise from
Nomura-specific or market-wide events such as inability to access the secured or unsecured debt markets, a deterioration in our credit ratings, a failure
to manage unplanned changes in funding requirements, a failure to liquidate assets quickly and with minimal loss in value, or changes in regulatory
capital restrictions which may prevent the free flow of funds between different group entities. Our global liquidity risk management policy is based on
liquidity risk appetite formulated by the Executive Management Board (“EMB”). Nomura’s liquidity risk management, under market-wide stress and in
addition, under Nomura-specific stress, seeks to ensure enough continuous liquidity to meet all funding requirements and unsecured debt obligations
across one year and 30-day periods, respectively, without raising funds through unsecured funding or through the liquidation of assets. We are required
to meet regulatory notice on the liquidity coverage ratio issued by the FSA.
We have in place a number of liquidity risk management frameworks that enable us to achieve our primary liquidity objective. These frameworks
include (1) Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio; (2) Utilization of Unencumbered Assets as Part of Our
Liquidity Portfolio; (3) Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets;(4) Management of Credit Lines to Nomura Group Entities; (5) Implementation of Liquidity Stress Tests; and (6) Contingency Funding Plan.
Our EMB has the authority to make decisions concerning group liquidity management. The Chief Financial Officer (“CFO”) has the operational
authority and responsibility over our liquidity management based on decisions made by the EMB.
1. Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio.
We centrally control residual cash held at Nomura Group entities for effective liquidity utilization purposes. As for the usage of funds, the CFO
decides the maximum amount of available funds, provided without posting any collateral, for allocation within Nomura and the EMB allocates the funds
to each business division. Global Treasury monitors usage by businesses and reports to the EMB.
In order to enable us to transfer funds smoothly between group entities, we limit the issuance of securities by regulated broker-dealers or banking
entities within the Nomura Group and seek to raise unsecured funding primarily through the Company or through unregulated subsidiaries. The primary
benefits of this strategy include cost minimization, wider investor name recognition and greater flexibility in providing funding to various subsidiaries
across the Nomura Group.
To meet any potential liquidity requirement, we maintain a liquidity portfolio, managed by Global Treasury apart from other assets, in the form of
cash and highly liquid, unencumbered securities that may be sold or pledged to provide liquidity. As of December 31, 2019, our liquidity portfolio was¥5,303.2 billion which sufficiently met liquidity requirements under the stress scenarios.
2. Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio.
In addition to our liquidity portfolio, we had unencumbered assets comprising mainly of unpledged trading assets that can be used as an additionalsource of secured funding. Global Treasury monitors other unencumbered assets and can, under a liquidity stress event when the contingency funding
plan has been invoked, monetize and utilize the cash generated as a result. The aggregate of our liquidity portfolio and other unencumbered assets was
sufficient against our total unsecured debt maturing within one year.
3. Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets
We seek to maintain a surplus of long-term debt and equity above the cash capital requirements of our assets. We also seek to achieve
diversification of our funding by market, instrument type, investors, currency, and staggered maturities in order to reduce unsecured refinancing risk.
We diversify funding by issuing various types of debt instruments—these include both structured loans and structured notes with returns linked tointerest rates, currencies, equities, commodities, or related indices. We issue structured loans and structured notes in order to increase the diversity ofour debt instruments. We typically hedge the returns we are obliged to pay with derivatives and/or the underlying assets to obtain funding equivalent toour unsecured long-term debt.
10

3.1 Short-Term Unsecured Debt
Our short-term unsecured debt consists of short-term bank borrowings (including long-term bank borrowings maturing within oneyear), other loans, commercial paper, deposit at banking entities, certificates of deposit and debt securities maturing within one year. Deposits
at banking entities and certificates of deposit comprise customer deposits and certificates of deposit of our banking subsidiaries. Short-term
unsecured debt includes the current portion of long-term unsecured debt.
The following table presents an analysis of our short-term unsecured debt by type of financial liability as of March 31, 2019 andDecember 31, 2019.
Billions of yen
March 31, 2019
December 31, 2019

Short-term bank borrowings
Other loans
Commercial paper
Deposits at banking entities
Certificates of deposit
Debt securities maturing within one year
Total short-term unsecured debt

¥

¥

107.0
231.4
313.0
1,149.1
11.1
707.2
2,518.8

¥

¥

135.7
158.5
473.7
1,052.9
7.1
967.2
2,795.1

3.2 Long-Term Unsecured Debt
We meet our long-term capital requirements and also achieve both cost-effective funding and an appropriate maturity profile byroutinely funding through long-term debt and diversifying across various maturities and currencies.
Our long-term unsecured debt includes senior and subordinated debt issued through U.S. registered shelf offerings and our U.S.
registered medium-term note programs, our Euro medium-term note programs, registered shelf offerings in Japan and various other debt
programs.
As a globally competitive financial services group in Japan, we have access to multiple global markets and major funding centers. The
Company, Nomura Securities Co. Ltd., Nomura Europe Finance N.V., Nomura Bank International plc, and Nomura International Funding
Pte. Ltd. are the main group entities that borrow externally, issue debt instruments and engage in other funding activities. By raising funds tomatch the currencies and liquidities of our assets or by using foreign exchange swaps as necessary, we pursue optimization of our funding
structures.
We use a wide range of products and currencies to ensure that our funding is efficient and well diversified across markets and investor
types. Our unsecured senior debt is mostly issued without financial covenants, such as covenants related to adverse changes in our credit
ratings, cash flows, results of operations or financial ratios, which could trigger an increase in our cost of financing or accelerate repayment of
the debt.
The following table presents an analysis of our long-term unsecured debt by type of financial liability as of March 31, 2019 andDecember 31, 2019.
Billions of yen
March 31, 2019
December 31, 2019

Long-term deposits at banking entities
Long-term bank borrowings
Other loans
Debt securities(1)Total long-term unsecured debt
(1)

¥

¥

232.5
2,727.5
87.9
3,435.6
6,483.5

¥

¥

177.1
2,627.3
82.9
3,357.9
6,245.2

Excludes long-term debt securities issued by consolidated special purpose entities and similar entities that meet the definition ofvariable interest entities under ASC 810 “Consolidation” and secured financing transactions recognized within Long-term borrowings
as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860 “Transfer
and Servicing.”
11

3.3 Maturity Profile
We also seek to maintain an average maturity for our plain vanilla debt securities and borrowings greater than or equal to three years. A
significant amount of our structured loans and structured notes are linked to interest rates, currencies, equities, commodities, or related
indices. These maturities are evaluated based on internal models and monitored by Global Treasury. Where there is a possibility that these
may be called prior to their scheduled maturity date, maturities are based on our internal stress option adjusted model. The model values theembedded optionality under stress market conditions in order to determine when the debt securities or borrowings are likely to be called.
3.4 Secured Funding
We typically fund our trading activities through secured borrowings, repurchase agreements and Japanese “Gensaki Repo” transactions.
We believe such funding activities in the secured markets are more cost-efficient and less credit-rating sensitive than financing in theunsecured market. Our secured funding capabilities depend on the quality of the underlying collateral and market conditions. While we haveshorter term secured financing for highly liquid assets, we seek longer terms for less liquid assets. We also seek to lower the refinancing risksof secured funding by transacting with a diverse group of global counterparties and delivering various types of securities collateral. In
addition, we reserve an appropriate level of liquidity portfolio for the refinancing risks of secured funding maturing in the short term for lessliquid assets. For more detail of secured borrowings and repurchase agreements, see Note 5 “Collateralized transactions” in our consolidated
financial statements.
4. Management of Credit Lines to Nomura Group Entities
We maintain and expand credit lines to Nomura Group entities from other financial institutions to secure stable funding. We ensure that thematurity dates of borrowing agreements are distributed evenly throughout the year in order to prevent excessive maturities in any given period.
5. Implementation of Liquidity Stress Tests
We maintain our liquidity portfolio and monitor the sufficiency of our liquidity based on an internal model which simulates changes in cash
outflow under specified stress scenarios to comply with our above mentioned liquidity management policy.
We assess the liquidity requirements of the Nomura Group under various stress scenarios with differing levels of severity over multiple time
horizons. We evaluate these requirements under Nomura-specific and broad market-wide events, including potential credit rating downgrades at theCompany and subsidiary levels. We call this risk analysis our Maximum Cumulative Outflow (“MCO”) framework.
The MCO framework is designed to incorporate the primary liquidity risks for Nomura and models the relevant future cash flows in the following
two primary scenarios:•

Stressed scenario—To maintain adequate liquidity during a severe market-wide liquidity event without raising funds through unsecured
financing or through the liquidation of assets for a year; and•Acute stress scenario—To maintain adequate liquidity during a severe market-wide liquidity event coupled with credit concerns regarding
Nomura’s liquidity position, without raising funds through unsecured funding or through the liquidation of assets for 30 days.

We assume that Nomura will not be able to liquidate assets or adjust its business model during the time horizons used in each of these scenarios.
The MCO framework therefore defines the amount of liquidity required to be held in order to meet our expected liquidity needs in a stress event to alevel we believe appropriate based on our liquidity risk appetite.
As of December 31, 2019, our liquidity portfolio exceeded net cash outflows under the stress scenarios described above.
We constantly evaluate and modify our liquidity risk assumptions based on regulatory and market changes. The model we use in order to simulate
the impact of stress scenarios includes the following assumptions:•

No liquidation of assets;•

No ability to issue additional unsecured funding;•

Upcoming maturities of unsecured debt (maturities less than one year);•

Potential buybacks of our outstanding debt;•

Loss of secured funding lines particularly for less liquid assets;•

Fluctuation of funding needs under normal business circumstances;
12•Cash deposits and free collateral roll-off in a stress event;•

Widening of haircuts on outstanding repo funding;•

Additional collateralization requirements of clearing banks and depositories;•

Drawdown on loan commitments;•

Loss of liquidity from market losses;•

Assuming a two-notch downgrade of our credit ratings, the aggregate fair value of assets that we would be required to post as additional
collateral in connection with our derivative contracts; and•Legal and regulatory requirements that can restrict the flow of funds between entities in the Nomura Group.

6. Contingency Funding Plan
We have developed a detailed contingency funding plan to integrate liquidity risk control into our comprehensive risk management strategy and toenhance the quantitative aspects of our liquidity risk control procedures. As a part of our Contingency Funding Plan (“CFP”), we have developed an
approach for analyzing and quantifying the impact of any liquidity crisis. This allows us to estimate the likely impact of both Nomura-specific andmarket-wide events; and specifies the immediate action to be taken to mitigate any risk. The CFP lists details of key internal and external parties to becontacted and the processes by which information is to be disseminated. This has been developed at a legal entity level in order to capture specific cash
requirements at the local level—it assumes that our parent company does not have access to cash that may be trapped at a subsidiary level due toregulatory, legal or tax constraints. We periodically test the effectiveness of our funding plans for different Nomura-specific and market-wide events.
We also have access to central banks including, but not exclusively, the Bank of Japan, which provide financing against various types of securities.
These operations are accessed in the normal course of business and are an important tool in mitigating contingent risk from market disruptions.
Liquidity Regulatory Framework
In 2008, the Basel Committee published “Principles for Sound Liquidity Risk Management and Supervision.” To complement these principles, theCommittee has further strengthened its liquidity framework by developing two minimum standards for funding liquidity. These standards have beendeveloped to achieve two separate but complementary objectives.
The first objective is to promote short-term resilience of a financial institution’s liquidity risk profile by ensuring that it has sufficient high-quality
liquid assets to survive a significant stress scenario lasting for 30 days. The Committee developed the Liquidity Coverage Ratio (“LCR”) to achieve thisobjective.
The second objective is to promote resilience over a longer time horizon by creating additional incentives for financial institutions to fund theiractivities with more stable sources of funding on an ongoing basis. The Net Stable Funding Ratio (“NSFR”) has a time horizon of one year and has beendeveloped to provide a sustainable maturity structure of assets and liabilities.
These two standards are comprised mainly of specific parameters which are internationally “harmonized” with prescribed values. Certain
parameters, however, contain elements of national discretion to reflect jurisdiction-specific conditions.
In Japan, the regulatory notice on the LCR, based on the international agreement issued by the Basel Committee with necessary national revisions,
was published by Financial Services Agency (on October 31, 2014). The notices have been implemented since the end of March 2015 with phased-inminimum standards. Average of Nomura’s LCRs for the three months ended December 31, 2019 was 192.3%, and Nomura was compliant withrequirements of the above notices. As for the NSFR, it is not yet implemented in Japan.
Cash Flows
Cash, cash equivalents, restricted cash and restricted cash equivalents’ balance as of December 31, 2018 and as of December 31, 2019 were
¥2,439.1 billion and ¥3,152.6 billion, respectively. Cash flows from operating activities for the nine months ended December 31, 2018 were outflows of¥440.8 billion due primarily to an increase in Trading assets and private equity investments and for the comparable period in 2019 were inflows of¥419.3 billion due primarily to an increase in Trading liabilities. Cash flows from investing activities for the nine months ended December 31, 2018
were outflows of ¥2.9 billion due primarily to Increase in loans receivable at banks, net and for the comparable period in 2019 were inflows of¥217.8 billion due primarily to Decrease in investments in affiliated companies, net. Cash flows from financing activities for the nine months ended
December 31, 2018 were inflows of ¥483.2 billion due primarily to an increase in Long-term borrowings and for the comparable period in 2019 were
outflows of ¥159.9 billion due primarily to a decrease in Deposits received at banks, net.
13

Balance Sheet and Financial Leverage
Total assets as of December 31, 2019, were ¥46,242.3 billion, an increase of ¥5,272.9 billion compared with ¥40,969.4 billion as of March 31,
2019, primarily due to an increase in Trading assets and Securities purchased under agreements to resell. Total liabilities as of December 31, 2019,were ¥43,452.7 billion, an increase of ¥5,164.1 billion compared with ¥38,288.6 billion as of March 31, 2019, primarily due to an increase in Securities
sold under agreements to repurchase. NHI shareholders’ equity as of December 31, 2019, was ¥2,701.2 billion, an increase of ¥70.1 billion comparedwith ¥2,631.1 billion as of March 31, 2019, primarily due to an increase in Retained earnings.
We seek to maintain sufficient capital at all times to withstand losses due to extreme market movements. The EMB is responsible for
implementing and enforcing capital policies. This includes the determination of our balance sheet size and required capital levels. We continuously
review our equity capital base to ensure that it can support the economic risk inherent in our business. There are also regulatory requirements forminimum capital of entities that operate in regulated securities or banking businesses.
As leverage ratios are commonly used by other financial institutions similar to us, we voluntarily provide a Leverage ratio and Adjusted leverage
ratio primarily for benchmarking purposes so that users of our annual report can compare our leverage against other financial institutions. Adjusted
leverage ratio is a non-GAAP financial measure that Nomura considers to be a useful supplemental measure of leverage.
The following table sets forth NHI shareholders’ equity, total assets, adjusted assets and leverage ratios:
Billions of yen, except ratios
March 31, 2019
December 31, 2019

NHI shareholders’ equity
Total assets
Adjusted assets(1)Leverage ratio(2)Adjusted leverage ratio(3)¥2,631.1
40,969.4
23,662.5
15.6x
9.0x

¥

2,701.2
46,242.3
26,687.4
17.1x
9.9x

(1) Represents total assets less Securities purchased under agreements to resell and Securities borrowed. Adjusted assets is a non-GAAP financial
measure and is calculated as follows:
Billions of yen
March 31, 2019
December 31, 2019

Total assets
Less:
Securities purchased under agreements to resell
Securities borrowed
Adjusted assets
(2)
(3)

¥

40,969.4¥

13,194.5
4,112.4
23,662.5¥

46,242.3¥

15,632.8
3,922.1
26,687.4

Equals total assets divided by NHI shareholders’ equity.
Equals adjusted assets divided by NHI shareholders’ equity.

Total assets increased by 12.9%, primarily due to an increase in Trading assets and Securities purchased under agreements to resell. NHI
shareholders’ equity increased by 2.7%, primarily due to an increase in Retained earnings. As a result, our leverage ratio rose from 15.6 times as ofMarch 31, 2019 to 17.1 times as of December 31, 2019.
Adjusted assets increased primarily due to an increase in Trading assets. As a result, our adjusted leverage ratio rose from 9.0 times as ofMarch 31, 2019 to 9.9 times as of December 31, 2019.
14

Consolidated Regulatory Capital Requirements
The FSA established the “Guideline for Financial Conglomerates Supervision” (“Financial Conglomerates Guideline”) in June 2005 and set out
the rules on consolidated regulatory capital. We started monitoring our consolidated capital adequacy ratio in accordance with the Financial
Conglomerates Guideline from April 2005.
The Company has been assigned by the FSA as a Final Designated Parent Company who must calculate a consolidated capital adequacy ratio
according to the Capital Adequacy Notice on Final Designated Parent Company in April 2011. Since then, we have been calculating our consolidated
capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final
Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III since then. We have calculated a Basel III-based consolidated
capital adequacy ratio from the end of March 2013. Basel 2.5 includes significant change in calculation method of market risk and Basel III includes
redefinition of capital items for the purpose of requiring higher quality of capital and expansion of the scope of credit risk-weighted assets calculation.
15

In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company, our consolidated capital adequacy ratio iscurrently calculated based on the amounts of common equity Tier 1 capital, Tier 1 capital (sum of common equity Tier 1 capital and additional Tier 1
capital), total capital (sum of Tier 1 capital and Tier 2 capital), credit risk-weighted assets, market risk and operational risk. As of December 31, 2019,
our common equity Tier 1 capital ratio (common equity Tier 1 capital divided by risk-weighted assets) was 18.06%, Tier 1 capital ratio (Tier 1 capital
divided by risk-weighted assets) was 19.25% and consolidated capital adequacy ratio (total capital divided by risk-weighted assets) was 19.58% and wewere in compliance with the requirement for each ratio set out in the Capital Adequacy Notice on Final Designated Parent Company (required level asof December 31, 2019 was 7.61% for common equity Tier 1 capital ratio, 9.11% for Tier 1 capital ratio and 11.11% for consolidated capital adequacy
ratio).
The following table presents the Company’s consolidated capital adequacy ratios as of December 31, 2019.
Billions of yen, except ratios
December 31, 2019

Common equity Tier 1 capital
Tier 1 capital
Total capital
Risk-Weighted Assets
Credit risk-weighted assets
Market risk equivalent assets
Operational risk equivalent assets
Total risk-weighted assets
Consolidated Capital Adequacy Ratios
Common equity Tier 1 capital ratio
Tier 1 capital ratio
Consolidated capital adequacy ratio¥¥

2,534.3
2,701.1
2,747.2
7,156.8
4,305.6
2,565.7
14,028.1
18.06%
19.25%
19.58%

Consolidated Leverage Ratio Requirements
In March 2019, the FSA set out requirements for the calculation and disclosure and minimum requirement of 3% of a consolidated leverage ratio,
and the publication of “Notice of the Establishment of Standards for Determining Whether the Adequacy of Leverage, the Supplementary Measure to
the Adequacy of Equity Capital of a Final Designated Parent Company and its Subsidiary Corporations, etc. is Appropriate Compared to the Assets
Held by the Final Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article 57-17 of the Financial Instruments andExchange Act” (2019 FSA Regulatory Notice No. 13; “Notice on Consolidated Leverage Ratio”), through amendments to revising “Specification of
items which a final designated parent company should disclose on documents to show the status of its sound management” (2010 FSA Regulatory
Notice No. 132; “Notice on Pillar 3 Disclosure”). We started calculating and disclosing a consolidated leverage ratio from March 31, 2015 inaccordance with the Notices. And we have started calculating a consolidated leverage ratio from March 31, 2019 in accordance with the Notice on Pillar
3 Disclosure, Notice on Consolidated Leverage Ratio and other related Notices. Management receives and reviews this consolidated leverage ratio on aregular basis. As of December 31, 2019, our consolidated leverage ratio was 4.84%.
Credit Ratings
On August 2, 2019, S&P Global Ratings downgraded the long-term issuer credit rating of the Company to BBB+ from A-. S&P Global Ratings
also downgraded the long-term issuer credit rating of Nomura Securities Co., Ltd. (“NSC”) to A- from A, and the short-term credit rating of NSC to A-2
from A-1.
(7) Current Challenges
The new challenges on operating and financing activities that arose during the nine months ended December 31, 2019 and until the submission
date of this Quarterly Securities Report are as follows:
In March, 2019, an incident occurred whereby information related to the listing and delisting criteria for the upper market currently under review
by the Tokyo Stock Exchange was handled improperly from the viewpoint of ensuring fair and sound markets in the course of communicating
information at Nomura Securities Co., Ltd.
On May 28, 2019, the Financial Services Agency of Japan (“FSA”) issued a business improvement order against Nomura Holdings, Inc. andNomura Securities Co., Ltd. as for management systems of information control.
16

On May 24, 2019, senior management submitted a remediation action plan including the following three points to the Board of
Directors that was approved on this day and announced.
I. Embed a conduct risk mindset that fulfills the role the public expects financial institutions to play, and create an environment to maintain and improveself-discipline
II. Reorganize the Wholesale Equities business to ensure that our people are incentivized to contribute to the development of the capital markets
III. Establish a framework to tightly control not only corporate confidential information, but also non-public information that could materially affectinvestment decisions
On June 3, 2019, we submitted reports on our business improvement measures to the FSA.
As for the progress of this Remediation Action Plan, top management itself review about the progress of this Remediation Action Plan in the
Executive Management Board and discuss the effectiveness to amend it if necessary. And the progress of this Remediation Action Plan has been
periodically reported to the Board of Directors. On December 3 2019, we published the Nomura Group Code of Conduct, which sets out guidelines for
Nomura Group directors, officers and employees to uphold the highest standards of ethics and integrity.
By fully implementing the remediation action plan, we will further strengthen our internal control framework and work together as one firm toregain the trust of our clients and all other concerned parties.
3. Significant Contracts
Not applicable.
17

Item 3. Company Information
1. Share Capital Information(1) Total Number of Shares
A. Number of Authorized Share Capital
Authorized Share Capital(shares)Type

Common stock
Class 1 preferred stock
Class 2 preferred stock
Class 3 preferred stock
Class 4 preferred stock
Total

6,000,000,000
200,000,000
200,000,000
200,000,000
200,000,000
6,000,000,000

The “Authorized Share Capital” is stated by the type of stock and the “Total” is the number of authorized share capital as referred in the Articles ofIncorporation.
B. Issued Shares
Number ofIssued Shares as ofDecember 31, 2019

Type

Common stock

3,493,562,601

Total

3,493,562,601

(1)
(2)

Number ofIssued Shares as ofFebruary 14, 2020

Trading Markets

3,493,562,601 Tokyo Stock Exchange(2)Nagoya Stock Exchange(2)Singapore Exchange
New York Stock Exchange
3,493,562,601—

Details

1 unit is 100 shares

Shares that may have increased from exercise of stock options between February 1, 2020 and the submission date (February 14, 2020) are notincluded in the number of issued shares as of the submission date.
Listed on the First Section of each stock exchange.
(2) Stock Acquisition Rights
A. Stock option
Not applicable in this quarter.
B. Other stock acquisition rights
Not applicable in this quarter.
18—

(3) Exercise of Moving Strike Bonds with Subscription WarrantNone(4) Changes in Issued Shares, Shareholders’ Equity, etc.
Millions of yen

Increase/Decreaseof Issued Shares

Date

December 31, 2019

—

Total
Issued Shares

Increase/Decreaseof Shareholders’Equity—Common stock

Shareholders’Equity—Common stock

Increase/Decrease of
Additional
capital reserve

Additional
capital reserve—594,493—559,676

3,493,562,601(5) Major Shareholders
Not applicable as this is the third quarter.
(6) Voting Rights
The “Voting Rights” as of the end of the current third quarter is presented as of September 30, 2019, the most recent cutoff date, because thenumber of beneficiary shareholders as of December 31, 2019, could not be ascertained.
A. Outstanding Shares

Number of Shares

Stock without voting right
Stock with limited voting right (Treasury stocks, etc.)
Stock with limited voting right (Others)
Stock with full voting right (Treasury stocks, etc.)

Stock with full voting right (Others)
Shares less than 1 unit

(Treasury Stocks)
Common stock(Crossholding Stocks)
Common stock
Common stock
Common stock

Total Shares Issued
Voting Rights of Total Shareholders

As of September 30, 2019
Number of Votes

Description

—
—
—

—
—
—

—
—
—

261,367,900——

1,005,000
3,229,611,900
1,577,801—
32,296,119—

3,493,562,601——
32,296,119——
Shares less than 1 unit
(100 shares)——

Stock with full voting right (Others) includes 2,000 shares held by Japan Securities Depository Center, Inc. Shares less than 1 unit includes 50 treasury
stocks.
B. Treasury Stocks

Name(Treasury Stocks)
Nomura Holdings, Inc.
(Crossholding Stocks)
Nomura Real Estate Development Co., Ltd.
Nomura Japan Corporation.

Address

1-9-1, Nihonbashi, Chuo-ku,
Tokyo, Japan
1-26-2, Nishishinjuku,
Shinjuku-ku, Tokyo, Japan
2-1-3, Nihonbashihoridomecho,
Chuo-ku, Tokyo, Japan

Total
19

Directly
heldshares

As of September 30, 2019
Indirectly
heldshares
Total

Percentage ofIssued Shares(%)

261,367,900—

261,367,900

7.48

1,000,000—

1,000,000

0.03

5,000
262,372,900

—
—

5,000
262,372,900

0.00
7.51

Item 4. Financial Information
12

Preparation Method of Consolidated Financial Statements(1)

The consolidated financial statements have been prepared in accordance with accounting principles, procedures, and presentations which
are required in order to issue American Depositary Shares, i.e., U.S. generally accepted accounting principles, pursuant to Article 95 of“Regulations Concerning the Terminology, Forms and Preparation Methods of Quarterly Consolidated Financial Statements” (Cabinet
Office Ordinance No. 64, 2007).

(2)

The consolidated financial statements have been prepared by making necessary adjustments to the financial statements of eachconsolidated company which were prepared in accordance with the accounting principles generally accepted in each country. Suchadjustments have been made to comply with the principles noted in (1) above.

Quarterly Review Certificate
Under Article 193-2 Section 1 of the Financial Instruments and Exchange Act, Ernst & Young ShinNihon LLC performed a quarterly
review of the consolidated financial statements for the nine and three months ended December 31, 2019.
<Note>
Although Ernst & Young ShinNihon LLC reported that they applied limited procedures in accordance with professional standards in Japanon the interim consolidated financial statements, prepared in Japanese for the nine and three months ended December 31, 2019, they havenot performed any such limited procedures nor have they performed an audit on the English translated version of the consolidated
financial statements for the above-mentioned periods which are included in this report on Form 6-K.
20

1. Consolidated Financial Statements(1) Consolidated Balance Sheets (UNAUDITED)Millions of yen
March 31,
December 31,
2019
2019

Notes

ASSETSCash and cash deposits:
Cash and cash equivalents
Time deposits
Deposits with stock exchanges and other segregated cash
Total cash and cash deposits
Loans and receivables:
Loans receivable (including ¥664,585 million and ¥814,580 million measured at fair value by applying
the fair value option as of March 31, 2019 and December 31, 2019, respectively)
Receivables from customers (including ¥8,318 million and ¥4,191 million measured at fair value by
applying the fair value option as of March 31, 2019 and December 31, 2019, respectively)
Receivables from other than customers
Allowance for doubtful accounts
Total loans and receivables
Collateralized agreements:
Securities purchased under agreements to resell (including ¥647,545 million and ¥542,587 million
measured at fair value by applying the fair value option as of March 31, 2019 and December 31,
2019, respectively)
Securities borrowed
Total collateralized agreements
Trading assets and private equity investments:
Trading assets (including securities pledged as collateral of ¥5,200,360 million and ¥5,242,264 million
as of March 31, 2019 and December 31, 2019, respectively; including ¥10,273 million and¥10,844 million measured at fair value by applying the fair value option as of March 31, 2019 andDecember 31, 2019, respectively)
Private equity investments (including ¥4,047 million and ¥5,873 million measured at fair value by
applying the fair value option as of March 31, 2019 and December 31, 2019, respectively)
Total trading assets and private equity investments
Other assets:
Office buildings, land, equipment and facilities (net of accumulated depreciation and amortization of¥416,052 million and ¥417,071 million as of March 31, 2019 and December 31, 2019, respectively)
Non-trading debt securities
Investments in equity securities
Investments in and advances to affiliated companies
Other (including ¥151,233 million and ¥146,553 million measured at fair value by applying the fairvalue option as of March 31, 2019 and December 31, 2019, respectively)
Total other assets
Total assets
21¥

2,686,659
289,753
285,457
3,261,869¥

3,152,017
266,708
316,822
3,735,547*2, 7

2,544,218

2,943,499*2, 4

449,706
892,283(4,169)3,882,038

406,029
513,962(6,069)3,857,421*2

13,194,543
4,112,416
17,306,959

15,632,816
3,922,106
19,554,922*2, 3

14,355,712

16,672,458*230,077
14,385,789

39,112
16,711,570

349,365
460,661
138,447
436,220

460,101
465,999
129,940
362,406

748,091
2,132,784¥ 40,969,439

964,428
2,382,874¥ 46,242,334

*7

*2
*2

*2, 9

(1) Consolidated Balance Sheets—(Continued) (UNAUDITED)Millions of yen
March 31,
December 31,
2019
2019

Notes

LIABILITIES AND EQUITY
Short-term borrowings (including ¥362,612 million and ¥419,068 million measured at fair value by applying
the fair value option as of March 31, 2019 and December 31, 2019, respectively)
Payables and deposits:
Payables to customers
Payables to other than customers
Deposits received at banks (including ¥—million and ¥10,737 million measured at fair value by
applying the fair value option as of March 31, 2019 and December 31, 2019, respectively)
Total payables and deposits
Collateralized financing:
Securities sold under agreements to repurchase (including ¥159,430 million and ¥112,009 million
measured at fair value by applying the fair value option as of March 31, 2019 and December 31,
2019, respectively)
Securities loaned (including ¥131,677 million and ¥137,231 million measured at fair value by applying
the fair value option as of March 31, 2019 and December 31, 2019, respectively)
Other secured borrowings
Total collateralized financing
Trading liabilities
Other liabilities (including ¥15,011 million and ¥14,540 million measured at fair value by applying the fairvalue option as of March 31, 2019 and December 31, 2019, respectively)
Long-term borrowings (including ¥3,576,293 million and ¥3,916,212 million measured at fair value by
applying the fair value option as of March 31, 2019 and December 31, 2019, respectively)
Total liabilities
Commitments and contingencies
Equity:Nomura Holdings, Inc. (“NHI”) shareholders’ equity:
Common stock
No par value share
Authorized—6,000,000,000 shares as of March 31, 2019 and December 31, 2019
Issued—3,493,562,601 shares as of March 31, 2019 and December 31, 2019
Outstanding—3,310,800,799 shares as of March 31, 2019 and 3,091,699,199 shares as ofDecember 31, 2019
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Total NHI shareholders’ equity before treasury stock
Common stock held in treasury, at cost—182,761,802 shares as of March 31, 2019 and 401,863,402 shares
as of December 31, 2019
Total NHI shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
22

*2 ¥

841,758¥

1,067,890*4

1,229,083
1,146,336

1,174,953
1,292,192*2

1,392,619
3,768,038

1,237,028
3,704,173*2

15,036,503

19,387,218

*2

*2, 3

1,229,595
418,305
16,684,403
8,219,811

1,266,228
317,138
20,970,584
8,626,238*2, 9

858,867

1,172,645*2

7,915,769
38,288,646

7,911,181
43,452,711

594,493687,761
1,486,825(29,050)
2,740,029

594,493683,304
1,695,182(58,404)
2,914,575

*15

*14

(108,968)(213,408)
2,631,061
2,701,167
49,73288,4562,680,793
2,789,623¥ 40,969,439 ¥ 46,242,334

(1) Consolidated Balance Sheets—(Continued) (UNAUDITED)The following table presents the classification of consolidated variable interest entities’ (“VIEs”) assets and liabilities included in the consolidatedbalance sheets above. The assets of a consolidated VIE may only be used to settle obligations of that VIE. Creditors do not typically have any recourse
to Nomura beyond the assets held in the VIEs. See Note 6 “Securitizations and Variable Interest Entities” for further information.
Billions of yen
March 31,
December 31,
2019
2019

Cash and cash deposits
Trading assets and private equity investments
Other assets
Total assets
Trading liabilities
Other liabilities
Borrowings
Total liabilities

¥

¥
¥

¥

The accompanying notes are an integral part of these consolidated financial statements.
23

20
1,273
126
1,419
23
3
1,035
1,061

¥

¥
¥

¥

15
1,282
50
1,347
19
3
1,007
1,029

(2) Consolidated Statements of Income (UNAUDITED)

Notes

Revenue:Commissions
Fees from investment banking
Asset management and portfolio service fees
Net gain on trading
Gain 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
Net income (loss)
Less: Net income attributable to noncontrolling interests
Net income (loss) attributable to NHI shareholders

Millions of yen
Nine months ended December 31
2018
2019

*4 ¥
*4
*4
*2, 3

*4

*9

*13
¥
¥

Notes

Per share of common stock:
Basic—Net income (loss) attributable to NHI shareholders per share
Diluted—
Net income (loss) attributable to NHI shareholders per share

226,954 ¥
212,743
76,20776,379186,312
180,909244,586
327,700
1,335
3,275
572,835
618,404(8,864)
1,488
37,401
161,835
1,336,766
1,582,733
521,250
532,374
815,516
1,050,359
372,428
64,335
123,232
48,692
27,354
241,529
877,570(62,054)
36,331(98,385) ¥2,901(101,286) ¥374,51474,565
126,939
53,75624,243
123,363
777,380
272,979
16,379256,600
5,127
251,473

Yen
Nine months ended December 31
2018
2019

*10

The accompanying notes are an integral part of these consolidated financial statements.
24¥(30.01) ¥

77.36

¥

(30.03) ¥75.65

Notes

Revenue:Commissions
Fees from investment banking
Asset management and portfolio service fees
Net gain on trading
Gain 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
Net income (loss)
Less: Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to NHI shareholders

Millions of yen
Three months ended December 31
2018
2019

*4 ¥
*4
*4
*2, 3

*4

*9

*13
¥
¥

Notes

Per share of common stock:
Basic—Net income (loss) attributable to NHI shareholders per share
Diluted—
Net income (loss) attributable to NHI shareholders per share

72,715 ¥33,12960,591
96,947461
214,542(9,852)(11,133)
457,400
196,803
260,597

79,28926,80361,020109,266
1,503
203,050
2,243
14,276497,450
162,472
334,978

118,928
23,821
41,75615,852
9,121
127,283
336,761(76,164)
19,698(95,862) ¥(586)(95,276) ¥128,987
24,56842,821
16,276
8,509
44,130265,291
69,687
10,33759,3502,284
57,066

Yen
Three months ended December 31
2018
2019

*10

The accompanying notes are an integral part of these consolidated financial statements.
25¥(28.52) ¥

18.07

¥

(28.52) ¥17.63

(3) Consolidated Statements of Comprehensive Income (UNAUDITED)Millions of yen
Nine months ended December 31
2018
2019

Net income (loss)
Other comprehensive income (loss):
Cumulative translation adjustments:
Cumulative translation adjustments
Deferred income taxes
Total
Defined benefit pension plans:
Pension liability adjustment
Deferred income taxes
Total
Own credit adjustments:
Own credit adjustments:
Deferred income taxes
Total
Total other comprehensive income (loss)
Comprehensive income (loss)
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income (loss) attributable to NHI shareholders¥¥¥(98,385) ¥256,600

35,040(1,702)33,338(16,837)
67(16,770)

2,039
(995)
1,044

4,167
625
4,792

31,350(5,982)25,36859,750(38,635) ¥3,645(42,280) ¥(19,640)
2,256(17,384)(29,362)
227,238
5,119
222,119

Millions of yen
Three months ended December 31
2018
2019

Net income (loss)
Other comprehensive income (loss):
Cumulative translation adjustments:
Cumulative translation adjustments
Deferred income taxes
Total
Defined benefit pension plans:
Pension liability adjustment
Deferred income taxes
Total
Own credit adjustments:
Own credit adjustments:
Deferred income taxes
Total
Total other comprehensive income (loss)
Comprehensive income (loss)
Less: Comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income (loss) attributable to NHI shareholders¥¥¥

The accompanying notes are an integral part of these consolidated financial statements.
26(95,862) ¥59,350(29,257)264(28,993)

22,483(178)
22,305

(25)
(188)
(213)

1,162
(287)
875

26,630(4,602)
22,028(7,178)(103,040) ¥(1,041)(101,999) ¥(16,484)
2,775(13,709)
9,471
68,821
2,716
66,105

(4) Consolidated Statements of Changes in Equity (UNAUDITED)Millions of yen
Nine months ended December 31
2018
2019

Common stock
Balance at beginning of year
Balance at end of period
Additional paid-in capital
Balance at beginning of year
Stock-based compensation awards
Balance at end of period
Retained earnings
Balance at beginning of year
Cumulative effect of change in accounting principle(1)Net income (loss) attributable to NHI shareholders
Cash dividends(2)Gain (loss) on sales of treasury stock
Cancellation of treasury stock
Balance at end of period
Accumulated other comprehensive income (loss)
Cumulative translation adjustments
Balance at beginning of year
Net change during the period
Balance at end of period
Defined benefit pension plans
Balance at beginning of year
Pension liability adjustment
Balance at end of period
Own credit adjustments
Balance at beginning of year
Own credit adjustments
Balance at end of period
Balance at end of period
Common stock held in treasury
Balance at beginning of year
Repurchases of common stock
Sales of common stock
Common stock issued to employees
Cancellation of common stock
Balance at end of period
Total NHI shareholders’ equity
Balance at end of period
Noncontrolling interests
Balance at beginning of year
Cash dividends
Net income attributable to noncontrolling interests
Accumulated other comprehensive income (loss) attributable to noncontrolling interests
Purchase / sale of subsidiary shares, net
Other net change in noncontrolling interests
Balance at end of period
Total equity
Balance at end of period¥¥

594,493594,493¥594,493594,493675,280
8,245
683,525

687,761(4,457)683,304

1,696,890
1,564(101,286)(10,147)(1,020)(89,916)
1,496,085

1,486,825
5,592
251,473(48,477)(231)—
1,695,182(15,596)
32,594
16,998

17,833(16,762)
1,071(47,837)
1,044(46,793)(71,107)
4,792(66,315)

4,077
25,36829,445(350)

24,224(17,384)6,840(58,404)(157,987)(51,711)
0
8,972
89,916(110,810)(108,968)(117,720)
013,280—(213,408)

2,662,943

2,701,167

50,504(2,457)
2,901
744
415
(9,039)43,06849,732(1,483)5,127(8)
16,09018,99888,456

2,706,011¥

2,789,623(1) Represents the adjustments to initially apply Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” for thenine months ended December 31, 2018 and ASU 2016-02, “Leases” for the nine months ended December 31, 2019.
(2) Dividends per share
Nine months ended December 31, 2018 ¥ 3.00
Nine months ended December 31, 2019 ¥ 15.00
The accompanying notes are an integral part of these consolidated financial statements.
27

Millions of yen
Three months ended December 31
2018
2019

Common stock
Balance at beginning of year
Balance at end of period
Additional paid-in capital
Balance at beginning of year
Gain (loss) on sales of treasury stock
Stock-based compensation awards
Balance at end of period
Retained earnings
Balance at beginning of year
Net income (loss) attributable to NHI shareholders
Gain (loss) on sales of treasury stock
Cancellation of treasury stock
Balance at end of period
Accumulated other comprehensive income (loss)
Cumulative translation adjustments
Balance at beginning of year
Net change during the period
Balance at end of period
Defined benefit pension plans
Balance at beginning of year
Pension liability adjustment
Balance at end of period
Own credit adjustments
Balance at beginning of year
Own credit adjustments
Balance at end of period
Balance at end of period
Common stock held in treasury
Balance at beginning of year
Repurchases of common stock
Sales of common stock
Common stock issued to employees
Cancellation of common stock
Balance at end of period
Total NHI shareholders’ equity
Balance at end of period
Noncontrolling interests
Balance at beginning of year
Cash dividends
Net income (loss) attributable to noncontrolling interests
Accumulated other comprehensive income (loss) attributable to noncontrolling interests
Purchase / sale of subsidiary shares, net
Other net change in noncontrolling interests
Balance at end of period
Total equity
Balance at end of period
The accompanying notes are an integral part of these consolidated financial statements.
28

¥

¥

594,493594,493¥594,493594,493

681,058—
2,467
683,525

682,851(12)
465
683,304

1,681,445(95,276)(168)(89,916)
1,496,085

1,638,347
57,066(231)—
1,695,182

45,536(28,538)
16,998(20,802)
21,873
1,071(46,580)(213)(46,793)(67,190)875(66,315)

7,417
22,02829,445(350)

20,549(13,709)
6,840(58,404)(162,592)(41,778)
0
3,644
89,916(110,810)(140,370)(76,392)
03,354—(213,408)

2,662,943

2,701,167

45,233
(222)
(586)
(455)
—
(902)
43,06880,297
(209)
2,284
432
1
5,651
88,456

2,706,011¥

2,789,623

(5) Consolidated Statements of Cash Flows (UNAUDITED)Millions of yen
Nine months ended December 31
2018
2019

Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
Impairment of goodwill(Gain) loss on investments in equity securities(Gain) loss on investments in subsidiaries and affiliates(1)Deferred income taxes
Changes in operating assets and liabilities:
Time deposits
Deposits with stock exchanges and other segregated cash
Trading assets and private equity investments
Trading liabilities
Securities purchased under agreements to resell, net of securities sold under agreements torepurchase
Securities borrowed, net of securities loaned
Other secured borrowings
Loans and receivables, net of allowance for doubtful accounts
PayablesBonus accrual
Accrued income taxes, net
Other, net(1)Net cash provided by (used in) operating activities
Cash flows from investing activities:
Payments for purchases of office buildings, land, equipment and facilities
Proceeds from sales of office buildings, land, equipment and facilities
Proceeds from sales of investments in equity securities
Decrease (increase) in loans receivable at banks, net
Decrease (increase) in non-trading debt securities, net
Decrease (increase) in affiliated companies, net(1)Other, net(1)Net cash provided by (used in) investing activities
Cash flows from financing activities:
Increase in long-term borrowings
Decrease in long-term borrowings
Increase in short-term borrowings, net
Increase (decrease) in deposits received at banks, net
Proceeds from sales of common stock held in treasury
Payments for repurchases of common stock held in treasury
Payments for cash dividends
Contribution from noncontrolling interests
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
Supplemental information:
Cash paid during the period for—
Interest
Income tax payments, net(1)¥(98,385) ¥256,600

43,356
81,372
8,864
6,887
7,265

47,029
—(1,488)(73,271)(16,684)(33,083)
4,006(2,254,436)(667,780)

16,944(34,402)(2,418,152)
465,826

337,656
2,091,175
15,315
106,354
12,950(60,892)
3,645(45,029)(440,760)

1,947,599
210,646(100,735)(69,371)
120,614
4,001(21,401)
85,522419,277(193,569)
182,661
321(21,167)
29,983(1,101)—(2,872)(182,729)
175,170
12,253
61,768(6,855)
159,792(1,594)
217,804

1,593,679
1,525,873(1,200,563)(1,606,841)
52,728229,670
136,246(148,385)
303
281(51,711)(117,720)(47,475)(58,416)—
15,618483,207(159,920)
44,703(11,735)
84,278465,426
2,354,868
2,687,132¥ 2,439,146 ¥ 3,152,558¥¥

Certain reclassifications of previously reported amounts have been made to conform to the current period presentation.
29

508,850
25,422¥¥536,782
54,465

The following table presents a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents as reported within the
consolidated balance sheets to the total of the same such amounts shown in the statements of cash flows above. Restricted cash and restricted cash
equivalents are amounts where access, withdrawal or usage by Nomura is substantively prohibited by a third party entity outside of the Nomura group.
Millions of yen
Nine months ended December 31
2018
2019

Cash and cash equivalents reported in Cash and cash equivalents
Restricted cash and restricted cash equivalents reported in Deposits with stock exchanges and other segregated cash
Total cash, cash equivalent, restricted cash and restricted cash equivalents
The accompanying notes are an integral part of these consolidated financial statements.
30¥ 2,438,649¥
497¥ 2,439,146¥ 3,152,017¥
541¥ 3,152,558

Notes to the Consolidated Financial Statements (UNAUDITED)
1. Basis of accounting:
In December 2001, Nomura Holdings, Inc. (“the Company”) filed a registration statement, in accordance with the Securities Exchange Act of1934, with the United States Securities and Exchange Commission (“SEC”) in order to list its American Depositary Shares (“ADS”) on the New York
Stock Exchange. Since then, the Company has had an obligation to file an annual report on Form 20-F with the SEC in accordance with the Securities
Exchange Act of 1934.
Therefore, the Company and other entities in which it has a controlling financial interest (collectively “Nomura”) prepares consolidated financial
statements in accordance with the accounting principles, procedures and presentations which are required in order to issue ADS, i.e., U.S. generally
accepted accounting principles (“U.S. GAAP”), pursuant to Article 95 of “Regulations Concerning the Terminology, Forms and Preparation Methods ofQuarterly Consolidated Financial Statements” (Cabinet Office Ordinance No. 64, 2007).
The following paragraphs describe the major differences between U.S. GAAP applied by Nomura and accounting principles generally accepted inJapan (“Japanese GAAP”) for the nine and three months ended December 31, 2019. Where the effect of these major differences are significant toIncome before income taxes, Nomura discloses as (higher) or (lower) below the amount by which Income before income taxes based on U.S. GAAP was
higher or lower than Japanese GAAP, respectively.
Scope of consolidation—
Under U.S. GAAP, the scope of consolidation is mainly determined by the ownership of a majority of the voting interests in an entity or by
identifying the primary beneficiary of variable interest entities. Under Japanese GAAP, the scope of consolidation is determined by a “financial
controlling model”, which takes into account the ownership level of voting interests in an entity and other factors.
Unrealized gains and losses on investments in equity securities—
Under U.S. GAAP applicable to broker-dealers, minority investments in equity securities are measured at fair value with changes in fair value
recognized in earnings. Under Japanese GAAP, these investments are also measured at fair value, but unrealized gains and losses, net of applicable
income taxes, are reported in other comprehensive income. Income (loss) before income taxes prepared under U.S. GAAP, therefore, was ¥9,008 million(lower) and ¥3,662 million (lower) for the nine months ended December 31, 2018 and 2019, respectively and ¥9,944 million (lower) and ¥2,193 million(lower) for the three months ended December 31, 2018 and 2019, respectively.
Unrealized gains and losses on non-trading debt and equity securities—
Under U.S. GAAP applicable to broker-dealers, non-trading securities are measured at fair value with changes in fair value recognized inearnings. Under Japanese GAAP, these securities are also measured at fair value, but unrealized gains and losses, net of applicable income taxes, arereported in other comprehensive income. Income (loss) before income taxes prepared under U.S. GAAP, therefore, was ¥875 million (lower) and¥233 million (higher) for the nine months ended December 31, 2018 and 2019, respectively, and ¥1,233 million (higher) and ¥2,166 million (lower) for
the three months ended December 31, 2018 and 2019, respectively for non-trading debt securities. Income (loss) before income taxes prepared under
U.S. GAAP was ¥3,085 million (lower) and ¥567 million (lower) for the nine months ended December 31, 2018 and 2019, respectively, and¥2,498 million (lower) and ¥273 million (lower) for the three months ended December 31, 2018 and 2019, respectively for non-trading equity securities.
Retirement and severance benefits—
Under U.S. GAAP, gains or losses resulting from either experience that is different from an actuarial assumption or a change in assumption isamortized over the average remaining service period of employees when a net gain or loss at the beginning of the year exceeds the “Corridor” which isdefined as 10% of the larger of projected benefit obligation or the fair value of plan assets. Under Japanese GAAP, these gains or losses are amortizedover a certain period regardless of the Corridor.
31

Amortization of goodwill and equity method goodwill—
Under U.S. GAAP, goodwill is not amortized and is tested for impairment periodically. Under Japanese GAAP, goodwill is amortized over certain
periods of less than 20 years using the straight-line method. Therefore, under U.S. GAAP, Income (loss) before income taxes was ¥35,486 million(lower) and ¥2,620 million (higher) for the nine months ended December 31, 2018 and 2019, respectively, and ¥38,951 million (lower) and ¥607 million(higher) for the three months ended December 31, 2018 and 2019, respectively.
Changes in the fair value of derivative contracts—
Under U.S. GAAP, all derivative contracts, including derivative contracts that have been designated as hedges of specific assets or specificliabilities, are carried at fair value, with changes in fair value recognized either in earnings or other comprehensive income. Under Japanese GAAP,
derivative contracts that have been entered into for hedging purposes are carried at fair value with changes in fair value, net of applicable income taxes,
recognized generally in other comprehensive income.
Fair value for financial assets and financial liabilities—
Under U.S. GAAP, the fair value option may be elected for eligible financial assets and financial liabilities which would otherwise be carried on abasis other than fair value (“the fair value option”). Where the fair value option is elected, the financial asset or financial liability is carried at fair value
with changes in fair value are recognized in earnings. Under Japanese GAAP, the fair value option is not permitted. Therefore, under U.S. GAAP,
Income (loss) before income taxes was ¥30,881 million (lower) and ¥1,889 million (higher) for the nine months ended December 31, 2018 and 2019,respectively and ¥29,780 million (lower) and ¥6,663 million (lower) for the three months ended December 31, 2018 and 2019, respectively. In addition,
non-marketable equity securities which are carried at fair value under U.S. GAAP applicable to broker-dealers are carried at cost less impairment loss
under Japanese GAAP.
Offsetting of amounts related to certain contracts—
Under U.S. GAAP, an entity that is party to a master netting arrangement is permitted to offset fair value amounts recognized for the right toreclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative
instruments that have been offset under the same master netting arrangement. Under Japanese GAAP, offsetting of such amounts is not permitted.
Stock issuance costs—
Under U.S. GAAP, stock issuance costs are deducted from capital. Under Japanese GAAP, stock issuance costs are either immediately expensed
or capitalized as a deferred asset and amortized over periods of up to three years using the straight-line method.
Accounting for change in controlling interest in a consolidated subsidiary’s shares—
Under U.S. GAAP, when a parent’s ownership interest decreases as a result of sales of a subsidiary’s common shares by the parent, and thesubsidiary becomes an equity method investee, the parent’s remaining investment in the former subsidiary is measured at fair value as of the date of lossof a controlling interest and a related valuation gain or loss is recognized in earnings. Under Japanese GAAP, the remaining investment on the parent’s
consolidated balance sheet is computed as the sum of the carrying amount of investment in the equity method investee recorded in the parent’s standalone balance sheet as adjusted for the share of net income or losses and other adjustments from initial acquisition through to the date of loss of acontrolling interest multiplied by the ratio of the remaining shareholding percentage against the holding percentage prior to loss of control.
Stock-based and other compensation awards—
Under U.S.GAAP, Restricted Stock Units (“RSUs”) are classified as equity awards, and the total compensation cost is measured based on the fairvalue of the Company’s common stock on the grant date. Under Japanese GAAP, the total compensation cost of RSUs is measured by the amount ofmonetary compensation liabilities which is granted to management and employees. Therefore, under U.S. GAAP, Income (loss) before income taxes
was ¥2,224 million (higher) and ¥562 million (lower) for the nine months ended December 31, 2018 and 2019, respectively and ¥872 million (higher)and ¥143 million (higher) for the three months ended December 31, 2018 and 2019, respectively.
32

New accounting pronouncements recently adopted—
No new accounting pronouncements relevant to Nomura were adopted during the three months ended September 30, 2019 and December 31,
2019.
The following table presents a summary of new accounting pronouncements relevant to Nomura which have been adopted during the threemonths ended June 30, 2019.

Pronouncement

Summary of new guidance

ASU 2016-02,“Leases”(1)• Replaces ASC 840 “Leases”, the current guidance on leaseaccounting, and revised the definition of a lease.
•
•
•
•

(1)
(2)

Expected adoption
date and methodof adoption

Effect on these
consolidated
statements

Modified retrospective ¥169,277 million increase
adoption from April 1, in Other Asset—Office2019.(2)buildings, land, equipment,
Requires all lessees to recognize a right of use asset andand facilities, andcorresponding lease liability on balance sheet.
¥163,685 million increasein Other liabilities as a
Lessor accounting is largely unchanged from current
result of recognizing
guidance.
operating leases on the
Simplifies the accounting for sale leaseback andconsolidated balance sheet“build-to-suit” leases.
as of April 1, 2019.
¥5,592 million increase in
Requires extensive new qualitative and quantitative footnote
Retained earnings as of
disclosures on lease arrangements.
April 1, 2019 mainly due
to changes in certain leaseclassifications.

As subsequently amended by ASU 2018-01 “Land Easement Practical Expedient for Transition to Topic 842”, ASU 2018-10 “Codification
Improvements to Topic 842, Leases”, ASU 2018-11 “Leases (Topic 842): Targeted Improvements”, ASU 2018-20 “Leases (Topic 842): NarrowScope Improvements for Lessors”, and ASU 2019-01 “Leases (Topic 842): Codification Improvements.”
Nomura used certain practical expedients permitted by ASC 842 including adopting the new requirements through a cumulative-effect adjustment
to retained earnings on adoption date.
33

Future accounting developments—
The following table presents a summary of new authoritative accounting pronouncements relevant to Nomura which will be adopted on or after
April 1, 2020 and which may have a material impact on these financial statements:

Pronouncement

ASU 2016-13,“Measurement of Credit Losses
on Financial Instruments”(1)Expected adoption
date and methodof adoption

Summary of new guidance

Effect on these
consolidated
statements• Introduces a new model for recognition and measurement of Modified retrospective •credit losses against certain financial instruments such as
adoption from April 1,loans, debt securities and receivables which are not carried 2020.
at fair value with changes in fair value recognized throughearnings. The model also applies to off balance sheet credit
exposures such as written loan commitments, standby lettersof credit and issued financial guarantees not accounted foras insurance, which are not carried at fair value throughearnings.

An increase inallowances for
expected credit losses
will impact groupshareholders equity
on adoption date andimpact earnings insubsequent reporting
periods.

• The new model based on lifetime current expected credit
losses (CECL) measurement, to be recognized at the time an
in-scope instrument is originated, acquired or issued.

•

Currently finalizing
implementation but
do not expect amaterial impact on the
consolidated financial
statements.

• Requires enhanced qualitative and quantitative disclosuresaround credit risk, the methodology used to estimate andmonitor expected credit losses and changes in estimates of
expected credit losses.

•

Impact is primarily inrespect of loans andloan commitments
originated by the
Wholesale Division.

Effective from• Simplifies the accounting for income taxes by removing
April 1, 2021.(2)certain exceptions to the general principles in ASC 740“Income Taxes”, such as the exception to the requirement to• Modified
recognize a deferred tax liability for equity method
retrospective
investments when a foreign subsidiary becomes an equity
adoption for the
method investment and the exception to the ability not toamendments
recognize a deferred tax liability for a foreign subsidiary
related to changes
when a foreign equity method investment becomes ain ownership ofsubsidiary.
foreign equity
method• Requires an entity to recognize a franchise tax (or similar
investments ortax) that is partially based on income as an income-based tax
foreign
and account for any incremental amount incurred as a
subsidiaries.
non-income-based tax.

Currently evaluating thepotential impact.

• Replaces existing incurred credit losses model under current
GAAP.

ASU 2019-12,“Simplifying the Accounting forIncome Taxes”• Makes other minor amendments for simplification andclarification of income taxes accounting.

(1)

(2)

•

Full or modified
retrospective
adoption for theamendments
related to franchisetaxes that are
partially based on
income.

•Prospective
adoption for allother amendments.

As subsequently amended by ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments—Credit Losses”, ASU 2019-04“Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial
Instruments”, ASU 2019-05 “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief”, ASU 2019-10 “Financial
Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates” and ASU 2019-11“Codification Improvements to Topic 326, Financial Instruments—Credit Losses”
Unless Nomura early adopts which is under evaluation.
34

2. Fair value measurements:
The fair value of financial instruments
A significant amount of Nomura’s financial instruments is measured at fair value. Financial assets measured at fair value on a recurring basis arereported in the consolidated balance sheets within Trading assets and private equity investments, Loans and receivables, Collateralized agreements andOther assets. Financial liabilities measured at fair value on a recurring basis are reported within Trading liabilities, Short-term borrowings, Payables
and deposits, Collateralized financing, Long-term borrowings and Other liabilities.
Other financial assets and financial liabilities are measured at fair value on a nonrecurring basis, where the primary measurement basis is not fairvalue but where fair value is used in specific circumstances after initial recognition, such as to measure impairment.
In all cases, fair value is determined in accordance with ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fairvalue as the amount that would be exchanged to sell a financial asset or transfer a financial liability in an orderly transaction between market
participants at the measurement date. It assumes that the transaction occurs in the principal market for the relevant financial assets or financial liabilities,
or in the absence of a principal market, the most advantageous market.
Fair value is usually determined on an individual financial instrument basis consistent with the unit of account of the financial instrument.
However, certain financial instruments managed on a portfolio basis are valued as a portfolio, namely based on the price that would be received to sell a
net long position (i.e., a net financial asset) or transfer a net short position (i.e., a net financial liability) consistent with how market participants would
price the net risk exposure at the measurement date.
Financial assets measured at fair value also include investments in certain funds where, as a practical expedient, fair value is determined on thebasis of net asset value per share (“NAV per share”) if the NAV per share is calculated in accordance with certain industry standard principles.
Increases and decreases in the fair value of assets and liabilities will significantly impact Nomura’s position, performance, liquidity and capital
resources. As explained below, valuation techniques applied contain inherent uncertainties and Nomura is unable to predict the accurate impact of future
developments in the market. Where appropriate, Nomura uses economic hedging strategies to mitigate its risk, although these hedges are also subject tounpredictable movements in the market.
Valuation methodology for financial instruments carried at fair value on a recurring basis
The fair value of financial instruments is based on quoted market prices including market indices, broker or dealer quotations or an estimation by
management of the expected exit price under current market conditions. Various financial instruments, including cash instruments and over-the-counter(“OTC”) contracts, have bid and offer prices that are observable in the market. These are measured at the point within the bid-offer range which best
represents Nomura’s estimate of fair value. Where quoted market prices or broker or dealer quotations are not available, prices for similar instruments orvaluation pricing models are considered in the determination of fair value.
Where quoted prices are available in active markets, no valuation adjustments are taken to modify the fair value of assets or liabilities marked
using such prices. Other instruments may be measured using valuation techniques, such as valuation pricing models incorporating observable valuation
inputs, unobservable parameters or a combination of both. Valuation pricing models use valuation inputs which would be considered by market
participants in valuing similar financial instruments.
Valuation pricing models and their underlying assumptions impact the amount and timing of unrealized and realized gains and losses recognized,
and the use of different valuation pricing models or underlying assumptions could produce different financial results. Valuation uncertainty results froma variety of factors, including the valuation technique or model selected, the quantitative assumptions used within the valuation model, the inputs into
the model, as well as other factors. Valuation adjustments are used to reflect the assessment of this uncertainty. Common valuation adjustments include
model reserves, credit adjustments, close-out adjustments, and other appropriate instrument-specific adjustments, such as those to reflect transfer or sale
restrictions.
35

The level of adjustments is largely judgmental and is based on an assessment of the factors that management believe other market participants
would use in determining the fair value of similar financial instruments. The type of adjustments taken, the methodology for the calculation of theseadjustments, and the valuation inputs for these calculations are reassessed periodically to reflect current market practice and the availability of new
information.
For example, the fair value of certain financial instruments includes adjustments for credit risk; both with regards to counterparty credit risk on
positions held and Nomura’s own creditworthiness on positions issued. Credit risk on financial assets is significantly mitigated by credit enhancements
such as collateral and netting arrangements. Any net credit exposure is measured using available and applicable valuation inputs for the relevant
counterparty. The same approach is used to measure the credit exposure on Nomura’s financial liabilities as is used to measure counterparty credit risk
on Nomura’s financial assets.
Such valuation pricing models are calibrated to the market on a regular basis and inputs used are adjusted for current market conditions and risks.
The Global Model Validation Group (“MVG”) within Nomura’s Risk Management Department reviews pricing models and assesses model
appropriateness and consistency independently of the front office. The model reviews consider a number of factors about a model’s suitability forvaluation and sensitivity of a particular product. Valuation models are calibrated to the market on a periodic basis by comparison to observable market
pricing, comparison with alternative models and analysis of risk profiles.
As explained above, any changes in fixed income, equity, foreign exchange and commodity markets can impact Nomura’s estimates of fair value
in the future, potentially affecting trading gains and losses. Where financial contracts have longer maturity dates, Nomura’s estimates of fair value may
involve greater subjectivity due to the lack of transparent market data.
Fair value hierarchy
All financial instruments measured at fair value, including those measured at fair value using the fair value option, have been categorized into athree-level hierarchy (“fair value hierarchy”) based on the transparency of valuation inputs used by Nomura to estimate fair value. A financial
instrument is classified in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement of the financial
instrument. The three levels of the fair value hierarchy are defined as follows, with Level 1 representing the most transparent inputs and Level 3
representing the least transparent inputs:
Level 1:
Observable valuation inputs that reflect quoted prices (unadjusted) for identical financial instruments traded in active markets at the measurement
date.
Level 2:
Valuation inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the financial instrument.
Level 3:
Unobservable valuation inputs which reflect Nomura assumptions and specific data.
The availability of valuation inputs observable in the market varies by product and can be affected by a variety of factors. Significant factors
include, but are not restricted to the prevalence of similar products in the market, especially for customized products, how established the product is in
the market, for example, whether it is a new product or is relatively mature, and the reliability of information provided in the market which would
depend, for example, on the frequency and volume of current data. A period of significant change in the market may reduce the availability ofobservable data. Under such circumstances, financial instruments may be reclassified into a lower level in the fair value hierarchy.
Significant judgments used in determining the classification of financial instruments include the nature of the market in which the product would
be traded, the underlying risks, the type and liquidity of market data inputs and the nature of observed transactions for similar instruments.
Where valuation models include the use of valuation inputs which are less observable or unobservable in the market, significant management
judgment is used in establishing fair value. The valuations for Level 3 financial instruments, therefore, involve a greater degree of judgment than thosevaluations for Level 1 or Level 2 financial instruments.
Certain criteria management use to determine whether a market is active or inactive include the number of transactions, the frequency that pricing
is updated by other market participants, the variability of price quotes among market participants, and the amount of publicly available information.
36

The following tables present the amounts of Nomura’s financial instruments measured at fair value on a recurring basis as of March 31, 2019 andDecember 31, 2019 within the fair value hierarchy.

Assets:Trading assets and private equity investments(2)Equities(3)Private equity investments(3)Japanese government securities
Japanese agency and municipal securities
Foreign government, agency and municipal securities
Bank and corporate debt securities and loans for trading purposes
Commercial mortgage-backed securities (“CMBS”)
Residential mortgage-backed securities (“RMBS”)
Real estate-backed securities
Collateralized debt obligations (“CDOs”) and other(4)Investment trust funds and otherTotal trading assets and private equity investments
Derivative assets(5)Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Netting
Total derivative assets
Subtotal
Loans and receivables(6)Collateralized agreements(7)Other assets
Non-trading debt securities
Other(2)(3)
Total
Liabilities:
Trading liabilities
Equities
Japanese government securities
Japanese agency and municipal securities
Foreign government, agency and municipal securities
Bank and corporate debt securities
Residential mortgage-backed securities (“RMBS”)
Collateralized debt obligations (“CDOs”) and other(4)Investment trust funds and otherTotal trading liabilities
Derivative liabilities(5)Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Netting
Total derivative liabilities
Subtotal
Short-term borrowings(8)Payables and deposits(9)Collateralized financing(7)Long-term borrowings(8)(10)(11)
Other liabilities(12)
Total

37

Billions of yen
March 31, 2019
Counterparty
and CashCollateral
Level 3
Netting(1)Balance as ofMarch 31,
2019¥

Level 1

Level 2

¥1,392
—
1,987
—
2,650
—
—
—
—
—
349
6,378

¥ 1,065
—
—
214
1,544
1,128
1
2,761
—
55
53
6,821

¥

1
12
2
0
1
—
16
¥6,394
—
—

806
8,610
500
4,870
0
—
14,786¥21,607
544
615

44
10
31
42
—
—
127
¥ 426
129
33

138
416
¥6,948323
10¥23,099

—
166
¥ 754

¥

¥1,622
1,264
—
2,906
—
—
—
121
5,913

¥

¥

¥

1
6
3
—
1
—
11
¥5,924———11
276¥6,211

867
8,228
422
4,820
0
—
14,337¥15,829
332
0
291
3,024
22
¥19,498

198
—
3
927
319
0
3
42
1,492

13
26
—
1
5
160
2
3
69
19
1
299

0

¥

¥

—
—
0
0
—
—
—
0
52
64
39
22
0
—
177
¥ 177
31
0
—
535
0
¥ 743

¥

¥

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(14,077)(14,077)(14,077)————(14,077)

—
—
—
—
—
—
—
—
—
—
—
—
—
—
(13,710)(13,710)(13,710)—————(13,710)

¥

¥

¥

¥

¥

2,470
26
1,987
215
4,199
1,288
3
2,764
69
74
403
13,498
851
8,632
533
4,912
1
(14,077)852
14,350
673
648
461
592
16,724

1,820
1,264
3
3,833
319
0
3
163
7,405
920
8,298
464
4,842
1
(13,710)
815
8,220
363
0
291
3,570
298
12,742Assets:
Trading assets and private equity investments(2)Equities(3)Private equity investments(3)Japanese government securities
Japanese agency and municipal securities
Foreign government, agency and municipal securities
Bank and corporate debt securities and loans for trading purposes
Commercial mortgage-backed securities (“CMBS”)
Residential mortgage-backed securities (“RMBS”)
Real estate-backed securities
Collateralized debt obligations (“CDOs”) and other(4)Investment trust funds and otherTotal trading assets and private equity investments
Derivative assets(5)Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Netting
Total derivative assets
Subtotal
Loans and receivables(6)Collateralized agreements(7)Other assets
Non-trading debt securities
Other(2)(3)
Total
Liabilities:
Trading liabilities
Equities
Japanese government securities
Japanese agency and municipal securities
Foreign government, agency and municipal securities
Bank and corporate debt securities
Residential mortgage-backed securities (“RMBS”)
Collateralized debt obligations (“CDOs”) and other(4)Investment trust funds and otherTotal trading liabilities
Derivative liabilities(5)Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Netting
Total derivative liabilities
Subtotal
Short-term borrowings(8)Payables and deposits(9)Collateralized financing(7)Long-term borrowings(8)(10)(11)
Other liabilities(12)
Total

38

Level 1

Level 2

Billions of yen
December 31, 2019
Counterparty
and CashCollateral
Level 3
Netting(1)¥1,760
—
1,782
—
3,540
—
—
—
—
—
358
7,440

¥

¥

1
16
1
0
1
—
19
¥7,459
—
—

721
8,997
427
3,791
1
—
13,937¥21,890
596
528

40
18
34
38
—
—
130
¥ 483
223
15

122
455
¥8,036344
121¥23,479

—
168
¥ 889

¥

¥1,664
963
—
3,333
—
—
—
267
6,227

¥

¥

¥

1
9
1
0
3
—
14
¥6,241———
3324¥6,568

925
8,410
433
3,719
1
—
13,488¥15,047
378
9
249
3,363
132
¥19,178

992
—
—
105
1,673
1,189
1
3,904
—
49
40
7,953

187
—
1
1,077
268
1
1
24
1,559

15
33
—
1
7
185
3
25
68
16
0
353

0

¥

¥

—
—
0
0
—
—
0
0
31
62
58
25
0
—
176
¥ 176
41
2
—
546
2
¥ 767

¥

¥

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(13,145)(13,145)(13,145)————(13,145)

—
—
—
—
—
—
—
—
—
—
—
—
—
—
(12,838)(12,838)(12,838)—————(12,838)

Balance as ofDecember 31,
2019

¥

¥

¥

¥

¥

¥

2,767
33
1,782
106
5,220
1,374
4
3,929
68
65
398
15,746
762
9,031
462
3,829
2
(13,145)941
16,687
819
543
466
744
19,259

1,851
963
1
4,410
268
1
1
291
7,786
957
8,481
492
3,744
4
(12,838)
840
8,626
419
11
249
3,912
458
13,675(1)(2)

Represents the amount offset under counterparty netting of derivative assets and liabilities as well as cash collateral netting against net derivatives.
Certain investments that are measured at fair value using net asset value per share as a practical expedient have not been classified in the fair value
hierarchy. As of March 31, 2019 and December 31, 2019, the fair values of these investments which are included in Trading assets and private
equity investments were ¥36 billion and ¥25 billion, respectively. As of March 31, 2019 and December 31, 2019, the fair values of theseinvestments which are included in Other assets—Others were ¥2 billion and ¥4 billion, respectively.
(3) Includes equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value option.
(4) Includes collateralized loan obligations (“CLOs”) and asset-backed securities (“ABS”) such as those secured on credit card loans, auto loans andstudent loans.
(5) Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rate contracts include complex derivatives
referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default
swaps as well as derivatives referencing corporate and government debt securities.
(6) Includes loans for which the fair value option has been elected.
(7) Includes collateralized agreements or collateralized financing for which the fair value option has been elected.
(8) Includes structured notes for which the fair value option has been elected.
(9) Includes embedded derivatives bifurcated from deposits received at banks. If unrealized gains are greater than unrealized losses, deposits are
reduced by the excess amount.
(10) Includes embedded derivatives bifurcated from issued structured notes. If unrealized gains are greater than unrealized losses, borrowings are
reduced by the excess amount.
(11) Includes liabilities recognized from secured financing transactions that are accounted for as financings rather than sales. Nomura elected the fairvalue option for these liabilities.
(12) Includes loan commitments for which the fair value option has been elected.
39

Valuation techniques by major class of financial instrument
The valuation techniques used by Nomura to estimate fair value for major classes of financial instruments, together with the significant inputs
which determine classification in the fair value hierarchy, are as follows.
Equities and equity securities reported within Other assets—Equities and equity securities reported within Other assets include direct holdings ofboth listed and unlisted equity securities, and fund investments. The fair value of listed equity securities is determined using quoted prices for identicalsecurities from active markets where available. These valuations should be in line with market practice and therefore can be based on bid prices or
mid-market prices. Nomura determines whether the market is active depending on the sufficiency and frequency of trading activity. Where thesesecurities are classified in Level 1 of the fair value hierarchy, no valuation adjustments are made to fair value. Listed equity securities traded in inactive
markets are also generally valued using the exchange price and are classified in Level 2. Whilst rare in practice, Nomura may apply a discount or
liquidity adjustment to the exchange price of a listed equity security traded in an inactive market if the exchange price is not considered to be an
appropriate representation of fair value. These adjustments are determined by individual security and are not determined or influenced by the size ofholding. The amount of such adjustments made to listed equity securities traded in inactive markets was ¥nil as of March 31, 2019 and December 31,
2019, respectively. The fair value of unlisted equity securities is determined using the same methodology as private equity investments described below
and are usually classified in Level 3 because significant valuation inputs such as liquidity discounts and credit spreads are unobservable.
Private equity investments—The determination of fair value of unlisted private equity investments requires significant management judgment
because the investments, by their nature, have little or no price transparency. Private equity investments are initially carried at cost as an approximationof fair value. Adjustments to carrying value are made if there is third-party evidence of a change in value. Adjustments are also made, in the absence ofthird-party transactions, if it is determined that the expected exit price of the investment is different from carrying value. In reaching that determination,
Nomura primarily uses either a discounted cash flow (“DCF”) or market multiple valuation technique. A DCF valuation technique incorporates
estimated future cash flows to be generated from the underlying investee, as adjusted for an appropriate growth rate discounted at a weighted average
cost of capital (“WACC”). Market multiple valuation techniques include comparables such as Enterprise Value/earnings before interest, taxes,
depreciation and amortization (“EV/EBITDA”) ratios, Price/Earnings (“PE”) ratios, Price/Book ratios, Price/Embedded Value ratios and other multiples
based on relationships between numbers reported in the financial statements of the investee and the price of comparable companies. A liquidity discount
may also be applied to either a DCF or market multiple valuation to reflect the specific characteristics of the investee. The liquidity discount includes
considerations for various uncertainties in the model and inputs to valuation. Where possible these valuations are compared with the operating cash
flows and financial performance of the investee or properties relative to budgets or projections, price/earnings data for similar quoted companies, trends
within sectors and/or regions and any specific rights or terms associated with the investment, such as conversion features and liquidation preferences.
Private equity investments are generally classified in Level 3 since the valuation inputs such as those mentioned above are usually unobservable.
Government, agency and municipal securities—The fair value of Japanese and other G7 government securities is primarily determined using
quoted market prices, executable broker or dealer quotations, or alternative pricing sources. These securities are traded in active markets and therefore
are classified within Level 1 of the fair value hierarchy. Non-G7 government securities, agency securities and municipal securities are valued using
similar pricing sources but are generally classified in Level 2 as they are traded in inactive markets. Certain non-G7 securities may be classified in
Level 1 because they are traded in active markets. Certain securities may be classified in Level 3 because they are traded infrequently and there is not
sufficient information from comparable securities to classify them in Level 2. These are valued using DCF valuation techniques which include
significant unobservable inputs such as credit spreads of the issuer.
40

Bank and corporate debt securities—The fair value of bank and corporate debt securities is primarily determined using DCF valuation techniques
but also using broker or dealer quotations and recent market transactions of identical or similar debt securities, if available. Consideration is given to thenature of the broker and dealer quotations, namely whether these are indicative or executable, the number of available quotations and how these
quotations compare to any available recent market activity or alternative pricing sources. The significant valuation inputs used for DCF valuations areyield curves, asset swap spreads, recovery rates and credit spreads of the issuer. Bank and corporate debt securities are generally classified in Level 2 ofthe fair value hierarchy because these valuation inputs are usually observable or market-corroborated. Certain bank and corporate debt securities will beclassified in Level 3 because they are traded infrequently and there is insufficient information from comparable securities to classify them in Level 2, or
credit spreads or recovery rates of the issuer used in DCF valuations are unobservable.
Commercial mortgage-backed securities (“CMBS”) and Residential mortgage-backed securities (“RMBS”)—The fair value of CMBS and RMBS
is primarily determined using DCF valuation techniques but also using broker or dealer quotations and recent market transactions of identical or similar
securities, if available. Consideration is given to the nature of the broker and dealer quotations, namely whether these are indicative or executable, thenumber of available quotations and how these quotations compare to any available recent market activity or alternative pricing sources. The significant
valuation inputs include yields, prepayment rates, default probabilities and loss severities. CMBS and RMBS securities are generally classified in
Level 2 because these valuation inputs are observable or market-corroborated. Certain CMBS and RMBS positions will be classified in Level 3 because
they are traded infrequently and there is insufficient information from comparable securities to classify them in Level 2, or one or more of the significant
valuation inputs used in DCF valuations are unobservable.
Real estate-backed securities—The fair value of real estate-backed securities is determined using broker or dealer quotations, recent market
transactions or by reference to a comparable market index. Consideration is given to the nature of the broker and dealer quotations, namely whether
these are indicative or executable, the number of available quotations and how these quotations compare to any available recent market activity oralternative pricing sources. Where all significant inputs are observable, the securities will be classified in Level 2. For certain securities, no direct
pricing sources or comparable securities or indices may be available. These securities are valued using DCF or valuation techniques and are classified in
Level 3 as the valuation includes significant unobservable valuation inputs such as yields or loss severities.
Collateralized debt obligations (“CDOs”) and other—The fair value of CDOs is primarily determined using DCF valuation techniques but alsousing broker or dealer quotations and recent market transactions of identical or similar securities, if available. Consideration is given to the nature of thebroker and dealer quotations, namely whether these are indicative or executable, the number of available quotations and how these quotations compare
to any available recent market activity or alternative pricing sources. The significant valuation inputs used include market spread data for each credit
rating, yields, prepayment rates, default probabilities and loss severities. CDOs are generally classified in Level 2 of the fair value hierarchy because
these valuation inputs are observable or market-corroborated. CDOs will be classified in Level 3 where one or more of the significant valuation inputs
used in the DCF valuations are unobservable.
Investment trust funds and other—The fair value of investment trust funds is primarily determined using NAV per share. Publicly traded funds
which are valued using a daily NAV per share are classified in Level 1 of the fair value hierarchy. For funds that are not publicly traded but Nomura has
the ability to redeem its investment with the investee at NAV per share on the balance sheet date or within the near term, the investments are classified
in Level 2. Investments where Nomura does not have the ability to redeem in the near term or does not know when it can redeem are classified in
Level 3. The fair value of certain other investments reported within Investment trust funds and other is determined using DCF valuation techniques.
These investments are classified in Level 3 as the valuation includes significant unobservable valuation inputs such as credit spreads of issuer andcorrelation.
Derivatives—Equity contracts—Nomura enters into both exchange-traded and OTC equity derivative transactions such as index and equity
options, equity basket options and index and equity swaps. Where these derivatives are traded in active markets and the exchange price is representativeof fair value, the fair value of exchange-traded equity derivatives is determined using an unadjusted exchange price and classified in Level 1 of the fairvalue hierarchy. The fair value of exchange-traded equity derivatives which are traded in inactive markets or where the exchange price is not
representative of fair value is determined using a model price and are classified in Level 2. The fair value of OTC equity derivatives is determinedthrough option models such as Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include equity prices, dividend yields,
volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets andNomura‘s own creditworthiness on derivative liabilities. OTC equity derivatives are generally classified in Level 2 because all significant valuation
inputs and adjustments are observable or market-corroborated. Certain less liquid vanilla or more complex equity derivatives are classified in Level 3
where dividend yield, volatility or correlation valuation inputs are significant and unobservable.
41

Derivatives—Interest rate contracts—Nomura enters into both exchange-traded and OTC interest rate derivative transactions such as interest rate
swaps, currency swaps, interest rate options, forward rate agreements, swaptions, caps and floors. Where these derivatives are traded in active markets
and the exchange price is representative of fair value, the fair value of exchange-traded interest rate derivatives is determined using an unadjusted
exchange price and classified in Level 1 of the fair value hierarchy. The fair value of exchange-traded interest rate derivatives which are traded ininactive markets or where the exchange price is not representative of fair value is determined using a model price and are classified in Level 2. The fairvalue of OTC interest rate derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes and Monte Carlosimulation. The significant valuation inputs used include interest rates, forward foreign exchange (“FX”) rates, volatilities and correlations. Valuation
adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura‘s own creditworthiness onderivative liabilities. OTC interest rate derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments areobservable or market-corroborated. Certain less liquid vanilla or more complex OTC interest rate derivatives are classified in Level 3 where interest
rate, volatility or correlation valuation inputs are significant and unobservable.
Derivatives—Credit contracts—Nomura enters into OTC credit derivative transactions such as credit default swaps and credit options on single
names, indices or baskets of assets. The fair value of OTC credit derivatives is determined through DCF valuation techniques as well as option models
such as Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include interest rates, credit spreads, recovery rates, default
probabilities, volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk onderivative assets and Nomura’s own creditworthiness on derivative liabilities. OTC credit derivatives are generally classified in Level 2 of the fair value
hierarchy because all significant valuation inputs and adjustments are observable or market-corroborated. Certain less liquid vanilla or more complex
OTC credit derivatives are classified in Level 3 where credit spread, recovery rate, volatility or correlation valuation inputs are significant andunobservable.
Derivatives—Foreign exchange contracts—Nomura enters into both exchange-traded and OTC foreign exchange derivative transactions such as
foreign exchange forwards and currency options. The fair value of exchange-traded foreign exchange derivatives which are traded in inactive markets or
where the exchange price is not representative of fair value is determined using a model price and are classified in Level 2. The fair value of OTC
foreign exchange derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes and Monte Carlosimulation. The significant valuation inputs used include interest rates, forward FX rates, spot FX rates and volatilities. Valuation adjustments are also
made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura’s own creditworthiness on derivative liabilities.
OTC foreign exchange derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments are observable or marketcorroborated. Certain foreign exchange derivatives are classified in Level 3 where interest rates, volatility or correlation valuation inputs are significant
and unobservable.
Nomura includes valuation adjustments in its estimation of fair value of certain OTC derivatives relating to funding costs associated with thesetransactions to be consistent with how market participants in the principal market for these derivatives would determine fair value.
Loans—The fair value of loans carried at fair value either as trading assets or through election of the fair value option is primarily determinedusing DCF valuation techniques as quoted prices are typically not available. The significant valuation inputs used are similar to those used in thevaluation of corporate debt securities described above. Loans are generally classified in Level 2 of the fair value hierarchy because all significant
valuation inputs are observable. Certain loans, however, are classified in Level 3 because they are traded infrequently and there is not sufficient
information from comparable securities to classify them in Level 2 or credit spreads of the issuer used in DCF valuations are significant andunobservable.
Collateralized agreements and Collateralized financing—The primary types of collateralized agreement and financing transactions carried at fairvalue are reverse repurchase and repurchase agreements elected for the fair value option. The fair value of these financial instruments is primarily
determined using DCF valuation techniques. The significant valuation inputs used include interest rates and collateral funding spreads such as generalcollateral or special rates. Reverse repurchase and repurchase agreements are generally classified in Level 2 of the fair value hierarchy because thesevaluation inputs are usually observable.
42

Non-trading debt securities—These are debt securities held by certain non-trading subsidiaries in the group and are valued and classified in thefair value hierarchy using the same valuation techniques used for other debt securities classified as Government, agency and municipal securities andBank and corporate debt securities described above.
Short-term and long-term borrowings (“Structured notes”)—Structured notes are debt securities issued by Nomura or by consolidated variableinterest entities (“VIEs”) which contain embedded features that alter the return to the investor from simply receiving a fixed or floating rate of interest toa return that depends upon some other variables, such as an equity or equity index, commodity price, foreign exchange rate, credit rating of a third party
or a more complex interest rate (i.e., an embedded derivative).
The fair value of structured notes is determined using a quoted price in an active market for the identical liability if available, and where notavailable, using a mixture of valuation techniques that use the quoted price of the identical liability when traded as an asset, quoted prices for similar
liabilities, similar liabilities when traded as assets, or an internal model which combines DCF valuation techniques and option pricing models,depending on the nature of the embedded features within the structured note. Where an internal model is used, Nomura estimates the fair value of boththe underlying debt instrument and the embedded derivative components. The significant valuation inputs used to estimate the fair value of the debt
instrument component include yield curves, prepayment rates default probabilities and loss severities. The significant valuation inputs used to estimate
the fair value of the embedded derivative component are the same as those used for the relevant type of freestanding OTC derivative discussed above. A
valuation adjustment is also made to the entire structured note in order to reflect Nomura’s own creditworthiness. This adjustment is determined basedon recent observable secondary market transactions and executable broker quotes involving Nomura debt instruments and is therefore typically treatedas a Level 2 valuation input. Structured notes are generally classified in Level 2 of the fair value hierarchy as all significant valuation inputs andadjustments are observable. Where any unobservable inputs are significant, such as yields, prepayment rates, default probabilities, loss severities,
volatilities and correlations used to estimate the fair value of the embedded derivative component, structured notes are classified in Level 3.
Long-term borrowings (“Secured financing transactions”)—Secured financing transactions are liabilities recognized when a transfer of afinancial asset does not meet the criteria for sales accounting under ASC 860 “Transfer and Servicing” (“ASC 860”) and therefore the transaction is
accounted for as a secured borrowing. These liabilities are valued using the same valuation techniques that are applied to the transferred financial assets
which remain on the consolidated balance sheets and are therefore classified in the same level in the fair value hierarchy as the transferred financial
assets. These liabilities do not provide general recourse to Nomura and therefore no adjustment is made to reflect Nomura’s own creditworthiness.
Level 3 financial instruments
The valuation of Level 3 financial assets and liabilities is dependent on certain significant valuation inputs which are unobservable. Common
characteristics of an inactive market include a low number of transactions of the financial instrument, stale or non-current price quotes, price quotes thatvary substantially either over time or among market makers, non-executable broker quotes or little publicly released information.
If corroborative evidence is not available to value Level 3 financial instruments, fair value may be measured using other equivalent products in themarket. The level of correlation between the specific Level 3 financial instrument and the available benchmark instrument is considered as anunobservable valuation input. Other techniques for determining an appropriate value for unobservable input may consider information such as consensus
pricing data among certain market participants, historical trends, extrapolation from observable market data and other information Nomura would expect
market participants to use in valuing similar instruments.
Use of reasonably possible alternative valuation input assumptions to value Level 3 financial instruments will significantly influence fair value
determination. Ultimately, the uncertainties described above about input assumptions imply that the fair value of Level 3 financial instruments is a
judgmental estimate. The specific valuation for each instrument is based on management’s judgment of prevailing market conditions, in accordance with
Nomura’s established valuation policies and procedures.
43Quantitative and qualitative information regarding significant unobservable inputs
The following tables present quantitative and qualitative information about the significant unobservable valuation inputs used by Nomura tomeasure the fair value of financial instruments classified in Level 3 as of March 31, 2019 and December 31, 2019. These financial instruments will also
typically include observable valuation inputs (i.e. Level 1 or Level 2 valuation inputs) which are not included in the table and are also often hedgedusing financial instruments which are classified in Level 1 or Level 2 of the fair value hierarchy. Changes in each of these significant unobservablevaluation inputs used by Nomura will impact upon the fair value measurement of the financial instrument. The following tables also therefore
qualitatively summarize how an increase in those significant unobservable valuation inputs to a different amount might result in a higher or lower fairvalue measurement at the reporting date and summarize the interrelationship between significant unobservable valuation inputs where more than one isused to measure fair value.
March 31, 2019

Financial Instrument

Assets:Trading assets and private equity
investments
Equities
Private equity investments

Fairvalue inbillionsof yen5

DCF
Marketmultiples
DCF

160

DCF

3

DCF

Real estate-backed securities

69

DCF

Collateralized debt obligations(“CDOs”) and other

19

DCF

Foreign government, agency
and municipal securities
Bank and corporate debt
securities and loans for
trading purposes
Residential mortgage backed
securities (“RMBS”)

¥

13
26

Valuationtechnique

Impact ofincreases insignificant
unobservablevaluation
inputs(3)(4)Interrelationships
between valuation
inputs(5)Significant
unobservablevaluation input

Range ofvaluation inputs(1)Liquidity discounts
EV/EBITDA ratios

75.0%
7.7 x

75.0%
7.7 x

Lower fair value
Higher fair value

Not applicableNot applicable

Credit spreads
Recovery rates
Credit spreads
Recovery rates

0.0 – 9.1%
4.0 – 36.0%
0.0 – 15.0%
0.0 – 99.1%

0.6%
31.6%
4.1%
72.2%

Lower fair value
Higher fair value
Lower fair value
Higher fair value

No predictableinterrelationship
No predictableinterrelationship

Yields
Prepayment rates
Loss severities
YieldsLoss severities
Yields
Prepayment rates
Default probabilities
Loss severities

0.0 – 78.4%
6.5 – 15.0%
9.1 – 100.0%
5.5 – 19.7%
0.0 – 55.2%
2.7 – 19.0%
20.0%
1.0 – 2.0%
31.5 – 100.0%

13.2%
10.5%
81.1%
12.5%
6.6%
13.1%
20.0%
2.0%
83.7%

Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value

No predictableinterrelationship44

Weighted
Average(2)No predictableinterrelationship
Change in default
probabilities typicallyaccompanied by directionallysimilar change in loss
severities and oppositechange in prepayment rates

March 31, 2019

Financial Instrument

Fair
value inbillionsof yenDerivatives, net:
Equity contracts¥

Valuationtechnique(8)

OptionmodelsInterest rate contracts

(54)

DCF/
OptionmodelsCredit contracts

(8)

DCF/
OptionmodelsForeign exchange contracts

20

Optionmodels

129
33

DCF
DCF

166

DCF

Loans and receivables
Collateralized agreements
Other assets
Other(6)Marketmultiples

Liabilities:
Short-term borrowings

31

Long-term borrowings

535

DCF/
Optionmodels
DCF/
Optionmodels

Impact ofincreases insignificant
unobservablevaluation
inputs(3)(4)Interrelationships
between valuation
inputs(5)Significant
unobservablevaluation input

Range ofvaluation inputs(1)Weighted
Average(2)Dividend yield
Volatilities
Correlations
Interest rates
Volatilities
Volatilities
Correlations
Credit spreads
Recovery rates
Volatilities
Correlations
Interest rates
Volatilities
Volatilities
Correlations
Credit spreads
Repo rate

0.0 – 8.0%
6.7 – 74.2%(0.80) – 0.98
0.0 – 2.4%
10.6 – 15.2%
24.2 – 66.8 bp(0.76) – 1.00
0.0 – 21.4%
0.0 – 100.6%
16.2 – 83.0%
0.27 – 0.75(0.4) – 2.4%
1.7 – 35.5%
209.0 – 245.0 bp(0.25) – 0.80
0.0 – 12.3%
3.5 – 8.4%

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3.6%
7.0%

Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Lower fair value
Lower fair value

WACC
Growth rates
Liquidity discounts
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts

10.2%
2.5%
10.0%
4.7 – 13.8 x
8.9 – 32.4 x
0.3 – 2.7 x
10.0 – 50.0%

10.2%
2.5%
10.0%
8.2 x
15.5 x
0.8 x
30.6%

Lower fair value
Higher fair value
Lower fair value
Higher fair value
Higher fair value
Higher fair value
Lower fair value

Volatilities
Correlations

6.7 – 54.5%(0.75) – 0.91——

Higher fair value
Higher fair value

No predictableinterrelationship

Volatilities
Volatilities
Correlations

6.7 – 54.5%
32.5 – 60.9 bp(0.75) – 0.98———

Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationship45

No predictableinterrelationship
No predictableinterrelationship

No predictableinterrelationship

No predictableinterrelationship

Not applicableNot applicable
No predictableinterrelationship
Generally changes in
multiples result in acorresponding similar
directional change in afair value measurement,
assuming earnings
levels remain constant.

December 31, 2019

Financial Instrument

Assets:Trading assets and private equity
investments
Equities
Private equity investments

Foreign government, agency
and municipal securities
Bank and corporate debt
securities and loans for
trading purposes
Commercial mortgage- backed
securities (“CMBS”)
Residential mortgage-backed
securities (“RMBS”)
Real estate-backed securities
Collateralized debt obligations(“CDOs”) and other

Fairvalue inbillionsof yen¥Weighted
Average(2)Impact ofincreases insignificant
unobservablevaluation
inputs(3)(4)Interrelationships
between valuation
inputs(5)ValuationtechniqueSignificant
unobservable input

Range ofvaluation inputs(1)

15
33

DCF
DCF

7
185

DCF

75.0%
6.8 – 13.4%
0.8 – 1.0%
5.0 – 10.0%
5.1 – 11.9 x
5.0%
0.0 – 1.3%
1.0 – 21.0%
0.1 – 20.1%
0.0 –60.6%

75.0%
9.2%
0.8%
6.8%
10.6 x
5.0%
0.6%
9.1%
5.3%
35.3%

Lower fair value
Lower fair value
Higher fair value
Lower fair value
Higher fair value
Lower fair value
Lower fair value
Higher fair value
Lower fair value
Higher fair value

Not applicable
No predictableinterrelationshipMarketmultiples
DCF

Liquidity discounts
WACC
Growth rates
Liquidity discounts
EV/EBITDA ratios
Liquidity discounts
Credit spreads
Recovery rates
Credit spreads
Recovery rates

3

DCF

25

DCF

DCF
DCF

8.3 – 12.3%
13.5 – 45.0%
0.0 – 80.0%
6.7 –15.0%
0.8 – 100.0%
0.0 – 18.9%
11.8 – 24.0%
20.0%
2.0%
21.0 – 99.3%

9.5%
22.0%
9.9%
9.1%
58.1%
6.1%
16.2%
20.0%
2.0%
70.4%

Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value
Lower fair value

No predictableinterrelationship
No predictableinterrelationship68
16

YieldsLoss severities
Yields
Prepayment rates
Loss severities
Loss severities
Yields
Prepayment rates
Default probabilities
Loss severities

46

No predictableinterrelationship
No predictableinterrelationship
No predictableinterrelationship

Not applicable
Change in default
probabilities typicallyaccompanied by directionallysimilar change in loss
severities and oppositechange in prepayment rates

December 31, 2019

Financial Instrument

Fair
value inbillionsof yenDerivatives, net:
Equity contracts¥

Impact ofincreases insignificant
unobservablevaluation
inputs(3)(4)Interrelationships
between valuation
inputs(5)ValuationtechniqueSignificant
unobservable input

Range ofvaluation inputs(1)Weighted
Average(2)9Optionmodels(44)

DCF/
OptionmodelsCredit contracts

(24)

DCF/
OptionmodelsForeign exchange contracts

13

OptionmodelsLoans and receivables

223

DCF

Collateralized agreements
Other assets
Other(6)15DCF

0.0 – 10.4%
11.2 – 85.6%(0.85) – 0.98
(0.2) – 2.0%
9.6 – 13.6%
24.8 – 96.7 bp(1.00) – 0.98
0.0 – 13.8%
0.0 – 105.4%
38.0 – 50.0%
0.29 – 0.74
0.1 – 1.8%
1.0 – 24.6%
39.0 – 202.0 bp(0.25) – 0.80
0.0 – 15.0%
98.0 – 100.0%
3.8 – 6.1%

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3.7%
98.8%
4.8%

Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Higher fair value
Lower fair value
Higher fair value
Lower fair value

No predictableinterrelationship

Interest rate contracts

Dividend yield
Volatilities
Correlations
Interest rates
Volatilities
Volatilities
Correlations
Credit spreads
Recovery rates
Volatilities
Correlations
Interest rates
Volatilities
Volatilities
Correlations
Credit spreads
Recovery rates
Repo rate

168

DCF

WACC
Growth rates
Liquidity discounts
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts

9.7%
2.0%
10.0%
4.8 – 15.0 x
8.1 – 36.1 x
0.3 – 3.3 x
10.0 – 40.0%

9.7%
2.0%
10.0%
7.8 x
14.6 x
0.8 x
30.1%

Lower fair value
Higher fair value
Lower fair value
Higher fair value
Higher fair value
Higher fair value
Lower fair value

No predictableinterrelationship

Volatilities
Correlations

11.2 – 63.5%(0.72) – 0.95——

Higher fair value
Higher fair value

No predictableinterrelationship

Volatilities
Volatilities
Correlations

9.6 – 63.5%
29.2 – 73.8 bp(1.00) – 0.98———

Higher fair value
Higher fair value
Higher fair value

No predictableinterrelationshipMarketmultiples

Liabilities:
Short-term borrowings

41

Long-term borrowings

546

(1)

(2)
(3)

(4)
(5)
(6)

DCF/
Optionmodels
DCF/
OptionmodelsNo predictableinterrelationship

No predictableinterrelationship

No predictableinterrelationship

No predictableinterrelationship
Not applicable

Generally changes in
multiples result in acorresponding similar
directional change in afair value measurement,
assuming earnings levels
remain constant.

Range information is provided in percentages, coefficients and multiples and represents the highest and lowest level significant unobservable valuation input used
to value that type of financial instrument. A wide dispersion in the range does not necessarily reflect increased uncertainty or subjectivity in the valuation input
and is typically just a consequence of the different characteristics of the financial instruments themselves.
Weighted average information for non-derivative instruments is calculated by weighting each valuation input by the fair value of the financial instrument.
The above table only considers the impact of an increase in each significant unobservable valuation input on the fair value measurement of the financial
instrument. However, a decrease in the significant unobservable valuation input would have the opposite effect on the fair value measurement of the financial
instrument. For example, if an increase in a significant unobservable valuation input would result in a lower fair value measurement, a decrease in the significant
unobservable valuation input would result in a higher fair value measurement.
The impact of an increase in the significant unobservable input on the fair value measurement for a derivative assumes Nomura is long risk to the input e.g., long
volatility. Where Nomura is short such risk, the impact of an increase would have a converse effect on the fair value measurement of the derivative.
Consideration of the interrelationships between significant unobservable inputs is only relevant where more than one unobservable valuation input is used todetermine the fair value measurement of the financial instrument.
Valuation technique(s) and unobservable valuation inputs in respect of equity securities reported within Other assets in the consolidated balance sheets.

47

Qualitative discussion of the ranges of significant unobservable inputs
The following comments present qualitative discussion about the significant unobservable valuation inputs used by Nomura for financial
instruments classified in Level 3.
Derivatives—Equity contracts—The significant unobservable inputs are dividend yield, volatilities and correlations. The range of dividend yields
varies as some companies do not pay any dividends, for example due to a lack of profits or as a policy during a growth period, and hence have a zero
dividend yield while others may pay high dividends for example to return money to investors. The range of volatilities is wide as the volatilities ofshorter-dated equity derivatives or those based on single equity securities can be higher than those of longer-dated instruments or those based on indices.
Correlations represent the relationships between one input and another (“pairs”) and can either be positive or negative amounts. The range ofcorrelations moves from positive to negative because the movement of some pairs is very closely related and in the same direction causing highly
positive correlations while others generally move in opposite directions causing highly negative correlations with pairs that have differing relationships
throughout the range.
Derivatives—Interest rate contracts—The significant unobservable inputs are interest rates, volatilities and correlations. The range of interest
rates is due to interest rates in different countries/currencies being at different levels with some countries having extremely low levels and others beingat levels that while still relatively low are less so. The range of volatilities is wide as volatilities can be higher when interest rates are at extremely low
levels, and also because volatilities of shorter-dated interest rate derivatives are typically higher than those of longer-dated instruments. The range ofcorrelations moves from positive to negative because the movement of some pairs is very closely related and in the same direction causing highly
positive correlations while others generally move in opposite directions causing highly negative correlations with pairs that have differing relationships
through the range. All significant unobservable inputs are spread across the ranges.
Derivatives—Credit contracts—The significant unobservable inputs are credit spreads, recovery rates, volatilities and correlations. The range ofcredit spreads reflects the different risk of default present within the portfolio. At the low end of the range, underlying reference names have a very
limited risk of default whereas at the high end of the range, underlying reference names have a much greater risk of default. The range of recovery rates
varies primarily due to the seniority of the underlying exposure with senior exposures having a higher recovery than subordinated exposures. The rangeof volatilities is wide as the volatilities of shorter-dated credit contracts are typically higher than those of longer-dated instruments. The correlation
range is positive since credit spread moves are generally in the same direction. Highly positive correlations are those for which the movement is very
closely related and in the same direction, with correlation falling as the relationship becomes less strong.
Derivatives—Foreign exchange contracts—The significant unobservable inputs are interest rates, volatilities and correlations. The range ofinterest rates is due to interest rates in different countries/currencies being at different levels with some countries having extremely low levels and others
being at levels that while still relatively low are less so. The range of volatilities is mainly due to the lower end of the range arising from currencies that
trade in narrow ranges e.g. versus the U.S. Dollar while the higher end comes from currencies with a greater range of movement such as emerging
market currencies. The range of correlations moves from positive to negative because the movement of some pairs is very closely related and in thesame direction causing highly positive correlations while others generally move in opposite directions causing highly negative correlations with pairsthat have differing relationships through the range.
Short-term borrowings and Long-term borrowings—The significant unobservable inputs are yields, prepayment rates, default probabilities, loss
severities, volatilities and correlations. The range of volatilities is wide as the volatilities of shorter-dated instruments are typically higher than those inlonger-dated instruments. The range of correlations moves from positive to negative because the movement of some pairs is very closely related and in
the same direction causing highly positive correlations while others generally move in opposite directions causing highly negative correlations withpairs that have differing relationships through the range.
48

Movements in Level 3 financial instruments
The following tables present gains and losses as well as increases and decreases of financial instruments measured at fair value on a recurring
basis which Nomura classified in Level 3 for the nine and three months ended December 31, 2018 and 2019. Financial instruments classified in Level 3
are often hedged with instruments within Level 1 or Level 2 of the fair value hierarchy. The gains or losses presented below do not reflect the offsetting
gains or losses for these hedging instruments. Level 3 financial instruments are also measured using both observable and unobservable valuation inputs.
Fair value changes presented below, therefore, reflect realized and unrealized gains and losses resulting from movements in both observable andunobservable valuation inputs.
For the nine months ended December 31, 2018 and 2019, gains and losses related to Level 3 assets and liabilities did not have a material impact
on Nomura’s liquidity and capital resources management.
Billions of yen
Nine months ended December 31, 2018
Beginningbalance as ofnine months
ended
December 31,
2018

Assets:Trading assets and private
equity investments
Equities
Private equity
investments
Japanese agency andmunicipal securities
Foreign government,
agency and municipal
securities
Bank and corporate debt
securities and loans
for trading purposes
Commercial mortgagebacked securities(“CMBS”)
Residential mortgagebacked securities(“RMBS”)
Real estate-backed
securities
Collateralized debt
obligations (“CDOs”)
and other
Investment trust funds
and other
Total trading assets
and private equity
investments¥¥

Total gains(losses)
recognizedin netrevenue(1)Total gains(losses)
recognized in
otherSales /
comprehensive Purchases /incomeissues(2) redemptions(2)

21 ¥

(4) ¥

—

3

1

1

¥

Settlements

ForeignTransfers
exchange
into
movements Level 3(4)(5)

5 ¥

(9) ¥

—

(2) ¥

16

—

7

(2)

—

—

—

9

0

—

1

(1)

—

—

—

1

6

0

—

13

(13)

—

0

2

(1)

7

139

5

—

78

(61)

—

4

40

(42)

163

2

0

—

1

(2)

—

0

0

—

1

0

0

—

8

0

—

0

—

(6)

2

63

0

—

167

(130)

—

3

—

—

103

24

(1)

—

45

(47)

—

1

(2)

27

1

0

—

3

(3)

—

0

—

—

1

260 ¥

1 ¥

—

328 ¥

(268) ¥

—

8 ¥

54 ¥

(53) ¥¥¥

0 ¥Transfers
out ofLevel 3(5)

0
—

¥

5 ¥

Balance as ofnine months
ended
December 31,
2018

7

330

Derivatives, net(3)Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange
contracts
Commodity contracts
Total derivatives, net
Subtotal
Loans and receivables
Collateralized agreements
Other assets
Other
Total
Liabilities:
Trading liabilities
Equities
Bank and corporate debt
securities
Collateralized debt
obligations (“CDOs”)
and other
Investment trust funds
and other
Total trading liabilities
Short-term borrowings
Payables and deposits
Collateralized financing
Long-term borrowings
Other liabilities
Total

(1)
(53)
2

14
(22)
(2)

—
—
—

—
—
—

—
—
—

(3)
(2)
(7)

0
0
0

(8)
8
0

8
14
(3)

10
(55)
(10)

27
—
(25)
235 ¥
70
5

(6)
0
(16)
(15) ¥
1
0

—
—
—
—
—
—

—
—
—
328 ¥
48
—

—
—
—
(268) ¥
(13)
—

3
0
(9)
(9) ¥
—
—

1
0
1
9 ¥
3
0

(1)
—
(1)
53 ¥
5
5

2
—
21
(32) ¥
—
—

26
0
(29)
301
114
10

¥

169
479 ¥

(17)
(31) ¥

—
—

¥

3
379 ¥

(1)
(282) ¥

—
(9) ¥

5
17 ¥

0
63 ¥

—
(32) ¥

159
584

¥

1 ¥

0 ¥

—

¥

19 ¥

(20) ¥

—

0 ¥

0 ¥

0 ¥

0

0

0

—

0

0

—

0

—

0

0

0

(1)

—

0

(1)

—

0

—

—

0
1 ¥
17
(1)
3
429
1
450 ¥

0
(1) ¥
0
0
—
3
0
2 ¥

—
— ¥
0
—
—
2
—
2 ¥

0
19 ¥
34
1
—
139
0
193 ¥

0
(21) ¥
(13)
0
(1)
(62)
(1)
(98) ¥

—
—
—
—
—
—
—
—

0
0 ¥
0

0
0 ¥
23
—
—
41
0
64 ¥

0
0 ¥
(18)
—
—
(81)
—
(99) ¥

¥

¥

¥

¥

49

¥

¥
—

¥

1
0
0
1 ¥

0
0
0
43
0
3
461
0
507

Billions of yen
Nine months ended December 31, 2019
Total gains
Beginning
Balance as of(losses)balance as of Total gains
nine months
recognized innine months(losses)
ForeignTransfers Transfers
ended
other
ended
recognizedexchange
into
Sales /
out ofDecember 31,
comprehensive Purchases /December 31,
in net2019
incomeissues(2) redemptions(2) Settlements movements Level 3(4)(5) Level 3(5)2019
revenue(1)Assets:Trading assets and private
equity investments
Equities¥
Private equity
investments
Japanese agency andmunicipal securities
Foreign government,
agency and municipal
securities
Bank and corporate debt
securities and loans for
trading purposes
Commercial mortgagebacked securities(“CMBS”)
Residential mortgagebacked securities(“RMBS”)
Real estate-backed
securities
Collateralized debt
obligations (“CDOs”)
and other
Investment trust funds
and other
Total trading assets andprivate equity
investments¥(3)
Derivatives, net
Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange
contracts
Commodity contracts
Total derivatives, net
Subtotal¥
Loans and receivables
Collateralized agreements
Other assets

13 ¥

0 ¥

— ¥

7 ¥

(3) ¥

—

26

3

—

6

(1)

—

(1)

1

0

—

0

0

—

—

5

0

—

21

(21)

—

0

160

2

—

58

(97)

—

2

0

—

1

0

—

3

(1)

—

39

(14)

—

0

69

3

—

137

(140)

—

(1)

19

(8)

—

88

(84)

—

0

1

0

—

7

(8)

—

299 ¥

(1) ¥

—

364 ¥

(368) ¥

—

(8)
(54)
(8)

9
10
(6)

—
—
—

—
—
—

—
—
—

20
0
(50)
249 ¥
129
33

(8)
0
5
4 ¥
1
0

—
—
—
— ¥
—
—

—
—
—
364 ¥
129
—

—
—
—
(368) ¥
(66)
(28)

¥

¥

(2) ¥

15

—

—

33

—

—

1

3

(1)

7

(3)

92

(27)

185

—

0

0

3

—

(2)

25

—

—

68

8

(7)

16

0

0

0

0

(5) ¥

103 ¥

(39) ¥

353

(3)
(3)
(8)

0
0
0

7
1
(11)

4
2
9

9
(44)
(24)

(2)
0
(16)
(16) ¥
—
—

0
0
0
(5) ¥
(1)
0

0
—
(3)
100 ¥
79
10

3
—
18
(21) ¥
(48)
—

13
0
(46)
307
223
15

¥

0 ¥

0 ¥

Other
Total
Liabilities:
Trading liabilities
Equities
Foreign government,
agency and municipal
securities
Bank and corporate debt
securities
Collateralized debt
obligations (“CDOs”)
and other
Investment trust funds
and other
Total trading liabilities
Short-term borrowings
Payables and deposits
Long-term borrowings
Other liabilities
Total

¥

166
577 ¥

0
5 ¥

—
— ¥

¥

0 ¥

0 ¥

—

0

0

—

0

0

—

—

—

—

—

—

0 ¥
31
0
535
0
566 ¥

0 ¥
(1)
0
(8)
0
(9) ¥

—
— ¥
0
0
0
—
0 ¥

¥

¥

10
503 ¥

(6)
(468) ¥

0 ¥

0 ¥

¥

—

—
(16) ¥

(2)
(8) ¥

—
189 ¥

—
(69) ¥

168
713

—

0 ¥

0 ¥

0 ¥

0

¥

—

—

0

—

—

0

1

(1)

—

0

—

—

0

3

(3)

—

—

—

—

—

0
4 ¥
52
7
222
2
287 ¥

0
(4) ¥
(41)
0
(206)
0
(251) ¥

—
—
—
—
—
—
—

0
0 ¥
7
0
54
—
61 ¥

—

0
0
41
2
546
2
591

50

¥

¥

0
0 ¥
0
0
0
0
0 ¥

0 ¥
(9)
(5)
(67)
—
(81) ¥

Billions of yen
Three months ended December 31, 2018
Total gains
Beginning
Balance as of(losses)balance as of Total gains
three months
recognized inthree months(losses)
ForeignTransfers Transfers
ended
other
ended
recognizedexchange
into
Sales /
out ofDecember 31,
comprehensive Purchases /December 31,
in net2018
incomeissues(2) redemptions(2) Settlements movements Level 3(4)(5) Level 3(5)2018
revenue(1)Assets:Trading assets and private
equity investments
Equities¥
Private equity
investments
Japanese agency andmunicipal securities
Foreign government,
agency and municipal
securities
Bank and corporate debt
securities and loans for
trading purposes
Commercial mortgagebacked securities(“CMBS”)
Residential mortgagebacked securities(“RMBS”)
Real estate-backed
securities
Collateralized debt
obligations (“CDOs”)
and other
Investment trust funds
and other
Total trading assets andprivate equity
investments¥(3)
Derivatives, net
Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange
contracts
Commodity contracts
Total derivatives, net
Subtotal¥
Loans and receivables
Collateralized agreements
Other assets

20 ¥

(3) ¥

— ¥

3 ¥

(3) ¥

—

(1) ¥

16

10

1

—

0

(1)

—

(1)

—

—

9

1

0

—

1

(1)

—

—

—

—

1

3

0

—

6

(4)

—

—

2

0

7

154

1

—

29

(31)

—

(3)

24

(11)

163

1

0

—

—

—

—

0

0

—

1

7

0

—

2

(1)

—

0

—

(6)

2

91

0

—

78

(65)

—

(1)

—

—

103

30

(2)

—

17

(20)

—

(1)

0

27

1

0

—

0

0

—

0

—

—

318 ¥

(3) ¥

—

136 ¥

(126) ¥

—

(7) ¥

30 ¥

(18) ¥

330

(13)
(53)
(2)

24
(11)
0

—
—
—

—
—
—

—
—
—

2
7
(6)

0
0
0

(5)
2
0

2
0
(2)

10
(55)
(10)

25
0
(43)
275 ¥
87
11

0
0
13
10 ¥
1
0

—
—
—
— ¥
—
—

—
—
—
136 ¥
30
—

—
—
—
(126) ¥
(2)
—

1
0
4
4 ¥
—
—

0
0
0
(7) ¥
(2)
(1)

(1)
—
(4)
26 ¥
—
—

1

26
0
(29)
301
114
10

¥

¥

¥

(1) ¥

1 ¥

3

1

—
1
(17) ¥——

Other
Total
Liabilities:
Trading liabilities
Equities
Bank and corporate debt
securities
Collateralized debt
obligations (“CDOs”)
and other
Investment trust funds
and other
Total trading liabilities
Short-term borrowings
Payables and deposits
Collateralized financing
Long-term borrowings
Other liabilities
Total

¥

180
553 ¥

(19)
(8) ¥

¥

0 ¥

0 ¥

—

1

1

—

0

¥

¥

0
1 ¥
42
(1)
3
461
0
506 ¥

0
1 ¥
1
(1)
—
5
0
6 ¥

—
— ¥

2
168 ¥

(1)
(129) ¥

0 ¥

0 ¥

—

—

0

0

—

0

—

—

0

—

0

—

—

0

—

—

0

0
0 ¥
(4)
—
—
(17)
0
(21) ¥

—
—
—
—
—
—
—
—

0
0 ¥
7
—
—
16
—
23 ¥

0
0 ¥
(6)
—
—
(33)
—
(39) ¥

¥

—
— ¥
0
—
—
1
—
1 ¥

—
0 ¥
6
0
—
40
0
46 ¥

51

—
4 ¥

¥

¥

¥

(3)
(13) ¥—
26 ¥—(17) ¥

159
584

0 ¥

0 ¥

0 ¥

0

0
0 ¥
(1)
—
0
0
0
(1) ¥

0
0
43
0
3
461
0
507

Billions of yen
Three months ended December 31, 2019
Beginningbalance as ofthree months
ended
December 31,
2019

Assets:Trading assets and private
equity investments
Equities¥
Private equity
investments
Japanese agency andmunicipal securities
Foreign government,
agency and municipal
securities
Bank and corporate debt
securities and loans
for trading purposes
Commercial mortgagebacked securities(“CMBS”)
Residential mortgagebacked securities(“RMBS”)
Real estate-backed
securities
Collateralized debt
obligations (“CDOs”)
and other
Investment trust funds
and other
Total trading assets andprivate equity
investments¥
Derivatives, net(3)Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange
contracts
Commodity contracts
Total derivatives, net
Subtotal¥
Loans and receivables

Total gains(losses)
recognizedin netrevenue(1)Total gains(losses)
recognized inothercomprehensive
income

10 ¥

0 ¥

—

26

1

1

Sales /
Purchases /issues(2) redemptions(2)¥Settlements

ForeignTransfers Transfers
exchange
into
out ofmovements Level 3(4)(5) Level 3(5)

7 ¥

(2) ¥

—

—

5

0

—

1

—

—

33

0

—

0

0

—

—

—

—

1

6

0

—

6

(5)

—

0

1

(1)

7

177

3

—

18

(36)

—

3

29

(9)

185

2

0

—

1

—

—

0

—

—

3

26

0

—

5

(6)

—

0

—

—

25

103

0

—

29

(65)

—

1

—

—

68

21

(3)

—

6

(9)

—

1

2

(2)

16

0

—

—

0

0

—

0

—

—

0

77 ¥

(123) ¥

—

6 ¥

32 ¥

(12) ¥

353

¥

¥

0 ¥

0 ¥

15

372 ¥

1 ¥

—

16
(46)
(23)

1
5
(3)

—
—
—

—
—
—

—
—
—

(2)
(5)
(7)

0
0
0

4
1
0

(10)
1
9

9
(44)
(24)

13
0
(40)
332 ¥
116

6
0
9
10 ¥
0

—
—
—
—
—

—
—
—
77 ¥
84

—
—
—
(123) ¥
(6)

(6)
0
(20)
(20) ¥
—

0
0
0
6 ¥
2

0
—
5
37 ¥
58

0
—
0
(12) ¥
(31)

13
0
(46)
307
223

¥

¥

0 ¥

Balance as ofthree months
ended
December 31,
2019Collateralized agreements
Other assets
Other
Total
¥
Liabilities:
Trading liabilities
Equities¥
Foreign government,
agency and municipal
securities
Bank and corporate debt
securities
Collateralized debt
obligations (“CDOs”)
and other
Investment trust funds
and other
Total trading liabilities¥
Short-term borrowings
Payables and deposits
Long-term borrowings
Other liabilities
Total
¥
(1)

(2)
(3)

(4)
(5)

12

0

—

—

—

—

0

3

179
639 ¥

(9)
1 ¥

—
—

¥

2
163 ¥

(6)
(135) ¥—
(20) ¥

2
10 ¥

0 ¥

0 ¥

—

¥

0 ¥

0 ¥

—

0 ¥

0

0

—

—

1

0

—

2

—
—
0 ¥
(1)
0
(10)
0
(11) ¥

0
3 ¥
25
7
543
0
578 ¥

¥

—

15

—
98 ¥

—
(43) ¥

168
713

0 ¥

0 ¥

0

—

—

0

—

—

0

0

(1)

—

0

—

—

0

—

—

(2)

—

0

—

—

—

—
— ¥
0
0
(1)
—
(1) ¥

0
0 ¥
22
0
85
2
109 ¥

0
(3) ¥
(11)
0
(82)
0
(96) ¥

—
—
—
—
—
—
—

0
0 ¥
1
0
0
0
1 ¥

—

—

0 ¥
7
—
16
—
23 ¥

0 ¥
(4)
(5)
(27)
—
(36) ¥

0
0
41
2
546
2
591

¥

¥

Includes gains and losses reported primarily within Net gain on trading, Gain on private equity investments, and also within Gain (loss) on
investments in equity securities, Revenue—Other and Non-interest expenses—Other, Interest and dividends and Interest expense in the
consolidated statements of income.
Amounts reported in Purchases / issues include increases in trading liabilities while Sales / redemptions include decreases in trading liabilities.
Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rate contracts include complex derivatives
referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default
swaps as well as derivatives referencing corporate and government debt securities.
Amounts of gains and losses on these transfers which were recognized in the quarter when the Transfers into Level 3 occurred were not significant
for the nine and three months ended December 31, 2018 and 2019.
Transfers into Level 3 indicate certain valuation inputs of a financial instrument become unobservable or significant. Transfers out of Level 3
indicate certain valuation inputs of a financial instrument become observable or insignificant. See Quantitative and qualitative information
regarding significant unobservable inputs above for the valuation inputs of each financial instruments.
52

Unrealized gains and losses recognized for Level 3 financial instruments
The following table presents the amounts of unrealized gains (losses) for the nine and three months ended December 31, 2018 and 2019, relating
to those financial instruments which Nomura classified in Level 3 within the fair value hierarchy and that were still held by Nomura at the relevant
consolidated balance sheet date.
Billions of yen
Nine months ended December 31
2018
2019
Unrealized gains / (losses)(1)

Assets:Trading assets and private equity investments
Equities
Private equity investments
Japanese agency and municipal securities
Foreign government, agency and municipal securities
Bank and corporate debt securities and loans for trading purposes
Commercial mortgage-backed securities (“CMBS”)
Residential mortgage-backed securities (“RMBS”)
Real estate-backed securities
Collateralized debt obligations (“CDOs”) and other
Investment trust funds and otherTotal trading assets and private equity investments
Derivatives, net(2)Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Total derivatives, net
Subtotal
Loans and receivables
Collateralized agreements
Other assets
Other
Total
Liabilities:
Trading liabilities
Equities
Bank and corporate debt securities
Collateralized debt obligations (“CDOs”) and other
Investment trust funds and otherTotal trading liabilities
Short-term borrowings
Payables and deposits
Long-term borrowings
Other liabilities
Total
53

¥

¥

¥

¥

¥

¥

¥

(3)
1
0
0
(1)
0
0
2
(7)
0
(8)
12
(20)
(5)
(5)
0
(18)
(26)
1
0
(18)
(43)

0
0
0
0
0
0
0
0
0
0

¥

¥

¥

¥

¥

¥

¥

(1)
3
0
0
(4)
0
(1)
(1)
(6)
0
(10)
3
(3)
(7)
1
0
(6)
(16)
1
0
1
(14)

0
0
0
0
0
0
0
1
(2)
(1)

Billions of yen
Three months ended December 31
2018
2019
Unrealized gains / (losses)(1)

Assets:Trading assets and private equity investments
Equities
Private equity investments
Japanese agency and municipal securities
Foreign government, agency and municipal securities
Bank and corporate debt securities and loans for trading purposes
Commercial mortgage-backed securities (“CMBS”)
Residential mortgage-backed securities (“RMBS”)
Real estate-backed securities
Collateralized debt obligations (“CDOs”) and other
Investment trust funds and otherTotal trading assets and private equity investments
Derivatives, net(2)Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Total derivatives, net
Subtotal
Loans and receivables
Collateralized agreements
Other assets
Other
Total
Liabilities:
Trading liabilities
Equities
Bank and corporate debt securities
Collateralized debt obligations (“CDOs”) and other
Investment trust funds and otherTotal trading liabilities
Short-term borrowings
Payables and deposits
Long-term borrowings
Other liabilities
Total
(1)

(2)

¥

¥

¥

¥

¥

(3)
1
0
0
0
0
0
2
(2)
0
(2)
26
(11)
(7)
0
0
8
6
0
0
(19)
(13)

¥

0
0
0
—
0

¥

0
0
(5)
0
(5)

¥

¥

¥

¥

¥

0
1
0
0
(1)
0
0
(1)
(3)
0
(4)
(2)
(1)
(4)
4
0
(3)
(7)
0
0
(10)
(17)

¥

0
0
—
0
0

¥

(1)
0
(6)
(2)
(9)

Includes gains and losses reported within Net gain on trading, Gain on private equity investments, and also within Gain on investments in equity
securities, Revenue—Other and Non-interest expenses—Other, Interest and dividends and Interest expense in the consolidated statements ofincome.
Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rate contracts include complex derivatives
referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default
swaps as well as derivatives referencing corporate and government debt securities.
54

Investments in investment funds that calculate NAV per share
In the normal course of business, Nomura invests in non-consolidated funds which meet the definition of investment companies or are similar innature and which do not have readily determinable fair values. For certain of these investments, Nomura uses NAV per share as the basis for valuation
as a practical expedient. Some of these investments are redeemable at different amounts from NAV per share.
The following tables present information on these investments where NAV per share is calculated or disclosed as of March 31, 2019 andDecember 31, 2019. Investments are presented by major category relevant to the nature of Nomura’s business and risks.

Hedge funds
Venture capital funds
Private equity funds
Real estate funds
Total

Hedge funds
Venture capital funds
Private equity funds
Real estate funds
Total
(1)
(2)
(3)

Fair value

Unfundedcommitments(1)

¥

¥

—

¥

2
10
1
13

16
2
17
3
38

¥

Fair value

Unfundedcommitments(1)

¥

¥

—

¥

1
11
1
13

2
2
21
4
29

¥

Billions of yen
March 31, 2019
Redemption frequency(if currently eligible)(2)Redemption notice(3)Monthly———

Same day-90 days———

Billions of yen
December 31, 2019
Redemption frequency(if currently eligible)(2)Redemption notice(3)Monthly———

Same day-90 days———

The contractual amount of any unfunded commitments Nomura is required to make to the entities in which the investment is held.
The range in frequency with which Nomura can redeem investments.
The range in notice period required to be provided before redemption is possible.
Hedge funds:

These investments include funds of funds that invest in multiple asset classes. The fair values of these investments are determined using NAV pershare. Although most of these funds can be redeemed within six months, certain funds cannot be redeemed within six months due to contractual,liquidity or gating issues. The redemption period is unknown for certain suspended or liquidating funds. Some of these investments contain restrictions
against transfers of the investments to third parties.
Venture capital funds:
These investments include primarily start-up funds. The fair values of these investments are determined using NAV per share. Most of these funds
cannot be redeemed within six months. The redemption period is unknown for certain suspended or liquidating funds. Some of these investments
contain restrictions against transfers of the investments to third parties.
Private equity funds:
These investments are made mainly in various sectors in Europe, U.S. and Japan. The fair values of these investments are determined using NAV
per share. Redemption is restricted for most of these investments. Some of these investments contain restrictions against transfers of the investments tothird parties.
Real estate funds:
These are investments in commercial and other types of real estate. The fair values of these investments are determined using NAV per share.
Redemption is restricted for most of these investments. Some of these investments contain restrictions against transfers of the investments to third
parties.
55

Fair value option for financial assets and financial liabilities
Nomura measures certain eligible financial assets and liabilities at fair value through the election of the fair value option permitted by ASC 815“Derivatives and Hedging” (“ASC 815”) and ASC 825 “Financial Instruments” (“ASC 825”). When Nomura elects the fair value option for an eligible
item, changes in that item’s fair value are recognized through earnings. Election of the fair value option is generally irrevocable unless an event occursthat gives rise to a new basis of accounting for that instrument.
The financial assets and financial liabilities primarily elected for the fair value option by Nomura, and the reasons for the election, are as follows:•

Equity method investments reported within Trading assets and private equity investments and Other assets held for capital appreciation or
current income purposes which Nomura generally has an intention to exit rather than hold indefinitely. Nomura elects the fair value option
to more appropriately represent the purpose of these investments in these consolidated financial statements.

•

Loans reported within Loans and receivables which are risk managed on a fair value basis and loan commitments related to loans
receivable for which the fair value option will be elected upon funding. Nomura elects the fair value option to mitigate volatility throughearnings caused by the difference in measurement basis that otherwise would arise between loans and the derivatives used to risk manage
those instruments.

•

Reverse repurchase and repurchase agreements reported within Collateralized agreements and Collateralized financing which are risk
managed on a fair value basis. Nomura elects the fair value option to mitigate volatility through earnings caused by the difference inmeasurement basis that otherwise would arise between the reverse repurchase and repurchase agreements and the derivatives used to risk
manage those instruments.

•

All structured notes issued on or after April 1, 2008 reported within Short-term borrowings and/or Long-term borrowings. Nomura elects
the fair value option for those structured notes primarily to mitigate the volatility through earnings caused by differences in themeasurement basis for structured notes and the derivatives Nomura uses to risk manage those positions. Nomura also elects the fair value
option for certain notes issued by consolidated VIEs for the same purpose and for certain structured notes issued prior to April 1, 2008.
Certain subsidiaries elect the fair value option for structured loans and straight bonds.

•

Certain structured deposit issuances reported within Deposits received at banks. Nomura elects the fair value option for those structured
deposits primarily to mitigate the volatility through earnings caused by differences in the measurement basis for structured deposits andthe derivatives Nomura uses to risk manage those positions.

•

Financial liabilities reported within Long-term borrowings recognized in transactions which are accounted for as secured financing
transactions under ASC 860. Nomura elects the fair value option for these financial liabilities to mitigate volatility through earnings that
otherwise would arise had this election not been made. Even though Nomura usually has little or no continuing economic exposure to thetransferred financial assets, they remain on the consolidated balance sheets and continue to be carried at fair value, with changes in fairvalue recognized through earnings.

Interest and dividends arising from financial instruments for which the fair value option has been elected are recognized within Interest anddividends, Interest expense or Net gain on trading.
56

The following table presents gains (losses) due to changes in fair value for financial instruments measured at fair value using the fair value option
for the nine and three months ended December 31, 2018 and 2019.
Billions of yen
Nine months ended December 31
2018
2019
Gains / (Losses)(1)

Assets:Trading assets and private equity investments(2)Trading assets
Private equity investments
Loans and receivables
Collateralized agreements(3)Other assets(2)
Total
Liabilities:
Short-term borrowings(4)Collateralized financing(3)Long-term borrowings(4)(5)
Other liabilities(6)
Total

¥

¥
¥

¥

0
1
0
5
(31)
(25)

¥

53
0
62
18
133

¥

0
0
4
0
(7)
(3)

¥

¥

(1)
(1)
(109)
(4)
(115)

Billions of yen
Three months ended December 31
2018
2019
Gains / (Losses)(1)

Assets:Trading assets and private equity investments(2)Trading assets
Private equity investments
Loans and receivables
Collateralized agreements(3)Other assets(2)
Total
Liabilities:
Short-term borrowings(4)Collateralized financing(3)Long-term borrowings(4)(5)
Other liabilities(6)
Total
(1)
(2)
(3)
(4)
(5)
(6)

¥

¥
¥

¥

0
0
1
5
(30)
(24)

¥

47
1
12
9
69

¥

0
0
1
(2)
(8)
(9)

¥

¥

(18)
1
(3)
0
(20)

Includes gains and losses reported primarily within Net gain on trading and Revenue—Other in the consolidated statements of income.
Includes equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value option.
Includes reverse repurchase and repurchase agreements.
Includes structured notes and other financial liabilities.
Includes secured financing transactions arising from transfers of financial assets which did not meet the criteria for sales accounting.
Includes unfunded written loan commitments.
57

As of March 31, 2019 and December 31, 2019, Nomura held an economic interest of 39.52% and 40.04% in American Century Companies, Inc.,
respectively. The investment is measured at fair value on a recurring basis through election of the fair value option and is reported within Other
assets—Other in the consolidated balance sheets.
There was no significant impact on financial assets for which the fair value option was elected attributable to instrument-specific credit risk.
Nomura calculates the impact of changes in its own creditworthiness on certain financial liabilities for which the fair value option is elected by
DCF valuation techniques using a rate which incorporates observable changes in its credit spread.
The following table presents changes in the valuation adjustment for Nomura’s own credit worthiness applied to certain financial liabilities forwhich the fair value option has been elected recognized in other comprehensive income during the period and cumulatively, and amounts reclassified toearnings from accumulated other comprehensive income on early settlement of such financial liabilities during the nine and three months ended
December 31, 2018 and 2019.
Billions of Yen
Nine months period ended December 31
2018
2019

Changes recognized as a credit (debit) to other comprehensive income during the period
Credit (debit) Amounts reclassified to earnings during the period
Cumulative credit (debit) balance recognized in accumulated other comprehensive income

¥

31
0
39

¥

(24)
(1)
13

Billions of Yen
Three months period ended December 31
2018
2019

Changes recognized as a credit (debit) to other comprehensive income during the period
Credit (debit) Amounts reclassified to earnings during the period

¥

27
0

¥

(22)
0

As of March 31, 2019, the fair value of the aggregate unpaid principal balance (which is contractually principally protected) of Loans andreceivables for which the fair value option was elected was ¥0 billion more than the principal balance of such Loans and receivables. The fair value ofthe aggregate unpaid principal balance (which is contractually principally protected) of Long-term borrowings for which the fair value option waselected was ¥50 billion less than the principal balance of such Long-term borrowings. There were no Loans and receivables for which the fair value
option was elected that were 90 days or more past due.
As of December 31, 2019, the fair value of the aggregate unpaid principal balance (which is contractually principally protected) of Loans andreceivables for which the fair value option was elected was ¥4 billion less than the principal balance of such Loans and receivables. The fair value of theaggregate unpaid principal balance (which is contractually principally protected) of Long-term borrowings for which the fair value option was electedwas ¥10 billion less than the principal balance of such Long-term borrowings. There were no Loans and receivables for which the fair value option waselected that were 90 days or more past due.
Investment by Investment companies
Nomura carries all of investments by investment companies under ASC 946 “Financial Services—Investment Companies” at fair value, withchanges in fair value recognized through the consolidated statements of income.
58Concentrations of credit risk
Concentrations of credit risk may arise from trading, securities financing transactions and underwriting activities, and may be impacted bychanges in political or economic factors. Nomura has credit risk concentrations on bonds issued by the Japanese Government, U.S. Government,
Governments within the European Union (“EU”), their states and municipalities, and their agencies. These concentrations generally arise from taking
trading positions and are reported within Trading assets in the consolidated balance sheets. Government, agency and municipal securities, including
Securities pledged as collateral, represented 16% of total assets as of March 31, 2019 and 15% as of December 31, 2019.
The following tables present geographic allocations of Nomura’s trading assets related to government, agency and municipal securities. See Note
3 “Derivative instruments and hedging activities” for further information regarding the concentration of credit risk for derivatives.

Japan

Government, agency and municipal securities¥2,202 ¥1,723 ¥1,897

Japan

Government, agency and municipal securities(1)

Billions of yen
March 31, 2019
U.S.
EU
Other

Billions of yen
December 31, 2019
U.S.
EU
Other

¥1,888 ¥2,395 ¥2,180

Total(1)¥ 579 ¥6,401

Total(1)¥ 645 ¥7,108

Other than above, there were ¥318 billion and ¥329 billion of government, agency and municipal securities reported within Other
assets—Non-trading debt securities in the consolidated balance sheets as of March 31, 2019 and December 31 2019, respectively. These securities
are primarily Japanese government, agency and municipal securities.

Estimated fair value of financial instruments not carried at fair value
Certain financial instruments are not carried at fair value on a recurring basis in the consolidated balance sheets since they are neither held for
trading purposes nor are elected for the fair value option. These are typically carried at contractual amounts due or amortized cost.
The carrying value of the majority of the financial instruments detailed below will approximate fair value since they are short-term in nature andcontain minimal credit risk. These financial instruments include financial assets reported within Cash and cash equivalents, Time deposits, Deposits
with stock exchanges and other segregated cash, Receivables from customers, Receivables from other than customers, Securities purchased underagreements to resell and Securities borrowed and financial liabilities reported within Short-term borrowings, Payables to customers, Payables to otherthan customers, Deposits received at banks, Securities sold under agreements to repurchase, Securities loaned and Other secured borrowings in the
consolidated balance sheets.
The estimated fair values of other financial instruments which are longer-term in nature or may contain more than minimal credit risk may bedifferent to their carrying value. Financial assets of this type primarily include certain loans which are reported within Loans receivable while financial
liabilities primarily include long-term borrowings which are reported within Long-term borrowings.
59

The following tables present carrying values, fair values and classification within the fair value hierarchy for certain classes of financial
instrument of which a portion of the ending balance was carried at fair value as of March 31, 2019 and December 31 2019.
Billions of yen
March 31, 2019(1)Fair value by level
Fair
value
Level 1
Level 2
Level 3Carrying
value

Assets:Cash and cash equivalents
Time deposits
Deposits with stock exchanges and other segregated cash
Loans receivable(2)Securities purchased under agreements to resell
Securities borrowed
Total
Liabilities:
Short-term borrowings
Deposits received at banks
Securities sold under agreements to repurchase
Securities loaned
Long-term borrowings
Total¥ 2,687
290
285
2,542
13,195
4,112¥23,111¥ 2,687
290
285
2,541
13,195
4,111¥23,109¥ 2,687—————¥ 2,687

¥

—
290
285
1,941
13,162
4,111¥19,789

¥

¥

¥

¥

¥

¥

841
1,393
15,0371,230
7,916¥26,417

Carrying
value

Assets:Cash and cash equivalents
Time deposits
Deposits with stock exchanges and other segregated cash
Loans receivable(2)Securities purchased under agreements to resell
Securities borrowed
Total
Liabilities:
Short-term borrowings
Deposits received at banks
Securities sold under agreements to repurchase
Securities loaned
Long-term borrowings
Total
(1)
(2)

Includes financial instruments which are carried at fair value on a recurring basis.
Carrying values are shown after deducting relevant allowances for credit losses.
60

841
1,393
15,0371,230
7,931¥26,432

¥

—
—
—
—
12
12

811
1,393
15,0371,230
7,353¥25,824

¥

¥

—
—
—
600
33
—
633
30
—
—
—
566
596

Billions of yen
December 31, 2019(1)Fair value by level
Fair
value
Level 1
Level 2
Level 3

¥ 3,152
267
317
2,940
15,633
3,922¥26,231¥ 3,152
267
317
2,940
15,633
3,922¥26,231¥ 3,152—————¥ 3,152

¥

—
267
317
2,195
15,6183,922¥22,319¥¥ 1,068
1,237
19,3871,266
7,911¥30,869¥ 1,068
1,237
19,3871,266
7,937¥30,895¥¥ 1,027
1,235
19,3871,266
7,325¥30,240

¥

¥

—
—
—
—
3
3

¥

¥

—
—
—
745
15
—
760
41
2
—
—
609
652

Assets and liabilities measured at fair value on a nonrecurring basis
In addition to financial instruments carried at fair value on a recurring basis, Nomura also measures other financial and non-financial assets andliabilities at fair value on a nonrecurring basis, where the primary measurement basis is not fair value. Fair value is only used in specific circumstances
after initial recognition such as to measure impairment.
As of March 31, 2019, goodwill allocated to the Wholesale segment was measured at fair value on a nonrecurring basis. The relevant goodwill,
which is reported within Other assets—Other in the consolidated balance sheets, was wholly impaired. Fair value was determined using a DCF
valuation technique and consequently, this nonrecurring fair value measurement was determined using valuation inputs which would be classified in
Level 3 of the fair value hierarchy. See Note 9 “Other assets—Other / Other liabilities” for further information.
As of December 31, 2019, there were no significant amount of assets and liabilities which were measured at fair value on a nonrecurring basis.
61

3. Derivative instruments and hedging activities:
Nomura uses a variety of derivative financial instruments, including futures, forwards, options and swaps, for both trading and non-trading
purposes.
Derivatives used for trading purposes
In the normal course of business, Nomura enters into transactions involving derivative financial instruments to meet client needs, for trading
purposes, and to reduce its own exposure to loss due to adverse fluctuations in interest rates, currency exchange rates and market prices of securities.
These financial instruments include contractual agreements such as commitments to swap interest payment streams, exchange currencies or purchase or
sell securities and other financial instruments on specific terms at specific future dates.
Nomura maintains active trading positions in a variety of derivative financial instruments. Most of Nomura’s trading activities are client oriented.
Nomura utilizes a variety of derivative financial instruments as a means of bridging clients’ specific financial needs and investors’ demands in the
securities markets. Nomura also actively trades securities and various derivatives to assist its clients in adjusting their risk profiles as markets change. In
performing these activities, Nomura carries an inventory of capital markets instruments and maintains its access to market liquidity by quoting bid andoffer prices to and trading with other market makers. These activities are essential to provide clients with securities and other capital market products atcompetitive prices.
Futures and forward contracts are commitments to either purchase or sell securities, foreign currency or other capital market instruments at a
specific future date for a specified price and may be settled in cash or through delivery. Foreign exchange contracts include spot and forward contracts
and involve the exchange of two currencies at a rate agreed by the contracting parties. Risks arise from the possible inability of counterparties to meet
the terms of their contracts and from movements in market prices. Futures contracts are executed through regulated exchanges which clear andguarantee performance of counterparties. Accordingly, credit risk associated with futures contracts is considered minimal. In contrast, forward contracts
are generally negotiated between two counterparties and, therefore, are subject to the performance of the related counterparties.
Options are contracts that grant the purchaser, for a premium payment, the right to either purchase or sell a financial instrument at a specified
price within a specified period of time or on a specified date from or to the writer of the option. The writer of options receives premiums and bears therisk of unfavorable changes in the market price of the financial instruments underlying the options.
Swaps are contractual agreements in which two counterparties agree to exchange certain cash flows, at specified future dates, based on an agreed
contract. Certain agreements may result in combined interest rate and foreign currency exposures. Entering into swap agreements may involve the riskof credit losses in the event of counterparty default.
To the extent these derivative financial instruments are economically hedging financial instruments or securities positions of Nomura, the overallrisk of loss may be fully or partly mitigated by the hedged position.
Nomura seeks to minimize its exposure to market risk arising from its use of these derivative financial instruments through various control
policies and procedures, including position limits, monitoring procedures and hedging strategies whereby Nomura enters into offsetting or otherpositions in a variety of financial instruments.
62

Derivatives used for non-trading purposes
Nomura’s principal objectives in using derivatives for non-trading purposes are to manage interest rate risk, to modify the interest ratecharacteristics of certain financial liabilities, to manage foreign exchange risk of certain foreign currency denominated debt securities, to manage net
investment exposure to fluctuations in foreign exchange rates arising from certain foreign operations and to mitigate equity price risk arising fromcertain stock-based compensation awards given to employees.
Credit risk associated with derivatives utilized for non-trading purposes is controlled and managed in the same way as credit risk associated with
derivatives utilized for trading purposes.
Nomura designates certain derivative financial instruments as fair value hedges of interest rate risk arising from specific financial liabilities andforeign currency risk arising from specific foreign currency denominated debt securities. These derivatives are effective in reducing the risk associatedwith the exposure being hedged and are highly correlated with changes in the fair value and foreign currency rates of the underlying hedged items, bothat inception and throughout the life of the hedge contract. Changes in fair value of the hedging derivatives are reported together with those of the hedged
assets and liabilities through the consolidated statements of income within Interest expense or Revenue—Other.
Derivative financial instruments designated as hedges of the net investment in foreign operations relate to specific subsidiaries with non-Japanese
Yen functional currencies. When determining the effectiveness of net investment hedges, the effective portion of the change in fair value of the hedging
derivative is determined by changes in spot exchange rates. Changes in fair value of the hedging derivatives attributable to changes in the difference
between the forward rate and spot rate are excluded from the measure of hedge effectiveness and are reported in the consolidated statements of income
within Revenue—Other. All other movements in fair value of highly effective hedging derivatives are reported through NHI shareholders’ equity within
Accumulated other comprehensive income (loss).
Concentrations of credit risk for derivatives
The following tables present Nomura’s significant concentration of exposures to credit risk in OTC derivatives with financial institutions
including transactions cleared through central counterparties as of March 31, 2019 and December 31, 2019. The gross fair value of derivative assets
represents the maximum amount of loss due to credit risk that Nomura would incur if the counterparties of Nomura failed to perform in accordance withthe terms of the instruments and any collateral or other security Nomura held in relation to those instruments proved to be of no value.

Financial institutions

Financial institutions
63

Gross fair value ofderivative assets

Billions of yen
March 31, 2019
Impact ofmaster netting
Impact ofagreements
collateralNet exposure tocredit risk

¥

¥

¥

13,332(11,602)¥ (1,507)

223

Gross fair value ofderivative assets

Billions of yen
December 31, 2019
Impact ofmaster netting
Impact ofagreements
collateralNet exposure tocredit risk

¥

¥

¥

12,380(10,775)¥ (1,336)

269

Derivative activities
The following tables quantify the volume of Nomura’s derivative activity as of March 31, 2019 and December 31, 2019 through a disclosure ofnotional amounts, in comparison with the fair value of those derivatives. All amounts are disclosed on a gross basis, prior to counterparty netting ofderivative assets and liabilities and cash collateral netting against net derivatives.

Derivatives used for trading and non-trading purposes(2)(3):
Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Total
Derivatives designated as hedging instruments:
Interest rate contracts
Foreign exchange contracts
Total
Total derivatives

Total Notional(1)Billions of yen
March 31, 2019
Derivative assets
Derivative liabilities
Fair value
Fair value(1)

¥

¥

¥
¥
¥
¥

45,7212,243,179
35,343
310,677
241
2,635,161
1,002
146
1,148
2,636,309

¥
¥
¥
¥

851
8,612
533
4,912
1
14,90920
0
20
14,929

¥

¥
¥
¥
¥

920
8,290
464
4,842
1
14,517———
14,517

Total Notional(1)Billions of yen
December 31, 2019
Derivative assets
Derivative liabilities
Fair value
Fair value(1)¥¥Derivatives used for trading and non-trading purposes(2)(3):
Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Total
Derivatives designated as hedging instruments:
Interest rate contracts
Foreign exchange contracts
Total
Total derivatives
(1)
(2)

(3)

¥
¥
¥
¥

42,1982,356,610
31,535248,965343
2,679,651
968
124
1,092
2,680,743

¥
¥
¥
¥

762
9,015
462
3,829
2
14,07016
016
14,086

¥

¥
¥
¥
¥

957
8,476
492
3,742
4
13,6710
2
2
13,673

Includes the amount of embedded derivatives bifurcated in accordance with ASC 815.
Each derivative classification includes derivatives referencing multiple risk components. For example, interest rate contracts include complex
derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit
default swaps as well as derivatives referencing corporate and government securities.
As of March 31, 2019 and December 31, 2019, the amounts reported include derivatives used for non-trading purposes which are not designatedas fair value or net investment hedges. These amounts have not been separately presented since such amounts were not significant.

Changes in fair value are recognized either through earnings or other comprehensive income depending on the purpose for which the derivatives
are used.
64Offsetting of derivatives
Counterparty credit risk associated with derivative financial instruments is controlled by Nomura through credit approvals, limits and monitoringprocedures. To reduce the risk of loss, Nomura requires collateral, principally cash collateral and government securities, for certain derivativetransactions. In certain cases, Nomura may agree for such collateral to be posted to a third-party custodian under a control agreement that enables
Nomura to take control of such collateral in the event of counterparty default. From an economic standpoint, Nomura evaluates default risk exposure netof related collateral. Furthermore, OTC derivative transactions are typically documented under industry standard master netting agreements which
reduce Nomura’s credit exposure to counterparties as they permit the close-out and offset of transactions and collateral amounts in the event of defaultof the counterparty. For certain OTC centrally-cleared and exchange-traded derivatives, the clearing or membership agreements entered into by Nomura
provide similar rights to Nomura in the event of default of the relevant central clearing party or exchange. In order to support the enforceability of theclose-out and offsetting rights within these agreements, Nomura generally seeks to obtain an external legal opinion.
For certain types of counterparties and in certain jurisdictions, Nomura may enter into derivative transactions which are not documented under amaster netting agreement. Similarly, even when derivatives are documented under such agreements, Nomura may not have yet sought evidence, or may
not be able to obtain evidence to determine with sufficient certainty that close-out and offsetting rights are legally enforceable. This may be the casewhere relevant local laws specifically prohibit such close-out and offsetting rights, or where local laws are complex, ambiguous or silent on theenforceability of such rights. This may include derivative transactions executed with certain foreign governments, agencies, municipalities, central
clearing counterparties, exchanges and pension funds.
Nomura considers the enforceability of a master netting agreement in determining how credit risk arising from transactions with a specificcounterparty is hedged, how counterparty credit exposures are calculated and applied to credit limits and the extent and nature of collateral requirementsfrom the counterparty.
Derivative assets and liabilities with the same counterparty documented under a master netting agreement are offset in the consolidated balance
sheets where the specific criteria defined by ASC 210-20 “Balance Sheet—Offsetting” (“ASC210-20”) and ASC 815 are met. These criteria include
requirements around the legal enforceability of such close-out and offset rights under the master netting agreement. In addition, fair value amounts
recognized for the right to reclaim cash collateral (a receivable) and the obligation to return cash collateral (a payable) are also offset against net
derivative liabilities and net derivative assets, respectively where certain additional criteria are met.
The following table presents information about offsetting of derivatives and related collateral amounts in the consolidated balance sheets as ofMarch 31, 2019 and December 31, 2019 by type of derivative contract, together with the extent to which master netting agreements entered into withcounterparties, central clearing counterparties or exchanges permit additional offsetting of derivatives and collateral in the event of counterparty default.
Derivative transactions which are not documented under a master netting agreement or are documented under a master netting agreement for which
Nomura does not have sufficient evidence of enforceability are not offset in the following table.
65Equity contracts
OTC settled bilaterally
Exchange-traded
Interest rate contracts
OTC settled bilaterally
OTC centrally-cleared
Exchange-traded
Credit contracts
OTC settled bilaterally
OTC centrally-cleared
Exchange-traded
Foreign exchange contracts
OTC settled bilaterally
Commodity contracts
OTC settled bilaterally
Exchange-traded
Total gross derivative balances(2)Less: Amounts offset in the consolidated balance sheets(3)Total net amounts reported on the face of the consolidated balance sheets(4)Less: Additional amounts not offset in the consolidated balance sheets(5)Financial instruments and non-cash collateral
Net amount
(1)
(2)

(3)

(4)

(5)

Billions of yen
March 31, 2019
Derivative
Derivative
assetsliabilities(1)Billions of yen
December 31, 2019
Derivative
Derivative
assetsliabilities(1)

¥

¥

636
215

¥

611
309

537
225

¥

595
362

7,295
1,327
10

6,946
1,341
3

7,779
1,236
16

7,252
1,215
9

355
176
2

283
178
3

220
241
1

254
237
1

4,912

4,842

3,829

3,744

—

—
1
1
1
1
1
3
¥ 14,929 ¥ 14,517 ¥ 14,086 ¥ 13,673(14,077)(13,710) (13,145)(12,838)
¥
852 ¥
807 ¥
941 ¥
835

¥

(115)
737 ¥

(86)
721 ¥

(154)
787 ¥

(144)
691

Includes the amount of embedded derivatives bifurcated in accordance with ASC 815.
Includes all gross derivative asset and liability balances irrespective of whether they are transacted under a master netting agreement or whether
Nomura has obtained sufficient evidence of enforceability of the master netting agreement. As of March 31, 2019, the gross balance of derivative
assets and derivative liabilities which are not documented under master netting agreements or are documented under master netting agreements forwhich Nomura has not yet obtained sufficient evidence of enforceability was ¥277 billion and ¥374 billion, respectively. As of December 31,
2019, the gross balance of such derivative assets and derivative liabilities was ¥281 billion and ¥305 billion, respectively.
Represents amounts offset through counterparty netting of derivative assets and liabilities as well as cash collateral netting against net derivatives
under master netting and similar agreements for which Nomura has obtained sufficient evidence of enforceability in accordance with ASC 815. Asof March 31, 2019, Nomura offset a total of ¥1,259 billion of cash collateral receivables against net derivative liabilities and ¥1,626 billion of cash
collateral payables against net derivative assets. As of December 31, 2019, Nomura offset a total of ¥1,140 billion of cash collateral receivables
against net derivative liabilities and ¥1,447 billion of cash collateral payables against net derivative assets.
Net derivative assets and net derivative liabilities are generally reported within Trading assets and private equity investments—Trading assets andTrading liabilities, respectively in the consolidated balance sheet. Bifurcated embedded derivatives are reported within Short-term borrowings orLong-term borrowings depending on the maturity of the underlying host contract.
Represents amounts which are not permitted to be offset on the face of the consolidated balance sheets in accordance with ASC 210-20 and ASC
815 but which provide Nomura with a legally enforceable right of offset in the event of counterparty default. Amounts relating to derivative andcollateral agreements where Nomura has not yet obtained sufficient evidence of enforceability of such offsetting rights are excluded. As of
March 31, 2019, a total of ¥140 billion of cash collateral receivables and ¥407 billion of cash collateral payables, including amounts reported in
the table, have not been offset against net derivatives. As of December 31, 2019, a total of ¥139 billion of cash collateral receivables and¥479 billion of cash collateral payables, including amounts reported in the table, have not been offset against net derivatives.
66

Derivatives used for trading purposes
Derivative financial instruments used for trading purposes, including bifurcated embedded derivatives, are carried at fair value with changes infair value recognized through the consolidated statements of income within Revenue—Net gain on trading.
The following tables present amounts included in the consolidated statements of income for the nine and three months ended December 31, 2018and 2019 related to derivatives used for trading and non-trading purposes by type of underlying derivative contract.
Billions of yen
Nine months ended December 31
2018
2019

Derivatives used for trading and non-trading purposes(1)(2):
Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Total

¥

¥

(31)
77
(16)
(2)
(2)
26

¥

¥

125
95
(116)
(13)
10
101

Billions of yen
Three months ended December 31
2018
2019

Derivatives used for trading and non-trading purposes(1)(2):
Equity contracts
Interest rate contracts
Credit contracts
Foreign exchange contracts
Commodity contracts
Total
(1)

(2)

¥

¥

7
37
48
81
(24)
149

¥

¥

79
23
(12)
71
8
169

Each derivative classification includes derivatives referencing multiple risk components. For example, interest rates contracts include complex
derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit
default swaps as well as derivatives referencing corporate and government securities.
Includes net gains (losses) on derivatives used for non-trading purposes which are not designated as fair value or net investment hedges. For thenine and three months ended December 31, 2018 and 2019, these amounts have not been separately presented as net gains (losses) for these
non-trading derivatives were not significant.
67

Fair value hedges
Nomura issues Japanese Yen and foreign currency denominated debt with both fixed and floating interest rates. Nomura generally enters into
swap agreements to convert fixed rate interest payments on its debt obligations to a floating rate and applies fair value hedge accounting to these
instruments.
The following table presents the carrying value of the hedged items that are currently designated in a hedging relationship and the related
cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items as of March 31, 2019 and December 31, 2019.

Line items in the statement of financial
position in which the hedged item is included:

Billions of yen
Cumulative gains/(losses) of fair value hedging
adjustment included in the carrying amount of theCarrying amount of the hedged liabilities
hedged liabilities
March 31, 2019
December 31, 2019
March 31, 2019
December 31, 2019

Long-term borrowings
Total

¥
¥

1,019
1,019

¥
¥

976
976

¥
¥

(13)
(13)

¥
¥

(10)
(10)

Hedging derivatives designated as fair value hedges are carried at fair value attributable to the hedged risk, which is recognized in the
consolidated statements of income within Interest expense and Revenue-Other, respectively together with the change in fair value of the hedged items.
The following tables present amounts included in the consolidated statements of income for the nine and three months ended December 31, 2018and 2019 related to derivatives designated as fair value hedges by type of underlying derivative contract and the nature of the hedged item.
Billions of yen
Nine months ended December 31
2018
2019

Derivatives designated as hedging instruments:
Interest rate contracts
Total
Hedged items:
Long-term borrowings
Total

¥
¥

3
3

¥
¥

1
1

¥
¥

(3)
(3)

¥
¥

(1)
(1)

Billions of yen
Three months ended December 31
2018
2019

Derivatives designated as hedging instruments:
Interest rate contracts
Total
Hedged items:
Long-term borrowings
Total

¥
¥

3
3

¥
¥

3
3

¥
¥

(3)
(3)

¥
¥

(3)
(3)

Net investment hedges
Nomura designates foreign currency forwards, etc., as hedges of certain subsidiaries with significant foreign exchange risks and applies hedge
accounting to these instruments. Accordingly, foreign exchange gains (losses) arising from the derivative contracts and non-derivative financial products
designated as hedges, except for the portion excluded from effectiveness assessment, is recognized through the consolidated statements ofcomprehensive income within Other comprehensive income (loss)—Change in cumulative translation adjustments, net of tax. This is offset by theforeign exchange adjustments arising from consolidation of the relevant foreign subsidiaries.
68

The following tables present gains (losses) from derivatives designated as net investment hedges included in the consolidated statements ofcomprehensive income for the nine and three months ended December 31, 2018 and 2019.
Billions of yen
Nine months ended December 31
2018
2019

Hedging instruments:
Foreign exchange contracts
Total

¥
¥

5
5

¥
¥

0
0

Billions of yen
Three months ended December 31
2018
2019

Hedging instruments:
Foreign exchange contracts
Total
(1)

¥
¥

2
2

¥
¥

(3)
(3)

The portion of gains (losses) representing the amount of hedge ineffectiveness and the amount excluded from the assessment of hedge
effectiveness are recognized within Revenue—Other in the consolidated statements of income. The amount of gains (losses) was not significant
during the nine months ended December 31, 2018 and 2019. The amount of gains (losses) was not significant during the three months ended
December 31, 2018 and 2019.
Derivatives containing credit risk related contingent features

Nomura enters into certain OTC derivatives and other agreements containing credit-risk-related contingent features. These features would require
Nomura to post additional collateral or settle the instrument upon occurrence of a credit event, the most common of which would be a downgrade in the
Company’s long-term credit rating.
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position as of March 31,
2019 was ¥486 billion with related collateral pledged of ¥410 billion. In the event of a one-notch downgrade to Nomura’s long-term credit rating in
effect as of March 31, 2019 the aggregate fair value of assets that would have been required to be posted as additional collateral or that would have been
needed to settle the instruments immediately was ¥3 billion.
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position as of December 31,
2019 was ¥567 billion with related collateral pledged of ¥482 billion. In the event of a one-notch downgrade to Nomura’s long-term credit rating in
effect as of December 31, 2019 the aggregate fair value of assets that would have been required to be posted as additional collateral or that would havebeen needed to settle the instruments immediately was ¥4 billion.
Credit derivatives
Credit derivatives are derivative instruments in which one or more of their underlyings are related to the credit risk of a specified entity (or groupof entities) or an index based on the credit risk of a group of entities that expose the seller of credit protection to potential loss from credit risk related
events specified in the contract.
Written credit derivatives are instruments or embedded features where Nomura assumes third party credit risk, either as guarantor in a guaranteetype contract, or as the party that provides credit protection in an option-type contract, credit default swap, or any other credit derivative contract.
Nomura enters into credit derivatives as part of its normal trading activities as both purchaser and seller of protection for credit risk mitigation,
proprietary trading positions and for client transactions.
The most significant type of credit derivatives used by Nomura are single-name credit default swaps where settlement of the derivative is based on
the credit risk of a single third party. Nomura also writes credit derivatives linked to the performance of credit default indices and issues other credit risk
related portfolio products.
Nomura would have to perform under a credit derivative contract if a credit event as defined in the respective contract occurs. Typical credit
events include bankruptcy, failure to pay and restructuring of obligations of the reference asset.
69

Credit derivative contracts written by Nomura are either cash or physically settled. In cash-settled instruments, once payment is made upon an
event of a default, the contract usually terminates with no further payments due. Nomura generally has no right to assume the reference assets of thecounterparty in exchange for payment, nor does Nomura usually have any direct recourse to the actual issuers of the reference assets to recover theamount paid. In physically settled contracts, upon a default event, Nomura takes delivery of the reference asset in return for payment of the full notionalamount of the contract.
Nomura actively monitors and manages its credit derivative exposures. Where protection is sold, risks may be mitigated by purchasing credit
protection from other third parties either on identical underlying reference assets or on underlying reference assets with the same issuer which would be
expected to behave in a correlated fashion. The most common form of recourse provision to enable Nomura to recover from third parties any amounts
paid under a written credit derivative is therefore not through the derivative itself but rather through the separate purchase of credit derivatives withidentical or correlated underlyings.
Nomura quantifies the value of these purchased contracts in the following tables in the column titled “Purchased Credit Protection.” Theseamounts represent purchased credit protection with identical underlyings to the written credit derivative contracts which act as a hedge against
Nomura’s exposure. To the extent Nomura is required to pay out under the written credit derivative, a similar amount would generally become due to
Nomura under the purchased hedge.
Credit derivatives have a stated notional amount which represents the maximum payment Nomura may be required to make under the contract.
However, this is generally not a true representation of the amount Nomura will actually pay as in addition to purchased credit protection, other risk
mitigating factors reduce the likelihood and amount of any payment, including:
The probability of default: Nomura values credit derivatives taking into account the probability that the underlying reference asset will default andthat Nomura will be required to make payments under the contract. Based on historical experience and Nomura’s assessment of the market, Nomura
believes that the probability that all reference assets on which Nomura provides protection will default in a single period is remote. The disclosed
notional amount, therefore, significantly overstates Nomura’s realistic exposure on these contracts.
The recovery value on the underlying asset: In the case of a default, Nomura’s liability on a contract is limited to the difference between thenotional amount and the recovery value of the underlying reference asset. While the recovery value on a defaulted asset may be minimal, this does
reduce amounts paid on these contracts.
Nomura holds assets as collateral in relation to written credit derivatives. However, these amounts do not enable Nomura to recover any amounts
paid under the credit derivative but rather mitigate the risk of economic loss arising from a counterparty defaulting against amounts due to Nomura
under the contract. Collateral requirements are determined on a counterparty level rather than individual contract, and also generally cover all types ofderivative contracts rather than just credit derivatives.
The following tables present information about Nomura’s written credit derivatives and purchased credit protection with identical underlyings asof March 31, 2019 and December 31, 2019.

Carrying value(Asset) / Liability(1)Single-name credit default swaps
Credit default indices
Other credit risk related portfolio products
Credit-risk related options and swaptions
Total

¥

(47)
(117)
14
—
(150)

¥

Carrying value(Asset) / Liability(1)Single-name credit default swaps
Credit default indices
Other credit risk related portfolio products
Credit-risk related options and swaptions
Total
(1)

¥

(99)
(206)
14
11
(280)

¥

Total

¥ 9,206
5,735
231—¥15,172

Total¥ 7,896
7,052
324
48
¥15,320

Billions of yen
March 31, 2019
Maximum potential payout/NotionalYears to maturity
Less than
1 to 33 to 5More than
1 yearyears
years
5 years

Notional
Purchased
creditprotection¥ 2,346612
31—¥ 2,989

989
630
3
—
¥ 1,622¥ 6,555
4,330
165—¥ 11,050

Billions of yen
December 31, 2019
Maximum potential payout/NotionalYears to maturity
Less than
1 to 33 to 5More than
1 yearyears
years
5 years

Notional
Purchased
creditprotection¥ 2,063650
4
11¥ 2,728¥ 5,575
5,497
242—¥ 11,314¥3,402
1,644
82—¥5,128¥2,614
2,334
144—¥5,092¥2,4692,849
115—¥5,433¥2,393
3,607
158
37¥6,195

¥

¥

826
461
18
—
¥ 1,305

Carrying value amounts are shown on a gross basis prior to cash collateral or counterparty netting. Asset balances represent positive fair value
amounts caused by tightening of credit spreads of underlyings since inception of the credit derivative contracts.
70

The following tables present information about Nomura’s written credit derivatives by external credit rating of the underlying asset. Ratings are
based on S&P Global Ratings (“S&P”), or if not rated by S&P, based on Moody’s Investors Service. If ratings from either of these agencies are notavailable, the ratings are based on Fitch Ratings Ltd. or Japan Credit Rating Agency, Ltd. For credit default indices, the rating is determined by taking
the weighted average of the external credit ratings given for each of the underlying reference entities comprising the portfolio or index.

Single-name credit default swaps
Credit default indices
Other credit risk related portfolio products
Credit-risk related options and swaptions
Total

Single-name credit default swaps
Credit default indices
Other credit risk related portfolio products
Credit-risk related options and swaptions
Total
(1)

AAA

AA

Billions of yen
March 31, 2019
Maximum potential payout/Notional
A
BBB
BB
Other(1)

¥520
35
—
—
¥555

¥915
72
—
—
¥987

¥2,5371,582
1—¥4,120AAA

AA

Billions of yen
December 31, 2019
Maximum potential payout/Notional
A
BBB
BB
Other(1)

¥370
49
—
—
¥419

¥899
95
—
—
¥994

¥2,3311,943
1—¥4,275¥3,411
2,663
139—¥6,213¥2,7393,454
198
48¥6,439¥1,4391,068
25—¥2,532¥1,2171,201
54—¥2,472

¥ 384
315
66
—
¥ 765

¥ 340
310
71
—
¥ 721

Total

¥ 9,206
5,735
231—¥15,172

Total¥ 7,896
7,052
324
48
¥15,320“Other” includes credit derivatives where the credit rating of the underlying reference asset is below investment grade or where a rating isunavailable.

Derivatives entered into in contemplation of sales of financial assets
Nomura enters into transactions which involve both the transfer of financial assets to a third party counterparty and a separate agreement with thesame counterparty entered into in contemplation of the initial transfer through which Nomura retains substantially all of the exposure to the economic
return on the transferred financial assets throughout the term of the transaction. These transactions primarily include sales of securities with bilateral
OTC total return swaps or other derivative agreements which are in-substance total return swaps. These transactions are accounted for as sales of the
securities with the derivative accounted for separately if the criteria for derecognition of the securities under ASC 860 are met. Where the derecognition
criteria are not met, the transfer and separate derivative are accounted for as a single collateralized financing transaction which is reported within Longterm borrowings—Trading balances of secured borrowings in the consolidated balance sheets.
As of March 31, 2019 and December 31, 2019, there were no outstanding sales with total return swap or in-substance total return swap
transactions accounted for as sales rather than collateralized financing transactions.
71

4. Revenue from services provided to customers
Revenues by types of service
The following table presents revenue earned by Nomura from providing services to customers by relevant line item in Nomura’s consolidated
statement of income for the nine and three months ended December 31, 2018 and 2019.
Millions of yen
Nine months ended December 31
2018
2019

Commissions
Fees from investment banking
Asset management and portfolio service fees
Other revenue
Total

¥

¥

226,954
76,207
186,31241,928531,401¥¥

212,743
76,379180,90935,145505,176

Millions of yen
Three months ended December 31
2018
2019

Commissions
Fees from investment banking
Asset management and portfolio service fees
Other revenue
Total

¥

¥

72,71533,12960,591
12,920179,355¥¥

79,28926,80361,02013,004
180,116

Commissions represent revenue principally from trade execution and clearing services provided by both the Retail and Wholesale Divisions. Feesfrom investment banking represent revenues from financial advisory, underwriting and syndication services primarily from Wholesale followed by
Retail. Asset management and portfolio service fees represent revenues from asset management services primarily from the Asset Management Division
followed by Retail. Other represents sundry revenues allocated to Other in Nomura’s segmental reporting.
The following table presents summary information regarding the key methodologies, assumptions and judgments used in recognizing revenue foreach of the primary types of service provided to customers, including the nature of underlying performance obligations within each type of service andwhether those performance obligations are satisfied at a point in time or over a period of time. For performance obligations recognized over time,
information is also provided to explain the nature of the input or output method used to recognize revenue over time.
Type of service provided tocustomers

Trade execution and clearing
services

Key revenue recognition policies, assumptions andsignificant judgments

Overview of key services provided• Buying and selling of securities onbehalf of customers• Execution and clearing commissions recognized at a point in time,
namely trade date.

• Clearing of securities and derivatives
on behalf of customers• Commissions recognized net of soft dollar credits provided tocustomers where Nomura is acting as agent in providing investment
research and similar services to the customer.

72

Type of service provided tocustomers

Financial advisory services

Key revenue recognition policies, assumptions andsignificant judgments

Overview of key services provided• Provision of financial advice tocustomers in connection with a
specific forecasted transaction ortransactions• Fees contingent on the success of an underlying transaction arevariable consideration recognized when the underlying transaction
has been completed since only at such point is it probable that asignificant reversal of revenue will not occur.

• Provision of financial advice not in
connection with a specific forecasted
transaction or transactions such as
general corporate intelligence andsimilar research• Retainer and milestone fees are recognized either over the period towhich they relate or are deferred until consummation of theunderlying transaction depending on whether the underlying
performance obligation is satisfied at a point in time or over time.

• Issuance of fairness opinions• Structuring complex financial
instruments for customers• Judgment is required to make this determination with factors
influencing this determination including, but not limited to, whether
the fee is in connection with an engagement designed to achieve a
specific transaction or outcome for the customer (such as thepurchase or sale of a business), the nature and extent of benefit to beprovided to the customer prior to, and in addition to such specifictransaction or outcome and the fee structure for the engagement.
• Retainer and milestone fees recognized over time are normallyrecognized on a straight-line basis over the term of the contract basedon time elapsed.

Asset management services• Management of funds, investment
trusts and other investment vehicles• Management fees earned by Nomura in connection with managing afund, investment trust or other vehicle generally recognized on astraight-line basis based on time elapsed.

• Provision of investment advisory
services• Performance-based fees are variable consideration recognized when
the performance metric has been determined since only at such point
is it probable that a significant reversal of revenue will not occur.

• Distribution of fund units• Providing custodial and administrative • Distribution fees are recognized at a point in time when the fund units
services to customers
have been sold to third party investors.
• Custodial and administrative fees recognized on a straight-line basis
over time based on time elapsed.
Underwriting and syndication
services• Underwriting of debt, equity and other • Underwriting and syndication revenues recognized at a point in timefinancial instruments on behalf ofwhen the underlying transaction is complete.
customers• Commitment fees where drawn down of the facility is deemed remote• Distributing securities on behalf ofrecognized on a straight-line basis over the life of the facility based
issuers
on time elapsed.
• Arranging loan financing forcustomers• Syndicating loan financing on behalfof customers• Underwriting and syndication costs recognized either as a reductionof revenue or on a gross basis depending on whether Nomura isacting as principal or agent for such amounts.

Where revenue is recognized at a point on time, payments of fees are typically received at the same time as when the performance obligation issatisfied, or within several days or months after satisfying a performance obligation. In relation to revenue recognized over time, payments of fees arereceived are received every month, three months or six months.
73

The underlying contracts entered into by Nomura in order to provide the services described above typically do not have significant financing
components within the contracts either provided to or from Nomura. If such components did exist in a contract, Nomura has made an accounting policy
permitted by ASC 606 “Revenue from Contracts with Customers” (“ASC 606”) not to adjust for the effects of a significant financing component where
the financing is effectively for a period of one year or less. Such contracts also typically do not contain rights of return or similar features for thecustomer.
Customer contract balances
When Nomura or the customer performs in accordance with the terms of a customer contract, a customer contract asset, customer contract
receivable or customer contract liability is recognized in Nomura’s consolidated balance sheet.
A customer contract asset represents accrued revenue recognized by Nomura for completing or partially completing a performance obligation,
namely a right of Nomura to receive consideration for providing the service to the customer, which is conditioned on something other than the passageof time. A customer contract receivable is an unconditional right of Nomura to receive consideration in exchange for providing the service. Bothcustomer contract assets and customer contract receivables are reported in Receivables from Customers within Nomura’s consolidated balance sheet. A
customer contract liability is any liability recognized in connection with a customer contract, including obligations to provide refunds and obligations toprovide a service in the future for which consideration has already been received or is due to be received. Customer contract liabilities are reported in
Payables to Customers within Nomura’s consolidated balance sheet.
The following table presents the balances of customer contract receivables, customer contract assets and customer contract liabilities in scope of
ASC 606 “Revenue from Contracts with Customers” as of March 31, 2019 and December 31, 2019. The amount of Customer contract assets as ofMarch 31, 2019 and December 31, 2019 was immaterial.

March 31, 2019

Customer contract receivables
Customer contract liabilities(1)(1)¥

78,226
4,971

Millions of yen
December 31, 2019¥83,804
3,255

Customer contract liabilities primarily represent rise from investment advisory services recognized in connection with the term of the contract
based on time elapsed.

The balance of contract liabilities as of March 31, 2019 were recognized as revenue for the nine months ended December 31, 2019. Nomura
recognized ¥1,232 million and ¥179 million of revenue from performance obligations satisfied in previous periods for the nine months ended
December 31, 2018 and the three months ended December 31, 2018, respectively. Nomura recognized ¥481 million and ¥1 million of revenue fromperformance obligations satisfied in previous periods for the nine months ended December 31, 2019 and the three months ended December 31, 2019,respectively.
Transaction price allocated to the remaining performance obligations
As permitted by ASC 606, Nomura has chosen not to disclose information about remaining performance obligations that have original expected
durations of one year or less as of March 31, 2019 and December 31, 2019.
Nomura retains no significant transactions for which individual estimated contract period exceeding one year. In addition, considerations arisingfrom contracts with customers do not comprise any significant amount that is not included in transaction price.
Customer contract costs
As permitted by ASC 340 “Other Assets and Deferred Costs”, Nomura has elected to expense all costs to obtain customer contracts where suchamounts would be otherwise be expensed within one year or less. As a result, the amount of deferred costs to obtain or fulfill customer contracts as ofMarch 31, 2019 and December 31, 2019 were not significant.
74

5. Collateralized transactions:
Nomura enters into collateralized transactions, including reverse repurchase agreements, repurchase agreements, securities borrowing
transactions, securities lending transactions, other secured borrowings and similar transactions mainly to meet clients’ needs, finance trading inventory
positions and obtain securities for settlements.
Reverse repurchase agreements, repurchase agreements, securities borrowing transactions and securities lending transactions are typically
documented under industry standard master netting agreements which reduce Nomura’s credit exposure to counterparties as they permit the close-out
and offset of transactions and collateral amounts in the event of default of the counterparty. For certain centrally-cleared reverse repurchase andrepurchase agreements, the clearing or membership agreements entered into by Nomura provide similar rights to Nomura in the event of default of therelevant central clearing counterparty. In order to support the enforceability of the close-out and offsetting rights within these agreements, Nomura
generally seeks to obtain an external legal opinion.
For certain types of counterparty and in certain jurisdictions, Nomura may enter into reverse repurchase agreements, repurchase agreements,
securities borrowing and securities lending transactions which are not documented under a master netting agreement. Similarly, even when thesetransactions are documented under such agreements, Nomura may not have yet sought evidence, or may not be able to obtain evidence to determinewith sufficient certainty that the close-out and offsetting rights are legally enforceable. This may be the case where relevant local laws specificallyprohibit such close-out and offsetting rights, or where local laws are complex, ambiguous or silent on the enforceability of such rights. This may include
reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions executed with certain foreign
governments, agencies, municipalities, central clearing counterparties, agent banks and pension funds.
Nomura considers the enforceability of a master netting agreement in determining how credit risk arising from transactions with a specificcounterparty is hedged, how counterparty credit exposures are calculated and applied to credit limits and the extent and nature of collateral requirementsfrom the counterparty.
In all of these transactions, Nomura either receives or provides collateral, including Japanese and non-Japanese government, agency, mortgagebacked, bank and corporate debt securities and equities. In most cases, Nomura is permitted to use the securities received to enter into repurchaseagreements, enter into securities lending transactions or to cover short positions with counterparties. In repurchase and reverse repurchase agreements,
the value of collateral typically exceeds the amount of cash transferred. Collateral is generally in the form of securities. Securities borrowing
transactions generally require Nomura to provide the counterparty with collateral in the form of cash or other securities. For securities lendingtransactions, Nomura generally receives collateral in the form of cash or other securities. Nomura monitors the market value of the securities either
received from or provided to the counterparty. Additional cash or securities are exchanged as necessary, to ensure that such transactions are adequately
collateralized throughout the life of the transactions.
Offsetting of certain collateralized transactions
Reverse repurchase agreements and repurchase agreements, securities borrowing and lending transactions with the same counterparty documented
under a master netting agreement are offset in the consolidated balance sheets where the specific criteria defined by ASC 210-20 are met. These criteria
include requirements around the maturity of the transactions, the underlying systems on which the collateral is settled, associated banking arrangements
and the legal enforceability of close-out and offsetting rights under the master netting agreement.
The following tables present information about offsetting of these transactions in the consolidated balance sheets as of March 31, 2019 andDecember 31, 2019, together with the extent to which master netting agreements entered into with counterparties and central clearing parties permit
additional offsetting in the event of counterparty default. Transactions which are not documented under a master netting agreement or are documented
under a master netting agreement for which Nomura does not have sufficient evidence of enforceability are not offset in the following tables.
75

Billions of yen
March 31, 2019
AssetsTotal gross balance(1)Less: Amounts offset in the consolidated balance sheets(2)Total net amounts of reported on the face of the consolidated balance sheets(3)Less: Additional amounts not offset in the consolidated balance sheets(4)Financial instruments and non-cash collateral
Cash collateral
Net amount

Reverserepurchaseagreements

Securities
borrowingtransactions¥ 32,312(19,117)¥ 13,195¥(11,445)(26)¥ 1,724

Liabilities
Securities
Repurchaselendingagreements
transactions

¥

4,087
—
4,087

¥ 34,154(19,117)¥ 15,037¥(2,580)—
1,507(10,443)—¥ 4,594

¥
¥

1,512
—
1,512

¥

(1,198)—314

Billions of yen
December 31, 2019
AssetsTotal gross balance(1)Less: Amounts offset in the consolidated balance sheets(2)Total net amounts of reported on the face of the consolidated balance sheets(3)Less: Additional amounts not offset in the consolidated balance sheets(4)Financial instruments and non-cash collateral
Cash collateral
Net amount
(1)

(2)

(3)

(4)

Reverserepurchaseagreements

Securities
borrowingtransactions¥ 37,489(21,856)¥ 15,633¥(13,149)(3)¥ 2,481

Liabilities
Securities
Repurchaselendingagreements
transactions

¥

3,890
—
3,890

¥ 41,243(21,856)¥ 19,387¥(2,740)—1,150(10,133)(30)¥ 9,224

¥
¥

1,710
—
1,710

¥

(1,401)—309

Includes all recognized balances irrespective of whether they are transacted under a master netting agreement or whether Nomura has obtained
sufficient evidence of enforceability of the master netting agreement. Amounts include transactions carried at fair value through election of thefair value option. As of March 31, 2019, the gross balance of reverse repurchase agreements and repurchase agreements which were not transacted
under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence
of enforceability was ¥749 billion and ¥3,575 billion, respectively. As of March 31, 2019, the gross balance of securities borrowing transactions
and securities lending transactions which were not transacted under master netting agreements or are documented under master netting agreements
for which Nomura has not yet obtained sufficient evidence of enforceability was ¥1,398 billion and ¥209 billion, respectively. As of December 31,
2019, the gross balance of reverse repurchase agreements and repurchase agreements which were not transacted under master netting agreements
or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was ¥933 billionand ¥7,702 billion, respectively. As of December 31, 2019, the gross balance of securities borrowing transactions and securities lendingtransactions which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura
has not yet obtained sufficient evidence of enforceability was ¥981 billion and ¥251 billion, respectively.
Represents amounts offset through counterparty netting under master netting and similar agreements for which Nomura has obtained sufficientevidence of enforceability in accordance with ASC 210-20. Amounts offset include transactions carried at fair value through election of the fairvalue option.
Reverse repurchase agreements and securities borrowing transactions are reported within Collateralized agreements—Securities purchased underagreements to resell and Collateralized agreements—Securities borrowed in the consolidated balance sheets, respectively. Repurchase agreements
and securities lending transactions are reported within Collateralized financing—Securities sold under agreements to repurchase andCollateralized financing—Securities loaned in the consolidated balance sheets, respectively. Amounts reported under securities lendingtransactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral. Nomura
recognizes the securities received at fair value and a liability for the same amount, representing the obligation to return those securities. The
liability is reported within Other liabilities in the consolidated balance sheets.
Represents amounts which are not permitted to be offset on the face of the balance sheet in accordance with ASC 210-20 but which provide
Nomura with the right of offset in the event of counterparty default. Amounts relating to agreements where Nomura has not yet obtained sufficientevidence of enforceability of such offsetting rights are excluded.
76

Maturity analysis of repurchase agreements and securities lending transactions
The following table presents an analysis of the total carrying value of liabilities recognized in the consolidated balance sheets for repurchaseagreements and securities lending transactions by remaining contractual maturity of the agreement as of March 31, 2019 and December 31, 2019.
Amounts reported are shown prior to counterparty netting in accordance with ASC 210-20.

Repurchase agreements
Securities lending transactions
Total gross recognized liabilities(2)Repurchase agreements
Securities lending transactions
Total gross recognized liabilities(2)(1)(2)

Overnight
and open(1)Up to
30 days

Billions of yen
March 31, 201930 – 90days
90 days – 1 year

¥ 14,657
996¥ 15,653¥15,827
157¥15,984¥2,031159¥2,190Overnight
and open(1)Up to
30 days

Billions of yen
December 31, 201930 – 90days
90 days – 1 year

¥ 13,770
991¥ 14,761¥24,005279¥24,284¥1,982243¥2,225

¥
¥

¥
¥

1,302
155
1,457

1,130
197
1,327

Greaterthan 1 year

¥
¥

337
45
382

Greaterthan 1 year

¥
¥

356
—
356

Total

¥34,1541,512¥35,666

Total¥41,243
1,710¥42,953

Open transactions do not have an explicit contractual maturity date and are terminable on demand by Nomura or the counterparty.
Repurchase agreements and securities lending transactions are reported within Collateralized financing—Securities sold under agreements torepurchase and Collateralized financing—Securities loaned in the consolidated balance sheets, respectively. Amounts reported for securities
lending transactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral.
Nomura recognizes the securities received at fair value and a liability for the same amount, representing the obligation to return those securities.
The liability is reported within Other liabilities in the consolidated balance sheets. The total gross recognized liabilities reported for repurchaseagreements and securities lending transactions are consistent with the total gross balances reported in the offsetting disclosures above.
77

Securities transferred in repurchase agreements and securities lending transactions
The following table presents an analysis of the total carrying value of liabilities recognized in the consolidated balance sheets for repurchaseagreements and securities lending transactions by class of securities transferred by Nomura to counterparties as of March 31, 2019 and December 31,
2019. Amounts reported are shown prior to counterparty netting in accordance with ASC 210-20.

Repurchaseagreements

Equities and convertible securities
Japanese government, agency and municipal securities
Foreign government, agency and municipal securities
Bank and corporate debt securities
Commercial mortgage-backed securities (“CMBS”)
Residential mortgage-backed securities (“RMBS”)(1)Collateralized debt obligations (“CDOs”) and other
Investment trust funds and otherTotal gross recognized liabilities(2)Billions of yen
March 31, 2019
Securities
lendingtransactions

¥

149
742
26,730
2,330
25
4,001
162
15
¥ 34,154

¥

¥

1,223
—
21
98
—
—
—
170
1,512

Billions of yen
December 31, 2019
Securities
Repurchaselendingagreements
transactions

Equities and convertible securities
Japanese government, agency and municipal securities
Foreign government, agency and municipal securities
Bank and corporate debt securities
Commercial mortgage-backed securities (“CMBS”)
Residential mortgage-backed securities (“RMBS”)(1)Collateralized debt obligations (“CDOs”) and other
Investment trust funds and otherTotal gross recognized liabilities(2)
(1)
(2)

¥

195
748
32,931
2,248
25
4,891
165
40
¥ 41,243

¥

¥

1,372
—
3
205
—
—
—
130
1,710

Total

¥ 1,372742
26,751
2,428
25
4,001
162
185
¥35,666

Total¥ 1,567748
32,934
2,453
25
4,891
165
170
¥42,953

Includes ¥3,860 billion as of March 31, 2019 and ¥4,749 billion as of December 31, 2019 of U.S. government sponsored agency mortgage passthrough securities and collateralized mortgage obligations
Repurchase agreements and securities lending transactions are reported within Collateralized financing—Securities sold under agreements torepurchase and Collateralized financing—Securities loaned in the consolidated balance sheets, respectively. Amounts reported for securities
lending transactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral.
Nomura recognizes the securities received at fair value and a liability for the same amount, representing the obligation to return those securities.
The liability is reported within Other liabilities in the consolidated balance sheets. The total gross recognized liabilities reported for repurchaseagreements and securities lending transactions are consistent with the total gross balances reported in the offsetting disclosures above.

Collateral received by Nomura
The following table presents the fair value of securities received as collateral, securities borrowed with collateral and securities borrowed without
collateral, which Nomura is permitted to sell or repledge, and the portion that has been sold or repledged as of March 31, 2019 and December 31, 2019.
Billions of yen
March 31, 2019
December 31, 2019

The fair value of securities received as collateral, securities borrowed as collateral and securities borrowed
without collateral where Nomura is permitted by contract or custom to sell or repledge the securities
The portion of the above that has been sold (reported within Trading liabilities in the consolidated balance
sheets) or repledged
78¥

46,92438,551¥

54,37043,153

Collateral pledged by Nomura
Nomura pledges firm-owned securities to collateralize repurchase transactions, other secured financings and derivative transactions. Pledged
securities that can be sold or repledged by the transferee, including Gensaki Repo transactions, are reported in parentheses as Securities pledged ascollateral within Trading assets in the consolidated balance sheets.
The following table presents the carrying amounts of financial assets recognized in the consolidated balance sheets which have been pledged ascollateral, primarily to stock exchanges and clearing organizations, without allowing the secured party the right to sell or repledge them by type of asset
as of March 31, 2019 and December 31, 2019.
Millions of yen
March 31, 2019
December 31, 2019

Trading assets:
Equities and convertible securities
Government and government agency securities
Bank and corporate debt securities
Commercial mortgage-backed securities (“CMBS”)
Residential mortgage-backed securities (“RMBS”)
Collateralized debt obligations (“CDOs”) and other(1)Investment trust funds and other¥

135,927
984,429
61,54702,535,244
42,607
14,926¥ 3,774,680
¥
1,031
¥
501

Non-trading debt securities
Investments in and advances to affiliated companies
(1)

¥

¥
¥
¥

200,823
1,473,953
53,594—
3,566,184
26,387
11,0185,331,959
29
2,775

Includes CLOs and ABS such as those secured on credit card loans, auto loans and student loans.

The following table presents the carrying amount of financial and non-financial assets recognized in the consolidated balance sheets, other thanthose disclosed above, which are subject to lien as of March 31, 2019 and December 31, 2019.
Millions of yen
March 31, 2019
December 31, 2019

Loans and receivables
Trading assets and private equity
Office buildings, land, equipment and facilities
Non-trading debt securities
Other

¥

42,544
1,589,483
5,371
142,092151¥ 1,779,641¥¥

24,887
1,405,649
5,316
152,797141
1,588,790

Assets in the above table were primarily pledged for secured borrowings, including other secured borrowings, collateralized borrowings ofconsolidated VIEs, trading balances of secured borrowings, and derivative transactions.
79

6. Securitizations and Variable Interest Entities:
Securitizations
Nomura utilizes special purpose entities (“SPEs”) to securitize commercial and residential mortgage loans, government agency and corporate
securities and other types of financial assets. Those SPEs are incorporated as stock companies, Tokumei kumiai (silent partnerships), Cayman special
purpose companies (“SPCs”) or trust accounts. Nomura’s involvement with SPEs includes structuring SPEs, underwriting, distributing and selling debt
instruments and beneficial interests issued by SPEs to investors. Nomura accounts for the transfer of financial assets in accordance with ASC 860. This
statement requires that Nomura accounts for the transfer of financial assets as a sale when Nomura relinquishes control over the assets. ASC 860 deems
control to be relinquished when the following conditions are met: (a) the assets have been isolated from the transferor (even in bankruptcy or otherreceivership), (b) the transferee has the right to pledge or exchange the assets received, or if the transferee is an entity whose sole purpose is to engage insecuritization or asset-backed financing activities, the holders of its beneficial interests have the right to pledge or exchange the beneficial interests, and(c) the transferor has not maintained effective control over the transferred assets. Nomura may retain an interest in the financial assets, including residualinterests in the SPEs. Any such interests are accounted for at fair value and reported within Trading assets in Nomura’s consolidated balance sheets,with the change in fair value reported within Revenue—Net gain on trading. Fair value for retained interests in securitized financial assets is determinedby using observable prices; or in cases where observable prices are not available for certain retained interests, Nomura estimates fair value based on thepresent value of expected future cash flows using its best estimates of the key assumptions, including forecasted credit losses, prepayment rates, forward
yield curves and discount rates commensurate with the risks involved. Nomura may also enter into derivative transactions in relation to the assets
transferred to an SPE.
As noted above, Nomura may have continuing involvement with SPEs to which Nomura transferred assets. For the nine and three months ended
December 31, 2018, Nomura received cash proceeds from SPEs in new securitizations of ¥159 billion and ¥38 billion, respectively, and the associatedgain (loss) on sale was not significant. For the nine and three months ended December 31, 2019, Nomura received cash proceeds from SPEs in new
securitizations of ¥180 billion and ¥61 billion, respectively, and the associated gain (loss) on sale was not significant. For the nine and three months
ended December 31, 2018, Nomura received debt securities issued by these SPEs with an initial fair value of ¥1,185 billion and ¥339 billion,
respectively, and cash inflows from third parties on the sale of those debt securities of ¥913 billion and ¥239 billion, respectively. For the nine and threemonths ended December 31, 2019, Nomura received debt securities issued by these SPEs with an initial fair value of ¥1,312 billion and ¥394 billion,
respectively, and cash inflows from third parties on the sale of those debt securities of ¥861 billion and ¥224 billion, respectively. The cumulativebalance of financial assets transferred to SPEs with which Nomura has continuing involvement was ¥4,488 billion and ¥4,253 billion as of March 31,
2019 and December 31, 2019, respectively. Nomura’s retained interests were ¥138 billion and ¥215 billion, as of March 31, 2019 and December 31,
2019, respectively. For the nine and three months ended December 31, 2018, Nomura received cash flows of ¥16 billion and ¥6 billion, respectively,from the SPEs on the retained interests held in the SPEs. For the nine and three months ended December 31, 2019, Nomura received cash flows of¥16 billion and ¥7 billion, respectively, from the SPEs on the retained interests held in the SPEs.
Nomura did not provide financial support to SPEs beyond its contractual obligations as of March 31, 2019 and December 31, 2019.
80

The following tables present the fair value of retained interests which Nomura has continuing involvement in SPEs and their classification in thefair value hierarchy, categorized by the type of transferred assets.
Billions of yen
March 31, 2019

Government, agency and municipal securities
Bank and corporate debt securities
CMBS and RMBS
Total

Level 1

Level 2

Level 3

Total

¥ —
—
—
¥ —

¥ 138
—
0
¥ 138

¥ —
—
0
¥ 0

¥138
—
0
¥138

Investment
grade

Other

¥

¥

138
—
0
138

¥

0
—
0
¥ 0

Billions of yen
December 31, 2019

Government, agency and municipal securities
Bank and corporate debt securities
CMBS and RMBS
Total

Level 1

Level 2

Level 3

Total

¥ —
—
—
¥ —

¥ 210
—
—
¥ 210

¥ —
—

¥210
—
5
¥215

¥

5
5

Investment
grade

¥

210
—
0
210

¥

Other

¥—
—
5
5

¥

As of December 31, 2019, predominantly all of the retained interests held by Nomura were valued using observable prices.
The following table presents the type and carrying value of financial assets included within Trading assets which have been transferred to SPEsbut which do not meet the criteria for derecognition under ASC 860. These transfers are accounted for as secured financing transactions and generally
reported within Long-term borrowings. The assets are pledged as collateral of the associated liabilities and cannot be removed unilaterally by Nomura
and the liabilities are non-recourse to Nomura.
Billions of yen
March 31, 2019
December 31, 2019

AssetsTrading assets
Loans
Liabilities
Long-term borrowings
81

¥

15

¥

19

¥

15

¥

19

Variable Interest Entities
In the normal course of business, Nomura acts as a transferor of financial assets to VIEs, and underwriter, distributor, and seller of repackaged
financial instruments issued by VIEs in connection with its securitization and equity derivative activities. Nomura retains, purchases and sells variableinterests in VIEs in connection with its market-making, investing and structuring activities.
If Nomura has an interest in a VIE that provides Nomura with control over the most significant activities of the VIE and the right to receive
benefits or the obligation to absorb losses that could be significant to the VIE, Nomura is the primary beneficiary of the VIE and must consolidate theentity, provided that Nomura does not meet separate tests confirming that it is acting as a fiduciary for other interest holders. Nomura’s consolidated
VIEs include those that were created to market structured securities to investors by repackaging corporate convertible securities, mortgages andmortgage-backed securities. Certain VIEs used in connection with Nomura’s aircraft leasing business as well as other purposes are consolidated.
Nomura also consolidates certain investment funds, which are VIEs, and for which Nomura is the primary beneficiary.
The power to make the most significant decisions may take a number of different forms in different types of VIEs. For transactions such as
securitizations, investment funds, and CDOs, Nomura considers collateral management and servicing to represent the power to make the mostsignificant decisions. Accordingly, Nomura does not consolidate such types of VIEs for which it does not act as collateral manager or servicer unless
Nomura has the right to replace the collateral manager or servicer or to require liquidation of the entity.
For many transactions, such as where VIEs are used for re-securitizations of residential mortgage-backed securities, there are no significant
economic decisions made on an ongoing basis and no single investor has the unilateral ability to liquidate the VIE. In these cases, Nomura focuses its
analysis on decisions made prior to the initial closing of the transaction, and considers factors such as the nature of the underlying assets held by the
VIE, the involvement of third party investors in the design of the VIE, the size of initial third party investment and the amount and level of any
subordination of beneficial interests issued by the VIE which will be held by Nomura and third party investors. Nomura has sponsored numerous
re-securitization transactions and in many cases has determined that it is not the primary beneficiary on the basis that control over the most significant
decisions relating to these entities are shared with third party investors. In some cases, however, Nomura has consolidated such VIEs, for example,
where it was determined that third party investors were not involved in the design of the VIEs, including where the size of third party investment was
not significant at inception of the transaction.
82

The following table presents the classification of consolidated VIEs’ assets and liabilities in these consolidated financial statements. Most of theseassets and liabilities are related to consolidated SPEs which securitize corporate convertible securities, mortgages and mortgage-backed securities. The
assets of a consolidated VIE may only be used to settle obligations of that VIE. Creditors do not typically have any recourse to Nomura beyond theassets held in the VIEs.
Billions of yen
March 31, 2019
December 31, 2019

Consolidated VIE assets
Cash and cash equivalents
Trading assets
Equities
Debt securities
CMBS and RMBS
Investment trust funds and other
Derivatives
Private equity investments
Office buildings, land, equipment and facilities
Other
Total
Consolidated VIE liabilities
Trading liabilities
Derivatives
Borrowings
Short-term borrowings
Long-term borrowings
Other
Total

¥

20

¥

15

¥

780
426
43
5
17
2
55
71
1,419

¥

720
500
41
0
18
3
27
23
1,347

¥

23

¥

19

¥

151
884
3
1,061

¥

105
902
3
1,029

Nomura continuously reassesses its initial evaluation of whether it is the primary beneficiary of a VIE based on current facts and circumstances aslong as it has any continuing involvement with the VIE. This determination is based upon an analysis of the design of the VIE, including the VIE’s
structure and activities, the power to make significant economic decisions held by Nomura and by other parties, and the variable interests owned by
Nomura and other parties.
Nomura also holds variable interests in VIEs where Nomura is not the primary beneficiary. Nomura’s variable interests in such VIEs include
senior and subordinated debt, residual interests, and equity interests associated with commercial and residential mortgage-backed and other asset-backed
securitizations and structured financings, equity interests in VIEs which were formed primarily to acquire high yield leveraged loans and other lower
investment grade debt obligations, residual interests in operating leases for aircraft held by VIEs, and loans and investments in VIEs that acquire
operating businesses.
83

The following tables present the carrying amount of variable interests of unconsolidated VIEs and maximum exposure to loss associated withthese variable interests. Maximum exposure to loss does not reflect Nomura’s estimate of the actual losses that could result from adverse changes, nordoes it reflect the economic hedges Nomura enters into to reduce its exposure. The risks associated with VIEs in which Nomura is involved are limited
to the amount recorded in the consolidated balance sheets and the amount of commitments and financial guarantees.
Billions of yen
March 31, 2019
Carrying amount ofMaximum exposure
variable interests
to loss toAssetsLiabilities
unconsolidated VIEs

Trading assets and liabilities
Equities
Debt securities
CMBS and RMBS
Investment trust funds and other
Private equity investments
Loans
Other
Commitments to extend credit and other guarantees
Total

¥

29
109
2,654
153
12
593
11
—
¥3,561

¥

¥

—
—
—
—
—
—
—
—
—

¥

¥

29
109
2,654
153
12
593
11
84
3,645

Billions of yen
December 31, 2019
Carrying amount ofMaximum exposure
variable interests
to loss toAssetsLiabilities
unconsolidated VIEs

Trading assets and liabilities
Equities
Debt securities
CMBS and RMBS
Investment trust funds and other
Private equity investments
Loans
Other
Commitments to extend credit and other guarantees
Total

¥

38
86
3,865
155
14
824
9
—
¥4,991
84

¥

¥

—
—
—
—
—
—
—
—
—

¥

¥

38
86
3,865
155
14
824
9
73
5,064

7. Financing receivables:
In the normal course of business, Nomura extends financing to clients primarily in the form of loans and collateralized agreements such as reverse
repurchase agreements and securities borrowing transactions. These financing receivables are recognized as assets on Nomura’s consolidated balance
sheets and provide a contractual right to receive money either on demand or on future fixed or determinable dates.
Collateralized agreements
Collateralized agreements consist of reverse repurchase agreements reported as Securities purchased under agreements to resell and securities
borrowing transactions reported as Securities borrowed in the consolidated balance sheets, including those executed under Gensaki Repo agreements.
Reverse repurchase agreements and securities borrowing transactions principally involve the buying of government and government agency securities
from customers under agreements that also require Nomura to resell these securities to those customers, or borrowing these securities with cash
collateral. Nomura monitors the value of the underlying securities on a daily basis to the related receivables, including accrued interest, and requests orreturns additional collateral when appropriate. Reverse repurchase agreements are generally recognized in the consolidated balance sheets at the amountfor which the securities were originally acquired with applicable accrued interest. Securities borrowing transactions are generally recognized in the
consolidated balance sheets at the amount of cash collateral advanced. No allowance for credit losses is generally recognized against these transactions
due to the strict collateralization requirements.
Loans receivable
The key types of loans receivable recognized by Nomura are loans at banks, short-term secured margin loans, inter-bank money market loans andcorporate loans.
Loans at banks include both retail and commercial secured and unsecured loans extended by licensed banking entities within Nomura such as The
Nomura Trust & Banking Co., Ltd. and Nomura Bank International plc. For both retail and commercial loans secured by real estate or securities,
Nomura is exposed to the risk of a decline in the value of the underlying collateral. Loans at banks also include unsecured commercial loans provided toinvestment banking clients for relationship purposes. Nomura is exposed to risk of default of the counterparty, although these counterparties usually
have high credit ratings. Where loans are secured by guarantees, Nomura is also exposed to the risk of default by the guarantor.
Short-term secured margin loans are loans provided to clients in connection with securities brokerage business. These loans provide funding forclients in order to purchase securities. Nomura requests initial margin in the form of acceptable collateral securities or deposits against these loans andholds the purchased securities as collateral through the life of the loans. If the value of the securities declines by more than specified amounts, Nomura
can make additional margin calls in order to maintain a specified ratio of loan-to-value (“LTV”) ratio. For these reasons, the risk to Nomura ofproviding these loans is limited.
Inter-bank money market loans are loans to financial institutions in the inter-bank money market, where overnight and intra-day financings aretraded through money market dealers. The risk to Nomura of making these loans is not significant as only qualified financial institutions can participate
in these markets and these loans are usually overnight or short-term in nature.
Corporate loans are primarily commercial loans provided to corporate clients extended by non-licensed banking entities within Nomura.
Corporate loans include loans secured by real estate or securities, as well as unsecured commercial loans provided to investment banking clients for
relationship purposes. The risk to Nomura of making these loans is similar to those risks arising from commercial loans reported in loans at banks.
In addition to the loans above, Nomura has advances to affiliated companies which are loans provided to related parties of Nomura. As these loans
are generally not secured, Nomura is exposed to the risk of default of the counterparty.
85

The following tables present a summary of loans receivable reported within Loans receivable or Investments in and advances to affiliatedcompanies in the consolidated balance sheets by portfolio segment.
Millions of yen
March 31, 2019
Carried at
Carried atamortized costfair value(1)Loans receivable
Loans at banks
Short-term secured margin loans
Inter-bank money market loans
Corporate loans
Total loans receivable
Advances to affiliated companies
Total

¥

565,603334,389
1,699
977,942¥ 1,879,633—¥ 1,879,633

¥

—
5,088
—
659,497¥ 664,585—¥ 664,585

Millions of yen
December 31, 2019
Carried at
Carried atamortized costfair value(1)Loans receivable
Loans at banks
Short-term secured margin loans
Inter-bank money market loans
Corporate loans
Total loans receivable
Advances to affiliated companies
Total
(1)

¥

503,868
320,454
1,376
1,303,221¥ 2,128,919
1,000¥ 2,129,919

—
4,911
—
809,669¥ 814,580—¥ 814,580

Total¥ 565,603
339,477
1,699
1,637,439¥2,544,218—¥2,544,218

Total¥ 503,868
325,365
1,376
2,112,890¥2,943,499
1,000¥2,944,499

Includes loans receivable and loan commitments carried at fair value through election of the fair value option.

There were no significant purchases nor sales of loans receivable during the nine and the three months ended December 31, 2018. During thesame period, there were no significant reclassifications of loans receivable to trading assets.
There were no significant purchases nor sales of loans receivable during the nine and the three months ended December 31, 2019. During thesame period, there were no significant reclassifications of loans receivable to trading assets.
Allowance for credit losses
Management establishes an allowance for credit losses against loans carried at amortized cost which reflects management’s best estimate ofprobable losses incurred. The allowance for credit losses against loans, which is reported in the consolidated balance sheets within Allowance for
doubtful accounts, comprises two components:•

A specific component for loans which have been individually evaluated for impairment; and•A general component for loans which, while not individually evaluated for impairment, have been collectively evaluated for impairment
based on historical loss experience.

The specific component of the allowance reflects probable losses incurred within loans which have been individually evaluated for impairment. A
loan is defined as being impaired when, based on current information and events, it is probable that all amounts due according to the contractual termsof the loan agreement will not be collected. Factors considered by management in determining impairment include an assessment of the ability ofborrowers to pay by considering various factors such as the nature of the loan, prior credit loss experience, current economic conditions, the current
financial situation of the borrower and the fair value of any underlying collateral. Loans that experience insignificant payment delays or insignificant
payment shortfalls are not classified as impaired. Impairment is measured on a loan by loan basis by adjusting the carrying value of the loan to either thepresent value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of thecollateral if the loan is collateral dependent.
86The general component of the allowance is for loans not individually evaluated for impairment and includes judgment about collectability basedon available information at the balance sheet date and the uncertainties inherent in those underlying assumptions. The allowance is based on historicalloss experience adjusted for qualitative factors such as current economic conditions.
While management has based its estimate of the allowance for credit losses against loans on the best information available, future adjustments tothe allowance may be necessary as a result of changes in the economic environment or variances between actual results and original assumptions.
Loans are charged-off when Nomura determines that the loans are uncollectible. This determination is based on factors such as the occurrence ofsignificant changes in the borrower’s financial position such that the borrower can no longer pay the obligation or that the proceeds from collateral will
not be sufficient to pay the loans.
The following tables present changes in the total allowance for credit losses for the nine and three months ended December 31, 2018 and 2019.

Loans
at banks

Opening balance
Provision for losses
Charge-offs
Other(1)Ending balance

Opening balance
Provision for losses
Charge-offs
Other(1)Ending balance

Opening balance
Provision for losses
Charge-offs
Other(1)Ending balance

Opening balance
Provision for losses
Charge-offs
Other(1)Ending balance(1)Millions of yen
Nine months ended December 31, 2018
Allowance for credit losses against loans
Short-term
Inter-banksecuredmoney
Advances tomarginmarketCorporateaffiliated
loans
loans
loans
companies
Subtotal

Allowance forreceivables
other than
loans

Total
allowance for
doubtfulaccounts¥¥¥¥ 1,140
1(96)—¥ 1,045

—
363
—
—
363

¥

Loans
at banks

Millions of yen
Nine months ended December 31, 2019
Allowance for credit losses against loans
Short-term
Inter-banksecuredmoney
Advances tomarginmarketCorporateaffiliated
loans
loans
loans
companies
Subtotal

Allowance forreceivables
other than
loans

Total
allowance for
doubtfulaccounts

¥

¥

¥

370
—
—
15
385

¥

¥

¥

417
—
—
17
434

¥

¥

¥

Loans
at banks

Millions of yen
Three months ended December 31, 2019
Allowance for credit losses against loans
Short-term
Inter-banksecuredmoney
Advances tomarginmarketCorporateaffiliated
loans
loans
loans
companies
Subtotal

Allowance forreceivables
other than
loans

Total
allowance for
doubtfulaccounts¥¥¥¥ 1,179———¥ 1,179

¥

374
—
—
11
385

¥

¥

Includes the effect of foreign exchange movements.
87

—
—
—
—
—

¥ 2,4621—30¥ 2,493

¥

¥

¥

—
—
—
—
—

—
—
—
—
—

¥ 1,864
1(2)(21)¥ 1,842¥ 4,0151—
41¥ 4,057

¥

¥

2,100
8
(1)
(8)
2,099

¥

4,169
1,889
3
8
6,069

¥

¥

¥

¥

1,879
133
3
(3)
2,012

¥ 1,047—(2)—¥ 1,045

¥

445
—
—
(11)
434

¥ 2,2901,756—
11¥ 4,057

¥

3,514
394
21
12
3,941

Loans
at banks

¥

—
—
—
—
—

¥

1,957
30
117
(5)
2,099

Total
allowance for
doubtfulaccounts¥¥¥ 1,557364(96)
17¥ 1,842

Allowance forreceivables
other than
loans

—
—
—
—
—

868
1,629
—
(4)
¥ 2,493

¥

—
—
—
—
—

Millions of yen
Three months ended December 31, 2018
Allowance for credit losses against loans
Short-term
Inter-banksecuredmoney
Advances tomarginmarketCorporateaffiliated
loans
loans
loans
companies
Subtotal

¥

¥

¥

¥

¥

—
—
—
—
—

¥

¥ 1,052127——¥ 1,179

372
1
—
(10)
363

¥

—
—
—
—
—

1,984
16
7
5
2,012

¥

¥

3,964
9
(3)
(29)
3,941

5,999
17
7
46
6,069

The following tables present the allowance for credit losses against loans and loans by impairment methodology and type of loans as of March 31,
2019 and December 31, 2019.
Millions of yen
March 31, 2019

Allowance by impairment methodology
Evaluated individually
Evaluated collectively
Total allowance for credit losses
Loans by impairment methodology
Evaluated individually
Evaluated collectively
Total loans

Loans atbanks

Short-term
secured margin
loans

Inter-bankmoneymarket loans

Corporate
loans

Advancestoaffiliatedcompanies

¥

¥

¥

¥

¥

¥

—
1,052
1,052

¥ 2,792
562,811¥565,603

¥
¥
¥

370
—
370
166,148
168,241
334,389

¥
¥
¥

—
—
—
1,699
—
1,699

¥

868
—
868

¥ 976,096
1,846¥ 977,942

¥
¥
¥

Total

—
—
—

¥

1,238
1,052
2,290

¥

—
—
—

¥1,146,735
732,898¥1,879,633

Millions of yen
December 31, 2019

Allowance by impairment methodology
Evaluated individually
Evaluated collectively
Total allowance for credit losses
Loans by impairment methodology
Evaluated individually
Evaluated collectively
Total loans

Loans atbanks

Short-term
secured margin
loans

Inter-bankmoneymarket loans

Corporate
loans

Advancestoaffiliatedcompanies

¥

¥

¥

¥

¥

¥

—
1,179
1,179

¥ 3,323
500,545¥503,868

¥
¥
¥

385
—
385
146,706
173,748
320,454

¥
¥
¥

—
—
—
1,376
—
1,376

¥

2,493
—
2,493

¥1,303,043
178¥1,303,221

¥

—
—
—

¥

—
1,000
¥ 1,000

Total

¥
¥

2,878
1,179
4,057

¥1,454,448
675,471¥2,129,919

Nonaccrual and past due loans
Loans which are individually evaluated as impaired are assessed for nonaccrual status in accordance with Nomura’s policy. When it is determined
to suspend interest accrual as a result of an assessment, any accrued but unpaid interest is reversed. Loans are generally only returned to an accrual
status if the loan is brought contractually current, i.e. all overdue principal and interest amounts are paid. In limited circumstances, a loan which has notbeen brought contractually current will also be returned to an accrual status if all principal and interest amounts contractually due are reasonably assuredof repayment within a reasonable period of time or there has been a sustained period of repayment performance by the borrower.
As of March 31, 2019, the amount of loans which were on a nonaccrual status was not significant. The amount of loans which were 90 days past
due was not significant.
As of December 31, 2019, the amount of loans which were on a nonaccrual status was not significant. The amount of loans which were 90 days
past due was not significant.
Once a loan is impaired and placed on a nonaccrual status, interest income is subsequently recognized using the cash basis method.
88

Loan impairment and troubled debt restructurings
In the ordinary course of business, Nomura may choose to recognize impairment and also restructure a loan classified as held for investment either
because of financial difficulties of the borrower, or simply as a result of market conditions or relationship reasons. A troubled debt restructuring(“TDR”) occurs when Nomura (as lender) for economic or legal reasons related to the borrower’s financial difficulties grants a concession to theborrower that Nomura would not otherwise consider.
Any loan being restructured under a TDR will generally already be identified as impaired with an applicable allowance for credit losses
recognized. If not (for example if the loan is collectively assessed for impairment with other loans), the restructuring of the loan under a TDR will
immediately result in the loan as being classified as impaired. An impairment loss for a loan restructuring under a TDR which only involves
modification of the loan’s terms (rather than receipt of assets in full or partial settlement) is calculated in the same way as any other impaired loan.
Assets received in full or partial satisfaction of a loan in a TDR are recognized at fair value.
As of March 31, 2019, the amount of loans which were classified as impaired but against which no allowance for credit losses had beenrecognized was not significant. For impaired loans with a related allowance, the amount of recorded investment, the total unpaid principal balance andthe related allowance was not significant.
As of December 31, 2019, the amount of loans which were classified as impaired but against which no allowance for credit losses had beenrecognized was not significant. For impaired loans with a related allowance, the amount of recorded investment, the total unpaid principal balance andthe related allowance was not significant.
The amounts of TDRs which occurred during the nine and three months ended December 31, 2018 and 2019 were not significant.
Credit quality indicators
Nomura is exposed to credit risks deriving from a decline in the value of loans or a default caused by deterioration of creditworthiness orbankruptcy of the obligor. Nomura’s risk management framework for such credit risks is based on a risk assessment through an internal rating process,in depth pre-financing credit analysis of each individual loan and continuous post-financing monitoring of obligor’s creditworthiness.
The following tables present an analysis of each class of loans not carried at fair value using Nomura’s internal ratings or equivalent credit quality
indicators applied by subsidiaries as of March 31, 2019 and December 31, 2019.

Secured loans at banks
Unsecured loans at banks
Short-term secured margin loans
Unsecured inter-bank money market loans
Secured corporate loans
Unsecured corporate loans
Advances to affiliated companies
Total

Secured loans at banks
Unsecured loans at banks
Short-term secured margin loans
Unsecured inter-bank money market loans
Secured corporate loans
Unsecured corporate loans
Advances to affiliated companies
Total
(1)

Relate to collateralized exposures where a specified ratio of LTV is maintained.
89

AAA-BBB

Millions of yen
March 31, 2019
BB-CCC
CC-D
Others(1)¥ 149,048
233,201—
1,699
474,305
16,467—¥ 874,720¥127,309
1,500——
439,156311—¥568,276

AAA-BBB

Millions of yen
December 31, 2019
BB-CCC
CC-D
Others(1)¥ 163,397
131,822—
1,376
721,166
16,2471,000¥1,035,008¥151,585
253——
464,178
18,730—¥634,746

¥ —
—
—
—
—
—
—
¥ —

¥ —
—
—
—
4,336
—
—
¥4,336¥ 54,545—
334,389—
4,025
43,678—¥436,637¥ 54,066
2,745
320,454—
7,136
71,428—¥455,829

Total¥ 330,902
234,701
334,389
1,699
917,486
60,456—¥1,879,633

Total¥ 369,048
134,820
320,454
1,376
1,196,816
106,405
1,000¥2,129,919

The following table presents a definition of each of the internal ratings used in the Nomura Group.
Rating Range

Definition

AAA

Highest credit quality. An obligor or facility has extremely strong capacity to meet its financial commitments. ‘AAA range’ is the highest
credit rating assigned by Nomura. Extremely low probability of default.

AA

Very high credit quality category. An obligor or facility has very strong capacity to meet its financial commitments. Very low probabilityof default but above that of ‘AAA range.’

A

High credit quality category. An obligor or facility has strong capacity to meet its financial commitments but is somewhat more
susceptible to the adverse effects of changes in circumstances and economic conditions than those in higher-rated categories. Low
probability of default but higher than that of ‘AA range.’

BBB

Good credit quality category. An obligor or facility has adequate capacity to meet its financial commitments. However, adverse economic
conditions or changing circumstances are more likely to lead to a weakened capacity to meet its financial commitments. Medium
probability of default but higher than that of ‘A range.’

BB

Speculative credit quality category. An obligor or facility is less vulnerable in the near term than other lower-ratings. However, it faces
major ongoing uncertainties and exposure to adverse business, financial, or economic conditions which could lead to the inadequate
capacity to meet its financial commitments. Medium to high probability of default but higher than that of ‘BBB range.’

B

Highly speculative credit quality category. An obligor or facility is more vulnerable than those rated ‘BB range’, but the obligor currently
has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the issuer’s orobligor’s capacity or willingness to meet its financial commitments. High probability of default – more than that of ‘BB range.’

CCC

Substantial credit risk. An obligor or facility is currently vulnerable, and is dependent upon favorable business, financial, and economic
conditions to meet its financial commitments. Strong probability of default – more than that of ‘B range.’CCAn obligor or facility is currently highly vulnerable to nonpayment (default category).

C

An obligor or facility is currently extremely vulnerable to nonpayment (default category).

D

Failure of an obligor to make payments in full and on time of any financial obligations, markedly disadvantageous modification to acontractual term compared with the existing obligation, bankruptcy filings, administration, receivership, liquidation or other winding-up
or cessation of business of an obligor or other similar situations.

Nomura reviews internal ratings at least once a year by using available credit information of obligors including financial statements and otherinformation. Internal ratings are also reviewed more frequently for high-risk obligors or problematic exposures and any significant credit event of
obligors will trigger an immediate credit review process.
90

8. Leases:
Nomura as lessor
Nomura leases office buildings and aircraft in Japan and overseas either as head lessor or through subleases. These leases and subleases areprimarily classified as operating leases under ASC 842 “Leases” which Nomura adopted from April 1, 2019. The related assets are stated at cost, net ofaccumulated depreciation, except for land, which is stated at cost in the consolidated balance sheets and reported within Other assets—Office buildings,
land, equipment and facilities.
The following table presents the types of assets which Nomura leases under operating leases:

Cost

Real estate(1)AircraftTotal(1)¥ 2,771
55,130¥57,901

Millions of yen
March 31, 2019
Accumulated
Net carrying
depreciation
amountCost

December 31, 2019
Accumulated
Net carrying
depreciation
amount¥¥¥(1,498)(310)(1,808)¥¥

1,273
54,82056,093¥ 3,061
27,641¥30,702¥(1,796)(518)(2,314)¥¥

1,265
27,12328,388

Cost, accumulated depreciation and net carrying amounts include amounts relating to real estate utilized by Nomura.

Nomura recognized lease income of ¥1,619 million and ¥333 million for the nine and three months ended December 31, 2018, respectively, and¥2,308 million and ¥573 million for the nine and three months ended December 31, 2019, respectively. These are included in the consolidated
statements of income within Revenue—Other.
The following table presents an analysis of future undiscounted lease payments to be received in connection with operating leases entered into by
Nomura as lessor over the remaining lease term by relevant reporting period as of December 31, 2019. Amounts for finance leases are not disclosed assuch amounts were not significant.

Total

Operating lease payments to be received¥

Less than
1 year

27,094 ¥2,374 ¥

1 to 2years

Millions of yen
Years of receipt
2 to 33 to 4
years
years

2,374 ¥

2,352 ¥

2,309 ¥

4 to 5years

More than
5 years

2,309 ¥

15,376

Nomura as lessee
Nomura enters into leases of office space, residential facilities for employees, motor vehicles, equipment and technology assets in the ordinary
course of business in both Japan and overseas as lessee. These arrangements are primarily classified as operating leases under ASC 842 “Leases” which
Nomura adopted from April 1, 2019. The total carrying value of Right-of-use (“ROU”) asset recognized in connection with operating leases as ofDecember 31, 2019 was ¥169,247 million. The total carrying value of ROU asset recognized in connection with finance leases as of December 31, 2019was not significant. These lease assets are reported within Other assets—Office buildings, land, equipment and facilities in the consolidated balance
sheets.
The following table presents income and expense amounts recognized through the consolidated statements of income for leases where Nomura isacting as lessee for the nine and six months ended December 31, 2019. Amounts for finance lease cost, short-term lease cost, variable lease cost and net
gains (losses) on qualifying sale and leaseback transactions for those periods have not been disclosed as such amounts were not significant.

Lease expense:
Operating lease cost
Other income and expenses:
Gross sublease income(1)(1)

Millions of yen
Three months ended
December 31, 2019

Millions of yen
Nine months ended
December 31, 2019¥

11,982¥35,871

¥

1,349

¥

4,066

Gross sublease income represents income from subleases separate from lease payments made by Nomura on the head lease as lessee.
91

Lease cash flow information
Lease payments made in cash in connection with operating leases are classified as an operating activity in the statement of cash flows. The initialrecognition of a ROU asset and lease liability on lease commencement date represents a noncash transaction.
The following tables present cash payments made by Nomura as lessee which meet the definition of lease payments and therefore have been
included in the measurement of operating and finance lease liabilities and the total amount of ROU assets and lease liabilities recognized during the ninemonths ended December 31, 2019.
Millions of yen
Nine months ended
December 31, 2019

Operating cash flow for operating leases¥

36,771Millions of yen
Nine months ended
December 31, 2019

ROU assets recognized in connection with new operating leases¥

13,267

Maturity analysis of lease liabilities
The following table presents an analysis of future undiscounted lease payments to be made in connection with operating leases entered into by
Nomura as lessee over the remaining lease term as of December 31, 2019 and also represents a reconciliation between total of such lease payments andthe discounted carrying value of operating lease liabilities recognized in the consolidated balance sheets as of December 31, 2019. Amounts for financelease liabilities as of December 31, 2019 has not been disclosed as such amounts were not significant. These lease liabilities are reported within Otherliabilities in the consolidated balance sheets.
Millions of yen
December 31, 2019
Operating leases

Years of payment
Less than 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
More than 5 years
Total undiscounted lease payments
Less: Impact of discounting
Lease liabilities as reported in the consolidated balance sheets¥¥¥

42,09130,141
24,12622,305
20,97776,927
216,567(24,749)
191,818

The following table presents the weighted-average discount rate used to measure lease liabilities and the weighted-average remaining lease termof operating leases as of December 31, 2019.
December 31, 2019
Operating leases

Weighted-average discount rate used to measure lease liabilities
Weighted-average remaining lease term

2.2%
8.3 years929. Other assets—Other / Other liabilities:
The following table presents components of Other assets—Other and Other liabilities in the consolidated balance sheets as ofMarch 31, 2019 and as of December 31, 2019.
Millions of yen
March 31,
2019

Other assets—Other:
Securities received as collateral
Goodwill and other intangible assets(1)Deferred tax assets
Investments in equity securities for other than operating purposes
Prepaid expenses
Other
Total
Other liabilities:
Obligation to return securities received as collateral
Accrued income taxes
Other accrued expenses
Other(2)
Total
(1)

(2)

¥

¥
¥

¥

December 31,
2019282,656
19,792
15,026
175,015
14,544
241,058
748,091¥

282,656
11,898401,408
162,905
858,867¥¥¥

443,608
18,363
15,683
176,279
15,387295,108
964,428
443,608
11,543
383,175
334,319
1,172,645

For the nine months ended December 31, 2018, Nomura recognized impairment losses on goodwill of ¥81,372 million within the Wholesalesegment. Nomura performed an impairment test based on Wholesale performance and changes in the operating environment, and impaired
goodwill within the Wholesale segment. As a result, the balance of goodwill within the Wholesale segment as of December 31, 2018 was ¥nil.
These impairment losses were recorded within Non-interest expense—Other in the consolidated statements of income. The fair values were
determined based on a DCF method.
As a result of adopting ASU 2016-02 as of April 1, 2019, operating lease liabilities are presented through Other liabilities—Other. See Note 8“Leases” for further information.
9310. Earnings per share:
A reconciliation of the amounts and the numbers used in the calculation of net income (loss) attributable to NHI shareholders per share (basic anddiluted) is as follows:
Millions of yen
except per share data
presented in yen
Nine months ended December 31
2018
2019

Basic—Net income (loss) attributable to NHI shareholders
Weighted average number of shares outstanding
Net income (loss) attributable to NHI shareholders per share
Diluted—
Net income (loss) attributable to NHI shareholders
Weighted average number of shares outstanding
Net income (loss) attributable to NHI shareholders per share¥(101,286)
3,374,581,279¥(30.01)¥¥¥(101,323)
3,374,583,290¥(30.03)

251,473
3,250,819,816¥
77.36
251,418
3,323,399,244¥
75.65

Millions of yen
except per share data
presented in yen
Three months ended December 31
2018
2019

Basic—Net income (loss) attributable to NHI shareholders
Weighted average number of shares outstanding
Net income (loss) attributable to NHI shareholders per share
Diluted—
Net income (loss) attributable to NHI shareholders
Weighted average number of shares outstanding
Net income (loss) attributable to NHI shareholders per share¥(95,276)
3,341,074,954¥(28.52)¥¥¥(95,281)
3,341,076,910¥(28.52)

57,066
3,157,789,804¥
18.07
57,0533,235,718,574¥
17.63

Net income (loss) attributable to NHI shareholders is adjusted to reflect the decline in Nomura’s equity share of earnings of subsidiaries andaffiliates for the nine and the three months ended December 31, 2018 and 2019, arising from options to purchase common shares issued by subsidiaries
and affiliates.
The weighted average number of shares used in the calculation of diluted earnings per share (“EPS”) reflects the increase in potential issuance ofcommon shares arising from stock-based compensation plans issued by the Company and affiliates, which would have minimal impact on EPS for thenine and the three months ended December 31, 2018.
The weighted average number of shares used in the calculation of diluted EPS reflects the increase in potential issuance of common shares arisingfrom stock-based compensation plans issued by the Company and affiliates, which would have minimal impact on EPS for the nine and the threemonths ended December 31, 2019.
Antidilutive stock options and other stock-based compensation plans to purchase 108,145,300 common shares were not included in thecomputation of diluted EPS for the nine and the three months ended December 31, 2018, respectively. Antidilutive stock options to purchase 15,463,900
common shares were not included in the computation of diluted EPS for the nine and the three months ended December 31, 2019, respectively.
9411. Employee benefit plans:
Nomura provides various pension plans and other post-employment benefits which cover certain employees worldwide. In addition, Nomura
provides health care benefits to certain active and retired employees through its Nomura Securities Health Insurance Society.
Net periodic benefit cost
The net periodic benefit cost of the defined benefit plans of Japanese entities’ includes the following components.
Millions of yen
Nine months ended December 31
2018
2019

Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial losses
Amortization of prior service cost
Net periodic benefit cost

¥

¥

8,145
1,635
(4,551)
2,873
(796)
7,306

¥

¥

9,065
1,359
(4,528)
3,974
(792)
9,078

Millions of yen
Three months ended December 31
2018
2019

Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial losses
Amortization of prior service cost
Net periodic benefit cost

¥

¥

2,716
545
(1,517)
958
(266)
2,436

Nomura also recognized net periodic benefit cost of plans other than Japanese entities’ plans, which are not significant.
95

¥

¥

3,008
453
(1,509)
1,327
(264)
3,015

12. Restructuring initiatives:
Nomura continues to experience a major structural shift such as a breakdown of the traditional investment banking business model, advances indigitization, and demographic shifts due to the shrinking population and aging society in Japan. To respond to the changing environment created bythese shifts, Nomura implemented various restructuring initiatives during the year ended March 31, 2019 to swiftly reengineer its business platforms andchange its business approach in order to achieve sustainable growth in any business environment. In particular, Nomura has restructured its management
reporting framework to eliminate the concept of regions to minimize duplication between businesses and region, reduce the number of corporate
functions, downscale unprofitable and low growth businesses and reduce its activities in EMEA.
As a result of these initiatives, Nomura recognized ¥10,348 million of severance costs reported within Non-interest expenses—Compensation andbenefits in the consolidated statements of income during the year ended March 31, 2019 and within Nomura’s Wholesale and Other segments. As of
March 31, 2019, these costs were reported as liabilities within Other liabilities in the consolidated statements of financial position. Liabilities relating tothese restructuring costs (including currency translation adjustments) were ¥772 million as of December 31, 2019 and ¥9,078 million were settled
during the nine months ended December, 2019.
Nomura also recognized ¥4,368 million of branch consolidation costs reported within Non-interest expenses—Occupancy and related
depreciation in the consolidated statements of income during the nine months ended December 31, 2019 and within Nomura’s Retail and Other
segments. As of December 31, 2019, ¥871 million were reported as liabilities within Other liabilities.
The most part of changes is expected to be completed during the year ending March 31, 2020. However, the total costs to be incurred going
forward are currently under evaluation.
13. Income taxes:
For the nine months ended December 31, 2018, the difference between the effective statutory tax rate of 31% and the effective tax rate of (58.5%)
was mainly due to non-deductible expenses whereas tax benefit recognized on the devaluation of investment in subsidiaries and affiliates decreased
income tax expense.
For the three months ended December 31, 2018, the difference between the effective statutory tax rate of 31% and the effective tax rate of (25.9%)
was mainly due to non-deductible expenses whereas non-taxable revenue decreased income tax expense.
For the nine months ended December 31, 2019, the difference between the effective statutory tax rate of 31% and the effective tax rate of 6.0%
was mainly due to non-taxable income whereas non-deductible expenses increased the effective tax rate.
Non-taxable income includes approximately ¥53 billion of the tax effect from non-taxable dividend income from affiliated Nomura companies,
including deemed dividend, during the nine months period ended December 31, 2019 which decreased Nomura’s effective tax rate by 19.3%.
For the three months ended December 31, 2019, the difference between the effective statutory tax rate of 31% and the effective tax rate of 14.8%
was mainly due to decrease in valuation allowance of foreign subsidiaries whereas non-deductible expenses increased effective tax rate.
9614. Other comprehensive income (loss):
Changes in accumulated other comprehensive income (loss) are as follows:

Balance at
beginningof year

Cumulative translation adjustments
Pension liability adjustment
Own credit adjustments
Total¥ (15,596)(47,837)
4,077¥ (59,356)

Millions of yen
Nine months ended December 31, 2018
Other
comprehensive
Reclassifications out of
income (loss)
accumulated otherNet change
during thebeforecomprehensive
periodreclassifications
income (loss)(1)

Balance at
end of period

¥

¥

¥

25,580916
25,35851,854

¥

¥

7,014
128
10
7,152

¥ 32,594
1,044
25,368¥ 59,006

16,998(46,793)
29,445¥(350)(1) Change in cumulative translation adjustments, net of tax in other comprehensive income (loss) for nine months ended December 31, 2018
includes reclassification adjustment of ¥6,956 million for loss due to substantially complete liquidation of an investment in a foreign entity. The
adjustment is recognized in Non-interest expenses-Other.

Cumulative translation adjustments
Pension liability adjustment
Own credit adjustments
Total

Balance at
beginningof yearMillions of yen
Nine months ended December 31, 2019
Other
comprehensive
Reclassifications out of
Net change
income (loss)
accumulated otherduring thebeforecomprehensive
periodreclassifications
income (loss)(1)

Balance at
end of period

¥

¥

¥

17,833(71,107)24,224¥ (29,050)¥ (16,762)
4,792(17,384)¥ (29,354)

1,071(66,315)6,840¥ (58,404)

Balance at
beginningof period

Millions of yen
Three months ended December 31, 2018
Other
comprehensive
Reclassifications out of
income (loss)
accumulated otherNet change
beforecomprehensive
during the(1)
reclassifications
income (loss)
periodBalance at
end of period

¥

¥

¥

¥

(17,385)
1,776(16,603)(32,212)

¥
¥

623
3,016
(781)
2,858

(1) Reclassifications out of accumulated other comprehensive income (loss) were not significant.

Cumulative translation adjustments
Pension liability adjustment
Own credit adjustments
Total

45,536(46,580)
7,417
¥
6,373

¥ (28,538)(213)
22,028¥ (6,723)

16,998(46,793)
29,445¥(350)

Millions of yen
Three months ended December 31, 2019
Other
comprehensive
Reclassifications out of
income (loss)
accumulated otherNet change
during thebeforecomprehensive
reclassifications
income (loss)(1)periodBalance at
end of period

¥

¥

¥

(28,590)(256)
22,039(6,807)

¥
¥

52
43
(11)
84

(1) Reclassifications out of accumulated other comprehensive income (loss) were not significant.

Balance at
beginningof period

Cumulative translation adjustments
Pension liability adjustment
Own credit adjustments
Total¥ (20,802)(67,190)
20,549¥ (67,443)¥

21,874
141(13,787)8,228(1) Reclassifications out of accumulated other comprehensive income (loss) were not significant.
97

¥

¥

(1)
734
78
811

¥ 21,873
875(13,709)¥ 9,039

1,071(66,315)6,840¥ (58,404)

15. Commitments, contingencies and guarantees:
Commitments—
Credit and investment commitments
In connection with its banking and financing activities, Nomura provides commitments to extend credit which generally have fixed expiration
dates. In connection with its investment banking activities, Nomura enters into agreements with clients under which Nomura commits to underwrite debt
and equity securities that may be issued by clients. As a member of certain central clearing counterparties, Nomura is committed to provide liquidity
facilities through entering into reverse repo transactions backed by government and government agency debt securities with those counterparties in asituation where a default of another clearing member occurs. The outstanding commitments under these agreements are included below in commitments
to extend credit.
Nomura has commitments to invest in various partnerships and other entities, and also has commitments to provide financing for investments
related to these partnerships. The outstanding commitments under these agreements are included below in commitments to invest.
The following table presents a summary of the key types of outstanding commitments provided by Nomura.
Millions of yen
March 31, 2019
December 31, 2019

Commitments to extend credit
Liquidity facilities to central clearing counterparties
Other commitments to extend credit
Total
Commitments to invest¥ 1,593,439
1,100,929¥ 2,694,368¥
14,413¥¥¥

1,204,709
1,256,068
2,460,777
16,0203 to 5years

More than
5 years

As of December 31, 2019, these commitments had the following maturities:
Millions of yen
Years to Maturity

Commitments to extend credit
Liquidity facilities to central clearing counterparties
Other commitments to extend credit
Total
Commitments to invest

Total
contractual
amountLess than
1 year¥1,204,709
1,256,068¥2,460,777¥ 16,020¥1,204,709
174,462¥1,379,171¥782

1 to 3years¥—
148,988¥148,988¥
4¥—
259,549¥259,549¥ 5,920¥—
673,069¥673,069¥ 9,314

The contractual amounts of these commitments to extend credit represent the amounts at risk but only if the contracts are fully drawn upon, should
the counterparties default, and assuming the value of any existing collateral becomes worthless. The total contractual amount of these commitments may
not represent future cash requirements since the commitments may expire without being drawn upon. The credit risk associated with these commitments
varies depending on the clients’ creditworthiness and the value of collateral held. Nomura evaluates each client’s creditworthiness on a case-by-casebasis. The amount of collateral obtained, if deemed necessary by Nomura upon extension of credit, is based on credit evaluation of the counterparty.
Contingencies—
Investigations, lawsuits and other legal proceedings
In the normal course of business as a global financial services entity, Nomura is involved in investigations, lawsuits and other legal proceedings
and, as a result, may suffer loss from any fines, penalties or damages awarded against Nomura, any settlements Nomura chooses to make to resolve a
matter, and legal and other advisory costs incurred to support and formulate a defense.
The ability to predict the outcome of these actions and proceedings is inherently difficult, particularly where claimants are seeking substantial orindeterminate damages, where investigations and legal proceedings are at an early stage, where the matters present novel legal theories or involve alarge number of parties, or which take place in foreign jurisdictions with complex or unclear laws.
98The Company regularly evaluates each legal proceeding and claim on a case-by-case basis in consultation with external legal counsel to assess
whether an estimate of possible loss or range of loss can be made, if recognition of a liability is not appropriate. In accordance with ASC 450“Contingencies” (“ASC 450”), the Company recognizes a liability for this risk of loss arising on each individual matter when a loss is probable and theamount of such loss or range of loss can be reasonably estimated. The amount recognized as a liability is reviewed at least quarterly and is revised whenfurther information becomes available. If these criteria are not met for an individual matter, such as if an estimated loss is only reasonably possible
rather than probable, no liability is recognized. However, where a material loss is reasonably possible, the Company will disclose details of the legal
proceeding or claim below. Under ASC 450 an event is defined as reasonably possible if the chance of the loss to the Company is more than remote but
less than probable.
The most significant actions and proceedings against Nomura are summarized below. The Company believes that, based on current information
available as of the date of these consolidated financial statements, the ultimate resolution of these actions and proceedings will not be material to theCompany’s financial condition. However, an adverse outcome in certain of these matters could have a material adverse effect on the consolidated
statements of income or cash flows in a particular quarter or annual period.
For certain of the significant actions and proceedings described below, the Company is currently able to estimate the amount of reasonably
possible loss, or range of reasonably possible losses, in excess of amounts recognized as a liability (if any) against such cases. These estimates are basedon current information available as of the date of these consolidated financial statements and include, but are not limited to, the specific amount ofdamages or claims against Nomura in each case. As of February 14, 2020, for those cases where an estimate of the range of reasonably possible losses
can be made, the Company estimates that the total aggregate reasonably possible maximum loss in excess of amounts recognized as a liability (if any)against these cases is approximately ¥37 billion.
For certain other significant actions and proceedings, the Company is unable to provide an estimate of the reasonably possible loss or range ofreasonably possible losses because, among other reasons, (i) the proceedings are at such an early stage there is not enough information available toassess whether the stated grounds for the claim are viable; (ii) damages have not been identified by the claimant; (iii) damages are unsupported and/or
exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant legal issues to be resolved that may bedispositive, such as the applicability of statutes of limitations; (vi) there are novel or unsettled legal theories underlying the claims and/or (vii) a
judgment has been made against Nomura but detailed reasons for the basis for the judgment and how the amount of the judgment has been determined
have not yet been received.
Nomura will continue to cooperate with regulatory investigations and to vigorously defend its position in the ongoing actions and proceedings set
out below, as appropriate.
In January 2008, Nomura International plc (“NIP”) was served with a tax notice issued by the tax authorities in Pescara, Italy alleging breaches by
NIP of the U.K.-Italy Double Taxation Treaty of 1998 (“Tax Notice”). The alleged breaches relate to payments to NIP of tax credits on dividends on
Italian shares. The Tax Notice not only denies certain payments to which NIP claims to be entitled but also seeks reimbursement of approximately EUR
33.8 million, plus interest, already refunded. NIP continues vigorously to challenge the Pescara Tax Court’s decisions in favor of the local tax
authorities.
In October 2010 and June 2012, two actions were brought against NIP, seeking recovery of payments allegedly made to NIP by Fairfield Sentry
Ltd. and Fairfield Sigma Ltd. (collectively, “Fairfield Funds”), which are now in liquidation and were feeder funds to Bernard L. Madoff Investment
Securities LLC (in liquidation pursuant to the Securities Investor Protection Act in the U.S. since December 2008) (“BLMIS”). The first suit was
brought by the liquidators of the Fairfield Funds. It was filed on October 5, 2010 in the Supreme Court of the State of New York, but was subsequently
removed to the United States Bankruptcy Court for the Southern District of New York. The second suit was brought by the Trustee for the liquidation of
BLMIS (“Madoff Trustee”). NIP was added as a defendant in June 2012 when the Madoff Trustee filed an amended complaint in the United States
Bankruptcy Court for the Southern District of New York. Both actions seek to recover approximately $35 million.
In April 2011, the Federal Home Loan Bank of Boston (“FHLB-Boston”) commenced proceedings in the Superior Court of Massachusetts against
numerous issuers, sponsors and underwriters of residential mortgage-backed securities (“RMBS”), and their controlling persons, including Nomura
Asset Acceptance Corporation (“NAAC”), Nomura Credit & Capital, Inc. (“NCCI”), Nomura Securities International, Inc. (“NSI”) and Nomura
Holding America Inc. (“NHA”). The action alleged that FHLB-Boston purchased RMBS certificates in four offerings issued by NAAC in the original
principal amount of approximately $406 million, for which the offering materials contained untrue statements or omitted material facts concerning theunderwriting standards used by the original lenders and the characteristics of the loans underlying the securities. On December 16, 2019, the parties
settled the matter for $34 million and the action has been dismissed.
99

In September 2011, the Federal Housing Finance Agency (“FHFA”), as conservator for the government sponsored enterprises, Federal National
Mortgage Association and Federal Home Loan Mortgage Corporation (“GSEs”), commenced proceedings in the United States District Court for theSouthern District of New York against numerous issuers, sponsors and underwriters of RMBS, and their controlling persons, including NAAC, Nomura
Home Equity Loan Inc. (“NHEL”), NCCI, NSI and NHA (the Company’s U.S. subsidiaries). The action alleged that the GSEs purchased RMBS issuedby NAAC and NHEL for which the offering materials contained untrue statements or omitted material facts concerning the underwriting standards usedby the original lenders and the characteristics of the loans underlying the securities. FHFA alleged that the GSEs purchased certificates in sevenofferings in the original principal amount of approximately $2,046 million and sought rescission of its purchases. The case was tried before the Court
beginning March 16, 2015 and closing arguments were completed on April 9, 2015. On May 15, 2015, the Court issued a judgment and ordered thedefendants to pay $806 million to the GSEs upon the GSEs’ delivery of the certificates at issue to the defendants. The Company’s U.S. subsidiaries
appealed the decision to the United States Court of Appeals for the Second Circuit and agreed, subject to the outcome of the appeal, to a consent
judgment for costs and attorneys’ fees recoverable under the blue sky statutes at issue in the maximum amount of $33 million. On September 28, 2017,
the Second Circuit affirmed the judgment of the district court. On March 12, 2018, the Company’s U.S. subsidiaries filed a petition for certiorari to the
U.S. Supreme Court. On June 25, 2018, the U.S. Supreme Court denied the petition for certiorari. The judgment has been satisfied and the proceedings
have been discontinued.
In November 2011, NIP was served with a claim filed by the Madoff Trustee in the United States Bankruptcy Court for the Southern District of
New York. This is a clawback action similar to claims filed by the Madoff Trustee against numerous other institutions. The Madoff Trustee alleges that
NIP received redemptions from the BLMIS feeder fund, Harley International (Cayman) Limited in the six years prior to December 11, 2008 (the dateproceedings were commenced against BLMIS) and that these are avoidable and recoverable under the U.S. Bankruptcy Code and New York law. The
amount that the Madoff Trustee is currently seeking to recover from NIP is approximately $21 million.
In March 2013, Banca Monte dei Paschi di Siena SpA (“MPS”) issued a claim in the Italian Courts against (1) two former directors of MPS and(2) NIP. MPS alleged that the former directors improperly caused MPS to enter into certain structured financial transactions with NIP in 2009(“Transactions”) and that NIP acted fraudulently and was jointly liable for the unlawful conduct of MPS’s former directors. MPS claimed damages of
not less than EUR 1.1 billion.
In March 2013, NIP commenced a claim against MPS in the English Courts. The claim was for declaratory relief confirming that the Transactions
remained valid and contractually binding. MPS filed and served its defence and counterclaim to these proceedings in March 2014. MPS alleged in its
counterclaim that NIP was liable to make restitution of a net amount of approximately EUR 1.5 billion, and sought declarations regarding the illegality
and invalidity of the Transactions.
On September 23, 2015, NIP entered into a settlement agreement with MPS to terminate the Transactions. NIP believes that the Transactions wereconducted legally and appropriately, and does not accept the allegations made against it or admit any wrongdoing. Taking into account the views of
relevant European financial authorities and the advice provided by external experts, NIP considered it to be in its best interests to reach a settlement inrelation to this matter. As part of the agreement, the Transactions were unwound at a discount of EUR 440 million in favour of MPS and the civil
proceedings between MPS and NIP in Italy and England, respectively, will no longer be pursued. Pursuant to the settlement agreement MPS and NIP
applied to the Italian Courts to discontinue the proceedings brought by MPS against NIP. These proceedings have since been discontinued.
In July 2013, a claim was also issued against the same former directors of MPS, and NIP, by the shareholder group Fondazione Monte dei Paschidi Siena (“FMPS”). The grounds of the FMPS claim are similar to those on which the MPS claim was founded. The level of damages sought by FMPS
is not less than EUR 315.2 million.
In January 2018, a claim before the Italian Courts brought by two claimants, Alken Fund Sicav (on behalf of two Luxembourg investment funds
Alken Fund European Opportunities and Alken Fund Absolute Return Europe) and Alken Luxembourg S.A (the funds’ management company) was
served on NIP. The claim is made against NIP, MPS, four MPS former directors and a member of MPS’s internal audit board, and seeks monetarydamages of approximately EUR 434 million on the basis of allegations similar to those made in the MPS and FMPS claims, as well as non-monetarydamages in an amount left to be quantified by the Judge.
In May 2019, a claim before the Italian Courts brought by York Global Finance Offshore BDH (Luxembourg) Sàrl and a number of seemingly
related funds was served on NIP. The claim is made against NIP, MPS, two MPS former directors and a member of MPS’s internal audit board, andseeks monetary damages of approximately EUR 186.7 million on grounds similar to those in the MPS and FMPS claims, as well as non-monetarydamages in an amount left to be quantified by the Judge.
100In April 2013, an investigation was commenced by the Public Prosecutor’s office in Siena, Italy, into various allegations against MPS and certainof its former directors, including in relation to the Transactions. The investigation was subsequently transferred to the Public Prosecutor of Milan. On
April 3, 2015, the Public Prosecutor’s office in Milan issued a notice concluding its preliminary investigation. The Public Prosecutor was seeking toindict MPS, three individuals from MPS’s former management, NIP and two former NIP employees for, among others, the offences of false accounting
and market manipulation in relation to MPS’s previous accounts. The preliminary hearing at which the Milan criminal court considered whether or not
to grant the indictment concluded on October 1, 2016, the Judge ordering the trial of all individuals and banks involved except for MPS (which enteredinto a plea bargaining agreement with the Public Prosecutor). The trial commenced in December 2016. As part of these proceedings, a number of civil
claimants have been permitted to bring damages claims against a number of entities and individuals, including NIP.
On 8 November 2019, the court delivered its oral verdict, finding two former employees of NIP guilty of false accounting, market manipulationand obstructing the supervisory activities of CONSOB and that NIP had breached Italian corporate liability legislation. In so doing it imposed a fine of
EUR 3.45 million on NIP as well as ordering confiscation of EUR 88 million. The detailed reasoning for the verdict (including the rationale for the
penalties imposed) is expected to be released in the next few months at which point NIP will consider all its options, including any appeal. The penalties
will not be enforceable until all appeals have been concluded. Given the limited amount of information available to Nomura at this time, the Company isunable to estimate whether the amounts referred to above represent the reasonably possible maximum loss in respect of these matters. Until the detailed
reasoning of the court is received, such amounts represent the only available quantifiable basis of potential loss at this stage even though they may notnecessarily represent the eventual outcome in respect of these matters.
Additionally, NIP was served by the Commissione Nazionale per le Società e la Borsa (“CONSOB”, the Italian financial regulatory authority)with a notice commencing administrative sanction proceedings for market manipulation in connection with the Transactions. In relation to theTransactions, the notice named MPS, three individuals from MPS’s former management and two former NIP employees as defendants, whereas NIP
was named only in its capacity as vicariously liable to pay any fines imposed on the former NIP employees. On May 22, 2018 CONSOB issued its
decision in which it levied EUR 100,000 fines in relation to each of the two former NIP employees. In addition, CONSOB decided that the two
employees do not meet the necessary Italian law integrity requirements to perform certain senior corporate functions, for a period of three months andsix months respectively. NIP is vicariously liable to pay the fines imposed on its former employees. NIP has paid the fines and appealed the decision to
the Milan Court of Appeal.
In January 2016, the Municipality of Civitavecchia in Italy (“Municipality”) commenced civil proceedings against NIP in the local courts in
Civitavecchia. The Municipality’s claim related to derivatives transactions entered into by the Municipality between 2003 and 2005. The Municipality
alleged that NIP failed to comply with its duties under an advisory agreement and sought to recover approximately EUR 35 million in damages. On
December 20, 2017, NIP entered into a settlement agreement with the Municipality pursuant to which the Municipality withdrew its proceedings against
NIP. The proceedings have since been discontinued.
In June 2016 and August 2016, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Special Investments Singapore Pte Limited(“NSIS”) were respectively served with a complaint filed in the Taipei District Court against NIHK, NSIS and certain individuals by Cathay United
Bank, Co., Ltd., Taiwan Cooperative Bank Ltd., Chang Hwa Commercial Bank Ltd., Taiwan Business Bank Ltd., KGI Bank and Hwatai Bank Ltd.
(collectively, “Syndicate Banks”). The Syndicate Banks’ complaint relates to a $60 million syndicated term loan to a subsidiary of Ultrasonic AG that
was arranged by NIHK, and made by the Syndicate Banks together with NSIS. The Syndicate Banks’ allegations in the complaint include allegations
that NIHK failed to comply with its fiduciary duties to the lenders as the arranger of the loan and the Syndicate Banks seek to recover approximately$48 million in damages and interest.
In March 2017, certain subsidiaries of American International Group, Inc. (“AIG”) commenced proceedings in the District Court of Harris
County, Texas against certain entities and individuals, including NSI, in connection with a 2012 offering of $750 million of certain project financenotes, of which $92 million allegedly were purchased by AIG. AIG alleges violations of the Texas Securities Act based on material misrepresentations
and omissions in connection with the marketing, offering, issuance and sale of the notes and seeks rescission of the purchases or compensatory damages.
Various authorities continue to conduct investigations concerning the activities of NIP, other entities in the Nomura Group and other third parties
in respect of government, supranational, sub-sovereign and agency debt securities trading. These investigations relate to various matters including
certain activities of NIP in Europe for which NIP and the Company have received a Statement of Objections from the European Commission(“Commission”) which reflects the Commission’s initial views around certain historical conduct. NIP and NSI are also defendants to class action
complaints filed in the United States District Court for the Southern District of New York alleging violations of U.S. antitrust law relating to the alleged
manipulation of the secondary trading market for supranational, sub-sovereign and agency bonds. NIP and NSI are also defendants to a similar classaction complaint filed in the Toronto Registry Office of the Federal Court of Canada alleging violations of Canadian competition law. Additionally, NIP
and NSI have been served with a separate class action complaint filed in the United States Court for the Southern District of New York alleging
violations of U.S. antitrust law in relation to the alleged manipulation of the primary and secondary markets for European government bonds.
101

In September 2017 and November 2017, NIHK and NSIS were respectively served with a complaint filed in the Taipei District Court against
NIHK, NSIS, China Firstextile (Holdings) Limited (“FT”) and certain individuals by First Commercial Bank, Ltd., Land Bank of Taiwan Co., Ltd.,
Chang Hwa Commercial Bank Ltd., Taishin International Bank, E.Sun Commercial Bank, Ltd., CTBC Bank Co., Ltd., Hwatai Bank, Ltd. and Bank of
Taiwan (collectively, “FT Syndicate Banks”). The FT Syndicate Banks’ complaint relates to a $100 million syndicated term loan facility to borrower FTthat was arranged by NIHK, and made by the FT Syndicate Banks together with NSIS. The FT Syndicate Banks’ allegations in the complaint include
tort claims under Taiwan law against the defendants. The FT Syndicate Banks seek to recover approximately $68 million in damages and interest.
In July 2018, a former Italian counterparty filed a claim against NIP in the Civil Court of Rome relating to a derivative transaction entered into by
the parties in 2006, and terminated in 2009. The claim alleges that payments by the counterparty to NIP of approximately EUR 165 million were madein breach of Italian insolvency law, and seeks reimbursement of those payments.
Nomura Securities Co., Ltd. (“NSC”) is the leading securities firm in Japan with approximately 5.33 million client accounts. Accordingly, with asignificant number of client transactions, NSC is from time to time party to various Japanese civil litigation and other dispute resolution proceedings
with clients relating to investment losses.
On February 8, 2018 for the action commenced in April 2013 by a corporate client seeking ¥10,247 million in damages for losses on currency
derivative transactions and the pre-maturity cash out or redemption of 11 series of equity-linked structured notes purchased from NSC between 2005
and 2011, and on December 25, 2018 for the action commenced in October 2014 by a corporate client seeking ¥2,143 million in damages for losses oncurrency derivative transactions between 2006 and 2012, NSC entered into settlement agreements with the relevant parties and each proceeding has
since been discontinued.
In February 2018, a determination was made that there would be an early redemption of the NEXT NOTES S&P500 VIX Short-Term Futures
Inverse Daily Excess Return Index ETN (“Product”), and with respect to matters such as losses that occurred due to this early redemption for clients
who purchased the Product, in terms of claims such as mediation procedures before the Non-Profit Organization, Financial Instruments Mediation
Assistance Center (“FINMAC”) and lawsuits (“Claims”), where there has been an indication of a decision that NSC has a certain amount ofresponsibility, NSC has been carryings out compensation of losses on this basis. Currently, a considerable number of clients have filed Claims and it isexpected that it will be necessary to continue to carry out compensation of losses on the basis of the Claim for the purpose of resolving this matter.
The United States Department of Justice (“DOJ”), led by the United States Attorney’s Office for the Eastern District of New York, investigated
NHA; NAAC; NCCI; NHEL; NSI; Nomura America Mortgage Finance, LLC; and Nomura Asset Capital Corporation; (the Company’s U.S.
subsidiaries) for possible civil claims against the Company’s U.S. subsidiaries under the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 focusing on RMBS the Company’s U.S. subsidiaries sponsored, issued, underwrote, managed, or offered during 2006 and 2007. The
Company’s U.S. subsidiaries cooperated with the investigation and on October 15, 2018, the Company’s U.S. subsidiaries reached a settlement with
DOJ pursuant to which the U.S. subsidiaries paid $480 million to resolve the matter.
The United States Securities and Exchange Commission (“SEC”) and the DOJ investigated past activities of several former employees of NSI in
respect of commercial and residential mortgage-backed securities transactions. NSI entered into settlements with the SEC on July 15, 2019, concerning
its supervision of certain former employees. Pursuant to the settlements, NSI paid penalties of $1.5 million to the SEC and deposited $25 million in asegregate account which will be used to reimburse certain clients in connection with the related cases.
102

Other mortgage-related contingencies in the U.S.
Certain of the Company’s subsidiaries in the U.S. securitized residential mortgage loans in the form of RMBS. These subsidiaries did not
generally originate mortgage loans, but purchased mortgage loans from third-party loan originators (“originators”). In connection with such purchases,
these subsidiaries received loan level representations from the originators. In connection with the securitizations, the relevant subsidiaries provided loanlevel representations and warranties of the type generally described below, which mirror the representations the subsidiaries received from theoriginators.
The loan level representations made in connection with the securitization of mortgage loans were generally detailed representations applicable toeach loan and addressed characteristics of the borrowers and properties. The representations included, but were not limited to, information concerning
the borrower’s credit status, the loan-to-value ratio, the owner occupancy status of the property, the lien position, the fact that the loan was originated inaccordance with the originator’s guidelines, and the fact that the loan was originated in compliance with applicable laws. Certain of the RMBS issued by
the subsidiaries were structured with credit protection provided to specified classes of certificates by monoline insurers.
The relevant subsidiaries have received claims demanding the repurchase of certain loans from trustees of various securitization trusts, made at the
instance of one or more investors, or from certificate insurers. The total original principal amount of loans for which repurchase claims were received by
the relevant subsidiaries within six years of each securitization is $3,203 million. The relevant subsidiaries summarily rejected any demand for
repurchase received after the expiration of the statute of limitations applicable to breach of representation claims. For those claims received within six
years, the relevant subsidiaries reviewed each claim received, and rejected those claims believed to be without merit or agreed to repurchase certain
loans for those claims that the relevant subsidiaries determined to have merit. In several instances, following the rejection of repurchase demands,
investors instituted actions through the trustee alleging breach of contract. The breach of contract claims that were brought within the six-year statute oflimitations for breach of contract actions have survived motions to dismiss. These claims involve substantial legal, as well as factual, uncertainty and theCompany cannot provide an estimate of reasonably possible loss at this time, in excess of any liability (if any) recognized in respect of this matter.
Cyber security incident
In June 2018, a foreign Nomura subsidiary experienced a spear phishing incident that resulted in the unauthorized access to the firm’s desktop
network including client information, requiring us to immediately launch an internal investigation to assess and remediate the incident, notify theappropriate authorities of its occurrence and communicate with clients and other individuals whose data may have been impacted. As a result of thisincident, Nomura may suffer financial loss through reputational damage, legal liability and enforcement actions and through the cost of additional
resources to both remediate this incident and also to enhance and strengthen cybersecurity of other Nomura group companies. As the extent andpotential magnitude of this incident have yet to be determined, the Company cannot provide an estimate of the reasonably possible loss in respect of thismatter.
Administrative action by Financial Services Agency of JapanOn May 28, 2019, NSC received an administrative action (a business improvement order) from Financial Services Agency of Japan (“FSA”) in
accordance with Article 51 of the Financial Instruments and Exchange Act of Japan (“FIEA”) due to NSC’s improper communication of information.
On the same day, for the same reason, the Company also received an administrative action (a business improvement order) from FSA in accordancewith Article 57-19 (1) of the FIEA. Because of such administrative action, NSC has lost some of business opportunities. On June 3, 2019, the Company
and NSC submitted reports on their business improvement measures to FSA and the reports were accepted by FSA. However, there is a possibility that
Nomura will continue to lose business opportunities due to the damage to our reputation and other causes, and the Company’s financial condition andbusiness performance may be affected onward. However, it is difficult for the Company to reasonably estimate the financial impact at this moment.
103

Guarantees—
In the normal course of business, Nomura enters into various guarantee arrangements with counterparties in the form of standby letters of credit
and other guarantees, which generally have a fixed expiration date.
In addition, Nomura enters into certain derivative contracts that meet the accounting definition of a guarantee, namely derivative contracts that
contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity
security held by a guaranteed party. Since Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging
purposes, Nomura has disclosed below information about derivative contracts that could meet the accounting definition of guarantees.
For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives, thenotional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate
caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.
Nomura records all derivative contracts at fair value on its consolidated balance sheets. Nomura believes the notional amounts generally overstate
its risk exposure. Since the derivative contracts are accounted for at fair value, carrying value is considered the best indication of payment andperformance risk for individual contracts.
The following table presents information on Nomura’s derivative contracts that could meet the accounting definition of a guarantee and standby
letters of credit and other guarantees.
Millions of yen
March 31, 2019
December 31, 2019
Maximum
Maximum
potential
potential
payout/payout/Carrying
Notional
Carrying
Notional
value
total
value
total

Derivative contracts(1)(2)Standby letters of credit and other guarantees(3)
(1)
(2)
(3)

¥4,315,743
80¥281,605,308
5,764¥4,099,384—¥284,296,565
2,371

Credit derivatives are disclosed in Note 3. “Derivative instruments and hedging activities” and are excluded from derivative contracts.
Derivative contracts primarily consist of equity, interest rate and foreign exchange contracts.
The amounts of collaterals held in connection with standby letters of credit and other guarantees are ¥2,481 million and ¥ nil as of March 31, 2019and December 31, 2019, respectively.

The following table presents maturity information on Nomura’s derivative contracts that could meet the accounting definition of a guarantee andstandby letters of credit and other guarantees as of December 31, 2019.

Derivative contracts
Standby letters of credit and other guarantees

Carrying
value

Total

¥4,099,384—¥284,296,565
2,371
104

Millions of yen
Maximum potential payout/NotionalYears to Maturity
Less than
1 to 33 to 5
1 yearyears
years¥72,851,844
9¥82,407,417
1,195¥37,136,195
1,166

More than
5 years¥91,901,109
1

16. Segment and geographic information:
Operating segments—
Nomura’s operating management and management reporting are prepared based on the Retail, the Asset Management, and the Wholesalesegments. Nomura structures its business segments based upon the nature of its main products and services, its client base and its management structure.
The operating result of Merchant Banking Division is included in “Other.”
The accounting policies for segment information follow U.S. GAAP, except for the impact of unrealized gains/losses on investments in equity
securities held for operating purposes, which under U.S. GAAP are included in Income (loss) before income taxes, but excluded from segment
information.
Revenues and expenses directly associated with each business segment are included in the operating results of each respective segment. Revenues
and expenses that are not directly attributable to a particular segment are allocated to each respective business segment or included in “Other”, based
upon Nomura’s allocation methodologies as used by management to assess each segment’s performance.
Business segments’ results are shown in the following tables. Net interest revenue is disclosed because management views interest revenue net ofinterest expense for its operating decisions. Business segments’ information on total assets is not disclosed because management does not utilize suchinformation for its operating decisions and therefore, it is not reported to management.
Millions of yen
RetailNine months ended December 31, 2018
Non-interest revenue
Net interest revenue
Net revenue
Non-interest expenses
Income (loss) before income taxes
Nine months ended December 31, 2019
Non-interest revenue
Net interest revenue
Net revenue
Non-interest expenses
Income (loss) before income taxes

AssetManagement¥259,305
6,020
265,325
219,136¥ 46,189¥¥242,764
4,801
247,565
216,546¥ 31,019¥¥¥

Wholesale

Other(Incl. elimination)

57,991
8,957
66,94847,191
19,757¥360,742
52,406413,148
511,532¥ (98,384)¥

77,623
7,958
85,581
48,07337,508¥427,058
75,653502,711420,580¥ 82,131

¥

¥

¥

Total

94,915(15,798)
79,117
99,711(20,594)¥ 772,953
51,585824,538
877,570¥ (53,032)

221,661(2,382)219,279
92,181
127,098¥ 969,106
86,0301,055,136
777,380¥ 277,756

Millions of yen
RetailThree months ended December 31, 2018
Non-interest revenue
Net interest revenue
Net revenue
Non-interest expenses
Income (loss) before income taxes
Three months ended December 31, 2019
Non-interest revenue
Net interest revenue
Net revenue
Non-interest expenses
Income (loss) before income taxes

AssetManagement¥ 84,783
1,999
86,78272,733¥ 14,049¥¥ 88,391
1,652
90,04372,403¥ 17,640¥¥¥

Wholesale

5,689
10,48916,17815,617561¥124,080
4,118
128,198
224,073¥ (95,875)

16,026
9,379
25,40516,085
9,320¥155,500
31,027
186,527
143,324¥ 43,203

Other(Incl. elimination)

¥

¥
¥

¥

Total

38,264
1,133
39,397
24,33815,059¥ 252,816
17,739270,555
336,761¥ (66,206)

37,174(1,479)35,69533,4792,216¥ 297,091
40,579337,670
265,291¥ 72,379

Transactions between operating segments are recorded within segment results on commercial terms and conditions and are eliminated in “Other.”
105

The following table presents the major components of Income (loss) before income taxes in “Other.”
Millions of yen
Nine months ended December 31
2018
2019

Net gain (loss) related to economic hedging transactions
Realized gain on investments in equity securities held for operating purposes
Equity in earnings of affiliates
Corporate items
Other(1)(2)
Total

¥

¥

(4,754)
158
16,599(25,570)(7,027)(20,594)¥¥

22,1706,265
21,072(12,339)
89,930127,098

Millions of yen
Three months ended December 31
2018
2019

Net gain (loss) related to economic hedging transactions
Realized gain on investments in equity securities held for operating purposes
Equity in earnings of affiliates
Corporate items
Other(1)
Total
(1)
(2)

¥

¥

25,071
106
1,444
631
(12,193)
15,059

¥

¥

2,333
4,935
4,798
(9,095)
(755)
2,216

Includes the impact of Nomura’s own creditworthiness.
Includes gain of ¥73,293 million from the partial sale of Nomura’s investment in ordinary shares of Nomura Research Institute, Ltd. for the ninemonths ended December 31, 2019.

The table below presents reconciliations of the combined business segments’ results included in the preceding table to Nomura’s reported Net
revenue, Non-interest expenses and Income (loss) before income taxes in the consolidated statements of income.
Millions of yen
Nine months ended December 31
2018
2019

Net revenue
Unrealized gain (loss) on investments in equity securities held for operating purposes
Consolidated net revenue
Non-interest expenses
Unrealized gain on investments in equity securities held for operating purposes
Consolidated non-interest expenses
Income (loss) before income taxes
Unrealized gain (loss) on investments in equity securities held for operating purposes
Consolidated income (loss) before income taxes

¥
¥
¥
¥
¥
¥

824,538(9,022)815,516
877,570—
877,570(53,032)(9,022)(62,054)¥ 1,055,136(4,777)¥ 1,050,359¥
777,380—¥
777,380¥
277,756(4,777)¥
272,979

Millions of yen
Three months ended December 31
2018
2019

Net revenue
Unrealized gain (loss) on investments in equity securities held for operating purposes
Consolidated net revenue
Non-interest expenses
Unrealized gain on investments in equity securities held for operating purposes
Consolidated non-interest expenses
Income (loss) before income taxes
Unrealized gain (loss) on investments in equity securities held for operating purposes
Consolidated income (loss) before income taxes
106

¥
¥
¥
¥
¥
¥

270,555(9,958)260,597336,761—
336,761(66,206)(9,958)(76,164)

¥
¥
¥
¥
¥
¥

337,670(2,692)334,978
265,291—
265,291
72,379(2,692)
69,687

Geographic information—
Nomura’s identifiable assets, revenues and expenses are generally allocated based on the country of domicile of the legal entity providing theservice. However, because of the integration of the global capital markets and the corresponding global nature of Nomura’s activities and services, it is
not always possible to make a precise separation by location. As a result, various assumptions, which are consistent among years, have been made inpresenting the following geographic data.
The table below presents a geographic allocation of Net revenue and Income (loss) before income taxes from operations by geographic areas, andlong-lived assets associated with Nomura’s operations. Net revenue in “Americas” and “Europe” substantially represents Nomura’s operations in the
U.S. and the U.K., respectively. Net revenue and Long-lived assets have been allocated based on transactions with external customers while Income(loss) before income taxes have been allocated based on the inclusion of intersegment transactions.
Millions of yen
Nine months ended December 31
2018
2019

Net revenue(1):Americas
EuropeAsia and Oceania
Subtotal
Japan
Consolidated
Income (loss) before income taxes:
Americas
EuropeAsia and Oceania
Subtotal
Japan
Consolidated

¥

¥
¥

¥

122,024
102,850
33,978258,852
556,664
815,516(110,355)(31,304)(3,722)(145,381)
83,327(62,054)

¥

¥
¥

¥

196,946
90,12739,442
326,515
723,844
1,050,359
31,783
5,384
23,16560,332
212,647
272,979

Millions of yen
Three months ended December 31
2018
2019

Net revenue(1):Americas
EuropeAsia and Oceania
Subtotal
Japan
Consolidated
Income (loss) before income taxes:
Americas
EuropeAsia and Oceania
Subtotal
Japan
Consolidated
(1)

¥

¥
¥

¥

There is no revenue derived from transactions with a single major external customer.
107

26,991
33,04914,062
74,102
186,495
260,597¥(87,095)(14,505)(3,923)(105,523)
29,359(76,164)¥¥¥

71,672
29,206
6,185
107,063
227,915334,978
16,374
2,345
993
19,712
49,97569,687

Millions of yen
March 31, 2019
December 31, 2019

Long-lived assets:
Americas
EuropeAsia and Oceania
Subtotal
Japan
Consolidated¥¥

50,82956,821
9,588
117,238
252,420369,658¥¥

87,42956,011
26,230169,670309,596479,266

2. OtherOn October 29, 2019, the Board of Directors resolved to pay the dividend based on the record date of September 30, 2019 to shareholders
registered as of September 30, 2019.
a. Total dividend based on the record date of September 30, 2019b. Dividend based on the record date of September 30, 2019 per share
108¥48,483 million¥15.0[Translation]
Quarterly Review Report of Independent Auditor
February 14, 2020
The Board of Directors
Nomura Holdings, Inc.
Ernst & Young ShinNihon LLC
Hiroki Matsumura
Certified Public Accountant
Designated and Engagement Partner
Hisashi Yuhara
Certified Public Accountant
Designated and Engagement Partner
Toru Nakagiri
Certified Public Accountant
Designated and Engagement Partner
Kenjiro Tsumura
Certified Public Accountant
Designated and Engagement Partner
We have performed a quarterly review of the quarterly consolidated financial statements of Nomura Holdings, Inc. (the “Company”) included in
Financial Information section for the three-month and nine-month periods ended December 31, 2019 within the fiscal period from April 1, 2019 toMarch 31,2020, which comprise the quarterly consolidated balance sheet, the quarterly consolidated statements of income, comprehensive income,changes in equity and cash flows, and the related notes, pursuant to the requirement of the rule specified in Article 193-2, Section 1 of the Financial
Instruments and Exchange Act.
Management’s Responsibility for the Quarterly Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the quarterly consolidated financial statements in accordance withaccounting principles generally accepted in the United States of America (see Note 1 to the quarterly consolidated financial statements) pursuant to
Article 95 of “Regulations Concerning the Terminology, Forms and Preparation Methods of Quarterly Consolidated Financial Statements”, and fordesigning and operating such internal control as management determines is necessary to enable the preparation and fair presentation of the quarterly
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to independently express a conclusion on the quarterly consolidated financial statements based on our quarterly review. We
conducted our quarterly review in accordance with quarterly review standards generally accepted in Japan.
A quarterly review of the quarterly consolidated financial statements consists of making inquiries, primarily of management and persons
responsible for financial and accounting matters, applying analytical and other quarterly review procedures. A quarterly review is substantially less inscope than an audit conducted in accordance with auditing standards generally accepted in Japan.
We believe that we have obtained the evidence to provide a basis for our conclusion.
Auditor’s Conclusion
Based on our quarterly review, nothing has come to our attention that causes us to believe that the quarterly consolidated financial statements
referred to above do not present fairly, in all material respects, the consolidated financial position of Nomura Holdings, Inc. and its consolidated
subsidiaries as of December 31, 2019, and the consolidated results of their operations for the three-month and nine-month periods then ended and cash
flows for the nine-month period then ended in conformity with accounting principles generally accepted in the United States of America (see Note 1 tothe quarterly consolidated financial statements).
109Conflicts of Interest
We have no interest in the Company which should be disclosed under the provisions of the Certified Public Accountants Act.
*1.
*2.

Above is an electronic version of the original Quarterly Review Report of Independent Auditor and the Company maintains the original report.
XBRL data is not included in the scope of the quarterly review.

(Note)
This is an English translation of the Japanese language Quarterly Review Report of Independent Auditor issued by Ernst & Young ShinNihon
LLC in connection with the limited procedures applied on the quarterly consolidated financial statements of Nomura Holdings, Inc., prepared inJapanese, for the three-month and nine-month periods ended December 31, 2019 within the fiscal period from April 1, 2019 to March 31, 2020. Ernst &Young ShinNihon LLC have not applied any such procedures nor have they performed an audit on the English language version of the quarterly
consolidated financial statements for the above-mentioned period which are included in this report on Form 6-K.
110

Exhibit 2
Confirmation Letter
1 [Appropriateness of Quarterly Securities Report]
Koji Nagai, Group Chief Executive Officer, and Takumi Kitamura, Chief Financial Officer, have confirmed that the quarterly securities report ofNomura Holdings, Inc. for the three months ended December 31, 2019 is appropriate under the Financial Instruments and Exchange Act.
2 [Special Comments]
There is no special comment to be stated.
111