Q1 2022 Nomura Holdings Inc Earnings Call
Good day, everyone and welcome to today's Nomura Holdings first quarter operating results for fiscal year, ending March 2022 conference calls.
Please be reminded that today's conference call is being recorded at the request of the hosting company.
Should you have any objections you may disconnect at this point in time.
During the presentation all the telephone lines are placed for listen only mode.
The question and answer session will be held after the presentation.
Please note that this telephone conference contains certain forward looking statements and other projected result, which involve known and unknown risks delays uncertainties and other factors not under the company's control which may cause.
Actual results performance or achievement over the company to be materially different from the results performance or other expectations implied by those projections.
Such factors include economy and market conditions political events and.
And investor sentiment liquidity of secondary market level and volatility of interest rates currency exchange rates security valuations competitive conditions and size number and timing of transactions.
With that we would.
The line to begin the conference.
Mr Clooney Kitamura Chief Financial Officer. Please go ahead.
Good evening. This is Doug can reach Nomura fearful of Nomura Holdings, no. Although our first quarter results for the fiscal year ending March 'twenty through 'twenty.
2 I'm using the document titled consolidated results of operations. Please turn to page 2 net revenue increased 108% quarter on quarter to $353.3 billion yen, while income before income taxes improved to $78.5 billion again, that's shown on the top right 3 segment income.
Income before income taxes was $35.6 billion yen recovering from a loss last quarter due to 2 main reasons first investment management established in April of this year made a significant contribution in the second half.
Wholesale performance improved.
Wholesale performance.
Again impacted this quarter by transactions with a U S client last quarter, but we exited all of our positions in may.
Fixed income revenue grew quarter on quarter, while strong momentum in investment banking continued.
Segment other income.
Before income taxes was $39.6 billion yen, representing an increase of around 100 billion yen from last quarter's loss last quarter. We also booked an impairment charge of $47.7 billion yen in Nomura real estate holdings and that was no longer present.
And this quarter and in June we booked a realized the gain of $36.2 billion again from the sale of part of our stake in Nomura Research Institute.
Net income was $48.5 billion yen annualized ROE was 7.1% and E. P. S.
So it's a 15.5 dollars 60 and $5.9 yes, sorry, no, let's take a closer look at each business starting with retail on page 5.
Retail first quarter net revenue declined 12% to 85 billion yen, while income before income taxes down 27%.
The 19 billion yen retail clients remained on the sidelines due to another wave of the pandemic and its lumpy in equity markets in early may pushing the Don sales of stocks and investment trusts. Despite this we continued to make progress in our efforts to expand the client assets.
Our children at the top right net inflows of cash and Securities was positive 470 billion yen and the retail client assets hit a record high of 2.127 trillion yen that's all.
Right of page 6 shows the investment Trust net inflows of 18, 9.2 billion yen, representing another quarter of net purchases.
It's discretionary investments have been trading was down for a while but that's not at the bottoming out in November last year, when we introduced CIO services and this quarter, we reported net inflows of $78.5 billion yen. This combined with market factors to lift recurring revenue outside stay with 19.1 trade Union.
And our recurring revenue to $25.2 billion again, marking the highest level. Since we started monitoring COVID-19 is in data indicators grew.
Both of consulting base consulting related revenues shown on the bottom left what sluggish given the restrictions on face to face obviously, it's about the number of active clients.
Both of them a variety of trending it smoothly.
The monthly up 500000, no page 7 as you May know, we dissolved but they also have an instrument in our merchant banking division and they created a new investment management Division on April 1st the graph on the top left here. It shows a reclassification of past figures under that new disclosure format.
But to make it easier for our comparisons business. The revenue includes a relatively stable revenue such as from the outset, the management of the business and the Nomura Babcock and Browns aircraft leasing business.
Investment gain loss includes gain loss related to American century investments private.
As equity investment gain loss and the Mark to market gain loss for securities held under investment management as such this figure is subject to fluctuation depending on changes in the fair value and investment exits.
First quarter net revenue in investment management increased 17%.
Send it through $63.5 billion yen, while income before income taxes grew 27% to 44.9 billion yen and this performance was driven by investment gain loss, which came in at $35.5 billion yen of 47% rise over the last quarter, we booked.
Booked a total of 24 billion yen in realized and unrealized gains on the IPO of Nomura capital partners in with the company at the end of June ACI related gain loss contributor just around 13 billion yen. This quarter business. The revenue was down 6% to 28, beating on yen.
In the January to March quarter.
On the overlap in the timing of recognizing performance fees, which meant there was extra performance fees booked last quarter are shown on the bottom left inflows the booths at the assets under management to a record high of 65 day trading and asset management fees.
It's increased.
Okay.
Please turn to page 8.
The graph on the top left shows ancillary interact investment trust business and the investment advisory and international business, giving total inflows of 474 billion yen.
A breakdown for the investment.
It's business as shown on the bottom left core investment trusts players, which exclude the Etfs and MLR as it had been negative through to the last quarter, but turned positive this quarter due partly to the bank channel shown on the top line right inflows this quarter centered on ESG related.
It's meant to products and wealth square, which provides fund rats saw an increase in assets under management.
The graph on the bottom right shows alternative assets under management, which we have grown steadily and worth 634 billion yen at the end of June.
Please turn to page 9 for wholesale.
As shown on the top left net revenue was $132.8 billion yen and loss before income taxes was $28.4 billion yen as I said earlier performance was significantly impacted by an additional loss of 65.4 billion yen arising from transactions with a U S client of this.
Related.
<unk> 6.1 billion yen it was booked as a trading loss in equities revenues and the remaining 9.3 billion yen. It was booked as loan loss provisions and expenses.
The regional breakdown of net revenue on the bottom left shows the Americas was largely affected.
Revenues in.
And Asia has slowed quarter on quarter EMEA delivered steady revenues driven by rates.
Please turn to page 10 for a breakdown by business line.
Global markets net revenue improved from last quarter to 97.2 billion yen declining 8% excluding.
The trading loss related to transactions with a U S client.
Cash equities and derivatives, both slowed due to a drop in volatility and lower trading volumes.
As the heat map on the top right shows a J and Japan are both pointing down.
Yeah.
Japan fixed income revenues increased to $88.1 billion yen driven by spread products, such as credit and securitized products.
The heat map shows a strong performance in securitized products in the Americas and higher credit revenues in Japan, as we tapped into the demand for yield and E. J.
Credit had a good quarter, but FX and emerging N slowed and the arrow is pointing down.
Next investment banking, please turn to page 11.
Net revenue was $35.5 billion yen markings, a third strong quarter.
With revenues over 35 billion yen.
M&A had another strong quarter, and we supported multiple cross border and sustainability related deals driven by Nomura and Green Tech.
ECM and DCM revenues also increased.
Key deals are shown on the right.
We supported our diverse range of fund raising this quarter.
We are seeing results from strategic alliances as shown on the bottom right.
We won multiple co lead manager of mandates in Americas, the ECM through alliance with Wolfe.
Research our alliance with Jordan in Australia, and New Zealand announced in May got off to a good start as we executed the first deal already.
Please turn to page 12 for an overview of noninterest expenses total noninterest expenses.
Declined 18% to $274.7 billion yen other expenses dropped by about 90 billion yen to $48.2 billion yen as loan loss provisions related to U S client transactions declined.
By 32 billion yen.
And the $47.7 billion yen impair.
I'm in charge on an affiliate booked last quarter was not present this quarter.
Compensation and benefits rose about 40% in line with pay for performance.
Please turn to page 13 for our financial position.
The table on the bottom left shows tier 1 capital at 3 trillion yen up 150 billion yen from the end of March due mainly to higher retained earnings and the issuance of additional tier 1 bonds.
Risk weighted assets declined.
1 point to Chilean yen from the end of March to $14.7 trillion yen as market risk of decline due to a drop in volatility and we stringently risk managed our positions and also due to lower credit risk.
As a result, our June and tier 1 capital.
Sure It was 20.3% N E T a y.
<unk> ratio was 17, 7% both improving markedly.
That concludes today's overview of our first quarter financial results.
To can fool.
Crude this quarter saw a number of positive.
<unk> despite slowing from the year ended March 'twenty 'twenty 1.
Investment management Division newly established in April plays a key role in our strategy to expand into the private markets and this quarter, our private equity Investees company listed.
Did listed and we saw a strong contribution to earnings.
Retail reported a decline in brokerage fees due to the market, but investment trusts and discretionary investments grew each month and recurring revenue reach.
Our record high recurring revenue accounted for about 30% of retail revenues and has grown to about 100 billion yen on an annualized basis, highlighting the transformation of our revenue mix into a more stable 1 reason.
<unk> performance in July has slowed slightly due to macroeconomic uncertainty.
Over the recent wave of the pandemic, but we will continue to make effective approach by segment to meet the needs of our retail clients.
Okay.
Wholesale performance has normalized from the very strong prior fiscal year, but global markets revenue are trending above where they were.
In the fiscal year ended March 'twenty 'twenty before the pandemic investment banking maintained strong momentum driven by M N a.
Excluding the U S laws wholesale income before income taxes was 37 billion yen or 150 billion yen on an annualized basis.
[noise] trending in line with our March 2023 target.
Recent market activity has been muted due to macroeconomic risks related to the delta variant and low liquidity and volatility can tend to spike in the slower summer months.
In July we have taken a prudent approach to risk taking and the second quarter has gotten off to a slower start than the first but we remain optimistic.
There are a lot of activities out there to prompt investors to rebalance their portfolios such as the full restart of the economy expectations on inflation.
And talk of tapering by the central banks, we expect to see structural changes once the pandemic is over and push to pursue growth opportunities.
Our management vision announced last year to achieve sustainable growth by helping resolve social issue remains unchanged.
We will also focus on building.
<unk> out in private markets. In addition to public and work to take the firm to the next level.
Thank you very much.
You are now in the Q&A session.
Zero.
Zero wanted to join the queue to ask a question.
Zero 2 to cancel you requested anytime during the session.
We have a question.
Now.
You have a question.
<unk> please.
Now why.
If you wanted to ask him a question.
Please pass the senior at 10.
After the announcement start your question with your name and company name.
We have a question please press zero 1.
No opioids are used to checking whether there is any question. Please wait for a while thank you.
No. The first question comes from Mr. Murky of F N B cynical.
Mr. <unk>. Please go ahead.
Okay.
Yeah.
Thank you. This is murky from F N B C I have 2 questions.
First.
No.
Okay.
Revenue from the markets Department page 10.
Top left fixed income on a 1 year basis is in line with USPS for acreage is slightly weaker compared with USPS, but how do you evaluate the performance of the first quarter also.
Softer August.
What kind of situation that will create another downside could you elaborate on your outlook that is my first question. My second question goes a bit away from the financial reports, but I would like to ask a question about.
Enhance mentals risk management yesterday credit Suisse, probably sized our report more than 100 pages and looking at the content of their report it appears that if they explore jake sees limit by more than 20.
Times.
So the exposure exceeding the limit by 'twenty.
And then what's left for a long time and that was identified as the cause but looking at your Securities report.
Liquidity.
Risk was monitored.
And if there are limited.
Well exceeded than immediate reaction is going to be taken that is the wording that was annuity audit.
So market risk and credit risk and liquidity.
Risk if the limits are breached what kind of specific proceeds yes.
He is in place in your case.
Diesel enhancement of monitoring or escalation to the management.
And also what is the time frame before you make a disclosure what is the procedure that you have put into place could you disclose on those as much as possible. Thank you. Thank you very much this is kitamura.
Regarding your first question regarding the.
Global markets revenue.
How do we evaluate the global markets revenue in the first quarter.
So a misnomer like you said.
For fixed income.
Our performance is in.
With our USPS.
Especially.
Actually when it comes to our core business, which is rates business.
The rates business declined in.
The market's normalized so as the market normalized our rates revenue was also normalized.
That's all evaluation equity business.
He is underperforming.
Somewhat however.
Excluding the impact from the incident in the USA wholesales overall poor fall months.
Is that.
Bottom line is.
37 meeting again. This includes investment banking annualized number is 150 billion yen. So this is not that bad.
If anything.
Okay.
<unk> thousand 19 and 20.
Compared with FY 2019, 'twenty before pandemic, we are above that level.
So.
That means we have accumulated the power work.
So looking at the numbers on a daily basis.
We acknowledge we have acknowledged the difficult.
Environment, but excluding that.
And in the USA, we have 30.
No getting away and of our bottom line profit. So our evaluation is that a couple of months, but decent.
And.
Our outlook into the future.
Oh no.
There is a mixed views towards the market conditions.
7 market moves seem quite.
Unstable so when it comes to risk, taking we are being quite prudent.
But moving forward of course, there will be some ups and downs.
We believe the environment will not be that bad.
As I mentioned earlier.
Reopening of economy and infrastructure package.
The buy button administration, any inflation expectation triggered by them and the tapering moves by central banks.
So.
There will be progress in discussions on those.
So there'll be some twists and turns moving ahead, but.
There will be various factors and that will urge investors to rebalance their positions. So current distillation will not continue forever.
Especially.
<unk>.
Monetary easing.
[noise] created lots of money that have been left to be visited somebody out so sometime in the future. We will start to see the move we had such funds waiting to be invested.
Regarding of the future risk factors firstly the.
And Delta variant and also.
Further deceleration of economy as a result of that spread of the virus that is possible.
The recovery economic recovery and you this spread widening.
They are the market consensus as of now.
But the level of conviction.
Yeah.
In relation to the Indian Delta variant.
Depending on how it expands the level of conviction seems to have come down and the market's interest.
Move have become quite.
Volatile.
So.
With the spread.
Infection, we have we are carefully watching the market with a market that went on to become risk off.
And although we are not certain but the heightened to jetblue.
Political risks.
Is another risk factor naturally.
So I spoke a lot about that is my answer to your first question to your second question regarding the risk management that you inquired about.
At Nomura.
Okay.
During 2 hour procedure in the policy, we have individuals limits set.
Yeah.
So let me tell you made so they are not there to be breached our people have to follow limits, but reality.
There are cases, where there are limits are breached in those situations.
Based upon the rules that are preset.
The second line of defense, meaning risk management in the finance will conduct escalation.
And regarding the plan to reduce exposure.
Of course, such reduction plan is developed by front office. The first line of defense.
But the timeline for the reduction in Arizona variance, but in a certain period over time, we are ensuring that we will be in line with that limit the regarding the market.
At risk credit risk and liquidity risk and there are various types of risks.
But the.
What is the easiest to control is market risk.
By applying hitching risk weighted asset can be suppressed.
So there is such a measure that we can properly.
Turning to market risk on the other hand credit risk to take some more time for us to address but as I mentioned earlier.
<unk>.
Our stream.
Stringent rules.
So if there is a case of breach and then immediate action is taken.
That concludes.
Thank you.
Thank you very much Mr. Academic regarding my first question. My follow up question is regarding risk you mentioned, the geopolitical risks, but in these days China.
Our rig regulatory risk has been drawing attention, but in your case at wholesale.
My business or local retail business in China.
Is there a possibility that the geopolitical reasonable will materialize that's not true risk. Thank you. This is a camera.
The last couple of days Chinese equities in Hong Kong equities have trended in a quite volatile mother.
Wholesale age that but it does not immediately affect our business.
At this point in time, but regarding this matter.
We are carefully monitoring the destination that is my answer.
Thank you very much Mr. Actemra 4 clear answer thank.
And the next.
That person would be what Mr. Watanabe from Daiwa Securities Autonomous someplace.
This is watanabe from Daiwa Securities.
I'd like to ask 2 questions on capital policy.
First a C T 1 percentage.
You too.
To 17, 4%.
And there is a cash and about 50 billion yen basis.
Selling a number of research Institute, a chance and can you tell me about your thinking around share buybacks.
Next is the on dividends.
The.
She is the profit revenue and I think that is taken into consideration the losses from the U S incident and.
So that 5 billion loss in the first quarter would that be brought back and.
So could you tell me are you of your thinking of what would be the profit level.
It might be a distributable dividends.
This is camera.
So I I think your first question is why we did not conduct share buybacks. This time now we had made.
We have had discussions and different considerations.
And quite honestly.
Of the day, if I may.
We just thought that this is not the right time for share buybacks.
At some point in time.
As we promised we will be conducting it and sometime in the future.
Second is on the thinking around the dividend.
Ladies and.
Distributed dividends in the profit.
When we distributed dividends.
The end of last fiscal year, we had excluded the impact from the loss of the Un's incident. So this time.
It would not be consistent.
N T.
Apply it differently. This time, so compared to what we did end of last fiscal year, so that would actually be difficult to to treat it differently. This time round.
And this is just a confirmation.
So even if you had.
If we are cash.
From NRI sale of 50 billion yen and you would be making considerations around in that loss from the U S incident.
So, yes, we will be making that consideration.
You bet.
Next question comes from Mr. Otsuka from Jpmorgan Securities Mr. <unk> the floor is yours.
Thank you this is otsuka from Jpmorgan Securities.
So I have 2 questions.
First question.
He's about to page 7.
Oh this is a new disclosure so the way to look at the numbers is what I wanted to ask about so this time.
So Nomura I kept our partners invest Ts IPO, you've mentioned I believe it's about us of a consulting but 20.
24 billion yen of.
Gain I'm not sure. This is everything about this IPO portion readout. This IPO portion.
Then.
From this gain loss number.
24 billion this.
Would have been or might have been lower than.
On the revenue.
Yeah.
Compared with our previous quarters number of 50.
54 billion the number could have been lower than the previous quarter is it the right way of thinking looking at this number. This is my first question. This is a huge number I think you so.
<unk> 5.5 billion is the investment gain so if we exclude 24 billion and then the remaining a number of course it will be smaller.
As you pointed out in the previous quarter.
$24.2 billion the investment gain.
See the school there.
Actually this number.
Partially.
Includes the former merchant banking departments.
Mark up numbers so.
There's 20.
4.2.
And number.
We have.
24 billion deducted from 35 billion and that is not Apple to Apple comparison.
So if you go back through the previous financial report than previously what was.
Was this close does offset the money that's meant the division AC I gains of 10 billion more so of a number of us are booked through ACI line. So the other remaining a number what's included in the investments and gain previously.
Hope I answered your question yes.
Yes, thank you very much.
That was clear let me move on to the next question. My second question is about the page 12 about personnel expense.
So in this.
Most recent quarter you show depending on the performance on a Q on Q basis their husband on improvement.
And.
This U S incident related loss.
Compared with the previous quarter and this quarter, excluding that loss. If he takes a signal numbers from 3 segments. Then unfortunately, the revenue is oh sorry.
Profit is down I believe but.
Personnel expense his seat.
Linked to the pre tax income.
This is kitamura speaking.
Regarding the personnel expense.
On a quarterly basis, well, it's difficult to look at personnel expense on a quarterly basis because of some technical factors involved especially.
In the fourth quarter for example.
Our bonus model.
Change to bonus memorial.
Could have a big concentrated effect, so compared with previous quarter.
Quarter on quarter analysis of comparison.
Something that doesn't not yours suite Ark situations.
Of course, that's as much as possible during the fiscal year or period, we are trying to equalize stuff, although that T. D. D. L. P. N. Dell However, we cannot rule out such a special factors.
And also.
So we're thinking about the bonus.
Yeah.
Is that of course revenue is an important factor, but there are other factors considered that as well. So Q on Q comparison is not that easy and it's.
Especially in the first quarter.
Technical accounting effect.
Doctors are also involved.
So you know.
Deferred compensation is grounded to all our employees.
And accounting impact from that.
Tends to concentrate in the first quarter.
So.
The first quarter personnel expense tends to look big and also there is a factor of weak Japanese yen and other factors.
So my.
I'm, sorry, it's not that straightforward about there.
Various factors involved here okay. Thank you Mr. Nomura, then page 9 the expense ratio 121%.
So the U S incident excluded then this ratio is around 80% and it's a bit high but that's.
A link to the factor you mentioned, so it's volatile and the tricky.
<unk> speaking, yes, so in the middle of the quarter or quarter on quarter. The expense ratio is a volatile. So we should take a look at the full year number about 80% done.
Percentage itself.
Excluding various factors.
Mr. <unk> are calculated.
That ratio.
Wholesales K P. I, Inc. A cost income ratio is 80%. So this number is in line with our Kpis.
Oh of wholesale.
Thank you very much Mr. Amaral for the clear answer.
Yeah.
Next.
It'll be Mitsubishi Morgan Stanley in institutional.
Sam please.
First.
I have a question on the market Division.
This time compared to the average situation last year.
Equity.
It has come down.
Hello.
When we look at the contents of what's going on.
Okay.
Equity.
You look at the market and the.
And comparing it with U S peers, you're not doing much in U S equities, so I can.
See that but for fixed income are what.
What are the areas that went did worse than last year and so basically when we look into the second quarter. What were the areas that you can expect a improvement or do you expect this situation to continue.
If you could.
Talk about that situation and say Ah on different products.
So that would be my first question.
Yes.
It's too shall we do want 1 on 1.
Can you reply to that question. Please.
This is Kevin.
Global markets.
So we have client.
Revenues from clients.
And then as the rest of the revenue coming from Florida. So there's 2 streams of.
Revenues are there are 2 components that we look at.
Yeah.
Yeah.
When we look at the trading.
Volume compared to last year.
The trading in government bonds went down about 11%.
And as a result.
The client revenue.
Has declined somewhat because of that.
And when we look at volatility is low compared.
Third last year, so they ask that yeah. It is a longer so the risk revenue and.
It hasnt been an environment, where we have not been able to get revenue from that given that environment.
And this time around that is this a first.
First quarter.
The direction of the yield curve.
Curve is hasn't been set.
And in the middle of this.
A quarter, we've been a ton of there'll be replacing trait replaced and churn trade and <unk>.
And because of macro factors, we have seen a lower activities.
Lower trading activities of our clients.
Yeah.
Moving forward.
I've mentioned the direction of the rates and rents and interest rates are mixed will probably be mixed but the overall trend.
It would be that.
There'd be inflation and the expansion of the yield spread so that is how we see it.
And in that environment.
Especially our business, especially around fixed income it would be an environment, where we should be able to have it.
A bit business for a fixed.
Income.
So I think the biggest catalyst would be tapering.
This is seasonal.
So for fixed income.
So when we look at your U S peers.
Better.
I thought that you could have done better or higher.
So compared to the peers is there anything that is of concern to you or.
This is coming at all.
It just so happens.
<unk>.
We're sort of sharing similarly, with what the U S parents did last here now as we look at the first quarter.
When we look at the securitized products and credit.
They did.
Well.
On the other hand.
Ross.
Our our strength or core business.
The slowdown in rates has been more pronounced this year.
And even in that environment, our performance bearing.
During our <unk> as well as our U S peers, I think we could say that we've done a relatively good job.
Is it soon and thank you very much.
The.
Valuation gain from AC I unrealized gain from AC I.
How should we.
Evaluate that are there are realized and unrealized portion.
And the unrealized gain realized gain of a plus alpha.
And.
You you said that on the.
The unrealized gain on going to be part of the distributable and dividend I mean, the profit per disagree with you a dividend.
Yeah.
And.
Yeah.
And I think since this is more of a temporary that the unrealized gains. So I don't think you would be.
Canceling.
Selling it against the U S incident loss, but.
When we see this kind of volatility in earnings.
So so there is a fluctuation and unrealized and realized gains and there is a fluctuation in your.
Our actual earnings what are what is your thinking around the dividend and they're thinking of our profit.
This is a camera.
So I thank you for.
First question was around how we think about the unrealized gains around ACI.
And the impact to our P&L.
Now a C is.
Earnings.
So regarding the evaluation, we take into consideration what we expect for their earnings moving forward.
And since there are a non listed company I don't know to what extent I could comment on this.
But when we look at the Au am of AC I E.
They have been expanding there are market factors. There is also a increasing AUM by inflows and that is the reason why we have increased our sort of valuation. There. So there is an unrealized gain there.
And.
Evaluating ACI the valuation of ACI it may not be straightforward, but as I mentioned it is a non listed company. Therefore, the when we make the valuation of our valuation we are quite conservative conservative of course, it's a bit of <unk>.
2 if you also have to prove what it is that they do now.
Now we are even when we look at our third party valuation sort of entities are we do think it's not the way we evaluate ACI is quite conservative.
Now the thinking around dividends.
That was your second question.
Now as a matter of course.
Since we are part of the market of course.
There will be fluctuations or are in our.
Our P&L, but we.
We are striving to stabilize our earnings.
Stabilize our revenues that is what I.
Cleaning and the thinking around shareholder returns.
Of course, our basic performance of our core business.
To be linked with that that is.
Of course that that's important.
In addition to that.
2.
We've been make.
A stable return dividend returns as possible is also important so as that.
<unk> has been taken in a comprehensive manner and that is how we decide our dividend amount now.
Since there is a large of fluctuation in.
<unk> earnings on our P&L, there would be fluctuations there inevitably but we.
We were thinking is that we want to be able to make stable dividend payments are stable as much as possible.
Thank you very much.
Yeah.
The next question.
Our items from Mr. Sasaki of B over here your securities. Mr. Sasaki. Please go ahead.
Thank you.
This is such a key from bank of America.
Uh huh.
So please answer to each of migration. The first question is about the retail.
After.
July.
So you mentioned that the current situation of wholesale about you didn't comment on the current situation of retail after July what is the current distribution and also in the first quarter.
Tough almost looking at the total sales due to COVID-19 in the first quarter last year.
Our sales activity has stopped and the level in the first quarter was the same last year. So how do you evaluate the current stress should thank you for that Christian this is cause Nomura.
Thought I.
Touched up on that but let me repeat the maturation of retail in July.
Geez I suppose because of the spread of Covid infections and concerns about the delta there is uncertainty about the macroeconomic situation. So the the retail division is off to a slow start in July.
On the other hand the approach.
Although the type.
Both customers or their initiatives to expand our clients' assets and that's been about focused so even in July investment trusts and the discretionary investment services hub continuously enjoyed net inflow.
But I think gives me such a mirror then regarding the level of total sales in the first quarter was there any special factors that impacted the total sales level in Q1.
This is the first quarter, our customers' activities were slow.
And.
Sales.
Especially the equities declined by 28% because of the customer staying.
Staying on the sidelines however.
Our business model is being transformed in significant muhtar.
So we are.
Total are single mindedly focused on expanding the all sorts of clients.
As a result.
But the decline.
It came in that juncture and we have not of course satisfied with this situation about where suddenly.
Sure.
Tent.
<unk> Oh, what happened was not avoidable.
But also we continue with our initiatives once we have support from the market than necessarily we will see recovery.
Thank you Mr. Nomura.
Regarding.
Adding the wholesale business.
Yeah.
Yes.
There was a loss.
In the U S incident, and that I believe has been a challenge but.
In Europe transactions with family offices has there been any changes that you have.
<unk> implemented.
Especially with single family office, there's no regulatory tightening has been discussed but us Nomura how have you changed the way to conduct business with them.
Thank you this is <unk> speaking.
Regarding the family offices, we cannot say that all family offices are to blame.
We cannot generalize family offices.
And Mick.
Our singular comment.
Family many of our.
The office.
Science have huge assets and in terms of the asset management and the financing and now there are various needs on their end and the Nomura global platform and Nomura capabilities of making proposals on.
Products.
Yes.
So those are services of ours, we believe are appropriate in.
Satisfying the needs of those clients on the other hand compared with the.
Irregular investors institutional investors there is only so much Amy.
Our foundation that we can obtain from family office clients. So we will do what we can to overtake information from them family office clients and we will do that basically we can in managing risks.
So this time Delaware.
For my weaknesses exposed you know risk management.
So regarding it out.
By strengthening risk management frameworks, we'd like to continue providing certain services.
So regarding the regulatory tightening being discussed.
Yeah, all of that but what is going to be the end result.
Honestly speaking, it's something we cannot control directly.
But.
Okay.
Due to that if the regulatory tightening.
Oh jeez somebody offices.
I know when you open up and disclose Tomorrow, then market to become more favorable than.
And then regarding the regulatory trend, we will keep monitoring the regulatory trend. Thank you Mr. Actemra.
Regarding the prime brokerage in some regions.
I believe you've downsized your prime brokerage is in some regions how would that hit your revenue in the future or will there be no impact. This is <unk>. The P. B try prime brokerage business itself. It is positioned.
Yes.
Playing a supporting role to the overall equity business.
So.
Some prime brokerage business might have been downsized.
But the impact on our powerful months is limited.
Nomura HUD strength in Japan in equities in Asia in equities and U S equity derivative for those areas.
By having the refined risk management, we will be continuing with those.
Businesses.
In that sense the impact on our business about 4 months it will be limited. Thank you. Thank you Mr. <unk> for your answer.
If you have a question please press <unk> 1.
So if you have a question crane crash fail 1.
The next question.
Be missing you out from city to city Securities.
Sam please.
This is Neal I have 2 questions.
On investment management.
And the thinking around personnel expenses.
My question.
Is that.
In the area of alternative investments.
The unrealized gain and what is.
Related to the I R are the right button and page 8.
You haven't disclosed.
The au am there.
Yes.
So how much unrealized gain is there.
Okay.
And the investment period.
From the vantage.
So.
The capital gain.
That you've seen in this first quarter is this a level of capital gain level something that you expect to see a regularly moving forward as well next question is around personnel expense and to acquire talent and talking about international.
Personnel expense.
So for the new joiners.
Joining us are then you crudes it seems that.
The pressure to higher compensation is increasing and it seems not.
All the other companies.
We are having an issue having troubles with that so which would.
B posing pressure on increased costs.
And how are you going to tolerate that and when we think when you think about the outflow of people. How you what are you doing to retain them Mr.
This is stem at all on your first question.
Okay.
So the large cross.
It came.
From.
Not from the alternative investment area.
On that area on the alternative investments.
The AUR.
I mean.
We will we are investor.
<unk> being our clients' assets to alternative products. So.
That is.
Additionally, the.
That is a different profit.
So it's in the profits are coming from the exit merchant banking business.
And it's a bit difficult to.
2 no.
How much we could expect now if we could mark up.
And of course, when there is an exiting from the position.
We would see a profit to this way so it is difficult.
Hey, what we could expect moving forward, how much or what the level. So.
So that is something difficult to comment on.
On your second point on the personnel expense costs and.
And gaining talent.
And.
Newspaper Rip 1 when you look at newspaper reports.
Are we seeing that companies are increasing compensation to capture young talent.
So.
What we need to retained.
Talent I think once it.
Most important.
This says to give a fair.
A fair evaluation of what they're doing and their contribution I think that is most important.
And.
Yeah.
And 2.
To return to their expectation.
And to their growth Korea birth.
Provide training opportunities education opportunities.
And to support their career or a group.
And.
To provide a working place that has diversity.
And 2.
To provide a platform or a place where you can expect people with a high capability to flourish.
And we have been conducting a things to increase the engagement of the employees. So we have been conducting engagement surveys.
As well.
And of course compensation on salary wage is an important factor in retaining talent and attracting talent, but in addition to that by different.
By implementing different initiatives, we intend to attract and retain talent.
Lent on me.
And just more bigger picture.
Sure.
So the role of employees or people is changing quite substantially compared to.
The past.
Now human capital is needless to say.
A very important for a company.
But things that.
Could be replaced buy I mean, what people need to do what they don't need to what could be replaced that is changing in a and we expect that that will change in the future as well we.
We need to understand that and to attract the necessary people.
So when we think about that I think it is a possible to control our personnel costs rise to some extent did I answer your question.
I'd like to ask a further.
Question on your latter part of this and you're off.
So even looking at your peers when you.
Luke.
At.
You're a medium term.
Profitability.
Profitability of 25% that doesn't need to be changed this is coming out no no intention.
To change that target.
Listen I, Thank you very much.
It is time to finish.
So we are finishing questions and answer session.
We will quote IR officer continue to receive questions of yours. So finally, let me say tomorrow, you'll say Oh, here's the message of gradings.
This is Kim Ryan. Thank you very much for your time today.
There are some ups and downs some items going up the others.
That's going to do.
But so he came out of the first quarter. We believe the result was decent.
And though it's not.
Reflected in P&L there are some.
Positive moves such as expansion of us.
That's.
Also our activities for stabilizing revenue I believe are.
Starting to see.
Sure.
Effectiveness and today I Havent had time to talk about this but for.
For example, we are working on establishing.
N D D..2 invest in private equities and also we're working on and how and cement our enrichment of contact centers and in a way we are sowing the seeds for future growth. So these new activities.
So that they will start to grow and bear fruits and contribute to the bottom line profit did that do you see or we would like to make our utmost effort and I ask for your continued support. Thank you very much and thank you for your time today.
Thank you for taking your time and that concludes today's conference call. You may now disconnect your lines. Thank you.
Okay.
Yeah.
Yes.
[music].