Nomura Holdings Inc. Q4 2023 Earnings Call
Speaker 1: conference call.
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A question and answer session will be held after the presentation.
Speaker 1: Please note that this telephone conference contains a certain forward-looking statement and other projected results, which involve known and unknown risks.
Please note that this telephone conference contains certain forward looking statement and other projected rethought, which involve known and unknown risks delays uncertainties and other factors not under the company's control, which may cause actual results.
Speaker 1: delays, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or other expectations implied by those projections.
With a full month well achievement over the company to be materially different from the results performance or is that expectation implied by those protections.
Speaker 1: Such factors include economic and market conditions, political events and investment sentiment, liquidity of secondary markets, labor and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and side number and timing of transactions.
That's factors include economic and market conditions political events, ending this sentiment liquidity of secondary market labor on the volatility of interest rates, calling C exchange rates acuity valuation competitive conditions and.
Hi, it's number and timing of the transaction.
Speaker 1: With that, we would like to begin the conference. Mr. Takune Kitamura, Chief Financial Officer. Please go ahead.
With that we'd like to begin the conference Mr. How can they keep that Moura Chief financial officer.
<unk> go ahead.
Speaker 2: Good evening. This is Takumi Kitamura, CFO of Nomura Holdings. I'll now give you an overview of our financial results for the fourth quarter and full year ended March 2023 using the document titled consolidated results of our patients. Please turn to page two. First the full year results. As you can see on the bottom left net revenue declined two percent year-on-year to one...
Good evening. This is takumi kitamura CFO of Nomura Holdings.
Are you an overview of our financial results for the fourth quarter and full year ended March 2023.
<unk> titled Consolidated results of operations. Please turn to page two first of all your results because you can see on the bottom left net revenue declined 2% year on year to one.
Speaker 2: 1 trillion 335.6 billion yen income before income taxes dropped 34 percent to 149.5 billion yen a breakdown of income before income taxes is shown on the bottom right segment other shown in the third row from the bottom was 73.4 billion yen a marked improvement from last year while three segment total was 106.4 billion yen down 48 percent year-on-year
One trillion $335 6 billion yen income before income taxes dropped 34% to $249 5 billion yen a breakdown of income before income taxes as shown on the bottom right segment. Other shown in the third row from the bottom was $73 4 billion yen a marked improvement from last year, while three segment total was $106.
4 billion yen down 48% year on year.
The past year was dominated by market uncertainty as volatility spiked and asset prices slumped on the back of sharp interest rate hikes by central banks.
Speaker 2: The past year was dominated by market uncertainty as volatility spiked and asset prices slumped on the back of sharp interest rate hikes by central banks.
In March this year the market fluctuated widely as bankruptcy led to the failure of some measure of regional banks in the U S. And this is spilled over into crisis in the European banking sector.
I made this environment retail reported income before income taxes of $33 5 billion yen a decline of 43% over last year.
Speaker 2: Amid this environment, retail reported income before income taxes of 33.5 billion yen, a decline of 43% over last year.
In the first half of the year market uncertainty led to weaker investor sentiment and flow revenue dropped mainly from slower sales of stocks and investment trusts.
Speaker 2: In the first half of the year, market uncertainty led to weaker investor sentiment and flow revenue dropped, mainly from slower sales of stocks and investment trusts.
At the same time, we were able to grow our recurring revenue assets, such as discretionary investments insurance and loans and in turn increase recurring revenue year on year. We did this by providing detailed consulting services, taking a gold based on portfolio management approach in order to protect our clients' assets and support their asset building over the medium to.
Speaker 2: At the same time, we were able to grow our recurring revenue assets such as discretionary investments, insurance and loans, and in turn increase recurring revenue year on year. We did this by providing detailed consulting services taking a goal-based and portfolio management approach in order to protect our clients' assets and support their asset building over the medium to the long term.
The long term.
Investment management book stable business revenue in line with last year's performance.
Speaker 2: Investment management booked stable business revenue in line with last year's performance.
This year as the airline industry has started to recover from the pandemic number of Babcock <unk> Brown reported an improvement in its aircraft leasing business.
Speaker 2: This year, as the airline industry started to recover from the pandemic, Nomura, Babcock and Brown reported an improvement in its aircraft leasing business.
The investment gain loss declined from last year, resulting in divisional income before income taxes of $43 5 billion yen, representing a drop of 39% year on year.
Speaker 2: Investment gain lost declined from last year resulting in divisional income before income taxes of 43.5 billion yen representing a drop of 39% year on year.
Speaker 2: Wholesale income before income taxes slumped 61% to 29.4 billion yen.
Wholesale income before income taxes slumped, 61% to $29 4 billion yen.
In global markets fixed income reported stronger revenues underpinned by macro products, while equities revenues improves as losses related to transactions with a U S client booked in the previous year, we're no longer present investment banking faced a challenging environment as people's dropped by over 40%, mainly in ECM and M&A.
Speaker 2: In global markets, fixed income reported stronger revenues underpinned by macro products, while equities revenues improved as losses related to transactions with a U.S. client booked in the previous year were no longer present. Investment banking faced a challenging environment as fee pools dropped by over 40 percent mainly in ECM and M&A.
Alright business remains relatively resilient, but revenues fell by about 20%.
Speaker 2: Our business remained relatively resilient, but revenues fell by about 20%.
Speaker 2: Wholesale expenses increased by 110 billion yen, over 80% of which is due to yen depreciation. The remaining nearly 20% is mostly the result of higher fixed costs due to inflation. This increase in expenses due to macro factors impacted wholesale earnings.
Wholesale expenses increased by 110 billion yen over 80% of which is due to yen depreciation the remaining nearly 20% is mostly the result of higher fixed costs due to inflation.
Increase in expenses due to macro factors impacted wholesale earnings.
Based on this business performance net income for the full year was $92 8 billion down 35% year on year EPS was $29 seven for yen and ROE was three 1%.
Speaker 2: Based on this business performance, net income for the full year was 92.8 billion yen, down 35% year-on-year. EPS was 29.74 yen and ROE was 3.1%.
Speaker 2: For shareholders on record, as of the end of March, we have announced a dividend of 12 yen per share, taking our annual dividend to 17 yen per share.
For shareholders on record as of the end of March we have announced the dividend of 12 yen per share taking our annual dividend to <unk> 17 per share.
Previously, we have strived to pay dividends using a consolidated payout ratio of 30% of each semi annual consolidated earnings as a key indicator today, we announced that we will raise that to over 40%.
Speaker 2: Previously, we have strived to pay dividends using a consolidated payout ratio of 30% of each semi-annual consolidated earnings as a key indicator. Today, we announced that we will raise that to over 40%.
Speaker 2: We will continue to aim for a total payout ratio, which also includes share buybacks of at least 50%.
We will continue to aim for a total payout ratio, which also includes share buybacks of at least 50%.
We also approved a resolution to set up a share buyback program to raise capital efficiency and ensure a flexible capital management policy and to deliver a shares on exercise of stock based compensation.
Speaker 2: We also approved a resolution to set up a share buyback program to raise capital efficiency and ensure a flexible capital management policy and to deliver shares on exercise of stock-based
Speaker 2: The share buyback program will run from May 16 to March 29, 2024, and have an upper limit of 35 million shares.
The share buyback program will run from May 16 to March 29, 2024, and have an upper limit of 35 million shares.
Yeah.
Speaker 2: The upper limit of the aggregate amount of the repurchase price will be 20 billion yen. Please turn to page 3 for an overview of our fourth quarter results. The percentages I refer to from now on all are quarter and quarter comparisons. Group net revenue was 324.9 billion yen, down 17%, while income before income taxes declined 73% to 22.7 billion yen.
The upper limit of the aggregate amount of the repurchase price will be 20 billion yen. Please turn to page three for an overview of our fourth quarter results.
The percentage referred to from now on all our quarter on quarter comparisons group net revenue was $324 9 billion down 17%, while income before income taxes declined 73% to $22 7 billion yen net.
Speaker 2: Net income was down 89% at 7.4 billion yen.
Net income was down 89% at seven 4 billion yen.
Earnings per share was $2 three for yen and ROA was 0.9% underscoring how challenging the quarter was.
Speaker 2: Earnings per share was 2.34 yen and ROE was 0.9%, underscoring how challenging the quarter was.
As you can see on the bottom right three segment income before income taxes was $11 9 billion down 73% as wholesale had a particularly difficult quarter.
Speaker 2: As you can see on the bottom right, three-segment income before income taxes was 11.9 billion yen, down 73% as wholesale had a particularly difficult quarter.
Speaker 2: Segment other income before income taxes declined 74% to 15.7 billion yen. The realized gain booked in the third quarter on the sale of shares in Nomura Research Institute was no longer present this quarter and gains from the sale of strategic shareholdings also slumped compared to last quarter.
Segment other income before income taxes declined 74% to $15 7 billion yen the realized gain booked in the third quarter on the sale of shares in Nomura Research Institute was no longer present, this quarter and gains from the sale of strategic shareholdings also slumped compared to last quarter.
Please turn to page six for an overview of fourth quarter performance in each business.
Speaker 2: Please turn to page 6 for an overview of fourth quarter performance in each business.
Net revenue in retail slipped, 7% to $75 3 billion yen, while income before income taxes slowed to 26% to $9 8 billion yen.
Speaker 2: Net revenue in retail slipped 7% to 75.3 billion yen, while income before income taxes slowed 26% to 9.8 billion yen.
As shown on the bottom left recurring revenue remained roughly unchanged at $33 7 billion yen.
Speaker 2: As shown on the bottom left, recurring revenue remained roughly unchanged at 33.7 billion yen.
Okay.
Speaker 2: Efforts to control costs help lift our recurring revenue cost coverage ratio to 52%.
Efforts to control costs help lift our recurring revenue cost coverage ratio to 52%.
Speaker 2: However, flow revenue declined 11% due to weaker sales of insurance products and bonds.
However flow revenue declined 11% due to weaker sales of insurance products and bonds.
Total sales byproducts are shown on page seven.
As you can see in the bar graph on the left total sales for the fourth quarter were $4 four trillion.
Speaker 2: As you can see in the bar graph on the left, total sales for the fourth quarter were 4.4 trillion yen.
Primary transactions, such as an offering by Japan Post bank made a strong contribution to sales of stocks, which increased 12% to $2 seven trillion yen.
Speaker 2: Primary transactions such as an offering by Japan Post Bank made a strong contribution to sales of stocks which increased 12% to 2.7 trillion yen.
Speaker 2: Bond sales declined by 35%, but this was mainly due to weaker demand from corporate clients to purchase bonds for short-term investment purposes. Meanwhile, sales of JGBs for individuals and foreign bonds increased.
Bond sales declined by 35%, but this was mainly due to weaker demand from corporate clients to purchase bonds for a short term investment purposes. Meanwhile, sales of JCB for individuals and foreign bonds increased.
Sales of investment trusts slowed due to the market turmoil in March.
Speaker 2: Sales of investment trusts flowed due to the market turmoil in March.
That said the reopened Japan fund launched in January targeting external demand and inbound solid demand of over 100 billion yen and inflows were driven by Japan stock funds.
Speaker 2: That said, the reopened Japan fund launched in January , targeting external demand and inbound, saw a demand of over 100 billion yen, and inflows were driven by Japan stock funds.
Please turn to page eight for an update on Kpis.
The top left shows net inflows of recurring revenue assets of $65 4 billion driven by investment trusts insurance on loans flow business clients shown on the bottom left represents clients, who trade with us at least once since April as of the end of March that number was $145 million, which is slightly below last year.
Speaker 2: The top left shows net inflows of recurring revenue assets of 65.4 billion yen driven by investment trusts, insurance and loans. Flow business clients shown on the bottom left represents clients who traded with us at least once since April . As of the end of March, that number was 1.45 million, which is slightly below last year.
Here.
In the fourth quarter, we were able to increase the number of clients, who newly transacted with us thanks to the offerings I mentioned earlier.
Speaker 2: In the fourth quarter, we were able to increase the number of clients who newly transacted with us, thanks to the offerings I mentioned earlier.
Next please turn to page nine for investment management.
Speaker 2: Next, please turn to page 9 for investment management.
Net revenue was $37 8 billion down 34% and income before income taxes was down 51% to $16 4 billion yen.
Speaker 2: Net revenue was 37.8 billion yen, down 34%, and income before income taxes was down 51% to 16.4 billion yen.
Business revenue at the bottom left declined 8% due mainly to last quarters seeing stronger demand than normal for aircraft leasing transactions as airlines recovered from the pandemic.
Speaker 2: Business revenue at the bottom left declined 8%, due mainly to last quarter seeing stronger demand than normal for aircraft leasing transactions as airlines recovered from the pandemic.
Speaker 2: Our asset management business remained solid as assets under management continued to grow and asset management fees remained around the same level as last quarter.
Our asset management business remains solid as assets under management continued to growth and asset management fees remained around the same level as last quarter.
Investment gain loss was $9 1 billion yen American century investments in private equity firm Nomura capital partners, both booked unrealized gains this quarter.
Speaker 2: Investment gain loss was 9.1 billion yen. American Century Investments and private equity firm Nomura Capital Partners both booked unrealized gains this quarter, although lower compared to the significant contribution that we saw in the previous quarter.
Although lower compared to the significant contribution that we saw in the previous quarter.
Please turn to page 10.
As shown on the upper left assets under management recovered from last quarter to $67 three trillion at the end of March as shown on the bottom left the investment Trust business saw outflows of about 360 billion yen.
Speaker 1: As shown on the upper left, assets under management recovered from last quarter to 67.3 trillion yen at the end of March. As shown on the bottom left, the investment trust business saw outflows of about 360 billion yen as outflows from MRFs, where clients parked idle cash were around the same level, indicating the funds flowed from MRFs to new investments.
Flows from Mris clients idle cash were around the same level, indicating the French flowed from.
New investments.
Etfs reported outflows of about 220 billion yen, while inflows into core investment Chris were about 230 billion yen contributions came from adding Alere securities channel underpinned by the reopening of the book.
Speaker 1: ETFs reported outflows of about 220 billion yen, while inflows into core investment trusts were about 230 billion yen. Contributions came from the Namur Security's channel, underpin by the Re-opened Japan Fund. The Bank channel and the Funds for Defined Contribution plans also reported ongoing inflows.
The bank channel and the funds for defined contribution plans also reported ongoing inflows.
The graph on the bottom right shows alternative assets under management, which grew by 110 billion from the end of December 17.
Speaker 1: The graph on the bottom right shows alternative assets under management, which grew by 110 billion yen from the end of December . Of this, 70 billion yen is from inflows, particularly into infrastructure funds and real estate funds.
17 billion yen in flows, particularly into infrastructure funds and real estate funds.
Please turn to page 11 for wholesale results net revenue declined 5% to $178 8 billion yen.
Speaker 1: Please turn to page 11 for wholesale results. Net revenue declined 5% to 178.8 billion yen. Fixed income revenues grew slightly but revenues from equities and investment banking declined.
Fixed income revenues grew slightly back revenues from equities and investment banking declined.
Wholesale expenses increased slightly from last quarter due to business related expenses, such as commissions and floor brokerage as well as decommissioning of IV systems as a result wholesale.
Speaker 1: Wholesale expenses increased slightly from last quarter due to business-related expenses such as commissions and floor brokerage, as well as decommissioning of IT systems. As a result, wholesale booked a loss before income taxes of 14.2 billion yen. Please turn to page 12 for an update by Business Line.
Loss before income taxes.
14 point too.
Yes.
Please turn to page 12 for an update by business line.
Speaker 1: First, global markets. Net revenue declined 3% to 149.3 billion yen. Fixed income revenues were up 1% at 87.5 billion yen.
First debit market.
Revenue declined 3% to $149 3 billion yen fixed income revenues were up 1% at 87 5 billion yen.
Speaker 1: Rates started the quarter strong in Japan but slowed due to the spike in volatility in March.
We started the quarter strong in Japan, but slowed due to the spike in volatility in March.
Forex imaging reported stronger revenues in <unk> offsetting a slowdown in EMEA and Japan.
Spread products reported a slowdown in credit revenues in Japan and AEG.
Speaker 1: Spread products reported a slowdown in credit revenues in Japan and AEG, while revenues from securitized products increased.
Revenues from securitized products increased.
Equities revenue.
$61 8 billion yen down 8% over last quarter, which included revenues of $9 1 billion yen arising from transactions with a U S client. Excluding this revenues were higher quarter on quarter, driven by equity products in the Americas and Japan on the back of an uptick in client.
<unk>, Please turn to page 13 for investment banking.
Speaker 1: Net revenue declined 15% to 29.6 billion yen. Advisory fee pools dropped due to market uncertainty and deals were postponed, leading to lower revenues in the Americas and EMEA.
Revenue declined 15% to $29 6 billion yen advisory fee pool dropped due to market uncertainty and deals are postponed leading to lower revenues in the Americas and EMEA.
Japan revenues increased contributions from high profile deals such as a tender offer for the privatization of Toshiba by Japan Industrial partners and the completion of techno associate anything.
Speaker 1: Japan revenues increased on contributions from high-profile deals, such as a tender offer for the privatization of Toshiba by Japan industrial partners and a conversion of techno-associate and nesting electric into wholly owned subsidiaries by Semicama Electric Industries. Financing revenues were up-quarter on quarter. The ECM business reported stronger revenues as it supported several high-profile transactions, such as a global offering by Japan per spank and the global IPO of SPI submission net bank. Our DCM business continued to support multiple sustainability transactions, including acting as a joint bookrunner on a 6 billion euro.
Nick into wholly owned subsidiaries by Sumitomo Electric industries financing revenues were up quarter on quarter. The ECM business reported stronger revenues as it supported several high profile transactions, such as a global offering by Japan, Postbank and the global IPO of SB isolation, Netbank, our DCM business.
We continue to support multiple sustainability transactions, including acting as joint book runner on a $6 billion.
Speaker 1: green bond experienced by the European Union.
Green Bank issuance by the European Union. Please turn to page 14 for an overview of non interest expenses non.
Speaker 1: Please turn to page 14 for an overview of not interest expenses. Group wide non-interest expenses decline 3% to 302.2 billion yen. Compensation and benefits remained in line with last quarter as a decline in severance-related expenses and yen appreciation offset an increase from year-end bonus adjustment.
Non interest expenses declined 3% to three 2.2 billion yen compensation and benefits remained in line with last quarter as the decline in severance related expenses and yen appreciation offset an increase from year end bonus adjustments commissions and floor brokerage declined 6%.
Speaker 1: Commissions and floor brokerage declined 6% due to lower trading volumes and lower expenses related to origination of aircraft leases in investment management.
Trading volumes and lower expenses related to the origination of aircraft leases in investment management.
Page 15 shows our financial position.
The table on the bottom left shows tier one capital of $3 two trillion yen down about 43 billion from the end of December at risk weighted assets declined by five.
Speaker 1: The table on the bottom left shows tier one capital of 3.2 trillion yen, down about 43 billion yen from the end of December . Risk-weighted assets declined by 550 billion yen from the end of December to 17.4 trillion yen. As a result, our set one capital ratio at the end of March was 16.2%.
550 billion from the end of December to 17.4 trillion yen as a result, our set when capital ratio at the end of March was 16, 2%.
Speaker 1: The waterfall chart on the bottom right shows changes to risk-weighted assets. Credit risk increased by 190 billion yen and operational risk increased by 100 billion yen. Meanwhile, market risk declined by 840 billion yen due to changes to warehousing and trading positions as well as yen appreciation. That concludes today's overview of our fourth quarter result.
The waterfall chart on the bottom right shows changes to risk weighted assets.
<unk> increased by 190 billion yen and operational risk increased by 100 billion yen. Meanwhile, market risk <unk> declined by 840 billion yen due to changes to warehousing and trading positions as soon as the end appreciation that concludes todays overview of <unk>.
Third quarter results.
Speaker 1: To sum up, looking back on the past year, we saw the fruits of our efforts to grow retail client assets and our recurring revenue cost coverage ratio increased to 51%. Investment management booked a total of 780 billion yen in inflows via the Nomura Securities, Bank and BC Fund channels, underlying progress in our focus on the broader asset management business.
Can you send that looking back on the past year, we saw the fruits.
Our efforts to grow our retail client assets and our recurring revenue cost coverage ratio increased to 51% investment management with a total of 780 billion in inflows via that Nomura Securities Bank, and VC fund channels underlying progress in our focus.
The broader asset management business.
Speaker 1: Wholesales saw a global slowdown in equity raising by issuers and M&A transactions resulting in a challenging environment for investment banking.
Wholesale.
Global slowdown in equity raising by issuers and M&A transactions, resulting in a challenging environment for investment banking.
Yeah.
Speaker 1: rates Forex and other macro businesses were able to monetize the spike in volatility and higher client flows particularly in the first half of the year.
Forex and other macro businesses, we're able to monetize the spike in volatility and higher client flows, particularly in the first half of the year.
Speaker 1: As such, we were able to gain some benefits from diversification of our business portfolio. Naturally, we are not satisfied with these results. The market uncertainty has remained in April . Retail revenues are roughly the same as in January and February . The personnel reshuffle announced in March is mostly complete, allowing us to optimally align our resources to client needs.
As such we were able to gain some benefits from diversification of our business portfolio naturally we are not satisfied with these results. The market uncertainty has remained in April retail revenues are roughly the same as in January and February .
Personnel reshuffle announced in March is mostly complete, allowing us to optimally align our resources to client needs.
Speaker 1: Our comprehensive alliances with Sun E. Goldau Bank and Awa Bank are delivering synergies beyond our initial plans.
Comprehensive alliances with.
The bank and our bank alright, delivering synergies beyond our initial plans.
Speaker 1: Our third alliance with Oita Bank commenced on March 27th. With our enhanced
Third Alliance with bank commenced on March 27th.
Our enhanced.
Organizational structure and bank alliances, we will increase client interactions and maximize opportunities for monetization.
Speaker 1: organizational structure and bank alliances, we will increase client interactions and maximize opportunities for monetization.
Yeah.
In wholesale Japan, and AEG had a strong April in rates and credits on the back of demand for portfolio rebalancing and yields however, equities and Forex imaging.
Speaker 1: In wholesale, Japan and AEJ had a strong April in rates and credit on the back of demand for portfolio rebalancing and yield. However, equities and forex emerging
Speaker 1: have seen muted client flows and volatility resulting in a slow slot for wholesale. Concerns over persistent inflation and geopolitical risks mean we must remain vigilant. The shift to higher interest rates and global tensions may lead to new business opportunities such as investment demand to realign how funds are raised and supply chains.
Have seen muted client flows and volatility, resulting in a slow slot for wholesale concerns of a persistent.
Session and geopolitical risks means we must remain vigilant the shift to higher interest rates and global tensions may lead to new business opportunities such as investment demand to realign how funds are raised and supply chains.
When we get more clarity on inflation and interest rates origination deals that have been installed globally, we would likely start moving forward again, we will continue to watch the macro environment and market movements to ensure we can monetize business opportunities.
Speaker 1: When we get more clarity on inflation and interest rates, origination deals that have been stalled globally will likely start moving forward again. We will continue to watch the macro environment and market movements to ensure we can monetize business opportunities. Thank you for your kind attention.
Thank you for your kind attention.
We have a question and answer session now.
If you have a question.
Speaker 1: If you have a question, press shop 7.
Kress shop Stephan.
Speaker 1: If we want to cancel a question, press sharp 7.
If we want to sell a question.
Sharp seven.
The first question.
Is from <unk> Nikko Securities <unk> San.
Speaker 2: is from SMBC Nico Securities, Muraki-san. For example, please go ahead.
Go ahead.
Thank you this is murky from <unk> Nikko.
Speaker 2: Thank you. This is Muraki from SMBC Nikko. Two questions, please. First, it's about global markets.
Two questions. Please first is about global markets.
On page 12.
Your comment on page 12.
Speaker 2: The volatility in March seems to have worked negatively for you. And...
The volatility in March.
We have worked negatively for Ya.
And.
When we hear the market's division of the U S banks.
Speaker 2: When we hear the markets division of the US banks, it wasn't really mentioned, but compared to January and February , what happened? What changed in March? Could you give us some more color about your global markets division, please? That's my first question.
It wasn't really mentioned, but.
Compared to January and February what happened what changed in March could you give us some more color.
Your global markets Division please.
That's my first question.
Thank you. This is camera thank you mark.
Yeah.
Yeah.
As I'm sure you are closely watching the market indices.
Speaker 2: As I'm sure you're closely watching the market indices, in the US, the US Treasury volatility...
In the U S. The U S treasury volatility.
Speaker 2: and the index move which shows the volatility of US treasuries. In March,
And the index move which shows the Halsey surgeries.
In March reached.
Reached the level.
Reached a record level since the global financial crisis and extremely high level.
Speaker 2: reached a record level since the global financial crisis, an extremely high level.
And.
Frankly, I'm not sure what's going on with our peers, but.
Yeah.
When I hear the analyst calls by your peers.
Speaker 2: seems like for rates the struggled in March but they were able to barely withstand.
It seems like for rates the struggles in March, but you were able to barely with fans.
And.
At Nomura.
Just like the U S players.
Speaker 2: just like the US players, we achieved the increase in revenue and profits year and year for eight. But so it wasn't that bad, but.
We would see to increase.
And revenue in profits year on year for it but it wasn't that bad but.
Speaker 2: the scope of the business, the range of the business was much more narrow compared to our peers.
The scope of the business the range of the business.
What's more narrow compared to our peers.
And.
Speaker 2: If we look back on the first quarter, January to March, and the uncertainty in the market...
If we look back on the first quarter January to March.
Uncertainty in the market.
It's good to have stable revenues outside of trading and that.
Speaker 2: it's good to have stable revenues outside of trading and that has a very strong effect. For example the sourcing capacity in primary primary markets.
Has a very strong effect for example, the sourcing capacity and primary primary markets.
Speaker 2: is something which the major banks have but we do not. So that is a big difference with our bigger peers. And there is some seasonality to this business.
What's the major banks have but we do not so that is a big difference with our.
Alright bigger peers and.
There is some seasonality to this business.
In the U S banks use peers.
In this march quarter, and if we compare with the previous quarter.
Speaker 2: in this March quarter and if we compare it with the previous quarter.
There is about a 70% 80%.
Increase in revenue in fixed income compared to the previous quarter.
Speaker 2: increase in revenue in fixed income compared to the previous quarter.
And.
Speaker 2: And in our case, for the March quarter, we typically see a decline in our revenues. So there is some seasonality which differs to the U.S. peers. And in the January-March period, the U.S. banks and the U.S.
In our case for the March quarter.
We typically see a decline in our revenues. So there is some seasonality, which defers to the USPS.
And.
And the January March period, the U S banks.
About one third of their annual earnings.
So they were able to absorb the decline in one product through revenues from other areas.
Speaker 2: So they were able to absorb the decline in one product through revenues from other areas. And that's the difference with Nomura, I believe.
And Thats the difference with Nomura I believe.
Okay.
This is murky thank you very much.
And by the way.
Although it is not that large scale.
Speaker 2: your CNBS ownership which you disclose in your financial disclosure and there are also CRE loans in your inventory.
You will see MBS ownership, which you disclosed in your financial disclosure and Theyre also CRE loans and your inventory.
What about these.
What about markdowns or provisions has that not really affected your earnings.
Speaker 2: What about markdowns or provisions? Has that not really affected your earnings?
This is <unk>.
Speaker 2: This is Kitamura. It wasn't zero, the impact, but it wasn't that large.
Zero impact, but it wasn't that large.
This is rocky thank you understood.
Speaker 2: This is Maraki. Thank you. Understood. My second question is about the ROE.
My second question is about the ROE.
There was a request by the PSC.
Speaker 2: and also the G-SIBs which had low ROE in Europe are facing a crisis. And with this backdrop, how do you plan to ROE?
And also the G SIB.
Which had low ROE in the Europe are facing a crisis and with this backdrop, how do you plan to our OE.
And Nomura has been focused on capital efficiency and cost of capital and you have been sophisticated your resource allocation, which are explained in the past but.
Speaker 2: And Nomura has been focused on capital efficiency and cost of capital and you have been sophisticated your resource allocation which we've explained in the past but
Speaker 2: with this current situation, your ROE of 0.9%.
With this current situation ROA of <unk>, 9%.
Speaker 2: And the US banks achieved more than 10% of ROE even in this market environment. And ROE is high in some banks, even in the investment banking division. So how do you think about your future?
And the U S banks achieved more than 10% of ROE even in this market environment.
And the ROE is high in some banks, even in the investment banking division so.
How do you think about your future Roe and.
What.
We will drive the improvement of the group ROE in the PBR what is the what is hindering the improvement all of these metrics.
Speaker 2: will drive the improvement of the group ROE and PBR. What is hindering the improvement of these metrics? And could you
And could you explain several.
Factors for this starting with the more important ones.
Speaker 2: factors for this, starting with the more important ones, and in this fiscal year.
And in this fiscal year.
How do you plan to address these.
Speaker 2: How do you plan to address these factors affecting your ROE and PBR? Thank you.
Factors affecting your ROE in PBR. Thank you.
Yes. This is <unk>. Thanks for your question.
Yes, how to improve our Roe.
Speaker 2: Yeah, how to improve our ROE. Well that is...
Well that is.
Something which we've been discussing a lot at the senior management level and.
Speaker 2: something which we've been discussing a lot at the senior management level and
Speaker 2: First there's the issue with the top line. And if we look at Nomura's business portfolio, that's one reason. But there were also market factors which worked adversely. And...
First is the issue with the topline.
And if we look at numerous business portfolio. That's one reason, but there were also market factors.
Which worked adversely.
And.
Our existing businesses alone will not be enough to grow our top line that much.
Speaker 2: Our existing businesses alone will not be enough to grow our top line that much.
And so we.
Speaker 2: And so we are looking at the growth areas and we have started several businesses in the growth areas.
Looking at the growth areas and we have started several businesses in the growth areas.
But these new businesses.
Speaker 2: But these new businesses do take time and it goes into like a J-curve situation. So costs tend to come first and they tend to be a drag on our P&L, at least in the early years. And then they start contributing to our earnings.
Do take time and it goes into like a J curve situations. So costs tend to come first and they tend to be a drag on our P&L at least in the early years and then they start contributing to our earnings.
So we are in that kind of phase plus the market environment, which leads to this slower start of these businesses.
Speaker 2: So we are in that kind of phase plus the market environment, which leads to the slower start of these businesses. And on the cost side.
And on the cost side.
Yes, there is currency.
Speaker 2: Yeah, there's currency which had an effect.
Which had an effect.
And that should also hit our revenues so currency should be neutral actually but.
Speaker 2: and that should also hit our revenues. So currently shipping neutral actually, but um...
Inflation.
Speaker 2: has put some pressure on our earnings. And in order to retain good talent, the-
Has that.
That put some pressure on our earnings.
And in order to retain good talent.
The fixed pay has gone up.
Which we have to tolerate to a certain extent and also if we look globally. The utilities expenses are going up.
Speaker 2: which we have to tolerate to a certain extent. And also, if we look globally, the utilities expenses are going up, which...
Which.
Speaker 2: is another drag on our coastline and
Another drag on our cost line.
And the infrastructure.
Sure.
Speaker 2: which includes the IT infrastructure for example, and we have quite a lot of IT infrastructure as a financial institution and we are in the process of unweaving this spaghetti state of our IT infrastructure.
Which includes the it infrastructure for example, and we have quite a lot of ice and frustrate the infrastructure as a financial institution and it's.
We are in the process of unwavering this spaghetti state of our it infrastructure.
Okay.
Speaker 2: and we do need to make investments if we are to achieve savings in the future, which is somewhat of a drag on our cost line as well.
And we do not need to make investments if we are to achieve savings in the future, which is somewhat of a drag on our cost line as well.
And this overlaps with the top line, but we do need to make growth investments.
Speaker 2: And this overlaps with the top line, but we do need to make growth investments. And that is leading.
And that is leading to some upfront costs.
Yeah.
Speaker 2: And in terms of how to improve our ROE, well the priority will be...
And in terms of how to improve our ROE will the priority will be.
Speaker 2: to grow the top line in each of our business lines. That will be the highest priority.
To grow the top line in each of our business lines that will be the highest priority.
And.
There are some businesses, which are in between the different business segments, which are not covered by the current business segmentation, which we want to capture and monetize in the future.
Speaker 2: There are some businesses which are in between the different business segments which are not covered by the current business segmentation which we want to capture and monetize in the future.
And in terms of resource allocation.
Speaker 2: And in terms of resource allocation,
We are looking at the margins through the cycle of each business and the PTA margin. We're also looking at and we're also looking at the concentration of the capital against.
Speaker 2: We are looking at the margins through the cycle of each business and the PTI margin. We're also looking at, and we are also looking at the concentration of the capital against, in revenue against RWA. That's also another important metric. And depending on the business line, they have different characteristics, which differ quite a bit. So we are trying to diversify and stabilize our business portfolio, which is also important.
Revenue against <unk>. That's also another important metric.
And depending on the business line.
They have different characteristics with different quite a bit. So we are trying to diversify and stabilize our business portfolio, which is also important.
In any case.
Speaker 2: We need to stabilize our bottom line. That will be crucial. Otherwise...
We need to stabilize our bottom line that will be crucial otherwise.
The cost of capital, we will not go down, especially when seen from the outside.
Speaker 2: the cost of capital will not go down, especially when seen from the outside.
So we will keep these factors in mind.
And continue managing Nomura.
Speaker 2: and to continue managing number of. Is that the time to see your question?
Is that does that answer your question.
Thank you. This is mackie, yes, I understand that it is quite hard but.
Speaker 2: Thank you, this is Marquis. Yes, I understand that it is quite hard, but in terms of timeframe...
In terms of timeframe.
So this is somewhat dependent to the revenue environment, but assuming that the revenue environment doesn't change.
Speaker 2: So this is somewhat dependent to the revenue environment, but I'm assuming that the revenue environment doesn't change.
Speaker 2: you are working on various initiatives. So, for example, in the second half of this year, will there be some top-line contribution or will there be a decline in your costs? Or perhaps, will you be able to do some savings in your capital? Do you have any visible expectations in this fiscal year? And will the ROE improve to a certain extent in this fiscal year? Or are you looking a bit further ahead? Is it going to take a bit longer? This is Kedemra.
You are working on various initiatives. So for example in the second half of this year.
Will there be some topline contribution or will there be a decline in your costs or perhaps we will you be able to do some savings in your capital do you have any visible expectations in this fiscal year and will the ROE improved to a certain extent in this fiscal year or are you looking a bit further ahead is it gonna take a bit longer.
This is debra.
Speaker 2: I can't really say there's going to be nothing in a whole year as CFO . So, of course, we would like to see some benefits from the efforts that we are making now.
I can't really say, there's going to be nothing.
Whole year as CFO . So of course, we would like to see some benefits from the efforts that we're making now and.
Speaker 2: We've been talking about how we're changing the retail earning structure and we are cutting costs by 20 billion yen by changing the way we make money. And we have been building up and making a lot of progress. So hopefully we will see some contribution from that and in investment banking.
We've been talking about how we are changing the retail earnings structure and we are doing.
We are cutting costs by 20 billion yen by changing the way, we make money and we have been building up.
I'm, making a lot of progress so.
Hopefully, we will see some contribution from that and in investment banking.
The environment was extremely tough last year and.
Speaker 2: the environment was extremely tough last year and...
Yeah.
Okay.
Speaker 2: that isn't going to change overnight just because we entered into a new fiscal year. But if we look at the current environment it's not that bad actually and then you can average 28,000 yen and above. So towards the last...
That isn't going to change overnight, just because we entered into a new fiscal year, but if we look at the current environment. It is not that bad actually and then you averaged $28000 and above.
<unk>.
Towards the latter half of the fiscal year.
Speaker 2: I think we should be able to work through the pipeline, which is quite strong at the moment, and we should be able to execute those deals on the pipeline.
I think we should be able to work through the pipeline, which is quite strong at the moment and we should be able to execute those deals on the pipeline.
But we can't just expect the market to pick up.
For example.
Speaker 2: There are some businesses which are losing their strategic rationale and we will take away the capital from those businesses. And we need to take that kind of action as well.
There are some businesses, which are losing their strategic rationale and we will take away the capital from those businesses.
And we need to take that kind of action as well.
Thank you.
Thank you. This is murky thank you very much.
Thank you very much. The next question is by Latin ADESA <unk> of Daiwa Securities with another set the floor is yours.
Speaker 3: Thank you very much.
Speaker 3: Thank you. This is what another of the IWA securities I have two questions. First of all, fake monthly revenues. January , February , March breakdown will be appreciated. Second, on capital policy.
Thank you. This is with another of Daiwa Securities I have two questions first of all sick.
Monthly revenues January February March breakdown will be appreciated second capital policy.
Speaker 3: 40% payout ratio. You've elevated. Why at this timing, this decision? And what about the basis of buyback?
40% payout ratio you've elevated why at this time in this decision and what about the basis of buyback.
40 billion yen of impact to.
Speaker 3: 40 billion yen of impact to RSU. So the total payout ratio will be below 50%. It didn't you take that into account in impact to RSU?
So the total payout ratio will be below 50% and didn't to take that into account in impacted RSC.
Those are my two questions. Let me answer those questions. Thank you very much the monthly breakdown.
Speaker 3: Those are my two questions. Let me answer those questions. Thank you very much. The monthly breakdown.
Speaker 3: uh i hesitate five four one 50 40 10 percent that's the breakdown between January February and march
I hate it at 541, 50 40, 10% that's the breakdown between January February and March when the results announcement took place previously.
Speaker 3: When the results announcement took place previously, I told you that the start was fine. It was a rocket start in January , so we were able to gain a robust start. But due to change in tone in February , uncertainty elevated, so there was slowdown. And in March, partly because of the reasons I told you before, the situation was very.....
Told you that it does start with fine it was a rocky start in January so we were able to gain a robust start but due to change in tone in February .
Elevated so they will slow down and in March certainly because of the reasons I told you before.
The situation with very harsh.
Speaker 3: So 50% in January , 40% in February and 10% in March. That is the breakdown.
So 50% in January 40% in February and 10% in March that is the breakdown.
So I hope I answered the first question.
Speaker 3: So I hope I answered the first question. Going on to your second question.
Going on to your second question.
Speaker 3: The reason why we elevated payout ratio to above 40%.
The reason why we elevated payout ratio to above 40%.
Speaker 3: analysts and investors we've talked to them and stable
Analysts and investors we've talked to.
Hey, Dan.
Okay.
Stable dividend payment.
There is high expectations from shareholders for us to pay stable dividends.
Speaker 3: There's high expectations from shareholders for us to pay stable dividends.
Okay.
Speaker 3: Now conventionally we used to talk about 30% benchmark.
No congressionally, we used to talk about 30% benchmark.
Speaker 3: But if you look at the actual results of Namura.
But if you look at the actual results of Nomura.
Ah.
Speaker 3: We have been paying above 30% payout ratio.
We have been paying above 30% payout ratio.
In good times and bad times, So that is why we've decided to change that to benchmark 240%.
Speaker 3: in good times and bad times. So that is why we've decided to change that benchmark to 40% this time around. Total payout ratio 50%.
Time around.
Payout ratio 50%.
Amongst the universe of Japanese companies is now towards the lower end.
Speaker 3: Amongst the universe of Japanese companies, it's now towards the lower end.
Oh.
So it's not bad, but it's 30% dividend payout ratio is not really.
Speaker 3: So it's not bad, but 30% dividend payout ratio is not really high toll, and therefore, that is why we decided to chain this indicator. Share bye-bye.
Hi, Tal and therefore.
That is why we decided to change this indicator.
Share buyback.
Our issue.
Dilution.
Of course, we take that into account.
That concludes my answer.
Speaker 3: Thank you. This is Watanabe again to check.
Thank you this is with another again to check.
Speaker 3: You mentioned the interest rate volatility for March, but can you name particular names in terms of unrealized losses?
What you mentioned the interest rate volatility for March but can you name particular names in terms of unrealized losses were there any particular name.
And.
You also said <unk> dilution impact was taken into consideration.
Speaker 3: You also said RSU dilution impact was taken into consideration but...
Speaker 3: Even after the next fiscal year, you will factor in RSE dilution as you decide and plan for buyback. Is that the prospect? Let me answer your follow-up question, the first.
Even after the next fiscal year.
Factor in RAC dilution as you decide and plan for buyback is that the prospect. Let me answer your follow up question for Chris.
Question was on whether there were specific names that led to losses no.
Speaker 3: Question was on whether there were specific names that led to losses. No.
Speaker 3: And your second point was RSU.
And to your second point was on a SKU.
Of course.
Speaker 3: There's no intention to dilute. So we also take into consideration the impact to RSU.
And there is no intention to dilute.
Also take into consideration the impact RPC.
This is <unk> again.
Speaker 3: This is Watanabe again. You don't make it to each fiscal year, but
Again, you don't get to each fiscal year.
But.
Speaker 3: Some portion will be carried over into the next fiscal year. Let me answer that. In one year, if you can recover, what has been granted this year? No, that's not how we do it. So.
Some portion will be carried over into the next fiscal year.
My accident in one year, if you can recover.
<unk> has been granted this year no that's not how we do it so.
Speaker 3: There is some time until execution takes place, so that timing change is taken into consideration. This is Watanabe. Thank you very much for the response.
Jason Tom into execution takes place so that timing of change is taken into consideration.
This is watanabe. Thank you very much for the response.
The next question is from Mitsubishi <unk> Morgan Stanley Securities.
Speaker 2: The next question is from Mitsubishi, U.F.J., Morgan Valley Securities, Sijun-Osan. Sijun-Osan, please go ahead.
Please go ahead.
Hello. This is the first of all about cost control.
You talked about the various cost pressures on your business.
Speaker 2: You talked about the various cost pressures on your business.
And.
Your peers.
We're okay in their revenue in global markets.
Speaker 2: were okay in their revenue in global markets.
<unk>.
Speaker 2: It's quite hard to reduce your head count, I think. But...
It's quite hard to reduce our head count I think but.
Your weak bottomline at Nomura.
And if we think in the short term like one year, what can you do to improve the bottom line and what are you doing what is in progress at the moment.
Speaker 2: And if we sink in the short term like one year, what can you do to improve the bottom line? And what are you doing? What is in progress at the moment? And for example, in Q3,
And for example in Q3.
There were some one off expenses to lower the personnel expenses going forward.
Speaker 2: There were some one off expenses to lower the personnel expenses going forward. But if we look at Q4, the personnel expenses remained flat and
If we look at Q4 the personnel expenses remained flat.
And.
Yeah.
Speaker 2: and you're doing some complicated things in Q4, for example, Instinet and the commissions fees outside of Japan and there was the revenue and expenses but you changed the way you book that and there was about 10 billion yen of impact and the expenses declined, well should decline by 10 billion but it isn't.
And Youre doing some complicated things in Q4 for example, infinite.
The commission fees outside of Japan.
And there was the revenue and expenses, but you changed the way you.
And there was about $10 billion of impact and expenses declined two should decline by $10 billion, but it isn't so.
There should be several billions of cost plus in other areas.
Speaker 2: there should be several billions of costs pushed in other areas. And I think that explains the reason why the headquarters outside of the business is using your linkage to those numbers.
And I think that explains the reason why the.
Headquarters outside of the business.
Yes.
No linkage to those numbers so.
My question is how can you reduce these negative factors negative cost pressures and also.
Speaker 2: My question is how can you reduce these negative factors, negative cost pressures, and also some of the peers have high ROE and...
Some of your peers have high Roe.
And.
You have to pay a decent amount to secure a good talent.
But.
Uh huh.
How are you going to make that work and retain the talent. That's my first question and my second question is.
Speaker 2: How are you going to make that work and retain the talent? Is my first question. And my second question is.
Speaker 2: you are using dividend payout ratio as a metric this time, but your profit is very hard to forecast.
You are using dividend payout ratio.
That metric this time, but your profit.
It's very hard to forecast.
Historically as well.
And.
Speaker 2: If you're going to change your dividend policy, then perhaps you could use the DME for the first time in the securities industry.
If youre going to change your dividend policy.
And then perhaps you could use the <unk> for the first time in the securities industry.
Okay.
Okay.
Speaker 2: but you chose to use profit. And so why are you using that in your dividend policy?
But you chose to use the profit.
Why are you using that in your dividend policy.
Speaker 2: This is Kitamura. I wasn't sure what you were after in your first question, but how are we going to control our costs, I believe. So that's how I interpreted it.
This is kitamura.
I wasn't sure what you were after and your first question, but how are we going to control our costs I believe so that's how I interpret it.
If we look Q on Q.
And if you look at our costs on a quarterly basis, there is a lot of noise.
Speaker 2: And if you look at a customer quarterly basis, there is a lot of noise.
No.
When we think about the cost I think we should take a longer term perspective.
Speaker 2: When we think about the cost, I think we should take a longer term perspective.
And.
Speaker 2: in terms of the cost reduction measures over the short term.
In terms of the cost reduction measures over the short term.
Now one of the reasons why costs went up in this period was the I T.
Speaker 2: Now one of the reasons why costs went up in this period was the IT...
Speaker 2: the retirement of the IT and the disposal of those IT assets.
The retirement of the <unk> and the disposal of those assets.
Which will lower costs in the next fiscal period onwards.
Speaker 2: which will lower costs in the next fiscal period onwards. And...
And.
I believe it was in January when we implemented some cost reduction measures mainly outside of Japan.
Speaker 2: I believe it was in January when we implemented some cost reduction measures mainly outside of Japan.
Speaker 2: And that has been booked as a retirement expenses in this period, but in the next period onwards, we will become lighter in terms of our cost base. And
And that has been booked as the retirement expenses in this period, but in the next period onwards, we will become lighter in terms of our cost base and.
This is not so much dependent on our actions, but it's more about how we book our accounts.
Speaker 2: This is not so much dependent on our actions, but it's more about how we book our accounts. It's more technical, but for example...
So it's a more technical but.
For example.
Okay.
Speaker 2: We have some variable compensation to our employees, which we pay out as deferred compensation. And in this period, if we look at the expenses,
We have some variable compensation to our employees, which we pay out as deferred compensation.
And in this periods if you look at the expenses.
There is some deferred compensation from the compensation that we granted back in FY March 2022, and we realize those expenses in this current period.
Speaker 2: there is some deferred compensation from the compensation that we granted back in FY March 2022 and we realize those expenses in this current period and that leads to quite a big amount. And you asked about how we are going to retain talent but the performance this year...
And that leads to quite a big amount and you asked about how we're going to retain talent, but.
The performance this year.
The number wasn't that high so.
Speaker 2: And we are continuing to pay for performance very thoroughly.
And we are.
To pay for performance very thoroughly.
Speaker 2: But we have been impacted by the deferred compensation which we granted in the previous fiscal year. And that has been realized in this current fiscal year. That's why the expenses seem a bit inflated.
But we have been impacted by the deferred compensation, which were granted in the previous fiscal year and that has been.
Realized in this current fiscal year.
The expenses seem a bit inflated.
Speaker 2: So this was more of an accounting issue. And so...
So this was more of an accounting issue.
So.
Through pay for performance, we are controlling the bonuses this year.
Speaker 2: through pay for performance. We are controlling the bonuses this year.
And.
Speaker 2: the deferred comp, which will be paid out in the next fiscal year or the current fiscal year, will be reduced to a certain extent.
The deferred comp, which will be paid out in the next fiscal year or the current fiscal year will be reviewed.
Reduce.
To a certain extent.
That is the first question.
And.
Speaker 2: Your second question about dividend payout ratio and how we reviewed the dividend policy. Well, as you said, Sijun Oshan.
Your second question about dividend payout ratio and how we reviewed the dividend policy.
As you said Suzanne.
We do have some volatility in our earnings.
And yes, it is hard to forecast.
But.
We are aiming to secure certain bottomline and payout the dividend.
Speaker 2: we are aiming to secure a certain bottom line and pay out the dividends. And yes, DOE is one way to think about it, but...
Yes.
One way to think about it but.
Our first priority is to generate the bottom line and one of the challenges from Nomura is just.
Speaker 2: Our first priority is to generate the bottom line. And one of the challenges from the Mura is to stabilize the earnings.
Catalyzed the earnings.
Speaker 2: and raise the overall level. That is of high priority. So as a result of that...
And raise the overall level that is of high priority. So as a result of that.
Speaker 2: We want to make sure to pay out the sufficient level of dividends. Thank you.
We want to make sure to pay out sufficient level of dividends. Thank you.
Yes. This is there is no. Thank you very much.
Speaker 2: Yes, this is the signal. Thank you very much. And just to add on.
To add on.
Speaker 2: You mentioned the 5 to 4 to 1 breakdown for the March quarter. But at the moment, what is the current situation in April ?
You mentioned, the 5% to four to one breakdown.
The March quarter, but at the moment what is the current situation in April .
This is <unk>.
Speaker 2: This is Kitamura. You want to know about the performance in April ?
You want to know where the performance in April .
Yes, that's right.
Speaker 2: Yeah, that's right. So March was 10%, but that's one off. So what is it like now?
So march was 10% but.
That's one off so what is it like now.
Yes. This is Jim Raabe will March was.
It was quite an extraordinary situation I think.
Speaker 2: was quite an extraordinary situation, I think. And there has been a recovery compared to March.
And there has been a recovery compared to March.
But.
As explained in the previous call.
Speaker 2: As explained in the previous call, January was quite strong, but it's not that strong in April .
January was quite strong, but it is not that strong.
<unk>.
I see so may be still weaker than January February I guess is that right.
Speaker 2: Actually, so may be, yeah, still we could and generally February , I guess. Is that right?
Yeah understood. Okay. Thank you very much.
Speaker 1: If you have a question, press sharp seven.
If we have a question Chris sharp Kathryn.
The next question will be by <unk> of Citigroup Securities <unk> San Please go ahead.
Speaker 3: The next question will be by Niwasan of City Group Securities. Niwasan, please go ahead.
Okay.
Speaker 3: Thank you very much. Can you hear my voice? Yes.
Thank you very much can you hear my voice yes.
Thank you.
Okay.
Steve.
Possible markets.
Okay.
Okay.
I'm not sure whether.
Speaker 3: I'm not sure whether others are interested in this, but if we look at markets...
They're interested in this but if we look at mortgage.
Speaker 3: When the market moves quite significantly, it seems that your share drops. Is that the right interpretation?
The market is quite.
Quite significantly.
Is that your share drops is that the right interpretation.
Okay.
Yes.
You touched upon that when <unk> asked you a question.
Speaker 3: You touched upon that when Muraki-san asked your question. This is Kitamura speaking.
Kitamura speaking.
Speaker 3: Niwa-san, your voice is coming through choppy.
And you must sign your voice is coming through choppy.
We were having difficulty in.
Speaker 3: We're having difficulty in understanding what you are saying.
Standing what youre, saying.
Speaker 3: This is me, this is me, this is better.
This is this is Eva is this better.
Okay.
Sure.
My question is on market.
Okay.
When the market.
Speaker 3: When their market is fluctuating significantly, it seems that Nomura's global share drops. Is that the right interpretation? The reason has already been commented, but if there are any countermeasures available, what are those responses that you can implement? That is my question. Thank you. Let me answer your question.
It is fluctuating signal significantly it seems that Nomura global share drops.
Is that the right interpretation.
<unk> has already been commented but.
If there are any counter measures available what are those responses that you can implement.
That is my question.
Thank you let me answer your question.
Fourth quarter.
We have analyzed.
The results of the first the fourth quarter, but.
Speaker 3: the results of the fourth quarter, but we don't believe that our share has dropped so significantly. As I said, one of the trends of Q4 is that the U.S. peers are going to
We don't believe that our share has dropped so significantly as I said one of the trends of Q4 is that the USPS.
Are quite strong.
Speaker 3: in the January-March quarter while for us, we are strong in the third quarter, so on full-year basis.
In the January March quarter.
For us we are strong in the third quarter, so a full year basis.
We do not believe that our share has dropped so significantly even with a longer horizon.
Speaker 3: We do not believe that our share has dropped so significantly, even with a longer horizon.
Speaker 3: In the areas where Numbura places focus, we have been gaining share.
In the areas, where Nomura places focus we have been gaining share.
Speaker 3: That is all recognition. Thank you.
That is a recognition thank you.
Thank you. This is Neal again, let me ask a follow up question so that sense.
Speaker 3: Thank you. This is Niawah again. Let me ask a follow-up question. So that said...
In order to maximize revenue.
Speaker 3: In order to maximize revenue, you don't think that M&A is necessary. There seems to be some displacement in the Western market amongst the financial institutions, but M&A doesn't consider this as an opportunity.
You don't think that it.
It is necessary.
There seems to be some displacement in the with Jane market amongst the financial institutions, but nowhere it doesn't consider this as an opportunity.
So can you comment on Nonorganic growth.
Speaker 3: So, can you comment on non-organic growth?
Thank you very much and let me try to respond to that question.
Speaker 3: Thank you very much. Let me try to respond to that question. We are looking
Looking.
Speaker 3: in depth and in the global fee pool there are regions and there are products
In depth and in the global fee pool.
There are regions.
Our products.
Speaker 3: And by product and by region, we are looking at the size of the feed pool.
And by product and by region. We are looking at the size of the fee pool.
Speaker 3: So if I may give you an example, say there is quite a significant fee pool in a certain area, but there are certain areas where Nomura's share is very small.
So if I may give you. An example say there is quite a significant fee pool.
At an area, but there are certain areas, where nomura share is very small.
Speaker 3: I don't think we need to have our hands on everything, but maybe we should place more weight on some such areas in order to diversify our revenue stream. Then does that mean we will be embarking upon M&A?
I don't think we need to have our hands on everything, but maybe we should place more weight on some such areas in order to diversify our revenue stream.
And then does that mean, we will be embarking upon M&A.
Speaker 3: Acquisition of company is not that easy, but
Acquisition of company is not that easy.
But maybe.
Acquisition of a team or hiring a team.
Speaker 3: acquisition of a team or hiring a team.
That could be quite a wise option.
Speaker 3: that could be quite a wise option.
As you know.
Speaker 3: In Europe , there has been some confusion in the financial sector.
In Europe , there has been some confusion in the financial sector.
There could be some outflow of talents into the market.
Speaker 3: there could be some outflow of talents into the market.
So.
You may say that that also means in organic growth but.
Speaker 3: You may say that that also means inorganic growth but...
Speaker 3: Maybe something like a team hiring not going as far as M&A But maybe taking such steps in order to increase revenue
Maybe something like a team hiring now going as far as England.
But maybe taking such steps in order to increase revenue.
Sorry. This is <unk> I have a follow up question.
Speaker 3: Sorry, this is Niwa. I have a follow-up question. Even then, will you be careful about cost control in terms of operation? Or will you not be so confident in the process of working
Dang.
Will you be careful about cost control in terms of operation.
Or.
Oh, well, you're not be so cautious.
Well.
Let me answer that question.
We're constantly keeping in mind J curve.
Speaker 3: We're constantly keeping in mind a J curve.
Speaker 3: And in terms of business opportunity, there could be differences in the depth of J, and the term that would be exposed could be different.
And in terms of business opportunity.
There could be differences in the depth of Jay.
And D J.
That would be exposed could be different so.
Speaker 3: We look at the portfolio as a whole and think about the depth of J-curve that we can tolerate.
We look at the portfolio as a whole and I think about the depth of J curve that we can tolerate.
Yes.
Speaker 3: It's probably not so easy just to think about expanding size. So constantly we need to be conscious of cost, but at the same time we need to take steps for future growth or else we will begin to shrink. And therefore, from such perspective, we will study future growth opportunities. That concludes my response. Thank you very much.
Probably not so easy just to think about expanding size. So constantly we need to be conscious of cost, but at the same time, we need to take steps for future growth or else, we will begin to shrink and therefore from such perspective, we will study future growth opportunity.
That concludes my response, thank you very much.
If we have a question press shops suffered.
Speaker 1: If you have a question press sharp 7.
The next question is from <unk>.
Speaker 2: The next question is from Bantan from Jefferies. Bantan, please go ahead.
<unk> from Jefferies.
Please go ahead.
Yes. Thank you this is <unk> from Jefferies.
Okay.
Just a follow up question.
Speaker 2: Just a follow-up question to what you explained today. This is my first question. In growing your top line, well you need to grow your top line, and you have your existing businesses and you're also launching new businesses and at the moment the costs are coming first. So at the moment costs are coming first.
What you explain today is my first question in growing your top line will you need to grow your top line and you have your existing businesses and you're also launching new businesses and at the moment the costs are coming first.
So at the moment.
Costs are.
Coming first but.
And when we think about this fiscal year.
Yeah.
Speaker 2: Will there be some contribution to the top line depending on the business area or region or product line? Are there going to be any contributors this year?
Will there be some contribution to the top line.
Depending on the business area or region or product line are there going to be any contributors this year.
And what are you looking forward to in the current fiscal year in terms of contribution.
Speaker 2: and what are you looking forward to in the current fiscal year in terms of contribution? That's my first question. My second question is, and this overlaps with the previous questions, but in the March quarter...
My first question.
My second question is.
And as it overlaps with the previous questions but.
In the March quarter.
There were some one off costs in wholesale.
And the cost income ratio was above 100%.
Speaker 2: but you're working on cost control. And so even if the revenue environment doesn't change...
But youre working on cost control.
So even if the revenue environment doesn't change.
The cost income ratio should it go below 100%.
Speaker 2: the cost income ratio should go below 100%.
I'm not asking for a commitment, but I'd like to hear your outlook on that in the second or the next two to three quarters, where will the cost income ratio go. Please.
Speaker 2: I'm not asking for a commitment, but I'd like to hear your outlook on that in the second or next two to three quarters. Where will the costing car ratio go, please?
Thank you this is kitamura.
We have begun several new initiatives.
Speaker 2: We have begun several new initiatives and
And.
We don't know how much bottomline contribution there will be but.
Speaker 2: We don't know how much bottom line contribution there will be, but...
One.
Speaker 2: One is the international wealth management for which we have strong expectations.
Is the international wealth management for which we have strong expectations.
Speaker 2: And you may have seen the press releases, but we have set up an office in Dubai, and we are targeting the high net worth clients in that area. And...
And you may have seen the press releases, but.
We have set up an office in Dubai, and we are targeting the high net worth clients in that area.
And over the.
Speaker 2: the next few years we will hire the new head and we will build the foundation for this business.
For the next few years, we will hire the new hedge and we will build the foundation for this business.
We had been building the foundation over the past few years, because we need a strong foundation. If we are to this business.
Speaker 2: we had been building the foundation over the past few years because we need a strong foundation if we are to do this business.
And.
Speaker 2: Even so, we were able to grow our AUM and double AUM actually. So...
Even though we were able to grow our AUM and double.
I am actually.
No.
From Hereon, we will make we will be entering the monetization pace and we.
Speaker 2: from here on we will be entering the monetization phase. And we have hired the North Asia head as well. So.
We have hired the North Asia ahead as well.
So.
Yeah.
We would like to have these businesses leads to revenue contribution.
Speaker 2: we would like to have these businesses lead to revenue contribution. And we've been talking a lot about wholesale today but on the retail side...
And we've been talking a lot about wholesale today, but.
On the retail side.
Speaker 2: We have been taking the segment-based approach, and that's been strengthened. And in March, we have made some appointments.
We have been taking the segment based approach and that's been strengthened and in March we have made some appointments.
Speaker 2: So we are now ready to fully implement this new structure.
So we are now ready to fully implement this new structure. So.
We have laid the groundwork now and we are ready to face the clients customers and support them.
Speaker 2: We have laid the groundwork now and we are ready to face the clients, customers and support them.
Speaker 2: And that should naturally lead to growth in top line.
And that should naturally leads to growth in top line.
Speaker 2: And for wholesale, the cost-income ratio.
And for wholesale the cost income ratio.
Cost income ratio is above 100% and that means basically that were loss, making so management cannot tolerate that and of course, we'd like to bring it down to below 100%.
Speaker 2: Cost income ratio is above 100% and that means basically that we're loss making so management cannot tolerate that. And of course we would like to bring it down to below 100% And that is the commitment which we should have.
And that is the commitment, which we should make thank you.
Yes understood. Thank you very much.
We'd like to conclude question answer session.
Speaker 1: We would like to conclude the question and answer session.
If you have some more questions. Please ask our Nomura holdings.
Speaker 1: If you have some more questions, please ask our Nomura Holdings IR department.
The bottom Inc.
India, and we'd like to make closing addressed by Nomura Holdings.
Speaker 1: In the end, we would like to make closing address by Nomura Holdings.
This is <unk>. Thank you very much for joining everyone. Unfortunately in Q4 and the full year, we are not happy with these results.
Speaker 2: This is Kitamura. Thank you very much for joining everyone. And unfortunately, in Q4 and the full year, we are not happy with these results.
I feel that at a personal level as well so.
Speaker 2: We will work to improve our earnings and that should lead to the share price, and that is of highest priority. So in order to do that.
We will work to improve our earnings and that should lead to the share price and that is of highest priority. So in order to do that.
Speaker 2: We need to make sure that the initiatives that we are working on lead to better PNL. And we have the growth expectations from our stakeholders. And also we should lower the cost of capital or that should lead to lower cost of capital. And hopefully we should see some progress there in this fiscal year.
We need to make sure that the initiatives that we are working on lead to better P&L and we have the growth expectations from our stakeholders.
And also we should lower the cost of capital or that should lead to lower cost of capital and hopefully we should see some progress there in this fiscal year.
Yeah.
Speaker 2: And we are aware of how Nomura is seen from outside. So we will reference that in managing the firm.
And we are aware of how Nomura.
Seen from outside so we will reference that in managing the firm.
And we look forward to your continued advice.
Thank you very much.
Speaker 1: Thank you for taking your time. And that concludes today's conference call. You may now disconnect.
Thank you for taking your time and that concludes today's conference call.
You may now disconnect your lines.
The host has placed this conference on hold.
Speaker 4: The host has placed this conference on hold.
[music].