Q3 2025 Nomura Holdings Inc Earnings Call
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With a full months or achievement of the company to be materially different from the results by four months, well I thought expectations implied by adults predictions.
Such factors include economy and market conditions political ebay Sandeep. This is sentiment liquidity of secondary markets, maybe on the black tea tea interest rates, calling C exchange rates take you a T value Asian competitive conditions and stuff.
Slide number and timing of transactions.
Kitamura: With that we'd like to begin the conference Mr. How can they kitamura Chief financial Officer.
Speaker Change: <unk> go ahead.
Speaker Change: Good evening this is taco meat somewhere our CFO.
Speaker Change: Let me explain our financial results for the third quarter of the fiscal year ending March 2025, using the document titled consolidated results of operations. Please turn to page two group wide net revenue increased 4% quarter on quarter to 502 billion yen income before income taxes grew 4% to $238 3 billion net income was $101 4 billion yen reprieve.
Speaker Change: Renting a 3% increase over last quarter EPS came to 33.0, H young and annualized return on equity came to 11, 8%. This.
Speaker Change: This was the seventh straight quarter of profit growth building on what was already a strong previous quarter, reflecting the positive outcomes of strategic initiatives undertaken to date.
Speaker Change: Improving profitability in our international operations has it been a management priority and we have made steady progress in global markets, We made progress with portfolio diversification and in each region, we were able to increase revenue across a wide range of products.
Speaker Change: Contributions from laser digital numerous digital assets subsidiary have also begun and income before income taxes in the three international regions came to $51 8 billion yen, increasing by 30% over last quarter.
Speaker Change: The international business came to account for nearly 40% of our group wide income before income taxes, and our effective tax rate fell to 25% as some international entities made use of tax loss carryforwards.
Speaker Change: Segment income before income taxes shown on the bottom right was 127 5 billion yen. This was in fact, the highest level in 2017 and a half years since the quarter ended June 2007 in wholesale income before income taxes increased steeply led by the international operations, while in wealth management and investment management stable revenues rose to a record high.
Speaker Change: Levels amid net inflows.
Speaker Change: Before going into each business in detail, let's first take a brief look at the results for the first nine months of the fiscal year. Please.
Speaker Change: Please turn to page three.
Speaker Change: As shown at the bottom left net revenue for the period came to one trillion $439 8 billion yen up 29% from the same period on previous fiscal year income before income taxes grew 106% to $374 2 billion yen well net income increased by 146% to $268 8 billion in EPS cadence.
Speaker Change: 80, 766 yen and ROE was 10, 4%.
Speaker Change: The table at the bottom right gives a breakdown of income before income taxes. All divisions reported strong gains with three segment income before income taxes totaling 336 5 billion yen. This means that nine months into the fiscal year, we have already gone nearly 50 billion yen over the target of 288 billion yen for the fiscal year.
Speaker Change: <unk> ending March 2025, which we announced at our Investor day in May 2023.
Speaker Change: Net revenue in wealth management increased by 18% led by the provision of comprehensive asset management services.
Inflows and improved performance lifted recurring revenue assets, such as the investment trusts and discretionary investments to a record high resulting in an increased by 30% of recurring revenue.
Speaker Change: In investment management, the asset management business has shown strong performance with assets under management climbing at a record high and business revenue also at the highest level. Since the division was established both divisions continued to buildup stable revenues, meaning revenues linked to the amount of client assets.
Speaker Change: In wholesale all business lines fixed income equities and investment banking and all regions reported stronger revenues compared with the same period last year underscoring progress in diversifying our revenue sources.
Speaker Change: Also worth highlighting is that we were able to realize greater operating leverage in all divisions. Thanks to continued cost controls.
Speaker Change: Revenues across the three divisions rose by 27% while costs increased only 12% with the result that income before income taxes came to two one times the previous year's level.
Speaker Change: Income before income taxes margin improved from 16% to 26%.
Speaker Change: Now, let's take a look at third quarter performance by segment, Please turn to page six.
Speaker Change: The percentages I referred to here are all quarter on quarter comparisons.
Speaker Change: Wealth management net revenue was flat quarter on quarter at $116 3 billion yen and income before income taxes grew 2% to 40 to $46 2 billion. Yet this was the seventh consecutive quarter of growth and income before income taxes, which reached its highest level in the nine and a half years since the quarter ended June 2000.
Speaker Change: <unk>.
Speaker Change: As shown in the lower left flow revenue fell slightly to $65 9 billion yen. There was a slight decline in revenue related to the Japanese stocks and bonds, but we saw revenue growth in investment trusts and foreign stocks.
Speaker Change: Recurring revenue rose to a record high of 54 billion yen.
Speaker Change: Recurring revenue as a category includes investment advisory fees that are recognized every second quarter and fourth quarter, which means that these fees were absent in this quarter. However, we were able to completely absorbed the impact through our efforts across a wide range of other recurring business, including investment trusts and insurance and discretionary investments.
Speaker Change: Thanks to the continuous cost reduction the division's net noninterest expenses held at roughly 70 billion yen with the result that the recurring revenue cost coverage ratio rose to 72% up two percentage points from the last quarter. This added further to the stability of earnings in the division.
Speaker Change: Please turn to page seven for an update on total sales by product total sales declined by 11% quarter on quarter to five two trillion yen.
Speaker Change: Within that sales of stocks fell by 12%.
Demand for it is the Penny Japanese stocks slowed as investors stayed largely on the sidelines in October ahead of major political events in the U S in Japan and the market subsequently stage range bound.
Speaker Change: And bonds, we saw an increase in sales of Japanese government bonds to retail investors as rising interest rates made them more attractive sales of foreign bonds fell however in part due to the absence of major primary transactions, but also because demand for other products increase including foreign stocks and our newly established publicly offered investment trusts that invests.
Speaker Change: In private credit.
Speaker Change: Sales of investment Trust increased by 9% we saw growth in demand for U S growth stock investment trusts as well as the aforementioned trust and invest in private credit.
Speaker Change: Sales of insurance products, and discretionary investments declined quarter on quarter, but held up fairly well in absolute terms investment trusts discretionary investments and insurance products are all product categories in which clients tend to be responsive to the advice and suggestions of our sales partners and all have continued selling well page eight you will see that we are ahead of target in all of our kpis for the fiscal.
Speaker Change: The Bar chart at the top left shows net inflows of recurring revenue assets of $282 2 billion yen net inflows of recurring revenue assets in the first three quarters of the fiscal year exceeded $1, one trillion yen already going well beyond our full year target of 800 billion yen at the top right you can see that recurring revenue assets at the end of the quarter came to $24 nine trillion, which is higher than ours.
Speaker Change: A 22.3.
Speaker Change: At the bottom left shows the number of flow of business clients at 1.48 million up 230000 from a quarter ago. We have already reached our full year target of $1 $46 million. We saw contributions from effective approaches by our sales partners and client facing channels from new client acquisitions in conjunction with Tokyo Metro IPO and other primary transactions and from clients entering into transactions over there.
Speaker Change: Own accord through there and you start counts.
Speaker Change: Please turn to page nine for investment management net revenue was down 18% at 47 points at $45 7 billion yen, while income before income taxes still 41% to $18 9 billion yen a major effect with a decline in American century investments related to valuation gain.
Speaker Change: Count it on the investment gains and losses.
Speaker Change: Delaware lift at the lower left you will see that business revenue of stable revenue source came to 42 billion the highest level since the division was established delta at the mud as men's business had another strong quarter with net inflow for the seventh straight seventh quarter in a row and assets under management clubbing to a record high of $93.
Speaker Change: <unk> revenue also increased Q on Q4 in the aircraft leasing business with Nomura Babcock <unk> Brown. Please turn to page nine for an update on the state the Monday as men's business, which is the key source of business revenue for investment management.
Speaker Change: On the management at the end of December sits at $93 five trillion yen shown in the chart.
Speaker Change: Lift net inflow came to 260 video again, which looks low in comparison to the previous three quarters, but the investment trust business saw an inflow of $490 billion and the product mix improved thanks to the inflows into private assets global equities and privately placed investment trusts, we have management fees are relatively high.
Speaker Change: Lula right you will see that the alternative assets under management as well as past $2 five trading in this was an increase of 400 <unk> three months since the end of September with 180 video that does seem to those next please turn to page four wholesale net revenue increased 10% to 295 billion yen.
Speaker Change: Global markets revenues increased for the seventh straight quarter, while investment banking revenues were the highest level for the period over which comparisons possible stretching back to this fiscal year ending March 2017, as shown on the bottom right. The three overseas the regions Americas, EMEA and Asia <unk>.
Speaker Change: Doyle with combined net revenue up 23% with segment revenue grilling and expenses only rising 5% the cost to income ratio improved to 79% income before income taxes of $62 4 billion Union represents the highest level in the fourth full quarter spoke.
Speaker Change: Since the quarter ended December 2020, please turn to page still for an update on each business line.
Speaker Change: Global markets net revenue increased 8% to 239 billion. There was a slow start to the quarter. In October ahead of major political events in Japan, and the U S. But net revenue improved month over month fixed income net revenue increased 9% to $139 9 billion yen.
Speaker Change: In macro products revenues from FX, Ian increased in EMEA and the Esa in spread products revenues from securitized products.
Speaker Change: Record high, particularly in the Americas and with increased visibility over U S rate cuts there were still the demand for a wide range of products, including in the origination and financing businesses created revenues, increasing EMEA and AEG.
Speaker Change: Equities net revenue increased 6% to $99 1 billion yen.
Speaker Change: <unk> revenues were particularly strong in the Americas and the revenues also grew in AEG as we expanded our franchise.
Speaker Change: Please turn to page 13 for investment banking.
Speaker Change: Net revenue increased 22% to 51 5 billion yen with multiple M&A and ECM deals contributing to revenue increased in all regions byproduct advisory revenues grew sharply as we work to monetize transactions in Japan, EMEA and <unk>.
Speaker Change: I guess, including several financial sponsor and cross border deals.
Speaker Change: <unk> seen in financing and solutions also increased ECM revenues were particularly strong driven by deals related to the unwinding of cross shareholdings and several large appeals, including Kansai electric power and the major ipos, including Tokyo Mitchell rigor coding <unk> shareholdings.
Speaker Change: And these are shown on the right.
Speaker Change: S revenue through contributions from several refinance and acquisition finance deals. Please turn to page 14 for non interest expenses grew blood expenses rose, 4% to $363 seven getting in compensation and benefits were up 933% to 3% at 190 <unk>.
Speaker Change: <unk> 9 billion yen, mainly due to an increase in stock based compensation following the rise in our share price.
Speaker Change: Other expenses totaled 50 billion yen up by around <unk> 9 billion from the previous quarter due to a rise in professional fees and transaction related expenses and an increase in expenses related to the disposal of filter there.
Speaker Change: Please turn to page 15 for an update on our financial position the table on the bottom left shows Taylor capital of roughly $3 six trading in.
0.2 trading again from the end of September risk weighted assets also rose by 0.8 3 million to $19 nine trillion again, resulting in a <unk> capital ratio of 18, 1% and a common equity tier one ratio of 16, 3% as of the end of December. This concludes our view of our third quarter results.
Speaker Change: Sure.
Speaker Change: To wrap things up we achieved telling you a lifestyle early this quarter of 11, 8% the highest since the quarter ended December 2020, other time wholesale accounted for about 60% of three segments.
Speaker Change: Income before income taxes, and the appropriate structure, let's glide skewed with rates products accounting for nearly all of the wholesale earnings no earnings are well balanced across all three divisions. This did not happen overnight, we think the path and Delta we have strategically followed is.
Speaker Change: Lee leading to tangible results.
Speaker Change: Yeah.
Speaker Change: Recurring revenue in wealth management and business revenue in investment management, both of which are sources of stable revenues increased to an annualized level of 370 billion yen.
Speaker Change: Lifting baseline pre tax ROE two around mid 4%.
Speaker Change: 4% range.
Speaker Change: Pretax.
Speaker Change: ROE comes to around 6% when we take into account recurring business such as financing in wholesale we think further accumulation of such highly stable and recurring profit will increase the stability of earnings and to boost our intrinsic earnings power.
Speaker Change: We aim to achieve consistent of 8% to 10% or more by 2030. This means we want to achieve 8% even when market conditions are challenging and we will aim to achieve more than 10% when market conditions are favorable.
Speaker Change: <unk>.
Speaker Change: We will endeavor to build the franchise industrial always aim higher.
Speaker Change: Having to lower our cost of capital by steadily achieving our minimum ROE targets of 8%, but the by the accumulation of stable recurring ROE of mentioned earlier.
Speaker Change: Yes.
Speaker Change: Wealth management and wholesale have gotten off to a somewhat slow start in January compared with the third quarter, but the revenue levels remain acceptable.
Speaker Change: We continue to aim for bottom line growth, while delivering operating leverage as we maintain cost controls.
Speaker Change: As we announced today for an effective use of <unk> instruments resources.
Speaker Change: Ciliary Nomura <unk> has signed a sale agreement for the transfer of the land and the building of the training center at Owens Cannella.
Speaker Change: The execution of the sale is scheduled from mid March to mid April this year and the following the completion of the asset transfer we expect the pre tax income of approximately 56 billion yen in closing Nomura will celebrate its 100 <unk>.
Speaker Change: Sorry on December 25th 2000, 2005 to express our sincere gratitude to all our shareholders for their support over the years, we will pay a commemorative dividends of 10 yen per share to shareholders of record as of March 31, 2025, we plan to steadfastly forwards you hit <unk> purpose.
Speaker Change: We aspire to create a better world by harnessing the power of financial markets. Thank you.
Speaker Change: We have a question and answer session now.
Speaker Change: If you have a question.
Seth: Sure Seth.
Seth: If we wanted to sell a question.
Seth: Kress shops and then.
Speaker Change: The first question is from SMB <unk> Nikko Securities Mr. Murky Roxanne. Please go ahead.
Murky Roxanne: Thank you. This is murky from SMB senior co two questions. Please.
Murky Roxanne: First about wholesale fixed income business.
Murky Roxanne: On page 12.
Murky Roxanne: And this time, the U S and Americas securitization in Europe rates and FX was strong.
Murky Roxanne: Other U S players.
Murky Roxanne: If you look at the other brokers.
Murky Roxanne: Securitization seems to have been very strong according to their comments.
Murky Roxanne: So the environment was good but also.
Murky Roxanne: The reasons for the strong revenue environment and how do you see the sustainability of this current strong revenue environment.
Murky Roxanne: What are the upside and downside risks of the environment and.
Murky Roxanne: Okay.
Murky Roxanne: You commented in the past about the securitized securitization business.
Murky Roxanne: And there are some liquidity regulations that.
Murky Roxanne: Have a effect on the securitization business. So when you think about the profitability of fixed income business are you happy with the current profitability in line with the regulations.
Murky Roxanne: Okay.
Murky Roxanne: My second question is.
Murky Roxanne: The sale of real estate, which you have announced.
Murky Roxanne: Yeah.
Murky Roxanne: And from a efficiency perspective.
Murky Roxanne: Okay.
Murky Roxanne: Okay.
Murky Roxanne: Okay.
Murky Roxanne: This real estate and also the stocks of NRI, which you have been selling in several phases.
Murky Roxanne: Are there any other targets to further improve asset efficiency and what is the process.
Murky Roxanne: What kind of frequency do you plan to sell assets are you going to sell at one go or are you going to sell it step by step.
Murky Roxanne: Is that how we should assume it.
Murky Roxanne: Any hints there please.
Murky Roxanne: Okay.
Murky Roxanne: Thank you. This is tomorrow, thank you Mara coupon.
Speaker Change: Your first question about wholesale fixed income.
Speaker Change: Yes, as you pointed out in the U S securitization business was very strong securitized products.
Speaker Change: And.
Speaker Change: Our securitized products business consists of loans sales secondary trading.
Speaker Change: All mixed together and for the loan part.
Speaker Change: Right.
Speaker Change: Funds become stagnant so.
Speaker Change: We are trying to improve the turnover of the funds as much as possible.
Speaker Change: Our business.
Speaker Change: And <unk>.
Speaker Change: After we originate the loans.
Speaker Change: Okay.
Speaker Change: We promptly you fill those positions.
Speaker Change: And we control the amount that we hold on our book.
Speaker Change: And as we always say to the business side, please recycle resources.
Speaker Change: Okay.
Speaker Change: In terms of profitability.
Speaker Change: It depends on what we used as the denominator to calculate but.
Speaker Change: We have secured sufficient ROE we believe.
Speaker Change: And in relation to securitized products.
Speaker Change: Yeah.
Speaker Change: We are diversifying our portfolio within the securitization book. So it's not just mortgage we also have a CLO private credit.
Speaker Change: We have various product lines in the securitization business. So we are further diversifying this business.
Speaker Change: Yeah.
Speaker Change: So.
Speaker Change: Whether we are satisfied with its current level of profitability.
Speaker Change: Yes securitized products.
Speaker Change: FX rates.
Speaker Change: Have recovered quite nicely this year.
Speaker Change: Period, but for rates products I think there is some more upside that we can take.
Speaker Change: Frankly.
Speaker Change: Yeah.
Speaker Change: In Q3.
Speaker Change: We are seeing signs of recovery.
Speaker Change: And compared to the bottom two years ago, we are definitely in a recovery trend.
Speaker Change: But.
Speaker Change: Theres still has room to generate earnings in this business.
Speaker Change: We are not fully leveraging our capabilities we think.
Speaker Change: Yeah.
Speaker Change: And your second question.
Speaker Change: About the real estate owned properties that we own and the sale of those properties.
Speaker Change: Yeah.
Speaker Change: As you know.
Speaker Change: In December 2005, 2025, we have the 100th anniversary coming up and our new headquarters building will be completed in 2026.
Speaker Change: So.
Speaker Change: Okay.
Speaker Change: We have training facilities and this new headquarter building so.
Speaker Change: We decided to sell the tuck on our property considering the usage of the properties.
Speaker Change: And the current.
Speaker Change: We also considered the state of the current real estate market and the future usage and we chose to sign the disposal or disposal contract at this time.
Speaker Change: And.
Speaker Change: You asked about NRI stocks and other stocks and the disposal of such stocks.
Speaker Change: Okay.
Speaker Change: We.
Currently do not expect to change the ratio of our holdings at this moment. Thank you.
Mark: Thank you this is mark yeah again.
Speaker Change: On page 22.
Speaker Change: The P&L by region.
Speaker Change: And the other day.
Speaker Change: In the U S wholesale was quite strong and Europe was the sell ins according to the CFO, but Tom at this time.
Speaker Change: This laser digital profit contribution that's booked in Europe I think.
Speaker Change: And for wholesale Roe.
Speaker Change: The target is 6% to 8% on a pretax level and for Europe and the Americas.
Speaker Change: Is it within that range that you are targeting.
Speaker Change: Yes. Thank you for the question.
Speaker Change: The disclosed numbers.
Speaker Change: Are categorized by legal entity so.
Speaker Change: It's a bit different from the business performance that we track.
Speaker Change: And as you pointed out.
Speaker Change: In Europe, this quarter $16 2 billion yen of pretax income and.
Speaker Change: Yes laser.
Speaker Change: The contribution from laser is.
And that and it makes up a certain portion.
Speaker Change: Meanwhile, the wholesale business.
Speaker Change: As I said earlier is showing signs of recovery, especially for fixed income.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Since last year and.
Speaker Change: The trading environment has been improving.
Speaker Change: So.
Speaker Change: Our earnings capability is recovering significantly.
Speaker Change: Okay.
Speaker Change: I think there is still room for improvement but.
Speaker Change: We are seeing signs of improvement.
Speaker Change: And that is encouraging and the U S.
Speaker Change: We do have strong earnings capability.
Speaker Change: Understood. Thank you.
Speaker Change: The next question comes from Bofa Securities.
Speaker Change: Please go ahead.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: I would like to ask you about your ideas about shareholder return this time definitely dividend.
Speaker Change: 40% of dividend payout ratio.
Speaker Change: In addition to that <unk> will be on the other hand total return ratio of 50% or more easier policy to IBEW will continue.
Speaker Change: And there Tim.
Speaker Change: 10 yen <unk>, David dividend, who will be excluded from there and then as far as.
Speaker Change: Based upon the information we have now 40% retail ratio is the numbers so for the full year what is the.
Speaker Change: Since the hubs.
Speaker Change: Yeah.
Speaker Change: Great.
Speaker Change: You mentioned the gain on sale of property.
Speaker Change: Yeah.
Speaker Change: That's included then.
Speaker Change: Yeah.
Speaker Change: That proceeds.
Speaker Change: Of which might be used for dividend payout whether it is.
Speaker Change: Paid out in the fourth quarter or in the first quarter.
Speaker Change: We don't have clarity, but.
Speaker Change: Many things now.
Speaker Change: Now moving so this time.
Speaker Change: I know, it's still only the gourmet variety of dividend, but at the end of April when you announced for the result.
Speaker Change: And then remaining portion.
Speaker Change: 50% of a lot more of the 10 you may announce.
Speaker Change: Back.
Speaker Change: Any other additional shareholder return can we expect such announcement.
Speaker Change: And.
Speaker Change: If proceeds our proceeds is booked.
Speaker Change: <unk> seen much or sorry, if the proceeds are booked in April in order to reach 50%. The number you have to.
Speaker Change: <unk> is now you have conducted share buyback so the amount of buyback could be smaller than in the past. So 56 would be a deal could be received in April given that the possibility of moving forward.
Speaker Change: <unk> you think about that Todd is that the right understanding.
Speaker Change: So that's my first question Okay.
Speaker Change: So.
Speaker Change: Thank you for analyzing the heyday keeping hunting.
Speaker Change: Yeah.
Speaker Change: Regarding the 10 yen payout.
Speaker Change: Oh, a commemorative dividend per share that has nothing to do with the regular dividend payout.
Speaker Change: For the purpose of <unk> collaboration so that 50% or more of retail in the ratio based upon profit.
Speaker Change: That policy remains unchanged and regarding the timing of recognition those proceeds from a sale that's not clear as of yet, but the proceeds from a sale will be used for shareholder return.
Speaker Change: In the fourth quarter.
Speaker Change: So we still have two more months before we closed the fourth quarter. So we will monitor what the final numbers will be looking and we will determine the most appropriate ways of conducting shareholder return policies. We may use shareholder return shareholder.
Speaker Change: Is it share buyback, partially so we would like to be open to various options, though I'd give you a straight answer but that's how.
Speaker Change: I am thinking right now.
Speaker Change: Regarding my second question, Mr. Kitamura regarding investment Trust, Inc.
Mr. Kitamura: In wealth management investment Trust sale in November grew greatly netting December it settled down.
Mr. Kitamura: So private credit fund was originated newly.
Mr. Kitamura: And moving forward.
Mr. Kitamura: So private credit products.
Mr. Kitamura: Are you going to be conducting the marketing in a more stable.
Mr. Kitamura: Then in that case.
Mr. Kitamura: This meant trust sales.
Mr. Kitamura: That will involve different profile product so the sales might be.
Speaker Change: Thats on a quite different trajectory from here or is it not going to be the case could you give me some sense. Thank you Ms <unk>.
Speaker Change: As you say private product.
Mr. Kitamura: What we are.
Mr. Kitamura: Strengthening great no and our clients, becoming increasingly for EMEA with private cloud products, but just vehicles products private Dewey did not sales just about anything thats not the ideal approach your sale.
Mr. Kitamura: Since we deal with private products product the governance is essential.
Mr. Kitamura: From our viewpoint.
Mr. Kitamura: We used to like to upside the screening.
Mr. Kitamura: We can only deliver.
Mr. Kitamura: For products that we are confident about.
Mr. Kitamura: So.
Mr. Kitamura: The frequency of loans, you're over such product.
Mr. Kitamura: Even if you're willing to offer such products.
Mr. Kitamura: Since we want to be careful in screening product.
Mr. Kitamura: It may not be so frequent and we like to.
Speaker Change: Refer to the risk appetite of clients. So that's how we're going to recommend to offer products to customers. Thank you. Thank you Mr. <unk>.
Mr. Kitamura: That gave me UBS sure. Thank you.
The next question is from Mr. Watanabe from Daiwa Securities <unk> San Please go ahead.
Mr. Kitamura: Thank you. This is watanabe from Daiwa two questions. Please first is about wealth management.
Mr. Kitamura: With the tightening of rules when visiting clients has that had an impact on your sales activities.
Mr. Kitamura: Activities and we can look at the flows there seems to be almost no impact I think.
Mr. Kitamura: Any thoughts there. Please the second question is about your expenses costs and in wealth management, you achieve revenue growth, but the absolute amount of cost has declined and going forward. Do you think you can maintain the cost to income ratio and in wholesale cost income ratio of 79%.
Mr. Kitamura: And with respect to 79% and.
Mr. Kitamura: You've achieved the target of 80%, but will you increase costs going forward. So any thoughts on the direction of cost. Please.
Mr. Kitamura: Thank you.
Speaker Change: This is tomorrow first about wealth management client.
Mr. Kitamura: Client visits and the rules.
Mr. Kitamura: Realistically there has been no.
Mr. Kitamura: Not that much impact on our business I think.
Mr. Kitamura: And we already have a relationship of trust with clients and we do communicate with clients and.
Mr. Kitamura: Of course, some customers have given us very harsh criticism.
Mr. Kitamura: But.
Mr. Kitamura: They still continue business with us.
Mr. Kitamura: Lot of cases.
Mr. Kitamura: And Thats why.
Mr. Kitamura: Would you be able to achieve the numbers that we're showing this time.
Mr. Kitamura: Meanwhile.
Mr. Kitamura: With the tightening of rules when visiting clients.
Mr. Kitamura: The acquisition of new customers has slowed down slightly I've heard so in that sense. There has been some impact.
Mr. Kitamura: Okay.
Mr. Kitamura: We want our customers to feel comfortable in dealing with Nomura.
Mr. Kitamura: We will work, we will do our utmost to regain our trust.
Mr. Kitamura: Yeah.
Mr. Kitamura: Your second question is about costs.
Mr. Kitamura: In wealth management.
Mr. Kitamura: Have a very stable cost control and.
Mr. Kitamura: We are working on cost reduction quite early and those results are showing up in the numbers and they are sticking and going forward.
Mr. Kitamura: On the architecture side.
Mr. Kitamura: I think there still is room for change for improvement.
Mr. Kitamura: And in doing so we will need some improvement investments.
Mr. Kitamura: So in the short term there's SaaS the cost may go up a little but that cost increase will be offset by the cost reductions in the future.
Mr. Kitamura: And Thats why we will be making these investments.
Mr. Kitamura: Okay.
Mr. Kitamura: We will try to control the total amount as much as possible.
Mr. Kitamura: And make some investments to achieve future cost reductions.
Mr. Kitamura: And in wholesale.
Mr. Kitamura: We are finally at 79% cost to income ratio.
Mr. Kitamura: And when you finally have a decent number.
Mr. Kitamura: This was thanks to topline growth as well as thorough cost control.
Mr. Kitamura: And we will continue to control our costs.
Mr. Kitamura: This isn't just about one fiscal period.
Mr. Kitamura: And we want to give comfort to our stakeholders. So we will continue our cost reduction efforts.
Mr. Kitamura: And compared to wealth management.
Mr. Kitamura: We started a little.
Mr. Kitamura: Two quick little later two quarters late.
Mr. Kitamura: So we expect to see the results in our P&L going forward.
Mr. Kitamura: Meanwhile.
Mr. Kitamura: Okay.
Mr. Kitamura: There's very strong inflationary pressure outside of Japan, even more than in Japan. So.
Mr. Kitamura: While we control our costs.
Mr. Kitamura: That will be somewhat offset by inflation, which is unfortunate.
Mr. Kitamura: But we will continue working on cost control.
Mr. Kitamura: Thank you.
Mr. Kitamura: Thank you.
Mr. Kitamura: About wealth management.
Mr. Kitamura: Architecture investment that you mentioned.
Mr. Kitamura: N.
Mr. Kitamura: We'll just take place from win to win and how much will be the size.
Mr. Kitamura: You saw I just please.
Speaker Change: Yes. This is <unk>.
Mr. Kitamura: It's already started partly actually and.
Mr. Kitamura: This year, we have not started a full fledged investments, but next year, we will make some investments.
Mr. Kitamura: And this is an investment so it will not immediately show up in our P&L.
Mr. Kitamura: There will be a time lag.
Mr. Kitamura: And as for size.
Mr. Kitamura: Okay.
Mr. Kitamura: I don't think we disclose that.
Mr. Kitamura: So.
Mr. Kitamura: Apologies, we will refrain from commenting but Tom.
Mr. Kitamura: We will of course be mindful of the bottom line when making these investments.
Mr. Kitamura: Thank you very much.
Speaker Change: Now we move to the next question as we couldn't confirm your affiliation. Please state your company name and Jamie after hearing our music announcement.
Mr. Kitamura: Now our music.
Moray: Hi, Moray from JP Morgan Securities.
Moray: I have two questions first question.
Moray: Is about the U S business.
Moray: Revenue and revenue and profit looking at the geographical Prophage revenues of wholesale U S. Top line seems to be growing significantly on the other hand looking at profits in page 22, the appropriate demand is coming down so how should I interpret these numbers my second question.
Moray: Regarding the investment banking pipeline accumulation.
Moray: And given the situation.
Moray: January one is the revenue forecast for the fourth quarter and next fiscal year. So those are my two questions. Thank you.
Speaker Change: Thank you very much for your questions regarding your first question.
Moray: Page 22.
Speaker Change: The numbers on page 22.
Speaker Change: So these numbers are based upon legal entities and they do not necessarily the wholesale numbers American century investments related.
Speaker Change: Okay investments to gain those numbers include ETS and as I mentioned on the site touched up on the investment management Division investment gain is positive, but compared to last year.
Speaker Change: <unk> down and luxury.
Speaker Change: Does every deal that comes film ACI related loss.
Speaker Change: So aside from that factor.
Speaker Change: Sure.
Speaker Change: It does pretax profit.
Speaker Change: Lately increased.
Speaker Change: Analysis.
Speaker Change: As for IV pipeline.
Speaker Change: All in all.
Speaker Change: Continuously centering around Japan, Louise see strength, especially in Monday, and ECM transactions.
Speaker Change: Especially advisory visa.
Speaker Change: Business recently.
Speaker Change: Enjoyed increasing customer activities.
Speaker Change: Changing environment.
Speaker Change: The pipeline is staying at an elevated level as for overseas, we have solid pipeline.
Speaker Change: And the deregulation Deregulatory move.
Speaker Change: How about the administration as well as a tax decrease those moves will be beneficial to Monday industry. However, our overseas IV business is not true value.
Speaker Change: No.
Speaker Change: A couple of months, we will not be in completely parallel with industry trend, but we are focused on accumulating our pipeline.
Speaker Change: Full ECM.
Speaker Change: We continue to see high level of performance with the <unk> appeal or IPO in terms of pipeline.
Speaker Change: Indeed due to market changes.
Speaker Change: Your line is affected but on the current environment our pipeline remains up.
Speaker Change: High level.
Speaker Change: This fiscal year.
Speaker Change: We see the sale of strategically held shares even though we see that peak to be reached at some point in the future, but the current trend is expected to continue for some time.
Speaker Change: Thank you that's my answer.
Mr. Kitamura: Thank you very much Mr camera.
Speaker Change: The next question is from <unk> Securities.
Mr Otsuka: Mr Otsuka.
Mr Otsuka: Hello. This is Oscar from Spi Securities Hope you can hear me.
Mr Otsuka: Yes. Thank you.
Mr Otsuka:
Mr Otsuka: Two questions.
Mr Otsuka: First.
Mr Otsuka: It's about the laser digital that you mentioned.
Speaker Change: How much was the profit. Please if you could give me some color or hence.
Mr Otsuka: That's my first question.
Mr Otsuka: Alright.
Mr Otsuka: Apologies, we cannot disclose the numbers.
Mr Otsuka: Uh huh.
Mr Otsuka: But.
Mr Otsuka: Ladies are digital.
Mr Otsuka: Started the business in 2022, and it's only been two years since then add it turns profitable.
Mr Otsuka: And going forward.
Mr Otsuka: I think there is.
Mr Otsuka: Signs of positive signs, especially with the Trump market.
Mr Otsuka: Which is a tailwind.
Mr Otsuka: And in the mid to long term crypto assets.
Mr Otsuka: We will become a more regular asset class.
Mr Otsuka: And that trend is going to continue so.
Mr Otsuka: The environment is positive for laser digital.
Mr Otsuka: Yeah.
Mr Otsuka: When it comes to crypto and digital assets.
Mr Otsuka: There is a lot of volatility.
Mr Otsuka: And then this quarter, we achieved strong numbers, but there will be volatility going forward.
Mr Otsuka: And we will that's why we will also another reason why we will refrain from disclosing the numbers.
Mr Otsuka: On page 22.
Mr Otsuka: Europe.
Mr Otsuka: Q on Q improvement in profit.
Mr Otsuka: And I think is it included here.
Speaker Change: No not all of it now.
Mr Otsuka: Not all of it now not all of the this is laser.
Speaker Change: I see so you have your core businesses.
Speaker Change: And the market factors was the bigger factor I believe.
Speaker Change: This leaves a contribution and Theres also.
Speaker Change: The wholesale business like rates et cetera.
Speaker Change: We cannot give you the exact breakdown.
Speaker Change: Okay understand.
Speaker Change: My second question.
Speaker Change: Page 26.
Speaker Change: You talked about the Hiroshima mandate.
Speaker Change: Which didn't have my case, which didn't have much impact negative impact from the incident, but for net inflows of cash and securities.
Speaker Change: Was there no impact from the heroes incidents.
Speaker Change: And you have achieved strong numbers, but Q2 Q3, there wasn't much change.
Speaker Change: And for wealth management overall.
Speaker Change: It is negative.
Speaker Change: But.
Speaker Change: Yeah.
Speaker Change: Are there any other factors aside from the incident.
Speaker Change: Yeah.
Speaker Change: Yes. Thank you.
Speaker Change: On page 26.
Speaker Change: What goes on you mentioned the negative number.
Speaker Change: As wealth management negative overall and.
Speaker Change: Yeah.
Speaker Change: This includes the actions by the corporate clients. So this is kind of irregular number.
Speaker Change: I think you should focus more on the retail only line.
Speaker Change: And since.
Speaker Change: A few years ago.
Speaker Change: We have started adding this retail only disclosure and thats the reason for that.
Speaker Change: And if you look at the retail only line.
Speaker Change: You can see how it was positive in this quarter as well.
Speaker Change: And we achieved inflows for nine consecutive quarters, So I don't see any major issues here.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Yes. This 467 billion 168 billion, if we look at the retail only.
Speaker Change: Is there any reason for this.
Speaker Change: Well October is.
Speaker Change: October was somewhat slow.
Speaker Change: There was the prime Minister <unk> in Japan.
Speaker Change: The U S presidential elections in early November and customers were waiting and seeing.
Speaker Change: And if you look at within the quarter October was.
Speaker Change: Relatively slow.
Speaker Change: Okay I understand thank you very much.
Speaker Change: The next question comes from Citigroup Securities Mr. <unk>.
Okay.
Speaker Change: Thank you I am <unk> from Citi I have two questions.
Speaker Change: So I'm deviating from the earnings release, but regarding the policy of holding and 2030 managements ambition there'll be Louis and regarding the policy holding over yes.
Speaker Change: No policy holdings held by Nomura What is your policy in the Securities report.
Speaker Change: I do understand you have provided explanations about the environment is changing or now.
Speaker Change: So could you comment on the.
Speaker Change: Policy.
Speaker Change: Which you may not be necessarily need it so.
Speaker Change: What do you see all of you and how should I think about your policies holdings and regarding your ROE targets for 2030.
Speaker Change: Two for you to conduct.
Speaker Change: Upward revisions what criteria needs to be met.
Speaker Change: Phil.
Speaker Change: The reason seems to be.
Speaker Change: Yeah.
Speaker Change: Whereas industrial to appropriate at the <unk> target seems to be too low right now.
Speaker Change: And then.
Speaker Change: Why are you not raising the target making up for the rabies on could you comment on those thank you. Thank you for the question. Let me start Nila regarding your first question I didn't understand the intention of your first question. So are you, saying that the reason that the increase the policy of holding of shares.
Speaker Change: Well, what's your intention.
Speaker Change: Needless speaking.
Speaker Change: So my intention my message was you could completely eliminates policy holding of shares.
Speaker Change: Speaking, so we have disclosed position.
Speaker Change: Quite quickly we are sitting in the down position and ratio against the tail on capital right now is.
Speaker Change: Two 8%.
Speaker Change: Around 3% and 3% is affected by the stock price increase so we have been quite aggressive in setting down.
Speaker Change: We're position in policy holdings, and Thats all of stones, and we have a target number of shares to hold and do we collect for rock, Dave Hayne setting those positions, but the <unk> the number of names when it comes to the sale of unlisted non listed.
Speaker Change: Still because it's difficult because if you do the powerful market.
Speaker Change: No.
Speaker Change: We have been quite aggressive in setting the shares held.
Speaker Change: But.
Speaker Change: Even though we have made progress and we have no intention of slowing down initiative.
Speaker Change: It will be quite a challenge for us to completely eliminate the holdings. However.
Speaker Change: In terms of direction <unk> Suisse do no tough to hold.
Speaker Change: We do not intend to hold.
Speaker Change: Regarding your second question.
Speaker Change: Why are we not raising that target.
Speaker Change: Well our target was set.
Speaker Change: May two years ago, our ROE yield 8% to 10% plus.
Speaker Change: So rather than focusing on debt to range from 8% to 10% plus but what's more important is for us too.
Speaker Change: Chief.
Speaker Change: <unk> no matter, what the market environment is no multiple that the market environment is we would like to achieve at least 80% in <unk>.
Speaker Change: So that's the background of our target so in the past.
Speaker Change: As we.
Speaker Change: Haile, it's 8% to 10% target.
Speaker Change: Many people told us many people asked us how are we going to achieve that target.
Speaker Change: Didn't see the pathway towards achieving the targets, we receive such quite harsh comment so.
Speaker Change: We have made efforts to achieve our ambition.
The last two quarters, we could that Keith.
Speaker Change: Little above.
Great.
Speaker Change: When <unk>.
Speaker Change: <unk> changed People's comments also change that's how I felt that base baseline <unk> and recurring business expansion.
Speaker Change: So without the weekend increased salary underlying really nice first step and on top of that is market environment is favorable then 10% plus just like 11% this time or we could even higher.
All right thinking.
Speaker Change: Did that answer your question.
Speaker Change: Thank you very much.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: The next question is from Bank of America Securities.
Speaker Change: Thank you, Jason again about laser digital profit.
Speaker Change: This is in Europe and in terms of segments, where is it booked.
Speaker Change: And from an accounting perspective, which line, which item is it.
Speaker Change: Okay.
Yes. This is <unk> in terms of segment it is in others of others.
Speaker Change: Sorry for that.
Speaker Change: The competition and in terms of the accounting item it is trading P&L.
Speaker Change: The answer to your question, so it's basically trading in P&L.
Speaker Change: Okay. That's another difficulty for me, Okay I understand.
Speaker Change: It's time for a niche and we'd like to thank Lee question answer session.
Speaker Change: If you have some more questions. Please ask our Nomura holdings.
The bottom Inc.
Speaker Change: We'd like to make closing addressed by Nomura Holdings.
Speaker Change: Yes.
Speaker Change: This is <unk>. Thank you everyone.
Speaker Change: Yes.
Speaker Change: In the second and third quarters, we could achieve our ROE exceeding 11%.
Speaker Change: And though our medium to longer term initiatives that we have worked on seem to be delivering results that gives us confidence smart instruments members, but we are.
Speaker Change: Not overly optimistic.
Speaker Change: We will stay focused on stabilizing top line and we will stay focused on diversifying revenue streams, while controlling cost and controlling managing risks.
Speaker Change: So we will stay attentive to all of those things.
Speaker Change: Okay.
Speaker Change: 206 to 8.8 billion yen of net profit has been achieved recently.
Speaker Change: Hi, its level record high of net profit, maybe just around the corner, but by working all the themes that I have worked on and we'd like to keep up our efforts. So that we can deliver a good performance. Thank you very much for your continued support thank you.
Thank you for taking your time and that concludes today's conference call.
Speaker Change: You may now disconnect your lines.
Speaker Change: The host has placed this conference on hold.
Speaker Change: [music].