Q4 2026 Nomura Holdings Inc Earnings Call

April 24, 2026

Speaker #2: Should you have any objections, you may disconnect at this point in time. During the presentation, all the telephone lines are placed in listen-only mode.

Speaker #2: The question-and-answer session will be held after the presentation. Please note that this telephone conference contains certain forward-looking statements and other projected results, which involve Norwood and unknown risks, delays, uncertainties, and other factors not under the company's control.

Speaker #2: Which may cause actual results, performance, or achievements of the Company to be materially different from the results, performance, or other expectations implied by these projections.

Speaker #2: Such factors include economic and market conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions. With that, we'd like to begin the conference.

Operator: Such factors include economic and market conditions, political events, and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions, and size, number, and timing of transactions. With that, we'd like to begin the conference. Mr. Hiroyuki Moriuchi, Chief Financial Officer, please go ahead.

Speaker #2: Mr. Hiroyuki Moriyuchi, Chief Financial Officer. Please go ahead.

Speaker #3: This is Moriyuchi CFO. Thank you for joining us. I will now give you an overview of our financial results for the fourth quarter and full year for the fiscal year ended March 2026.

Hiroyuki Moriuchi: This is Moriuchi, CFO. Thank you for joining us. I will now give you an overview of our financial results for Q4 and full year for the fiscal year ended March 2026. Please turn to page two. First of all, our full year results. As you can see on the bottom left, group net revenue increased 15% year on year to JPY 2,167.7 billion, while income before income taxes grew 14% to JPY 539.8 billion, and net income increased 6% to JPY 362.1 billion, setting a record high for the second consecutive year. We achieved full year ROE of 10.1% on target for the second year in a row, since we set our ROE target range of 8% to 10% or more by 2030. Core segment income before income taxes reached an all-time high of JPY 506.9 billion.

Speaker #3: Please turn to page two. First of all, our full year results. As you can see on the bottom left, group net revenue increased 15% year on year to ¥2,167.7 billion, while income before income taxes grew 14% to ¥539.8 billion, and net income increased 6% to ¥362.1 billion, setting a record high for the second consecutive year.

Speaker #3: We achieved full-year ROE of 10.1%, on target for the second year in a row since we set our ROE target range of 8 to 10 percent or more by 2030.

Speaker #3: Four-segment income before income taxes reached an all-time high of ¥506.9 billion. Wealth Management and Wholesale drove company-wide earnings, with both divisions achieving their highest income since their respective establishments.

Hiroyuki Moriuchi: Wealth management and wholesale drove company-wide earnings, while both divisions achieving their highest income since their respective establishments. Wealth management achieved growth of 23% in income before income taxes as the recurring revenue-based business model gained further momentum, and major KPIs also saw substantial growth. Investment management saw its assets under management rise by more than 50% over the year to around JPY 137 trillion, with a substantial increase in the stable business revenue base.

Speaker #3: Wealth Management achieved growth of 23% in income before income taxes, as the recurring revenue-based business model gained further momentum and major KPIs also saw substantial growth.

Speaker #3: Investment Management saw its assets under management rise by more than 50% over the year to around ¥137 trillion, with a substantial increase in the stable business revenue base.

Speaker #3: Meanwhile, Wholesale saw revenue growth across all regions, and both Global Markets and Investment Banking achieved record-high revenue, resulting in income growth of 21%.

Hiroyuki Moriuchi: Meanwhile, wholesale saw revenue growth across all regions, and both global markets and investment banking achieved record high revenue, resulting in income growth of 21%. As for banking, it has steadily expanded its business base since the division was established and is making solid progress toward implementing deposit sweep. In view of our strong performance for the period ended 26 March, we expect to pay an ordinary dividend of JPY 24 per share.

Speaker #3: As for banking, it has steadily expanded its business base since the division was established and is making solid progress toward implementing deposit sweep. In view of our strong performance for the period ended March 26, we expect to pay an ordinary dividend of ¥24 per share.

Speaker #3: This brings the annual dividend to ¥51 per share, for a dividend payout ratio of 41%. Next, let me give you an overview of the fourth quarter results.

Hiroyuki Moriuchi: This brings the annual dividend to JPY 51 per share for a dividend payout ratio of 41%. Next, let me give you an overview of the Q4 results. Please turn to page 3. All the percentages I mention from here on are quarter-on-quarter comparisons. First of all, group net revenue rose 5% to JPY 577.2 billion, income before income taxes fell 20% to JPY 107.7 billion, and net income was down 19% at JPY 73.9 billion. Earnings per share came to JPY 24.34, and ROE was 8%, while four-segment net revenue rose, income fell due to factors including a decrease in the amount of profit recognized from affiliates in the other segment, as well as an impairment loss at an investee company in investment management. Next, please turn to page 7, and I will present an overview of each business in the Q4.

Speaker #3: Please turn to page three. All the percentages I mention from here on are quarter-on-quarter comparisons. First of all, group net revenue rose 5% to ¥577.2 billion. Income before income taxes fell 20% to ¥107.7 billion, and net income was down 19% at ¥73.9 billion.

Speaker #3: Earnings per share came to ¥24.34, and ROE was 8%. While four-segment net revenue rose, income fell due to factors including a decrease in the amount of profit recognized from affiliates in the Other segment, as well as an impairment loss at an investee company in Investment Management.

Speaker #3: Next, please turn to page seven, and I will present an overview of each business in the fourth quarter. As you can see in the top left, in wealth management, net revenue was more or less flat versus the previous quarter at $133.1 billion yen, while income before income taxes exceeded the strong previous quarter rising 5% to $61.2 billion yen.

Hiroyuki Moriuchi: As you can see in the top left, in Wealth Management, net revenue was more or less flat versus the previous quarter at JPY 133.1 billion, while income before income taxes exceeded the strong previous quarter, rising 5% to JPY 61.2 billion. The recurring revenue cost coverage ratio reached 72%, and the division achieved a high level of profitability, with the margin on income before income taxes remaining above 40%, which is higher than the industry average. As shown on the bottom left, recurring revenue reached an all-time high of JPY 56.8 billion.

Speaker #3: The recurring revenue cost coverage ratio reached 72%, and the division achieved a high level of profitability with a margin on income before income taxes remaining above 40%, which is higher than the industry average.

Speaker #3: As shown on the bottom left, recurring revenue reached an all-time high of ¥56.8 billion. Net inflows of recurring revenue assets remained at a high level again this quarter.

Hiroyuki Moriuchi: Net inflows of recurring revenue assets remained at a high level, exceeding JPY 400 billion once again this quarter. Flow revenue was down slightly, but at JPY 76.4 billion, remained high in absolute terms, second only to the level of the previous quarter, as we were able to effectively support customers' needs amid volatile market conditions.

Speaker #3: Flow revenue was down slightly, but at $76.4 billion, remained high in absolute terms, second only to the level of the previous quarter, as we were able to effectively support customers' needs amid volatile market conditions.

Speaker #3: Next, I will give you an update on total sales by product. Please turn to page eight. Total sales rose 75% quarter-on-quarter to around ¥11.7 trillion.

Hiroyuki Moriuchi: Next, I will give you an update on total sales by product. Please turn to page 8. Total sales rose 75% quarter on quarter to around JPY 11.7 trillion. This was largely due to major tender offers totaling JPY 4 trillion. Even excluding this factor, total sales remained at a high level. By product, excluding the tender offers, sales of Japanese stocks remained high thanks to a contribution from primary deals. Sales of bonds fell by 5%, while demand for foreign products was solid. Sales of Japanese bonds fell slightly in the absence of primary deals.

Speaker #3: This was largely due to major tender offers totaling ¥4 trillion, but even excluding this factor, total sales remained at a high level by product. Excluding the tender offers, sales of Japanese stocks remained high thanks to a contribution from primary deals.

Speaker #3: Sales of bonds fell by 5%, while demand for foreign products was solid. Sales of Japanese bonds fell slightly. In the absence of primary deals, sales of investment trusts and discretionary investments, which constitute recurring revenue assets, saw some fluctuations but remained at a high level as the flow from savings to investments continued.

Hiroyuki Moriuchi: Sales of investment trusts and discretionary investments, which constitute recurring revenue assets, saw some fluctuations but remained at a high level as the flow from savings to investments continued. In insurance, meanwhile, sales of foreign currency-denominated products declined on weaker yen. Next, we take a look at KPIs on page 9.

Speaker #3: In insurance, meanwhile, sales of foreign currency-denominated products declined on a weaker yen. Next, we take a look at KPIs on page nine. Net inflow of recurring revenue, as shown on the top left, was ¥422.8 billion, the 16th straight quarter for inflows to exceed outflows.

Hiroyuki Moriuchi: Net inflow of recurring revenue assets shown on the top left were JPY 422.8 billion, the 16th straight quarter for inflows to exceed outflows. Recurring revenue assets at the end of March, shown on the top right, were down owing to market factors, but recurring revenue came to JPY 56.8 billion, a record high even when factoring out the receipt of half-yearly investment advisory fees. As shown on the bottom left, number of flow business clients rose by around 200,000 from the previous quarter, reaching 1.74 million. Business has been growing against a backdrop of high market volatility, primarily in face-to-face channels. Next is Investment Management. Please turn to page 10. As seen on the top left, net revenue increased 42% to JPY 86.2 billion, and income before income taxes was more or less flat at JPY 18.1 billion.

Speaker #3: Recurring revenue assets at the end of March, shown on the top right, were down owing to market factors, but recurring revenue came to ¥56.8 billion.

Speaker #3: A record high, even when factoring out the receipt of half-yearly investment advisory fees. As shown on the bottom left, the number of flow business clients rose by around 200,000 from the previous quarter, reaching 1.74 million.

Speaker #3: Business has been growing against a backdrop of high market volatility, primarily in face-to-face channels. Next is investment management. Please turn to page 10.

Speaker #3: As seen on the top left, net revenue increased 42% to ¥86.2 billion, and income before income taxes was more or less flat at ¥18.1 billion.

Speaker #3: Business revenue, which is a stable type of revenue, was at an all-time high, owing to growth in existing business and the expansion of international business through acquisitions.

Hiroyuki Moriuchi: Business revenue, which is a stable type of revenue, was at an all-time high, owing to growth in existing business and the expansion of international business through acquisitions. At the same time, expenses related to acquired businesses, and losses on impairment of our equity stake in an investee company were recognized. An explanation of the breakdown of net revenues can be found on the bottom right. Solid asset management business and the aircraft leasing business, Nomura Babcock & Brown, both contributed to the increase in business revenue, while investment gains related to American Century Investments rose quarter on quarter. Moving on to page 11, we look at our asset management business as a backbone of business revenue. The graph on the upper left shows that assets under management hit an all-time high of JPY 136.9 trillion at the end of March.

Speaker #3: At the same time, expenses related to acquired businesses and losses on impairment of our equity stake in an investee company were recognized. As an explanation of the breakdown of net revenues can be found on the bottom right, solid asset management business and the aircraft leasing business Nomura Babcock and Brown both contributed to the increase in business revenue, while investment gains related to American Century Investments rose quarter-on-quarter.

Speaker #3: Moving on to page 11, we look at our asset management business, the backbone of business revenue. The graph on the upper left shows that assets under management hit an all-time high of ¥136.9 trillion at the end of March.

Speaker #3: Shifting our focus on the bottom left, we see there were net outflows of ¥279 billion. In the domestic investment trust business, which had inflows of ¥816 billion, funds went mostly into Japanese equity products in the ETF category, and into balance funds, Japan Equity Active Funds, and private asset-related products in the investment trust category.

Hiroyuki Moriuchi: Shifting our focus on the bottom left, we see there were net outflows of JPY 279 billion in the domestic investment trust business, which had inflows of JPY 816 billion. Funds went mostly into Japanese equity products in the ETF category and into balance funds, Japan equity active funds, and private asset-related products in the investment trust category. In the domestic investment advisory international business, outflows came to about JPY 1 trillion, mainly from business targeted for acquisition. In line with the industry trends in the US, we expect funds to continue flowing from active type mutual funds for now, but we aim to grow assets under management by boosting total sales and bringing net new flows to neutral as soon as possible, with enhancements to marketing capabilities and expansion of active ETF SMA business opportunities.

Speaker #3: In the domestic investment advisory international business, outflows came to about ¥1 trillion, mainly from business targeted for acquisition. In line with industry trends in the US, we expect funds to continue flowing from active-type mutual funds for now, but we aim to grow assets under management by boosting total sales and bringing net flows of new funds to neutral.

Speaker #3: As soon as possible, with enhancements to making capabilities and expansion of active ETF SMA business opportunities. Alternative assets under management on the bottom right grew to a record high of ¥3.6 trillion, an increase of about ¥300 billion from the end of December, of which fund inflows account for more than half.

Hiroyuki Moriuchi: Alternative assets under management, on the bottom right, grew to a record high of JPY 3.6 trillion, an increase of about JPY 300 billion from the end of December, of which fund inflows account for more than half. Next, wholesale. Please refer to page 12. On the top left, you can see that wholesale net revenue fell 2% to JPY 308.1 billion, and income before income taxes declined 31% to JPY 43.2 billion. Looking at the breakdown on the bottom left, Global Markets net revenue slipped 2%, and Investment Banking net revenue fell 3%.

Speaker #3: Next, Wholesale. Please refer to page 12. On the top left, you can see that wholesale net revenue fell 2% to ¥308.1 billion, and income before income taxes declined 31% to ¥43.2 billion.

Speaker #3: Looking at the breakdown on the bottom left, global markets net revenue slid 2%, and investment banking net revenue fell 3%. Discussion by Businessline can be found on page 13.

Hiroyuki Moriuchi: Discussion by business line can be found on page 13. Global Markets net revenue was down 2% at JPY 252.5 billion. Please find the middle section on the right. Fixed Income revenue declined 8% to JPY 125.3 billion. In macro products, rates revenue was weak in the Americas, with weak volatility rising, but rose in Japan. FX emerging revenue offset some of the weakness in rates revenue as client flows were accurately captured. In spread products, securitized products revenue remained high, mainly in Americas, and fell quarter-on-quarter in AEJ. Credit revenue was unchanged despite widening spreads.

Speaker #3: Global Markets net revenue was down 2% at ¥252.5 billion. Please find the middle section on the right. Fixed Income revenue declined 8% to ¥125.3 billion.

Speaker #3: In macro products, rates revenue was weak in the Americas, with weak volatility rising, but rose in Japan. FX emerging revenue offset some of the weakness in rates revenue as client flows were accurately captured.

Speaker #3: In spread products, securitized products revenue remained high, mainly in the Americas, and fell quarter-on-quarter in AEJ. Credit revenue was unchanged, despite widening spreads. Equities revenue was up 6% to ¥127.2 billion.

Hiroyuki Moriuchi: Equities revenue was up 6% to JPY 127.2 billion. Equity products revenue reached a record high as revenue rose sharply in Japan and AEJ on strong financing and derivatives performance. Execution services revenue rose in all regions, benefiting from a pickup in client activity. Please go to page 14 next. As shown on the bottom left, investment banking net revenue came to JPY 55.6 billion, down 3%, but still at a high level. By product in advisory, revenue growth momentum continued based on involvement in many M&A deals, chiefly in Japan.

Speaker #3: Equity products revenue reached a record high as revenue rose sharply in Japan and AEJ on strong financing and derivatives performance. Execution services revenue rose in all regions, benefiting from a pickup in client activity.

Speaker #3: Please go to page 14 next. As shown on the bottom left, investment banking net revenue came to $55.6 billion yen, down 3%, but still at the high level.

Speaker #3: By-product in advisory revenue growth momentum continued based on involvement in many M&A deals, chiefly in Japan. The range of deals was varied, and included domestic realignment, privatization, and cross-border deals.

Hiroyuki Moriuchi: The range of deals was varied and included domestic realignment, privatization, and cross-border deals. In financing and solutions, et cetera, ECM revenue rose partly on contributions from large-scale CB and PO deals. Solutions business continued to perform well as it tapped demand for unwinding of cross-shareholdings. Let's continue to banking on page 15. On the top left, banking net revenue was up 6% at JPY 14.5 billion, and income before income taxes was down 27% at JPY 3.0 billion. Loans outstanding accumulated steadily during the quarter as recognition of loan products on offer grew.

Speaker #3: In financing and solutions, etc., ECM revenue rose partly on contributions from large-scale CB and PO deals, solutions business continued to perform well as it tapped demand for unwinding of cross-shell holdings.

Speaker #3: Let's continue to banking on page 15. On the top left, banking net revenue was up 6% at $14.5 billion yen, and income before income taxes was down 27% at $3.0 billion yen.

Speaker #3: Loans outstanding accumulated steadily due to, during the quarter, as recognition of loan products on offer grew, the investment trust balance grew thanks to both market factors and the establishment of new trusts.

Hiroyuki Moriuchi: The investment trust balance grew thanks to both market factors and the establishment of new trusts. Income fell as expenses rose, including spending on IT and a part of the standardization of business processes and recognition of taxes and public charges. We would like you to view this as an upfront investment aimed for future business expansion. Next expenses on page 16. Group-wide expenses were JPY 469.5 billion, a quarter-on-quarter increase of about 13% or JPY 53 billion. Extraordinary factors that boosted expenses include impairment losses associated with our equity stake in Investment Company, compensation and benefits accompanying changes to remuneration regulation, and effects from changes to the method of presentation of financial statements.

Speaker #3: Income fell as expenses rose, including spending on IT and a part of the standardization of business processes, and recognition of taxes and public charges.

Speaker #3: We would like you to view this as an upfront investment aimed at future business expansion. Next, expenses are on page 16. Group-wide expenses were ¥469.5 billion.

Speaker #3: A quarter-on-quarter increase of about 13%, or ¥53 billion. Extraordinary factors that boosted expenses include impairment losses associated with our equity staking investee company, compensation and benefits accompanying changes to remuneration regulation, and effects from changes to the method of presentation of financial statements. When these factors are excluded,

Hiroyuki Moriuchi: When these factors are excluded, we think it's evident that the cost structure in place is appropriate for the revenue growth. We aim to balance revenue growth and cost controls while making steady investment in growth. Next, page 17 for financial position. As you can see in the bottom left, the common equity Tier 1 ratio stood at 12.9% at the end of March, down 0.1 point from 13.0% at the end of December. This concludes our overview of our Q4 results.

Speaker #3: We think it's evident that the cost structure in place is appropriate for the revenue growth. We aim to balance revenue growth and cost controls, while making steady investment in growth.

Speaker #3: Next page, 17. For financial position. As you can see in the bottom left, the Common Equity Tier 1 ratio stood at 12.9% at the end of March, down 0.1 points from 13.0% at the end of December.

Speaker #3: This concludes our overview of our fourth-quarter results. In closing, we announced reaching—lastly, please allow me to briefly talk about the situation related to private credit.

Hiroyuki Moriuchi: Lastly, please allow me to briefly talk about the situation related to private credit. First, our group's exposure is properly diversified and managed. Breaking down our exposure in wholesale business, lender financing for private credit funds comes to about $800 million, and direct lending to SMEs comes to about $1.2 billion, while in investment management, investment holdings related to private credit come to about $400 million.

Speaker #3: First, our group's exposure is properly diversified and managed. Breaking down our exposure in wholesale business, lender financing for private credit funds comes to about $800 million.

Speaker #3: And direct lending to SMEs comes to about $1.2 billion. While in investment management, investment holdings related to private credit come to about $400 million.

Speaker #3: Lender financing is backed by a diversified corporate credit portfolio, and the credit fund counterparties are, by and large, supported by long-term capital provided by institutional investors and the like.

Hiroyuki Moriuchi: Lender financing is backed by a diversified corporate credit portfolio, and the credit fund counterparties are by and large supported by long-term capital provided by institutional investors and the like. Direct lending is diversified across more than 40 companies, and investment management investments are also suitably diversified and have been performing stably. In closing, we announced Reaching for Sustainable Growth, our vision for business in 2030 in May 2024, and set as numerical targets the consistent attainment of ROE of 8% to 10% or more, and income before income taxes of more than JPY 500 billion. With our targets attained now in the span of two years, great strides have been made to build the franchise required to realize sustained growth of the Nomura Group. I would like to briefly touch upon the situation as of now in April.

Speaker #3: Direct lending is diversified across more than 40 companies, and the investment management investments are also suitably diversified and have been performing stably. In closing, we announced reaching for sustainable growth.

Speaker #3: Our vision for business in 2030, set in May 2024, is to consistently attain an ROE of 8 to 10 percent or more, and income before income taxes of more than ¥500 billion.

Speaker #3: With a target attained now in the span of two years, great strides have been made to build the franchise required to realize sustained growth of the Nomura Group.

Speaker #3: I would like to briefly touch upon the situation as of now in April. In Wealth Management, net revenue is largely at the same level as in the fourth quarter.

Hiroyuki Moriuchi: In Wealth Management, net revenue is largely at the same level as in Q4. Uncertainty remains in the market due to geopolitical risk, but the flow of funds into products and services assuming a long-term diversification of investments remains firm, and client sentiment has been recovering. In Wholesale, net revenue has been trending much higher than in Q4, with equity markets rebounding sharply from the end of March and rising to new all-time highs. Client activity has picked up, and equity products revenue has been strong. The rates have also been steadily monetizing client flows amid moderate market volatility. We aim to monetize business opportunities while keeping mindful of appropriate risk levels and cost controls. Your continued support is appreciated. Thank you.

Speaker #3: Uncertainty remains in the market due to geopolitical risk, but the flow of funds into products and services assuming a long-term diversification of investments remains firm.

Speaker #3: And client sentiment has been recovering. In Wholesale, net revenue has been trending much higher than in the fourth quarter. With equity markets rebounding sharply from the end of March and rising to new all-time highs, client activity has picked up, and equity products revenue has been strong. Rates have also been steadily monetizing client flows amid moderate market volatility.

Speaker #3: We aim to monetize business opportunities while keeping mindful of appropriate risk levels and cost controls. Your continued support is appreciated. Thank you. We have a question-and-answer session now.

Operator: We have a question and answer session now. If you have a question, press sharp seven. If you want to cancel a question, press sharp seven. The first question is from SMBC Nikko Securities, Muraki-san. Please go ahead, Muraki-san.

Speaker #3: If you have a question, press #7. If you want to cancel a question, press #7. The first question is from SMBC Nikko Securities, Muraki-san.

Speaker #3: Please go ahead, Muraki-san. SMBC Nikko, Muraki. I have two questions. First, international asset management company control. On page 10, in the footnote, four years ago, investment had been made—forced, related asset management investment was done, and ¥12 billion of losses have been booked.

Masao Muraki: SMBC Nikko, Muraki. I have two questions. First, international asset management company control. On page 10, on the footnote, four years ago, investment had been made, a forest-related asset management investment was done, and JPY 12 billion of losses have been booked this time around. Can you explain the backdrop? On page 11, Macquarie Asset Management. Regarding the cancellation of the agreement, there is a comment. But against the plan, how is the actual performance? That's my first question. Second question is with regards to capital, page 17. The short question is, in the next quarter, what would be the CET1 ratio? This is the new fiscal year, so I think this is a quarter where you can quite easily leverage your balance sheet. In equity derivatives, you are taking significant credit risk and private credit.

Speaker #3: This time around, can you explain the backdrop? And on page 11, Makori Asset Management—regarding the cancellation of the agreement, there is a comment, but against the plan, how is the actual performance?

Speaker #3: That's my first question. Second question is with regards to capital, page 17. The short question is, in the next quarter, what would be the CET1 ratio?

Masao Muraki: The short question is, in the next quarter, what would be the CET1 ratio? This is the new fiscal year, so I think this is a quarter where you can quite easily leverage your balance sheet. In equity derivatives, you are taking significant credit risk and private credit. US division portfolio has been increasing in the past few years, which is using your balance sheet. What's your idea regarding the use of balance sheet, and how will that impact your CET1 ratio? Thank you.

Speaker #3: This is the new fiscal year, so I think this is a quarter where you can quite easily leverage your balance sheet. In equity derivatives, you are taking significant credit risk, and the private credit US division portfolio has been increasing in the past few years, which is using your balance sheet.

Hiroyuki Moriuchi: US division portfolio has been increasing in the past few years, which is using your balance sheet. What's your idea regarding the use of balance sheet, and how will that impact your CET1 ratio? Thank you. Muraki-san, thank you very much. Let me take the first question first, international asset management related question. You touched upon two points. The forestry asset management company, we made an investment four years ago, and what about the loss and the history that had led to this loss? Back then, when we made the investment, global ESG trend was on the rise globally and in the United States, and we expected that this will become a major trend. We were also advocating public to private, and we were trying to expand our private asset business.

Speaker #3: So what's your idea regarding the use of balance sheet, and how will that impact your CET1 ratio? Thank you. Muraki-san, thank you very much.

Hiroyuki Moriuchi: Muraki-san, thank you very much. Let me take the first question first, international asset management related question. You touched upon two points. The forestry asset management company, we made an investment four years ago, and what about the loss and the history that had led to this loss? Back then, when we made the investment, global ESG trend was on the rise globally and in the United States, and we expected that this will become a major trend. We were also advocating public to private, and we were trying to expand our private asset business.

Speaker #3: Then let me take the first question first. International asset management-related question. You touched upon two points. The forestry asset management company we made an investment in four years ago, and what about the loss and the history that had led to this loss?

Speaker #3: Back then, when we made the investment, the global ESG trend was on the rise, both globally and in the United States. And we expected that this would become a major trend.

Speaker #3: And we were also advocating public-to-private, and we were trying to expand our private asset business. So those had been the objectives, based upon which we made a decision to make an investment into this company.

Hiroyuki Moriuchi: Those had been the objectives based upon which we'd made a decision to make an investment into this company. On the other hand, after the investment was made, as is well known to all of you, the ESG environment had significantly changed, mainly in the United States. That had triggered some difficulties in fundraising. This company itself, AUM is top five in forestry, so the health doesn't change. But in comparison to the plan we had drawn back when we made the investment, the growth has decelerated. We had to book that based upon accounting standards, and that is why we've decided to book for impairment this time around. Carbon offset requirements from operating companies, there are funds that will be introduced, and those initiatives are under study. We are hoping to further accelerate this business in the coming months and years. That's the backdrop.

Speaker #3: On the other hand, after the investment was made, as is well known to all of you, the ESG environment had significantly changed, mainly in the United States.

Speaker #3: So that had triggered some difficulties in fundraising. This company itself, AUM, is top five in forestry, so the health doesn't change, but in comparison to the plan we had drawn back when we made the investment, the growth has decelerated.

Speaker #3: So, we had to book that based upon accounting standards, and that is why we've decided to book for impairment this time around. Carbon offsets requirements from operating companies—there are funds that will be introduced, and those initiatives are under study.

Hiroyuki Moriuchi: Carbon offset requirements from operating companies, there are funds that will be introduced, and those initiatives are under study. We are hoping to further accelerate this business in the coming months and years. That's the backdrop. Now, this company is booking profits at the moment. However, the growth of profit is slower than we had expected. International asset management, your second point, net outflow. I touched upon that in the initial presentation. Against the plan, what is the current situation?

Speaker #3: So, we are hoping to further accelerate this business in the coming months and years. So that's the backdrop. Now, this company is booking profits at the moment.

Hiroyuki Moriuchi: Now, this company is booking profits at the moment. However, the growth of profit is slower than we had expected. International asset management, your second point, net outflow. I touched upon that in the initial presentation. Against the plan, what is the current situation? That was your question. Net outflow itself from the acquisition, US traditional asset management company, it was the industry trend. That had been factored into the valuation in making investments. Based upon that, what about the performance? In principle, one time off investment or excluding one time off costs, the original revenue and expense and EBITDA expected. In the CEO forum in December, we made a presentation, the peer earning power a quarter, so one quarter worth has been booked.

Speaker #3: However, the growth of profit is slower than we had expected. And international asset management—your second point—net outflow. I touched upon that in the initial presentation.

Speaker #3: Against the plan, what is the current situation? That was your question? Net outflow itself—from the acquisition, a US traditional asset management company. It was the industry trend.

Hiroyuki Moriuchi: That was your question. Net outflow itself from the acquisition, US traditional asset management company, it was the industry trend. That had been factored into the valuation in making investments. Based upon that, what about the performance? In principle, one time off investment or excluding one time off costs, the original revenue and expense and EBITDA expected. In the CEO forum in December, we made a presentation, the peer earning power a quarter, so one quarter worth has been booked.

Speaker #3: So that had been factored into the valuation in making investments. And based upon that, what about the performance? In principle, one-time-off investment or excluding one-time-off costs.

Speaker #3: The original revenue and expense and EBITDA expected. In the CEO Forum, in December, we made a presentation. The pure earning power, a quarter. So one quarter worth has been booked.

Speaker #3: On the other hand, as we mentioned on that occasion, towards integration, one-time off expenses have been booked, and depreciation amortization of intangibles have also been booked.

Hiroyuki Moriuchi: On the other hand, as we mentioned on that occasion, towards integration, one-off expenses have been booked and amortization of intangibles have also been booked. We are more or less in line with the original expectations, but in the mid to long run, this net outflow will be minimized, and we have to achieve net inflow. Back when we hosted the CEO forum, active ETF transition, and we will also be making J-curve investments in order to expand the business. On your second question, CET1 ratio for the next quarter, wholesale equity and SPPC balance sheet, use of the balance sheet. Those were the points that you touched upon. Regarding wholesale, as you know, based upon self-funding within the bounds of additional capital, balance sheet is used. RWA leverage exposure is used within that framework.

Speaker #3: So, more or less, we are in line with the original expectations, but in the mid to long run, this net outflow will be minimized, and we have to achieve a net inflow.

Speaker #3: So back when we hosted the CEO Forum, active ETF transition, and we will also be making J-curve investments in order to expand the business.

Speaker #3: On your second question, set one ratio for the next quarter. Wholesale equity and SPPC balance sheet. Use of the balance sheet. Those were the points that you touched upon.

Speaker #3: Regarding wholesale. As you know, self-funding based upon self-funding, within the border of additional capital, balance sheet is used. RWA leverage exposure is used within that framework.

Hiroyuki Moriuchi: Regarding wholesale, as you know, based upon self-funding within the bounds of additional capital, balance sheet is used. RWA leverage exposure is used within that framework. Based upon the earning power, they are hoping to grow business in that quarter. Additional capital is within self-funding. CET1 ratio impact through business expansion is not that significant.

Speaker #3: So based upon the earning power, they are hoping to grow business in that quarter, but additional capital within self-funding—additional capital is within self-funding.

Hiroyuki Moriuchi: Based upon the earning power, they are hoping to grow business in that quarter. Additional capital is within self-funding. CET1 ratio impact through business expansion is not that significant. Within that, what would be the positioning of equity SPPC and credit business?

Speaker #3: So, set 1 ratio impact through business expansion is not that significant. And then, within that, what would be the positioning of Equity, PC, and Credit business?

Hiroyuki Moriuchi: Within that, what would be the positioning of equity SPPC and credit business? In the mid to long run, we want to have a balanced portfolio, and that policy remains unchanged. Of course, we want to grow equity, but regarding SPPC, we will be looking at certain opportunities, and we will not deviate from that policy, and quantitative control will be in place as we try to manage our portfolio. I hope I answered your question.

Speaker #3: In the mid to long run, we want to have a balanced portfolio and that policy remains unchanged. Of course, we want to grow equity, but regarding SPPC, we will be looking at certain opportunities and we will not deviate from that policy.

Hiroyuki Moriuchi: In the mid to long run, we want to have a balanced portfolio, and that policy remains unchanged. Of course, we want to grow equity, but regarding SPPC, we will be looking at certain opportunities, and we will not deviate from that policy, and quantitative control will be in place as we try to manage our portfolio. I hope I answered your question.

Speaker #3: And quantitative control will be in place as we try to manage our portfolio. I hope I answered your question. Thank you very much. Then, in Q1, top line performance was good.

Masao Muraki: Thank you very much. In Q1, top-line performance was good. CET1 ratio will not decline so significantly and ROE will improve. Is that the right interpretation?

Speaker #3: CET1 ratio will not decline so significantly and ROE will improve. Is that the right interpretation? CET1 ratio will not decline due to this factor.

Hiroyuki Moriuchi: CET1 ratio will not decline due to this factor. We don't think so. As you rightly pointed out, we are also hopeful that this will lead to improved ROE.

Speaker #3: We don't think so. As you rightly pointed out, we are also hopeful that this will lead to improved ROE. Thank you very much.

Masao Muraki: Thank you very much.

Speaker #2: Next question. Comes from BOA Securities, Tsujino-san. Tsujino-san, please. Thank you very much. Regarding personnel expense, on a Q1/Q basis, it's up by more than ¥6 billion, but in the UK, there was a regulatory change and from the third quarter, there has been a change made to the deferred compensation.

Hiroyuki Moriuchi: Next question comes from BofA Securities, Tsujino-san. Tsujino-san, please. Thank you very much. Regarding personnel expense, on a Q-on-Q basis, it's up by more than JPY 6 billion. In the UK, there was regulatory change, and from Q3 there has been a change made to the deferred compensation. What's the impact coming from them? That's my question. Also then, in Q1, what is going to be the impact coming from them? Could you explain? Another question relates to Global Markets. In April, compared to Q4, wholesale outperformed. In other words, I believe that's due to thanks to Global Markets performance and Japan equity was mentioned, and it may be the case for overseas as well, but could you speak more about geographical split, equity or FIC and something like that? Thank you.

Operator: Next question comes from BofA Securities, Tsujino-san. Tsujino-san, please.

Natsumu Tsujino: Thank you very much. Regarding personnel expense, on a Q-on-Q basis, it's up by more than JPY 6 billion. In the UK, there was regulatory change, and from Q3 there has been a change made to the deferred compensation. What's the impact coming from them? That's my question. Also then, in Q1, what is going to be the impact coming from them? Could you explain? Another question relates to Global Markets. In April, compared to Q4, wholesale outperformed. In other words, I believe that's due to thanks to Global Markets performance and Japan equity was mentioned, and it may be the case for overseas as well, but could you speak more about geographical split, equity or FIC and something like that? Thank you.

Speaker #2: So what's the impact coming from them? That's my question. And also, then in the first quarter, what is going to be the impact coming from them?

Speaker #2: Could you explain? Another question relates to global markets. In April, compared to the fourth quarter, wholesale outperformed compared to the fourth quarter. In other words, I believe that's due to the global markets performance and Japan equity was mentioned, and it may be the case for overseas as well. But could you speak more about the geographical split?

Speaker #2: Equity or fixed and something like that. Thank you. Thank you, Tsujino-san, for your questions. Regarding personnel expense, in the fourth quarter, as you pointed out—or in the third quarter, we made the announcement—but deferred compensation changed, so that had an impact.

Hiroyuki Moriuchi: Thank you, Tsujino-san, for your questions. Regarding personnel expense, in Q4, as you pointed out. Oh, in Q3 we made the announcement, but deferred compensation change. That had an impact. As a result, in Q4, we booked a relevant impact. Compared to Q3, the impact amount is smaller. However, it's about the same as in Q3. In Q3 and Q4, deferred compensation related expense is booked. In Q3, I explained it, but there is a timing gap, a timing difference in terms of booking. For Q4, in terms of the amount, it's smaller. This year, the impact is going to get closer to zero.

Speaker #2: And as a result, in the fourth quarter, we booked a relevant impact. Compared to the third quarter, the impact amount is smaller; however, it's about the same as in the third quarter.

Speaker #2: In the third and fourth quarters, deferred compensation-related expense is booked, but in the third quarter, I explained it, but there is a timing gap—a timing difference in terms of booking.

Speaker #2: So for the fourth quarter, in terms of the amount, it's smaller. And this year, the impact is going to get closer to zero. As for the compensation regulation relaxation in the UK, I am skipping details, but it's one-off in nature.

Hiroyuki Moriuchi: As for the compensation regulation, relaxation in the UK, I am skipping details, but it's one-off in nature, so it's similar to the difference, like a slide in the booking timing. That's my answer regarding personnel cost. Regarding April, when wholesale performance improved compared to Q4, the main factors are as follows. In wholesale, mainly rates, equity products drove the outperformance, and in Q4, rates, especially from the middle of March, based upon the turmoil in the Middle East. The risk had to be controlled. It's not just about the end of year factors, but due to risk control, revenue slowed down. In April, we saw the significant improvement. Equity product is continuously performing well. As for nations, please give me a moment. As for the geography, geographical split, all regions compared to Q4, we see outperformance.

Speaker #2: So, it's similar to the difference—like a slide in the booking timing. That's my answer regarding personnel cost. Regarding April, when wholesale performance improved compared to the fourth quarter, the main factors are as follows.

Speaker #2: In wholesale, mainly rates, equity products drove the outperformance. And in the fourth quarter, rates—especially from the middle of March, based upon the turmoil in the Middle East—the risk had to be controlled.

Speaker #2: So, it's not just about the end-of-year factors, but due to risk control, revenue slowed down. And in April, we saw the significant improvement.

Speaker #2: Equity product is continuously performing well. As for nations, please give me a moment. As for the geography, geographical split, all regions compared to the fourth quarter, we see outperformance, but regions other than the US are particularly outperforming.

Hiroyuki Moriuchi: Equity product is continuously performing well. As for nations, please give me a moment. As for the geography, geographical split, all regions compared to Q4, we see outperformance. Regions other than the US are particularly outperforming. The US is performing well, but compared to other regions, growth rate is relatively lower. I hope I answered your question.

Hiroyuki Moriuchi: Regions other than the US are particularly outperforming. The US is performing well, but compared to other regions, growth rate is relatively lower. I hope I answered your question. Thank you very much.

Speaker #2: The US is performing well, but compared to other regions, the growth rate is relatively lower. I hope I answered your question. Thank you very much.

Natsumu Tsujino: Thank you very much. I have not captured everything, but US was doing well as of the end of previous fiscal year. If I am not mistaken, the US business was strong. On the other hand, compared to the US, in Q1, growth is limited.

Natsumu Tsujino: I have not captured everything, but US was doing well as of the end of previous fiscal year. If I am not mistaken, the US business was strong. On the other hand, compared to the US, in Q1, growth is limited. Oh, Tsujino-san, sorry, I did not explain clearly, but bottom right on page 12, you can find revenue by geography. Americas, in Q4, revenue has come down relatively significantly in Americas compared to other regions. That's partially due to seasonality, and also due to the impact from the Middle East. Since the middle of March, we had to control business. Especially macro business in Americas was particularly impacted, and the timing didn't work well, especially the last one week of the month. That happened.

Speaker #2: I have not captured everything, but the US was doing well as of the end of the previous fiscal year. If I am not mistaken, the US business was strong.

Speaker #2: On the other hand, compared to the US, in the first quarter, growth is limited. Oh, Tsujino-san, sorry. I did not explain clearly, but bottom right on page 12, you can find revenue by geography.

Hiroyuki Moriuchi: Oh, Tsujino-san, sorry, I did not explain clearly, but bottom right on page 12, you can find revenue by geography. Americas, in Q4, revenue has come down relatively significantly in Americas compared to other regions. That's partially due to seasonality, and also due to the impact from the Middle East. Since the middle of March, we had to control business. Especially macro business in Americas was particularly impacted, and the timing didn't work well, especially the last one week of the month. That happened. The situation got relaxed, and then there has been less tension after April, and we saw recovery.

Speaker #2: And in America, in the fourth quarter, revenue has come down relatively significantly compared to other regions. That's partially due to seasonality and also due to the impact from the Middle East.

Speaker #2: Since the middle of March, we had to control business. So, especially, macro business in America was particularly impacted, and the timing didn't work well, especially in the last one week of the month.

Speaker #2: And those that happened. And then the situation got relaxed, and then there has been less tension after April, and we saw recovery.

Hiroyuki Moriuchi: The situation got relaxed, and then there has been less tension after April, and we saw recovery.

Speaker #2: Okay, understood. Thank you very much.

Natsumu Tsujino: Okay, understood. Thank you very much.

Speaker #1: The next question is Diverse Securities, Watanabe-san. Watanabe-san, please go ahead. Diverse Securities, Watanabe. I have two questions. First, private credit. $2.4 billion, you explained.

Hiroyuki Moriuchi: The next question is Daiwa Securities, Watanabe-san. Watanabe-san, please go ahead.

Operator: The next question is Daiwa Securities, Watanabe-san. Watanabe-san, please go ahead.

Kazuki Watanabe: Daiwa Securities, Watanabe. I have two questions. First, private credit, $2.4 billion you explained. You also said diversification is in place, somewhat by sector. Can you give us some more detailed breakdown? Retail, private related products, what is the redemption call and what is your policy of sales going forward? Secondly, capital policy. You didn't announce any new buyback program. RSU, JPY 40 billion. It would be about JPY 20 billion buyback, 50% total payout ratio to shareholders. Is that the right interpretation?

Speaker #1: You also said diversification is in place, software by sector. Can you give us some more detailed breakdown? And retail private related products? What is the redemption call, and what is your policy of sales going forward?

Speaker #1: And secondly, capital policy. You didn't announce any new buyback program. RSU ¥40 billion, it would be ¥20 billion about buyback, 50% total return, total payout ratio to shareholders.

Speaker #1: Is that the right interpretation? Watanabe-san, thank you very much. First of all, private credit. Sector diversification. So what is the picture? Overall, healthcare, business service, software and computer service, consumer, engineering and construction.

Hiroyuki Moriuchi: Watanabe-san, thank you very much. First of all, private credit sector diversification. So what is the picture? Overall, healthcare, business service, software and computer service, consumer, engineering, and construction. These are the sectors included. Mostly healthcare and business service occupy quite a large proportion. Software, not necessarily high in terms of percentage. On top of that, there is regional diversification in place as well. Regarding the second half of your first question, retail customers, private credit, what about the redemption? Regarding sales policies, as client sentiments, there is some conservativeness, but at the moment, we are not seeing any calls for cancellation or requests. Originally, or to begin with, when we sell to retail customers, we tell them that it's based upon the assumption of mid to long-term investment. When we obtain their understanding, we sell those products to them for the first time.

Speaker #1: These are the sectors included. Mostly, healthcare and business services occupy quite a large proportion. Software is not necessarily high in terms of percentage. And on top of that, there is regional diversification in place as well.

Speaker #1: And regarding the second half of your first question—retail customers' private credit—what about the redemption? And regarding sales policies, as for client sentiment, there is some conservativeness, but at the moment, we are not seeing any calls for cancellation or requests.

Speaker #1: Originally, or to begin with, when we sell to retail customers, we tell them that it's based upon the assumption of mid- to long-term investment.

Hiroyuki Moriuchi: Originally, or to begin with, when we sell to retail customers, we tell them that it's based upon the assumption of mid to long-term investment. When we obtain their understanding, we sell those products to them for the first time. I think those communications had been effective, so much so that there hasn't been any significant run. On buyback and total payout ratio, H1, H2 put together, full year RSU included 58%.

Speaker #1: And when we obtain their understanding, we sell those products to them for the first time. So I think those communications have been effective, so much so that there hasn't been any significant run.

Hiroyuki Moriuchi: I think those communications had been effective, so much so that there hasn't been any significant run. On buyback and total payout ratio, H1, H2 put together, full year RSU included 58%. Excluding RSU, it's beyond 50%. I hope that answers your question. Regarding buyback announcement timing. If there's an announcement in Q4, that would be fiscal year 2025. The JPY 60 billion buyback program we announced in Q3. In Q4, we assumed the Q4 profit, and we defined the amount based upon our assumption. Thank you very much. The next question comes from J.P. Morgan Securities, Sato-san. Sato-san, please.

Speaker #1: And on buyback and total payout ratio, first half, second half put together, full year RSU included, 58%. Excluding RSU, it's beyond 50%. So I hope that answers your question.

Hiroyuki Moriuchi: Excluding RSU, it's beyond 50%. I hope that answers your question. Regarding buyback announcement timing. If there's an announcement in Q4, that would be fiscal year 2025. The JPY 60 billion buyback program we announced in Q3. In Q4, we assumed the Q4 profit, and we defined the amount based upon our assumption.

Speaker #1: Regarding buyback announcement timing: if there's an announcement in Q4, that would be fiscal year '25. The ¥60 billion buyback program we announced in Q3.

Speaker #1: In Q4, we assumed the Q4 profit, and we defined the amount based upon our assumptions. Thank you very much.

Kazuki Watanabe: Thank you very much.

Speaker #2: The next question comes from JP Morgan Securities, Sato-san. Sato-san, please. Thank you. I am Sato from JP Morgan Securities. I have two questions. The first question is about wholesale and wealth management expense.

Operator: The next question comes from J.P. Morgan Securities, Sato-san. Sato-san, please.

Koki Sato: Thank you. I am Sato from J.P. Morgan Securities. I have two questions. First question is about Wholesale and Wealth Management expense outlook. In Wholesale, performance was strong and there was adjustment made to the bonus, I believe, and as you explained, and there were one-time factors, so 83% cost income ratio for the year and the next following year onward. If top line is at the same level, then what kind of a level can we expect? On the other hand, for Wealth Management, in Q4, the performance was solid. The quarterly expense came down. In this strong performance, I believe you are doing the payout to employees and even in light of that, if this is the level you are achieving, then when recurring asset growths are bigger, then can we expect more leverage?

Speaker #2: Outlook: In wholesale, performance was strong, and there was an adjustment made to the bonus, I believe. And as you explained, there were one-time factors, so 83% is our cost income ratio for the year and the next following year onward.

Speaker #2: If top line is at the same level, then what kind of a level can we expect? And on the other hand, for Wealth in the fourth quarter, the performance was solid.

Speaker #2: The quarterly expense came down. So, in this strong performance, I believe you are doing the payout to employees, and even in light of that, if this is the level you are achieving, then when recurring asset growth is bigger, can we expect more leverage?

Speaker #2: So, could you explain your outlook for expenses for those two divisions? Secondly, in the third quarter, related to the Laser Digital loss that was booked—at that time, risk control and net exposure reduction were explained.

Hiroyuki Moriuchi: Could you explain your outlook for expense for those two divisions? Secondly, in the Q3, related to Laser Digital, loss was booked at that time. Risk control and net exposure reduction were explained. But in the Q4 period, what was the market situation? Or based upon the market situation in the Q4 and based upon the result of the Q3, and what is the update on the effects achieved as a result of the countermeasure you have taken? Thank you for your question. First, the outlook for expense. First, Wholesale in the Q4 on a Q-on-Q basis, plus JPY 13 billion. Out of this increase, 30% is due to the compensation regulatory change, and also end-of-year performance-linked bonus adjustment. Then the last part is increase in the professional fee and the payment for services received.

Koki Sato: Could you explain your outlook for expense for those two divisions? Secondly, in the Q3, related to Laser Digital, loss was booked at that time. Risk control and net exposure reduction were explained. But in the Q4 period, what was the market situation? Or based upon the market situation in the Q4 and based upon the result of the Q3, and what is the update on the effects achieved as a result of the countermeasure you have taken?

Speaker #2: But in the fourth quarter period, what was the market situation? Based upon the market situation in the fourth quarter and based upon the result of the third quarter, what is the update on the effects achieved as a result of the countermeasure you have taken?

Speaker #2: Thank you for your question. First, outlook for our expenses—first, wholesale. In the fourth quarter, on a Q basis, plus ¥13 billion.

Hiroyuki Moriuchi: Thank you for your question. First, the outlook for expense. First, Wholesale in the Q4 on a Q-on-Q basis, plus JPY 13 billion. Out of this increase, 30% is due to the compensation regulatory change, and also end-of-year performance-linked bonus adjustment. Then the last part is increase in the professional fee and the payment for services received. The expense rate increased, but fixed cost was suppressed. This fiscal year, in the sense of the review of expense in Q4, Wholesale, they had a few one-time items, and also fees paid or professional fees.

Speaker #2: Out of this increase, 30% is due to the compensation regulatory change and also end-of-the-year performance-linked bonus adjustment. And then the last part is the increase in professional fees and the payment for services received.

Speaker #2: So the expense rate increased, but the fixed cost was suppressed. So this fiscal year, in the sense of the review of expense in the fourth quarter, Wholesale, they had a few one-time items and also fees paid—professional fees, for example, SPPC pipeline.

Hiroyuki Moriuchi: The expense rate increased, but fixed cost was suppressed. This fiscal year, in the sense of the review of expense in Q4, Wholesale, they had a few one-time items, and also fees paid or professional fees. For example, SPPC pipeline. Cost was incurred before the deal as we hired lawyers, and the revenue recognition got delayed. Compared to Q4, we expect the expense level to come down. As for wealth management, we booked high level of margin, and can we expect the same level this year? As for this year, advance investment in AI, also corporate cost increase due to inflation are expected, but continuously in Japan for wealth management, we are going to tightly control cost.

Hiroyuki Moriuchi: For example, SPPC pipeline. Cost was incurred before the deal as we hired lawyers, and the revenue recognition got delayed. Compared to Q4, we expect the expense level to come down. As for wealth management, we booked high level of margin, and can we expect the same level this year? As for this year, advance investment in AI, also corporate cost increase due to inflation are expected, but continuously in Japan for wealth management, we are going to tightly control cost.

Speaker #2: So, cost was incurred before the deal, as we hired lawyers in the revenue recognition. It got delayed, so compared to the fourth quarter, we expect the expense level to come down.

Speaker #2: As for Wealth Management, we booked a high level of margin. And can we expect the same level this year? As for this year, advanced investment in AI and also corporate cost increases due to inflation are expected, but continuously in Japan.

Speaker #2: For wealth management, we are going to tightly control cost. So even though there are timings when cost increases due to advance investment, it depends on revenues, but we expect we will be able to deliver a certain level of margin.

Hiroyuki Moriuchi: Even though there are times when cost increases due to advance investment, it depends on revenues, but we expect we will be able to deliver a certain level of margin. Finally, regarding Laser, in Q3, we troubled you and we got you worried with loss related to Laser. But as you said, we have controlled risk volume and we have taken a more conservative stance. In Q4, when we look at the market, Bitcoin and crypto market decline was the same level as in Q3. In terms of profit and loss, our impact on consolidated result was limited. I hope I answered your question. Regarding the latter part of your answer, the situation in the crypto market and the impact on your profitability.

Speaker #2: And finally, regarding laser—in the third quarter, we troubled you and we got you worried with loss related to laser. But as you said, we have controlled risk volume and we have taken a more conservative stance.

Speaker #2: And in the fourth quarter, when we look at the market, the Bitcoin and crypto market decline was at the same level as in the third quarter.

Speaker #2: In terms of profit and loss, the impact on the consolidated result was limited. I hope I answered your question. Regarding the latter part of your answer, the situation in the crypto market and the impact on your profitability.

Speaker #2: Simply put, you've reduced the exposure, so the benefit you've received is as a result of reduced exposure and the hedging, or different ways of conducting market making?

Koki Sato: Simply put, you've reduced the exposure, so the benefit you've received is as a result of reduced exposure and hedging or different ways of conducting market making. In other words, what I'm getting at is previously you said you are not intending to downsize the business, so the exposure level, I think, will increase in the future. Even with that, you have a structure in place to prevent impact on profit?

Speaker #2: In other words, what I'm getting at is, previously you said you are not intending to downsize the business. So, the exposure level, I think, will increase in the future.

Speaker #2: Even with that, you have structure in place to prevent impact on profit? Thank you very much. Regarding trading, the market making, the absolute amount of risk has been reduced.

Hiroyuki Moriuchi: Thank you very much. Regarding trading, the market making, the absolute amount of risk has been reduced. Of course, there are venture capital investments and asset management seed capital with our own fund. For those areas, in non-trading areas, we have long positions. When we have progress in asset management business and from seed capital, we will see the transfer to equity capital by investors, LP investment.

Hiroyuki Moriuchi: Regarding trading, the market making, the absolute amount of risk has been reduced. Of course, there are venture capital investments and asset management seed capital with our own fund. For those areas, in non-trading areas, we have long positions. When we have progress in asset management business and from seed capital, we will see the transfer to equity capital by investors, LP investment.

Speaker #2: And of course, there are venture capital investments and the asset management seed capital with our own fund. So for those areas, in non-trading areas, we have long positions.

Speaker #2: So, when we have progress in the asset management business, and from seed capital, we will see the transfer to equity capital by investors' LP investment.

Speaker #2: Thank you very much. Understood.

Koki Sato: Thank you very much. Understood.

Speaker #1: The next question. SBI Securities, Otsuka-san. Otsuka-san, please go ahead. Otsuka of SBI Securities—is my voice coming through? Yes. Thank you very much. Thank you very much, then.

Hiroyuki Moriuchi: The next question, SBI Securities, Otsuka-san. Otsuka-san, please go ahead. Otsuka of SBI Securities, is my voice coming through?

Operator: The next question, SBI Securities, Otsuka-san. Otsuka-san, please go ahead.

Wataru Otsuka: Otsuka of SBI Securities, is my voice coming through?

Hiroyuki Moriuchi: Yes.

Operator: Yes.

Wataru Otsuka: Thank you very much. Thank you very much then. Could I do one question and one answer? The first question is just for confirmation purposes, but Wholesale, quarter-on-quarter basis, profits declined. What's the reason? Can you recap that? Revenue, as you had explained, Global Markets, Fixed Income, Q4 seasonality factor, and Iran had been quite significant. Expenses, expertise fee, and pay for performance. Due to the revenue and expenses, 30% decline in profit. That's quite significant, but it wasn't a surprise to you? That's my first question. Thank you very much. You've made the situation very clear. If we divide between revenue and cost, as far as revenue is concerned, seasonality, due to the end of the fiscal year, risk position was controlled.

Speaker #1: Could I do one question and one answer? The first question is just for confirmation purposes, but—wholesale, quarter-on-quarter basis, profits declined. What's the reason?

Speaker #1: Can you recap that? Revenue, as you had explained—global markets, fixed income, Q4 seasonality factor, and Iran had been quite significant. And expenses: expertise fee and performance pay for performance, and so due to the revenue and expenses, a 30% decline in profit.

Speaker #1: That's quite significant, but it wasn't a surprise to you? So, that's my first question. Thank you very much. And you've made the situation very clear.

Hiroyuki Moriuchi: Thank you very much. You've made the situation very clear. If we divide between revenue and cost, as far as revenue is concerned, seasonality, due to the end of the fiscal year, risk position was controlled. On top of that, due to the Middle East situation in the mid to late March period, there was exacerbation quite rapidly. We had to control defensive position, and that's the big factor for the reduction of revenue. On the cost side, I slightly touched upon this in my presentation, but due to the review of the compensation regulation and also being the end of the fiscal year, part of it is timing gap, and there has been a one-time off increase.

Speaker #1: So, if we divide between revenue and cost, as far as revenue is concerned, seasonality due to the end of the fiscal year, risk position was controlled, and on top of that, due to the Middle East situation, in the mid to late March period, there was exacerbation quite rapidly.

Hiroyuki Moriuchi: On top of that, due to the Middle East situation in the mid to late March period, there was exacerbation quite rapidly. We had to control defensive position, and that's the big factor for the reduction of revenue. On the cost side, I slightly touched upon this in my presentation, but due to the review of the compensation regulation and also being the end of the fiscal year, part of it is timing gap, and there has been a one-time off increase. The remainder is increase of fees payable to experts and for transactions. Regarding this factor, the original understanding regarding SPPC, we were to add one product to the lineup. The initial investment, that was within our control, but professional fees, we paid it earlier than booking the revenue. This was a relatively high cost increase, higher than we had expected.

Speaker #1: So we had to control defensive positions, and that's the big factor for the reduction of revenue. And on the cost side, I slightly touched upon this in my presentation, but due to the review of the compensation regulation and also being the end of the fiscal year, part of it is a timing gap.

Speaker #1: And there has been a one-time off increase, and the remainder is the increase of fees payable to experts and for transactions. But regarding this factor, the original understanding regarding SPPC was that we were to add one product to the lineup.

Hiroyuki Moriuchi: The remainder is increase of fees payable to experts and for transactions. Regarding this factor, the original understanding regarding SPPC, we were to add one product to the lineup. The initial investment, that was within our control, but professional fees, we paid it earlier than booking the revenue. This was a relatively high cost increase, higher than we had expected. That's my personal view. I hope I answered your first question.

Speaker #1: So the initial investment was within our control, but professional fees—we paid them earlier than booking the revenue. So this was a relatively high cost increase, higher than we had expected.

Speaker #1: That's my personal view. I hope I answered your first question. Sorry, one follow-up question: 86% expense ratio is slightly high. So there was the timing gap, but 83% for the full year.

Wataru Otsuka: That's my personal view. I hope I answered your first question. Sorry. One follow-up question. 86% expense ratio is slightly high, so there was the timing gap, but 83% for full year, is that the normalized basis ratio? Thank you very much. Q4, 86%. Obviously, it's quite significantly higher. Regarding expense ratio, rather than expense side, the impact from revenue is quite heavy. At any rate, 86% is slightly higher than normal. Thank you. Thank you very much. Second question. At the end, you mentioned ROE, 10% full year basis and 8% to 10% or higher, and stably performing such ROE, you've achieved that goal. On the other hand, if we look at banks and other Japanese financial institutions, or more so regarding overseas financial institutions, 8% to 10% ROE isn't that high. Plus, don't you have an intention to elevate your goal?

Wataru Otsuka: Sorry. One follow-up question. 86% expense ratio is slightly high, so there was the timing gap, but 83% for full year, is that the normalized basis ratio? Thank you very much. Q4, 86%. Obviously, it's quite significantly higher. Regarding expense ratio, rather than expense side, the impact from revenue is quite heavy. At any rate, 86% is slightly higher than normal. Thank you. Thank you very much. Second question. At the end, you mentioned ROE, 10% full year basis and 8% to 10% or higher, and stably performing such ROE, you've achieved that goal.

Speaker #1: Is that the normalized basis ratio? Thank you very much. Q4, 86%. Obviously, it's quite significantly higher. And regarding the expense ratio, rather than the expense side, the impact from revenue is quite heavy, but at any rate, 86% is slightly higher than normal.

Speaker #1: Thank you. Thank you very much. Second question. At the end, you mentioned ROE—10% on a full-year basis. And 8% to 10% or higher and stably performing such ROE, you've achieved that goal.

Speaker #1: On the other hand, if we look at banks and other Japanese financial institutions—or more so regarding overseas financial institutions—8 to 10% ROE, isn't that high?

Wataru Otsuka: On the other hand, if we look at banks and other Japanese financial institutions, or more so regarding overseas financial institutions, 8% to 10% ROE isn't that high. Plus, don't you have an intention to elevate your goal? Isn't that discussed at the board of directors meeting? Can you touch upon such aspects?

Speaker #1: So, plus, don't you have an intention to elevate your goal? Isn't that discussed at the Board of Directors meeting? Can you touch upon such aspects?

Hiroyuki Moriuchi: Isn't that discussed at the board of directors meeting? Can you touch upon such aspects? Thank you very much. Otsuka-san, your point is very true. Of course, in comparison to mega banks, Japanese financial institutions, and peers overseas, from the perspective of being in the investment business, 8% to 10% plus level is just a midpoint. It's not the ultimate goal.

Speaker #1: Thank you very much, Otsuka-san. Your point is very true. Of course, in comparison to mega banks, Japanese financial institutions, and peers overseas, from the perspective of being in the investment business, 8 to 10 percent plus level is just a midpoint.

Hiroyuki Moriuchi: Thank you very much. Otsuka-san, your point is very true. Of course, in comparison to mega banks, Japanese financial institutions, and peers overseas, from the perspective of being in the investment business, 8% to 10% plus level is just a midpoint. It's not the ultimate goal. Regarding this matter, in the deliberations for the budget, there is intensive discussion on this matter. If there are any points that we need to review, in late May, we will have the Investors Day, so we may touch upon that aspect. Thank you. That concludes my response.

Speaker #1: It's not the ultimate goal. Regarding this matter, in the deliberations for the budget, there is intensive discussion on this matter. So if there are any points that we need to review, in late May, we will have the Investor's Day.

Hiroyuki Moriuchi: Regarding this matter, in the deliberations for the budget, there is intensive discussion on this matter. If there are any points that we need to review, in late May, we will have the Investors Day, so we may touch upon that aspect. Thank you. That concludes my response.

Speaker #1: So we may touch upon that aspect. Thank you. That concludes my response. So your answer is you're discussing that point heavily, right? Yes, exactly.

Wataru Otsuka: Your answer is you're discussing that point heavily, right?

Hiroyuki Moriuchi: Yes, exactly.

Speaker #1: Understood. Thank you.

Wataru Otsuka: Understood. Thank you.

Speaker #2: The next question comes from UBS Securities, Niwa-san. Niwa-san, please go ahead. Thank you. I am Niwa. Can you hear me? Yes. Thank you. Okay.

Hiroyuki Moriuchi: The next question comes from UBS Securities, Niwa-san. Niwa-san, please go ahead. Thank you. I am Niwa. Can you hear me? Yes. Thank you. Okay, thank you very much. Regarding wholesale cost and private asset initiatives of Nomura, I have a question about them. First, regarding wholesale cost. This year and next year, on a run rate basis, what's the percentage? I do understand you have a medium-term goal, but given the environment where there is a strong cost increase pressure, what is your outlook? My second question is more longer term than the earnings result. In Americas, what's the future outlook of private asset market in the USA? On that basis, what is Nomura's strategy? If it's in the initial phase, then there will be the room for expansion. In the call today, listening to the tone of your explanation, it appears you remain positive.

Operator: The next question comes from UBS Securities, Niwa-san. Niwa-san, please go ahead.

Koichi Niwa: Thank you. I am Niwa. Can you hear me?

Hiroyuki Moriuchi: Yes. Thank you.

Speaker #2: Thank you very much. Regarding wholesale's cost and private asset initiatives of Nomura, I have a question about them. First, regarding wholesale cost. This year.

Koichi Niwa: Okay, thank you very much. Regarding wholesale cost and private asset initiatives of Nomura, I have a question about them. First, regarding wholesale cost. This year and next year, on a run rate basis, what's the percentage? I do understand you have a medium-term goal, but given the environment where there is a strong cost increase pressure, what is your outlook? My second question is more longer term than the earnings result. In Americas, what's the future outlook of private asset market in the USA? On that basis, what is Nomura's strategy? If it's in the initial phase, then there will be the room for expansion. In the call today, listening to the tone of your explanation, it appears you remain positive. Looking at your peers, they are switching gears. If you could give me some perspective on this, that's appreciated.

Speaker #2: And next year, on the run-rate basis, what's the percentage? I do understand you have a medium-term goal, but given the environment where there is strong cost increase pressure, what is your outlook?

Speaker #2: My second question is about the long-term, rather than the earnings result. In America, what's the future outlook of the private asset market in the USA? And on that basis, what is Nomura's strategy?

Speaker #2: So, if it's in the initial phase, then there would be room for expansion. And in the call today, listening to the tone of your explanation, it appears you remain positive.

Speaker #2: But looking at your peers, they are switching gears. So if you could give me some perspective on this, that's appreciated. Thank you very much.

Hiroyuki Moriuchi: Looking at your peers, they are switching gears. If you could give me some perspective on this, that's appreciated. Thank you very much. Regarding your first question on wholesale cost control and cost-income ratio target, what is the rate of our progress and what is our outlook for this year? Cost pressure may be high, as you said, but as you said, the group-wide cost control has an important theme of how to manage inflation. Certain parts of this are unavoidable, but rather than absorbing, taking them 100%, the theme is to look at where we can reduce cost in other areas. For example, through location strategy, offshore can be more effectively used. We are considering approaches, including structural approaches, so that we can suppress cost increase to a certain level.

Hiroyuki Moriuchi: Thank you very much. Regarding your first question on wholesale cost control and cost-income ratio target, what is the rate of our progress and what is our outlook for this year? Cost pressure may be high, as you said, but as you said, the group-wide cost control has an important theme of how to manage inflation. Certain parts of this are unavoidable, but rather than absorbing, taking them 100%, the theme is to look at where we can reduce cost in other areas. For example, through location strategy, offshore can be more effectively used. We are considering approaches, including structural approaches, so that we can suppress cost increase to a certain level.

Speaker #2: Regarding your first question on Wholesale's cost control and cost income ratio target, what is the rate of progress and what is our outlook for this year?

Speaker #2: And the cost pressure may be high, as you said, but as you said, the group-wide cost control has an important theme of how to manage inflation.

Speaker #2: So, certain parts of this are unavoidable, but rather than absorbing and taking them 100%, the theme is to look at where we can reduce costs in other areas.

Speaker #2: For example, through location strategy, offshore can be more effectively used. So we are considering approaches, including structural approaches, so that we can suppress cost increases to a certain level.

Speaker #2: And regarding cost income ratio, we would like to grow revenue at a rate that beats inflation. That's an important factor. And for business, this is more important, so in wholesale, ROI against traditional capital needs to be increased to increase ROE.

Hiroyuki Moriuchi: Regarding cost income ratio, we would like to grow revenue at a rate that beats inflation. That's an important factor. For business, this is more important. In wholesale, ROI against traditional capital needs to be increased, to increase ROE. That's our intention. Secondly, regarding our outlook for private credit, we need to separate my answer for midterm and long-term. Regarding private credit market itself, our view is positive. In the medium to long term, market has the potential to grow. On the other hand, BOJ, BlackRock, and our peers have pointed out repeatedly that in the short term, credit cycle needs to be monitored closely, and the risks must be controlled tightly. We do acknowledge the need to do so. Earlier, I answered to a previously asked question, but in SPPC, we have a rich pipeline with attractive opportunities.

Speaker #2: That's our intention. Secondly, regarding our outlook for private credit, we need to separate my answer for mid-term and long-term. Regarding the private credit market itself, our view is positive.

Speaker #2: In the medium to long-term, market has the potential to grow on the other hand, budget bracket and our peers have pointed out repeatedly that in the short-term, credit cycle needs to be monitored closely and the risks must be controlled tightly.

Speaker #2: We do acknowledge the need to do so. Earlier, I answered a previously asked question, but in SBBC, we have a rich pipeline with attractive opportunities. Our stance is to take a selective approach and maintain a medium- to long-term portfolio in wholesale as a whole.

Koichi Niwa: Our stance is to take selective approach and medium to long-term portfolio. Well, in Wholesale as a whole, we like to control so that no single product stands out too much. That kind of control will be needed, and we have an agreement in our approach with Wholesale. That's all. Thank you very much. Just one more thing from me. Mainly, impact on you in terms of division, the impact is happening mainly in Wholesale, not really in Investment Management. Wholesale is mainly impacted in terms of product line? Thank you very much. As for the existing P&L, especially risk side, Wholesale portion is the biggest.

Hiroyuki Moriuchi: Our stance is to take selective approach and medium to long-term portfolio. Well, in Wholesale as a whole, we like to control so that no single product stands out too much. That kind of control will be needed, and we have an agreement in our approach with Wholesale. That's all. Thank you very much.

Speaker #2: We would like to control so that no single product stands out too much, so that kind of control would be needed. And we have an agreement in our approach with wholesale.

Speaker #2: That's all. Thank you very much. Just one more thing from me. So mainly, impact on you in terms of division—the impact is happening mainly in Wholesale, not really in Investment Management, but Wholesale is mainly impacted.

Koichi Niwa: Just one more thing from me. Mainly, impact on you in terms of division, the impact is happening mainly in Wholesale, not really in Investment Management. Wholesale is mainly impacted in terms of product line?

Speaker #2: In terms of product line, thank you very much. So, as for the existing P&L, especially on the risk side, the wholesale portion is the biggest. So your understanding is fine.

Koichi Niwa: Thank you very much. As for the existing P&L, especially risk side, Wholesale portion is the biggest.

Hiroyuki Moriuchi: Your understanding is fine. As we think about medium- to long-term growth, asset management is the area. As we have said since 2020, we are closely looking at the market opportunities and not just private credit, but we look to grow private business. As part of that, hopefully private credit will grow and wealth management, based upon the principle of suitability, based upon the needs of our clients, we would like to steadily accumulate assets. Going back to the previous point, in the short term, we need to control risk for wholesale. That's as you pointed out.

Speaker #2: But as we think about medium- to long-term growth, asset management is the area, as we have said since 2020. We are closely looking at the market opportunities, and not just private credit, but we look to grow private business.

Speaker #2: And as part of that, hopefully private credit will grow, and wealth management based on the principle of suitability—based upon the needs of our clients—we would like to steadily accumulate assets.

Speaker #2: And going back to the previous point, in the short term, we need to control risk for wholesale—that's as you pointed out. Thank you very much for the comprehensive answer.

Koichi Niwa: Thank you very much for the comprehensive answer.

Speaker #1: We'd like to conclude the question and answer session. If you have any more questions, please contact our Nomura Holdings IR department. In closing, we'd like to invite Nomura Holdings to make the closing address.

Operator: We'd like to conclude the question and answer session. If you have some more questions, please ask our Nomura Holdings IR department. In the end, we'd like to make the closing address by Nomura Holdings.

Speaker #3: Once again, thank you for joining us. As I have said a few times, for two successive years, on a full-year basis, we've renewed the net profit and ROE. Yes, there were some voices saying that this may not be enough, but we exceeded 10%.

Hiroyuki Moriuchi: Once again, thank you for joining us. As I have said a few times, for two successive years, on a full year basis, we've renewed the net profit and ROE. Yes, there were some voices saying that this may not be enough, but we exceeded 10%, and we were able to achieve the goal towards the 2030 Vision two years upfront. Recurring asset increase, banking division establishment, Macquarie Asset Management acquisition. These investments were done in order to make a robust platform for future growth. That was what we've done in the past 12 months. I think we will begin to monetize out of those initiatives and therefore we call upon you to provide your continued support. That was Moriuchi, CFO. Thank you.

Speaker #3: And we were able to achieve the goal towards the 2030 Vision two years upfront. Recurring asset increase, banking division establishment, Macquarie, asset management, acquisition—these investments were done in order to make a robust platform for future growth.

Speaker #3: That was what we've done in the past 12 months. So, I think we will begin to monetize out of those initiatives, and therefore, we call upon you to provide your continued support.

Speaker #3: That was Moriyuchi, CFO. Thank you.

Speaker #1: Thank you for taking your time. And that concludes today's conference call. You may now disconnect your lines.

Operator: Thank you for taking your time, and that concludes today's conference call. You may now disconnect your lines.

Q4 2026 Nomura Holdings Inc Earnings Call

Request DemoDemo

Nomura Holdings

Earnings