Q1 2027 Nomura Holdings Inc Earnings Call

July 29, 2026

Speaker #1: The conference is now in presentation mode. Your line is muted.

Speaker #2: Good day, everyone, and welcome to today's Nomura Holdings Q4 operating results for the fiscal year ended March 2027 conference call. Please be reminded that today's conference call is being recorded.

Operator: Good day, everyone, and Welcome to today's Nomura Holdings Q1 Operating Results for Fiscal Year ended March 2027 conference call. Please be reminded that today's conference call is being recorded at the request of the hosting company. Should you have any objections, you may disconnect at this point in time. During the presentation, all the telephone lines are placed for listen-only mode. The question and answer session will be held after the presentation. Please note that this telephone conference contains certain forward-looking statements and other projected results, which involve known and unknown risks, delays, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or other expectations implied by these projections.

Operator: Good day, everyone, and Welcome to today's Nomura Holdings Q1 Operating Results for Fiscal Year Ended March 2027 conference call. Please be reminded that today's conference call is being recorded at the request of the hosting company. Should you have any objections, you may disconnect at this point in time. During the presentation, all the telephone lines are placed for listen-only mode. The question and answer session will be held after the presentation. Please note that this telephone conference contains certain forward-looking statements and other projected results, which involve known and unknown risks, delays, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or other expectations implied by these projections.

Speaker #2: At the request of the hosting company, should you have any objections, you may disconnect at this point in time. During the presentation, all 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 known and unknown risks, delays, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results.

Speaker #2: Performance or other expectations implied by these projections—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 the 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 Moriuchi, Chief Financial Officer, please go ahead.

Speaker #3: This is Moriuchi, CFO, speaking. I would like to start right away to report the results from Q1, year ending March 2027. In this quarter, all divisions achieved higher revenue and income before income taxes than in the previous quarter, and ROE reached 15.4%. We believe the results of the structural reforms implemented over the past few years are now steadily being reflected in our performance.

Hiroyuki Moriuchi: This is Moriuchi, CFO speaking. I would like to start right away to report the results from Q1 year ending March 2027. In this quarter, all divisions achieved higher revenue and income before income taxes than in the previous quarter, and ROE reached 15.4%. We believe the result of the structural reforms implemented over the past few years are now steadily being reflected in our performance, and that we are making good progress towards our 2030 management vision. I would like to highlight three key points. First, growth in our recurring revenue business contributed to the steady strengthening of our stable revenue base. Second, our international businesses saw sharp growth, particularly in our priority areas. Income before income taxes in our three overseas regions reached a record high since this quarter began in fiscal year 2008, adding greater depth to profits.

Speaker #3: And that we are making good progress towards our 2030 management vision. I would like to highlight three key points. First, growth in our recurring revenue business contributed to the steady strengthening of our stable revenue base.

Speaker #3: Second, our international businesses saw sharp growth, particularly in our priority areas. Income before income taxes in our three overseas regions reached a record high since disclosure began in fiscal year 2008–09, adding greater depth to profits.

Speaker #3: Third, we launched a deposit sweep service to strengthen our banking business, and we are steadily laying the groundwork for future growth. Through these initiatives, we feel confident that, heading toward 2030, the stability of our earnings base has steadily improved, and our ability to generate profits has also been enhanced.

Hiroyuki Moriuchi: Third, we launched the deposit sweep service to strengthen our banking business, and we are steadily laying the groundwork for future growth. Through these initiatives, we feel confident that heading towards 2030, the stability of our earning space has steadily improved, and our ability to generate profits has also been enhanced. We now look at Q1 results for each division. Please turn to page seven. All percentage discussed from now on are based on Quarter-on-Quarter comparison. On the top left, you can see the wealth management net revenue increased 9% to JPY 145.4 billion, while income before income taxes increased 16% to JPY 71.1 billion. Thus, revenue and income increased for the fifth consecutive quarters as asset management business transformed the division's revenue structure. On the bottom left, you can see the recurring revenue rose to an all-time high of JPY 59.2 billion.

Speaker #3: We will now look at first quarter results for each division. Please turn to page 7. All percentages discussed from now on are based on quarter-on-quarter comparisons.

Speaker #3: On the top left, you can see the wealth management net revenue increased 9% to $145.4 billion, while income before income taxes increased 16% to $71.1 billion.

Speaker #3: Thus, revenue and income increased for the fiscal consecutive quarters as the asset management business transformed the division's revenue structure. On the bottom left, you can see that recurring revenue rose to an all-time high of $59.2 billion again.

Speaker #3: Net inflows of recurring revenue assets also remained strong, reaching an all-time high of $539.6 billion again. Flow revenue was strong too. Accurate perceptions of client activity as major equity markets hit all-time highs ensured growth in high-quality flow, which in turn translated into growth in recurring revenue assets.

Hiroyuki Moriuchi: Net inflows of recurring revenue assets also remained strong, reaching an all-time high of JPY 539.6 billion. Flow revenue was strong, too. Accurate perceptions of client activity as major equity markets hit all-time highs ensured growth in high-quality flow that in turn translated into growth in recurring revenue assets and thereby supported revenue growth. Solid cost controls also enabled the division to generate a high ratio of pre-tax profit margin of 49%. The recurring revenue cost coverage ratio came in at 76%, representing steady progress toward the target in our 2030 vision. Please turn to page eight, where you can see an update on total sales by product. Total sales fell versus the previous quarter to JPY 8.5 trillion, sales predicated on long-term diversified investment roads, thereby ensuring high-quality inflows that will translate into recurring revenue.

Speaker #3: And thereby supported revenue growth. Solid cost control also enabled the division to generate a high pre-tax profit margin of 49%. The recurring revenue cost coverage ratio came in at 76%, representing steady progress toward the target.

Speaker #3: Our 2030 vision. Please turn to page 8, where you can see an update on total sales by product. Total sales fell versus the previous quarter to $8.5 trillion again, but sales are predicated on long-term, diversified investment roads, thereby ensuring high-quality inflows that will translate into recurring revenue.

Speaker #3: By product, stocks registered a decline of 36% owing to the absence of major tender offers, but remained high in absolute terms. Bonds registered a rise of 14% as rising yen interest rates ensured solid demand for Japanese bonds.

Hiroyuki Moriuchi: By product, stocks registered a decline of 36% owing to the absence of major tender offers but remained high in absolute terms. Bonds registered a rise of 14% as rising JPY interest rates ensured solid demand for Japanese bonds. Investment trusts and discretionary investments, which constitute recurring revenue assets, registered substantial growth of 22% and 38% respectively, supported by services tailored to client requirements and the sort of product lineup that only Nomura can offer. Insurance also registered substantial growth of 36% on strong demand for pension and estate planning. Next, I would like to look at KPIs on page nine. On the top left, you can see the recurring revenue assets saw a net inflow of JPY 539.6 billion, which represents the 17 consecutive quarters of net inflows.

Speaker #3: Investment trusts and discretionary investments, which constitute recurring revenue assets, registered substantial growth of 22% and 38%, respectively, supported by services tailored to client requirements and an assured product lineup that only Nomura can offer.

Speaker #3: Insurance also registered substantial growth of 36% on strong demand for pension and estate planning. Next, I would like to look at the KPIs on page 9.

Speaker #3: On the top left, you can see the recurring revenue assets saw a net inflow of $539.6 billion again, which represents 17 consecutive quarters of net inflows.

Speaker #3: As a result, as shown on the top right, recurring revenue assets totaled $31.7 trillion at the end of June, representing an all-time high.

Hiroyuki Moriuchi: As a result, as shown on the top right, recurring revenue assets totaled JPY 31.7 trillion at the end of June, representing an all-time high. Recurring revenue also registered an all-time high, despite the absence of half-yearly investment advisory fees. As shown on the bottom right, workplace client assets, which we have established as a new KPI, saw steady growth to JPY 10 trillion at the end of June on consistently high inflows from ESOPs. Next, let's take a look at investment management. Please turn to page 10. On the top left, you can see that net revenue rose 14% to JPY 98.3 billion, and that income before income taxes rose 148% to JPY 45 billion. In both cases, this was the best performance since the division was established in April 2021. On the bottom left, you can see that business revenue was solid at JPY 86.2 billion.

Speaker #3: Recurring revenue also registered an all-time high, despite the absence of half-yearly investment advisory fees. As shown on the bottom right, workplace client assets—which we have established as a new KPI—saw steady growth to $10 trillion again at the end of June, on consistently high inflows from ESOPs.

Speaker #3: Next, let's take a look at investment management. Please turn to page 10. On the top left, you can see that net revenue rose 14% to $98.3 billion, and that income before income taxes rose 148% to $45 billion.

Speaker #3: In both cases, this was the best performance since the division was established in April 2021. On the bottom left, you can see that business revenue was solid at $86.2 billion. Again, asset management fees registered an all-time high owing to growth in assets under management.

Hiroyuki Moriuchi: Asset management fees registered an all-time high owing to growth in assets under management. Furthermore, there were steady inflows of funds into newly established emerging market equity funds actively managed by Nomura Asset Management International, and collaboration between Japanese and overseas offices with respect to acquired operations also generated rapid results and made a larger contribution to revenue. Investment gain or loss also benefited from much better performance at American Century Investments. Expenses also fell on the disappearance of impairments and one-time acquisition-related costs posted in the previous quarter. Let's now turn to page 11 and examine our asset management business, which is the key source of business revenue for the division. The graph on the upper left shows that asset under management reached an all-time high of JPY 156.4 trillion at the end of June, supported by favorable market conditions.

Speaker #3: Furthermore, there were steady inflows of funds into newly established emerging market equity funds actively managed by Nomura Asset Management International. Collaboration between Japanese and overseas offices with respect to the acquired operations also generated rapid results and made a larger contribution to revenue.

Speaker #3: Investment gain and loss also benefited from much better performance at American Century Investments. Expenses also fell due to the disappearance of impairments and one-time acquisition-related costs.

Speaker #3: Posted in the previous quarter. Let's now turn to page 11 and examine our asset management business, which is the key source of business revenue for the division.

Speaker #3: The graph on the upper left shows that asset management assets under management reached an all-time high of $156.4 trillion again at the end of June, supported by favorable market conditions.

Speaker #3: As shown at the bottom left, net outflows amounted to $1.33 trillion again. Net inflows into investment trusts, excluding ETFs and MRFs, totaled around $500 billion again, owing to actively managed Japanese equity trusts.

Hiroyuki Moriuchi: As shown at the bottom left, net outflows amounted to JPY 1.33 trillion. Net inflows into investment trusts, excluding ETFs and MRFs, totaled around JPY 500 billion, owing to actively managed Japanese equity trusts and newly established actively managed emerging market equity funds. Net outflows from ETFs totaled around JPY 940 billion, mainly from Japanese equity ETFs amid rising equity markets. Domestic investment advisory and international businesses saw net inflows in Japan, mainly into actively managed Japanese equity investment trusts and private assets, but net outflows overseas, including sustained outflows from mutual funds in line with US market trends, as well as outflows from US high-yield bonds. As shown at the bottom right, alternative AUM rose to a new high owing to net inflows.

Speaker #3: And newly established actively managed emerging market equity funds, but net outflows from ETFs totaled around $940 billion, again mainly from Japanese equity ETFs amid rising equity markets.

Speaker #3: Domestic investment advisory and international businesses saw net inflows in Japan, mainly into actively managed Japanese equity investment trusts and private assets, but net outflows overseas, including sustained outflows from mutual funds in line with US market trends, as well as outflows from US high-yield bonds.

Speaker #3: As shown at the bottom right, alternative AUM rose to a new high owing to net inflows.

Speaker #1: Next, wholesale division. Page 12, please. On the top left, you can see that wholesale net revenue rose 20% to $369.1 million, while income before income taxes rose 116% to $93.3 million.

Hiroyuki Moriuchi: Next, Wholesale Division. Page 12, please. On the top left, you can see that Wholesale net revenue rose 20% to JPY 369.1 billion, while income before income taxes rose 116% to JPY 93.3 billion. In both cases, this was the best performance since the division was established in April 2010. Global Markets net revenue rose 26%, driven by equities. Investment Banking net revenue fell versus the strong previous quarter, but registered an all-time high for Q1 of the fiscal year. The revenue to modified risk-weighted asset ratio rose to 9.3% on flexible allocation of resources in response to market conditions and steady efforts to tap revenue opportunities under the self-funding framework. Please turn to page 13 for an update on each business line. Net revenue in the Global Markets rose 26% to JPY 318.7 billion. Please look at the middle section on the right.

Speaker #1: In both cases, this was the best performance since the division was established in April 2010. Global Markets net revenue rose 26%, driven by Equities. Investment Banking net revenue fell versus the strong previous quarter, but registered an all-time high for the first quarter of the fiscal year.

Speaker #1: The revenue to modified risk-weighted asset ratio rose to 9.3% on flexible allocation of resources in response to market conditions and steady efforts to tap revenue opportunities under the self-funding framework.

Speaker #1: Please turn to page 13 for an update on each business line. Net revenue in Global Markets rose 26% to $318.7 billion. Again, please look at the middle section on the right.

Speaker #1: Fixed income revenue rose 11% to $139.2 billion. In macro products, rates revenue rose in EMEA on client activity, while FX and emerging markets revenues rose substantially in AEJ on increased client flows.

Hiroyuki Moriuchi: Fixed Income revenue rose 11% to JPY 139.2 billion. In Macro Products Rates, revenue rose in EMEA on client activity, while FX emerging markets revenues rose substantially in AEJ on increased client flows. In Spread Products, credit revenue rose substantially in Japan and AEJ on increased client activity triggered by tighter spreads, while Securitized Products revenue came in flat. International Wealth Management revenue also grew steadily on expansion of client base, thereby helping to ensure more diverse sources of revenue for Global Markets. Equities revenue registered strong growth, rising 41% to JPY 179.4 billion, owing to the strategic global rollout of businesses that have already been established in certain regions, as well as favorable market conditions. Equity Products saw strong revenue growth across all regions as increased client flows drove growth in derivatives. Elsewhere, accurate perceptions of client activity enabled AEJ to drive growth in execution services.

Speaker #1: In spread products, credit revenue rose substantially in Japan and AEJ on increased client activity triggered by tighter spreads, while securitized products revenue came in flat.

Speaker #1: International wealth management revenue also grew steadily on expansion of the client base, thereby helping to ensure more diverse sources of revenue for global markets.

Speaker #1: Equities revenue registered strong growth, rising 41% to $179.4 billion, again owing to the strategic global rollout of businesses that have already been established in certain regions, as well as favorable market conditions.

Speaker #1: Equity products saw strong revenue growth across all regions, as increased client flows drove growth in derivatives. Elsewhere, accurate perceptions of client activity enabled AEJ to drive growth in execution services.

Speaker #1: Let's turn to page 14 for investment banking. As you can see on the top left, investment banking net revenue fell 9% to $50.4 billion. However, it hit an all-time high for the first quarter of the fiscal year, exceeding $50 billion again for the first time since fiscal year 2016-17, the earliest period for which data is available.

Hiroyuki Moriuchi: Let's turn to page 14 for Investment Banking. As you can see on the top left, Investment Banking net revenue fell 9% to JPY 50.4 billion, but it hit an all-time high for Q1 of the fiscal year, exceeding JPY 50 billion for the first time since fiscal year 2016/2017, the earliest period for which data is available. By-products Advisory revenue fell versus the strong prior quarter, but benefited from growth investment and portfolio realignment in Japan, and from multiple deals outside of Japan, including renewable energy-related deals that are an area of particular focus. In Financing and Solutions, et cetera, ECM remained at the top of the league table in Japan, with contributions from multiple major deals. The business also responded to diverse needs, including the issuance of Bond-Type Class Shares.

Speaker #1: By-products advisory revenue fell versus the strong prior quarter, but benefited from growth investment and portfolio realignment in Japan, as well as from multiple deals outside of Japan, including renewable energy-related deals, which are an area of particular focus.

Speaker #1: In financing and solutions, ECM remained at the top of the league table in Japan, with contributions from multiple major deals. The business also responded to diverse needs, including the issuance of bond-type class shares.

Speaker #1: Elsewhere, the ECM was widely involved in bond issuance by a broad range of Japanese and overseas issuers, while Solutions businesses also continued to perform solidly.

Hiroyuki Moriuchi: Elsewhere, DCM was widely involved in bond issuance by a broad range of Japanese and overseas issuers, while solutions businesses also continued to perform solidly. Next, banking division, please turn to page 15. As shown on the top left, net revenue was up 5% to JPY 15.2 billion, and income before income taxes was up 19% to JPY 3.6 billion. Starting from this quarter, we disclose net revenue broken down into banking revenue and trust and agent service revenue. As you see in the middle of the right, banking revenue rose 19% to JPY 4.1 billion. The balance of deposit and number of accounts grew steadily owing to the marketing of deposit sweep service launched on 27 April and collaboration with wealth management. Revenue from lending operations grew on a steady increase in loans outstanding and valuation gains on securities holdings also contributed to revenue growth.

Speaker #1: Next, Banking division—please turn to page 15. As shown at the top left, net revenue was up 5% to $15.2 billion, and income before income taxes was up 19% to $3.6 billion.

Speaker #1: Starting from this quarter, we disclosed net revenue broken down into banking revenue and trust and agent services revenue. As you see in the middle of the right, banking revenue rose 19% to $4.1 billion again.

Speaker #1: The balance of deposits and number of accounts grew steadily, owing to the marketing of the deposit sweep service launched on April 27 and collaboration with wealth management.

Speaker #1: Also, revenue from lending operations grew on a steady increase in loans outstanding, and valuation gains on securities holdings also contributed to revenue growth. Trusts and agents service revenue was $11.2 billion again.

Hiroyuki Moriuchi: Trust and agent service revenue was JPY 11.2 billion. Revenue trended solidly by a growth in investment trust balances backed by the launch of new investment trusts and market factors. Next, we turn to KPIs on page 16. On the top left, loans outstanding were JPY 1,247 billion. Loans outstanding grew centered on Nomura Web Loan, reflecting a growing recognition of securities-backed loans and an increase in the value of collateral accompanying the market's rise, as shown at the bottom of the slide. The investment trust balance and asset under administration have been growing steadily on the acquisition of mandates for newly established investment trusts and as fund inflows have continued on the back of marketing strategy enhancements. Next, expenses, page 17, please. Group-wide expenses were JPY 475.2 billion, an increase of about 1% or JPY 5.7 billion from the previous quarter.

Speaker #1: Revenue trended solidly, driven by growth in investment trusts balances backed by the launch of new investment trusts and market factors. Next, we turn to KPIs on page 16.

Speaker #1: On the top left, loans outstanding were $1 trillion 247 billion. Loans outstanding grew, centered on Nomura web loans, reflecting a growing recognition of securities-backed loans and an increase in the value of collateral accompanying the market's rise, as shown at the bottom of the slide.

Speaker #1: The investment trusts' balance and assets under administration have been growing steadily with the acquisition of mandates for newly established investment trusts, and as fund inflows have continued on the back of marketing strategy enhancements.

Speaker #1: Next, expenses. Page 17, please. Group-wide expenses were $475.2 billion—again, an increase of about 1%, or $5.7 billion, from the previous quarter. Performance-linked bonus provisions and other compensation and benefits rose, but at the same time, other expenses were held down, leading to the capture of benefits from operating leverage.

Hiroyuki Moriuchi: Performance-linked bonus provisions and other compensation and benefits rose. At the same time, other expenses were held down, leading to the capture of benefits from operating leverage. Next, financial position, page 18, please. As shown in the table on the bottom left, at the end of June, Common Equity Tier 1 capital ratio was 12.9%, up 0.1 percentage point from 12.8% at the end of March. That completes our overview of the first quarter results. In closing, in May this year, we raised our numerical target range for ROE to 10% to 12% or more by 2030, and our target for income before income taxes in 2030 to at least JPY 750 billion.

Speaker #1: Next, financial position, page 18, please. As shown in the table on the bottom left, at the end of June, common equity capital ratio was 12.9%, up 0.1 percentage point from 12.8% at the end of March.

Speaker #1: That completes our overview of the first quarter results. In closing, in May this year, we raised our numerical target range for ROE to 10% to 12% or more by 2030, and our target for income before income taxes in 2030 to at least $750 billion again.

Speaker #1: ROE of 15.4% in the first quarter was the highest since the April to June quarter of 2020, when Wholesale, with relatively volatile earnings, was making a major contribution to profits amid quantitative easing measures being taken around the world in response to the COVID-19 pandemic.

Hiroyuki Moriuchi: ROE of 15.4% in the first quarter was the highest since the April to June quarter of 2020, when Wholesale, with relatively volatile earnings, was making a major contribution to profits amid quantitative easing measures being taken around the world in response to COVID-19 pandemic. In recent years, the net revenue structure has been changing as exposure to any one particular division has declined, and the generation of profits has become more balanced across divisions. Stable revenues have expanded to roughly 60% from a year earlier, indicating a steady reinforcement of income before income taxes level. In Wholesale, revenue sources are becoming more diversified, driven by growth in equity products and securities products, as well as the expansion of the International Wealth Management business.

Speaker #1: In recent years, the net revenue structure has been changing as exposure to any one particular division has declined, and the generation of profits has become more balanced.

Speaker #1: Across divisions, stable revenues have expanded roughly 60% from a year earlier, indicating steady reinforcement of income before income taxes. Levels in wholesale revenue sources are becoming more diversified, driven by growth in equity products and securities products, as well as the expansion of the international wealth management business.

Speaker #1: Although performance may fluctuate to some extent in response to market conditions, we believe the quality of our profits has been steadily improving because of restructuring efforts made to date.

Hiroyuki Moriuchi: Although performance may fluctuate to some extent in response to market conditions, we believe the quality of our profits has been steadily improving because of restructuring efforts made to date. Let me comment briefly on the situation since July. Market environment has been characterized by continued uncertainty amid the renewed heightening of geopolitical risk, and the equity market has seen corrections and increased volatility. Despite these circumstances, net revenue in wealth management has been roughly on par with Q1. Fund inflows to products and services predicated on long-term diversified investments remain firm. In wholesale, net revenue has slowed somewhat of late. This is partly in reaction to strong net revenue in Q1, mainly in equities, but also owing to seasonal factors specific to the summer. Nevertheless, the pipeline for the division as a whole remains favorable.

Speaker #1: Let me comment briefly on the situation since July. The market environment has been characterized by continued uncertainty amid the renewed heightening of geopolitical risk, and the equity markets have seen corrections and increased volatility.

Speaker #1: Despite these circumstances, net revenue in wealth management has been roughly on par with the first quarter. Fund inflows to products and services predicated on long-term diversified investments remain firm.

Speaker #1: Wholesale net revenue has slowed somewhat of late. This is partly in reaction to strong net revenue in the first quarter, mainly in equities, but also owing to seasonal factors specific to the summer.

Hiroyuki Moriuchi: This is partly in reaction to strong net revenue in Q1, mainly in equities, but also owing to seasonal factors specific to the summer. Nevertheless, the pipeline for the division as a whole remains favorable. We think market volatility is likely to increase in H2 with midterm elections to be held in the US and in view of monetary policy trends in key nations. We plan to monetize opportunities while engaging in appropriate risk-taking and maintaining strict discipline in terms of cost controls. Thank you for your continued support.

Speaker #1: Nevertheless, the pipeline for the division as a whole remains favorable. We think market volatility is likely to increase in the second half of the year, with midterm elections to be held in the US and in view of monetary policy trends in key nations.

Hiroyuki Moriuchi: We think market volatility is likely to increase in H2 with midterm elections to be held in the US and in view of monetary policy trends in key nations. We plan to monetize opportunities while engaging in appropriate risk-taking and maintaining strict discipline in terms of cost controls. Thank you for your continued support.

Speaker #1: We plan to monetize opportunities while engaging in appropriate risk-taking and maintaining strict discipline in terms of cost controls. Thank you for your continued support.

Speaker #2: We have a question and answer session now. If you have a question, press #7. If you want to cancel a question, press #7.

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.

Speaker #2: I'm Watanabe from Daiwa Securities. I have two questions. First, about wholesale revenue. In July, you explained that it slowed down somewhat in comparison to Q1.

[Analyst] (Daiwa Securities): I'm Kazuki from Daiwa Securities. I have two questions. First, about wholesale revenue. In July, you've explained that it slowed down somewhat in comparison to Q1. I believe there are seasonality factors, but on year-on-year basis, was revenue in July an increase? Revenue sources are diversified, and what is your outlook on wholesale revenue? The second is on capital policy based on payout ratio 40% with our Q1 revenue DPS of close to JPY 20 securities. Is that the right understanding? As income increases with the capital accumulation, ROE will be under downward pressure. Will there be adjustment of capital, including buyback? These are two questions. Thank you, Kazuki-san, for your questions. About wholesale revenue, it slowed down a little in July. Every year, because of seasonality, in July and in August, according to the past trends, in almost all years, we see some slowdown in summer.

Kazuki Watanabe: I'm Watanabe from Daiwa Securities. I have two questions. First, about wholesale revenue. In July, you've explained that it slowed down somewhat in comparison to Q1. I believe there are seasonality factors, but on year-on-year basis, was revenue in July an increase? Revenue sources are diversified, and what is your outlook on wholesale revenue? The second is on capital policy based on payout ratio 40% with our Q1 revenue DPS of close to JPY 20 securities. Is that the right understanding? As income increases with the capital accumulation, ROE will be under downward pressure. Will there be adjustment of capital, including buyback? These are two questions.

Speaker #2: I believe there are seasonality factors, but on a year-on-year basis, was revenue in July an increase? Revenue sources are diversified. And what is your outlook on wholesale revenue?

Speaker #2: The second is on capital policy. Based on a payout ratio of 40%, with a Q1 revenue DPS of close to 20 yen, securities. Is that the right understanding, that as income increases with the capital accumulation?

Speaker #2: ROE will be under downward pressure. Will there be adjustments to capital, including buybacks? These are two questions. Thank you, Watanabe, for your questions. Regarding wholesale revenue, it slowed down a little in July.

Hiroyuki Moriuchi: Thank you, Kazuki-san, for your questions. About wholesale revenue, it slowed down a little in July. Every year, because of seasonality, in July and in August, according to the past trends, in almost all years, we see some slowdown in summer. Having said so, in terms of year-on-year, how does it compare? Currently, it is more or less flat. That is my response to your first question. Regarding the second question on payout ratio, to be honest, it is only at the end of Q1, and payout ratio, perhaps may be too premature to be discussed. Growth investment and enhancement of shareholder returns will have to be balanced. In view of that balance, we would like to take this into further consideration. I hope this answers your questions.

Speaker #2: Every year, because of seasonality, in July and in August, according to past trends, in almost all years, we see some slowdown in summer.

Speaker #2: Having said so, in terms of year-on-year comparison, it is currently more or less flat. So, that is my response to your first question.

Hiroyuki Moriuchi: Having said so, in terms of year-on-year, how does it compare? Currently, it is more or less flat. That is my response to your first question. Regarding the second question on payout ratio, to be honest, it is only at the end of Q1, and payout ratio, perhaps may be too premature to be discussed. Growth investment and enhancement of shareholder returns will have to be balanced. In view of that balance, we would like to take this into further consideration. I hope this answers your questions. Thank you very much. Regarding the first question, equity especially was strong in Q1. Will this momentum be sustained in Q2 and beyond? Thank you for that question. As you rightly pointed out, in Q1, equities were very strong, including bulge bracket. Periods also enjoyed multiple favorable conditions that were unique according to these periods.

Speaker #2: And regarding the second question on shareholder return policy, to be honest, it is only the end of Q1, and discussing the payout ratio may be a bit premature.

Speaker #2: Growth investment and enhancement of shareholder return will have to be balanced. In view of that balance, we would like to take this into further consideration.

Speaker #2: I hope this answers your questions. Thank you very much. Regarding the first question, equity was especially strong in Q1. Will this momentum be sustained in Q2 and beyond?

Kazuki Watanabe: Thank you very much. Regarding the first question, equity especially was strong in Q1. Will this momentum be sustained in Q2 and beyond?

Speaker #2: Thank you for that question. As you rightly pointed out, in the first quarter, equities were very strong. Including Bougie Brackets, Pears also enjoyed multiple favorable conditions.

Hiroyuki Moriuchi: Thank you for that question. As you rightly pointed out, in Q1, equities were very strong, including bulge bracket. Periods also enjoyed multiple favorable conditions that were unique according to these periods. On our part, because of the activities of the market over short-term to long-term, perhaps there may be a small normalization. In any event, it continues to be the case that equities remain strong. Even though there may be small normalization, in comparison to the past level, there may be an upward correction of the baseline. Thank you.

Speaker #2: There were unique factors according to these peers. On our part, because of the activities in the market over the short term to long term, perhaps there may be some small normalization.

[Analyst] (Daiwa Securities): On our part, because of the activities of the market over short-term to long-term, perhaps there may be a small normalization. In any event, it continues to be the case that equities remain strong. Even though there may be small normalization, in comparison to the past level, there may be an upward correction of the baseline. Thank you. Thank you very much.

Speaker #2: In any event, it continues to be the case that equities remain strong. So even though there may be small normalization, in comparison to the past level, there may be an upward correction of the baseline.

Speaker #2: Thank you. Thank you very much.

Kazuki Watanabe: Thank you very much.

Speaker #1: The next question comes from SMBC Nikko Securities. Mr. Muraki, please. Thank you. I'm Muraki from SMBC Nikko. I have two questions. My first question is about revenue.

Operator: The next question comes from SMBC Nikko Securities, Mr. Muraki. Muraki-san, please. Thank you. I'm Muraki from SMBC Nikko. I have two questions. First question is about revenue. This time, page 13. I'm looking at graph on page 13, and the performance was driven by equity product revenue. Compared to a year ago, it's about double, JPY 120 billion. In what way was the revenue generated or driven? I'd like to deepen my understanding, if possible. Derivatives, structured products, and prime finance. I'd like to know the breakdown. That's my first question. My second question is regarding resource usage. I ask this question every time, but page 20, overall balance sheet shows that securities, backed lending, and trading asset combined, it's about JPY 4 trillion and JPY 0.7 trillion when I look at the pure loan. Balance sheet has grown bigger.

Operator: The next question comes from SMBC Nikko Securities, Mr. Muraki. Muraki-san, please.

Masao Muraki: Thank you. I'm Muraki from SMBC Nikko. I have two questions. First question is about revenue. This time, page 13. I'm looking at graph on page 13, and the performance was driven by equity product revenue. Compared to a year ago, it's about double, JPY 120 billion. In what way was the revenue generated or driven? I'd like to deepen my understanding, if possible. Derivatives, structured products, and prime finance. I'd like to know the breakdown. That's my first question. My second question is regarding resource usage. I ask this question every time, but page 20, overall balance sheet shows that securities, backed lending, and trading asset combined, it's about JPY 4 trillion and JPY 0.7 trillion when I look at the pure loan. Balance sheet has grown bigger.

Speaker #1: This time, page 13. I'm looking at the graph on page 13, and the performance was driven by equity product revenue. Compared to a year ago, it's about a double — ¥120 billion.

Speaker #1: So, in what way was the revenue generated driven? I'd like to deepen my understanding, if possible—derivatives, structured products, and prime finance.

Speaker #1: So I'd like to know the breakdown. That's my first question. My second question is regarding resource usage. I ask this question every time, but page 20, overall balance sheet, shows that securities-backed lending and trading assets are combined.

Speaker #1: It's about ¥4 trillion, and ¥0.7 trillion when I look at the pure loan. So the balance sheet has grown bigger compared to US peers from hedge fund clients, so there is a very strong need for financing.

[Analyst] (SMBC Nikko Securities): In terms of US peers from hedge fund clients, there is a very strong need for financing, so they have increased resources, but they cannot keep up with increasing demand from clients. In your case, leverage ratio came down, but it's 0.6%. Compared to regulation, there is still headroom in your case. In this situation, resource management and risk management, what is your approach to them? Thank you.

Masao Muraki: In terms of US peers from hedge fund clients, there is a very strong need for financing, so they have increased resources, but they cannot keep up with increasing demand from clients. In your case, leverage ratio came down, but it's 0.6%. Compared to regulation, there is still headroom in your case. In this situation, resource management and risk management, what is your approach to them? Thank you.

Speaker #1: So they have increased resources, but they cannot keep up with increasing demand from clients. In your case, the leverage ratio came down, but it's 0.6%.

Speaker #1: So compared to regulation, there is still headroom in your case. In this situation—resource management and risk management—what is your approach to them?

Speaker #1: Thank you. Thank you, Mr. Muraki, for your question. Regarding your first question—equities, equity products breakdown. So, what was the driver for the revenue growth?

Hiroyuki Moriuchi: Thank you, Mr. Masao, for your question. Regarding your first question, equity products breakdown.

Hiroyuki Moriuchi: Thank you, Mr. Masao, for your question. Regarding your first question, equity products breakdown. What was the driver for the revenue growth? The detailed breakdown cannot be disclosed, but roughly speaking, finance-related business such as corporate derivative or prime finance and trading-type business such as flow credit and cash business and structure trade. Finance and trading represent 50% each of revenue growth in terms of contribution to revenue growth. It just so happens that in the past, we started with cash and gradually centering on the US, we have expanded product lineup and geographically looking at the success in the US. In Asia, we have strengthened our business.

Hiroyuki Moriuchi: What was the driver for the revenue growth? The detailed breakdown cannot be disclosed, but roughly speaking, finance-related business such as corporate derivative or prime finance and trading-type business such as flow credit and cash business and structure trade. Finance and trading represent 50% each of revenue growth in terms of contribution to revenue growth. It just so happens that in the past, we started with cash and gradually centering on the US, we have expanded product lineup and geographically looking at the success in the US. In Asia, we have strengthened our business. Market theme was captured and monetized into revenue in Asia as well as for lineup of products in addition to derivatives, financing, execution services, and we have expanded product lineup. That's been our situation. The second question. Our balance sheet has grown bigger, but our financial resources, especially leverage exposure.

Speaker #1: The detailed breakdown cannot be disclosed, but roughly speaking, finance-related businesses such as corporate derivatives or prime business, and trading-type businesses such as flow trading, cash business, and structured trade.

Speaker #1: So, finance and trading represent 50% each of revenue growth in terms of contribution to revenue growth. It just so happens that, in the past, we started with cash and gradually centered on the USA.

Speaker #1: We have expanded our product lineup and, geographically, are looking at the success in the U.S.A. In Asia, we have strengthened our business. The market theme was captured and monetized into revenue in Asia as well.

Hiroyuki Moriuchi: Market theme was captured and monetized into revenue in Asia as well as for lineup of products in addition to derivatives, financing, execution services, and we have expanded product lineup. That's been our situation. The second question. Our balance sheet has grown bigger, but our financial resources, especially leverage exposure.

Speaker #1: As for the lineup of products, in addition to derivatives and financing execution services, we have expanded our product lineup. So that's been our situation. The second question.

Speaker #1: Our balance sheet has grown bigger, but our financial resources, especially leverage exposure, and when it comes to risk management—what is our approach? I believe that was your question.

Hiroyuki Moriuchi: When it comes to risk management, what is our approach? I believe that was your question. Regarding the balance sheet growing bigger, the reason for that is simply put, equity business contribution is big as a factor. Equity business has been quite active, and that led to increase in balance sheet. As for management of financial resources, as you pointed out, leverage exposure still has some headroom. Regarding leverage exposure, unlike CET1, by issuing AT1, leverage exposure can be expanded if we try to do so. As you know, Muraki-san, regarding the Wholesale Division, we have a self-funding framework within which we have certain guidelines about financial resources. Within the guideline, we would like the Wholesale Division to grow business. The intent here is our financial resource is precious.

Speaker #1: Regarding the balance sheet growing bigger, the reason for that is, simply put, equity business contribution is big. As a factor, equity business has been quite active, and that led to an increase in the balance sheet.

Speaker #1: And as for management of financial resources, as you pointed out, leverage exposure still has some headroom. Regarding leverage exposure, unlike CET1, by issuing AT1, leverage exposure can be expanded if we try to do so.

Speaker #1: But as you know, Muraki-san, regarding the Wholesale division, we have a self-funding framework within which we have certain guidelines about financial resources. Within those guidelines, we would like Wholesale to grow business.

Speaker #1: The intent here is that our financial resources are precious. So, within a certain limit or framework within Wholesale, we would like Wholesale to control resources, so the resources can be focused on the high-margin projects or deals. This way, the revenue to RWA ratio can be increased.

Hiroyuki Moriuchi: Within certain limit or framework, within the Wholesale Division, we would like the Wholesale Division to control resource so the resource can be focused on the high-margin projects or deals so that revenue to RWA ratio can be increased. That is our aspiration. The group-wide business portfolio, within the group-wide portfolio, we do not want the concentration into the Wholesale Division. We want to avoid concentration risk. In the Wholesale Division, sometimes we are flexible in providing resources to the Wholesale Division, but basically, we are aiming to drive growth within the framework set within the Wholesale Division. That's how we manage portfolio and risk management risk, and that's going to be our continued approach. It's not just the Wholesale Division that conducts business that use resources. For example, in terms of IM, inorganic opportunities, they will use RWA and Nomura Trust & Banking Division. These businesses will use more leverage exposure moving forward.

Speaker #1: That is our aspiration. And within the group-wide business portfolio, we do not want to have concentrated exposure to wholesale. So we want to avoid concentration risk.

Speaker #1: So in wholesale, sometimes we are flexible in providing resources to wholesale, but basically, we are aiming to drive growth within the framework set within wholesale.

Speaker #1: That's how we manage portfolio and risk management risk, and that's going to be our continued approach. So it's not just Wholesale that conducts business that uses resources. For example, in terms of IM, inorganic opportunities, they will use RWA and Nomura Trust and Bankings.

Hiroyuki Moriuchi: That's how we manage portfolio and risk management risk, and that's going to be our continued approach. It's not just the Wholesale Division that conducts business that use resources. For example, in terms of IM, inorganic opportunities, they will use RWA and Nomura Trust & Banking Division. These businesses will use more leverage exposure moving forward.

Speaker #1: Banking division. So, these businesses will use more leverage exposure moving forward. Therefore, financial resource control will become increasingly important. I hope that answers your questions.

Hiroyuki Moriuchi: Financial resource control will become increasingly important. I hope that answered your questions. Regarding your first point, you say the derivatives business did well, but derivatives in the 50% of equity business, it belongs to flow trading. Now derivatives represent a significant portion of the latter part, 50%. Regarding the breakdown, there is some mixture. We would like to check the specific details and then keep you updated at some point in the future. Thank you. Thank you very much.

Speaker #1: Regarding your first point, you said that the derivatives business did well, but derivatives are in the 50% of the equity business. So, it belongs to flow trading.

Speaker #1: And now, derivatives represent a significant portion of the latter part, about 50%. So regarding the breakdown, there is some mixture. We would like to check the specific details and then keep you updated at some point in the future.

Speaker #1: Thank you. Thank you very much.

Masao Muraki: Thank you very much.

Speaker #2: This is Tsushino from BofA. I have three questions. First, regarding compensation and benefits, since last year there were some special factors—one-time factors—that led to an increase in compensation and benefits.

[Analyst] (BofA): This is Natsumu from BofA. I have three questions. First, regarding compensation and benefits. Since last year, there were some special factors, one-time factors, that led to increase in compensation and benefits. From this fiscal year onwards, I believe you've discussed that you expect decline in compensation and benefits. Going forward, how will it trend in Q2? Because of changes in bonus, et cetera, will there be temporary increase in compensation benefits which will come down subsequently? That is my first question. The second question is about global markets from July onwards. In comparison to Q1, it is a bit slow. Wholesale, it is almost flat. Global markets, when we focus only on global markets, FICC in Q1 has increased substantially year-on-year. FICC is relatively flat. When we look at the market, FICC sudden decline is not likely. FICC versus equity.

Natsumu Tsujino: This is Natsumu from BofA. I have three questions. First, regarding compensation and benefits. Since last year, there were some special factors, one-time factors, that led to increase in compensation and benefits. From this fiscal year onwards, I believe you've discussed that you expect decline in compensation and benefits. Going forward, how will it trend in Q2? Because of changes in bonus, et cetera, will there be temporary increase in compensation benefits which will come down subsequently? That is my first question. The second question is about global markets from July onwards. In comparison to Q1, it is a bit slow. Wholesale, it is almost flat. Global markets, when we focus only on global markets, FICC in Q1 has increased substantially year-on-year. FICC is relatively flat. When we look at the market, FICC sudden decline is not likely. FICC versus equity.

Speaker #2: And from this fiscal year onwards, I believe you've discussed that you expect a decline in compensation and benefits. Going forward, how will it trend in Q2?

Speaker #2: Because of changes in bonuses, etc., will there be a temporary increase in compensation and benefits, which will come down subsequently? That is my first question.

Speaker #2: And the second question is about Global Markets from July onwards. In comparison to Q1, it is a bit slow. Wholesale is almost flat.

Speaker #2: But in global markets, when we focus only on global markets, thick in Q1 has increased substantially year-on-year. Thick is relatively flat. When we look at the market, a sudden decline in thick is not likely.

Speaker #2: So, thick versus equity—if thick slows down in summer and if it is lower than Q1, unless equity suffers from a very sharp decline, on a year-on-year basis, I don't think there will be a leveling off or plateauing.

[Analyst] (BofA): If FICC slows down in summer and if it is lower than Q1, unless equity suffers from very sharp decline on year-on-year basis, I don't think there will be a leveling off or plateauing. Could you add color to FICC and equity separately? Another question is about IM profit, excluding investment gain and loss. Then JPY 20 billion is increased Quarter-on-Quarter. The forestry asset is a JPY 12.1 billion decrease. Acquisition cost, JPY 5.5 billion decline. That should lead to improvement. To begin with, in Q4, Nomura Babcock & Brown was extremely strong. Because of such factors, the performance was not so bad, which means that Nomura Babcock & Brown at this time, how normalized was it? How much normalization was there in Nomura Babcock & Brown? Could you discuss these developments? Ms. Natsumu, thank you for your questions.

Natsumu Tsujino: If FICC slows down in summer and if it is lower than Q1, unless equity suffers from very sharp decline on year-on-year basis, I don't think there will be a leveling off or plateauing. Could you add color to FICC and equity separately? Another question is about IM profit, excluding investment gain and loss. Then JPY 20 billion is increased Quarter-on-Quarter. The forestry asset is a JPY 12.1 billion decrease. Acquisition cost, JPY 5.5 billion decline. That should lead to improvement. To begin with, in Q4, Nomura Babcock & Brown was extremely strong. Because of such factors, the performance was not so bad, which means that Nomura Babcock & Brown at this time, how normalized was it? How much normalization was there in Nomura Babcock & Brown? Could you discuss these developments?

Speaker #2: So could you add color to FICC and equity separately? And another question is about IM profit excluding investment gain and loss. And then about ¥20 billion, it increased Q-on-Q.

Speaker #2: And the forestry asset is a $12.1 billion decrease, and acquisition cost is a $5.5 billion decline. And so, that should lead to improvement. But to begin with, in Q4, Nomura Babcock was extremely strong.

Speaker #2: And because of such factors, the performance was not so bad. Which means that, for Nomura Babcock this time, how normalized was it? How much normalization was there in Nomura Babcock?

Speaker #2: Could you discuss these developments? Ms. Tsushino, thank you for your questions about the increase in compensation and benefits. One-time factors occurred last year, as you rightly pointed out.

Hiroyuki Moriuchi: Ms. Natsumu, thank you for your questions. About increase in compensation and benefits, one-time factors occurred last year, as you rightly pointed out. As we also provided information on this, there were several one-time factors, one of which is deferred compensation-related factor. This is a replacement of cash compensation. This was one-time factor last year, and gradually this cost will be leveled off. That is, I believe, how we explained in the Q3 presentation. Actually, as a matter of fact, what we call DCA, deferred compensation, regarding that cost, assuming that earnings remains the same, then DCA declines, earnings are improving, rising. Deferred compensation, included compensation and benefits are also increasing. Because of the nature of the industry, there is some fixed level of compensation and benefits, in line with the performance, there is also additional compensation and benefits linked to performance.

Hiroyuki Moriuchi: About increase in compensation and benefits, one-time factors occurred last year, as you rightly pointed out. As we also provided information on this, there were several one-time factors, one of which is deferred compensation-related factor. This is a replacement of cash compensation. This was one-time factor last year, and gradually this cost will be leveled off. That is, I believe, how we explained in the Q3 presentation. Actually, as a matter of fact, what we call DCA, deferred compensation, regarding that cost, assuming that earnings remains the same, then DCA declines, earnings are improving, rising. Deferred compensation, included compensation and benefits are also increasing. Because of the nature of the industry, there is some fixed level of compensation and benefits, in line with the performance, there is also additional compensation and benefits linked to performance.

Speaker #2: And as we also provided information on this, there were several one-time factors, one of which is a deferred compensation-related factor. And this is a replacement of cash compensation.

Speaker #2: So this was a one-time factor last year, and gradually, this cost will be leveled off. That is, I believe, how we explained it in the third quarter presentation.

Speaker #2: Actually, as a matter of fact, what we call DCA—deferred compensation—regarding that cost, assuming that earnings remain the same, then DCA declines. But earnings are improving, rising.

Speaker #2: So deferred compensation, including compensation and benefits, is also increasing. Because of the nature of the industry, there is some fixed level of compensation and benefits.

Speaker #2: But in line with also additional compensation and benefits linked to performance. So, to an extent, there is some increase linked to performance, and performance has been very strong.

Hiroyuki Moriuchi: To an extent, there is some increase linked to performance. Performance has been very strong. Rather than a likely decline, at this phase, we anticipate some increase. Having said so, in Q1, there are so many one-time factors for compensation and benefits, there is a stock compensation that will be vested in short-term, and that was booked in Q1. Because of that, there was a one-time effect. Regarding the second question about the recent July equity fixed income breakdown, year-on-year it is about the same, and that led to your estimate that equity may have fallen. Regarding equities, due to market corrections, in comparison to the previous quarter, it is calming down. However, it is still at a high level. High level is maintained for equities.

Speaker #2: So, rather than likely decline, at this pace, we anticipate some increase. Having said so, in Q1, there are so many one-time factors for compensation and benefits.

Speaker #2: But there is stock compensation that will vest in the short term, and that was booked in Q1. Because of that, there was a one-time effect.

Speaker #2: Regarding the second question about the recent July equity and fixed income breakdown: year on year, it is about the same. That led to your estimate that equities may have fallen right now, due to market corrections.

Speaker #2: In comparison to the previous quarter, it is calming down. However, it is still at a high level. A high level is maintained for equities. As for fixed income, there are investors on the sidelines, trying to see the monetary policy of Western countries.

Hiroyuki Moriuchi: As for fixed income, there are investors on the sidelines trying to see the monetary policy of Western countries, because of market volatility, it is leading to more volatile revenue. As for credits and securitized products, in the previous quarter, from the very high level in the previous quarter, since there are deals that affect the performance, the number of deals may affect the performance, and that may have had some effect. I believe you've had a question related to IM as your third question. Factors that led to increase in revenue in terms of Q-on-Q performance. Babcock had some seasonal factors, there was a slight decline. Babcock products typically have a stronger performance in Q3, Q4. In Q1, there was a slight decline. As for contingency fees, there were some strong results, including Vietnam, Taiwan, and AUM increased.

Speaker #2: And because of market volatility, it is leading to more volatile revenue. As for credits and securitized products, in the previous quarter—from the very high level in the previous quarter—and since there are deals that affect the performance, the number of deals may affect the performance.

Speaker #2: And that may have had some effect. And I believe you had a question related to IM as your third question—factors that led to the increase in revenue.

Speaker #2: In terms of quarter-on-quarter performance, Babcock had some seasonal factors, and there was a slight decline. Babcock products typically have a stronger performance in Q3 and Q4.

Speaker #2: In Q1, there was a slight decline. As for contingency fees, there were some strong results, including from NAM Taiwan. Also, AUM increased. Seed investments—this is similar to proprietary investment.

Hiroyuki Moriuchi: As for contingency fees, there were some strong results, including Vietnam, Taiwan, and AUM increased. Seed investments, this is similar to proprietary investment, this seed investment also had a good performance. In the meantime, there are some offsetting factors, I hope this addresses your question. About seed investment, do you mean there was a mark to market?

Hiroyuki Moriuchi: Seed investments, this is similar to proprietary investment, this seed investment also had a good performance. In the meantime, there are some offsetting factors, I hope this addresses your question. About seed investment, do you mean there was a mark to market?

Speaker #2: And this seed investment also had good performance. In the meantime, there are some offsetting factors. But I hope this addresses your question. Regarding seed investment, do you mean there was a mark-to-market?

Speaker #2: Yes, that is correct. I see. Thank you.

Hiroyuki Moriuchi: Yes, that is correct.

Natsumu Tsujino: Yes, that is correct.

[Analyst] (BofA): I see. Thank you.

Hiroyuki Moriuchi: I see. Thank you.

Speaker #1: The next person asking a question is Sato-san from JP Morgan Securities. Please go ahead. Thank you. I am Sato from JP Morgan Securities. I have two questions.

Operator: Next person asking the question is Sato-san from JPMorgan Securities. Please go ahead. Thank you. I am Sato from JPMorgan Securities. I have two questions. First question is about Wholesale Division's revenue, especially revenue to RWA ratio. 9.3% was the result of Q1. On a quarterly basis, it's the highest level. The other day compared to 2030 target, the Q1 result was quite high in terms of the ratio. You've explained equities business did quite well. Regarding the risk asset mix, could you add some color to risk asset mix? When I do calculation backward, adjusted risk assets have not increased much. Actually, it may have decreased somewhat, so I'd like to understand if there is any change to the mix.

Operator: Next person asking the question is Sato-san from JPMorgan Securities. Please go ahead.

Koki Sato: Thank you. I am Sato from JPMorgan Securities. I have two questions. First question is about Wholesale Division's revenue, especially revenue to RWA ratio. 9.3% was the result of Q1. On a quarterly basis, it's the highest level. The other day compared to 2030 target, the Q1 result was quite high in terms of the ratio. You've explained equities business did quite well. Regarding the risk asset mix, could you add some color to risk asset mix? When I do calculation backward, adjusted risk assets have not increased much. Actually, it may have decreased somewhat, so I'd like to understand if there is any change to the mix.

Speaker #1: First question is about Wholesale division's revenue, especially the revenue-to-RWA ratio. 9.3% was the result for Q1, so on a quarterly basis, it's the highest level.

Speaker #1: And the other day, 2030 compared to the 2030 target, the Q1 result was quite high in terms of the ratio. And you've explained the equities business did quite well.

Speaker #1: But regarding the risk asset mix, could you add some color to the risk asset mix? When I do the calculation backward, adjusted risk assets have not increased.

Speaker #1: Much. Actually, it may have decreased somewhat. So, I'd like to understand if there is any change to the mix. The second question: in the second half of the year, you are scheduled to relocate the headquarters.

[Analyst] (J.P. Morgan Securities): The second question, in the H2 of year, you are scheduled to relocate the headquarters, what is your latest outlook on the relocation cost this time? Well, new headquarter-related equipment cost increase was mentioned, by September, the investment into the retained floor space, about JPY 150 billion or so, accounting-wise, it might be an amortization or depreciation. If there is such cost, what is going to be the total cost associated with relocation? Thank you.

Koki Sato: The second question, in the H2 of year, you are scheduled to relocate the headquarters, what is your latest outlook on the relocation cost this time? Well, new headquarter-related equipment cost increase was mentioned, by September, the investment into the retained floor space, about JPY 150 billion or so, accounting-wise, it might be an amortization or depreciation. If there is such cost, what is going to be the total cost associated with relocation? Thank you.

Speaker #1: And what is your latest outlook on the relocation cost? This time, were headquarters new headquarter related equipment cost increase was mentioned. And by September, the investment into the retained floor space about $150 billion.

Speaker #1: So, accounting-wise, it might be an amortization or depreciation if there is such cost. Then, what is going to be the total cost associated with relocation?

Speaker #1: Thank you. Sato-san, thank you for your questions. First, regarding your first question about the revenue to RWA ratio, the level has gone up, but the RWA level remains unchanged.

Hiroyuki Moriuchi: Koki-san, thank you for your questions. First, regarding your first question, revenue to RWA ratio, that level has gone up, RWA level remains unchanged. What is the mix? That was your first question, I understand. Regarding the mix, equity products, SPG was securitized products, International Wealth Management resources have been increased. In the area of equities, the resource allocation has been increased. How we should think about the current situation toward 2030, we have macro business centering on rates, equity business, spread business, credit, and SPG. The rough breakdown will be kept. In the medium to long term, we would like to grow all of them in a balanced manner. Particularly, we would like to grow equity business more in the medium to long term.

Speaker #1: So, what is the mix? That was your first question, I understand. Regarding the mix, equity products and SPPC, which is securitized products, and IWM, International Wealth Management resources, have been increased.

Speaker #1: In the area of equities, the resource allocation has been increased. And how we should think about the current situation—toward 2030, we have macro business centering on rates and equity business.

Speaker #1: And the spread business created an SPPC. The rough breakdown will be kept, and in the medium to long term, we'd like to grow all of them in a balanced manner.

Speaker #1: But particularly, we'd like to grow the equity business more in the medium to long term. So, in the medium to long term, our portfolio mix target is not going to change.

Hiroyuki Moriuchi: In the medium long term, our portfolio mix target is not going to change much. When it comes to short term, depending on the themes or situation of markets, the demand for certain products sometimes greatly increase. This time, equities market has been quite active, so financial resources have been reallocated from other businesses to equities business. This is a sign that Wholesale self-funding worked. Where there is opportunities for revenue generation, headquarters have urged Wholesale to make revenue by shifting resources, and they are living up to the headquarters' expectations. US peers included in equities business, demand is bigger than the capacity of balance sheet of each firm. In this kind of situation, the level of profitability is remaining with the firms. I believe has trended up somewhat. That's my answer to your first question.

Speaker #1: Much. On the other hand, when it comes to the short term, depending on the themes or situation of markets, the demand for certain products sometimes greatly increases.

Speaker #1: This time, the equities market has been quite active. So, financial resources have been reallocated from other businesses to the equities business. This is a sign that wholesale self-funding worked.

Speaker #1: So where there are opportunities for revenue generation, headquarters have reached out to wholesale to make revenue by shifting resources. And they are living up to the headquarters' expectations.

Speaker #1: And U.S. bears included in equities business, demand is bigger than the capacity of balance sheet of each firm. So, in this kind of situation, the level of profitability is remaining with the firms.

Speaker #1: I believe it has trended up somewhat. That's my answer to your first question. Regarding your second question about headquarters costs, in the most recent quarter, there were some costs incurred.

Hiroyuki Moriuchi: Regarding your second question about headquarters cost. In the most recent quarter, there was some cost incurred, but headquarters relocation itself will be proceeded with gradually, so the associated costs will be incurred gradually. This fiscal year and next, we expect certain volume of cost. However, impact on this year's performance is considered to be relatively small. While I would like to refrain from speaking about specific number, at the right timing, we would like to explain the relevant cost.

Speaker #1: But headquarter relocation itself will be proceeded with gradually, so the associated costs will be incurred gradually. So, this fiscal year and next, we expect a certain volume of cost.

Speaker #1: However, the impact on this year's performance is considered to be relatively small. While I would like to refrain from speaking about specific numbers, at the right timing, we'd like to explain the relevant cost.

[Analyst] (J.P. Morgan Securities): Thank you. You can give me qualitative remark about Otemachi properties and other properties. Now you are paying rent, after you've completed relocation and you've exited the existing buildings, you've returned the floor, on a net basis, cost is going to stay flat?

Koki Sato: Thank you. You can give me qualitative remark about Otemachi properties and other properties. Now you are paying rent, after you've completed relocation and you've exited the existing buildings, you've returned the floor, on a net basis, cost is going to stay flat?

Speaker #1: Thank you. So, you can give me a qualitative remark about the Otemachi property and other properties. Now, you are paying rent. Then, after you’ve completed relocation and exited the existing buildings, you’ve returned the floor.

Speaker #1: Then on a net basis, cost is going to stay flat. Thank you for the follow-up question. Regarding headquarters, the expense will switch from rent expense to depreciation after relocation.

Hiroyuki Moriuchi: Thank you for the follow-up question. Regarding headquarters, the expense will switch from rent expense to depreciation after relocation. In the medium to long term, the headquarters-related cost will stay flat or annual cost, I believe, will end up being a bit lower, though I do not have specific number here. When we are ready to disclose, we'd like to follow up with this.

Speaker #1: But in the medium to long term, the headquarters-related costs will stay flat on an annual basis. I believe they will end up being a bit lower, though I do not have a specific number here.

Speaker #1: So, when we are ready to disclose, we'd like to follow up with this. Thank you. Thank you very much.

[Analyst] (J.P. Morgan Securities): Thank you. Thank you very much.

Koki Sato: Thank you. Thank you very much.

Speaker #2: I'm Otsuka from SBI. I hope you can hear me. Yes, we can hear you. Loud and clear. Page 25. I have two questions, and I would like to have a response after the first question.

[Analyst] (SBI): I'm Otsuka from SBI. I hope you can hear me.

Wataru Otsuka: I'm Otsuka from SBI. I hope you can hear me.

Hiroyuki Moriuchi: Yes, we can hear you loud and clear.

[Analyst] (SBI): Page 25. I have two questions, and I would like to have response after the first question. I'm looking at page 25. As for revenue in international operations, you have three regions, and this quarter, JPY 39.8 billion from Americas. In comparison to the past, for example, in fiscal 2020, this level was achieved. Asia and Oceania, JPY 47.2 billion, this is a huge amount that was not seen before. What are the factors, and how sustainable is this level of income? As for EMEA or Europe, market was performing well, but losses continue to be incurred. Competitors, Paribas and Deutsche, in markets IBD division, they are reporting profits. Of course, the businesses are different between Nomura and them. In Europe, despite a favorable market environment, losses are incurred. Could you comment on these? Thank you for your question, Mr. Otsuka.

Wataru Otsuka: Page 25. I have two questions, and I would like to have response after the first question. I'm looking at page 25. As for revenue in international operations, you have three regions, and this quarter, JPY 39.8 billion from Americas. In comparison to the past, for example, in fiscal 2020, this level was achieved. Asia and Oceania, JPY 47.2 billion, this is a huge amount that was not seen before. What are the factors, and how sustainable is this level of income? As for EMEA or Europe, market was performing well, but losses continue to be incurred. Competitors, Paribas and Deutsche, in markets IBD division, they are reporting profits. Of course, the businesses are different between Nomura and them. In Europe, despite a favorable market environment, losses are incurred. Could you comment on these?

Speaker #2: I'm looking at page 25 as for revenue in international operations. You have three regions. And this quarter, $39.8 billion from Americas. In comparison to the past, for example, in fiscal 2020, this level was achieved.

Speaker #2: But Asia and Oceania, 47.2. This is a huge amount that was not seen before. What are the factors, and how sustainable is this level of income, as for India or Europe?

Speaker #2: The market was performing well, but losses continue to be incurred. Competitors Paribas and Deutsche in the Market ID division are reporting profits. Of course, the businesses are different between Nomura and them.

Speaker #2: But in Europe, despite a favorable market environment, losses are incurred. Could you comment on these? Thank you for your question, Mr. Otsuka. As for international operations, the US is at a high level.

Hiroyuki Moriuchi: Thank you for your question, Mr. Otsuka. As for international operations, the US is at a high level, but this was a level similar to what was achieved in the past year. As for Asia Pacific, this high level of income is quite unusual, and you would like to understand the background. This fiscal year, as we have been discussing, equity contributed hugely to increase in revenue. In addition, FX and emerging also enjoyed a very large increase in revenue. Flow credit was also relatively strong. In addition to these, what is different from the past is IWM, International Wealth Management. Since around four to five years ago, we began to revitalize the business, and initially there was a J curve, and we had to restructure several franchises.

Hiroyuki Moriuchi: As for international operations, the US is at a high level, but this was a level similar to what was achieved in the past year. As for Asia Pacific, this high level of income is quite unusual, and you would like to understand the background. This fiscal year, as we have been discussing, equity contributed hugely to increase in revenue. In addition, FX and emerging also enjoyed a very large increase in revenue. Flow credit was also relatively strong. In addition to these, what is different from the past is IWM, International Wealth Management. Since around four to five years ago, we began to revitalize the business, and initially there was a J curve, and we had to restructure several franchises.

Speaker #2: But this was a level similar to what was achieved in the past year. As for Asia-Oceania, this high level of income is quite unusual and you would like to understand the background.

Speaker #2: This fiscal year, as we have been discussing, Equity contributed hugely to the increase in revenue. In addition, FX and Emerging also enjoyed a very large increase in revenue.

Speaker #2: Credit flow credit was also relatively strong. In addition to these, what is different from the past is IWM—International Wealth Management. Since around four to five years ago, we began to revitalize the business, and initially there was a J-curve and we had to restructure several franchises.

Speaker #2: But since around two years ago, we began to see a blossoming of these efforts, and in this fiscal year, not only in terms of revenue but also in terms of income, IWM is making a huge contribution.

Hiroyuki Moriuchi: Since around two years ago, we began to see blossoming of these efforts, and in this fiscal year, not only in terms of revenue, but in terms of income, IWM is making a huge contribution. In relation to this, although there is some fluctuation, in comparison to other products from GM, we expect more stable growth continuously. As for EMEA, you've mentioned the other competitors and why the sustained loss-making situation. We would like to strengthen business. We are making efforts to grow business. As for the magnitude of the losses on a two to three-year range, it is being reduced. This fiscal year, rates are showing relatively strong growth, and fixed income and equity both have enjoyed increasing revenue. On the other hand, in particular, we are focusing on growing equities, and regional diversification and regional expansion are being pursued. We are making progress gradually.

Speaker #2: In relation to this, although there is some fluctuation, in comparison to other products from GM, we expect more stable growth, continuously. As for IMEA, you've mentioned other competitors.

Speaker #2: And while the sustained loss-making situation we would like to strengthen business, we are making efforts to grow business. As for the magnitude of the losses on two to three-year range, it is being reduced.

Speaker #2: This fiscal year, rates are showing relatively strong growth, and fixed income and equity both have enjoyed increases in revenue. On the other hand, in particular, we are focusing on growing equities, and regional diversification and regional expansion are being pursued.

Speaker #2: We are making progress gradually, but when it comes to IMEA, especially in our international operations as a booking center—booking hub—we are using IMEA.

Hiroyuki Moriuchi: When it comes to EMEA, especially in our international operations, as booking center, booking hub, we are using EMEA. As transfer pricing, of course, we are assigning appropriate pricing. As a legal entity, there are some costs that need to be incurred. In that respect, amongst the three international regions, EMEA is a special region. It is a profit center as well as a cost center or functioning similar to corporate center. Therefore, in comparison to other regions, there is some added burden for EMEA. As for self-funding framework, based on that framework, there is some dynamic reallocation of financial resources. In this time, in wholesale, as we have repeatedly mentioned, US equity and Asian equities are capturing very good opportunities in large number, there was an intentional shift of resources to that area, and that also is resulting in these numbers.

Speaker #2: Transfer pricing—of course, we are assigning appropriate pricing, but as a legal entity, there are some costs that need to be incurred. In that respect, among the three international regions, IMEA is a special region.

Speaker #2: It is a profit center as well as a cost center, functioning similarly to a corporate center. Therefore, in comparison to other regions, there is some added burden for IMEA under the wholesale self-funding framework based on that framework.

Speaker #2: There is some dynamic reallocation of financial resources at this time in wholesale. As we have repeatedly mentioned, US equities and Asian equities are capturing very good opportunities in large numbers.

Speaker #2: And therefore, there was an intentional shift of resources to that area. And that also is resulting in these numbers. So does that mean that, looking from the outside, these are losses?

Hiroyuki Moriuchi: Does that mean that seen from outside, these are losses? Is it a profit center? It appears only as a cost center. Seen from the management, you believe that this is something you have to persevere. If we stop EMEA, we cannot do business in other international regions. That is what is meant by booking center. For wholesale overall, I believe it would be more accurate to look at the entire picture of wholesale. It may be difficult to take such a view, globally, in managing our business, we are looking at global products for wholesale rather than looking at region by region. We hope you will be able to see wholesale business in that perspective. The second question is on page 29 about cash and securities. Rather, inflows of cash and securities. It was very large at JPY 8 trillion.

Wataru Otsuka: Does that mean that seen from outside, these are losses? Is it a profit center?

Speaker #2: Is it the profit center? It appears only as a cost center. But from the management's perspective, you believe that this is something you have to persevere with.

Hiroyuki Moriuchi: It appears only as a cost center. Seen from the management, you believe that this is something you have to persevere. If we stop EMEA, we cannot do business in other international regions. That is what is meant by booking center. For wholesale overall, I believe it would be more accurate to look at the entire picture of wholesale. It may be difficult to take such a view, globally, in managing our business, we are looking at global products for wholesale rather than looking at region by region. We hope you will be able to see wholesale business in that perspective. The second question is on page 29 about cash and securities. Rather, inflows of cash and securities. It was very large at JPY 8 trillion.

Speaker #2: If we stop IMEA, we cannot do business in other international regions. That is what is meant by 'booking center.' So, for Wholesale overall, I believe it would be more accurate to look at the entire picture of Wholesale.

Speaker #2: It may be difficult to take such a view, but globally, in managing our business, we are looking at global products for wholesale rather than looking at region by region.

Speaker #2: So, we hope you will be able to see the wholesale business from that perspective. The second question is on page 29 about cash and securities—or rather, inflows of cash and securities.

Speaker #2: It was very large at $8 trillion. There was an outflow in the previous quarter. In comparison to the previous quarter, there were fluctuations. To the extent possible, could you discuss what the reasons behind that are, and what inflows or outflows there were?

[Analyst] (SBI): There was an outflow in the previous quarter. In comparison to previous quarter, there were fluctuations. To the extent possible, could you discuss what the reasons behind are and what inflows, outflows there were? Thank you for your question. It may be difficult to discern here, but a large negative this time is because there were several major corporate actions, and as a result, there was a large amount of funding that was paid out. This was a unique situation. If we look only at retail inflows of cash and securities, it is JPY +400 billion. Therefore, it is not as if this is indicating a major trend. I believe it would be better to understand that there was some special factor or unique factor.

Wataru Otsuka: There was an outflow in the previous quarter. In comparison to previous quarter, there were fluctuations. To the extent possible, could you discuss what the reasons behind are and what inflows, outflows there were?

Speaker #2: Thank you for your question. It may be difficult to discern here, but a large negative this time is because there were several major corporate actions, and as a result, there was a large amount of funding that was paid out.

Hiroyuki Moriuchi: Thank you for your question. It may be difficult to discern here, but a large negative this time is because there were several major corporate actions, and as a result, there was a large amount of funding that was paid out. This was a unique situation. If we look only at retail inflows of cash and securities, it is JPY +400 billion. Therefore, it is not as if this is indicating a major trend. I believe it would be better to understand that there was some special factor or unique factor.

Speaker #2: So this was a unique situation. If we look only at retail, inflows of cash and securities, it is a positive of more than $400 billion.

Speaker #2: Therefore, it is not as if this is indicating a major trend. I believe it would be better to understand that or identify unique factors. If you have any numbers, you can discuss them.

[Analyst] (SBI): If you have any numbers that you can discuss regarding retail, it may be completely equal, but in wealth management, what kind of funding inflow, what kind of product inflow did you see on page eight? There were various descriptions of strong performance of equities. If you could add color to that, please. Thank you for that question. Generally speaking, as for the trends in retail, as you rightly mentioned, total sales on page eight, I believe that shows the trend very clearly. I see. Investment trusts were sold, and discretionary investment was also doing well because of cash in? Yes, that is correct. I see. Thank you.

Wataru Otsuka: If you have any numbers that you can discuss regarding retail, it may be completely equal, but in wealth management, what kind of funding inflow, what kind of product inflow did you see on page eight? There were various descriptions of strong performance of equities. If you could add color to that, please.

Speaker #2: Regarding retail, it may be completely equal, but in wealth management, what kind of funding inflow—what kind of product inflow—did you see on page eight?

Speaker #2: There were various descriptions of strong performance in equities, so if you could add color to that, please. Thank you for that question. Generally speaking, as for the trends in retail, as you rightly mentioned, total sales on page 8—I believe that shows the trend very clearly.

Hiroyuki Moriuchi: Thank you for that question. Generally speaking, as for the trends in retail, as you rightly mentioned, total sales on page eight, I believe that shows the trend very clearly.

Speaker #2: I see. Then, investment trusts that were sold in discretionary investment were also doing well because of cash-in. Yes, that is correct. I see. Thank you.

Wataru Otsuka: I see. Investment trusts were sold, and discretionary investment was also doing well because of cash in?

Hiroyuki Moriuchi: Yes, that is correct.

Wataru Otsuka: I see. Thank you.

Speaker #1: The next question comes from Niwa-san from UBS Securities. Thank you. Can you hear me? Yes. Niwa-san, please go ahead. Thank you. I have two questions.

Operator: This question comes from Niwa-san from UBS Securities. Thank you. Can you hear me? Yes. Niwa-san, please go ahead. Thank you. I have two questions regarding page 19, wealth management and ROE of the total company first. Page 19, wealth management recent situation. Inflow has been strong according to your explanation, but the market environment is uncertain. In this situation, how should I put it? What is the key points of advice? In other words, about what are your customers concerned about? Even if the current uncertain environment continues, could we expect the stable revenue to continue? Could I have some more colors regarding some episodes that you can share with us regarding the dialogues you have had with clients? The second question, 15% or more of ROE achieved in Q1.

Operator: This question comes from Niwa-san from UBS Securities.

Koichi Niwa: Thank you. Can you hear me?

Hiroyuki Moriuchi: Yes. Niwa-san, please go ahead.

Koichi Niwa: Thank you. I have two questions regarding page 19, wealth management and ROE of the total company first. Page 19, wealth management recent situation. Inflow has been strong according to your explanation, but the market environment is uncertain. In this situation, how should I put it? What is the key points of advice? In other words, about what are your customers concerned about? Even if the current uncertain environment continues, could we expect the stable revenue to continue? Could I have some more colors regarding some episodes that you can share with us regarding the dialogues you have had with clients? The second question, 15% or more of ROE achieved in Q1.

Speaker #1: Regarding page 19, wealth management and ROE of the total company first. Page 19, wealth management, recent situation, inflow has been strong according to your explanation but the market environment is uncertain.

Speaker #1: So, in this situation, how should I put it? What are the key points of advice, in other words? What are your customers concerned about?

Speaker #1: Even if the current uncertain environment continues, could we expect stable revenue to continue? Could you also give us some more color, perhaps share any episodes or conversations you've had with clients that illustrate this?

Speaker #1: The second question: 15% or more ROE achieved in the first quarter. My question is, were there areas where you could have done better in terms of revenue?

[Analyst] (UBS Securities): My question is, was there areas where you could have done better in terms of revenue? ROE exceeded target and it's very good. Hypothetically, if you could have done this and that, then do you believe you could have delivered more revenue? For example, Wholesale allocation, if you had given more resources beyond the self-funding to global markets. What would have been the result Q2 onward? Could you have delivered a bigger revenue had you allocated more resources to certain businesses? Also I'd like to know about the sustainability of revenue. Thank you very much. Regarding your first question, the market is now uncertain, but what are the key points to look at to understand business? That's how I understood your question. In that sense, as you pointed out, our wealth management business has recurring revenue and flow revenue.

Koichi Niwa: My question is, was there areas where you could have done better in terms of revenue? ROE exceeded target and it's very good. Hypothetically, if you could have done this and that, then do you believe you could have delivered more revenue? For example, Wholesale allocation, if you had given more resources beyond the self-funding to global markets. What would have been the result Q2 onward? Could you have delivered a bigger revenue had you allocated more resources to certain businesses? Also I'd like to know about the sustainability of revenue.

Speaker #1: ROE exceeded the target and it's very good, but hypothetically, if you could have done this and that, do you believe you could have delivered more revenue?

Speaker #1: For example, wholesale allocation—if you had given more resources beyond the sale funding to global markets, what would have been the result, second quarter onward?

Speaker #1: But could you have delivered bigger revenue had you allocated more resources to certain businesses? Also, I'd like to know about the sustainability of revenue.

Speaker #1: Thank you very much, Niwa-san. Regarding your first question, the market is now uncertain, but what are the key points to look at to understand the business?

Hiroyuki Moriuchi: Thank you very much. Regarding your first question, the market is now uncertain, but what are the key points to look at to understand business? That's how I understood your question. In that sense, as you pointed out, our wealth management business has recurring revenue and flow revenue. In terms of flow revenue, flow revenue is influenced by market sentiments. We would like to stay close to our clients and conduct consulting-based services, and that's what we've been doing. Regarding recurring revenue, which is relatively stable in wealth management, we are working to grow recurring revenue. We have recurring revenue, and that's supported by the net increase in recurring assets, and also recurring revenue cost coverage ratio.

Speaker #1: So that's how I understood your question. In that sense, as you pointed out, our wealth management business has recurring revenue and flow revenue. In terms of flow revenue, flow revenue is influenced by market sentiment.

Hiroyuki Moriuchi: In terms of flow revenue, flow revenue is influenced by market sentiments. We would like to stay close to our clients and conduct consulting-based services, and that's what we've been doing. Regarding recurring revenue, which is relatively stable in wealth management, we are working to grow recurring revenue. We have recurring revenue, and that's supported by the net increase in recurring assets, and also recurring revenue cost coverage ratio. Those are the key points to pay attention to. Regarding your second question, ROE of more than 15%, especially in the area of Wholesale regarding resource allocation, were there areas where we could have done better? As you say, if we had infinite amount of resources, we could have received more demand from clients. We could have captured more demands from customers because demands are quite strong.

Speaker #1: So, we would like to stay close to our clients and conduct consulting-based services, and that's what we've been doing. Regarding recurring revenue, which is relatively stable in wealth management, we are working to grow recurring revenue.

Speaker #1: We have recurring revenue, and that's supported by the net increase in recurring assets, as well as recurring revenue cost coverage ratios. Those are the key points to pay attention to.

Hiroyuki Moriuchi: Those are the key points to pay attention to. Regarding your second question, ROE of more than 15%, especially in the area of Wholesale regarding resource allocation, were there areas where we could have done better? As you say, if we had infinite amount of resources, we could have received more demand from clients. We could have captured more demands from customers because demands are quite strong.

Speaker #1: Regarding your second question, ROE of more than 15%, especially in the area of Wholesale—regarding resource allocation—were there areas where we could have done better?

Speaker #1: As you say, if we had an infinite amount of resources, then we could have received more demand from clients. We could have captured more demand from customers because demand is quite strong.

Speaker #1: So in that sense, well, we had to be selective in choosing which deal to do, and that places the burden on our business divisions.

Hiroyuki Moriuchi: Well, in that sense, we had to be selective in choosing which deal to do. That placed burden on our business divisions, but still concentration risk for a group as a whole, and concentration risk on certain products within Wholesale has been controlled, so that in the medium-long term, we can grow in a sustainable manner. For that, the approach we took was unavoidable. That's our understanding. Hope I answered your question. Thank you very much. Regarding the second point, I'd like to ask a follow-up question. It's another hypothetical question, but if without what you have described, what would have been the ROE level? What would have been the highest level of ROE you could have achieved hypothetically? Thank you. It's a very difficult question to answer. With consent understanding from shareholders, we hold excess capital.

Speaker #1: But still, concentration risk for the group as a whole, and concentration risk on certain products within Wholesale, has been controlled so that, in the medium to long term, we can grow in a sustainable manner.

Speaker #1: So, for that, the approach we took was unavoidable. That's our understanding. I hope I answered your question—thank you very much. Regarding the second point, I'd like to ask a follow-up question.

Koichi Niwa: Thank you very much. Regarding the second point, I'd like to ask a follow-up question. It's another hypothetical question, but if without what you have described, what would have been the ROE level? What would have been the highest level of ROE you could have achieved hypothetically?

Speaker #1: It's another hypothetical question, but if not for what you have described, then what would have been the ROE level? So, what would have been the highest level of ROE you could have achieved?

Speaker #1: Hypothetically, thank you. But it's a very difficult question to answer. So, with consent and understanding from shareholders, we hold excess capital, in addition to regulatory capital. We have an internal target of 11%, and we have a buffer above that.

Hiroyuki Moriuchi: Thank you. It's a very difficult question to answer. With consent understanding from shareholders, we hold excess capital. In addition to regulatory capital, we have internal target of 11%, and we have a buffer above that. Regarding capital usage, sometimes we allocate capital to Wholesale beyond self-funding, but actually, there is a need for capital. Can we recoup the capital? The flexibility of resources is what we have to pay attention to, because once resources are given to business division, the capital is not returned easily.

Hiroyuki Moriuchi: In addition to regulatory capital, we have internal target of 11%, and we have a buffer above that. Regarding capital usage, sometimes we allocate capital to Wholesale beyond self-funding, but actually, there is a need for capital. Can we recoup the capital? The flexibility of resources is what we have to pay attention to, because once resources are given to business division, the capital is not returned easily. If it's used for client business, there is certain duration given that for future opportunities, we will have to retain certain buffer. If we had captured all opportunities, we would have achieved ROE above 15.4%, but that might have undermined the future growth opportunities. It's a hypothetical question, but it is a difficult question to answer. Thank you. Thank you very much for making efforts to answer my question. I understood. Thank you.

Speaker #1: Regarding capital usage, sometimes we allocate capital to wholesale beyond sale funding, but when there is actually a need for capital, can we recoup the capital?

Speaker #1: So the flexibility of resources is what we have to pay attention to, because once resources are given to a business division, the capital is not returned easily if it is used for client business.

Hiroyuki Moriuchi: If it's used for client business, there is certain duration given that for future opportunities, we will have to retain certain buffer. If we had captured all opportunities, we would have achieved ROE above 15.4%, but that might have undermined the future growth opportunities. It's a hypothetical question, but it is a difficult question to answer. Thank you.

Speaker #1: There is a certain duration given for future opportunities, so we will have to retain a certain buffer. If we had captured all opportunities, then we would have achieved ROE above 15.4%, but that might have undermined future growth opportunities.

Speaker #1: So, it's a hypothetical question, but it is a difficult question for you. Thank you very much for making the effort to answer my question. I understand.

Koichi Niwa: Thank you very much for making efforts to answer my question. I understood. Thank you.

Speaker #1: Thank you.

Speaker #2: It's time to finish. We'd like to conclude the question-and-answer session. If you have any further questions, please contact our Nomura Holdings IR department.

Operator: It's time to finish, we'd like to conclude 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 closing address by Nomura Holdings.

Speaker #2: In closing, we would like to make a closing address from Nomura Holdings.

Speaker #3: Closing message from Nomura Holdings: Thank you very much for your participation this quarter. There were market themes and market opportunities; that is certainly the case.

Hiroyuki Moriuchi: Closing message from Nomura Holdings. Thank you very much for your participation. In this quarter, there were market themes, market opportunities. That is certainly the case, and in order to capture these opportunities, we are engaged in business portfolio restructuring and structural reform in the past two, three years. These were translated into actual good performance. Towards good 2030, we were able to make a good start immediately after a revision of our target. Summer is a slow season typically, but Q2 and beyond, we would like to make sure that we continue to achieve strong performance, and we appreciate your continuous support. Thank you very much once again for your patience.

Hiroyuki Moriuchi: Thank you very much for your participation. In this quarter, there were market themes, market opportunities. That is certainly the case, and in order to capture these opportunities, we are engaged in business portfolio restructuring and structural reform in the past two, three years. These were translated into actual good performance. Towards good 2030, we were able to make a good start immediately after a revision of our target. Summer is a slow season typically, but Q2 and beyond, we would like to make sure that we continue to achieve strong performance, and we appreciate your continuous support. Thank you very much once again for your patience.

Speaker #3: In order to capture these opportunities, we engaged in business portfolio restructuring and structural reform over the past two to three years. These efforts translated into actual good performance.

Speaker #3: Towards Good 2030, we were able to make a good start immediately after the revision of our target. Summer is typically a slow season, but in Q2 and beyond, we would like to make sure that we continue to achieve strong performance, and we appreciate your continuous support.

Speaker #3: And thank you very much once again for your patience.

Speaker #2: Thank you for taking the time. That concludes today's conference call. You may now disconnect your lines.

Operator: Thank you for taking your time, that concludes today's conference call. You may now disconnect your lines. The host has placed this conference on hold.

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