Nomura Holdings FY2025 Earnings Call - Record Net Income Driven by Wealth Management Momentum

Conference Call Moderator, Nomura Holdings: Good day everyone, and welcome to today’s Nomura Holdings fourth quarter and full year operating results for fiscal year ended March 2026 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.

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.

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

Wealth Management and Wholesale drove company-wide earnings, while both divisions achieving their highest income since their respective establishments. Wealth Management achieved growth of 23% in income before income taxes as the recurring revenue-based business model gained further momentum, and major KPIs also saw substantial growth. Investment Management saw its assets under management rise by more than 50% over the year to around JPY 137 trillion, with a substantial increase in the stable business revenue base. Meanwhile, Wholesale saw revenue growth across all regions, and both Global Markets and Investment Banking achieved record high revenue, resulting in income growth of 21%. As for Banking, it has steadily expanded its business base since the division was established and is making solid progress toward implementing deposit sweep. In view of our strong performance for the period ended March 26, we expect to pay an ordinary dividend of 24 yen per share.

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

As you can see in the top left, in Wealth Management, net revenue was more or less flat versus the previous quarter at JPY 133.1 billion, while income before income taxes exceeded the strong previous quarter, rising 5% to JPY 61.2 billion. The recurring revenue cost coverage ratio reached 72%, and the division achieved a high level of profitability with the margin on income before income taxes remaining above 40%, which is higher than the industry average. As shown on the bottom left, recurring revenue reached an all-time high of JPY 56.8 billion. Net inflows of recurring revenue assets remained at a high level, exceeding JPY 400 billion once again this quarter. Flow revenue was down slightly, but at JPY 76.4 billion, remained high in absolute terms, second only to the level of the previous quarter as we were able to effectively support customers’ need amid volatile market conditions.

Next, I will give you an update on total sales by product. Please turn to page 8. Total sales rose 75% quarter-on-quarter to around JPY 11.7 trillion. This was largely due to major tender offers totaling JPY 4 trillion. Even excluding this factor, total sales remained at a high level by product. Excluding the tender offers, sales of Japanese stocks remain high thanks to a contribution from primary deals. Sales of bonds fell by 5%, while demand for foreign products was solid. Sales of Japanese bonds fell slightly in the absence of primary deals. Sales of investment trusts and discretionary investments, which constitute recurring revenue assets, saw some fluctuations but remained at a high level as a flow from savings to investments continued. In insurance, meanwhile, sales of foreign currency denominated products declined on weaker yen. Next, we take a look at KPIs on page 9.

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

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

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

Alternative assets under management on the bottom right grew to a record high JPY 3.6 trillion, an increase of about JPY 300 billion from the end of December, of which fund inflows account for more than half.

Senior Management/Wholesale Division Lead, Nomura Holdings: Next, Wholesale. Please refer to page 12. On the top left, you can see that Wholesale net revenue fell 2% to JPY 308.1 billion, and income before income taxes declined 31% to JPY 43.2 billion. Looking at the breakdown on the bottom left, Global Markets net revenue slipped 2%, and Investment Banking net revenue fell 3%. Discussion by business line can be found on page 13. Global Markets net revenue was down 2% at JPY 252.5 billion. Please find the middle section on the right. Fixed Income revenue declined 8% to JPY 125.3 billion. In Macro Products, rates revenue was weak in the Americas, with weak volatility rising, but rose in Japan. FX emerging revenue offset some of the weakness in rates revenue as client flows were accurately captured. In Spread Products, Securitized Products revenue remained high, mainly in Americas, and fell quarter-on-quarter in AEJ.

Credit revenue was unchanged despite widening spreads. Equities revenue was up 6% to JPY 127.2 billion. Equity Products revenue reached a record high as revenue rose sharply in Japan and AEJ on strong financing and derivatives performance. Execution Services revenue rose in all regions, benefiting from a pickup in client activity. Please go to page 14 next. As shown on the bottom left, Investment Banking net revenue came to JPY 55.6 billion, down 3%, but still at a high level. By product in advisory, revenue growth momentum continued based on involvement in many M&A deals, chiefly in Japan. The range of deals was varied and included domestic realignment, privatization, and cross-border deals. In financing and solutions, et cetera, ECM revenue rose partly on contributions from large-scale CB and PO deals. Solutions business continued to perform well as it tapped demand for unwinding of cross-shareholdings.

Let’s continue to banking on page 15. On the top left, banking net revenue was up 6% at JPY 14.5 billion, and income before income taxes was down 27% at JPY 3.0 billion. Loans outstanding accumulated steadily during the quarter as recognition of loan products on offer grew. The investment trust balance grew thanks to both market factors and the establishment of new trusts. Income fell as expenses rose, including spending on IT and a part of the standardization of business processes and recognition of taxes and public charges. We would like you to view this as an upfront investment aimed for future business expansion. Next, expenses on page 16. Group-wide expenses were JPY 469.5 billion, a quarter-on-quarter increase of about 13% or JPY 53 billion.

Extraordinary factors that boosted expenses include impairment losses associated with our equity stake in investee company, compensation and benefits accompanying changes to remuneration regulation, and effects from changes to the method of presentation of financial statements. When these factors are excluded, we think it’s evident that the cost structure in place is appropriate for the revenue growth. We aim to balance revenue growth and cost controls while making steady investment in growth. Next, page 17 for financial position. As you can see in the bottom left, the Common Equity Tier 1 ratio stood at 12.9% at the end of March, down 0.1 point from 13.0% at the end of December. This concludes our overview of our fourth quarter results. Lastly, please allow me to briefly talk about the situation related to private credit. First, our group’s exposure is properly diversified and managed.

Breaking down our exposure, in wholesale business, lender financing for private credit funds comes to about $800 million, and direct lending to SMEs comes to about $1.2 billion, while in Investment Management, investment holdings related to private credit come to about $400 million. Lender financing is backed by a diversified corporate credit portfolio, and the credit fund counterparties are by and large supported by long-term capital provided by institutional investors and the like. Direct lending is diversified across more than 40 companies, and investment management investments are also suitably diversified and have been performing stably. In closing, we announced Reaching for Sustainable Growth, our vision for business in 2030, in May 2024, and set as numerical targets the consistent attainment of ROE of 8%-10% or more, and income before income taxes of more than JPY 500 billion.

With our targets attained now in the span of two years, great strides have been made to build the franchise required to realize sustained growth of the Nomura Group. I would like to briefly touch upon the situation as of now in April. In Wealth Management, net revenue is largely at the same level as in the fourth quarter. Uncertainty remains in the market due to geopolitical risk, but the flow of funds into products and services assuming a long-term diversification of investments remains firm, and client sentiment has been recovering. In Wholesale, net revenue has been trending much higher than in the fourth quarter, with equity markets rebounding sharply from the end of March and rising to new all-time highs. Client activity has picked up and equity products revenue has been strong. Rates have also been steadily monetizing client flows amid moderate market volatility.

We aim to monetize business opportunities while keeping mindful of appropriate risk levels and cost controls. Your continued support is appreciated. Thank you.

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

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

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

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

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

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

Based upon the earning power, they are hoping to grow business in that quarter, but additional capital is within self-funding. CET1 ratio impact through business expansion is not that significant. Within that, what would be the positioning of equity P&C and credit business? In the mid to long run, we want to have a balanced portfolio, and that policy remains unchanged. Of course, we want to grow equity, but regarding SP&PC, we will be looking at certain opportunities, and we will not deviate from that policy, and quantitative control will be in place as we try to manage our portfolio. I hope I answered your question. Thank you very much. In Q1, top-line performance was good. CET1 ratio will not decline so significantly, and ROE will improve. Is that the right interpretation? CET1 ratio will not decline due to this factor. We don’t think so.

As you rightly pointed out, we are also hopeful that this will lead to improved ROE. Thank you very much.

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

Senior Management/Wholesale Division Lead, Nomura Holdings: Thank you, Tsujino-san, for your questions. Regarding personnel expense, in the third quarter, we made the announcement, but deferred compensation change. That had an impact, and as a result, in the fourth quarter, we booked a relevant impact. Compared to the third quarter, the impact amount is smaller. However, it’s about the same as in the third quarter. In the third and fourth quarters, deferred compensation-related expense is booked. In the third quarter, I explained it, but there is a timing gap, a timing difference in terms of booking. For the fourth quarter, in terms of the amount, it’s smaller. This year, the impact is going to get closer to zero.

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

Hiroyuki Moriuchi, Chief Financial Officer, Nomura Holdings: As for the geographical split, all regions compared to the fourth quarter, we see outperformance, but regions other than the U.S. are particularly outperforming. The U.S. is performing well, but compared to other regions, growth rate is relatively lower. I hope I answered your question.

Conference Call Moderator, Nomura Holdings: Thank you very much.

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

Hiroyuki Moriuchi, Chief Financial Officer, Nomura Holdings: That happened, and then the situation got relaxed, and then there has been less tension after April, and we saw recovery.

Conference Call Moderator, Nomura Holdings: Okay, understood. Thank you very much.

Watanabe, Analyst, Daiwa Securities: The next question is Daiwa Securities, Watanabe-san. Watanabe-san, please go ahead. Daiwa Securities, Watanabe. I have two questions. First, private credit, $2.4 billion you explained. You also said diversification is in place, software by sector. Can you give us some more detailed breakdown? Retail, private related products, what is the redemption call and what is your policy of sales going forward? Secondly, capital policy. You didn’t announce any new buyback program. RSU, JPY 40 billion. It would be JPY 20 billion about buyback, 50% total payout ratio to shareholders. Is that the right interpretation? Watanabe-san, thank you very much. First of all, private credit sector diversification. What is the picture? Overall, healthcare, business service, software and computer service, consumer, engineering, and construction. These are the sectors included. Mostly healthcare and business service occupy quite a large proportion. Software, not necessarily high in terms of percentage.

Hiroyuki Moriuchi, Chief Financial Officer, Nomura Holdings: On top of that, there is regional diversification in place as well. Regarding the second half of your first question, retail customers, private credit. What about the redemption? Regarding sales policies, as client sentiments, there is some conservativeness, but at the moment, we are not seeing any calls for cancellation or requests. Originally, or to begin with, when we sell to retail customers, we tell them that it’s based upon the assumption of mid to long-term investment. When we obtain their understanding, we sell those products to them for the first time. I think those communications had been effective, so much so that there hasn’t been any significant run. On buyback and total payout ratio, first half, second half put together, full year, RSU included, 58%. Excluding RSU, it’s beyond 50%. I hope that answers your question. Regarding buyback, announcement timing.

If there’s an announcement in 4Q, that would be fiscal year 2025. The JPY 60 billion buyback program we announced in Q3.

Senior Management/Wholesale Division Lead, Nomura Holdings: In Q4, we assumed the Q4 profit and we defined the amount based upon our assumption. Thank you very much. The next question comes from J.P. Morgan Securities, Sato-san. Sato-san, please. Thank you. I am Sato from J.P. Morgan Securities. I have two questions. First question is about Wholesale and Wealth Management expense outlook. In Wholesale, performance was strong and there was adjustment made to the bonus, I believe, and as you explained, and there were one-time factors. 83% of our cost income ratio for the year and next following year onward, if top line is at the same level, then what kind of a level can we expect? On the other hand, for Wealth Management, in the fourth quarter, the performance was solid. The quarterly expense came down. In this strong performance, I believe you are doing the payout to employees.

Even in light of that, if this is the level you are achieving, then when recurring asset growths are bigger, then can we expect more leverage? Could you explain your outlook for expense for those two divisions? Secondly, in the third quarter, related to Laser Digital, loss was booked. At that time, risk control and net exposure reduction were explained. In the fourth quarter period, based upon the market situation in the fourth quarter and based upon the result of the third quarter, and what is the update on the effects achieved, as a result of the countermeasure you have taken? Thank you for your question. First, the outlook for expense. First, Wholesale. In the fourth quarter on a Q on Q basis, plus JPY 13 billion. Out of this increase, 30% is due to the compensation regulatory change and also end of the year performance-linked bonus adjustment.

The last part is increase in the professional fee and the payment for services received. The expense rate increased, but fixed cost was suppressed. This fiscal year, in the sense of the review of expense in the fourth quarter, Wholesale, they had a few one-time items and also fees paid or professional fees. For example, SP&PC Pipeline. Cost was incurred before the deal as we hired lawyers, and the revenue recognition got delayed. Compared to the fourth quarter, we expect the expense level to come down. As for Wealth Management, we booked high level of margin. Can we expect the same level this year? As for this year, advance investment in AI, also corporate cost increase due to inflation are expected, but continuously in Japan for Wealth Management, we are going to tightly control cost.

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

Sato, Analyst, J.P. Morgan Securities: Regarding the latter part of your answer, the situation in the crypto market and the impact on your profitability. Simply put, you’ve reduced the exposure, so the benefit you’ve received is as a result of reduced exposure and hedging or different ways of conducting market making. In other words, what I’m getting at is previously you said you are not intending to downsize the business, so the exposure level, I think, will increase in the future. Even with that, you have a structure in place to prevent impact on profit?

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

Sato, Analyst, J.P. Morgan Securities: Thank you very much. Understood.

Hiroyuki Moriuchi, Chief Financial Officer, Nomura Holdings: The next question. SBI Securities, Otsuka-san. Otsuka-san, please go ahead. Otsuka of SBI Securities. Is my voice coming through? Yes. Thank you very much. Thank you very much then. Could I do one question and one answer? The first question is just for confirmation purposes, but Wholesale, quarter-on-quarter basis profits declined. What’s the reason? Can you recap that? Revenue, as you had explained, Global Markets, fixed income, Q4 seasonality factor, and Iran had been quite significant, and expenses, expertise fee, and pay for performance. Due to the revenue and expenses, 30% decline in profit. That’s quite significant, but it wasn’t a surprise to you. That’s my first question. Thank you very much. You’ve made the situation very clear. If we divide between revenue and cost, as far as revenue is concerned, seasonality due to the end of the fiscal year risk position was controlled.

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

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

Isn’t that discussed at the board of directors meeting? Can you touch upon such aspects?

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

Otsuka, Analyst, SBI Securities: Your answer is you’re discussing that point heavily, right?

Senior Management/Wholesale Division Lead, Nomura Holdings: Yes, exactly.

Otsuka, Analyst, SBI Securities: Understood. Thank you.

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

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

Regarding cost-income ratio, we would like to grow revenue at a rate that beats inflation. That’s an important factor. For business, this is more important. In wholesale, ROI against additional capital needs to be increased to increase ROE. That’s our intention. Secondly, regarding our outlook for private credit, we need to separate my answer for midterm and long-term. Regarding private credit market itself, our view is positive. In the medium to long term, market has the potential to grow. On the other hand, bulge bracket and our peers have pointed out repeatedly that in the short term, credit cycle needs to be monitored closely and the risks must be controlled tightly. We do acknowledge the need to do so.

Earlier I answered to a previously asked question, but in SP&PC, we have a rich pipeline with attractive opportunities, but our stance is to take selective approach and medium to long-term portfolio. In Wholesale as a whole, we like to control so that no single product stands out too much. That kind of control will be needed, and we have an agreement in our approach with Wholesale. That’s all. Thank you very much. Just one more thing from me. Mainly, impact on you in terms of division, the impact is happening mainly in Wholesale, not really in Investment Management, but Wholesale is mainly impacted in terms of product line? Thank you very much. As for the existing P&L, especially risk side, Wholesale portion is the biggest, so your understanding is fine. As we think about medium to long-term growth, asset management is the area.

As we have said since 2020, we are closely looking at the market opportunities and not just private credit, but we look to grow private business. As part of that, hopefully private credit will grow. Wealth Management, based upon the principle of suitability, based upon the needs of our clients, we would like to steadily accumulate assets. Going back to the previous point, in the short term, we need to control risk for Wholesale, that’s as you pointed out. Thank you very much for the comprehensive answer.

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

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

Conference Call Moderator, Nomura Holdings: Thank you for taking your time, and that concludes today’s conference call. You may now disconnect your line.