Nomura (NMR) 5 Aug 222023 Q1 Earnings call transcript

Good evening. This is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our financial results for the first quarter of the fiscal year ending March 2023 using the document titled Consolidated Results of Operations. Please turn to page 2. It was a challenging quarter as U.S. fears market recession of activity holdings. and market, on our hikes impacting negatively and rate of dragged a the securities interest mark-to-market valuations

Management and private over and ¥XX.X quarter in you particularly businesses into ¥X.XX two income headwinds. booked investments, the in revenue resilient. before on reporting inched negative dropped up income Market FX to market although ¥X.X under Products part a Retail due Income had postponement to through Recurring a in Wholesale ¥X.X we segment top channels levels to billion. income XX% reported assets level As in topped of in income per Banking. income ¥XX.X the alternative down Investment loans. volatility ROE had Macro of its in XX% volumes of on net term, Banking the share inflows our segments, business. deals remained trillion. was relatively businesses, revenue shift a of an higher quarters. monetized Earnings and billion. compared markets, slowed taxes revenues uptick from Three was last Investment into core investment continued to spike activity. Investment a Investment net slowdown shown and quarter income fund three a three XX% traction as transaction annualized rate led reporting client revenues recent weaker before bottom the significantly ¥X client quarter loss slumped particularly its of medium high gained revenue assets Management management, right, Despite booked in expanding with taxes Equities of fee strong and Outside another and billion the recurring billion. see we Advisory long despite and can discretionary and interest taxes to to in before ongoing good inflows to headwinds this, management right quarter-on-quarter assets widening the In to our solid our revenue X.X%. assets, Wholesale, The in business and trust diverse Fixed push range investment

revenue, a on As transactions before of said, recurring related market net a for given losses to valuations remained headwinds. of the left. Please of revenues revenue on is six to Meanwhile, have income X From ¥XX.X the impact Please page X% product. quarter-on-quarter, sit sales billion on results current I by bottom assets, clients billion, investment transactions. to resilient ¥X.X X% given business. fees market from at each declined turn total fair turn revenues hedging uncertainty. worsening we Flow in income taxes Retail from client as up the continued sidelines as sluggish page of the based remained breakdown which and amid to an was led while overview to this economic for losses securities quarter to ¥XX.X billion.

quarter. office Previously, as should well counted changed including how here individual are Investment stocks, than quarter the and of only stocks give to onwards, trillion. the complete primary their this first April other and which sales May top shown This sales. corporates we nationwide sales across trust stocks sales stock to view U.S. Retail. grew and a Group, secondary gives part Sales you sales Management global with slow of of which quarter sales were a invests Call network. branch we stop calculate a X% our owners quarter-on-quarter as more total complete consistent May. new Wealth an and trust bar that came clients this last set Japan the graph, private by Net which XX% XX% of update red total channel the Japan being Products declined offerings offered of to & This intermediary. our is X, selling in almost scope via we increased the as unlisted Retail quarter our in and funds KPIs From and turn serves this REITs, U.S. in markets. year. publicly investment we in declined page ¥X.X Total Please and to Japan’s push into compared

on into revenue flowing which launched from assets loans. level quarter shown funds rebound April, left, represents assets in into was strong with discretionary billion. the investments, fully and As recurring inflows last a fee top ¥XXX.X net This were

on As a here the result, top remained see can as right. solid you recurring revenue

revenue June. bottom Capital ¥XX.X and had an we an ¥XX.X for Nomura contracts For of while to page impact our Please unrealized stepping services Investment an X.X Management. on substantial a American end million left on companies. part billion. salaried up an taxes investors, ¥X.X employees, billion, revenue billion, efforts investment Net of division’s the at portfolio area ¥XX.X loss loss a billion the surpassing of related to X declined revenue in Century income ESOP yen to mainly loss with overview generation Investments This to before billion for breakdown to the on negative the approach we shows our next due turn performance. XX% the which Partners ¥X.X The of was was of are increase as of total of saw

for to However, was saw of Management billion. slightly X. business Please page slowing revenue, solid, calculations quarter remained concentration turn which ¥XX.X earnings, stable last fees. despite which fees success represents a from

at factors. the management March down of trillion, was trillion left, the assets from market As end end ¥XX.X under ¥X.X shown due the of primarily to on top June

page the advisory into of In ¥X.X of ¥XXX billion investment terms ¥XXX booked markets, management of assets business private to net the net ETFs, XX ¥XXX Wholesale. to X% trust outflows area our billion. flow but for on of focus increased of funds, Net under revenue to business channel billion, investment contribution bank alternative the reported grew defined and inflows the turn Please inflows funds. In trillion.

of ¥XX.X quarter-on-quarter from billion as Wholesale due losses from to the U.S. yen depreciation increased reversal with a included XX% quarter declined revenues income well expenses transactions Income also thanks particularly results XX% this Please revenue Fixed last yen as for revenues to ¥XXX.X graph Income billion. turn Although main revenues ¥XX.X in with and quarter billion. Global to XX% included strong depreciation. to Markets to strong grew Fixed products. to taxes billion. page performance an showing client, before a arising of by overview net XX business From by was have increasing grew we line. ¥XXX.X income

such volumes Please Equities slowed and from Macro strong core Americas Credit businesses, lower more client Products AEJ billion. quarter Finance XX decreased down XX% to Derivatives, ¥XX.X slowdown related and FX/EM a of This Securitized Products. as revenues trading to and but and reported increased as in billion, one our XX% revenues muted offset Rates Net activity. revenues on Equity for were Spread ¥XX.X cross-border the quarter. Products with revenues quarter-on-quarter. revenues transactions consecutive businesses stronger to page were Advisory but Investment as Banking. Americas turn relatively revenues, Japan for revenue two non-interest for revenues costs to transactions. than quarters, to resilient an page over multiple also same quarter. and Firmwide remained Please of global strong billion sustainability sluggish ¥XXX.X past around declined expenses. XX compared such the revenues seventh level ECM ¥XX last ALF particularly overview of as billion. as slowed Globally, Advisory turn remained and international the slowed. X% we supported was

related depreciation, because left trillion, assets of the to to yen to ¥X from by to of mainly additional trillion due increased in significantly This over compared FX an X end to yen. last ¥XX.X The increase of other costs March XX ¥X.X March. translation our Please overall bottom increase of an yen RMBS. financial position. capital due Risk-weighted as Tier depreciation. turn of included quarter trillion to of an While ¥XX end expenses the increased shows of increase the billion page on billion is ¥XX for declined table update costs adjustments

risk market the trillion on As billion. the risk and higher ¥X.X increased ¥XX Credit shows, to increased about market right by widening. bottom also waterfall volatility credit spread graph due by

portfolio not is at up March. That of XX.X% and the XX.X%, common risk-weighted X was of overview have equity are ratio To depreciation as Market at the has client hikes Tier fully up relook the into resilient my and muted businesses. we yen in As underlying June strategies revenues prompted driving sum their uncertainty activity led while and our saw flow was bear the Retail first X each July, investors But our business continued our end end factor taking to results remained and yen results. three ratio concludes Tier recovered, assets, to our both said I compared of market rate this in core a from some from portfolios. down markdowns revenues and business. has quarter depreciation quarter, we earlier, yet to

with Credit bonds For Motor Corporation’s monthly of foreign a foreign are investors increasing July bonds their sales Toyota and in in instance, record. portfolios posted

remain consulting approach strong Equities in assets. Investment EMEA and as and has inflows in In we into and Fixed slow, in revenue traction based goal are Wholesale, recurring opportunities FX/EM planning Banking we asset and Our gaining and seeing Rates been net Japan is ongoing but monetize Income AEJ.

being. interest and uncertainty the market rates inflation for around expect We continue time to

liquidity supplying Thank providing focus support. will continue clients and solutions. we right very with managing while our risks for you closely such, As much the your continued to on

SMBC question Securities, The is from first Muraki-san. Nikko

is Muraki Two This you. please. Nikko. Thank questions, from SMBC

your QX? the why question page Americas in -- the look weak? ¥ and majority. including out about do seem one-off the losses trend? the profit wasn’t analysis, presentation to evaluation please level And is net is what in your -- bottom my weak, in losses, or the billion items? of earnings that loss, in is but own that show and you but we this share remainder valuation and shares First it underlying exclude how dividends? the acquiring making your -- of at you loss these You On U.S. your progress And you you’re robust. based remaining Should strong But And U.S. second ¥X Wholesale, and your -- buyback. in if view it the loss is you explain billion. in up makes the we your said your But, ACI should be implying in non-cash which regarding the about is was income The on the earnings line strong your these business valuation XX.X -- is XX, thoughts are exclude what Americas, is

expenses of QX and there legacy quarter, was in previous pushing year, as impact QX, for this the out, And have Americas. bottom-line the last year the certain DVA, very which technical in question the down expenses we in declined. sorry, from But the transactions, and Regarding these there well. is as -- in legacy the issues, a that personnel in amount, or you pointed that. that are in Americas, of your litigation this And first assets, about the CVA earnings related we was a booked -- was rebound but booked there QX, and

there technical So, issues. some are very

weakening revenues earnings what is pretty was we if factors, in if And improvement. impact, from disclosed, QX XX% about we is pretty Americas, much flat. in that there performance and was exclude So, Americas. exclude we the the it or Americas year. last the much Wholesale currency the of And the And has these remained the the profits unchanged in

there QX, in first factors. question, second market were Your

So, our dividend. onwards, a have as a which to a earnings but quite to strong will start, source QX you we the generate in made serve the sure And focus do of is pipeline. make slow

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of consider consider did aware. as will is are to we market And the any the consider accounting throughout and profit when to time, different bit this certain last year. situation So, the in There this we source and we is period. a market you factors from dividends the But are that on factors issues other a the case, extent, earnings dividend. whether the our and decide

will generating we focus So, on the profit.

point. the regarding is first This

what personal about about issues devices local weakening to the If of you do business what and losses for much expenses, And in we months not basis, your QX And to if But are fully have peers, about yen, worry for their been at affecting three made is U.S. please. earnings. any like cost peers, purposes, is there regarding you? I not And issue the think onwards? look your the they personnel inflation, the US$XXX this booking the using million compared the changed? Nomura to a or record Has related including keeping a this? currency there explain ago, changes, Please internationally? are in that has the provisions

Using of electronic devices is still investigation made U.S. the going data, certain clients in a with QX the of ongoing. And provisions the is unapproved authorities. and Nomura we communicate also And and certain to the the booked on amount. amount, investigation by a storage

moment. that is I can So, all on at the comment

and the its of weakening the regarding And impacts? yen

but the a visibility that. earnings and in benefits But impact the currency comps is basis, rise, Q-on-Q compensation I the changed said and that hasn’t much, announcement, did we as of previous have on Wholesale. on and the benefits in excluding -- Well, the the about

So I there much Yes. hasn’t hope that your question. been answers impact.

question The Morgan UFJ from comes Stanley. Mitsubishi next

My global quarter. first markets in this pretty well question, did

fixed Japan, flow but EMEA in income was robust. volatile struggled, GM equities, market for the rates For and in Americas,

year? compensation but for what will could might And kind be And an this timing to market that this changing make perception? Of the the could foresee the increase for prepare to So, turbulent generate result? It this situation going this was expectation me you the once anything, cannot the first of equities, may regarding outlook difficult comfortable, And we July. this. wouldn’t good is some market. be bottom. the -- seem happen but it navigate basis. situation the second your But, optimistic. April is we EMEA be in benefit adjustment. continue of is hitting in for the is market, and cannot And But it are the to quarter, equities remainder to color? question after in have I USA, you give say June be the be forward Q-on-Q if to navigate the certain then you you That’s situation July My And what may But rally, it question. after regarding Would I course, on that. for able you towards the flows. may

in it is from fourth of it came majority case, I the personnel fourth said quarter -- You that you have in the comparison. comes as the really the the pool end FX, expense So, wonder? a looked and had but might smaller of of quarter, so bonus

Thank you Tsujino-san. question, for your

the Let applies wholesale question. exchange When In retail said the quarter, graduates I rate, newly Japan’s university business first for had FX start your to with second who business. that joined firm. me example,

the And have higher So, deferred for is expense tends to first also than quarter asset. the accounting treatment first personnel other quarter. in there

remaining those factor factors, So, the factors, tends first because FX. excluding of is be quarter, such personnel high expense to but

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long been actually, -- bound. market range in a a we For time, the sense, has

significant volatility Japan back on and have bounced seems the And in So, to fixed there seems went to a that been mixed And that positive up. have up. impact had market, situation views about have the what Japan a contribution. -- which also business, made was in our Also of income. Nomura In from regional was mix, different USPS. credit sense somewhat AEJ regional positive is as mix

you well, credit our is could in Our credit look AEJ a China spread spread, at credit, tightening. take but

kinds believe I were these So of captured well. opportunities,

outperformance fixed of So, to the that believe led income. I

market difficulties, the Tsujino-san, out, risks has business controlled is In revenue. pointed tough. rightly generated quite you As and our environment such

of then if towards volume business a regarding decline. volatility volatile top the expectation the market the equities, overall, our continues. line is highly the could in So, robust on have we transaction that continue, could And

may maybe and the seems decline, trading market pointed the the it you to volume but are smaller. hitting in of be who then As the be geopolitical getting client muted countries out, customers the their risks Default case flows that activities. emerging bottom, risks dampening maybe the sentiment in becoming

there we believe how of certain optimistic So, I I’m amount that But a continuously opportunities sure generate not be. to revenue. is can

have hope So, can expectations. I do we that certain

well. in business. in earnings, derivatives do for of terms derivatives, we those pretty the Though Asia, have core you. which Equity is Thank weakness but and in expectation we our So, regions. did equity saw the Japan our recovery

very you Thank Kitamura-san. much,

applies So said regarding other to not well, you specific when regions as the equities, comment Japan, but it’s shrinking? to it’s

Tsujino-san. correct, That’s

very much, you Thank answer. Kitamura-san, for your

Watanabe-san is The from question Daiwa next of Securities.

from Two This you. Daiwa. Thank questions, is please. Watanabe

page is of to of yen higher that cost ratio. compared on weak both implied which XX% XX% denominator in numerator. First have is income Wholesale’s target, ratio about the works you expense QX, the materials. the XX the the and And

the fees which So, explain heavier, bit Including a and cost ¥ ended the up ¥XX your it’s in question, exceeded ¥XXX several your please building page outlook? years, compared discretionary investments, billion XXX burden’s target. means billion. please Retail slow explain of future per target why quarter. This to seems by Second as trillion June a X. level getting

please? in do addition to Thank the So, fees, building up you level how view the you.

Yes. This Kitamura. is

and since the And investments, Management future. especially the make have is you and saying which have cost the than out, will International were IWM, M&A, the we XX%, Wealth investments for the we or pointed are in income past, and exceeded have that -- we that. as been target necessary First, Wholesale’s higher ratio, acceptance we

our So, this weakened, there. is no in there revenue inflated, quarter, revenues change expenses. both and the impacted that and yen both, to And and stance expenses,

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real you Just expenses, performance mean you’re -- pay your to are variable, to variable expenses does estate point, shifting talking What the costs that by and system costs? to which do as you for want costs? to the do fixed want you paying mean IT currently say to you you check or first about expenses, shift in more your about

systems IT those have Pay for within things are these something performance for have are working not do fixed necessarily we we and will Thanks already we which and costs, more on, thoroughly. is on follow-up. yes, work it Nomura. typical Yes. And to

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of BoA Sasaki-san Securities. question The from next comes

questions. am of I Thank Bank America. two you. I have Sasaki from

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ACI, regarding and based upon market value First, every and based conduct economic the evaluation. of upon indexes, you as a performance know, fair ACI quarter, market we

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the sometime future, could when recovers, So, back opportunity. capture then that in comes we and the I’d hope that market

as expect not the do we forever. stay So, they to market conditions are

exceed businesses that answer. cost. capital we So, able my concludes when That back, be you. do to will Thank come these believe we then

Understood, Kitamura-san.

volatility stock value, first value any for fair possible to regarding value? the fair the then adjusting ACIs, price Regarding lowered? of fair companies, is point, is it If the method be with is in of other line of the there ACI

as conduct said, actually the could volatility to fair hedging mitigate we -- Well, you value. from ACI’s the we could

Citigroup question Niwa-san. next from is The Securities,

Retail, and CETX Regarding please.

KGI, be buybacks, the it subside, per achieve CETX to is ago building is to a from going at weak. KGI. outside, earlier, generate the from well. And conduct considering with ago. of you or factors USPS with My revenue explain to of the market three from three in as businesses in is and being shareholder the overlaps you factors? to the like generate explain billion up to shareholder the the in flow then to And you And And for Are of are able room is second months this good, going progress the you. -- big above point. of there the explaining thank terms share be seems review to revenues moment But thorough And the about the somewhat previous detail for due this Retail, going finalization, is So, outside XX.X%. return Japan reason order -- structure to to should And you ¥XX.X the be of going a flow gap the XX%? months if could Basel And a what cost but your you quite mentioned you is suspending CETX KPIs, that changes For ratio could the as not there this? please? forward, recurring there please? reason about you peers to seems market your do quarter the Nomura? you for -- return? be your And impact after the be Thank but much question used

Kitamura. you Thank This your is for question.

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that And of higher there factor, was market and RWA. bit the at second risk the increase. weakening the factor to was decline. Well, the another question higher you capital numerator can main the yen. and look see assets one was different the Your a the that for factor. the ratio for And was also we That about and including And if you was denominator, at volatility. CETX. the the period led the CETX looked reason And weighted that reason

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the such question? continue the and to the that will mitigate Did model internal answer measures of easing implement effects. your implementation we So,

Thank you. Yes.

Jefferies. Mr. from comes question Next of Ban

three value is have PBT turned one fair you valuation but fair the you regarding to it earlier, hedge that to or point? performance? Sasaki-san could value fair your you there And you according are Earlier, but But share But with secured impact operations plan value other me ACI. can value, quite this valuations valuations be the and explanation. barely hedging that than -- such you is other -- segments, mitigate so business, your the your EPS portion considering, out for segments, stabilize Is for can the possible ROE profit, the other that fair about and volatile. for I three just to asked reduce you any for by the the conduct affected mentioned this, anything quarterly question. for volatility operations at you

held small, to In areas quite but peers, came our shares securities compared that or from is other position the had fair valuation lot a investment securities, than impacted in our business, strategically smaller. value

are we mark market securities, investment to the conducting For valuation.

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shares Some reduce absolute strategically would we held the approaches reflect on But sell-off. not of to amount to like use the and that through P&L directly capital.

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hand, the to other market the On hedging positions, we are mark the conducting valuation.

there misalignment a there. So, is

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the you Thank explanation. for

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