Nomura (US:NMR)2022-02-01 17:06Financial Data and Key Metrics Changes - For the nine-month period ending December, net revenue declined 17% year-on-year to ¥1.0231 trillion, and income before income taxes declined 55% to ¥177.1 billion [2][3] - Net income for the nine months was ¥112 billion, a decline of 64% year-on-year, with EPS at ¥35.32 and ROE at 5.4% [3] - Firm-wide income before income taxes for the third quarter was ¥80.1 billion, with net income at ¥60.3 billion, showing marked improvement from the second quarter [5] - Annualized ROE was 8.7%, and CET1 ratio was 18% as of the end of December [6][18] Business Line Data and Key Metrics Changes - Retail segment net revenue increased 3% quarter-on-quarter to ¥87.4 billion, with income before income taxes growing 6% to ¥18 billion [7] - Investment Management net revenue increased 17% to ¥40.1 billion, and income before income taxes grew 35% to ¥20.4 billion [9] - Wholesale segment net revenue increased 17% quarter-on-quarter to ¥202.7 billion, with income before income taxes rising 64% to ¥40.8 billion [11][13] Market Data and Key Metrics Changes - In the Americas, revenues increased 24% driven by equity derivatives and M&A advisory [12] - AEJ reported revenue growth in fixed income, particularly in credit and ForEx/emerging products [12] - EMEA saw improved performance in fixed income driven by rates [12] Company Strategy and Development Direction - The company is focusing on broader asset management and capital light businesses, with a shift towards asset consulting in retail [4] - Investment Banking is performing well in global M&A, particularly in the Americas, and revenues have increased in the ECM business [4] - The company aims to stabilize revenues and enhance risk management while pursuing sustainable growth [20][60] Management's Comments on Operating Environment and Future Outlook - Management noted a drop-off in investor sentiment in January due to a significant stock market drop, but continued net flows into investment trusts and discretionary investments [20] - The company expects trading demand driven by macro events in the U.S. and sustainability-related demand in Investment Banking to continue [20] - Management emphasized the importance of risk management in a volatile market environment [20] Other Important Information - The company reported no one-off items for the first time in four quarters, indicating progress in achieving sustainable growth [19] - The CET1 ratio increased to 18% due to earnings growth, while risk-weighted assets grew only slightly [18] Q&A Session Summary Question: Dividend distribution policy and January performance - Management confirmed that the dividend payout policy remains unchanged at 30% per half year, despite various considerations [24][26] - January performance in equities was described as a good start, with no significant slowdown compared to the previous quarter [27] Question: Wholesale cost increase and share buyback policy - Management acknowledged a slight impact from a cheaper Yen and increased personnel costs in the Wholesale segment [30] - The remaining ¥10 billion for share buyback will be monitored based on regulatory and market conditions [33] Question: Future outlook for Wholesale business and Level 3 assets - Management expressed cautious optimism for the Wholesale business, anticipating normalization in the Rates business and strong performance in Credit [39] - The increase in Level 3 assets was linked to the Securitized products business, with a focus on stringent risk controls [41][42] Question: Retail level fee initiative and ROE targets - The level fee initiative is aimed at improving customer satisfaction, with positive feedback received during trials [55] - Management is focused on achieving an 8% ROE, with potential for a 10% target depending on market conditions and strategic investments [58]