Nomura (US:NMR)2020-05-09 04:05Financial Data and Key Metrics Changes - For the fiscal year ended March 2020, net revenue was ¥1,287.8 billion, an increase of 15% compared to the previous year [3] - Income before income taxes was ¥248.3 billion, and net income was ¥217 billion, indicating a strong recovery from the previous year [3] - Earnings per share (EPS) for the year was ¥66.2, with a return on equity (ROE) of 8.2% [3] Business Line Data and Key Metrics Changes - Retail segment net revenue for Q4 was ¥88.8 billion, down 1% quarter-on-quarter, but income before income taxes increased by 4% to ¥18.4 billion [15] - Asset Management reported a net revenue of ¥7 billion for Q4, down 72% compared to the previous quarter, with a loss before income taxes of ¥8.7 billion [19] - Wholesale net revenue was ¥145.9 billion, down 22% quarter-on-quarter, with income before income taxes declining 77% to ¥10.1 billion [22] Market Data and Key Metrics Changes - The S&P 500 index fell by 34% from its February high, while the VIX index surged, indicating increased market volatility [11] - The firm-wide loss before income tax for Q4 was approximately ¥24.7 billion, with a net loss of ¥34.5 billion [14] - The market downturn in March led to significant unrealized losses across various segments, particularly in fixed income and equities [14][22] Company Strategy and Development Direction - The company is focused on rebuilding its business platform and delivering solutions to client needs in areas of competitive strength [5] - There is a strategic shift from secondary to primary business, with an emphasis on macro trading and flow-type businesses [55] - The firm aims to maintain a robust financial position while adapting to the changing market environment due to COVID-19 [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of COVID-19 on operations and market conditions, emphasizing the importance of business continuity [33] - The outlook remains uncertain, with management noting that the recovery will depend on the pace of economic reopening and potential future waves of COVID-19 [79] - April revenues showed a decline of only 20% compared to Q4, indicating some resilience in the business despite ongoing challenges [35] Other Important Information - The year-end dividend for shareholders was ¥20 per share, with a dividend of ¥5 per share for the year-end [4] - The company reported a Tier 1 capital of ¥2.568 trillion, down by over ¥130 billion from the end of December, primarily due to performance deterioration and shareholder returns [29] Q&A Session Summary Question: Regarding the significant loss numbers and market dislocation - Management explained that the losses were primarily due to market dislocation caused by COVID-19, with specific unrealized losses booked [36][38] Question: On the decline of CET1 ratio and its sensitivity to market conditions - Management acknowledged the decline in CET1 ratio and explained that it was influenced by increased risk-weighted assets and market volatility [42] Question: About the postponement of share buyback announcements - Management stated that the decision was influenced by global trends and guidance from authorities to control outflows from financial institutions [47][48] Question: On the potential for revenue opportunities in the financing business - Management indicated that there could be increased demand for financing as companies look to raise funds, particularly in the current economic climate [57][58] Question: Regarding the outlook for the fiscal year and budget considerations - Management noted that the budgeting process was impacted by COVID-19, and the focus remains on business continuity and adapting to the new environment [76][79]