Nomura (US:NMR)2025-10-28 10:32Financial Data and Key Metrics Changes - Group-wide net revenue was ¥515.5 billion, down 2% from the previous quarter, while income before income taxes fell 15% to ¥136.6 billion and net income decreased 12% to ¥92.1 billion [3] - Excluding gains from real estate sales in the previous quarter, net revenue increased by 10% and net income rose by 40%, indicating steady growth [3] - Earnings per share for the quarter were ¥30.49, and return on equity was 10.6%, achieving the quantitative target for 2030 of 8 to 10% for the sixth consecutive quarter [3][23] Business Line Data and Key Metrics Changes - Wealth Management net revenue increased 10% to ¥116.5 billion, with income before income taxes growing 17% to ¥45.5 billion, marking the highest income in about 10 years [8] - Investment Management net revenue reached ¥60.8 billion, up 20%, with income before income taxes amounting to ¥30.7 billion, up 43% [10] - Wholesale division net revenue was ¥279.2 billion, up 7%, with Global Markets net revenue increasing by 6% and Investment Banking net revenue rising by 15% [14] Market Data and Key Metrics Changes - The balance of recurring revenue assets in Wealth Management saw a net inflow for the 14th consecutive quarter, reaching an all-time high [8] - Assets under management in Investment Management topped ¥100 trillion, with stable business revenue growing steadily [10] - The overall trend in the market showed strong client activity and revenue growth, particularly in equities and investment banking [15][16] Company Strategy and Development Direction - The company aims to transform Japan into an asset management powerhouse by building trust with clients and providing tailored asset management services [24] - The focus remains on self-sustained growth in Wholesale, with a commitment to maintaining a balance between investment opportunities and shareholder returns [30][56] - The management is optimistic about the pipeline for corporate actions and advisory services, expecting continued strength in these areas [60] Management's Comments on Operating Environment and Future Outlook - The management noted that stock indices in Japan and other major economies rose steeply, contributing to strong earnings [22] - The company expects the impact of phishing scams on profits to diminish, thanks to enhanced security measures [22] - The outlook for October indicates that net revenue in Wealth Management is above levels observed in the second quarter, with continued growth in investment products [24] Other Important Information - The company plans to pay a dividend of ¥27 per share, resulting in a dividend payout ratio of 40.3% [7] - Group-wide expenses increased by 4% to ¥378.8 billion, driven by higher compensation and benefits [17] - The CET1 ratio at the end of September was 12.9%, within the target range, but expected to decrease post-acquisition of Macquarie Group's U.S. asset management business [19] Q&A Session Summary Question: Regarding personnel expenses and CET1 ratio - The increase in compensation and benefits was attributed to bonuses linked to earnings and larger-than-usual retirement payments [29] - The CET1 ratio is expected to decline post-Macquarie acquisition, but the company remains committed to a 40% dividend payout and a total payout ratio of 50% or above [30] Question: Market revenue and risk-taking - The company is seeing strong performance in credit trading and has interesting deals in the pipeline, while being mindful of concentration risks [34] - The impact from the First Brands case was negligible, and the company conducts regular stress tests to assess risk [36] Question: October revenue environment and tax burden - Fixed income trends are strong, with expectations for continued revenue growth, while Wholesale division revenue is expected to be at similar levels to Q2 [44][47] - The increase in tax burden is due to various technical issues, with no specific details provided [46] Question: Equity product business trends and risk capacity - Equities performance has been strong across regions, with expectations for some normalization in the future [52] - The CET1 ratio post-Macquarie acquisition will allow for increased risk-taking capacity, with a focus on self-funding growth in Wholesale [56]