Nomura (NMR) - 2026 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Return on equity was 10.3%, meeting the 2030 target of 8%-10% for the seventh consecutive quarter [3] - Group-wide net revenue reached JPY 551.8 billion, a 7% increase from the previous quarter [3] - Income before income taxes decreased by 1% to JPY 135.2 billion, while net income also fell by 1% to JPY 91.6 billion [3] - Earnings per share for the quarter were JPY 30.19 [3] - Pre-tax income across all four divisions rose 8% to JPY 142.9 billion, the highest level in 18.5 years [4] Business Line Data and Key Metrics Changes - Wealth Management saw a growth of approximately 30% compared to the previous quarter, with net revenue increasing by 14% to JPY 132.5 billion [4][8] - Investment Management's business revenue reached an all-time high, but profits fell due to weaker investment gains and one-time expenses from an acquisition [4][12] - Wholesale net revenue rose 12% to JPY 313.9 billion, with Investment Banking net revenue increasing by 31% to JPY 57.1 billion [15][17] Market Data and Key Metrics Changes - Recurring revenue assets experienced a net inflow of JPY 503.9 billion, reaching an all-time high of JPY 28.1 trillion [10][11] - The number of flow business clients increased by around 270,000 to 1.53 million, driven by buoyant market conditions [11] - Equities revenue grew by 4%, while bonds saw a decline of 25% due to market conditions [10] Company Strategy and Development Direction - The company announced a share buyback program to enhance shareholder returns, with a limit of 100 million shares and JPY 60 billion in total [5] - The focus remains on maximizing synergies between existing and newly acquired businesses, particularly in the Investment Management division [25][26] - The company aims to continue fostering growth in the digital asset market while managing volatility [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong performance across all divisions, despite one-time costs associated with acquisitions [21] - The outlook for January indicated stable client sentiment and a shift in household financial assets towards investments [21] - Management acknowledged the challenges in the domestic rates business due to increased market volatility but noted solid performance in other areas [46] Other Important Information - Group-wide expenses increased by 10% to JPY 416.5 billion, driven by one-time costs and strategic investments [19] - The Common Equity Tier 1 ratio at the end of December was 12.8%, with a slight decrease attributed to changes in regulatory capital calculations [20] Q&A Session Summary Question: Regarding losses in Laser Digital and position management - Management acknowledged the losses and stated that they are taking measures to control volatility while maintaining long-term commitments in the digital asset space [31][32] Question: Sustainability of net inflow in Wealth Management - Management refrained from making definitive comments on sustainability but noted a significant shift from savings to investments among retail investors [32] Question: Wealth Management pricing strategy - Management declined to comment on internal discussions regarding commission rate increases, focusing instead on value provision to customers [38][39] Question: Timing and scale of buyback - Management explained that the timing was influenced by the recent acquisition and the need to meet investor expectations [39][40] Question: Impact of personnel costs and deferred compensation - Management provided details on the expected impact of accounting changes on personnel costs, estimating around JPY 8 billion for the current quarter [52] Question: Long-term strategy for Laser Digital - Management emphasized the need for a thorough discussion on risk management and the growth strategy for the digital asset business [55]