Nomura Holdings Inc ADR American Depositary Shares

Good day everyone and welcome to today's Nomura Holdings third quarter operating result for fiscal year ending March 2025 conference call. Please be reminded that today's conference call is being recorded at the request of the hosting company. Should you have any objections, you may disconnect at this point in time. During the presentation, All the telephone lines are placed for listen-only mode. The question and answer session will be held after the presentation. Please note that this telephone conference contains certain forward-looking statements and other projected results which involve known and unknown risks. delays, uncertainties, and other factors not under the company's control which may cause actual result, performance, or achievement of the company to be materially different from the result, performance, or other expectations implied by those projections. Such factors include economic and market conditions, political events and investment sentiment, liquidity of secondary market, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions. With that, we would like to begin the conference. Mr. Takumi Kitamura, Chief Financial Officer, please go ahead.

Good evening. This is Takumi Kitamura, CFO. Let me explain our financial results for the third quarter of the fiscal year ending March 2025 using the document titled Consolidated Results of Operations. Please turn to page 2. Group-wide net revenue increased 4% quarter-on-quarter to 502 billion yen. Income before income taxes grew 4% to 138.3 billion yen. Net income was 101.4 billion yen, representing a 3% increase over last quarter. EPS came to 33.08 yen, and annualized return on equity came to 11.8%. This was the seventh straight quarter of profit growth, building on what was already a strong previous quarter, reflecting the positive outcomes of strategic initiatives undertaken to date. Improving profitability in our international operations has been a management priority, and we have made steady progress. In global markets, we made progress with portfolio diversification, and in each region we were able to increase revenue across a wide range of products. Profit contributions from Laser Digital, numerous digital assets subsidiary, have also begun, and income-before-income taxes in the three international regions came to 51.8 billion yen, increasing by 30% over last quarter. The international business came to account for nearly 40% of our group-wide income-before-income taxes, and our effective tax rate fell to 25%, as some international entities made use of tax-loss carry-forwards. Three-segment income before income taxes, shown on the bottom right, was 127.5 billion yen. This was, in fact, the highest level in 17 and a half years since the quarter ended June 2007. In wholesale, income before income taxes increased deeply, led by the international operations, while in wealth management and investment management, stable revenues rose to record high levels amid net inflows. Before going into each business in detail, let's first take a brief look at the results. of the fiscal year. Please turn to page 3. As shown at the bottom left, net revenue for the period came to 1 trillion 439.8 billion yen, up 29% from the same period on previous fiscal year. Income before income taxes grew 106% to 374.2 billion yen, while net income increased by 146% to 268.8 billion yen. EPS came to 87.66 yen, and ROE was 10.4%. The table at the bottom right gives a breakdown of income-before-income taxes. All divisions reported strong gains, with three-segment income-before-income taxes totaling 336.5 billion yen. This means that nine months into the fiscal year, we have already gone nearly 50 billion yen over the target of 288 billion yen for the fiscal year ending March 2025, which we announced at our investor day in May 2023. Net revenue in wealth management increased by 18%, led by the provision of comprehensive asset management services. Net inflows and improved performance lifted recurring revenue assets, such as investment trusts and discretionary investments, to a record high, resulting in an increase by 30% of recurring revenue. In investment management, the asset management business has shown strong performance, with assets under management climbing to a record high, and business revenue also at the highest level since the division was established. Both divisions continued to build up stable revenues, meaning revenues linked to the amount of client assets. In wholesale, all business lines, fixed income, equities, and investment banking, and all regions reported stronger revenues compared with the same period last year, underscoring progress in diversifying our revenue sources. Also worth highlighting is that we were able to realize greater operating leverage in all divisions thanks to continued cost controls. Revenues across the three divisions rose by 27%, while costs increased only 12%, with the result that income before income taxes came to 2.1 times the previous year's level. The income before income taxes margin improved from 16% to 26%. Now, let's take a look at third quarter performance by segment. Please turn to page 6. The percentages I refer to here are all quarter-on-quarter comparisons. Wealth management net revenue was flat quarter-on-quarter at 116.3 billion yen, and income-before-income taxes grew 2% to 46.2 billion yen. This was the seventh consecutive quarter of growth in income-before-income taxes, which reached its highest level in the nine and a half years since the quarter ended June 2015. As shown in the lower left, flow revenue fell slightly to 65.9 billion yen. There was a slight decline in revenue related to Japanese stocks and bonds, but we saw revenue growth in investment trusts and foreign stocks. Recurring revenue rose to a record high of 50.4 billion yen. Recurring revenue as a category includes investment advisory fees that are recognized every second quarter and fourth quarter, which means that these fees were absent in this quarter. However, we were able to completely absorb the impact through our efforts across a wide range of other recurring business, including investment trusts, insurance, and discretionary investments. Thanks to continuous cost reduction, the division's net non-interest expenses held at roughly 70 billion yen, with the result that the recurring revenue cost coverage ratio rose to 72%, up two percentage points from the last quarter. This added further to the stability of earnings in the division. Please turn to page 7 for an update on total sales by product. Total sales declined by 11% quarter-in-quarter to 5.2 trillion yen. Within that, sales of stocks fell by 12%. Demand for Japanese stocks slowed as investors stayed largely on the sidelines in October, ahead of major political events in the US and Japan, and the market subsequently stayed range-bound. In bonds, we saw an increase in sales of Japanese government bonds to retail investors as rising yen interest rates made them more attractive. Sales of foreign bonds fell, however, in part due to the absence of major primary transactions, but also because demand for other products increased, including foreign stocks and a newly established publicly offered investment trust that invests in private credit. Sales of investment trusts increased by 9%. We saw growth in demand for U.S. growth stock investment trusts, as well as the aforementioned trusts that invest in private credit. Sales of insurance products and discretionary investments declined quarter-on-quarter, but held up fairly well in absolute terms. Investment trusts, discretionary investments, and insurance products are all product categories in which clients tend to be responsive to the advice and suggestions of our sales partners, and all have continued selling well. Page 8, you will see that we are ahead of target in all of our KPIs for the fiscal year. The bar chart at the top left shows net inflows of recurring revenue assets of 282.2 billion yen. net inflows of recurring revenue assets in the first three quarters of the fiscal year exceeded 1.1 trillion yen, already going well beyond our full-year target of 800 billion yen. At the top right, you can see that recurring revenue assets at the end of the quarter came to 24.9 trillion yen, which is higher than our target of 22.3. The figure at the bottom left shows the number of flow business clients at 1.48 million, up 230,000 from a quarter ago. We have already reached our full-year target of 1.46 million. We saw contributions from effective approaches by our sales partners in client-facing channels, from new client acquisitions in conjunction with the Tokyo Metro IPO, and other primary transactions, and from clients entering into transactions of their own accord through their NISA accounts.

Please turn to page 9 for investment management. Net revenue was down 18% at 45.7 billion yen, while income before income taxes fell 41% to 18.9 billion yen. A major factor was a decline in American century investments related to valuation gain counted under investment gains and losses. At the lower left, you will see that business revenue, a stable revenue source, came to 42 billion yen, the highest level since the division was established. The asset management business had another strong quarter with net inflow for the seventh straight year. Seventh quarter in a row, and assets under management climbing to a record high of 93.5 trillion yen. Revenue also increased queue on queue for the aircraft leasing business of Nomura, Babcock and Brown. Please turn to page 9 for an update on the asset management business, which is the key source of business revenue for investment management. Asset under management at the end of December stood at 93.5 trillion yen. As shown in the chart at the lower left, net inflow came to 260 billion yen, which looks low in comparison to the previous three quarters, but investment trust business saw an inflow of 490 billion yen, and the product mix improved thanks to inflows into private assets, global equities, and privately placed investment trusts where management fees are relatively high. At the lower right, you will see that alternative assets under management rose past 2.5 trillion yen. This was an increase of 400 billion yen in the three months since the end of September, with 180 billion of that has inflows. Next, please turn to page 11 for wholesale. Net revenue increased 10% to 290.5 billion yen. Global markets revenues increased for the seventh straight quarter, while investment banking revenues were at the highest level for the period over which comparisons are possible, stretching back to the fiscal year ended March 2017. As shown on the bottom right, the three overseas regions of Americas, EMEA and AEJ all performed well, with combined net revenue up 23%. with segment revenue growing and expenses only rising five percent the cost to income ratio improved to 79 percent income before income taxes of 62.4 billion yen represents the highest level in the four four quarters four years since the quarter ended december 2020 please turn to page 12 for an update on each business line first global markets net revenue increased eight percent There was a slow start to the quarter in October ahead of major political events in Japan and the U.S., but net revenue improved month on month. Fixed income net revenue increased 9% to 139.9 billion yen. In macro products, revenues from FX-EM increased in EMEA and AEJ. In spread products, revenues from securitized products were at a record high, particularly in the Americas, and with increased visibility over U.S. rates cuts, there was strong demand for a wide range of sub-products, including in the origination and financing businesses. Credit revenues increased in EMEA and AEJ. Equities net revenue increased 6% to ¥99.1 billion. Equity products revenues were particularly strong in Americas and revenues also grew in AEJ as we expanded our franchise. Please turn to page 13 for investment banking. Net revenue increased 22% to 51.5 billion yen with multiple M&A and ECM deals contributing to revenue increase in all regions. Byproduct, advisory revenues grew sharply as we worked to monetize transactions in Japan, EMEA, and the Americas, including several financial sponsor and cross-border deals. Revenues in financing and solutions also increased. ECM revenues were particularly strong, driven by deals related to the unwinding of cross-shareholdings, and several large IPOs, including Kansai Electric Power, and major IPOs, including Tokyo Metro, Rigaku Holdings, and Kyokusha Holdings. These are shown on the right. ALF revenue throws on contributions from several refinance and acquisition finance deals. Please turn to page 14 for non-interest expenses. Group-wide expenses rose 4% to 363.7 billion yen. Compensation and benefits were up 3% to 3% at 190.9 billion yen, mainly due to an increase in stock-based compensation following the rise in our share price. Other expenses totaled 50 billion yen, up by around 9 billion yen from the previous quarter due to a rise in professional fees and transaction-related expenses. and an increase in expenses related to the disposal of software. Please turn to page 15 for an update on our financial position. The table on the bottom left shows Tier 1 capital of roughly ¥3.6 trillion up by ¥0.2 trillion from the end of September. Risk-weighted assets also rose by ¥0.8 trillion to ¥19.9 trillion, resulting in a Tier 1 capital ratio of 18.1% and a common equity Tier 1 ratio of 16.3% as of the end of December. This concludes our view of our third quarter results. To wrap things up, we achieved annualized ROE this quarter of 11.8%, the highest since the quarter ended in December 2020. At that time, wholesale accounted for about 60% of three segments, income before income taxes, and the profit structure was quite skewed with rates products accounting for nearly all of the wholesale earnings. Now, earnings are well balanced across all three divisions. This did not happen overnight. We think the path that we have strategically followed is finally leading to tangible results. Recurring revenue in wealth management and business revenue in investment management, both of which are sources of stable revenues, increased to an annualized level of 370 billion yen. lifting baseline pre-tax ROE to around mid 4% range. Pre-tax ROE comes to around 6% when we take into account recurring business such as financing in wholesale. We think further accumulation of such highly stable and recurring profits will increase the stability of earnings and boost our intrinsic earnings power. We aim to achieve consistent ROE of 8 to 10% or more by 2030. This means we want to achieve 8% even when market conditions are challenging, and we will aim to achieve more than 10% when market conditions are favorable. We will endeavor to build a franchise that can always aim higher while striving to lower our cost of capital by steadily achieving our minimum ROE target of 8% backed by the accumulation of stable recurring ROE as mentioned earlier. Wealth management and wholesale have gotten off to a somewhat slow start in January compared with the third quarter, but the revenue levels remain acceptable. We continue to aim for bottom-line growth while delivering operating leverage as we maintain cost controls. As we announced today, For an effective use of management resources, our subsidiary Nomura Properties has signed a sale agreement for the transfer of the land and building of the training center it owns at Takanawa. The execution of the sale is scheduled from mid-March to mid-April this year, and following the completion of the asset transfer, we expect to book a pre-tax income of approximately 56 billion yen. In closing, Nomura will celebrate its 100th anniversary on December 25, 2025, to express our sincere gratitude to our shareholders for their support over the years. We will pay a commemorative dividend of 10 yen per share to shareholders of record as of March 31, 2025. We plan to steadfastly forge ahead in pursuit of our purpose. We aspire to create a better world by harnessing the power of financial markets. Thank you.

We have a question and answer session now. If you have a question, press sharp seven. If we want to cancel a question, press sharp seven.

The first question is from SMBC Nikko Securities, Mr. Muraki. Muraki-san, please go ahead. Thank you. This is Muraki from SMBC Nikko. Two questions, please. First, about wholesale fixed income business. On page 12, and this time the U.S., the Americas had securitization. In Europe, rates and FX was strong. Other U.S. players, and click at the other brokers, U.S. securitization seems to have been very strong, according to their comments. So the environment was good, but also the reasons for the strong revenue environment. How do you see the sustainability of this current strong revenue environment? What are the upside and downside risks of the environment? You commented in the past about the securitization business, and there are some liquidity regulations that have effect on the securitization business. So when you think about the profitability of fixed income business, are you happy with the current profitability in line with the regulations? My second question is the sale of the real estate, which you have announced. And from an asset efficiency perspective, there's real estate and also the stocks of NRI, which you have been selling in several phases. Are there any other targets to further improve asset efficiency? And what is the process? What kind of frequency do you plan to sell assets? Are you going to sell it one go or are you going to sell it step by step? Is that how we should assume it? Any hints there, please? Thank you. This is Kitamura. Thank you, Muraki-san. Your first question about wholesale fixed income. Yeah, as you pointed out, in the US, securitization business was very strong, securitized products. And our securitized products business consists of loans, sales, secondary trading. It's all mixed together. And for the loan part, the funds become stagnant. So we are trying to improve the turnover of the funds as much as possible in our business. And after we originate the loans, we promptly sell those positions and we control the amount that we hold on our book. And as we always say to the business side, please recycle resources. In terms of profitability, It depends on what we use as the denominator to calculate, but we have secured sufficient ROE, we believe. And in relation to securitized products, we are diversifying our portfolio within the securitization book. So it's not just mortgage. We also have CLO, private credit. We have various product lines in the securitization business. So we are further diversifying this business. So, whether we are satisfied with this current level of profitability? Yes, securitized products and FX rates have recovered quite nicely this year, this period. But for rates products, I think there is some more upside that we can take, frankly. In Q3, we are seeing signs of recovery. And compared to the bottom two years ago, we are definitely in a recovery trend. But there still is room to generate earnings in this business. We are not fully leveraging our capabilities, we think. And your second question about the real estate and properties that we own and the sale of those properties. As you know, in December 25, 2025, we have the 100th anniversary coming up, and our new headquarters building will be completed in 2026. So, we have training facilities in this new headquarters building. we decided to sell the Takanawa property considering the usage of the properties and the current we also consider the state of the current real estate market and the future usage and we chose to sign the disposal or sale and disposal contract at the time and you asked about NRI stocks and other stocks and the disposal of such stocks we currently do not expect to change the ratio of our holdings at this moment thank you thank you this is Meraki again on page 22 you show the P&L by region and the other day in the US wholesale was quite strong and Europe was the challenge according to the CFO but this time there's laser digital profit contribution that's booked in Europe I think and for wholesale ROE the target is six to eight percent on a pre-tax level and for Europe and the Americas is it within that range that you are targeting yeah thank you for the question the disclosed numbers are categorized by legal entity so it's a bit different from the business performance that we track and as you point out in europe this quarter 16.2 billion yen of pre-tax income and yes laser the contribution from laser is in that and it makes up a certain portion meanwhile the wholesale business as I said earlier, is showing signs of recovery, especially for fixed income. We replaced the positions last year, and the trading environment has been improving, so our earnings capability is recovering significantly. I think there is still room for improvement, but We are seeing signs of improvement, and that is encouraging. In the U.S., we do have strong earnings capability. Understood. Thank you.

The next question comes from BOA Securities, Ms. Tsujino. Please go ahead. Thank you. I'd like to ask you about your ideas about shareholder return. This time, the full year dividend, well, 40% of dividend payout ratio in addition to that 10 yen will be added. On the other hand, total return ratio of 50% or more is your policy that I believe you will continue and there. 10 yen commemorative dividend will be excluded from there then as far as I know based on the information we have then 40 percent return ratio is the number so for the full year what is the sense that I should have earlier you mentioned the gain on sale of property when that's included then that proceed some of which might be used for dividend payout whether it is paid out in the fourth quarter or in the first quarter I do not have clarity but many things are now moving so this time you announced only the commemorative dividend but at the end of April when you announced full year result then remaining portion in order to achieve 50% or more of return, you may announce buyback or any other additional shareholder return. Can we expect such announcement? And if profit is or proceed is booked in March or sorry, if the proceed is booked in April, then in order to reach 50%, the number you have to secure is now you have conducted share buyback. So the amount of buyback could be smaller than in the past. So 56 billion could be received in April, given that possibility moving forward. Kitamura-san, you will think about the plan. Is it the right understanding? So that's my first question. OK, Ms. Sujino. So thank you for analyzing the headache I've been having. Regarding the 10 yen payout of commemorative dividend per share, that has nothing to do with the regular dividend payout. It's for the pure purpose of commemoration. So the 50% or more of return ratio based upon profit, that policy remains unchanged. And regarding the timing of recognition of proceeds from sale, that's not clear as of yet. but proceeds from sale will be used for shareholder return. In the fourth quarter, so we still have two more months before we close the fourth quarter, so we will monitor what the final numbers will be looking like and we will determine the most appropriate ways of conducting shareholder return policies we may use shareholder return shareholder share buyback partially so we would like to be open to various options though I did not give you a straight answer but that's how I am thinking right now regarding my second question Mr. Kitamura regarding investment trust in wealth management investment trust sale in November grew greatly then in December it settled down So private credit fund was originated newly. And moving forward, as for private credit products, are you going to be conducting the marketing in a more stable manner? Then in that case, investment trust sales that will involve different profile or products. So the sales might be put on a quite different trajectory from here, or is it not going to be the case? Could you give me some sense? Thank you, Ms. Tsujino. As you say, private products are what we are strengthening right now, and our clients are becoming increasingly familiar with private products. But just because products are private, we do not sell just about anything. That's not the ideal approach of sale. Since we deal with private products, product governance is essential. From our viewpoint, we would like to apply the screening so that we can only deliver, offer products that we are confident about. So the frequency of launch of such products, even if we want to offer such products, since we want to be careful in screening products, it may not be so frequent. And we would like to refer to the risk appetite of clients. So that's how we are going to recommend or offer products to customers. Thank you. Thank you, Mr. Kitamura. Your answer gave me reassurance. Thank you.

The next question is from Mr. Watanabe from Daiwa Securities. Watanabe-san, please go ahead. Thank you. This is Watanabe from Daiwa. Two questions, please. First is about wealth management. With the tightening of rules when visiting clients, has that had an impact on your sales activities? And if you look at the flows, there seems to be almost no impact, I think. But any thoughts there, please? Second question is about your expenses, costs. And in wealth management, you achieve revenue growth, but the absolute amount of cost has declined. And going forward, do you think you can maintain the cost-to-income ratio? And in wholesale, cost-to-income ratio, 79%. And it's recovered to 79%. and you've achieved the target of 80%, but will you increase costs going forward? So any thoughts on the direction of cost, please? Thank you. This is Kitamura. First, about wealth management client visits and the rules. Realistically, there has been not that much impact on our business, I think. And we already have a relationship of trust with clients, and we do communicate with such clients. And of course, some customers have given us very harsh criticism, but they still continue business with us in a lot of cases. And that's why we were able to achieve the numbers that we are showing this time. Meanwhile, with the tightening of rules when visiting clients, the acquisition of new customers has slowed down slightly, I've heard. So in that sense, there has been some impact. We want our customers to feel comfortable in dealing with Nomura, and we will work, we will do our utmost to regain our trust. Your second question is about costs. In wealth management, we have a very stable cost control and we worked on cost reduction quite early and those results are showing up in the numbers and they are sticking. And going forward, on the IT architecture side, I think there still is room for change, for improvement. And in doing so, we will need some improved investment. So in the short term, there's a chance that costs may go up a little, but that cost increase will be offset by the cost reductions in the future. And that's why we will be making these investments. We will try to control the total amount as much as possible and make some investments to achieve future cost reductions. And in wholesale, we are finally at 79% cost-income ratio. And we finally have a decent number. And this was thanks to top-line growth as well as thorough cost control. And we will continue to control our costs. This isn't just about one fiscal period. And we want to give comfort to our stakeholders, so we will continue our cost-reduction efforts. And compared to wealth management, we started a little later, two quarters late. So we expect to see the results in our P&L going forward. Meanwhile, there's very strong inflationary pressure outside of Japan, even more than in Japan. So while we control our costs, That will be somewhat offset by inflation, which is unfortunate. But we will continue working on cost control. Thank you. Thank you. This is Watanabe. About wealth management, the IT architecture investment that you mentioned, when will this take place? From when to when? And how much will be the size? If you have any ideas, please. Yes, this is Kitamura. It's already started, partly, actually. And this year, we have not started a full-fledged investment, but next year, we will make some investments. And this is an investment, so it will not immediately show up in our P&L. There will be a time lag. And as for size, I don't think we disclosed that. Apologies, we will refrain from commenting, but we will, of course, be mindful of the bottom line when making these investments. Understood. Thank you very much.

Now we move to the next question. As we couldn't confirm your affiliation, please state your company name and your name after hearing a muted announcement. Now unmuted.

I'm from JP Morgan Securities. I have two questions. First question is about the U.S. business revenue and profit. Looking at the geographical profit or revenue of wholesale, U.S. top line seems to be growing significantly. On the other hand, looking at profit in page 22, the profit amount is coming down. So how should I interpret these numbers? My second question. is regarding the investment banking pipeline accumulation. And given the situation in January, what is the revenue forecast for the fourth quarter and next fiscal year? So those are my two questions. Thank you. Thank you very much for your questions. Regarding your first question, page 22, the numbers on page 22, So these numbers are based upon legal entities, and they do not necessarily show wholesale numbers. American Century Investments related investment gain loss numbers are included here. And as I mentioned, as I touched upon investment management division, investment gain is positive, but compared to last year, the gain amount is down. And the majority of that comes from HCI-related loss. So aside from that factor, America's pre-tax profit has greatly increased. That's our analysis. As for IB pipeline, all in all, continuously centering around Japan, we see strength, especially M&A and ECM transactions, especially advisory transactions. business recently has enjoyed increasing customer activities amid the changing environment and M&A pipeline is staying at an elevated level. As for overseas, we have solid pipeline and the deregulation, deregulatory move of Trump administration, as well as a tax decrease, those moves will be beneficial to M&A industry. However, our overseas IB business is not full line. So our performance will not be in completely parallel with industry trend, but we are focused on accumulating our pipeline. As for ECM, We continue to see high-level performance, whether it is PO or IPO, in terms of pipeline. Indeed, due to market changes, our pipeline is affected, but under the current environment, our pipeline remains at a high level, and this fiscal year, we see the sale of strategically held shares, even though we see the peak to be reached at some point in the future, but the current trend is expected to continue for some time. Thank you. That's my answer. Thank you very much, Mr. Kitamura.

The next question is from SBI Securities. Mr. Otsuka. Hello, this is Otsuka from SBI Securities. Hope you can hear me. Yes, thank you. Two questions. First is about the laser digital that you mentioned. How much was the profit, please, if you could give me some color or hints? That's my first question. Apologies, we cannot disclose the numbers, but Laser Digital started business in 2022, and it's only been two years since then, and it turned profitable. And going forward, I think there's positive signs, especially with the Trump market, which is a tailwind. And in the mid to long term, crypto assets will become a more regular asset class, and that trend is going to continue. So the environment is positive for laser digital. When it comes to crypto and digital assets, there is a lot of volatility. And in this quarter, we achieved strong numbers, but there will be volatility going forward. And that's another reason why we'll refrain from disclosing the numbers. On page 22, Europe, Q1Q improvement in profit. And I think, is it included here? No, not all of it, no. Not all of it, no. Not all of it. This is laser. I see. So you have your core businesses. And the market factors was a bigger factor, I believe. There's laser contribution. And there's also the wholesale business like rates, etc. And we cannot give you the exact breakdown. Okay, I understand. My second question Page 26. You talked about the Hiroshima case, which didn't have much negative impact from that incident. But for net inflows of cash and securities, was there no impact from the Hiroshima incident? And you have achieved strong numbers, but Q2, Q3, there wasn't much change. And for wealth management overall, it is negative, but are there any other factors aside from the incident? Yes, thank you. On page 26, Otsuka-san, you mentioned the negative number or is wealth management negative overall? This includes the actions by the corporate clients. So this is kind of an irregular number. I think you should focus more on the retail-only line. And since a few years ago, we have started adding this retail-only disclosure, and that's the reason for that. And if you look at the retail-only line, you can see how it was positive in this quarter as well. And we achieved inflows for nine consecutive quarters. So I don't see any major issues here. Thank you. Yes, this 467 billion, 168 billion, if we look at the retail only. Is there any reason for this? Well, October is, October was somewhat slow. There was the prime minister election in Japan and the US presidential elections in early November, and customers were waiting and seeing. And if you look at within the quarter, October was relatively slow. OK, I understand. Thank you very much.

The next question comes from Citi Group Securities, Mr. Niwa. Thank you. I am Niwa from Citi. I have two questions. So I'm deviating from the earnings release, but regarding the policy holding and 2030 management ambition of yours, and regarding the policy holding of shares, The policy holdings held by Nomura, what is your policy in the securities report? I do understand you have provided explanation, but environment is changing now. So could you comment on the policy? which may not be necessarily needed. So what is your view and how should I think about your policy holdings? And regarding our target for 2030, for you to conduct upward revision, what criteria needs to be met? So the vision seems to be a word that's not appropriate because the target seems to be too low right now. Then why are you not raising the target, making upward revision? Could you comment on those? Thank you. Thank you for the question, Mr. Niwa. Regarding your first question, I didn't understand the intention of your first question. So are you saying that we should increase the policy holding of shares? What was your intention, Mr. Niwa? Niwa speaking. So my intention, my message was you could completely eliminate policy holding of shares. Kinamara speaking. So we have disclosed our position, but quite quickly we are setting down our position. And the ratio against tier one capital right now is 2.8% or only around 3% and 3% is affected by the stock price increase so we have been quite aggressive in selling down our position in policy holdings and that's our stance and we have a target number of shares to hold and we are quite proactive in selling those positions but in the sense of the number of names When it comes to the sale of unlisted, non-listed stocks, it's difficult because we do not have a market. So we have been quite aggressive in selling the shares held. But even though we have made progress and we have no intention of slowing down our initiatives, but it would be quite a challenge for us to completely eliminate the holdings. However, In terms of direction, shares which do not have to hold, we do not intend to hold. Regarding your second question, why we are not raising the target? Well, our target was set May two years ago, ROE of 8% to 10% plus. So rather than focusing on that range from 8% to 10% plus, but what's more important is for us to achieve profit no matter what the market environment is, no matter poor the market environment is, we would like to achieve at least 8% in ROE steadily. So that's the background of our target. So in the past, as we held 8% to 10% targets, Many people told us, many people asked us, how are we going to achieve the target? They didn't see the pathway toward achieving the target. We received such quite harsh comment. So we have made efforts to achieve our ambition and the last two quarters we could achieve. level above 11%. So when situations change, people's comments also change. That's how I felt. But baseline ROE and recurring business expansion are our focus so that we can increase our underlying ROE. That is our first step. And on top of that, if market environment is favorable, then 10% plus ROE just like 11% this time, or we could aim even higher. That's our thinking. Did that answer your question? Thank you very much.

The next question is from Bank of America Security's Tsuchino-san. Thank you, Tsuchino again. About laser digital profit, This is in Europe. And in terms of segment, where is it booked? And from an accounting perspective, which item is it? Yes, this is Kitamura. In terms of segment, it is in others of others. Sorry for the complication. And in terms of the accounting item, it is trading P&L. to answer your question. So it's basically trading in P&L. Okay, that's another difficulty for me. Okay, I understand.

It's time to finish and we would like to conclude question and answer session. If you have some more questions, please ask our Nomura Holdings IR department. In the end, we would like to make closing address by Nomura Holdings.

This is Kitamura. Thank you, everyone. In the second and third quarters, we could achieve ROE exceeding 11%. And our medium to long-term initiatives that we have worked on seem to be delivering results that gives us confidence as management members. But we are not overly optimistic. We will stay focused on stabilizing top line and we will stay focused on diversifying revenue streams while controlling costs and controlling or managing risks. So we will stay attentive to all those things. 268.8 billion yen of net profit has been achieved recently and highest level record high of net profit maybe just around the corner. But by working on the themes that I have worked on, we would like to keep up our efforts so that we can deliver a good performance. Thank you very much for your continued support. Thank you.

Thank you for taking your time. And that concludes today's conference call. You may now disconnect your lines.