NOMURA HOLDINGS INC Q3 FY2025 earnings call

• Group wide net revenue increased 4% quarter-on-quarter to JPY502 billion. Income before income taxes grew 4% to JPY138.3 billion. Net income was JPY101.4 billion, a 3% increase over last quarter. EPS came to JPY33.08 and annualized return on equity came to 11.8%.
• Improving profitability in international operations has been a management priority, with progress made in portfolio diversification and revenue increase across a wide range of products in each region. Profit contributions from Laser Digital have begun, and income before income taxes in the three international regions came to JPY51.8 billion, increasing by 30% over last quarter. The international business accounted for nearly 40% of group-wide income before income taxes.
• For the first nine months of the fiscal year, net revenue came to JPY1,439.8 billion, up 29% from the same period in the previous fiscal year. Income before income taxes grew 106% to JPY374.2 billion, while net income increased by 146% to JPY268.8 billion. All divisions reported strong gains, and the income before income taxes margin improved from 16% to 26% due to greater operating leverage from cost controls.
• In wealth management, recurring revenue rose to a record high, and the recurring revenue cost coverage ratio rose to 72%. In investment management, the asset management business had net inflow for the seventh straight quarter and assets under management climbed to a record high. In wholesale, global markets revenues increased for the seventh straight quarter, and investment banking revenues were at a high level.

Wealth management: Net revenue was flat quarter-on-quarter at JPY116.3 billion, and income before income taxes grew 2%. Income before income taxes reached its highest level in the nine and a half years since the quarter ended June 2015. Recurring revenue rose to a record high of JPY50.4 billion. Investment management: Net revenue was down 18% at JPY45.7 billion, while income before income taxes fell 41% to JPY18.9 billion. However, business revenue, a stable revenue source, came to JPY42 billion, the highest level since the division was established. Assets under management climbed to a record high of JPY93.5 trillion. Wholesale: Net revenue increased 10% to JPY290.5 billion. Global markets revenues increased for the seventh straight quarter, while investment banking revenues were at the highest level for the period stretching back to the fiscal year ended March 2017. The three overseas regions of America, EMEA and AEJ all performed well with combined net revenue up 23%. Income before income taxes of JPY62.4 billion represents the highest level in four years since the quarter ended December 2020.

• Aim to achieve consistent ROE of 8% to 10% or more by 2030, with the ability to reach 8% even in challenging market conditions and more than 10% in favorable conditions.
• Plan to use the proceeds from the sale of Nomura Properties' training center land and building, expected to book a pre-tax income of approximately JPY56 billion, for shareholder return in the fourth quarter, with various options like share buyback being considered.
• Continue to focus on stabilizing top line, diversifying revenue streams, controlling costs, and managing risks while working towards achieving their ROE targets.

• Economic and market conditions, political events and investor 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 may cause actual results to differ materially from projections.
• For fixed income business, concerns about liquidity regulations affecting securitization business and the need to manage portfolio diversification and turnover of funds.

Q: About wholesale fixed income business, reasons for strong revenue environment and sustainability, and profitability in line with regulations. Also, about sale of real estate and further asset efficiency targets.

A: For wholesale fixed income, securitized products business involves diversifying portfolio, controlling book holdings, and recycling resources. Profitability is satisfactory with secured ROE. Regarding real estate sale, the training center property sale is for effective use of management resources, and currently, no plans to change NRI stock holdings ratio.

Q: About wealth management, impact of client visit rules on sales, and cost-to-income ratio in wealth management and wholesale.

A: Client visit rules have had some impact on new customer acquisition but not major on existing business. In wealth management, cost control is stable with room for IT investment in the future. In wholesale, cost-to-income ratio is 79% due to top line growth and cost control, and will continue cost reduction efforts.

Q: About US business revenue and profit, and investment banking pipeline accumulation.

A: Page 22 numbers are based on legal entities, and Americas pre-tax profit has greatly increased aside from American Century Investments related factors. IB pipeline is strong with M&A and ECM transactions, especially in Japan, and overseas pipeline is solid with deregulatory moves benefiting M&A industry.

Q: About Laser Digital profit, its booking in segments and impact on Europe's profit.

A: Laser Digital profit contribution is in 'others of others' segment and trading P&L. Europe's profit improvement is due to multiple factors including Laser and wholesale business recovery.

Q: About policy holdings and 2030 ROE target.

A: Policy holdings are being actively reduced, with a target number of shares to hold. The 2030 ROE target of 8% to 10% plus is focused on increasing underlying ROE through baseline ROE and recurring business expansion, with plans to aim higher in favorable market conditions.