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Good day everyone, and welcome to today's Nomura Holdings fourth quarter and full year operating results for fiscal year ended March 2026 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 results, performance, or achievements of the company to be materially different from the results, performance, or other expectations implied by these projections.

Such factors include economic and market conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions. With that, we'd like to begin the conference. Mr. Hiroyuki Moriuchi, Chief Financial Officer, please go ahead.

This is Moriuchi, CFO. Thank you for joining us. I will now give you an overview of our financial results for the fourth quarter and full year for the fiscal year ended March 2026. Please turn to page 2. First of all, our full year results. As you can see on the bottom left, group net revenue increased 15% year-on-year to JPY 2,167.7 billion, while income before income taxes grew 14% to JPY 539.8 billion, and net income increased 6% to JPY 362.1 billion, setting a record high for the second consecutive year. We achieved full year ROE of 10.1% on target for the second year in a row, since we set our ROE target range of 8%-10% or more by 2030. Four segment income before income taxes reached an all-time high of JPY 506.9 billion.

Wealth Management and Wholesale drove company-wide earnings, while both divisions achieving their highest income since their respective establishments. Wealth Management achieved growth of 23% in income before income taxes as the recurring revenue-based business model gained further momentum, and major KPIs also saw substantial growth. Investment Management saw its assets under management rise by more than 50% over the year to around JPY 137 trillion, with a substantial increase in the stable business revenue base. Meanwhile, Wholesale saw revenue growth across all regions, and both Global Markets and Investment Banking achieved record high revenue, resulting in income growth of 21%. As for Banking, it has steadily expanded its business base since the division was established and is making solid progress toward implementing deposit sweep. In view of our strong performance for the period ended March 26, we expect to pay an ordinary dividend of JPY 24 per share.

This brings the annual dividend to JPY 51 per share for a dividend payout ratio of 41%. Next, let me give you an overview of the fourth quarter results. Please turn to page 3. All the percentages I mention from here on are quarter-on-quarter comparisons. First of all, Group net revenue rose 5% to JPY 577.2 billion, income before income taxes fell 20% to JPY 107.7 billion, and net income was down 19% at JPY 73.9 billion. Earnings per share came to JPY 24.34 and ROE was 8%. While Wholesale segment net revenue rose, income fell due to factors including a decrease in the amount of profit recognized from affiliates in the Other segment, as well as an impairment loss at an investee company in Investment Management. Next, please turn to page 7, and I will present an overview of each business in the fourth quarter.

As you can see in the top left, in Wealth Management, net revenue was more or less flat versus the previous quarter at JPY 133.1 billion, while income before income taxes exceeded the strong previous quarter, rising 5% to JPY 61.2 billion. The recurring revenue cost coverage ratio reached 72%, and the division achieved a high level of profitability with the margin on income before income taxes remaining above 40%, which is higher than the industry average. As shown on the bottom left, recurring revenue reached an all-time high of JPY 56.8 billion. Net inflows of recurring revenue assets remained at a high level, exceeding JPY 400 billion once again this quarter. Flow revenue was down slightly, but at JPY 76.4 billion, remained high in absolute terms, second only to the level of the previous quarter as we were able to effectively support customers' need amid volatile market conditions.

Next, I will give you an update on total sales by product. Please turn to page 8. Total sales rose 75% quarter-on-quarter to around JPY 11.7 trillion. This was largely due to major tender offers totaling JPY 4 trillion. Even excluding this factor, total sales remained at a high level by product. Excluding the tender offers, sales of Japanese stocks remain high thanks to a contribution from primary deals. Sales of bonds fell by 5%, while demand for foreign products was solid. Sales of Japanese bonds fell slightly in the absence of primary deals. Sales of investment trusts and discretionary investments, which constitute recurring revenue assets, saw some fluctuations but remained at a high level as a flow from savings to investments continued. In insurance, meanwhile, sales of foreign currency denominated products declined on weaker yen. Next, we take a look at KPIs on page 9.

Net inflow of recurring revenue assets shown on the top left were JPY 422.8 billion, the 16th straight quarter for inflows to exceed outflows. Recurring revenue assets at the end of March, shown on the top right, were down owing to market factors, but recurring revenue came to JPY 56.8 billion, a record high even when factoring out the receipt of half-yearly investment advisory fees. As shown on the bottom left, number of flow business clients rose by around 200,000 from the previous quarter, reaching 1.74 million. Business has been growing against a backdrop of high market volatility, primarily in face-to-face channels. Next is investment management. Please turn to page 10. As seen on the top left, net revenue increased 42% to JPY 86.2 billion, and income before income taxes was more or less flat at JPY 18.1 billion.

Business revenue, which is a stable type of revenue, was at an all-time high, owing to growth in existing business and the expansion of international business through acquisitions. At the same time, expenses related to acquired businesses and losses on impairment of our equity stake in an investee company were recognized. An explanation of the breakdown of net revenues can be found on the bottom right. Solid asset management business and the aircraft leasing business, Nomura Babcock & Brown, both contributed to the increase in business revenue, while investment gains related to American Century Investments rose quarter-over-quarter. Moving on to page 11, we look at our asset management business as a backbone of business revenue. The graph on the upper left shows that assets under management hit an all-time high of JPY 136.9 trillion at the end of March.

Shifting our focus on the bottom left, we see there were net outflows of JPY 279 billion. In the domestic investment trust business, which had inflows of JPY 816 billion, funds went mostly into Japanese equity products in the ETF category and into balance funds, Japan Equity Active funds, and private asset-related products in the investment trust category. In the domestic investment advisory international business, outflows came to about JPY 1 trillion, mainly from business targeted for acquisition. In line with the industry trends in the U.S., we expect funds to continue flowing from active type mutual funds for now, but we aim to grow assets under management by boosting total sales and bringing net flows close to neutral as soon as possible, with enhancements to marketing capabilities and expansion of active ETF SMA business opportunities.

Alternative assets under management on the bottom right grew to a record high JPY 3.6 trillion, an increase of about JPY 300 billion from the end of December, of which fund inflows account for more than half.

Next, Wholesale. Please refer to page 12. On the top left, you can see that Wholesale net revenue fell 2% to JPY 308.1 billion, and income before income taxes declined 31% to JPY 43.2 billion. Looking at the breakdown on the bottom left, Global Markets net revenue slipped 2%, and Investment Banking net revenue fell 3%. Discussion by business line can be found on page 13. Global Markets net revenue was down 2% at JPY 252.5 billion. Please find the middle section on the right. Fixed Income revenue declined 8% to JPY 125.3 billion. In Macro Products, rates revenue was weak in the Americas, with weak volatility rising, but rose in Japan. FX emerging revenue offset some of the weakness in rates revenue as client flows were accurately captured. In Spread Products, Securitized Products revenue remained high, mainly in Americas, and fell quarter-on-quarter in AEJ.

Credit revenue was unchanged despite widening spreads. Equities revenue was up 6% to JPY 127.2 billion. Equity Products revenue reached a record high as revenue rose sharply in Japan and AEJ on strong financing and derivatives performance. Execution Services revenue rose in all regions, benefiting from a pickup in client activity. Please go to page 14 next. As shown on the bottom left, Investment Banking net revenue came to JPY 55.6 billion, down 3%, but still at a high level. By product in advisory, revenue growth momentum continued based on involvement in many M&A deals, chiefly in Japan. The range of deals was varied and included domestic realignment, privatization, and cross-border deals. In financing and solutions, et cetera, ECM revenue rose partly on contributions from large-scale CB and PO deals. Solutions business continued to perform well as it tapped demand for unwinding of cross-shareholdings.

Let's continue to banking on page 15. On the top left, banking net revenue was up 6% at JPY 14.5 billion, and income before income taxes was down 27% at JPY 3.0 billion. Loans outstanding accumulated steadily during the quarter as recognition of loan products on offer grew. The investment trust balance grew thanks to both market factors and the establishment of new trusts. Income fell as expenses rose, including spending on IT and a part of the standardization of business processes and recognition of taxes and public charges. We would like you to view this as an upfront investment aimed for future business expansion. Next, expenses on page 16. Group-wide expenses were JPY 469.5 billion, a quarter-on-quarter increase of about 13% or JPY 53 billion.

Extraordinary factors that boosted expenses include impairment losses associated with our equity stake in investee company, compensation and benefits accompanying changes to remuneration regulation, and effects from changes to the method of presentation of financial statements. When these factors are excluded, we think it's evident that the cost structure in place is appropriate for the revenue growth. We aim to balance revenue growth and cost controls while making steady investment in growth. Next, page 17 for financial position. As you can see in the bottom left, the Common Equity Tier 1 ratio stood at 12.9% at the end of March, down 0.1 point from 13.0% at the end of December. This concludes our overview of our fourth quarter results. Lastly, please allow me to briefly talk about the situation related to private credit. First, our group's exposure is properly diversified and managed.

Breaking down our exposure, in wholesale business, lender financing for private credit funds comes to about $800 million, and direct lending to SMEs comes to about $1.2 billion, while in Investment Management, investment holdings related to private credit come to about $400 million. Lender financing is backed by a diversified corporate credit portfolio, and the credit fund counterparties are by and large supported by long-term capital provided by institutional investors and the like. Direct lending is diversified across more than 40 companies, and investment management investments are also suitably diversified and have been performing stably. In closing, we announced Reaching for Sustainable Growth, our vision for business in 2030, in May 2024, and set as numerical targets the consistent attainment of ROE of 8%-10% or more, and income before income taxes of more than JPY 500 billion.

With our targets attained now in the span of two years, great strides have been made to build the franchise required to realize sustained growth of the Nomura Group. I would like to briefly touch upon the situation as of now in April. In Wealth Management, net revenue is largely at the same level as in the fourth quarter. Uncertainty remains in the market due to geopolitical risk, but the flow of funds into products and services assuming a long-term diversification of investments remains firm, and client sentiment has been recovering. In Wholesale, net revenue has been trending much higher than in the fourth quarter, with equity markets rebounding sharply from the end of March and rising to new all-time highs. Client activity has picked up and equity products revenue has been strong. Rates have also been steadily monetizing client flows amid moderate market volatility.

We aim to monetize business opportunities while keeping mindful of appropriate risk levels and cost controls. Your continued support is appreciated. Thank you.

We have a question-and-answer session now. If you have a question, press sharp seven. If you want to cancel a question, press sharp seven. The first question is from SMBC Nikko Securities, Muraki-san. Please go ahead, Muraki-san.

SMBC Nikko, Muraki. I have two questions. First, international asset management company control. On page 10, on the footnote, four years ago, investment had been made, a forest-related asset management investment was done, and JPY 12 billion of losses have been booked this time around. Can you explain the backdrop? On page 11, Macquarie Asset Management. Regarding the cancellation of the agreement, there is a comment, but against the plan, how is the actual performance? That's my first question. Second question is with regards to capital. Page 17. The short question is, in the next quarter, what would be the CET1 ratio? This is the new fiscal year, so I think this is a quarter where you can quite easily leverage your balance sheet. In equity derivatives, you are taking significant credit risk and private credit.

U.S. division portfolio has been increasing in the past few years, which is using your balance sheet. What's your idea regarding the use of balance sheet, and how will that impact your CET1 ratio? Thank you.

Muraki-san, thank you very much. Let me take the first question first. International asset management related question. You touched upon two points. The forestry asset management company, we made an investment four years ago, and what about the loss and the history that had led to this loss? Back then, when we made the investment, global ESG trend was on the rise, globally and in the United States, and we expected that this will become a major trend. We were also advocating public to private, and we were trying to expand our private asset business.

Those had been the objectives based upon which we'd made a decision to make an investment into this company. On the other hand, after the investment was made, as is well known to all of you, the ESG environment had significantly changed, mainly in the United States. That had triggered some difficulties in fundraising. This company itself, AUM, is top five in forestry, so the health doesn't change. But in comparison to the plan we had drawn back when we made the investment, the growth has decelerated. We had to book that based upon accounting standards, and that is why we've decided to book for impairment this time around. Carbon offset requirements from operating companies. There are funds that will be introduced, and those initiatives are under study. We are hoping to further accelerate this business in the coming months and years. That's the backdrop.

Now, this company is booking profits at the moment. However, the growth of profit is slower than we had expected. International asset management, your second point, net outflow. I touched upon that in the initial presentation. Against the plan, what is the current situation? That was your question. Net outflow itself from the acquisition, U.S. traditional asset management company, it was the industry trend. That had been factored into the valuation in making investments. Based upon that, what about the performance? In principle, one-off investment or excluding one-off costs, the original revenue and expense and EBITDA expected. In the CEO forum in December, we made a presentation, the peer earning power a quarter, so one quarter worth has been booked.

On the other hand, as we mentioned on that occasion, towards integration, one-time expenses have been booked and amortization of intangibles have also been booked. We are more or less in line with the original expectations, but in the mid- to long run, this net outflow will be minimized, and we have to achieve net inflow. Back when we hosted the CEO forum, active ETF transition, and we will also be making J-curve investments in order to expand the business. On your second question, CET1 ratio for the next quarter, wholesale equity and SPPC balance sheet, use of the balance sheet. Those were the points that you touched upon. Regarding wholesale, as you know, self-funding. Based upon self-funding within the bounds of additional capital, balance sheet is used, RWA leverage exposure is used within that framework.

Based upon the earning power, they are hoping to grow business in that quarter, but additional capital is within self-funding. CET1 ratio impact through business expansion is not that significant. Within that, what would be the positioning of equity PC and credit business? In the mid to long run, we want to have a balanced portfolio, and that policy remains unchanged. Of course, we want to grow equity, but regarding SPPC, we will be looking at certain opportunities, and we will not deviate from that policy, and quantitative control will be in place as we try to manage our portfolio. I hope I answered your question.

Thank you very much. In Q1, top-line performance was good. CET1 ratio will not decline so significantly, and ROE will improve. Is that the right interpretation?

CET1 ratio will not decline due to this factor. We don't think so.

As you rightly pointed out, we are also hopeful that this will lead to improved ROE.

Thank you very much.

Next question comes from BofA Securities, Tsujino-san. Tsujino-san, please.

Thank you very much. Regarding personnel expense, on a Q on Q basis, it's up by more than JPY 6 billion. In the U.K., there was regulatory change, and from the third quarter, there has been a change made to the deferred compensation. What's the impact coming from them? That's my question. Also then, in the first quarter, what is going to be the impact coming from them? Could you explain? Another question relates to Global Markets. In April, compared to the fourth quarter, Wholesale outperformed compared to the fourth quarter. In other words, I believe that's due to thanks to Global Markets performance and Japan equity was mentioned, and it may be the case for overseas as well, but could you speak more about geographical split, equity or FIC, and something like that? Thank you.

Thank you, Tsujino-san, for your questions. Regarding personnel expense, in the third quarter, we made the announcement, but deferred compensation change. That had an impact, and as a result, in the fourth quarter, we booked a relevant impact. Compared to the third quarter, the impact amount is smaller. However, it's about the same as in the third quarter. In the third and fourth quarters, deferred compensation-related expense is booked. In the third quarter, I explained it, but there is a timing gap, a timing difference in terms of booking. For the fourth quarter, in terms of the amount, it's smaller. This year, the impact is going to get closer to zero.

As for the compensation regulation relaxation in the U.K., I am skipping details, but it's one-off in nature, so it's similar to the difference, like a slide in the booking timing. That's my answer regarding personnel cost. Regarding April, when Wholesale performance improved compared to the fourth quarter, the main factors are as follows. In Wholesale, mainly rates, equity products drove the outperformance. In the fourth quarter, rates, especially from the middle of March, based upon the turmoil in the Middle East, the risk had to be controlled. It's not just about the end-of-year factors, but due to risk control, revenue slowed down. In April, we saw the significant improvement. Equity product is continuously performing well. As for nations, please give me a moment.

As for the geographical split, all regions compared to the fourth quarter, we see outperformance, but regions other than the U.S. are particularly outperforming. The U.S. is performing well, but compared to other regions, growth rate is relatively lower. I hope I answered your question.

Thank you very much.

I have not captured everything, but U.S. was doing well as of the end of previous fiscal year. If I am not mistaken, the U.S. business was strong. On the other hand, compared to the U.S., in the first quarter, growth is limited.

Oh, Tsujino-san, sorry, I did not explain clearly, but bottom right on page 12, you can find revenue by geography. Americas, in the fourth quarter, revenue has come down relatively significantly in Americas compared to other regions. That's partially due to seasonality and also due to the impact from the Middle East. Since the middle of March, we had to control business, so especially macro business in Americas was particularly impacted, and the timing didn't work well, especially the last one week of the month.

That happened, and then the situation got relaxed, and then there has been less tension after April, and we saw recovery.

Okay, understood. Thank you very much.

The next question is Daiwa Securities, Watanabe-san. Watanabe-san, please go ahead.

Daiwa Securities, Watanabe. I have two questions. First, private credit, $2.4 billion you explained. You also said diversification is in place, software by sector. Can you give us some more detailed breakdown? Retail, private related products, what is the redemption call and what is your policy of sales going forward? Secondly, capital policy. You didn't announce any new buyback program. RSU, JPY 40 billion. It would be JPY 20 billion about buyback, 50% total payout ratio to shareholders. Is that the right interpretation?

Watanabe-san, thank you very much. First of all, private credit sector diversification. What is the picture? Overall, healthcare, business service, software and computer service, consumer, engineering, and construction. These are the sectors included. Mostly healthcare and business service occupy quite a large proportion. Software, not necessarily high in terms of percentage.

On top of that, there is regional diversification in place as well. Regarding the second half of your first question, retail customers, private credit. What about the redemption? Regarding sales policies, as client sentiments, there is some conservativeness, but at the moment, we are not seeing any calls for cancellation or requests. Originally, or to begin with, when we sell to retail customers, we tell them that it's based upon the assumption of mid to long-term investment. When we obtain their understanding, we sell those products to them for the first time. I think those communications had been effective, so much so that there hasn't been any significant run. On buyback and total payout ratio, first half, second half put together, full year, RSU included, 58%. Excluding RSU, it's beyond 50%. I hope that answers your question. Regarding buyback, announcement timing.

If there's an announcement in 4Q, that would be fiscal year 2025. The JPY 60 billion buyback program we announced in Q3.

In Q4, we assumed the Q4 profit and we defined the amount based upon our assumption.

Thank you very much.

The next question comes from JPMorgan Securities, Sato-san. Sato-san, please.

Thank you. I am Sato from JPMorgan Securities. I have two questions. First question is about Wholesale and Wealth Management expense outlook. In Wholesale, performance was strong and there was adjustment made to the bonus, I believe, and as you explained, and there were one-time factors. 83% of our cost income ratio for the year and next following year onward, if top line is at the same level, then what kind of a level can we expect? On the other hand, for Wealth Management, in the fourth quarter, the performance was solid. The quarterly expense came down. In this strong performance, I believe you are doing the payout to employees.

Even in light of that, if this is the level you are achieving, then when recurring asset growths are bigger, then can we expect more leverage? Could you explain your outlook for expense for those two divisions? Secondly, in the third quarter, related to Laser Digital, loss was booked. At that time, risk control and net exposure reduction were explained. In the fourth quarter period, based upon the market situation in the fourth quarter and based upon the result of the third quarter, and what is the update on the effects achieved, as a result of the countermeasure you have taken?

Thank you for your question. First, the outlook for expense. First, Wholesale. In the fourth quarter on a Q on Q basis, JPY +13 billion. Out of this increase, 30% is due to the compensation regulatory change and also end of the year performance-linked bonus adjustment.

The last part is increase in the professional fee and the payment for services received. The expense rate increased, but fixed cost was suppressed. This fiscal year, in the sense of the review of expense in the fourth quarter, Wholesale, they had a few one-time items and also fees paid or professional fees. For example, SPPC Pipeline. Cost was incurred before the deal as we hired lawyers, and the revenue recognition got delayed. Compared to the fourth quarter, we expect the expense level to come down. As for Wealth Management, we booked high level of margin. Can we expect the same level this year? As for this year, advance investment in AI, also corporate cost increase due to inflation are expected, but continuously in Japan for Wealth Management, we are going to tightly control cost.

Even though there are timings when cost increases due to advance investment, but it depends on revenues, but we expect we will be able to deliver a certain level of margin. Finally, regarding Laser. In the third quarter, we troubled you, and we got you worried with loss related to Laser. As you said, we have controlled risk volume, and we have taken a more conservative stance. In the fourth quarter, when we look at the market, Bitcoin and crypto market decline was the same level as in the third quarter. In terms of profit and loss, our impact on consolidated result was limited. I hope I answered your question.

Regarding the latter part of your answer, the situation in the crypto market and the impact on your profitability. Simply put, you've reduced the exposure, so the benefit you've received is as a result of reduced exposure and hedging or different ways of conducting market making. In other words, what I'm getting at is previously you said you are not intending to downsize the business, so the exposure level, I think, will increase in the future. Even with that, you have a structure in place to prevent impact on profit?

Thank you very much. Regarding trading, the market making, the absolute amount of risk has been reduced. Of course, there are venture capital investments and asset management seed capital with our own fund. For those areas, in non-trading areas, we have long positions. When we have progress in asset management business and from seed capital, we will see the transfer to equity capital by investors, LP investment.

Thank you very much. Understood.

The next question. SBI Securities, Otsuka-san. Otsuka-san, please go ahead.

Otsuka of SBI Securities. Is my voice coming through?

Yes. Thank you very much.

Thank you very much then. Could I do one question and one answer? The first question is just for confirmation purposes, but Wholesale, quarter-on-quarter basis profits declined. What's the reason? Can you recap that? Revenue, as you had explained, Global Markets, fixed income, Q4 seasonality factor, and Iran had been quite significant, and expenses, expertise fee, and pay for performance. Due to the revenue and expenses, 30% decline in profit. That's quite significant, but it wasn't a surprise to you. That's my first question.

Thank you very much. You've made the situation very clear. If we divide between revenue and cost, as far as revenue is concerned, seasonality due to the end of the fiscal year risk position was controlled.

On top of that, due to the Middle East situation in the mid to late March period, there was exacerbation quite rapidly. We had to control defensive position, and that's the big factor for the reduction of revenue. On the cost side, I slightly touched upon this in my presentation, but due to the review of the compensation regulation and also being the end of the fiscal year, part of it is timing gap, and there has been a one-off increase. The remainder is increase of fees payable to experts and for transactions. Regarding this factor, the original understanding regarding SPPC, we were to add one product to the lineup. The initial investment, that was within our control, but professional fees, we paid it earlier than booking the revenue. This was a relatively high cost increase, higher than we had expected.

That's my personal view. I hope I answered your first question.

Sorry. One follow-up question. The 86% expense ratio is slightly high, so there was the timing gap, but 83% for a full year. Is that the normalized basis ratio?

Thank you very much. Q4 86%. Obviously, it's quite significantly higher. Regarding expense ratio, rather than expense side, the impact from revenue is quite heavy. At any rate, 86% is slightly higher than normal. Thank you.

Thank you very much. Second question. At the end, you mentioned ROE 10% full year basis and 8%-10% or higher, and stably performing such ROE, you've achieved that goal. On the other hand, if we look at banks and other Japanese financial institutions, or more so regarding overseas financial institutions, 8%-10% ROE isn't that high. Plus, don't you have an intention to elevate your goal?

Isn't that discussed at the board of directors meeting? Can you touch upon such aspects?

Thank you very much. Otsuka-san, your point is very true. Of course, in comparison to mega banks, Japanese financial institutions and peers overseas, from the perspective of being in the investment business, 8%-10%+ level is just a midpoint. It's not the ultimate goal. Regarding this matter, in the deliberations for the budget, there is intensive discussion on this matter. If there are any points that we need to review, in late May, we will have the Investor Day, so we may touch upon that aspect. Thank you. That concludes my response.

Your answer is you're discussing that point heavily, right?

Yes, exactly.

Understood. Thank you.

The next question comes from UBS Securities, Niwa-san. Niwa-san, please go ahead.

Thank you. I am Niwa. Can you hear me?

Yes.

Thank you. Okay, thank you very much. Regarding wholesale cost and private asset initiatives of Nomura, I have a question about them. First, regarding wholesale cost. This year and next year, on a run rate basis, what's the percentage? I do understand you have a medium-term goal, but given the environment where there is a strong cost increase pressure, what is your outlook? My second question is more longer term than the earnings result. In Americas, what's the future outlook of private asset market in the U.S.? And on that basis, what is Nomura's strategy? So if it's in the initial phase, then there will be the room for expansion. In the call today, listening to the tone of your explanation, it appears you remain positive.

Looking at your peers, they are switching gears. If you could give me some perspective on this, that's appreciated.

Thank you very much. Regarding your first question on wholesale cost control and cost-income ratio target, what is the rate of our progress and what is our outlook for this year? The cost pressure may be high as you said, but as you said, the group-wide cost control has an important theme of how to manage inflation. Certain parts of this are unavoidable, but rather than absorbing, taking them 100%, the theme is to look at where we can reduce cost in other areas. For example, through location strategy, offshore can be more effectively used. We are considering approaches, including structural approaches, so that we can suppress cost increase to a certain level.

Regarding cost-income ratio, we would like to grow revenue at a rate that beats inflation. That's an important factor. For business, this is more important. In wholesale, ROI against additional capital needs to be increased to increase ROE. That's our intention. Secondly, regarding our outlook for private credit, we need to separate my answer for midterm and long-term. Regarding private credit market itself, our view is positive. In the medium to long term, market has the potential to grow. On the other hand, bulge bracket and our peers have pointed out repeatedly that in the short term, credit cycle needs to be monitored closely and the risks must be controlled tightly. We do acknowledge the need to do so.

Earlier I answered to a previously asked question, but in SPPC, we have a rich pipeline with attractive opportunities, but our stance is to take selective approach and medium to long-term portfolio. In Wholesale as a whole, we like to control so that no single product stands out too much. That kind of control will be needed, and we have an agreement in our approach with Wholesale. That's all.

Thank you very much. Just one more thing from me. Mainly, impact on you in terms of division, the impact is happening mainly in Wholesale, not really in Investment Management, but Wholesale is mainly impacted in terms of product line?

Thank you very much. As for the existing P&L, especially risk side, Wholesale portion is the biggest, so your understanding is fine. As we think about medium to long-term growth, asset management is the area.

As we have said since 2020, we are closely looking at the market opportunities and not just private credit, but we look to grow private business. As part of that, hopefully private credit will grow. Wealth Management, based upon the principle of suitability, based upon the needs of our clients, we would like to steadily accumulate assets. Going back to the previous point, in the short term, we need to control risk for Wholesale, that's as you pointed out.

Thank you very much for the comprehensive answer.

We'd like to conclude question-and-answer session. If you have some more question, please ask our Nomura Holdings IR department. In the end, we'd like to make closing address by Nomura Holdings.

Once again, thank you for joining us. As I have said a few times, for two successive years, on a full year basis, we've renewed the net profit and ROE. Yes, there were some voices saying that this may not be enough, but we exceeded 10%, and we were able to achieve the goal towards the 2030 vision two years upfront. Recurring asset increase, Banking Division establishment, Macquarie, asset management acquisition. These investments were done in order to make a robust platform for future growth. That was what we've done in the past 12 months. I think we will begin to monetize out of those initiatives, and therefore, we call upon you to provide your continued support. That was Moriuchi, CFO. Thank you.

Thank you for taking your time, and that concludes today's conference call. You may now disconnect your line.

Good day, everyone, and welcome to today's Nomura Holdings Third Quarter Operating Results for Fiscal Year ending March 2026 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. [Operator Instructions]. 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 results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these projections. Such factors include economic and market conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions. With that, we'd like to begin the conference. Mr. Hiroyuki Moriuchi, Chief Financial Officer. Please go ahead.

This is Moriuchi, CFO. Thank you for joining us. I will now give you an overview of our financial results for the third quarter of the fiscal year ending March 2026. Please turn to Page 2. Return on equity was 10.3%, reaching the quantitative target for 2030 of 8% to 10% or more for the seventh consecutive quarter. Group-wide net revenue came in at JPY 551.8 billion, up 7% over the last quarter. Income before income taxes fell 1% to JPY 135.2 billion, while net income fell 1% to JPY 91.6 billion. EPS for the quarter were JPY 30.19. The 4 main divisions performed solidly, but the segment -- other incurred losses because of the downturn in market conditions for the digital asset-related businesses. For all 4 divisions in total, pretax income rose 8% to JPY 142.9 billion. This is the highest level in 18.5 years since the first quarter of the fiscal year ended March 2008. Wealth Management achieved growth of around 30% versus the previous quarter, which was itself a strong quarter. Investment Management saw business revenue rise to an all-time high since the establishment of the division, thanks to the consolidation of the public asset management business of the Macquarie Group, which we acquired in December 1, 2025, but profits fell because of weaker investment gains and onetime expenses associated with this acquisition. In wholesale, both Equities and Investment Banking performed solidly generating record revenues. Banking also generated solid revenues from lending activities as well as trust and agent services. In view of our strong momentum, we resolved to set up a share buyback program in order to enhance shareholder return and capital efficiency. The program will run from February 17 to September 30 of this year with an upper limit of 100 million shares and JPY 60 billion in amount. Before we go into details for each business, let us first take a look at earnings in the first 9 months of the fiscal year. Please turn to Page 3. As shown on the bottom left, income before income taxes rose 15% year-on-year to JPY 432.1 billion, net income rose 7% to JPY 288.2 billion. Earnings per share came in at JPY 94.67, and return on equity came in at 10.8%. Please see the bottom right for breakdown of income before income taxes. Pretax income at 4 main divisions rose 10% to JPY 381.3 billion. On a 9-month basis, income before income taxes is running slightly ahead of the target of over JPY 500 billion in our 2030 management vision. Looking at individual divisions, Wealth Management continue to generate stock strong profits and year-on-year recurring revenue cost coverage ratio rose sharply, improving revenue stability. Profits fell in Investment Management because of onetime expenses associated with the Macquarie acquisition, but existing operations continued to generate organic growth, thereby steadily broadening the division's business foundations with a view to future growth. Moreover, at all wholesale businesses -- business lines, they performed well, thereby actively driving group-wide earnings. Banking saw costs rise ahead of the introduction of the new deposit sweep service in the next fiscal year, but loans outstanding and investment trust balances rose smoothly. We will take a look at the third quarter results. Please turn to Page 7. All percentages discussed from now on are based on a quarter-on-quarter comparison. On the top left, you can see that Wealth Management net revenue increased 14% to JPY 132.5 billion, while income before income taxes of JPY 58.5 billion represents a growth of 29% versus the previous quarter, which was itself a strong quarter. The margin of over 40% on income before income taxes was not only high in absolute terms, but was ahead of the street, too. On the bottom left, you can see that recurring revenue rose to an all-time high of JPY 52.7 billion. The first and third quarters tend to be flat quarters for recurring revenue because investment advisory fees are only booked in the second and fourth quarters, but this was completely offset this quarter, thanks to net inflows of recurring revenue assets in excess of JPY 500 billion. Floor revenue also increased sharply to JPY 79.8 billion. Accurate assessment of market movements and client needs, along with supply of new products, helped to ensure strong revenue. Recurring revenue cost coverage ratio also rose 1 percentage point to 71% amid ongoing cost control initiatives. Please turn to Page 8, where you can see an update on total sales by product. Total sales rose around JPY 300 billion to JPY 6.6 trillion, thanks to growth across a wide range of products. Equities registered growth of 4%, thanks to increased secondary trading during market correction phases as well as major primary deals. Bonds registered a decline of 25%, yen-denominated bond sales came in flat as rising interest rates boosted yields and ensured solid demand, but foreign bond sales were hit by the disappearance of primary deals booked in the previous quarter. Investment Trusts and Discretionary Investments, which make up recurring revenue assets saw steady growth in sales and insurance sales remained strong. This demonstrates that the shift from savings to investment has now firmly taken root. Next, we take a look at the KPIs on Page 9. On the top left, you can see that recurring revenue assets saw a net inflow of JPY 503.9 billion, although there were some liquidity needs prompted by record highs in major markets, we secured the largest net increase on record. Our efforts to expand the recurring business are steadily producing results, strengthening our confidence. Meanwhile, as shown on the top right, recurring revenue assets totaled JPY 28.1 trillion at the end of December, which also presents an all-time high. As shown on the bottom left, the number of flow business clients rose by around 270,000 to 1.53 million. Volume market conditions led to an upturn in client activity and primary deals such as the SBI Shinsei Bank IPO, also encouraged trading activity. Next, let's take a look at Investment Management on Page 10. On the top left, you can see that net revenue came in flat at JPY 60.9 billion, and the income before income taxes fell 42% to JPY 17.9 billion, mainly because of onetime expenses associated with the Macquarie acquisition, together with weaker gain associated with American Century Investments, which came under investment gains and losses. On the bottom left, you could see that business revenue, which constitutes stable revenue rose to an all-time high of JPY 57.8 billion, benefiting from revenue from the acquisition that we completed in December last year as well as from solid performance in asset management business in Japan. However, Investment gains fell because of smaller gains related to American Century Investments and the disappearance of gains in the sales of portfolio companies at Nomura Capital Partners. Although profits for the division fell because of weaker investment gain and onetime expenses associated with the acquisition. The impact was offset in consolidated accounts via the reversal of the valuation allowance for deferred taxes, -- deferred tax assets. Let's now turn to Page 11 and examine our Asset Management business, which is a key source of business revenue for the division. The graph on the upper left shows that assets under management reached an all-time high of JPY 134.7 trillion at the end of December as shown on the bottom left, net inflows amounted to JPY 115 billion, representing the 11th consecutive quarter of net inflows. Net inflows to domestic investment trust business totaled JPY 71 billion. Although there were outflows from ETFs for profit taking amid rising equity markets and from Japanese equity investment trusts due to early redemptions, they were offset by inflows into newly established Japanese equity active funds, private assets and balanced funds. Net inflows into domestic investment advisory and International businesses totaled JPY 44 billion, with the outflows from U.S. high-yield bonds and the business we acquired, but influenced mainly into yen-denominated bonds in Japan. As shown at the bottom right, alternative assets under management rose to a new high of JPY 3.3 trillion. This represents growth of about JPY 400 billion versus the end of September, more than half of which stems from net inflows. Next, let's take a look at wholesale on Page 12. On the top left, you can see that wholesale net revenue rose 12% to JPY 313.9 billion, while income before income taxes rose 17% to JPY 62.3 billion. The breakdown on the bottom left shows that global market net revenue rose 9%, while Investment Banking net revenue rose 31%. Please turn to Page 13 for an update on each business line. Page 13, please. Net revenue in the Global Markets business rose 9% to JPY 256.8 billion. Please look at the middle section on the right. Fixed income revenue rose 12% to JPY 136.9 billion. In macro products, rates, revenue growth in Japan and the Americas increased flows, while FX emerging revenues rose in EMEA and also recovered in ASIA from the previous quarter. In Spread products, credit revenues fell in AEJ of investors adopted a cautious approach, but securitized products revenues remained high in the Americas, in particular. Equities revenue rose 5% to a new high of JPY 119.9 billion. Equity Products revenue rose sharply in the Americas on strong performance in derivatives, and execution services revenues rose sharply in Japan, particularly thanks to primary deals. Turn to Page 14, please. As you can see on the bottom left, Investment Banking net revenue rose 31% to JPY 57.1 billion. This represents the strongest performance for the period since the fiscal year ended March 2017, the earliest period for which we can make meaningful comparisons by product in advisory momentum remained strong in Japan with multiple transactions involving moves to take companies private and cross-border deals, and international businesses made the contribution with multiple deals, including deals in closely watched sectors, mainly in EMEA and AEJ. Revenue rose sharply in financing and solutions. Major IPOs and public offerings made strong contributions to growth in ECM, especially in Japan. Elsewhere, solutions revenue and DCM revenue in Japan also remained strong. Now let's look at banking. Please turn to Page 15. As seen on the top right, in banking, net revenue came to JPY 13.7 billion, up 7% from the previous quarter. Income before income taxes rose 31% to JPY 4.2 billion. Income from lending business and trust agent business held firm as the division established in April 2025 increased the outstanding balances that we have set as KPIs, while benefits of marketing and advertising strategies slowly started to emerge. Preparations for the deposit sweep service scheduled for introduction in the next fiscal year are progressing as planned. Next, Page 16, for expenses. Group-wide expenses came to JPY 416.5 billion, a 10% or JPY 37.7 billion increase from previous quarter. As shown on the right, the drivers of the increase include an FX impact of JPY 9 billion as well as JPY 13 billion in one-off costs, such as onetime expenses associated with the acquisition and the temporary costs arising from partial changes to the deferred compensation plan. Other major factors include operating expenses related to the acquired business provisions for performance-linked bonus and commissions and the floor brokerage fees. These are primary strategic investments aimed at strengthening our future earnings base or variable costs that move in line with revenue. Moving forward, we will continue to execute strict cost control and work to secure our profitability. Last, Page 17 for financial position. In the table on the bottom left, we can see that Tier 1 capital at the end of December came to JPY 3.6 trillion, up JPY 60 billion since the end of September, while risk-weighted assets came to JPY 24 trillion, up by JPY 700 billion. The common equity Tier 1 ratio at the end of December came to 12.8%. Our common equity Tier 1 ratio finished the quarter down 13% at the end of September, but this is mainly attributable to the negative effect of 0.5% as a calculation method for regulatory capital ratio changed with the completion of the acquisition of the business from Macquarie Group. This concludes our overview of third quarter results. In closing, in the Q3, strong performance continued across all 4 segments, as stable revenue grew and repeat client flows were monetized against backdrop of U.S. Japanese equities rising to new heights, while absorbing one-off costs associated with acquisition, ROE for the Q3 came to 10.3% and ROE based on performance in the 9 months through the end of Q3, came to 10.8%. Let me touch upon the situation in January. In Wealth Management, net revenue thus far in January is about even with the level in the third quarter. Client sentiment has been favorable despite some selling pressures in the market, and we think household financial assets are steadily shifting into investment in response to concerns about the inflation and heightened long-term diversified investment need. In wholesale, due to seasonal factors, Q4 tends to be somewhat slower than the previous quarter, even though GM, or Global Market, is striking broadly in line with the prior quarter. Meanwhile, Investment banking has gotten off to a slower -- slightly slow start, but overall, the pipeline is solid, and we are not concerned. In Q3, the impact on earnings from fraudulent transactions stemming from phishing and scams was negligible based on recent conditions, we think the impact on earnings will continue to be very minimal. Also, there are 2 items that needs additional explanation regarding Laser and Investment Management division. First, starting with Laser. Let me explain the losses in the segment Other. In this past quarter, we recorded losses in part of our business in EMEA owing to digital asset market movements and the effect of currency hedges. Specifically, earnings at Laser Digital, the unit that runs digital asset business were negatively impacted by market movements observed in October and November of last year. Laser became profitable 2 years after its establishment and its performance was solid in Q2, but the units suffered a temporary negative impact in the third quarter. Earnings in the crypto asset business are volatile by nature, and we are well aware of management of the business over medium to long term, has to take that volatility into account. At the same time, to limit short-term earnings fluctuations, we have further tightened control over positions and risk exposure. Moving forward, we will continue to capture growth in crypto markets while strengthening our services and customer base. Next, regarding Investment Management division's performance, let me add -- let me explain the existing platform and acquired business separately. First, excluding the impact of the acquisition of existing platform's AUM expanded from JPY 101 trillion as of end of September to JPY 110 trillion at the end of December, supported by net inflows and the business revenue reached a record high. I will explain next the acquired business after consolidating December results. We newly recorded approximately JPY 25 trillion in assets under management, business revenue for the period was JPY 7 billion, and operating expenses were JPY 5 billion, in addition, one-off acquisition-related costs and amortization of intangible assets were recorded, bringing total expenses, including operating costs to roughly JPY 11 billion. These one-off acquisition costs reduced the division's pretax profit, but the impact on consolidated net profit after tax was offset by releasing valuation allowances against deferred tax assets associated with the acquisition. As we explained at the investor event in December, we expect total future expenses of $100 million or so for transfer and integration-related costs and other items. These costs will be incurred over the next 2 years, but the majority is expected to be recognized over the 1-year period starting from the fourth quarter, we are now going over the details of what we expect to spend on growth investments and plan to present this information at the Investor Day event in May because the acquisition was only just been completed, have commented in some detail here about the contribution of the acquired business, but as acquired the business, becomes more fully integrated into operational commentary on business performance, we will treat the division as a unified whole while maintaining the disclosure transparency once we are through the initial investment phase of the J-curve, our long-term aim is to grow profits by maximizing synergies between our existing and the newly acquired business. The company celebrated its centennial on December 25 last year. Going forward, we aim to continue striving for growth with the help of our stakeholders and other stakeholders. We are grateful for your continued support. Thank you.

[Operator Instructions] The first question is by SMBC Nikko's Muraki-san.

Muraki of SMBC Nikko. I have 2 questions. Page 24, JPY 10.6 billion Red Inc. in Europe. Laser Digital, you said that there was a fluctuation of the market between September and November. So JPY 10 billion of losses. At that stage, there was quite a sizable position. What was the status in terms of position management? One year ago, quite a sizable profits had been recorded, but at that stage, what was the state of position management and in order to control volatility, you said that you are taking measures, but what's your forecast regarding the volatility of performance going forward? That's my first question. Second question, Wealth Management, Page 7. There was net increase in investment trust, but amount outstanding, net inflow was quite strong. What's the backdrop? There was not any outflow. Is this sustainable? And margin is more than 40% -- 44%, AI-related investment was cited, but what would be the level of margin?

Muraki-san, thank you for those questions. The first question -- the first point of question one, Laser's activity, were there any long positions taken? As you know, regarding Laser's activities, institutional investor market making and crypto assets, fund management and Nomura seed investment, venture investment. These are the diverse activities that Laser is engaged in as we offer services to customers. As you pointed out, there had been some long positions, and based upon that situation, going to the second point of your first question, how will we control volatility of performance going forward? This is a new industry of digital assets, and there are growth prospects, and we are currently in the stage of fostering businesses. And we -- our position is unchanged. We will -- we have long-term commitments. And in terms of risk management framework, we already had a robust risk management framework. On the other hand, in the short term, as you have rightly pointed out, how should I put it? There are times when sizable revenues are recorded, but last year, in November and December, there was some market disruption. So there is upside as well as downside, quite significant upside as well as significant downside. So in the short term, already, in order to control volatility, we are reducing the volume of risk in the positions we take. So this kind of precise position management will be continued in order to control upside and downside volatility, and in the long run, we wish to expand this business. So that concludes my response to your first question. Second question, net inflow of investment trust is sizable. Is this sustainable? Now having said so, there is market impact. There is impact from customers' preference. And I would like to, therefore, refrain commenting on whether we think that this trend will continue. On the other hand, 44% is a high margin, and can we further seek higher margin on this matter? Partially there are impacts coming from the market. So it's difficult to make any comments on that dimension. We are impacted by cyclical factors. Market structural change is taking place. And our policies are well aligned to market structural change. The Japanese market, retail investors are making a major shift from savings into investment. This is a sustainable trend, and we are taking measures that are well aligned to that trend. So in comparison to historical trends, we think that the margin level will be high, we will be able to maintain higher margin level. On the other hand, on the cost control side, we are continuing our efforts. But selectively, we are using AI, investing into AI, in order to improve the services we provide to our customers, so that will continue. So that concludes my response to your 2 questions.

My second question, Morgan Stanley and Merrill Lynch margins are 30%. They've targeted 30% and the actual is slightly over the target, but why does Nomura such advantage? Is it because the asset size is -- would they have larger asset size? What's your advantage?

Thank you for the question. I was consulting with our people in IR. There are country-to-country differences in terms of market structure, making it difficult to do an apple-to-apple comparison. Nomura's Wealth Management 100% sales are in-house. And because of that, partly because of that, it's easier to control cost. And the revenue market structure, I will have to once again check the market structure to respond regarding revenue. So I will conclude here.

The next question is asked by Watanabe-san of the Daiwa Securities.

I'm Watanabe from Daiwa. I have 2 questions. First question is about Wealth Management's pricing strategy, other face-to-face securities, overseas equities, and other products they are raising commissions. Do you have a discussion internally about raising pricing? Second question is about the timing and scale of buyback. Why Q3? Why not Q4? What's the background of the JPY 60 billion in size?

Thank you for your questions. For your first question on Wealth Management's commission rate, whether our peers are raising commission and what is our situation? That's your question. It's related to Wealth Management strategy. So I would like to refrain from answering that question. For us, we are focusing on value provision to customers. So we are considering what is the best solutions for customers. And we would like to continue our deliberation. Regarding your second question about the timing of buyback, why Q3? And also you asked about the value or amount. Regarding the timing, for one thing, Macquarie U.S. Asset Management transaction closing was the 1st of December. And by booking the business, CET1 ratio impact was not clear, but it was clarified and finalized. So our investment capacity was clarified. So in the market, there is expectation for buyback. So with that taken into consideration, we wanted to live up to expectations of investors and decided on buyback. Regarding the size of buyback as mentioned repeatedly, for us, investment strategy and future opportunities and also, at the same time, the importance of shareholder return are all considered. And based upon the balance, we came to the decision on the size.

Regarding the second answer, CET1 ratio. That's above the target range this time. And on that basis, you came to JPY 60 billion. So if FY 2025, so based upon the total return ratio target. So this completes your actions to meet the target for FY 2025?

So whether we are at or above 50% in total return ratio that cannot be decided until we see the fourth quarter results. Based upon the fourth quarter results, we will check whether there is shortfall or not. If there is shortfall, then we will consider measures to take at that point in time, but when deciding on the amount, it is possible to add to what we have announced.

The next question will be by JPMorgan Securities, Sato-san.

JPMorgan Securities, Sato. I have 2 questions. First, Global Markets, post-January performance. You touched upon that subject Q3. You said that the trend of Q3 has been maintained since the beginning of the month. Domestic rates, recently, there had been some fiscal concerns that had led to spike in interest rates, which means there was lack of buyers. So some people cited that there was dysfunctioning of the market. And under such circumstances, how should we view your domestic rates business? Secondly, just to confirm the numbers, Macquarie acquisition, 1-month worth revenue expenses, revenues and expenses will be booked, but normal rate contribution, JPY 7 billion revenue, JPY 5 billion cost, so JPY 1 billion per month times 12. Is that the right assumption? So can you confirm whether those numbers are correct?

Thank you for the question. Then on the first question, the performance is solid in January as was the case of Q3, but what about domestic rates? As you have pointed out, there has been some increase in volatility in the market, super-long bond rates are going up. And therefore, some of the clients are taking a wait-and-see attitude and that is partly reflected in our Japan rates business, which has seen some slowdown. On the other hand, for global markets, in general, we are doing quite well because our business has diversified. In Japan, it's not rates alone. We're doing equity, credit. We're in diverse business areas and our GM business overseas, especially U.S., the business has grown to become quite sizable. So this slowdown has been absorbed, and we are recording sound performance in January. On the second question of Macquarie acquisition, no, in peacetime, 7 minus 5, to minus goodwill, 1 times 12. That's the broad image, but this 1 month is quite difficult because in revenue, seed capital -- we have seed capital to foster the business, and there is fluctuation. For the annual -- in annualized term, the position is neutral, but when we look at a snapshot of 1 month, there could be some fluctuation. So it could become bigger. So I think that's the way to look at it.

The next question comes from Tsujino-san of BofA Securities.

So this time, personnel cost increased and deferred compensation accounting method was changed and that impact is included, and moving forward in Q4 and after Q4 as well, what is going to be the impact in and after Q4? And also, what is the actual amount, absolute amount in impact? And considering that this time, revenue due to weak yen and personnel costs due to weak yen, both seem to have increased. But the way personnel costs increased, what was the reality of how personnel costs increased. That is my first question. And the impact from next fiscal year. Next question, second question is about Laser Digital. You said you have reduced position, but moving forward, this business is what you would like to grow. And of course, you have traditional securities business, which is growing, but when the size increases, then you have no choice about to increase positions and then hedge is impossible for crypto assets. Then how should we think about the positioning. In the long term, how do you deal with the volatility that needs to be considered. So what is your thinking?

Thank you for your questions, Tsujino-san. Regarding your first question on deferred compensation, accounting method change, what is the actual impact? And what is the impact expected in the fourth quarter and the next year? In the third quarter, actual impact amount is about JPY 8 billion. In the fourth quarter, about the same amount is expected as impact. And next year onward, JPY 15 billion or JPY 16 billion are expected impact. But next year -- well, that's this year. So next year, 40% or 50% of that is what we expect for next year. And year after next, the impact will be negligible. It's difficult for me to explain here the accounting treatment involving the slide in timing of cost recognition. Deferred compensation systems have varying treatments. So the cost is front-loaded and spending after 12 months, the level normalizes, that's how we should think about it. Regarding your second question about the reduction of Laser positions. In the medium and long term, with the business growing, the position will grow bigger, and the volatility will stay elevated. That's the point, which you pointed out, I believe. And regarding your point, strategy included, we need to have a thorough discussion in any ways. We would like to grow this business in the medium to long term, but there are several activities by holding inventories we do market making and trading for customers, then the unit risk exposure will be reduced. On the other hand, as mentioned, digital asset or crypto asset-related businesses, in addition to market making for institutional investors include other businesses such as crypto asset, management business or venture ecosystem supporting business, also combine custody-related businesses, there are such other businesses. So while ensuring diversity, we would like to grow the ecosystem. That is our direction. So just like you, Tsujino-san, we have the same sense of risk. So while understanding those points, we would like to conduct this business.

Regarding lending, are you conducting lending right now? And there is no extra risk there, if you are conducting lending business like crypto asset lending.

Regarding lending business, we do have lending business as part of product lineup, but activity is very small.

The next question is for UBS Securities, Niwa-san.

This is Niwa. I hope you can hear my voice.

Yes, we can hear you.

Wholesale resource efficiency and private assets. First, revenue and risk-weighted asset ratio Page 12, 7.7%, quite high. And how does the management evaluate this level? And you've been talking about improving efficiency. So is there room for further increase division ROE. Do you think that this could be raised further? That's the point of my question. And secondly, I will deviate, but in Nikkei newspaper, Mr. Okuda was responding to an interview regarding private assets, and he was talking about selling Japanese products in other countries. So if you want to invite assets or investments into Japanese private asset, what is your estimate of the size of the business in terms of AUM or revenue? Or in order to engage in such business, does Nomura need to be equipped with a new function. So those are my questions.

Then on your first question regarding resource efficiency of resource, Page 12, 7.8%, revenue modified RWA, we think that this is so and so acceptable global markets, Hong Kong, Singapore, IWM is engaged in wealth management business. Resource is not so much needed and taking that growth, all of the activities taken together, this is the level. So for example, if the question is whether the resource efficiency is going up in a certain business, not so. This is a result of the business mix. So that's my first point. And next, this number, is it possible to further increase this number? If we overfocus on that, the statutory capital RWA revenue or profitability in order to increase that, we may end up taking too high substantive risk in light of the economic capital. So it's good that this number goes up, but rather than just focusing on this indicator, we would look at various indicators comprehensively for risk management. And if in the end, this number goes further up, then that's positive. We have the self-funding program. The resource maybe somewhat tight for the business, and they are incentivized to focus on efficiency of resources. So even if there is a potential project, they have to judge whether resource can be used efficiently in light of the revenue that could be gained from that project. So I think that kind of incentive has also delivered some results. So this 7.8% is quite reasonable and appreciated, but we're not just chasing this number. Second question, Japanese private asset in order to invite money into Japan for development of Japanese infrastructure, what kind of mechanism, or what's our estimate of the size of the resource? Regarding those points, it might be a bit premature to share the design we have in mind. And I think we need to engage in more internal discussions. At one point in time, we will probably have more factors that we can speak to you, and then we will explain our strategy. I hope that this would do for today.

[Operator Instructions] As there is no more question, we'd like to conclude question-and-answer session. Now, we'd like to make closing address by Nomura Holdings.

Thank you very much. I am Moriuchi. Thank you very much for spending your precious time. As mentioned, there are one-off items and the technical accounting-related items, which are difficult to grasp. And they are ending up in increase in revenue and decrease in profit in any ways for divisions delivered a strong performance and we are positively looking at the performance. So medium, long term, we are focused on growing the revenue power of those four divisions. As for Laser Digital, we believe the business is promising in the medium, long term. So we would like to grow the business while suppressing short-term volatility by controlling the risk volume. In any case, thank you very much for your precious time that you spent with us. That is all for me. Thank you.

Thank you for taking your time, and that concludes today's conference call. You may now disconnect your lines. [Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good day, everyone, and welcome to today's Nomura Holdings Second Quarter Operating Results for Fiscal Year Ending March 2026 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. [Operator Instructions] 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 results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these projections. Such factors include economic and market conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions. With that, we'd like to begin the conference. Mr. Hiroyuki Moriuchi, Chief Financial Officer. Please go ahead.

Thank you very much. This is Moriuchi, CFO. I will now give you an overview of our financial results for the second quarter of the fiscal year ending March 2026. Please turn to Page 2. Group-wide net revenue came in at JPY 515.5 billion, down 2% from last quarter. Income before income taxes fell 15% to JPY 136.6 billion, while net income was JPY 92.1 billion, down 12%. Excluding gains from the sale of real estate recorded in the previous quarter, net revenue was up 10% and net income was up 40%, reflecting steady growth. Earnings per share for the quarter were JPY 30.49 and return on equity was 10.6%, reaching the quantitative target for 2030 of 8% to 10% or more for the sixth consecutive quarter. In addition, income before income taxes in the 3 international regions rose 63% to JPY 44.9 billion, marking the ninth consecutive quarter of profitability. For all 4 divisions in total, income before income taxes rose 25% to JPY 132.6 billion. In Wealth Management, the balance of recurring revenue assets and recurring revenue saw a net inflow for the 14th consecutive quarter, reaching an all-time high. And in Investment Management, assets under management also reached an all-time high on a 10th consecutive quarter of net inflows. Revenues and profits rose in both divisions. In Wholesale, the overall trend of growth in both revenue and profits strengthened further with net revenue in Equities reaching a record high in Global Markets and momentum remains strong in Investment Banking, too. The Banking division established in April also performed well. Before we go into details for each business, let us first take a look at the performance in the first half of the fiscal year. Please turn to Page 3. As shown on the bottom left, income before income taxes rose 26% year-on-year to JPY 296.9 billion. Net income rose 18% to JPY 196.6 billion, and earnings per share came in at JPY 64.53. Return on equity rose to 11.3% as medium- to long-term initiatives steadily bore fruit. In addition, group revenue rose by 11% and profits benefited from cost controls and operating leverage with a cost coverage ratio of 71%. Please see the bottom right for a breakdown of income before income taxes. Income before income taxes at the 4 main divisions rose 11% to JPY 238.4 billion. Growth in recurring business revenue in Wealth Management and Investment Management helped to stabilize overall performance and Wholesale continued its self-sustained growth based on the principle of self-funding, enabling income before income taxes to rise substantially, thereby driving overall performance. Banking got off to a good start and has made progress with preparations for the introduction of a deposit sweep service next fiscal year. In view of this performance, for the period ended September 2025, we expect to pay a dividend of JPY 27 per share. This works out at a dividend payout ratio of 40.3%. Please turn to Page 4. This time, we have added this slide to our presentation. We calculate stable revenues as the sum of recurring revenue at Wealth Management, business revenue at Investment Management and revenue at Banking. Steady growth in recurring assets in both Wealth Management and Investment Management, shown on the left, has resulted in strong growth in stable revenues, as shown in the graph on the right. And Banking has been steadily increasing its recurring business, including loans outstanding and trust balance, thereby expanding its foundation for growth. Now we will look at the second quarter results for each division. Please turn to Page 7. All percentages discussed from now on are based on a quarter-on-quarter comparison. Wealth Management net revenue increased 10% to JPY 116.5 billion, and income before income taxes grew 17% to JPY 45.5 billion. Income before income taxes was the highest in about 10 years since the quarter ended June 2015. Recurring revenue and the balance of recurring revenue assets both reached record highs as recurring revenue assets saw a net inflow for the 14th consecutive quarter. As major equity markets rose to fresh highs during the quarter, client activity increased and flow revenue registered strong growth. Meanwhile, the pretax profit margin reached a high level of 39%, buoyed by ongoing cost controls. The recurring revenue cost coverage ratio for the last 4 quarters came to 70%, leading additional stability to the division's performance. Please turn to Page 8, where you can see an update on total sales by product. Total sales declined around JPY 300 billion to JPY 6.4 trillion, but this was owing to a tender offer in excess of JPY 1 trillion during the previous quarter. As for recurring revenue assets, sales of investment trusts and discretionary investments grew steadily, supported by continued strong demand for long-term investment diversification. Regarding insurance, sales have continued at a high level, reflecting the relatively high U.S. interest rate environment. Next, let's take a look at the KPIs on Page 9. On the top left, you can see that recurring revenue assets saw a net inflow of JPY 289.5 billion. As major markets reached new highs, net inflows remained at a high level despite increased selling pressure from portfolio adjustments as our efforts to expand the recurring business proved successful, taking us to the next stage. Meanwhile, as shown on the top right, recurring revenue assets totaled JPY 26.2 trillion at the end of September and recurring revenue exceeded JPY 50 billion for the first time in our quarterly results, owing to a contribution from investment fees, which are collected on a half-yearly basis in the second quarter. As shown on the bottom right, the number of workplace services rose steadily to exceed 4 million. Next, let's take a look at Investment Management. Please turn to Page 10. Net revenue came to JPY 60.8 billion, up 20%. Income before income taxes amounted to JPY 30.7 billion, up 43%. Stable business revenue has been growing steadily. In addition to favorable market factors, 10 straight quarters of net inflows resulted in assets under management topping JPY 100 trillion and asset management fees reaching a new high. Investment gain loss came to JPY 16.8 billion, rising sharply by 69%. This reflects not only a large increase in investment gain loss related to American Century Investments, but also profits recorded at private equity investment firm, Nomura Capital Partners on the sale of shares held in Orion Breweries, which publicly listed. Let's now turn to Page 11 and examine our asset management business, which is the key source of business revenue for the division. The graph on the upper left shows that assets under management reached JPY 101.2 trillion at the end of September. As shown on the bottom left, net inflows amounted to JPY 498 billion. Net inflows to the investment trust business totaled around JPY 525 billion and net outflows from the investment advisory and international businesses were around JPY 26 billion. Net inflows in the investment trust business were achieved despite share price increases on the major markets, triggering profit-taking sales, pushing up funds kept in reserve in MRFs. But even excluding MRFs, funds flowed into Japan equity ETFs, private assets and balanced funds. The investment advisory and international businesses saw net outflows owing to reshuffling of investments by Japanese investors and outflows from Asian equities, which outweighed inflows to U.S. high-yield bonds and UCITS investment funds. As shown in the graph at the bottom right, alternative assets under management rose to a new high of JPY 2.9 trillion. This performance is the result of solid net inflows and not solely owing to market factors. Next, Wholesale Division. Please go to Page 12. Net revenue came to JPY 279.2 billion, up 7% as shown at the bottom left of the slide. Global Markets net revenue was up 6% and Investment Banking net revenue was up 15%. Meanwhile, stringent cost management resulted in division expenses only rising 3%. As a result, cost-income ratio improved to 81% and income before income taxes rose 27% to JPY 53.1 billion. Please turn to Page 13 for an update on each business line. Net revenue in Global Markets business rose 6% to JPY 235.7 billion. Fixed income revenue was JPY 121.9 billion, in line with the previous quarter. Let's look at the product breakdown. In macro products, rates revenues were down quarter-on-quarter in EMEA. FX/EM revenues in AEJ were also down. In spread products, credit revenue growth in Japan and AEJ was attained by capturing client flows and securitized products revenue growth was supported in the Americas by the prevailing direction of the interest rate environment. As a result, higher revenue from spread products offset lower revenues from macro products. Equities revenue rose 16% to a new high of JPY 113.8 billion. In equity products, revenues grew on higher client activity in Japan and AEJ, supporting a strong performance in the derivative business and the Americas business remained favorable. Execution services sustained strong revenue from the previous quarter. Please turn to Page 14. Investment Banking net revenue rose 15% to JPY 43.5 billion. Corporate action in Japan remained consistently strong and the international business also contributed to revenue growth. By product, in advisory, momentum remained strong in Japan with multiple transactions involving financial sponsors and moves to take companies private. And international business also made a contribution with M&A deals related to renewable energy and digital infrastructure, primarily in EMEA. Advisory continued to rank top in the Japan-related M&A league table for January through September and ranked 15th in the global M&A league table, demonstrating its global presence. In financing and solutions, revenue rose in DCM on continued solid performance in Japan and multiple international transactions, primarily in EMEA as well as ALF deals, particularly in the Americas. Now let's look at Banking. Please turn to Page 15. In Banking, net revenue came to JPY 12.9 billion, flat from the previous quarter. Income before income taxes fell 12% to JPY 3.2 billion. KPIs such as loans outstanding and investment trust balance remained at a high level and revenue from lending business and trust agent business held firm. Meanwhile, higher costs pushed down profit as an upgrade to the core banking system completed at Nomura Trust and Banking in May 2025 resulted in the associated depreciation being fully booked this quarter. Preparations for the deposit sweep service scheduled for introduction in FY 2026, '27 are progressing as planned. Now I will explain noninterest expenses. Please turn to Page 16. Group-wide expenses came to JPY 378.8 billion, a 4% increase from the previous quarter. Compensation and benefits totaled JPY 195.1 billion, rising 5%, reflecting an increase in performance-linked bonus provisions. Commissions and floor brokerage fees came to JPY 47.2 billion, up 5%. The increase was driven by a heavier volume of transactions. Other expenses came to JPY 52.8 billion, which includes JPY 3.1 billion related to acquisition and integration of the U.S. asset management business of Macquarie Group as well as the expense of paying compensation for losses arising from fraudulent trades in clients' accounts due to phishing scams. I will comment in more detail on how the phishing scams affected our profits this past quarter at the end of today's presentation. Lastly, we take a look at the financial position, Page 17. In the table on the bottom left, you can see that Tier 1 capital at the end of September came to approximately JPY 3.6 trillion, up roughly JPY 170 billion since the end of June, while risk-weighted assets came to JPY 23.5 trillion, up roughly JPY 660 billion. The common equity Tier 1 ratio at the end of September accordingly came to 12.9%. This is within our target range of 11% to 14%. Our common equity Tier 1 ratio finished the quarter down from the 13.2% marked at the end of June, but this decrease reflected the accumulation of positions commensurate with revenue opportunities as well as the increase in the value of risk-weighted assets due to market factors. As we explained 3 months ago, the calculation method for regulatory capital ratios will change once the acquisition of Macquarie Group's U.S. asset management business has been completed, and we currently expect this to depress the CET1 ratio by about 0.7 percentage points. This concludes our overview of second quarter results. We would like to provide more detail on the issue of fraudulent trading in client assets resulting from phishing scams. In response to instances of fraudulent trading, we have raised the security level in stages and the number and scale of damages have come down greatly from April peak. At this point, we have been in direct contact with nearly all clients that have been affected by the attacks, and we are working through the process of paying a compensation to them. There are times during the second quarter when the related damages increased again, but at present, the situation has settled down, owing to various steps undertaken to address the issue. In the second quarter, the negative impact on the profit came to JPY 4.8 billion. Although the number of damages fell sharply, fluctuation in share prices led to high costs in some cases to restore our clients' assets to their original condition. In this regard, we are working to avoid market volatility risk to the greatest extent possible. On October 18, we introduced a passkey authentication system that is recognized as an effective means of thwarting phishing attempts, and we are strengthening measures to eliminate such damages. Looking ahead, we expect that the impact of phishing scams will be much smaller than it has been up through the second quarter, judging from the current state of damages. Our swift action to implement high-quality security countermeasures does more than just limit the damages suffered by our clients. It enhances the security and convenience of the financial services we provide. Our plan is to be proactive in assembling effective account security measures in our role as an industry leader and thereby reinforce our brand as the most trusted partner for our clients. I would like to close with some final remarks. During the quarter just finished, stock indices in Japan and other major economies rose steeply amid lessened uncertainty over the trajectory of U.S. interest rates and widespread interest in AI-related stocks and other high stocks -- high-tech stocks. Those conditions helped us record another quarter of strong earnings as we expanded our stable source of revenue and successfully monetized robust client flows. EPS in the second quarter came to JPY 30.49 and ROE came to 10.6%. For 6 quarters in a row, we have attained a quantitative target for 2030 announced last year of consistently achieving ROE of 8% to 10% or more. In addition, ROE for the first half of the fiscal year was 11.3%. As mentioned at the beginning of this presentation, we have seen solid growth in our key sources of stable revenue, including revenue -- recurring revenue in Wealth Management, business revenue in Investment Management and net revenue in Banking. This has added further to the stability of our company-wide performance. Wholesale as well as steadily achieving independently sustainable growth under the self-funding approach. Revenues and profits in the division have both been increasing in the continuation of last year's trend and overseas business, which has long presented a challenge, has gained ground in making a steady profit contribution. Let me briefly touch on the situation in October. In Wealth Management, net revenue thus far in October is well above the levels observed in the second quarter. We have seen continuous medium- to long-term growth in investment trust and discretionary investment and other such products and services premised on the idea of long-term diversified investment, and this trend has continued in October. The flow from savings to investment has become well established, and we have tangible sense that the client base for investment in marketable securities have broadened steadily. We intend to continue playing our part to transform Japan into an asset management powerhouse by building relationship of trust with our clients and providing them with asset management services tailored to their needs. In Wholesale GM business, equity products have continued performing well. In Investment Banking, we expect the current high frequency of corporate actions to continue. In October thus far, the net revenue in Wholesale continues to be solid. Going forward, we aim to raise our profit baseline by taking on risks appropriate to market conditions, and we ask for your continued support.

[Operator Instructions] The first question, Bank of America Securities, Tsujino-san.

This is Tsujino. Two questions. First is regarding the personnel expenses. And as explained, in Q1, you had the U.K. and according to the accounting rules, every year, the expenses tends to be high. So you started at a low level. And this time, compared to Q1, the yen has weakened slightly, so the costs are a bit higher. But even so, if you look at it on a Q-on-Q basis, the personnel or compensation and benefits has increased too much, I think. Considering the wholesale revenue and even compared to that, I think comp and benefits has increased too much is my impression. So could you add more color on that, please, is my first point. My other point is, and this was the case in the past, too, but the CET1 ratio is within target range. And after Macquarie acquisition, it will go down a little bit. And it was 12.5% or so, which -- and you said you were not exactly fully comfortable with that. So now the market is strong and the position tends to increase. So for this year, regarding the buybacks this year, is there going to be any change compared to the past? So could you -- maybe you can't disclose that, but any color on that, too, please?

Tsujino-san, this is Moriuchi. Regarding your first question about comp and benefits, yes, the points you raised are all correct. And yes, let me add some color to that. Within the compensation and benefits, there's the bonus increase linked to our earnings. That is a big factor. And on top of that, there was some retirement bonus increase in Wholesale, for example. And that does tend to happen as part of our business. And in this quarter, the retirement payments was a little larger than usual. So that's my answer to your first question. And for the second question, regarding the CET1 ratio target, 12.9% is going to go down to 12.8%, but how we think about the buybacks this year? Well, as for buybacks and for shareholder return in general, we have committed to the market of 40% dividend or above and total payout ratio of 50% or above. And we plan to stick to that as we consider shareholder return. And we had the Macquarie closing and the CET1 ratio is going to decline further from here. And within Wholesale at the moment, we are seeing some high-quality deals and opportunities, and those are increasing. So from an investment perspective and financial discipline perspective and shareholder return, we will keep those 3 factors in mind, and it's quite hard to balance those 3. But we will make sure to stick to our commitments. Thank you. I hope that answers your question.

The next person asking the question is SMBC Nikko Securities, Mr. Muraki.

I'm Muraki from SMBC Nikko. I have 2 questions. First question is about markets department revenue. Now in macro, revenue seems weak and credit and equity derivatives -- sorry, securitized products and equity derivatives seem strong. But the way revenue is generated in Page 17, the credit risk RWA increase has followed -- or is continuing? And where are you taking the risk and what kind of revenue is being generated? And recently, you said there are quality deals, but what kind of risk taking is expected in the third quarter? So could you explain? That's my first question, market revenue and risk taking. And my second question is as follows. The First Brands failure, so such incident from such instance, did you have some impact or any lesson that you have taken? And regarding private credit, oftentimes, there are many inquiries we receive about private credit. But looking at your balance sheet, trading book loan is JPY 1.9 trillion. And other than that, excluding Nomura Trust and Banking, loan is about JPY 1.2 trillion. In Americas, securitized -- securitization department or private credit-related business, what is the size of the business in this overall number? Could you give me some sense?

Thank you very much for your questions. For your first question regarding credit risk, where we are taking and how we are taking credit risks. In the first quarter and second quarter, as you say, SPPC and equity derivatives were very strong. Also, usually in credit trading business, our credit trading business contributed to revenue solidly. And what is the outlook for the third quarter, as you said, related to SPPC. There are interesting deals in the pipeline. On the other hand, your -- it's related to your second question, but in our credit business, including First Brands, whether we see abnormality in credit market, we receive such questions often. Regarding SPPC, internally, we have been having various discussions and high profitability deals lined up. On the other hand, in our balance sheet, concentration risk on SPPC is something we have to be mindful of. So more than ever before, we have to be selective in deciding which deal to do. So in our total portfolio, SPPC portion is not going to be grown rapidly from where it is now. Regarding your second question about First Brands related impact as well as lessons we have learned and also the scale or magnitude. Firstly, regarding this specific case or impact on our business or P&L was very small from this specific case. To a certain extent, we had some exposure, but it's negligible in size. Also, this name in question did not cause direct cost. And is there a broader implication related to this? As you say, regarding firm-wide stress testing, periodically and nonperiodically, we conduct a stress test to see the changing pattern of tail risk. Indeed, looking at our existing portfolio, whether the risk has grown bigger a lot or not, the risk is not growing rapidly because in SPPC business, private credit business portion in size is very small. So the SPPC business has mortgage structured lending and infrastructure business. So those represent a big portion. So regarding private credit, private credit-related business is right now in the sense of the balance sheet of our P&L, the impact from that is not big, even though I cannot give you a specific number. That's all.

If possible, I am deviating from the earnings result, but I'd like to ask you about your perspective. So related to First Brands -- so risks related to First Brands, which you mentioned, what kind of risks are you paying attention to? For example, simply, but is it simple credit risk or nonbank intermediary-related risks or double collaterals were involved in some companies' transactions, but is there a risk of fraudulent transactions that you may be involved in? So specifically, what kind of risks are you being attentive to?

It's not that because this incident happened, but regarding individual cases, credit, we need to perform due diligence closely to look at the creditworthiness of each case. And regarding the fraudulent case or scam, by -- all we can do is to conduct a thorough due diligence to screen for the fraudulent trading. Regarding the nonbank intermediaries, unlike commercial banks, we are a firm that's focused on the trading. So what we take is inventory as a counterparty. So how should I put it? Nonbank credit risks themselves are not taken greatly by us. The risk which I mentioned is in the sense that regarding individual transactions, we pay close attention to credit. And for example, for the specific individual cases, when we receive sizable deal to conduct, we are not a major firm. Our balance sheet size is limited. So to what extent do we allocate balance sheet to one transaction. So what is the level of concentration risk. So those are the items or matters that we closely evaluate as we make a decision, and that's what we will have to keep doing.

The next question is from Mr. Watanabe of Daiwa Securities.

This is Watanabe from Daiwa Securities. Two questions, please. First is regarding the October revenue environment. And in wholesale equity and IB is strong, which I understand. But for FIG, what are the trends you see in FIG? And compared to Q2, if you look at the Wholesale division revenue, is it above or higher or lower, please? Number two is the tax burden, Page 5. If we look at it year-on-year, the pretax income is increasing, but the net profit is down. And international pretax income size is larger, but the tax rate is going up. Why is that, please? Two questions.

Watanabe-san, this is Moriuchi. Regarding your first question, the fixed income trends. First, for Japan, fixed income is quite strong. In the first half, for the ultra-long-term domain, it was quite difficult, including position taking. But even in that domain, we are seeing a normalization. And the market is very active and the revenues are catching up in accordance with that is my impression for fixed income in Japan. As for international, I think we're seeing a similar trend, similar to first half. And from here on, depending on the rate environment going forward, there could be upside. And as part of the overall portfolio, when fixed income improves, that starts -- that tends to normalize the other businesses. But as we bundle the overall business, we are seeing an increase in stable revenues and that level is gradually improving is my impression. That's my first answer. Your second question regarding the tax burden or the tax cost going up slightly. Sorry, it's hard to go into the details. There's a lot of technical issues here. So what I can say now, well, I won't go into the technical details.

Just to check on the first point, in October, Wholesale division revenue compared to Q2, is it above? Is it higher?

Well, overall, it is strong, but I would say it's about the same level. It's still only been 3 or 4 weeks. So we'll see where things go. It's still a bit early to say. But just for the first 3 weeks, I would say it's about the same level.

The next question comes from JPMorgan Securities, Sato-san.

I am Sato from JPMorgan Securities. I have 2 questions. First question, sorry for dwelling on this, but Wholesale, Equities or especially equity product business. So the revenue has reached the record high level. But firstly, in the short term, in the first quarter, Americas derivative did well, if I recall. But this time, looking at the material, Japan, AEJ had a significant increase in revenue. Anyways, derivative seems to be the strong area. But if it is fine with you over the several quarters in each region, what has been the trend of movement of each business line over the last several quarters? And such trend, is it sustainable over the next several quarters in the future? Can you give me some sense? My second question is about risk asset. The target range is set at 11% to 14%. And in this situation, now after the closing of Macquarie acquisition, it will come to around 12%, but the CET1 ratio, CET, if it's JPY 3 trillion, if core equity, then if it's 11%, then it's going to be JPY 27 trillion. Then for the time being, is that going to be the allowable ceiling of risks you can take? Can I have that sense? So I'd like to ask you to elaborate on the capacity of risk taking.

Sato-san, thank you for your questions. Firstly, your first question, equities, what was the equities performance in each region? And what is the extent of sustainability moving forward? This time for the U.S., I might not have -- the material might not have mentioned it. But in the first quarter, the Americas has been the driver of revenue and the strength continues in Americas, though that's not specifically mentioned. On the other hand, for Asia and Japan, compared to the first quarter on a Q-on-Q basis. Now second quarter results came in stronger. Overall, equities in AEJ, Japan and U.S.A. the performance was very strong. And to what extent for how long can we retain this strength? If equities continues to be this strong, then sometime down the road, there will be a point of normalization. That's what we are discussing internally. But as you are aware, not only in Japan, but in U.S.A. and Asia, we have geographical diversification. And within equities, we have various products and the last several years, we have worked to diversify and broaden the product range within equities. So in that sense, we are more tolerant or resistant against downside risk. In any case, equities have become stronger. So moving forward, we expect certain normalization, but in such situation, resource could be -- resource -- fixed income resource, which we had intentionally reduced could go up for macro and other fixed income. So I encourage you to take a look at the entirety of the portfolio. And regarding your second question, target range from 11% to 14%. After Macquarie closing, the ratio is around 12%. So what is the future capacity of risk taking, that's what you asked about. So it is a good point you made. But firstly, regarding Wholesale, so stringently, they are sticking to the self-funding concept as they grow their business. So self-sustaining growth is being driven. So in the third and fourth quarters, if Wholesale continues to perform strongly, then based upon the revenue and profit generated by Wholesale and based upon the capital accumulated -- to be accumulated, RWA headroom or capacity will be increased. On the other hand, for areas other than Wholesale, we have the question of whether we find a need for capital in the near-term future. But if there are opportunities for M&A or inorganic growth, then in a step change manner, resource may be grown. But in any case, it's going to be immediately after Macquarie transaction. So when it comes to finance, we would like to stay on the safe side, and we would like to be conservative to a certain extent, and we want to take a look at the balance. I hope I answered your question.

The next question is from Morgan Stanley MUFG Securities, Nagasaka-san.

This is Nagasaka. Two questions. On Slide 14, Investment Banking. In the second half and next year, how do you think about the pipeline towards the future? In Q2, Japan was strong. International also recovered. And according to your explanation, corporate actions will remain strong. So what about advisory, finance solutions? Could you add some comments by product, please, is my first point. My second question is regarding the ROE. In Q2, 10.6% ROE on a full year basis, and there were some one-off items, but even so, 10.6%. So what is the base ROE which you can achieve? I think -- I guess the base ROE has gone up quite a bit. And your target 2030 target of 8% to 10% plus, what is the -- and I guess your expected profit level to achieve that is going up. So are you going to reconsider the target profit level at this stage? Any thoughts on the upside, downside, as CFO, please?

Thank you for your questions. This is Moriuchi. Regarding your first question about the pipeline by product. First of all, for advisory, in Japan, there are some cross-border opportunities and large opportunities and quite a lot of opportunities are building up in the pipeline. And for international, it depends on the region, but we have announced many deals. And also in the second half, there are some deals which we haven't announced, which is building up as well. And for advisory, the pipeline is building up quite nicely. Meanwhile for ECM, the fee pool is normalizing and shrinking somewhat. And there are some normalizations of the cross-shareholdings opportunities. But even for the reduction of cross-shareholdings, that seems to be picking up slightly. And in the second half, usually, it's the second half that corporate actions tend to be concentrated versus first half in this product. So we'll make sure to pitch and win these opportunities. And for DCM, the business remains strong. And for the second half, as rates are expected to go up, but we are expecting a certain level of deal flow. Advisory, very strong. DCM is -- we expect a similar level to continue. For ECM, compared to a typical year, it's a bit weak, but we expect some recovery would be the summary. Your second question regarding ROE. And in Q1, Q2, and based on the results, we are already booking more than 10% ROE. So are we not going to raise the level is your question. And yes, as you pointed out, if we look at the current earnings, our base earnings power is gradually improving. This is a result of portfolio reforms as well as the operational reforms at each business division, and those are leading to results. So in terms of ROE, we get a lot of inquiries about whether we are going to reconsider and revise it. And we are discussing a little bit internally, but the point here is that which part of the cycle we are in right now, that's something we need to be mindful of. And regardless of the economic cycle, we want the products in Wholesale to offset each other so that we can maintain the overall revenue level. That's the kind of portfolio we are aiming for. But if we are going to enter a slowdown, is something we need to consider. And even in that case, we want to maintain at least the 8%, which is the lower end of the range of 8% to 10%. And we are currently building up the earnings capability, and that's what we should be focusing on at the moment. I hope that answers your question.

[Operator Instructions] As there is no more question, we'd like to conclude question-and-answer session. Now we'd like to make closing address by Nomura Holdings.

Thank you. This is Moriuchi again. Thank you very much for attending the call despite your tight schedule. So we were able to show you the good results. And we still have third quarter and the fourth quarter remaining, so we will stay focused so that we can deliver results so that we can do so, the management members will keep making efforts. 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. [Statements in English on this transcript were spoken by an interpreter present on the live call.]