Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nomura Holdings Inc (NMR, Financial) reported a 6% increase in group-wide net revenue quarter-on-quarter, reaching JPY483.3 billion.
- Income before income taxes grew by 29% to JPY133 billion, marking the highest level since June 2020.
- Net income increased by 43% to JPY98.4 billion, with an EPS of JPY32.26 and an annualized ROE of 11.6%, exceeding the company's 2030 target.
- The wealth management segment achieved a 30% increase in recurring revenue, with net inflows of recurring revenue assets surpassing the annual target.
- The wholesale division saw an 8% increase in net revenue, with a significant improvement in the cost-to-income ratio to 83%.
Negative Points
- Market volatility in August led to a decline in total sales by JPY900 billion, although this was partly due to a large tender offer in the previous quarter.
- Despite strong performance, the company faces intense competition in ECM deals, which could impact future sustainability.
- The asset management business experienced a dip in assets under management at the end of September due to market factors.
- The company decided against a share buyback, citing the need to evaluate the impact of Basel III and other considerations.
- October saw a slowdown in wealth management and wholesale activities due to political events and market uncertainties.
Q & A Highlights
Q: Are the strong performances in Japan's ECM deals and Asia's wealth management sustainable? What is your forecast for the months and years ahead?
A: Takumi Kitamura, CFO: In Japan, we have a strong pipeline of ECM deals, including large transactions. We are actively pitching to maintain our position despite intense competition. In Asia, we have diversified our revenue sources, with strength in equity derivatives and International Wealth Management, which should sustain performance. The recent boost from Chinese and Hong Kong equities was more about our diversified revenue sources than just market conditions.
Q: What factors contributed to Nomura's outperformance in fixed income compared to US peers?
A: Takumi Kitamura, CFO: Our fixed income business grew significantly year-on-year due to revenue diversification. We saw increased activity in securitized products and a recovery in macro products, particularly in rates and FX emerging markets. This allowed us to monetize client flows and gain market share.
Q: Can you explain the factors behind the significant gains in American Century Investments (ACI) and whether these gains are sustainable?
A: Takumi Kitamura, CFO: The gains were driven by increased AUM due to strong business performance and market factors, as well as a decline in interest rates. While we hedge partially, the gains are not fully protected against rate increases. The sustainability of these gains depends on market conditions and the degree of hedging.
Q: What are the reasons behind the improvement in the wholesale cost-income ratio, and is it sustainable?
A: Takumi Kitamura, CFO: The improvement to 83% is due to revenue growth and cost control measures. We have implemented JPY50 billion in cost-saving initiatives, and we continue to focus on operational efficiency. While we face inflationary pressures, we aim to maintain and further improve this ratio.
Q: What is Nomura's strategy for M&A in asset management, and how does it plan to acquire new wealth management customers?
A: Takumi Kitamura, CFO: Asset management remains a target for M&A, particularly in foreign equity management and alternatives. In wealth management, we focus on acquiring quality customers rather than maximizing numbers. We aim to provide comprehensive services to build trust and satisfaction, leading to increased client assets with Nomura.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
