Nomura Holdings, Inc. (NMR) Q1 2023 Earnings Call Transcript

For the period ending June 20, 2022

August 3, 2022 5:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Takumi Kitamura

Good evening. This is Takumi Kitamura, CFO of Nomura Holdings.

I will now give you an overview of our financial results for the first quarter of the fiscal year ending March 2023 using the document titled Consolidated Results of Operations. Please turn to page 2.

It was a challenging quarter as U.S. interest rate hikes and fears of a recession dragged on the market, negatively impacting market activity and mark-to-market valuations of our securities holdings. As you can see on the top right, income before income taxes slumped 76% to ¥11.7 billion and net income dropped 95% to ¥1.7 billion. Earnings per share was ¥0.52 and annualized ROE was 0.2%.

Three segment income before income taxes shown on the bottom right slowed 45% to ¥18.5 billion. Market headwinds led to a widening of negative investment revenue in Investment Management compared to last quarter and a slowdown in Wholesale due to weaker transaction volumes and postponement of deals in Equities and Investment Banking. Despite this, revenues in our three core businesses remained relatively resilient.

Retail gained traction in its shift to expanding client assets over the medium to long term, reporting net inflows into recurring revenue assets, particularly discretionary investments, level fee assets and loans. Recurring revenue inched up quarter-on-quarter despite the market headwinds.

Investment Management had another solid quarter in its fund management business. The investment trust business booked ongoing inflows through a diverse range of channels and alternative assets under management, part of our push into private markets, topped ¥1 trillion.

In Wholesale, Fixed Income had a good quarter with Macro Products reporting significantly higher revenues as we monetized the spike in interest rate and FX volatility and an uptick in client activity.

Investment Banking reported continued high levels of revenue in Advisory businesses, although down from the particularly strong recent two quarters.

Outside our three segments, we booked a loss before income taxes of ¥6.7 billion. As I said, the impact of fair valuations led to a worsening of losses on investment securities and losses related to economic hedging transactions.

Please turn to page 5 for an overview of results in each business.

Retail net revenue was ¥71.4 billion, up 1% quarter-on-quarter, while income before income taxes declined 5% to ¥4.9 billion. From this quarter we have given a breakdown of revenues at the bottom left.