Nomura Holdings Inc (NMR) 2011 Q1 法說會逐字稿

Good day everyone and welcome to today's Nomura Holdings first quarter operating results for fiscal year ending March 2011 conference call. Please be reminded that today's conference call is being recorded at the request of (technical difficulty). And welcome to today's Nomura Holdings first quarter results. This conference call is uploaded on the website of Nomura Holdings. Slides will be used. If you do not have the documents in hand, I ask you to please look at the home page.

Please note that this telephone conference contains certain forward-looking statements and other projected results and actual results may be different from expectations implied by these projections due to various factors. Please be reminded today's conference call is being recorded at the request of the hosting company. Should you have any objection you may disconnect at this point in time.

During the presentation, all the telephone lines are placed for listen-only mode. A Q&A session will be held after the presentation.

With that we'd like to begin this conference. Mr. Nakada, CFO of Nomura Holdings, please proceed.

Thank you for taking the time to join us today. I am Nakada, CFO of Nomura Holdings. I will first give you a brief overview of our first quarter results using the document entitled consolidated results of operations. And I will then open the lines to questions.

Please page four. Page four provides you with an executive summary of highlights for the quarter. Net revenue was JPY259.8b.

Income before income taxes was JPY6.5b.

And net income attributable to Nomura Holdings was JPY2.3b.

So although revenues declined due to adverse market conditions, we remained profitable for the quarter.

The market turbulence in Europe that led to a decline in revenues at our global peers also affected our wholesale business. Net revenue in wholesale declined by 36% from last quarter to JPY108.6b.

The market dislocation in early May caused conditions to deteriorate rapidly and led to subdued client activity across all markets. The positions we hold to supply liquidity to clients were also adversely impacted by the difficult market conditions.

That said, we mainly hold highly liquid products, and we were able to quickly reduce risk in order to limit the negative market effect. At the same time, we further increased client revenues by providing clients with the best pricing, despite the challenging market conditions. We continued to make steady progress in our strategy of building out our global client business.

Our retail business also faced a tough market in the first quarter as the Nikkei average dropped by 15%. Despite this, we booked another quarter of solid results with net revenue in retail up 16% quarter on quarter to JPY111b. This further demonstrates how our consulting based approach is meeting the needs of retail investors. We saw a substantial inflow of new funds in the quarter, primarily into investment trusts and foreign bonds.

Asset management also generated stable revenues on the back of net inflows into investment trust and an increase in investment advisory mandate from international investors. Our financial position remains robust.

The graph on the bottom left of page six shows that our capital ratios continue to be among the best in the industry. As of the end of June, our Tier One ratio was 16.9% and our Tier One common ratio was 16.8%.

Our balance sheet is also strong. Total assets at the end of June was JPY33.9 trillion. Shareholders equity was JPY2.1 trillion. Gross leverage was 16.1 times, and net leverage was 10.1 times.

We continue to reduce Level 3 assets which stood at JPY800b, or 42% of Tier One capital.

Today we also announced a share buyback program that will run from August 9 until September 17. This will have an upper limit of 75m shares of Nomura Holdings' common stock representing a maximum of JPY50b. We plan to use the acquired treasury stock to issue shares upon the exercise of stock options.

The next page, page seven gives you a breakdown of net revenue. The graph -- I will come to the specific reports later on. The graph on the right shows that during the first quarter, 62% of revenues were generated in Japan and 38% outside Japan.

Now I will give you an overview of the results of each business division. Please turn to page eight. Net revenue in retail was, as I said earlier, JPY111b and income before income taxes was JPY37.7b.

Retail client assets saw a substantial increase in new funds, but declined overall due to the drop in the Nikkei average and the higher yen. But as noted on the right hand side of the slide, the new funds increased substantially.

And please turn to the next page, page nine. As I said, our consulting based approach is meeting the needs of retail investors and we recorded JPY1.289 trillion in new fund inflows.

New asset inflows into investment trusts were JPY438b. Along with the appreciation of the yen starting in May, we saw robust sales of foreign bonds in response to increased client interest. The graph on the right shows balanced growth in retail sales across stocks, bonds and investment trusts.

In addition, our retail client base continues to expand with the number of accounts with the balance increasing to 4.89m.

Next page. Asset management results are shown on this page. Net revenue was JPY18.1b and income before income taxes was JPY4.9b. Although overall assets under management declined as a result of the market slump, as shown on this slide, we generated net asset inflows during this quarter.

Page 11. The graph on the bottom left of this page shows net asset inflows of JPY555b for the first quarter. This is higher than each quarter last fiscal year.

Asset management also saw steady growth in mandate from institutional investors outside Japan, primarily for Japanese and Asian equities and global bonds.

Please turn to page 12. Next is wholesale division. As you are aware, from this fiscal year we have integrated the previous global market, investment banking, merchant banking divisions, and newly set up the wholesale division. This quarter, due in part to the turmoil in financial markets, which I mentioned, net revenues for the wholesale division was JPY108.6b, and pre-tax loss was JPY41.1b.

Page 13 onwards, I will explain the wholesale division in further detail.

Page 13, this page describes the global markets division, global markets business. Net revenues were JPY96.4b.

In fixed income, our European rates revenues were not that strong mainly due to the slowdown in our client activity and the impact on our inventory position. Rates and also credit products saw a slowdown in revenues. In equities, due to the sharp increase in volatility we saw an impact in our revenues as well.

On the two line graphs on the right, this shows the changes in the market and our response in terms of adjusting our risk volume, how we managed our risk volume.

As you can see here, the top graph shows fixed income and the bottom shows equities. We were able to respond to the sharp changes, sudden changes in the market and quickly shrink our risk volume.

As I touched upon earlier, under these very tough market conditions, as you can see in the bar chart on the bottom on the left, client flow and client base expansion we have been working on continuously and, as a result, as you can see on the top graph, the number of clients. This shows the active clients who we had business with in the current quarter, or in Q1. And if you compare it to previous year, 146 compared to 100 (sic - see presentation) so you can see an increase. And also the revenues from client flow businesses, you can see a similar growth 145 in Q4. Q1 was 155.

Our basic principle, which is to expand our client business on a global basis, we believe we are progressing steadily.

Page 14 explains the investment banking business. Due to the deterioration in market environment, we were impacted. And in Q1 some of the deals which were expected in Q1 were pushed out due to the weak share price and other reasons. As a result, the gross revenues were JPY29b, which was a slowdown compared to the previous year.

For investment banking, in Japan we have continued to maintain the top market share for various products and in our overseas business we have focused on cross-border deals and we have been able to be involved in high profile deals. We have shown some examples on the bottom half of the page.

The pharmaceutical company in Spain, Girfols, acquisition of Telacris, $4b, we have been nominated as the advisor. This is the largest LBO transaction following the financial crisis in the fall of 2008, and it also marks the first cross-Atlantic deal for Nomura between Europe and the US.

In Q2, for example, we have had the Impex Corporation JPY520b public offering as well as the recently announced Panasonic transaction of the acquisition of Panasonic Electric Works and Sanyo Electric Company. We were working as the financial advisor for Panasonic.

In the overseas side we are working with Permira, which is the European private equity fund, and their acquisition of Findus the Italian frozen food company, acquisition of EUR800m.

If you add these deals, our ranking in the global league tables is ninth for ECM and 13 for M&A.

Next on page 15, this page explains the Europe -- US and Asian operations, which we are hoping for the mid- to long-term growth in our wholesale business, and explains the recent business conditions.

On the left we show the US business. As shown on the first bullet point, the ISDA Master Agreements which we need to conduct derivatives transactions, we have seen a 35% increase quarter-on-quarter. So in the US we are continuing to steadily increase -- expand our client base. And as shown on the bottom bar chart, we are increasing our client flow revenues very steadily.

Our headcount in the US, as of June end it was 1,455 people which was a 729 increase year on year.

As it was covered in the media and newspapers, in equity research we have been able to hire analysts in finance, retail, telecom media sectors who have achieved high ranks in institutional investor rankings. And also in investment banking we have been able to hire senior bankers with very strong track records.

On the right, we explain the situation in Asia. In Asia, in most of the major markets, we have progressed with establishing our onshore platforms. For example, India, Korea, Malaysia, as shown here, we have been able to establish our business platform. This year, as part of diversification of our financing, we have conducted our first Islamic finance. For example, issuing bonds in Islamic finance.

Our research teams were ranked second, Asia equity second and China research first in institutional investor ranking. And together with our second and first rankings in Europe and Japan we have been highly recognized and evaluated by the global institutional investors as a top tier research house.

Page 16, we explain the Other segment. What we would like you to note here is in Q1, due to the fair value gain on our own debt, the gain was JPY13.9b, and our CDS year spreads were widened in Q1, which caused this fair value gain to be booked on our books. And although it is not included in the segment information, we have had some mark downs on our investment securities of JPY10.6b.

Lastly, I would like to explain our expenses, cost situation. Page 17 please. This bar chart shows that our expenses have been declining since March '09 which was the peak. And in Q1 of this year our expenses were JPY253.4b, which was 1.6% increase quarter on quarter, but 5% reduction year on year.

This 1.6% increase quarter on quarter, the main reasons were personnel expenses and the fees and commissions which increased. For personnel expenses, this was due to the expansion of our US business, as well as the global strengthening of our business platform which caused the increase in personnel expenses.

For personnel expenses this year, and the ratio against revenues is 47% for this Q1.

For the non-personnel expenses, as I mentioned earlier, we saw an increase in fees and commissions which we paid. This was mainly due to the growth in our client flow business, and we saw an increase in the commissions that we paid to third parties.

Other than this, real estate expenses -- we have been working on real estate and other expenses. We have been working on cost cutting from last fiscal year and we are continuing to do so in the current fiscal year. And we were able to reduce our IT communication expenses, as well as business promotion expenses. Through these efforts, our overall expense was increased only slightly.

Going forward, we will continue to invest in our mid- to long-term growth areas, but at the same time we will rigorously manage our costs.

That is the brief overview of the Q1 results. As I mentioned earlier, the first quarter we saw very tough market conditions and we need to continue carefully watching the economy as well as the regulatory trends.

Having said that we will continue to provide liquidity to our clients and increase our client business and as a result, we plan to expand our revenue base. There is no change in our business strategy. We will continue in our efforts to become a global investment bank.

That's the presentation from my side. Thank you for your attention. I would now like to move on to Q&A, open the line to questions.

We would like to start the Q&A session. (Operator Instructions). First person, JP Morgan Securities Tsujino san. Tsujino san please, the floor is yours.

Thank you very much. I have three questions. First point, slide 16. This is the corporate account section. First quarter you have the reduced figure. You have changed the method of allocation is that it? And going forward, is it going to be at this level? Do you expect the same level going forward?

The second point is headcount related expense. You said that the 47% was the personnel expense ratio against the revenue. Fourth quarter, I think number was low; 42% to 43% as I remember. Before that last year, earlier on, I think you had higher figure. So on average, how do you read the situation? What should be the proper interpretation of those numbers as a way of methodology or by way of trends? For example, Q1 usually, even if the performance may be bad, but the bonus provisions have to be accumulated, that may be the trend and fourth quarter you have a tendency of having lower number. Is that the way to read? Can you comment on that aspect?

In short, what I want to know is that the growth of personnel expense compared with Q4 is very big even taking into account the increased headcount, so can you give us the explanation?

Third point is the market revenue, slide 13. Slide number 13, trade account. So fixed income equity you show the graph. In terms of order flow based revenue first you have -- sorry page 15. US situation is more or less explained there. But fixed income, equity, if you take these items, fourth quarter and first quarter quarterly change, you can only talk about the variance. In terms of order flow basis what is the variance between the different quarters Q4 and Q1 and in other segments, how was the situation?

At the very bottom of the slide the revenue from client flow, and it is turned into index from Q4 to Q1, revenue is increased in terms of index. So other position management may be incurring a lot of loss, I would presume. But can you talk about the situation. I can't get the sense of it. So fixed income Q4 and Q1 variance, order flow and non-order flow, can you segregate the situation and give us your explanation?

Thank you very much Tsujino san. I'd like to respond to your question. First is the corporate account. I think your first question was regarding corporate account. Largely speaking, there were two major factors. First one; to begin with, transition related cost, that is incorporated into the corporate account at a substantial degree. And this portion is coming down actually. That is the first factor.

The second factor, so-called strategic investments. So we have expenditure, expenses related to so-called strategic investment. And a part of that is incorporated into the corporate account. So that was what we had in the past. And regarding this, as Tsujino san indicated in your question, actually we are going to increase the tying up to various divisions, so the allocation is changed.

Well then so the future trend would be at this low level?

Well in that sense there are factors incorporated into this. And I guess that is what it is. But going forward, what happens going forward, different factors may be coming in. There is a possibility. I'm not saying that there are such factors already in place, but that will be the case.

Next one is the headcount related expense, personnel expense. Tsujino san, as you said in your question, from Q4 to Q1 if you compare, if you want us to compare these two different quarters, Q4 in the previous year, top line revenue we recorded. And then through the full year, when we looked into that situation, in the final analysis in Q4 we ended up in having a certain level of bonus amount. In fourth quarter bonus amount was solidified, or finalized. So in Q4 there were some extraordinary reasons. So if you compare from Q4 you see a certain variance. And then simply looking at that you cannot conclude that the personnel expense has increased, or how much is the increase. That kind of analysis may be a bit misleading if you compare Q4 with Q1.

Furthermore, 47%, that's the compensation ratio. You were referring to that. In previous fiscal year, on average, I think it was around 46% was the compensation ratio. Against that, in Q1, 47%. So slightly there is an increase.

Now, how to interpret this increase? In the previous fiscal year, as I said, against the net revenue the compensation ratio was taken up as one indicator, and we've used that as an indicator index and we have reported that to you. But from the latter part of last fiscal year, for example in the UK, UK authority and various regulatory authorities are saying their views on compensation, for example, not only that level of revenue but the actual profit. How much profit did the organization make, or how much risk was taken?

So those factors should be taken into consideration. That was the guidance given by various regulatory authorities. So in our Company too, we looked into the guidance from those regulatory authorities. And bearing that in mind, not only revenue but the risk adjusted pre-tax revenue, and against that we can take certain proportions. That can be taken as the management of our personnel expense. That is the way of thinking that we have on this particular question.

Now may I go on and your last question, global markets order flow, the client flow business, how was the situation of client flow business, I think that was your last question. With respect to fixed income, flow related business on one hand and the proportion of revenue of that was about 60% I would say. Roughly speaking, it will be about 60%.

Also with respect to equity, on this side trading is at the mercy of market situations and profit level came down, but roughly speaking, about 50%. That would be the number I could tell you.

Well it sounds strange, four quarter I think you explained in a similar vein. You said that the flow revenue proportion was like that as a major framework and the same as Q4 to Q1 the absolute level of revenue went down. But according to slide 13, the index of revenue from client flow is increased. So I really wonder. So maybe the flow revenue proportion has to increase otherwise I can't properly read this particular slide on page 13.

Well this slide is a little difficult to explain. I am sorry that this explanation has been a little complicated, but I have been talking about the revenue from client flow business. What it is, is that we actually have trading business deals with customers and then the profit or the revenue is accrued from the actual dealing with the customers.

Now the flow business that I have been talking about, flow business revenue, that is meant by the client flow business that is one thing and in that strategy of client flow business, the proportion is what we are taking it up. For example, flow interest rate business we have and then flow interest business. Then, of course, we have a customer business and then we have a revenue accruing directly from customers business and also we have the inventory position to that end, management of the inventory position, and then we have certain PL from that management. So there are two elements to this.

So I have been talking about revenue, client revenue. We call it client revenue. That is all regarding the whole Company and from Q4, this number has increased. But this client business needs a certain facilitation and we have to have certain inventory positions. And then PL is taken into consideration overall. That is the flow business, flow business revenue. That is what we mean by that. So in that sense, if from our clients, we get certain revenue, the direct revenue from the customers deals--

What was the actual situation in terms of the ratio?

Unfortunately, the trading section, as I said, fixed income equity in both segments, in this particular quarter, revenue experienced a sizeable reduction. So direct customer business profit is what it is.

So that is greater. So actually that revenue is more than the fixed income or equity business? Facilitation for the position management related, am I right in assuming that you have incurred losses?

Well in its totality, by and large, it's about the same level. The situation is about the same.

About the same? Yes now I see. So the total amount was the revenue from the business with customers, so that's what you mean.

Yes, yes, that is the case.

JPY96.4b that number is interpreted in that way. Most of that comes from client flow business.

Yes, that is the case.

Thank you very much.

The next question is from Daiwa Securities Capital Markets, Mr. Muraki.

I have three questions. First is in terms of risk management. On Page 13 you explained how you responded quickly to the changes in the market conditions. But in reality did you control your risk on a top-down basis or was it more a bottom-up approach? I would like to ask about the background of how you responded to the changes in the market?

Next is share buybacks. You explained that the objective is to net out the impact of the stock options. But as some other institutions are doing, is it to try to control the outstanding balance or outstanding number of the shares? Is this your policy going forward?

And the third point is on Page 15 you show your expansion in the US and how your headcount is currently 1,455 in the US. But what is your headcount expansion plan for this year, towards the end of the year?

And for the US, until now you have been pursuing organic growth. In the future in order to maintain the balance with the European and Asian businesses, will you be considering M&A?

Firstly, the risk management, the question on risk management, whether it was top-down or bottom-up, in a sense you could say both. However in this quarter the top management, based on the recent market conditions, the top management took a very hands-on approach in managing our risk. There was a very top-down approach in terms of communicating the policy of the firm, of top management.

Share buybacks and our policy for share buybacks, this is very much related to how we manage the total capital base of the firm and the stock options which are currently outstanding and also the stock options which we are potentially going to issue going forward. Based on the situation, we have announced the upper limit of the share buybacks.

In relation to us issuing the stock options, there will be some dilution and management is very cautiously going to manage the dilution which will arise from the stock options.

Thirdly, the headcount in our wholesale business in the US, as we have announced already we plan to increase our headcount to about 2,000 at the end of this year. We will continue to hire up to about 2,000 people. Of course this depends on the market conditions and also the bottom line situation in the market, but our basic policy is in relation to the rebuilding of our US business. We view this as a crucial part of our mid- to long-term growth so we will continue hiring in the US.

In terms of the US expansion, you will continue to pursue organic growth?

Yes at the moment, yes we continue to pursue organic growth.

Thank you.

The next question Morgan Stanley Securities, Shinoda san. Shinoda san, please take the floor.

Thank you I have two questions. Wholesale business registered a red number after one year. Asset valuation was the reason. It was a transitory and considering the market situation, I think this was an unavoidable situation last year, but this time it's a fair valuation. So I have a question. There are divisions hiring new people or you have the old divisions continuing on. Are they really contributing to your profit? Or the newly created divisions, partly they may be profitable but recently adopted divisions not functioning very properly and therefore the profit making segment is not properly reflected in the P&L, is that the situation? That's the first question.

The second question. Up until now I have read through the presentation materials and the client base has enlarged, however the revenue increase has not come from the client base increase. Looking into the slide, page 13, when market, value at risk is lowered when market moves are very big. So former Lehman you hired people, or you have been spending a lot of cost and are utilizing people and relatively low risk, low profitable business is handled by these people. So low profitable work is done by those newly hired people, that looks like that. Is that a fair way of interpreting your situation, or am I wrong about reading this current situation?

These are the two questions. Thank you.

Now you have asked the two questions in a way I think what you said really hits at the Q1 situation of wholesale business. It is really pertinent to the wholesale business. First of all, the loss incurred in wholesale business. As I explained earlier on, from the month of May we talked about the notion of dislocation. So in, so many different events happened and fiscal uncertainty emerges, that was the situation. And against that backdrop, investors moved more or less uni-directionally, every time one event happens then investors will follow suit in one pack following the same direction. So for trading business environment was very tough, or the trading business had to be at the mercy of such changing market situations.

So if that was the case, in our Company, Europe, Asia, in a way, we have not completely built up our wholesale business. We cannot say that we have completed our building of profit base or revenue base of wholesale business. We are in the process of doing that, so we are close to breakeven point. So in this situation, as I said, revenue evolved in the way you saw. It reduced. 36% is the reduction of revenue for our wholesale business.

So when that situation arises then on P&L, the Q1 situation is something that you cannot avoid. You will evidently have this situation. So the point is how we can improve this particular point? Well revenue level has to be increased. That is the first thing that we have to do. To that end the client flow business share has to be expanded, thereby we can see the expansion of revenue. So in that sense, for example, client base, thanks to many people's support it is expanding and therefore the share is growing favorably, as I said.

In terms of the analysts ranking we are commended rather highly. So from this particular point onward we would like to clearly lead into the revenue expansion. I think that is the most urgent challenge for us.

That is all, thank you.

Additional question. Now you said the foundational building up. Of course, it depends upon the market situation, but can you tell me about the timeframe? When do you think that you'll be complete with the foundation building?

Well at what point in time can we say that? Can we terminate our operation? I think it is very difficult to pinpoint at a particular point in time, but at least, regarding Europe and Asia, last fiscal year to a substantial degree, a so-called platform has been solidly built.

On the other hand, the client base, the client base is not complete yet. There is ample room for further expansion. So the question is how best we can really expand in a solid way?

Regarding the US, in terms of organization and in terms of platform the foundational business is still in progress. It is work in progress. So as I said earlier on, hiring people, or the building of the firm base, these are areas that we have to concentrate on working in the United States.

Now time line -- timeframe, it's very difficult to pinpoint, as I said earlier on. But always we will be investing. We will watch the market situation business environment and actual business situation. We will clearly and carefully looking into those elements and then we would like to manage our speed.

Now additionally about Asia, in terms of timeframe I think we will have to have a long range view regarding our investment in Asia. Not about Asia as a whole but specific markets, specific countries or specific customer markets. There are certain idiosyncrasies in those segments in Asia.

So in this context, client base is something that we want to expand. In order for us to do that we have to have onshore bases in each respective market and to that end we need a certain licensing that we have to obtain. It requires a certain amount of time. So in these regions I think we will have to have a longer timeframe in terms of our investment.

That is all.

Thank you very much.

The next question is from Mr. Ohno of Credit Suisse.

I have two main questions. The first is in terms of your VaR, value at risk, which has come down, if you look at the risk adjusted asset against capital, which you have seen an increase, could you please explain the background for this?

The second question is in relation to personnel expenses. On slide 17 you showed the variable expenses in a separate item, but could you please disclose the variable expenses for this current quarter.

And in relation to stock options and in order to avert dilution you are going to conduct share buybacks. I believe this is -- there were some stock options which are linked to the share price and the value was about JPY67b. How are you going to book the expenses going forward? What is going to be the impact on your P&L in relation to the stock option position?

The comp ratio, which was 46% last year, this year for the full year, you talked about the regulatory bodies. Is the comp ratio going to go up or down? What is going to be -- What are your expectations for the comp ratio this year?

I believe there were four items in your question. First, our VaR and the risk-weighted assets, this is a somewhat a technical explanation, but for the risk-weighed assets and VaR, the calculation method is fundamentally different.

And for risk-weighted assets, as you are aware, there are the regulatory rules and the calculation method is designated by the regulations. And based on these rules, if you look at the credit risk, or namely the counter-party risk, for example for derivative transactions, we calculate the counter-party risk on a notional basis which means if the flow business with clients increases, theoretically, the credit risk portion increases.

On the other hand, for the VaR, this is the normal market risk calculation, which means for derivative transactions; short, long or net out; the positions, so the VaR and risk-weighted assets are not directly correlated.

Personnel expenses and the variable portion of personnel expenses, as you pointed out, in the past, until March 10, we disclosed the variable portion of personnel expenses.

For Japanese companies, the personnel expenses tend to be quite fixed against being variable and we have been working on making personnel expenses more variable rather than fixed and we tried to show our progress in making personnel expenses more variable. This was the intention of disclosing the variable portion of personnel expenses.

However, following the Lehman integration and the resulting changes in our personnel systems, personnel organization we have progressed quite significantly in making our personnel expenses a variable expense. Therefore, from this fiscal year onwards, we have stopped disclosing the breakdown between fixed and variable.

Of course, as management, we will continue to work on making the personnel expenses more variable. But disclosing the variable portion will mean that -- will have a negative impact in terms of our competitive position with our peers when our competitors are not disclosing it and if we do so. That's why we have chosen to stop disclosing the variable portion.

Stock options and stock option expenses and how we book that on our P&L, we will work under the accounting rules. We are working under the accounting rules, regulations, which means that in Q1 of this year, part of the expenses have been recognized and booked. And going forward, for the following quarters, we will take a similar approach and we will follow the accounting regulations.

Lastly, your point on personnel expenses and comp ratio. As I explained in my answer to Tsujino san's question, making a very simple analysis of the compensation against revenue is not sufficient based on the requests from the regulatory bodies. We need to consider these requests as well and we need to think about the risk and other items, not just the comparison against revenue, and control our compensation at an adequate level.

In terms of the last point, if you start taking into consideration the risk, or if you took into consideration the risk and profits last year with the 46% comp ratio last year, would that go up or down if your considered the risk and also the income levels?

I don't think it will change that much.

Thank you.

(Operator Instructions). Since there is no more questions, I'd like to end this Q&A session.

Well thank you very much for attending today's conference call despite your very busy schedules and we hope for your continued support. Thank you.

We would now like to conclude today's telephone conference. Thank you very much for your attendance.

Speaker statements on this transcript were interpreted on the conference call by an Interpreter present on the live call. The Interpreter was provided by the Company sponsoring this Event.