Nomura Holdings Inc (NMR) 2018 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 2018 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 the 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. Takumi Kitamura, Chief Financial Officer, please go ahead.

Good evening.

This is Takumi Kitamura, CFO.

I will now give you an overview of our results for the first quarter ended June 2017.

Please turn to Page 2. The first quarter got off to a slow start due to the heightened geopolitical risks such as elections in Europe and the situation surrounding North Korea.

Into the latter part of the quarter, stocks rallied and client activity picked up as the French elections turned out as expected and economic indicators in Japan and the U.S. remained solid.

Amid this environment, revenues improved each month, and total net revenue for the 3 months was JPY 360.8 billion, up 3% quarter-on-quarter.

As you can see on the bottom right, 3 segment income before income taxes increased 2% quarter-on-quarter to JPY 63.8 billion.

Apart from the third quarter last year, this has been trending above the JPY 600 billion mark, although with some variation in underlying performance for each business.

In our international business, where we have been working to improve profitability, robust risk management and stringent cost controls led to income before income taxes of JPY 15.5 billion marking the fifth straight quarter of profitability.

Group income before income taxes was JPY 77.4 billion, down 6% quarter-on-quarter due to a decline in pretax income other than the 3 business segments.

Net income for the quarter slipped to 7% from the previous quarter to JPY 56.9 billion.

Annualized ROE was 8.1% and EPS was JPY 15.77.

Next, let's take a look at the results for each business.

Please turn to Page 5 for Retail.

Net revenue was JPY 101.7 billion, and income before income taxes was JPY 24.9 billion, both roughly unchanged from the previous quarter.

The market rally led to an improvement in retail investor sentiment, and we reported an uptick in sales of secondary stocks and investment trusts.

Although total sales declined 16%, that is due to slower sales of JGBs for individual investors following the record high last quarter.

Excluding this impact, total sales were roughly flat quarter-on-quarter.

The graph on the bottom left of Page 6 shows quarterly sales of investment trusts and investment trust assets under management.

Both of these increased quarter-on-quarter driven by inflows into India stock and thematic products as well as low-risk products aimed at distributing income.

The graph on the bottom right shows continued net inflows into discretionary investments with assets under management growing to over JPY 2.5 trillion.

Annualized recurring revenue grew to JPY 80.9 billion, and our expense coverage ratio was 26% as the steps we have taken to expand client assets combined with favorable market factors.

Please turn to Page 7 for Asset Management.

Net revenue increased 21% to JPY 28.1 billion and income before income taxes climbed 56% to JPY 13.6 billion.

As shown on the bottom left, assets under management reached a record high for the third straight quarter at JPY 46.1 trillion, pushing up asset management fees.

We also booked a gain related to American Century Investments.

Please turn to Page 8. The graph on the top left shows first quarter inflows of JPY 230 billion.

Of this, the investment trust business reported inflows of JPY 316 billion, mainly into ETFs and MRFs.

This combined with an increase in the market value of investment trusts to drive Nomura Asset Management's as of the public investment trust market to over 26% as shown here in the graph on the top right.

The bottom right outlines how we are collaborating with ACI.

Last year, we started distributing a U.S. stock fund managed by ACI to our clients.

And in May, this year, we started providing our U.S. high yield bond management services to ACI's retail funds.

These are some examples of how we have started collaborating to provide products to each other.

Please turn to Page 9 for Wholesale.

Net revenue increased 5% quarter-on-quarter to JPY 179.3 billion.

Investment banking revenues declined partially due to seasonal factors related to the first quarter.

Global Markets revenue has increased on the back of robust risk management and monetization of an uptick in client activity in the latter half of the quarter.

Wholesale expenses increased 8% quarter-on-quarter to JPY 154 billion.

On an annualized U.S. dollar basis, that translates to around $5.5 billion, but we are maintaining our run rate costs at around JPY 5.2 billion.

Expenses this quarter were above the run rate because of higher bonus provisions in line with revenues and a technical factor in which the recognition of deferred compensation was higher than normal.

We haven't loosened our grip on controlling expenses.

We will continue to work on lowering our cost base with a particular focus on fixed costs.

With this increase in expenses, the first quarter income before income taxes and Wholesale was JPY 25.4 billion, down 10% quarter-on-quarter.

Looking at Wholesale by business line, please turn to Page 10 for an overview of Global Markets.

Net revenue increased 7% quarter-on-quarter to JPY 154.2 billion.

Fixed Income revenues grew 11% to JPY 95.7 billion as our Emerging Markets and G10 FX businesses improved.

As shown on the right, EMEA slowed from the particularly strong previous quarter, while Japan was up on stronger revenues in Rates and FX, and AEJ had a better quarter as the Emerging Markets related business improved.

Equities net revenue was JPY 58.5 billion, up 3% quarter-on-quarter on higher derivatives revenues in Japan and the Americas.

Please turn to Page 11 for Investment Banking.

As shown on the top left, net revenue declined 9% to JPY 25.1 billion.

Gross revenue, which represents revenues from clients before allocation to other divisions, was JPY 45.4 billion.

Revenues declined compared to last quarter, which was partially attributable to seasonal factors such as a decline in financing mandates ahead of the shareholder AGM season in Japan.

All regions reported stronger revenues year-on-year.

In Japan, DCM mandates increased and the Solutions business, such as the sale of shares held by corporates, continued to increase.

Internationally, we were able to increase M&A multi-product deals and grow our Solutions business such as FX and Rates hedging by stepping up collaboration across divisions and regions.

The result of this is shown on the top right.

International gross revenue increased by 40% over the same period last year.

Our international business accounted for 50% of investment banking revenues.

Please turn to Page 12 for an overview of expenses.

Noninterest expenses were up 6% at JPY 283.4 billion.

This is mainly due to compensation and benefits, specifically higher bonus provisions.

We take into account full year performance when determining bonuses, and our quarterly provisions are not perfectly aligned with revenues each quarter.

We will look at full year revenues and maintain our focus on pay-for-performance while tightly controlling our cost base.

In addition, this quarter included a technical factor whereby the recognition of expenses for deferred compensation granted as part of bonus payments was higher than usual.

Other expense items generally declined quarter-on-quarter.

As you can see on Page 13, we maintain a robust financial position.

Our Tier 1 ratio at the end of June was 19.1%, and our common equity Tier 1 ratio was 18.1%.

Applying the fully-loaded 2019 Basel III standard to our balance sheet at the end of the June gives a common equity Tier 1 ratio of 17.8%.

That concludes the review of our first quarter results.

Before I finish, let me add that in Retail, we organized our structure to do away with the previous regional-based approach.

By giving branch managers more discretion, we are better placed to deliver the best value-added solutions to each client tailored to the specific requirements of each region.

While this hasn't shown up in our financials yet, we are sowing the seeds for future growth as we see more client contact and branch offices coming up with their own bespoke strategies.

Asset Management continued to increase assets under management on ongoing inflows.

In July, both Retail and Asset Management have maintained their momentum from the first quarter.

Looking at such indicators as the ratio of job offers to job seekers or recent performance in the corporate sector, you can see that the outlook for the Japanese economy is bright.

If this trend continues to gain traction, we expect to see upside for the Nikkei and an improvement in retail investor sentiment.

Globally, the environment in April and May was challenging, marked by a low market volatility and a drop-off in client activity.

But through stringent risk management and tight cost control, we were able to book profits in all international regions.

Although we are not yet satisfied with the level of profit, we are seeing good momentum as the profitable trend continues.

In July, uncertainty surrounding monetary policy has investors increasingly taking a wait-and-see stance and Wholesale performance has slowed slightly compared to the first quarter.

The revenue environment called for a continued vigilance.

We will continue to tap into client flows while managing expenses and risk to ensure we have a sustainable business platform.

(Operator Instructions) The first question is from Mr. Muraki of Deutsche Securities.

This is Muraki.

My first question is regarding the markets division and the second question is regarding Retail.

In the market revenues, compared to the previous quarter, there was -- I think, there was an improvement in the currency levels.

But on the fixed income earnings by district, by revenue, by geography, and the sales commissions, and the position, could you give me the breakdown of those figures, please?

That's my first question.

So -- and based on those questions, I might ask a follow-up question.

The second point is, starting from April, you have changed your policy or strategy for Retail.

And for some of your competitors, the bond sales, Fixed Income sales and Retail has been slowing down and that has led to a revenue decline.

In your case, foreign bonds and structure bond sales has been improving.

And Retail bonds or Retail Fixed Income revenue has improved 3% or more than 30% year-on-year.

Has the change in your management or management policy, operational policy, contributed to your Fixed Income earnings?

Those are my 2 questions, please.

Thank you.

This is Kitamura.

First of all, Fixed Income and Equities and the breakdown of clients' revenue.

For Fixed Income, client flow was up more than 70% and trading revenue was less than 30%.

And for Equities, client flow was about 90%, trading revenue was about 10%.

And for Fixed Income and Equities, the geographical revenue breakdown for Fixed Income, Japan, mid-20%; EMEA, more than 30%; Americas, mid-20%; and AEJ about 10% to 15%; and 30% Japan; and EMEA 10%; the Americas 40%; and AEJ 10%.

Your second question, regarding the Retail and Bond or Fixed Income sales growth in Retail and reason for that.

Well, I'm not in a position to comment on the sales of -- sales by our peers.

But in relation to structured bonds, that was not necessarily the main product in this business area for us.

So we are not that exposed to structure bonds and putting that much focus on such bonds.

And in this quarter, the foreign bonds in Retail achieved quite a lot of growth, especially the foreign bonds denominated in emerging country currencies.

In Japan, the negative rates or 0 interest rates have been in place for quite a long time.

So I believe, Retail investors have appetite for foreign bonds with a certain level of a coupon, it's probably attractive to Retail investors.

And this was not necessarily due to the -- it's quite difficult to quantify whether this was linked to our change in the retail policy.

I think it was a result of us working with our clients and accommodating their demands.

And as a result of that, I believe the sales of such bonds picks up.

This is Muraki, again.

Regarding my first point, in your peers, the Asian emerging currencies were very strong, but -- and also you have said the same in your disclosure.

But for Fixed Income, overall, what was behind these strong -- the revenues for Fixed Income?

Was it not necessarily Asia, but also Japan FX?

Thank you.

This is Kitamura.

In our case, in Q4, the emerging FX for Q3 was strong last year and there was a negative rebound from that in Q4.

So we struggled somewhat in Q4 of last year.

And compared to that, Q1 of this year saw quite a substantial -- significant recovery.

And so it is, as you pointed out in your question.

In terms of Japan FX, things were not that strong, I believe.

But as I mentioned earlier, the foreign bonds did well, and there was some movement in the currency.

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

This is Watanabe, and I have 2 questions.

One is with regards to the direction of the group strategy.

What was the reason behind selling JAFCO's shares?

And NRI and Nomura Real Estate, what is the policy with regard to your equity in these group companies?

Secondly, the progress of stock buyback, JPY 80 billion -- up to JPY 80 billion is a program that you announced in April, but we've not seen any progress so far.

So what's the prospect in the remaining months ahead?

Those are my 2 questions.

Thank you very much.

First of all, on our group strategy and the reason for selling JAFCO shares.

JAFCO had made us a proposal on their share buyback, and we began to study this matter.

And the reason that we responded to this proposal is as follows.

We wanted to optimize the resource allocation of our group, and in the end, we decided to agree to sell our holdings.

What about our other group companies NRI or Nomura Real Estate?

We will continue to monitor the changes in the market and constantly consider all of the options available.

At the current moment, when we take into consideration synergy with Nomura, we are considering various options, but we have no specific plans to sell off the shares we hold at the moment.

On your second question, is with regards to the reason why we have not seen any progress in share buyback and the prospects.

When, in what form, will we buy back our shares that is with regards to the substance of our trust agreement, and it may breach the insider information rules, and therefore, our basic position is that we not make any specific comments.

This was the question asked at the AGM, but -- of course, we set up the program because we have the will to buy back.

And the term is up to March next year, which is rather long.

And at the right timing, we will buy back our shares and that's all I can say at this juncture.

I have a follow-up question on the first point.

You mentioned optimal allocation of managerial resources.

And do you have any other objectives in your strategy that would give you more benefits than holding your JAFCO shares?

Well, candidly speaking, JAFCO's stock was not significantly drawn down on our risk-weighted assets.

Optimum allocation of resources not the only reason.

We took into consideration various perspectives as we reached this conclusion.

JPY 38 billion, JPY 39 billion, we will be obtaining such amount of cash.

And the proceeds, we haven't specifically decided on the purpose of the use of proceeds.

The next question is from Ms. Tsujino of JPMorgan Securities.

I have 3 questions in some detail and also a big picture question.

You talked about the deferred compensation and how it was somewhat large in this quarter.

For example, the compensation and benefits on a Q-on-Q basis, it's JPY 21.4 billion increase, Q-on-Q.

Meanwhile, for Wholesale, the noninterest expenses increased about JPY 10 billion.

And the compensation and benefits is quite hard to understand.

In Q4, maybe there was a negative adjustment in the deferrals and compensation and benefits seems low, and this time the deferred compensation seems large.

And is that flowing into the corporate expenses?

So I would like to ask about the increase, decrease in the compensation and benefits.

And meanwhile, the SG&A for Wholesale hasn't really increased.

So how that is flowing into the corporate expenses?

That's my first point.

My second question is on Page 7 for Asset Management.

Asset Management revenues and pretax income saw a big jump.

And with the American Century Investments, can you explain how some of that was from American Century Investments?

And you calculate the fair value of your stake in ACI, and you book the increase, decrease as a result of that.

So my question is, is most of the increase here due to American Century Investments mark-to-market?

My third question is about Retail and the sales situation for your various products and the fees and commission trend.

When I look at that, my feel is that, what you mentioned earlier that April onwards, you talk about your change in the Retail strategy, and not just Nomura, but the entire industry has changed the policy for Retail sales.

And I don't really see that much impact of the change in the Retail strategy in your figures.

Is that the way to understand it?

Has there not been much impact?

And/or is it the case that it hasn't really shown up in your financial results.

But has there been some qualitative change?

Is there something notable to -- there has been a notable change?

Thank you.

This is Kitamura.

I'd like to answer the second question first, regarding ACI, American Century and the related P&L.

As you mentioned in your question, we are -- we do a mark-to-market of ACI, and we book the gains from that.

And as you know, U.S. share prices have risen significantly, and as a result, ACI's business performance has been very strong.

And when we do our fair valuation, we consider it adequate to raise the valuation.

Meanwhile, in terms of whether this is the only component here?

No, there have been some other items, like Nomura Asset Management, AUM, I mentioned JPY 46 trillion, it's now more than JPY 46 trillion and that has increased the asset management fees of Nomura Asset Management.

And that's also led to the increase in revenue.

Your third question about Retail and Retail sales situation.

Yes, it is true that there's this focus on clients, client focus, client-centric model.

But our business model change has been ongoing since 2012, it's not something new.

So we have not necessarily changed our stance in Retail starting from this fiscal year.

And we haven't really changed our -- what we are doing there, that's why the results haven't really changed.

But we have abolished the region-based system in our Retail operations.

And as a result of that, as I mentioned in my presentation, although it still has not showed up in our financials, we don't really feel that yet.

But the sales people are able to spend more time with their clients.

And the branches are also coming up with their own original customized approaches and the branch managers have more discretion to do this as a result of this change.

So these are positive changes we are seeing.

And we believe or we hope that this will lead to actual contribution in our financials.

And your first question regarding the deferred compensation.

I didn't really understand what you meant when you said the flow into the corporate accounts headquarter expense, but...

This is Tsujino.

Well, to simplify my question, the compensation benefits was JPY 21.4 billion increase Q-on-Q.

Meanwhile, your corporates expenses, what was the increase of compensation and benefits in the corporate expenses?

There's almost no -- nothing included in corporate expenses, because the corporate expenses -- the compensation and benefits is booked in the business segment, so it's not booked in the corporate side.

This is Tsujino.

In that case, the SG&A for wholesale has not increased that much.

And in Retail, the noninterest expenses has not really increased.

So I thought that the increase -- big increase in -- it doesn't -- it's not very consistent with the big increase in compensation and benefits.

So I was wondering where this was booked.

And I thought it should be booked in corporate items, corporate expenses, that's why I'm asking.

This is Kitamura.

The Wholesale expense increase is due to the deferred compensation, as I mentioned, and we recognized the deferred compensation.

This is Tsujino...

This is Kitamura, again.

The SG&A has also increased.

Wholesale increased up JPY 10 billion.

Out of that, a major component is the deferred compensation.

And there is also some expenses allocated from corporate to the business segments and that has led to the increase.

On the Retail side, the compensation has also increased.

But the reason for the overall decline is because, in the previous quarter, as you know, there was the JGB campaign for Retail investors, and the cost of that was booked in SG&A.

So the JGB campaign -- impact of the JGB campaign was not continued in Q1 and that's why the SG&A declined.

(Operator Instructions) The next question is by Mr. Niwa of Citigroup.

This is Niwa speaking, I have 2 questions.

First of all, risk control at Wholesale.

And the second question is somewhat redundant, but your policy on good companies.

On the first point, in your comment you referred to the Wholesale business, and you will continue to control risk and, at the same time, pursue revenue opportunities.

And in Markets, you said you were able to capture the revenue opportunities.

Three months ago, you mentioned that you were on a risk-mode attitude.

Is this an extension of that strategy?

So my question is, when we think about the profit level of the midterm, I guess you will not be able to attain the profit level if you don't take certain level of risk.

So this is a rather abstract point.

But how do you think would be the optimum -- how do you think you can strike the optimum balance?

The second point is with regards to your strategy on group companies.

When we think about the capital efficiency and the optimal allocation of resources, which you mentioned in your press release with regards to JAFCO, and in your comment you said that they need a proposal and that you considered their approach or their proposal.

So my question, you don't have any policy to review the risk assets or disposal of your holdings?

Will there be further opportunities to dispose of your holdings?

Those are my 2 questions.

Thank you very much.

This is Kitamura speaking.

And your first point was with regards to wholesale risk control.

In Q1, as I said in the announcement of the previous quarter, again, the risk off mode had continued in the reported quarter.

You may know well that market volatility, if we take a span of the past decade or 2, is probably at the bottom level, at its lowest.

And therefore, I don't think we need to stretch ourselves to take risk excessively.

And July, August, we are seeing the continuation of the risk off mode partly because of the summer vacation season.

FOMC is slated to take place in September, and ECB may make a decision.

And triggered by those decisions, will the market recover or not, we will continue to monitor very closely the trend.

I may not have directly responded to your question, but I guess we will flexibly respond to whatever trends we observe in the market.

Coming to your second question, which is with regards to capital efficiency, and do we review the core and noncore assets, and are we thinking of recategorization.

What is core?

And what is noncore?

Of course, such review is being constantly done.

And we made a final decision that JAFCO can be categorized as noncore.

And therefore, we decided to subscribe to their call for share buyback.

From risk weighted asset perspective, it's not so significant, but this demarcation between core versus noncore is something that we should be constantly doing, which we plan to continue.

I have one follow-up question that is with regards to additional program of share buyback.

As you said, you are thinking that you are not in an environment to take risk in an excessive manner.

From the capital efficiency perspective, do you think that current program with its limits is sufficient?

Or do you think there are other options available in terms of share buyback, in addition to the current program?

Again, this is Kitamura.

And that question was asked already indicating that we have not done anything, but we have set up this current program which exists.

So first and foremost, if we are to do a share buyback, we will prioritize on this program that we've set up.

If we complete the program to its maximum level, then we will think what the next step would be.

The next question is from Mr.Sasaki of Merrill Lynch Japan Securities.

This is Sasaki from Merrill Lynch.

Two questions.

The first is related to the capital ratio.

Some of the major banks and Daiwa Securities, they talked about the current review of the Basel program -- Basel regulations and they have started to make some comments.

What is your view on the Basel and the changes that are ongoing?

And how much increase do you expect in risk assets?

Or how much the CET1 is expected to fall?

That's my first question.

My second question is regarding the headcount outside of Japan.

The Americas and AEJ, as of June end, I believe, there has been an increase since March end.

But as you strive to achieve your targets, what is your outlook on the headcount outside of Japan?

Yes.

This is Kitamura.

Your first question regarding the regulatory environment and the impact from that.

Well, yesterday, Daiwa made their announcement and they commented in quite detail -- in some detail.

I'm aware of that.

And I'm not in a position to comment on Daiwa's actions, but I was quite impressed by their comments.

And in relation to CVA, the final rule has not decided yet, whether it's going to be on accounting base or regulatory base.

This has not been announced.

So it's quite -- pretty much subject to the rules.

And in terms of the FRTB, the execution role in Japan and the -- whether the internal model will be used or not is still not decided.

And how much the internal model is -- will be approved is not decided.

And the trade book foundry, what's going to happen to that is still unclear.

But these factors will have quite a big impact.

In terms of Nomura's position, we are considering various scenarios and assessing the impact of each scenario, and we are also thinking of how we will respond.

As of today, I don't think we are ready to comment on and give you an actual figure because they will be somewhat misleading.

So we would like to assess the outcome of these discussions and decisions.

Your second question was regarding the headcount outside of Japan.

In AEJ and the Oceania region, there has been an increase of about 50 people.

This was mainly in India, in the Powai region, the offshore center we have there and the headcount increase in this Powai offshore center.

That was the major component.

In achieving the international target, we will be reshuffling our headcount and also adding headcount, and we will be making strategic investments.

So we are not thinking of sharp increase in our headcount outside of Japan.

The next question is by Mr. Muraki of Deutsche Securities.

I have one additional question, this is Muraki speaking.

And this is with regards to court cases.

This is with regards to mortgage loans that you had sold in the past and there are some pending cases.

In Q1, have such expenses been booked?

What about the months ahead, post-Q1?

What are the prospects with regards to expenses?

And at the same time, with your company, Royal Bank of Scotland is also involved in this court case.

In the court of first instance, $400 million provisioned for the court of first instance, and they are asserting that they will charge you.

And you have provisioned for the litigations in the past.

And will those provisions be sufficient to cover these claims?

On litigation-related issues, in principle, our position is not to make any comments, because these are pending cases.

And we do not intended to make any specific comments.

And you referred to RBS and its comments, and we are aware of that; however, they are the underwriter and we are the originator.

And that kind of contract guarantee or indemnity clause, it's standard contract provision.

But what's the specific language of the provision, and have we provisioned for that, that would also relate to the specific case.

And therefore, I'm not in any position to make any specific comments.

(Operator Instructions) The next question is from Ms. Tsujino of JPMorgan Securities.

In your financial disclosure, you mentioned a maximum probable loss for the litigations.

And in Q3, JPY 52 billion, I believe -- JPY 52 billion, no -- has there been no change there?

Is that the way to understand it?

This is Kitamura.

The maximum loss -- probable which we disclosed, yes, that's right.

This is Tsujino.

I've only seen up to Q3, so I haven't seen -- I haven't -- I've jumped -- I've skipped Q4, but...

This is Kitamura.

In the (inaudible) disclosure, we have disclosed the figure of JPY 47 billion and Q3 was JPY 52 billion, Q4 was JPY 47 billion.

And in terms of what it is in Q1 of this year, I would like to refrain on commenting that today.

Well, Q3 was mainly a currency fluctuation, I believe.

This is Tsujino.

And as was asked earlier, the figure includes the high probability losses, is that the way to think about it?

This is Kitamura.

Well, generally speaking, we make provisions for the highly -- the losses which are probable, and we are making these provisions based on the accounting standards.

And the maximum lost amount -- probable lost amount, which we disclosed include the rationally or logically calculable lost amount, the reasonably estimated amount.

And Tsujino, you mentioned that it's the currency, but no, it's not just the currency.

With the progress of the litigation, we have reduced this amount.

And you mentioned how you skipped Q4, but we have made a disclosure in Q4.

So we'd like you to take a look at the (inaudible) disclosure for Q4.

(Operator Instructions)

Thank you very much, everyone, for participating, again, on a premium Friday, when you should be leaving the office early.

Thank you for participating in this conference call.

Looking back on the results of this quarter, we believe we were able to navigate the difficult times in both Japan and overseas.

And I believe we did relatively well considering the difficulty in the markets.

And we have been able to continue the profitable trend outside of Japan.

We will continue to control our risks and costs while sincerely accommodating our customers and clients' needs.

So we look forward to your continued support.

Thank you very much.

Thank you for taking your time.

And that concludes today's conference call.

You may now disconnect your lines.