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Operator: Good day, everyone and welcome to today’s Nomura Holdings First Quarter Operating Results for Fiscal Year Ending March 2024 Conference Call. Please be reminded that today’s conference call is being recorded at the request of the hosting company. If you have any objections, you may disconnect at this point in time. [Operator Instructions] Please note that this telephone conference contains forward-looking statements and other projected result, which involve known and unknown risks, delays, uncertainties and other factors not under the company’s control, which may cause actual result, performance or achievement of the company to be materially different from the result, performance or other expectations implied by those projections.

Such factors include economic and market conditions, political events and investor sentiment, 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 would like to begin the conference. Mr. Takumi Kitamura, Chief Financial Officer, please go ahead.

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 year ending March 2024. Please turn to Page 2 of the document. Group-wide net revenue was JPY348.9 billion, up 7% quarter-on- quarter; pretax income increased 104% to JPY46.3 billion; net income was JPY23.3 billion, 3.2x higher than the previous quarter; EPS was JPY7.4; and annualized ROE was 2.9%. During the first half of the quarter, international market participants sat on the sidelines due to the bankruptcies of U.S. regional banks and the debt ceiling issue. Concerns of systemic risk dissipated in the second half of the quarter and the fast pace of rate hikes in the U.S. that started over a year-ago began to show signs of changing.

In Japan, the move towards ending deflation and speculation over the changes to the BOJ monetary policy combined with expectations of structural reforms to boost profitability at Japanese corporates led to inflows of risk capital from abroad lifting the Nikkei Average to a 33-year high and bringing some bright news for the first time in a while. Amid this environment, as you can see on the lower right, Three segment income before income taxes increased 140% quarter-on-quarter to JPY28.7 billion. Our Japan related businesses had a strong quarter, particularly our Retail business. Now let’s turn to the performance of each business. Please turn to Page 5 for an overview of Retail results. All the percentages quoted hereinafter are quarter-on-quarter comparisons.

Retail net revenue increased 22% to JPY92.1 billion and income before income taxes increased 133% to JPY22.9 billion. Since 2019, Retail has been reforming its channels by allocating sales staff in line with the characteristics of clients with a segment-based business strategy and expanded product and service offering. In March, we completed our reorganization with a major reshuffle of our people to better meet the needs of our clients. Under this optimized organizational structure, we provided detailed consulting services resulting in stronger sales across all products and services and higher revenues. As shown on the bottom left, recurring revenue increased 2% to JPY34.2 billion. While bonus provisions increased in line with higher revenues, we stringently controlled non-personnel expenses and maintained a recurring revenue cost coverage ratio of 50%.

Flow revenue was JPY57.8 billion, an increase of 38% driven by significantly stronger sales of stocks and investment trusts. Please turn to Page 6 for an overview of sales by product. Total sales for the quarter reached JPY5.4 trillion, up 21%. Of this, JPY2.8 trillion was sales of stocks. We saw the results of our efforts from last year to promote the attractiveness of investing in Japanese stocks and a tailwind from the market rally from May led to a significant increase in sales of Japanese secondary stocks. Sales of investment trusts increased 56% to JPY600 billion with inflows into Japan and global stock funds as shown on the bottom right. Please turn to Page 7 for an update on KPIs. Net inflows of recurring revenue assets was negative JPY71.4 billion as some corporate clients sold out.

Excluding the corporate clients section which is affected by these large transactions, net inflows were JPY10 billion. As shown on the right, recurring revenue assets reached record high of JPY20.3 trillion supported by the market rally. The bottom left shows flow business client numbers up 10% year-on-year at 896,000 mainly due to improved market sentiment and the reorganization of our people to provide services to inactive clients. Please turn to Page 8 for an overview of Investment Management results. Net revenue declined 30% to JPY26.5 billion. Income before income taxes dropped 78% to JPY3.6 billion. As shown on the bottom left, investment loss was JPY6 billion. While private equity firm Nomura Capital Partners booked unrealized gain, we posted unrealized losses related to investment in American Century Investments.

However, business revenue grew 13% to JPY32.5 billion. The asset management business continued to deliver stable revenues and performance in our aircraft leasing business grew. Please turn to Page 9. As you can see on the top left, assets under management at the end of June were a record JPY76.1 trillion, which is higher than our March 2025 target of JPY75.8 trillion. Of course market factors had a big part to play in this. But net inflows were JPY1.7 trillion marking the highest level in 31 quarters since the second quarter of the year ended March 2016. Net inflows on the bottom left show the investment trust business posting inflows of JPY650 billion. MRF assets under management increased by JPY730 billion on inflows of idle funds created due to profit taking while Japan stock related ETFs booked net inflows of JPY40 billion.

Main investment trusts, excluding MRFs and ETFs, reported outflows of JPY120 billion. Sales of U.S. and Japan stock funds continued, but we saw outflows from the Reopen Japan fund with early redemptions planned due to rise in net asset value and from foreign bond funds. The investment advisory and international businesses booked inflows of JPY1 trillion. In Japan we won mandates for yen bond and global stock funds while internationally inflows were driven by high yield bond funds. As you can see on the bottom right, alternative assets under management exceeded JPY1.5 trillion. Please turn to Page 10 for an update on our Wholesale business. Net revenue increased 7% to JPY190.9 billion and income before income taxes was JPY2.1 billion improving from a loss last quarter.

The graph on the bottom right shows Japan revenues of JPY69.2 billion representing the strongest quarter since the third quarter of the year ended March 2016. Internationally while the Americas improved from the previous tough 2 quarters, overall it was a challenging quarter as market participants remained on the sidelines in the first half of the quarter due to macro environment uncertainty. Please turn to Page 11 for an overview of performance by business line. First, Global Markets: net revenue increased 7% to JPY160.4 billion. Fixed income revenue was JPY97.4 billion up 11%. Spread Products made a significant contribution to revenues. In credit, the interest rate differential between Japan and overseas drove a strong increase in revenues from foreign denominated bonds in Japan while international regions also reported higher revenues due to credit spread tightening and a strong client activity.

Macro Products performance was roughly unchanged from last quarter. FX/EM slowed in AEJ on lower volatility and slower client activity while rates improved in the Americas and continued to perform well in Japan. Equities revenues increased 2% to JPY63 billion. Although international client activity was slow, our Japan equity related business continued to see inflows from outside Japan and both cash equities and derivatives booked revenue growth. Please turn to Page 12 for Investment Banking. Net revenue increased 3% to JPY30.5 billion. Despite ongoing declines in global fee pools, our Advisory business booked stronger revenues on contributions from completed M&A deals in EMEA in focus sectors such as consumer and retail and health care. As shown on the right, we supported multiple sustainability related transactions.

In our Financing and Solutions business, ECM and DCM both slowed; but this was offset by our Solutions and ALF businesses resulting in flat revenues quarter-on-quarter. Please turn to Page 13 for an overview of expenses. Group-wide non-interest expenses were roughly unchanged from last quarter at JPY302.6 billion. Excluding the impact of yen depreciation, expenses actually declined slightly from last quarter. Compensation and benefits was up 2% at JPY158.7 billion due to yen depreciation and a rise in base pay in our international business. Other expenses declined 7% mainly due to lower professional fees. Lastly, please look at Page 14 for our financial position. The table on the bottom left shows Tier 1 capital of JPY3.3 trillion, up about JPY140 billion from the end of March.

Risk-weighted assets increased by JPY570 billion from the end of March to JPY17.9 trillion. As a result, our CET1 capital ratio at the end of June was 16.5%. The waterfall chart on the bottom right shows changes to risk-weighted assets. Credit risk increased by JPY500 billion mainly due to yen depreciation. While market risk was also impacted by yen depreciation, the increase was limited to around JPY70 billion as we managed risk prudently amid the uncertain market environment. That concludes today’s overview of our first quarter results. To sum up, we saw results from our ongoing initiatives this quarter and tailwind from the Japan market rally helped improve performance both quarter-on-quarter and year-on-year. Retail completed its reorganization to better understand client needs and was able to deepen its business across both in-person and non-face-to-face channels while also expanding its client base.

Investment Management delivered a broad range of products across both public and private markets to global investors resulting in inflows that helped lift assets under management to a record high. Wholesale had a challenging quarter as volatility in international markets dropped and market participants were in risk-off mode. However, we saw some bright spots in our Japan related businesses. We believe the momentum in the JGB and Japan stock markets will continue on the back of adjustments to Bank of Japan monetary policy, corporate actions by Japanese companies to improve profitability and capital efficiency and the new NISA scheme due to be significantly expanded next year. Our Retail business has remained solid in July, performing above the monthly average of the first quarter.

In Wholesale, our international business got off to a slow start, but fixed income and equities in Japan are doing well and ECM deals in Investment Banking are showing signs of improving. We are having very active dialog with clients and will continue to work to deliver the best solutions leveraging the full capabilities of the group. We are also making progress on the JPY50 billion cost reduction program announced at our Investor Day. We have already identified about 60% of the total to be implemented by March 2024 and we expect to see the full benefits of the cost reductions to start appearing next fiscal year. Uncertainties remain in the international environment. We will continue to manage risk prudently and ensure stringent cost control while focusing on expanding our earnings.

Thank you.

Operator: [Operator Instructions] The first question is by SMBC Morgan Stanley Securities, Tsujino-san. Tsujino-san, please go ahead.

Natsumu Tsujino: Mitsubishi UFJ Morgan Stanley Securities, Tsujino is my name. I have two questions. First of all, yen depreciation and base salary going up. From the third quarter and fourth quarter last year, you’ve been reducing headcount and with surveillance, you were talking about slight decline. But on Q-on-Q there has been a positive change rather than a negative decline and I was surprised. In U.S. banking sector, cost went up. So can you elaborate more on personnel expenses? So that’s my first point. Secondly, ACI, if we do the calculation, the investment of the JPY13 billion unrealized losses, that’s probably the mark-to-market losses. Was it in Q3 or Q2 last year positive JPY15 billion was booked? So I was thinking that these unrealized losses, that was too big and now it’s down.

What can we imagine from the AUM level multiple changing? And what can we observe from the share prices? The facts announced is deviating our assumptions so I’m uncomfortable about these results. Can you explain what’s behind these results?

Takumi Kitamura: Thank you for the question. First of all, on personnel expenses, there are several factors behind and Tsujino, as you have pointed out, the yen depreciation is quite a significant factor and also base salary. Inflation overseas has progressed and in Japan as well, there has been an elevated level of salaries. So that has been the factor that had pushed up personnel expenses. What else? In Retail, we have seen recovery in the performance so the bonus provisions increased. That reflected the results of the quarter that has just ended. So those were some of the factors behind. On Q-on-Q basis, it didn’t decline. It rather increased as it appears. In terms of ACI, that’s your concern, Tsujino-san and you are quite right.

Regarding ACI, we have been saying that we are hedging our investments. This is a specific name unlisted stock and there’s the difficulty of hedging and we are feeling that difficulty in our results. There are a few parameters that are applied for the valuation of ACI and by using those parameters we are engaged in hedging activities. But for this particular quarter, we saw some hedging error or mismatch. Valuation of ACI in itself wasn’t that bad rather there was losses caused by the hedging error. So your points are very correct and it’s difficult to see what’s ongoing just by looking at the numbers by peers. I understand that well. So we will think about how more effectively we can engage in hedging activities. Sorry about the uncertainties, but these are some of the background factors.

Natsumu Tsujino: Right. In order to make it neutral, you were hedging. When market values go up, you were in the position to book losses so there would be gains when market goes down. But all of those trends were against Nomura, but underlying valuation remained more or less unchanged. In fact share prices have remained flat more or less, right? Is that the right analysis?

Takumi Kitamura: Well, I can’t make any comments on specific names, but ACI’s valuation in itself didn’t fluctuate so significantly. And in terms of ACI valuation; if there is gain, we offset that by taking hedging position and when ACI goes down, hedging gain should have been enjoyed. But unfortunately, due to some of the specific stocks, we were not able to do that in the first quarter. Thank you very much.

Operator: The next person asking the question is SMBC Nikko Securities, Muraki-san. Muraki-san, please go ahead.

Masao Muraki: I’m Muraki from SMBC Nikko. Firstly, I have a question about Wholesale. This time under this environment, 2.9% of ROE is what was achieved. But Page 21, you see the geographical split profit and loss and ACI. Even without ACI hedging, Americas is in loss and EMEA is making loss as well. So those are separating or holding down the entire profit. But regarding this, already you’ve made announcement or disclosure. But compared with American peers that have already made announcement, what are the difference and what’s the factor behind ROE level? And at Investor Day, you talked about the assumptions, but has there been deviation from your assumptions and if you are considering some additional actions, I would like you to explain at the Investor Day?

Investor Day headcount will be increased by 5% over a 2-year period. But based upon the current financial performance, is the increase in headcount the right way to go? Is that the way to think about it? Thank you. And the second question is about Retail. Due to personnel transfer in April, channel reformation I believe has been completed. But in the April through June quarter, how do we evaluate the net increase in the revenue and asset? What I want to ask about is the timing immediately after the transfer of personnel so April may not have been the timing when you could make a strong start. But what about the situation from April through July? So what was the extent to which the channel reformation has taken root.

Takumi Kitamura: Thank you, Muraki-san, for your questions. Firstly, regarding Wholesale. Our Global Markets in Americas, we have rates business; but our core business is agency mortgage, which belongs to rates business and also Securitized Products and equity derivatives. Those are core businesses of ours. And as you know, the U.S.A. had fast-based rate hike and our core product agency mortgage last year and Securitized Products struggled and the struggle has continued into this year. That seems to be the biggest factor for other business lines excluding agency mortgage or rates. For other business lines, all in all the situation is solid. Also in Americas it is not that we do not have credit business, but our credit business is small in Americas.

And in Americas compared to our peers, our numbers performance seem lackluster. But as you know, the rate hikes in the U.S.A. seem to be nearing the peak so the turning point, including agency and long-term bond business, may start to recover. If that happens then Americas business overall will be lifted significantly and that is our expectation and hope. But recently our businesses are not performing to the best of their potential and the overall revenue is not sufficient. That’s what we believe. But both in EMEA and Americas, the tightening cycle seems to be coming closer to the exit. That’s our view as well. So investors’ risk upside is expected to improve gradually, but at what timing I cannot pinpoint precisely at what point. But this situation I do not think will continue forever, but at some point, the situation will change.

So when the market comes back, we would like to be in a position to monetize the opportunities. As for agency mortgage, I believe we are at the bottom so the only direction that’s remaining is the upside. As for the headcount expansion, needless to say including replacement, some producers are being hired. But naturally the increase or decrease of headcount is prudently controlled by paying attention to the revenue level. As I mentioned as we announced the financial results, looking at the performance of the year business side and Wholesale side, headcount restructuring has been undertaken. At the Investor Day we said we are expanding headcount, but we are not randomly increasing. We will not be randomly increasing headcount. But GM unlike Investment Banking had shorter advanced investment period so including replacement, the higher talent will start contributing to revenue early on.

That is my answer to your first question. Regarding your second question, our evaluation of revenue and the net increase in assets. At the Retail division, the revenue and bottom line when we look at that, of course there has been tailwind from markets, but there are non-P&L numbers. Looking at such numbers, the impact of personnel reshuffling or restructuring seem to have materialized, but not all impact has come to materialize yet. For example in the area of high net worth, we have allocated and deployed our partners, but the flow of revenue from clients that are being covered by our partners has grown about 50% on a Q-on-Q basis. But from customers that our partners have not contacted yet, Q-on-Q progress has been negative. So touch points with client are expanded with increase in headcount, but still we have not been able to contact all clients.

So if we can broaden our partner base, then we will start to see the benefit in the sense of revenue and assets. So in April we put in place the new structure so I am expecting the result to come out. For newly appointed partners, about 1,600 partners who have been deployed to the area of high net worth. So they have gone through OJT and to gain knowledge up until the end of May and they have been attending to relation building with clients and it’s after the mid-May when we started seeing increase in stock price. So I believe we started seeing the benefits of reshuffling of personnel in the latter half of the second half. So we will be accelerating our initiative from here.

Masao Muraki: Thank you very much, [indiscernible] So you mentioned that at the end, but if I may ask. 1,800 partners who are appointed to the [indiscernible], that number came down to 200 so drastically reduced. What was the impact from that reduction? I believe you’ve assumed the impact, but compared with your assumption, is the impact in line with your assumption?

Takumi Kitamura: Thank you for the question. So more or less. So we’ve intentionally made the decision of not assigning that many number of headcounts. But looking at the revenue of course partially due to market factors, revenue has not declined much. So compared with our initial assumption, we have not observed too much of negative impact.

Masao Muraki: Okay, understood. Thank you very much.

Operator: The next question will be by Watanabe-san of Daiwa Securities. Please go ahead.

Kazuki Watanabe: Watanabe of Daiwa Securities. I have two questions. First of all Page 11 on the document, fixed income. This overlaps with your presentation. But when we look at the year-on-year, it seems that there has been a drop in macro products. And can you give us the monthly trend of April, May and June? Second question on capital policy. What’s the progress in terms of buyback? You haven’t bought back up to April, why not? And also when you think about second half dividend, ACI unrealized loss of JPY13 billion. Is there the possibility of adjustment excluding this unrealized loss? Thank you.

Takumi Kitamura: First of all to respond to your first question, macro product drop. Rates business in itself is not performing so poorly. But FX/EM, which was at the peak last year, dropped slightly in the quarter that had just ended. Our core business Asia FX/EM, that’s our core product line and clients’ activity in this segment dropped significantly and also position management in comparison to the previous quarter there was a drop. So on year-on-year, this was the major factor behind the drop in macro products. Fixed income monthly trend in April, May and June; close to 30% in April, close to 30% in May and mid-40% in June. So month after month the situation improved. Thank you. Did you mention equity, Watanabe-san?

Kazuki Watanabe: No, no, I just mentioned fixed.

Takumi Kitamura: Right. And buyback was your second question. From the long-term perspective, we will be buying back our shares. That’s the plan. When and how will we buyback? We will refrain from making any specific comments. But as you look at the track record, you understand that although the amount was not so significant that we will be buying back up to the amount we have announced. And also the relationship between dividend policy and ACI unrealized loss, we’re still at the timing of first quarter just ending. It will depend on how the situation fares in Q2. Various factors will be taken into consideration. Not only ACI, but various factors will be studied as we decide on the dividend and after the completion of the second quarter, we will study the situation. Thank you.

Kazuki Watanabe: Thank you very much. I have a follow-up on question one. In the presentation Wholesale after July, you said that the start of the new quarter was low overseas. In comparison to April to June quarter, it is slow or on average is it slow? Can you give us more details?

Takumi Kitamura: It’s doing better than April and May. I have this feeling that the level of July was at par with the first quarter.

Kazuki Watanabe: Thank you very much, that was great information. Thank you.

Operator: Now we move to next question. As we couldn’t confirm your affiliation, please state your company name and your name. [Operator Instructions]

Unidentified Analyst: Otsuka from SBI Securities. Can you hear me?

Takumi Kitamura: Yes.

Unidentified Analyst: Thank you very much. Page 11, – sorry, maybe could you give an answer to my question one by one. So I’m looking at the global market number on Page 11. In equities in the first quarter, I’d like you to walk me through the equities. I do understand the situation for fixed income. But on a Q-on-Q basis, 2% increase in revenue is achieved. But for Japan, the highest level after the economic bubble. Other security firms are enjoying this situation. Then based upon that situation, your number does not seem so strong though your focus products are different and accounting treatments would be different. But 34% increase Q-on-Q in the case of Daiwa and EMEA and Americas must have been weak in your case. So could you give me some concrete information? That’s my first question.

Takumi Kitamura: Thank you very much. Regarding equities, as you pointed out, the interest or attention to Japanese equities is very strong, so is execution and derivatives equity products regarding Japan, those business lines were strong. On the other hand, Americas’ derivatives, relatively speaking, I believe the performance was solid, but U.S. securities volume itself has come down, so the execution business struggled. In execution of U.S. securities, especially without the business, how should I put it, not just revenue, but there is cost involved. So, just because revenue grew, it does not mean that significant bottom line profit remains. That’s not the nature of that business. Looking at the revenue, it’s not so strong, but when we look at the bottom line, not much difference there.

Unidentified Analyst: Okay. Then that means other than Japan, other regions kind of dragged down the average.

Takumi Kitamura: When we look at the adjusted revenue, yes, the numbers looked weak, but the profit line other regions did not drag down the average.

Unidentified Analyst: Thank you. My second question is a simple question just to confirm my understanding. Last week BOJ’s policy meeting resulted in a change in their policy, but for Japan’s fixed income, is it tailwind? That’s my second question.

Takumi Kitamura: Thank you for the question. Whether the impact is positive or negative, my straight answer is it is a positive. The Bank of Japan has been quite prudent in their communication. That’s my impression. For the time being based upon the real economy, interest rates will change. So, the new point of balance seems to be pursued by BOJ. But from the viewpoint of investors, the last few years the large-sized loosening policy has been continued. But finally, it seems to come to the end. That seems to be the view of investors. As a result, certain volatility is produced and client activities will recover. That’s our view. In our JGB market, our share is quite high, so we will be careful about risk management. But business opportunities I believe will be a tailwind for us.

Unidentified Analyst: Understood. Thank you very much.

Operator: Next question is by Citigroup Securities, Niwa-san. Please go ahead.

Koichi Niwa: This is Niwa of Citi. Can you hear my voice?

Takumi Kitamura: Yes, we are receiving your voice.

Koichi Niwa: Thank you very much. I have two questions, retail and capital policy, I am looking at Page 5, I have two questions. How do you evaluate the recurring revenue? In comparison to mid-term plan, frankly speaking, I don’t think you have been able to get a good start. How do you foresee the rest of the year? And then secondly on flow revenue, have there been any changes to the investment appetite of clients, the product range or method of investment? There were many contrarian clients in the past. Have they disappeared? So, in the flow revenues, has there been any change to your client attributes? Secondly, capital policy, there could be some update of U.S. capital policy, but is there going to be any impact to your group capital policy?

Takumi Kitamura: Thank you very much. On retail recurring revenue, how do we perceive the level, against the target of 70%, you said that our performance was slightly lower, but we are not so deeply worried to be frank. If you look at the most recent market rally, it was quite sudden, so investors sold for profit taking. So, in terms of net increase, yes, there was certain slowness. However, as we take the approach of getting all of the assets from the clients, there would be transaction basis and also investment trust sales to our clients. And as a result, recurring revenue is expected to grow through our continued and sustained efforts. On the other hand, we will be reducing cost, so recurring revenue expense coverage ratio will be increasing through our efforts.

On the flow side, have there been any changes in our client portfolio, day-in, day-out we are checking the changes to clientele. But clients who buy at the dip, there are many such clients and then they would sell to take profit when the prices go up. So, yes, that’s the main trend. But as the market rallies, similar actions will be taken. But in the long-term, there could be clients buying when prices go up. Do you call them contrarians is quite difficult. When share prices go down – stock prices go down, yes, they purchase. But when the stock prices continue to go up, we saw some clients purchase at higher prices. So, in comparison to historical client sentiment, I think they have become more active. I think we are close to a major turning point in Japanese economy.

Wage increase was achieved for the first time in several years, which was bright news, and end of deflation is much talked about. So, if we compare where we are in comparison to a decade or two decades ago in terms of Japanese economy, there has been much change. So, we are seeing many clients that are interested in investing more. So, that is my response to the first question. Secondly, the capital restrictions in U.S. end of July. Yes, there was information that that will kick in. FRB, FDIC and OCC supervised banks and also capital or assets of $100 billion or higher bank and banking groups will be subjected to such restrictions. At the moment Nomura’s America bases, there are several bases we operate in the United States. The FRB, FDIC, our entities are not subject to these regulatory bodies, so there will be no direct impact coming in from such regulatory activities, but we will need to analyze more details in the coming weeks.

Credit risk calculation methodology may be under review, so there could be or there could not be indirect impact. We will be vigilant and analyze to see whether or not there would be indirect impact. Sorry, I do understand that I am not straightforwardly answering your question, but we have not been able to estimate any indirect impacts. Thank you.

Koichi Niwa: Thank you very much. I am looking forward because retail investors are quite risk appetite now. Thank you.

Operator: [Operator Instructions] As there is no more questions, we would like to finish question-and-answer session. Now, we would like to make the closing address by Nomura Holdings.

Takumi Kitamura: Thank you very much. Thank you very much for attending. At the Retail division for the first time in a while and since the December quarter of 2020, we have achieved good numbers. But there are still things that we have not been able to accomplish, but our initiatives I believe are starting to bear fruit. On the other hand for wholesale, the bottom line profit is not remaining much so that’s a huge issue and challenge. But looking at top line, towards June, agency mortgage and FX/EM in those areas, we are seeing the sign of recovery. In July due to seasonal factors, the pace has slowed down once again. But as I answered earlier, this situation will not persist because what we see now is seasonal factors. So, activities will come back at some point and at that time, we would like to drive our top line.

On the other hand, we faced various issues related to cost structure. It’s not unique to wholesale. In retail, we are working on various activities. But Retail division revenue grew by 22% while suppressing costs increased by 6%. So, that’s the tangible result of our initiatives. These initiatives could be implemented at wholesale as well to reduce cost/income ratio. That is our immediate challenge to address, so we will continue our efforts. So, thank you for your continued support. Thank you once again for your attendance today.

Operator: Thank you for taking your time and that concludes today’s conference call. You may now disconnect your lines.