Nomura Holdings, Inc. (NMR) Q3 2015 Earnings Report, Transcript and Summary

This is Shigesuke Kashiwagi, CFO. I will now give you an overview of our financial results for the third quarter of the year ending March 2015 using the document titled Consolidated Results of Operations. Page two please. For the nine months till December, we booked net revenue of ¥1,169.7 billion, income before income taxes of ¥241.8 billion, and net income of ¥142.8 billion, close to the strong results in the same period last year. Fund inflows and market factors combined to drive up retail client assets to over ¥100 trillion, while assets under management in asset management reached a record high. For the third quarter, net revenue grew 14% from last quarter to ¥425 billion. Income before income taxes increased 57% to ¥116.1 billion, and net income was up 32% at ¥70 billion. Annualized ROE for the quarter was 10.6%. EPS was ¥18.72. Revenues and income before income taxes were both up quarter-on-quarter and year-on-year. Income before income taxes from our three business segments totaled ¥60.3 billion representing a 13% decline from last quarter. Retail and Asset Management both had a good quarter, while Wholesale profitability declined substantially due to slowdown in Fixed Income in EMEA and Americas. Segment other income before income taxes was ¥44.8 billion and we booked an ¥11 billion unrealized gain on investments being equity securities both of which boosted Group earnings. We benefited from higher mark-to-market valuations of shares held due to yen depreciation and higher share prices, while gains from credit spread changes also contributed to earnings. Today, we also resolved to conduct a share buyback program with an upper limit of 40 million shares and maximum total value of ¥30 billion. The share buyback, we announced last October with an upper limit of 40 million shares and ¥28 billion was completed between November 13 and January 16. We acquired 15.2 million shares for a total value of ¥10.2 billion. We decided to carry out that share buyback because we had sufficient capital and our share price was undervalued. To minimize the impact on our share price, we set a ceiling on the acquisition price and number of shares to be acquired per day and entrusted the acquisitions to a trust bank. However, the monetary easing announced by the BOJ on October 31st sent our share price spiking higher than expected, which meant we were not able to reach the upper limit of fee buyback program. The share buyback program resolved today consists of the 25 million shares left over from last time and 15 million additional shares for a total of 40 million shares. Of these 40 million shares, approximately 5 million will be used for stock options exercised in the future. The remaining 35 million shares will be used flexibly for various capital management options. Please turn to page four. In the box at the bottom of the page, you will find additional information regarding the ¥44.8 billion income before income taxes from segment Other. First, equity in earnings of affiliates of ¥18.2 billion was higher than normal. This is due to a large unrealized gain on securities held by affiliates. Second, we booked a gain of ¥8.9 billion from changes in our own and our counterparty credit spreads. And third, we booked an unrealized gain of ¥9.9 billion from the shares we hold in Ashikaga Holdings. Please turn to page five for an overview of results by business. First, in Retail, sales of stocks were robust on the back of the market rally stemming from monetary easing by the Bank of Japan and an increase in primary deals. Discretionary investment inflows and sales of insurance products also performed well. As shown on the bottom, total sales rose 13% quarter-on-quarter. The market rally led to profit taking and net inflows of cash and securities were lower at ¥176.6 billion, but Retail client assets climbed to a record ¥104.8 trillion at the end of December, supported by market factors. Retail net revenue increased 9% quarter-on-quarter to ¥128.8 billion. Income before income taxes grew 30% to ¥50.5 billion, which is the highest level since June 2013. As shown on page six, discretionary investment net inflows and sales of insurance products were at the highest level since the start of our business model transformation. Third quarter recurring revenue was ¥16.6 billion, which is ¥65.7 billion when annualized, putting us within reach of our March 2016 target of ¥69.6 billion. Please turn to page seven for Asset Management. Net revenue increased 8% to ¥23.4 billion. Income before income taxes grew to ¥9.3 billion, representing the best quarter since the three months ended September 2007. Assets under management reached the record high of ¥37.7 trillion as of the end of December driven up by inflows into products for discretionary investments and market factors. In the investment trust business we saw solid sales of privately placed funds and fund draft and SME funds, all of which reported growth in assets under management. In the investment advisory business, our international business continues to grow through use of compliance funds. Outside Europe in addition to AEJ we're expanding distribution channels in terms of regional coverage and client as evidenced by winning new mandates from pension funds in Chile and Mexico. Please turn to Page 9, for an overview of wholesale. Net revenue declined 6% quarter-over-quarter to ¥178.9 billion, the main reason for the decline was a significant drop in fixed income revenues in EMEA and the Americas as a result of the challenging trading environment on the back of a decline in yields and a spike in volatility in October. Equities and investment banking reported higher revenues compared to last quarter, by region Japan and AEJ had a good quarter while EMEA and the Americas reports hit a slowdown. Income before income taxes declined 98% quarter-over-quarter to ¥500 million due to factors such as higher costs associated with an increase in trading volumes.

Please turn to Page 10, for business lines results. Global markets took net revenue of ¥149.7 billion down 11% quarter-on-quarter, fixed income net revenue declined 27% to ¥76.3 billion. Japan Rates and AEJ FX performed well, while Rates and Credit in EMEA and the Americas had a challenging quarter. Equities net revenue grew 15% to ¥73.5 billion. Our cash business had a good quarter as global market volumes rebounded. By region, EMEA and the Americas slowed, while Japan and AEJ reported considerably stronger revenues. AEJ reported its highest quarterly revenues since April 2009 as we steadily expand our client franchise, particularly in the emerging market business. Please turn to Page 11 for investment banking. Net revenue increased 30% to ¥29.2 billion. Investment Banking gross revenue was ¥52.7 billion. We booked stronger revenues in both Japan and overseas quarter on quarter and year on year. In Japan, we won high-profile IPO and convertible bond mandates and retained a high market share in the league tables. Internationally, EMEA and the Americas made significant revenue contributions. In the third quarter, we won numerous high-profile mandates such as non-Japan related M&A deals, including deals with transaction value over ¥1 trillion as shown on the right, and equity finance transactions. Notably, in the Americas where we are building out our platform, we are extending our track record in our key focus sectors such as financial sponsors. Many of the M&A deals shown here are expected to close in the fourth quarter and onwards, so we expect to see revenue contributions going forward. Please turn to Page 12 for an overview of expenses. Third quarter firm-wide expenses were ¥308.9 billion, up 3% quarter on quarter. This is due to yen depreciation. Excluding the FX impact, firm-wide costs actually declined slightly. In particular, compensation and benefits declined as bonus provisions were reduced in line with performance in Wholesale. Please turn to Page 13 for an update of our balance sheet. Total assets were ¥44.1 trillion and shareholders’ equity was ¥2.7 trillion. Our Basel III Tier 1 and Tier 1 common ratios were 12.5%, down slightly from 12.7% at the end of September due to an increase in risk-weighted assets as a result of yen depreciation. Applying the fully loaded Basel III 2019 standard to our balance sheet at the end of December gives a high Tier 1 ratio of 11.7%. To sum up, we continue to gain traction with our Retail business model transformation and this is spreading to Asset Management, so we are pleased with the performance of these businesses during the quarter. However, Wholesale was affected by the challenging trading environment in October, leading to sluggish performance in Fixed Income in EMEA and the Americas. We continue to review our business portfolio and focus on areas of strength, while allocating resources to businesses with growth potential. The Moody’s upgrade in the second quarter is already starting to act as a tailwind. As I just mentioned, we are winning Investment Banking mandates in our key focus sectors. Looking ahead, we remain focused on further expanding our client franchise and improving profitability. That concludes today's presentation. Thank you very much.

The first question is from Mr. Masao Muraki of Deutsche Securities.

Hello this is Muraki. I have two questions. One is related to the markets-related division. First is as I ask all the time about the fixed income and equities, the geographical breakdown of revenues as well as sales commission and trading breakdown please for fixed income and equities. My second question is on page 17 of the presentation you show the value at risk. September end was quite low. Was this because there were few revenue opportunities then or with the turmoil in October you were preparing for the turmoil that came in October? As for December end, the VaR has risen from September. Is this implying that there will be an increase in revenue opportunities in January onwards? Could you also comment on the revenue environment in January and your performance as well? Thank you.

This is Kashiwagi. Let me first talk about the fixed income and equities, the geographical breakdown, fixed income Japan is about 50% EMEA about 10%, Americas several percent, AEJ a little bit less than 40%. For equities Japan is around 30%, EMEA between 10% to 20%, Americas with the less 40% and AEJ again between 10% to 20% or in the middle. And the client driven and risk driven breakdown for fixed income in equities, first with fixed income this is a bit embarrassing but client driven revenue exceed the 10% which means there have been losses on the trading side. For equities client driven is 80%, trading is 20%. And for your second question about the value-at-risk, basically the September -- the disclosure for September the VaR was ¥6.8 billion and that grew to 9.7 in December. The year-end based on my experience there is some seasonality at the year end. The market tends to be quite so trades tend to sale options. This happened last year as well ¥8.6 billion that are high and towards December end there were these kinds of actions but in the beginning of the year the VaR has already shrunk or started to shrunk. And the reason why the VaR rose in December is probably because of the yen depreciation and our trading positions we have more trading positions in foreign currency. So on a yen basis the figure seems high. And as for our performance in January fixed income overall was made a relatively good start EMEA and AEJ did well. The Americas and Japan were somewhat low. For equities again we made a reasonably good start as well.

Next question is from Natsumu Tsujino from JPMorgan Securities. Natsumu Tsujino, please. Thank you very much.

This time, other segment -- others in the other segment, on a q-on-q basis has grown very much. And over that amount, Ashikaga related unrealized gain is about ¥10 billion and others related the fee equity in earnings of affiliates is about ¥18.2 billion. So inclusive all that, and concerning all the factors, still the other segment income on a q-on-q basis grew by ¥37.1 billion, therefore it’s more than ¥10 billion or so. So, the interest expenses and other is only seen an increase of ¥3 billion or so. Therefore the other revenue -- What are other elements included in this segment Other, which contributed to the increased revenue?

Yes, you are right; regarding the Ashikaga shares and also equity method related unrealized gains are also included in that. Other than that, we have our subsidiaries which own equity securities and unrealized gain from that, particularly all our subsidiaries are mainly engaged in financial business, Nomura Trust and Banking and Nomura Bank Luxembourg and Asahi Kasei, so these are included in this unrealized gain. And in addition to that, this is only a temporary factor, but we have transferred some items from trading account to Other segment amounting to ¥1 billion or so, and that caused a noise.

So is it positive or negative?

So that is a negative impact. Because that has come from trading to others or.

So it was negative in the past but because of this transition that has turned positive. So that means Other revenue has increased because of that?

Yes, that's right.

So if that is the case then the unrealized gains in equity held by affiliates including others?

So others item

So that is including a ¥22.6 billion?

So that is outside of segment.

So, is it a line below the corporate item? And that is included in that 22.6 billion? So part of it is booked in corporate items and others including others Other item?

That's right. So that is including corporate items, right? This time corporate items, the negative figure is very, very small. That’s why you have more than ¥10 billion or so amount in this item, right? Well, others. I said ¥10 billion and segment other was very good. However that was not necessarily due to Ashikaga and there are other items contributing in the overall seven hundreds of billion yen.

And you said there is unrealized gains from shares held by affiliates and I want to know the size of it, and that is included in the corporate items and also some of it is included in others?

That's right, your understanding is correct.

Understood, thank you very much. Earlier regarding client flow you mentioned clients flow and on the trading side you caused losses however the gains from client flow on a Q-o-Q basis how much was that? was it flat or do they declined? Could you elaborate on that?

The second quarter and third quarter in terms of client revenue in August we didn’t have a much flow in second quarter that is why in the third quarter although we had a slow business in December. However, after all third quarter was better than second quarter.

So in terms of position, you had a challenging quarter. What kind of products were the cause of this difficulty?

The big one is in the beginning of October, 14th and 15th rates trading and also credit trading again spread-widening was seen. So in these two product areas trading didn't performed very well. As opposed to that, fixed income, FX performed better.

The next question is from Jun Shiota of Daiwa Securities.

Two questions please. First is about your share buyback. This is the third time this fiscal year and the first time you were able to achieve the limit very quickly. The second time, as Kashiwagi San explained, you did not reach your upper limit and you had the Trust Bank working on it, but this time again you are buying back 40 million shares. In terms of how you will be buying back the shares, is it going to be the same as the second time, meaning that if there are any sudden movements in the market, is there a chance that you will not be able to buyback all the shares that you want. How will you buyback your shares? That's my first question. My second question is about the asset management business. You have been -- you have won some business in relation to pension funds in Latin America related pension funds. As for the background of you winning these types of businesses, has the Moody's upgrade helped? What is driving you expanding into these new business areas?

Your first question, as you pointed out when we did the share buyback in spring, we completed the operations of the buyback quite quickly which I wasn't very happy about because the prices seem to decline after we bought the shares. So I was quite disappointed with it. So in the second time when we bought back the shares we set the limit on the price plus we also set a limit on the volume, daily volume of shares that we will buyback, we ordered the trust bank to do so. But unfortunately the share price went up, so we will not be able to buy as much shares as we wanted to. So based on that experience this time we think it will be both. So we do not want to buy back shares too quickly, we don't want to be too slow either, and as for the daily volume that we will buy back, we have increased the limits compared to the second buyback this year. And I forgot the exact date but we want to buy back the shares by March end, previously it was by January end. But in terms of number of actual days it's smaller, so the daily volume should be larger than the previous buyback.

This is Shiota again. An additional question; the limit that you set on the price, is this based on the one-times P/B R, no change there?

Yes previously the 700 trillion was the bps this time ¥ 744 or ¥ 745 is the bps. And we have reflected that and we'll buyback the same amount 40 billion but we have increased the amount from ¥28 billion to ¥30 billion, that's the benchmark we have in mind. And your second question, the asset management division is currently selling mainly two products overseas, one is the U.S. high yield bond fund which is managed by NCRAM in the U.S. When I was based in New York we were doing business with U.S. pension funds and European pension funds. And this is expanding further into Asia and also Latin America recently. The other product is the Japan strategic fund, which is performing well, especially in terms of the absolute performance or actual amount in Japan equities is doing well and the Japan strategic fund is gaining lot of popularity, and distribution is increasing. So the strong performance is the answer to your question.

The next question is from Mr. Lui from Guoco Management. Please go ahead.

Mr. Kashiwagi. On page 24 of your presentation, you show that the stock brokerage commission on the retail side increased by 23% quarter-on-quarter, that means versus the September quarter, but down about 26% year-on-year, that means versus the December quarter of 2013. I was looking at the retail brokerage trading value or volume on the TSE. It seems to me that maybe, there may be some difference between the 23% for your stock brokerage commission in the December quarter versus the increase on the Tokyo Stock Exchange and also the same thing is true of the year-on-year change as well. Could you comment on that thanks.

I don't all the detailed information right now, but my gut feeling is telling me that the reason we had a significant transaction volume last year in the third quarter ¥36.3 billion is driven by the fact that this strength over the Japanese equity market, what are the expectation that mix will be successful? And in the meantime there was changing tax position on the capital gains on all the individual clients. So up until the December 2013 Japanese equity holder, where they were enjoying the tax benefit whereby their capital gain was tax only at the 10% instead of the normal 20%, in order to incentivize equity investment by the government. And because of the introduction of NISA starting from the January of the last year 2014, Japanese government abolished the tax incentive mechanism whereby they touch on 10%. So there was a significant selling pressure from the clients to take advantage of that incentive towards end of the 2013. That is a major driver or the things will be strong performance of equity commission. And in this quarter-quarter our performance was driven by the, partially driven by this things of the Japanese equity market but more importantly I think it has been expand the trends of the EBIT equity market where we do have a brokerage firm ‘called [Instant]. That attracted all of the transaction and volume.

Okay. If I could have a follow-up, Kashiwagi San I guess my point was on comparing the December quarter versus the September quarter, it seems to me that the 23% increase, while it seemed to be good, was a little bit below the increase in the average retail trading value on the Tokyo Stock Exchange. So there seemed to be a little bit of underperformance there and I was wondering if you could address that? Thanks.

David I did a mistake sorry, you’re talking about the retail division so this should not include the [Instant] but the performance of the strength of the equity brokerage commission on a domestic was driven by the fist, I think with the Japanese industry they were able to capture the market turbulence. They were a significant buyer during the first two weeks of October while the world financial market was suffering and they made the money after the October 31st announcement by that BoJ and GPIS and quickly they were able to capture something I think 10% return of their investment in November. Those are the two key factors which we observe significant buying order during the first two weeks of the October and significant selling pressure during the first and second week of the November.

Okay, great. Thank you. If I could have one more follow-up, Kashiwagi San. On page six of your presentation, you talked about recurring revenue there. I think that’s the first -- this is the first time you’ve talked about this, I mean in details. And you in one of the tables on the upper right-hand side, you listed out discretionary investment net flows, investment trust net flows, as well as sales of insurance products. Are these three the primary drivers of your recurring retail revenue, or are there more to these three?

No, actually with respect to the insurance, distribution this is nothing to do with stock revenue. Regarding revenue is coming from only two area, one is discretionary account and also the management fee from the investment trust.

.:

Two questions please. Firs, in relation to the share buyback and additional question on that, as for your treasury stock, you said you wanted to flexibly implement your capital strategy, but how long do you plan to hold on to the treasury stock? What kind of time-frame do you have in mind when you think about your capital strategy? Are you going to hold on to them forever or do you have a certain time-frame in mind? Could you clarify that? And my second question is in relation to your international business and your core segments. In this quarter, EMEA and Americas [FIG] there was quite a lot of change in the performance. Meanwhile investment banking, retail asset management did very well. Things were better than expected, but there was a big slowdown in some businesses. So in the international business when you compare yourself with your peers you don’t seem to be that behind, but you are not as diversified as your peers. So the international volatility has a big impact on your overall earnings it seems. And on top of the optimizing your resource allocation is there anything else you can do to address this situation? Thank you.

Thank you. This is Kashiwagi. The first question about the treasury shares, our basic policy is to hold then for a year or year and half and at that point we will decide on some kind of conclusion but depending on the market conditions we could hold on to them a bit longer. There is a chance that we could conduct some kind of M&A in which case we could use the shares in the part of share swap for the options. Right now in this volatile market if there are opportunities I think one of the options could be to keep holding on to our shares. But the plan that we have in mind at the time of the purchase is to make a decision within a year or maybe a year and half that’s in line with our investors’ expectations I think. Your second question about fixed income in wholesale performing badly and how we will adjust that in the future, that’s a very big question I think. One thing is that fixed income business especially this year it’s kind of risk taking business will face several challenges. And the fixed income business which is risk taking I think there is going to be some volatility this is an inevitable. So, we will continue to focus on our strength and also focus on client driven areas within fixed income. And we want to take risks more smartly in the future smart risk taking is important. And in this quarter the yen continue to depreciate that’s why the resource management on the front end is conducted on a yen basis. So the front office or front side there was some tightening of resources to a certain extent. And due to the yen depreciation the front office from their perspective there was a decline but due to the yen depreciation. So although they are making money it’s not like we’re going to allocate them more resources as a result of the yen depreciation we have not done that. And that’s also one reason why we have room to buyback our shares. So right now things are tightening fixed income is facing a challenge but that’s precisely why the other businesses like equities and also within fixed income we will be conducting more severe performance reviews. And we have actually started from last year we have started to terminate some of the employees in our U.S. business and recently there was in AJ. We reduced headcount inflow derivative as well as reporting in the media and we will continue these types of initiatives. We will continue to scrutinize or tighten our performance management. We also have to expand into new businesses. And for example in investment banking we have been selectively investing over the past two to three years in the U.S. and I think we are starting to see the fruits of those efforts in this quarter and in fixed income the cash business, flow business, credit business struggled but the other businesses for example emerging or FX these businesses. We appointed a person focused on this business last and categorize or divided the businesses and I think we’re starting to see positive results of these strategies. We also separated sales and trading in Asia and we clarified leadership and as a result I think we were able to deepen our grip on the business. So fixed income if it continues to -- if the business continues to be challenging we will make sure that we can generate bottom line income despite the tough conditions in fixed income and also equities and in order to do so you commented on your western peers who have more diversification and deeper pockets. And because we are not as diversified I think we have to be more client focused and be selective in the businesses we participate in. And our resources this is both intellectual and also geographical allocation of our resources is very important. And as we have been saying from the past the upgrade by Moody’s and also the relative advantage we have on the regulatory front we’ll continue these will be tailwinds for Nomura. And recently some companies are continuing to announce restructuring of their businesses. And of course we are doing some on a small scale as well but I think we are at an advantage to our peers in these aspects. So we will continue to improve collaboration among divisions and eat the fruits of our efforts meanwhile continue to control our cost both at the middle and at the front offices and improve profitability per head. I think we just have to keep doing this over and over. So that we can meet the expectations of the various stakeholders including shareholders, vendors, employees and regulatory authorities I think balancing these stakeholders is one of the roles of management. Thank you.

Tanaka Katsunori from Goldman Sachs, Japan.

I have two questions if I may. First question is about the buyback, the philosophy with regard to share buyback this time around. And you are going to expand the program size, and as of now the share buyback, by what criteria have you decided the size of this share buyback program? And from the next quarter onward what would be your approach with regard to share buyback? Please explain about that. And second question has to do with foreign currency exchange rate and the oil price impact upon your business. Could you elaborate on the impact of exchange rate and oil prices? With regard to oil price maybe you can get a business opportunity. However, with regard to exchange rate you talked about the controlled currency as well. When yen continue to depreciate and in your business management what kind of change, if any, are you going to make with regard to business management?

The first question regarding share buyback program, the reason why we are implementing this program this time around, our basic philosophy is as follows. When we come to share buyback, after paying out dividend we're going to make returns to the shareholders, therefore the April and October when we make our financial result announcement we have to make a decision on that. However this time, last time we spent 2.8 billion available to buy up to 14 million shares, however we couldn't restart the threshold, therefore we're going to have included that lift over amount in the program this time around. However share price remains unchanged. So if we have funds available, we wanted to increase the size of the share buyback program. There is no specific equation or criteria for the size to be determined, we have identified 25 million of shares leftover and also the original total shares 40 million shares in the last share buyback program and we thought we have funds available to buy up to 40 million shares now. So 35 million -- 50 million shares, those numbers have not been considered by us conversely speaking. Second question, exchange rate. Basically as I said earlier for our firms is going to be a constraint and like this time on a quarterly basis if there is a speedy yen depreciation then that would be a greater constraint have has been sensed by front office people, I am sure. However, in our capital account, you can see the movement of money we're making investment in overseas market by subsidiaries. And the exchange hedging is done, therefore we enjoy the currency rate change in our book. Therefore we would like to respond to this situation, if yen weakens too much then perhaps we have to restrain our position, however we issued ¥120 to that at the end of the year, restrained balance sheet size at the end of the year. However, 16.2 times in the balance sheet can be seen, therefore the exchange rate is not serving as a big impediment as of now.

How about oil price, could you comment on oil price impact?

Regarding oil price, I think there are different perspectives you can take. Directly, it isn't that we can gain from maturing activities because of the oil price plunge. However, oil-related exposure or the performance of oil-related companies may deteriorate and then we have exposure to these companies. On a mark-to-market basis, it is possible that we suffer losses. However we heard announcements of financial results by many American banks last week, looking at those numbers our exposure is very, very small compared to their exposure. And within our exposure share of energy sector is relatively small. So I think broker by and bank business is completely different, that's what I sense from the last week's announcement.

The next question is from Mr. Niwa of SMBC Nikko Securities.

I'd like to ask about the wholesale division, two questions. One is about the pretax income overseas. It's a bit too early, but through our next fiscal year, your target is ¥50 billion. Right now the trading environment is somewhat stable, but based on that what do you need to do to achieve the targets for next fiscal year? This is an abstract question, but could you share with -- what your thinking is? My second question is about investment banking pipeline. In the presentation, you explained how there's some promising deals coming up in the pipeline. What kind of geographies and products do you think there will be opportunities?

This is Kashiwagi. First question the March ’16 target of ¥50 billion in our international business we announced this two and half years ago. We set this as our management target back then and no change to this target. So we’re still trying to achieve it. And for the market environment which have changed since then so we have to move constantly. And as I explained earlier one is the review of our business performance we have to further tighten the way we review our performance and in that process we will assist the cost cutting at the front level is the revenue decline as a result of cost cutting we also have to cut down on the cost of our infrastructure for this kind of cycle. So the front office, middle, back office have to work together to achieve the cost cutting, took on this for cost cutting. And also the upgrade by Moody’s the effect of it was seen or is being seen in Q4 and we are starting a dialog with about 200 clients and on the first of December we have target of ¥26.3 billion which we will achieve in 12 to 18 months on a runway basis. This is again joint effort by front, middle and back offices and we want to tie this as quickly as possible. Your second question about investment banking pipeline, right now the vision pipeline is mainly, Japan is the strongest especially the IPO sector is there have been a lot of -- there will be a lot of large IPOs like Japan post and the number of IPOs will exceed 2014 number of companies will reach 100. Last year it was 80 companies ¥1 trillion. So these IPOs will help and also shareholder return also conducted by Nomura there will be share buyback deals and also recaps deals, these types of solution transaction will be seen as well. And just add to that, M&A will I just talked with Okada San who is the head or in-charge of investment banking. We seem to be getting a lot of inquiries for M&A. And for our international business, for M&A internationally the cross broader M&A between Japan and overseas and also between non-Japan countries we need to monetize from these opportunities. And in the Q3 results one change from the past is, in the past there used to be transactions that we win but these were one-off but I think that’s changing to more recurring revenue. So we’re starting to generate multiple revenues from the same transactions. And in Q4 I think we will be able to build up a certain size and figure as well not just in Q3. Thank you.

[Operator Instructions]