Good evening. This is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our results for the first half and the second quarter of the year ending March 2020. Please turn to Page 2. For the first half of the year, net revenue increased 29% year-on-year to JPY715.4 billion, while income before income taxes jumped 14.4 times to JPY203.3 billion. Market activity remained muted throughout the period as U.S.-China trade friction raised concerns of an economic slowdown, and geopolitical risk grew in the Middle East. Japanese retail investors stayed on the sidelines, leading to more than 10% decline in equity trading volumes and sales of stock investment trust, excluding ETFs. The fixed income market proved to be a challenging trading environment. Although central banks continued their easing policies and interest rates trended down, liquidity remained thin due to seasonal factors and interest rates fluctuated from August onwards while volatility spiked. Amid this environment, we focused on realigning our business portfolio, as announced in April, and maintained stringent cost and risk management. As shown on the bottom right, three segment income before income taxes for the first half increased 65% year-on-year to JPY80.5 billion. By reducing low-profitability businesses and focusing on our core strength in Wholesale, we have improved the stability of our revenues. In Fixed Income, revenue growth was driven by Rates products in EMEA and the Americas, and ForEx and Emerging Markets and Credit in Asia excluding Japan. We also made progress in reducing costs. Wholesale revenue for the period increased 11%, while costs declined by 4%. Retail reported a decline in income before income taxes of 58% as retail investor sentiment weakened and stock and investment trust sales declined. Asset Management booked 47% increase in income before income taxes due to improvements related…

[Operator instructions] The first question is by SMBC Nikko Securities, Muraki-san.

I have two questions. First of all, on Wholesale, if I look at the cost in the first half, there has been a significant drop. And in the first quarter, there was a big drop, and the second half decline was muted. When will be the timeline when the cost reduction will be reflected in the profit and loss? You said you would be focusing on the middle banking sector, but could you update us on the Wholesale cost reduction effort? Another question on Wholesale. Rates products were the driver of revenue, but in the past three months, there was market activity. But in terms of revenue stream, was the revenue stream balanced by different months? Or were there volatility between months? And second big subject is Retail. You said you will be reorganizing the Retail channel. But can you elaborate on what's ongoing at the actual branches? With regards to business owners and high net worth, in addition to traditional products, alternatives and derivatives, nontraditional products are being advertised and sold. I think that was your policy. Are you beginning to see revenue contribution from such sales pitches? Or do you think more time is required before those efforts will be reflected in the revenue numbers?

Thank you very much. The first subject is the Wholesale cost reduction and the timing when that would be reflected in the profit and loss statement. In the first half, as I said, certain actions have been taken. But as you know, there's some time lag until those efforts are reflected in the P&L. And in the second half, we believe that the effects will begin to become visible. Most recently, on the occasion of the Investor Day, we announced our cost-reduction plan. And last fiscal year, the environment was extremely challenging and $5 billion of revenue was the assumption. So the second quarter revenue is approximately $5.8 billion, which is higher than what we had assumed, and necessary additional investment has also been done. So excluding those factors, run rate cost is probably around $4.8 billion. That's the level to which cost has declined. On the Investors Day, as I spoke, the target for March 2020 exit costs, $4.7 billion, and we will continue our efforts to achieve that goal. On your second point, which is the monthly ups and downs of Wholesale, in this quarter, there were ups and downs. There was the holiday season for summer vacation and market was inactive, and yet there was volatility. So on monthly basis in Fixed Income, July 4, August 2 and September 4, 40%, 20%, 40%. In other words, there was a significant drop in August. And if we look at the equity business, July, 30%, 40% for August and 40% for September. A slight decline in July. Your final question was on channel formation. And as I said in my initial remarks, the 45% or 1.25 million accounts, customers with salesperson assigned. Now the transfer of those accounts have already been completed by end of August. And when I have conversations with those branches, they say that their goal has been clarified in terms of what they need to do, and that has elevated the general motivation of the people at the branches who are in contact with the customers. But is this going to be shown in numbers? Maybe partly in the near future, but these efforts are rather long-tailed. And therefore, their mission is to capture accurately the requirements of the customers and try to respond to their questions and offer a solution that would fulfill their needs, and that will take some time.

Next, Ms. Tsujino from Mitsubishi UFJ Morgan Stanley Securities, please.

I have a question on the impact of cost reduction. In reality, it seems that the impact is not yet reflected in the P&L. The fourth quarter cost was high because of the JPY12 billion settlement with DOJ and the JPY1.9 billion of compensation. So excluding that, personnel expense is not so coming down. And in the first quarter, there was an impact from bonus. In the second quarter, I think there was also some impact. What is the actual reduction in the cost since it's not reflected in the P&L yet? It is difficult to see. So in the third quarter, no matter what the business environment, is there going to be a time lag effect of the reduction of the personnel cost? What are the rough levels that you anticipate to help me understand the impact of the cost reduction on P&L? So that is the first question. And the second question is -- perhaps I may have missed this in your presentation. The head office item was in the negative, and the reason, the corporate items, there should be some negative numbers. So JPY4.6 billion, maybe something that can be easily anticipated, but JPY 1.4 billion positive was firm for the first quarter, and this was a sizable number. So this time, negative JPY4.6 billion of corporate items. Is this a noise-free level?

Thank you very much for your question. The first question was that our PE has not come down. So in that sense, this is related to the first set of questions that I have responded. And at the risk of sounding repetitive, in Wholesale mainly, performance significantly improved. And as a result, on a pay-for-performance basis, a bonus was given and we had to reverse for bonus allowances. As a result, it appears that still personnel expenses have not come down. I hope that this helps your understanding. So it might appear as though compensation and benefits are not coming down as much. And the second question was about corporate items. It so happens that, as Tsujino-san correctly pointed out, corporate items tend to be in the negative oftentimes. So JPY4.6 billion negative figure is not due to anything that is extraordinary. This is a result of accumulation of small items. But in the first quarter, there was a positive factor, so the number was in the positive territory. But the level of the second quarter might be considered a usual level.

In the second half, the cost reduction level that we may see is my question. Run rate cost reduction level was discussed earlier in your response or actual run rate and the cost cuts that have already occurred but are yet to be reflected in the P&L. How is that reflected? When you say run rate, does run rate mean the already reflected cost in the P&L or cost-reduction measures for which the cost has not been booked yet?

Run rate is a complex concept. At the end of September, the situation at the end of September, assuming that, that continues for the next one year, that is what we mean by run rate. But cost reduction target is difficult to describe in our industry. If revenue fluctuates, then cost level also fluctuates. So we have to use certain assumptions when we measure the progress in cost reduction. So that is what we are calculating. And as I responded to the first set of questions, the basis point of cost reduction assumes certain revenue level, which is $5 billion for Wholesale. Based on that assumption, how much progress has been made in cost reduction is what we are discussing. Various cost reduction measures have been implemented, and some are already reflected in the P&L and some may be -- some will be reflected in the second half P&L. On the other hand, as for the performance, business performance was higher than our initial expectation by JPY 800 million. So bonus allowance was increased because of pay-for-performance principles. So it's difficult to understand. But run rate -- what I mean by run rate is that the revenue of $5 billion for Wholesale, if that continues for the next 1 year, that is what is meant by run rate. And the run rate cost has come down to about JPY4.8 billion recently.

So at the end of July, the question, at the end of July, you mentioned the progress of cost reduction was about 50%. At the end of April, it was 40%, and it progressed to 50% at the end of July. And what is the progress to date?

As of now, I discussed this in my presentation, it is above 60%. The progress rate is now above 60%.

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

This is Watanabe of Daiwa Securities. I have two questions. First of all, on Retail, the reformation and onetime-off revenue impact, how much was that? And in the United States, online securities are not charging any fee nor commission. Is that going to have impact to your strategy? Secondly, on management goal, EPS JPY 100, that's been delayed. But for Retail and Wholesale together, you are introducing a new organization. In the near future, can we expect any new announcements of new targets?

Thank you. On your first question, reorganization of Retail, how much impact is this going to have. This is an initiative that's quite difficult to quantify, and we have not actually measured the impact or sales either. But as I said, 1.25 million accounts have had their assigned salesperson changed. So that means that certain amount of costs as well as human work and labor have been injected into that initiative. I think that's not difficult to imagine. And also, including Charles Schwab, U.S. online brokerages have announced that they're no longer charging any brokerage that they would offer free of charge. But we're doing the channel formation change to target affluent high net worth through matching. We're doing so because we think that there is a certain level of demand. Japan -- in Japan, the culture of asset buildup has not become truly rooted, and face-to-face service and contacts will continue to be on demand at a certain level for the affluent group. Of course, we cannot offer full coverage just through our human resources on a face-to-face basis. So we will augment our efforts as such through digital and IT initiatives. So we will enrich the service not only through our face-to-face service, but through digital means. On the EPS JPY100 and postponing of that target, various initiatives were most recently announced in April, and we're concentrating on executing those measures. And gradually, we're beginning to see the impact from those measures. So first and foremost, I think our priority should concentrate on those measures. As well as new plans are concerned at the appropriate timing in the future, we will be making announcements. But as I said, they're urgent things we need to do which we should prioritize, and we will concentrate on those measures.

On your second point, we should not be expecting any announcement in the next investment forum?

Well, in investment forums or CEO fora, some large-scale initiatives are announced. But I have nothing to comment on specifically as to the timing of such next announcements.

Next, we have Mr. Otsuka from JPMorgan Securities.

About cost reduction in Retail and the 10% reduction in three years, what was the progress in the first half of this year? That is my first question. And the second question is about dividend. JPY15 first half dividend, could you tell us the reason why it was decided to be JPY15 as opposed to EPS of about JPY58 because it's about 25% that you've decided on JPY15 interim dividend?

Turning to your first question regarding Retail cost reduction. Resetting the progress vis-à-vis the target is about 50%. 50% is in comparison to the target of cost reduction at the end of the year. And as for the progress in the second quarter, as we announced in June, we had integrated 25 branches, and I think there was an impact from that consolidation. Turning to the question regarding dividend of JPY15. Regarding dividend payout ratio, we consider 30% to be one of the important indicators. However, in the first half of this year, in calculating the dividend, we also considered the sales -- stock buyback as an important factor. We have conducted large-scale stock buyback. And there was also proceeds of sale of NRI stocks that are also used as the source to pay out dividend. So payout ratio -- so the payout ratio will be close to 30%. Dividend was determined to be JPY15, and right now, the level is about 25%. But one of the benchmarks for dividend payout ratio that we have announced is 30%. But we also are looking at total return ratio, including stock buybacks. And because of this duplication, currently, the payout ratio is 25% or a dividend of JPY15.

In the second half, I'm sure that amount has not been decided yet. But last year, even though you were incurring losses, dividend was paid, and so the level was higher. As Mr. Kitamura mentioned, dividend payout ratio of 30% will also be the guide for dividend for the second half?

Regarding the second half, the dividend payout ratio of 30% for semi-annual consolidated performance is the announced indicator. So based on that, we will consider the amount of the dividend.

The next question is David Lui from Guoco Management Company.

Thank you for the JPY15 dividend. Now the JPY15 dividend is going to cost you about JPY52.5 billion considering the number of shares outstanding that you have. And the sale of the NRI shares netted you JPY160 billion. So you have used about one third of that -- of the sale proceeds to finance this dividend. Please tell me your plans for the remaining proceeds from the NRI sale? Will -- could we receive more dividends from the remaining amount in the future or the dividend coming from the NRI is over? That is it. That's my first question. The second question, Kitamura-san, is about the Retail division. As we can see on Page 6, the pretax margin for the Retail division fell quite a bit in this quarter. Obviously, part of it had to do with the decline in the revenue. With the cost cuts that you have alluded to ever since the Investor Day, when do you think we can get back to a 15%, 1-5, pretax margin which, as you can tell from Page 6, was the prevailing pretax margin even in the last fiscal year, right? Like you look at the June quarter last year as well as the September quarter, it was about 14% pretax margin, 16% pretax margin for the Retail division. When can we get back to that? Because this quarter, September quarter, as you can tell, is below 10%.

Thank you very much. To respond to your first question on the proceeds from NRI sales, JPY160 billion, David, you understand well our buyback program is 300 million -- up to 300 million shares and up to JPY150 billion. So you said one third has been paid out by dividend and how are we going to use the rest. So of the JPY160 billion, almost all of that is funding the buyback program. And secondly, PTI margin is declining. When is this going to come back? As I have been saying, Q2 was a quarter in which we have launched a variety of measures such as sales formation, which we call as matching and consolidation of branches. Many initiatives were taken. I recall that I've been saying this -- talking about this to you from before that there will be negative impact in the second quarter that was already expected, as we had spoken to you previously, and the actual results prove that, that was true. But cost reduction continues. And what are the measures to increase future revenue? Yes, we are taking such measures as well. So we want to improve the PTI margin for the Retail business, and initiatives are being planned. But in my response to the other question, I responded that this will be long-tailed. So when can we recover back to the 15% margin? Is it going to be Q3 or Q4 of the current accounting year? No, we're not as optimistic as such.

Next, we have Mr. Niwa from Citigroup Japan.

I have a question on Retail and Global Markets. Regarding Retail, what KPIs you would be emphasizing going forward? In the discussion so far, you've described that efforts currently underway are of a long-term nature. And in long tail in nature, recurrent revenue and recurrent revenue cost coverage ratio and the net inflows of cash and securities, total sales, these are what I am looking at. But efforts that you are implementing may not be reflected quickly in these numbers. So how are you trying to manage your efforts? Which indicators are you looking at? That is my first question. And the second question is about the fixed business and about the lease business in the United States. Revenue level is high, but it seems that there is a slight downward trend. However, market environment is not so weak. In comparison to the peers, what is your share? And how are you competing?

Turning first to your first question. As of now, there are several indicators in our IR package. With the sales structure reorganization, our objective to be achieved through that is to match our sales force depending on the attributes and needs of the customers. Our sales partners' skill sets will be matched to cater to customer attributes and needs. And we would like to enhance customer satisfaction by all means. And as a result, we hope that, that will in turn lead to increasing AUM. By increasing customer satisfaction, we may be able to see increase in net inflows of cash and securities, total sales and AUM. In order to make this happen, by customer attributes, we have qualified roles and responsibilities of our sales partners, and there have to be quantitative indicators to measure the performance, and we have such indicators internally. These are internal indicators, and there may be a limit to how much we are able to discuss this publicly. But to support customers' core business and to supporting investment policies and to improve stock price and corporate value for corporate customers, for all our customers, advice regarding balance sheet and estate planning and business succession, tax planning, real estate, these are services that we will have to provide. These services will be needed. And therefore, KPIs for corporate customers will be such that consulting-related revenues or customer account opening or number of active customers so that progress can be measured. As for the numbers, in the current IR package, these indicators are not included at the moment. So in the future, how we can describe these? We would like to look into that. And moving on to your second question, which was about the United States. As rates are declining in comparison to peers, how is our share trending in comparison to our peers as Rates products are declining? Our first quarter results were very strong. As we see it, in the second quarter, in comparison to the first quarter, there maybe have been -- it may have been somewhat slow, but this is because of very strong first quarter. As a matter of fact, in the first quarter, our competitors -- in comparison to our competitors, quarter-on-quarter number of our first quarter was plus 21%, whereas our competitors suffered negative numbers Q-on-Q. So our first quarter was very strong. And therefore, it might appear as though the second quarter slowed down, but more it was that the first quarter performance was extremely strong. When we look on a year-on-year term, our numbers and competitors' numbers do not look too out of place. And as I mentioned during the presentation, centering around agency mortgage performance continues to be strong.

I hope that you will be able to indicate leading indicator of performance for the Retail for our better understanding. Those are all of my questions.

[Operator instructions] The next question is by Sasaki-san from Merrill Lynch Japan.

My name is Sasaki of Merrill Lynch. I have two questions. First of all, on Page 3, there's a comment at the bottom with regards to tax. One of the reasons for declined amount of tax with NRI share sales, you mentioned the introduction of the deemed dividend system and the reversal of the deferred tax liability. Are these treatments going to continue? Even after Q3, will there be reversal of deferred tax liabilities? That's my first question. And in the performance in and after Q3, dollar short-term market and tightness in the market is being talked about. If any confusion is caused because of measures not being taken by Central Bank, what are you going to do? Do you have any plans in mind? Any readiness in terms of possible volatility in the short-term dollar market?

Thank you. On the DTL -- reversal of the DTL, which was your first question, this is a one-off item accompanying the sales of NRI shares. The performance of NRI was taken in under the equity method. And in so doing, we accounted for DTL. We responded to the DOV of NRI and decided to sell our holdings. So we had accounted for the DTL, and therefore, the DTL that is in match with the shares we sold is no longer needed. So this reversal is the one-off treatment that is accompanying this round of sales of NRI shares this time around. Coming to your next question, in September, the U.S. swap market spiked once and short-term repo rates jumped up first, and there were rumors that Fed intervened. What about Nomura? Cash at hand, JPY4.5 trillion is available. And as far as liquidity is concerned, we do liquidity management by currency. So even if there is short-term dislocation in the short-term market, I'm not sure whether such an event as the one we saw in September will be happening again, but we are well prepared. I hope I answered your question. In April, we announced our review of the business platform, and we do have a feeling of crisis and urgency, and measures are being implemented. But even then, for two consecutive quarters, we were able to record profits and we are feeling the strength. And by going through this reform, Nomura will become an entity that can offer even higher values to our customers. So we thank you for your continued support, and thank you for joining us this evening.