Nomura Holdings, Inc. (NYSE:NMR) Q3 2024 Earnings Call Transcript
Nomura Holdings, Inc. (NYSE:NMR) Q3 2024 Earnings Call Transcript February 1, 2024
Nomura Holdings, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Takumi Kitamura: Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. First, I would like to extend my heartfelt condolences to those affected by the Noto Peninsula earthquake and pray for a swift recovery from this disaster. I will now give you an overview of our Financial Results for the Third Quarter of the Fiscal Year ending March 2024 using the document titled Consolidated Results of Operations. Please turn to Page 2. Group net revenue increased 9% quarter-on-quarter to ¥400.2 billion, while income before income taxes grew 39% to ¥78.7 billion. Net income was up 43% at ¥50.5 billion and as you can see on the top right, performance bottomed out in the fourth quarter last year and has continued to improve since then.
The third quarter proved to be somewhat of an emotional rollercoaster for market participants over the possibility of the FRB moving away from its tightening stance. This, combined with tensions in the Middle East, resulted in elevated volatility in equity markets and heightened uncertainty. Inflation in the US slowed towards the end of the quarter, raising hopes of an exit from the sharp rate hikes over the past two years and driving robust performance in equity markets. In fixed income markets, we also started to see a recovery in the issuance of securitized product as interest rates fell and credit spreads tightened. Interest in Japan remained high. Activity picked up among not only institutional investors, but also corporates and individuals over expectations of a monetary policy shift, various actions by corporates to improve capital efficiency, and reduce strategic shareholdings, and investment momentum in the lead up to the introduction of the new NISA scheme.
Amid this environment, we played to our strengths by fully leveraging our extensive client franchise in Japan and our global network to deliver products, services, and solutions tailored to the needs of our clients. This resulted in strong momentum across our three core businesses. Before I go into the details of performance of each business, please take a look at the bottom right which shows three segment income before income taxes of ¥70.5 billion, up 16% over last quarter. Our international wholesale business reported an uptick in client activity towards the end of the quarter and all international regions had a profitable quarter. Diluted earnings per share for the quarter was ¥16.1 and return on equity was 6.2%. While this represents a positive trend towards improved performance, we are still not where we want to be.
With this momentum in performance and given our sufficient capital base, today, we resolved to set up a share buyback program in order to raise capital efficiency and secure a flexible capital management policy, and to deliver shares on exercise of stock-based compensation. The program will run from February 16th to September 30th and have an upper limit of 125 million shares with the upper limit of the aggregate amount of the repurchase price being ¥100 billion. Please turn to Page 3, update of results for the nine months to December. Net revenue for the period was ¥1,116.9 billion, up 11% compared to the same period last year. Income before income taxes increased 43% to ¥181.8 billion, while net income grew 28% to ¥109.1 billion. EPS was ¥34.69 and ROE was 4.5%.
As shown on the right, three segment income before income taxes rose 69% to ¥159.7 billion. Income before income taxes in retail jumped 3.5 times and in investment management, it increased 56%. Now, I will turn to business performance in the third quarter, starting with retail on Page 6. All the percentages I mention from now refer to changes compared to the second quarter. Retail net revenue increased 4% to ¥102.6 billion yen and income before income taxes was ¥31.9 billion, marking the highest level in eight years since the July to September quarter in 2015. The reallocation of our partners last spring has delivered steady results and we are starting to see good signs in terms of the quality and quantity of our dialogue with clients. As you can see on the bottom left, flow revenue increased 7% to ¥64 billion, spurred on by strong equity related revenues due to favorable market conditions and primary transactions such as the offering by Denso.
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