This is Kitamura, CFO. I will now give you an overview of our results for the first-half and second quarter using the document titled Consolidated Results of Operations. Please turn to Page 2. During the first half of the year, retail investors remained cautious due to monetary policy around the world, Brexit, and more recently, the upcoming U.S. election. Institutional investor activity was relatively solid in the fixed-income market but volumes were muted in the equities market due to concerns over event risk. Amid this environment, Group net revenue declined by 10% year-on-year. However income before income taxes increased 15% to ¥144.5 billion. Wholesale profitability improved significantly, following a strategic review of our business in EMEA and the Americas to implement further cost reductions. Group international income before income taxes was ¥40 billion and our effective tax rate was 25%. As a result, although net income declined 6% from last year, which included a one-off factor that lowered our tax expense, it remained high at ¥108 billion, exceeding ¥100 billion for the second straight year. Annualized ROE was 8.1%, and EPS was ¥29.39. Today, we also announced a half-year dividend of ¥9 per share, giving a dividend payout ratio of 30%. Let’s now turn to the second quarter results on the Page 3. Retail performance improved in the second quarter and non-business segment results improved significantly. As a result, as shown here in the graph on the top right, income before income taxes increased 30% to ¥81.8 billion and the net income grew 31% to ¥61.2 billion. Our international business was profitable for the second straight quarter on a solid business performance and cost reductions. International income before income taxes was ¥23.2 billion, up 37% quarter-on-quarter. Second quarter ROE was 9.3% and EPS was ¥16.68. Turning now to each business…

We have a question-and-answer session now. [Operator Instructions]. The first question is from Mr. Muraki from Deutsche Securities.

Thank you. This is Muraki. The first question is about the Global Markets on Page 11 of the material. So this is the question that I ask all the time about fixed-income and equity revenue split is what I'm interested in, and client flow versus revenue from positions. I would like to know that split. In addition, what I would like to know is as follows. Looking at the earnings release by the U.S. players over that three months period, there were events such Brexit and financial policies by the regulated central banks, so the regulatory environment was relatively favorable in the July-through-September quarter. What was the environment, and how about the situation after October? Do you believe the September quarter situation to continue or a slowdown after October? So I would like to ask you about your view. The second question is about CET1 ratio. This time around Page 14, I'm looking at Page 14, the CET1 ratio is up to about 17% as we see on top right. Now market risks will have to be revisited, and that has to be reflected. But given the market risk review, how do we view 17.1% of CET1 ratio? Thank you.

Thank you for that question. Now the first question on the split between fixed income and equity and the split between client flow and position. For fixed income, client flow was about 60%, mid-range of 60% and trading is about 30%, mid-range of 30%. For equity, client flow is close to mid-80s and trading is mid 10%. Now as for July to September quarter and the environment for this quarter, as Mr. Muraki rightly pointed out, we believe that we were in a favorable business environment after Brexit in July. The hedging needs of the customers and readjustment of portfolio, we were able to generate business out of these and yield curve has steepened slightly in Japan and that also was favorable for our businesses. Recently - whether that environment is sustainable going forward? Outside of Japan, I believe the environments remain more or less the same. Rates and emerging products are performing well. They continued to perform well. On the other hand in Japan, as you know, in September, towards the late September the policy was introduced by BOJ and after that we have seen slight decline in trading volumes. It appears the trading volumes are declining slightly and because of - and we anticipate somewhat slower trading volume environment going forward. However there are investment needs on the part of our clients and JGB is not the only product, and therefore in other products we would like to capture customers’ needs successfully. Regarding the third question on CET1 ratio, which is about 17% and how we view this percent. So we honestly believe that this has become substantially high. However on the other hand, recently there are various uncertainties. There are various factors. And therefore we had been quite constrained in terms of risk-taking and there are some technical measurement factors which decreased the risk-weighted assets. 17% appears slightly high, to be honest, but for the foreseeable future we believe we will be managing this conservatively. As you know, regulatory trends have become more visible but they are not entirely clear either and therefore we would like to be prepared and maintain this level.

Thank you very much for your answer. I have one additional question. Earlier you talked about fixed income revenue, mid-30s was from trading according to you. Last year in the USA credit from last year to this year, you’ve compressed the positions for credit and securitized products because of the increase in prices. The markup impact was not that big. Is it correct understanding?

Thank you for that question. The securitized products that you have mentioned and some credit products, as you correctly pointed out, we have reduced our position. In the end, the market has recovered this year. However the benefit of the price increase, unfortunately we were not able to benefit from that.

Thank you very much for your answer.

Next question is from Watanabe of Daiwa Securities. Mr. Watanabe, please.

This is Watanabe from Daiwa Securities speaking. I have two questions. First on Page 22. European business income before income tax, in the first quarter of ¥4.4 billion loss to ¥7.9 billion-plus so this is an improvement of ¥12 billion, what is the breakdown, for example, headcount reduction, fixed cost reduction and trading, profit and loss changes, and customer flow changes? What were the contributions from these different factors? That is my first question. And the second question is with respect to Wholesale division and cost reduction effectiveness. In fiscal ‘15, it was ¥5.9 billion cost and the plan was to reduce to ¥5.2 billion, and in the first quarter the progress was ¥5.5 billion rate. What is the run rate for this quarter?

Firstly for Europe, the reason for the profitability in Europe, the investment banking fee was boosted because of the robust IB business compared to the last fiscal year. Also for expense, as a result of a strategic review, the headcounts has come down and consequently the bonus and salaries were reduced. That’s the reduction of cost which was bigger. I would like to say both made contributions. As for Wholesale costs, recently the run rate is about $5.3 billion or $5.4 billion, which is a slight decline from first quarter. As for cost reduction as you mentioned, $5.2 billion is the target that we talked about, but as for the progress about 60% to 70% of the target has been achieved so far.

Thank you very much for that very clear answer.

Next question is Yamanaka from Credit Suisse Securities.

Thank you very much. I have one question regarding overseas wholesale. I have a question about the environment. You have a plan of reducing cost and up until now looking at the progress of execution of that plan. In terms of revenue side, the market is slightly changing but compared with the time when you develop the plan in terms of the positioning of Nomura, do you believe - compared with an initial assumption, do you think you are in line with the initial assumption, or there has been a upside. Could you comment on the progress? So this is a vague question but thank you for your answer.

That is not an easy question to answer. The top line whether this is in line with our expectation. Is that your question in a nutshell?

Yes.

In that sense, it’s more or less in line. As a matter of fact, when we look at equity business environment, the business environment remains somewhat difficult. In that sense, at that time we made the right decision. We believe we did make the right decision.

In U.S. dollar terms, the fixed income revenue trend - if I look at the trend of fixed income revenue, then Q2 and Q1 revenue of Nomura and foreign players’ financials if I compare those, Nomura’s numbers seem a bit weak. But it's probably because of differences in nature in conducting business. Correct?

Naturally the products in regions are different and therefore it is not possible to make an apple-to-apple comparison easily but does not appear weak. Does Nomura appear weak on the dollar basis? We believe that we are reasonably doing well and not so inferior to others. The other financial institutions, especially American institutions are doing very well year-on-year, we are aware of that, but we believe that we are not as all inferior to them.

Thank you very much for your answer.

Next question comes from Ms. Tsujino of JP Morgan Securities. Ms. Tsujino, please.

First about expenses. P&L other than interest expenses, non-interest expenses, there are various [ph] expense items, and if you could explain about these expense items, compensation and benefits in the second quarter because of allowances because of stronger revenue, I believe bonus allowances outside of Japan are increasing but the rest of the items such as commissions and floor brokerage and other expense items, quarter-on-quarter all of these items are down. And the reason that these are coming down is that due to one-time reasons or was it higher in the first quarter and/or due to some other reasons? What is the expectation for the third quarter continuing to decline in these expense items, could you discuss item-by-item? And the second question is, recently in retail business and the trends of the retail business, this is not exactly about your customers but online brokerage daily volume in comparison to September on average in October is down by more than 10%. Investment trust sales were discussed, and there was a recovery in July-September quarter in comparison to April-June quarter but as of now then the July-September quarter, is there a slowdown in investment, or when you look at July, August, September on average, which month was the best performing month. So, what has been the trend and what is the current status?

First regarding expenses, the commissions and floor brokerage is down significantly but that’s because of equity performing slowly, and because of that, the commission paid came down. That’s the major reason. And of course if market recovers, then commissions paid will increase but at the same time revenue will increase. Also as for the IT costs, depreciation came down slightly. A while ago we have made an investment into system and depreciation started coming down. Also for occupancy and related depreciation, the number will not go up any further. In reality, the headcounts are trending down, so unnecessary space will probably be subleased, so the number for this cost line will not increase. Also for the business development expense, this quarter the advertising expense has come down so the number is down slightly, but we will look at the environment and we will spend as needed. Regarding the second question about trend in retail business. Firstly when I talk about the trend, if anything, the trend was edging up compared with the start of July in the month of September, the revenue - more revenues seem to have been generated, but as for the investment trust, August was the strongest month for the sales of investment trusts. And in recent trend, the nature of the trend hasn’t changed much but on the other hand, there has been several primary deals such as IPO by JR Kyushu and Toyota Motor Credit Corporation’s issuance of bonds. Because of those primary deals, we started to see some movements in the market. Earlier I talked about the edging up trend in the September quarter but it’s a very small difference, so the revenue level has stayed unchanged mostly.

Thank you. Ask about IT cost, that there is room for further reduction, or there was a decrease in IT cost but it will remain flat?

In that sense for technology - for Nomura, technology is a very important infrastructure, so necessary investments will be conducted but on the other hand, the action to reduce IT cost needs to be conducted as well. In order to reduce the cost, capital spending will be needed. So the cost would not be reduced immediately, but as a general trend our aim is to reduce the expense.

Thank you. And expense run rate, you are expecting it to come down but by what extent?

As I mentioned earlier, the occupancy and related depreciation, because of the unnecessary space, will become the object of cost reductions, and also IT cost will trend down as part of our initiative. So those are the cost items that we can aim to tackle for cost reduction.

Thank you very much.

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

I am Sasaki from Merrill Lynch Japan Securities. I have one question. So in the presentation you mentioned about this but this time you made an announcement about the transfer of equities or stocks of Nomura Real Estate Holdings, JAFCO and NRI to NHI. I do understand there is no impact on P&L. But in the first place, why did you choose the form of dividend in-kind for the transfer of stocks? And also as part of this and transfer, what is going to be the tax treatment. And also as Nomura Group, the acquisition cost is - the acquisition cost of those three companies cost change? My question may be trivial but thank you for answering my question.

Thank you for the question. First, why not sales and purchasing, but rather dividend in-kind. I believe this is strongly linked to your second question. If it takes the form of selling and buying but this is consolidated taxation, so the tax does not arrive, but in terms of cost, we felt that dividend in-kind is the most appropriate way and tax is not incurred at all. And this is somewhat technical but these are consolidated 100% wholly-owned subsidiaries transactions, so the book value on a consolidated basis will not change be it sell and buy or dividend in-kind. However on a non-consolidated basis, if it is the form of selling and buying, the acquisition cost will change. However it will not change if it is distributed as a dividend in-kind, and therefore for the whole Group, it would be better to use the same acquisition cost book value and that is why dividend in-kind was selected.

I understand. So the purpose of this transaction is to increase the efficiency of equity holdings but in what sense do you believe there is an efficiency enhancement?

These affiliates are all within our groups and there are listed affiliates, and if there are any discussions involving them, we have to treat them as insider discussions and it is also cumbersome if subsidiaries hold affiliate shares and the communications will also be more complex and voting rights will have to be exercised separately, which is also not efficient. But by consolidating the shareholding at Nomura Holdings we believe we can improve efficiency.

Thank you very much for you answer.

Next question comes from SMBC Nikko Securities, Mr. Niwa. Mr. Niwa, please.

Thank you for taking my question. I have two questions. First about domestic retail. Recently it seems that there is a slight recovery, especially in investment, but as far as customer sentiments are concerned, is it because of the recovery in customer sentiments, or is it due to your product strategy which was well accepted by customers. Which is a bigger factor? This is more a qualitative question. India was a keyword that was mentioned a number of times during this presentation and hence this question. And the second question is, if you have done any analysis at all the foreign exchange factor, what is the impact on income before income tax, if you have analyzed, please?