Good evening. This is Takumi Kitamura, CFO of Nomura Holdings. I will now give you an overview of our results for the first quarter of the year ending March 2019. Please turn to Page 2. Market conditions remained uncertain in the quarter, clouded by concerns over U.S.-China trade friction and geopolitical risks. U.S. long-term interest rates topped 3% at one stage. And as the dollar strengthened, risk-off sentiment prevailed, and funds flowed out of emerging markets. In our home market of Japan, the yield curve control policy remained in place, drying up liquidity in the JGB market. Trading in the equities market was muted, and fewer investment trusts were sold. Amid this tough environment, Asset Management and Retail both delivered resilient performance, but Wholesale turned to a pretax loss, mainly due to a challenged quarter in the Fixed Income trading business. Three, segment income before income taxes was ¥22.8 billion, as shown on the bottom right, representing a decline of 70% quarter-on-quarter. Segment Other reported a significant loss, driven by a ¥13.8 billion loss related to economic hedging transaction. As a result, group income before income taxes was ¥13.6 billion and net income was ¥5.2 billion, both down markedly from the previous quarter. ROE for the quarter was 0.8%, and EPS was ¥1.5. Let's now take a closer look at each business, starting with Retail. Please turn to Page 5. Net revenue was ¥92.8 billion, down 5% quarter-on-quarter. And income before income taxes was ¥19.9 billion, down 7%. The decline in earnings came as market uncertainty forced retail investors to remain on the sidelines, and transactions for Japanese stocks dropped compared to the previous quarter. Investment trust sales remained slow, but we did see inflows into products that invest in U.S. and Chinese equities. Sales of bonds increased, primarily driven…

[Operator Instructions] The first question is from Mr. Muraki of Deutsche Securities.

This is Muraki. My first question is related to Page 10, Fixed Income earnings. In terms of the geographical breakdown and also the client flow and position or trading-related earnings breakdown, what is the breakdown, so geographic and also client flow versus trading? And my second point is, in terms of your business with your clients compared to the previous quarter or until -- compared to the previous quarter and before that, has there been any change? For example, have you seen a decline in your share? In terms of revenues and earnings, there has been quite a big drop. But can you recover in the next quarter onwards is what I'm after, and how do you see the current situation? My next point is related to your capital strategy -- capital policy, Page 13. There's a decline in CET1, which is partly related to the underwriting of the RMBS, which is one-off, but this decline and also the heightening of the litigation risk, does this mean that -- or is this behind the reason -- or behind the fact that you did not conduct your buyback in Q1? The 100 million shares of buyback which you have announced, is it going to be conducted in Q2 onwards? Are you planning to do the buyback? So those 2 points, please.

Regarding the Fixed Income business and the geographical breakdown, Japan is between 20% to 30%; EMEA, about 30%; Americas, more than 30%; AEJ, more than 10%. And in terms of the breakdown between the client flow versus trading, unfortunately, the client flow was about 10 -- oh, sorry, more than 100% client flow. And our business with our clients and the client revenues and the situation regarding that, if you look at it on a quarter-on-quarter basis, there was a slight decline about 8% or so, so only an 8% decline, which means that there has not been a significant change in the franchise with our clients. And our peers also suffered a decline, mainly in rates on a Q-on-Q basis. So it was not just Nomura that experienced this decline. As for your second point regarding the capital policy and the decline in CET1, the heightening of the litigation risk and whether that will have any impact on our share buyback program, whether that was the reason behind us not doing the share buyback in Q1. Well, the timing and the method of the buyback is something we cannot comment on. And we have set this -- the number of shares that we plan to buy back, which means that we do have the intention of buying back these shares. And we do have the intention of executing this share buyback program, otherwise, we would not set the program in the first place. So we plan to execute the buyback in Q2 onwards, choosing the right timing. Thank you.

This is Muraki again. Regarding the first point, does this mean, in Q1, the trading result was, because of the market environment, it ended up being at the earnings or that revenue level? Is that right? So to ask it a different way, what needs to happen in order for you to start generating the revenues that you used to? Does the market environment have to improve significantly? Or was it just -- did it just happen to be a bad quarter? And do you expect a recovery going forward? How should I expect the revenues to trend in Q2 onwards? Should I see the dip in Q1 to be something irregular?

Thank you. This is Kitamura. It's very hard to forecast the market outlook, but I think one of the reasons why Nomura lagged our peers was the product mix and also the geographic mix. And we do business -- oh, we have quite a high dependence on Japan and the emerging markets. And the headwind in the April to June quarter hit Nomura directly, unfortunately. And for example, in our Americas business, it wasn't that bad, actually, in the Americas. Especially rates and other businesses, there was not that much of a decline. So what works as a disadvantage to Nomura was the home market, Japan, the impact of the yield curve control and trading was very slow. Meanwhile, the U.S. players benefited from the early normalization of their home market, and they were able to generate robust revenues. In terms of the emerging markets, we have been working quite hard for a while now, and we have been achieving some results. But because of the interest rate hike in the U.S. and also the slight rise in the oil prices, the emerging market suffered a slight outflow of money, as you are probably aware. And we continued to provide liquidity in the market, which led to -- especially for the Fixed Income business in emerging markets, we had to keep some inventory on our books, which led to us suffering somewhat in the trading business. And as I explained in the TSE press conference, our peers benefited in their commodities business, but unfortunately, we did not have that product in our lineup. So that also led to the difference in performance. And as for the future outlook for Q2 onwards, I think the environment in Japan is not going to change that much. But having said that, if you look at the past few days, there has been some movement in the market. Today, JGB, 0.1%. So there has been some movement and -- which could create revenue opportunities for Nomura. I think we are starting to see some positive signs. So as I said, it's very difficult to forecast the market. But looking back over Q1, it wasn't like we booked some irregular losses in trading. In fact, we continued to fulfill our role as a liquidity provider, and unfortunately, that led to losses. And we suffered somewhat on the trading side. So as for Q2 onwards, we will monitor how things change or trend in the market. But our plan would be to steadily build up our trading revenues.

Next question is from Daiwa Securities, Mr. Watanabe.

I'm Watanabe from Daiwa Securities. I have two questions. My first question is about your -- no, inherent to risk loss. In the Americas, is there any additional reserve or VIX rate you have for early redemption related actions? What is the time frame that is going to materialize and surface? And my second question is about the Wholesale division. And for the cost, what was the cost level in the first quarter? And based on the financial results, what is the -- any changes in the direction of the cost management? Those are two questions from myself.

First of all, for the reserve and any possibility of further losses, at this moment, the reserve for VIX-related expenses is not something that we can forecast. Our clients, unfortunately, now for those who had the redemption are -- should be well-consulted and move on to the process of the solicitations as for -- before the negotiations. But as for the timing and the amount, it's not something that we can forecast and we cannot provide any numbers. For any reserve for the United States or Americas, so this is an individual transaction and cases and, therefore, I have to refrain from making any comments on the individual cases. With regards to your second question, our Wholesale run rate cost. In the first quarter, run rate cost was $5.3 billion approximately, according to our estimates. As a matter of fact, and I repeatedly stated to you, cost management is an area that we will continue to improve. There is no end to our efforts there. And therefore, there is no final goal that we are aiming at, but we will continuously have a better cost management. Especially looking at the recent technological development in mind, for example, back office and middle office, they should be more efficient in terms of operation. But at the same time, front office should also take advantage of the technology and other operations, including market-making. Front office or to the back office and middle offices, and as company-wide or firm-wide, cost management, the cost reductions should be continued. Having said that, on the Investor Day at the end of last year, corporate operating model are covered, and 6 billion reduction was aimed in five years. But looking at the current situation environment, we have to accelerate the effort, in my opinion.

This is Sasaki from Merrill Lynch Japan. Two questions, please. The first is regarding how you view your results, and this overlaps with the earlier question, but it was basically due to the market fluctuation. So it doesn't mean that you have to make a major change in the way you run the firm. Is this the right way to think about it? My second point is regarding the M&A and the big deal. Have you already booked the fees that you received in relation to this deal? And what's going to be the impact of this big M&A deal on your earnings?

This is Kitamura. Regarding the first point, how we view our results, we are not happy at all. And I'm not trying to make any excuses, but I did talk about the geography issue and also the product mix issue, and it was somewhat inevitable, I think. And our home market or mother market is Japan, so we cannot leave Japan, and we have to continue to serve as a liquidity provider to our customers in Japan, that's one of our missions. So that was somewhat inevitable. And we do not have the strength to offer a full lineup of business like the U.S. players. And I talked about how our peers benefited from commodities, but that doesn't make us want to enter commodities. And over the past two years or even longer, we have continued to focus and be more selective in our business. And we do not think that we were wrong in the basic direction of this selection and focus strategy. However, when we think about the Rates business, we may have focused too much on the Rates business, frankly. And with the current environment, the negative impact on the businesses which we had placed our resources on was somewhat big. So we are, of course, kind of thinking about how to allocate or reallocate our resources and in terms of expanding our client base, and these are global market clients, so they are financial institutions, in general. But we should also focus on the non-financial institution clients, the corporates, or we should also focus on generating more stable revenues. And we will continue these efforts. Your second point regarding the M&A fees and commissions. Have we fully booked those fees? In Q1 -- well, I'm sure you know how M&A fees and commissions are booked, and they come in, in a step-by-step basis rather than in one go. And in Q1, we received the -- the fee we booked was a retainer fee. And going forward, we will receive fees step-by-step as the deal goes on.

The next question is David Lui from Guoco Management Company.

I have 2 of them. First of all, on Page 23 of your presentation, it's about the Retail data. The second line there, stock brokerage commission, it's down 22.3% quarter-on-quarter. I was looking at the Tokyo Stock Exchange data for -- trading data for the retail investors, and it was down about 16% quarter-on-quarter. I'm just wondering whether you noticed this discrepancy, Nomura's retail brokerage commission, stock brokerage commission being down 22.3% versus the 16% on the TSE. And if you are aware of this discrepancy, do you have any insights into this differential? I have one more question after this.

Thank you very much for your question. Now for the Tokyo Stock Exchange data and our data compared are -- in your actions. As for the turnover, that's down by 16%. But if I break it down further, Retail, the turnover is down by 20% or so. I believe, David, you can see that as well. So our equity commissions or the stock commissions, 22.3% is down, the brokerage commissions are down by 22.3%. It's largely a decline, and that means that it's not too far away from the TSE's number from that point of view.

I'll look more carefully. Second question I have, Kitamura-san, is on Steinhoff. 2 quarters ago, at the announcement of your December quarter results, Nomura took a fairly big charge on the margin loans from Steinhoff. And if you look at the stock price of Steinhoff, it has fallen for the last 6 months. And I'm wondering whether the company has taken additional provisions or are you evaluating the situation right now, knowing that the stock price of Steinhoff has collapsed even more since you took -- made your last provision?

Excuse me, with regards to the question, I do not recall and remember at all what I said with regards to this. But for actual -- I'm refraining from any comments on individual cases and transactions, so I have to say no comment on this. Having said that, I'm stating this at various occasions. But in the first quarter, we do not have any irregular and extraordinary loss. It's not the case. We do not have any extraordinary losses in the first quarter. I cannot comment on any individual deal. However, as I recall, in the business, there is no one-off type of big loss at all.

Okay. My last question, a very quick one, is, of course, I think the people who asked questions before me have already asked you quite a few questions on the disappointing Wholesale results, which, of course, recorded -- reported a loss for the June quarter as opposed to a profit in the last year or so. And you did explain that the reason why Nomura did not do as well as the U.S. banks was because you operated in different geographies, and you also said that there were no trading losses, unusual trading losses. So I guess, my question is the difference is quite big between Nomura's performance and the other U.S. big banks. And is the company -- is Nomura's management happy with the exposure to Japan as well as the emerging markets, which really, according to you earlier, was the major difference between your results and the U.S. bank results, which were quite positive in the June quarter?

Well, I am not trying to make any excuses at all, but we are not happy at all with these results. But having said that, as I stated at the outset, we had the geopolitical risk in mind, and we had risk operations management to some degree. And as a result, we were not able to generate sufficient revenue in the trading business. And compared to our competitors, we were not as good as our competitors. And also, we were not maybe able to leverage our risk to capacity to the full extent. So that's a discussion we have to have. And at the same time, in the secondary market and the secondary business, the situation was quite difficult. We have been saying this, Nagai, a CEO, has been saying that it's difficult. And we should be less dependent, and we should be more inclined to a primary-type business. And we have been saying that we are going to shift. And client finances, losses and solutions is a team that we launched and established, and the cross-sell financing will be enhanced and also solution business is going to be promoted. So we should be less dependent on secondary business, and we are enhancing our non-secondary business going forward. And also, as I stated before, flow rates and rates is the area that we focus too much of our attention, and that's something that we wish is left back. So we should reallocate our resources to other products, and that's also one of our -- an area that we are pursuing. Maybe I'm not completely responding to questions, but with the financial results we have in mind, we are going to -- and we are analyzing very deeply and what actions we can take to improve the situation is going to be fully discussed within the company and to be implemented.

This is Tanaka. I'd like to ask you about the numbers. On Page 22, the segment Other and the net gains or losses related to economic hedging transactions, that is minus ¥13.8 billion. Is this related to the market valuation of the derivatives? And is this the difference related to the interest rate hike, which is the way I understand it? But with time and when it reaches maturity, is this ¥13.8 billion going to disappear? Is that the way to look at it or not?

Thank you. This is Kitamura. Regarding the net gains, losses related to economic hedging transactions, minus ¥13.8 billion in Q1, which was quite big. And as you pointed out, this is related to Nomura acting as an underwriter of the bonds. And when we sell the bonds, the structured bonds to our clients, this is -- the ¥13.8 billion is related to that. And because we are a service issuer, in order to offset this risk, we hedge the position with an external party. And economically, we call it economic hedge, but from an economic perspective, we are hedging our position. However, on an accounting basis, unfortunately, there is a mismatch because, on the one hand, the position is not market -- mark-to-market, whereas, the hedging transaction is mark-to-market. So from an accounting perspective, there is a mismatch. And as you correctly pointed out, Tanaka-san, when the bond is issued and when it -- until it is redeemed, if you look at it on a life-to-date basis, it is completely neutral, if you look at it on a -- over the full life of the bond. But as long as the bond still exists, due to the interest rate fluctuations during the period, there is always a P&L that is booked, unfortunately. So as you -- so your understanding is correct or is as you mentioned.

Next question is from Citigroup Securities, Mr. Niwa.

I have two questions, Wholesale business and also management strategy. Firstly, I received the comments on the client financing solutions business. Second quarter and onwards, what's the pipeline situation in terms of the revenue? Is there any high expectation we can put on the pipeline and or -- so the managerial accounting, the November accounting or from accounting point of view? And then secondly, on the business strategy. In the risk of repeating the previous questions and if, in the future, if the management strategy is going to be reviewed, what are the kind of triggers and the conditions, especially on the cost management aspect? There is no extraordinary losses, but you said it's a market condition. But in the Wholesale division, loss is the very real situation, but you had loss in this quarter. So if this bears any additional actions that you have to take, what is your view point? What is the trigger in reviewing your strategy?

CFS's second quarter pipeline and going forward is your first question. As far as we discussed with the business line, pipeline is accumulated and being filled, but it's a pipeline. So how we can make into the actual business is very important for us from the pipeline. Looking at the revenue, looking at the numbers, is it really material or not? I think that's the nutshell of your question. Looking at the revenue in the Wholesale, the secondary is still a larger portion in the Wholesale business. But CFS is a business that we are very serious in growing this business. And in various ways, the customers' needs and requirements should be met as a financial institution. And proposed solution offering should be the source of revenue to be tapped. Of course, the secondary is still a major portion of the business, but solution business should be grown through our effort. Now in response to your second question, in order to review and change the management strategy, what are the triggers and conditions. As I stated before, there is no major management strategy change. We don't think that the direction was wrong at all. However, there are some lessons and there are some points that we should reflect back, and I covered that already. And in addition to that, globally, resource allocations should be the area that we can give a second look. Regional resource allocations needs to be reviewed, in our opinion. And also, with regards to the cost and expenses, in the past several years efforts, we are getting stronger and have a better cost management. However, honestly speaking, there are much more room to improve. There are more actions we can take. Digital strategy and data strategy is one area, and technology to be introduced is another. And that will push up the top line, as we expect. And on the other hand, it can also help to reduce the cost at the same time. Now with regards to this, in the immediate months and days, there is no specific actions that we can share with you, but we are doing some pilots in various ways. So we would like to provide the results of the pilot at an earlier point as possible, before the end of this year, probably. We'd like to communicate what we can share with you.

Can I ask an additional question with regards to the second question? For the reallocation resource, in the past telephone conference, we have covered this. But if it's okay, can you give us some ideas and what's the time frame for the resource reallocation ideas?

I'm very sorry to say this, but we will find the right timing to share our plans. As for today, please understand that I cannot share any comments. Thank you.

[Operator Instructions]