Prepared remarks
Good day, everyone, and welcome to today's Nomura Holdings Fourth Quarter and Full Year Operating Results for Fiscal Year Ending March 2025 Conference Call. Please be reminded that today's conference call is being recorded at the request of the hosting company. Should you have any objections, you may disconnect at this point in time. During the presentation, all the telephone lines are placed for listen-only mode. The question-and-answer session will be held after the presentation. Please note that this telephone conference contains certain forward-looking statements and other projected results which involve known and unknown risks, delays, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievement of the company to be materially different from the result, performance or other expectations implied by those projections. Such factors include economic and market conditions, political events and investor sentiment, liquidity of secondary market, level and volatility of interest rates, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions. With that, we would like to begin the conference. Mr. Takumi Kitamura, Chief Financial Officer, please go ahead.
Good evening. This is Kitamura, CFO of Nomura Holdings. I will now give you an overview of our financial results for the fourth quarter and full year of fiscal year ended March 2025. Please turn to page two. First of all, our full-year results, as you can see in the bottom left, Group net revenue increased 21% year-on-year to 1,892.5 billion, while income before income taxes grew 72% to 472 billion. Net income increased to 2.1 times the year-earlier level, to a record-high 340.7 billion. Earnings per share came to 111.03 yen and return on equity was 10%, marking a strong performance. As shown in the bottom right, all three main segments performed solidly, and three segment income before income taxes grew by 80% to 426.6 billion. I think it is important to highlight that earnings clearly show the fruits of our medium to long-term initiatives. Wealth Management recurring revenue grew by 30%, on a continued net inflow into recurring revenue assets via the provision of comprehensive asset management services, coupled with growth in client assets, thanks to an upturn in market conditions.
Investment Management saw a 20% increase in business revenue, thanks to a high level of assets under management, which reflected an eighth consecutive quarter of net inflows. Both divisions saw steady growth in stable revenues. Meanwhile, Wholesale revenues grew in all business lines and all regions, thanks to the diversification of revenues, particularly overseas. Income before income taxes rose sharply on the back of revenue growth across all divisions as well as thoroughgoing cost controls. As a result, income before income taxes reached an 11-year high in Wealth Management, a fifteen-year high in Wholesale, and the highest level at the Investment Management division since it was established in April 2021. Turning to page three, as you can see on the left-hand side, all divisions achieved income before income taxes targets for the fiscal year ended March 2025 presented at May 2023 Investor Day.
Profitability also improved sharply in the three international regions, as you can see on the right-hand side. Their combined income before income taxes came to 137 billion yen, marking the highest level since we first disclosed geographic information in the year ended March 2003. Our group-wide effective tax rate also fell to 26% as some international entities made use of tax loss carry forwards. Please turn back to page two again. In view of our strong performance, for the period ended March 2025, we expect to pay an ordinary dividend of 24 yen per share, in addition to the 100th anniversary commemorative dividend of 10 yen per share we previously announced, making a total year-end dividend of 34 yen. This works out as an annual dividend of 57 yen per share, and a payout ratio of 49%. Today, we resolved to set up a share buyback program in order to raise capital efficiency and ensure a flexible capital management policy, and to deliver shares on the exercise of stock-based compensation.
The program will run from May 15 to December 30 and have an upper limit of 100 million shares with the upper limit of the aggregate amount of the repurchase price being 60 billion yen. Next, let me give you an overview of our fourth quarter results. Please turn to page four. All the percentage figures I mention from now on are quarter-on-quarter comparisons. First of all, Group net revenue fell 10% to 452.7 billion, income before income taxes fell 29% to 97.7 billion, and net income was down 29% at 72 billion. Earnings per share came to 23.39 yen. Compared with the previous quarter, when performance was robust, conditions were more difficult amid a rise in yen rates and a decline in the stock market. However, we achieved an annualized ROE of 8.2%, exceeding for the fourth consecutive quarter, the lower end of our ROE target range of 8% to 10% or more by 2030. As you can see on the bottom right, three segment income before income taxes totaled 90.1 billion.
Amid uncertain market conditions, the quarter saw a decline in flow revenue in Wealth Management and lower Fixed Income revenues in Wholesale, but stable revenues, specifically recurring revenue and business revenue, increased further, and Equities and Investment Banking both achieved strong results. Next, please turn to page seven, and I will present an overview of each business in the fourth quarter. In Wealth Management, net revenue fell 10% to 104.5 billion, and income before income taxes fell 20% to 37 billion. We generated record-high stable recurring revenue of 51.6 billion yen, on a boost from investment advisory fees booked half-yearly and also achieved cost savings of 4%, as a result of which our recurring revenue cost coverage ratio for the quarter rose sharply to 76%. Flow revenue fell 20% to 52.9 billion, owing to a 45% decline in primary stock subscriptions and a slowdown in secondary stock transactions and investment trust purchases amid an uncertain market outlook.
Quarterly earnings tend to fluctuate owing to prevailing market conditions at a given time, but on a full-year basis you can see that the division achieved revenue growth of 12%, or around 49 billion yen in value terms, while keeping cost increases down to a modest 1 billion yen. This can be seen as the fruits of our ongoing efforts to reduce costs. As a result, leverage enabled us to achieve growth of 39% in income before income taxes. Please turn to page eight for an update on total sales by product. Total sales rose 3% quarter-on-quarter, to 5.4 trillion. Sales of stocks rose 6% to 3.9 trillion, in part owing to a large-lot purchase. Sales of bonds increased 16% with a contribution from Toyota Motor Credit Corporation’s primary deal. Secondary sales of stocks, excluding the large-lot purchase, and sales of investment trusts fell as investors stayed on the sidelines amid range-bound trading in equity markets and an uncertain outlook.
Next, on page nine, we look at progress in KPIs. In Wealth Management, priority was given to four KPIs in the fiscal year: net inflows of recurring revenue assets, recurring revenue assets, flow business clients, and workplace services. As you can see, targets were attained for all four KPIs. In particular, net inflows of recurring revenue assets, seen on the top left, came to 1,374 billion, sharply exceeding the target of 800 billion and contributing to growth in recurring revenue. On the bottom right, we see that 3.88 million units of workplace services were provided, and efforts to broaden the client base, centered on ESOP-related services, have been going well. Please turn to page 10 for Investment Management. Net revenue was down 6% to 43 billion yen, while income before income taxes fell 18% to 15.5 billion. Net revenue fell owing to investment gain/loss. The private equity investment firm Nomura Capital Partners recognized unrealized valuation gains as the value of portfolio companies appreciated, but investment valuation gain/loss related to American Century Investments turned slightly downwards.
Business revenue, which is a stable type of revenue, came to 43.3 billion yen, a record high for the fifth straight quarter. Assets under management were down at end-March owing to market factors, while asset management fees were little changed from the strong previous quarter. Revenue rose in the aircraft leasing business. Please turn to page 11 for an update on the asset management business, which is the key source of business revenue. As seen on the top left, assets under management at the end of March were 89.3 trillion, exceeding the KPI target of 89 trillion for the fiscal year ended March 2025. On the bottom left, net inflows came to 314 billion, marking the eighth straight quarter of net inflows. Investment trust business accounted for about 270 billion of inflows. There were outflows of 420 billion from MRFs, hinting at a prominent shift of funds to new investments, while ETFs saw inflows of around 670 billion into Japanese stocks, mainly at the time of the market downturn in March, and there were inflows to investment trusts, including Japan’s first publicly-placed investment trust investing in private infrastructure company stocks, as well as balanced funds.
On the lower right, we see that alternative assets under management came to a record-high 2.6 trillion. Yen appreciation had an adverse effect, but there were about 170 billion in net inflows owing to inflows to the investment trusts we mentioned earlier that invest in private infrastructure company stocks and additional investments by institutional investors in response to capital calls. Next, please look at page 12 for Wholesale performance. Wholesale net revenue fell 11% to 259.2 billion and income before income taxes declined 40% to 37.5 billion. Equities revenues rose for the fifth straight quarter and investment banking revenues increased on contributions from EMEA. Fixed Income revenues slowed relative to the previous quarter, when they were strong. On the top left, the cost-to-income ratio was 84% and the ratio of revenue to modified RWA was 7.6% for the full year, beating the fiscal year KPI targets of 86% and at least 6%, respectively.
Net revenue rose 22% and growth in expenses was held to 10%, producing income before income taxes of 3.1 times the previous year’s level. Please turn to page 13 for an update on each business line. First, Global Markets net revenue declined 13% to 206.9 billion yen. Fixed Income net revenue fell 24% to 105.8 billion yen, partly in response to a strong performance through the previous quarter. Rates revenues fell as client activity slowed in the latter half of the quarter. Credit revenues were unfavorable owing to spread widening. On the other hand, FX, EM, and Securitized Products revenues were down from the previous quarter, when revenues were strong, but remained firm. Equities net revenue rose for the fifth straight quarter to 101.1 billion. Revenues were particularly strong in the Americas and Derivatives revenues rose sharply on the backdrop of high volatility and increased client activity.
Execution Services revenues were up thanks to increased volume. Next page 14 for Investment Banking. Net revenue was 52.3 billion yen, the highest quarterly net revenue on record going back to the fiscal year ended March 2017, which is the span over which comparisons are possible. Advisory revenues were strong in the fourth quarter with several large-scale cross-border and tender offer deals executed in Japan, as shown on the top right. Overseas, deals related to renewable energy and beverages, mainly in EMEA, contributed to revenues. Advisory revenues accounted for half of Investment Banking net revenue. Revenues in Financing and Solutions fell from the previous quarter, when ECM deals were strong in Japan, but we executed several deals in the fourth quarter, including a global PO for Japan Post Bank and SSA bonds, including Spanish government bonds. Next page 15 for non-interest expenses.
Group-wide expenses amounted to 355 billion yen, down 2%. Compensation and benefits declined 10% to 172.3 billion yen, mainly owing to a decline in bonus provisions linked to the top line. Please turn to page 16 for an update on our financial position. As shown on the bottom left, the Tier 1 capital ratio was 16.2% and the Common Equity Tier 1 ratio was 14.5% at the end of March, both down about 2 percentage points from the end of December. This reflects the start of the implementation of new capital requirements from the end of March, as part of the Basel III finalization. We aim to maintain the Common Equity Tier 1 ratio at 11% or higher over the medium term and thus should be able to comfortably meet capital requirements even after the new rules are implemented. This concludes our overview of our fourth quarter results. To sum up, in May of last year, we issued our Management Vision 2030, titled Reaching for Sustainable Growth.
The numerical targets set forth in that vision include consistently achieving ROE of 8% to 10% or more, and generating more than 500 billion yen in income before income taxes. In the year since we presented that management vision, we have made tremendous progress in building up a franchise capable of delivering sustainable growth for the Nomura Group. It is worth highlighting the steps we have taken to achieve sustainable growth of stable revenues. As discussed earlier, recurring revenue in Wealth Management and business revenue in Investment Management have risen to record levels, and just this week we reached an agreement to acquire the Macquarie Group’s US and European public asset management business. This acquisition makes Investment Management larger in size and also more global, setting up a major step change in the division’s growth. Also just this month, we established a new banking division that will leverage the strengths of our banking and trust banking functions so that we can provide our clients with more diverse, high-quality services.
In taking on these initiatives in Japan and globally, our aim is to put the Nomura Group more solidly on the path to steady growth. Our management team attaches great importance to capital efficiency. Basel III finalization took effect at the end of March, and our Common Equity Tier 1 capital ratio is comfortably higher than the target we have set for ourselves of 11% over the medium term. The decision regarding today's share buyback was made after considering both the current capital levels and the prevailing stock price levels. Going forward, we intend to use our surplus capital to invest in strategically selected growth areas while also rewarding our shareholders. The market environment has been turbulent and uncertain ever since the Trump administration revealed its reciprocal tariff policy, but it is precisely at times like these that Nomura Group has an especially vital role to play.
In April thus far, Wealth Management has seen a slowdown in net revenue as clients have retreated to the sidelines, but during the three-day period of consecutive steep declines in the stock market, the division as a whole saw more buying than selling, with some investors choosing to buy on the correction. Our Sales Partners provided our clients with timely and appropriate information that helped limit the extent of overdone selling among our client base, and recurring revenue assets in the Private Wealth Management and Wealth Management domains have continued seeing net inflows. In Wholesale, the upsurge in market volatility has been accompanied by robust trading activity in Equities and FX/Emerging Markets. Net revenue in the division is currently on track to be higher than in the fourth quarter of the fiscal year just ended. I believe that the Nomura Group’s talented and abundant human resources, robustly healthy financial position, and powerful global reach will manifest as strengths, especially in times of uncertainty like now. As we celebrate our 100th anniversary, we will continue to strive for further growth, and we appreciate your continued support.
Questions and answers
We have a question and answer session now. The first question is from Muraki San at SMBC Nikko Securities.
SMBC Nikko Securities’ Muraki speaking. I have two questions. First of all, global markets, page 13, fixed income year-on-year in comparison to US peers seems weak. Equities seem to be at the right level, but I think that there's some weakness in fixed income. January, February, March, how was your business and what's the latest situation this month in April? Can you elaborate, especially focusing on comparison with your peers? My second question, page 16, capital policy, policy finalization 14.5% and from here onwards acquisition of asset management above about 1.5% drop and share buyback 0.3% or slightly lower according to your plan. So 12.8% would probably be your target. Is my guess correct? And you will probably be showing your target next month in Investor Day, but the target range was probably in your mind, as you thought about, set one, 13% in deciding the share buyback program. Is that the correct assumption?
This is Kitamura speaking. Thank you Muraki san for your question. Fixed income, it appears to be weak and that's our view as well. First of all, product mix is a bit different. When we look at the scripts of competitors, we see comments saying that they were healthy in commodity, but as we have been saying, we don't have that business at all, so that's a factor that makes the difference. But we have no intention whatsoever to enter the commodities business. So this is an area where we don't have any option. And macro seems to be a bit weak. And in rates, structured rates, agency mortgage, the percentage of these products are high. Flow rates were good, but other rates mortgages didn't do so well. And region mix-wise, Japan, in comparison to our competitors, the share or proportion is high, and as you are well aware, the credit spreads are rising in Japan, and therefore a challenging environment continued.
So against this backdrop, unfortunately, in comparison to our peers, our performance may seem to have been weak. Regarding monthly performance, January was 40%; February slightly less than 40%; and March slightly over 20%; especially we saw the drop of revenues in March as I have introduced. But there are mixed fears regarding a possible rate hike, and the domestic investors were on the sidelines and thus less liquidity. So those are some of the reasons behind. And as far as April is concerned, generally speaking, the average of Q4 is about the level we are observing for this month. And on your second question, regarding the target, this time we made a decision on share buyback program. We of course took a look at various indicators, and when we do analyst meetings, we usually talk about the target but you're the expert, I don't intend to preach, but Basel regulation is not just about CET1; there's tier one, there's capital adequacy, and equity ratio.
So we take a look at each of these indicators in order to decide the amount of share buyback. And if you look at the capital structure of Nomura, much of it is CET1. So we took that into consideration and decided on the figure of 60 billion. It's not necessarily the case that we've set the target at slightly lower than 13%. On the Investor Day, we will announce the target range, so if you could wait for some time to come.
Thank you very much. On the first point, I will deviate from this performance announcement, but capital that used to be concentrated in the US is transferring to Europe. You are doing well in the US, but you are facing difficulty in Europe. But trading included, are you beginning to see changes in that trend, or is it premature to probably decide on a change of resource allocation? What do you think about trading resource allocation and regional divide? Have you begun debate on this issue?
This is Kitamura speaking. The ECB rate reduction has provided some support for Europe, but it has not been significant enough to alter our resource allocation thus far. However, if this trend persists longer than anticipated, we may have to consider making a decision regarding our allocation.
Thank you. I am Watanabe from Daiwa. I have two questions. First question is about capital policy. Buyback of 60 billion yen, what's the rationale for that amount? As part of that RSU portion, how much? And three months ago, a commemorative dividend separate from the usual dividend was talked about, but 10% of more than 330 billion, is it pure buyback? And regarding the reshuffling of the business portfolio, sale of Takanawa and also Macquarie Asset Management acquisition, so you are reshuffling the portfolio, but the NRL stock and group stock, is there a plan to make a revision to the holding? Thank you very much.
Why 60 billion? The rationale behind the number is your question. The rationale is, as I mentioned in my answer to Mr. Muraki, we looked at the various ratios and we came to 60 billion yen. And in the 60 billion yen, naturally RSU portion is included. So even if we deduct that portion better than 50%, our committed total return ratio is satisfied. Does that answer your question? And your second question, various changes to our portfolio include the sale of Takanawa Training Center and as we announced this week, acquisition of Macquarie business. So dynamically there have been changes to our portfolio. Regarding NRI, at this point we do not have a plan for making changes to our holdings of stake in NRI, and there are other assets that we have to pay attention to.
Thank you for taking my questions. I have three specific inquiries. First, regarding IT, there was an increase in IT expenditure during the three months of Q4. Is this a one-time event, or will this be the new baseline going forward? Second, the M&A fees in Q4 were notably high, continuing an upward trend. Last year saw a major transaction, but it has been relatively quiet recently. Should we anticipate this figure decreasing? Third, March Investment Trust sales underperformed. What caused this downtrend? Lastly, I would like to confirm if you are referencing FIG or if equity is included for April. You mentioned that April figures are in line with the average of Q4. Does that encompass the entire global market? That concludes my questions.
This is the CFO speaking. I have three questions. First, regarding IT expenses, many factors were considered, including some fiscal year-end elements. Half of the third quarter's figures were reflected in Q4 bookings. Will this trend continue? We don't believe so. I hope that addresses your first question. For your second question, we are working to improve corporate governance, and Japanese companies are actively pursuing M&A strategies. That is our assessment, but we need to be cautious due to the recent Trump tariff policies, and we will keep a close eye on the situation. As I mentioned in my presentation, the current FX rate is about 143 yen to the dollar, having decreased from 160 yen. This may present some positive opportunities for Japanese companies. There is also discussion about shifting production to the US and increasing investment in the US market. Strengthening corporate governance is a definitive move.
Will there be any immediate deals? We must remain composed and observe the situation. While the pipeline overseas is relatively stable, stock prices and market trends appear uncertain. Regarding the tariff policy, we are unsure of how it will conclude and have noted that investors seem to be taking a cautious approach, with poor investment trust sales in March. It’s worth mentioning that a significant private infrastructure fund deal occurred in February. New investment trusts haven't launched, and market visibility is limited, leading investors to stay on the sidelines. However, during these challenging times, we should focus on partnerships and listen to our clients' challenges rather than pushing sales. Although you may perceive the numbers as disappointing, we maintain an optimistic outlook. As for your final point, in April, we have seen Q4 trends continue, with fixed income slightly weak while equities performed well, and that trend persists across the GM overall.
Thank you. I'm Sato from JPMorgan Securities. I have two questions. First, in April, the market experienced high volatility, and various explanations were provided regarding the impact on flow. Specifically, what is your assessment of the risk of certain losses, such as counterparty risk and position-related losses, and how do you see this affecting risk assets? I hope you will indicate that you do not foresee any significant impact. My second question pertains to the cost/income ratio of wholesale; how do you assess that? Throughout the year, you've discussed your evaluation, but looking back at the fluctuations over the past several quarters—whether good or bad—the progress in top-line revenue has influenced the cost/income ratio. Moving forward, if the top line remains at the fourth-quarter level, is it realistic to expect the cost/income ratio to reach 80%? Particularly in the second, third, and fourth quarters, could you provide your thoughts on the progress of the cost-income ratios and your outlook on this? Thank you.
Thank you, Sato San, for your questions. Since around March, we have been observing the market trend and adopting risk-averse positions. We have been managing risks closely. Currently, credit spreads are widening, which requires our caution. Recently, we haven’t experienced any significant impact on our positions, but we will need to monitor developments carefully. This caution is not unique to us; the entire finance industry must remain vigilant. However, as mentioned earlier, we are cautious, so we do not have concerns at this time. Regarding the cost/income ratio, it decreased to 79% in the third quarter but then increased to 86%. As you noted, we still have room to manage the cost/income ratio. The current high ratio is mainly due to progress in equities execution, which increased revenue but also comes with high costs, leading to a rise in the cost ratio. Nevertheless, based on market data and other factors, we believe there is potential to reduce the cost ratio. We have various initiatives in progress, but it will take some time for these to have an impact on our financial statements. In wealth management, we have implemented some measures, and we are beginning to see their effects in the profit and loss statement. In the wholesale division, we are involved in multiple transformation initiatives, which will also require time before we observe the results.
This is Niwa of Citi speaking. I have two questions. Value at risk and risk assets and the use, first, this was already replied to. There's overlap, but page 19, March numbers were quite low. So you said you were already in risk-off mode. But was this as a result of intentional control or was it due to the market? What was the judgment that led to this operation? The direction seems to be rather different from your competitors. So if there's something that we need to keep in mind, please let us know. That's my first point. Secondly, this fiscal year and the future accounting years and the use of risk assets is the subject of my question. Already you've announced the acquisition of the asset management business and brokerage strengthening was in some press reports. I thought that you used to do business within each division, but are you more aggressive in using risk assets and including the pipeline; can you give us more color and detail?
This is Kitamura speaking. Thank you, Niwa san. The first point VAR, we announced the full year result and we looked at the market. We had to announce the full year result, and we were rather subdued. What about the situation at our competitors? We haven't been monitoring so closely. For them, it was Q1, so they must have been more aggressive but that's only my imagination. But we took into consideration the recent market situation and controlled quite stringently our business activities. The second question is on the use of risk-weighted assets, and cash PV was touched upon, but that's only in the press reports. There's nothing that has been decided within our company, and it's not just cash PV, but we're always debating on various options, and nothing has been decided, and that's a true fact. The recent news was regarding the acquisition which we announced earlier this week, and most recently we have been spending much time debating on that deal.
Business-wise, in wholesale, we've already introduced the self-funding concept, and within wholesale if they are to do new business, they would do that by switching the portfolio. On the other hand, the most recent announcement regarding the acquisition of the asset management business, it's about public; it's a public company and some of the people gave us comments saying, 'I thought you'd be acquiring private business,' but by having a strong franchise, we could do both on M&A to layover some private business on top of this platform. That could be a possibility. So we're not saying we won't be using risk assets. To a certain extent, we will be using risk assets. So if we discover such opportunity in the future, we will be using risk assets.
Thank you. Can you hear me? I am Otsuka from SBI Securities. I have two questions. The first question is about wealth management and flow revenue. Based on the latest numbers and the situation in April, what is the current level of flow revenue? Is it the same as the fourth quarter when you consider April, or is there likely to be a slowdown? Any qualitative insights would be appreciated. That's my first question.
Thank you very much. Regarding wealth management, I don’t have specific numbers available, but looking at the third quarter, it was the most challenging period for this division. In April, the situation isn’t as severe as in March, but it is similar to the fourth quarter with a decline in market customers. Our clients are making purchases, but there are fluctuations afterward. Overall, activities have slowed down, yet we are using this time to engage with clients more. In such market conditions, it’s an opportunity for us to understand our customers' concerns. They are increasingly worried about their portfolios, and by assisting them, even though things are slow right now, the time we invest with customers will yield positive results in the future.
Thank you. The next question is about the investment management dividends. Recently, you announced the Macquarie acquisition. After this acquisition, will you focus on generating business revenue rather than on investment?
Yes.
And another question. Okay, thank you very much. Another question, regarding American Century, in the fourth quarter there was weakness, and recently the investment gain-loss at American Century. Can we assume American Century continues to struggle?
So your question regarding ACI, indeed there is impact of the market, and there is volatility. For us, in order to mitigate volatility, we have hedge in place. So in the fourth quarter, our hedge took effect. So even if ACI performance goes up or down, we have hedged to mitigate the impact either way. So ACI evaluation, what is going to be the trend or end result in the first quarter? We cannot tell at this point, but what we aim to achieve is to hold down or suppress volatility.
Understood. It's a tough question, but compared to before, you have a larger hedge position now. The impact of investment gains and losses, which used to be significant in certain quarters, will not be recognized in the same way as before.
Regarding the ACI evaluation, some market factors are mitigated through hedging, which means that volatility will be lower than it was previously. However, within ACI, there are certain aspects that cannot be hedged. For instance, last year saw some fluctuations in ACI due to internal factors. Therefore, we cannot promise that volatility will completely reach zero.
Okay, my understanding has been clarified. Thank you.
The next question is from Bloomberg Intelligence. Regarding the ACI evaluation, some market factors are suppressed with hedging, meaning volatility will be less than before. However, within ACI, there are some parameters that cannot be hedged. For example, last year, fluctuations in ACI occurred due to internal factors. Therefore, we cannot guarantee that volatility will disappear completely. Thank you for your clarification.
I have two simple questions. Regarding wealth management, your presentation indicated a net increase in relation to the 80 billion KPI. In comparison to the first half of the quarter, the second half experienced market movement. You mentioned that the fourth quarter was challenging, while the third quarter represented the lowest point for acquired assets. My question is whether, in light of the recent market chaos and the trend surrounding the 80 billion KPI, you have reached a stage where you can improve this KPI further. Was last year's performance relatively strong based on the run rate? It's a bit abstract, but that's my first question. My second question pertains to the details of the 60 billion buyback set one ratio, which you mentioned was your equity ratio. You've already announced the sale of the Takanawa Training Center. If the proceeds from that asset sale are not included in shareholder returns this year, will they be factored into shareholder returns for the next fiscal year? I understand this may be a repetition, but I would appreciate any comments on that point as well.
Thank you. This is Kitamura speaking. Regarding the increase in stock assets for the first quarter and second quarter of last year, it was strong and in a way it was more than expected. But what we want you to focus on is the red portion, which includes corporate and there's quite big volatility, and the gray zone is the stock asset net gain and loss. And you see that the level has been high and true that Q3 was low, but Q4 was at a high level. Was Q3 the bottom? It's difficult to say, but if we look at the plunge in the market most recently, Wealth Management, which is our core and PWM, in these areas, buy outperformed sales and recurring assets increased on net basis, so we see robustness. I think we have been doing well in terms of our conversation with our customers. And outside of WM and PWM, the affluent class through digital means we are providing services. So we are trying to achieve net gain, and the Wealth Management division is making all-out efforts to do that this fiscal year as well.
The 60 billion yen, Takanawa proceeds; Takanawa proceeds is recognized in Q1. And when we decided the shareholder return for last fiscal year, which was announced today, this was not included. Takanawa was not included. Thank you for attending. As I mentioned earlier, our initiatives are finally showing results, and for the full year, we achieved strong performance. Profits reached a record high, exceeding our 8% target for four consecutive quarters, demonstrating the stability of our performance. Since April, we have launched a banking division and announced the acquisition of Macquarie assets while implementing various initiatives. We are taking every possible measure to stabilize the business. Conversely, the market environment remains challenging. I received a question about wholesale; however, cost control and business process transformation are still only halfway through. Even though our performance is strong this time, we will continue to pursue our initiatives, and by consistently delivering strong results, we hope to improve your perception of us and enhance our market valuation. We will make company-wide efforts moving forward, and I appreciate your continued support. Thank you.
Thank you for taking your time, and that concludes today's conference call. You may now disconnect your lines.