Shigesuke Kashiwagi – CFO.

Masao Muraki – Deutsche Securities Natsumu Tsujino – JPMorgan Securities Takehito Yamanaka – Credit Suisse Securities Jun Shiota – Daiwa Securities Capital Markets Futoshi Sasaki – Mitsubishi UFJ Morgan Stanley Securities David Louie [ph] – Guoco Management Company Koichi Niwa – SMBC Nikko Securities David Louie – Guoco Management Company.

Good day everyone, and welcome to today’s Nomura Holdings’ Second Quarter Operating Results for Fiscal Year ending March 2014 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, beliefs, uncertainties and other factors not under the company’s control which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these projections.

Such factors include economic and market conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security evaluations, competitive conditions and size, number and timing of transactions. With that, we’d like to begin the conference. Mr.

Shigesuke Kashiwagi, Please go ahead..

This is Shigesuke Kashiwagi. Thank you very much for participating today. I will now give you an overview of our financial results for the second quarter of the year ending March 2014 using the document titled, Consolidated Results of Operations. Please turn to Page 3.

For the first half period, although revenues and expenses were elevated through last year as Nomura Real Estate Holdings was a consolidated subsidiary, net revenue increased 2% year-on-year to 787.7 billion yen.

All business divisions reported higher revenues and income and group-wide income before income taxes jumped 3.4 times year-on-year to 186.2 billion yen. Net income was 104 billion yen, representing the highest level since the year ended March 2003.

Client activities weekend during the second quarter amidst certainties surrounding tapering of QE3 in the U.S. and the situation in Syria. This resulted in a slowdown from the first quarter, particularly in our Japan-related businesses. Second quarter net revenue was 356.4 billion yen.

Income before income taxes was 72.9 billion yen and net income was 38.1 billion yen. Annualized ROE was 6.4%. Net revenue from the three business segments was 321.7 billion yen and income before income taxes was 71.4 billion yen. Retail reported a slowdown compared to the record first quarter.

The environment in the wholesale business also had its challenges. However, our international business had a strong quarter, and our Fit for the Future initiatives took effect enabling us to deliver income before income taxes in line with last year. The performance of each business is shown from Page 6 onwards, which I will discuss in a moment.

Page 4, gives an overview of our second quarter and first half results. Please turn to Page 5 for our Business Segment Results. As shown at the bottom of the page, segment other, includes a loss from changes to our own and counterparty credit spreads of 11.6 billion yen.

Our credit spread tightened throughout the quarter, partly due to Fitch upgrading Nomura Holdings and Nomura Securities to A minus on September 25. Please turn to Page 6. As shown on the right, retail net revenue declined 28% quarter-on-quarter to 119.7 billion yen.

Income before income taxes remained strong at 40 billion yen, despite declining 51% from the first quarter, which was the best quarter since the year ended March 2002. Net asset inflows exceeded 1.2 trillion yen, predominantly from stocks and bonds. This combined with market factors to boost retail client assets above 90 trillion yen.

Recurring revenue, one of our key performance indicators was 13.2 billion yen or 52.9 billion yen on an annualized basis, as shown on the bottom left of Page 7. Although this is slightly lower than last quarter, it is trending ahead of plan as we work towards achieving our March 2016 targets.

The whole company is also working hard in the lead up to the launch of NISA in January. As you can see on the bottom right of Page 7, we held 1,100 seminars from April to September, which attracted 30,000 applications. As a result, we reported 850,000 account applications as of the end of September or one million including reservations.

Please turn to Page 8 for Asset Management. Net revenue in asset management was 18.6 billion yen, a decline of 8% from last quarter. Income before income taxes remained strong, although declining 8% to 6.2 billion yen. Net assets under management reached 30 trillion yen for the first time since September 2007 on inflows primarily into existing funds.

The investment advisory business also reported continued inflows. As noted on the bottom right, we won mandates from leading international asset managers to manage Japan Stock Funds. We also won mandates for various products including high-yield bond and Sharia-compliant products. Please turn to Page 10 for Wholesale.

Wholesale booked net revenue of 183.3 billion yen, a decline of 6% compared to last quarter. Income before income taxes was 25.3 billion as disciplined cost control resulted in income in line with the first quarter.

As shown on the bottom left, by region, Japan-related businesses slowed down due to weaker client activity, while all international regions reported stronger revenues driven by global markets. Please turn to Page 11 for Global Markets. Net revenue in global markets was 159.6 billion yen.

As show on the heat map on the top right, Japan reported a slowdown compared to the strong first quarter, while both Fixed Income and Equities booked higher revenues in all international regions seen in the quarter-on-quarter decline to few percent. Fixed income net revenue was 93.8 billion yen.

Credit and securitized products slowed, while Rates and Forex products improved. Equities net revenue was 65.8 billion yen as Japan-related businesses slowed from the robust first quarter, while the Americas Cash Equity business-centered on Instinet and the derivatives businesses improved. Please turn to Page 12 for Investment Banking.

Net revenue in investment banking was 23.8 billion yen, down 19% quarter-on-quarter. Investment banking gross revenues shown at the top left of the page was in line with the last quarter driven by resilient performance in Japan and EMEA.

We were able to tap into the strong demand in Japan for financing, winning a number of high profile ECM and DCM mandates. Internationally, closer cross-regional collaboration in areas where we have a competitive advantage led to revenue contributions from our financial sponsors and our FIG businesses.

Our leveraged finance and solutions businesses continue to grow in EMEA and the Americas. Please turn to Page 13 for an overview of expenses. Non-interest expenses declined 11% quarter-on-quarter to 283.5 billion yen. In particular, compensation and benefits declined 17% to 135.4 billion yen.

The decline in expenses was due primarily to; the absence of approximately 9 billion in full career retirement related expenses in the past quarter, restructuring expenses in this quarter of 1.4 billion yen, down by 1 billion yen compared to the last quarter, lower bonus provisions due to the slowdown in Japan-related businesses and lower commissions and floor brokerage due to lower volumes mainly in Equities.

As shown on the bottom right, although we achieved our most recent $1 billion cost reduction target in September, we will continue to adjust our cost base in line with revenue opportunities to further improve profitability. Please turn to Page 14. Wholesale has been implementing cost reduction initiatives of $2 billion since July 2011.

The blue bar graph on the top left shows quarterly wholesale expenses on a half yearly basis. The red line tracks expenses converted into U.S. Dollars using the average month-end spot rate over each six months period. The bar illustrates how expenses fluctuate on a yen basis depending on the revenue environment exchange rates and restructuring costs.

However, the U.S. Dollar expenses represented by the line have declined by 15% of the past 2.5 years. Annualized first half U.S.

Dollar expenses equal $6.6 billion, because this includes the first quarter full career retirement expenses and one-off expenses related to cost reductions, we expect the run rate to be around $6 billion plus for the third quarter. The graph on the bottom left show revenues.

While continuing to reduce costs over the past 2.5 years, revenues has grown by 37% on a U.S. Dollar basis as you can see from the red line. Please turn to Page 15 for an update on our balance sheet. Total assets at the end of September were 41.9 trillion yen, gross leverage was 17.6 times, and net leverage was 10.9 times.

On a Basel 3 basis, our Tier 1 ratio and Tier 1 common ratio were both 12.2%. The 10.7% figure shown on the top right was calculated by applying the Basel 3 standards to our balance at the end of September and had trended up since the end of June. Lastly, Page 16 shows our funding and liquidity.

As there are no significant changes from June, I would leave it for you to look through later. That concludes the presentation on our second quarter results. Today, we also declared a dividend of 8 yen per share to shareholders of record as of September 30, 2015..

We have a question-and-answer session now. (Operator Instructions) After the announcement, start with your question with your name and company. (Operator Instructions) The first question is from Mr. Muraki of Deutsche Securities..

Thank you. This is Muraki. First, I would talk about – let’s just ask about the market divisions, and second about the retail division related to NISA. First of all for the market-related division – market division.

For the Fixed Income and Equity divisions and the regional breakdown of revenue as well as the sales commission and the production related revenues, could you give me a rough breakdown of the revenues? And as for the companies which have announced their results as of until today and if you breakdown the market share, your market share since have gone up by about one percentage point for Fixed Income and also for Equities about another – also another one percentage point in this quarter.

And I guess this is mainly driven by the non-Japan revenues. And you made a large strong out-performance compared to your peers, because Japan seems to be somewhat sluggish. So how would you analyze the trends or changes on the Fixed Income and Equities’ divisions in this quarter? My second question is related to NISA.

You say you plan to achieve one million accounts. So you seem to have been making a good start in acquiring accounts, but for next year onwards, how do you plan to connect these accounts that you have won into recurring revenues.

Could you tell me your plans please?.

Thank you. This is Kashiwagi. Let me first explain about the regional breakdown for Fixed Income and Equities. For Fixed Income, Q1 was strong and compared to that, client activity has slowed down and our revenues have declined. This is especially so in Japan as you can see in the heat map.

On the other hand in the EMEA region, credit and rates businesses both – we were able to conduct certain amount of credits and rates businesses. In the Americas, the rates trading business improved whereas for securitized products, the client activity continued to be sluggish.

As for Asia, AJ, we were able to win both client business and our own businesses in the rates business and the currencies. So based on this, the Fixed Income – if you look at the breakdown of Fixed Income business, the Japan exposure was about the mid-20% level and EMEA was about 40%, Americas 20% and AJ was about mid-10% level.

For Equities business, again there was a slowdown compared to the Q1 which was strong in Japan.

As for the non-Japan business, in Americas, both Cash and Derivatives businesses grew revenues, whereas in EMEA and Asia as well, there was Corporate Services and Flow Derivatives business as well as Structured Derivatives business saw strong client activity and we saw strong client-related business.

Especially in AJ, we have a new Equity Head which we appointed this spring and I think we are starting to see the positive results of these efforts. As for the regional breakdown, Japan roughly 30%, EMEA roughly 20%, Americas including Instinet is about 40% and AJ is about 10%.

Overall, the client flow and trading revenues breakdown for both Fixed Income and Equities was 70% flow and 30% trading. And in Q1, the client flow was about 80%, trading was about 20%. So trading was somewhat weak in Q1. Whereas in Q2, both risk-on and risk-off activities were conducted adequately we think.

And as a result of that, the question is why our Fixed Income business outperformed our peers? I think one reason is the cross-selling which we have been working on from last year, as well as focusing on certain business areas, I think these are – we are seeing positive results of these efforts.

And going forward, we will – with the improvement in our ratings, and with the progress in cost reductions, we would like to continue strengthening the overseas business. And as for your second question about NISA. As for costs this year and for the Cash Back Campaign costs, we will be booking from January onwards.

And we are spending other costs and making some investments in relation to NISA at the moment. On the other hand, in terms of how we will generate revenues – recurring revenues from NISA, we are conducting various simulations.

For example, how many accounts we’ve planned to win and how much of those accounts will lead to investment trust businesses, and also how much of the one million will be actually paid in as cash. And in the U.K.

we hear, it was about 60%, so we are calculating how much will be flow – how much will flow into investment trusts and how much commissions we will generate from that. I think we can conduct various simulations based on various assumptions.

When compared to the costs which I explained earlier, I think we can turn the business profitable in quite a short period of time. And as we pointed out, because we will not be booking that many – that much additional costs in relation to this business, I think we can expect quite strong figures from this business..

Thank you. This is Muraki again. And as for your first point, the reason why your market share has grown, the one of the reasons could be that the U.S. banks are shrinking their businesses due to leverage regulations and shrinking their balance sheet, while you did not shrink your balance sheet.

And as for the Repo phase which you depend on to certain extent these will be regulated as well.

So according – at the Fixed Income business structure right now, do you feel any need to change the structure of that business in relation to these trends?.

Yes, for the overseas side of the Fixed Income business, yes there are the regulations and the Repo regulations that you mentioned. And also as we discussed in our earlier conference call, the FPO in the U.S., there are various regulations which surround this business and our peers seem to be making various efforts in relation to these regulations.

And some companies are cutting down on their risk-weighted assets. They have publicly announced that they will do so. As for Nomura, we are able to sufficiently raise our capital and we are controlling our liquidity adequately.

So for the leverage regulations, there are some – the outlets still seems unclear, so we have not made any actions in relations to the leverage regulations. So I think we have a relative advantage to our peers.

And thanks to our sales efforts, research efforts that we conduct on a daily basis about the cross-border – cross-selling which we have been working on. We are starting to see some results of these activities..

Thank you very much..

The next question is by JPMorgan, Ms. Tsujino. Ms. Tsujino, the floor is yours..

Thank you very much. First of all – rather I’ll begin with question about the capital ratio 10.7 as of end of September when 2019 standards are applied. The calculation you do of market risk is mostly based upon your models.

In comparison to model and the standard methodology, we understand, there is a great difference and that is going to be placed on the agenda of the Basel Committee going forward for certain adjustments. And some American banks are saying that what would happen if standard approach is applied, and to what extent their ratio would be going down.

Do you have those numbers? And if so, could you share them with us? Next – I will present you to the next question after your response..

On the calculation of risk-weighted assets, if models are used by large banks and there are differences between models. Last year, the Basel Commission identified the methodology of risk-weighted assets of 17 banks, and they did a test by giving the model portfolio. And in actuality, that resulted in difference in risk-weighted assets.

And also capital adequacy ratio would defer by between 1% or 2% according to their analysis. We are aware that however – do we do an calculation of standard approach without using Basel? No, we don’t do that kind of calculation..

Thank you very much. Next question, according to touching on Page 13 you usually have the non-segment information. One major point of non-segment issue is the equity method of your affiliates. Some improvement from quarter one, so just the [ph] equity method companies, is that the main element or factor and also corporate items.

The negativeness has been reduced.

Is this because of restructuring costs declining or the liquidity pool becoming more stabilized? Is it correct to consider that the second quarter number is more or less the benchmark or the standard which will continue? So coming to my first point, others minus 2 billion, CVA/DVA included on quarter-to-quarter basis is the deterioration of about 140 or deterioration of 17.5 billion, but you must have seen a significant improvement.

In the first quarter, maybe the other was too low, so its improvement from a low base.

So can you explain the reasons behind these intervals?.

Thank you. I believe you asked your questions. And the answer to your first question is, yes, equity method company gained improvement is being reflected in those – these better numbers. And the second, corporate item liquidity-related expenses, Ms.

Tsujino you know well that liquidity expenses and unallocated expenses as well as mismatch of terms, but liquidity expenses declining and the unallocated expenses reducing, that had led to a quarter-on-quarter improvement. And the third question was others.

As we have pointed out, the difference on credit of 5.9 and there is a difference between 13 billion. And on net basis due to 2 billion in Q1, 8 billion, so 23.5 billion difference. And the biggest factor is the other businesses in affiliated companies increasing in revenues in the order of billions. So that’s the difference between Q1 and Q2.

And I believe you asked the question where we – and as an result of Q1, U.S. GAAP adjustments, and also the differences between the management accounting as well as financial accounting. And we were not able to explain well in the adjustments but in Q2, there has been an increase there.

So there has been a change or fluctuation between Q1 by 23.5 billion yen..

Banking sector affiliates, is this because of the change of the equity prices that you hold, and this declined in Q1 but increased in Q2.

Is that the reason for the difference?.

Yes. The unrealized changes in the bonds we hold..

Does that include yen bonds as well non-yen bond as well?.

Yes..

Thank you very much..

The next question is from Mr. Yamanaka of Credit Suisse..

Hello, this is Yamanaka. I have just one question, which might overlap with the first question, but your ratings are slowing moving in a positive direction.

Which business – what kind of business can you expect as a result of the ratings improvement, could you give me some idea of some actual businesses? Actually in Nomura’s case, you focused on various businesses in each geography for like Fixed Income and also Equity derivatives. I think you are going to be selective and focusing in various businesses.

So could you tell me which business has the most potential?.

Thank you. This is Kashiwagi. As for the ratings improvement by Fitch and the impact of that. Fitch is very well known in the U.S. so we expect an improvement in the institutional investor business in the U.S. especially derivatives and Repo business and also CVA [ph] business which lead to our exposure.

We expect an increase in the credit lines and also the opening of new accounts. We are receiving quite a lot of inquiries in this area. As of today, S&P are rating us single A, as well as Fitch. So as a result, the inquiries from clients is increasing..

Sorry, this is Yamanaka again. Just a follow-up on that.

So in that sense in the U.S., the impacts of the ratings by Moody’s, is it still diminishing and what about EMEA? Is there a change in situation?.

This is Kashiwagi. The impacts from Moody’s – I wouldn’t say it’s diminishing. I can’t be that bold, but thanks to Fitch raising the ratings, we are seeing some positive signs. That’s all I can say. As for EMEA, nothing has changed negatively since Fitch, but compared to the U.S., I think EMEA and Asia is somewhat quiet..

Thank you..

Mr. Shiota of Daiwa Securities will ask the next question. The floor is yours..

Thank you very much. This is Shiota speaking. I have two questions. First of all, market related international business. Quarter-on-quarter revenue increased was reported.

Can you just give us a breakdown by months? I would assume that you made lots of money in September, but what about the monthly breakdown, and most recently in comparison to those two quarters, what’s the so far results for the current month, October? Second question, Page 34 – sorry 28, Page 28, the net increase in retail customers 1.2 trillion yen, quite significant.

What has been the driver for this increase? Those would be the two questions. Thank you..

Thank you very much. This is Kashiwagi speaking. First of all, the monthly trend. In May and June, the market was quite volatile. And since mid-June, stability was regained. And in July, the environment was favorable. Seasonal factors came into play in August and concerns of tapering of QE3 as well as Syria, so people had just a wait and see attitude.

And in September, there was great improvement in markets in September which led to even better performance in comparison to July. And retail AUM client assets, net asset inflow. There are two main drivers. First of all, in terms of products, there were three popular products – or four. Retail, JGBs. Forex bonds, second.

There were PO mandates, so equity coming from PO mandates. And thirdly MRF, as standby funds by products. By channel, we call it retail. So it was one channel, but there is peer retail with management or workplace asset formation or regional banking institution, small and mid-sized enterprises, corporates.

So there are sub-channels within retail, and all of those sub-channels performed quite well. And that had led to an inflow of 1.2 trillion yen, a significant increase..

Thank you very much. This is Shiota speaking.

How would you compare the level of October in comparison to September?.

Sorry, I didn’t – I failed to touch upon our results for October, but into the business momentum so and so doing well. The turnover at TSE for stocks, in comparison to September, there was a slight drop. So domestic retail business has somewhat slowed down, but generally speaking wholesale is doing well as well..

Thank you very much..

The next question is from Mr. Sasaki of Mitsubishi UFJ Morgan Stanley..

I have two questions. First is related to NISA. How much additional cost are you expecting in relation to NISA? Could you disclose what you can? And also as you touched upon briefly earlier, when do you plan to put these figures onto your P&L? That’s my first question.

And secondly on Slide 7, you used to disclose the net increase in investment trust, but your format has changed.

So could you give me the figure for the net increase in the investment trust?.

Thank you. This is Kashiwagi. First of all, the costs related to NISA. There are three items. One is the advertising cost and the IT-related costs. Second is the cost in relation to the Cash Back Campaign. The cash back amounted 2,000 yen, so assuming that we have one million accounts, its 2 billion yen.

And we will be booking these in January 2014 onwards. And as for the advertising costs and the IT-related costs and also the administration – also administration work, we already realizing or booking these costs. And I think you got a feel of those costs from the disclosure materials.

And for the IT costs, there is 3 billion yen of additional costs which we are expecting and we will book these or amortize – depreciate this over five years. So it will be 150 million yen for each quarter. That will be the cost impact. And your second question about the net increase in investment trust.

We show it on Page 6, the figure is 5.8 billion yen..

This is Sasaki again. Thank you. For the JGB and the Equities business in Q2, these were the products which were the main drivers of your business.

Is that the way to understand it?.

Investment trust saw quite a bit slowdown in the sales trends. Well, this was the first time that I found out as well, but the 5.8 billion yen for the net increase in investment trust, this does not include MRFs. So the net increase is basically the equity investment trust. This is how we define investment trust here.

So MRF, MMF, these types of bonds – short-term bond products are not included in this figure, which we have been disclosing. So the 1.2 trillion that I mentioned earlier, this includes both Equities and Fixed Income bonds and also MRFs, which is not included in the narrow terms of investment trust..

Thank you..

The next question is Mr. David Louie [ph] from Guoco Management Company of Hong Kong. Please go ahead..

Okay, this is David Louie [ph]. Thank you Mr. Kashiwagi. On Page 22 of your PowerPoint, I was looking at the stock brokerage commissions from the retail sector.

And that felt pretty hard from 42.5 billion yen in the June quarter to 25.4 billion yen in the September quarter, is a decline of like 40%, which is even higher than the shrinkage in the daily trading volume on the Tokyo Stock Exchange. I think that one shrank by about 35% from the June quarter to the September quarter.

Could you tell us whether we should concerned about this 40% decline in your retail brokerage commission, and I guess can you shed some light into why it fell so much even more than the Tokyo Stock Exchange volume? Thank you..

Thank you very much for your question. Regarding the stock brokerage commission from the retail side, yes, we have seen a decline of about 40%. In the meantime if you looked at the Tokyo Stock Exchange transaction volume with respect to the individual, it did declined by 39%. So I think we are in line with market trend.

And also one thing I’d like to add is that the – with respect to the distribution for the JGB retail targeted bonds, we do have more than 50% of the market share. So some of the sales force, it would have been shifting towards the solution of the JGB market..

Okay, great. Thank you. If I may have a follow-up then, on the same page, Page 22 of the PowerPoint, it seems that the institutional commissions are better. They felt only about 17% from 37.7 billion yen in the June quarter to 31.6 billion in the September quarter.

Is it more or less the same between Japanese institutional investors, and I guess foreign institutional investors? Could you share some light on that, or actually one might have done better than the other?.

Sorry, regarding the competitors, you are talking about Japanese competitors?.

No, I am talking about the institutional investors – Japanese institutional investors versus the [indiscernible] institutional investors.

Did their commissions fall roughly as the same about 17% which is what you are showing on Page 22 from 37.7 billion yen down to about 31.6 billion yen in the September quarter? I mean your clients, not your competitors..

Okay, so this brokerage commission includes the both, Japanese as well the overseas commission we generated. And the overseas commission generation has not declined as much as the – and as for the foreign side institutional commission, this is in line with the decline in the transaction volume as we focused some big change..

Okay, great. Thank you. If I may ask one final question, Kashiwagi sir. On Page 21 of your PowerPoint, you show net gain on trading of 110.2 billion yen for the September quarter.

Is this mostly client driven trading and very little proprietary trading by Nomura?.

Yes, as for the prop trading, we have been focusing on the client driven business, and we do not much of the fewer proprietary trading revenues on this category..

Okay. Thank you very much..

The next question is Mr. Niwa of SMBC Nikko Securities..

Thank you. I have two questions. First is quite an ambiguous question, but the uncertainty that you saw in Q2, do you think this will be removed in the future.

And for your corporate clients, the ECM and M&A appetite, and your efforts in winning business in this area, how do you expect things to trend in the future? Will there be any trends, positive signs in your client activity in ECM related areas? And as for the retail investors, how do you see the sales trends in September and October? And on the cost side, you say that you have basically completed your transition into a lean structure and you will continue to work on your cost structure, but as for your costs, should we see the current level as basically the bottom.

And going forward your growth will come from top line growth rather than cost reductions?.

This is Kashiwagi. As for the first point about the uncertainty going forward and being – uncertainty being removed, if you think about the investment banking business and the M&A pipeline, I think that’s what you’re asking. For the overall market, M&A was relatively slow until August.

And in September we are starting to see some big transactions, big M&A deals.

And this does not mean there hasn’t been a big change in the fence, but it’s just that Japanese companies, corporates, they have been – they have had quite strong potential demand for these types of cross-border transactions and they do have some – they do have special funding.

So we are receiving a lot of inquiries in relation to cross-border M&A transactions. As for your second question about the investment trusts and the retail sales of investment trust. During the July to September quarter, in September we focused quite a lot on the retail JGBs, but the underlying trend remains unchanged.

So we are continuing to sell JGBs to retail investors.

And for your third question about the cost reductions, whether we have already hit the bottom going forward and the growth will come from top line growth? As for the wholesale cost reductions, on an annualized basis, I think it was something like $6 billion plus, if you multiply by four, but we have achieved the most recent wholesale $1 billion cost reduction target, but there are still some cost reduction items which are waiting to be identified and booked.

And we will be executing these cost reduction measures. Meanwhile, we will be making some new investments. So the $6 billion plus of cost reduction is based on the current market environment, this should be – it should be something close to the $6 billion plus.

And as business grows in the future, there could be increase in our expenses, for example, compensation. Thank you very much..

(Operator Instructions) The next question is Mr. David Louie [ph] of Guoco Management Company of Hong Kong. Please go ahead..

Thank you. Kashiwagi sir, on Page 21 of your PowerPoint, under Revenue, there is an item called other. And for the September quarter, it was 45 billion yen. This seems that this number was quite volatile over the last five quarters as you show on Page 21.

It went from 143.4 billion yen to 118.8 billion yen to 304 billion yen and to 28.2 billion yen and 45.1 billion yen. Is it possible for you to shed some light on what the major components are, and whether you see this number to remain volatile going forward or it should start subsiding? Thank you..

Yes, during the last quarter – up until the last quarter – at the end of last quarter, the Nomura Real Estate Holdings consolidated under the Nomura Holdings. And part of the revenue has been recorded in this segment. And that contributes to some of the valuation or fluctuations on the number.

And after, we saw the partial holdings of the Nomura Holdings and now we are treating as an equity method company, those factors should not affect this difference.

And during the previous quarter and this quarter – I mean in the first quarter and second quarter, we discussed earlier some of the performance of the banking affiliated affected negatively during the first quarter and positively in the second quarter. And the question regarding going forward, what’s going to happen is that – hold on one second.

Yes, I guess that the – we have to – I think I hope you understood some sort of the fluctuation going forward still due to the fact that this is a section called others, and but I do not expect that it would be [indiscernible]..

Great, thank you..

The next question is from Ms. Tsujino of JPMorgan..

This is Tsujino again. Some of the western banks are putting variance expenses – litigation expenses in the U.S.

And I think the figures have already been booked for some of the items that have already been fixed, but how much of these expenses have you been booking in advance? For example, have you been making provisions and reserves, and should we be worried about any future bookings of these litigation-related expenses?.

This is Kashiwagi. Generally speaking, the residential mortgage backed securities business which we used to be involved in and the securitization of these securities, our business was somewhat different from what the U.S. banks were conducting in the Americas.

We were not originating these mortgage products, but we were buying them for mortgage banks and warehousing them and then securitizing them and distributing them. This was our business. And as for the distribution of these products, most of the distribution was conducted by other broker dealers and they distributed it on behalf of us.

And we were able to – so our business was different from the investment bank which has an integrated mortgage related business. And as for provisions, under the U.S. GAAP, if there is a high probability of losses being booked and if these losses can be estimated, we are making rational provisions.

So we are not booking any arbitrary figures as our provisions. Going forward, we will continue to discuss with the accountant and book any rational provisions that have to be booked. And in relation to the FHFA issue, we are not being investigated. There are no criminal investigations still conducted towards Nomura.

And that nothing is decided in relation to the settlement. For example how much it’s going to be or any details about settlement, we cannot disclose..

Thank you..

Thank you. This is Kashiwagi. Thank you very much for participating for long time. If you have any follow-up questions, please feel free to contact the IR division. Thank you very much..

Thank you for taking your time. And that concludes today’s conference call. You may now disconnect your lines..