[TOKYO] Nomura Holdings Inc reported a 45 per cent rise in third-quarter net profits on Thursday, the biggest jump in its quarterly profits in a year, thanks to a strong performance by its retail equity business.
Nomura, Japan's largest investment bank and brokerage, has benefited along with nearest rival Daiwa Securities Group Inc from a renewed appetite for equities which propelled the Nikkei index to a 7-1/2 year high in the period.
Pretax profit at the retail division rose 6 per cent to 50.05 billion yen (S$57.82 million), the strongest quarterly performance in the last six quarters and boosted by the 213.8 billion-yen share sale by Recruit Holdings, which was underwritten by Nomura. Retail client assets also grew to a record 104.8 trillion yen.
The rally in the stock market helped Nomura book around 40 billion yen in gains on its stakes in a regional lender, Ashikaga Holdings Co Ltd, and the company's affiliates. This compared with a loss of nearly 4 billion yen on Nomura's other investments a year earlier.
"This was a positive surprise. Particularly retail business and the increase in net assets was stronger than expected," said Deutsche Securities analyst Masao Muraki.
However, Nomura's fixed income business fared less well, with broking revenue down 23 per cent as traders were less active in the face of concerns over Greece, the prospect of European deflation and the plunge in oil prices.
The fixed income business makes up the bulk of Nomura's wholesale division, which in turn accounts for around 42 per cent of the bank's revenue.
Nevertheless the group's net profit rose to 70 billion yen (US$595 million) in October-December from 48.3 billion yen, beating analysts' estimates of around 39.5 billion-yen, according to Thomson Reuters Starmine.
While the results showed the strength of Nomura's retail business, they also highlighted the challenge of turning around its foreign operations, which have only been profitable in one of the past six years since Nomura bought the European and Asian operations of Lehman Brothers in 2008.
"There were several events that caused market volatility in the quarter," Chief Financial Officer Shigesuke Kashiwagi said at a results news conference.
Overseas operations posted a pretax loss of 7 billion yen in the quarter, but would likely book a profit for the year ending March as planned, Mr Kashiwagi said.