Japan's Nomura reports 24% drop in Q3 net profit, but core businesses strong

NOMURA Holdings, Japan’s biggest brokerage and investment bank, reported on Wednesday (Jan 31) a 24 per cent drop in quarterly net profit, largely reflecting the one-off gains that boosted year-earlier earnings.

Nomura also said it would buy back up to 4.0 per cent of own shares worth 100 billion yen (S$907.2 million).

October-December profit came in at 50.5 billion yen, down from 66.9 billion yen a year earlier, when the bank booked a 28-billion-yen gain from a partial stake sale in an affiliate.

But profits at its core divisions – retail, investment management and wholesale – rose 58 per cent, benefiting from buoyant fundraising deals at home thanks to a Japanese stock boom.

Nomura’s investment banking underpinned core profits as equity offerings soared last year in Japan, as companies took advantage of the Tokyo stock market’s surge to more than 30-year highs to procure funds for growth opportunities.

A rare call by the Tokyo bourse for action plans to improve capital efficiency also accelerated unwinding of shareholdings in affiliates and partners, a practice known as cross-shareholding that investors say hinders governance and hampers returns.

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Nomura’s advisory business was also strong in Japan, where the M&A market stood out against a worldwide decline last year, as low interest rates, stricter governance rules and shareholder pressure fuelled corporate restructuring and management buyouts. REUTERS