Nomura CEO sees big growth phase in wealth and asset management

[TOKYO/YOKOHAMA] Nomura’s chief executive officer vowed to build on the company’s earnings revival by strengthening businesses across the board, ranging from wealth to asset management and dealmaking. 

“I believe we have now built a much stronger and more stable earnings base,” Kentaro Okuda said in a presentation in Tokyo on Tuesday (Dec 2).

“With that foundation in place, we want to move into a significant growth phase, and I am beginning to feel a clear sense of momentum in this,” he added.

Japan’s biggest securities firm has beaten analysts’ profit estimates for the past few quarters, as households boosted investments and corporate clients cut more deals.

After many rounds of cost cuts, Nomura is now in expansion mode. It completed a US$1.8 billion acquisition of Macquarie Group’s US and European public asset management business this week. 

In wealth management, Okuda said that the company is focusing on further strengthening its base of high-net-worth clients, including those who generate wealth from initial public offerings and stock options.

It is also using digital technology and artificial intelligence to offer individualised services at a lower cost. 

Under Okuda, Nomura has also been expanding into private markets. The firm is increasing its line-up of public and alternative investment products for both individuals and institutions, he said.

On the corporate side, a mindset shift away from holding onto assets is creating business opportunities, especially in investment banking, he added.

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Over the past year, Japan’s volume of mergers and acquisitions has reached an all-time high, and Nomura is seeing more deal flow than ever, he added.

Shares of Nomura have climbed 27 per cent this year to touch a key milestone for the first time since 2016.

The price-to-book ratio hit the threshold of 1 during trading on Tuesday, meeting an important benchmark set by the Tokyo Stock Exchange in its drive to improve shareholder value.

Local rivals, including Daiwa Securities Group, have already exceeded that mark.

Okuda’s upbeat tone contrasted with a more sombre note at the same forum a year earlier, when he announced another round of cost-cutting.

Nomura’s management at the time was grappling with setbacks, including regulatory penalties for market manipulation, and allegations of robbery and attempted murder by an employee at a client’s home. Executives, including Okuda, took pay cuts over the incidents. 

While Nomura intends to accelerate growth, it will never do so at the expense of safety, Okuda said. The company is focusing on the early detection of potential risks as both external uncertainties and market volatility remain high, he added.

“Unfortunately, we experienced losses related to Archegos in 2021,” he said, in a reference to the US$2.9 billion loss the firm suffered when Bill Hwang’s US family office collapsed.

Nomura has made significant progress in strengthening its risk-management framework since then, Okuda said. BLOOMBERG