Nomura posts biggest quarterly loss in over a decade on US$2.3b Archegos hit

[TOKYO] Nomura Holdings reported on Tuesday a US$2.3 billion hit from the collapse of US investment fund Archegos, causing it to log its biggest quarterly net loss since the 2008 global financial crisis.

Japan's biggest brokerage and investment bank said while it expects to book a further US$570 million in charges related to Archegos this financial year and would be beefing up its risk controls, it saw the debacle as an isolated incident.

"We are not planning to make major changes to our US and global business strategy," Nomura CEO Kentaro Okuda told a media briefing.

Its January-March net loss came in at 155.4 billion yen (S$1.90 billion). That compares with a 34.4 billion yen loss a year earlier when global stock markets were battered by the coronavirus pandemic.

Before Archegos failed to meet margin calls on heavily leveraged stock bets last month, Nomura had been on track for record annual profit, bolstered by a buoyant US trading business. That was set to have been a hard-fought victory in its decade-long, stop-start efforts to successfully expand outside Japan.

Instead, it posted net income of 153.1 billion yen, down 29 per cent from the previous year but a second consecutive year of profit.

Most analysts had expected a profit of between 160 billion and 225 billion yen, according to Refinitiv data.

Nomura's Archegos loss, which is slightly larger than a previously flagged US$2 billion, is the second worst after Credit Suisse. The Swiss bank booked a 4.4 billion franc (S$6.37 billion) Archegos hit in January-March and expects further losses of about 600 million francs this quarter.

Morgan Stanley lost nearly US$1 billion, while Goldman Sachs Group and Deutsche Bank exited without losses, Reuters and other media outlets have reported.

REUTERS