Nomura profit exceeds estimates on stock trading boom

[TOKYO] Nomura Holdings’ profit beat expectations last quarter, as the Japanese firm joined the equity trading boom that fuelled earnings for Wall Street banks.  

Japan’s biggest brokerage said in a statement on Tuesday (Jul 29) that net income rose 52 per cent from a year earlier to 104.6 billion yen (S$907.05 million) in the fiscal first quarter ended Jun 30.

That marked the sixth straight quarter of growth and exceeded the 76.4-billion-yen average of three analyst estimates compiled by Bloomberg. The results were helped by one-time gains from the sale of a Tokyo property.

Investors are watching whether chief executive officer Kentaro Okuda can sustain the earnings growth that led to record profit last year as Japan’s markets roared back to life. Global banks from Goldman Sachs Group to Deutsche Bank reaped income from trading stocks and bonds last quarter, taking advantage of volatility fuelled by US President Donald Trump’s trade policies. 

Revenue from stock trading jumped 20 per cent from a year earlier, the ninth consecutive quarter of growth. 

Fixed-income revenue fell 1 per cent, even as the biggest US banks posted gains. Volatility in Japanese government bond trading hit a historic high in recent months, leaving banks and investors grappling with how to navigate a market that was moribund until the Bank of Japan ended its ultra-loose monetary policy last year. 

Nomura is off to a “solid start” to the new fiscal year, chief financial officer Hiroyuki Moriuchi said at a news briefing in Tokyo. Volatility in April had a significant impact on the company’s fixed-income trading business, but the team recovered in the ensuing months, he said. 

Revenue from investment banking rose 2 per cent, led by fees from bond underwriting. Fees on mergers and acquisitions slipped from a year earlier, even as Nomura grabbed the top spot among financial advisers, according to data compiled by Bloomberg. 

Shares of Nomura closed 0.3 per cent higher before the results were released. The stock has risen almost 10 per cent since March 31, in line with an increase in the benchmark Topix, which reached a record high last week after Japan secured a trade deal with the US. 

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Revenue from the wealth management business fell 4 per cent, signalling the stock market’s rebound wasn’t enough to spur trading by individual clients in Japan. 

The brokerage earned 56 billion yen from the sale of a training centre in central Tokyo, a plan announced in February. That accounted for about a third of pretax profit. BLOOMBERG