Nomura profit up as unit sale offsets US expenses

NOMURA Holdings posted a fourth straight quarter of profit as Japan's largest brokerage booked gains from a stake sale in one of its affiliated companies, offsetting further expenses for a legal case in the US.

Net income totalled 31 billion yen (S$333 million) in the 3 months ended Mar 31, the firm said in a statement on Tuesday (Apr 26).

Nomura said it will buy back up to 30 billion yen of its own stock. It also pocketed 42.8 billion yen by unloading part of its holding in Nomura Research Institute Ltd., its second sale in less than a year of NRI stock.

The results cap one of the toughest financial years for Nomura marked by hits from the collapse of Archegos Capital Management and litigation against the company in the US, which chief financial officer Takumi Kitamura confirmed in a briefing on Tuesday was related to residential mortgage-backed securities.

Revenue in the firm's retail division dropped 27 per cent as market volatility arising from the Russia-Ukraine war and uncertainty around the speed of monetary policy tightening in the US kept some individual traders on the sidelines.

The firm's equities and investment banking business also suffered and geopolitical uncertainty is expected to continue, CFO Kitamura said at the briefing.

Meantime, Nomura's fixed income revenue slipped 5 per cent, in stark contrast to US peers. Goldman Sachs Group and Morgan Stanley posted surprise increases in trading revenue while Citigroup and JPMorgan Chase also surpassed analysts' expectations in recent first-quarter results.

Last quarter's profit is a turnaround from a year earlier when the Archegos saga led the Japanese broker to log a net loss of 155.4 billion yen -- the largest since the global financial crisis.

Nomura's most recent stock buyback was carried out in November and December, totalling about US$306 million. BLOOMBERG