Nomura Exceeds Profit Expectations Amid Global Trading Surge
Nomura Holdings has reported a significant profit increase, comfortably surpassing analyst expectations for its fiscal first quarter. Japan’s largest brokerage announced on Tuesday, July 29, that its net income rose by an impressive 52 percent year-on-year, reaching 104.6 billion yen (approximately S$907.05 million) for the quarter ending June 30. This strong result marks the company’s sixth consecutive quarter of growth and exceeded Bloomberg’s average analyst estimate of 76.4 billion yen. The better-than-expected performance was partly attributed to a one-time gain from the sale of a property in Tokyo, but it was primarily driven by a global surge in equity trading. The robust performance mirrors that of major international banks, including Goldman Sachs and Deutsche Bank, which also benefited from the heightened market volatility influenced by US trade policies. As a result, Nomura’s revenue from stock trading experienced a significant jump of 20 percent year-on-year, marking its ninth consecutive quarter of growth in this key business segment, demonstrating consistent strength in its core operations.
Mixed Performance in Key Business Segments
Despite the strong performance in equities, Nomura’s fixed-income revenue experienced a slight decline of 1 percent, which contrasts with the gains reported by major US banks in the same area. The Japanese government bond market has been a source of historic volatility in recent months, largely following the Bank of Japan’s decision to end its ultra-loose monetary policy last year. This market turbulence has created significant challenges for both banks and investors. Hiroyuki Moriuchi, Nomura’s chief financial officer, acknowledged that while the company had a “solid start” to the new fiscal year, volatility in April had a notable impact on fixed-income trading. However, he noted that the team successfully managed to recover in the subsequent months, mitigating the potential negative effects. Furthermore, the company’s revenue from its investment banking division increased by 2 percent, driven mainly by fees from bond underwriting. Although fees from mergers and acquisitions advising did slip from the previous year, Nomura still secured the top spot among financial advisers, according to Bloomberg data, underscoring its continued prominence in the advisory space.
Strategic Shifts and Future Outlook
Nomura has been actively implementing a strategic shift away from its China wealth management business to prioritize the expansion of its core brokerage and asset management divisions. However, the company’s revenue from its wealth management business fell by 4 percent during the quarter. This decline indicates that even the significant rebound in the stock market was not enough to stimulate a corresponding increase in trading activity among individual clients in Japan, a key demographic for this business unit. The brokerage’s reported gain of 56 billion yen from the sale of a training center in central Tokyo, a plan that was previously announced in February, accounted for a substantial portion of the company’s pretax profit for the quarter, highlighting the importance of non-core asset sales in its overall financial performance. Nomura’s shares have also shown a positive trend, closing 0.3 percent higher before the results were released and rising nearly 10 percent since March 31, aligning with the benchmark Topix, which reached a record high last week after Japan secured a trade deal with the US.
