TOKYO: Nomura Holdings, Japan’s largest brokerage and investment bank, reported a 195 per cent jump in first-quarter profit on Tuesday (Jul 30) as the rally in global markets and return of domestic inflation bolstered demand for its wealth management services.
The results show the progress Nomura has made in shifting toward a fees-based profit model in order to secure more consistent revenue that is less subject to market swings.
Nomura said net profit in the April-June period was ¥68.9 billion (US$446 million) versus ¥23.3 billion a year earlier.
The end of deflation in Japan has encouraged retail clients to move into investment products, Nomura’s chief financial officer Takumi Kitamura told a media briefing.
“The major update to our business structure since last spring and the shift in our customers’ mindset from savings to investment has meant we were able to achieve strong results,” Kitamura said.
Alongside this, the global market rally led to improved client sentiment and higher sales of US and global stock funds, Nomura said.
Pre-tax income in the wealth management segment grew 84 per cent compared to the same period the previous year to reach its highest since the 2015/16 financial year.
Nomura has a dominant position in wealth management in Japan and the business accounted for roughly half its pre-tax profit in the previous financial year.
Inflows into Nomura’s investment management business pushed assets under management to a record 92.5 trillion yen while its wholesale business, which houses its investment banking and trading businesses, grew revenue by 28 per cent compared to the same period the previous year.
Investment banking was strong in Japan due to a series of delistings, business reorganisations and cross-border transactions. However international deals slowed.
“Our investment banking numbers compare a little unfavourably to those of US investment banks’, but seasonal factors are at play and we outperformed when they were struggling,” Kitamura said.
Cost-cutting measures introduced over the past year to improve flagging profitability also bore fruit this quarter.
Return on equity (ROE), a measure of profitability, at the group level shot up to 8.1 per cent over April-June, far exceeding the 5.1 per cent Nomura achieved over the year ended March 2024.
