(Bloomberg) — Nomura Holdings Inc.’s profit rose more than analysts estimated last quarter as Japan’s record-breaking stock market rally boosted wealth-management results and income from trading and investment banking jumped.
Net income tripled from a year earlier to ¥68.9 billion ($446 million) in the three months through June, the company said in a statement Tuesday. That beat the ¥56.6 billion average of three analyst estimates compiled by Bloomberg.
The results continue recent momentum for Chief Executive Officer Kentaro Okuda, whose firm is enjoying a revival in Japanese bond and stock markets as the country exits years of deflation. He recently introduced a goal to double pretax earnings by March 2031, along with measures to control spending.
The wealth-management business is growing steadily as people increasingly shift more of their savings to investment, Chief Financial Officer Takumi Kitamura said at a news briefing in Tokyo. Still, he said, more needs to be done to address a stubbornly high-cost ratio in the wholesale division that houses trading and investment-banking operations.
“The domestic retail business did very well indeed,” said Michael Makdad, an analyst at Morningstar Inc. in Singapore. “On the other hand, the wholesale business continues to be a bit lackluster, with the expense ratio still high.”
Pretax profit from the newly renamed wealth-management division — which serves retail investors at home — jumped 84% from a year earlier to a nine-year high, the firm said in a presentation. That’s even as Japan’s stock market took a breather during the quarter after the Nikkei 225 Stock Average hit a record high in March.
The division’s so-called recurring assets, which include mutual funds and other products sold to clients that bring in steady fees, hit a record ¥24.3 trillion last quarter, partly on fresh fund inflows.
Standard Chartered Plc was also boosted by a strong wealth performance in its results on Tuesday. The London-headquartered lender posted an increase in pretax profits driven by its wealth business.
At Nomura, revenue from the global-markets business — which houses equity and fixed-income trading — climbed 29%, marking the third straight quarter of year-on-year growth.
Equities-trading income grew 30%, as Nomura joined Wall Street banks in benefiting from robust stock-market activity. Nomura’s fixed-income trading saw revenue rise 29%.
Investment banking revenue rose 22% from a year earlier, growing for the fifth consecutive quarter. Nomura’s advisory business had a strong quarter in Japan but slowed abroad, the firm said.
Nomura’s operations outside Japan delivered ¥17 billion in pretax profit in the quarter, with only Europe posting a loss. That followed a rare annual profit in the bank’s overseas business last fiscal year.
“We want to aim at a little higher level instead of becoming satisfied with ¥17 billion,” Kitamura said during a conference call with analysts.
Non-interest expenses for the wholesale division increased 19%. The ratio of costs to income — a closely watched measure — improved to 91% from 92% in the previous quarter.
Nomura unveiled plans in May to make the wholesale operation “self-funding,” in a bid to channel more resources into growth areas such as banking and investment management.
Shares of Nomura closed 0.2% lower before the results were released. The stock has gained 43% this year, versus the benchmark Topix Index’s 16% advance.
Share buybacks are an “important option” for Nomura from the perspective of the firm’s capital policy, Kitamura said.
“We strongly feel expectations from everyone,” he said, “so we will throughly consider the timing and size.”
