Nomura's net income more than doubles amid Japanese stock trading

Nomura Holdings Inc.'s net income more than doubled in the quarter ended September, aided by demand for Japanese equity trading.

Profit jumped to ￥35.2 billion from ￥16.8 billion a year earlier, the Japanese brokerage and investment company said in its fiscal second-quarter report. Total stock sales in the retail division surged 56% to ￥3.485 trillion.

"Japanese stocks became a tailwind for us," Nomura CFO Takumi Kitamura said during an Oct. 27 online conference. "There was strong appetite for domestic shares."

Pretax profit in Nomura's retail business jumped more than fivefold to ￥29.0 billion, helped by Japan's benchmark Nikkei 225 Stock Average rising about 20% this year. Further stock gains and government proposals to expand tax-exempt Nippon Individual Savings Accounts would likely help the retail business in future, said Michael Makdad, a senior analyst at Morningstar.

"It will continue to do well as long as the Nikkei is performing well," Makdad said. The Nippon Individual Savings Accounts plan will be "positive for both retail and asset management," he said.

Nomura's return on equity was 4.3% in the quarter, compared with a target of 8% or more. The figure did rise from 2.2% a year earlier.

"We're not satisfied with it," Kitamura said, but the executive did not elaborate on how and when Nomura would reach the target.

The company's investment management business boosted pretax profit to ￥23.2 billion from ￥5.6 billion a year earlier. Assets under management hit a record ￥76.5 trillion.

Pretax profits in the wholesale business fell 59% to ￥8.3 billion, weighed down by slow M&A advisory activity in the US and Europe.

The Nikkei fell about 4% in the quarter, and is down about 8% from its year-to-date high. That partly reflects expectations that the Bank of Japan will abandon negative interest rates. Uncertainty remains about the timing and pace of rate increases.

As of Oct. 26, US$1 was equivalent to ¥150.49.