Nomura Holdings Inc. suffered a significant fiscal first-quarter pretax loss in its overseas markets but weathered the global economic turbulence thanks to a rebound in Japanese stocks.
The bank saw the pretax quarterly loss in its overseas markets widen to ￥23.9 billion from a loss of ￥15.2 billion in the corresponding quarter a year ago. The Americas business alone reported a pretax loss of ￥19.9 billion in the fiscal first quarter.
At the same time, Nomura, Japan's largest brokerage and investment bank, reported a quarterly profit plunge in its wholesale business to ￥2.1 billion from ￥25.3 billion.
"The Americas had a somewhat sizable pretax loss and the wholesale segment overall was barely profitable," said Michael Makdad, a senior analyst at Morningstar. "Putting these two together, it was a disappointing quarter given the strong markets in Japan."
Profit up despite headwinds
Overall, Nomura reported a net income of ￥23.3 billion for the April-to-June period, versus ￥1.7 billion a year ago, with a surge in pretax profit from its home market more than offsetting overseas markets headwinds, the bank reported Aug. 1.
The nearly 18% rally in the domestic stock market helped to push overall pretax profit from Japan to ￥70.3 billion in the first quarter, from ￥26.9 billion a year ago.
Global investors have focused on Japanese equity this year as the nation's central bank continues with its ultraloose monetary policy stance. While the Bank of Japan tweaked its yield curve control policy on July 28, effectively tightening policy, most analysts expect negative interest rates to stay at least through 2023. In contrast, most global central banks, led by the US Federal Reserve, have raised rates since early 2022 to combat inflation.
"Japanese stocks were a tailwind for us," Takumi Kitamura, Nomura's chief of finance, said during an online briefing after the results were announced. "The market uncertainty in overseas markets will stay with us," Kitamura said.
Nomura's pretax profit from its retail segment more than quadrupled to ￥22.9 billion in the three months through June, from ￥4.9 billion a year ago. The investment management business reported a pretax profit of ￥3.6 billion, reversing a loss of ￥11.7 billion. Assets under management reached a record high of ￥76.1 trillion in June, up from ￥65.6 trillion a year ago.
In its investment banking business, advisory fees were down to ￥13.6 billion from ￥14.0 billion.
The challenges in the wholesale business, however, were a significant drag for the lender, as the uncertain economic outlook put market participants on the sidelines. Turning this around could be "a big challenge," Kitamura said.
As of July 31, US$1 was equivalent to ¥142.13.
