Nomura Holdings Inc. expects to gain from Japan's tax-friendly investment program and the growing trend among corporates to cut cross-shareholdings after it posted a nearly eight-fold jump in its net profit for the quarter ended March 31.
Japan's largest investment bank already cashes in on the updated tax-exemption program, Nippon Individual Savings Account (NISA), introduced in January for individual stock investors. It also seeks seeds of revenue from corporate efforts to unwind cross-held shares in response to market demands to reduce unproductive assets and improve capital efficiency.
"Chances are high that we will be involved in transactions [of stocks]" when Japanese businesses increasingly slash their cross-held shares, Nomura CFO Takumi Kitamura said during an April 26 online conference.
These strategically held shares refer to equity that companies hold in business partners for the purpose of maintaining those relationships.
Results
Nomura's net income for the fiscal fourth quarter surged to ￥56.8 billion from ￥7.4 billion a year ago and its revenue grew 37% to ￥445.1 billion over the same period. The performance was supported by businesses across the three major segments. For the year ended March 31, the company's net income increased 79% to ￥165.9 billion from ￥92.8 billion.
Unlike other commercial banks, Nomura will not forecast annual earnings for the current fiscal year that started April 1.
Pretax profit for Nomura's retail operations nearly quadrupled year over year to ￥38.8 billion, benefiting from an upbeat stock market and the NISA program. Strong foreign bond sales contributed to the retail division's results.
The investment management business' pretax profit rose to ￥17.8 billion from ￥16.4 billion a year ago. As of March-end, total assets under management were at a record high of ￥89 trillion, compared with ￥67.3 trillion a year ago. Higher-yielding overseas alternative investment, which swelled to ￥1.861 trillion from ￥1.263 trillion, contributed to this.
The wholesale business turned around to post a ￥20.6 billion pretax profit in the quarter, reversing a pretax loss of ￥14.2 billion a year ago, as revenue in all regions increased. Equity products were well received in Japan and Asia, while rates and securitized products performed better in Americas and Europe.
Nomura's investment banking business contributed to the wholesale results as fee income from advisory and financial consultancy grew in and outside Japan on increased cross-border M&As and management buyout deals in the country.
