Nomura Holdings’ Shares Jump to Highest in 16 Years
Strong Trading and Cost Cuts Drive Profit Growth
Nomura Holdings’ shares surged to their highest level in 16 years after the Japanese brokerage announced a significant increase in third-quarter profit, exceeding market estimates. The company’s net income doubled to 101.4 billion yen (S$889.5 million) in the three months ended December 31, reaching a four-year peak.
CEO’s Steerage and Market Conditions
Chief Executive Officer Kentaro Okuda has led Nomura to an earnings recovery, despite facing the fallout from a pair of scandals in recent months. Japanese brokerages are benefiting from elevated trading and dealmaking activity, as well as a growing investment appetite among individual clients seeking to protect their wealth from the emergence of inflation at home.
Strong Performance Across Business Segments
Nomura’s revenue from its global markets business, one of the biggest drivers of income, rose 39% from a year earlier to the highest since at least 2016. Fixed-income revenue climbed 35%, while equities saw a 45% gain, both exceeding the average performance of the five largest US banks.
Cost Savings and Risk Management
The wholesale group led by Christopher Willcox made further inroads on cost savings, with a closely watched measure of costs for the division that houses trading and investment banking operations falling to a four-year low of 79% of net revenue. Chief Financial Officer Takumi Kitamura emphasized the importance of cost control and risk management, stating, "While market conditions are not bad, we believe cost control and risk management will remain key. We will stay focused as we aim to accomplish a record profit."
Wealth Management Division Grows
Revenue at Nomura’s domestic wealth management division grew 13% for the eighth straight quarter of gains. Nomura and its rivals, including Daiwa Securities Group, are aggressively expanding their wealth business as the emergence of inflation spurs Japanese households to invest more of their $7.3 trillion in cash and deposits.
Conclusion
Nomura’s strong performance is a testament to the company’s ability to adapt to changing market conditions and implement effective cost-saving measures. As the global economy continues to evolve, it will be important for the company to maintain its focus on cost control and risk management to achieve long-term success.
Frequently Asked Questions
Q: What was Nomura’s net income for the third quarter?
A: 101.4 billion yen (S$889.5 million)
Q: How did Nomura’s revenue perform across its business segments?
A: Revenue from global markets rose 39%, fixed-income revenue climbed 35%, and equities saw a 45% gain.
Q: What is the significance of the company’s cost savings efforts?
A: The company’s closely watched measure of costs for its trading and investment banking operations fell to a four-year low of 79% of net revenue.
Q: How is the wealth management division performing?
A: Revenue at Nomura’s domestic wealth management division grew 13% for the eighth straight quarter of gains.
