Unlock Editor’s Digest for free
Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
Bank and brokerage Nomura’s net profits rose nearly 670 percent in the latest quarter from a year earlier, as Tokyo stocks surpassed their bubble-era peak of the 1980s and Japanese companies raced to raise money and close deals.
Japan’s largest brokerage and investment bank said Friday that net profit in the fourth quarter ending March was 56.8 billion yen ($363 million), compared with just 7.4 billion yen in the same period of the previous year. when the markets were frozen due to fears of a banking crisis.
Renewed global interest in Japanese stocks as an alternative to investing in China, as well as the Japanese government’s efforts to persuade households to invest part of their $7.5 trillion in savings in risky assets, led to Tokyo- Stocks in January were among the world’s best performing stocks through March.
The surge in stock trading in the last fiscal quarter helped Nomura increase its annual profit for the first time since Kentaro Okuda took over as CEO in 2020. The company reported net profit of 166 billion yen, compared with 93 billion yen in the last fiscal year.
The bank’s share price has risen more than 40 percent this year, while the Nikkei 225, the country’s benchmark stock index, has gained 14 percent.
Nomura also got a boost from a rebound in fixed-income trading, which boosted revenues by 40 percent year-on-year and brought its wholesale business back to a profit before tax after a loss in the final quarter of 2023.
Investment banking revenue rose despite a “decline in global fee pools,” Nomura said, with a particularly strong performance in Japanese stock markets.
Since taking the reins, Okuda has struggled to turn the bank around and was forced to cut profit targets last May.
Not only did Nomura have to deal with billions of dollars in losses from the implosion of Archegos – the family office of former hedge fund manager Bill Hwang – but its investment banking business also had to deal with the impact of last year’s U.S. banking crisis and the collapse of Credit Suisse .
Okuda has pushed the wholesale division to reduce its reliance on volatile trading and increase revenue from more stable sources such as asset management, which also performed strongly in the fourth quarter.
In November, the Nomura boss said he was targeting another $100 million in wholesale cost cuts to achieve a return on equity for the bank of 8 to 10 percent. ROE was 5.1 percent for the year to March, compared to 3.1 percent a year earlier.
On Friday, the bank said costs increased “mainly due to the depreciation of the yen, bonus provisions in line with performance and higher fixed costs due to inflation.”