Nomura Holdings Inc.’s shares dropped the most since March 2021 after the Japanese brokerage reported a slump in profit and as market turmoil clouds the firm’s outlook.
(Bloomberg) — Nomura Holdings Inc.’s shares dropped the most since March 2021 after the Japanese brokerage reported a slump in profit and as market turmoil clouds the firm’s outlook.
Shares fell as much as 8.3% in Tokyo on Thursday. A day earlier, Nomura said fourth-quarter profit slid 76% to 7.4 billion yen ($55.4 million), missing analysts’ estimates.
Earnings per share and return on equity “were well below our expectations,” Hideyasu Ban, an analyst at Jefferies, wrote in a note.
Read more: Nomura Profit Falls for Third Straight Year Under CEO Okuda (1)
Muted client sentiment and lackluster dealmaking weighed on revenue at the Japanese brokerage while its overseas operations have now lost money in 10 out of the past 12 years, according to filings. Meanwhile, it emerged the firm’s Frankfurt offices are being searched as part of a probe into the Cum-Ex tax dividend scandal.
Nomura’s 6.2% bond due 2033 fell 0.2 cents, adding to losses of 0.7 cents a day earlier.
“Nomura’s materially weaker profitability in the fiscal year ended March 2023 is credit negative,” said Tomoya Suzuki, a senior analyst at Moody’s Investors Service said.
Nomura is grappling with challenges that include historic market moves triggered by troubles at Silicon Valley Bank and Credit Suisse Group AG.
The firm’s profit fell for the third straight year since Kentaro Okuda became its chief executive officer, as market turmoil adds to headwinds for his turnaround.
Nomura’s revenues in the three months through March fell 6% at the global markets unit, in line with the average decline in trading at five of the biggest Wall Street lenders. Fixed income rose 9% despite the turbulence in March, while equities was down 21%.
A surge in volatility caused Nomura’s fixed-income business to slow in March, the firm said without elaborating. It was an otherwise strong quarter for the unit that surpassed several Wall Street rivals.
“Given that cost inflation in the wholesale segment appears to be becoming a trend, I think cost-cutting will be in order,” said Michael Makdad, an analyst at Morningstar Inc. in Tokyo, referring to the division that houses trading and investment banking. “Whereas a quarter ago Nomura seemed more inclined to wait and see before risking cuts that might have been poorly timed.”
–With assistance from Ameya Karve.
(adds comment from Morningstar analyst, additional details throughout)
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