Nomura Gains a Windfall in Q2 despite Global Worries

Japanese brokerage and investment banking giant, Nomura, generated a net profit of 16.8 billion yen ($113.9 million) between July and September, the second quarter of the ongoing fiscal year.

The figure strengthened by 9.9 times quarter-over-quarter and 5.2 times year-over-year. Though it looks impressive on the surface, the figure was actually lackluster. It was pushed higher as the company booked a 39 billion yen charge from US mortgage-backed loans issued a decade ago.

Nomura’s Chief Financial Officer, Takumi Kitamura, also admitted in a press briefing that “the latest results are not at satisfactory levels.”

The Japanese giant ended the three months with net revenue of 318.0 billion yen ($2.2 billion). The figure came in 6 percent higher from the previous quarter but was weak by 0.3 percent year-over-year. It generated a pre-tax income of 31.5 billion yen ($218 million).

Business Divisions

Nomura’s businesses are categorized into four segments: retail, investment management and wholesale.

While retail and investment management revenue declined year-over-year, it strengthened for the wholesale division. Pre-tax income in all three segments went down from the same period of the previous year.

With a low demand for bond and equity underwriting, revenue from investment management came in at 26.2 billion yen, which is 24 percent lower than in Q2 of the previous fiscal. In addition, its pre-tax income decreased by 63 percent to 56 billion yen.

The retail segment generated 72.5 billion yen in revenue, which is down by 15 percent, whereas the wholesale segment was 72.5 billion yen, which is higher by 19 percent. Income from the retail division came in 68 percent lower at 5.5 billion yen, while the figure dived by 19 percent for wholesale to 20.2 billion yen.

The group's business was impacted by increasing interest rates and the fallouts of the Russia-Ukraine war on the stock markets. Nomura even changed its earnings structure to safeguard itself from market swings.

“Amid the ongoing market uncertainty, we remain committed to meeting the diversified needs of our clients and delivering sustainable growth,” said Kentaro Okuda, Nomura’s President and Group CEO.