TOKYO-Nomura Holdings on Thursday posted a modest growth in third-quarter profit that missed analysts’ estimates amid sluggishness in its investment banking business, but Japan’s recent stock rally promises to offer a much-needed boost for Japan’s largest securities firm.
Tokyo-based Nomura, which is also trying to win back investor confidence after an insider trading scandal last year, said net income rose 13 percent to 20.1 billion yen, or $221 million, for the last three months of 2012, compared to 17.8 billion yen a year earlier.
That performance fell short of an average 31 billion yen profit forecast from eight analysts surveyed by Bloomberg News. A drop in investment banking fees offset savings from a cost-cutting drive and gains in brokerage commissions, hurting Nomura’s bottom line.
Nomura aims to slash expenditures by$1 billion to cut back costs that surged after the firm in 2008 acquired the European and Asian operations of the now defunct investment bank, Lehman Brothers.
Mr. Nagai, who took helm at Nomura in August, has also promised to restore the bank’s reputation after an insider trading case that was a throwback to its scandal-racked 1990s. Nomura admitted last year that its salespeople had divulged information on share offerings to customers before it became public.
Still, Japan’s recent stock market rally came as welcome relief for Nomura, which saw its trading earnings rise. The Nikkei stock index has surged almost 25 percent in the past three months on expectations that Prime Minister Shinzo Abe will go much further than his predecessors to stimulate growth in the Japanese economy.
Nomura said brokerage commissions jumped 13 percent to 83.7 billion yen, while trading profits rose 10 percent to 88.2 billion yen and its investment in equities yielded gains of 8.9 billion yen. In the latest quarter, earnings were also buoyed by the sale of Annington Homes, the British real estate company, part of Nomura’s efforts to pare down its private equity holdings.
But investment banking fees slumped 24 percent to 13 billion yen, hurt partially by a loss of business as companies stayed away from Nomura in the wake of its insider-trading scandal. Overall, revenue fell 4.7 percent from the previous year to 459 billion yen. Nomura does not disclose earnings forecasts.
