Japan's largest investment bank and broker, Nomura, surpassed analysts' expectations in the third quarter of the fiscal year 2024. With earnings per share (EPS) of USD 1.24, the result significantly exceeded the projected USD 0.184 and marked a substantial increase compared to USD 0.11 from the previous year.
The revenue rose to $11.188 billion compared to $9.29 billion in the previous year, surpassing the analysts' expected $10.99 billion. This growth is primarily attributed to extreme market volatility, where the areas of wealth management, investment banking, and trading performed strongly, supported by increased purchases from retail investors who benefited from price fluctuations.
Despite the impressive quarterly figures, Nomura remains burdened by significant controversies. A court ruling decided that Nomura and Reckitt Benckiser subsidiary Mead Johnson are not responsible for the bowel disease of a boy, after being accused of not adequately disclosing the risks of infant formula. This verdict follows previous losses, such as the payment of 495 million USD to Abbott and 60 million USD to Reckitt Benckiser in connection with similar cases.
Additionally, Nomura was fined $21.8 million for manipulating Japanese government bonds through layering. CEO Kentaro Okuda and other executives accepted a voluntary two-month pay cut of 20 percent to take responsibility for the incidents.
The situation is exacerbated by the arrest of a former employee suspected of having murdered and robbed two elderly Nomura customers. "It is extremely regrettable that a former employee of ours has been arrested," said Chief Financial Officer Takumi Kitamura in a statement.
Despite these setbacks, Nomura reaffirmed its forecast for the current fiscal year and remains optimistic about future growth opportunities. The company has experienced steady growth over the past six months and plans to expand its global asset management capacity to accommodate upcoming changes in Japanese investment habits.
Analyst Thilo Kleibauer from Warburg Research criticizes, however, that Nomura is focusing heavily on expansion in the USA, while growth in its domestic market, Japan, is falling short of expectations. "Stronger, independent growth is needed to sustainably secure operational profit margins," emphasized Kleibauer.
Shares of Nomura initially reacted positively to the release of quarterly figures, but lost value again over the course of the day. The stock listed on the NYSE temporarily fell by 3.12 percent to $153.46, despite a yearly decline of over 12 percent and a current market value of around $100 billion.
