Nomura exceeds expectations: Strong results despite challenges

Nomura, Japan's largest brokerage firm, experienced a profitable upswing in the last quarter that exceeded analysts' expectations. The company impressed with solid results in wealth management, trading, and investment banking. Net income doubled compared to the previous year, reaching 98.4 billion yen (approximately 645 million dollars) in the three months ending September 30. This exceeded the average analyst estimate of 63 billion yen, as announced by the company on Friday. However, despite these financial successes, Nomura is under pressure from recent revelations of market manipulation that came to light in late September. CEO Kentaro Okuda chose to take a pay cut due to this incident, which led some clients to place their bond trading transactions elsewhere. Further troubling news includes the arrest of a former employee suspected of robbery and attempted murder of elderly clients. Meanwhile, Okuda is working to reinforce the recovery path and leave behind past burdens, such as the nearly 3 billion dollar loss from the collapse of the U.S. family firm Archegos Capital Management in 2021. CFO Takumi Kitamura expressed regret over both the market manipulation and the former employee's arrest, stating that it is still too early to assess the impact of these incidents on the wealth business. However, the influence of the bond trading scandal on profits is expected to be limited. Despite these challenges, Kitamura was able to celebrate the impressive second-quarter results, which he described as 'very strong.' During the quarter's volatility, when Japanese stocks reached a record high in July and then succumbed to a panic sell-off in August, Nomura benefited from fees generated by individual clients moving to investment fund products. Revenue in the wealth management division, targeting domestic retail customers, rose by 18% compared to the previous year. The pre-tax profit reached a nine-year high. The wholesale business segment, responsible for trading and investment banking, recorded a 29% increase in revenue.