Nomura Holdings Inc., Japan's largest brokerage and investment bank, has reported a 76% drop in its quarterly net profit as fears of a global banking crisis have taken a toll on the financial markets. The company's investment banking business has been severely impacted, with deal-making fees slumping due to the lowest level of global mergers and acquisitions activity seen in over ten years.
"The market volatility we experienced in March significantly affected our fixed income trading revenues," said Takashi Miwa, CEO of Nomura Holdings. "Additionally, muted client activity led to less deal-making opportunities."
The wholesale division of Nomura Holdings suffered for the second consecutive quarter with a pre-tax loss of 14.2 billion yen ($126 million), further indicating the challenges faced by its investment banking and trading businesses.
January-March profits came in at 7.4 billion yen ($55.37 million), a considerable decrease from last year's figure of 30.96 billion yen during the same period. Furthermore, net profits for this fiscal year ended March were reported at just 92.8 billion yen – much lower than analysts' average estimate of 136.26 billion yen.
These underwhelming results cast doubt on Nomura Holding’s ambitious midterm plan announced last year that aimed to achieve annual pre-tax income up to 390 billion yen for its three core divisions by March 31st,2025.
Analysts suggest that these unfavorable conditions will continue to challenge major financial institutions like Nomura Holdings Inc., urging them to adapt their strategies accordingly.
"Given the ongoing uncertainty surrounding both domestic and international economic conditions due to factors such as COVID-19 variants and geopolitical tensions," says Masayoshi Suzuki, Chief Financial Analyst at Bankhaus Metzler Japan Ltd., "it is crucial for firms like Nomura to remain agile and prepared to navigate through these volatile times."
Despite the disappointing financial results, Nomura Holdings Inc. remains committed to its long-term goals and will continue to evaluate various strategies in response to current market conditions.
"We recognize that we need to adapt our approach in order to weather the challenges ahead," said CEO Takashi Miwa. "We are determined not only to improve performance but also maintain a strong focus on risk management and compliance as part of our commitment towards sustainable growth."