Nomura sees profits soften

Nomura saw profits soften in the fourth quarter, as heightened geopolitical tensions weighed on the Japanese bank.

The lender, Japan’s biggest broker and investment bank, posted net income of ¥31bn in the three months to March end, compared to a net loss of ¥155.4bn a year previously, when it was hit by the collapse of one of its biggest clients, Archegos Capital.

Net revenues rose 100% to ¥340.8bn year one year, but fell 3% on the previous quarter. Net income was also down on the third quarter, when it was ¥60.3bn.

Nomura chief financial officer Takumi Kitamura told reporters: “Higher US interest rates and greater geopolitical risks caused market volatility, dampening client activity and hurting the value of our securities holdings,” according to Reuters.

Annual net revenues were ¥1.36trn, a 3% fall on the previous year, while net income eased 7% to ¥143bn, below analyst expectations.

Kentaro Okuda, president, said: “As of the fourth quarter, we have almost completed the accounting treatment of legacy transactions in the Americas from before the global financial crisis, freeing up management resources to be allocated to growth areas.

“We remain committed to delivering sustainable growth.”

He added that the wholesale banking division had reported its best results since the 2017 financial year, and that investment management had booked “solid” business revenues. “Our retail business made further progress in the shift towards asset consulting, and our medium-to long-term initiatives yielded results,” he added.

The collapse in March 2021 of US fund Archegos rocked a number of leading financial institutions, including Credit Suisse and Morgan Stanley. In April 2021, Nomura said the collapse would cost it around $2.9bn.