Thu, Feb 03, 2011 - Page 6 News List

Nomura’s Q3 profit misses estimates as fees slump

Bloomberg

Nomura Holdings Inc chairman Junichi Ujiie rubs his face during a session on the second day of the World Economic Forum annual meeting in Davos, Switzerland, last Thursday.

Photo: Bloomberg

Nomura Holdings Inc, Japan’s largest brokerage, posted third-quarter profit that missed analysts’ estimates as investment-banking fees declined and rising personnel costs overshadowed gains in trading income.

Net income for the three months ended Dec. 31 climbed rose 31 percent to ¥13.4 billion (US$164 million) from ¥10.2 billion a year earlier, the company said in a statement in Tokyo yesterday. That was smaller than the ¥20 billion median estimate of seven analysts surveyed by Bloomberg.

Nomura has yet to reap the benefits of its expansion after tripling overseas staff following its acquisition of Lehman Brothers Holdings Inc assets in 2008. The firm’s global ranking for equity underwriting and advice on mergers slipped last quarter, even as chief executive officer Kenichi Watanabe, 58, looks abroad to make up for waning growth prospects at home.

Investment banking fees declined to ¥34 billion last quarter from ¥44.5 billion a year earlier, the company said.

Brokerage commissions totaled ¥100 billion, compared with ¥101.1 billion previously.

Trading profit rose to ¥104.9 billion from ¥66.5 billion, helped by the Nikkei 225 Stock Average’s 9.2 percent jump in the quarter.

Daiwa Securities Group Inc, Japan’s second-largest brokerage, on Tuesday said third-quarter profit plunged to ¥1.2 billion from ¥26.4 billion a year earlier as a decline in underwriting fees overshadowed gains from trading.

Nomura’s staffing costs increased 13 percent last quarter from a year earlier to ¥143.1 billion, the highest in five quarters, the bank said.

The firm has boosted its workforce outside of Japan to 12,028 employees as of last September from 4,089 in March 2008. In the US, it is investing ¥250 billion and plans to offer research coverage on 600 companies.

The brokerage posted a ¥3 billion pretax loss on overseas business in the third quarter, compared with a profit of ¥7.5 billion a year earlier.

In Europe, the firm posted a ¥3.4 billion loss before taxes and in Asia it lost ¥2.4 billion. In the US, the bank recorded profit of ¥2.7 billion, down from ¥6.3 billion a year earlier.

“US business improvement is the key to tell if Nomura will able to raise its bottom line,” said Takehito Yamanaka, a Tokyo-based analyst at MF Global FXA Securities Ltd.

“It will be easier for Nomura to do business in the US than Asia, where it may face different cultures and regulations,” Yamanaka said.

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