Nomura reports strong EQD revenues in Japan, Americas steady

Nomura Holdings has reported net revenues of JPY348.9 billion (US$2.4 billion) from April to June, up 16.7% from the prior-year quarter, according to its earnings report for the first quarter of the fiscal year ending 31 March 2024.

Non-interest expenses, at JPY302.6 billion, were stable compared to the previous quarter and up five percent year-on-year (YoY). Accordingly, net income rose 3.2-fold to JPY23.3 billion quarter-on-quarter (QoQ), which was a 13.8-fold increase YoY.

There is strong interest in Japanese equities, and our Japan execution services and equity products business such as derivatives had a strong quarter - Kentaro Okuda, CEO

Net revenue for global markets (GM), at JPY160.4 billion, increased by seven percent (QoQ), but was nine percent lower YoY.

GM had a solid quarter in Japan-related businesses, but saw a slowdown in FX/EM and securitised products as ‘internationally market participants remained on the sidelines due to uncertainty in macro environment,’ stated the report.

Within GM, fixed income collected JPY97.4 billion in net revenue, up 11% QoQ but down 14% YoY. The quarterly advance was attributed to ‘growth in the credit business globally, improved performance in rates in the Americas’. However, the FX/EM unit underperformed in Asia, ex-Japan due to low volatility and client activity partially offset by growth in Europe, the Middle East, and Africa (Emea) and Japan.

Equities revenue of JPY63 billion rose by two percent QoQ and one percent YoY as international inflows into Japanese stocks remained strong amid overall muted client activity in international regions. ‘As interest in Japanese equities grows, we captured increased client flows and booked stronger revenues in derivatives, particularly in Japan, while Americas revenues remained steady,’ the bank stated.

As a result, fixed income and equities contributed to 60.7% and 39.3% of the group’s net revenue during the quarter, respectively.

‘There is strong interest in Japanese equities, and our Japan execution services and equity products business such as derivatives had a strong quarter,’ said Kentaro Okuda (pictured), CEO of Nomura, when being asked about the underperformance of equities revenues compared with peers in a conference call.

‘Americas equity derivatives was also relatively solid,’ Okuda added.

From April to June, Nomura International Funds increased its issuance of structured notes to 187 from 138 in Taiwan QoQ, according to SRP data. These products are mostly autocalls linked to a basket of shares, with a tenor of less than a one year. Taipei-based Yuanta Securities was the biggest distributor of these notes, followed by KGI, and Fubon Securities.

Business segments

Overall, GM gathered 84.0% of net revenues for the wholesale division from April to June. The remaining comes from the investment banking (IB) unit, which recorded a net revenue of JPY$30.5 billion, up three percent QoQ and 29% YoY.

For wholesale, net revenues were up seven percent to JPY190.9 billion QoQ but were down four percent YoY.  

Retail, the bank’s second-largest contributor by segment, generated JPY92.1 billion, up 22% QoQ and 29% YoY. Nomura stated that retail booked stronger sales across all products and services as ‘the division reorganised its teams to better understand client needs and provided in-depth consulting services’.

Flow revenues and recurring revenues grew on back of higher total sales, and recurring revenue assets reached a record high of JPY20.3 trillion at the retail segment.

Additionally, the third division - investment management - posted JPY26.5 billion in net revenue during the quarter, down 30% QoQ but 3.5 times higher YoY.

‘Assets under management in investment management reached a new high, lifted by strong inflows combined with market factors,’ Okuda said.

Nomura has made a number of senior structured products appointments this year, including John Goff (right), who was named as senior managing director, global head of structuring . The position was newly created with an aim to capture ‘considerable opportunity’ in structured products. Last week, the bank announced six management appointments across its Asia Pacific EQD trading.

Click the link to read Nomura Holdings’ Q1 FY23/24 earnings results, presentation and supplement.