Nomura Jumps to 11-Month High After Quarterly Profit Surges

(Bloomberg) -- Nomura Holdings Inc. jumped after Japan’s biggest brokerage posted its highest quarterly profit in 17 years, driven by a one-time gain and improvements in its wholesale business.

The stock climbed as much as 4.4% on Wednesday morning in Tokyo to 521 yen, heading for the highest close since Nov. 12. Nomura reported growth in revenue from trading and investment banking, which made up for continued weakness in the retail business.

Shares of Nomura have now surged 55% since June as a cost-cutting program helped to spur a profit recovery. Chief Financial Officer Takumi Kitamura vowed to continue the restructuring exercise as the slump in operations serving individual investors at home leaves it vulnerable to a tenuous rebound in overseas business.

The results showed a “major improvement” even though they were inflated by one-time factors, Takayuki Hara, an analyst at SMBC Nikko Securities Inc., wrote in a note. “Wholesale performed robustly, while retail struggled.”

See more analysts’ reactions to Nomura’s results

Net income was 138.6 billion yen ($1.3 billion) in the three months ended Sept. 30 compared with an 11.2 billion yen loss a year earlier. A 73.3 billion yen gain from the sale of a stake in the firm’s Nomura Research Institute Ltd. affiliate buoyed the results.

At the wholesale division -- which includes trading services for global corporate clients and investment banking -- pretax profit more than tripled from a year earlier, led by equity revenues.

The retail business saw pretax profit slide 57%, as factors such as the U.S.-China trade war dissuaded individual investors. A review of the firm’s sales structure also affected the results, the firm said.

Kitamura said Nomura has completed about 60% of its restructuring program, which includes slashing $1 billion of costs in the wholesale business and closing retail branches at home.

“We haven’t yet carried through all of our structural reforms,” he said. “We will proceed with the overhaul to build a business base that will make it possible for us to grow in a sustained manner.”

To contact the reporters on this story: Takashi Nakamichi in Tokyo at tnakamichi1@bloomberg.net;Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward, David Scheer

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