Nomura Raises Profit Target in Recovery From Archegos Blowup

Nomura Holdings Inc. raised its pretax income target for the financial year ending March 2023 by 14%, with the bulk of growth expected to come from its wholesale division as it moves on from the implosion of Archegos Capital Management.

Japan’s biggest brokerage expects pretax income at its retail, investment management and wholesale divisions to rise to 320 billion yen ($2.9 billion), up from a May 2020 target of 280 billion yen, Chief Executive Officer Kentaro Okuda said in a speech during an Investor Day on Wednesday.

Income at Nomura’s wholesale division, which suffered a $2.9 billion hit from the collapse of Bill Hwang’s family office Archegos in March, is expected to rise to 150 billion yen, more than double the 64.3 billion yen for the year ended March 2021. The bulk of the growth is likely to come from advisory, wealth management and private markets.

Nomura’s management is taking the U.S. incident “very seriously,” and the firm will “refrain” from the areas of prime brokerage that involves simply lending using stocks as collateral, Okuda said. As of May 10, Nomura had closed more than 99% of its trading positions related to Archegos, he said.

Advisory Hiring

Nomura is among several global banks shaken by transactions with Archegos, an obscure investment firm set up to manage the fortune of trader Hwang. Only Credit Suisse Group AG suffered a bigger hit -- $5.5 billion -- from dealings with the family office.

Separately, head of wholesale Steven Ashley, said Nomura plans to hire 35 to 40 senior bankers for its global advisory business as it seeks to boost revenue in that area by 50% over three years. More than half of those hires will focus on the U.S. business, he said. It will also recruit more than 40 international relationship managers for its wealth division.

The firm is also targeting more than $100 million in incremental revenues related to digital assets in coming years and sees that asset class near to a “tipping point” with increasing institutional adoption, Ashley said.

Shares in Nomura were trading down 1.6% as of 3:37 p.m. in Tokyo.

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