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Investment bank lifts Nomura profit

FUND-RAISING by Japanese companies helped investment bank Nomura to rack up its third straight quarterly profit, boosting hopes that its earnings recovery and global expansion plans are on track.

Japan’s largest broker made a 10.2bn yen (£70.8m) net profit between October and December, compared to a 342.9bn yen loss a year earlier when costs related to the acquisition of collapsed investment bank Lehman Brothers peaked.

Nomura’s investment banking operations turned a profit for the first time in six quarters as it managed a string of public share offerings by firms taking advantage of a recovery in the stock market to replenish their capital.

Japanese firms raised $33.5bn (£21bn) in share offerings in the quarter, five times the year earlier level. Nomura managed two-fifths of that total, while Morgan Stanley ranked a distant second with a market share of seven per cent.

But a sharp slowdown in trading amid low market volatility and tighter spreads on bonds hit Nomura’s earnings. Trading gains slumped by more than half from the prior quarter to 66bn yen.

Chief financial officer Masafumi Nakada said: “Volatility everywhere – in currencies, interest rates, stocks – fell. So the environment was very difficult for trading. But as of January trading flow is coming back.”

Nomura, which has not given a full-year profit outlook, is likely to be able to turn a profit this year, Nakada said. The market consensus is for a net profit of 90bn yen, following a record loss of more than $7bn in the year to March 2009.