Nomura fails to compete with US rivals

City A.M. Reporter
Nomura’s inability to take advantage of an upswing in the US credit market led to modest quarterly profits and raised questions as to just how quickly it can become a global powerhouse.

Nomura Holdings posted a fourth straight quarterly profit on the back of recovering stock markets, but Japan’s top broker failed to match the big trading gains posted by its global peers.

The Tokyo-based broker has been expanding in Europe and Asia after buying the operations of failed US investment bank Lehman Brothers in those regions. But it’s been building up its presence in the United States.

Nomura posted a quarterly net profit of 18.4bn yen (£129m), compared with a 215.8bn yen loss a year earlier and roughly in line with the 16.5bn yen average profit expected by analysts.

But Nomura’s results paled in comparison to global rivals such as Morgan Stanley, Goldman Sachs and JPMorgan Chase, which booked big gains on fixed income trading amid volatile swings in US government bonds.
“We have just started our expansion in the US and we are fully aware of the importance of the US market,” Nakada told a news conference.

Nomura said its global markets division, which handles trading, booked 30bn yen in income before taxes, helped by an expanding derivatives client base.

That compares with the $2.7bn (£1.8bn) Morgan Stanley booked from fixed income sales and trading revenue. The US bank more than doubled the revenue from a year ago.

Still, Nomura dominated significant market share in key areas in Japan. It controlled a 25 per cent share of stock underwriting for Japanese companies in the quarter and 34 per cent share for M&A advisory.