Nomura Holdings Inc. will probably fall into the red in fiscal 2008 with a record group net loss of about ¥700 billion, sources said Thursday.
Nomura is likely to have incurred the massive loss in the year that ended March 31 due to investment losses that swelled amid the worsening global financial turmoil and costs related to taking over part of the failed U.S. investment bank Lehman Brothers Holdings Inc., the sources said.
The red ink also stemmed from growing evaluation losses on securities holdings, they added.
It will be the second consecutive fiscal year for Japan’s largest brokerage to fall into the red. Nomura posted a group net loss of ¥67.85 billion in fiscal 2007.
Nomura is scheduled to release its fiscal 2008 earnings report Friday.
Together with electronics conglomerate Hitachi Ltd., Nomura’s group net loss is likely to be the largest among Japanese firms reporting their fiscal 2008 earnings data. Hitachi is expected to post a group net loss of ¥700 billion.
By booking hefty losses in its fiscal 2008 earnings report, Nomura is eyeing settling its losses linked with the financial crisis and swinging back into the black at an early date, the sources said.
However, the firm’s earnings forecast remains uncertain since the recovery of the global financial market is likely to take time, observers said.
In the January-March period alone, Nomura’s consolidated net loss is likely to have been roughly ¥200 billion, the sources said.
In late January, Nomura said it fell into the red with a group net loss of ¥492.36 billion for the first nine months of fiscal 2008.
The firm’s consolidated earnings results are based on U.S. accounting standards.
Big Mizuho loss seen
Mizuho Financial Group Inc. is expected to incur a group net loss of more than ¥580 billion in fiscal 2008, sinking into the red for the first time in six years as disposal costs for bad loans surged amid the global economic slump, the financial group said Thursday.
Mizuho, one of Japan’s three megabanks, is expected to announce sharp downward revisions to its current earnings forecast of ¥100 billion in net profit for the year that ended March 31 in the near future, Mizuho said.
With Mizuho’s anticipated loss, the nation’s three megabanks, which also include Sumitomo Mitsui Financial Group Inc. and Mitsubishi UFJ Financial Group Inc., are now almost certain to report a consolidated net loss for fiscal 2008, Mizuho said.
Financial institutions are widely suffering from deteriorating earnings with higher appraisal losses on shareholdings due to the stock market turbulence and rising bad loans due to the recession.
The deterioration in earnings may have an adverse effect on their lending stance, observers said.
Mizuho is suffering from huge losses in stockholdings in Merrill Lynch & Co., in which it invested about ¥130 billion. The company intends to accelerate efforts to restore its financial health under the new top managers installed earlier this month at the holding company and two group banks.
Given the deteriorating earnings, major financial institutions have implemented a series of large-scale capital reinforcements to strengthen their narrowing capital bases.
Among them was Sumitomo Mitsui, which announced a fresh capital increase through a public offering worth up to ¥800 billion. The bank is expected to incur a ¥390 billion group net loss for fiscal 2008.
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