• Bloomberg

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Nomura Holdings Inc. returned to profit in the third quarter on a ninefold surge in the value of local equity sales as banks issued new stock to bolster capital.

Net income was ¥10.2 billion for the three months ended Dec. 31, compared with a record quarterly loss of ¥342.9 billion a year earlier when the acquisition of units from Lehman Brothers Holdings Inc. drove up staff costs, according to a statement Tuesday.

Revenue at Nomura surged to ¥322 billion from ¥2.7 billion as companies raised a combined ¥2.96 trillion in the biggest quarter for equity and equity-linked sales in at least a decade. Chief Executive Kenichi Watanabe is also seeking growth outside Asia by boosting his U.S. workforce.

“Nomura and Japanese brokerages are in for a great year on the back of the recapitalization on the banks and others,” said Curtis Freeze, chairman of Honolulu-based Prospect Asset Management Inc. “The few new IPOs will also be big enough to make a strong contribution.”

Earnings missed the ¥32.7 billion average estimate of five analysts. Forecasts ranged from as low as ¥11.1 billion to as high as ¥57 billion.

Investment banking fees rose to ¥44.5 billion for the quarter, from ¥19.7 billion a year earlier. Brokerage commissions increased to ¥101.1 billion, from ¥73.4 billion, while trading profit was ¥66.5 billion, from a loss of ¥134.5 billion a year earlier.

Nomura was the No. 1 equity underwriter in Japan for the three months ended Dec. 31, arranging 27 transactions worth ¥1.68 trillion, compared with 11 transactions valued at ¥195.4 billion a year earlier.

Staff costs fell to ¥126.2 billion from ¥161.8 billion even as Nomura increased its U.S. workforce to 1,642 people as of Dec. 31, from 1,079 on March 30.

Nomura may issue foreign currency denominated bonds to help fund expansion overseas, Chief Financial Officer Masafumi Nakada said.

Daiwa Securities Group Inc., Japan’s second-largest brokerage, ranked No. 4 for equity underwriting during the quarter, with seven deals worth a total of ¥197.8 billion. Daiwa on Friday posted net income of ¥26.4 billion, its biggest quarterly profit in more than two years, boosted by equity underwriting and principal investments.

The three largest banks — Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. — raised a combined ¥3.7 trillion in stock sales since December 2008 to shore up balance sheets battered by the global financial crisis and to meet tougher capital requirements.

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