Nomura Holdings Inc., Japan’s largest brokerage, reported a significant drop in net income for the first quarter of 2023 due to a spike in volatility and muted client activity. The company’s net income fell by 76% compared to the same period last year to 7.4 billion yen ($55 million), falling short of analysts’ expectations. Fixed income trading revenues were particularly affected by the turbulence, which led to a 6% decline in global markets unit revenues.
Despite the challenges, Nomura plans to buy back up to 20 billion yen in shares, albeit less than what it had announced last year. The company’s rates traders eventually bounced back from the market volatility, according to the head of Nomura’s investment banking and trading businesses.
Nomura is facing numerous challenges, including the historic market moves triggered by Silicon Valley Bank and Credit Suisse Group AG’s troubles, which have affected trading activity. The economic outlook also remains uncertain, with interest rates rising and client activity muted.
To rein in costs, Nomura has reportedly cut its entertainment budget for executives. The company also aims to generate more stable revenue from advisory and wealth management services while reducing its reliance on volatile trading, a challenging task as competition for serving wealthy clients heats up.
Despite the headwinds, Chief Financial Officer Takumi Kitamura remains optimistic, stating that deal origination should recover later this year. Nonetheless, muted activity in capital markets continues to weigh on big investment banks, including Nomura, depressing fees and putting pressure on the industry to adapt.
.jpg)
Social Plugin