Nomura's Lucrative Dive into the Volatile Post-Trump Markets
Trump's Reign Fueling Trading Frenzy Boosts Nomura's Profits by 27%
Japan's mammoth investment bank, Nomura, capitalized on the chaotic US equity markets post-Donald Trump's election, padding their quarterly profits before analyst predictions. The banking powerhouse announced a net income of ¥72bn ($502mn) in the three months to March, surging 27% year-on-year and outperforming an average estimate of around ¥64bn, as reported by Bloomberg.
Thanks to the unpredictable market swings, Nomura's equity trading revenues saw a significant 24% jump. This boost was chiefly due to increased client activity and higher market volatility in the Americas region, mimicking the trend observed among Wall Street banks, according to their recent earnings reports.
Dealmaking fees edged up by 5% compared to the previous year, although fixed income revenues took a 14% hit. However, the wholesale unit, incorporating trading, investment banking, and international wealth management businesses, recorded a 2% revenue growth overall.
At a press event, chief financial officer Takumi Kitamura acknowledged the positive impact of recent market volatility on the bank but stressed the importance of careful risk management moving forward.
Christopher Willcox, boss of the wholesale unit, revealed to the Financial Times that his traders were drawing nearer to taking full advantage of market turmoil due to the reforms he implemented. Willcox, who joined Nomura four years ago from JPMorgan Chase, was tasked with overhauling the wholesale unit following the Archegos family office's collapse in 2021.
These impressive results mark a significant milestone for Nomura, signifying a close to a year of unprecedented profits for the bank. With chief executive Kentaro Okuda spearheading a shift toward more stable revenue sources, Japanese savers seeking higher returns as inflation resurges in the country, the bank's wealth management and investment management sectors notched record years.
However, both sectors experienced a slight dip in their Q4 results compared to the same period last year when markets were riding high. Kitamura noted on Friday that wealth management clients remained unfazed by ongoing market upheavals, with April witnessing net inflows to the bank’s funds persisting.
The previous fiscal year under Okuda's reign marked the first time Nomura recorded annual profit growth. This year, the bank reported a ¥340.7bn net income—more than double the measly 2024 result of ¥166bn.
As part of Okuda's strategy, Nomura agreed to purchase Macquarie's US and European public asset management business for $1.8bn—the bank's biggest deal since the problematic 2008 acquisition of Lehman Brothers’ Asian and European assets.
According to anonymous sources, the bank is seemingly considering escalating its cash prime brokerage operations in the US and Europe, businesses they mostly withdrew from post-Archegos debacle. Although unwilling to comment on media reports, Nomura confirmed the news, effectively handing the cat out of the bag to Bloomberg.
To further bolster its financial position, the bank unveiled plans to repurchase up to 3.2% of its shares for as much as ¥60bn. Despite closing 0.5% higher in Tokyo on Friday, Nomura's stock has taken a 10% tumble over the past year.
- Nomura, a global banking powerhouse, outperformed analyst predictions with a net income of ¥72bn, due to increased client activity and higher market volatility in the Americas region.
- The banking industry giant also capitalized on chaotic US equity markets post-Donald Trump's election, with equity trading revenues seeing a significant 24% jump from the unpredictable market swings.
- dealmaking fees edged up by 5%, but fixed income revenues took a 14% hit; however, the wholesale unit, including trading, investment banking, and international wealth management businesses, recorded a 2% revenue growth overall.
- Japanese savers seeking higher returns as inflation resurges in the country have found favor in Nomura's wealth management and investment management sectors, which notched record years under the leadership of CEO Kentaro Okuda.
- Despite this success, both sectors experienced a slight dip in their Q4 results compared to the same period last year, with April witnessing net inflows to the bank's funds persisting.
- As part of Okuda's strategy, Nomura agreed to purchase Macquarie's US and European public asset management business for $1.8bn, the bank's biggest deal since the problematic 2008 acquisition of Lehman Brothers’ Asian and European assets.
