Nomura Holdings has delivered a net income of JPY 142.5billion (US$1.36 billion) in the three months ended June 30, which was a recovery from a loss of JPY34.5 billion a quarter earlier and 1.55x year-on-year (YoY).

The bank’s net revenue posted JPY 460.7billion, up 94% and 39% from a quarter and a year earlier respectively, according to its Q1 FY20/21 report. 

The wholesale division recorded a net revenue of JPY248.7 billion, the highest since the year ended March 2002, 93.5% of which was from global markets business while 6.5% from investment banking.

SRP data shows that the Japanese bank did not issued any products during Q2 2020. However, Nomura remains an active player in its domestic structured products market Japan and appears as the issuer of 23 live products worth an estimated US$4.2 billion. The Japanese bank has also a number of live structures in the institutional space (11 products/US$187m) and has a handful of live products in several markets including the Taiwan (two products/ US$3.6m), the UK (one product/US$16.4m), The Netherlands (one product/US$14.6m), and Russia (one product/ US$2.2m).

The bank appears as the distributor of 54 live products worth an estimated US$5.83 billion. The Japanese bank has also a number of live structures in the institutional space as a distributor (18 products/US$465.6m) and has a handful of live products in several markets including the United States (six products/US$ 35.8m), Mexico (three products/ US$4.9m), South Korea (three product/US$50.2m), the UK (two products/US$ 32.2m), The Netherlands (one product, US$ 14.6m).

Nomura bolstered its investment bank last December with the hire of Roland Domann as managing director and head of sales and trading for Emea. Domann joined from Deutsche Bank and was charged with expanding the bank’s asset and liability management and insurance solutions structuring team focusing on European pension and insurance clients. However, he left in March to join MUFG as head of Paris distribution and structured financing and solutions sales in Germany, Austria and Switzerland.

Earlier this month, several media outlets reported that the Japanese bank had cut jobs in its Instinet Equity Research division after deciding to partner with New York based Wolfe Research instead of offering its own content product to clients, and that 10% of its US investment banking staff would have their jobs reviewed.

Divisional breakdown

Despite the background noise, Nomura has posted a net income of JPY 87.9billion was generated by the division, representing an 8.7x and 4.4x increase quarter-on-quarter (QoQ) and YoY respectively.  

The growth came from fixed income as well as Americas and Asia ex-Japan equities, which were driven by “normalization from market downturn in March, an uptick in client activity due to portfolio rebalancing, and elevated volatility”.

Japan equity capital markets, cross-border M&A as well as acquisition and leveraged finance remained sluggish, which resulted in a 32% decrease YoY for investment banking business.

For global markets business, equities worth JPY 77.7billion made up 33.4% of its revenue and saw derivatives rebound in Americas and Asia ex-Japan. Fixed income worth JPY 154.9billion contributed to the rest of the revenue where credit environment improved in EMEA, Japan and Asia-ex Japan.

The other two main segments for the Japanese financial service company - Retail and Asset Management - recorded a net income of JPY 15.1billion and JPY 19.2billion, translating to an 85.6% and 5.6% rise YoY respectively.

Compared with the January to March period, the net income of retail business dropped by 18% due to “weak investor sentiment and restrictions on face-to-face services” in April and May, while asset management recovered from a net income loss of JPY 8.7billion as “continued inflows into ETFs boosted AuM (asset under management) to a record high” of JPY 20.3trillion at the end of June.

Besides, other revenues outside the three pillars reported JPY 94.7billion, 7.7x QoQ and a 57% increase of the prior year, with a net income of JPY 57.4billion.

The gain linked to the approval to covert rights in a Nihonbashire development project worth JPY 71.1billion and “economic hedging transactions” valued at JPY 5.6billion. Meanwhile, a loss of JPY 5.4billion occurred from “changes to own and counterparty credit spread relating to derivatives”.