Nomura EQD revenue tumbles, America’s build up slows down

Nomura Holdings has posted a net revenue in its global markets (GM) business of JPY158.2 billion (US$1.2 billion) from January to March, which was a 3.4% decrease quarter-on-quarter (QoQ), according to its earnings report for FY21/22 ended in March.

The amount reflected a recovery from the Archegos-related loss of JPY36.8 billion at GM in the prior-year period. By asset class, fixed income and equities contributed to 50.6% and 49.4% of the net revenues, respectively.

Japan reported stronger revenues in equities and investment banking, while Emea posted revenues growth in macro products such as rates and FX/EM and in investment banking

Equities reported ‘stronger revenues’ in cash but derivatives revenues dropped in Americas ‘giving an overall slight decline’. Other regions in Q1 22. ‘In fixed income, rates revenues increased while securitized products slowed,’ stated the Japanese bank about its Americas franchise.

Meanwhile, equity derivatives revenue grew in Japan and Asia ex-Japan. Cash equities reported increased revenue driven by Americas and Emea in the first three months of 2022. Nomura exited the EQD business in Emea in 2016.

By region, Americas remained the most profitable centre for global markets (GM) followed by Japan, Asia ex-ex Japan and Emea.

GM contributed to 81.2% of the wholesale net revenues while the remaining JPY36.7 billion came from investment banking (IB).

‘Japan reported stronger revenues in equities and investment banking, while Emea posted revenues growth in macro products such as rates and FX/EM and in investment banking,’ stated the bank led by Nomura President and Group CEO Kentaro Okuda (pictured).

At wholesale, IB reported its best results since the year ended March 2017 when comparisons became possible, according to Okuda.

‘Despite market volatility due to changes in monetary policy and heightened geopolitical risks, global markets maintained strong revenue momentum underpinned by disciplined risk management and diversification across regions and products,’ he said.

From January to March, Nomura International Funding lowered its issuance of structured notes to 151 from 189 in Taiwan in Q1 22 QoQ, which were distributed by Fubon Bank, UBS, BNP Paribas, Uni-President Securities and Bank SinoPac, SRP data shows.

Linked to unspecified share baskets, these privately placed structures feature snowball or range accrual payoffs with a tenor ranging one to three years.

Management line-up

The Japanese bank reported earlier this month the appointment of 83 senior managing directors across the retail, wholesale, investment management and other segments, including Steven Ashley, head of wholesale based in London and Yutaka Nakajima, head of GM in Tokyo.

Revenue

Groupwide, wholesale continues to be the backbone segment by generating 57.2% of the entire net revenues, followed by retail (20.7%) and investment management (3%) in Q1 22.

Retail net revenues dropped 19% to JPY70.5 billion compared to the previous quarter. There was slower progress across all the quarterly KPIs due to external factors, but recurring revenue (assets) and consulting-related revenue increased for the full fiscal year, according to Nomura. 

Investment management posted JPY10.1 billion during the quarter, which was 75% lower QoQ, after the investment business booked negative JPY21.1 billion mainly due to a loss of JPY18.8 billion yen related to American Century Investments and an unrealised loss of 4 billion yen on investee companies of Nomura Capital Partners.

The total pre-tax income fell 38% to JPY49.5 billion at Nomura in Q1 22 QoQ. On a yearly basis, that amounted to JPY226.6 billion, down two percent YoY, after the Japanese bank booked additional JPY23 billion Q1 22 related to ‘pre-financial crisis legacy transaction in the Americas’.

Click here to view Nomura Holding’s FY21/22 earnings presentation.