Net income at the Japanese bank plunged by 93% to JPY3.2 billion (US$28.1m) in Q2 FY21/22 ended in September despite the rebound of wholesale business.

Nomura has posted a wholesale pre-tax income of JPY25 billion in Q2 from a loss of JPY28.4 billion in the previous quarter as the damage arising from transactions with Archegos Capital Management is no longer present.

Net revenue at the wholesale segment increased 30% to JPY172.7 billion quarter-on-quarter (QoQ), or down 22% year-on-year (YoY). The Japanese bank’s wholesale business accounted for 54.2% of the total net revenue, followed by retail and investment management divisions.

Performance in our core business of equity derivatives was in line with the US banks - Takumi Kitamura 

During this period, Nomura appeared as the issuer of 109 live products across Taiwan (40), Poland (33), USA (17), institutional (13) and Japan (6) with the largest issuance entity as Nomura Bank International, according to SRP data. 

There are 69 live products distributed by subsidiaries of Nomura Holdings - led by Nomura Securities - in Japan (30), institutional (19), Germany (eight), US (six), Mexico (three), South Korea (two) and UK (one), SRP data shows.  

The main issuers of these products include Nomura International, Mitsubishi UFJ Trust & Banking and Kommuninvest i Sverige. For the Japanese market, there’re 27 Uridashi and three structured funds linked to the Nikkei 225, swap rate, Libor, JPY/AUD, AUD/JPY, JPY/USD and unspecified share baskets. 

By region, equity derivatives remained solid in Americas, Asia ex-Japan and Japan – Americas was the largest contributor in terms of net revenue. 

The Japanese bank last week appointed Vijay Sundaram as managing director, global head of wholesale front office risk and control. In this newly-created position, he will be responsible for enhancing Nomura’s front office risk governance and practices across global markets and investment banking based in New York.

By business line, global markets delivered net revenue of JPY137.2 billion in Q2, 41% higher QoQ. Equities revenue climbed to JPY66.5 billion due to the absence of Archegos-related losses while ‘macro uncertainty and muted client activity led to a slowdown in fixed income particularly in rates’.

Client revenues and trading revenues at both global markets units accounted for 90% and 10%, respectively.

The bank’s equities business remains strong compared with the US peers, said Takumi Kitamura (pictured), CFO of Nomura Holdings in the conference call.

‘Performance in our core business of equity derivatives was in line with the US banks and we didn’t see any impact from revising our prime brokerage business,’ said Kitamura. 

In a response to the Archegos-related loss at US$2.9 billion, Nomura last month established a board risk committee comprising outside directors and a non-executive director to enhance its risk management and carry out controls and business oversight following a review of its business management processes.

According to the bank’s results, retail pre-tax income dropped 11% to JPY17 billion as ‘brokerage commissions from sales of stocks and investment trusts slowed as retail investors took a wait and see approach’.

In addition, the pre-tax income from investment management declined 67% to JPY15 billion from last quarter which included strong contribution from unrealized and realized gains at JPY24bn. 

Firmwide, net income plunged 94% to JPY3.2 billion QoQ, or 95% lower YoY while net revenues reached JPY318.9 billion, down 10% QoQ, or a 14% decrease YoY.

Click here to view Nomura’s Q2 FY21/22 presentation.