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Investing.com -- Nomura Holdings (NYSE:NMR) Inc., Japan’s largest brokerage, reported a significant rise in profit, surpassing analyst predictions. The company benefited from strong trading and investment banking business, while also making strides in cost reduction.
The company’s investment banking revenue rose by 14%, reaching its highest level since at least 2016. Pretax profit from overseas nearly tripled to ¥51.8 billion, as Nomura generated profits in all regions. The firm’s return on equity increased to 11.8%, up from 11.6% three months prior.
The firm’s net income for the three months ending on Dec. 31 doubled from the same time the previous year, reaching ¥101.4 billion ($661 million), the highest in over four years. This result exceeded the ¥72.4 billion average estimate of five analysts.
Nomura’s CEO, Kentaro Okuda, has successfully led the company towards an earnings recovery, despite recent scandals. Japanese brokerages, including Nomura, are capitalizing on increased trading and deal-making activity, as well as a growing investment interest from individual clients seeking to safeguard their wealth amid rising inflation at home.
The company’s fixed-income revenue increased by 35%, while equities saw a 45% gain. Both outperformed the average performance of the five largest US banks, according to Hideyasu Ban, a senior analyst at Bloomberg Intelligence.
The wholesale group, headed by Christopher Willcox, made additional progress on cost savings. The division, which includes trading and investment banking operations, saw its costs fall to a four-year low, 79% of net revenue.
Nomura’s domestic wealth management division reported an increase in revenue by 13% for the eighth consecutive quarter. Nomura, along with other competitors like Daiwa Securities Group Inc. (TYO:8601), is aggressively expanding its wealth business as inflation prompts Japanese households to invest more of their $7.3 trillion in cash and deposits.
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