Nomura profit outlook dims on weak wholesale


TOKYO • Nomura Holdings Inc said the struggles in its loss-making wholesale business stretched into the current quarter, signalling that the division remains a drag on profit as its retail operation also falters.

After getting off to a good start in October, wholesale client activity “dropped steeply in November for both individual and institutional investors”, CEO Koji Nagai said yesterday. “We can’t be optimistic about our profit environment for the third quarter (3Q).”

The remarks damp hopes that Nomura is getting back on track after posting a net loss in the fiscal 2Q ended September. Weakening investor sentiment at home is compounding the woes of Japan’s biggest brokerage, which has struggled to sustain profitability abroad for years, particularly in Europe.

Nagai said the firm will reduce expenses at its retail division by 10% over the next three years, part of a ¥60 billion (RM2.19 billion) cost-cutting plan unveiled a year ago.

The firm will review branches with overlapping coverage in Japan’s metropolitan areas amid changing demographics, the presentation showed.

Retail profits have been declining as revenue from brokerage commissions falls and costs rise. It will also reduce capital held by its UK unit to US$3 billion. Capital will be reallocated to units that serve “growth areas” in the US, Asia and Japan.

The Japanese firm’s wholesale business lost ¥2.5 billion before taxes in the fiscal first half, as fixed income revenue fell.