Nomura Holdings Inc.’s first-quarter profit more than tripled as surging brokerage commissions and investment-banking fees outweighed a drop in trading income.
Net income climbed to 68.7 billion yen ($556 million) in the three months ended June 30 from 19.9 billion yen a year earlier, Japan’s biggest brokerage said in a statement Wednesday. That beat the 59 billion yen average estimate of seven analysts surveyed by Bloomberg.
Daiwa Securities Group Inc. also posted a larger-than-anticipated increase in profit as a Japanese stock market in its fourth year of gains prompted more people to invest their savings. Nomura tapped its retail clients when it sold shares for Toyota Motor Corp. and Sony Corp. in the current quarter, and the firm is also managing an initial public offering for Japan Post Holdings Co.
“The stock market environment is favorable for Nomura, which underwrote the Toyota deal that enabled it to obtain new accounts,” said Shinichi Ina, an analyst at UBS Group AG. “Nomura will benefit from large deals that will give an incentive for depositors to shift their cash into investments.”
Net income at Daiwa rose 30 percent to 44.8 billion yen, the highest in eight quarters, led by brokerage commissions and trading, the firm said in a statement Wednesday. Analysts surveyed had expected 36 billion yen.
Revenue at Nomura gained 10 percent in the quarter from a year earlier to 508.4 billion yen, the report showed. Brokerage commissions jumped 36 percent and investment banking fees climbed 24 percent. Asset management fees rose 30 percent.
Trading profit fell 21 percent as fixed-income business slowed amid a decline in liquidity, the company said.
More than half of Nomura’s profit before taxes came from its retail operations, underscoring Chief Executive Officer Koji Nagai’s reliance on domestic business. While the firm made money abroad for a second straight quarter with pretax profit of 2.7 billion yen, that was a fraction of its 50 billion yen goal for overseas business for the year.
“It wasn’t enough, but at the same time we withstood the Greece issue and many events happened in the quarter,” Chief Financial Officer Shigesuke Kashiwagi said on a call with analysts. “It may seem like we have a long way to go, but we’ll just push on and we won’t take risks” to achieve the target for overseas.
Shares of Nomura fell 0.5 percent to 860.4 yen at the close in Tokyo before the results, paring this year’s advance to 25 percent. Daiwa gained 0.2 percent and is down 4 percent in 2015.
Japan’s equity market will continue to perform steadily as the economy is recovering and individuals are keen to buy equities, Kashiwagi said. The Nikkei 225 Stock Average gained 5.4 percent in the quarter, touching the highest since 1996.
Stocks in Japan have been climbing following unprecedented monetary easing and, most recently, Prime Minister Shinzo Abe’s efforts to bolster corporate governance. Transactions on the Tokyo Stock Exchange’s First Section rose 39 percent last quarter from a year earlier to 357.4 trillion yen, exchange data show.
Nomura is receiving 22.5 billion yen in fees from Toyota for exclusively selling 500 billion yen of shares for the automaker, its biggest equity underwriting deal. Kashiwagi said the firm added about 35,000 retail accounts in July, more than double the monthly average, thanks in part to demand for Toyota’s securities.
CEO Nagai, 56, is seeking to increase client assets under management to 150 trillion yen by March 2020 from 113.4 trillion yen in June.