Nomura Holdings said revenue from its global trading and investment banking business has increased “modestly” so far this quarter, signaling a slowdown from double-digit growth in the previous two quarters. Revenue from the wholesale division of Japan’s biggest brokerage was “progressing slightly above year-on-year” for the quarter as of Sept. 14, it said in a statement Wednesday. Operations related to equity products have remained “solid” and those for foreign exchange and emerging markets have recovered, but rates trading has been “challenging,” the Tokyo-based firm said.
Wholesale net revenue jumped 41% in the fiscal first quarter ended June 30, as Nomura joined Wall Street rivals in benefiting from stock-market volatility fueled by speculation over artificial intelligence and the war in the Middle East. The wholesale business generates more than half of the company’s overall income and played a key role in helping Nomura post record annual profit last fiscal year. Shares of Nomura fell 0.9% in Tokyo on Thursday morning, versus a 1% gain in the benchmark Topix index.
The stock has risen about 25% this year, returning to levels seen in 2008 before the peak of the global financial crisis. Wall Street banks have signaled diverging performance for the current quarter after a banner year for trading. Goldman Sachs Group Chief Executive Officer David Solomon said Wednesday that fixed income has been softer than equity trading, which has remained “very strong.” JPMorgan Chase forecast gains in trading revenue, while Bank of America Corp. expects a “relatively flat” result.
Nomura also noted that the modest growth in wholesale revenue is “partly reflecting the impact of yen depreciation.” A weaker Japanese currency inflates the value of earnings generated abroad when converted back to yen, while also adding to overseas fixed costs.Nomura reports results in yen. Analysts expect Nomura’s profit to keep growing this quarter as Chief Executive Officer Kentaro Okuda pushes for earnings that remain stable even during downturns. Net income is projected to climb 23% in the three months to ¥113.1 billion ($725 million) from a year earlier, according to the average of five analyst estimates.
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