Nomura Holdings, Inc. today announced its consolidated financial results for the second quarter of the fiscal year ending March 31, 2011.
Second quarter net revenue was 275.6 billion yen (US$3.3billion)1, an increase of 6.1 percent over the first quarter and 8.1 percent below the same quarter last year. Income before income taxes was 21.6 billion yen (US$259 million), up 233.8 percent from the prior quarter and down 20.9 percent year on year. Net income attributable to Nomura declined 54.7 percent quarter on quarter and 96.2 percent from the second quarter last year to 1.1 billion yen (US$13 million).
Net revenue for the first half (Apr - Sep) was 535.4 billion yen (US$6.4 billion), a decrease of 10.5 percent compared to the same period last year. Income before income taxes was 28.1 billion yen (US$336 million), down 52.2 percent from the prior year, while net income attributable to Nomura declined 91.4 percent year on year to 3.4 billion yen (US$40 million).
"All divisions were profitable in the quarter. Wholesale posted a strong performance and Asset Management revenues increased. Although Retail declined from a strong first quarter, our retail client franchise continues to provide a stable earnings base," said Kenichi Watanabe, Nomura's President and Chief Executive Officer.
"We remain preeminent in Japan, and our international strategy is gaining momentum. In Asia and EMEA we have established a record of high profile deals, and our investment in the US is already delivering results. In the second half, we will continue to focus on flow businesses and generating revenues from our investments while maintaining a robust financial position."
Nomura also announced today that its Board of Directors declared a first-half dividend of 4 yen per common share. The dividend is expected to be paid on December 1, 2010, to common shareholders of record on September 30, 2010.
Second quarter highlights
- Wholesale revenues up 50.5 percent. Fixed Income, Equities, and Investment Banking all reported higher revenues.
- Robust inflows into foreign currency denominated products in Retail despite a decline in overall revenues from a strong first quarter.
- Asset Management revenues increased 6.5 percent on higher market share in investment trusts in Japan and growth in investment advisory business.
- Capital ratio of 22.7 percent and Tier 1 ratio of 16.5 percent are among the highest in the industry.
Retail
Net revenue in Retail was 87.8 billion yen and income before income taxes was 22.8 billion yen.
The retail environment in Japan was particularly tough during the second quarter due to subdued client activity as a result of unsettled market conditions. Despite the challenging environment, Retail reported net asset inflows as new funds continued to flow into investment trusts and foreign bonds, underscoring the progress the firm has made in diversifying its product offering and providing retail clients with consulting-based services.
Asset Management
Asset Management booked net revenue of 19.3 billion yen and income before income taxes of 5.2 billion yen. Assets under management increased by 5 percent from the prior quarter to 23.3 trillion yen. Nomura also increased its share of the publicly offered investment trust market in Japan to 21.2 percent at the end of September. Asset Management expanded its investment advisory business in Europe and Asia, winning new mandates from a diverse range of investors including pension funds, financial institutions, and government clients.
Wholesale
Net revenue in Wholesale was 163.4 billion yen and income before income taxes was 7.6 billion yen. Global Markets booked second quarter net revenue of 144.4 billion yen. In Fixed Income, market volumes improved in the latter half of the quarter, driving a rebound in revenues across the core product set of Rates, Credit, Securitized Products, and FX. In Equities, primary businesses such as public offerings by Japanese companies and Asian convertible bonds contributed to revenues. Nomura's US equities and convertible bonds businesses are now fully operational and Equities continues to enhance global connectivity.
Investment Banking gross revenues were 39.7 billion yen. Nomura further increased its market share during the quarter even as global investment banking fee pools continued to decline from last year. The firm also executed a number of high profile cross-border M&A deals and rose up the ECM league tables compared to its ranking at the same time last year.
Financial position
Nomura maintains a robust financial position and a healthy balance sheet. As of the end of September, Nomura's total capital ratio was 22.7 percent and its Tier 1 ratio was 16.5 percent.
Nomura had total assets of 34.3 trillion yen and shareholders' equity of 2.1 trillion yen. Gross leverage was 16.7 times and net leverage was 9.8 times. All figures are shown on a preliminary basis.
