* Q4 net profit at 61.3 bln yen, beats 41 bln yen analyst
* Waning enthusiasm for Abenomics weighs on trading volumes
* Retail profit falls 59 pct, wholesale profit falls 6 pct
* Nomura announces buyback; shares likely to rise, says
(Adds Daiwa CFO's comment on buybacks)
By Ritsuko Ando and Nathan Layne
TOKYO, April 30 Nomura Holdings,
Japan's biggest investment banking and brokerage group, reported
its first profit decline in seven quarters as waning enthusiasm
over Prime Minister Shinzo Abe's economic stimulus policies
brought down stock trading volumes.
Nomura and second-placed Daiwa Securities Group
processed a surge of transactions last year as optimism over
"Abenomics", aimed at ending a decade of deflation, helped the
Nikkei stock average rise over 50 percent.
But many who invested heavily grew impatient for more
drastic structural reform, leading to a drop in sales of mutual
funds and a decline of around 9 percent in the Nikkei benchmark
in the first three months of 2014.
Net profit for January-March fell 26 percent from a year
earlier to 61.3 billion yen ($597.8 million), Nomura said in a
statement on Wednesday. That still beat the 41 billion yen mean
estimate from five analysts polled by Thomson Reuters, thanks to
a strong showing in its fixed income and investment banking
Chief Financial Officer Shigesuke Kashiwagi said investors
appeared to be seeking more concrete indications of economic
recovery and assurances that the economy can withstand the
impact of a sales tax hike on April 1.
"If an improvement in corporate profits becomes clear and
employment shows further signs of recovery, then I think we can
see a more positive impact from the macro environment,"
Kashiwagi told a news conference.
Even with the quarterly decline, profit for the fiscal year
to March 31 doubled to 213.6 billion yen, the highest since the
year to March 2006. Earnings per share also roughly doubled to
55.8 yen, beating Nomura's target of 50 yen by March 2016.
Nomura on Wednesday also said it would repurchase 100
million shares, or 2.6 percent of its outstanding stock, with 44
million of that set aside for those exercising stock options, or
rights to buy shares.
Deutsche Bank analyst Masao Muraki said the buyback amount,
compared with last year's 40 million bought for stock options,
was much bigger than he expected and showed the company is
intent on improving returns for shareholders.
He forecast that Nomura's shares, which have fallen almost
30 percent since the start of the year, would rise in reaction
to the buyback announcement. The results came in after
Wednesday's market close.
Nomura earns more than half of its annual profit from
individual investors, in contrast to global peers such as
Goldman Sachs Group Inc, which focus mostly on corporate
In the fourth quarter, weak investor sentiment pushed pretax
profit at its retail division down 59 percent. The drop was also
brought about by a 58 percent fall in sales of stock investment
trusts as Nomura cut back on marketing new funds and shifted
resources to longer-term asset management services to cater to
Japan's ageing population.
Profit in Nomura's wholesale business, which includes
overseas operations and investment banking, fell 6 percent from
a year earlier but rose 20 percent from the previous quarter
thanks to growth in its fixed income business.
Rival Daiwa, which is more dependent on domestic retail
clients, also on Wednesday after the market close reported a 31
percent fall in fourth-quarter net profit to 33.2 billion yen.
Daiwa Chief Financial Officer Mikita Komatsu said the
company had no plans to buy back shares, even though its
full-year profit more than doubled.
Komatsu said investors, particularly those outside Japan,
wanted the government to follow up on promises of reform, with
policies including a reduction in corporate taxes.
"There's a demand for something reasonably specific," he
said. "I hope there will be change - change that's noticeable."
Nomura's Kashiwagi said investors also expected the Bank of
Japan (BOJ) to embark on further monetary easing.
"I personally understand the BOJ has done all it can since
last April. But they are expecting an additional message to the
market," he said.
($1 = 102.5500 Japanese Yen)
(Additional reporting by Emi Emoto; Editing by Christopher
Cushing and Jane Baird)