* Nomura to hold bi-annual investors meeting on Friday
* Expected to boost EPS target from 50 yen
* Seen focusing on growing client assets, turning profit
TOKYO, July 31 Nomura Holdings Inc,
Japan's biggest investment banking and brokerage group, will
likely announce a higher long-term profit target on Friday after
achieving the current goal two years early, analysts said.
Chief Executive Koji Nagai, shortly after he was picked two
years ago to overhaul the brokerage stricken by an insider
trading scandal, had said the group would aim to report earnings
per share (EPS) of 50 yen in the year ending in March 2016. It
previously did not have a bottom-line target.
Nomura achieved that objective in the fiscal year ended
March 2014, earning 55.81 yen per share. That raised hopes it
would set its sights higher, especially as Japan is finally
showing signs of emerging from almost two decades of deflation.
Nagai is expected to announce a new target on Friday at
Nomura's bi-annual investor gathering as a demonstration of the
group's resolve to keep growing even as the first flush of
Abenomics fades and its traditional client base shrinks due to
an ageing population. Nomura typically updates investors on its
long-term strategy at such meetings.
Any new target will likely be modest, however, since last
year's jump in profit was boosted by a surge in trading activity
as growth strategies unveiled shortly after Prime Minister
Shinzo Abe took office in late 2012 encouraged a wave of stock
buying, analysts said.
Nomura's April-June results released on Tuesday showed a
pullback in earnings, with net profit down year-on-year for the
second straight quarter. EPS fell to 5.26 yen from 17.24 yen a
"They already achieved 50 yen last year, but the number for
the first quarter, annualised, came to just 21 yen," said
Deutsche Bank senior analyst Masao Muraki.
He added that he was more interested in seeing details of
Nomura's retail strategy, referring to a push under Nagai to
grow client assets and recurring revenue.
RETAIL REVOLUTION, GLOBAL RESTRUCTURING
Retail clients account for 60 percent of Nomura's pretax
profit. To keep that segment growing in the face of an ageing
customer base, Nagai has been encouraging salesmen to shift away
from "churning" investment trusts - the practice of trying to
earn commission fees by encouraging clients to frequently switch
to new products.
Instead, Nomura staff are now being coached to sell more
longer-term funds, insurance products and to offer consultation
services on retirement and inheritance planning.
It is also hoping to expand its customer base by marketing
its service to younger people through the tax-free Nippon
Individual Savings Account (NISA) scheme.
Analysts also expect Nomura to explain how it can bolster
its overseas operations, which have yet to turn profitable
despite $1 billion in cost cuts. Its global business was only
profitable in one of the past six years since Nomura acquired
the European and Asian operations of Lehman brothers in 2008.
Nomura says it has been winning share in the global
fixed-income market as peers pull back to meet new capital
requirements. But analysts say it still looks tough for Nomura
to meet its earlier target of earning 50 billion yen ($487
million) in annual profit from its global business by March
"Gaining relative share in fixed income hasn't made its
global business profitable. Bringing the actual profit amount up
- that's the task facing Nomura," said Barclays analyst Azuma
($1 = 102.7600 Japanese Yen)
(Reporting by Ritsuko Ando and Emi Emoto; Editing by Ryan Woo)