January 30, 2014 / 6:41 AM / 4 years ago

UPDATE 2-Japan's Nomura sees solid earnings ahead after Q3 profit jumps

* Oct-Dec net 48.3 bln yen vs 41.2 bln yen analyst view

* Earnings pushed up by stock trading volume surge, one-off gain

* CFO not overly concerned about emerging market asset selloff (Adds CFO comments on emerging markets, retail, wholesale divisions’ earnings)

By Nathan Layne

TOKYO, Jan 30 (Reuters) - Nomura Holdings Inc is confident earnings will remain strong for the foreseeable future after profit more than doubled in the latest quarter, saying it is not overly concerned about a global selloff of emerging market assets.

Japan’s biggest investment bank, like peer Daiwa Securities Group Inc, has been cashing in on renewed interest in stocks among individual investors, with the benchmark Nikkei index hitting a six-year high last month thanks to pro-growth government policies and a weaker yen.

Nomura can maintain its earnings momentum as the strength of the Japanese as well as U.S. economies can offset a general withdrawal of speculative funds from China, Argentina and other emerging markets prompted by U.S. central bank action, Chief Financial Officer Shigesuke Kashiwagi said on Thursday.

“Nomura, with its business model, can continue to perform strongly,” Kashiwagi said at a news conference after the bank released earnings for its fiscal third quarter. “There is no need to be overly concerned.”

Nomura logged a net profit of 48.3 billion yen ($472.37 million) for October-December, compared with the 20.1 billion yen of a year earlier and 41.2 billion yen mean estimate of three analysts polled by Thomson Reuters.

That keeps the bank on track to nearly double its earnings for the business year ending March 2014, with analysts projecting profit of 203 billion yen from 107 billion a year earlier.

Shares of Nomura ended Thursday 3.9 percent lower ahead of the earnings release compared with a 2.5 percent decline in the benchmark stock index.

The stock has risen 43 percent over the past 12 months, underperforming a 64 percent rise in the securities sector subindex.


The investment bank said earnings were lifted by a 12 billion yen gain as it marked up the value of its stake in Ashikaga Holdings Co Ltd, a regional bank that became a public company in December.

But Nomura attributed the bulk of its profit growth to a surge in the Japanese stock market, which offered an opportunity for its 176 domestic branches to ramp up retail sales. Daiwa, which has around 120 branches, is also widely expected to book solid earnings when it reports on Friday.

A common route for individuals to own shares is through mutual funds, the market for which grew a record 27 percent last year to exceed 80 trillion yen for the first time in more than six years.

The increase helped double the average daily trading value on the Tokyo Stock Exchange in last three months of the year from the same period a year prior.

Against that backdrop, Nomura’s retail division churned out a pre-tax profit of 48 billion yen in the third quarter, more than double a year earlier and making the unit Nomura’s biggest earnings driver.

Nomura’s retail client assets ended the year at a record 96 trillion yen, close to the bank’s target of 100 trillion yen by March 2016.

The wholesale division, which covers global markets and investment banking, put on a weaker showing as profit fell 37 percent to 28 billion yen, in part because a decline in the value of the yen pushed up overseas costs.

Overall, net revenue sagged 2 percent to 379 billion yen, reflecting the absence of the sales contribution of a property affiliate that Nomura removed from its consolidated accounts last year. ($1 = 102.2500 Japanese Yen) (Reporting by Nathan Layne; Editing by Christopher Cushing)

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