to the end of June. It also powered a near-fivefold increase in pre-tax earnings at the bank’s retail unit from the same period last year. Nomura’s own stock has also benefitted, though its 20% rise this year to a two-year high lags the broader market. And the rally did nothing to fix the abysmal underperformance at its mainstay wholesale division.
Revenue at the unit that comprises the volatile investment banking and trading businesses fell 4% to 191 billion yen . But a 9% increase in costs compared to its first quarter in 2022 sent pre-tax profit plunging 92% to just 2.1 billion yen and meant Nomura’s overall annualised return on equity for the quarter was a dismal 2.9%.
The depreciating yen didn’t help. But the wholesale unit’s margins were already tight as expenses were too high. Global rivals like Morgan Stanley have reacted to the current weak M&A and IPO market by cutting some costs, which were less onerous in any case. While Nomura insists it’s making progress on its cost-cutting plan outlined in May, boss Kentaro Okuda needs to do more.
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