Nomura Holdings Inc said it aims for up to 90% increase in core pre-tax profit in three years, as Japan's largest investment and brokerage bank intends to strengthen advisory services to achieve revenues that are less vulnerable to fluctuations of the market.
“We will work to expand businesses with stable revenues in an environment of extremely high market volatility,” Chief Executive Kentaro Okuda said at an investor meeting on Tuesday.
It is doable in a strong market
Nomura said it is aiming for an annual pre-tax profit of between 350 and 390 billion yen ($ 2,7-3,0 billion) for its three main divisions in the year ending in late March 2025.
This compares with the 205,2 billion yen that the three divisions recorded for the year through March 2022. The guidance also exceeded the average estimates of three analysts interviewed by Refinitiv on the company's pre-tax profit. for the year up to March 2025 and for the following year.
"It's doable in a strong market, but in the current context, with geopolitical concerns like the war in Ukraine, it feels like a stretch," said Morningstar Inc analyst Michael Makdad of Nomura's goal.
It is also surprising that Nomura expects its fixed income businesses to account for a smaller share of wholesale revenues over the medium to long term, as these businesses have typically generated more revenue, Makdad said.
Improving stable sources of income has been key for Nomura, which has had a troubled history of global expansion efforts with occasional major financial hits, including a $ 2,9 billion loss from the collapse of the fund. US investment Archegos.
One of its growth engines is its global investment banking advisory business, particularly sustainability-related operations led by Nomura Greentech, a merger and acquisitions advisor in the cleantech sector. Nomura hopes to increase consulting revenue by more than 50% over the next three years.
New digital asset company
“We are now orienting our business towards ESG,” Okuda said at a subsequent press conference, referring to environmental, social and governance issues.
The institute also plans to strengthen its wealth management business in Asia.
The bank's shares remained unchanged in Tokyo trading at 474 yen. The Nikkei benchmark index also remained flat.
Nomura also said it will create a digital asset company this year that will allow institutional investors to trade products related to cryptocurrencies, stablecoins, decentralized finance and non-fungible tokens.
The firm said it wants to build a platform that can compete with native cryptocurrency firms and operate across the cryptocurrency industry by offering market-making services for digital assets, providing investors with cryptocurrency products that generate returns and quantitative trading strategies, as well as managing a venture capital arm.
It will add 2024 employees by 100
Global banks have been cautiously moving in the cryptocurrency industry for several years, some by inserting them into existing operations and others by creating new businesses.
Singapore-based DBS Group Holdings Ltd launched an independent cryptocurrency trading platform in 2020 that offers corporate investors and accredited investors cryptocurrency trading services for various digital assets.