HONG KONG, April 26 (Reuters Breakingviews) - The $12 billion Japanese bank’s net profit plunged 76% year-on-year to 7.4 billion yen ($55 million) in the three months ending March. That undoes a decent recovery trend and pushes the fiscal year’s earnings down by a third. Return on equity fell to a parlous 3.1%, far below the 8%-10% target. Like peers, it is feeling the pain of the Silicon Valley Bank crisis and Credit Suisse’s (CSGN.S) collapse. And Nomura (8604.T), as with Goldman Sachs (GS.N), is ill-positioned to benefit from rising lending rates as much as commercial banks are; both investment-banking firms posted a 5% decline in net revenue in the most recent quarter.
Wholesale revenue, dragged down by a 20% decline in investment banking, contracted for the quarter but remained up 10% for the year. Retail and investment management contracted compared to the prior quarter; that could be more than just seasonal if the global economy stays rickety. Shareholders might remind themselves that this particular external shock is not boss Kentaro Okuda’s fault - but they’re hyper-sensitive given Nomura’s history. The company is, at least, better positioned to benefit from the revival of Asian initial public offerings, especially in Japan, while Western markets remain tepid. That, plus the share buybacks in the pipeline, is a silver lining investors might want to contemplate.(By Pete Sweeney)
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