Japan's Nomura Q1 profit soars on strong domestic stock market

By Makiko Yamazaki

TOKYO (Reuters) -Nomura Holdings Inc on Tuesday reported a jump in first-quarter net profit as a strong Japanese stock market helped the country's biggest brokerage and investment bank attract money from global investors.

Renewed investor interest in Japanese stocks, driven by hopes for an end to deflation and a corporate drive for better capital use, boosted Nomura's assets under management as well as its retail client assets to record highs.

"We had a market tailwind," Chief Financial Officer Takumi Kitamura told a media briefing.

"The Bank of Japan's policy tweak, a rise in corporate action and a new tax exemption scheme for individual investors together are likely to keep the momentum going in the Japanese bond and stock markets," he said.

Nomura's April-June profit came in at 23.33 billion yen ($163.42 million) versus 1.696 billion yen a year earlier, when fears of slowing global economic growth hit financial markets and forced investment portfolio writedowns at the Japanese firm.

But the quarterly profit is a small fraction of Nomura's core pretax income target of 288 billion yen for the year to March 2025, a bullish goal for CEO Kentaro Okuda who has faced three years of profit declines since taking the top job in 2020.

In contrast to the strong gains at the retail business, Nomura's wholesale division, which houses its investment banking and trading businesses, posted a pretax profit of just 2.1 billion yen, down sharply from 25.3 billion yen a year earlier.

Fixed income trading slowed amid lower market volatility.

Meanwhile, the investment banking business saw signs of recovery with some major deals including Pattern Energy Group's 300 billion yen sale of its Japanese assets to NTT Group and JERA.

Kitamura said Nomura's plans to cut 50 billion yen of costs by March 2025 were on track, expecting to achieve about 60% of the total by the end of March next year, mainly by streamlining administrative and systems operations.

The Bank of Japan's relaxation of its cap on bond yields last week could also be "a major tailwind" to its business, as it is likely to increase market volatility, he said.

($1 = 142.7600 yen)

(Reporting by Makiko Yamazaki; Editing by Himani Sarkar and Mark Potter)