Nomura profit hits nine-year high on asset management, M&A gains

By Antoni Slodkowski

TOKYO (Reuters) - Nomura Holdings' annual net profit climbed 5 percent to a nine-year high, beating expectations on a strong performance by its asset management and investment banking divisions, although its overseas operations were in the red for a fifth year in a row.

A buoyant Japanese stock market has helped funds flow into its asset management business, with pretax profits for that division up 18 percent. The bank also benefited from fees made on several large M&A deals and international investment banking revenues were at their strongest in six years.

Income from its retail operations, which accounts for about half of its profits, remained strong but slipped 16 percent after doubling in the previous business year.

Japan's largest investment banking and brokerage group said net profit for the year to end March rose to 224.8 billion yen ($1.9 billion), 10 percent higher than a Thomson Reuters Starmine consensus estimate.

For the fourth-quarter alone, net profit came in at 82 billion yen, a 34 percent surge from the year-earlier period and its strongest level in two years.

It was, however, unable to meet its goal of returning its international business to profit by the end of the last business year, as it made provisions for overseas lawsuits.

It did not specify the lawsuits. One high-profile lawsuit it faces has been brought by U.S. regulators who are seeking a combined $1 billion from Nomura and Royal Bank of Scotland, accusing them of selling defective mortgage-backed securities.

"I regret we couldn't turn around our overseas operations back to profit because of a one-time event," said Chief Financial Officer Shigesuke Kashiwagi.

"However, I believe strongly that we will be able to achieve our long term goals and achieve solid profitability of the overseas business," he said.

The Japanese bank has long struggled to turn around the Europe and Asia operations it bought from Lehman Brothers Holdings in 2008 despite $1 billion in cost cuts carried out by the CEO Koji Nagai since 2012.

Shares in Nomura have climbed 12 percent in the year to date in line with gains for the Tokyo share market which has benefited from an influx of buying from pension funds.

(This story corrects fall in retail income to 16 percent, not 6 percent, in third paragraph; focus of lawsuit to mortgage-backed securities, not mortgages in seventh paragraph)

(Reporting by Antoni Slodkowski; Editing by Edwina Gibbs)