Nomura Holdings, Inc.
) reported net revenue of ¥401.7 billion ($5.1 billion) for
fiscal second quarter 2013 (ended September 30, 2012). This
reflects a surge of 33.2% from net income of ¥301.6 billion ($3.8
billion) reported in the year-ago period.
NOMURA HLDG-ADR (NMR): Free Stock Analysis
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Results reflect a rise in total revenue, partially offset by
increases in operating expenses. Moreover, performance of the
Wholesale division was solid in the quarter. Further, strong
capital ratios were the other positives.
Performance in Detail
Total revenue improved 22% to ¥461.2 billion ($5.9 billion) from
¥ 377.8 billion ($4.8 billion) in the prior-year quarter. The
surge was driven primarily by increases in net gains on trading
activities as well as gain on private equity investments and
gains on investments in equity securities along with other
Operating expenses for the quarter totaled ¥366.3 billion ($4.7
billion), up 5.8% year over year. The increase was primarily a
result of substantial rise in the company's other expenses
(including a goodwill impairment charge of ¥8.3 billion) as well
as higher information processing and communications expenditure.
Income before taxes was recorded at ¥35.4billion ($0.4 billion)
as against a loss of ¥44.6 billion ($0.6 billion) in the year-ago
Retail Division: Net revenue for the quarter came in at ¥80.8
billion ($1.0 billion), down 3.8% year over year. Further income
before taxes stood at ¥11.0 billion ($0.14 billion), up 2.8% from
the prior-year quarter. However, non-interest expenses declined
4.8% year over year to ¥ 69.8 billion ($0.9 billion).
Asset Management: Net revenue for the quarter came in at ¥15.4
billion ($0.2 billion), down 3.8% year over year. Further income
before taxes stood at ¥4.6 billion ($0.06 billion), down 2.1%
from the prior-year quarter. However, non-interest expenses
declined 2.7% year over year to ¥ 10.9 billion ($0.1 billion).
Wholesale Division: Net revenue for the quarter came in at ¥137.1
billion ($1.74 billion), soaring 68% year over year. However,
non-interest expenses stood at ¥136.9 billion ($1.73 billion),
down 10.0% from the prior-year quarter. Further, income before
taxes came in at ¥0.2 billion ($0.003 billion) as against loss of
¥70.7 billion ($0.9 billion) in the prior-year quarter.
Total assets as of September 30, 2012 came in at ¥35.4 trillion
($0.44 trillion), down 0.8% from ¥35.7 trillion ($0.45 trillion)
as of March 31, 2012.
Total shareholders' equity came in at ¥2.09 trillion ($0.03
trillion), down 0.5% from ¥2.10 trillion ($0.03 trillion).
As of September 30, 2012, Tier 1 capital ratio stood at 15.1% as
against 15.0% as of June 30, 2012. Total capital ratio was 17.2%
compared with 17.4% as of June 30, 2012.
Concurrent with the earnings release, Nomura declared a quarterly
dividend of ¥2 ($0.03) per share to shareholders of record as of
September 30, 2012. The dividend will be paid on December 3,
Going forward, we expect Nomura's decent top-line growth and
sound financial position to prove beneficial to its overall
growth in the future. Further, steady capital deployment
activities will continue to reinforce investor's confidence in
the stock. However, rising expenses keep us on the sidelines.
Moreover, we are concerned about the increasing competition,
volatility in the Japanese economy and the effects of the
deepening Euro-Zone crisis.
Shares of Nomura retain a Zacks #4 Rank, which translates into a
short-term Sell rating. One of its peers,
Piper Jaffray Companies
) retains a Zacks #1 Rank, which translates into a short-term
Strong Buy rating.