TOKYO (Reuters) -Nomura Holdings Inc expects its core pretax income to increase by up to 90 percent over the next three years. Japan’s largest brokerage and investment bank intends to expand its advisory services to generate revenue that is less susceptible to market fluctuations.
In a meeting with investors on Tuesday, Chief Executive Kentaro Okuda said, “We will try to build companies with reliable income under tremendous market volatility.”
Nomura said that its three primary businesses will aim for an annual pretax revenue of 350 billion to 390 billion yen ($2.7 billion to $3 billion) in the fiscal year ending in March 2025.
This would compare to the 205,2 billion yen reported by the three divisions for the fiscal year ending in March 2022. The outlook also exceeded the average pretax profit expectations of three analysts polled by Refinitiv for the fiscal year ending in March 2025 and the following year.
Analyst Michael Makdad of Morningstar Inc said, about Nomura’s goal, “It is attainable in a strong market, but in the present context with geopolitical worries such as the Ukraine crisis, it sounds ambitious.”
Makdad also found it strange that Nomura expects its fixed-income business to generate less wholesale revenue in the medium to long term, considering that the company had historically generated more revenue.
Nomura has a tumultuous history of attempting to develop abroad, suffering occasional huge financial setbacks, such as a $2.9 billion loss from the bankruptcy of the U.S. investment firm Archegos, so diversifying its income streams is crucial.
One of its growth drivers is the advising business in global investment banking, especially for sustainability-related acquisitions powered by Nomura Greentech, a clean technology merger-and-acquisition adviser. Over the next three years, Nomura expects to increase advising income by over 50 percent.
Okuda said during a later press conference, “We are now focusing our company on ESG,” alluding to environmental, social, and governance problems.
It also intends to expand its wealth management operations throughout Asia.
The bank’s shares closed Tokyo trading at 474 yen with no change. The benchmark Nikkei index was likewise unchanged.
NEW ELECTRONIC ASSET COMPANY
Nomura has also announced that it would establish a digital asset firm this year, enabling institutional investors to trade cryptocurrencies, stablecoins, decentralized finance, and non-fungible tokens.
It said that it intends to create a platform that can compete with crypto-native enterprises and operate throughout the crypto sector by providing market-making for digital assets, yield-generating crypto products, quantitative trading tactics, and a venture capital arm.
By 2024, 100 staff will be added.
Over the last few years, global banks have been gingerly moving into crypto, with some integrating it into their current operations and others establishing new companies.
In 2020, Singapore’s DBS Group (OTC:DBSDY) Holdings Ltd established a cryptocurrency trading platform enabling corporate investors and accredited investors crypto trading services for a variety of digital assets.
($1 = 128.9100 yen)
