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UPDATE 3-Nomura yet to deliver global brokerage-sized profit

Published 04/28/2011, 05:25 AM
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* Q4 net profit 11.9 bln yen vs 10.6 bln consensus

* Gains in private equity, investment banking fees

* Higher tax charge hits profits

* Nomura results follow big loss by rival Daiwa Securities (Adds details)

By Tim Kelly

TOKYO, April 28 (Reuters) - Nomura Holdings said its pretax profit rose 30 percent on private equity gains and investment banking fees, but Japan's biggest brokerage failed to deliver an improvement in earnings that would vindicate its overseas expansion.

Nomura's goal is to join the elite of global brokerages using the former Lehman network it bought in Europe and Asia in 2008, and by building its business in the United States from the ground up.

To succeed in its global ambition Nomura needs to win a bigger share in the U.S. market, which accounts for about half of the world's investment banking fees. It must also establish itself as a major player in Asia, a fast-growing but highly competitive market.

"Nomura's bottom line could have been better considering it had more than 20 billion yen in profit from its private equity business," said Azuma Ohno, an analyst at Credit Suisse Securities.

Nomura posted a net profit of 11.9 billion yen ($145 million) for the three months ended March 31 after paying higher tax charges, compared with a profit of 18.4 billion in the same period last year. In the previous quarter, ended Dec. 31, the brokerage had a net profit of 13.4 billion yen.

The result was slightly better than a consensus forecast for a 10.6 billion yen profit from three analysts surveyed by Thomson Reuters I/B/E/S after Japan's earthquake and tsunami on March 11.

Pretax profit rose 31 percent to 37 billion yen, helped by more fees from investment banking, mostly in Japan, and a gain in its private equity business.

Nomura last month sold ballbearing maker Tsubaki Nakashima to U.S. private equity firm Carlyle Group

For the current business year to March 2012, the average net income prediction of six analysts is 75.4 billion yen. Nomura does not release an outlook for its own business.

Nomura avoided valuation losses that hurt its nearest rival, Daiwa Securities Group , which on Tuesday posted a bigger-than-expected fourth-quarter loss in part because it had to put money aside to cover losses on its holdings in real estate, insurers and other assets following the earthquake. [ID:nL3E7FQ0SD]

Still, compared with its U.S. and European peers, Nomura's profits are meagre. Although it suffered a 72 percent dip in first-quarter profit, Goldman Sachs Group Inc on April 19 posted a quarterly profit to common shareholders of $908 million.

Nomura's effort to win more market share in the U.S. received a blow on March 29 when Glenn Schiffman, the head of its U.S. investment banking unit, resigned his post just over a year after he was hired with a mandate to build the business. [ID:nL3E7ET0H9]

In the latest quarter pretax profit in its global markets wholesale unit was a third of that earned in the same quarter last year and 13 percent less than in the previous period.

Nomura's shares rose 0.5 percent in Tokyo trading to 412 yen before it released its earnings, underperforming a 1.3 percent increase in the Tokyo's securities subindex . ($1 = 82.220 Japanese Yen) (Addditional reporting by Junko Fujita; Editing by Muralikumar Anantharaman and Nathan Layne)

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