By Anton Bridge
TOKYO (Reuters) -Japan's Nomura Holdings (NYSE:NMR) more than doubled its quarterly profit on Friday, boosted by strong performance at its wholesale and wealth management businesses during a quarter overshadowed by a bond trading scandal.
Nomura delivered its highest profit in four years and its sixth quarter of growth, results that may take some of the sting out of the recent scandal. Japan's biggest brokerage was forced to pay a regulatory fine and temporarily lost its status as a primary dealer of government bonds.
The banking regulator on Thursday slapped Nomura with a 21.8 million yen ($143,000) penalty after an investigation determined a trader manipulated the price of 10-year bond government futures contracts in March 2021.
The impact on the quarterly results from the loss of the primary dealer business and loss of confidence from clients was limited and Nomura would assess any further impact in the future and explain as appropriate, Chief Financial Officer Takumi Kitamura said at an earnings briefing.
Net profit totalled 98.4 billion yen ($645 million) in the July-September quarter, compared to 35.2 billion yen the same period a year earlier.
The results mark the recovery of Nomura's long underperforming wholesale segment, which saw pretax income overtake that of the wealth management segment for the first time in two years.
“I think our efforts over recent years to grow and diversify revenue streams while controlling costs is quantitatively coming through in the numbers,” Kitamura said.
The wholesale business, which includes global markets and investment banking, was helped by a flurry of deals in Japan, as well as tight cost control.
Like many financial firms, Nomura is pushing more into wealth management to generate stable fees-based profits less impacted by swings in market sentiment. That business saw its highest pretax profit in nine years.
In response to the scandal, Nomura has promised to strengthen its compliance and internal controls and said "strict disciplinary action" had been taken against the trader and relevant managers.
A number of senior executives will take voluntary pay cuts of 20% for two months, it said.
Nomura may face another stain on its reputation after media reports came out on Thursday of a former employee's arrest for the robbery and attempted murder of two elderly clients.
Kitamura said it was true a former employee had been arrested and that the firm would have to examine the impact on its overall business, but declined to comment further as the case is under investigation.
($1 = 152.5300 yen)