Japan's Nomura says cost-cutting to boost profits after second-quarter drop

Slideshow ( 2 images )

TOKYO (Reuters) - Nomura Holdings Inc 8604.T, Japan's biggest brokerage and investment bank, on Wednesday posted a 51.2% drop in second-quarter net profit from last year, when a stake sale in its research-focused unit boosted income.

It said profitability had improved and its Chief Financial Officer said a plan to cut costs by about 140 billion yen ($1.34 billion) by March 2022 was about 85% complete, compared with 70% at the end of June.

The company’s July-September profit came in at 67.6 billion yen, down from 138.6 billion yen last year, compared with an estimate of 58.95 billion yen compiled by Refinitiv.

Pretax income for the wholesale segment, which serves corporations and institutional investors, was 65.5 billion yen for the quarter, compared with a pretax income of 18.9 billion yen last year.

The retail division posted 22.8 billion yen net profit for the three months, compared with 5.3 billion yen a year ago.

The division, which has a 7,000-strong sales force, even before the new coronavirus outbreak had started shifting the focus to emails and phone calls from a traditional emphasis on face-to-face sales partly because of the increased popularity of online brokerages.

“As we started rebuilding our business portfolio last year, we now realise the effect gradually has emerged and our profitability has improved,” CFO Takumi Kitamura said on an earnings conference call.

In the second quarter last year, Nomura posted its strongest quarterly profit in more than 17 years, lifted by the stake sale in its affiliate Nomura Research Institute 4307.T with a one-off profit of 73.3 billion yen.

Reporting by Takashi Umekawa; Editing by Sam Holmes, Sherry Jacob-Phillips and Barbara Lewis