May 8, 2020 / 6:16 AM / 23 days ago

Nomura posts first quarterly loss in over a year as virus takes toll

TOKYO (Reuters) - Nomura Holdings Inc (8604.T), Japan’s biggest brokerage and investment bank, racked up its first quarterly loss in five quarters as the coronavirus pandemic battered global stock markets.

FILE PHOTO: A man holding an umbrella walks in front of a signboard of Nomura Securities outside its branch in Tokyo October 29, 2013. REUTERS/Issei Kato

The firm posted a fourth-quarter net loss of 34.5 billion yen ($324.22 million), its first loss since the October-December period in 2018.

Net profit for the year ended March came in at 217 billion yen, compared with an average estimate of 276 billion yen from five analysts polled by Refinitiv.

“The quarterly results were tough as losses on trading assets and equities have grown due to drastic market moves in March,” Chief Financial Officer Takumi Kitamura told reporters in a telephone conference on Friday.

Nomura’s asset management division posted a pretax loss of 8.7 billion yen in the quarter, mainly because the share price of its affiliate American Century Investments fell during the period, it said in a statement, adding the total loss related to the company was 16.4 billion yen.

It was the first quartely loss in the division since the October-December period of 2008.

Pretax income for the wholesale segment, which serves corporations and institutional investors, came in at 10.1 billion yen for the three months through March compared with a 13 billion yen pretax loss a year ago.

The retail division recorded pretax income of 18.4 billion yen, more than 5 times that from a year earlier.

Nomura has been in a heavy cost-cutting mode for the past year, targeting about 140 billion yen in cost cuts by March 2022. About 70% of the plan has been achieved as of end-March, Kitamura said.

RETAIL OUTLOOK

While Nomura’s retail division was the most profitable among three segments, that will be difficult to sustain outlook as the government has asked its citizens to stay home as much as possible to halt the spread of the COVID-19 respiratory illness.

Nomura has suspended over-the-counter business at all its retail branches nationwide after the government last month expanded the state of emergency to all areas of the country.

That means that one of Nomura’s major strengths, face-to-face style sales to retail investors, might be scraped.

“I’ve got used to face-to-face style and now I feel like I lost my weapon if I can’t meet my customer,” said a Nomura sales person in the retail division who declined to be named as the person is not authorised to speak to media.

Sales persons are now only allowed to reach their customers via phone and email, Nomura said.

“We were just like actors in front of customers but we are now like radio DJs. It’s really hard to sell products only with our voice,” the sales person said.

CFO Kitamura told reporters revenue in the retail division in April had decreased by about 20%, compared with the monthly average from January to March.

Editing by Jacqueline Wong

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