CORRECTED-WRAPUP 2-Nomura,Macquarie profits hit by trading slump

(Corrects spelling of CFO in paragraph 12)

* Nomura Q2 profit Y1.1 bln vs consensus Y5.6 bln

* Daiwa Q2 net loss Y4.2 bln vs consensus Y3.4 bln profit

* Results highlight sector woes as trading revenue sags

* Macquarie beats consensus but helped by one-offs

* Macquarie shares jump after keeps outlook unchanged
(Adds detail)

By Tim Kelly and Narayanan Somasundaram

TOKYO/SYDNEY, Oct 29 (BestGrowthStock) – Quarterly profits at
Japan’s Nomura Holdings (8604.T: ) plunged and Daiwa Securities
(8601.T: ) posted another loss, underscoring a tough trading
environment for investment banks and raising questions about
their strategies.

Australia’s Macquarie Group (MQG.AX: ) kept its full-year
outlook, defying fears of an earnings downgrade, but that came
thanks to one-off factors that helped first-half profits beat
forecasts. [ID:nSGE69Q09L]

Brokerages across the globe are eager for an end to a
drought in trading that has dried up revenue amid doubts about
the strength of the economic recovery. Morgan Stanley (MS.N: ) (Read more about the money market today. )
reported a surprise third-quarter loss while Goldman Sachs
(GS.N: ) said its quarterly net income fell. [ID:nN20189694]

Nomura, in search of growth outside saturated Japan, has
been ramping up its expansion abroad after its purchase of part
of Lehman Brothers, but the slump market conditions have so far
made it hard to capitalise on its growing overseas network.

“Nomura just managed to stay profitable,” said Ehsan Syed,
an analyst at Fitch Ratings. “It needs to increase its revenue
because its cost base has become high due to its expansion
overseas in Asia, Europe and the U.S.,” he said.


Breakingviews story on Nomura results: [ID:nLDE69S0KJ]

StarMine comparative table:

Macquarie results graphic:



Nomura, Japan’s biggest brokerage, eked out a 1.05 billion
yen ($13 million) net profit in the July-September period, far
below the year ago profit and less than the average estimate of
a 5.6 billion yen profit in a poll of three analysts by Thomson
Reuters I/B/E/S.

Japan’s benchmark Nikkei share average was flat during the
quarter and has stagnated as investors who pulled back
following the European debt crisis continued to steer clear of
Japanese stocks.

Nomura’s costs crept up for a third straight quarter,
pushed up by a 3.8 percent rise in salary expenses and a 5.4
percent increase in technology-related costs as it adds to
operations abroad. Foreign revenue accounted for 43 percent of
its total up from 38 percent in the previous quarter.

Japan’s second-ranked brokerage Daiwa, which is relying on
expansion in Asia to bolster future revenue, fell to a 4.19
billion yen net loss for the July-September quarter, marking
its third straight quarterly loss. [ID:nTOE69Q09X]


Macquarie, which had given three profit warnings since June
as it grapples with the worst trading period in recent memory,
said it expected fiscal 2011 profit to be in line with 2010,
when it reported a profit of A$1.05 billion ($1.03 billion).
Thomson Reuters I/B/E/S net profit forecast for the year to
March 2011 stands at A$920.7 million.

That meagre sign of improvement pushed its shares up 4.8
percent on relief that Australia’s top investment bank may now
have seen the worst of the poor market conditions.

“The fact that Macquarie have actually come through and
haven’t downgraded is comforting and it is better than I think
general expectations were,” said Angus Gluskie, chief
investment officer at White Funds Management.

The Australian bank and Nomura saw glimpses of a market
recovery. While acknowledging a a tough market, Nomura CFO
Masafumi Nakada noted a big increase in quarter-on quarter
trading revenue. “The was an improvement in September and we
have seen an improvement in October,” he said in Tokyo.

Nomura’s wholesale, or trading, revenue during the quarter
fell 18 percent from a year earlier to 163.4 billion yen but
was up 51 percent from the previous quarter.

Its asset management business also was a bright spot, with
revenue up 17 percent to 19.3 billion yen.

Nomura’s net profit is expected to total 42.6 billion yen
for the financial year to March, according to the average
forecast of six analysts. Nomura does not issue earnings

Before the announcement, shares of Nomura closed down 3
percent while Daiwa shed 0.6 percent. Tokyo’s securities
subindex (.ISCEU.T: ) fell 1.9 percent.
($1=81.03 Yen=1.023 Australian Dollar)
(Additional reporting by Junko Fujita; Writing by Chris
Gallagher; Editing by Muralikumar Anantharaman)

CORRECTED-WRAPUP 2-Nomura,Macquarie profits hit by trading slump