On Monday, Nomura Holdings (8604.T) shares fell by almost 8%, its biggest daily decline since March, after the Japanese brokerage reported worse-than-expected earnings due to a loss from transactions completed more than a decade ago.
Last week, Nomura said that its second-quarter net profit was almost wiped out by a charge of about 39 billion yen ($342 million) that it said was related to legacy transactions in the United States from before the global financial crisis in 2007 and 2008.
The $2.9 billion hit from the collapse of U.S. investment fund Archegos – news of which emerged in March, was followed by Nomura’s loss. On March 29, Nomura stock slumped more than 16% after the firm flagged a potential loss at a United States subsidiary. L1N2LR00H
An equity analyst at Jefferies, Hideyasu Ban said Nomura’s latest quarterly earnings were below his expectations.
“We estimated that its earnings would start normalizing this quarter and its core businesses did, but 39 billion yen of reserve provisioning against the transactions before the global financial crisis was unexpected.”
Nomura, backing the broader positive trend, traded 6.58% lower at 513.9 yen by 0451 GMT after falling as much as 7.8% earlier in the session.
After Prime Minister Fumio Kishida’s ruling party held on to a majority in a parliamentary election, the Nikkei share average (.N225) hit a one-month high on Monday.
Since the beginning of the year, Nomura has been underperforming the benchmark Nikkei losing 5.96% against Nikkei’s jump of 7.74% so far.
