By Makiko Yamazaki
TOKYO (Reuters) -Nomura Holdings, Japan's biggest brokerage and investment bank, reported a doubling in second-quarter net profit after a buoyant domestic stock market led to a surge in equity offerings and retail brokerage fees.
Nomura's dominant position in Japan, where the stock market is trading at 33-year highs, helped it offset lethargic dealmaking and sluggish trading overseas.
July-September profit came in at 35.2 billion yen ($235 million), rebounding from last year when a sharp downturn in global financial markets battered its asset management and investment banking businesses.
This year, Japanese firms have been increasingly willing to embark on fundraising - either via equity or debt markets. Stricter governance rules and shareholder pressure are also forcing companies to explore strategic options.
As a result, Nomura's investment banking business saw a 19% increase in net revenue due to robust equity offerings and active dealmaking in Japan.
"Encouraged by the strong stock market, Japanese companies are becoming more proactive in making investments for growth," Chief Financial Officer Takumi Kitamura told a media briefing.
Japan was the only major market in the world this year to log M&A growth with the value of deals involving Japanese companies up 14% at $111 billion for the first nine months of 2023, according to data compiled by LSEG.
Nomura's domestic retail division's profit grew five-fold, helped by an end to a long period of deflation and as growing corporate interest in more effectively deploying capital whetted investor appetite for Japanese stocks.
The company has also said it is reallocating more bankers to wealth management to better serve rich families and entrepreneurs.
But pretax profit at Nomura's wholesale division, which houses its investment banking and trading businesses, dropped 59% after a series of rate hikes from the U.S. Federal Reserve made market participants reticent about trading aggressively in overseas fixed-income securities.
($1 = 150.1000 yen)