Nomura shares drop more than 7% after quarterly profit tanks

TOKYO (Reuters) -Nomura Holdings Inc shares dropped more than 7% early on Thursday after Japan’s biggest brokerage posted a sharp fall in quarterly net profit as worries about a global banking crisis roiled markets and hit its investment banking business.

Nomura on Wednesday reported a 76% fall in January-March net profit, joining Wall Street investment banks in reporting a slump in dealmaking fees as global mergers and acquisitions activity shrank to the lowest level in more than a decade in the last quarter.

Investors have grown more cautious about volatile markets as a banking crisis that began with the collapse of Silicon Valley Bank spread to Europe with the sale of Credit Suisse Group AG to its Swiss rival UBS Group AG (SIX:).

Moody’s (NYSE:) Japan senior analyst Tomoya Suzuki also blamed rapidly rising interest rates around the world and geopolitical tensions for dampened investor sentiment.

“Moody’s has a negative outlook on Nomura Holdings’ rating, reflecting structural challenges to the company’s profitability in the domestic retail segment,” Suzuki wrong in a report.

Nomura’s wholesale division, which houses its investment banking and trading businesses, sank into the red for the second consecutive quarter with a pre-tax loss of 14.2 billion yen ($106.24 million). Costs also ballooned at the division due to global inflation and a weaker yen.

Its shares were down 7.5% in early trade, marking the biggest daily fall since March 2021.

($1 = 133.6600 yen)