No­mura CEO sees buy­back af­ter share price lows

The Pak Banker - - COMPANIES/BOSS -

No­mura Hold­ings Inc., Ja­pan's largest bro­ker­age, is weigh­ing buy­ing back its shares af­ter they plunged to the low­est price in three years.

"We're con­sid­er­ing re­turn­ing profit ap­pro­pri­ately" to share­hold­ers, Chief Ex­ec­u­tive Of­fi­cer Koji Na­gai, 57, said in an in­ter­view in Tokyo on Tues­day. "There's no doubt that it's bet­ter for us to do it when they're cheap."

The Tokyo-based firm has tum­bled about 24 per­cent this month af­ter it posted earn­ings that missed es­ti­mates and re­frained from an­nounc­ing the re­pur­chase of its shares, un­like smaller com­peti­tor Daiwa Se­cu­ri­ties Group Inc. Re­cent global fi­nan­cial-mar­ket tur­moil has dealt a blow to No­mura's am­bi­tions to re­turn to profit abroad, and Na­gai said that now isn't the time to make a pre­dic­tion for when that might hap­pen.

"There's no point dis­cussing such top­ics dur­ing this rain­storm, un­for­tu­nately," he said. "That's some­thing we can talk about in nor­mal times. We have to mon­i­tor the sit­u­a­tion care­fully un­der th­ese cir­cum­stances." Na­gai said the mar­ket volatil­ity is af­fect­ing No­mura's over­seas whole­sale busi­ness, in­clud­ing fixed in­come, as well retail op­er­a­tions at home.

The ben­e­fits of Abe­nomics have faded for Ja­pan's bro­ker­ages. No­mura's shares are now close to the price they were at when Shinzo Abe be­came prime min­is­ter in De­cem­ber 2012 and sparked a stock-mar­ket rally with his agenda of re­viv­ing the econ­omy through mon­e­tary eas­ing, fis­cal spend­ing and dereg­u­la­tion.

The stock fell for a sev­enth day Wed­nes­day, slump­ing 3 per­cent to 494.9 yen as of 11:05 a.m. in Tokyo. That's lower than when No­mura sold 454 bil­lion yen ($4 bil­lion) of shares in a pub­lic of­fer­ing in 2009 to help fund an ex­pan­sion abroad stem­ming from its pur­chase of Lehman Brothers Hold­ings Inc.'s Euro­pean and Asian op­er­a­tions in the pre­vi­ous year.

No­mura is trad­ing at 0.63 times the book value of its as­sets, while Daiwa's price-to­book ra­tio is 0.87. Daiwa fell 1.9 per­cent. Na­gai de­clined to com­ment on the tim­ing and the size of any buy­back. Chief Fi­nan­cial Of­fi­cer Shige­suke Kashi­wagi said on Feb. 2 that the com­pany wouldn't rule out re­pur­chas­ing its shares if the tim­ing is right. No­mura has an­nounced five buy­backs since May 2013.

The firm will cut costs over­seas by trim­ming jobs and shrink­ing un­pro­duc­tive op­er­a­tions, Na­gai said, de­clin­ing to elab­o­rate. At the same time, the com­pany will con­tinue to in­vest more in the U.S. to strengthen its ca­pac­ity to orig­i­nate in­vest­ment- bank­ing deals, in­clud­ing equity and bond un­der­writ­ing and merg­ers ad­vice, he said. No­mura post­poned a goal of gen­er­at­ing 50 bil­lion yen in over­seas pre­tax profit for the year end­ing March af­ter its lat­est re­sults re­leased on Feb. 2 showed it lost 63 bil­lion yen abroad in the first nine months. CFO Kashi­wagi said he ex­pects the tar­get to be achieved at some point be­fore March 2020.

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