TOKYO (Reuters) - Nomura Holdings (8604.T) said on Wednesday it would reduce risk-weighted assets by up to 6% and make additional cost cuts in its wholesale business as the top Japanese investment bank scrambles to shore up its struggling division.
Nomura's wholesale division, which houses its investment banking and trading businesses, has been the biggest drag for CEO Kentaro Okuda's ambitious long-term profit target as he has faced three years of profit declines since taking the top job in 2020.
"Our biggest challenges right now are low profitability, particularly high expense rates," CEO Kentaro Okuda told investors on Wednesday.
Specifically, the Japanese bank plans for an additional $100 million in cost cuts for the wholesale division, reducing total annual costs for the division to around $5.1 billion by the year ending March 2025, Okuda said.
Nomura also plans to re-allocate resources within the group by adjusting the number of positions in trading overseas fixed-income and foreign exchange products and expanding relatively risk-light businesses such as advisory and wealth management, he said.
The fixed-income trading business is expected to improve as the outlook for global interest rates becomes clearer, but "we won't just wait for a market recovery," he added.
Nomura is aiming for an annual pre-tax income of 288 billion yen ($1.96 billion) for its three core divisions in the fiscal year ending in March 2025.
That would compare with the 106.4 billion yen the three divisions - retail, investment management, and wholesale - posted for the year through March 2023.
A bright spot for Nomura is the domestic business, as the Japanese stock market is trading at its highest levels in three decades.
Nomura's Japan business revenue for the April-September first half of the current fiscal year grew 31% from the same period a year before.
The Japan market recovery "is providing the greatest business chance for us with the strong Japanese franchise and global investor base," he said.