Nomura’s results suggest it cut all the right people
It’s results day at Nomura. Due to a quirk of the Japanese fiscal year, Nomura announced its third rather than its fourth quarter results. They look pretty fine.
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In the nine-month period from April to December 2024, profits at Nomura’s wholesale bank quadrupled to Y129bn (US$843m). In the three months to December, profits were higher than they've been in the same quarter for four years running. The cost-income ratio for the division was 79%, down from 88% last year. It's not quite the 63% cost-income ratio of Deutsche's investment bank, but it's better than the 81.6% achieved by the investment bank of UBS.
This feat can be attributed to Christopher Willcox, the very generously paid ex-Citi and JPMorgan rates trader who's been running Nomura's investment bank since 2022. Nomura said today that the bank has been imposing "cost controls." Willcox spoke more bluntly when he said last year that he'd been, "taking out underperformers and making some tough decisions to replace people with what we regarded as talent upgrades.” In 2023, for example, Nomura hired 400-500 people in the wholesale bank, and let go of a similar number.
Despite last year's late departure of popular and performing leaders like Kevin Connors in FX, there are signs that the Willcox strategy is bearing fruit. Nomura's net revenues in investment banking were at their highest levels for nearly a decade. Fixed income and equities sales and trading revenues were 35% and 45% respectively year-on-year.
Nomura did especially well on Willcox's home turf of EMEA rates trading. While European rates desks at most banks struggled in 2024, Nomura's tripled its revenues. This coincided with the arrival of 10 new flow rates traders during the year. They included Deutsche Bank escapees like Hemish Shah and Kilian Frensch, or Stefan Auerweck from Bank of America, who joined as co-head of European government bond (EGB) trading in May.
Nomura doesn't announce bonuses for another few months, but after the quadrupling of profits, people there will be hopeful. Unfortunately, not everyone may be there to receive them. 10 people disappeared from Nomura's global markets business only last month. Willcox's slash and burn strategy isn't over yet.
Nomura declined to comment.
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