In most parts of the world, an unexpected 97 per cent drop in net income would be enough to floor the stock price. Not in Japan and not when the company is Nomura. Shares of Japan’s biggest investment bank barely budged after it posted disappointing first-quarter earnings on Wednesday. It needs to be careful not to push loyal investors too far.
Net income plunged to just ¥1.7bn ($12.7mn) in the quarter to June, significantly below expectations and down from ¥48.5bn a year earlier. Market volatility pushed down investment banking and asset management businesses earnings. The fall brings back not-so-distant memories of its 95 per cent plunge in net income in the quarter to September.
Yet the shares were largely unmoved. Nomura’s retail clients provide nearly a quarter of its total net revenue. Retail investors give its shares enviable stability. Long-term ownership in Japan, where some companies reward retail investors with sacks of rice and other gifts, is common. Nomura is a household name with a dividend yield of over 4 per cent.