Nomura returns second quarter profit on fixed income gains

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October 29, 2012 5:28 PM EST

Nomura Holdings <8604.T>, Japan's largest investment bank, posted its fourth straight quarterly profit on Monday as an upswing in its fixed income operations helped it counter weak equity markets and the fallout from an insider trading probe.

Nomura, whose top competitor in Japan is Daiwa Securities Group <8601.T>, reported a net profit of 2.81 billion yen (21.9 million pounds) for the July-September second quarter, against a loss of 46.09 billion yen in the same period last year. The consensus of eight analysts was for a profit of 5.7 billion yen.

Nomura's results were supported by an upswing in bond trading and other fixed income products, a major factor boosting quarterly earnings at U.S. banks including Morgan Stanley and JP Morgan Chase & Co .

That helped offset the drag from Japan's sluggish stock market. The benchmark Nikkei average <.N225> fell 1.5 percent during July-September, while turnover on the first section of the Tokyo Stock Exchange slumped 12 percent from April-June.

Nomura also lost underwriting business due to an insider trading scandal that triggered a shake-up of top management. In the most high-profile case, it was relegated to a more junior role on the $8.5 billion (5.2 billion pounds) initial public offering of Japan Airlines <9201.T>, the world's second-largest IPO of 2012.

Following a review under newly appointed Chief Executive Koji Nagai, the company announced plans in late August to chop an additional $1 billion in costs in the second major restructuring since it embarked on an overseas expansion through the acquisition of parts of Lehman Brothers in 2008.

(Reporting by Nathan Layne; Editing by Neil Fullick)

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