The firm decided to cut the spending plan by around 30% for the current fiscal year after weak earnings in the first half, said the people, who asked not to be named because the information is private.
Nomura Holdings Inc. cut its executive entertainment budget, people familiar with the matter said, as it stepped up efforts to control costs after some rough quarters.
The firm decided to cut the spending plan by around 30% for the current fiscal year after weak earnings in the first half, said the people, who asked not to be named because the information is private. The move affects executives and senior CEOs, though it is unclear if managers outside of Japan are also affected, they said.
Like its global peers, Japan’s biggest brokerage is tightening its belt as CEO Kentaro Okuda tries to restore earnings growth. Nomura has been reviewing costs in its key retail business after a slump, recently laying off several senior investment bankers in Asia and Europe amid a sluggish trading environment.
“It is not our policy to comment on individual cost line items, but we are always committed to constantly reviewing and keeping a close watch on costs,” Nomura said in an emailed response to Bloomberg’s questions.
Nomura’s net income fell 64% in the first half ended September 30 from a year earlier, though profit showed signs of recovery in the subsequent quarter ended December 31.
Entertainment is traditionally an important part of doing business in Japan, where activities like dining and drinking and playing golf help build customer relationships. Such spending fell 25% when the pandemic struck in 2020, the most recent figures from the National Tax Agency show.
“Entertainment spending is one of the discretionary expenses that Nomura can restrict first, before taking more significant measures, such as reducing personnel expenses, such as bonuses,” said Michael Makdad, an analyst at Morningstar Inc. in Tokyo, noting increasing the cost-benefit ratio of the company. income ratio.
“A temporary cut in entertainment spending probably shouldn’t hurt the business much, but in the medium term it’s necessary as part of the process of soliciting deals, cultivating new customers and expanding business with existing customers,” Makdad said.
Nomura’s non-interest expenses rose more than 14% in the third quarter from a year earlier to 310.1 billion yen ($2.3 billion), according to filings. The cost ratio in its wholesale division soared to 101% of revenue last quarter from 80% a year earlier.
Financial institutions globally are finding ways to cut spending amid persistent inflation and a slowdown in trading. BNP Paribas SA plans to move most of its Hong Kong staff out of offices in the city center to cut costs, people familiar with the matter said this week. Citigroup Inc. is set to join Wall Street rivals JPMorgan Chase & Co. and Goldman Sachs Group Inc. in cutting jobs