Nomura Holdings Inc has slashed its entertainment budget for executives, people familiar with the matter said, as the Japanese company stepped up efforts to rein in costs after some tough quarters.
The firm cut the spending plan by about 30 percent for the current fiscal year following weak earnings in the first half, the people said.
The move affects executive officers and senior managing directors, although it is unclear if managers outside of Japan are also affected, they said.
Photo: REUTERS
Like its global peers, Japan’s biggest brokerage is tightening its belt as chief executive officer Kentaro Okuda tries to restore profit growth.
Nomura has been reviewing costs at its key retail business following a slump and recently let go of some senior investment bankers in Asia and Europe amid a sluggish dealmaking environment.
“It is not our policy to comment on individual cost line items, but we are always committed to constantly reviewing and maintaining vigilant control of costs,” Nomura said in an e-mailed response to Bloomberg questions.
Nomura’s net income fell 64 percent annually in the first half ended Sept. 30 last year, although earnings showed signs of a recovery in the subsequent quarter ended Dec. 31.
Entertaining is traditionally an important part of doing business in Japan, where activities such as dining and playing golf help build client relations.
Such spending dropped 25 percent when the COVID-19 pandemic struck in 2020, Japanese National Tax Agency figures showed.
“Entertainment spending is one of the discretionary expenses Nomura can restrain first, before it takes more significant steps like cutting personnel expense such as bonuses,” Morningstar Inc analyst Michael Makdad said, adding that the firm is seeking to rise its cost-to-income ratio.
“A temporary cut in entertainment spending probably shouldn’t affect business much, but over the medium term it is needed as part of the process to solicit deals, cultivate new customers and expand business with existing customers,” Makdad said.
Nomura’s noninterest expenses climbed more than 14 percent in the third quarter from a year earlier to 310.1 billion yen (US$2.28 billion), corporate filings showed.
The cost ratio at its wholesale division ballooned to 101 percent of revenue last quarter from 80 percent a year earlier.
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