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Nomura’s overseas operations – reshaped by heavy job cuts and a series of large strategic shifts – have booked positive profits for the first time in seven years as Japan’s biggest investment bank readies its European business for a hard Brexit.

The stark improvement in the performance of the international business followed what Nomura executives describe as a “philosophical” shift that saw a number of businesses cut and culminated in last year’s closure of the European equities operation.

Propelled by stronger performance by its international bond trading operations, the overall Nomura group saw net profits for the 12 months that ended on March 31 surge 82 per cent compared with the previous year. The full-year net profit total, at ¥239bn, represented the firm’s best annual performance since the year ending March 2006.

Much of the heavy lifting behind that result was made in the January to March quarter, which saw the group booking net profits of ¥61.3bn to reverse the net loss of ¥19.2bn yen made in the same period of 2016. Results for the full year included a record high ¥44.4trn of assets under management at the asset management division.

Less encouraging signs came from the core retail business. Net income before income taxes for the full year were ¥74bn – down 41 per cent year-on-year and reflecting the company’s longer-term difficulties convincing individual Japanese to take more investment risk with their collective mountain of savings.

Despite the efforts of the administration of Prime Minister Shinzo Abe to encourage investment and the Bank of Japan’s introduction of a negative interest rate policy in February last year, Japanese households remain conservative, and retain much of their savings in bank deposits.

The unfolding financial crisis at Toshiba, coupled with political uncertainties caused by Brexit, the election of Donald Trump and tensions surrounding North Korea have done little to persuade potential retail investors to take on more risk, and Japanese individuals have been net sellers of domestic stocks for the past four years.

That reality, combined with the demographics of the world’s fastest-aging society have laid a hefty aspirational burden on Nomura’s overseas operations, which has long been seen as the engine for future growth – an ambition that has proved elusive despite a number of different strategic approaches.

Earlier this month, Nomura senior management indicated that it was looking to expand in the US to meet the demands of Japanese companies looking for overseas acquisitions. The credit ratings agency Moody’s was critical of the move, saying that it “exemplifies its corporate behaviour of frequently changing its strategic direction.”

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