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Nomura's New CEO to Boost Growth With Focus on Private Markets

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Nomura Holding’s (NMR - Free Report) new CEO Kentaro Okuda seeks to put the company on a growth trajectory with his impressive business strategy. The company will switch to focus more on the private markets rather than its traditional business with public markets.

In its business strategy update, it said that it aims to expand product offerings by strengthening the alternatives business, which includes private equity, private debt and infrastructure. Also, it seeks to offer digital bonds and security tokens.

The company targets to achieve return on equity of 8-10% by 2024-2025, whereas it has 6% at present.

In its retail business, Nomura aims to drive revenues by boosting advisory functions by offering institutional investor services to customers. Also, it will invest in digital modes of dealing with customers in order to improve communications. Further, it will continue to look for inorganic growth opportunities.

Regarding the asset management segment, Nomura seeks to have assets worth Y65 trillion by 2022-23, expand products to include multi-asset solutions in addition to individual investment strategies and build out alternative product offerings.

Cost control continues to remain a key focus point for Nomura. The company has already achieved 70% of its Y140 billion cost-reduction target by 2022. The remaining will be achieved through the reduction in IT-related costs, standardization of corporate functions, and efforts to lower consulting and outsourcing costs.

Further, in the medium term, Nomura aims to achieve sustainable growth by helping solve social issues such as advise clients on their total balance sheet requirements, provide comprehensive services covering both public and private, and earnings contributions from businesses and areas other than the three segments.

Shares of the company have lost 25% on the NYSE in the year-to-date period compared with a 22% decline recorded by the industry.

 

 

The stock currently carries a Zacks Rank #3 (Hold).

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