TOKYO (REUTERS) - Nomura Holdings, Japan's biggest brokerage and investment bank, on Friday (July 30) reported a 66 per cent drop in first-quarter net profit due to a slowdown in the trading business and a previously flagged loss from the Archegos debacle.

April-June profit came in at 48.5 billion yen (S$599 million) versus 142.5 billion yen a year earlier, when buoyant US trading revenue drove the bank to its best quarterly earnings in almost two decades.

The result compared with the 42.98 billion yen average of two analyst estimates compiled by Refinitiv.

Trading revenue was weak particularly in fixed-income markets compared with the same period last year, when unprecedented volatility during the early months of the Covid-19 pandemic led clients to reposition portfolios, boosting trading volume.

Nomura's rival Wall Street banks also suffered a slowdown in the pandemic-era trading boom in the last quarter, but gains from a surge in deal-making activity helped them score solid profit.

Nomura benefited from buoyant dealmaking, but its relatively small presence in the US market compared with top-league investment banks limited the earnings impact of such advisory business.

As previously flagged, Nomura booked a further US$600 million (S$811 million) loss from an unidentified US client, widely understood to be collapsed investment fund Archegos, bringing the total Archegos-related hit to US$2.9 billion.

The wholesale segment, which houses trading and investment banking, reported a loss of 28.4 billion yen versus a profit of 87.9 billion yen a year prior.

Shares of Nomura have lost more than 20 per cent since it revealed the Archegos loss in March, just a few days before the end of its financial year. Before the Archegos collapse, the bank had been on track for record annual profit.