Moody's Japan K.K., a subsidiary of Moody's Corporation (MCO - Free Report) , has affirmed all the ratings of Nomura Holdings, Inc (NMR - Free Report) and its subsidiaries. The Japanese bank’s long-term senior unsecured debt rating has been affirmed at Baa1.
At the same time, A3 ratings of Nomura Securities Co., Ltd. and the Baa1 rating of Nomura America Finance, LLC have been maintained.
However, the rating firm’s outlook for the bank has been upgraded to “stable” from “negative”.
Per Moody’s, improvements in Nomura’s domestic retail and wholesale segments, along with reduction in risks in global business post restructuring efforts over the past two years, will reduce the heightened volatility in revenues. Therefore, the rating firm has affirmed the ratings and upgraded the outlook.
Nevertheless, there are lesser chances of an upgrade in the next 12-18 months as challenges persist for the bank in improving the profitability of its domestic retail segment, along with tough competition in overseas markets.
However, Nomura might face a downgrade in ratings by Moody's on failure to maintain the profitability in terms of return on assets. Also, rise in higher-risk assets, elevated leverage, stiff liquidity buffer and higher reliance on shorter-term funding could be possible reasons of downgrade.
Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s shares have rallied 16% on the NYSE over the past three months. This is way above other big banks, such as Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) and Deutsche Bank AG (DB - Free Report) . It also compares favorably with the industry’s decline of 3.5% during the same time frame.
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