TOKYO: Nomura Holdings Inc shares dropped more than 7% early on Thursday after Japan’s biggest brokerage posted a sharp fall in quarterly net profit as worries about a global banking crisis roiled markets and hit its investment banking business.

Nomura on Wednesday reported a 76% fall in January-March net profit, joining Wall Street investment banks in reporting a slump in dealmaking fees as global mergers and acquisitions activity shrank to the lowest level in more than a decade in the last quarter.

Investors have grown more cautious about volatile markets as a banking crisis that began with the collapse of Silicon Valley Bank spread to Europe with the sale of Credit Suisse Group AG to its Swiss rival UBS Group AG.

Nomura’s wholesale division, which houses its investment banking and trading businesses, reported its second consecutive quarterly loss, at 14.2 billion yen ($106 million) pre-tax, casting doubt on CEO Kentaro Okuda’s midterm plan to raise core pre-tax profit by up to 90% in three years.

Costs also ballooned at the division due to global inflation and a weaker yen.

Asian shares sink on banking jitters, US economic concerns

“The wholesale segment lost money due to some one-off expenses such as severance payment and system disposal costs,” Jefferies analyst Hideyasu Ban said in a note.

“The absence of such items should lead to a profit recovery, but the market and we await its top-line recovery to drive a further EPS/ROE recovery,” Ban said, referring to the ratio of earnings per share to return on equity.

Shares in Nomura tumbled 7.5%, the biggest daily percentage decline in two years, to their lowest level in four months. Moody’s Japan senior analyst Tomoya Suzuki blamed rapidly rising interest rates around the world and geopolitical tensions for dampened investor sentiment.

“Moody’s has a negative outlook on Nomura Holdings’ rating, reflecting structural challenges to the company’s profitability in the domestic retail segment,” Suzuki wrote in a report.