* Nomura says Lehman acquisition is paying off.
* Nomura turns profit on underwriting, trading
* Shares end down 0.7 pct before results (Writes through, adds an analyst comment)
By Junko Fujita
TOKYO, July 29 (Reuters) - Nomura Holdings Inc (8604.T) posted its first profit in six quarters in a sign Japan's largest brokerage has started to leverage its acquisition of Lehman Brothers' assets to bolster its global presence.
Nomura is coming off a $7 billion loss in the past business year when it was weighed down by heavy costs to acquire Lehman's Asian, European and Middle East operations and merge its operations with the failed investment bank.
While taking a cautious tone on its prospects for a full-fledged profit recovery, Nomura said the acquisition was starting to pay off in an expanded reach in global equity and bond markets and in helping it land cross-border deals.
The brokerage, ranked as the No.1 equity underwriter in Japan in the April-June quarter, has also been in a prime position to profit from a rush by Japanese companies to sell shares into the recent upswing in the stock market.
"Nomura should be praised in a certain way for its purchase of Lehman," said Azuma Ohno, a brokerage analyst at Credit Suisse Securities. "Looking at the profit growth at its global market division, we can see how the acquisition has been working."
Nomura reported an 11.4 billion yen net profit for the April-June quarter, compared with a 76.6 billion yen loss a year earlier, joining Goldman Sachs (GS.N) and other U.S. banks in posting profits in the latest quarter.
The result was better than a consensus estimate for a 25.5 billion yen loss in a survey of three analysts by Thomson Reuters but roughly in line with an estimate published earlier this week by the Nikkei newspaper. [ID:nT73276]
Nomura's retail division punched in with higher profits on a solid increase in client assets, helped by a 23 percent gain in Japan's benchmark Nikkei average .N225 amid signs the global economy might be bottoming out.
The company's global markets division, which handles stock and fixed income trading, booked a 17-fold jump in profit as traders took advantage of big swings in bond prices and yields as well as volatility in the currency markets.
"The rebound was supported by the good environment and the effect of Lehman. We needed both. The good market alone would not have helped us," said Nomura Chief Financial Officer Masafumi Nakada.
Nomura profited from a move by Japanese companies to tap the equity markets for funds in the April-June quarter. Firms sold $13.8 billion worth of shares in the period, six times more than a year earlier, Thomson Reuters figures show.
Nomura controls 42.5 percent of the market, according to Thomson Reuters data, with Daiwa Securities SMBC, the investment banking unit of Daiwa Securities (8601.T) a distant second with an 18.3 percent share.
And Nomura's standing outside Japan improved in the latest quarter, indicating it is leveraging the Lehman deal.
It ranked as the 29th equity underwriter in the United States, in the April-June quarter where it was not even ranked a year ago, according to Thomson Reuters. It came 24th on the league tables in Asia excluding Australia, up from 54th.
But Nomura still faces many challenges, including a weak domestic economy where it still gets the bulk of its profits, and the risk of losing talented ex-Lehman staff. Moreover, its investment banking division is still in the red.
The former Asia Pacific CEO for Lehman will step down from his chairman role at Nomura according to a memo obtained by Reuters on Tuesday, and there is the risk that more bankers will leave once their bonuses are paid in full. [ID:nHKG214165]
"The economic outlook is not clear yet. There are some uncertainties and in that sense we cannot be fully optimistic about our business environment," Nomura's Nakada said.
Nomura in the latest quarter did not separate costs related to acquiring Lehman because the unification of the two banks have been completed. Nomura in the January-March quarter booked 53.1 billion yen in costs related to Lehman purchase, following a similarly sized charge in the October-December period.
Nomura's bonus payments increased 60 percent from the previous quarter to 50.3 billion yen.
Before the results, Nomura shares ended Wednesday trade down 0.7 percent at 809 yen. Nomura's stock has gained 11 percent since the start of the year, underperforming the benchmark Nikkei average's .N225 14 percent gain.
Wataru Kasatani, a financial analyst at MDAM Asset Management, said Nomura's stock was unlikely to get much of a boost from the results given they were roughly in line with the Nikkei's figures. (Additional reporting by Yumiko Nishitani; Editing by Valerie Lee) ($1=94.38 Yen)