Nomura Holdings cemented a second straight year of record profit, fueled by Japan¡¯s financial-market recovery, even after fourth-quarter results missed analysts¡¯ expectations.

Net income rose 2.7% from a year earlier to ?73.9 billion ($463 million) in the three months ended March 31, the Tokyo-based company said Friday. That missed the ?98.9 billion average of four analyst estimates compiled by Bloomberg News. Full-year profit hit an all-time high of ?362.1 billion.

Japan¡¯s biggest brokerage has been benefiting from volatile global markets and a boom in investing and dealmaking at home. The coming quarters may provide a test for Chief Executive Officer Kentaro Okuda as the Middle East conflict puts a strain on the global economy, while signs of stress in the $1.8 trillion private credit market cloud his push into alternative assets.

Nomura¡¯s Chief Financial Officer Hiroyuki Moriuchi said that the firm became more conservative in its U.S. macro trading business in the fourth quarter due to the Middle East situation. He said that the economy and financial businesses would be hit if the conflict gets protracted. Already, some deals have been delayed, though there are plenty of M&A and equity capital market deals in the pipeline, Moriuchi said.

The results last quarter were marred by a ?2.9 billion loss related to ¡°economic hedging¡± transactions, along with a ?6 billion loss in equity in earnings of affiliates.

Nomura¡¯s European operations posted a ?13.8 billion pretax loss, widening from a loss the previous quarter when its operations there were hit partly because of a setback in the digital-asset market.

Markets in Japan have seen a turnaround in recent years as inflation returns and companies take steps to boost value for shareholders. Mergers and acquisitions in the country hit a record high last quarter, and the Nikkei 225 Stock Average is trading at a record after recouping losses since the 51³Ô¹ÏÍø began.

Revenue from stock trading rose 26%, climbing for a 12th straight quarter, as it joined Wall Street firms that also posted double-digit gains. Fixed-income revenue rose 18%, the first increase in five quarters.

Investment-banking revenue increased 6%, extending its growth to a 12th quarter, led by equity underwriting. Wealth management revenue jumped 33%.

Nomura¡¯s operations outside Japan earned ?2.9 billion before taxes, marking the 11th straight quarter of profit.

Shares of Nomura closed down 1.5% before the results were announced. The stock is up less than 1% this year, trailing the Nikkei¡¯s 19% advance.

Nomura¡¯s return on equity reached 10.1% for the year, exceeding its target of 8% to 10% or more.