Citigroup takeover target Nikko Cordial reported a 38% increase in quarterly net profit on Tuesday as a beneficial change in its tax status compensated for a decline in underlying earnings.
Japan's third-biggest brokerage said group net profit totalled 24.68 billion yen ($209 million) in the January-March fourth quarter, compared with 17.9 billion yen in the same period a year earlier.
The result was in line with an estimate of annual earnings published by Nikko on March 22, which implied quarterly net profit of 26.55 billion yen.
Nikko's quarterly operating profit, which was not affected by the tax change, fell 36% to 21.69 billion yen, reflecting damage to Nikko's business from an accounting scandal as well as a sector-wide underwriting slowdown.
Nikko has lost mandates to manage share issues and seen sales of government bonds fall since the accounting mess emerged in mid-December. Citigroup approached the brokerage after it paid a $4.2 million fine and top executives quit.
The U.S. bank's 1,700 yen-a-share tender offer for Nikko expires on Thursday.
Shares in Nikko surged 23% in the three months through March, bolstered by Citigroup's bid. The sector as a whole ISECU.gained 12% in the same period while the benchmark Nikkei was about flat.