Nomura NYSE: NMR reported broad-based growth in its first quarter of the fiscal year ending March 2027, with every division posting higher revenue and income before income taxes from the prior quarter. Chief Financial Officer Hiroyuki Moriuchi said return on equity reached 15.4%, supported by expanding recurring revenue, record overseas earnings and continued investment in the banking business.
“We believe the result of the structural reforms implemented over the past few years are now steadily being reflected in our performance,” Moriuchi said, adding that the company was making progress toward its 2030 management vision.
The company recently raised its 2030 targets to return on equity of 10% to 12% or more and income before income taxes of at least ¥750 billion. Moriuchi said stable revenues accounted for roughly 60% of total revenue, up from a year earlier, while profits had become more balanced across divisions.
Wealth Management Builds Recurring-Revenue Base
Wealth Management net revenue rose 9% from the previous quarter to ¥145.4 billion, while income before income taxes increased 16% to ¥71.1 billion. Revenue and profit increased for a fifth consecutive quarter, and the division generated a pretax profit margin of 49%.
Recurring revenue reached a record ¥59.2 billion, while net inflows into recurring-revenue assets hit an all-time high of ¥539.6 billion. Recurring-revenue assets totaled a record ¥31.7 trillion at the end of June, marking the 17th consecutive quarter of net inflows. The recurring-revenue cost coverage ratio was 76%, moving toward the company’s 2030 target.
Although total sales declined to ¥8.5 trillion, stock sales fell primarily because the prior quarter did not have the same level of major tender offers. Demand for Japanese bonds increased as yen interest rates rose. Sales of investment trusts and discretionary investments rose 22% and 38%, respectively, while insurance sales climbed 36% on demand tied to pension and estate planning.
Workplace client assets, a newly disclosed key performance indicator, rose to ¥10 trillion at the end of June, supported by inflows from employee stock ownership plans.
Investment Management Posts Best Results Since Formation
Investment Management reported net revenue of ¥98.3 billion, up 14% from the prior quarter, and income before income taxes of ¥45 billion, up 148%. Moriuchi said both figures represented the division’s strongest performance since it was established in April 2021.
Business revenue was ¥86.2 billion, with asset-management fees reaching an all-time high as assets under management grew. Total assets under management reached a record ¥156.4 trillion at the end of June, aided by favorable market conditions.
Net outflows totaled ¥1.33 trillion, largely reflecting approximately ¥940 billion of ETF outflows from Japanese equity ETFs amid rising equity markets. However, investment trusts excluding ETFs and money reserve funds recorded around ¥500 billion of net inflows, including into actively managed Japanese equity strategies and newly established emerging-market equity funds.
The division also benefited from improved performance at American Century Investments and the absence of impairment and acquisition-related costs recorded in the prior quarter. Alternative assets under management rose to a new high, supported by net inflows.
Wholesale Revenue Reaches Record Levels
Wholesale net revenue rose 20% from the prior quarter to ¥369.1 billion, while income before income taxes more than doubled, increasing 116% to ¥93.3 billion. Both were the highest results since the division’s creation in April 2010.
Global Markets net revenue increased 26% to ¥318.7 billion. Fixed-income revenue rose 11% to ¥139.2 billion, aided by stronger client activity in rates, foreign exchange, emerging markets and credit products. Equities revenue surged 41% to ¥179.4 billion, driven by derivatives, execution services and the broader global rollout of established businesses.
In response to analyst questions, management said roughly half of the growth in equities revenue came from financing-related activities, including corporate derivatives and prime services, while the other half came from trading-related activities such as flow trading, cash equities and structured trading.
Investment Banking revenue declined 9% sequentially to ¥50.4 billion but still marked a record first-quarter result. The company cited investment and portfolio realignment in Japan, renewable-energy-related deals outside Japan, major equity capital markets transactions and bond issuance activity.
The Wholesale division’s revenue-to-modified-risk-weighted-assets ratio rose to 9.3%. Management said it shifted resources toward equities, securitized products and International Wealth Management where opportunities were strongest, while maintaining its self-funding framework and limits on concentration risk.
Banking Growth and Outlook
Banking net revenue increased 5% to ¥15.2 billion, and income before income taxes rose 19% to ¥3.6 billion. Banking revenue climbed 19% to ¥4.1 billion following the April 27 launch of its deposit sweep service and increased collaboration with Wealth Management.
Loans outstanding totaled ¥1.247 trillion, with growth centered on Nomura Web Loan, as securities-backed lending gained recognition and rising markets increased collateral values. Trust and agent service revenue was ¥11.2 billion, supported by growing investment-trust balances and assets under administration.
Groupwide expenses rose about 1% from the prior quarter to ¥475.2 billion. Moriuchi said increased performance-linked bonus provisions and compensation were partly offset by lower other expenses. The common equity Tier 1 capital ratio was 12.9% at the end of June, up from 12.8% at the end of March.
Looking beyond the quarter, Moriuchi said Wealth Management revenue since July had been roughly in line with the first-quarter level, with inflows into long-term diversified investment products remaining firm. Wholesale revenue had slowed somewhat in July and was roughly flat from a year earlier, reflecting both a reaction to strong first-quarter equities revenue and typical summer seasonality.
Management said it expects market volatility could increase in the second half because of U.S. midterm elections and monetary-policy developments. Nomura plans to pursue revenue opportunities while maintaining risk discipline and cost controls.
About Nomura (NYSE:NMR)
Nomura Holdings, Inc is a global financial services group headquartered in Tokyo, Japan, with origins dating back to 1925 when Tokushichi Nomura II established the firm as a securities business. Over the decades Nomura has grown from a domestic securities house into a multinational financial services firm by expanding its product offerings and international footprint. The company is publicly listed and operates through a network of subsidiaries and branches to serve a broad client base.
Nomura's principal businesses encompass retail brokerage, wholesale (investment banking and global markets), and asset management.
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