Nomura (NYSE:NMR) reported second-quarter earnings that moderated from the prior quarter but remained above its return-on-equity target, as growth in recurring revenue and gains across its businesses helped offset more volatile market conditions.
For the second quarter of the fiscal year ending March 2027, group net revenue totaled JPY607.5 billion, down 12% from the previous quarter. Income before income taxes declined 30% to JPY148.0 billion, while net income fell 29% to JPY103.7 billion. Earnings per share were JPY34.61, and return on equity was 10.9%.
Chief Financial Officer Hiroyuki Moriuchi said the result met the company’s quantitative ROE target of 10% to 12% or higher toward 2030, despite uncertainty tied to rising interest rates, geopolitical risks and equity-market corrections. First-half ROE was 13.3%.
Across the company’s four divisions, first-half income before income taxes rose 50% year over year, Moriuchi said. He also highlighted the expansion of asset management-related businesses, with wealth management recurring-revenue assets rising 20% from a year earlier to about JPY31 trillion and investment-management assets under management reaching about JPY150 trillion, partly reflecting acquisitions.
The company said it will pay an interim dividend of JPY35 per share, with a Sept. 30 record date, representing a 41% payout ratio.
Wealth Management recurring revenue reaches record
Wealth Management net revenue fell 3% sequentially to JPY141.5 billion, while income before income taxes declined 8% to JPY65.6 billion. However, recurring revenue rose 13% to a record JPY66.7 billion, and net inflows into recurring-revenue assets increased 40% from the prior quarter to a record JPY755.4 billion.
The division’s recurring-revenue cost-coverage ratio was 79%. Flow revenue fell 13%, although Moriuchi said several large transactions helped offset a slowdown in equity trading.
Total sales in Wealth Management declined 13% to JPY7.4 trillion. Equity sales dropped 21%, while bond sales climbed 66%, supported by demand for public and corporate bonds as yen interest rates rose and by a large primary transaction. Sales of investment trusts fell 14%, but the company said long-term holdings such as Japan equity and balanced funds continued to attract inflows. Discretionary investments increased 9%, and insurance sales rose 14% amid demand related to pensions and estate planning.
During the question-and-answer session, Moriuchi said government bonds for individual investors have become an increasingly important entry point for customers moving from deposits toward direct financing and broader investment products. He said the company expects clients who become familiar with government bonds to potentially diversify into investment trusts, public bonds, corporate bonds and other asset classes.
For October to date, Moriuchi said Wealth Management revenue was running at roughly the same level as the second quarter. While some clients have been cautious in trading, inflows into medium- and long-term asset-management products and services have remained solid.
Investment Management and Wholesale results decline from high first-quarter levels
Investment Management generated net revenue of JPY84.8 billion, down 14% from the prior quarter, and income before income taxes of JPY27.4 billion, down 39%. Business revenue, which the company characterizes as stable revenue, was JPY82.3 billion.
Net inflows during the quarter totaled JPY478 billion. Investment trusts recorded approximately JPY1 trillion of inflows, including inflows into private equity, balanced funds and actively managed Japanese equity funds. Alternative assets under management rose to a record high.
Investment gains declined to JPY2.5 billion, reflecting a lower contribution from American Century Investments-related gains. Moriuchi also said valuation losses related to seed investments were larger than usual in the second quarter, though he did not disclose the amount. He described seed investments as necessary for developing future products and said Nomura has allocated capital to normalize investment levels at its international asset-management operations and support active ETFs.
Wholesale net revenue was JPY308.9 billion, down 16% from the record first-quarter level, while income before income taxes declined 51% to JPY46.1 billion. Global Markets revenue fell 20% to JPY254.2 billion, with fixed-income revenue down 14% to JPY119.2 billion and equities revenue down 25% to JPY135.0 billion.
In fixed income, macro-product revenue declined amid rising global rates, while credit client activity was subdued as spreads widened. Securitized-products revenue increased, primarily in the Americas. In equities, financing revenue remained solid, but derivatives and execution-services revenue declined from the first quarter.
Investment Banking was a relative bright spot, with net revenue rising 9% to JPY54.7 billion. Nomura said it ranked first in Japan-related equity capital markets and debt capital markets league tables for the April-to-September period. The company acted as bookrunner on nine of the 10 largest deals in Japan during the first half, according to Moriuchi.
Banking growth and expense management
Banking Division net revenue increased 7% to JPY16.4 billion and income before income taxes rose 20% to JPY4.4 billion. Banking revenue rose 11% to JPY4.5 billion, supported by growth in deposit-sweep contracts and balances, investment holdings and higher market rates. Trust and agent-service revenue increased 6% to JPY11.9 billion.
Loans outstanding totaled JPY1.361 trillion at the end of the quarter. Nomura said loan accounts and balances have continued to grow, particularly for Nomura Web Loan.
Group-wide non-interest expenses were JPY459.5 billion, down about 3% from the prior quarter. Lower performance-linked bonus provisions and normalized trading-related expenses contributed to the decline. The common equity tier 1 capital ratio was 12.6% at the end of September, compared with 13.2% at the end of June.
Outlook and capital priorities
Moriuchi said Wholesale began October more slowly than the previous quarter as geopolitical concerns and high interest rates led some market participants to remain on the sidelines. Equities remained solid and rates activity was recovering, while Investment Banking’s pipeline remained solid despite a slow start, he said.
Asked about risks related to data centers, AI financing and hedge-fund deleveraging, Moriuchi said Nomura had not seen an impact on its positions. The company has exposure to data-center-related investments but has avoided excessive concentration in a specific company or area, he said. Nomura is pursuing selective, generally medium-sized deals rather than large balance-sheet-intensive transactions.
On capital deployment, Moriuchi said the company would consider organic and inorganic growth opportunities alongside shareholder returns and financial soundness. He reiterated commitments to a payout ratio of at least 40% and a total payout ratio of at least 50%.
About Nomura (NYSE:NMR)
Nomura Holdings, Inc is a Japan-based financial services group that provides investment, financing, and asset management services to individuals, corporations, financial institutions, and governments. Through its businesses, the company offers securities brokerage, investment banking, capital markets, research, advisory services, wealth management, and investment management.
Nomura’s principal operations are organized around its wealth management, investment management, and wholesale divisions.
