Executive Summary / Key Takeaways

• Nomura Holdings, Inc. has demonstrated a significant financial resurgence, achieving a record-high net income of JPY340.7 billion for the fiscal year ending March 2025 and an annualized Return on Equity (ROE) of 12% in Q1 FY2026, consistently meeting its 2030 target of 8% to 10% or more.
• The company's strategic pivot towards stable revenue streams is evident in the record-high recurring revenue in Wealth Management and business revenue in Investment Management, supported by consistent net asset inflows and a focus on comprehensive client services.
• Strategic initiatives, including the acquisition of Macquarie Group (MQG)’s US and European public asset management business and the establishment of a new Banking division, are poised to expand Nomura's global footprint and diversify its service offerings, particularly in asset management.
• Nomura maintains a strong competitive position in Asia, leveraging its local expertise and extensive branch network, while actively addressing operational risks like phishing scams through enhanced security measures and managing capital efficiently with a commitment to shareholder returns.
• Despite global market uncertainties and inflationary pressures, management's focus on cost control, risk management, and strategic investments positions Nomura for continued bottom-line growth and enhanced intrinsic earnings power.

A Century of Evolution: Nomura's Foundation and Strategic Reorientation

Founded in 1925, Nomura Holdings, Inc. has evolved into a global financial services powerhouse, offering a comprehensive suite of services to individuals, institutions, corporations, and governments through its Wealth Management, Investment Management, Wholesale (Global Markets and Investment Banking), and the newly established Banking divisions. The firm's enduring presence is built on a tradition of disciplined entrepreneurship, with its strategic focus increasingly centered on sustainable growth and diversified revenue streams. This foundational strength, particularly in the Asian financial markets, provides Nomura with a distinct competitive advantage, allowing it to offer localized expertise and navigate regional regulatory landscapes with greater agility than many of its global peers.

In the broader financial services industry, Nomura operates within a highly competitive landscape. Direct competitors such as Goldman Sachs Group, Inc. (GS), Morgan Stanley (MS), JPMorgan Chase & Co. (JPM), and Citigroup Inc. (C) often boast greater global scale and advanced digital infrastructures. While these larger, more diversified institutions may exhibit higher profitability and cash flow generation due to their extensive global reach and high-margin institutional deals, Nomura differentiates itself through its deep penetration and strong brand recognition in Asia, particularly Japan. This regional concentration, while a strength, also presents a vulnerability to localized economic shifts. Nomura's strategic emphasis on retail and regional services, supported by an extensive branch network, provides a more resilient revenue base compared to competitors heavily reliant on wholesale activities.

Nomura's technological approach, while not characterized by a single "core differentiated technology" in the manufacturing sense, is strategically focused on enhancing operational efficiency, security, and client service. The company recently completed an upgrade of Nomura Trust and Banking's core banking system in May 2025, a move aimed at streamlining operations and improving service delivery. Furthermore, in response to rising digital threats, Nomura plans to roll out a passkey authentication system utilizing biometric authentication this fall, significantly enhancing client account security. These initiatives underscore a commitment to leveraging technology to improve internal processes and protect client assets, which are critical for maintaining trust and operational integrity in the digital age. The profitability of its digital assets subsidiary, Laser Digital, which turned profitable within two years of its 2022 launch, further highlights Nomura's engagement with emerging financial technologies and its intent to capitalize on the growing acceptance of crypto assets as a regular asset class.

Financial Performance and Operational Momentum

Nomura's recent financial performance underscores the efficacy of its strategic reorientation. For the fiscal year ending March 2025, the company reported a record-high net income of JPY340.7 billion, a significant increase from JPY165.86 billion in the prior year. Group net revenue for FY2025 surged 21% year-on-year to JPY1,892.5 billion, with income before income taxes growing 72% to JPY472 billion. This robust performance translated into an earnings per share of JPY111.03 and a strong return on equity of 10%. All three main segments—Wealth Management, Investment Management, and Wholesale—contributed solidly, with their combined income before income taxes growing 80% to JPY426.6 billion. The group-wide effective tax rate also saw a favorable reduction to 26%, partly due to the utilization of tax loss carryforwards by some international entities.

The momentum continued into Q1 FY2026, with Group net revenue increasing 16% quarter-on-quarter (QoQ) to JPY523.3 billion. Income before income taxes grew 64% to JPY160.3 billion, and net income rose 45% to JPY104.6 billion. Notably, all four divisions, including the newly independent Banking division, achieved growth in both revenues and profits. The sale of fixed assets by Nomura Properties further bolstered Q1 FY2026 results, contributing approximately JPY56 billion to income before income taxes.

Segmental Deep Dive

Wealth Management has been a cornerstone of Nomura's stable revenue growth. In Q1 FY2026, net revenue increased 6% to JPY105.8 billion, and income before income taxes rose 8% to JPY38.8 billion. This growth was driven by tailored consulting services, leading to increased primary bond sales and secondary stock transactions. Despite a sharp stock market decline in April, recurring revenue assets saw net inflows for the 13th consecutive quarter, reaching JPY278.9 billion in Q1 FY2026. The recurring revenue cost coverage ratio reached a high of 69% over the last four quarters, reflecting effective cost management. Management notes an improving client sentiment since mid-June, leading to increased business volume in stocks and investment trusts.

Investment Management also demonstrated strong performance, with Q1 FY2026 net revenue up 18% to JPY50.6 billion and income before income taxes rising 39% to JPY21.5 billion. Assets under management (AUM) hit a record high of JPY94.3 trillion by the end of June 2025, propelled by market recovery. Net inflows totaled JPY108 billion in Q1 FY2026, with significant contributions from investment advisory and international businesses. The strategic acquisition of Macquarie Group’s US and European public asset management business is anticipated to significantly expand this division's scale and global reach, marking a "major step change" in its growth trajectory.

Wholesale experienced a 1% rise in net revenue to JPY261.1 billion and a 12% increase in income before income taxes to JPY41.9 billion in Q1 FY2026. Global Markets revenues increased 8%, with strong performance in fixed income (rates in Europe, FX emerging in Asia, credit in Japan and Europe, securitized products in the US) and equities (derivatives in the Americas). Investment Banking revenues, while down 27% QoQ after a particularly strong Q4, still achieved the highest Q1 level since FY2016/17, driven by M&A deals in Japan. Nomura's top ranking in Japan-related M&A league tables and 11th in global M&A league tables from January through June 2025 highlights its strong competitive standing in advisory services.

The newly established Banking division reported Q1 FY2026 net revenue of JPY12.8 billion, up 12%, and income before income taxes of JPY3.6 billion, an increase of 19%. This division is leveraging Nomura Trust and Banking's upgraded core system and preparing for sweep accounts, indicating a focus on expanding its lending and trust services.

Capital Strength, Risks, and Forward Outlook

Nomura maintains a robust financial position, with a Common Equity Tier 1 (CET1) ratio of 13.2% at the end of June 2025, comfortably within its target range of 11% to 14%. While the CET1 ratio saw a slight decline from 14.5% at the end of March due to increased risk assets from normal business activities and the Macquarie acquisition agreement, management views this as a manageable adjustment. The company's capital policy prioritizes strategic business investments, followed by returning benefits to shareholders, with a commitment to a total payout ratio of more than 50%. A share buyback program with an upper limit of JPY60 billion was authorized in May 2025, further demonstrating this commitment.

Despite the positive performance, Nomura operates in a dynamic and often uncertain market environment. Geopolitical risks and the introduction of reciprocal tariffs by the United States have created market volatility. The company also faced operational challenges, including JPY6.6 billion in compensation for losses from phishing scams in Q1 FY2026. Nomura has responded by enhancing security measures, including the planned rollout of a passkey authentication system, and adopting a "restitution" approach for affected clients, aiming to restore their positions to the state before the damage. Inflationary pressures outside Japan also pose a challenge to cost control, which the company is actively managing.

Looking ahead, Nomura's management is confident in its ability to achieve its Management Vision 2030, which targets consistent ROE of 8% to 10% or more and over JPY500 billion in income before income taxes. The successful integration of the Macquarie asset management business, expected to close by the end of December, is proceeding smoothly and is anticipated to significantly enhance the Investment Management division. While the pace of policy holding sales is expected to normalize, the Investment Banking pipeline, particularly in M&A advisory and DCM, remains strong, especially in Japan, driven by ongoing corporate actions to improve capital efficiency. Wealth Management is expected to "shine precisely because of the changing conditions," with continued client engagement and rising recurring revenue. Nomura's continued focus on diversifying revenue streams, stringent cost controls, and strategic capital allocation positions it for sustained growth and enhanced shareholder value.

Conclusion

Nomura Holdings, Inc. is demonstrating a compelling narrative of strategic transformation and financial resilience. Through a disciplined focus on stable revenue growth in Wealth and Investment Management, coupled with a diversified and robust Wholesale division, the company has consistently delivered strong financial results, exceeding its ROE targets. The strategic acquisition of Macquarie's asset management business and the establishment of the Banking division underscore a clear vision for global expansion and enhanced service offerings. While navigating market uncertainties and operational risks, Nomura's commitment to technological advancements in security and efficiency, alongside its strong competitive positioning in Asia, provides a solid foundation. The firm's balanced approach to capital management, prioritizing both strategic investments and shareholder returns, reinforces its long-term investment appeal. As Nomura approaches its 100th anniversary, its strategic initiatives and disciplined execution suggest a continued trajectory of sustainable growth and value creation for discerning investors.