Nomura Holdings Inc Earnings - Q1 2026 Analysis & Highlights
Nomura Holdings reported record-high full-year net income and achieved its 2030 ROE target two years ahead of schedule, driven by strong performance across wealth management and wholesale divisions, while management discussed capital allocation priorities, private credit risk management, and medium-term growth strategies.
Key Financial Results
Group net revenue increased 15% year-over-year to ¥2,167.7 billion for the full year ended March 2026.
Income before income taxes grew 14% to ¥539.8 billion, and net income increased 6% to ¥362.1 billion, setting a record high for the second consecutive year.
Full year ROE of 10.1% achieved on target for the second year in a row, meeting the company's 8% to 10% or more ROE target by 2030 two years ahead of schedule.
Segment income before income taxes reached an all-time high of ¥506.9 billion.
Fourth quarter group net revenue rose 5% to ¥577.2 billion on a quarter-on-quarter basis.
Fourth quarter income before income taxes fell 20% to ¥107.7 billion, and net income was down 19% at ¥73.9 billion.
Fourth quarter earnings per share came to ¥24.34 and ROE was 8%.
Ordinary dividend of ¥24 per share announced, bringing the annual dividend to ¥51 per share for a dividend payout ratio of 41%.
Business Segment Results
Wealth management achieved growth of 23% in income before income taxes, with both divisions achieving their highest income since their respective establishments.
Wealth management net revenue was more or less flat versus the previous quarter at ¥133.1 billion, while income before income taxes exceeded the strong previous quarter, rising 5% to ¥61.2 billion.
Recurring revenue cost coverage ratio reached 72%, with the division achieving a high level of profitability and margin on income before income taxes remaining above 40%, which is higher than the industry average.
Recurring revenue reached an all-time high of ¥56.8 billion.
Net inflows of recurring revenue assets exceeded ¥400 billion once again this quarter.
Investment management saw its assets under management rise by more than 50% over the year to around ¥137 trillion, with a substantial increase in the stable business revenue base.
Investment management net revenue increased 42% to ¥86.2 billion, and income before income taxes was more or less flat at ¥18.1 billion.
Assets under management hit an all-time high of ¥136.9 trillion at the end of March.
Alternative assets under management grew to a record high ¥3.6 trillion, an increase of about ¥300 billion from the end of December.
Wholesale saw revenue growth across all regions and both global markets and investment banking achieved record high revenue, resulting in income growth of 21%.
Wholesale net revenue fell 2% to ¥308.1 billion on a quarter-on-quarter basis, and income before income taxes declined 31% to ¥43.2 billion.
Global markets net revenue slipped 2%, and investment banking net revenue fell 3%.
Fixed income revenue declined 8% to ¥125.3 billion.
Equities revenue was up 6% to ¥127.2 billion, with equity products revenue reaching a record high.
Investment banking net revenue came to ¥55.6 billion, down 3%, but still at a high level.
Banking net revenue was up 6% at ¥14.5 billion, and income before income taxes was down 27% at ¥3.0 billion.
Capital Allocation
Annual dividend of ¥51 per share announced for a dividend payout ratio of 41%.
Full year RSU included 58% total payout ratio to shareholders, and excluding RSU, it's beyond 50%.
¥60 billion buyback program announced in Q3 for fiscal year 2025.
Company expects to balance revenue growth and cost controls while making steady investment in growth.
Macroeconomic Environment
Uncertainty remains in the market due to geopolitical risk, but the flow of funds into products and services remains firm and client sentiment has been recovering.
Equity markets rebounded sharply from the end of March and rising to new all-time highs as of April.
Middle East situation in the mid-to-late March period caused exacerbation, requiring defensive position control.
Risk position was controlled due to seasonality at the end of the fiscal year.
Growth Opportunities and Strategies
Wealth management business model gained further momentum as a recurring revenue-based business model, with major KPIs seeing substantial growth.
Banking division has steadily expanded its business base since establishment and is making solid progress toward implementing deposit sweep.
Net inflows of recurring revenue were ¥422.8 billion, the 16th straight quarter for inflows to exceed outflows.
Number of flow business clients rose by around 200,000 from the previous quarter, reaching 1.74 million, with business growing against a backdrop of high market volatility, primarily in face-to-face channels.
Business revenue in investment management was at an all-time high owing to growth in existing business and the expansion of international business through acquisitions.
Solid asset management business and the aircraft leasing business Nomura Babcock & Brown both contributed to the increase in business revenue.
Company aims to grow assets under management by boosting total sales and bringing net flows to neutral as soon as possible, with enhancements to making capabilities and expansion of active ETFs and business opportunities.
In advisory, revenue growth momentum continued based on involvement in many M&A deals, chiefly in Japan, with the range of deals including domestic realignment, privatization and cross-border deals.
ECM revenue rose partly on contributions from large scale CB and PO deals.
Solutions business continued to perform well as it helped demand for unwinding of cross-shareholdings.
Company announced reaching for sustainable growth, its vision for business in 2030 in May 2024, with numerical targets of consistent attainment of ROE of 8% to 10% or more and income before income taxes of more than ¥500 billion.
Company aims to monetize business opportunities while keeping mindful of appropriate risk levels and cost controls in wholesale.
Financial Guidance and Outlook
In wealth management, net revenue is largely at the same level as in the fourth quarter as of April.
In wholesale, net revenue has been trending much higher than in the fourth quarter, with equity markets rebounding sharply and client activity picking up.
Equity products revenue has been strong, and rates has been steadily monetizing client flows amid moderate market volatility.
Management expects the expense level to come down in wholesale compared to the fourth quarter, as the fourth quarter included one-time items and professional fees paid earlier than revenue recognition.
For wealth management, advanced investment in AI and corporate cost increases due to inflation are expected, but the company will tightly control cost and expects to deliver a certain level of margin.
Regarding private credit market, management view is positive and the market has the potential to grow in the medium- to long-term.
In the short-term, credit cycle needs to be monitored closely, and risks must be controlled tightly.
Private Credit Risk Management
Group's exposure to private credit is properly diversified and managed.
Lender financing for private credit funds comes to about $800 million, and direct lending to SMEs comes to about $1.2 billion.
Investment management investment holdings related to private credit come to about $400 million.
Lender financing is backed by a diversified corporate credit portfolio, and credit fund counterparties are, by and large, supported by long-term capital provided by institutional investors.
Direct lending is diversified across more than 40 companies, and investment management investments are also suitably diversified and have been performing stably.
Private credit sector diversification includes healthcare, business service, software, computer service, consumer, engineering and construction, with healthcare and business service occupying quite a large proportion.
Regarding retail customers and private credit products, there are no significant calls for cancellation or requests at the moment.
Company takes a selective approach to private credit opportunities and aims to control the portfolio so that no single product stands out too much.
Cost Management and Profitability
Group-wide expenses were ¥469.5 billion, a quarter-on-quarter increase of about 13%, or ¥53 billion.
Extraordinary factors that boosted expenses include impairment losses associated with equity stake in investee company, compensation and benefits accompanying changes to remuneration regulations, and effects from changes to the method of presentation of financial statements.
When extraordinary factors are excluded, the cost structure in place is appropriate for the revenue growth.
Fourth quarter wholesale cost income ratio was 86%, which is slightly higher than normal.
Full year wholesale cost income ratio was 83%.
Management intends to grow revenue at a rate that beats inflation as an important factor for managing cost income ratio.
Capital Position
Common equity tier 1 ratio stood at 12.9% at the end of March, down 0.1 point from 13.0% at the end of December.
CET1 ratio impact through business expansion in wholesale is not that significant, as self-funding is used within the border of additional capital balance sheet.
Impairment and Investment Losses
¥12 billion of losses have been booked related to forestry asset management company investment made four years ago.
ESG environment had significantly changed, mainly in the United States, triggering difficulties in fundraising for the forestry asset management company.
The forestry company itself, AUM, is top five in forestry, but growth has decelerated compared to the plan.
Impairment loss at an investee company in investment management was recognized in the fourth quarter.
Regarding Laser Digital, in the fourth quarter when looking at the market, Bitcoin and crypto market decline was the same level as in the third quarter, and the impact on consolidated result was limited.
