Nomura Delivers Double-Digit ROE in First Half Amid Rising Japanese Rates and Deal Momentum
Nomura Holdings posted a 13% increase in second-quarter net profit from a year earlier, leveraging double-digit gains in wealth management and rising domestic interest rates to offset a sequential normalization in trading activity.
Japan’s premier brokerage and investment bank reported net income attributable to shareholders of ¥103.7 billion ($659 million) for the three months ended September 30, 2026, compared with ¥92.1 billion during the same period in 2025. Group net revenue rose 18% year-on-year to ¥607.5 billion ($3.9 billion), while income before income taxes gained 8% to ¥148.0 billion ($941 million).
Although quarterly earnings retreated from record-setting trading volumes logged in the first quarter—with net income and pretax profit dropping 29% and 30% quarter-on-quarter, respectively—the results cemented an annualized return on equity (ROE) of 10.9% for the quarter. This marks the second consecutive quarter meeting the brokerage's updated quantitative target of 10% to 12% or higher under its 2030 Management Vision. Earnings per share (EPS) for the quarter came in at ¥34.61.
The performance lifted first-half net profit by 27% year-on-year to ¥249.3 billion ($1.6 billion) on revenue of ¥1,294.2 billion, up 25%. Pretax profit across the firm’s four operating business divisions rose 50% year-on-year to ¥356.4 billion, bringing total consolidated first-half pretax profit to ¥359.5 billion. First-half ROE reached 13.3%, prompting the board to declare an interim dividend of ¥35 per share, representing a 41% payout ratio.
Macro Backdrop and Business Model Transformation
The results reflect resilience across Nomura's diversified franchise amid turbulent global conditions. Group Chief Executive Kentaro Okuda pointed out that the first half opened with sharp energy swings, with crude oil briefly climbing above $110 per barrel on Middle Eastern conflict, followed by global equity rallies led by AI and semiconductor equities. Later in the half, financial markets faced renewed corrections triggered by higher sovereign bond yields and heightened geopolitical tensions.
"In the first half of the fiscal year, we continued to see the positive results of our business model transformation," Okuda said. "ROE was 13.3 percent, and pretax income from our four business divisions rose 50 percent year on year. Stable revenues grew about 60 percent compared to the same period last year, reflecting the expansion of our asset management-based business. We also continued to strengthen our revenue base by further diversifying our Wholesale revenue streams."
Divisional Breakdown: Fee-Based Engines Cushion Capital Market Swings
- Wealth Management: Net revenue rose 22% year-on-year to ¥141.5 billion, while pretax profit surged 44% to ¥65.6 billion. While income dipped 8% from the first quarter, client net inflows into recurring revenue assets set a record high of approximately ¥750 billion. Total recurring revenue assets reached roughly ¥31 trillion, expanding 20% year-on-year. This asset accumulation lifted the division's recurring revenue cost coverage ratio to 79%. Net retail inflows of cash and securities totaled ¥773.0 billion, fueled by sustained individual demand for investment trusts and fixed-income products as Japanese bond yields advanced.
- Wholesale: Segment net revenue rose 11% year-on-year to ¥308.9 billion, though it slid 16% sequentially from the division’s record first quarter. Pretax income fell 13% year-on-year and 51% quarter-on-quarter to ¥46.1 billion. Global Markets generated net revenue of ¥254.2 billion, up 8% year-on-year but down 20% sequentially as fixed-income trading moderated, though equity transaction volumes held near historic highs. Investment Banking delivered a strong counterweight, with net revenue jumping 26% year-on-year and 9% sequentially to ¥54.7 billion, propelled by robust activity in financing, solutions, and cross-border advisory mandates.
- Investment Management: Net revenue rose 39% year-on-year to ¥84.8 billion, though pretax income declined 11% to ¥27.4 billion (and down 39% quarter-on-quarter) due to amplified mark-to-market fluctuations on seed investments. Overall assets under management (AuM) stood at approximately ¥150 trillion, expanding by ¥50 trillion compared to the prior year, bolstered by ongoing inflows into newly launched and balanced funds along with the acquisition of Macquarie’s North American business.
- Banking: Bolstered by wider deposit spreads and policy rate normalization by the Bank of Japan, Banking net revenue grew 27% year-on-year to ¥16.4 billion. Pretax profit climbed 37% year-on-year and 20% sequentially to ¥4.4 billion. The performance was anchored by higher lending income and increased adoption of automated deposit sweep contracts established in partnership with the Wealth Management division.
Global Expansion, AI Financing, and Risk Management
During the post-earnings conference call, Chief Financial Officer Hiroyuki Moriuchi addressed external market volatility, reassuring investors regarding credit exposures and strategic initiatives.
- Credit Market Insulation: Moriuchi confirmed that Nomura has suffered no notable losses from current concerns surrounding select emerging cloud infrastructure providers, French sovereign debt volatility, or hedge fund deleveraging. He noted that while some hedge fund clients trimmed exposures ahead of key macroeconomic events, investor activity is anticipated to rebound as monetary policy and geopolitical uncertainties clear.
- Data Center and AI Financing: Nomura is selectively growing its exposure to AI infrastructure and hyperscalers through Securitized Products within Fixed Income, an area currently accounting for several percent of that business. Rather than deploying large balance-sheet loans like commercial lenders, the firm focuses on mid-sized origination, rigorous offtaker credit analysis, and swift risk distribution to institutional buyers.
- International Wealth Management (IWM): Revenues at Nomura's international wealth unit have grown sixfold and AuM has climbed to $44 billion since its integration into Wholesale in 2020. The unit has opened more than 3,000 accounts and is expanding advisory headcount, setting up an office in Dubai to complement its existing hubs in Hong Kong and Singapore.
- Inorganic Growth and Capital Returns: Management reiterated its commitment to a dividend payout ratio of at least 40% and a total shareholder return payout ratio of at least 50%. In overseas asset management, the firm will evaluate bolt-on acquisitions using its acquired Macquarie platform while committing seed capital primarily toward active ETFs and organic fund launches.
Cost Discipline and Capital Adequacy
Groupwide non-interest expenses reached ¥459.5 billion in the second quarter, up 21% year-on-year but declining 3% from the prior quarter. The quarter-on-quarter reprieve was driven by a 5.4% reduction in compensation and benefits to ¥224.0 billion as bonus provisions adjusted to normalized quarterly revenues.
Inflationary pressures, tech investments, and yen depreciation pushed the Wholesale division's cost-to-income ratio to 85%. In response, Nomura’s internal Structural Reform Committee is directing capital toward enterprise AI solutions and systemic back-office automation to structurally lower operating costs over the medium term.
Nomura’s balance sheet closed the half in a stable position. The group’s Common Equity Tier 1 (CET1) capital ratio stood at 12.6% as of September 30, 2026, slightly down from 13.2% at the end of June due to risk-weighted asset expansion to ¥25.5 trillion. Consolidated total assets amounted to ¥67.5 trillion, supported by a ¥12.7 trillion liquidity buffer and a consolidated liquidity coverage ratio of 182.4%.
Norbert Gehrke
