Nomura Holdings, Inc. (NMR) Q1 2026 Earnings Call Transcript

Nomura Holdings reported strong Q1 FY2026 results, with net revenue up 16% to JPY523.3 billion and net income rising 45% to JPY104.6 billion, driving an annualized ROE of 12% that surpassed its 2030 target. All four divisions, including the newly established banking unit, contributed to revenue and profit growth despite a challenging market, bolstered by a JPY56 billion gain from asset sales, consistent wealth management inflows, and robust global markets performance. The firm's Common Equity Tier 1 ratio settled at 13.2%, within its target range, as it progresses with the acquisition of Macquarie's US asset management business and manages a JPY6.6 billion cost related to client phishing scams.

Analysis

Nomura Holdings reported a strong first quarter for fiscal year 2026, with net revenue climbing 16% quarter-over-quarter to JPY 523.3 billion and net income rising 45% to JPY 104.6 billion. This performance translated to an annualized Return on Equity (ROE) of 12%, surpassing the firm's 2030 target of 8-10% for the fifth consecutive quarter. The results were significantly bolstered by a one-time gain of approximately JPY 56 billion from the sale of fixed assets. All four business divisions, including the new Banking unit, posted sequential growth in revenue and pre-tax income. The Wholesale division's Investment Banking segment, despite a 27% sequential decline from a very strong Q4, achieved its highest Q1 net revenue since fiscal 2016/17, driven by a robust M&A advisory pipeline in Japan. Global Markets revenue grew 8%, led by an 18% increase in Fixed Income. Wealth Management demonstrated resilience with its 13th consecutive quarter of net inflows into recurring revenue assets, which recovered to JPY 24.6 trillion by quarter-end. However, the firm's Common Equity Tier 1 (CET1) ratio fell to 13.2% from 14.5%, reflecting increased risk-weighted assets from business growth and the pending acquisition of Macquarie's US asset management business. Management also provisioned JPY 6.6 billion for client losses from phishing scams, which it states is fully accounted for as of the end of June.

Key Decisions for Investors

• Investors should recognize the strong underlying operational performance, particularly the record Q1 for Investment Banking and consistent inflows in Wealth Management, while mentally adjusting earnings for the significant JPY 56 billion one-off gain from an asset sale.
• Monitor the Common Equity Tier 1 ratio, as the drop to 13.2% and the expected further decline post-Macquarie acquisition could tighten the firm's capacity for aggressive risk-taking or shareholder returns, as suggested by the CFO's commentary.
• The robust M&A advisory pipeline in Japan, fueled by corporate governance initiatives, represents a key forward-looking revenue driver that could provide stability against more volatile market-driven businesses like trading.
• While the JPY 6.6 billion phishing scam cost appears contained, the ongoing implementation of enhanced security measures should be watched as a mitigator against future financial and reputational risk in the retail-facing segments.