NMR — Nomura Holdings, Inc.

Nomura Holdings Q1 2027 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue Growth: All divisions reported higher revenue and income before income taxes compared to the previous quarter.
• Return on Equity (ROE): Achieved 15.4%, the highest since Q1 2020.
• Wealth Management: Net revenue increased by 9% to JPY 145.4 billion, with income before income taxes rising 16% to JPY 71.1 billion.
• Recurring Revenue: Reached an all-time high of JPY 59.2 billion, with net inflows of recurring revenue assets at JPY 539.6 billion for the quarter.
• Investment Management: Net revenue rose 14% to JPY 98.3 billion, with income before income taxes up 148% to JPY 45 billion.
• Wholesale Division: Net revenue increased by 20% to JPY 369.1 billion, with income before income taxes rising 116% to JPY 93.3 billion.

2. Strategic Updates and Business Highlights

• Structural Reforms: The results reflect the positive impact of structural reforms implemented over the past few years, contributing to a more stable revenue base.
• International Growth: Significant growth in international operations, particularly in priority areas, with income before income taxes in overseas regions reaching record highs.
• New Services: Launched a deposit sweep service to enhance the banking business.
• Diversification: Continued diversification of revenue sources, particularly in the wholesale division, with a focus on equities and securitized products.

3. Forward Guidance and Outlook

• Market Conditions: Anticipate increased market volatility in the second half of the year due to geopolitical risks and U.S. midterm elections.
• Revenue Stability: Despite recent market corrections, Wealth Management revenue is expected to remain stable, supported by strong fund inflows into diversified investment products.
• Long-term Goals: Revised targets for ROE to 10%-12% by 2030 and income before income taxes to at least JPY 750 billion.

4. Challenges and Points of Concern

• Seasonal Slowdown: Noted a typical seasonal slowdown in July and August, impacting wholesale revenue.
• Market Volatility: Increased volatility and uncertainty in the market could affect future performance, particularly in equities and fixed income.
• Competitive Pressures: EMEA region continues to incur losses despite favorable market conditions, indicating challenges in that area compared to competitors.

5. Notable Q&A Insights

• Wholesale Revenue Outlook: CFO Hiroyuki Moriuchi acknowledged a slowdown in wholesale revenue in July, attributing it to seasonal factors but noted year-on-year performance remains stable.
• Resource Allocation: Discussion on balancing capital allocation between growth investments and shareholder returns, with a focus on maintaining flexibility in resource management.
• Client Engagement: Emphasized the importance of staying close to clients and adapting to their needs amid uncertain market conditions.
• Equity Performance: While equity markets performed strongly in Q1, there is an expectation of normalization in performance moving forward.

Overall, Nomura Holdings reported strong Q1 results, driven by structural reforms and growth in recurring revenue, while also acknowledging challenges posed by market volatility and competitive pressures in certain regions.