Nomura Holdings, Inc. (NMR) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial performance with significant increases in net income, pre-tax income, and ROE. Despite a decrease in assets under management, other metrics such as investment management income and wholesale revenue have shown robust growth. The Q&A session reveals management's confidence in sustaining performance in wealth management and ECM, despite no share buyback. Additionally, cost-saving measures are being implemented, and the dividend payout ratio is high. These factors suggest a positive outlook, likely resulting in a 2% to 8% stock price increase over the next two weeks.
Key Financial Performance
Group-wide net revenue JPY483.3 billion, 6% increase quarter-on-quarter.
Income before income taxes JPY133 billion, 29% increase.
Net income JPY98.4 billion, 43% increase.
EPS JPY32.26.
Annualized ROE 11.6%, at the upper limit of the 2030 target of 8% to 10%.
Three segment income before income taxes JPY122.5 billion, marking the sixth straight quarter of gains.
Wealth management net revenue JPY116.7 billion, 2% increase.
Wealth management income before income taxes JPY45.3 billion, 7% increase.
Recurring revenue JPY50.3 billion, 10% increase to a record high.
Net revenue for the first half of the fiscal year JPY937.8 billion, 31% increase year-over-year.
Income before income taxes for the first half JPY235.9 billion, 129% increase.
Net income for the first half JPY167.3 billion, 186% increase.
Investment management net revenue JPY56.1 billion, 18% increase.
Investment management income before income taxes JPY31.9 billion, 38% increase.
Stable business revenue in investment management JPY39.4 billion, record high.
Wholesale net revenue JPY263.4 billion, 8% increase.
Global markets revenues 6% increase.
Investment banking revenues 14% increase.
Wholesale income before income taxes JPY45.3 billion, 114% increase.
Cost-to-income ratio in wholesale Improved to 83%.
Group-wide expenses JPY350.3 billion, roughly flat.
Tier 1 capital JPY3.4 trillion, decrease of approximately JPY150 billion.
Risk-weighted assets Declined by JPY900 billion to JPY19.2 trillion.
Tier 1 capital ratio 17.6%.
Common equity Tier 1 ratio 15.7%.
Dividend per share JPY23, with a payout ratio of 40.6%.
Net inflows of recurring revenue assets JPY438.3 billion, further gain from the prior quarter.
Assets under management in investment management JPY88.8 trillion, down from last quarter.
Accounts with balance equity holdings 360,000 accounts, with 280,000 equity holdings accounts.
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Operating Highlights
Recurring Revenue: Wealth management's asset management type business gained further ground to record a 30% increase in recurring revenue.
Investment Management: Investment management's asset management business continues to gain traction with business revenue at a record high since the division was established.
Dividend Announcement: A JPY23 dividend per share was announced for shareholders of record, as of the end of September.
Market Positioning: Nomura has diversified its revenue mix in wholesale by growing equity products and securitized products businesses.
International Expansion: All three international regions were profitable, indicating a strong global market presence.
Cost Control: Nomura maintained control of costs, with a cost-to-income ratio improving to 83% in wholesale.
Operational Efficiency: Wealth management achieved a recurring revenue cost coverage ratio of 70%, beating the March 2031 target ahead of schedule.
Strategic Focus: Nomura is focusing on diversifying revenue sources and enhancing client services in wealth management.
M&A Strategy: Asset management remains a target area for M&A, with a focus on expanding capabilities in alternatives.
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Risk or Challenges
Economic and Market Conditions: The company faces risks from economic and market conditions, including volatility in interest rates and currency exchange rates, which can impact performance.
Competitive Pressures: Intense competition in the selection of lead managers for ECM deals may affect the company's ability to secure profitable transactions.
Regulatory Issues: The upcoming Basel 3 regulations may impose new capital requirements, which the company is currently assessing.
Supply Chain Challenges: Market volatility and geopolitical risks have created challenges in maintaining stable operations and client confidence.
Investor Sentiment: Investor sentiment is influenced by political events, which can lead to clients adopting a wait-and-see approach, affecting transaction volumes.
Liquidity of Secondary Markets: The liquidity of secondary markets is a concern, as it can impact the company's ability to execute trades effectively.
Cost Control: Rising operational costs due to inflationary pressures pose a challenge to maintaining profitability.
Market Volatility: Recent market volatility has led to fluctuations in revenue, particularly in wealth management and investment banking segments.
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Guidance & Outlook
Annualized ROE: Achieved an annualized ROE of 11.6%, which is at the upper limit of the 2030 quantitative target of 8% to 10%.
Dividend Payout Ratio: Announced a JPY23 dividend per share, resulting in a dividend payout ratio of 40.6%.
Recurring Revenue Growth: Recurring revenue in wealth management increased by 10% to a record high of JPY50.3 billion.
Cost Control Initiatives: Implemented cost-saving measures amounting to JPY50 billion, with ongoing efforts to improve operational efficiency.
Revenue Diversification: Diversified revenue sources in wholesale by growing equity products and securitized products.
M&A Focus: Continues to target asset management for potential M&A opportunities.
Future Revenue Expectations: Expect continued strong performance in wealth management and wholesale, despite market volatility.
Capital Policy: Considering share buybacks and evaluating CET1 ratio maximum ceiling in light of Basel 3 regulations.
Market Outlook: Anticipate a comeback in market activities in the second half of the fiscal year.
Client Acquisition Strategy: Focus on acquiring quality customers rather than maximizing the number of customers.
Investment Management: Expect ongoing inflows into products requiring investment management expertise.
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Shareholder Return Plan
Dividend per share: JPY23 per share for shareholders of record as of the end of September.
Dividend payout ratio: 40.6%
Share buyback: No share buyback was announced; the decision was based on various factors including Basel 3 regulations.
Total payout ratio commitment: Commitment to a total payout ratio of 50% or higher.
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Key Q&A
Q:Are the performances in ECM and Asia sustainable?
A:There are many deals in the pipeline, including large deals and euro-yen CDs with rate increases. Competition is intense, but we are working to secure lead manager positions. We believe sales levels will remain high.
Q:What kind of debate took place regarding share buyback?
A:We are not denying share buyback as an option, but we decided not to this time. We are committed to a total payout ratio of 50% or higher.
Q:What factors contributed to the outperformance of FIC revenue compared to U.S. peers?
A:Revenue diversification has progressed, with increases in securitized products and FX and emerging markets. Client activity in rates products has also improved.
Q:What was the monthly revenue trend in Wealth Management during July-September?
A:July had the highest revenue, while August and September saw lower revenues due to market factors.
Q:What changes occurred in October compared to previous months?
A:There has been slight sluggishness in forex emerging and rates, but the overall operating environment is not weak.
Q:What is the breakdown of factors contributing to the significant gains in ACI?
A:AUM has increased due to market factors and strong business performance, with rate decline being a major contributor.
Q:What is the progress of core cost reduction in wholesale?
A:We have implemented JPY 50 billion in cost-saving measures, but we are not satisfied yet and will continue to control costs.
Q:What is the content of non-personnel cost reductions in Wealth Management?
A:We have identified JPY 20 billion in cost savings by eliminating unnecessary costs and are now reviewing operational processes.
Q:What is the target area for M&A?
A:Asset management continues to be a target area, particularly in foreign equity management and alternatives.
Q:Is there still potential for acquiring new customers in Wealth Management?
A:Yes, we believe there is significant potential for growth, especially among inactive customers and new high-net-worth individuals.
Q:Review of Unclear Management Responses
A:Management's response regarding the sustainability of ECM deals was somewhat vague, lacking specific data on future performance. Additionally, the discussion on share buyback did not provide clear reasoning for the decision not to proceed, and the mention of 'many elements' was unclear.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AUM
Asia
Basel
ECM
Income income
JPY Income
JPY income
Nomura Securities
SRC
Tsujino
Wealth
account
acquisition
addition
affiliation name
average
breakdown
contributor
control
cost ratio
customer
direction
diversification
example
flow
improvement
market factor
measure effect
mix
name announcement
page update
piece
quality
room
sale partner
satisfaction
source
tax JPY
transaction Nomura
type
wealth cost
wholesale
NMR Transcript
Nomura Holdings, Inc. (NMR) Q3 2026 Earnings Call Transcript
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The earnings call summary presents mixed signals. Financial performance shows growth in Tier 1 Capital and Risk-Weighted Assets, but there's a decline in the Common Equity Tier 1 Ratio. The Q&A reveals concerns about volatility and uncertainties in net inflows, while management's unclear responses add to uncertainty. The buyback plan and strong Global Markets performance are positives, but the lack of clarity on future strategies and the impact of regulatory changes temper enthusiasm. Overall, the sentiment remains neutral due to these mixed factors.
Nomura Holdings, Inc. (NYSE:NMR) Q4 2025 Earnings Call Transcript
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The earnings call shows strong year-on-year financial growth, but quarter-on-quarter declines in key metrics raise concerns. The Q&A reveals weak fixed income performance and unclear management responses, which could worry investors. The 60 billion yen buyback and dividend are positives, but not enough to offset the mixed financial performance and cautious market outlook. Overall, the sentiment is neutral with a slight negative bias due to uncertainties and lack of clear guidance.
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Despite strong annual financial growth, the quarterly decline in key metrics and cautious management responses temper enthusiasm. The Q&A revealed uncertainties, especially in fixed income performance and resource allocation. The announced share buyback is positive, but unclear capital ratio targets and high costs in wholesale raise concerns. The overall sentiment is neutral, balancing strong yearly results with quarterly setbacks and management's cautious outlook.
Nomura Holdings, Inc. (NMR) Q2 2025 Earnings Call Transcript
Positive11-1
The earnings call summary indicates strong financial performance with significant increases in net income, pre-tax income, and ROE. Despite a decrease in assets under management, other metrics such as investment management income and wholesale revenue have shown robust growth. The Q&A session reveals management's confidence in sustaining performance in wealth management and ECM, despite no share buyback. Additionally, cost-saving measures are being implemented, and the dividend payout ratio is high. These factors suggest a positive outlook, likely resulting in a 2% to 8% stock price increase over the next two weeks.
NMR Report
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