Nomura Holdings, Inc. (NMR) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Return on Equity (ROE) 10.3%, reaching the quantitative target for 2030 of 8% to 10% or more for the seventh consecutive quarter.
Group-wide Net Revenue JPY 551.8 billion, up 7% over the last quarter.
Income Before Income Taxes JPY 135.2 billion, fell 1% quarter-over-quarter due to downturn in market conditions for digital asset-related businesses.
Net Income JPY 91.6 billion, fell 1% quarter-over-quarter.
Earnings Per Share (EPS) JPY 30.19.
Pretax Income for 4 Main Divisions JPY 142.9 billion, rose 8%, highest level in 18.5 years since Q1 of fiscal year ended March 2008.
Wealth Management Net Revenue JPY 132.5 billion, increased 14% quarter-over-quarter.
Wealth Management Income Before Income Taxes JPY 58.5 billion, grew 29% quarter-over-quarter.
Recurring Revenue JPY 52.7 billion, an all-time high.
Total Sales by Product JPY 6.6 trillion, rose around JPY 300 billion due to growth across a wide range of products.
Recurring Revenue Assets JPY 28.1 trillion, an all-time high.
Investment Management Net Revenue JPY 60.9 billion, flat quarter-over-quarter.
Investment Management Income Before Income Taxes JPY 17.9 billion, fell 42% due to onetime expenses from Macquarie acquisition and weaker investment gains.
Assets Under Management (AUM) JPY 134.7 trillion, an all-time high.
Net Inflows to AUM JPY 115 billion, 11th consecutive quarter of net inflows.
Alternative Assets Under Management JPY 3.3 trillion, a new high, grew by JPY 400 billion.
Wholesale Net Revenue JPY 313.9 billion, rose 12% quarter-over-quarter.
Wholesale Income Before Income Taxes JPY 62.3 billion, rose 17% quarter-over-quarter.
Global Markets Net Revenue JPY 256.8 billion, rose 9% quarter-over-quarter.
Investment Banking Net Revenue JPY 57.1 billion, rose 31% quarter-over-quarter.
Banking Net Revenue JPY 13.7 billion, up 7% quarter-over-quarter.
Banking Income Before Income Taxes JPY 4.2 billion, rose 31% quarter-over-quarter.
Group-wide Expenses JPY 416.5 billion, increased 10% or JPY 37.7 billion quarter-over-quarter due to FX impact, onetime acquisition costs, and deferred compensation plan changes.
Tier 1 Capital JPY 3.6 trillion, up JPY 60 billion since the end of September.
Risk-Weighted Assets JPY 24 trillion, up JPY 700 billion since the end of September.
Common Equity Tier 1 Ratio 12.8%, down 0.5% due to regulatory capital ratio calculation changes from Macquarie acquisition.
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Operating Highlights
New Products in Wealth Management: Accurate assessment of market movements and client needs, along with supply of new products, helped ensure strong revenue in Wealth Management.
New Products in Investment Management: Net inflows into newly established Japanese equity active funds, private assets, and balanced funds contributed to growth.
Market Expansion in Investment Management: Acquisition of Macquarie Group's public asset management business added approximately JPY 25 trillion in assets under management, expanding the division's business foundation.
Market Expansion in Wealth Management: Recurring revenue assets reached an all-time high of JPY 28.1 trillion, with net inflows of JPY 503.9 billion, the largest net increase on record.
Operational Efficiencies in Wealth Management: Recurring revenue cost coverage ratio rose 1 percentage point to 71% amid ongoing cost control initiatives.
Operational Efficiencies in Investment Management: Business revenue reached a record high of JPY 57.8 billion, supported by solid performance in Japan and the acquired business.
Strategic Shift in Digital Assets: Laser Digital, the unit running digital asset business, faced losses due to market movements but tightened control over positions and risk exposure to manage volatility.
Strategic Shift in Shareholder Returns: A share buyback program was initiated with an upper limit of 100 million shares and JPY 60 billion to enhance shareholder return and capital efficiency.
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Risk or Challenges
Digital Asset Market Movements: Losses in the EMEA region due to digital asset market downturns and currency hedge effects. The crypto asset business is volatile, and tighter controls on positions and risk exposure are being implemented to manage fluctuations.
Macquarie Acquisition Costs: One-time expenses and integration-related costs from the acquisition of Macquarie Group's public asset management business negatively impacted profits in the Investment Management division.
Phishing and Scams: Fraudulent transactions stemming from phishing and scams had a negligible impact on Q3 earnings, but ongoing vigilance is required to mitigate potential risks.
Rising Costs in Banking: Costs increased in preparation for the introduction of a new deposit sweep service, which could pressure profitability in the short term.
Regulatory Capital Ratio Changes: The common equity Tier 1 ratio decreased due to changes in the calculation method for regulatory capital ratios following the Macquarie acquisition.
Volatility in Investment Gains: Weaker investment gains, particularly related to American Century Investments and the absence of gains from portfolio company sales, impacted profits in the Investment Management division.
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Guidance & Outlook
Wealth Management: Net revenue in January is about even with Q3 levels. Client sentiment remains favorable, and household financial assets are shifting into investments due to inflation concerns and long-term diversified investment needs.
Wholesale: Q4 tends to be slower due to seasonal factors, but Global Markets is performing in line with Q3. Investment Banking has had a slightly slow start, but the pipeline remains solid.
Digital Asset Business (Laser Digital): Earnings were negatively impacted by market movements in Q3. Management plans to limit short-term earnings fluctuations by tightening control over positions and risk exposure. The company aims to capture growth in crypto markets while strengthening services and customer base.
Investment Management Division: Existing platform's AUM expanded from JPY 101 trillion to JPY 110 trillion by December, supported by net inflows. The acquired business added approximately JPY 25 trillion in AUM. Total future expenses of $100 million for transfer and integration-related costs are expected over the next two years, with the majority recognized in the next year. Long-term aim is to grow profits by maximizing synergies between existing and newly acquired businesses.
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Shareholder Return Plan
Share Buyback Program: Nomura Holdings has resolved to set up a share buyback program to enhance shareholder return and capital efficiency. The program will run from February 17 to September 30 of this year, with an upper limit of 100 million shares and JPY 60 billion in amount.
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Key Q&A
Q:What was the status of position management for Laser Digital during the market fluctuation between September and November, and what is the forecast for performance volatility?
A:Laser Digital had some long positions during the market fluctuation. To control short-term volatility, they are reducing the volume of risk in their positions. They aim to expand the business in the long term while maintaining a robust risk management framework.
Q:Is the net inflow of investment trust sustainable, and what is the margin level?
A:The sustainability of the net inflow is uncertain due to market impact and customer preferences. The margin level is high at 44%, and while it is expected to remain high compared to historical trends, it is influenced by cyclical factors and market structural changes.
Q:Why does Nomura have an advantage in Wealth Management margins compared to Morgan Stanley and Merrill Lynch?
A:Nomura's Wealth Management has 100% in-house sales, making it easier to control costs. However, differences in market structure between countries make direct comparisons difficult.
Q:What is Nomura's stance on raising Wealth Management commission rates?
A:Nomura refrained from commenting on raising commission rates, focusing instead on providing value to customers and considering the best solutions for them.
Q:Why was the buyback timing set for Q3, and why was the size JPY 60 billion?
A:The timing was influenced by the Macquarie U.S. Asset Management transaction closing and the clarification of CET1 ratio impact. The size was determined by balancing investment strategy, future opportunities, and shareholder return.
Q:Is the JPY 60 billion buyback sufficient to meet the FY 2025 total return ratio target?
A:It is uncertain until the fourth quarter results are available. If there is a shortfall, additional measures may be considered.
Q:What is the performance of Global Markets post-January, and how is the domestic rates business affected?
A:Global Markets performance remains solid, but the domestic rates business has slowed due to increased market volatility and a wait-and-see attitude among clients. However, this slowdown is offset by diversified business areas and strong performance in overseas markets, especially in the U.S.
Q:What are the revenue and cost expectations for the Macquarie acquisition?
A:The annualized revenue is expected to be JPY 7 billion, with costs at JPY 5 billion, resulting in JPY 1 billion per month. However, monthly fluctuations may occur due to seed capital and other factors.
Q:What is the impact of the deferred compensation accounting method change on personnel costs?
A:The impact in Q3 was about JPY 8 billion, with a similar amount expected in Q4. For the next fiscal year, the impact is estimated at JPY 15-16 billion, reducing to 40-50% of that amount in the following year, and becoming negligible thereafter.
Q:How does Nomura plan to manage the volatility in Laser Digital's business as it grows?
A:Nomura plans to grow Laser Digital's business while managing volatility by diversifying activities, such as market making, crypto asset management, and custody-related businesses. They aim to build a diverse ecosystem and maintain a sense of risk.
Q:Is Nomura conducting crypto asset lending, and are there risks involved?
A:Nomura has a small-scale crypto asset lending business, with minimal activity and associated risk.
Q:What is the management's evaluation of the 7.7% revenue and risk-weighted asset ratio, and is there room for improvement?
A:The 7.7% ratio is considered reasonable and a result of the business mix. While there is room for improvement, the focus is on comprehensive risk management rather than solely increasing this indicator.
Q:What is Nomura's plan for inviting investments into Japanese private assets?
A:Nomura is still in the internal discussion phase and has not shared specific plans or estimates for the size of the business or required mechanisms.
Q:Review of Unclear Management Responses
A:Management avoided giving direct answers to questions about the sustainability of net inflows in investment trusts, the potential for raising Wealth Management commission rates, and specific plans for inviting investments into Japanese private assets. They also refrained from providing detailed revenue estimates for private asset initiatives and the exact impact of deferred compensation accounting changes.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Chief Financial
Conference today
Financial Officer
Group JPY
Holdings Results
Instructions telephone
Mr Chief
Officer Return
Results Conference
Return equity
achievement result
condition event
condition size
conference Mr
conference request
conference statement
control result
currency exchange
day today
delay uncertainty
equity Group
event investor
exchange rate
expectation projection
factor control
factor market
interest rate
investor sentiment
level volatility
liquidity market
market condition
number timing
point Instructions
result expectation
NMR Transcript
Nomura Holdings, Inc. (NMR) Q3 2026 Earnings Call Transcript
Unknown1-30
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
Unknown4-29
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.
Nomura Holdings, Inc. (NMR) Q4 2025 Earnings Conference Call Transcript
Unknown4-26
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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