Nomura Holdings, Japan’s largest brokerage and investment bank, reported a 195% surge in first-quarter profit on Tuesday. This impressive growth is attributed to a rally in global markets and the return of domestic inflation, which bolstered demand for its wealth management services.
The results highlight Nomura’s successful transition towards a fees-based profit model, aimed at securing more consistent revenue less affected by market volatility.
For the April-June period, Nomura reported a net profit of 68.9 billion yen ($446 million), a significant increase from 23.3 billion yen in the same period last year.
The end of deflation in Japan has encouraged retail clients to invest more in various financial products, according to Nomura’s Chief Financial Officer, Takumi Kitamura, during a media briefing.
“Our major update to the business structure since last spring, coupled with a shift in our customers’ mindset from savings to investment, has enabled us to achieve strong results,” Kitamura stated.
The global market rally also improved client sentiment and boosted sales of U.S. and global stock funds, Nomura added.
Pre-tax income in the wealth management segment increased by 84% compared to the previous year, reaching its highest level since the 2015/16 financial year.
Nomura holds a dominant position in wealth management in Japan, with this business segment accounting for roughly half of its pre-tax profit in the previous financial year.
Inflows into Nomura’s investment management business pushed assets under management to a record 92.5 trillion yen. Additionally, its wholesale business, which includes investment banking and trading, grew by 22% compared to the same period the previous year.
Investment banking performed well in Japan, driven by a series of delistings, business reorganizations, and cross-border transactions. However, international deals saw a slowdown.
“Our investment banking numbers may not compare favorably to those of U.S. investment banks due to seasonal factors, but we outperformed them when they were struggling,” Kitamura noted.
Cost-cutting measures introduced over the past year also contributed to improved profitability this quarter.
Return on equity (ROE), a key measure of profitability, at the group level surged to 8.1% for April-June, significantly higher than the 5.1% achieved over the year ended March 2024.
($1 = 154.6300 yen)
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