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Issuer Flash: Nomura Holdings, Inc.

Issuer: Nomura Holdings | Document: Issuer Flash | Date: 2026-07-29 | Event: Q1 Fy2027 Results

Report date: 2026-07-29 Event date: 2026-07-29 Event title: Q1 FY2027 Results

1. Flash Conclusion

Nomura's first-quarter results strengthen the view that a broader recurring-revenue base is lifting the earnings floor, but they do not remove the market and balance-sheet risks that constrain the credit. Net revenue rose 19% quarter on quarter to JPY686.7bn, pretax income almost doubled to JPY211.5bn, and net income attributable to shareholders rose 97% to JPY145.6bn. Wealth Management's recurring-revenue cost coverage increased to 76%, Investment Management assets under management reached JPY156.4tn, and all four divisions improved.

The credit-positive feature is operating leverage across a more diversified earnings mix: group expenses increased only 1% quarter on quarter while revenue rose 19%. The caution is that Wholesale generated JPY93.3bn, or 44%, of four-segment pretax income, led by a record Equities quarter, and Investment Management also benefited from acquired-business revenue and investment gains. These contributions demonstrate earnings capacity but should not be treated as a through-the-cycle run rate.

Capital and liquidity remain supportive, although the balance sheet became more intensive. Preliminary risk-weighted assets rose to JPY25.5tn from JPY24.5tn and net leverage to 12.9x from 12.2x. The Tier 1 ratio declined to 14.7% from 15.6%, the total capital ratio to 15.6% from 16.4%, and the leverage ratio to 4.64% from 5.18%, while CET1 was broadly stable at 12.9% versus 12.8%. At the same time, the liquidity portfolio increased to JPY12.7tn, high-quality liquid assets to JPY8.9tn, and the liquidity coverage ratio remained high at 196.9%. For senior holdco bondholders, strong earnings and liquidity are supportive, but RWA growth, market-risk use, capital allocation and the structural position of TLAC-eligible debt remain central monitoring points. The issuer-level fundamental stance for existing exposure remains hold/monitor, with security selection still conditional on spreads, ranking, terms and loss-absorption features.

2. What Was Announced

Nomura reported net revenue of JPY686.7bn, pretax income of JPY211.5bn and attributable net income of JPY145.6bn for the three months ended 30 June 2026. Non-interest expenses were JPY475.2bn, up 31% year on year but only 1% from the preceding quarter.

Wealth Management pretax income increased 16% to JPY71.1bn as both recurring and flow revenue rose. Record net inflows into recurring-revenue assets of JPY539.6bn, the seventeenth consecutive quarterly inflow, lifted those assets to JPY31.7tn. Investment Management pretax income increased to JPY45.0bn from JPY18.1bn. Business revenue included the Macquarie public-asset-management business acquired in December 2025, while JPY12.1bn of investment gains included American Century Investments and portfolio valuation gains. AUM rose to JPY156.4tn, although domestic active-fund inflows were partly offset by outflows from Japanese equity ETFs and parts of the international business.

Wholesale pretax income more than doubled to JPY93.3bn. Global Markets revenue rose 26% to JPY318.7bn, driven by JPY179.4bn of Equities revenue. Investment Banking revenue declined 9% from a strong fourth quarter but reached a first-quarter high of JPY50.4bn. Banking remained small, with JPY3.6bn of pretax income, while deposits at The Nomura Trust and Banking rose by JPY329.7bn to JPY1.66tn after the deposit-sweep launch.

Indicator Q1 FY2027 Change / comparison Credit reading
Net revenue JPY686.7bn +19% QoQ; +31% YoY Broad revenue growth and strong operating leverage
Pretax income / attributable net income JPY211.5bn / JPY145.6bn +96% / +97% QoQ Strong internal capital generation, but quarterly annualization is inappropriate
Wealth Management pretax income JPY71.1bn +16% QoQ Recurring-revenue depth raises the earnings floor
Investment Management pretax income / AUM JPY45.0bn / JPY156.4tn +148% QoQ; record AUM Scale is positive; acquisition effects, flows and investment gains require separation
Wholesale pretax income JPY93.3bn +116% QoQ Strong franchise performance, but the largest cyclical contribution
RWA / net leverage JPY25.5tn / 12.9x JPY24.5tn / 12.2x at March Higher capital and funding intensity offsets part of the earnings improvement
CET1 / Tier 1 / total capital ratios 12.9% / 14.7% / 15.6% 12.8% / 15.6% / 16.4% at March; June preliminary CET1 broadly stable; other ratios declined as exposure and RWA expanded
Consolidated leverage ratio 4.64% 5.18% at March; June preliminary Lower exposure-based headroom warrants monitoring as the balance sheet grows
HQLA / LCR JPY8.9tn / 196.9% JPY7.9tn / 214.0% at March Larger liquid-asset buffer; LCR remains high despite declining

3. Credit Read-Through

The most durable improvement is in Wealth Management. Recurring revenue of JPY59.2bn rose 4% quarter on quarter even without the semiannual advisory fees booked in the preceding quarter, and recurring-revenue cost coverage increased from 72% to 76%. Record inflows and a larger asset base make this a better indicator of a higher earnings floor than headline group ROE. Even so, the result benefited from favorable markets, and client assets and fee revenue remain sensitive to asset prices and investor activity rather than equivalent to stable insured deposits.

Investment Management also supports revenue diversification, but the quality of the increase is mixed. Higher management fees from the acquired Macquarie business are strategically positive, while ACI-related and portfolio valuation gains are less recurring. The next test is whether the enlarged platform sustains client retention, net inflows, fee margins and cost synergies. The reported AUM record alone does not establish an equivalent improvement in earnings durability.

Wholesale's quarter confirms strong global execution and a broader international franchise, but it also illustrates the existing concentration of earnings sensitivity to market conditions. Equities drove much of the increase. Nomura disclosed average one-day VaR of JPY6.0bn during the quarter and quarter-end VaR of JPY6.3bn; these measures are not compared directionally with the prior quarter because a like-for-like prior-quarter average was not confirmed. The disclosed VaR figures do not by themselves establish the risk-adjusted durability of record Wholesale earnings, which should be assessed together with RWA, leverage, collateral and funding needs rather than as a standalone credit improvement.

Total assets increased 9% from March to JPY68.2tn, mainly because trading assets and related liabilities expanded. Shareholders' equity rose to JPY3.83tn, but RWA and leverage grew faster. The resulting decline in Tier 1, total capital and leverage ratios is not an immediate stress signal given the 12.9% CET1 ratio, 29.4% RWA-based TLAC ratio and strong liquidity metrics. It does, however, make disciplined capital allocation more important. Strong earnings are most credit-supportive if retained capital and liquidity keep pace with Wholesale and Banking growth, acquisitions, dividends and share repurchases.

For bondholders, the quarter improves repayment capacity but does not change structural ranking. Nomura Holdings remains a financial holding company reliant on regulated subsidiaries for upstream distributions, and TLAC-eligible senior instruments remain designed to absorb losses in resolution. No relative-value or security-level conclusion is drawn without current spreads and instrument terms.

4. What To Watch Next

The first follow-up is the 6 August auditor-reviewed quarterly financial statements and the subsequent formal regulatory disclosure for final June capital, leverage, TLAC and liquidity measures. Management's conference-call Q&A should also be checked for guidance on Wholesale normalization, RWA appetite, capital returns and the integration economics of the acquired asset-management business.

Operationally, the next two quarters should test whether Wealth Management can preserve recurring-revenue inflows and cost coverage in less favorable markets, whether Investment Management converts higher AUM into durable fee margins and client retention, and whether Wholesale revenue remains diversified without disproportionate RWA or leverage growth. For existing holdco exposure, the event-level stance remains hold/monitor on fundamentals. Legal-entity liquidity, secured versus unsecured funding, subsidiary upstream capacity, individual debt ranking, loss-absorption terms and current pricing remain necessary before a security-specific investment decision.

5. Sources