Nomura Q2 2025 presentation slides: ROE hits 10.6% despite quarterly profit dip

Introduction & Market Context

Nomura Holdings Inc (TYO:8604) saw its stock rise 5.94% following the release of its second quarter fiscal year 2025/26 results, despite reporting a sequential decline in profits. The Japanese financial services giant maintained its return on equity (ROE) above the 8-10% target range for the sixth consecutive quarter, reaching 10.6% in Q2.

The company's presentation, delivered in October 2025, highlighted a continued shift toward more stable revenue streams, with record-high recurring revenue assets in Wealth Management and assets under management (AuM) in Investment Management.

Quarterly Performance Highlights

Nomura reported Q2 net revenue of ¥515.5 billion, down 2% quarter-on-quarter, while income before income taxes fell 15% to ¥136.6 billion and net income declined 12% to ¥92.1 billion. The company attributed the quarterly profit decline primarily to gains on real estate sales in the previous quarter.

As shown in the following summary of key financial metrics:

Despite the sequential decline, Nomura's first half performance for FY2025/26 showed significant year-on-year improvement, with income before income taxes increasing 26% to ¥296.9 billion and net income rising 18% to ¥196.6 billion. The half-year ROE reached 11.3%, exceeding the company's medium-term target.

The segment breakdown reveals varying performance across business lines:

Wholesale emerged as a standout performer with a 43% year-on-year increase in income before income taxes for the first half, reaching ¥95.0 billion. The Banking segment experienced a 21% decline to ¥6.8 billion, while Wealth Management and Investment Management saw slight year-on-year decreases of 1% and 5%, respectively.

Strategic Initiatives

Nomura's strategic focus on building stable, recurring revenue streams continues to bear fruit, as illustrated by the growth in recurring assets:

Wealth Management's recurring revenue assets reached ¥26.2 trillion in the first half of FY2025/26, up from ¥18.2 trillion in FY2020/21. Similarly, Investment Management's AuM grew to ¥101.2 trillion from ¥64.7 trillion over the same period.

The Wealth Management segment reported net revenue of ¥116.5 billion in Q2, up 10% quarter-on-quarter and 4% year-on-year, while income before income taxes increased 17% quarter-on-quarter to ¥45.5 billion.

Notably, recurring revenue assets in Wealth Management saw net inflows for the 14th consecutive quarter, adding ¥289.5 billion. The recurring revenue cost coverage ratio reached 70%, indicating improved efficiency.

Investment Management achieved a significant milestone with assets under management exceeding ¥100 trillion for the first time, supported by continued net inflows:

The division recorded its tenth consecutive quarter of net inflows, demonstrating sustained client confidence and the success of Nomura's asset management strategies. Alternative AuM also reached a record high, reflecting the company's diversification efforts.

Wholesale Performance

The Wholesale division reported strong results, with net revenue of ¥279.2 billion in Q2, up 7% quarter-on-quarter and 6% year-on-year. Income before income taxes increased 27% quarter-on-quarter to ¥53.1 billion.

Global Markets, a key component of the Wholesale division, saw its Equity revenue reach a record high, contributing to overall revenue growth:

Investment Banking showed consistent strength in Japan while international business continued to recover:

Nomura maintained its strong position in the Japanese M&A market, ranking second in the Japan-related M&A league table.

Forward-Looking Statements

According to the earnings article, CFO Hiroyuki Moriyuchi emphasized Nomura's commitment to transforming Japan into an asset management powerhouse and highlighted the company's resilience against downside risks. The company remains focused on its balanced approach to capital management, aiming for sustainable growth and effective risk management.

Nomura announced a half-year dividend of ¥27 per share, maintaining its commitment to a 40% dividend payout and a 50% total payout ratio. This dividend policy reflects confidence in the company's ability to generate stable revenue streams despite quarterly fluctuations.

The company is also addressing security challenges, with the earnings article noting that Nomura expects the negative impact of phishing scams to diminish in future quarters as they enhance security measures, including the recently introduced pass key authentication system.

Conclusion

Nomura's Q2 2025 results demonstrate the company's successful transformation toward a more stable business model, with record-high recurring revenue assets and AuM offsetting quarterly volatility. Despite the sequential decline in profits, the company maintained above-target ROE and showed strong year-on-year growth for the first half of FY2025/26.

The market's positive reaction, with the stock rising 5.94% following the earnings announcement, suggests investor confidence in Nomura's strategic direction. As the company continues to build its recurring revenue base and strengthen its international operations, it appears well-positioned to navigate market uncertainties while delivering sustainable returns to shareholders.

Full presentation:

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