Japan’s largest brokerage, Nomura Holdings Inc., reported a significant profit increase for the fiscal first quarter of 2025, capitalizing on a global equity trading surge that has also boosted earnings for major Wall Street firms. The company’s performance, announced on July 29, 2025, reflects sustained growth and strategic gains, though challenges in certain sectors highlight the complexities of navigating volatile markets.
Q1 Financial Performance
Nomura Holdings recorded a net income of ¥104.6 billion ($706 million) for the quarter ending June 30, 2025, marking a 52% rise compared to the same period in the previous year. This figure surpassed the average analyst forecast of ¥76.4 billion, as compiled by Bloomberg, underscoring the firm’s ability to exceed market expectations. The results represent Nomura’s sixth consecutive quarter of profit growth, a streak that has drawn attention from investors tracking the firm’s trajectory under Chief Executive Officer Kentaro Okuda.
A significant portion of the profit was bolstered by a one-time gain of ¥56 billion from the sale of a training facility in central Tokyo, a transaction announced earlier in February 2025. This sale accounted for approximately one-third of the company’s pretax profit for the quarter, highlighting the impact of strategic asset management on its financial performance.
Equity Trading Drives Growth
The global equity trading boom, fueled in part by market volatility tied to U.S. President Donald Trump’s trade policies, played a pivotal role in Nomura’s strong results. The company reported a 20% increase in revenue from stock trading, marking its ninth consecutive quarter of growth in this segment. This performance aligns with trends observed among global banking giants like Goldman Sachs and Deutsche Bank, which also capitalized on heightened market activity.
However, Nomura’s fixed-income trading segment faced challenges, with revenue declining by 1% year-over-year. This contrasted with gains reported by major U.S. banks in the same period. According to Chief Financial Officer Hiroyuki Moriuchi, volatility in Japanese government bond trading, which reached historic highs in recent months, posed significant hurdles for the firm’s fixed-income division. The Bank of Japan’s decision to end its ultra-loose monetary policy in 2024 has reshaped the bond market, requiring banks and investors to adapt to a more dynamic environment. Moriuchi noted that while April’s volatility impacted performance, the fixed-income team managed a recovery in subsequent months.
Investment Banking and Wealth Management
Nomura’s investment banking division saw modest growth, with revenue increasing by 2% compared to the previous year. This uptick was driven primarily by fees from bond underwriting, a bright spot in an otherwise mixed performance. However, revenue from mergers and acquisitions (M&A) declined, despite Nomura securing the top position among financial advisers in Japan for the first half of 2025, according to Bloomberg data.
In contrast, the wealth management business experienced a 4% drop in revenue. Despite a rebound in Japan’s stock market, with the Topix index reaching a record high following a trade agreement with the U.S., individual client trading activity remained subdued. This suggests that the broader market recovery has not fully translated into increased engagement from retail investors in Japan.
Strategic and Operational Highlights
Nomura’s performance reflects both strategic successes and ongoing challenges as it navigates a rapidly evolving financial landscape. Key operational metrics provide insight into the firm’s efficiency and profitability:
- Wholesale Costs: A key measure of wholesale costs improved to 84% of the division’s net revenue, down from 86% in the prior quarter, indicating better cost management.
- International Operations: Nomura’s operations outside Japan generated ¥27.5 billion in pretax profit, marking the eighth consecutive quarter of profitability, though losses in Europe tempered overall results.
- Banking Division: The newly established banking division reported a 14% revenue increase year-over-year, signaling potential for growth in this segment.
- Return on Equity (ROE): Nomura’s ROE reached 12%, up from 8.2% in the previous quarter, surpassing the firm’s target range of 8% to 10%.
These metrics highlight Nomura’s ability to maintain profitability across diverse operations while addressing challenges in specific markets.
Market Context and Investor Sentiment
Nomura’s stock performance has mirrored broader market trends, with shares rising nearly 10% since March 31, 2025, in line with gains in Japan’s Topix index. On the day of the earnings announcement, Nomura’s shares closed 0.3% higher, reflecting cautious optimism among investors. The company’s ability to sustain earnings growth, as demonstrated by last year’s record profit, has placed CEO Kentaro Okuda under scrutiny to maintain this momentum amid global economic uncertainties.
The Japanese financial sector has benefited from a revitalized market environment following the Bank of Japan’s policy shift. However, the transition to a higher-interest-rate environment has introduced volatility, particularly in bond markets, posing challenges for firms like Nomura. The company’s ability to adapt to these conditions will be critical to its long-term success.
Challenges and Opportunities Ahead
While Nomura’s Q1 results are a positive signal, the firm faces several challenges moving forward. The decline in fixed-income trading revenue underscores the need for strategic adjustments in a volatile bond market. Additionally, the lackluster performance of the wealth management division suggests that Nomura must find ways to re-engage individual clients in Japan, particularly as the stock market continues to recover.
On the opportunity front, Nomura’s leadership in M&A advisory and bond underwriting positions it well to capitalize on Japan’s active deal-making environment. The firm’s international operations, despite losses in Europe, continue to contribute to overall profitability, offering a foundation for future growth.
Leadership and Corporate Governance
CEO Kentaro Okuda’s leadership has been a focal point for investors, particularly following a series of corporate governance challenges in recent years. While Okuda was re-elected to the board, his approval rating was the lowest among directors, reflecting lingering concerns about past scandals. Nomura has also made strategic decisions to streamline operations, including closing a branch in China as part of a broader scaling back of its wealth management business in the region.
Looking Forward
Nomura’s strong Q1 performance sets a positive tone for the fiscal year, but sustaining this growth will require navigating a complex global financial landscape. The firm’s ability to balance its strengths in equity trading and investment banking with challenges in fixed-income and wealth management will be critical. Investors will closely monitor whether Nomura can maintain its ROE targets and capitalize on Japan’s economic recovery.
Conclusion
Nomura Holdings Inc. reported a 52% profit increase to ¥104.6 billion for the fiscal first quarter of 2025, surpassing analyst expectations due to strong equity trading performance and a one-time gain from a Tokyo property sale. Despite challenges in fixed-income trading and wealth management, the firm achieved its sixth consecutive quarter of profit growth. Key metrics, including an improved ROE of 12% and robust international operations, highlight Nomura’s resilience. As the company navigates market volatility and strategic challenges, its Q1 results underscore its ability to capitalize on global trading trends while addressing areas for improvement.
Sources & References:
- Bloomberg
- Reuters
- The Wall Street Journal
