Nomura Holdings, Japan’s largest brokerage and investment bank, reported a remarkable 195% increase in first-quarter profit on Tuesday, driven by a global market rally and the resurgence of domestic inflation, which boosted demand for its wealth management services.

The impressive results highlight Nomura’s progress in transitioning toward a fees-based profit model, aimed at ensuring more consistent revenue less susceptible to market fluctuations. The company reported a net profit of 68.9 billion yen ($446 million) for the April-June period, a significant rise from 23.3 billion yen the previous year.

“The end of deflation in Japan has encouraged retail clients to move into investment products,” Nomura’s chief financial officer Takumi Kitamura stated during a media briefing. He added, “The major update to our business structure since last spring and the shift in our customers’ mindset from savings to investment has meant we were able to achieve strong results.”

Nomura also benefited from the global market rally, which improved client sentiment and boosted sales of U.S. and global stock funds. This positive trend was reflected in the pre-tax income of its wealth management segment, which grew by 84% compared to the same period the previous year, reaching its highest level since the 2015/16 financial year.

With a dominant position in Japan’s wealth management market, this segment accounted for roughly half of Nomura’s pre-tax profit in the previous financial year. The inflows into Nomura’s investment management business pushed assets under management to a record 92.5 trillion yen.

Nomura’s wholesale business, which includes investment banking and trading operations, saw a revenue increase of 28% compared to the same period last year. Investment banking was particularly strong in Japan due to a series of delistings, business reorganizations, and cross-border transactions, although international deals slowed down.

“Our investment banking numbers compare a little unfavorably to those of U.S. investment banks, but seasonal factors are at play and we outperformed when they were struggling,” Kitamura remarked.

The company’s profitability was further enhanced by cost-cutting measures introduced over the past year. Return on equity (ROE), a key measure of profitability, surged to 8.1% in the April-June period, significantly exceeding the 5.1% ROE achieved in the year ended March 2024.

Overall, Nomura’s strategic shifts and favorable market conditions have positioned the company for robust growth, highlighting its resilience and adaptability in a fluctuating economic landscape.

(Adapted from EconomicTimes.com)

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