Nomura (NMR) Q4 2026 earnings review
Record Full-Year Eclipses Sequential Margin Squeeze in Q4
Nomura wrapped up FY26 with a victory lap, hitting a record Y362.1 billion full-year net income and achieving its long-term 10.1% ROE target. However, zooming into Q4 reveals a sobering short-term divergence. While Q4 net revenue rose 5% QoQ to Y577.2 billion, net income declined 19% to Y73.9 billion. This profit deceleration was driven by severe margin compression in Wholesale (income down 31% QoQ), upfront IT investments dragging Banking profits down 27%, and a massive top-line surge in Investment Management (+42% QoQ) that was entirely erased at the bottom line by acquisition expenses and an investee impairment loss. The undisputed bright spot remains Wealth Management, which continues to print record, highly profitable recurring revenue.
🐂 Bull Case
The pivot to an asset management-based model is working flawlessly. Recurring revenue hit an all-time high, covering 72% of segment expenses, and lifting Q4 income before taxes to Y61.2 billion (+70% YoY)—the best result since 2002.
Total Investment Management AUM exploded to Y136.9 trillion (up over 50% YoY), fueled by organic net inflows and the Macquarie acquisition. This fundamentally elevates Nomura's stable revenue floor.
🐻 Bear Case
Despite resilient Equities trading, Wholesale income before taxes fell 31% QoQ to Y43.2 billion. Global Markets revenue shrank 2% QoQ, highlighting vulnerability to macro volatility and rising compensation/execution costs.
Group non-interest expenses spiked 13% QoQ to Y469.5 billion. While partly driven by acquisitions, the 41% QoQ surge in commissions and floor brokerage signals significant cost-to-serve headwinds.
⚖️ Verdict: ⚪
Neutral. The structural shift toward recurring, stable revenue is genuinely impressive and warrants a re-rating. However, the Q4 margin contraction across Wholesale, Investment Management, and Banking requires caution until integration costs and volatility settle.
Key Themes
Wealth Management Cash Machine
Accelerating. The Wealth Management division is Nomura's clearest success story. Q4 income before taxes reached Y61.2 billion (+5% QoQ, +70% YoY). The segment recorded its 16th consecutive quarter of strong net inflows (+Y422.8B in Q4) into recurring revenue assets. The recurring revenue cost coverage ratio now sits at an exceptional 72%, proving the business model transformation is highly accretive to margins.
Investment Management: Revenue Up, Profits Flat
Reversing. A glaring disconnect appeared in the Investment Management division. Top-line net revenue surged 42% QoQ to an all-time high of Y86.2 billion, heavily aided by the Macquarie acquisition. However, segment non-interest expenses skyrocketed by 58% QoQ (from Y43.0B to Y68.1B). Consequently, income before taxes was essentially flat (+1% QoQ) at Y18.1 billion. Management cited integration expenses and an impairment loss on a forestry asset investee company. This raises execution risk flags for the M&A strategy.
Wholesale Margins Compress
Decelerating. Wholesale Q4 net revenue dropped slightly (-2% QoQ) to Y308.1 billion, but the bottom line took a much harder hit. Income before taxes fell 31% QoQ to Y43.2 billion. While Equities revenues reached an all-time high (Y127.2B), Fixed Income decelerated (-8% QoQ to Y125.3B) due to a slowdown in Americas Rates. The severe operating leverage breakdown indicates sticky fixed costs and rising execution expenses.
Equities Trading Resilience
Stable. Amid broader Global Markets weakness, Equities trading was a standout, posting an all-time high revenue of Y127.2 billion (+6% QoQ, +26% YoY). This was driven by substantial financing and derivatives growth in Japan and AEJ, along with elevated global execution services activity.
Unallocated 'Other' Segment Drag
Reversing. Group profitability was heavily penalized by the 'Other' segment, which reported a Y22.0 billion loss before taxes in Q4, compared to a Y10.3 billion loss in Q3 and a Y2.3 billion profit in Q2. This was driven by declining equity in earnings of affiliates (-Y6.0B) and significant negative corporate items (-Y5.5B). Such opaque drags severely cloud underlying operating performance.
Other KPIs
Nomura successfully met its long-term 2030 target of 8-10% for the second consecutive year. However, zooming into Q4, annualized ROE slipped to 8.0%, demonstrating that the quarterly run-rate has decelerated amid softer Wholesale margins and elevated group expenses.
Decelerating. While Banking net revenue actually grew 6% QoQ to Y14.5 billion, profits plunged 27% QoQ. Management explicitly attributed this margin compression to upfront IT investments related to standardizing business processes and preparing for upcoming service launches.
Stable. The ratio sits comfortably above the 11% regulatory minimum, calculated post-Basel III finalization. However, it is down from 13.0% in Q3, leaving management with a tight balancing act between funding risk-weighted asset growth and executing shareholder return programs.
Guidance
Stable. In line with historical practices, Nomura did not provide explicit forward numeric guidance for the next quarter or fiscal year. Management instead reiterated its commitment to maintaining the medium-term 2030 ROE target of 8-10% and pursuing growth through its newly expanded asset management footprint.
Key Questions
Investment Management Impairment Details
You cited an impairment loss on a forestry asset investee company that effectively wiped out the bottom-line benefit of your 42% QoQ revenue surge in Investment Management. Can you quantify the exact size of this charge, and is the portfolio fully de-risked from similar future impairments?
Wholesale Cost Base
Wholesale income before taxes fell 31% QoQ on just a 2% revenue decline. How much of this margin compression is due to sticky structural compensation versus variable execution costs, and what is the timeline to normalize the cost-to-income ratio?
Capital Return Capacity
With the CET1 ratio stepping down to 12.9% post-Basel III finalization and the Macquarie integration, what is your practical capacity for further share repurchases in FY27 while still funding necessary RWA expansion in Global Markets?