Nomura (NMR) Q2 2027 earnings review
Nomura's wealth profit jumps, but higher costs hit asset management
Nomura, Japan's largest brokerage and investment bank, grew second-quarter profit from a year ago even as trading cooled from the spring. Net revenue rose 18% from last year to 607 billion yen, and net profit attributable to shareholders climbed 13% to 104 billion yen. Stripping out a Tokyo property sale from last year's first quarter, first-half pre-tax profit jumped 49% by our math.
| Q2 net revenue | ¥607.5B +18% from a year ago |
|---|---|
| Q2 profit per share (diluted) | ¥34.61 +14% from a year ago |
| First-half return on equity | 13.3% 11.3% a year ago |
| Interim dividend | ¥35 ¥27 a year ago (41% payout) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because booming retail wealth fees offset a cost squeeze in asset management and trading. Wealth Management pre-tax profit jumped 44% from a year ago on tight expense control, lifting first-half return on equity to 13.3%. One caution: expenses in Investment Management nearly doubled from a year ago after the Macquarie acquisition, so that division's pre-tax profit fell 11% despite much higher fee revenue.
The question now is whether the Macquarie fund acquisition can add to the bottom line once integration work finishes. Either the 57 billion yen quarterly cost base in Investment Management includes temporary deal expenses that will fade, or the acquired US funds carry structurally thin margins. The third-quarter expense breakdown will tell.
🐂 Bull Case
Wealth Management Profit Jumped on Mild Cost Growth
Wealth Management, the division serving individual and affluent clients in Japan, delivered the cleanest profit growth in the group. Nomura has spent years shifting these clients into ongoing advisory contracts so revenue does not depend on daily stock trading.
Second-quarter net revenue in the division rose 21.5% from a year ago to 141.5 billion yen, while operating expenses grew only 7.0% to 75.9 billion yen by our math. Because revenue grew three times as fast as costs, pre-tax profit jumped 44.0% from a year ago to 65.6 billion yen, making it the group's largest profit contributor this quarter.
What to watch: net inflows into recurring revenue assets in the upcoming presentation. Continued inflows above 300 billion yen a quarter would show clients are still signing up for fee-based accounts.
Client Assets Reached 153 Trillion Yen
Nomura bought Macquarie's US and European public fund business in December 2025 to build a larger, steadier fee base in Investment Management. That deal, along with market gains and client inflows, lifted assets under management to 152.8 trillion yen at the end of September.
By our math, assets under management rose by 15.9 trillion yen over the last six months and 51.0% from a year ago. That larger asset pool lifted company-wide asset management and portfolio service fees by 67.4% from a year ago in the second quarter to 171.6 billion yen, and by 5.9% from the first quarter.
What to watch: net client flows in the acquired US mutual funds when detailed segment tables arrive. Turning those flows positive would prove the Macquarie deal can grow on its own.
Underlying First-Half Profit Rose Nearly 50%
First-half comparisons look understated on the surface because last year's first quarter included a 56.1 billion yen gain from selling land and buildings in Takanawa, Tokyo. Stripping that one-time real estate gain from last year's base shows how much the core brokerage and asset management businesses improved.
- First-half pre-tax profit: up 49.3% from a year ago excluding the property sale by our math, vs 21.1% as reported
- First-half net revenue: up 31.7% excluding the property sale by our math, vs 24.6% as reported
- Annualized return on equity: 13.3% in the first half, up from 11.3% a year ago
- Interim dividend: 35 yen per share, up from 27 yen a year ago
What to watch: whether management announces a new share buyback program alongside the second-quarter presentation. A new buyback would show confidence that capital ratios have absorbed the Macquarie acquisition.
🐻 Bear Case
Higher Costs Cut Investment Management Profit
Nomura bought the Macquarie fund business to add stable earnings, and the deal helped lift Investment Management net revenue by 39.4% from a year ago in the second quarter to 84.8 billion yen. Yet the division earned less money for shareholders than it did before the acquisition.
Non-interest expenses in Investment Management rose 90.7% from a year ago in the second quarter to 57.4 billion yen, and climbed 7.7% from the first quarter. Because of that cost jump, divisional pre-tax profit fell 10.8% from a year ago to 27.4 billion yen. Across the whole group, commissions and floor brokerage fees rose 2.4 percentage points of net revenue from a year ago.
What to watch: Investment Management operating expenses in the third quarter. A drop below 53 billion yen would show that integration costs are fading, while another rise would mean the acquired business carries permanently lower margins.
Trading Slowdown Halved Wholesale Profit
Wholesale, which houses global trading and investment banking, remains sensitive to quarterly swings in market activity. After a strong first quarter, group net gain on trading fell 11.2% from the prior quarter to 204.6 billion yen, pulling Wholesale net revenue down 16.3% from the first quarter to 308.9 billion yen.
Costs barely adjusted to the slower revenue. Wholesale non-interest expenses dipped only 4.7% from the first quarter to 262.9 billion yen, and were up 16.3% from a year ago by our math. As a result, pre-tax profit in the division fell 50.6% from the first quarter and 13.3% from a year ago to 46.1 billion yen.
What to watch: the Wholesale cost-to-income ratio in the third quarter. It rose to 85.1% this quarter by our math, and staying above 83% would show that fixed pay and technology bills are eating up trading gains.
Risks this quarter didn't answer
Four standing concerns from prior quarters cannot be read from the summary financial report and await the presentation and filing.
- Common Equity Tier 1 (CET1) capital ratio: stood at 12.9% in March; the full capital table will show how much balance-sheet growth to 67.5 trillion yen lowered the buffer.
- Outflows from acquired US active funds: caused 1 trillion yen of outflows in the fourth quarter; the presentation's flow breakdown will show if redemptions slowed.
- Private credit exposure: stood at $2.4 billion in March; the call will test whether rapid loan growth added credit risk.
- Overseas profit by region: Europe lost 13.8 billion yen in the fourth quarter; regional tables will show if international operations stayed profitable.
💲 Other KPIs
Lending grew faster than the rest of the balance sheet. Loans receivable rose 13.3% over the last six months and 36.4% from a year ago by our math, reaching 8.77 trillion yen. Total assets rose 7.7% over the same six months to 67.48 trillion yen, "mainly due to the increase in Trading assets", Nomura said.
Banking was the only operating division to grow both revenue and profit from the first quarter. Pre-tax profit rose 19.9% from last quarter and 37.1% from a year ago by our math, as net revenue climbed 7.5% from the first quarter to 16.4 billion yen on higher deposit and loan balances.
Average shares over the first six months fell 1.2% from a year ago by our math. However, period-end shares outstanding crept up from 2,901 million in March to 2,923 million in September because the firm issued 30.7 billion yen of treasury stock to employees while buying back only 18.5 billion yen.
🔮 Guidance
Unchanged policy. The Japanese brokerage group declared a 35 yen first-half dividend, up from 27 yen a year ago. By our math, that equals 41.0% of first-half basic earnings per share, keeping the payout in line with its policy of returning at least 40% of semi-annual profit. It "does not present earnings and dividend forecasts" for the full year, the release said.
❓ Key Questions
Why did Investment Management expenses jump 91% from last year?
Investment Management non-interest expenses reached 57.4 billion yen in the second quarter, up from 53.3 billion yen in the first quarter and 30.1 billion yen a year ago. Investors need to know how much of that bill is temporary Macquarie integration work.
Where did the CET1 capital ratio land in September?
Total assets expanded by 4.8 trillion yen in six months and loans receivable rose by 1.0 trillion yen. The summary report omits the Common Equity Tier 1 ratio, which stood at 12.9% in March near the bottom of the 11% to 14% target.
Have outflows from the acquired US mutual funds slowed?
In the fourth quarter of last year, the international asset management unit saw about 1 trillion yen of net outflows from active US mutual funds. Total assets under management rose to 152.8 trillion yen, but the release does not separate market gains from client flows.
What drove the 1 trillion yen jump in loans receivable?
Loans receivable rose 13.3% in six months to 8.77 trillion yen. After analysts questioned the $2.4 billion private credit book and securitized product concentration earlier this year, management should clarify which borrowers took on this new lending.