Nomura Q2 Net Profit Up 13% but Misses Expectations; Persistent Overseas Losses Weigh on Results
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Nomura Holdings posted Q2 net profit of ¥103.7 billion, up 13% year-on-year but below analysts' estimates and down 29% from the prior quarter's record; wealth management hit all-time highs while Europe booked a fourth straight quarterly loss.
Profit grew — so why is the market disappointed?
Net income attributable to shareholders reached ¥103.7 billion (~$6.57 billion), up 13% year-on-year but below the Bloomberg consensus of ¥109.1 billion.
The sharper miss is sequential: profit fell 29% from the prior quarter's record high.
This means → year-on-year growth masks quarter-on-quarter deceleration — "growing but slowing" is the real source of disappointment.
Where was the brightest spot?
Wealth management net revenue rose 22% year-on-year, marking a fifth consecutive quarter of expansion.
Net inflows into recurring-revenue assets hit a record ¥750 billion; the recurring-revenue cost-coverage ratio climbed to 79%.
In plain terms = wealth management earns fees that recur every period, and client money keeps pouring in — the franchise's foundation is getting thicker quarter by quarter.
How did trading and investment banking break down?
Equity trading revenue grew 19% year-on-year, extending a streak of over three years. Fixed-income trading revenue dipped 2%, snapping two consecutive quarters of double-digit gains.
Investment banking revenue jumped 26%, driven by M&A advisory fees and equity and debt underwriting.
Yet the wholesale division's cost-income ratio worsened from 75% last quarter to 85%. This means → revenue rose, but costs rose faster — profitability actually deteriorated.
Why has the overseas business become a drag?
Overseas pre-tax profit fell 41% year-on-year to ¥26.4 billion. Europe posted a loss for the fourth straight quarter; the Americas also weakened.
CFO Hiroyuki Moriuchi said market participants remain cautious amid geopolitical risks and persistently high rates, and the current quarter's wholesale business "started somewhat slower overall."
This reflects a broader reality: Nomura's overseas expansion strategy has yet to deliver profit — when Europe stops bleeding will be the key test of the restructuring.
ROE hit the target — so why no buyback?
Annualized ROE came in at 10.9%, within Nomura's mid-term target of 10%–12%; the first-half ROE was higher still at 13.3%.
Some analysts expected a buyback announcement, but none came. Bloomberg Intelligence analyst Michael Makdad said he would watch for management's explanation.
Put simply = earnings power is on target and cash is coming in, but management chose to keep the capital — that either signals plans for future deployment or lingering caution about the outlook.
Why is the stock lagging its peers?
Nomura shares are up roughly 10% year-to-date, trailing Daiwa Securities Group's 24% gain and the Topix index's 17% rise.
First-half cumulative net profit totaled ¥249.3 billion, up 27% year-on-year; Q2 dividend per share was ¥35.
This means → profits are growing and dividends are being paid, but the valuation discount suggests investors are still waiting to see wholesale momentum recover and overseas losses reverse.
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