| Item | Current | Prior | YoY % |
|---|---|---|---|
| Net Sales | ¥1.37T | ¥1.16T | +18.6% |
| Profit Before Tax | ¥211.54B | ¥160.28B | +32.0% |
| Net Income | ¥145.56B | ¥104.56B | +39.2% |
| Item | Current End | Prior End | Change |
|---|---|---|---|
| Total Assets | ¥68.22T | ¥62.65T | +¥5.58T |
| Total Equity | ¥3.99T | ¥3.85T | +¥138.80B |
| Shareholders' Equity | ¥3.83T | ¥3.71T | +¥126.41B |
| Equity Ratio | 5.6% | 5.9% |
| Item | Value |
|---|---|
| Net Profit Margin | 10.6% |
| Item | YoY Change |
|---|---|
| Net Sales YoY Change | +18.6% |
| Profit Before Tax YoY Change | +32.0% |
| Net Income YoY Change | +39.2% |
| Item | Value |
|---|---|
| Shares Outstanding (incl. Treasury) | 3.09B shares |
| Treasury Stock | 165.97M shares |
| Average Shares Outstanding | 2.92B shares |
| Book Value Per Share | ¥1,366.50 |
Nomura Holdings delivered a solid FY2027 Q1 with clear top- and bottom-line acceleration, underpinned by stronger market activity and improved profitability. Revenue rose 18.6% year over year to 13,717.1, while profit before tax increased 31.9% to 2,115.4 and net income advanced 39.2% to 1,455.6. Net profit margin improved to 10.6% from approximately 9.0% in the prior-year quarter, reflecting better operating leverage and a stable tax burden. Profit before tax margin expanded to 15.4% from 13.9%, indicating healthier core earnings generation. The DuPont profile shows ROE at 3.6%, driven by higher net margin, modestly faster asset turnover (0.020 vs. ~0.0185), and slightly higher leverage (financial leverage 17.08x vs. ~16.3x implied by the equity ratio trend). Effective tax burden (NI/EBT) was 0.688, broadly consistent with a roughly 31% effective tax rate, providing a steady bridge from PBT to NI. Total assets increased by 8.9% quarter on quarter-year to 68.2 trillion yen, supporting revenue growth through higher client and trading balances. Total equity increased by 138.8 billion yen year over year to 3.99 trillion yen, though the equity ratio edged down to 5.6%, consistent with balance-sheet expansion in a buoyant market. EPS for the quarter is approximately 49.9 yen, calculated from reported net income and average shares. The improved margin profile suggests cost discipline and favorable business mix in brokerage, investment banking, and investment management. ROE improved versus the prior-year quarter (c. 3.6% vs. ~2.7% by our DuPont-based estimate), though it remains below long-term targets typical for global peers. Earnings quality appears supported by a consistent tax bridge and stronger pre-tax margin, with no signs of unusual dilution to net income. Balance sheet leverage remains structurally high for a broker-dealer but in line with business model norms. Forward-looking, sustained market volumes and underwriting pipelines will be key to maintaining the current margin gains. The quarter sets a constructive base for the fiscal year, contingent on capital markets conditions and client activity remaining favorable.
ROE decomposition: 3.6% = 10.6% net profit margin × 0.020 asset turnover × 17.08x financial leverage. The component showing the most improvement year over year is net profit margin (c. +156 bps), followed by a modest increase in asset turnover (from ~0.0185 to 0.020) and a slight uptick in leverage (equity ratio moved from 5.9% to 5.6%). The margin expansion likely reflects operating leverage from higher client activity and fees, stronger trading results, and disciplined costs. This appears partially sustainable so long as market conditions and client engagement remain supportive; however, it is sensitive to market volatility and fee-pool normalization. SG&A discipline is implied by the expansion of PBT margin ahead of revenue growth, suggesting positive operating leverage.
Top-line growth of 18.6% was accompanied by a 31.9% increase in profit before tax and a 39.2% increase in net income, indicating operating leverage and improved mix. Asset growth (8.9%) supported higher client balances and trading capacity, aligning with revenue expansion. Net profit margin increased to 10.6% while PBT margin rose to 15.4%, highlighting strong flow-through. Sustainability will depend on the persistence of favorable market conditions, underwriting activity, and client risk appetite.
Total assets expanded to 68.2 trillion yen and total equity rose to 4.0 trillion yen, with the equity ratio at 5.6%. Leverage is inherently high for securities firms and has inched up versus last year, consistent with balance-sheet usage to support client activity. There is no indication of covenant stress in the reported figures. The capital base increased year over year, supporting business growth.
Total Assets: +5.58tn (+8.9%) - Expanded client/trading balances supporting higher revenue and activity. Total Equity: +0.14tn (+3.6%) - Retained earnings accretion strengthens capital base. Equity Ratio: -0.3pp to 5.6% - Slight leverage increase alongside balance-sheet growth.
The tax bridge (NI/EBT = 0.688) is consistent with a roughly 31% effective tax rate, supporting the quality of earnings recognition. The improvement in PBT margin alongside revenue growth suggests earnings were not solely driven by below-the-line items. Working capital intensity typically rises with client and trading volumes, which is consistent with the increase in total assets.
Quarterly EPS is approximately 49.9 yen, indicating capacity to fund ordinary dividends from earnings. Prior-year dividend per share was 27.0 yen, providing context for distributable capacity given current earnings momentum. Capital strength increased year over year, providing flexibility for shareholder returns while supporting business growth. The payout trajectory will likely align with earnings cyclicality and capital market conditions.
Business risks include Market volatility risk affecting brokerage, trading, and investment banking fees, Fee-pool cyclicality in ECM/DCM and advisory, Competitive pressure in wholesale and retail segments affecting pricing and margins, Global macroeconomic shocks impacting client activity and asset prices.
Financial risks include Low equity ratio (5.6%) reflects structurally high leverage inherent to broker-dealers, Balance-sheet expansion increases sensitivity to funding and liquidity conditions, Earnings sensitivity to trading performance and market liquidity.
Key concerns include Profitability is exposed to market conditions; a downturn could compress margins and ROE, Leverage uptick alongside asset growth increases sensitivity to risk-weighted exposures, Tax rate stability is important; deviations could alter net profitability.
Key takeaways include Strong start to FY2027 with revenue up 18.6% and NI up 39.2%, Margin expansion drove ROE improvement to 3.6%, Equity base increased YoY, while equity ratio dipped to 5.6% amid balance-sheet growth, Earnings momentum is supported by operating leverage but remains market-dependent.
Metrics to watch include Net profit margin and PBT margin trajectory, ROE versus management targets, Equity ratio and balance-sheet usage relative to market conditions, Client activity levels and underwriting pipeline indicators.
Regarding relative positioning, Performance reflects cyclical tailwinds and operating leverage typical of leading Japanese broker-dealers; continued outperformance versus domestic peers will hinge on sustaining fee momentum and trading income while maintaining disciplined balance-sheet usage.
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