Nomura’s profitability, earnings stability strengthen through 2025

Enhanced risk management will reduce risk of losses and earnings volatility.

Nomura Holdings, Inc. is expected to see its profitability and earnings stability strengthen over the next 12-18 months, according to Moody’s Ratings.

Sustained improvements in its international wholesale business coupled with strong momentum in its domestic securities business will lead to stronger profitability and earnings stability, Moody’s said.

“We expect that Nomura's enhanced risk management and ongoing efforts to stabilize earnings will reduce the risk of significant losses and earnings volatility,” the ratings agency said in a report where it affirmed Nomura’s Baa1 ratings and gave it a stable outlook.

Efforts reportedly include focusing on revenue diversification in the wholesale segment, increasing earnings contribution from the stable wealth management and investment management segments, and prioritizing cost efficiency.

Nomura's profitability, measured as return on average assets (ROAA), improved to 0.6% (annualized) for the first nine months of the fiscal year ending March 2025 (fiscal 2024).

Improved business momentum in the domestic and international securities market and stringent cost management have reduced the wholesale segment's expense ratio to 84% during the same period, down from 95% a year ago.

A sustained track record of stabilizing the international wholesale business is critical to enhancing its overall credit profile, considering the historically weak profitability and high earnings volatility in this segment, Moody’s said.

The bank has an adequate buffer against unexpected risks, with a CET1 ratio of 16.3% as of end-December 2024.

About 17% of its total assets consist largely of government securities, cash equivalents, and time deposits.