Nomura Holdings, Inc. is set to experience strengthened profitability and enhanced earnings stability over the next 12 to 18 months, according to Moody’s Ratings.
The ratings agency highlighted the positive momentum in Nomura’s international wholesale business, combined with robust performance in its domestic securities operations, as key drivers for the anticipated improvement in financial stability and profitability.
Moody’s further emphasized that Nomura’s enhanced risk management strategies and ongoing initiatives to stabilize earnings would mitigate the likelihood of significant losses and reduce earnings volatility. These efforts were underscored in the report, which affirmed Nomura’s Baa1 ratings and provided the company with a stable outlook.
The firm’s focus on diversifying revenue streams within the wholesale business, increasing earnings from its wealth management and investment management divisions, and enhancing cost efficiency are all pivotal to its growth strategy.
For the first nine months of the fiscal year ending March 2025 (fiscal 2024), Nomura’s profitability, as measured by return on average assets (ROAA), improved to an annualized 0.6%. Moody’s also noted that the company’s strategic cost management efforts have led to a significant reduction in the wholesale segment’s expense ratio, which dropped to 84% from 95% in the previous year.
The firm’s ability to stabilize its international wholesale business is vital for improving its overall credit profile, especially given the historically volatile profitability and earnings fluctuations within this segment.
Nomura is also well-positioned to weather unexpected risks, with a strong CET1 ratio of 16.3% as of December 2024. Notably, about 17% of the bank’s total assets are comprised primarily of government securities, cash equivalents, and time deposits, providing a solid buffer against market uncertainties.
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