Nomura Holdings Inc. reported its highest quarterly net income in more than four years in the October-to-December 2024 period, driven by strong performance in its three main business segments.
Nomura said in its Feb. 5 earnings statement that its net income more than doubled from a year earlier to ¥101.4 billion for the quarter ended Dec. 31, 2024. This marks the highest since the April-to-June quarter of 2020. Pretax profit across wealth management, investment management and wholesale businesses surged 81% to ¥127.5 billion.
"Overall, it was a very strong performance, as Nomura is now generating earnings above its cost of capital in a favorable environment," said Michael Makdad, an analyst at Morningstar. "I think the strong performance is likely to continue if the environment surrounding Japan's financial markets remains as it is now."
The Bank of Japan remains on a path of raising interest rates after it abandoned its policy of negative rates in 2024. The central bank hiked its benchmark interest rate to 0.5% on Jan. 24, the third increase since March 2024. While Japan's rate hikes are in contrast with cuts in the US and Europe, analysts believe the US Federal Reserve's recent commentary signals a slower pace of cuts ahead, giving the Japanese central bank greater room to normalize its monetary policy. The nation's equity market benchmark Nikkei 225 index gained 20% in 2024.
Wholesale boost
Nomura's wholesale operations led the strong performance, posting ¥62.4 billion in pretax profit in the December quarter, nearly three times the previous year's ¥23 billion. The segment, which accounted for roughly half of the total pretax profit in the three sectors, gained momentum in equities and fixed-income operations in Asia, Europe and the Americas. Its investment banking business also contributed to the results by securing cross-border deals, while Nomura was involved in major initial public offerings in Japan.
Its wealth management business generated ¥46.2 billion in pretax profit in the December quarter, up 45% from the previous year. The segment has been in an upward momentum for nearly two years as Nomura acquired new customers, growing its assets under management by ¥1.10 trillion in the April-to-December period, higher than the company's full-year target of ¥800 billion.
Investment management segment posted a 21% gain to ¥18.9 billion in pretax profit. The outstanding assets under management in this business grew to a record ¥93.5 trillion in December, while assets in alternative investments also increased to an all-time high of ¥2.50 trillion.
