Nomura's Earnings Surge and Strategic Expansion: A Pathway to Sustained Growth in a Volatile Market

In an era of global economic uncertainty, Nomura Holdings Inc. (NMR) has emerged as a standout performer in the Asian financial sector. The firm's second-quarter 2025 earnings report—marked by a 31% year-on-year revenue increase and a 134% surge in pretax income—demonstrates its ability to thrive despite macroeconomic headwinds. But what sets Nomura apart is not just its financial performance, but its disciplined cost management, strategic revenue diversification, and bold international acquisitions. These elements collectively position the firm as a top-tier investment opportunity in a market where agility and foresight are paramount.

Cost Discipline: The Foundation of Resilience

Nomura's earnings surge is underpinned by rigorous cost control. For the quarter ending September 30, 2024, the firm's cost-to-income ratio improved to 83%, driven by both revenue growth and deliberate cost-cutting measures. The CFO, Takumi Kitamura, has spearheaded a JPY50 billion cost-saving initiative, focusing on automation, operational streamlining, and selective workforce optimization. This discipline has allowed Nomura to maintain profitability even in volatile markets, as evidenced by its 11.6% annualized return on equity (ROE)—a figure that exceeds its 2030 target.

Investors should note that Nomura's cost efficiency is not a one-time adjustment but a sustained strategy. The firm's ability to balance expense management with strategic reinvestment—such as in technology for its wealth management division—ensures long-term competitiveness. further underscores its superior operational efficiency.

Market-Driven Revenue Growth: Diversification as a Catalyst

Nomura's revenue growth is rooted in its diversified business model. The wealth management segment, for instance, reported a 56% year-on-year increase in pretax income, fueled by a 30% rise in recurring revenue and JPY438.3 billion in net inflows of recurring revenue assets. This shift toward fee-based, stable income streams insulates the firm from the volatility of trading and underwriting cycles.

Equally compelling is the investment management division's performance. With net revenue up 24% year-on-year to JPY56.1 billion, the segment has capitalized on global demand for alternative assets and active ETFs. Nomura's recent launch of an active ETF platform in 2023, now scaling to 15+ strategies, aligns with investor preferences for diversified, low-cost products. highlights its accelerating market share.

Strategic Acquisitions: A Global Footprint for the Future

Nomura's most transformative move is its acquisition of Macquarie Group's U.S. and European public asset management business for $1.8 billion. This all-cash deal—its largest since the 2008 Lehman Brothers acquisition—adds $180 billion in assets under management (AUM), with 35% now sourced outside Japan. The acquisition not only diversifies revenue but also provides access to nine of the top ten U.S. retail distribution platforms, including Fidelity and Schwab.

This expansion is critical for Nomura's 2030 strategy to become a global investment management leader. The acquired business, rooted in Delaware Investments (established in 1929), brings a legacy of active management and institutional client relationships. By integrating this team and scaling the active ETF platform, Nomura is poised to capture a larger slice of the $120 trillion global asset management market.

Risks and Mitigations: A Balanced Outlook

While Nomura's strategy is compelling, risks remain. Market volatility, particularly in equity derivatives and fixed income, could pressure short-term earnings. Additionally, competition in ECM deals and dips in AUM during market downturns pose challenges. However, Nomura's Basel III-compliant capital structure—with a 15.7% CET1 ratio—provides a buffer. The firm's decision to forgo a share buyback in favor of capital preservation further underscores its risk-averse stance.

Investment Thesis: A Buy for Long-Term Growth

For investors seeking exposure to a Japanese financial institution with global ambition, Nomura offers an attractive risk-reward profile. Its earnings growth, cost discipline, and strategic acquisitions create a compounding effect: stable fee-based income from wealth and investment management, while international expansion opens new revenue avenues.

The stock's forward P/E ratio of 10.5x, combined with a projected ROE above 10%, suggests undervaluation relative to peers. indicates strong relative performance, supported by its earnings momentum.

Final Verdict: Nomura is a buy for investors with a 3–5 year horizon. Its disciplined approach to cost, revenue diversification, and strategic global expansion positions it as a leader in the evolving Asian financial sector. While macroeconomic risks persist, the firm's proactive strategies and robust capital base make it a resilient long-term investment.