There are two ways a major financial institution can post a record annual profit. The first is by riding a wave — a bull market, a credit boom, a surge in deal activity — that lifts all boats and rewards every bank equally regardless of strategy. The second is by having built something structurally different: a business model that generates more stable, recurring revenue than its competitors, that benefits from volatility rather than simply tolerating it, and that has positioned itself for a specific set of trends that are running in its direction regardless of external conditions. The second kind of record is more durable and more instructive.
Nomura Holdings, Japan’s largest investment bank and brokerage, reported on Friday, April 24, that it has achieved the second kind of record — for the second consecutive year. Net income attributable to shareholders for the fiscal year ended March 31, 2026, reached an all-time high of 362.1 billion yen, up 6% from the prior year’s previous record of 340.7 billion yen. Net revenue rose 15% to 2,167.7 billion yen. Return on equity came in at 10.1%, sustaining the double-digit return level that had been Nomura’s 2030 strategic target — achieved years ahead of schedule.
The result was delivered despite a fourth quarter that missed analyst expectations: Q4 net income rose a modest 3% year-on-year to 73.9 billion yen against a Bloomberg consensus of 98.9 billion yen. The quarterly shortfall does not obscure the full-year achievement. What matters is the pattern: two consecutive record years, broad-based strength across all major divisions, and a management team that is asking investors to focus not on quarterly noise but on structural momentum.
What Drove the Record: Three Divisions Firing Simultaneously
The architecture of Nomura’s record profit is worth examining in detail, because it reflects a business transformation that has been years in the making and that is now producing measurable results across multiple segments simultaneously.
Wealth Management, Nomura’s retail-facing business serving Japanese individual investors, achieved its best annual pretax result since the division’s launch in 2002. Recurring revenue — the subscription-style, fee-based income from advisory mandates and discretionary portfolios — hit a record level and covered 72% of total costs, up from significantly lower levels in prior years. This recurring revenue coverage ratio is the single most important structural metric Nomura tracks: it measures how much of the business’s cost base is covered by predictable, non-market-dependent income before a single transaction or market move occurs. At 72% coverage, Nomura’s Wealth Management division is far more resilient to market downturns than it was when the ratio was substantially lower.
The driver of this improvement is Japan’s ongoing and profound shift in household investment behaviour. For decades, Japanese household savings — among the highest in the developed world as a percentage of income — sat predominantly in bank deposits and government bonds. The combination of near-zero interest rates extending from the Bank of Japan’s policy framework, the introduction of the NISA (Nippon Individual Savings Account) tax-incentivised investment account, and the broader “asset income doubling plan” promoted by the Japanese government has been redirecting a substantial flow of household savings into equities and investment trusts. Nomura, with its dominant position in Japan’s wealth management market and its network of relationship managers and branches, is the primary beneficiary of this structural reallocation. Net inflows into recurring revenue assets have been positive for 14 consecutive quarters. Assets under management in the Wealth Management and Investment Management divisions reached record levels.
The Wholesale division — Nomura’s investment banking and global markets arm — posted its highest annual revenue since the division was established in April 2010. This is a particularly significant milestone because the Wholesale division has historically been the most volatile and problematic part of Nomura’s business. The firm’s international expansion in the wake of the 2008 financial crisis, when it acquired Lehman Brothers’ European and Asian operations, produced years of losses and strategic uncertainty. The current Wholesale leadership team, operating under a “self-funding” principle designed to ensure the division’s cost base is covered by its own revenue without subsidies from elsewhere in the group, delivered record performance in Global Markets and Investment Banking simultaneously. The contribution came from Japan and EMEA particularly strongly.
Investment Management’s assets under management climbed to approximately 136.9 trillion yen, reflecting both strong net inflows and the benefit of overseas acquisitions including the purchase of Macquarie Asset Management’s public investments business, which took Nomura’s total AUM from approximately $590 billion to $770 billion. This acquisition has added private assets capability and international distribution that complement Nomura’s historically Japan-centric investment management business.
The Iran War: A Risk Acknowledged, Not Yet Materialised
CFO Hiroyuki Moriuchi addressed the Iran war question directly at Friday’s briefing, with the measured language of an executive who is watching a risk carefully but has not yet seen it damage the business. “Markets have been favourable up to now, but there are various risk factors at present,” he said. “For M&A and equity capital markets, some decision making may be held up, but looking at the mid- to long-term, the structural challenges facing Japanese companies, such as a declining population and overseas expansion aims, are unaffected by the situation in the Middle East.”
This framing is both honest and analytically important. Nomura is acknowledging what any informed observer already knows: the Iran war’s energy shock, the closure of the Strait of Hormuz in early March, and the resulting volatility in oil prices, bond markets, and equity markets have created near-term uncertainty that will affect deal activity and capital market volumes. IPO pipelines have frozen globally. M&A decision-making has slowed. These are Wholesale division revenue headwinds that any investment bank faces.
But Moriuchi’s strategic point is that the forces driving Nomura’s domestic business — the NISA-driven shift in household investment behaviour, the corporate governance reforms pushing Japanese companies to restructure and return capital to shareholders, the overseas expansion pressures that Japanese multinationals face as the domestic market shrinks with the population — are none of them caused by or resolved by events in the Strait of Hormuz. The demographics of Japan are unchanged. The regulatory framework incentivising retail investment is unchanged. The governance reform agenda is unchanged. A war in the Middle East does not alter the structural case for Japan’s financial industry transformation, and Nomura is the institution most positioned to monetise that transformation.
The Q4 earnings miss, which produced the gap between the ¥73.9 billion actual and ¥98.9 billion consensus, reflected in part the market volatility created by the Iran war in February and March — the same volatility that generated elevated flow fees from Nomura’s trading and brokerage operations while simultaneously suppressing new issuance and deal closure. The quarter was simultaneously good for some parts of the business and challenging for others. That is the hallmark of a diversified financial institution navigating a period of genuine market stress.
The 2030 Vision and the Questions It Faces
CEO Kentaro Okuda’s 2030 management vision — which targets pretax income exceeding 500 billion yen against the 539.8 billion yen already achieved in fiscal 2026, implying the target needs to be raised — is being tested by two specific risks that the Japan Times identified in its coverage of the results.
The first is the Iran war’s impact on the global economic outlook. If the conflict persists and the energy shock translates into a genuine global recession, the demand for investment banking services, asset management, and wealth management products will decline broadly. Nomura’s structural domestic growth story does not make it immune to a severe global economic contraction. The CFO’s “favourable up to now” qualifier carries weight.
The second is the alternative assets expansion. Okuda has made growing Nomura’s alternative assets capability — private equity, private credit, infrastructure — a central pillar of his 2030 strategy, betting that Japanese institutional investors want access to these asset classes and that Nomura can build the distribution and manufacturing capability to serve them. That bet is being complicated by the global private credit market stress that the Japan Times specifically flagged: the $1.8 trillion private credit market is seeing redemption pressure, software portfolio concerns, and fundraising slowdowns that directly affect the new Nomura alternative assets strategy.
For now, the record speaks for itself. Two consecutive record years. Three divisions simultaneously at all-time performance levels. ROE of 10.1%, meeting the 2030 target ahead of schedule. A dividend of ¥51 per share for the full year, reflecting management’s confidence in the earnings base. And a CFO who is watching the risks carefully but sees Japan’s structural transformation as bigger than the Middle East’s near-term disruption.
He may be right. The next two quarters will begin to provide the answer.
Written by Shalin Soni, CMA specializing in financial analysis, global markets, and corporate strategy, with hands-on experience in financial planning and analytical decision-making.
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Source: Based on U.S. News and publicly available information.