Echoing Wall Street, Nomura (NMR.US) also “made a big profit” in the stock market boom: Q2 profit reached a record high in a single quarter, and stock trading revenue surged 83%

The Zhitong Finance App learned that, driven by the boom in stock market trading, Japan's largest brokerage firm Nomura Holdings (NMR.US) handed over an impressive report card.

According to the company's financial report released on Wednesday, net profit for the first fiscal quarter (ending June 30) surged 39% year on year to 145.6 billion yen (approximately US$890 million), far exceeding market expectations of 111.5 billion yen. At the same time, it set the highest profit level in a single quarter since 2002, making it the second-highest quarterly profit in its history.

This performance continues Nomura's strong momentum in the previous fiscal year, and once again confirms the rich returns brought to large financial institutions by active global capital markets.

Stock trading revenue set a new record, and the wholesale business strengthened across the board

The most prominent highlight of Nomura's performance this season came from the stock trading business. According to financial reports, stock business revenue soared 83% year over year to a record 179.4 billion yen. This performance is mainly due to the resonance of many positive factors in Japan and abroad, and also echoes Wall Street giants such as Goldman Sachs (GS.US). Previously, Wall Street Bank's stock trading revenue also hit a record, driven by supply chain disruptions caused by the Middle East conflict and the volatility brought about by the wave of artificial intelligence (AI) investment.

The total revenue of the wholesale business division, which includes global markets and investment banks, jumped 41% year-on-year this quarter, reaching the highest level since the division was established in April 2010. Among them, revenue from the fixed income business increased by 12%, while revenue from the investment banking business increased 33% to 50.4 billion yen, a record high in the first quarter of the previous year.

Nomura Chief Financial Officer Hiroyuki Moriuchi revealed at a press conference that the company's reserves of financing transactions were significantly stronger than in the same period last year, but he also warned that geopolitical uncertainty may cause delays in some transactions.

It is worth mentioning that the wholesale department's cost control has also achieved results, and its key cost-revenue ratio indicator has improved dramatically from 86% in the previous quarter to 75%.

Wealth management continues to gain strength, and overseas business profit before tax breaks records

Against the backdrop of inflation in Japan eroding savings and retail investors seeking higher-yield assets, Nomura's wealth management business, which dominates the high-net-worth customer base, continues to be a stable source of profit. The division's revenue for the quarter increased 37% year over year, and has achieved four consecutive quarters of growth, with recurring revenue reaching a record high. Profit before tax soared 83% from the same period last year to 71.1 billion yen.

In terms of overseas business, although the European division experienced pre-tax losses for the third consecutive quarter due to being dragged down by the cryptocurrency business, etc., the overall overseas business performed well. This quarter, regions outside of Japan achieved a total profit of 75.2 billion yen before tax, setting a new record in history.

Moriuchi attributed the overall rise in performance to “not only a favorable market environment, but also the results of structural reforms implemented over many years.”

Nomura's current impressive report card is also the result of its long-term strategic transformation. Driven by CEO Kentaro Okuda, the company will expand its stock business over the years, including trade execution services, as a priority development direction, with the aim of reducing reliance on fixed income transactions and building more stable revenue streams that generate recurring expenses and are less affected by market cycles.

According to the company's profit growth plan, the wholesale division aims to increase stock business revenue by another 20% to 30% over the next five years.

Judging from the stock price performance, Nomura Holdings closed slightly up 0.1% in the Tokyo market on the day the earnings report was announced. The cumulative increase since this year has reached 21%, but compared to the 34% increase of competitor Daiwa Securities (DSEEY.US) and the impressive rise of Japan's top three major banks, it is still slightly inferior.