On Tuesday, Morgan Stanley maintained its Equalweight rating and a JPY970.00 price target for Nomura Holdings (NYSE:NMR) Inc. (8604:JP) (NYSE: NMR). The firm outlined Nomura's strategy to enhance its resource-light, low-volatility operations within its wholesale division.
The company's near-term objective is to reach a pre-tax profit of approximately JPY130 billion in fiscal year 2024, a significant increase from the JPY54 billion reported in the previous fiscal year. The anticipated growth is largely attributed to the Fixed Income, Currencies, and Commodities (FICC) business.
Additionally, Nomura's medium-term plan includes stabilizing pre-tax Return on Equity (ROE) between 8-10%, with contributions expected from expanding sectors such as international wealth management. The company's current usage rate of risk-weighted assets in the wholesale division is slightly over 60%, but there are intentions to reduce it to around 50% by fiscal year 2030.
Nomura is set to focus on self-driven growth in the medium term, aiming to sustain pre-tax ROE within the target range. The firm plans to implement cost discipline by maintaining an expense ratio of approximately 80% and leveraging operating leverage as part of an overall self-funded approach. This strategy indicates Nomura's commitment to achieving growth while managing expenses and risks effectively.
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