TOKYO: Daiwa Securities Group Inc’s quarterly profit has risen more than analysts expected to the highest in 13 years, as Japan’s second-largest brokerage benefitted from the global stock trading boom.
Net income rose 81% from a year earlier to 56.4 billion yen (US$360mil) in the first quarter ended June 30, the Tokyo-based firm said in a statement yesterday.
That topped the 51.1 billion yen average estimate of five analysts and was the highest since the April to June quarter of 2013.
Brokerages around the world posted bumper results as market volatility fuelled by the war in the Middle East and artificial intelligence (AI)-related news drove clients to step up their trading of stocks and other securities.
Daiwa’s larger Japanese rival Nomura Holdings Inc reported its highest quarterly profit in 24 years last week, though investors signalled doubts over the sustainability of the equity trading rally that fuelled the earnings.
“The global markets business is off to a slower start in the current quarter, although client flows remain solid,” Daiwa’s chief financial officer Kotaro Yoshida said at a briefing in Tokyo.
Revenue from equity trading jumped 84% from a year earlier to 28.7 billion yen the highest on record. Fixed-income revenue rose 51%, climbing for a third consecutive quarter.
Investment banking, including advice on mergers and acquisitions, saw a 31% increase.
Wealth management revenue gained 40%, a sign that Japanese individuals continued to invest more of their savings to guard against inflation.
Shares of Daiwa fell 1.8% yesterday morning before the results, as Japanese stocks declined. The shares are up 29% this year.
Daiwa has taken a series of steps this year to accelerate growth, including its acquisition of Orix Corp’s banking subsidiary in Japan to deepen a foray into commercial lending.
It has completed the deal and earnings consolidation will begin from the second quarter, the firm said yesterday.
Still, like Nomura, Daiwa lost money in Europe last quarter, while remaining profitable in other markets abroad.
Daiwa said its first pre-tax loss in Europe in a year was due to weak merger and acquisition performance stemming from geopolitical risks. — Bloomberg
