Daiwa's profit surges over 80% as investors flock to stock markets

By Takashi Nakamichi and Hideki Suzuki 

Daiwa Securities Group Inc.’s profit surged as gains from wealth and asset management drove performance on the back of increased investor interest in the stock market. 

Net income jumped more than 80 per cent from a year earlier during the three months ended Sept. 30 to ¥53.8 billion ($352 million), Japan’s second-biggest brokerage said in a statement. That compares with the average forecast of ¥38.8 billion by three analysts polled by Bloomberg News.  

Under its mid-term plan, Daiwa aims to raise its pretax profit to at least ¥240 billion for the year ending March 2027. The firm also intends to hire more bankers for its M&A business, as well as for Japanese equity trading to capitalize on the upturn in the nation’s stock market.  

 

Markets may remain volatile with the US presidential election coming up next month, Daiwa’s Chief Financial Officer Kotaro Yoshida said at an earnings briefing. But he also said that clients were largely calm when Japanese shares tumbled in August. 

This was reflected in Daiwa’s results. Ordinary income from wealth management rose almost 21 per cent as it sold more investment trusts from US to India stock funds as well as Japanese and foreign bonds. Ordinary income from asset management surged over 57 per cent to a record high, with the firm saying it experienced strong capital inflows into overseas equity funds.  

In its global markets and investment banking division however, ordinary income fell 36 per cent.  

Daiwa’s Europe operations fell into the red in the second quarter, though losses narrowed significantly compared to the previous quarter. Both its Americas and Asia/Oceania operations saw double-digit increases in their ordinary income.