By Anton Bridge
TOKYO (Reuters) -Japan’s Daiwa Securities booked a rise of 30.2% in first-quarter net profit from a year earlier, it said on Wednesday, as its asset management division made up for dampened profits from trading and investment banking.
Market volatility after U.S. President Donald Trump’s sweeping tariffs in April hit trading position management and overseas M&A dealmaking, leading to a fall of 17% in quarterly income for the global markets and investment banking division.
Daiwa shares were up about 2% in afternoon trade after the results, which showed profit for the period from April to June at 31.2 billion yen ($210.73 million), up from 23.9 billion in the year-earlier period.
The results snapped a run of two consecutive quarters of profit decline but nevertheless lagged those of larger rival Nomura, which reported on Tuesday a rise of 52% in first-quarter profit, to 104.6 billion yen.
“While the global markets and investment banking results were rather sluggish, fixed income credit, debt underwriting and domestic M&A picked up in the second half of the quarter,” Chief Financial Officer Kotaro Yoshida said.
“I think the second quarter got off to a good start in July,” he added at a press briefing in Tokyo.
Daiwa’s investment banking unit made a small profit of 900 million yen, supported by domestic M&A deals, but well short of its record high profit of 7 billion in the three months to the end of March.
The results reflect the shift in the firm’s business model to focus on more stable fees-based revenue less subject to market swings.
The shift has coincided with the return of sustained inflation in Japan that has spurred households to steer assets out of cash and deposits offering negligible returns into investment products.
Asset management income rose more than 30% on the year-earlier period, and securities and real estate assets under management both hit a record high this quarter.
($1=148.0600 yen)
(Reporting by Anton Bridge; Editing by Christopher Cushing and Clarence Fernandez)
