Daiwa profit climbs on strong global markets trading income

Daiwa Securities Group’s profit rose last quarter, topping analyst expectations, driven by a boost to global markets trading.

Net income climbed 7.8% from a year earlier to ¥51.43 billion ($326 million) in the three months ended Sept. 30, the Tokyo-based company said Friday. That compared with the ¥47.7 billion average of analyst estimates compiled by Bloomberg.

The firm posted strong gains in fixed income trading in a quarter that saw global banks struggle with that business due to rising interest rates, while equity trading remained buoyant. Daiwa and larger rival Nomura Holdings are seeking stable income from Japanese households that are shifting savings into investments to protect their wealth from inflation.

“We are able to demonstrate strong performance,” Daiwa’s Chief Financial Officer Kotaro Yoshida said at a briefing in Tokyo. Yoshida added that its global markets division was off to a “slower start” this quarter compared to the prior one.

Revenue from equity trading rose about 9% from a year earlier, the sixth straight quarter of growth. Fixed income revenue climbed 25%.

Investment banking, including advice on mergers and acquisitions, saw a 9.1% increase. Wealth management revenue surged 33%.

Daiwa has taken a series of steps this year to accelerate growth, including its acquisition of Orix’s banking subsidiary in Japan to deepen a foray into commercial lending.

Shares of Daiwa dipped 1% on Friday morning before the results, paring this year’s gain to 25%, outpacing Nomura’s 14% advance.

Nomura this week posted a 13% increase in profit for the quarter, as gains in wealth management and stock trading made up for a slight drop in revenue from fixed income.