Release date: October 29, 2024
For a complete record of financial statements, see Complete Record of Financial Statements.
Net operating revenue increased 8% to 161 billion yen, demonstrating strong financial performance.
Ordinary profit increased significantly by 93.1% to 72.8 billion yen.
Wealth Management showed steady progress with increased asset-based revenues.
Due to an increase in active funds and real estate management balances, the asset management division’s ordinary income reached a new record high.
Profit attributable to owners of the parent company increased by 124.2%, resulting in an annualized ROE of 13.9%.
Brokerage commissions decreased by 8.5% due to lower stock trading volume.
Wealth Management’s flow revenues decreased due to market uncertainty.
FICC’s revenues declined due to the sharp decline in interest rates, particularly in the domestic market.
Trading-related expenses increased, impacting overall SG&A expenses.
Wealth Management division’s ordinary profit decreased by 22.1%.
Q: Please tell us more about the significant increase in ordinary income in the second quarter. A: Ordinary profit increased 93.1% year on year to 72.8 billion yen, explained Kotaro Yoshida, Managing Executive Officer and CFO. This was driven by asset-based revenue growth in Wealth Management, record recurring profit in Asset Management, and revenue growth in Global Markets and Investment Banking. Additionally, gain on acquisition of Aozora Bank shares contributed to non-operating income.
Q: What were the factors behind the highest interim dividend ever? A: According to Mr. Yoshida, the interim dividend was a record high of 28 yen, and the payout ratio was 50.6%. This was supported by a significant increase in net income attributable to owners of parent company, which increased by 124.2% to 53.7 billion yen. The dividend increase was supported by strong financial performance across various divisions, including Wealth Management and Asset Management.
Q: How did your overseas business perform in the second quarter? A: According to Mr. Yoshida, ordinary income from the overseas business was 4.6 billion yen, an increase of 103.6% from the previous quarter. In Europe, revenues and profits improved due to a recovery in equity primary and M&A revenues. Asia and Oceania maintained strong margins, while Americas’ margins increased due to increased customer order flow in FICC.
Q: Could you provide more details about the Wealth Management Division’s performance? A: The Wealth Management Division’s operating revenue decreased by 3.1% to 60.6 billion yen, and ordinary income decreased by 22.1% to 15.9 billion yen. Although flow income decreased due to market uncertainty, the transition to a wealth management business model progressed smoothly, with wrap-related income and investment trust agency fees increasing.
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Q: What are the main drivers behind the growth of Alternative Asset Management? A: Mr. Yoshida said Alternative Asset Management’s net operating revenue increased by 85.8% to 5.7 billion yen and ordinary income increased by 972.5%. 8.4 billion yen. This growth was driven by capital gains from private equity investment exits and increased income from equity affiliates and dividends from infrastructure investments.
For a complete record of financial statements, see Complete Record of Financial Statements.
This article first appeared on GuruFocus.
