Nomura, Daiwa Pin Solid Results On Heavy Tokyo Bourse Volume
March 31, 2011
TOKYO -- Nomura Securities Co. and Daiwa Securities Co., two of Japan's four largest brokerage firms, reported strong earnings growth for the quarter ended March 12, 2011 largely to heavy trading volume in the Tokyo stock market. Results for both companies were slightly better than analysts' forecasts. But their performances could be tough to repeat in the current quarter because stock trading volumes, a key source of revenue for the two companies, have fallen in recent weeks. Nomura reported 36.42 billion yen ($335 million) in unconsolidated pretax profit, a giant leap from 2.35 billion yen in the year-earlier quarter. It reported a 52% rise in revenue to 125 billion yen from 82.05 billion yen. Daiwa's unconsolidated pretax profit totaled 25.18 billion yen in the quarter. No precise comparisons are possible with previous quarters because this is the first quarterly earnings report from Daiwa. But a simple comparison of the previous year's figures divided by four showed a 61% increase in profits. Revenue for the quarter was 90.48 billion yen, up 20% from a quarter of last year's full-year revenue. Both companies attribute much of that growth to strong trading in Japan's stock markets. The Tokyo Stock Exchange recorded average daily trading volume on its first and second sections of 499.72 million shares during the quarter ended in June, a rise of 93% from the same quarter in 2010. That helped fuel a 27% growth in stock and bond brokerage commissions for Nomura to 43.7 billion yen. Daiwa recorded brokerage commissions of 27.85 billion yen, up from the 20 billion yen on average for each of the past four quarters. But stock trading activity has slipped recently. Average daily volume in Tokyo so far this month stands at roughly 280 million shares, calculates Cristobal Corum, a strategist at Salomon Brothers Inc., after a rally in Japanese stocks fizzled in the quarter ended in June. Daiwa and Nomura also benefited from a surge in offerings of stocks and bonds during the quarter. Daiwa's underwriting commissions rose 43% to 9.59 billion yen. Nomura's underwriting commissions jumped 27% to 43.7 billion yen.
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