Daiwa Securities Group (8601) Q1 2025 earnings summary

Executive summary

• Net operating revenues for Q1 FY2024 were JPY 149.1 billion, up 11.2% year-over-year but down 9.4% sequentially; operating revenue rose 26% year-over-year to ¥335.3 billion.

• Ordinary income increased 4.6% year-over-year to JPY 37.7 billion, but dropped 33.5% sequentially; profit attributable to owners was JPY 23.9 billion, up 1.2% year-over-year but down 39.4% sequentially.

• Wealth Management saw record-high wrap account assets and contracts, strong net inflows, and recurring profit up 23% year-over-year.

• Asset Management achieved record-high AUM and profit growth in securities, but real estate and alternative asset management profits declined due to one-off costs and lower capital gains.

• Global Markets & Investment Banking revenues and profits declined due to lower retail investor activity, fewer large M&A deals, and higher overseas M&A costs.

Financial highlights

• Commissions received were JPY 93.4 billion, down 10% sequentially; brokerage commissions fell 21.2% to JPY 23.1 billion, while underwriting commissions dropped 26.1% to JPY 8.4 billion.

• Net trading income rose 34.3% year-over-year to JPY 27.5 billion, but net financial income dropped 10.7% to JPY 18.4 billion.

• SG&A expenses increased 10.3% year-over-year to JPY 114 billion, mainly due to higher personnel and trading-related costs.

• EPS was JPY 17.10 for the quarter.

• Overseas ordinary income was JPY 2.2 billion, down 50.5% quarter-over-quarter.

Outlook and guidance

• Base income from core divisions rose 20% year-over-year, supporting a more stable earnings base.

• Wealth Management business model transition continues, focusing on recurring, balance-based revenue.

• Asset Management expects continued inflows, especially into overseas equity funds and new NISA products.

• No earnings forecast disclosed due to market and economic uncertainty; dividend policy targets a payout ratio of 50% or more, with a minimum annual dividend of ¥44 per share through FY2027.

• Investment banking expects income from multiple large ECM mandates in coming quarters.