By Anton Bridge
TOKYO (Reuters) -Daiwa Securities, Japan’s second-largest brokerage and investment bank, said on Monday that net income slumped 24% in the fourth quarter, hurt by lower valuations for its alternative assets business and a tumble in trading income.
However, net profit for the full year rose 27%, indicating Daiwa has had some success in developing a business model with more stable sources of recurring revenue. Its wealth management division saw annual asset inflows almost double to 1.57 trillion yen ($11 billion).
Daiwa also announced a share buyback of up to 50 billion yen to conclude by next March, helping lift its shares which were up 1.8% in afternoon trade.
Chief Financial Officer Kotaro Yoshida told reporters a broad shift from savings to investment in Japan in part due to the return of inflation has not been disrupted by volatility from U.S. President Donald Trump’s tariffs.
“Volatility is high at the moment but what we have to do has not changed, ” he said.
Net profit for the January-March period came in at 29.9 billion yen, its second consecutive quarter of profit decline and the weakest one since April-June last year. It also fell short of an LSEG consensus estimate of 32.9 billion yen.
Income for Daiwa’s global markets division more than halved from a year earlier to 6.3 billion yen as volatile U.S. interest rates hit fixed-income revenue.
Daiwa’s alternative assets business, which includes private equity, energy and infrastructure investments, logged a loss of 1.99 billion yen. Valuations for energy and infrastructure investments were hit the hardest. That led to a slump of 41% in profit for its asset management division.
“It is difficult to read the Trump administration’s impact on, for instance, renewable energy or interest rates, so we must invest carefully,” Yoshida said.
Last week, larger rival Nomura Holdings posted a 27% rise in fourth-quarter profit and logged record annual profit.
($1 = 143 yen)
(Reporting by Anton Bridge; Editing by Himani Sarkar and Edwina Gibbs)
