Daiwa Profit Falls for First Time in Nine Quarters on Stock Drop

Daiwa Securities Group Inc. (8601), Japan’s second-largest brokerage, posted its first profit decline in nine quarters as underwriting, trading and brokerage commissions fell amid a stock-market slump.

Net income slid 32 percent to 33.2 billion yen ($324 million) in the fourth quarter from 48.8 billion yen a year earlier, the Tokyo-based firm said in a statement today. The result was in line with the 33 billion-yen average estimate of seven analysts surveyed by Bloomberg News.

Japanese stocks went from being the best performers among major markets in 2013 to the worst this year, clouding the outlook for securities firms. Daiwa and larger peer Nomura Holdings Inc. are trying to attract Japanese individuals to invest their savings as foreigners sell the country’s equities amid concern that the economic recovery is losing momentum.

Daiwa’s revenue fell 15 percent in the three months ended March 31 to 147.4 billion yen, today’s report showed. Underwriting fees slumped 32 percent from a year earlier to 5.8 billion yen, and trading profit sank 24 percent to 35 billion yen. Brokerage commissions slid 19 percent to 16.6 billion yen.

Daiwa dropped to seventh among managers of Japanese share sales in the quarter from the top position a year earlier, when it managed offerings by companies including Japan Tobacco Inc. (2914) data compiled by Bloomberg show.

Shares of Daiwa closed 2.2 percent lower today in Tokyo, extending this year’s decline to 27 percent. A measure of securities firms tumbled 28 percent in 2014, the worst among the Topix (TPX) index’s 33 industry groups. The benchmark gauge sank 11 percent.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net Russell Ward, Darren Boey

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