Goldman Stands Out in Japan With Rising Profit, Revenue and Staff

Goldman Sachs Group Inc. Headquarters Stand in New York
Goldman Sachs’s trading revenue fell 15 percent to $16 billion in 2013, excluding accounting charges, as the firm generated less from bond trading and sold a reinsurance unit that reported its results in the firm’s equities segment. Photographer: Ron Antonelli/Bloomberg

Goldman Sachs Group Inc. seized on Japan’s buoyant stock market and local companies’ appetite for mergers to become the only large foreign investment bank to boost revenue, profit and headcount there last fiscal year.

Other banks such as Citigroup Inc. and BNP Paribas SA also saw improved results from their Japanese operations, though the number of employees at those institutions dropped during the 12 months through March, according to regulatory filings reviewed by Bloomberg.

As well as the overseas expansion drive by Japanese companies, which bolstered fees on merger and acquisition transactions, Goldman and other global banks benefited from increased investor appetite for Japanese shares, which pushed the Nikkei 225 Stock Average to a 15-year high in February.

“Both our investment banking and securities businesses performed well,” Masanori Mochida, president of Goldman Sachs Japan Co., said in e-mailed comments. “A growing number of Japanese clients are coming to us for global M&A advice, based on our longstanding client relationships and our extensive global network.”

Goldman Sachs Japan boosted net income 39 percent to 13.6 billion yen ($109 million) last fiscal year, while revenue rose 31 percent, the bank said in a regulatory filing. The unit’s headcount increased 6 percent to 775.

Goldman Deals

Goldman worked on 12 Japan-related transactions that were completed during the year to March 31, including Dai-ichi Life Insurance Co.’s $5.5 billion acquisition of Protective Life Corp. and Mizkan Group’s $2.2 billion purchase of Unilever’s Ragu and Bertolli pasta sauce business, data compiled by Bloomberg show.

The Japan unit’s fees and commissions from its investment banking and brokerage businesses, including merger advisory, jumped to a four-year high of 74 billion yen. Profit from fixed income and equities trading rose 10 percent to 25.1 billion yen.

Citigroup’s Japanese subsidiary returned to a profit of 7.4 billion yen on a 31 percent gain in revenue, helped by higher M&A advisory fees and a rise in brokerage commissions, according to its filing. Profits in the year-earlier period were depressed by a trading loss of 514 million yen. Staff numbers fell by 43 to 577 during the year, the filing showed.

“Reflecting favorable market conditions, we reported a higher level of revenue from brokerage commission on equities, coupled with a significant increase in net trading gain from bonds and FX, and M&A advisory fees,” Mika Nemoto, a Tokyo-based spokeswoman for Citigroup’s Japanese brokerage unit, said in an e-mail.

BNP Paribas

BNP Paribas Japan posted higher profit and revenue for the year to March 31 as a result of stronger dividend and interest income on securities it owns, according to the French bank’s regulatory filing. Staff numbers slipped by 6 to 393.

“Cross-border investments by institutional clients are expanding, and BNP Paribas will continue to support their diverse needs,” said Philippe Avril, chief executive officer of BNP Paribas Securities (Japan) Ltd.

Morgan Stanley MUFG Securities Co., the New York-based firm’s local joint venture with Mitsubishi UFJ Financial Group Inc., saw lower brokerage commissions and underwriting fees in the year to March 31, according to its filing. That helped depress profit to 20.4 billion yen from 30.6 billion yen a year earlier.

Japan’s economic reforms “should help give confidence to both domestic and foreign investors,” Jonathan Kindred, CEO of Morgan Stanley MUFG, said in an e-mailed statement. “We feel good about our business outlook for the current fiscal year and beyond.”

Below are tables showing revenues, profits and staff numbers at major foreign investment banks.

Revenue (Billions of yen)    3/2015   3/2014   % Change
Morgan Stanley               114.1    127.2     -10.3
Goldman Sachs                110.8     84.7      30.8
Deutsche Bank                 80.5     93.9     -14.3
BNP Paribas                   70.7     58.3      21.3
JPMorgan                      61.1     71.6     -14.7
Bank of America               53.6     71.9     -25.5
Credit Suisse                 52.6     52.4       0.4
Citigroup                     52.2     39.9      30.8
Barclays                      52.0     71.2     -17.0
Societe Generale              49.7     41.1      20.9
UBS                           29.3     35.2     -16.8
RBS                            2.7     13.0     -79.2
Total                        729.3    760.4      -4.1

Net Income (Billions of yen) 3/2015   3/2014   % Change
Deutsche Bank                 21.3     30.3     -29.7
Morgan Stanley                20.4     30.6     -33.3
Societe Generale              17.8     18.3      -2.7
Goldman Sachs                 13.6      9.8      38.8
Credit Suisse                  9.7     10.1      -4.0
Citigroup                      7.4     -3.5       n.a.
BNP Paribas                    2.7      0.3     800.0
JPMorgan                       2.5     13.5     -81.5
Barclays                      -2.9      9.5       n.a.
UBS                           -6.1     -4.2     -45.2
Bank of America               -6.9      7.3       n.a.
RBS                           -8.9     -5.7     -56.1
Total                         70.6    116.3     -39.3

Employees                    3/2015   3/2014   % Change
JPMorgan                       790      793      -0.4
Goldman Sachs                  775      731       6.0
Bank of America                769      810      -5.1
Morgan Stanley                 681      680       0.1
Barclays                       588      616      -4.5
Citigroup                      577      620      -6.9
Deutsche Bank                  536      556      -3.6
UBS                            484      503      -3.8
Credit Suisse                  453      439       3.2
BNP Paribas                    393      399      -1.5
Societe Generale               231      214       7.9
RBS                            171      115      48.7*
Total                        6,448    6,476      -0.4

* 2015 figures for RBS include some banking unit employees.
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