Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net operating revenues increased by 8% to JPY161 billion, indicating strong financial performance.
- Ordinary income saw a significant rise of 93.1%, reaching JPY72.8 billion.
- The wealth management segment showed steady progress with asset-based revenues growing.
- Record high ordinary income in the asset management segment, driven by growth in active funds and real estate AUM.
- Profit attributable to owners of the parent increased by 124.2%, with an annualized ROE of 13.9%.
Negative Points
- Brokerage commissions dropped by 8.5% due to a decrease in stock trading volume.
- Flow revenues in the wealth management division declined due to market uncertainty.
- FICC revenues decreased, particularly in the domestic market due to a sharp decline in interest rates.
- Trading-related expenses increased, impacting overall SG&A costs.
- Ordinary income in the wealth management division decreased by 22.1%.
Q & A Highlights
Q: Can you elaborate on the significant increase in ordinary income for the second quarter?
A: Kotaro Yoshida, Managing Executive Officer & CFO, explained that ordinary income reached JPY72.8 billion, up 93.1% from the previous quarter. This was driven by growth in asset-based revenues in the wealth management segment, record-high ordinary income in asset management, and increased revenues in the global markets and investment banking division. Additionally, gains from the acquisition of Aozora Bank shares contributed to non-operating income.
Q: What factors contributed to the record high interim dividend?
A: Yoshida noted that the interim dividend reached a record high of JPY28, with a payout ratio of 50.6%. This was supported by a significant increase in profit attributable to owners of the parent, which was JPY53.7 billion, up 124.2%. The strong financial performance across various segments, including wealth management and asset management, underpinned this dividend increase.
Q: How did the overseas operations perform in the second quarter?
A: Yoshida reported that ordinary income for overseas business totaled JPY4.6 billion, up 103.6% quarter-on-quarter. Europe saw improved revenues and earnings due to a recovery in equity primary and M&A revenues. Asia and Oceania maintained solid profits, while the Americas experienced profit growth from increased customer order flows in FICC.
Q: Could you provide more details on the performance of the wealth management division?
A: The wealth management division saw net operating revenues of JPY60.6 billion, down 3.1%, and ordinary income of JPY15.9 billion, down 22.1%. Despite a decline in flow revenues due to market uncertainty, the transition to a wealth management business model progressed steadily, with increases in wrap-related revenues and agency fees for investment trusts.
Q: What were the key drivers behind the growth in alternative asset management?
A: Yoshida highlighted that net operating revenues in alternative asset management were JPY5.7 billion, up 85.8%, and ordinary income was JPY8.4 billion, up 972.5%. This growth was driven by capital gains from exits in private equity investments and increased income from equity affiliates and dividends in infrastructure investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
