Securities firms record larger profits for 1999

Thanks to increased trading activity and a resultant rise in revenue from commissions, Japan’s big and medium-size securities houses on Friday generally reported huge profit gains in the business year that ended March 31.

Daiwa Securities Group Inc. and Nikko Securities Co., which both released their results Friday, returned to profitability with Daiwa earning 105.38 billion yen in consolidated net profit and Nikko recording 90.16 billion yen.

Nomura Securities Co., the last of the nation’s “Big Three” houses, released its unconsolidated results April 21. That data also showed a strong performance, with a rise in unconsolidated pretax profit of around 570 percent from a year earlier to 303.3 billion yen. Nomura’s consolidated data is due out May 12.

In its financial report released Friday, Daiwa Securities Group said its net profit swung back into the black on a consolidated basis, a turnaround from a net loss of 127.89 billion yen the previous year.

Daiwa Securities Group’s consolidated earnings report, which combines the results of the parent company and those of 56 subsidiaries and four affiliates, showed a pretax profit of 224.12 billion yen on operating revenues of 654.65 billion yen.

In the previous business year that ended in March 1999, the company incurred a pretax loss of 87.96 billion yen on operating revenue of 354.96 billion yen.

Daiwa Securities Group chalked up 364.12 billion yen in commission revenues in fiscal 1999, up 96.3 percent over the previous year, on the strength of a booming domestic stock market.

Daiwa Securities Group is a holding company set up in April 1999 to oversee group companies. They include Daiwa Securities Co., a unit that specializes in retail securities operations, and Daiwa Securities SB Capital Markets Co., which focuses on investment banking and trading for corporate customers.

Daiwa Securities Group reported consolidated business results for itself, Daiwa Securities and Daiwa Securities SB Capital Markets so as to allow investors to compare results of the former Daiwa Securities Co. from a year earlier.

The combined results of these three companies showed a net profit of 119.28 billion yen against a net loss of 116.97 billion yen in fiscal 1998. Daiwa Securities Group also reported a pretax profit of 188.8 billion yen, up from 16.59 billion yen, on operating revenues of 436.21 billion yen, up from 257.18 billion yen. Meanwhile, Nikko Securities Co. announced that its consolidated net balance went into the black in fiscal 1999 for the first time in four years, thanks to a recovery in the Tokyo stock market.

The major Japanese brokerage said the group posted a pretax profit of 184.86 billion yen in the business year that ended March 31.

The group suffered a net loss of 177.49 billion yen and a pretax loss of 36.62 billion yen in fiscal 1998.

Operating revenues grew 52.8 percent to 531.73 billion yen, due mainly to a 141 percent jump in income from commission charges from trading, and a 134 percent surge in gains from dealings on its own account.

On an unconsolidated basis, the brokerage, which has been in a capital tieup with Citigroup Inc. of the United States since 1998, chalked up a pretax profit for the first time in three years, at 137.83 billion yen, compared with a 7.82 billion yen loss in the previous business year.

It posted a net profit of 96.24 billion yen, compared with a 183.34 billion yen loss the year before, and operating revenues of 310.5 billion yen, up 48.6 percent.

Among the five midsize houses returning to profitability on an unconsolidated pretax basis was Shinko Securities Co., Japan’s fourth largest brokerage, created through the merger of Wako Securities Co. and New Japan Securities Co.

Sakura Friend Securities Co., which changed its name in April from Yamatane Securities Co., boosted unconsolidated pretax profit by 850 percent to 10.9 billion yen.

Kankaku Securities Co. remained in the black on an unconsolidated pretax basis but incurred a net loss. for the ninth consecutive year.

The loss was caused by the liquidation of some loss-making companies before it joins the Mizuho Financial Group, which will be created in September by Kankaku’s parent, Dai-Ichi Kangyo Bank, and two other major Japanese banks.