Nikko Cordial Corp., Japan’s third-largest securities firm, said Friday its group net profit in the first quarter of fiscal 2003 soared more than three-fold, thanks to a jump in sales of foreign bonds.
Smaller brokerages also announced upbeat business results Friday for the April-June period.
The influence of the recent stock market rally was relatively small, however, underscoring intensified competition with online brokerages for commission fees, along with moves by securities firms that do not operate online to diversify their revenue sources.
During the first quarter, Nikko Cordial’s group net profit surged to 5.89 billion yen, having stood at 1.89 billion yen a year ago, while its revenue increased 14.1 percent to 77.26 billion yen.
The brokerage house said growth in foreign bond sales drove up earnings, with profits from bond and foreign currency trade logging a 2.2-fold jump to 14.1 billion yen.
Reflecting growing difficulty in securing revenue from stock brokerage commission fees, commission fee revenue logged a 24 percent fall from a year ago, hitting 12.3 billion yen.
The company blamed this on the weak performance of the wholesale business.
The recent stock market surge has greatly benefited online securities firms, such as Matsui Securities Co., that have attracted individual investors through relatively low commission fees.
“Revenue and profits are on the increase as a result of diversifying the investment tools for clients,” said Hajime Yamamoto, chief financial officer at Nikko Cordial. “Earnings have become less subject to the vagaries of a single market.”
Most of the smaller securities companies that announced their quarterly results returned to profitability, following losses posted a year ago. Most of this growth was again attributed to foreign bond sales and cost-cutting efforts.
Mitsubishi Securities Co. reported a group net profit of 8.78 billion yen during the first quarter, marking a turnaround from the loss of 12.06 billion yen posted a year earlier by Kokusai Securities Co.
Kokusai Securities is one of four brokerages that merged to create Mitsubishi Securities in September 2002.
Mitsubishi Securities offered its figures in the financial report as a measure of comparison.