The main retail arm of Daiwa Securities Group has seen its asset under custody steadily grow during the past nine months, reaching a record high of JPY70.7 trillion (US$680 billion) as of the end of December 2020 – 66.6% of which is in equity and 15.3% in Japanese bonds.
Net profit at Daiwa Securities Co increased by 1.5x to JPY17.3 billion in the Q3 20 ended in December 2020 QoQ, or by 1.6x YoY as net operating revenues grew by 21.2% to JPY84.5 billion QoQ, or by 20.1% YoY.
The net profit represents 69.5% of that of the Group where fixed income revenues climbed by 40% to JPY7.7 billion QoQ as ‘structured bonds sales rose’.
In the meantime, the brokerage’s financial expenses climbed by 31.4% to JPY3.7 billion QoQ, or a decrease of 54.1% YoY.
On-balance sheet derivatives assets dropped by JPY0.63 trillion to JPY3.06 trillion while derivatives liabilities fell by JPY0.59 trillion to JPY2.9 trillion as of 31 December 2020.
Daiwa Securities Co has distributed 18 reverse convertible notes (FCNs) with a knockout option in Japan over the last three months - 12 were issued by Crédit Agricole and six by BNP Paribas which also include a worst of option, SRP database shows.
The products are all linked to the performance of the Nikkei 225 index, 13 of which are also tied to S&P 500. The total sales volume reached JPY41.7 billion with the 複数指数連動/KI Nikkei225, S&P 500 M20241216 recording the highest sales volume at JPY5.27 billion with an investment period of four and a half years.
Overall issuance has decreased compared to the previous quarter when Daiwa Securities distributed 21 FCNs issued by Société Générale, HSBC and BNP Paribas, according to the SRP database.
In the meantime, Daiwa Asset Management issued and distributed 18 structured funds during the period – three less than a quarter ago. These continuous call overwriting products raised sales of JPY56 billion with the 通貨選択型ダイワ米国リートαクアトロ/US REIT Quattro α selling JPY18.2 billion.
Launched in September 2020, this income product is linked to the performance of Credit Suisse Universal Trust (Cayman) III Daiwa American REIT Quattro Income Fund and Daiwa Money Portfolio Mother Fund. Its third-party distributors are Akatsuki Securities, Credit Suisse Securities, Monex Securities, Rakuten Securities, and SBI Securities.
Mizuho
Net profit at Mizuho Securities nearly doubled to JPY30.8 billion in the quarter ended in December 2020 QoQ, up almost two times compared to a year ago. Net operating revenues rose by 20.8% to JPY102.4 billion driven by almost-halved interest expenses.
Commissions and net gains on trading posted a bright spot – the former was up 19.3% to JPY56.2 billion QoQ and the latter up 24.6% QoQ.
On-consolidated balance sheet, derivative assets fell by 22.1% to JPY6.2 trillion while derivative liabilities dropped by 25.3% to JPY4.4 trillion as of 31 December 2020 compared with that as of 31 March 2020.
The fully-owned subsidiary of Mizuho Financial Group distributed 12 autocallable reverse convertible notes (RCNs) with a tenor of five years from October to December 2020 – eight issued by Municipality Finance and four by Svensk Exportkredit, SRP data shows.
Nine of the structures are linked to the performance of S&P 500 index with the rest tied to the performance of Nikkei 225 - together they sold JPY27.3 billion, according to the data.
Theノックイン債/KI S&P 500 M20251024 raised the highest volume at JPY4.8 billion with a strike date on 30 October 2020. The product offers a fixed coupon of 3.5% pa. for the first quarter and thereafter a quarterly coupon of the same amount if the exchange rate is at or above 85% of its initial level on any valuation date or of 0.1% pa. otherwise.
In the meantime, Mizuho Bank has posted a net profit of JPY195.1 billion in the nine months ending in December 2020, down 53.7% YoY as its ordinary income decreased by 35.4% to JPY1.5 trillion mainly due to a drop of interest income.
Ordinary expenses also fell by 29% to JPY1.3 trillion led by a plunge of interest expenses during the nine months YoY.
On balance-sheet, derivative assets other than for trading were down 19.6% to JPY4.15 trillion while derivative liabilities other than for trading were down 15.9% to JPY4.07 trillion as of 31 December 2020.
The integrated retail and corporate banking unit of Mizuho Financial Group issued and distributed 12 dual currency notes and three range digital notes in the quarter ended in December 2020 – accumulating a volume of JPY36.9 billion – bringing the total issuance to 50 products from March to December 2020. They are all tied to unspecified FX rates, SRP database shows.
Click to view the Q3 FY20 results from Daiwa Securities Co, Mizuho Securities and Mizuho Bank.