Daiwa Securities Posts Record Q1 Profit as Wealth Management and Asset Management Surge
Japan's second-largest brokerage reports 31% jump in ordinary income to ¥88 billion, driven by asset-based revenue hitting all-time highs and ROE climbing to 12.7%.
Record Quarter Across All Divisions
Daiwa Securities Group Inc. delivered its strongest first-quarter performance on record, with profit attributable to owners climbing 13.2% to ¥56.4 billion for the three months ended June 2026. Net operating revenue rose 11.4% to ¥220.3 billion, while ordinary income surged 31.4% to ¥88 billion, according to CFO Kotaro Yoshida (earnings call, 2026-08-03).
Return on equity reached 12.7% as the firm posted profit growth across all four operating divisions—Wealth Management, Asset Management, Global Markets, and Investment Banking. Yoshida emphasized that the results reflected "the group's steadfast effort and disciplined execution of the strategies" rather than simply favorable market conditions (earnings call, 2026-08-03).
Wealth Management Breaks Records
The Wealth Management division anchored the quarter's performance, with asset-based revenue hitting an all-time high of ¥35.8 billion as the firm's Total Asset Consulting approach gained traction. Net operating revenue in the division rose 8.8% to ¥88.2 billion, while ordinary income increased 12.4% to ¥37.2 billion (earnings call, 2026-08-03).
Wrap account services continued their expansion, with contracted assets under management reaching a record ¥6.77 trillion after net inflows of ¥237.6 billion during the quarter. Wrap-related revenue climbed ¥1.1 billion to a new high. Asset-based revenue now covers 126% of fixed costs, up from 77.3% for total expenses (earnings call, 2026-08-03).
Daiwa Next Bank, the group's online banking subsidiary, posted ordinary income of ¥7.2 billion, up 15.8%, as deposits grew to ¥5.3 trillion. Net interest income rose 16.2% to ¥13 billion, benefiting from policy rate increases that widened interest margins (earnings call, 2026-08-03).
Asset Management Surpasses Targets
Daiwa Asset Management's AUM in publicly offered investment trusts exceeded ¥43 trillion for the first time, while the Securities Asset Management business delivered ordinary income of ¥15.7 billion, up 37.6%. Real Estate Asset Management reached ¥1.8 trillion in AUM, achieving the firm's fiscal 2030 target four years ahead of schedule (earnings call, 2026-08-03).
Stable income—a key performance indicator in Daiwa's medium-term plan—rose 83.8% year-over-year to ¥62.8 billion, running well ahead of the ¥150 billion final-year target (earnings call, 2026-08-03).
Markets and Investment Banking Contribute
Global Markets generated net operating revenue of ¥53.8 billion, up 4.9%, with equities benefiting from strong client order flows in both Japanese and foreign stocks despite elevated volatility. FICC revenues remained solid though below the prior quarter's elevated levels (earnings call, 2026-08-03).
Global Investment Banking saw ordinary income jump 52.5% to ¥30.2 billion, driven by several large deals. Underwriting and secondary offering commissions surged 86.4% to ¥17 billion, though M&A-related commissions fell 27.9% to ¥12.5 billion (earnings call, 2026-08-03).
Overseas operations posted record ordinary income of ¥13.1 billion, up 90%, with particularly strong performances in Asia-Oceania and the Americas (earnings call, 2026-08-03).
ORIX Bank Integration Progresses
Yoshida confirmed that Daiwa completed the acquisition of ORIX Bank during the quarter, making it a wholly owned subsidiary. The bank generates approximately ¥20 billion in net income on a five-year average basis, though integration costs and goodwill amortization will offset some contribution. Gun-jumping regulations have limited direct integration discussions to date, and no merger timeline has been disclosed (earnings call, 2026-08-03).
MarginX data shows a ¥30 cash dividend scheduled for September 29, 2026.
This article was generated by MarginX from the earnings call on 2026-08-03. It is not investment advice.