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Introduction & Market Context
Daiwa Securities Group Inc (TYO:8601) released its first quarter fiscal year 2025 earnings presentation on July 30, 2025, revealing a mixed financial performance characterized by strong year-over-year growth but quarter-over-quarter declines in key metrics. The company’s stock price surged 44.45% to 651.8 yen following the announcement, reflecting investor confidence despite earlier market volatility.
The financial services firm demonstrated operational resilience through its diversified business model, with base income—a key indicator of stable earnings—growing 10.3% year-over-year to 34.1 billion yen, accounting for 78.2% of consolidated ordinary income.
Quarterly Performance Highlights
Daiwa Securities reported substantial year-over-year growth across major financial metrics for Q1 FY2025. Net operating revenues increased 4.1% to 155.2 billion yen, ordinary income rose 15.8% to 43.7 billion yen, and profit attributable to owners of parent jumped 30.2% to 31.2 billion yen.
As shown in the following comprehensive overview of the company’s year-over-year performance:
However, when compared to the previous quarter (Q4 FY2024), results showed some moderation. Net operating revenues decreased 10.9% quarter-over-quarter, while ordinary income declined 14.3%. Despite these decreases, profit attributable to owners of parent still managed to increase by 4.3% from the previous quarter.
The following chart illustrates this quarterly performance trend:
The company’s annualized ROE stood at 7.7% for the quarter, showing improvement from 6.3% in the same quarter of the previous year, but a slight decrease from 7.3% in Q4 FY2024.
Segment Performance Analysis
Daiwa Securities’ consolidated profit and loss statement revealed mixed performance across business segments. While commissions received decreased 12.6% overall, the company’s focus on asset-based revenues continued to yield positive results.
The detailed breakdown of the company’s financial performance is illustrated in the following profit and loss summary:
The Wealth Management Division maintained its focus on total asset consulting, leading to expanded net inflows in wrap account services. Contract assets under management (AUM) for wrap accounts reached a record high of 4.9 trillion yen, while net asset inflow remained firm at 262.3 billion yen.
The Asset Management Division showed strong performance, with Securities Asset Management’s ordinary income increasing to 7.5 billion yen, partly driven by equity method income from Global X LLC. Real Estate Asset Management assets under management reached a record high of 1.6 trillion yen.
The following chart shows the trends in consolidated ordinary income and base income, highlighting the growing contribution of stable revenue sources:
In the Global Markets & Investment Banking Division, Global Markets saw a recovery in credit customer flows in FICC (Fixed Income, Currency and Commodities) from May onwards. Global Investment Banking performed well, with M&A-related revenues increasing by 30% year-over-year, while both debt capital markets (DCM) and domestic M&A showed strong results.
Overseas Operations
Daiwa Securities’ overseas operations delivered mixed results across regions. Overall, overseas operations generated 3.8 billion yen in ordinary income, representing a 35.9% increase year-over-year.
The Americas region performed particularly well, with ordinary income increasing 4.2% to 3.3 billion yen, benefiting from increased equity revenues and equity method income from Global X LLC. Asia/Oceania contributed 2.4 billion yen, down 2.8% but still showing strength in wealth management and equity method income.
Europe, however, remained in the red with a 2.0 billion yen loss, though this represented an improvement from the 2.4 billion yen loss in the same period last year. The European operations were impacted by decreased M&A revenues.
The following chart details the ordinary income breakdown by region:
Strategic Initiatives and Outlook
Daiwa Securities Group continues to focus on expanding its asset-based revenues and enhancing its total asset consulting services. The banking arm, Daiwa Next Bank, showed particularly strong growth with ordinary income increasing 53.8% year-over-year to 4.4 billion yen.
The company’s strategic focus on stable income sources appears to be yielding results, as evidenced by the 10.3% growth in base income despite market fluctuations. This aligns with CFO Kotaro Yoshida’s statement that "The Q1 results, even in the face of such major market fluctuations, once again demonstrated the strength of our earnings base."
However, the company faces several challenges, including market volatility, variability in FICC performance in overseas markets, and security concerns following a recent unauthorized access incident that necessitates enhanced system security measures.
Looking forward, Daiwa Securities is investing in talent and technology to support its strategic initiatives, with revenue forecasts for FY2026 and FY2027 set at 8,261.08 million USD and 8,676.09 million USD, respectively. The company remains optimistic about its strategic investments and aims to contribute to the revitalization of Japan’s macroeconomic environment.
Full presentation:
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