Japan's banks have delivered an almost flat performance in the third quarter of 2017 on the back of solid economic growth and robust earning around equities and fixed income.
Tokai Tokyo Financial Holdings issued 30 structured products worth JPY90bn (US$794m) in the third quarter of 2017, down from 32 products with a sales volume of JPY31bn in the same period last year, according to SRP data. The products, which were wrapped as registered notes, were all linked to equities and included 25 products linked to a single share. Fifteen of the bank's products were issued via Svensk Exportkredit while the remaining products were issued in collaboration with Municipality Finance (seven), Kommunalbanken (six) and Kfw Bankengruppe (two).
The group posted a total profit of JPY3.9bn in the third quarter of 2017, down 71% on a quarterly basis and up 34% on an annual basis. Ordinary income in 3Q17 was JPY4.4bn, up 9.6% as compared to the previous quarter, and income before tax was reported to be JPY4.9bn, down from JPY15bn in 2Q17 and up from JPY3.8bn in 3Q16. Operating income reached JPY3.8bn, up from JPY3.2bn in 2Q17 and from JPY676m in 3Q16.
The group's net operating revenue went up 5% on a quarterly basis, from JPY19.8bn to JPY18.9bn, and 45% on an annual basis. Sales of foreign currency bonds and structured bonds, at JPY55.6bn, were down 16% quarter-on-quarter and down 15% on an annual basis, according to the company. Structured bonds sales, at JPY45.5bn, decreased by 10.6% on an annual basis, while foreign currency bonds sales were down 35% to JPY10.2bn. The retail segment generated 55% of revenues.
Mitsubishi UFJ Morgan Stanley Securities issued a total of 19 structured products worth JPY90bn in the third quarter of 2017, up from 18 products with a sales volume of JPY131bn, according to SRP data. The company used ten different issuing parties for its products including Kommunalbanken, Kfw Bankengruppe and Morgan Stanley.
Mitsubishi UFJ Morgan Stanley Securities reported a decrease of 26% in net profit year-on-year to JPY35.1bn and a 5% decrease in net operating revenue year-on-year to JPY92.3bn. Net profit, at JPY20bn, was down 29% year-on-year. Both revenue and profit went down due to the struggle of domestic securities companies affected by intermittently heightened geopolitical risks and decreasing volatilities, the bank explained.
MUFJ increased its revenue and profit due to the recovery of the retail business and net trading income thanks to the market recovery trends was said in a statement. Quarter-on-quarter, net operating revenue went up 10.8%, from JPY83.3bn to JPY92.3bn. As compared to the previous period, net profit decreased 32% from JPY20bn to JPY15.1bn. Net trading income was JPY42.3bn, up 14.6% quarter-on-quarter and up 9% year-on-year. Commission revenue was up 7.6% quarter-on-quarter and down 13.5% year-on-year.
Notably, the company reported that foreign bonds for individual investors remained on a recovery trend with sales going up 13.6% from JPY460bn to JPY522.7bn. However, compared to the same period last year, foreign bonds from individual investors increased 47%.
Shinsei Bank marketed 13 structured products with combined sales of JPY28bn in 3Q17, significantly up from the 21 products with a sales volume of JPY62bn during the same period last year. The majority of the bank's products this quarter were linked to interest rates and FX and were issued, among other, via Credit Agricole and UBS.
Shinsei Bank reported a net revenue of JPY58.1bn for the third quarter of 2017, up 0.9% year-on-year from JPY57.6bn. Net profit decreased by 17.5%, from JPY24.1bn in 3Q16 to JPY19.9bn for 3Q17 while non-interest income totaled JPY32.2bn, indicating an increase of 7% from JPY30.1bn for 3Q17. This reflected a gain on the sales of equities in the principal transactions business and fee income increase from the corporate business and structured finance, while gains on sales of bonds in asset and liability management (ALM) operations and revenues associated with asset management products sales related revenue in the retail banking business decreased, according to the bank.
Okasan Securities issued a total of 31 structured products worth JPY33bn, up from 27 structured products worth JPY26bn. The group reported an increase in net operating revenue of 1.9% year-on-year, from JPY38bn to JPY38.7bn. On the other hand, the group announced a sharp annual decrease of 20.5% in operating income, from JPY6.3bn to JPY4.8bn, as well as a decrease of 22.8% in ordinary income. The group's total assets reached JPY617bn went up 11.8% from JPY552.8bn in 3Q17.
Revenue from equities decreased by 6.1% to JPY8.1bn. Similarly, revenue from bonds went down 21.9% from JPY5.9bn to JPY4.6bn.
Click in the links to access the quarterly reports: Mitsubishi UFJ, Shinsei Bank, Tokai Tokyo Financial Holdings, and Okasan Securities.
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