Japanese banks have published their financial results for the third quarter of fiscal year 2018 (FY18), October 1 - December 31, 2018, reporting stable performance on the back of solid economic growth and robust earning around equities and fixed income.

Tokai Tokyo Financial Holdings issued 41 structured products worth JPY46bn (US$430m) in the third quarter of FY18, down from 47 products with a sales volume of JPY46bn in the same period last year, according to SRP data. The products were all wrapped as registered notes. Sixteen of them were issued via Svensk Exportkredit while the remaining 25 products were issued via Municipality Finance.

The group posted a total profit of JPY4.8bn in the third quarter of FY18, up 26.9% on a quarterly basis and up 48.4% on an annual basis. Ordinary income in 3Q18 went up drastically by 65.6% on a quarterly basis, from JPY4.4bn to JPY7.7bn, and by 67.6% on an annual basis, from JPY4.3bn. Additionally, the group's income before tax was reported to be JPY7.2bn, up 47.5% from JPY4.9bn in the second quarter of FY18 and up 62.7% from JPY4.4bn in the third quarter of FY16. Operating income reached JPY6.4bn, up almost 70% from JPY3.6bn in the previous quarter and up 68.7% from JPY3.7bn in the third quarter of 2016.

The group's net operating revenue went up 16.9% on a quarterly basis, from JPY19.8bn to JPY23.18bn, and 33.6% on an annual basis. Similarly, total revenue increased 17.6% quarter-on-quarter and 33.8% year-on-year. Sales of foreign currency bonds and structured bonds, at JPY89.8bn, were up 61.4% quarter-on-quarter and up 15.6% on an annual basis, according to the company. Sales of bonds in foreign currencies, at JPY11.5bn, increased by 12.8%, quarter-on-quarter, and decreased by 32.5% year-on-year.  Structured bonds sales, at JPY78.4bn, went up 72.4%, quarter-on-quarter, and 29%, year-on-year. The retail segment generated 57% of the group's revenues.

Mitsubishi UFJ Morgan Stanley Securities issued a total of 25 structured products worth JPY91bn in the third quarter of FY18, up from 11 products with a sales volume of JPY91bn in the third quarter of FY16, according to SRP data. The company used eight different issuing parties for its products including Municipality Finance (6), Svensk Exportkredit (6), Morgan Stanley (4), Kfw Bankengruppe (3), etc.

Mitsubishi UFJ Morgan Stanley Securities reported a decrease of 14% in net profit year-on-year to JPY31.1bn and a 5% increase in net operating revenue year-on-year to JPY273.6bn (cumulative). Ordinary profit, at JPY60.5bn, was up 8% year-on-year. Net revenue increased while net profit went down due to the deconsolidation of MUFG Securities Americas Inc. and a decrease in share of entities accounted for using equity method.

On a quarterly basis, domestic subsidiaries 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 5%. As compared to the previous period, net profit decreased 26.5%.

Net trading income was JPY45.5bn, up 7.3% quarter-on-quarter and up 9.6% year-on-year. Notably, the company reported that foreign bonds for individual investors remained on a recovery trend with sales going up 37.6% from JPY522.7bn to JPY718.2bn. Compared to the same period last year, foreign bonds from individual investors increased 78%.

Shinsei Bank marketed 16 structured products with combined sales of JPY30bn in 3Q17, down from the 18 products with a sales volume of JPY39bn 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, Societe Generale and UBS.

Shinsei Bank reported a total combined revenue of JPY174.9bn for the nine months of FY18, up 1.7% year-on-year from JPY172bn.For the third quarter of FY18, revenue was JPY58.1bn. Net profit for the nine months of FY18 was JPY35.6bn, down 17%, from JPY43.3bn year-on-year. For Q3FY18, net profit was JPY10.5bn. The group stated that total revenue increased due to a stable growth in the bank's major businesses including the Structured Finance Business and the Principal Transactions Business, while the bank experienced a decline in gains from the sale of bonds and income from the sale of asset management products.

Net interest income for the nine months of FY18 totaled JPY96.7, indicating an increase of 5% from JPY92.1bn on an annual basis. For the third quarter of FY18, net interest income was JPY32.6bn. Non-interest income was JPY78.1bn for the nine months of FY18, indicating a decrease of 2.3% year-on-year. For the third quarter of FY18 only, non-interest income was JPY26.4bn.

Okasan Securities issued a total of 35 structured products worth JPY32bn in the third quarter of FY18, up from 27 products worth JPY26bn. Eighteen of them were issued via Municipality Finance , 11 via Kommunalbalken and 6 via Svensk Exportkredit.

The group reported an increase in net operating revenue of 2.5% year-on-year, from JPY60.2bn to JPY61.8bn. Similarly, net operating revenues went up 2.4% to JPY60.8bn. On the other hand, the group announced a sharp annual decrease of 14.7% in operating income, from JPY10.7bn to JPY9.01bn, as well as a decrease of 16.1% in ordinary income. The group's total assets reached JPY500bn, down 9.4% from JPY552bn year-on-year.

Net gain from equities trading decreased by 8.8% from JPY15bn to JPY13.7bn, year-on-year. Similarly, net gain from bonds selling went down 30.2% from JPY9.2bn to JPY6.4bn.

Click in the links to access the quarterly reports: Okasan Securities and Mitsubishi UFJ.

Related stories:
Japan Market Review - January 2018

Japan Market Review - December 2017

Japan Market Review - November 2017

Japan Market Review - October 2017

Japanese banks deliver stable performance