(Bloomberg) -- Daiwa Securities Group Inc.’s profit rose less than analysts estimated as investment banking losses overshadowed gains in the domestic wealth management business.
Net income gained 1.2% from a year earlier during the three months ended June 30 to ¥24 billion ($160 million), Japan’s second-biggest brokerage said in a statement Thursday. That compares with the average forecast of ¥30.8 billion by three analysts polled by Bloomberg News.
The results suggest that Daiwa has been slow to ride on a rebound in the business of advising companies on mergers and capital fundraising that Nomura Holdings Inc. and Wall Street banks are enjoying. Chief Financial Officer Kotaro Yoshida said the investment banking losses were due to the hiring of M&A bankers, resulting in higher costs.
“It is very important to recruit bankers who can play key roles” for the company, Yoshida said at a briefing.
Pretax profit for equity and debt underwriting as well as M&A advisory fell into a ¥2.1 billion loss in the first quarter. In a sign of the challenges the company faces, its Japan equity underwriting in the fiscal year started April fell to No. 7 from No. 3 in the industry a year earlier, Bloomberg-compiled data show.
For investment banking, M&As were solid in Japan but declined overseas, Daiwa said in a statement.
Under its overseas operations, losses in Europe widened, while pretax profits in the Americas also dropped sharply. Its Asia and Oceania operations improved.
Daiwa’s results stand in contrast to its larger rival Nomura, whose profit rose more than analysts estimated as revenue from domestic wealth management jumped while trading and investment banking income grew.
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