Daiwa Q1 FY2027: Ordinary Profit Soars 101% to ¥88bn on Market Boom

Daiwa's top line surged in the April–June quarter as revenue (before financial expenses) grew 33.1% to ¥434.3 billion, and net operating revenue after financial costs jumped 42.0% to ¥220.3 billion. Operating profit more than doubled, soaring 114.3% to ¥77.5 billion, while ordinary profit climbed 101.5% to ¥88.0 billion. Net profit attributable to shareholders rose 80.6% to ¥56.4 billion. The performance was driven by a sharp rise in brokerage commissions, which leapt 65.3% to ¥34.9 billion on higher equity trading volumes, and underwriting fees, which surged 91.8% to ¥17.0 billion after winning large mandates. Trading gains rose 48.9% to ¥33.2 billion, led by equities, and net interest income increased 23.9% to ¥24.5 billion. Selling, general and administrative expenses rose 20.0% to ¥142.8 billion, partly due to higher performance-linked bonuses, but robust revenue growth easily outpaced the cost rise, resulting in a powerful profit recovery that saw earnings double.

All four reporting segments posted higher revenue and profit year-on-year, with Asset Management and Global Markets & Investment Banking delivering particularly strong growth.

Wealth Management: Net operating revenue rose 40.3% to ¥88.2 billion, and ordinary profit surged 88.9% to ¥37.2 billion. Deeper adoption of total asset consulting drove broad-based product sales, with wrap account revenue staying high and wrap assets under contract reaching a record ¥6,765.0 billion. Deposit balances at Daiwa Next Bank expanded to ¥5,308.5 billion, up 4.8% from the end of the previous fiscal year.

Asset Management: Net operating revenue increased 45.1% to ¥40.9 billion, and ordinary profit more than doubled, climbing 105.5% to ¥30.3 billion, hitting a century-mark for profit growth. In the securities asset management business, Daiwa Asset Management's AUM rose to ¥50.4 trillion, aided by net inflows and rising stock prices. Real estate asset management AUM was steady at ¥1,810.6 billion. Alternative investments delivered a 15.1-fold jump in ordinary profit to ¥4.8 billion, boosted by gains on disposal of portfolio holdings.

Global Markets & Investment Banking: Net operating revenue soared 53.6% to ¥76.5 billion, and ordinary profit rocketed 354.0% to ¥22.7 billion. Global Markets saw increased client flows in both equities and fixed income, and successful position management. Global Investment Banking captured lead-managed deals in equities and bonds, and executed M&A advisory business, driving a sharp expansion in underwriting fees and M&A revenue.

The table that follows summarizes segment net operating revenue and ordinary profit growth rates.

Total assets at quarter-end stood at ¥39,867.2 billion, up 4.7% from the previous fiscal year-end. Cash and deposits swelled 28.7% to ¥4,876.7 billion, while trading assets grew 9.7% to ¥13,598.4 billion. Total liabilities increased 4.9% to ¥37,789.8 billion, driven by higher deposits and short-term borrowings. Net assets were ¥2,077.3 billion, a 1.5% rise, with retained earnings edging up 0.7% to ¥1,129.3 billion after booking net profit of ¥56.4 billion and paying dividends. The equity ratio remained stable at 4.5%.

On dividends, Daiwa's policy is to pay semi-annual dividends with a payout ratio of at least 50% based on consolidated results. For the period from FY2025 to FY2027, the minimum annual dividend per share is set at ¥44; in the previous fiscal year (FY2026), the actual payout was ¥64 per share. No new share buyback announcement was made; treasury stock deducted from equity totaled ¥147.8 billion, down ¥1.7 billion from the prior year-end.

Daiwa does not provide full-year earnings forecasts because results are highly sensitive to economic conditions and market environments. The strong first quarter was heavily supported by buoyant markets; a sharp economic downturn or the emergence of geopolitical risks could quickly reverse the gains.

Segment-specific risks include: in Wealth Management, a decline in individual investor appetite or weak product sales; in Asset Management, poor investment performance or outflows; in Global Markets, lower volatility or reduced client flows; and in Global Investment Banking, a cooling of IPO and M&A markets. In addition, the integration of Orix Bank carries risks such as goodwill impairment or delays in system integration.

On August 3, 2026, Daiwa completed the acquisition of all outstanding shares of Orix Bank through its consolidated subsidiary Daiwa Next Bank, making it a wholly owned subsidiary. The final adjusted purchase price was ¥370.0 billion. The deal is part of Daiwa's medium-term management plan, 'Passion for the Best 2026,' and aims to fundamentally strengthen lending and trust capabilities. By combining Daiwa Next Bank's efficient deposit management with Orix Bank's real estate lending and trust expertise, Daiwa seeks to deepen its total asset consulting offering, covering both asset and liability sides. The group also envisions a future merger of the two banks to maximize synergies and build a more stable, sustainable earnings base.