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Morgan Stanley (MS.US) is on a roll in Japan, beating its rivals for the second straight year.

AInvestThursday, Aug 15, 2024 12:30 am ET
1min read

Under the growth of equity and bond trading, Morgan Stanley (MS.US) reported record revenue in Japan. According to the filing, Morgan Stanley MUFG Securities’ revenue grew 13% to ¥135.8bn ($923m), the highest since the company’s inception in 2010, and the second consecutive year of record income performance.

Morgan Stanley MUFG Securities CEO Alberto Tamura said the bank “is focused on helping global and Japanese investors expand their activities in Japan” when responding to questions about the performance. He said the end of deflation, corporate governance reform and structural changes “finally bore fruit in driving the Japanese economy.”

The bank’s profit grew 0.4% to ¥32.7bn, the highest in 11 years, outperforming other global giants that ended their fiscal years in March. The French bank’s Paris-based brokerage business saw a 33% drop in profit to ¥21.2bn, while Morgan Stanley’s Japanese Securities profit fell 32% to ¥18.8bn. Representatives of both banks declined to comment on performance.

Until recently, the stock market’s record highs had boosted trading at financial institutions, while the shift in the Bank of Japan’s policy to tighten monetary policy has largely benefited its bond market operations. The Nikkei has shown signs of recovery after a sharp sell-off earlier this month, with some of the selling attributed to concerns about tougher policy and attention to improving corporate profits.

Moreover, in the foreign banks’ Tokyo-based securities subsidiaries that ended their fiscal year in December, Goldman Sachs earned the most due to better-than-expected returns from fixed income trading.

Bloomberg Intelligence analyst Hideyasu Ban said there could be an uneven distribution of earnings among foreign banks, partly because individual banks have some power to decide how much global business profits are allocated to each geographical region.

Morgan Stanley MUFG Securities is one of two joint-stock securities companies formed after Mitsubishi UFJ Financial Group invested $9bn in the American bank during the global financial crisis. The company reorganized parts of the securities business this year to aim to surpass Japan’s largest broker Nomura Holdings, though that goal has recently been derailed by a regulator’s punishment for violating client confidentiality rules.

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