Morgan Stanley Is the Most Profitable Investment Bank in Japan

(Bloomberg) -- Morgan Stanley kept its position as the most profitable investment bank in Japan last year, as demand for overseas bonds from yield-hungry investors helped offset weakness in the trading business.

Net income at Morgan Stanley MUFG Securities Co. rose 8% to 21.3 billion yen ($201 million) in the year ended March, the highest among 10 large global banks that filed annual financial reports in Japan. A jump in trading losses at Goldman Sachs Japan Co. helped push the U.S. bank into third place behind BNP Paribas Securities (Japan) Ltd., which benefited from a drop in selling and administrative costs.

Major Wall Street companies are enduring some of the worst conditions in their trading business in years, as uncertainty over global trade tensions keeps investors on the sidelines. At Credit Suisse Securities (Japan) Ltd., the only firm on this list to report red ink, weakness in trading was one factor behind its 3.4 billion yen net loss.

Goldman Sachs Japan’s trading losses nearly tripled to 34.3 billion yen, according to the filings. Trading income at Morgan Stanley’s Japanese venture with Mitsubishi UFJ Financial Group Inc. fell 32% to 7.6 billion yen.

Morgan Stanley Is the Most Profitable Investment Bank in Japan

However, that was offset by other factors, including commissions associated with foreign bond and structured note sales, which climbed 22% to 37.5 billion yen.

“We remain optimistic about business opportunities in Japan, where ongoing corporate governance reforms and a series of measures to tackle the country’s demographic issues are likely to raise corporate productivity in the long term,” Alberto Tamura, chief executive officer at Morgan Stanley MUFG Securities, said by email.

Total headcount at the 10 foreign securities firms in Japan fell by 80 to 5,580 last year. The drop was steepest at Deutsche Bank AG, which shed a net 73 jobs.

Profit (billion yen)Revenue (billion yen)Headcount (change on year)
Morgan Stanley21.3120.6700 (+17)
BNP Paribas12.385.9377 (0)
Goldman Sachs*10.4102.4799 (+16)
JPMorgan6.489.5735 (+10)
Citigroup*5.570.1774 (-59)
Societe Generale*2.937.0269 (+11)
Deutsche Bank2.353.5429 (-73)
UBS*1.727.8424 (+29)
Merrill Lynch Japan*1.346.5592 (-33)
Credit Suisse-3.442.9481 (+2)

Note: Figures are for year ended March 31, except banks with (*), which report for year ended Dec. 31. Excludes Barclays because it only posted nine-month results after changing earnings period.

©2019 Bloomberg L.P.

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