International Finance

Morgan Stanley is most profitable investment bank in Japan

Investors’ demand for overseas bonds is a major factor behind the growth in earnings

Morgan Stanley, an American multinational investment bank was the most profitable investment bank in the Japan in 2018.

Investors’ demand for overseas bonds is considered to be a major reason for the growth in the Morgan Stanley’s Japan investment banking profit, despite the weakness in the trading business.

The net earnings of Morgan Stanley Japan increased by 8 percent to reach 21.3 billion yen or $201 million in the year ended March. Morgan Stanley’s income stood at the top among the ten investment banks in Japan that filed their annual financial reports in Japan.

Goldman Sachs Japan, a US based bank, was pushed to the third position behind BNP Paribas Securities due to a jump in trading losses. BNP Paribas Securities benefitted from a drop in selling and administrative costs.
All the major Wall Street firms are facing worse conditions in their trading businesses due to the on-going global trade tensions.

Credit Suisse Securities, the only firm that reported a loss in the list, witnessed weakness in its trading leading to 3.4 billion yen net loss.

According to reports Goldman Sachs Japan’s trading losses tripled to 34.3 billion yen. Meanwhile, Morgan Stanley Japan witnessed a fall in its trading income by 32 percent to 34.3 billion yen, in its Japanese venture with Mitsubishi. But the loss was compensated by an increase in the commissions associated with foreign bonds and structured note sales, which rose by 22 percent to 37.5 billion yen.

Alberto Tamura, the chief executive officer at Morgan Stanley MUFG Securities, stated that the firm is optimistic about its growing opportunities in Japan. He added that the on-going corporate governance reforms and a series of measures to tackle the country’s demographic issues will raise corporate productivity.

The firm reported net earnings of $10.2 billion for the second quarter of 2019 that ended on June 30th.

Morgan Stanley had earlier reported total revenue of $40.1 billion in the financial year 2019, which included three revenue streams, namely institutional securities, wealth management, and investment management.

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