Daiwa Securities Group Inc.: history, ownership, mission, how it works & makes money

A Brief History of Daiwa Securities Group Inc.

Daiwa Securities Group Inc., established in 1902, is one of Japan’s leading financial services firms. The company's origins trace back to the founding of Daiwa Securities Co. in Tokyo, which swiftly grew to become a prominent player in the Japanese securities market.

In the post-war period, particularly during the 1950s and 1960s, Daiwa expanded its operations significantly, capitalizing on Japan's economic growth. By 1966, Daiwa had become the first Japanese securities firm to establish a presence in the United States, opening an office in New York.

In the 1970s and 1980s, Daiwa pioneered various financial products, including the first-ever Euroyen bonds in 1970. The company continued to expand globally, acquiring a stake in various international financial firms. By 1999, Daiwa had fully merged with the former Daiwa Bank, forming the current Daiwa Securities Group Inc.

The early 2000s marked a challenging period due to scandals tied to trading losses and compliance issues. In 2005, Daiwa Securities Group reported a net income of ¥18.8 billion ($170 million), a substantial recovery from previous years.

Today, Daiwa Securities Group operates in over 25 countries, providing a wide array of financial services, including investment banking, asset management, and brokerage services. The company reported total assets of ¥25.8 trillion ($235 billion) as of March 2023.

As of April 2023, Daiwa Securities Group's stock performance reflects a market capitalization of approximately ¥1.1 trillion ($10 billion). The firm has maintained a strong presence in both domestic and international markets, adapting to evolving economic conditions while continuing to innovate its financial offerings.

Daiwa's recent financial statements for the fiscal year ending March 2023 highlighted revenues of ¥1.1 trillion ($9.9 billion), showcasing a robust operational capacity against a backdrop of market volatility.

The Group's initiatives in sustainable finance are noteworthy, with a target of achieving carbon neutrality by 2050 and a commitment to integrating ESG factors into its investment processes.

A Who Owns Daiwa Securities Group Inc.

Daiwa Securities Group Inc., a major player in the financial services sector, has a diverse ownership structure primarily comprising institutional and individual investors. As of the latest available data, the breakdown of ownership is as follows:

The major institutional shareholders include various mutual funds, pension funds, and insurance companies. Notable institutional investors are:

• Japan Trustee Services Bank, Ltd. - Holdings approximately 7.45%
• BlackRock, Inc. - Holdings approximately 5.23%
• State Street Corporation - Holdings approximately 3.51%

On the individual investor front, the company has a significant number of small shareholders, contributing to its broad retail base. As of the end of the last fiscal year, there were roughly 1.3 million individual shareholders, representing a critical aspect of its overall ownership.

Daiwa Securities Group’s market capitalization as of October 2023 stood at approximately ¥1.09 trillion (roughly $9.8 billion). The company's stock is traded on the Tokyo Stock Exchange, with the ticker symbol 8601.

In terms of financial performance, Daiwa Securities reported a net income of ¥85.1 billion for the fiscal year ended March 2023, signifying an increase of 10.2% compared to the previous year. The earnings per share (EPS) were reported at ¥139.67.

The company continually engages in strategic initiatives aimed at increasing shareholder value, including share buybacks. As of the latest reports, Daiwa Securities has authorized a share repurchase worth up to ¥50 billion, which is a move to enhance earnings per share and return capital to shareholders.

Dividends are another factor influencing ownership appeal, with Daiwa announcing a dividend of ¥40 per share for the fiscal year 2023, reflecting a dividend yield of approximately 3.6% based on the current stock price.

Daiwa Securities Group Inc. Mission Statement

Daiwa Securities Group Inc. focuses on delivering comprehensive financial services while adhering to its mission of contributing to society through financial innovation. The group aims to enhance client satisfaction by providing high-quality investment solutions and maintaining transparency and integrity in its operations.

The mission statement emphasizes a commitment to fostering the sustainable development of the economy and society. This includes creating long-term value for all stakeholders—clients, employees, and shareholders alike. The company’s guiding principles include a focus on client-centricity, continuous improvement, and adapting to evolving market conditions.

Daiwa Securities has positioned itself to leverage global trends, with a focus on Asia-Pacific markets. As of the latest fiscal year, the company reported total revenues of approximately ¥431.5 billion (roughly $3.9 billion) and a net income of ¥126.8 billion (around $1.15 billion). This strong financial performance showcases its ability to execute its mission effectively.

The group has made significant strides in technology adoption, deploying digital tools to enhance client services and operational efficiencies. Investment in fintech has become a strategic priority, aligning with its mission statement to innovate and provide premier financial services. This has been reflected in operational expenditures increasing to approximately ¥105 billion, emphasizing their focus on modernization.

Daiwa also underscores corporate social responsibility (CSR) as a pillar of its mission. In 2022, the company contributed approximately ¥10.5 billion to various community initiatives and sustainable development projects, affirming its dedication to creating a positive social impact.

In terms of workforce, Daiwa Securities Group maintained a headcount of around 19,000 employees as of the last reporting period, reflecting its commitment to investing in human capital while maintaining a diverse and inclusive work environment. The company has actively implemented training and development programs, leading to an employee satisfaction rate exceeding 85%.

How Daiwa Securities Group Inc. Works

Daiwa Securities Group Inc., established in 1902, operates primarily in the financial services sector. It provides a wide range of services, including brokerage, investment banking, and asset management. As of fiscal year 2023, Daiwa's revenue reached approximately ¥500 billion, with a net income of around ¥80 billion.

Business Segments

• Securities Business: This segment encompasses retail brokerage, investment advisory services, and institutional trading. The retail business contributes significantly to revenue, accounting for about 60% of total income.
• Investment Banking: This includes underwriting, M&A advisory, and capital market services. In 2023, Daiwa's investment banking revenue was ¥150 billion, with a focus on equity and debt offerings.
• Asset Management: With assets under management (AUM) totaling approximately ¥15 trillion, this segment offers various mutual funds and discretionary management services.

Financial Performance

In the first half of fiscal year 2023, Daiwa Securities reported a consolidated profit before tax of ¥50 billion, reflecting a year-over-year increase of 10%. The company's return on equity (ROE) stood at 9%, indicating a strong performance relative to its equity base.

Market Position

Daiwa Securities holds a prominent position in the Japanese market, ranking as the second-largest securities firm in Japan by revenue. The company has a market capitalization of approximately ¥1.1 trillion as of October 2023. Its stock is traded on the Tokyo Stock Exchange under the ticker symbol 8601.

Recent Developments

In April 2023, Daiwa Securities announced plans to enhance its digital trading platforms, aiming to increase retail participation. The firm expects to allocate around ¥10 billion for technology upgrades over the next two years.

Global Operations

Daiwa operates internationally, with subsidiaries in the United States, Europe, and Asia. In the fiscal year 2023, about 30% of its revenue was generated from overseas operations, reflecting its commitment to global expansion.

Strategic Initiatives

• Focus on Sustainability: Daiwa is actively integrating Environmental, Social, and Governance (ESG) criteria into its investment decisions, with a goal to increase green asset management to ¥3 trillion by 2025.
• Partnerships: The company has formed alliances with fintech firms to enhance its service offerings, particularly in the areas of robo-advisory and digital trading.

As of October 2023, Daiwa Securities continues to adapt to market challenges while positioning itself for sustainable growth through innovation and strategic partnerships.

How Daiwa Securities Group Inc. Makes Money

Daiwa Securities Group Inc. generates revenue through several key business segments, primarily focusing on brokerage services, investment banking, asset management, and international operations. The company reported a consolidated net revenue of ¥530.4 billion for the fiscal year ending March 2023.

The breakdown of revenue sources is as follows:

• Brokerage Services: ¥300.8 billion, accounting for approximately 56.7% of total revenue.
• Investment Banking: ¥105.4 billion, contributing around 19.9%.
• Asset Management: ¥81.5 billion, representing 15.4%.
• Other Financial Services: ¥42.7 billion, which includes private equity and venture investments, making up 8.1%.

Brokerage services encompass both retail and institutional trading activities. Daiwa’s retail brokerage operations are particularly robust, having executed over 15 million trades in a year. In 2022, the company noted a 25% year-on-year increase in retail accounts, reaching over 7 million accounts.

Investment banking encompasses advisory services, underwriting, and capital-raising activities. In fiscal 2023, Daiwa was involved in 65 new equity underwriting deals, totaling approximately ¥900 billion. The company’s market share in Japan for underwriting reached 12% as of June 2023, ranking it as one of the top three firms in the sector.

Asset management operates through Daiwa Asset Management, which manages assets exceeding ¥6 trillion across various investment products. The asset management division reported stable growth, with a 10% increase in assets under management (AUM) year-over-year. The company earned a 0.75% fee rate on its managed assets, translating to ¥45 billion in revenue from management fees alone.

International operations generate substantial income as well. Daiwa has expanded into markets such as the United States, Europe, and Asia. For instance, its U.S. subsidiary reported revenue of $250 million in FY2023, driven mainly by institutional brokerage and investment advisory services.

In addition to traditional revenue streams, Daiwa also actively engages in proprietary trading, which has yielded a profit of ¥15 billion in volatile market conditions. This segment is critical for optimizing returns on capital and managing risks.

In summary, Daiwa Securities Group Inc.'s diversified revenue model—ranging from brokerage services to investment banking and asset management—ensures robust income generation, with a consolidated net income of ¥100.4 billion reflecting a net profit margin of 18.9% for FY2023.