First Quarter Revenues at Monex Tick Higher as Japan Market Booming

The company's Chinese business has ticked into the black for the first time ever while Japanese client deposits hit an

Monex reported a quarterly increase in revenues and profits for the quarter ending on the 30th of June, 2015. The Japanese publicly listed brokerage announced that its revenues increased 5 percent when compared to the final quarter of the previous fiscal year ending on March 31st, 2015, to ¥12.9 billion ($104 million).

Bottom line, net profits increased by almost 7.5 percent for the same period to ¥1.7 billion ($13.9 million).

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Compared to a year ago, the growth numbers are much higher due to the stark difference in volatility levels across the variety of markets on which Monex Group is operating. Revenues have spiked higher by 37 percent, while the bottom line increased more than threefold.

Regional Breakdown

Throughout the quarter revenues from Monex’s Japanese operations have increased materially due to the booming stock market, with average daily trading values increasing by 7 percent quarter-on-quarter on both Japanese stock exchanges. The company also registered a record number of client assets for a quarter-end totaling ¥3.8 trillion ($30.6 billion).

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The U.S. segment of the Japanese broker’s business appears to be slowly turning the corner with improvements in net interest income and a change in the custodian bank holding the client funds for TradeStation customers, leading to a quarterly growth in operating revenues net of expenses by 4.4 percent to ¥4.1 billion ($33.8 million). That said, the bottom line for the U.S. business remained in the red.

The Chinese segment of the business has moved into the black with the sharp increase in activity on the Hong Kong market leading to a 69 percent quarterly increase in commissions from Monex Boom Securities. Total operating revenues net of expenses from the Chinese business were reported at ¥264 million ($2.1 million) with the bottom line from the segment coming in at ¥57 million ($0.5 million) before taxes.

Revenue Stream Analysis

The main advance in the Monex Group’s Japanese business was due to higher brokerage commissions, as the FX and fixed income segments have remained more or less flat. Net financial income was the second best performing sector in Japan and the bulk of the revenue growth in the U.S. where the execution of an interest rate swap compensated for the drop in FX and fixed income.

Brokerage commissions and the change of bank managing client funds have also contributed to the improved performance of Monex’s U.S. business. For this segment the company has noted decreased volatility, with every point higher in the VIX estimated to bring in an additional $3 million of revenue.

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