Monex Revenues and Profits Drop as New Brokerage System Delayed

Japanese brokerage Monex has announced a material decline in revenues and profits in the first quarter of fiscal 2017.

Japanese brokerage Monex Group Inc today reported its preliminary quarterly consolidated financial results for the first quarter of the fiscal year ending 31 March, 2017 showing a marked decline in both revenues and profits.

Financial Metrics of Monex Group Inc

For Q1 2016, Monex’s results showed a total operating revenue of $109.2 million (¥11.6 billion), once again revealing a further consecutive quarterly decline of -6.2% quarter-on-quarter from Q4 2015 and a year-on-year decline of -18.3% over Q1 2015 figures of $133.7 million (¥14.2 billion).

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Monex’s Q1 2016 profits however look to be back on track, at $5.2 million (¥550 million), compared with $4.6 million (¥484 million) during Q4 2015. However, the figures still represent a substantial decline of 78% over Q1 2015 figures of $23.5 million  (¥2.5 billion).

Monex Inc Subsidiary Financial Metrics

The brokerage has also published its quarterly financial metrics for its wholly-owned subsidiary, Monex Inc for the first quarter of the fiscal year ended 31 March, 2017.

Operating revenue for Q1 2016 revealed a figure of $74.4 million (¥7.9 billion) representing a notable decline of -18.8% compared with Q1 2015’s figures of $92.2 million (¥9.8 billion).

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New Brokerage System Delays

Monex Group Inc has also announced that the scheduled upgrade to its brokerage systems in going to be postponed. The company has outsourced the development of a new backbone brokerage system for its operations last year and booked a provision of ¥2.4 billion ($23 million).

The outsourcing contract for which the provision has been taken will be partially reversed as the deal has been cancelled. The subcontractor which Monex Group Inc hired has delayed the schedule for the data system operation module on which it was working.

Monex, Inc. has committed to revamp its brokerage system in order to cut operational costs and will be terminating the outsourcing contract as of September the 30th, 2016. The new system was set to go live this fall but will effectively be delayed to early next year.

The company expects to book 508 million yen of other income due to the cancellation of the contract.

At present Monex, Inc. continues to pay data processing fees totaling to ¥3.6 billion per year ($34.5 million). As for the new brokerage system, the total amount of funds committed to the development has been ¥5.5 billion ($52.6 million) with the amount of investment from present to the final launch estimated to around ¥5.0 billion ($47.8 billion).

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