Monex Group Inc., the Tokyo-based brokerage, today reported preliminary financial results for both the parent company and its wholly owned subsidiary Monex Inc., the dedicated FX and CFD business unit. Final results are expected to be published on October 30th, 2014.
The accounting period used by Monex is from April 1st, 2014 to September 30, 2014. Monex sees this period as the first half of its fiscal year, but is essentially Q2 and Q3 2014.
First, the Bad News
The parent company reported significant year-on-year declines in both Total Operating Revenue and Income.
Monex reported a total operating revenue figure of ¥22,800 million (~$211 million) compared to ¥29,284 (~$271 million) for the same period last year, representing a 22% year-on-year decline. Pre-tax income collapsed from ¥11,078 million in 2013 down to ¥300 million this year – a 97% fall. Net income was actually negative (-¥300 million) since April.
The sharp fall in the Group’s overall performance is also reflected in the results of Monex Inc. – the Japanese-based subsidiary offering retail FX trading services. The comparatively better performance of Monex Inc. compared to Monex Group means that Monex Inc. now accounts for approximately 65% of the company’s total revenue.
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Trading volumes at Monex Inc. had a healthy bounce back in the month of September, although when contrasting Monex’s performance in 2014 with last year’s, indicating a broad decline in trading volume, fees/commissions and consequently, revenue generated.
Total Operating Revenue at Monex Inc. fell from ¥20,729 million last year to ¥14,895 million in 2014 – a 22% decline. Net Operating Income plummeted by over 63% year-on-year from ¥8,904 million in 2013 to ¥3,263 million for the same period in 2014.
Since April 1st 2014, total liabilities and net assets have grown from ¥531,551 to ¥574,176 with a large proportion of the rise attributed to a ¥36,816 (24%) rise in client deposits over the period.
Looking at the figures in more detail indicate that all metrics at Monex Inc. suffered over the past 6 months. Commission revenue was 36.5% lower while operating income is 63% lower. Stocks and ETF commissions have been hit hardest, falling 39% from ¥11,296 million to ¥6,933 million.
Now the Good News
On the flip side, Monex reports higher levels of client deposits, segregated capital and monies held in trust accounts. Client deposits rose from ¥53,193 million to ¥62,590 million and segregated capital rose from ¥192,897 million to ¥221,792 million.
On a broad basis these results underline two key points. One is that market volatility continues to hold retail brokerages to ransom. If markets stay flat, clients refrain from trading and retail brokers’ revenues are the first to suffer. And two, that clients are happy to sit on the sidelines in the absence of market volatility with a view of raising exposure in volatile times – a retail market indeed.
In other news, Monex has promoted Nozomi Takasaki to the firm’s Board of Directors Office – a specialised unit that reports directly to the Board of Directors on corporate governance issues and “reinforces business execution oversight,” according to a Monex company announcement.