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NISA Fuels Success for Securities Firms as Tokyo Stocks Soar

Japan's top securities firms, including SMBC Nikko and Daiwa, reveal solid performance fueled by a booming stock market and the NISA initiative.

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Stock price board displays the Nikkei average stock prices exceeding 40,000 yen. On March 4 in Osaka's Chuo Ward. (@Sankei by Yukia Watanabe)

On April 30, Japan's five major securities firms released their consolidated financial statements for the fiscal year ending March 2024. They showed that the booming stock market had led to significant profit increases for many companies. The rollout of the new Nippon Individual Savings Account, or NISA initiative in January also garnered attention as a potential game-changer. Analysts are now pondering its capacity to drive the transition from saving to investing.

This stock market surge is exemplified by the Nikkei Stock Average, which reached its highest level in nearly 34 years in February. It later surpassed the ¥40,000 JPY ($256.8 USD) milestone in March. 

Mizuho Bank holds a "Mizuho NISA Cafe" event at it's Yaesu Exit Branch in Tokyo. The cafe teaches about the new NISA structure, brands, etc. December 14, 2023. (Provided by Mizuho Bank)

Fiscal Turnarounds and Success

During its April 30 earnings report press conference, SMBC Nikko Securities Executive Officer Ayumu Goto underscored the company's improved performance. "Our customers' unrealized gains are at an all-time high," he stated. In fiscal year 2022 (ending March 2023), SMBC Nikko faced a ¥39.8 billion (about $256 million) deficit due to market manipulation. However, the company successfully reversed the situation. By the end of FY2023 (ending March 2024), it had posted a profit of ¥16.2 billion ($104 million). 

Daiwa Securities Group Inc. also boasted an impressive financial performance for the fiscal year ending March 2024. At an April 25 press conference, Chief Financial Officer Kotaro Yoshida highlighted the company's outstanding results. 

He noted that Daiwa's final profit surged to ¥1,215 billion (about $7.8 million ), a 90.3% increase over the previous period. Yoshida attributed this remarkable achievement to favorable market conditions. "We've capitalized on the momentum of a thriving market," he affirmed. 

Robust trading activity in the stock market boosted profits for all companies. Japan's flourishing private sector helped propel this increase. 

Prime Minister Fumio Kishida also participates in a dialogue on NISA and financial and economic education on April 16 at the Prime Minister's Office (@Sankei by Ataru Haruna)

From Savings to Investment

NISA has also proved to be quite advantageous. Goto revealed that new SMBC NISA accounts nearly tripled in number from January to March 2024 compared to the same period in 2023. He expressed strong enthusiasm for attracting new clients, stating, "We're seeing our investor base grow."

The government is also preparing to launch special financial and asset management zones by summer. It aims to utilize these zones to redirect household financial assets towards growth investments, cultivating an investment-oriented nation. Securities firms recognize that to successfully encourage this shift, they need to prioritize customer-centric approaches and establish user-friendly investment environments. 

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Author: Takehiko Nagata

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