Morgan Stanley tops Goldman Sachs with biggest profit in Japan

[TOKYO] Morgan Stanley beat Goldman Sachs Group Inc to become the most profitable foreign securities firm in Japan last fiscal year after it boosted structured-product sales and managed the two biggest initial public offerings.

Net income at Morgan Stanley MUFG Securities Co rose 32 per cent to 29 billion yen (S$356.61 million) in the year ended March 31, the most among 10 large global banks that submitted annual financial statements, according to regulatory filings obtained or seen by Bloomberg.

The venture with Mitsubishi UFJ Financial Group Inc and controlled by the New York-based firm posted its biggest revenue in three years as Japan's introduction of negative interest rates prompted clients to seek assets with better returns than government bonds. It also underwrote the debut share sales of Kyushu Railway Co and Line Corp, the largest in Japan last year.

"We are committed to growing our businesses in Japan where the national-level reforms offer exciting potential," chief executive officer Jonathan Kindred said in an emailed statement. He was referring to initiatives such as the government's efforts to make Tokyo a global financial hub.

Morgan Stanley's fees for fixed income-related sales and trading, a category that includes structured products, climbed 22 per cent to 43.7 billion yen, according to the filing to the Financial Services Agency.

Goldman Headcount Goldman Sachs generated the second-highest revenue as well as profit, which totaled 22.1 billion yen in the year ended Dec 31. The firm's headcount dropped by 46 over the 12 months, bringing it roughly level with JPMorgan Chase & Co.

This year, Goldman Sachs is advising Toshiba Corp on the sale of its memory-chip business, a transaction that may fetch about US$19 billion, and it's working with the Ministry of Finance on its sale of an additional stake in Japan Post Holdings Co.

JPMorgan posted the third-largest profit, followed by Deutsche Bank AG, while BNP Paribas SA had the third-biggest revenue. The French bank has also been growing in structured products, hiring about 30 people in Tokyo since January, and it plans to recruit more this year, people with knowledge of the matter said earlier this month.

UBS Group AG was among three firms that posted losses in part because of one-time charges. The Swiss bank incurred a goodwill impairment charge of 41.9 billion yen as it restructured its business model, Tokyo-based spokeswoman Eiko Noda said in an emailed statement. "The firm is on target for the current year," she said.

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