Goldman Tops Investment Banks Reaping Windfall in Tokyo

May 10, 2024

1 minute read

(Bloomberg) — Goldman Sachs Group Inc. led major investment banks posting higher profits in Japan as bond trading boomed, offering a cushion last year in an otherwise tough environment globally.

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Net income at the Wall Street firm’s local securities arm rose by a quarter last year to 39.2 billion yen ($251 million) as fixed-income trading gains doubled, according to annual disclosures filed over recent weeks. The figure marked the highest earnings in 14 years for Goldman. The company was the most profitable among global banks that closed their books in the country on Dec. 31.

Deutsche Bank AG’s bottom line for its securities business grew 43% to 17.2 billion yen, the Frankfurt-based lender’s best showing in at least six years. Barclays Plc posted a record profit for the London-based bank’s brokerage unit in the Asian nation.

The Bank of Japan’s historic shift in monetary policy has helped revive volatility in the country’s roughly $7 trillion government bond market, generating more money-making opportunities for traders. With compensation at banks in Tokyo in many cases a fraction of other financial hubs, it has already sparked competition for talent with hedge funds.

Dealmaking, in share sales as well as mergers and acquisitions, is also booming in Japan. Japan-related deals accounted for 22% of Asia’s entire transaction volumes for 2023, the highest in four years, according to data compiled by Bloomberg.

“2023 was a year in which Japan business drew the spotlight at global banks” as they faced a relatively tough time elsewhere because of lackluster deal-making and other headwinds, said Hideyasu Ban, an analyst at Bloomberg Intelligence.

Bank of America Corp.’s brokerage unit, the only firm on the list to report a loss, booked fewer gains from debt trading in addition to more transaction costs, according to a filing. Other major global banks including Morgan Stanley and JPMorgan Chase & Co. will announce their results later because their securities subsidiaries closed their books on March 31.

–With assistance from Masaki Kondo.

(Updates with dealmaking activity in fifth paragraph and chart after last paragraph.)