British bankBarclays is increasing profits from its yen interest rate business in Japan. As market interest rates rose following the Bank of Japan’s policy revisions, the business model of focusing on the bond sector was successful.Although there are struggles in other parts of the world, the Japanese corporationbarclays securitiesIn this fiscal year (December 2023), the company is on track to reach new record high profits for the second consecutive year.
In an interview with Bloomberg, Kosuke Morihara, country CEO who oversees Barclays’ Japan business, said that although some things depend on the Bank of Japan’s actions, “Japan is now, for the first time in a long time,” I feel like I’m on the middle of the radar.”
Mr. Morihara of Barclays (14th, Tokyo)
Photographer: Akio Kon/Bloomberg
Regarding the yen interest rate business, Morihara said, “The volatility has increased, and we are receiving many inquiries from overseas investors,” and revealed that the buying and selling and trading of domestic bonds is increasing. He acknowledged that although there are market risks, the net profit level for this fiscal year is “projected to be the highest ever if things continue like this.”
Barclays Securities withdrew from the cash stocks business in 2016 and has focused its business on bonds and foreign exchange. Following July, the Bank of Japan made yield curve control (long-term and short-term interest rate control, YCC) flexible again at its policy meeting in October, and rival financial institutions at home and abroad are competing to earn profits through government bond trading. is becoming more intense.
According to disclosed materials, Barclays Securities’ net profit for the previous fiscal year (ended December 2022) was a record high of 15.1 billion yen, an increase of 67% from the previous fiscal year. Bonds, etc. acceptance fees increased by 80% from two periods ago to 27.2 billion yen, and bond trading profits increased 2.8 times from the previous year to 3.2 billion yen.
Highest profit expected as yen interest rate business expands
Barclays Securities net income trend
Source: Company data
Following the Bank of Japan’s revision of the YCC, the yield on 10-year government bonds, an indicator of long-term interest rates, hit a 10-year high of 0.97% on November 1st. Volatility reached levels not seen since 2008 in early April.
Mr. Morihara explained that as interest rates fluctuate, what is important is “being able to provide liquidity at all times.” Communication between trading and sales staff is also said to be “very close.” Regarding human resources, he said, “We have a good mix of experienced people and young people, and things are going well,” and he also indicated that he plans to increase the number of personnel in the future as necessary.
In the third quarter results announced by parent company Barclays in October, the corporate and investment banking division’s revenue was 3.08 billion pounds (approximately 570 billion yen). Fixed income, currency and commodity trading revenue fell 26% year over year. The company’s Japanese business, which includes banking and asset management, accounts for more than 30% of its total revenue in Asia.
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2023-11-19 22:00:00
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