(Bloomberg) -- Daiwa Securities Group Inc.’s quarterly profit more than doubled, driven by a surge in trading for Japan’s second-largest brokerage as the country’s benchmark stock index hit a record in the period. 

Net income rose to 39.5 billion yen ($254 million) in the three months ended March 31 compared with 17.1 billion yen a year earlier, the company said in a statement. Citigroup Inc. had forecast net income of 29 billion yen and Morgan Stanley MUFG Securities Co. had predicted 29.9 billion yen. 

Securities firms in Japan are benefiting from increased stock and bond trading driven by the nation’s economic recovery and policy changes. Daiwa’s larger rival Nomura Holdings Inc. will release its earnings Friday. 

The firm’s retail division led earnings growth, with ordinary income more than tripling to 20.7 billion yen from the year earlier period. At the wholesale division, ordinary income also tripled to 13.4 billion yen. The company’s investment division’s ordinary income was little changed at 6.6 billion yen and the asset management division increased ordinary income 14% to 13.7 billion yen.  

The investment banking unit posted a loss of 642 million yen in the fourth quarter, which Chief Financial Officer Kotaro Yoshida said stemmed from the cost of hiring bankers to strengthen the mergers and acquisitions business abroad. The firm’s costs related to bonuses also rose to 22.2 billion yen from 14.3 billion yen a year ago. 

Daiwa’s shares have risen 19% so far this year, outpacing the 13% gain in the Topix index. 

The company also declared an annual dividend of 44 yen a share. 

(Adds income by segment in fourth paragraph)

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