Daiwa Q2 2026 slides: asset-based fees hit record, base income on track

Daiwa Securities reported record first-half results, with net operating revenue up 35.5% year over year to ¥444.3 billion and ordinary income up 69.9% to ¥166.3 billion; first-half base income of ¥125.2 billion exceeded 80% of its ¥150 billion full-year target. In Q2, ordinary income fell 11.2% sequentially to ¥78.2 billion and attributable profit declined 8.8% to ¥51.4 billion, while base income rose 41.9% year over year to ¥62.3 billion; shares fell 1.82% to ¥1,698.5 after the results. The company declared a record interim dividend of ¥39 per share, up from ¥32 a year earlier, and reported record wealth-management asset-based revenue of ¥38.3 billion.

Analysis

The important read-through is a change in earnings quality, not a clean de-risking: recurring client-asset fees can cushion weaker trading, but remain exposed to market levels, flows and client risk appetite. The less obvious cost is that success in wrap products can increase dependence on a concentrated set of investment platforms and sustained net inflows; a reversal in markets could pressure both asset values and fee growth at once. For Daiwa Securities, the ORIX Bank addition broadens revenue sources but also imports property-lending and integration risks. The bank’s investment-property exposure makes credit quality, collateral values and refinancing conditions a key 6–18 month monitor; rising rates may aid lending spreads while worsening borrower stress.

Near term, weaker global-market activity and the quarter-on-quarter profit decline argue against extrapolating first-half earnings. Over 1–3 months, the tests are continued wrap/fund net inflows, fee growth, and whether integration costs or credit provisions offset bank contribution. The reported ORIX Bank consolidation does not establish ORIX Corporation’s current ownership, continuing economic exposure or transaction proceeds. Accordingly, do not translate Daiwa’s results into an IX earnings view without verifying the transaction structure. Contrarian point: the recurring-revenue narrative is credible, but “stable” fees are not fully defensive when market drawdowns can reduce AUM and trigger outflows.

Key Decisions for Investors

• No standalone position in ORIX Corporation (IX) from this release: verify ORIX Bank’s ownership and sale/consolidation terms, any retained interest, and the effect on ORIX’s earnings and capital before changing the thesis.
• For Daiwa Securities, avoid chasing the medium-term target narrative until the next quarter confirms that asset-based fee growth and net inflows persist; reassess if flows turn negative or fee growth stalls.
• Monitor ORIX Bank credit indicators over the next 1–3 quarters—delinquencies, provisions, loan growth by property type and collateral values. Rising property-related provisions or weaker refinancing conditions would challenge the integration upside.
• Treat the weaker trading quarter as a near-term earnings risk, not yet a structural break. The thesis is falsified if Daiwa’s recurring-fee momentum reverses alongside continued weakness in global markets, or if bank integration costs and credit losses materially erode segment contribution.