Monex Group, a Japan-based financial services company, released its financial results for the third quarter of the fiscal year 2023 on Monday. In the nine-month period between April and December 2022, the company's operating revenue and profit recorded a visible slump with the contribution of the crypto and TradeStation business.

Monex Shows Significantly Lower Net Income

According to the recent press release, the overall operating income stood at ¥69,691 million ($16,127 million), falling by 15.8% year-over-year (YoY) from ¥58,672 million. The quarterly net profit slump was even more painful and came in at 85.2% YoY, with the final number falling to ¥1,853 million.

In addition, the basic earnings per share fell significantly from ¥48.19 reported for 2021 to ¥7.27. On top of that, Monex shares on the Tokyo Stock Exchange fell by more than 40% in 2022, sliding along with other technology companies and investment service providers. However, the start of 2023 brings an optimistic rebound.

In its report, Monex distinguishes three main segments of its business: the Japanese segment, which provides stable profits, the US segment (TradeStation) where a significant improvement in earnings was seen in 2022, and the crypto assets segment, which recorded a loss through unfavorable market conditions.

"Going forward, in addition to the steady earnings of the Japan and US Segment, the Crypto Asset Segment has profit upside potential when the crypto asset market recovers," Monex commented in a presentation attached to the financial report.

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TradeStation Shows Increasing Momentum

For the nine months of 2021 from April to December, TradeStation reported a net loss of ¥3,808 million, compared with a loss of ¥2,089 million last year. While still sizable, Monex highlights significant improvement since its mid-year strategy change. If the business strategy remodelling cost is subtracted from the result, the profit will come in at ¥1,000 million.

Profitability increased partly due to cost reductions and higher financial income driven by interest rate increases, which translated into favorable results for Japanese operations.

The cryptocurrency sector had the most adverse impact on overall performance, with a net loss of ¥748 million compared to a ¥14,942 million profit YoY.

Monex Adds US Stock Margin Trading in Japan

In mid-January, the Japanese-originated financial services giant unveiled a new margin account services offering for US-based equities . The latest offering is available to local traders from 23 January 2023.

With the acquisition of TradeStation in 2021, Monex was one of the few brokers in Japan able to offer direct access to US equities without having to open a separate brokerage account. It has expanded its product offering to include derivatives based on the underlying equities, including margin trading.

"With US equity margin trading, investors can trade twice the amount of their original capital (margin deposit) and buy and sell the same stock as many times as they wish on the same day," the company commented in the press release.

At the end of 2022, Monex announced the closing of an agreement with AEON Bank for their partnership in the financial instruments intermediary business. As part of the deal, Monex will provide asset management services to the major lender.