JPX Q1 Operating Profit Jumps 73% as Cash Equity Turnover Lifts Trading and Clearing Fees

Operating leverage in its purest form

Japan Exchange Group, Inc. (TSE: 8697) published consolidated results for the three months to June 30, 2026 on July 28, 2026 under IFRS. Operating revenue rose 50.8% to ¥65,515 million while operating expenses rose only 22.4% to ¥23,146 million, so operating profit rose 73.3% to ¥43,716 million. Pre-tax profit rose 74.1% to ¥44,062 million and profit attributable to owners 73.6% to ¥29,567 million. Basic earnings per share were ¥28.81 against ¥16.42, and comprehensive income rose 72.2% to ¥30,189 million. The operating margin reached 66.7%.

This is what an exchange looks like in a heavy-turnover quarter: revenue is largely variable with trading activity while the cost base — people, systems, depreciation — is largely fixed. Of the ¥22,064 million of extra revenue, ¥17,821 million dropped through to operating profit.

Cash equities drive trading and clearing alike

Trading services revenue rose 60.4% to ¥27,837 million. Within it, transaction fees rose 69.9% to ¥24,647 million, and cash-equity transaction fees alone rose 86.7% to ¥21,928 million — turnover value on the Prime, Standard, Growth and TOKYO PRO markets was well above a year earlier. Financial derivatives added a more modest 4.9% to ¥2,553 million, with JGB futures up 20.8%, Nikkei 225 options up 6.6% and TOPIX futures up 2.1% while Nikkei 225 futures fell 7.5%; commodity derivatives fell 49.1%. Access fees rose 19.2% to ¥1,881 million on higher order counts.

Clearing services, run through Japan Securities Clearing Corporation, was the fastest-growing line, rising 88.9% to ¥20,150 million — the same cash-equity volumes reaching the group a second time. Listing services rose 20.2% to ¥4,519 million, with initial and secondary listing fees more than doubling to ¥842 million and annual listing fees up 9.9% to ¥3,676 million on higher market capitalisation. Information services rose 15.4% to ¥9,311 million on market-data fees and the index business, and system services 2.2% to ¥3,480 million.

Costs up, but mostly in one line

Operating expenses rose 22.4% to ¥23,146 million. Personnel costs rose 13.4% to ¥6,157 million, system maintenance and operation 10.5% to ¥5,657 million and depreciation and amortisation just 0.6% to ¥4,518 million. The outlier is other operating expenses, up 76.4% to ¥6,812 million — the single largest contributor to the cost increase, and the line to watch if turnover normalises.

Why the equity ratio reads 0.5%

Total assets fell 5.7% to ¥67,538,582 million and equity attributable to owners 6.9% to ¥321,138 million, leaving an owners' equity ratio of 0.5%. That figure should not be read as leverage. JPX grosses up on both sides of its balance sheet the clearing assets and liabilities that Japan Securities Clearing Corporation assumes as a central counterparty, plus clearing participants' deposits and the statutory funds that back market safety. Those items are enormous, swing daily with participants' positions, and net to nothing economically; the ¥4,060,984 million fall in total assets this quarter is mostly a fall in clearing assets. The company directs readers to its own balance-sheet discussion for a view excluding those items.

Guidance and dividend both raised

JPX revised the guidance published with its FY3/2026 results on April 28, 2026. Full-year operating revenue is now ¥241,500 million (+21.5%), operating profit ¥145,500 million (+25.1%), pre-tax profit ¥147,000 million (+25.7%), profit ¥100,500 million (+23.4%) and profit attributable to owners ¥98,500 million (+24.5%), for basic earnings per share of ¥96.40. The forecast assumes full-year average daily turnover of ¥10.2 trillion in equities, 51,000 units in JGB futures, 87,000 in TOPIX futures, 136,000 in Nikkei 225 futures and ¥30.0 billion in Nikkei 225 options. The first quarter has already delivered 27.1% of the revenue target and 30.0% of the operating-profit target.

The dividend forecast was raised to an ordinary dividend of ¥77.00 for FY3/2027, against ¥61.00 paid for FY3/2026. JPX targets a payout ratio of 60% or more, balanced against the financial soundness expected of an exchange group, the risk buffer required of a clearing house and investment in its markets' competitiveness.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.