Korean securities firms enjoy record earnings in Q1 amid retail trading boom

Retail trading boom and initial public offering (IPO) craze powered South Korea’s securities firms to record earnings in the first quarter.

Korea Investment & Securities disclosed Monday that it registered a record net profit of 350.6 billion won ($308.3 million) in the first quarter ended March. Its operating income came to 423.6 billion won and revenue 4.7 trillion won as the securities firm performed well across the board, from securities brokerage to asset management and investment banking services.

Kyobo Securities also finished the first quarter with record earnings. Its first-quarter operating income totaled at 60.2 billion won and net income 48.2 billion won, up 40 percent and 64 percent, respectively, from the previous quarter. The company did especially well in asset management service business. Brokerage income from wealth management service jumped 555 percent compared to a year earlier and that from investment banking service 111 percent on year.

KTB Investment & Securities reported 45.7 billion won in the first-quarter net income, also an all-time quarterly high, and 45.4 billion won in operating income. It had been in the red a year earlier.

“All divisions, from investment banking to securities trading, delivered solid growth,” said a company official, adding that the firm already earned 60 percent of what it made last year during the first three months of this year.

KTB’s subsidiaries also did well. KTB Network, preparing to go public on the secondary Kosdaq market this year, raked in highest-ever quarterly net income of 17.4 billion won. KTB Asset Management’s operating income surged 39 percent on year as its assets under management expanded 4.5 percent to 13.2 trillion won from three months ago.

Daishin Securities saw the first-quarter net profit more than doubled to 97.2 billion won from a year earlier and operating income also more than doubled to 120.7 billion won.

Their stellar earnings performance was largely owed to the ongoing retail trading frenzy. Daily transaction amount averaged 37.8 trillion won in the first quarter, growing 18.5 percent from the previous quarter. The daily average figure even reached 47.8 trillion won in January when the Kospi broke above the 3,000-mark for the first time.

Kiwoom Securities, one of the top securities firms used by retail investors, benefited much from the retail stock trading boom. It earned 266.7 billion won in net income in the first quarter, up a whopping 3,887 percent from a year earlier.

Individual investors’ trading boom has spilled over to other financial sectors including investment banking that runs initial public offering services.

NH Investment & Securities, which led SK Bioscience’s blockbuster IPO as bookrunner, saw its investment bank unit’s profit jump 40.9 percent on year to 94.0 billion won.

Buoyed by solid earnings, the prices of securities stocks are also shooting up. Shares of NH Investment & Securities have gained 15.04 percent so far this year and those of Samsung Securities 11 percent. Daishin Securities shares have zoomed 41.15 percent after it announced to raise dividend payout by 20 percent.

Industry watchers, however, project that the securities firms would be unable to maintain their winning streak in earnings to the latter half as the growth in transaction amount have been slowing entering the second quarter.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]