With Q2 best, Mirae Asset Securities eyes milestone 1 trillion won annual bottom line

South Korea’s top brokerage Mirae Asset Securities is projected to report milestone annual bottom line of 1 trillion won ($875 million) for the first time in the industry this year, having earned 635 billion won in the first half, thanks to asset frenzy at home and abroad.

According to financial market tracker FnGuide Inc. on Thursday, a consensus by three securities firms showed that Mirae Asset Securities will reap over 1 trillion won in consolidated income this year. Shinhan Investment Corp. projected its income at 1.04 trillion won, Korea Investment & Securities 1.007 trillion won and BNK Securities 1.006 trillion won.

It would be a landmark achievement for a domestic brokerage. Although an industry best, the company’s earnings fell short of 1 trillion won at 818.3 billion won last year.

Kim In, a researcher at BNK Securities, said that Mirae Asset Securities’ interest and non-interest income will remain strong this year. It is also reaping fruit from its overseas investment it reached out since 2016 and will see profit increase over time after regulatory approval of issuing financing bills.

Mirae Asset Securities on Thursday reported a net profit of 634.9 billion won on a consolidated basis for the first half, up 55.4 percent from the same period a year ago. Its pre-tax net income also surged 55.3 percent on year to 879.1 billion won in the January-June period.

Its rivals also fared well, but fell behind Mirae Asset Securities. Consolidated net income came to 582.7 billion won for Korea Investment & Securities and 527.9 billion won for NH Investment & Securities 527.9 billion won in the same period.

In the second quarter ended June alone, Mirae Asset Securities raised 479.6 billion won in pre-tax income and 343.7 billion won in consolidated income, both all-time quarterly highs. Market consensus was 284.1 billion won.

The firm’s overseas corporation is also projected to reap high net profit this year.

In the January-June period, Mirae Asset Securities’ overseas corporation raised 180 billion won in pre-tax net income, nearly reaching 201 billion won for the full year last year.

Mirae Asset Securities expected its overseas entity to break last year’s record earnings this year.

Jeong Tae-joon, a researcher at Yuanta Securities, said that Mirae Asset Securities owns much investment assets from past aggressive equity capital investment and it is likely to sell them to boost earnings. Jeong added that second-half earnings will depend on its successful sale of investment asset and improvement in trading performance.

Analysts noted that Mirae Asset Securities is on track to join a regional top-tier rank as envisioned by its founder Park Hyeon-joo.

When Mirae Asset Securities was named as preferred bidder of KDB Daewoo Securities in 2015, Park unveiled a roadmap of achieving 10 trillion won in equity capital by 2020, 1 trillion won in pre-tax income, and 10 percent in return on equity.

Last year, its pre-tax income was 1.1 trillion won, and its equity capital as of end of June has reached 10.05 trillion won and 13.15 percent ROE.

Japan’s Nomura Securities has 30 trillion won in equity capital as of end of December last year and Daiwa Securities 14 trillion won. Mirae Asset Securities had 9.27 trillion won in equity capital as of end of last year and Mirae Asset Group as a whole 15 trillion won.

Analysts noted that Mirae Asset, which started out with 50 billion won in equity capital in 1999, is capable of standing neck and neck with other global firms with longer history and become one of top 3 investment banks in Asia.

Industry insiders, meanwhile, noted that Mirae Asset Securities should further enhance asset management service and global network to boost global competitiveness. They noted that the brokerage should differentiate itself from other traditional lenders through ROE to become a mega securities firm.

JP Morgan and Morgan Stanley, for example, has ROE of over 10 percent each of equity capital exceeding 100 trillion won. Mirae Asset Securities should also boost competitiveness to raise profitability, they noted.

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