Meritz Securities tops $76 mn in net profits for 22 consecutive quarters

Meritz Securities Co.’s office building. [Courtesy of Meritz]

Meritz Securities Co. continues to deliver strong results despite growing financial market uncertainties. It recorded net profits exceeding 100 billion won ($75.7 million) for a 22nd consecutive quarter in the second quarter of 2022, a result it has achieved since the first quarter of 2018 thanks to its differentiated risk management approach.

Meritz Securities reported 443.1 billion won in operating profits and 361.3 billion won in net profits for the first half of this year, the brokerage house said on Sunday. Looking solely at the second-quarter figures, operating profits and net profits for the quarter stood at 204.5 billion won and 161.5 billion won respectively and were up by 2.3 percent and 1.9 percent year-on-year.

The strong performance is attributed to the “effective operation of Meritz’s strength in risk management systems,” according to a company official.

Meritz Securities has its own criteria for selecting investment projects, including a loan-to-value ratio (LTV) of 50 percent or less and a senior bond proportion of 95 percent or more in real estate project financing (PF) exposure.

However, the brokerage house has been reducing its exposure in PF due to the uncertainty in the real estate market. According to an investor presentation delivered by Meritz Securities Vice Chairman Choi Hi-moon in mid-August, the proportion of real estate earnings in the company’s corporate finance sector decreased to about 49 percent in 2022 from about 84 percent in 2019, and the proportion of real estate income in the company’s total income decreased to 21 percent from 41 percent during the same period.

Meritz Securities has also been proactively identifying favorable business opportunities within corporate finance to generate income. These opportunities include deals such as financing for acquiring equities in Australia’s Kestrel Coal Midco Pty Ltd, arranging financing for the global private equity fund KKR & Co Inc., and collateral loans for Samsung Heavy Industries Co.’s drillship.

“We are active participants in good business opportunities, even outside of real estate. Leveraging our strategic partnerships with domestic and foreign major companies as well as global private equity funds, we concluded various corporate finance deals, including acquisition financing and collateral loans,” Choi said.