Mirae Asset Daewoo Beats Q1 Earnings Consensus... Relatively Strong Despite COVID-19

[Asia Economy Reporter Song Hwajeong] Mirae Asset Daewoo recorded relatively favorable first-quarter earnings despite the challenging market conditions caused by the novel coronavirus infection (COVID-19).

Mirae Asset Daewoo announced on the 28th that it posted consolidated first-quarter operating profit of 138.7 billion KRW, pre-tax net income of 150.7 billion KRW, and net income of 107.1 billion KRW. Operating profit decreased by 2.4% compared to the same period last year but exceeded market expectations by approximately 77% and 97%, respectively.

A representative from Mirae Asset Daewoo stated, "Despite the significant increase in volatility due to COVID-19, we demonstrated downside resilience in earnings through diversification of revenue sources, thorough risk management, and a balanced business structure." They added, "In particular, in this first quarter, the proportion of proprietary hedging in the management of equity-linked securities (ELS) was lower than that of other companies, and the scale of debt guarantees relative to equity capital was also among the lowest compared to major domestic securities firms, confirming our stable risk management capabilities in effectively addressing liquidity issues."

Consolidated controlling shareholder equity recorded 9.15 trillion KRW, slightly increasing from the previous quarter despite paying dividends of 182.1 billion KRW in the first quarter.

By business segment revenue composition, brokerage commissions accounted for 40.7%, corporate finance (IB) fees 22.2%, trading including proprietary investment (PI) 15.7%, financial product sales commissions 14.3%, and interest income 7.0%.

Compared to the previous year, brokerage-related revenue increased due to a record surge in market trading volume, and the IB fee ratio remained above 20% for eight consecutive quarters. Additionally, the overseas division accounted for 29.3% of total consolidated pre-tax revenue, establishing itself as a solid revenue source.

Looking at net operating income by segment, brokerage commission income was 143.2 billion KRW, up 70.7% from the previous quarter. Quarterly commission income from overseas products, including foreign stocks, reached 30.6 billion KRW for the first time in the industry, increasing 137.2% quarter-on-quarter, and the share of overseas commission income expanded to 21.4%. The balance of overseas stocks continued to grow, increasing by 700 billion KRW this quarter to reach 8.3 trillion KRW.

IB fee income decreased by 15.6% compared to the previous quarter. Total IB-related revenue (103.6 billion KRW) has remained above 100 billion KRW for eight consecutive quarters since the second quarter of 2018.

Trading profit and loss, including PI, was 55.2 billion KRW, down 59.6% from the previous quarter. A Mirae Asset Daewoo representative said, "Although the issuance and redemption of derivative-linked products contracted due to declines in major global indices and increased stock market volatility, our company was able to mitigate the volatility of overall trading profit and loss thanks to actual distributions and dividend income generated from investment purpose assets."

The overseas subsidiary posted pre-tax net income of 44.2 billion KRW, down 6.2% from the previous quarter but up 3.3% year-on-year. The overseas subsidiary, which became the first securities firm last year to achieve annual net income in the 100 billion KRW range, expanded its share of total consolidated pre-tax net income to 29.3% in this first quarter.

This content was produced with the assistance of AI translation services.