Korea Investment & Securities Reports Loss for First Time in 11 Years... Also Loses 'Top Net Profit' Title

[Asia Economy Reporter Koh Hyung-kwang] Korea Investment & Securities posted a net loss exceeding 130 billion KRW in the first quarter of this year. This was due to a significant increase in losses from derivative products such as Equity-Linked Securities (ELS) and Derivative-Linked Securities (DLS). It is the first time in over 11 years since the global financial crisis in 2008 that Korea Investment & Securities has recorded a quarterly loss. Even Korea Investment & Securities, which boasted the highest net profit among securities firms, could not escape the impact of the novel coronavirus disease (COVID-19).

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 16th, Korea Investment & Securities announced the previous day that it posted sales (operating revenue) of 7.9079 trillion KRW and a net loss of 133.8 billion KRW in the first quarter. Sales increased 2.5 times (148.4%) compared to the first quarter of last year (3.1835 trillion KRW), but net profit turned to a loss compared to the same period last year (218.6 billion KRW). Operating loss in the first quarter was also 191.3 billion KRW, turning to a loss compared to the previous year (274.5 billion KRW). It is the first time in 45 quarters since the fourth quarter of 2008 that Korea Investment & Securities posted a quarterly net loss.

The large-scale loss occurred in the trading division. Korea Investment & Securities explained that the separate financial statements of the securities firm showed a loss of 56 billion KRW due to valuation losses on derivatives such as ELS and DLS. Additionally, the consolidated net loss including subsidiary profits and losses was significantly affected by the impact of overseas markets caused by COVID-19, such as valuation losses of overseas funds due to declines in major overseas stock markets.

A Korea Investment & Securities official said, "The recent decline in major global stock markets caused by COVID-19 is showing some stabilization," adding, "The valuation losses of overseas funds of subsidiaries included in the derivative products segment and consolidated profits and losses, which were the main causes of the first quarter loss, are recovering significantly." Meanwhile, Korea Investment & Securities recorded a net profit of 709.9 billion KRW last year, the highest annual net profit ever recorded by a domestic securities firm, and ranked first in net profit among securities firms for four consecutive years. With Korea Investment & Securities posting a large loss this time, the top net profit among domestic securities firms in the first quarter of this year went to Mirae Asset Daewoo (107.1 billion KRW).

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