Full-time Investment Advisory Firms, H1 Net Profit 128.3 Billion KRW... Turned Positive YoY

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[Asia Economy Reporter Ji-hwan Park] The net profit of dedicated investment advisory firms in the first half of this year (April to September) increased by 144.6 billion KRW compared to the same period last year.

According to the Financial Supervisory Service on the 28th, as of the end of September this year, 215 dedicated investment advisory firms recorded a net profit of 128.3 billion KRW between April and September. This is a result of a 144.6 billion KRW increase in net profit compared to a 16.3 billion KRW loss during the same period last year. Analysts attribute this to improved proprietary asset gains due to the rise in stock indices and increased fee income generated from growth in investment advisory and discretionary contract balances.

During this period, fee income increased by 93.8% compared to the same period last year. Proprietary asset management gains turned from a 4.1 billion KRW loss to a 133.3 billion KRW profit. A Financial Supervisory Service official analyzed, "The KOSPI, which recorded 2,063.05 in September last year, rose to 2,327.89 by the end of September this year, and the stock market boom caused proprietary asset management profits to more than double."

Looking at each company, among the 215 advisory firms engaged in investment advisory and discretionary management, 164 firms recorded profits. Fifty-one firms recorded losses.

As of the end of September, the contract balance of dedicated investment advisory firms was 12.4 trillion KRW, an increase of 200 billion KRW compared to the end of March. This is interpreted as an increase in the number of contracts due to increased stock investment amid the stock market boom.

However, investment advisory and discretionary contract balances still appear to be stagnant. It is analyzed that polarization is intensifying, with the top 10 firms accounting for more than half, 58.2%, of the contract balance of dedicated investment advisory firms.

The Financial Supervisory Service expects that if COVID-19 continues, there is a possibility of a decline in stock indices due to economic slowdown such as contraction of the real economy. A Financial Supervisory Service official stated, "Since dedicated investment advisory firms rely mostly on fee income and highly volatile proprietary asset management income for their profits, we plan to strengthen monitoring of their financial conditions."

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