Securities Firms and Asset Management Companies Achieve Record High Net Profit

Last Year's Stock Market Boom and Surge in Individual Investors Drive Sharp Increase in Commission Revenue... Highest Performance in One Year
Brokerages Report Net Profit of About 6 Trillion Won... Custody Fee Income Up 105%
Asset Management Firms Achieve Record High Net Profit and Assets Under Management at 1.332 Trillion Won

[Asia Economy Reporter Park Jihwan] Last year, domestic securities firms and asset management companies recorded their highest-ever net profits. This was thanks to a surge in commission income driven by a booming stock market and a frenzy of stock investments by individual investors.

According to the Financial Supervisory Service on the 24th, the net profit of 57 domestic securities firms last year was 5.9148 trillion KRW, an increase of 1.0203 trillion KRW (20.8%) compared to the previous year. This surpassed the previous record of 4.4299 trillion KRW set in 2007, which had stood for 12 years since 2019, setting a new record again just one year later.

This was mainly due to increased commission income from the surge in direct investments by individual investors. Securities firms' commission income from custody fees reached 7.0924 trillion KRW last year, up 3.6288 trillion KRW (104.8%) from the previous year. The total stock trading value last year, combining KOSPI and KOSDAQ, increased by 3,396 trillion KRW compared to the previous year, causing commission income generated from each transaction to surge. KOSPI custody fees increased by 108.8% to 3.475 trillion KRW, and KOSDAQ fees rose by 106.7% to 2.2118 trillion KRW. In particular, the average daily trading value of individual investors rose from 6 trillion KRW in 2019 to 17.6 trillion KRW last year, an increase of 11.6 trillion KRW (193.3%). Additionally, the emergence of so-called Seohak Gaemi, who ventured into direct overseas stock investments, also played a role. Overseas stock custody fee income, which was only 163.7 billion KRW in 2019, surged by 234.4% to 547.5 billion KRW last year.

The asset management industry also achieved record highs in both earnings and assets under management due to the stock market boom. As of the end of last year, the assets under management of 326 asset management companies totaled 1,197.8 trillion KRW, an increase of 61.3 trillion KRW (5.4%) compared to the end of the previous year. Assets under management have been steadily increasing since first surpassing 1,000 trillion KRW in June 2019.

Net profit also reached a record annual high of 1.332 trillion KRW, up 511.8 billion KRW (62.4%) from 820.2 billion KRW the previous year. This was due to the increase in assets managed by firms, which led to a surge in fee income, their main source of revenue. Last year, asset managers' fee income was 3.2188 trillion KRW, an increase of 536.8 billion KRW (20.0%) from 2.682 trillion KRW the previous year, influenced by growth in assets under management and performance fees. Securities investment gains (including derivative gains) from proprietary assets invested in stocks and other instruments amounted to 335.8 billion KRW, up 211 billion KRW (169.0%) from 124.8 billion KRW the previous year.

The industry expects the strong trend in commission income, the largest source of profit for securities firms last year, to continue for the time being. According to the Korea Exchange, the average daily trading value of KOSPI and KOSDAQ markets in January was 42.1 trillion KRW, a 254.3% increase from the previous year, marking an all-time high. Although it slightly decreased to the 30 trillion KRW range in February, it is still considered a high level given that the average daily trading value for the entire last year was around 23 trillion KRW.

A securities firm official said, "The strong trading volume is expected to continue for the time being due to ongoing participation by individual investors in the stock market. If the ELS operating losses, which reflected significant losses in the first quarter of last year, normalize and the investment banking (IB) sector's performance, which had been sluggish due to COVID-19, improves, high profitability is expected to continue this year as well." An asset management industry official stated, "This year, steady growth is expected to continue, especially among asset managers specializing in business areas such as equity mutual funds, exchange-traded funds (ETFs), pensions, and alternative investments."

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