Financial Holding Securities Firms, Becoming the Group's Profit Drivers

Stock Market Boom Drives Q1 Net Profit Share to 16.7%...Expanded Support Including Capital Increase

[Asia Economy Reporter Park Ji-hwan] The performance of securities firms affiliated with financial holding companies has significantly improved thanks to the stock market boom, establishing them as profit drivers within their groups.

According to the financial investment industry on the 14th, the average proportion of net profit contributed by securities firms under financial holding companies in the first quarter of this year was 16.7%. This marks a significant increase from the 3-11% range seen in 2019 and 2020.

The securities firm with the largest share of net profit within its financial holding company was NH Investment & Securities, recording 19.0%. It was followed by KB Securities (17.4%), Hana Financial Investment (16.4%), and Shinhan Financial Investment (14.1%).

NH Investment & Securities posted a net profit of 257.5 billion KRW in the first quarter, a 699.7% increase compared to the same period last year, achieving its highest quarterly performance ever. Considering NH Nonghyup Financial's total net profit of 604.4 billion KRW and its 46.13% stake, the net profit proportion within the holding company reached 19%.

KB Securities turned a loss of 21.4 billion KRW in the first quarter of last year into a profit of 221.1 billion KRW this year. While it detracted from the group's overall performance last year, it contributed 17.4% to the group's results this year. With quarterly net profit exceeding 200 billion KRW, it is regarded as a core company within the group. KB Financial also recorded its highest-ever performance of 1.2701 trillion KRW, a 74.1% increase from the previous year, significantly contributing to maintaining its position as the leading bank, surpassing Shinhan Financial Group.

Hana Financial Investment's first-quarter net profit was 136.8 billion KRW, a 192.6% increase from 46.7 billion KRW the previous year. It ranked second in scale after Hana Bank's net profit of 575.5 billion KRW, supporting the overall improvement in the holding company's performance. Its net profit contribution within the holding company rose from 7.1% last year to 16.4%. Shinhan Financial Investment posted a net profit of 168.1 billion KRW, 3.5 times the 46.7 billion KRW recorded in the same period last year. Its net profit share within the holding company increased by 9.1 percentage points to 14.1% compared to a year ago.

The growing status of securities firms within financial holding companies is due to the securities industry collectively continuing a record-breaking streak of maximum performance, driven by brokerage (commissioned trading) revenues and increased fees related to investment banking (IB) amid the stock market boom. Additionally, financial holding companies are actively supporting their securities subsidiaries through capital expansion and other measures as part of portfolio diversification, which also plays a role.

An industry insider said, "The global financial environment is currently abundant with liquidity, making it a time when diverse investments are needed," adding, "Since banks have clear limitations in alternative investments they can undertake, the role of securities firms within the group is becoming more significant in terms of synergy."

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