Securities Firms' Quarterly Net Profit Matches Banks'... Impact of Stock Market Boom

Net Profit of Top 20 Securities Firms in Q1 Reaches 2.7688 Trillion KRW, Equivalent to 94.6% of Banks' Level

On the 21st, the KOSPI index opened at 3,171.91, up 9.63 points (0.30%) from the previous trading day. Dealers are working in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. On the same day, the won-dollar exchange rate started trading at 1,128.0 won, down 4.0 won from the previous trading day. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Gong Byung-sun] As the stock market has become active since COVID-19, securities firms' net profits in the first quarter of this year have become comparable to those of banks.

According to the Financial Supervisory Service's electronic disclosure system on the 23rd, the net profits of 20 major securities firms, including Mirae Asset Securities, reached a total of 2.7688 trillion KRW in the first quarter. This is about 16 times higher than the 163.3 billion KRW net profit recorded by securities firms in the first quarter of last year. This is also the highest performance ever recorded.

During the same period, the combined net profits of the five major banks, including KB Kookmin Bank and Shinhan Bank, amounted to 2.9261 trillion KRW. Securities firms' net profits were about 94.6% of those of banks.

Until now, securities firms' performance had not reached that of banks because customers preferred stable asset management. In 2019, the annual net profit of 20 securities firms was 4.7413 trillion KRW, which was less than half of the five major banks' annual net profit of 9.9629 trillion KRW.

The surge in securities firms' net profits began in the second quarter of last year. From April to June last year, securities firms recorded net profits of 1.8576 trillion KRW, reaching 80% of the 2.2084 trillion KRW net profits recorded by the five major banks during the same period. In the third quarter of last year, net profits surpassed 2 trillion KRW, catching up to 83.4%. In the fourth quarter of last year, securities firms recorded net profits of 1.6185 trillion KRW, surpassing banks' 1.5454 trillion KRW. Although banks' net profits were low due to setting aside various year-end expenses as reserves, it was the first time securities firms surpassed banks on a quarterly basis.

Since COVID-19, individual investors have actively traded in the stock market, leading to profits for securities firms. From April last year for one year, individual investors net purchased stocks worth 64.6 trillion KRW in the KOSPI market and 18.4 trillion KRW in the KOSDAQ market, totaling 83 trillion KRW.

As a result, the KOSPI index rose from 1700 at the end of last year to surpass 3000. Additionally, money flowed into overseas stocks and the initial public offering (IPO) market, leading securities firms to experience an unprecedented boom.

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