Securities Firms' Q1 Net Profit Nears 3 Trillion Won...Record Quarterly Earnings Set Again

[Asia Economy Reporter Ji-hwan Park] Domestic securities firms posted the largest quarterly net profit in history for the first quarter of this year. They once again broke the record for the highest quarterly performance of 2.1565 trillion won set in the third quarter of last year. They earned more than half of last year's annual net profit in just three months. This was thanks to a surge in commission income due to an unprecedented stock market boom.

On the 3rd, the Financial Supervisory Service announced the '2021 Q1 Securities and Futures Companies Business Performance' (provisional), stating that the net profit of 57 securities companies in the first quarter of this year was 2.9888 trillion won, an increase of 113.2% compared to 1.4018 trillion won in the previous quarter. The average return on equity (ROE) rose by 3.5 percentage points to 4.4% from 0.9% the previous year.

Looking at revenue by category, commission income, a traditional source of revenue for securities firms, rose by 24.5%. In particular, trust fees increased by 668.9 billion won from the previous quarter to 2.5216 trillion won. This was largely due to increased commissions from higher KOSPI trading volume and foreign currency securities settlement amounts.

KOSPI's commission income in the first quarter was 1.3038 trillion won, up 39.1% compared to the previous quarter. Due to the influence of overseas Korean investors (Seohak Gaemi), commission income from foreign currency securities trust fees also increased by 85.6% to 281.8 billion won compared to the previous quarter.

IB division commissions were 1.2073 trillion won, up 5.5% from the previous quarter, and asset management division commissions increased by 20.9%.

Proprietary trading profits, which securities firms earn by trading stocks, bonds, and derivatives, rose 59.8% from the previous quarter to 1.0818 trillion won. Stock-related profits and bond-related profits increased by 515.2 billion won and 338.1 billion won respectively compared to the previous quarter. On the other hand, derivative-related losses decreased by 448.6 billion won.

The total assets of 57 securities companies in the first quarter of this year amounted to 618.6 trillion won, up 1.5% from 609.3 trillion won at the end of last year. Total liabilities increased by 1.4% to 549 trillion won. The total equity capital of all securities firms rose 2.7% to 69.6 trillion won.

The net profit of four futures companies in the first quarter was 11.1 billion won, up 131% from the previous quarter. This was due to an increase of 14.2 billion won in trust fees.

The Financial Supervisory Service explained, "Securities firms' net profits have been continuously increasing due to the stock market boom that has continued since last year." However, it analyzed that there is a possibility of deterioration in securities firms' profitability if investors withdraw due to future stock market downturns or domestic and international economic uncertainties. A Financial Supervisory Service official stated, "We plan to closely monitor the impact of domestic and international risk factors, such as domestic and foreign stock markets, on the profitability and soundness of securities companies."

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