Securities Firms' Q3 Net Profit Up 10.5%... "Impact of IPO Market Boom and Increased IB Revenue"

[Asia Economy Reporter Park Ji-hwan] Despite the decrease in stock trading volume and the rise in government bond yields in the third quarter of this year, securities firms recorded a net profit growth of over 10% compared to the second quarter.

According to the Financial Supervisory Service on the 28th, the net profit of 58 securities companies in the third quarter of this year was tentatively estimated at 2.5162 trillion won, an increase of 10.5% (238.7 billion won) compared to the previous quarter. This was largely due to a 903.8 billion won (100.5%) increase in proprietary trading profits, mainly from derivative-related gains (677.8 billion won) and stock-related gains (269.2 billion won).

Looking at the revenue by sector in the third quarter, commission income remained at a similar level to the previous quarter. Total commission income was 4.1913 trillion won, a slight increase of 39 billion won (0.9%) compared to the previous quarter. Due to the decrease in trading volume, trust fees among commissions shrank by 6.7% to 1.8652 trillion won. IB sector commissions increased by 7.6% from the second quarter to 1.3746 trillion won. Asset management sector commissions rose by 10.3% compared to the second quarter, reaching 366.6 billion won.

Proprietary trading profits in the third quarter recorded 1.803 trillion won, an increase of 100.5%. The return on equity (ROE) was 10.8% (annualized 14.5%), up 3.8 percentage points from 7.0% in the same period last year.

The total assets of all securities firms at the end of the third quarter increased by 25.3 trillion won from the end of the second quarter to 655.1 trillion won. Total liabilities at the end of the third quarter were 579.4 trillion won, up 23.2 trillion won.

The average net capital ratio of all securities firms in the third quarter was 762.7%, an increase of 746.6 percentage points from the end of the second quarter. The average leverage ratio in the third quarter was 661.7%, up 3.1 percentage points.

The Financial Supervisory Service stated, "Despite the decrease in stock trading volume and the rise in government bond yields in the third quarter, high profits were continuously recorded," adding, "This was due to increased revenues in the IB sector and proprietary trading sector, driven by a booming initial public offering (IPO) market and hedge operations responding to market volatility."

The Financial Supervisory Service emphasized, "There remain domestic and international uncertainties such as investor withdrawal due to stock index declines and inflation concerns at home and abroad," and added, "We will continuously monitor the impact of potential domestic and international risks, including normalization of COVID-19 crisis response policies and worsening demand-supply imbalances in the post-COVID era, on the profitability and soundness of securities companies."

The net profit of four futures companies in the third quarter was tentatively estimated at 8.3 billion won, a decrease of 880 million won (8.8%) compared to the second quarter. Operating income such as commission revenue increased by 9.9 billion won (12.2%), but operating expenses due to derivative trading losses also increased by 10.7 billion won (15.4%). The total assets of futures companies were 4.7142 trillion won, up 384.9 billion won (8.9%) from the end of the second quarter.

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