'Record-Breaking Profit Party' Net Income 10 Trillion... Mirae and KTB Securities Fierce Competition "Separating Wheat from Chaff"

[Asia Economy Reporter Lee Seon-ae] This year, domestic securities firms in Korea are expected to hold a record-breaking "money festival." The combined net profit of the top 10 large domestic securities firms is projected to reach 10 trillion won this year. The number of securities firms joining the annual operating profit "1 trillion won club" is also expected to increase significantly. The fierce competition for the top spot in performance between Mirae Asset Securities and Korea Investment & Securities is a key point to watch, and the advances of small and medium-sized securities firms are also notable. However, next year is expected to be a stage for "separating the wheat from the chaff" due to factors such as a decrease in trading volume.

◆ Mirae Asset and Korea Investment & Securities take 1st place in operating profit and net profit respectively = According to the financial investment industry on the 2nd, the competition for the top performance between Mirae Asset Securities and Korea Investment & Securities is intense. Korea Investment & Securities surpassed an unprecedented net profit of 1 trillion won on a cumulative basis through the third quarter. The net profit through the third quarter was 1.2043 trillion won, which is a 186.2% surge compared to the same period last year. It is highly likely to reclaim the annual net profit leadership that Mirae Asset Securities recorded last year.

Mirae Asset Securities’ cumulative net profit through the third quarter was recorded at 975.7 billion won. However, Mirae Asset Securities boasts the largest operating profit in the securities industry. Mirae Asset Securities achieved an operating profit of 1.2506 trillion won through the third quarter this year. It also secured the title of the first securities firm to achieve 1 trillion won for two consecutive years.

The performance of other large securities firms is also soaring. Samsung Securities’ net profit reached 821.7 billion won through the third quarter this year, and NH Investment & Securities’ net profit was recorded at 794.3 billion won. If the figures are tallied through the fourth quarter, their net profits are also expected to reach 1 trillion won. A financial investment industry official said, "The net profit of the top 10 large domestic securities firms is estimated to be around 7 trillion won through the third quarter," adding, "If the performance is tallied through the fourth quarter, 10 trillion won can also be expected."

◆ Eight firms in the operating profit '1 trillion won club'... advances of small and medium-sized firms = The operating profits of securities firms are also soaring. As of the third quarter this year, the securities firms that have joined the operating profit "1 trillion won club" are Mirae Asset Securities (1.2506 trillion won), Samsung Securities (1.1183 trillion won), Korea Investment & Securities (1.0637 trillion won), and NH Investment & Securities (1.0601 trillion won), totaling four firms. If the fourth quarter results are included, four more firms are expected to join, making a total of eight firms in the 1 trillion won club.

Kiwoom Securities’ cumulative operating profit through the third quarter was 960.8 billion won, making its entry into the 1 trillion won club this year highly likely. Daishin Securities (818.4 billion won), Meritz Securities (765.7 billion won), and KB Securities (729.5 billion won) are expected to reach 1 trillion won depending on their fourth quarter results.

The advances of small and medium-sized securities firms are also attracting attention. Among small and medium-sized firms, five securities companies are already certain to surpass 100 billion won in annual operating profit this year. Kyobo Securities (169.2 billion won) and IBK Investment & Securities (118.5 billion won) exceeded 100 billion won in cumulative operating profit as of the third quarter. Kyobo Securities’ operating profit jumped 80.86% compared to the same period last year, and IBK Investment & Securities’ growth rate also reached 41.23%. KTB Investment & Securities (97.7 billion won), Hanyang Securities (96.8 billion won), and Eugene Investment & Securities (95.6 billion won) are also expected to easily surpass 100 billion won.

◆ Next year’s performance depends on IB and WM results = This year’s strong performance in the securities industry is due to increased brokerage commission income from higher average daily trading volume and strong results in investment banking (IB) and wealth management (WM) sectors. However, next year, a decrease in trading volume is expected to lead to weaker performance, making it a stage for distinguishing the strong from the weak. Due to the spread of the new COVID-19 variant Omicron and inflation concerns, investment sentiment has rapidly weakened, causing a sharp decline in stock market trading volume.

Jung Joon-seop, a researcher at NH Investment & Securities, said, "Concerns about liquidity reduction due to U.S. tapering (asset purchase reduction) and rising domestic and international interest rates, as well as increased profit-taking demand, have caused investment contraction," adding, "A decrease in demand for financial product investments due to market liquidity reduction, a decrease in trading volume, concerns about reduced bond management income from ELS self-hedging and issuance of promissory notes are expected."

Kang Seung-geon, a researcher at KB Securities, also analyzed, "With the average daily trading volume expected to fall from about 27.1 trillion won this year to about 22.6 trillion won next year, brokerage commission income is expected to decrease by 15%, and related interest income will also decrease by 5.9% due to a decline in average credit balance."

Accordingly, next year, the profit and loss of the WM and IB sectors are expected to determine the performance of securities firms. Jang Hyo-seon, a researcher at Samsung Securities, predicted, "The growth trend in the securities industry’s IB sector will continue next year."

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