Last Year Securities Firms' Stock Investment Gains Soared 710%... Net Income Approaches 10 Trillion Won

[Asia Economy Reporter Ji Yeon-jin] Last year, the net income of 58 domestic securities firms approached 10 trillion won. This was due to increased commission revenue from the stock market boom, and stock-related profits surged by 710%.

According to the provisional business performance of securities and futures companies for 2021 announced by the Financial Supervisory Service on the 21st, the net income of 58 securities companies last year was 9.0941 trillion won, an increase of 3.1968 trillion won (54.2%) from the previous year (5.8973 trillion won). The return on equity was 12.5%, up 3.4 percentage points from 9.1% the previous year.

The commission revenue of these securities firms was 16.8048 trillion won, up 3.1613 trillion won (23.2%) from 13.6435 trillion won the previous year, and custody fees recorded 8.0708 trillion won as stock trading volume increased. This is nearly a 1 trillion won (977.8 billion won, 13.8%) increase compared to the previous year. The trading volume in the KOSPI market expanded from 1,194 trillion won in 2019 to 2,968 trillion won in 2020, and further increased to 3,760 trillion won last year. The KOSDAQ market also rose from 1,060 trillion won to 2,941 trillion won during this period. In particular, as the number of Seohak Gaemi (Korean investors investing in U.S. stocks) increased, foreign currency securities custody fee revenue rose by 303.2 billion won (55.4%) to 850.7 billion won from 547.5 billion won the previous year.

IB division fees increased by 31.9% year-on-year to 5.1901 trillion won, and asset management division fees rose 33.1% to 1.3699 trillion won.

Proprietary trading profits recorded 4.9675 trillion won last year, an increase of 1.7293 trillion won (53.4%) from 3.2382 trillion won the previous year. In particular, stock-related profits surged by 710.4% to 1.7013 trillion won compared to the previous year. A Financial Supervisory Service official explained, "Compared to the end of 2020, the KOSPI and KOSDAQ indices rose sharply, increasing the valuation gains and investment income of stocks held by securities firms."

Derivative-related profits increased by 168.8% to 1.1023 trillion won, while bond-related profits decreased by 57.7% (2.9545 trillion won) to 2.1639 trillion won last year due to the rising bond yields.

Other asset profits of securities companies last year increased by 18.6% to 4.5966 trillion won compared to a year earlier. Due to the effect of increased credit extension, loan-related profits rose 45.2% to 3.5957 trillion won, and foreign currency asset profits increased by 370.7% following the rise in the won-dollar exchange rate.

At the end of last year, the total assets of all securities companies amounted to 620 trillion won, up 1.6% (9.9 trillion won) from 610.1 trillion won a year earlier, and total liabilities increased by 100 billion won to 542.4 trillion won.

While sales of equity-linked securities (ELS) and other sold derivative-linked securities decreased by 7.1%, long-term funding such as bonds and borrowings increased by 22.6%. At the end of last year, the total equity capital of all securities companies was 77.6 trillion won, an increase of 9.8 trillion won from 67.8 trillion won at the end of the previous year.

Meanwhile, the net income of four futures companies was 34 billion won, down 300 million won (0.9%) from the previous year, and the return on equity (ROE) fell 0.7 percentage points to 6.8% compared to the previous year.

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