NH Investment & Securities Target Performance 'Halved'

[Asia Economy Reporter Park So-yeon] NH Investment & Securities has tarnished its reputation as an industry-leading company by failing to achieve even half of its original performance targets.

According to the financial investment industry on the 25th, NH Investment & Securities set its net profit target for this year at 750 billion KRW. If the plan had proceeded as expected, the net profit for the first half of the year should have exceeded 350 billion KRW, but it is reported to have remained around 200 billion KRW.

There are also forecasts that even with full efforts in the second half of the year amid the sluggish stock market, it will be difficult to exceed a net profit of 500 billion KRW. NH Investment & Securities recorded a net profit of 102.3 billion KRW in the first quarter. The net profit forecast for the second quarter is 115 billion KRW.

The biggest cause of the poor performance is the deterioration of external conditions such as a decrease in trading volume and a decline in bond prices.

According to the Korea Exchange, the average daily stock market trading volume in the first quarter of this year was 19.8 trillion KRW, a decrease of more than 40% compared to the same period last year. In the second quarter, the average daily trading volume was 17.2 trillion KRW, down 13% from the previous quarter. The interest rate hike has led not only to a reduction in stock market liquidity but also to a decline in bond prices (rise in bond yields), expanding valuation losses and operational losses.

The securities industry expects NH Investment & Securities' second-quarter net profit to fall short of consensus. The downward trend in brokerage commissions is expected to continue through the third quarter. It is estimated that losses related to bond operations expanded around June due to rising interest rates and increased market volatility.

Another key factor in NH Investment & Securities' poor performance is the series of IPOs of companies it underwrote that have been canceled. Following the withdrawal of SK Shieldus and One Store, for which NH Investment & Securities was the lead underwriter, Hyundai Oilbank, which had been highly anticipated as a major IPO this year, also withdrew its listing. Feeling the crisis, NH Investment & Securities is attempting a strong overhaul by newly appointing three department heads in the ECM (Equity Capital Market) division, but it still shows significantly poor performance compared to competitors.

According to the Korea Exchange, the companies for which NH Investment & Securities has underwritten IPOs this year include BCNC, Easytronics, and Bumhan Fuel Cell, totaling five companies with a public offering amount of 272.974 billion KRW. This compares to KB Securities (4 companies, 12.827354 trillion KRW), Korea Investment & Securities (10 companies, 302.79 billion KRW), and Mirae Asset Securities (5 companies, 174.076 billion KRW).

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