"2nd Quarter at Giant Step"… NH Investment & Securities Down 60.8% from Last Year

2Q Operating Profit 154.2 Billion
Bond Management Losses Significantly Impact Performance
Brokerage Declines Due to Reduced Trading Volume and Overseas Stocks
IB Division Performs Well... 27% Increase Compared to Q1

[Asia Economy Reporter Hwang Yoon-joo] NH Investment & Securities recorded poor performance in the second quarter due to the impact of high-intensity tightening policies. Bond valuation losses had a significant effect on the deterioration of results.

According to NH Investment & Securities on the 26th, consolidated operating profit for the second quarter of this year was preliminarily estimated at 154.2 billion KRW, down 60.8% compared to the same period last year. During the same period, sales increased by 93.8% to 4.0497 trillion KRW compared to the same period last year, while net profit decreased by 55.8% to 119.6 billion KRW.

The biggest factor behind the poor performance was bond valuation losses caused by increased interest rate volatility. NH Investment & Securities recorded bond operation gains and losses of 133.4 billion KRW on a consolidated basis, but a loss of 100.1 billion KRW on a separate basis.

As the U.S. Federal Reserve (Fed) raised rates by 50 basis points (1bp=0.01 percentage points) in May and 75 basis points in June, bond interest rate volatility intensified, causing bond operation losses to far exceed expectations. However, since market interest rates have shown a clear downward trend since July, recovery is expected in the second half of the year.

Brokerage commissions also decreased by 11.1% from the first quarter to 99.3 billion KRW. This was due to an 8% decrease in market trading volume compared to the first quarter and an 18% decline in overseas stock revenue to 17.3 billion KRW. An NH Investment & Securities official explained, "The market deteriorated, with the average daily trading volume dropping 12.8% from the first quarter to 17.4 trillion KRW."

On the other hand, IB fee income increased by 27% from the first quarter to 110 billion KRW. Despite declines in IPO and bond underwriting, strong performance in acquisition financing, rights offerings, and financial advisory segments contributed to this growth. Interest income related to wealth management (WM) rose by 7% from the first quarter to 69.2 billion KRW, with improved profitability related to customer deposits.

NH Investment & Securities emphasized, "Despite unfavorable domestic and international investment environments such as decreased market trading volume and a sharp rise in bond interest rates, net profit increased by 16.9% compared to the previous quarter (102.3 billion KRW), achieving over 100 billion KRW for six consecutive quarters." They added, "We will mitigate volatility in bond operation gains and losses through portfolio rebalancing and maintaining a conservative risk management stance going forward."

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