[Column] Planning to Fill the Stomach with 1 Trillion Won Using 'Debt Investment Interest' Taken from Ant Wallets

[Asia Economy Reporter Lee Seon-ae] 861.9 billion KRW. This is the interest income earned by domestic securities firms through individual margin trading loans in the first half of this year. Although the stock market has been sluggish this year and the scale of individual investors' leveraged investments (debt-financed investments) has decreased, it increased by nearly 10 billion KRW (9.5 billion KRW) compared to the first half of last year (852.4 billion KRW), when leveraged investments surged significantly. It is more than twice the amount of the first half of 2019 (390.4 billion KRW) and 2020 (364 billion KRW).

By securities firm, Samsung Securities (138.1 billion KRW), Kiwoom Securities (122.4 billion KRW), Mirae Asset Securities (115.7 billion KRW), and NH Investment & Securities (104.9 billion KRW) ranked highest in interest income, each earning over 100 billion KRW. Despite the decrease in leveraged investments, why did securities firms' interest income increase? It is due to high interest rates. Securities firms have been raising the interest rates on margin trading loans one after another, with some places even exceeding a 'leveraged investment interest rate' of 10%.

This year, individual investors have been sitting on a 'loss cushion' due to the sharp decline in the stock market. It is difficult for them even to pay interest. On the other hand, securities firms are filling their granaries with interest from leveraged investments without worrying about losses from margin loans. As of the end of the first half, the scale of securities firms' margin trading loans approached 18 trillion KRW, but the allowance for doubtful accounts set in advance in accounting to anticipate losses is only 15.7 billion KRW. This means that the proportion of the amount expected to incur losses due to difficulty in repayment among the money lent by securities firms is only 0.08%. The reason is the safety device called 'forced liquidation.'

Securities firms lend money by using stocks already owned by investors as collateral when providing margin trading loans. If an investor using margin trading fails to maintain the required collateral maintenance ratio, the securities firm initiates forced liquidation by selling the relevant stocks at the lower limit price (-30%) at the market opening the next day, effectively preventing losses. Margin trading loans have a 'three-piece set' of stock collateral, collateral ratio, and forced liquidation, making the possibility of losses for securities firms zero (0%). Because of this, there is criticism that securities firms charging around 10% interest are making excessive profits. The securities firms' claim that they must maintain high interest rates due to risk management costs and funding rates sounds like a weak excuse. Some securities firms do not even provide margin trading loans with their own funds.

Nevertheless, KB Securities announced that it will raise the interest rate on margin trading loans by 0.3 to 0.7 percentage points starting next month. There is a prevailing view that the industry leader Mirae Asset Securities will also raise interest rates soon. Earlier, securities firms raised interest rates one after another this year as the Bank of Korea increased the base rate, and some securities firms are already applying interest rates exceeding 10%.

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