Securities Firms Earn Over 1.8 Trillion Won from 'Customer Deposits' in 4 Years

[Asia Economy Reporter Lee Jung-yoon] It has been revealed that securities firms have earned more than 1.8 trillion KRW over the past four years using customers' deposited funds.

According to data submitted by the Financial Supervisory Service to Yang Jeong-suk (Independent) of the National Assembly's Political Affairs Committee on the 20th, the total income earned by 30 domestic securities firms from customers' deposited funds from 2019 to 2022 amounted to 2.467 trillion KRW. During this period, the interest paid to customers was 596.5 billion KRW.

Customer deposits entrusted to securities firms are fully entrusted or deposited with Korea Securities Finance Corporation. Korea Securities Finance Corporation invests these funds and distributes the profits to the securities firms. Securities firms earn stable profits simply by entrusting or depositing customers' funds with Korea Securities Finance Corporation without bearing any significant risk from managing the deposits.

The deposit income rate earned by securities firms through Korea Securities Finance Corporation over the past four years was identified as a maximum of 1.94% and a minimum of 0.80%. In terms of amount, it was 451.3 billion KRW in 2019, 441 billion KRW in 2020, 501.2 billion KRW in 2021, and during the interest rate hike period in 2022, profits reached 1.0735 trillion KRW.

Estimated profits of the top five securities firms accounted for 1.4758 trillion KRW, representing 59.8% of the total. The profits are distributed intact to securities firms each year by applying the same interest rate according to the size of their deposited funds.

The usage fee rate paid by securities firms to customers who have deposited funds varies depending on the amount of individual deposits and the interest rate of the relevant year. From the end of 2020 to the end of 2022, if the deposit amount was less than 500,000 KRW, the average usage fee rate was around 0.1?0.2%; for 500,000 to less than 1,000,000 KRW, it was 0.2?0.3%; and for amounts over 1,000,000 KRW, it was 0.2?0.4%, averaging about 0.2%.

Considering the profits securities firms have earned from deposits so far, the actual proportion of profits returned to customers was only about one-quarter. The amounts paid by securities firms to customers from deposits were 173.9 billion KRW in 2019, 123.5 billion KRW in 2020, 102 billion KRW in 2021, and 197 billion KRW in 2022, totaling 596.5 billion KRW over four years. The top five securities firms paid 337.9 billion KRW, accounting for 56.6% of the total payments.

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