Domestic Securities Firms' Overseas Subsidiaries' Net Profit Plummets 57%... Impact of Stock Market Slump

Last year, the net income of overseas local subsidiaries of domestic securities firms in South Korea was found to have decreased by approximately 57% compared to the previous year.

According to the "2022 Operating Performance of Overseas Branches of Domestic Securities Companies" announced by the Financial Supervisory Service on the 3rd, the net income of overseas subsidiaries of domestic securities firms was $12.383 million (approximately 156.9 billion KRW), a 56.9% decrease from the previous year. This accounted for about 5.3% of the net income of 14 securities firms. Among 60 overseas local subsidiaries, 35 recorded profits while 25 posted losses.

Among the 14 countries where securities firms have entered, a total profit of approximately $15.58 million was recorded in 11 countries including Vietnam and the United States, while losses of about $3.2 million were reported in three countries including Thailand and Singapore.

As of the end of last year, 14 securities firms have expanded into 14 countries, operating 72 overseas branches. The distribution of branches was 56 in Asian regions such as China, Indonesia, and Vietnam, 11 in the United States, 4 in the United Kingdom, and 1 in Brazil. Over the past five years, the number of branches in China and Hong Kong has decreased, while expansion into Southeast Asian regions such as Indonesia, Thailand, and Vietnam has increased.

The total assets of overseas local subsidiaries amounted to $27.75 billion (approximately 35.2 trillion KRW), accounting for about 7.6% of the total assets of the 14 securities firms. The equity capital was $7.55 billion (approximately 9.6 trillion KRW), representing about 17.1% of the equity capital of the 14 securities firms.

Since 2017, the overseas expansion of securities firms has shown a slight upward trend. While the number of overseas branches in Southeast Asian regions such as Indonesia, Singapore, and Thailand increased, those in China and Hong Kong decreased.

The Financial Supervisory Service evaluated that although the net income of overseas local subsidiaries of securities firms significantly decreased last year due to sluggish stock markets in major countries, the impact on the overall soundness and profitability is limited since the net income of overseas subsidiaries accounts for only 5.3% of the total net income of securities firms.

A Financial Supervisory Service official stated, "We will continuously collect and actively support solutions for any difficulties and suggestions for institutional improvements that may arise when securities companies expand overseas," adding, "We will strengthen the monitoring system to proactively identify potential risk factors that may occur due to overseas expansion."

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