Samsung and Hanwha Investment & Securities Provide PF Credit of 2.5 Trillion Won... Largest in the Industry

Ebest Securities PF Credit Exposure Balance Increases by 33%

The scale of real estate project financing (PF) credit extensions by Samsung Securities and Korea Investment & Securities both recorded around 2.5 trillion won, marking the largest level in the securities industry. While PF credit extensions are considered the biggest risk factor in the securities industry this year, some securities firms such as Ebest Investment & Securities saw their PF credit extension balances increase by up to about 33%.

According to the industry on the 26th, as of that day, the outstanding balance of real estate PF credit extensions by domestic securities firms was tallied at 21.4665 trillion won. Among them, Korea Investment & Securities and Samsung Securities had PF credit extension scales of 2.5663 trillion won and 2.5297 trillion won respectively, both exceeding 2.5 trillion won, making them the largest in the securities industry.

Meritz Securities (2.301 trillion won) and KB Securities (2.06 trillion won) also ranked high with amounts in the 2 trillion won range. Following them were Mirae Asset Securities (1.449 trillion won), NH Investment & Securities (1.0746 trillion won), and Hana Securities (1.0315 trillion won), all exceeding 1 trillion won. Notably, Samsung Securities, Meritz Securities, and Hana Securities had their entire PF credit extensions as purchase commitments.

Real estate PF credit extensions by securities firms are broadly divided into purchase guarantees and purchase commitments. Purchase commitments carry higher risk as securities firms receive higher fees. Purchase guarantees involve securities firms providing liquidity only for refinancing securitized bonds, whereas purchase commitments require securities firms to repay loans or purchase shortfalls if the developer fails to repay the PF loan or if investors withdraw, causing a shortage in refinancing securitized bonds.

While the total outstanding balance of PF credit extensions by securities firms slightly decreased compared to the end of last year (21.4857 trillion won), some securities firms saw their balances increase during the same period. The highest growth rate was at Ebest Investment & Securities, which rose 32.7% from 268.9 billion won at the end of last year to 356.7 billion won currently. Korea Investment & Securities increased by 32.1% compared to the end of last year (1.9434 trillion won), and IBK Investment & Securities also grew 25.0% from 431.6 billion won to 539.7 billion won. Meritz Securities increased by 18.9% from 1.9346 trillion won.

Although problems caused by PF defaults in securities firms have not yet surfaced, experts expect an adverse impact on securities firms’ earnings first. KB Securities researcher Kang Seung-geon explained, "The securities firms’ earnings in the second quarter will be sluggish in terms of absolute profit size due to provisions and impairment recognition related to real estate PF. While the delinquency rate will stabilize if delinquent bonds are written off to manage the delinquency rate, related costs will be reflected in the second quarter earnings."

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