Securities Firms’ Q3 Net Profit at 2.5 Trillion Won... Down 12.6% from Previous Quarter

In the third quarter, the net profit of domestic securities firms decreased by more than 10% compared to the previous quarter. While commission income, including entrusted commission fees, increased due to the revitalization of the stock market, it is analyzed that profits related to bonds declined. In particular, the decline in foreign exchange-related profits was significant due to the rise in exchange rates.

According to the 'Third Quarter Operating Results (Provisional) of Securities and Futures Companies' released by the Financial Supervisory Service on December 3, the net profit of 60 securities firms in the third quarter was 2.4923 trillion won, down 12.6% (357.9 billion won) from the previous quarter. During the same period, the return on equity (ROE) of securities firms was 2.6%, a decrease of 0.5 percentage points.

An official from the Financial Supervisory Service explained, "In the third quarter, securities firms achieved strong results, with net profit increasing by 37.6% year-on-year thanks to the revitalized stock market. However, net profit decreased somewhat compared to the previous quarter, as profits related to bonds and other areas declined due to rising market interest rates during the quarter."

Looking at the profit and loss status by major category, the increase in commission income for securities firms in the third quarter stands out. It reached 4.3945 trillion won, up 14.1% (543.8 billion won) from the previous quarter. In particular, as stock trading volume increased, entrusted commission fees rose by 19.6% (373.9 billion won) to 2.2775 trillion won. Investment banking (IB) commission income was 1.0154 trillion won, similar to the previous quarter.

Proprietary trading profit in the third quarter was 3.5033 trillion won, an increase of 8% (258.8 billion won) from the previous quarter. Other asset profit was 967.2 billion won, nearly halved from 1.7783 trillion won in the previous quarter. Loan-related profit (1.1776 trillion won) increased by 106.7 billion won, while foreign exchange-related profit (-210.4 billion won) decreased by as much as 917.9 billion won due to the impact of rising exchange rates. Meanwhile, selling and administrative expenses were 3.471 trillion won, similar to the previous quarter.

As a result, as of the end of September, the total assets of securities firms stood at 908.1 trillion won, an increase of 56.4 trillion won (6.6%) compared to the end of June. Liabilities were 807.3 trillion won and equity was 100.7 trillion won, up 6.9% and 4.4%, respectively.

During the same period, the average net capital ratio of securities firms was 920.2%, and the average leverage ratio was 670.5%, up 84.6 percentage points and 4.1 percentage points, respectively, from the end of June.

Meanwhile, the net profit of the three domestic futures companies in the third quarter was 23.07 billion won, up 2.4% (540 million won) from the previous quarter. The return on equity (ROE) for futures companies in the third quarter was 3.1%, the same as the previous quarter. As of the end of September, total assets were 6.2061 trillion won, liabilities were 5.4177 trillion won, and equity was 788.4 billion won. Compared to the end of June, assets and liabilities decreased by 1.3% and 2.0%, respectively, while equity increased by 3.3%.

An official from the Financial Supervisory Service stated, "There are concerns that financial market uncertainty could increase due to the recent expansion of stock price volatility, as well as rises in exchange rates and market interest rates. We will continue to monitor the soundness of securities firms and push for improvements in capital and liquidity regulations, while also encouraging and supporting the supply of venture capital, mainly through issuance notes and comprehensive investment accounts (IMA)."

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