Securities Firms with 1 Trillion Won Quarterly Net Profit Shake Up the Financial Sector... Nervous Financial Holding Companies Say "The Race for No. 1 Is Changing"

Securities Firms Lead with Brokerage and IMA, Surpassing Banks in Profitability

“Growth Limited with Banks Alone”... Rising Sense of Crisis Among Financial Holding Companies

Expanding Risk in Securities Divisions to Strengthen Capital Market

Domestic securities firms are rapidly catching up to banks in terms of performance, leveraging the booming stock market and shaking up the financial sector landscape. While bank-centered financial holding companies have experienced stagnation due to their limited profit structures centered on loans, financial groups with securities companies as their core affiliates are scaling up by capitalizing on explosive brokerage revenues from the stock market boom and expanding capital through the sale of Integrated Managed Accounts (IMA). In response, some financial holding companies are making efforts to strengthen their non-banking competitiveness, such as increasing the risk-weighted asset (RWA) limits for their securities affiliates.

According to financial information provider FnGuide on May 13, Mirae Asset Securities posted a net profit of 1.019 trillion won in the first quarter of this year, a 288% surge compared to the same period last year. This figure surpasses not only Woori Financial Group's 603.8 billion won, but also NH NongHyup Financial Group's 868.8 billion won. Mirae Asset Securities also recorded an operating profit of 1.375 trillion won in the first quarter, marking the first time in Korea’s securities industry that a quarterly operating profit surpassed 1 trillion won.

This reversal first emerged last year. Korea Investment & Securities posted an annual net profit of 2.0135 trillion won last year, overtaking NH NongHyup Bank, one of the top five financial holding companies, which reported 1.814 trillion won. The net profit gap with Woori Bank (2.6066 trillion won) was also minimal. With global investment banks raising their target for the KOSPI index to as high as 10,000 points, major Korean securities firms are expected to continue their strong performance for the time being. As a result, some believe that this year, the annual profits of certain securities firms could surpass those of commercial banks.

Just two years ago, the gap between the two sides was significant. In 2024, Mirae Asset Securities and Korea Investment & Securities posted annual net profits of 893.6 billion won and 1.1 trillion won, respectively. In contrast, Woori Bank’s net profit during the same period was 3.0394 trillion won, more than double that of major securities firms, and NH NongHyup Bank also recorded a net profit of 1.807 trillion won. Considering that Korea Financial Group's total net profit (1.033 trillion won) did not even match the profit of a single commercial bank at that time, the change is striking.

Banks are fundamentally structured to rely on interest income. However, since the inauguration of the Lee Jaemyung administration, persistent tightening of lending regulations and changes in the interest rate environment have made growth limitations more apparent. On the other hand, securities-centered financial groups have benefited from a surge in brokerage revenues, the flow of funds into the stock market, and expectations for the expansion of IMAs and promissory notes, creating a more favorable growth environment than banks. In particular, IMAs—referred to as “deposit equivalents offered by securities firms”—are proving to be a powerful driver. Korea Financial Group has already launched up to its fourth IMA product, and the cumulative funds raised through the first three products alone have reached 2.1 trillion won. A representative from a commercial bank stated, “The introduction of IMAs has given securities companies a major boost,” adding, “The ability to stably secure customer funds and deploy them for large-scale investments and operations poses the greatest threat.”

Given this situation, bank-centered financial holding companies are feeling a heightened sense of crisis. It is reported that Yang Jonghee, Chairman of KB Financial Group, recently voiced concerns about the rise of Mirae Asset Securities and Korea Investment & Securities during an executive meeting. As the financial market moves toward a structure centered on securities holding companies (Korea Investment & Securities, Mirae Asset), conglomerate holding companies (Samsung, Hanwha), and the five major financial holding companies, there is a growing recognition that the traditional bank-centered financial holding company model alone has its limitations. This is interpreted as a call to respond to the shift toward a capital market-centered structure, rather than simply competing on financial performance among holding companies. A senior official at KB Financial Group commented, “The rapid expansion of assets under management (AUM) at Mirae Asset Securities and Korea Investment & Securities is seen as the biggest threat factor.”

However, it is not easy for securities companies affiliated with financial holding companies to directly emulate the aggressive investment strategies of Mirae Asset Securities. This is because the holding company system itself puts them at a disadvantage in terms of risk allocation compared to securities-centered holding companies. Specialist securities firms such as Korea Investment & Securities and Mirae Asset can concentrate capital and risk on the securities business, while financial holding companies like Shinhan and KB must allocate RWA limits across multiple affiliates, including banks, cards, capital, and insurance. In other words, it is difficult for them to concentrate resources on a specific sector as dedicated securities firms do.

Nevertheless, signs of change are emerging. This reflects the growing need for changes in group-level capital allocation strategies against the backdrop of capital market expansion and a push for more productive finance. KB Financial Group is considering expanding the allocation of RWA—previously concentrated in banking—to the securities sector. However, the company explained that, given the high volatility of variables such as exchange rates and asset growth rates, it has not yet set concrete targets.

Shinhan Financial Group is reportedly taking a similar stance. A senior official at Shinhan Financial Group stated, “Recently, there is a growing consensus within the group that the securities business should be nurtured as a core pillar of the capital market, rather than merely serving as a supplement to banking,” adding, “Accordingly, there is a movement to gradually expand the targets and risk allocation for the securities sector.”

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