Daishin Securities Ranks Number One in Real Estate Rental Income Among Securities Firms

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[Asia Economy Reporter Park Jihwan] Domestic securities firms have been generating substantial profits from ancillary businesses such as real estate leasing, in addition to their main revenue sources like commission income. In some securities firms, rental income accounted for as much as 25% of their total net profit.

According to the Korea Financial Investment Association on the 18th, the total rental income of 24 securities firms that earned rental revenue in the first half of this year was 36.964 billion KRW, a 9.54% decrease compared to 40.862 billion KRW during the same period last year. This decline is attributed to the overall reduction in rental income across the industry due to initiatives like rent reductions aimed at supporting self-employed individuals affected by COVID-19, known as the "good landlord" movement.

The securities firm with the highest rental income was Daishin Securities, which earned 8.894 billion KRW in rental income in the first half of this year. This amount represents 8.8% of its half-year net profit of 101.3 billion KRW. Since relocating to Daishin Finance Center in Myeongdong in December 2016, Daishin Securities has been generating approximately 20 billion KRW annually in rental income.

Kyobo Securities and Shinhan Financial Investment also earned 4.947 billion KRW and 4.547 billion KRW respectively in rental income over six months, reaching an annual rental income level of around 10 billion KRW.

Following them were KB Securities with 3.774 billion KRW, Yuanta Securities with 2.99 billion KRW, Shinyoung Securities with 2.638 billion KRW (converted on a half-year basis for the March fiscal year-end corporation), Yuha Securities with 2.049 billion KRW, NH Investment & Securities with 2.024 billion KRW, Kiwoom Securities with 1.793 billion KRW, and Bookook Securities with 1.134 billion KRW.

The securities firm most dependent on rental income was Yuha Securities. In the second quarter, Yuha Securities earned a total of 2.049 billion KRW in rental income, a 136.8% increase from 865 million KRW in the same period last year. Rental income accounted for 23.7% of its net profit of 8.645 billion KRW in the first half of this year. Yuha Securities' rental income even significantly exceeded its commission income of 1.556 billion KRW, making it an essential source of revenue for the company. Daishin Securities, Kyobo Securities, and Bookook Securities also had rental income proportions relative to net profit of 8.8%, 5.4%, and 3.0% respectively, much higher than the industry average of 0.8%.

Although rental income is not a core business of securities firms, it is considered a stable revenue source as it can yield returns higher than market interest rates. Recently, as non-face-to-face channels such as Mobile Trading Systems (MTS) have become the primary means of trading, securities firms are actively pursuing strategies to secure profitability through idle real estate. As of the end of June, the number of domestic branches in the industry decreased by 38 from 854 in the first half of last year to 816. An industry insider stated, "Strategies to increase asset value through remodeling of idle real estate, such as closed branches, and securing rental income are emerging as key business strategies."

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