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 closing the performance gap with banks by capitalizing on a bullish stock market, shaking up the landscape of the financial sector. While bank-centered financial holding companies are experiencing stagnant growth due to a limited, loan-focused profit structure, financial groups with securities firms as core affiliates are scaling up their operations through a surge in brokerage revenues driven by the stock market boom and capital expansion via Integrated Investment Accounts (IMA) sales. As a result, some financial holding companies are striving to strengthen their non-banking competitiveness by expanding the risk-weighted asset (RWA) limits for their securities subsidiaries.

According to the financial sector on May 13, Mirae Asset Securities posted a consolidated net profit of 1.019 trillion won in the first quarter of this year, becoming the first in the securities industry to usher in the “era of 1 trillion won in quarterly net profit.” This figure surpasses both Woori Financial Group, which relies heavily on banking profits (net profit of 603.8 billion won), and even NH NongHyup Financial Group (net profit of 868.8 billion won). As global investment banks raise their KOSPI index targets to as high as 10,000 points, the strong performance of major domestic securities firms is expected to continue for the time being. Consequently, there is even speculation that this year, the annual profits of some securities firms could surpass those of commercial banks.

This reversal trend has been evident since last year. Korea Investment & Securities recorded an annual net profit of 2.0135 trillion won last year, surpassing NH NongHyup Bank (1.814 trillion won), a core affiliate of Korea's top five financial groups. The gap with Woori Bank (2.6066 trillion won) was also minimal.

Just two years ago, the size difference between the two sides was significant. As of 2024, the annual net profits of Mirae Asset Securities and Korea Investment & Securities were 893.6 billion won and 1.1 trillion won, respectively. During the same period, Woori Bank posted a net profit of 3.0394 trillion won—more than double that of major securities firms—while NH NongHyup Bank also recorded a net profit of 1.807 trillion won. Considering that the total net profit of Korea Financial Holdings (1.033 trillion won) at the time did not even match the profit of a single commercial bank, it is a dramatic change.

Banks are fundamentally structured to rely on interest income. However, since the inauguration of the Lee Jaemyung administration, the continued tightening of lending regulations and changes in the interest rate environment have made growth limitations more apparent. In contrast, securities-centered financial groups have enjoyed a favorable growth environment, driven by a surge in brokerage income, a “money move” (capital shift) into the stock market, and expectations for the expansion of IMAs and promissory notes. In particular, the IMA—often referred to as the “securities firm’s version of a deposit”—is a significant growth driver. Korea Financial Holdings has already launched up to its fourth IMA product, with cumulative funding from the first three alone reaching 2.1 trillion won. A commercial bank official stated, “The introduction of IMA has given securities firms wings. The ability to stably procure customer funds for large-scale investments and operations is the biggest threat.”

Given these developments, bank-centered financial holding companies are feeling significant pressure. Yang Jonghee, Chairman of KB Financial Group, reportedly directly mentioned Mirae Asset Securities and Korea Investment & Securities at a recent executive meeting, expressing concern about the rise of securities holding companies. As the financial market shifts toward a structure of securities holding companies (Korea Investment Holdings, Mirae Asset), conglomerate holding companies (Samsung, Hanwha), and the five major financial holding companies, there is a growing recognition that the traditional, bank-focused financial holding company model has limitations. This is interpreted as a call to respond to a broader shift toward a capital market-centered paradigm, rather than just competition among financial holding companies. A high-ranking executive at KB Financial Group said, “The rapid expansion of AUM (assets under management) at Mirae Asset Securities and Korea Investment & Securities is seen as the most significant threat factor.”

However, it is not easy for securities affiliates under financial holding companies to emulate the aggressive investment strategies of firms like Mirae Asset Securities. This is because the holding company structure itself is at a disadvantage in risk allocation compared to securities-centered financial groups. Dedicated securities firms such as Korea Investment Holdings and Mirae Asset can concentrate capital and risk in the securities business, but financial holding companies like Shinhan and KB must distribute their RWA limits among multiple subsidiaries, including banks, card, capital, and insurance companies. Thus, it is structurally difficult to channel resources into a particular sector as dedicated securities firms do.

Nevertheless, signs of change are emerging. This reflects a growing consensus that capital allocation strategies at the group level must evolve in response to the expansion of the capital market and the move toward more productive finance. KB Financial Group is considering expanding the allocation of RWA, previously concentrated in banking, to its securities division. However, the company explained that due to volatility in factors such as exchange rates and asset growth rates, it has not yet set specific targets.

Shinhan Financial Group is showing a similar trend. A high-ranking official at Shinhan Financial Group said, “Recently, there has been a strengthened internal direction that securities should be fostered not as a simple auxiliary to banking, but as a core pillar of the capital market. Accordingly, there is a growing movement to gradually expand targets and risk allocation for the securities division.”