Securities firms hit by earnings shocks
Hyundai, Daishin swing into red
By Yi Whan-woo
Domestic brokerage houses have been hit hard by worsening business performances due to the prolonged economic slump, with some major players seeing their balance sheets swing into the red.
According to the Financial Supervisory Service (FSS) Thursday, 62 local and foreign securities firms here posted a combined net profit of 113.1 billion won ($104.5 million) in the third quarter of fiscal year 2012, down 78 percent from the previous year’s 509.4 billion won. The financial year ends on March 31.
This is the lowest earnings in a single quarter since 2008 when the country was hit by the global economic crisis,” an FSS official said.
Hyundai Securities posted a net loss of 67.2 billion won over the cited period as did IBK and Daishin Securities, reporting net losses of 4.9 billion won and 10.2 billion won respectively.
Samsung Securities, the largest brokerage by market cap, saw a net profit of 17 billion won in the third quarter, down 73.7 percent from three months earlier. Woori Investment and Securities managed net profit of 2.1 billion won but down 95.5 percent from a year earlier.
The financial watchdog said the dismal performances are mainly attributed to decreasing trade volume on the local stock market. The volume dropped 9.1 percent to 384.5 trillion won from 422.8 trillion won in the second quarter of fiscal 2012.
The decrease in trading volume led to commission income falling from 1.57 trillion between July and September to 1.48 trillion won in the third quarter.
“The reduced amount of commission income coupled with other outside factors caused the brokerage houses to suffer low earnings,” an FSS official said.
The official mentioned the fiscal cliff in the United States, the eurozone crisis and the sluggish economy in China as well as a decrease in bond-related profits for firms as also impacting earnings.
“The global economy is seeing a slow recovery and that could continue to influence our earnings,” said Woori Investment and Securities analyst Park Sun-ho. “We expected it but the outcome is worse than we anticipated.”
“Commission income decreased due to the falling trading volume, and losses made from shares listed on the main bourse also added to the weak performances,” a Hyundai Securities official said.
The firms’ combined brokerage income reached 888.7 billion won in the third quarter, dipping 33.8 percent from a year earlier. The firms also logged a 21 percent loss in bond-related profits for a combined 108.5 billion won, as yields on government bonds gained.