Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Securities firms suffer major setback in Q1 earnings
By Anna J. Park
By Anna J. Park
Major securities firms in Korea have recorded a significant drop in first-quarter profit due to the negative effects of COVID-19.
According to their earnings reports published earlier in the week, four brokerage houses affiliated with Korea's four major financial groups ― Hana, Shinhan, NH and KB ― saw their combined net profit for the first three months of this year fall by more than 70 percent.
Combined profit for the first quarter was 110.9 billion won ($90.9 million), a 71.7 percent drop on the same period last year. On a quarter-on-quarter basis, the figure decreased 56 percent.
KB Securities logged a net loss of 14.7 billion won in the first quarter, down 130 percent from a year ago, the first red figure since the fourth quarter of 2018. The loss was mainly due to its equity-linked securities (ELS) risk-hedging efforts and total return swap (TRS) deals related to Lime Asset Management scandals.
NH Investment & Securities' net profit declined 81.2 percent. Although the firm had a 42.3 percent increase in brokerage income and an 11.8 percent increase in its investment banking (IB) department, it could not avoid a major profit decline in proprietary trading.
Hana and Shinhan Investment & Securities posted relatively lower drops in their quarterly profits.
“The firms' investment banking results turned out to be generally OK compared to expectations, yet a sharp fall in profits from proprietary trading was a main cause of the poor results,” Kang Seung-gun, an analyst at Hi Investment & Securities, said.
Mirae Asset Daewoo, the top performer in the nation's securities industry, logged a net profit of 107.1 billion won in the first quarter, down 36.3 percent from a year earlier.
Most securities firms raked in increased profit from brokerage, as retail investors flocked to the stock market following crashes in February and March amid the COVID-19 pandemic. However, brokerage income was not large enough to offset profit declines in other areas.
According to the Korea Securities Depository (KSD), the daily average stock trading volume in the first quarter increased 64.1 percent compared to the previous quarter.