Investment banking bolsters brokerages' Q1 earnings

By Kim Bo-eun

Local securities firms recorded an earnings surprise in the first quarter, largely due to robust performances in investment banking.

According to data from the Financial Supervisory Service, investment banking accounted for more than 30 percent of the operating income of major brokerages, including NH Investment and Securities, Mirae Asset Daewoo and Meritz Securities.

NH recorded 237 billion won in operating income in the first quarter, up 34.5 percent from the same period a year earlier. Its net profit for the same period grew 33.6 percent to 171.1 billion won.

Operating income from investment banking stood at 89.9 billion won or 37.9 percent of the total, up from 22.3 percent in the previous quarter.

Mirae Asset Daewoo posted 142 billion won in operating income and 168.2 billion won in net profit, each down 33.8 percent and 16.2 percent from a year earlier.

However, considering over 80 billion won were costs incurred from voluntary resignations, the brokerage performed better than forecast.

For the company, operating income from investment banking came down to 74.6 billion won, accounting for 52.5 percent of total operating income, up from 23.2 percent from a year earlier.

Meritz posted 165.9 billion won in operating income and 141.3 billion won in net profit, each up 22.8 percent and 38.6 percent.

Earnings from investment banking stood at 88.9 billion won.

KB also saw its operating income and net profit grow 0.5 percent and 6.6 percent to 117.6 billion won and 87.3 billion won, respectively.

Operating income from investment banking was 32.1 billion won, a 103.2 percent growth from the same period a year earlier. The operating income from investment banking accounted for 27.3 percent of total operating income.

“Securities firms' performance was due to earnings from investment banking, asset management and brokerage services,” an analyst at KB Securities said.

“While unexpected factors may have weighed in, the brokerages are expected to maintain their level of earnings, based on solid earnings from investment banking, even if the stock market declines,” he said.