Securities firms reduce dividends amid earnings declines

Financial district of Yeouido in Seoul / gettyimgagesbank

By Lee Min-hyung

Korea's major securities firms have reduced their 2022 year-end dividend offerings by as much as 55 percent amid a prolonged stock market slump, data showed Monday.

According to data from the Financial Supervisory Service (FSS), all of the listed brokerage houses here ― except for Meritz Securities ― decided to cut their dividends.

Samsung Securities topped the list in terms of the scale of dividend cuts. The brokerage confirmed its year-end dividend at 1,700 won per share, down 55.26 percent from the previous year.

Other major securities firms also decided on a double-digit reduction in their dividend offerings. Mirae Asset Securities, the nation's most valuable brokerage house by market capitalization, cut its dividend by 33.3 percent during the same period. NH Investment & Securities slashed its dividend by 33.3 percent. Daishin Securities and Kiwoom Securities each cut theirs by 14.29 percent.

This was attributable to the year-long stock market doldrums, which lingered as a consequence of the U.S. Federal Reserve's aggressive rate hikes. With the Bank of Korea following the same path, investors here and abroad felt it increasingly burdensome to make stock investments. This led to the abrupt fall of major stock indices not just in Korea, but also in other major economies.

Securities firms were also hit by falling stock trading commissions throughout 2022. Most brokerages suffered double-digit declines in their earnings last year due to gloomy market sentiment. The FSS data also showed that a total of 58 securities firms here generated a combined net profit of 4.51 trillion won last year, down 50.3 percent from a year earlier.

However, Meritz Securities was the only firm out of the nation's top 10 securities firms that decided to increase its dividend offering by 35 percent. This was driven by the firm's surprising earnings growth of 12.8 percent last year.

Financial watchdogs' warnings also played a part in cutting brokerages' dividend payments.

“Brokerage houses, which suffered liquidity crises amid widened financial volatility, should be more cautious with cash dividends,” FSS Governor Lee Bok-hyun said.