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| A panorama view of Seoul's financial district in Yeouido / gettyimagesbank |
By Lee Min-hyung
Securities firms have generated what customers consider "unfair" interest revenues by reducing returns to asset management accounts and increasing interest rates for credit transaction loans, data showed Thursday.
According to the industry, major brokerage houses ― such as KB Securities, NH Investment & Securities and Samsung Securities ― cut the interest rate for customers' credit management accounts (CMA) by 0.14 percentage points from Feb. 7.
But most of them still maintain high-interest rates of around 10 percent annually for their credit transaction loan products. Mirae Asset Securities plans to increase the interest rate for its short-term credit loan by 1 percentage point to 5.9 percent from Feb. 27. Starting from Wednesday, Yuanta Securities also raised the rate by 0.25 percentage points to an upper end of 10.4 percent.
The move helped securities firms generate somewhat decent interest margins last year despite then-prevailing stock doldrums. Data from the Korea Financial Investment Association showed that their accumulated credit loan interest revenue reached around 2 trillion won for the first three quarters combined in 2022, up 0.2 percent from a year earlier.
This allowed them to offset a steep profit fall in their cash-cow stock transaction commission revenue last year when most brokerage houses here reported double-digit earnings falls.
Korea Investment & Securities was the first to have decided to cut the credit loan interest rate. According to the company, the upper end of the figure will drop by 0.4 percentage points to 9.5 percent from Feb. 24.
"The rates for certificate of deposit and commercial paper ― key barometers indicating the market's interest rates ― are showing signs of stabilizing, and expectations for the revival of investors' sentiment are growing," an official from the brokerage house said. "So we decided to cut the credit loan rate, as part of efforts to reduce customers' financial burden and help rev up the market sentiment here."
But it remains to be seen whether other securities firms will follow suit amid mounting pressure from financial authorities.
Watchdogs headed by the Financial Supervisory Service are stepping up their political pressure on banks and financial firms, urging the latter to stop making undue interest profits by increasing their loan interest rate with a much bigger margin than that of other deposit-related products.
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