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| Meritz Financial Group headquarters in Seoul / Yonhap |
By Lee Min-hyung
Meritz Financial Group completed the incorporation of its securities and insurance arms as its wholly owned subsidiaries, Tuesday, in a move aimed at streamlining key decision-making processes.
Last year, the company announced its plans to sign a comprehensive stock exchange agreement with shareholders of Meritz Fire & Marine Insurance and Meritz Securities. Both affiliates were delisted from the Korean stock market ahead of the much-awaited launch of Meritz's new financial holding firm.
Meritz shares were traded with a gain of more than 3 percent shortly after its stock trading started on Tuesday morning. The firm's stock price also soared by 6.46 percent Monday from the previous trading day on growing investor anticipation relating to the newly launched holding firm.
The market capitalization of the group topped 9.5 trillion won ($7.11 billion) on its first trading day, surpassing that of Woori Financial Group. Meritz became the nation's fourth-most-valuable financial holding firm following KB, Shinhan and Hana.
Meritz seeks to maximize its group-wide synergy after the incorporation. The company expects the brokerage arm's deal-sourcing capability to generate synergy effects with the insurer's know-how in building long-term investment structures.
"Meritz Financial Group and the two core subsidiaries have been able to build a more flexible financial structure than before the incorporation, as the group can now demonstrate efficient capital allocation by utilizing the stable profitability of the securities and insurance affiliates," Meritz Financial Group CEO and Vice Chairman Kim Yong-beom said.
"We will keep enhancing the expertise of our financial businesses and focus on creating more synergy among affiliates and expanding our financial ecosystem, thereby helping to stabilize the market."
The company also pledged to strengthen its shareholder return policy by returning half of its net profit to its shareholders starting this year. This exceeds its recent shareholder return rate by a huge margin. The figure for the holding firm came in at 27.6 percent on average during the past three years. That of the securities and insurance affiliates also reached 39.3 percent and 39.7 percent respectively during the same period.
Meritz is on track to prove its resilience after Meritz Securities attained an operating profit of more than 1 trillion won last year. The company was the only securities firm here to top the symbolic earnings figure despite the overall stock market doldrums prevalent in 2022. This was driven by the firm's differentiated business portfolio by reducing its reliance on brokerage commissions and expanding its foothold in investment banking businesses such as real estate project financing.
Meritz Fire & Marine Insurance also displayed robust earnings growth by generating 868.3 billion won in net profit last year, up 30.9 percent from the previous year. The insurer also reaped 1.16 trillion won in operating profit, up 27.9 percent during the same period, solidifying its position as the third-largest player in the industry.
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