Samsung Securities
The author is an analyst for NH Investment & Securities. She can be reached at yd.yoon@nhqv.com -- Ed.
In 1Q23, Samsung Securities’ bond management division entered the black q-q, exceeding the market expectations, and the brokerage division also performed well. Expecting its stable business flow to continue, we maintain Samsung Securities as our second-preferred pick in the industry in reflection of its superb handling of asset quality.
Future performance to be more important
While major domestic securities firms have been logging sound 1Q23 earnings results, we believe that the remaining quarters of 2023 will be more important. When macro volatility sustains at home and abroad, we prefer companies with robust PF soundness that show less chance of needing provisioning or recognizing losses.
With a PF balance of approximately W2.5tn (75% of which is main PF), Samsung Securities’ provisioning recognized in 1Q23 was insignificant. Of note, the scale of uncollected accounts receivable due to recent financial product issues was not as large as the market had feared.
1Q23P NP of W253bn (+66.4% y-y, +2,339.5% q-q)
Surpassing predictions, Samsung Securities reported a significant q-q improvement in major revenue sources thanks to favorable business conditions.
Trading/other: OP of W255.6bn (TTP q-q). Large-scale bond management profits were recognized on a decline in market interest rates (3yr KTB: 4Q22 3.72% → 1Q23 3.27%).
Brokerage: Commission income (fees) of W125.2bn (-1.5% y-y, +34.5% q-q). Despite intensifying competition in overseas stock trading, the firm maintained its market share, with overseas stock commissions upping by W27.1bn q-q.
IB: Commission income of W37.5bn (-17.3% y-y, +25.3% q-q). Samsung Securities is gradually expanding its PF operations in structured finance while continuing to perform solidly in the traditional IB sector.
WM: Commission income of W21.3bn (-24.1% y-y, +18.3% q-q). Early redemption increased due to the market rebound, but it will take time to expand ELS sales.