Overseas branches of South Korean securities firms returned to profit in just one year.
According to the data released by the Financial Supervisory Service (FSS) on April 19, the branches set up by domestic securities companies in foreign countries made US$48 million won (50.98 billion won) of aggregate net profit in 2017, up US$52.5 million (55.76 billion won) from net losses of US$4.5 million (4.78 billion won) in the previous year.
The overseas branches of local securities firms showed a loss after 2009 but turned a profit in 2014 and 2015. Then, they turned towards the red again in 2016.
As of the end of last year, 15 securities companies run 48 branches and 15 overseas offices in 13 countries across the globe. As they decided to shut down their branches and offices which are small or continuously post net losses, three branches and two offices were closed. Meanwhile, KB Securities Co. and Mirae Asset Daewoo Securities Co. established a local subsidiary in Vietnam and India, respectively.
The number of the overseas branches is on the decrease from 75 in 2015 to 68 in 2016 and 63 at the end of 2017. The securities firms saw its overseas branches go into the red in four out of 13 countries, including the United States and China, due to the increase in selling and administrative expenses after launching new businesses. By contrast, they ran a surplus in the rest of eight countries, such as Hong Kong and Brazil, thanks to the rise in commissions and interest earnings.
As of the end of last year, their equity capital rose 37.2 percent on-year to US$2.6 billion (2.76 trillion won), while their combined assets stood at US$32.86 billion (34.9 trillion won), growing a whopping 1338.7 percent on-year.
A spokesperson of the FSS said, “With uncertainties in other countries having been recently rising, the number of overseas branches set up by local securities firms is constantly decreasing on account of poor business showings as a whole. However, the overseas branches will not have a great effect on the securities companies’ financial soundness since they take up only a small part of the firms’ sales figures.”