The Highest Figure in 11 Years
South Korea’s securities companies saw their net profit surpass 4 trillion won (US$3.55 billion) in total last year, hitting an 11-year high.
The combined net profit of 56 brokerages stood at 4.17 trillion won (US$3.71 billion) in 2018, up 9.6 percent from a year ago, according to the data from the Financial Supervisory Service on March 5. This is the highest figure in 11 years since a combined net profit of 4.43 trillion won (US$3.93 billion) logged in 2007
By category, commission fees collected from investment banking, assets management and third-party stock trades contributed the most to the companies’ robust earnings last year. The combined commission fees of 56 brokeragescame to 9.71 trillion won (US$8.63 billion), up 15.4 percent on-year. Of this, consignmentcommission fees amounted to 4.54 trillion won (US$4.03 billion), accounting for 46.7 percent of the total, followed by commission fees in the investment banking sector with 2.66 trillion won (US$2.36 billion), or 27.4 percent, other fees with 1.50 trillion won (US$1.33 billion), or 15.4 percent, and commission fees in the asset management sector with 1.01 trillion won (US$899.47 million), or 10.4 percent. The proportion of consignment commission fees to the total fee income fell from 69.2 percent in 2009 to 46.7 percent in 2018.
Securities companies’ proceeds of transactions on a dealer basis totaled 4.53 trillion won (US$4.02 billion), up only 3.60 billion won (US$3.20 million), or 0.1 percent, from a year earlier. The profit from bonds grew by a whopping 105.3 percent on-year to 6.19 trillion won (US$5.49 billion) due to the decrease in interest rates. However, this was caused by gains and losses from stocks and derivatives. Stocks had some 600 billion won (US$532.86 million) worth of gains in 2017 but the profits turned into losses of 13.60 billion won (US$12.08 million) last year. This was due to the fact that 800 billion won (US$710.42 million) worth of profits from derivatives turned into 1.64 trillion won (US$1.46 billion) of losses because of the bearish stock market at home and abroadin the fourth quarter.
Securities firms’ other asset profits related to loans and funds came to 1.57 trillion won (US$1.39 billion) last year, down 14.50 billion won (US$12.87 million) from a year ago. Their selling and administrative expense increased by 6.1 percent on-year to 8.37 trillion won (US$7.43 billion). Their return on equity (ROE) for 2018 stood at 7.7 percent, up 0.1 percentage points from the previous year. The combined value of the 56 securities firms’ net assets rose by 12.5 percent on-year to 439 trillion won (US$389.70 billion) as of the end of last year. Their debts and equity capital grew by 13.2 percent and 8.2 percent, respectively, to 382 trillion won (US$339.13 billion) and 57 trillion won (US$50.60 billion).
The combined net profit of five futurestradingcompanies stood at 23.30 billion won (US$20.69 million) last year, up 70 percent from a year earlier. This came after consignment commission fees grew by 10.40 billion won (US$9.23 million). Accordingly, the ROE of the futurestradingcompanies rose by 3.1 percent points to 6.8 percent. The combined value of the futurestradingfirms’ net assets increased by 38.4 percent to 4.60 trillion won (US$4.08 billion) as of the end of last year, while their debt and equity capital showed a 42.8 percent and 2.6 percent growth to 4.23 trillion won (US$3.76 billion) and 375.40 billion won (US$333.24 million), respectively.