Thanks to Stock Market Rally
The Financial Supervisory Service (FSS) announced on March 16 that the combined net profit of the 56 South Korean securities companies increased from 4,166.7 billion won to 4,910.4 billion won last year.
Specifically, their commission income fell 2.3 percent to 9,490.2 billion won. Especially, their brokerage commissions fell from 4,542.6 billion won to 3,463.6 billion won. The brokerage commissions-to-commission income ratio dropped from 69.2 percent to 46.8 percent from 2009 to 2018 and then to 36.5 percent in 2019. On the other hand, their commissions on the investment banking side and the ratio rose from 2,661.2 billion won to 3,412.2 billion won and from 27.4 percent to 36 percent, respectively. In addition, their asset management commissions rose from 1,012.8 billion won to 1,058.1 billion won.
Their proprietary trading income fell 18.5 percent to 3,679.6 billion won, with derivatives-related losses increasing by 1,945.6 billion won to 3,597.9 billion won, although stock- and bond-related profits increased to 529.5 billion won and 6,748 billion won, respectively. The FSS explained that the decline in proprietary trading income was because of an increase in losses related to ELS and DLS.
Profits from other assets jumped 149.8 percent to 4,091.2 billion won. With the South Korean stock market rallying late last year, fund profits increased from negative 832.1 billion won to positive 1,221 billion won in one year. Their selling and administrative expenses rose 6.4 percent to 8,916 billion won and ROE rose from 7.7 percent to 8.3 percent.
Their total assets reached 482.6 trillion won at the end of last year, up 10 percent from a year earlier. The liabilities and equity capital rose 10.1 percent and 9.2 percent to 420.8 trillion won and 61.8 trillion won, respectively. The average net capital ratio increased 11.6 percentage points to 559.1 percent and the leverage ratio fell 2 percentage points to 680.1 percent.
In the meantime, the net profit of five futures companies increased 12.2 percent to 26.1 billion won in 2019. Their ROE fell from 6.8 percent to 6.5 percent and their total assets decreased 31.5 percent year on year to 3,158.1 billion won. Their liabilities and equity capital decreased 35.7 percent to 2,724.9 billion won and increased 15.4 percent to 433.2 billion won, respectively.