Ten Brokerages Earn 4 Trillion Won in Q1, but Shares Take a Breather

Ten major securities firms posted combined net profit of more than 4 trillion won in the first quarter, data showed.

The gains were driven by rising brokerage fee income amid a buoyant stock market, along with an expansion in trading gains and losses. With a string of positive catalysts—including the launch of an integrated account service for foreign investors—some analysts expect share prices, which had recently lost momentum, to turn higher.

A view of Yeouido’s brokerage district / News1

According to the securities industry on the 15th, the combined consolidated net profit (preliminary) of the top 10 securities firms by equity capital totaled 4.3318 trillion won in the first quarter. This marks a 113.7% jump from 2.0272 trillion won a year earlier. In other words, the industry posted in a single quarter earnings close to half of last year’s full-year net profit of 8.9731 trillion won. Seven of the 10 firms—Mirae Asset, Korea Investment, NH, Samsung, KB, Shinhan and Kiwoom—set record-high quarterly results.

By firm, Mirae Asset Securities posted the largest net profit at 1.0019 trillion won, followed by Korea Investment & Securities at 784.7 billion won. Next came Kiwoom Securities (477.3 billion won), NH Investment & Securities (475.7 billion won), Samsung Securities (450.9 billion won), KB Securities (350.2 billion won), Shinhan Investment Corp. (288.4 billion won), Meritz Securities (254.3 billion won), Daishin Securities (145.5 billion won) and Hana Securities (102.8 billion won).

Brokerage commission income led the strong performance. Among seven firms that disclosed revenue by item in their first-quarter earnings releases—Mirae Asset, Korea Investment, NH, Samsung, Meritz, Kiwoom and Shinhan—brokerage commission income (from consignment trading and custody services) totaled 2.1701 trillion won, up 151.1% from 864.1 billion won a year earlier. By firm, the largest amounts were posted by Mirae Asset (459.4 billion won), Kiwoom (365.5 billion won), NH (349.5 billion won), Samsung (349.3 billion won) and Korea Investment (313.8 billion won).

Brokerages earn commissions by intermediating investors’ stock trades, and as trading value surged, their fee income rose accordingly.

According to the Korea Exchange (KRX), the average daily trading value of domestic stocks in the first quarter came to 62.0387 trillion won (including ETFs), nearly tripling from 22.5491 trillion won a year earlier. While overseas stock settlement amounts were expected to fall sharply amid government efforts to encourage a return to domestic equities, the average daily settlement amount slipped only 0.4% year on year to $2.44495 billion (about 3.6 trillion won).

Consolidated net profit of the top 10 securities firms by equity capital / By Yoon Seung-jun

Trading results also improved as stock prices at home and abroad surged despite rising market interest rates. Trading gains and losses reported by eight securities firms—Mirae Asset, Korea Investment, NH, Samsung, Meritz, KB, Kiwoom and Shinhan—came to 2.2424 trillion won, up 44.2% from 1.5556 trillion won a year earlier.

The stock-market rally also translated into higher wealth-management (WM) fee income. WM fee revenue at six firms—Mirae Asset, Korea Investment, NH, Samsung, Meritz and Shinhan—nearly doubled over the same period, rising 97.2% from 204.5 billion won to 403.3 billion won.

Proprietary investment (PI) also paid off. Mirae Asset Securities booked 804.0 billion won in gains and losses from fair-value valuation of investment assets in the first quarter, reflecting valuation gains from global innovators such as SpaceX. The firm has invested in SpaceX and other companies through vehicles including the “Mirae Asset Global Space Investment Partnership No. 1.”

Despite the strong earnings, share prices have been largely flat. After surging more than 80% from the start of the year through late February, the KRX Securities Index has risen just 0.9% since the outbreak of the Middle East war—far below the KOSPI’s 27.8% gain over the same period. By company, aside from Samsung Securities (21.7%), shares of Mirae Asset Securities (0.4%), Korea Financial Group (-0.2%), NH Investment & Securities (-1.4%), Kiwoom Securities (-9.9%) and Daishin Securities (-20.3%) have all underperformed. Analysts said elevated valuations—share prices relative to earnings—have weighed on the stocks.

Ahn Young-joon, an analyst at Kiwoom Securities, said, “First-quarter earnings at brokerages were broadly strong, supported by a rise in stock trading value, and share prices climbed as the market priced that in ahead of time.” He added, “However, the perception that it will be difficult for trading value to remain at current levels throughout the year appears to have pressured investor sentiment, leading some investors to take profits.”

While recent share-price momentum has cooled, the market outlook for brokerage stocks remains positive. Market weakness triggered by the Middle East war recovered within a month, keeping trading value on an upward trajectory, and additional drivers—such as the launch of an integrated account service for foreign investors—have emerged to support further growth in trading value. The integrated account service allows foreign investors to buy and sell Korean stocks more easily via overseas brokerages, without opening personal accounts directly with Korean securities firms.

Ahn said, “Compared with the past, it is clear that the overall level of stock trading value has risen, and that can provide a stronger earnings base for brokerages.” He added, “It is still hard to say the effects of the integrated account system change have become clearly visible, but with a new channel for bringing in investors now open, expectations for higher trading value are more likely to be reflected. We maintain a positive view.”