Nashinpyung Upgrades Kyobo Securities Credit Rating to 'AA-'

[Asia Economy Reporter Kum Boryeong] NICE Credit Rating has upgraded Kyobo Securities' credit rating to AA-.

Kyobo Securities announced on the 20th that NICE Credit Rating's credit rating has changed from A+ to AA-. The rating outlook also changed from 'positive' to 'stable.'

NICE Credit Rating cited stable profit-generating ability as the reason for upgrading Kyobo Securities' credit rating. NICE Credit Rating explained, "Despite increased volatility in the financial market, the improved profit-generating ability is being maintained steadily. The commission trading sector has expanded mainly through Contracts for Difference (CFD) and overseas futures, and the investment banking (IB) sector has shown business expansion, resulting in increased revenue scale. Since 2015, the return on assets (ROA) has consistently exceeded 1%."

The improvement in capital buffer through a large-scale paid-in capital increase also influenced this credit rating evaluation. Kyobo Securities conducted a third-party allotment paid-in capital increase worth 200 billion KRW in June. As of the end of September, the size of equity capital increased to 1.2311 trillion KRW. NICE Credit Rating analyzed, "The ratio of net operating capital to total risk amount improved from 356.1% at the end of last year to 416.7% as of the end of September, showing a very excellent level compared to the industry average."

As of the end of September, Kyobo Securities' contingent liabilities balance was 763.6 billion KRW. The ratio of contingent liabilities to equity capital was 62.0%, which is lower than the industry average (70.6% as of the end of June), indicating good risk management.

NICE Credit Rating stated, "Considering the diversified revenue structure and increased capital capacity, it is expected that stable profit-generating ability and capital buffer will be maintained, leading to the change in rating outlook."