Hi·BNK Investment & Securities... Regional Financial Holding Securities Firms Show Outstanding Performance

[Asia Economy Reporter Park Jihwan] Regional financial holding company-affiliated securities firms are continuing their strong performance streak in the second quarter, following the first quarter of this year. This contrasts with the majority of securities firms in the industry, whose earnings growth has slowed from the second quarter due to a decline in stock market participation by Donghak Ants investors.While major securities firms in the industry reported an average net profit decrease of over 15% in the second quarter compared to the first quarter, these regional financial holding company-affiliated securities firms posted strong results with an 11.6% increase.

According to the financial investment industry on the 4th, Hi Investment & Securities, a securities subsidiary of DGB Financial, recorded a net profit of 46.5 billion KRW in the second quarter, a 16.25% increase from 40 billion KRW in the first quarter. The total net profit for the first half of the year reached 86.5 billion KRW, achieving the highest performance ever. This already exceeds 77.5% of last year's annual net profit. The strong performance across all business sectors was driven mainly by increased earnings from its core businesses, investment banking (IB), project financing (PF), and product management. The second quarter revenue from the IB and PF businesses was 82.8 billion KRW, up 52.8% from the first quarter. In the IB division, the company conducted a direct IPO for Innodep, its first solo listing in nine years. It also expanded earnings in the equity capital market (ECM) sector by participating as a convertible bond underwriter for CJ CGV. Product management also performed well, with second quarter revenue increasing 58.1% from the first quarter to 24.5 billion KRW, driven by strong over-the-counter derivatives operations.

BNK Investment & Securities, part of BNK Financial Group, posted a net profit of 33.5 billion KRW in the second quarter, up 6.35% from 31.5 billion KRW in the first quarter. The half-year net profit totaled 65 billion KRW, marking the best half-year performance since its founding. The profit earned in six months already significantly exceeds last year's total net profit of 53.4 billion KRW. The strong performance in the fee business stood out. Underwriting fee income in the second quarter rose 79.2% from 5.3 billion KRW in the first quarter to 9.5 billion KRW, and financial advisory fees increased 27.5% from 26.9 billion KRW to 34.3 billion KRW. A BNK Investment & Securities official evaluated, "The stock management division and IB-related fee income recorded 50 billion KRW and 75.5 billion KRW respectively in the first half, more than doubling last year's results."

The record-breaking strong performance streak of regional financial holding company-affiliated securities firms contrasts with the majority of securities firms in the industry, whose second quarter earnings fell short of the first quarter. Securities firms that had been enjoying a high-flying performance from the second half of last year through the first quarter have recently shown a clear slowdown. As of this day, six securities firms?Korea Investment & Securities, Meritz Securities, NH Investment & Securities, KB Securities, Shinhan Financial Investment, and Hana Financial Investment?that have announced their second quarter results reported a combined net profit of 1.1401 trillion KRW. This is a 17.7% increase from 968.4 billion KRW in the second quarter of last year but a 15.2% decrease compared to 1.3449 trillion KRW in the first quarter. This reflects a nearly 20% drop in stock market trading volume compared to the first quarter and the impact of operating valuation losses from bonds held due to rising market interest rates.

So far, the securities firm with the largest decrease in net profit from the first to the second quarter is Korea Investment & Securities, which recorded a 33.5% decline. This was followed by KB Securities (-30.4%), Meritz Securities (-10.3%), and Shinhan Financial Investment (-8.0%). However, some firms continued their growth by achieving results in asset management (WM) through expanding customer assets and earnings from financial product sales. NH Investment & Securities posted a 5% increase in second quarter net profit from the previous quarter, reaching 270.4 billion KRW. Hana Financial Investment also recorded a 1.8% increase from the previous quarter, with a second quarter net profit of 139.3 billion KRW.