As Debt Investment Increases... Securities Firms' Interest Income Approaches 900 Billion Won in First Half

Credit Transaction Interest Hits Record High
Expected to Surpass 2 Trillion Won This Year

[Asia Economy Reporter Park Jihwan] The securities industry has generated profits of 900 billion KRW from interest on margin trading loans provided to individual investors in the first half of this year. This amount nearly matches the record high of 997 billion KRW in annual margin trading interest income recorded last year.

According to the Financial Investment Association's electronic disclosure service on the 19th, the total interest income from margin trading loans provided by 28 securities firms in the first half of this year reached 852.5 billion KRW, a 134.2% increase compared to 364 billion KRW in the same period last year. These firms earned 997 billion KRW in margin trading interest income from individual investors last year, up 33.4% from 747.3 billion KRW the previous year. This was the largest amount since related statistics began in 2009. If the current trend continues, the annual total for this year could exceed 2 trillion KRW. Margin trading loans refer to investors borrowing funds from securities firms to purchase stocks by paying a certain interest, anticipating a rise in stock prices. This service is mainly used by individual investors for short-term profit purposes.

By securities firm, Samsung Securities earned the highest margin trading interest income at 133.6 billion KRW. It was closely followed by Mirae Asset Securities with 131.9 billion KRW, just 1.7 billion KRW behind. Next were NH Investment & Securities (106.5 billion KRW), Kiwoom Securities (91.5 billion KRW), Korea Investment & Securities (87.4 billion KRW), KB Securities (71.7 billion KRW), and Shinhan Financial Investment (42.3 billion KRW). In terms of year-on-year growth rate of margin trading interest income, mid-sized firms showed particularly steep increases. For example, Sangsangin Securities saw a 3.8-fold increase from 169 million KRW to 639 million KRW over one year. Hanwha Investment & Securities, Hi Investment & Securities, and Cape Investment & Securities also recorded high growth rates of 196.1%, 195.0%, and 191.8%, respectively, compared to the same period last year. Among large firms, Samsung Securities (192.8%), Shinhan Financial Investment (178.5%), KB Securities (175.4%), Korea Investment & Securities (169.9%), and NH Investment & Securities (156.5%) showed significant growth rates.

The record-breaking streak of margin trading interest income in the securities industry is expected to continue for the time being. The outstanding balance of margin trading loans at securities firms has reached an all-time high of 25 trillion KRW, creating a structure where related interest income inevitably increases as well. In fact, in the second quarter of this year, only two securities firms?Shinyoung Securities (-3.7%) and KTB Investment & Securities (-1.7%)?experienced a decrease in margin trading interest income compared to the first quarter. The other 26 securities firms showed an average increase of 11.3% in margin trading interest income compared to the first quarter, despite already reaching record highs.