[Click eStock] "NH Investment & Securities, Positive Differentiated IB Capabilities"

Yuanta Securities Report

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained its buy rating and target price of 15,000 KRW on NH Investment & Securities on the 25th, stating that despite the challenging market environment, the company is sustaining expected profit resilience through its IB capabilities.

NH Investment & Securities' consolidated operating profit for the third quarter was 214.6 billion KRW, in line with the market expectation of 202.7 billion KRW. Although brokerage commission income and trading and product profits fell significantly short of estimates due to the sluggish stock market and rising short-term interest rates, IB and other commission incomes greatly exceeded estimates, driving net operating revenue.

On a consolidated basis, net commission income recorded 302 billion KRW, up 2.2% compared to the same period last year. While brokerage commission income was affected by the weak stock market, the significant increase in IB and other commission incomes was positive. Taejun Jeong, a researcher at Yuanta Securities, said, “The company holds differentiated competitiveness in the IB sector, and recently overseas PF has also resumed, so even if transaction volumes decline further in the future, this impact can be substantially offset.”

Interest income was 193 billion KRW, up 2.8% from the same period last year, meeting estimates. Going forward, profit growth is expected to slow due to credit limit management, liquidity reduction, and PF loan regulations.

Trading and product losses were 3 billion KRW, significantly below the market expectation of 5.7 billion KRW. This is attributed to expanded bond valuation losses from rising short-term interest rates and the weak stock market. In the previous quarter, the figure greatly exceeded expectations due to the reflection of real estate fund valuation gains, but in the third quarter, there was no asset revaluation, so this effect disappeared.

Researcher Jeong said, “Other income was 41 billion KRW, affected by a decrease in some provision expenses, but this is at a normal level and, barring issues related to asset soundness, is unlikely to change significantly from the current level.”