[Asia Economy Reporter Lee Jung-yoon] Due to sluggish stock markets and a downturn in the real estate sector, commission income has decreased, causing the net profit of domestic securities firms in the third quarter of this year to plummet compared to the same period last year.
According to the Financial Supervisory Service on the 4th, the net profit of 59 securities firms in the third quarter was 1.438 trillion won, down 42.8% from the same period last year. Although this figure increased by 32.9% compared to the previous quarter, excluding gains from the disposal of tangible assets classified as non-operating income, it decreased by 10.3% compared to the previous quarter.
The Financial Supervisory Service explained, "Due to the decline in the stock market and the downturn in the real estate sector, commissions from custody fees and investment banking (IB) sectors have decreased, expanding uncertainty in the operating performance of securities firms."
Looking at revenue by category, commission income was 2.9355 trillion won, down 21.8% from the previous quarter. Custody fees were 1.1878 trillion won, decreasing by 9.3% compared to the previous quarter due to a decline in stock trading volume and other factors. Additionally, commissions from the IB sector and asset management sector decreased by 37.2% and 6.0%, respectively.
Proprietary trading gains were 1.2013 trillion won, down 0.5% from the previous quarter. Stock-related gains were 482.9 billion won, similar to the previous quarter, and bond-related gains were 21.2 billion won, with losses decreasing. On the other hand, derivative-related gains sharply declined by 60.2% to 697.1 billion won compared to the previous quarter.
Other asset gains were 802.7 billion won, increasing by 4414.5%, and foreign exchange-related gains surged by 319.7% to 369.2 billion won. Fund-related gains also increased by 39.5%. Selling and administrative expenses decreased by 3.7% to 2.6392 trillion won.
As of the end of the third quarter, the total assets of all securities companies amounted to 669.5 trillion won, up 2.3% from the previous quarter. Total liabilities also increased by 2.5% to 589.3 trillion won. Equity capital rose by 1.3% to 80.2 trillion won.
Regarding financial soundness, the average net capital ratio of all securities companies was 718.6%, similar to the previous quarter. The average leverage ratio increased by 7.7 percentage points from the end of the previous quarter to 661.3%.
The net profit of all four futures companies was 14.83 billion won, up 41.3% from the previous quarter. The return on equity (ROE) rose by 1.0 percentage point to 2.6%.
Total assets increased by 11.1% from the previous quarter to 6.776 trillion won, and liabilities rose by 12.0% to 6.1993 trillion won. Equity capital increased by 2.5% to 576.7 billion won.
An official from the Financial Supervisory Service stated, "We plan to closely monitor the impact of potential risk factors such as future global interest rate hikes and a downturn in the real estate market on the profitability and soundness of securities companies."
He added, "Due to the execution of real estate project financing (PF) debt guarantees and tightening in the short-term funding market, the soundness and liquidity risks of securities firms may materialize. We will continuously check liquidity and soundness management, especially focusing on high-risk securities firms."
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