Average Annual Salary at Securities Firms Reaches 100 Million KRW... Spotlight on Bonuses Amid Real Estate PF Insolvency Controversy

Financial Authorities "Closely Monitoring Excessive Performance Bonuses"

The average annual salary of major domestic securities firms in 2021 reached the 100 million KRW range, higher than that of the banking sector. This reflects the industry's characteristic of a high proportion of performance bonuses. It is possible that the billion-won salaries continued last year as well. However, since there were significant concerns such as the risk of project financing (PF) defaults that occurred that year, there was an evaluation that excessive performance bonuses should be avoided.

According to the salary status data of major securities firms received by Yoon Chang-heon, a member of the National Assembly's Political Affairs Committee (People Power Party), from the Financial Supervisory Service on the 12th, the average total salary including performance bonuses of employees at 10 major securities firms such as Mirae Asset Securities, Korea Investment & Securities, and NH Investment & Securities all exceeded 100 million KRW in 2021. This was higher than the highest average annual salary in the banking sector, Kookmin Bank (110.74 million KRW).

The firm with the highest average annual salary was Meritz Securities (193.66 million KRW). Following were ▲Samsung Securities (168 million KRW) ▲NH Investment & Securities (154.2 million KRW) ▲Hana Securities (147.79 million KRW) ▲KB Securities (146.79 million KRW) ▲Mirae Asset Securities (144.24 million KRW) ▲Korea Investment & Securities (141.49 million KRW) ▲Shinhan Investment Corp. (130.91 million KRW) ▲Daishin Securities (115.26 million KRW) ▲Kiwoom Securities (112.46 million KRW).

This year, South Korea's capital market experienced a more challenging year than ever due to turbulent volatility. We should take this as a lesson that sometimes a "one-step back for two steps forward" is necessary to gain new momentum in 2023. At the end of the year, the high-rise buildings in Yeouido's financial district are brightly lit, promising a hopeful future for the coming year. Photo by Dongju Yoon doso7@

The median total salary of these securities firms also exceeded 100 million KRW except for Kiwoom Securities (81.1 million KRW) and Samsung Securities. The median is the middle value when salaries are arranged in order, and Samsung Securities did not disclose this figure citing personal information reasons.

Regarding the average salary of the top 10% of employees, Meritz Securities, which has a strong performance-based culture, recorded 891.92 million KRW. Many securities firms such as Hana Securities (466.02 million KRW), Korea Investment & Securities (421.48 million KRW), and Kiwoom Securities (399.42 million KRW) showed figures in the 300 to 400 million KRW range. Compared to the top 10% average salary of the five major commercial banks, which is below 200 million KRW, the salaries were generally higher.

The average salary of major securities firms last year is also expected to be in the billion-won range. However, performance bonuses may decrease. This is due to the stock market downturn, rising market interest rates, and a shrinking capital procurement market, which led to a sharp decline in operating profits.

Additionally, the government introduced the Bond Market Stabilization Fund to support the improvement of securities firms' real estate PF defaults that year. They have stated that they will monitor if excessive performance bonuses are paid. As of the end of September last year, the delinquency rate of securities firms' real estate PF loans recorded 8.2%, up 4.5 percentage points from 3.7% at the end of the previous year.

Assemblyman Yoon said, "Securities firms are receiving support from institutions such as the Korea Development Bank and the Bank of Korea due to PF loan defaults," adding, "Performance bonus payments that exceed the public's expectations should be approached with caution." He continued, "Once financial instability subsides, there is also a need to prepare measures to address the 'privatization of profits and socialization of risks' enjoyed by the securities industry."