[Why&Next] Earnings Party at Top 10 Securities Firms, Per Capita Productivity Also Up 70%

Kiwoom Securities Tops Operating Profit per Employee for Four Consecutive Years
Meritz Securities Narrowing the Gap Despite Retail Weakness
Trading Volume Rebounds, Fee Reduction Competition Intensifies

Last year, half of the top 10 securities firms joined the '1 Trillion Club,' recording strong performance and significantly improving productivity (operating profit per employee). In particular, Kiwoom Securities, known as a retail powerhouse, posted an outstanding productivity record, while competition among large securities firms to attract individual investors is expected to intensify.

On the 14th, Asia Economy analyzed the performance data of securities firms posted on the Financial Investment Association's electronic disclosure service and found that as of December last year, the operating profit of the top 10 securities firms by equity capital amounted to 8.1104 trillion won, a 68% increase compared to the previous year (4.8264 trillion won). In 2023, five firms entered the operating profit '1 Trillion Club,' which had no members the previous year.

The growth in operating profit led to increased productivity. The number of employees at the top 10 securities firms slightly decreased from 23,655 in 2023 to 23,430 last year, while operating profit improved significantly, causing operating profit per employee to jump about 690 million won from approximately 204 million won to 346 million won during the same period. Ji-Young Kim, a researcher at Kyobo Securities, explained the background, saying, "In the first half of last year, the domestic stock market activation increased brokerage commission revenue, and as the year progressed, overseas stock investments surged, boosting overseas stock brokerage commission income."

Among the top 10 securities firms, Kiwoom Securities topped the list for the fourth consecutive year with operating profit per employee exceeding approximately 1.1 billion won. It also showed the largest increase compared to 2023. A Kiwoom Securities official said, "Compared to large securities firms, we have relatively fewer employees, which seems to have benefited the productivity indicator calculation," adding, "Another factor is that many junior employees are positioned at the front lines of financial centers, making us one of the younger firms in the securities industry." Kiwoom Securities, which returned to the '1 Trillion Club' after three years by posting about 1.0982 trillion won in operating profit last year, is characterized by having about one-third the number of employees compared to large securities firms.

Meritz Securities also closely followed Kiwoom Securities by ranking second in productivity for the second consecutive year. With improved corporate finance (IB) performance and increased bond management income due to falling interest rates, it posted 1.0548 trillion won in operating profit, stabilizing productivity at around 700 million won per employee. Despite being evaluated as the weakest in retail among the top 10 securities firms, it received a productivity score comparable to Kiwoom Securities, the absolute leader in brokerage. Following them, the 'Big 5'?Samsung Securities (467 million won), Korea Investment & Securities (438 million won), Mirae Asset Securities (345 million won), NH Investment & Securities (288 million won), and KB Securities (257 million won)?secured high rankings, maintaining their reputations. Hana Securities, which recorded an operating loss of about 360 billion won in 2023, successfully returned to profitability last year and re-entered the rankings.

"Catch the Ants"... MTS Competition Heats Up

With the recent upswing in the domestic stock market and a recovery in trading volume, the top securities firms' performance is expected to ride an upward trend. In February, the average daily trading volume in the domestic stock market reached 21.2 trillion won, a 32.5% increase compared to the same period last year. Young-Jun Ahn, a researcher at Kiwoom Securities, said, "Events favorable to increased trading volume, such as the lifting of the short-selling ban, activation of alternative trading systems, and expansion of ISA tax benefits, are awaiting," estimating that "this year, the combined brokerage commission revenue of covered securities firms will increase by 11% compared to the previous year."

The competition among securities firms to lower commission rates to capture a larger share of the increasing trading volume is also expected to intensify. Researcher Ahn explained, "The commission competition among securities firms continues. The combined commission rate (brokerage) of domestic securities firms, which was 0.081% (0.181% for overseas) in 2017, dropped nearly by half to 0.038% (0.114% for overseas) in the third quarter of last year."

Especially with the development of Mobile Trading Systems (MTS), the barrier for individual investors to trade securities has significantly lowered, intensifying the competition among securities firms to attract them. According to Mobile Index, Kiwoom Securities surpassed 2.55 million monthly active users (MAU) on its domestic MTS last month, revealing the secret behind its top performance with a small workforce. Even during July and August last year, when other securities firms generally showed sluggish performance, Kiwoom Securities maintained an upward trend, approaching 2.6 million users.

Among the 'Big 5,' Mirae Asset Securities (2.39 million) and Samsung Securities (2.34 million) fiercely competed for second place. KB Securities (2.06 million) held the MAU crown in January, April, and May last year but fell below the 2 million mark in the second half, widening the gap with the leaders. Meritz Securities' upward trend, driven by its zero-commission policy, also stands out. By deciding not to charge domestic and U.S. stock trading commissions or dollar exchange fees until December 2026 for customers using its online-only investment account 'Super365,' it has caused a significant stir in the industry. Thanks to this bold policy, Meritz Securities' retail customer deposits exceeded 27 trillion won at the end of last year, a 15% increase from the previous year.

Researcher Ahn predicted, "Individual investors' interest in the financial market is steadily increasing, and accordingly, the retirement pension and asset management markets are expected to grow rapidly," adding, "The competition among securities firms to secure customer deposits through commission rate cuts will continue in the future."