Overseas Subsidiaries' Net Profit of Securities Firms Surges 155% Last Year

Last year, domestic securities firms saw the net profit of their overseas subsidiaries surge by more than 150% year-on-year, driven by gains in trading operations. However, nearly half?32 out of 70?of these overseas subsidiaries reported losses.

According to the "2024 Overseas Branch Performance of Domestic Securities Companies" released by the Financial Supervisory Service on May 19, as of the end of last year, 15 securities firms were operating a total of 80 overseas branches, including 70 subsidiaries and 10 offices. By country, Asia accounted for the largest share with 58 branches (72.5%), including China, Singapore, and Indonesia, followed by 14 in the United States, 6 in the United Kingdom, 1 in Greece, and 1 in Brazil.

In 2024, 10 new overseas subsidiaries were established in countries such as India, the United Kingdom, and the United States, while 3 subsidiaries in Indonesia were closed. As of the end of last year, 9 comprehensive financial investment firms (excluding Meritz) and 6 general securities firms were operating overseas branches. A Financial Supervisory Service official stated, "Over the past five years, the proportion of branches in China and Hong Kong has declined, while the expansion into India in 2024 is diversifying the distribution of branches within Asia."

Excluding offices established for market research purposes, the net profit of overseas subsidiaries last year reached $272.2 million (approximately KRW 400.2 billion), accounting for 7.3% of the total net profit of the 15 securities firms. This figure represents a 155.5% increase compared to the previous year. The increase is attributed to higher profits from trading operations, such as bond brokerage and ETF-related businesses.

However, among the 70 overseas subsidiaries, 38 recorded profits while 32 posted losses. Of the 15 countries where securities firms have a presence, subsidiaries in 10 countries?including the United States, Hong Kong, and Vietnam?were profitable, whereas subsidiaries in 5 countries?including the United Kingdom and Thailand?incurred losses.

During the same period, the total assets of overseas subsidiaries stood at $34.28 billion (approximately KRW 5.04 trillion), accounting for 8.9% of the total assets of the 15 securities firms. This represents a decrease of nearly 10% compared to the end of the previous year. Equity capital amounted to $8.14 billion, representing 18.5% of the total equity capital of the 15 securities firms.

A Financial Supervisory Service official stated, "Last year, the net profit of overseas subsidiaries of securities firms increased significantly, driven by higher trading profits at subsidiaries in key countries such as the United States. While we will actively support the overseas expansion of securities firms by listening to their challenges and suggestions to financial authorities, we also plan to continuously monitor potential risks, given the increasing business uncertainties arising from greater external volatility, such as the imposition of reciprocal tariffs by the United States."