[Issuance Note Challenge]② Kiwoom "Strengths as an Online Securities Firm... Aiming for Industry-Leading Interest Rates"

Interview with Sungjin Park, Head of Investment Management at Kiwoom Securities
First Issuance Note Sold Out in a Week... Targeting 3 Trillion Won This Year
"A Securities Firm That Started as a Venture... Supporting Innovative Companies Through Vari

"As an online securities firm, Kiwoom Securities has lower fixed costs, such as branch maintenance expenses and fees, compared to other companies. This allows us to offer more competitive interest rates to our customers."

Sungjin Park, Executive Director and Head of Investment Management Division at Kiwoom Securities. Kiwoom Securities

Sungjin Park, Executive Director and Head of Investment Management Division at Kiwoom Securities, who leads the company's promissory note business, said in a recent interview with The Asia Business Daily, "Our goal is to offer the highest deposit rates in the industry for our promissory notes," explaining the company's strategy.

On December 16 of last year, Kiwoom Securities launched the "Kiwoom Promissory Note." The special offering of promissory notes, worth 300 billion won, was fully sold out in just about a week by December 23. Even the company had not anticipated such strong demand.

Park said, "Initially, we took a conservative approach and expected it would take about two weeks to sell out, but the response was stronger than expected. It appears that pent-up demand was released all at once due to the launch of a new promissory note issuer for the first time in about four years since other securities firms issued theirs in 2021, as well as the higher interest rates compared to other promissory note issuers."

At the time of issuance, Kiwoom Securities' special promissory notes offered a high pre-tax annual interest rate of 3.45%. The reason this was possible lies in the cost structure. Park emphasized, "As an online securities firm, our branch maintenance and various fixed costs are relatively low," adding, "The structure that allows customers to set their own maturity date also increased convenience."

Kiwoom Securities views the promissory note business as a pillar for mid- to long-term growth. As of January 1 this year, the company upgraded its retail financial product sales organization from a division to a department and established a new "Wealth Management Division." In addition, the company expanded its corporate financial product sales organization from one department to two and continues to recruit sales personnel with networks at major corporations. Organizational restructuring is underway to diversify the business portfolio from a retail focus to include corporate finance.

Kiwoom Securities aims to continue selling promissory notes to both individual and corporate clients, targeting 1 trillion won in deposits by the end of the first quarter and 3 trillion won within the year. Furthermore, the company plans to expand the outstanding balance of promissory notes to 3 trillion won in the first year and 5 trillion won in the second year. Park emphasized, "The promissory note business is a crucial turning point for Kiwoom Securities as it evolves from a brokerage-focused securities firm into a mega investment bank encompassing principal investment and investment banking."

Managing the funds raised is a balance between prudence and profitability. Within the scope of promissory note regulations, the company plans to allocate 70-80% to marketable assets and 20-30% to non-marketable assets. The strategy is to manage liquidity with cash-equivalent assets and credit instruments (commercial paper, short-term bonds, and corporate bonds), while seeking excess returns through corporate loans, venture capital, real estate, and infrastructure assets.

The company is also mindful of concerns about maturity mismatches between short-term funding and mid- to long-term investments. Kiwoom Securities applies stricter internal standards than the 1- and 3-month liquidity ratio regulation (100%) required by the Capital Markets Act. Park explained, "We have set up a three-stage buffer at 5% intervals above the standard ratio, and have established response procedures for each stage."

The company is also actively responding to the financial authorities' call to expand the supply of venture capital. Even before receiving approval for the promissory note business, Kiwoom Securities managed venture capital mainly through equity investments in small and venture companies. As of the end of September last year, the company held approximately 820 billion won in such assets. It plans to expand supply over the next three years, aiming to increase the outstanding balance of venture capital to 3 trillion won by 2028.

Park stated, "Leveraging the experience and know-how of Daou Kiwoom Group, which grew from a venture company into a financial group, we will support innovative companies through various methods such as venture capital, equity investment, mezzanine, and new technology venture capital." He added, "Through collaboration with promising ventures, innovative companies, and venture capital firms, we will provide financial solutions that cover the entire corporate growth cycle, from discovery and acceleration to IPOs and mergers and acquisitions."