Second straight record quarter after W4.3tr in Q1
Trading volume surges to W4,438tr as brokerage fees jump 34%
Wealth management fees up 57%, IB fees up 28%, trading gains up 46%
South Korean brokerages posted a net profit of more than 5 trillion won ($3.73 billion) in the second quarter of this year. The result set a new quarterly record amid a stock market rally. Stock trading volume surged nearly 60 percent from the previous quarter, driving brokerage commissions sharply higher, while revenue from wealth management and investment banking also grew.
The Financial Supervisory Service released the "2026 Second-Quarter Securities and Futures Firms' Business Performance (Preliminary)" report on Thursday. It showed the 61 domestic securities firms recorded a combined net profit for the period of 5.19 trillion won in the second quarter. That is up 864.6 billion won, or 20 percent, from the previous record of 4.33 trillion won set in the first quarter. It also marks an increase of 2.34 trillion won, or 82.1 percent, from the same period last year, when the figure stood at 2.85 trillion won.
Brokerage earnings have now broken records for two consecutive quarters this year. The first-quarter net profit of 4.33 trillion won had itself marked an all-time quarterly high, only to be surpassed again just three months later. As a result, cumulative net profit for the first half of the year reached 9.52 trillion won, edging close to the 10 trillion won mark.
The rally in the domestic stock market drove the improved earnings. Brokerages' commission income totaled 8.87 trillion won in the second quarter, up 2.17 trillion won, or 32.5 percent, from 6.69 trillion won in the previous quarter. Of that, brokerage commissions rose 1.47 trillion won, or 34 percent, to 5.77 trillion won.
The jump reflects a sharp increase in stock trading. Trading volume on the Kospi, including alternative trading systems, rose to 4,438 trillion won in the second quarter from 2,775 trillion won in the first quarter. That marked an increase of 1,663 trillion won, or 59.9 percent.
Revenue also grew in business lines beyond stock brokerage. Wealth management fees rose 381 billion won, or 56.7 percent, to 1.05 trillion won from 672.1 billion won in the previous quarter, driven by an increase in discretionary investment fees. Investment banking fees climbed 259.3 billion won, or 27.5 percent, to 1.2 trillion won from 941.5 billion won, helped by higher fees tied to debt guarantees.
The stock market rally also boosted proprietary trading. Brokerages' proprietary trading gains rose 1.88 trillion won, or 45.8 percent, to 5.98 trillion won in the second quarter from 4.1 trillion won in the previous quarter. The Kospi climbed 67.8 percent, from 5,052 points at the end of March to 8,476 points at the end of June, lifting stock and fund-related gains by 37.38 trillion won. By contrast, derivatives-related losses tied to hedging operations widened by 36.19 trillion won, while bond-related gains rose by 684.3 billion won.
Brokerages also grew in size. Total assets held by securities firms reached 1,256.1 trillion won as of the end of June, up 157.7 trillion won, or 14.4 percent, from 1,098.4 trillion won at the end of March. The increase was driven by gains of 57.8 trillion won in cash and deposits and 50.4 trillion won in accounts receivable. Total liabilities rose 149.4 trillion won, or 15.1 percent, to 1,140.9 trillion won from 991.5 trillion won over the same period. Total equity capital increased by 8.2 trillion won, or 7.7 percent, to 115.1 trillion won.
Financial soundness indicators also improved. The average net capital ratio for brokerages stood at 1,140.5 percent, up 140.1 percentage points from the end of March, with every firm exceeding the regulatory threshold of 100 percent. The average leverage ratio rose 5.1 percentage points to 723.4 percent, with all firms remaining within the regulatory ceiling of 1,100 percent.
The three domestic futures firms posted a combined net profit for the period of 36.84 billion won in the second quarter, up 4.19 billion won, or 12.8 percent, from 32.65 billion won in the previous quarter. That was also up 63.5 percent from the same period last year.
"Amid a favorable stock market environment, both large and small and midsize firms saw improved earnings, driven by brokerage commissions as well as proprietary trading gains," a Financial Supervisory Service official said. "In particular, large comprehensive financial investment firms are seeing overall profit expand as revenue also rises in other business areas such as wealth management and investment banking."
The official added that the regulator "plans to encourage brokerages to take preemptive steps such as disposing of distressed assets, and to strengthen monitoring of profitability and soundness, in preparation for prolonged geopolitical risks and growing volatility in domestic and overseas financial markets."
hajun825@heraldcorp.com
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