Cumulative net profit tops 2 trillion won
Q3 operating profit 348.7 billion won, down 58%
Individual customer financial product balance reaches 108 trillion won
Korea Investment & Securities surpassed 2.5 trillion won ($1.86 billion) in cumulative consolidated operating profit and topped 2 trillion won in cumulative net profit through the first three quarters of this year. Its standalone third-quarter earnings declined from a year earlier, however, weighed down by heightened stock market volatility and sharp swings in exchange rates.
The brokerage disclosed preliminary earnings Thursday, reporting cumulative consolidated operating profit of 2.52 trillion won for the first nine months of this year, up 27 percent from the same period last year.
Cumulative consolidated net profit for the period rose 20.1 percent year-on-year to 2.01 trillion won.
On a standalone basis, excluding subsidiaries, cumulative operating profit reached 1.99 trillion won, up 27.8 percent from 1.56 trillion won in the same period last year. Standalone cumulative net profit grew 18.3 percent to 1.48 trillion won.
Third-quarter consolidated results slowed, however, as a contraction in the stock market reduced trading volumes and worsened the investment management environment.
Consolidated operating profit for the third quarter came in at 348.7 billion won, down 58.3 percent from a year earlier, while net profit for the period fell 56.7 percent year-on-year to 281.8 billion won.
Standalone net operating revenue for the third quarter was 801.9 billion won, a slight decline of 2.2 percent from a year earlier. Net operating revenue is calculated by adding selling, general and administrative expenses to operating profit, excluding trust management, value management and dividends from local subsidiaries.
By business segment, brokerage commission revenue in the third quarter totaled 287.2 billion won, down 36.5 percent quarter-on-quarter from 452.4 billion won but up 81.7 percent from 158.1 billion won in the same quarter last year. The firm's domestic equity market share rose to 13.31 percent from 9.87 percent a year earlier, continuing an upward trend from 12.11 percent the previous quarter.
Customer deposits stood at around 17.58 trillion won, down from 21.79 trillion won the previous quarter but significantly higher than the 10.11 trillion won recorded in the third quarter of last year.
In wealth management, the balance of financial products held by individual customers grew 3.3 percent quarter-on-quarter to 108.47 trillion won, from 104.97 trillion won, driven by increased sales of bonds and short-term notes. The balance also expanded sharply from 81.02 trillion won in the same quarter last year, reflecting continued qualitative growth. Sales commission revenue fell 60.2 percent quarter-on-quarter to 100.1 billion won, hurt by weak sales of wrap accounts and beneficiary certificates, though it remained above the 68.5 billion won recorded in the third quarter of last year.
The investment banking division posted solid results across equity capital markets, rights offerings and domestic bond underwriting, with related revenue rising 12 percent quarter-on-quarter and 11.8 percent year-on-year to 216.4 billion won. The trading and investment division, however, saw a temporary dip in profitability as declining interest margins and foreign-currency asset valuation losses converged.
The balance of short-term notes issued expanded to 24.47 trillion won, while the IMA balance grew to 3.34 trillion won.
"As global macroeconomic volatility has increased in the second half of the year, we are focusing on identifying new revenue sources and managing risk," a company official said. "We will proactively respond to market changes and achieve balanced growth by making full use of our solid capital base — standalone equity of 13.55 trillion won as of end of the third quarter — and our diversified business portfolio."
jiyun@heraldcorp.com
