As the domestic stock market continues to thrive, the scale of borrowing for investment, known as "debt investment," has reached an all-time high. Consequently, major Korean brokerages reported interest income of 600 billion won in the first quarter of this year.
According to reports from the top ten domestic brokerages (Mirae Asset Securities, Korea Investment & Securities, Samsung Securities, KB Securities, NH Investment & Securities, Shinhan Investment Corp., Meritz Securities, Kiwoom Securities, Hana Securities, and Daishin Securities) released on May 17, the total interest income from margin trading for these firms in Q1 amounted to 600 billion won.
This figure represents a 55.9% increase compared to 384.6 billion won during the same period last year. It also marks a 14% rise from the previous quarter (Q4 2025), which saw interest income of 526.2 billion won, despite a market contraction due to provisions for real estate project financing.
The surge in interest income is attributed to a significant influx of retail investors seeking leverage as the KOSPI index, which hovered around 4,200 at the end of last year, surpassed 6,000 during the first quarter.
In fact, the average daily balance of margin trading in Q1 reached 31.1 trillion won, crossing the 30 trillion won mark for the first time. This figure is a 79.3% increase from the average of 17.3 trillion won in Q1 of last year and a 19.2% rise from the previous quarter's average of 26 trillion won.
Given that brokerages are applying high interest rates ranging from 5% to nearly 10% for loans depending on the duration, investors are estimated to be bearing an average interest rate of around 8-9% for their debt investments.
The reliance on interest income from debt investments varies significantly among brokerages. Some firms derive over 25% of their quarterly net profit from margin trading interest, while others see this income account for less than 10% of their total net profit.
However, as the overall performance of brokerages has improved, the contribution of margin trading interest to net profit has actually decreased compared to last year. In Q1, the total net profit of the top ten brokerages was 4.33 trillion won, with margin trading interest accounting for 13.8% of this total, down from 18.7% in Q1 of last year and a sharp decline from 26.1% in the previous quarter.
* This article has been translated by AI.
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