The dominance of banks in South Korea's financial market is being challenged as securities firms report record profits. Following a strong stock market rally that began in the second half of last year, the top 10 securities firms achieved unprecedented earnings in the first quarter of this year. Their combined net profit surpassed 4 trillion won for the first time, narrowing the gap with the five largest banks to just 1.1 trillion won.
According to data from the Financial Supervisory Service's electronic disclosure system, the combined net profit of the top 10 securities firms (based on equity capital) for the first quarter was 4.33 trillion won, a significant increase of 2.3 trillion won (113.65%) compared to 2.07 trillion won during the same period last year.
The gap with the five largest banks has also narrowed significantly. The combined net profit of these banks for the first quarter was 4.44 trillion won, leaving a difference of only about 1.1 trillion won. This marks a substantial shift in the financial landscape, as securities firms grow to challenge the long-standing supremacy of banks.
Leading the securities sector, Mirae Asset Securities and Korea Investment & Securities outperformed NH Nonghyup Bank (5.58 trillion won) and Woori Bank (5.31 trillion won). Mirae Asset Securities reported a record net profit of 1.01 trillion won for the first quarter, a staggering 288% increase from the same period last year, marking the first time any domestic securities firm has exceeded 1 trillion won in quarterly net profit. Korea Investment & Securities also posted a net profit of 784.7 billion won, driven by increased brokerage revenue and improved performance in the investment banking sector.
Kiwoom Securities ranked third with a net profit of 477.4 billion won, while Samsung Securities achieved a record quarterly profit of 450.9 billion won. Most of the top 10 securities firms, including KB Securities (350.2 billion won), Shinhan Investment Corp. (288.4 billion won), Meritz Securities (254.3 billion won), Daishin Securities (145.5 billion won), and Hana Securities (103.3 billion won), reported strong performances.
The share of net profit from securities firms compared to banks is also rising rapidly. In 2022, the net profit of securities firms accounted for 27.8% of that of banks, but this figure increased to 36.3% in 2023, 42.9% in 2024, and reached 50.0% last year. The annual combined net profit of the top 10 securities firms was 7.67 trillion won, nearing half of the 15.33 trillion won reported by the five largest banks. Analysts attribute the accelerated narrowing of this gap to the rising stock market and increased trading volumes this year.
The increase in trading volumes and a recovery in investor sentiment are key factors behind the improved performance. As the KOSPI index continues to hit record highs, individual investors have poured significant funds into the stock market, accompanied by foreign investments, leading to a surge in brokerage revenue. The recovery in the corporate finance (IB) market, including initial public offerings (IPOs) and corporate bond issuances, has also contributed to profitability. Jeong Tae-jun, a researcher at Mirae Asset Securities, noted, "As the stock market has been on an upward trend since last year, changes are also occurring in household asset composition. We expect the trend of improving performance among securities firms to continue in the future."
* This article has been translated by AI.
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