Korean securities firms reported a record profit of approximately 9 trillion won last year, benefiting from a surge in daily trading volumes and increased overseas stock trading commissions.
South Korean securities firms experienced a remarkable surge in profits, accumulating around 9 trillion won in net profits last year, largely driven by increased daily trading volumes in the domestic stock market and a significant rise in overseas trading commissions. Following a peak trading cycle in June last year, the daily average trading volume for domestic stocks soared to about 31.6 trillion won, leading to an increase of 500 billion to 700 billion won in profits compared to the previous peak in 2021, marking the highest performance in history. The first two months of 2023 continued this trend, with the average daily trading volume exceeding 63 trillion won, suggesting a potential for breaking further records this year.
A recent report from the three major credit rating agencies in South Korea indicated that the combined net profits for 28 domestic securities firms projected for 2025 would be approximately 8.7 trillion won, a significant increase from 6.3 trillion won in 2024, suggesting an upward trend in the industry. However, disparities between large and small firms persisted, with the net profits for nine major securities firms expected to reach around 7.2 trillion won, reflecting a 1.4 trillion won increase from the previous year. The report highlighted that the boom in the stock market augmented the operating profits from securities management, along with rising trading volume and margin loans, which ultimately enhanced intermediation revenues.
The surge in profitability was attributed primarily to the explosive growth in stock commission revenues linked to trading volumes. Average daily trading volumes for domestic stocks were disappointing in the early months of last year but surged to 31.6 trillion won after June. This trend continued into 2023, with the first two months averaging around 63 trillion won, setting new records. Another credit rating agency, NICE Investors Service, also reported a combined net profit of 9.2 trillion won for 27 securities firms they cover, exceeding their previous high of 8.5 trillion won in 2021. The ongoing growth trend in trading and profits signals a robust outlook for the South Korean securities industry in the coming years.
