Brokerages' net profit hits 10-year high

´South Korean brokerages’ combined yearly net profit in 2017 hit a 10-year high, mainly on the back of a stock market boom that led to an upshot in revenue from brokerage fees and trades of shares and derivatives, data showed Tuesday.

The total net profit for the 55 securities firms came to 3.83 trillion won ($3.57 billion) in 2017, up 79.6 percent from a year prior, according to a preliminary set of data by the Financial Supervisory Service. The figure was the highest since 2007, when the Korean firms’ net profit reached 4.43 trillion won.

The firms earned a combined 4.53 trillion won of net income in trades, up 84.6 percent on-year. Revenue from securities trades nearly doubled from the previous year. Derivative product operations came in the black with 885.9 billion won of net income, after a loss of 1.84 trillion won in 2016.

Such performance had far offset the 24.3 percent decline in net revenue from the firms‘ bond trades. But the FSS, the financial watchdog, said in a release the projected additional rate hikes this year at home and abroad might further undermine bonds’ profitability.

Revenue from brokerage commission also surged 12.4 percent to 8.42 trillion won in 2017, driven by rises in trade commission income by 8.3 percent and investment banking commission income by 11.7 percent.

The FSS cited a boom in Korean stock markets. The top-tier Kospi and the second-tier Kosdaq rose 21.8 percent and 26.4 percent in 2017, respectively. The value of shares traded daily on the Kospi and the Kosdaq jumped 17.9 percent and 8.7 percent.

The brokerages‘ return-on-equity in total came to 7.7 percent, up 3.1 percentage points on-year.

By Son Ji-hyoung 
(consnow@heraldcorp.com)