Major securities firms in South Korea posted strong earnings in the first quarter thanks to a sharp rise in brokerage fees from increased stock turnover and other financial instruments amid low interest rates, data showed Tuesday.
Four listed brokerage houses — Hyundai Securities, Meritz Securities, KDB Daewoo Securities and Samsung Securities — logged a combined 447.8 billion won ($410 million) in operating profit in the January-March period, a 175.5 jump from a year earlier, according to the data compiled by market researcher FnGuide.
The figure is 72 percent of the operating income they earned in total last year, when the tepid local equity market squeezed their brokerage margins, the data showed.
Their upbeat revenue was largely attributable to increased fees in tandem with a rise in stock turnover.
The daily transaction fees averaged 4.7 trillion won in the first three months of this year, the largest in three years.
A growing number of investors shifted their money from bank deposits to stock accounts and other financial vehicles that promise higher returns than interest income amid low interest rates.
The Bank of Korea, the country’s central bank, lowered its policy rate by a quarter percentage point to a record low of 1.75 percent in March to support Asia’s fourth-largest economy.
Even some investors borrowed money or stocks from securities firms to join the bull market run.
“Securities firms are in a relatively better position than banks and insurance companies under the current low interest environment,” said Kang Seung-kwon, a researcher at Daishin Securities. “Their earnings outlook depends on how stocks and bonds trade, but the business environment is expected to remain positive in the second quarter.” (Yonhap)
