The net profit of the top 10 securities firms based on equity capital for the first half of this year (January to June) has been reported to equal the annual total of the past securities industry. The larger the equity capital, the more diverse the businesses can be conducted, leading to a pronounced phenomenon of 'the rich get richer and the poor get poorer.'
According to the Financial Supervisory Service's electronic disclosure system (DART) on the 14th, the consolidated net profit of the top 10 companies, including Korea Investment & Securities, Mirae Asset Securities, NH Investment & Securities, Samsung Securities, MERITZ Securities, KB Securities, Hana Securities, Shinhan Investment Corp., Kiwoom Securities, and DAISHIN SECURITIES, for the first half of this year totals 4.4958 trillion won. This amount fills 70% of their annual net profit of 6.4163 trillion won last year in just half a year. The 2023 annual net profit of 3.3967 trillion won has already been surpassed.
Korea Investment & Securities achieved a net profit of 1.0252 trillion won in the first half of this year, entering the 'trillion club' for the first time among domestic securities firms. Compared to the first half of last year, the net profit has increased by over 60%.
Mirae Asset Securities and Kiwoom Securities also recorded net profits of 664.1 billion won and 545.7 billion won, respectively, in the first half. Compared to the same period last year, Mirae Asset Securities increased by 80.3%, while Kiwoom Securities grew by 14.4%.
DAISHIN SECURITIES (44%), Shinhan Investment Corp. (25%), MERITZ Securities (11%), and NH Investment & Securities (10%) also recorded double-digit increases in net profits compared to the previous year.
Among the top 10 securities firms, Samsung Securities, KB Securities, and Hana Securities saw a decline in net profit compared to the first half of last year. Samsung Securities was significantly affected by the withdrawal of initial public offerings (IPOs) from DN Solutions and LOTTE Global Logistics. KB Securities was hindered by the reflection of provisions for real estate project financing (PF), while Hana Securities was impacted by the recognition of losses on foreign assets.
Despite some fluctuations among certain securities firms, the top 10 securities firms based on equity capital are likely to exceed 90% of the total net profit in the domestic securities industry (60 firms) for the first time this year. This ratio continues to rise from 82.5% in 2022 to 84.3% in 2023 and 85.9% in 2024. It is evaluated that polarization has become apparent as the real estate project financing (PF) business, which was once a lucrative segment for small and medium-sized securities firms, faces a crisis while the importance of other investment banking (IB) and wealth management (WM) sectors has grown.
As the performance differentiation among securities firms with large equity capital becomes more distinct, the competition for obtaining approval from financial authorities is intensifying.
Previously, the Financial Services Commission announced plans to provide additional support for comprehensive financial investment companies (investment firms) based on the 'Measures to Enhance the Competitiveness of the Securities Industry'. For investment firms, the range of permitted activities varies according to their equity capital size, such as 3 trillion won (corporate credit extension), 4 trillion won (issuance of notes), and 8 trillion won (comprehensive investment accounts - IMA).
Korea Investment & Securities, Mirae Asset Securities, and NH Investment & Securities have submitted applications for IMA authorization. In particular, NH Investment & Securities secured about 650 billion won through a third-party allotment capital increase from NongHyup Financial Group, considering its equity capital criteria.
Samsung Securities, Kiwoom Securities, Hana Securities, Shinhan Investment Corp., and MERITZ Securities have thrown their hats into the ring for the issuance of notes. As the government has decided to tighten designation requirements starting in 2026, the goal is to cross the threshold within this year.
Unlike large firms, small and medium-sized companies are growing increasingly concerned. To rapidly expand equity capital, mergers and acquisitions (M&A) or capital increases are considered options, but the conditions are currently not favorable.
A representative of a mid-sized securities firm said, "There are no M&A opportunities to increase equity capital, and considering the market's resistance, capital increases are difficult options to choose. If we cannot increase our equity capital, the gap may widen, and we are concerned about whether there are no points to leverage our unique strengths."