Kim Jeong-gak, president of Korea Securities Finance, said he would strengthen support for the financial investment industry in line with the government's policy to revitalize the capital market and expand the supply of venture capital. With Securities Finance's profitability increasing recently and its equity capital expected to exceed 4 trillion won this year, he said the company plans to build a virtuous cycle that supplies liquidity to the capital market based on that.
On the 16th, Kim attended a press briefing marking the 70th anniversary of Korea Securities Finance's founding in Yeouido, Seoul, and said, "We are continuing profit growth through active expansion of business scale and risk management efforts, recording the best performance since our founding last year."
Korea Securities Finance is the only dedicated securities finance institution in the country. It handles securities finance operations and investor deposit trust services. Since 2021, it has managed not only won-denominated deposits but also foreign-currency deposits. Under the Capital Markets Act, when a securities firm deposits investor funds, Securities Finance manages them and pays the profits earned to the securities firm.
Securities Finance's equity capital increased from 3 trillion won in 2022 to 3.8 trillion won last year due to higher revenue. The Bank for International Settlements (BIS) ratio, a capital soundness indicator, also improved from 21.43% to 23.85% over the same period. Kim said, "Based on capital expansion, we have laid the groundwork to expand liquidity supply within the capital market," adding, "We will strengthen support for the financial investment industry to back the government's policy to expand the supply of venture capital going forward."
Recently, Securities Finance also began revising rules to introduce an interim dividend next year to strengthen shareholder rights and interests. Kim said, "We will also establish shareholder-friendly policies, including maintaining a stable dividend payout ratio."
Since last year, Securities Finance has been pushing three key management strategies: ▲ strengthening the market safety net role ▲ globalization ▲ digitalization. While steadily increasing the amount of liquidity supplied to the capital market, it plans to allow new transactions using overseas stocks as collateral within the year to help improve the utilization of securities held by securities firms.
To improve capabilities related to foreign currency, it created a dedicated organization and hired specialists. It also plans to diversify management tools by expanding counterparties for securities repurchase agreement (RP) transactions and foreign bond operations, and it will review ways to expand foreign currency funding channels, including issuing foreign currency bonds.
To that end, Securities Finance will hold a "securities finance agreement ceremony" on the 30th to promote multilateral cooperation with securities finance companies around the world. Securities finance companies from five countries, including Korea, Japan, China, Thailand, and Indonesia, will participate.
For digitalization, it sharply increased the annual information technology (IT) budget from 15.1 billion won in 2022 to 53 billion won this year. It launched non-face-to-face and mobile-only products focused on customer convenience and, on the 15th, built a "market purchase support system" for employee stock ownership so that employee stock ownership associations can conveniently buy shares and acquire employee stocks.
In line with the legalization of virtual assets, it is also planning a research project on what role Securities Finance should play when virtual assets and the capital market converge.
As part of strengthening domestic and overseas business infrastructure, it also opened a central region center in Suwon, Gyeonggi Province, in Aug. Kim said, "Through the central region center, we will strengthen funding support for semiconductor and AI corporations, listed companies in the region, and corporations pursuing initial public offerings (IPO)."
In addition, in the first quarter of next year, it plans to convert its existing Hong Kong office into a Hong Kong corporation. Currently, six domestic securities firms operate in Hong Kong: Mirae Asset Securities, NH Investment & Securities, Korea Investment & Securities, KB Securities, Shinhan Investment, and Samsung Securities. Kim emphasized, "Through the Hong Kong corporation, Securities Finance will actively support the overseas businesses of domestic securities firms so their role can grow even in the rapidly changing global financial environment."
He went on, "Based on 70 years of history, Korea Securities Finance is safely holding and managing about 87.4 trillion won in investor deposits," adding, "We will pursue management strategies suited to changes in the financial environment to promote the co-growth of the capital market and Securities Finance."