As the domestic stock market rose and investors' "bit-too (borrowing to invest)" surged, major securities firms' interest income appears to have increased sharply.
According to quarterly reports from the top 10 securities firms by domestic equity capital (Mirae Asset, Korea Investment, Samsung, KB, NH, Shinhan, Meritz, Kiwoom, Hana, Daishin Securities) on the 17th, their first-quarter interest income related to margin trading loans totaled about 600 billion won.
This is a 55.9% increase from the first quarter of last year (384.6 billion won). It also rose 14.0% compared with the previous quarter, the fourth quarter of last year (526.2 billion won).
A margin trading loan is a transaction in which an investor borrows funds from a securities firm to buy stocks. The balance of margin trading loans, which is the unpaid amount that investors have not repaid, is typically used as an indicator showing the scale of "bit-too."
The expansion of securities firms' interest income is seen as the result of increased margin lending due to the stock market boom. As the KOSPI surged from the 4,200 level at the end of last year to above the 6,000 level intraday in the first quarter, retail investors' demand for leveraged investing also grew.
In fact, the average daily balance of margin trading loans in the first quarter was tallied at 31.0126 trillion won. This is the first time the average margin balance has exceeded 30 trillion won. Compared with the first-quarter average of last year (17.2877 trillion won), it increased 79.3%, and it was also up 19.2% from the previous quarter's average (26.0034 trillion won).
The industry believes the top 10 securities firms account for about 70% to 80% of the overall margin lending market. Based on that, their first-quarter average margin lending balance is estimated at about 21 trillion to 25 trillion won. The industry also sees the average applied interest rate at around 8% to 9% per year.
Securities firms typically apply interest rates ranging from around 5% per year up to about 10%, depending on the margin loan period. However, there were large differences in earnings structures by firm. At some securities firms, interest income from margin lending exceeded 25% of net income, while at others it did not even reach 10%.