As the KOSPI topped 8,000 for the first time ever on the nth of last month, the four major commercial banks (KB Kookmin, Shinhan, Hana, Woori) were found to have earned fees in the 130 billion won range in a month from exchange-traded fund (ETF) sales alone. Investment demand from middle-aged and older customers flocking to bank counters amid the stock market boom has become a new driver supporting banks' non-interest income.
According to the financial sector on the 25th, ETF sales at the four major commercial banks totaled 14.7136 trillion won last month. That was a 54% surge from April's 9.5362 trillion won. Applying the roughly 1% ETF sales fee rate in the banking sector, they effectively earned about 130 billion to 147 billion won in fee revenue.
Bank ETF sales have steadily risen this year and peaked in May as the KOSPI jumped. On the 6th of last month, the KOSPI climbed 6.45% in a day on the strength of semiconductor stocks to break 7,000 for the first time, and on the 15th it surpassed 8,000 intraday for the first time. On the 29th, it set a fresh record high at 8,476 on news of Jensen Huang's visit to Korea. By bank, top-selling products were also led by semiconductor ETFs.
Banks' ETF fees are about 1%, far higher than securities firms' 0.1%. Banks do not offer real-time transactions, and when customers give management instructions, the bank trades on their behalf, which delays order execution and makes it hard to set prices. Even so, middle-aged and older customers who prefer face-to-face transactions trade ETFs at bank counters. Because these products can incur principal losses, there is strong demand to invest after hearing explanations from staff at the counter.
As of the 22nd, ETF sales across the banking sector exceeded 55.7 trillion won. If this trend continues, it is expected to top 100 trillion won for the first time this year. A banking industry official said, "While bancassurance (insurance sold by banks), which banks have traditionally sold, and dollar insurance that was popular last year are weak, ETF inquiries have continued to increase this year thanks to the stock market boom."