Net income of South Korean brokerage firms have surged over 91 percent in 2015 as their brokerage commissions and investment-banking fees soared, data compiled by the country’s financial authority showed Monday.
According to Financial Supervisory Service, a combined net profit of 56 brokerages climbed to 3.23 trillion won ($2.6 billion) last year, up 91.7 percent from 1.54 trillion won a year earlier.
The surge was attributed to brokerage commissions that jumped 32.6 percent on-year to 7.92 trillion won with increased transaction volume due to stock rally in the first half of the year attracting investors.
Last year, quarterly earnings of securities companies seesawed, followed by ups and downs of the benchmark KOSPI index. Net income touched the highest in eight years in the second quarter but sharply declined from the third quarter due to huge losses from derivatives amid a bearish stock market.
“The increase in commissions was largely due to the jump in stock market transaction volume in the bourses during the period amid increased volatility of global stock markets and investment banking-related fees,” a FSS official said.
In 2015, the combined daily turnover of the KOSPI and minor KOSDAQ markets stood at 8.87 trillion won, up 49 percent from the previous year, according to the data by the bourse operator, the Korea Exchange.
Buoyed by Korean firms’ robust activities of initial public offerings as well as mergers and acquisitions, fees from investment banking services rose 32.4 percent to 1.23 trillion won, the report showed.
Of the 56 securities companies that had published full-year balance sheets, nine reported net losses totaling 39.9 billion won, while 47 posted a net income of a combined 3.27 trillion won. The firms’ returns on equity, a key gauge of profitability, increased to 7.3 percent from 4.1 percent in 2014.
Faced with a slew of risk factors at home and abroad, the FSS said it will strengthen its monitoring on the companies while urging them to beef up risk management.
“Profitability of securities firms could be dented this year because of sluggish domestic growth, China’s economic slowdown and the U.S. rate hike,” the official said.
