Brokerage firms in S.Korea log sharp falls in 2022 earnings

Brokerage firms in South Korea, led by Mirae Asset Securities Co., suffered a 50% plunge in net profit in 2022, as dwindling trading fees outweighed a triple-digit surge in profit from derivatives investments, regulatory data showed on Thursday. 

Among the 58 securities firms operating in the country, 46 companies saw their earnings decline or swing to losses last year.

Their combined net profit plummeted 50.3% to 4.5 trillion won ($3.5 billion) from the year previous, according to the Financial Supervisory Service (FSS).

Their return on equity decreased 6.7 percentage points on-year to 5.8%. They managed 608 trillion won in assets, down 21% on-year.

The number of brokerage houses in shortfalls increased to 11 from six in 2021.

Trading commissions shrank by 22.5% on-year to 13 trillion won, with fund management fees down 38% to 5 trillion won.

Stock trading value and fees have been on the decline after peaking at 2.5 trillion won in the first quarter of 2021.

By contrast, they enjoyed handsome profits from proprietary trading of derivatives, which skyrocketed 380% on-year to 5.2 trillion won in 2022.

Thanks to soaring derivatives trade linked to global equity indexes, four futures companies in South Korea reported a 56% surge for a combined 53.1 billion won in net profit in 2022.

Write to Hyeong-Gyo Seo at seogyo@hankyung.com

Yeonhee Kim edited this article