Brokerage units of South Korea's five biggest financial holding groups, including KB, Shinhan, Hana, NH and Woori, post record-level results in the first quarter of this year. Higher domestic stock trading value boosts brokerage commissions, while product management gains and wealth management (WM) income also recover, helping lift financial holding group earnings.

As of April 27, NH Investment & Securities posts the biggest net profit in the first quarter, the financial investment industry said. NH Investment & Securities reports operating profit of 636.7 billion won and net profit of 475.7 billion won for the quarter.

The figures are up 120.3 percent and 128.5 percent, respectively, from a year earlier, marking the biggest quarterly results on record. Brokerage commission balance totals 349.5 billion won, up 57.4 percent from the previous quarter.

The rise is driven largely by an 80.5 percent increase in average daily trading value for domestic stocks to 66.8 trillion won from the previous quarter. Commission income from domestic stocks comes to 309.7 billion won, and market share stands at 10.7 percent.

KB Securities also posts a sharp improvement. KB Securities' consolidated first-quarter revenue rises 179.46 percent from a year earlier to 8.3509 trillion won. Operating profit increases 101.73 percent to 453.1 billion won, and net profit grows 92.75 percent to 350.2 billion won.

The company says it posts balanced growth across all areas, including wealth management (WM), investment banking (IB), capital markets and wholesale.

Shinhan Investment posts first-quarter net profit of 288.4 billion won, up 167.4 percent from a year earlier. Operating profit rises 228.5 percent to 386.4 billion won. Operating revenue increases 90.2 percent to 701.5 billion won, while fee income jumps 111.7 percent to 407.4 billion won.

Brokerage commissions surge 216.1 percent to 293.5 billion won, and fee income related to financial products also rises 70.5 percent to 28.3 billion won. Product management income increases 269.0 percent to 162.3 billion won, contributing to a return to profit. IB income, however, falls 24.0 percent from a year earlier to 42.6 billion won.

Hana Securities posts consolidated first-quarter operating profit of 141.6 billion won and net profit of 103.3 billion won. Operating profit and net profit rise 47.9 percent and 37.1 percent, respectively, from a year earlier. First-quarter operating profit is about 85 percent of its full-year operating profit of 166.5 billion won last year.

Revenue rises to 8.6728 trillion won from 3.6491 trillion won a year earlier, an increase of about 138 percent. Hana Securities says fee income and financial product income expand in its WM business, while IB performance, including a focus on high-quality deals and results in acquisition finance, contributes to the improvement. Its sales and trading (S&T) business focuses on issuing equity-linked securities and risk management.

Woori Investment is smaller in scale than other large brokerages under financial holding groups, but shows clear growth. First-quarter net operating revenue rises 75.0 percent from a year earlier to 70.1 billion won. Non-interest income jumps 173.3 percent to 41.4 billion won, leading overall revenue growth. Operating profit comes to 16.6 billion won and net profit totals 14.0 billion won.

A common factor behind the five brokerages' improved results is higher trading value. As stock market activity picks up, stock trading by individuals and institutions increases, expanding brokerage commissions.

In particular, NH Investment & Securities and Shinhan Investment show high growth rates in brokerage. KB Securities and Hana Securities improve results across several areas, including WM, IB and capital markets. Woori Investment shows a shift toward changing its profit structure around non-interest income.

Shinhan Investment also posts a sharp increase in product management income, while NH Investment & Securities sees improved gains and related net interest income from management and investment compared with the previous quarter. That means profits come not only from higher trading fees but also from managing held assets and responding to the market.

Differences among brokerages also emerge. NH Investment & Securities and KB Securities confirm their status as large firms in terms of profit scale and business portfolio. Shinhan Investment sees its results improve on a recovery in brokerage commissions and product management gains, but its IB business is down from a year earlier.

Hana Securities improves profitability by posting first-quarter operating profit close to its full-year operating profit last year. Woori Investment still has a relatively small capital base, but is at a stage of seeking to broaden its growth foundation through an expansion of non-interest income and a rights offering.

Based on first-quarter results alone, brokerages of the five biggest financial holding groups broadly benefit from a strong stock market. Higher brokerage commissions and improved financial product sales and management gains help restore earnings strength. A profit structure that relies heavily on trading value, however, could become more volatile depending on market conditions.

Looking ahead, results are expected to depend not only on stock market trends but also on how stably firms can generate earnings through IB, WM, asset management and their ability to deploy capital.