SEOUL, Nov. 18 (Korea Bizwire) — Big brokerages in South Korea saw their investment banking unit report solid profits in the first nine months of this year, overtaking commission fees as their main profit driver, data showed Monday.
Mirae Asset Daewoo Co., the nation’s largest brokerage, reported an operating profit of 249.8 billion won (US$214.6 million) from investment banking in the January-September period, according to the company’s recent regulatory filing.
In comparison, Mirae Asset Daewoo posted an operating profit of 237.3 billion won from commission fees for the nine-month period.
KB Securities Co., the brokerage arm of KB Financial Group Inc., posted an operating profit of 120.4 billion won from investment banking for the nine-month period, compared with a profit of 95.2 billion won from commission fees.
NH Investment & Securities Co., the brokerage arm of Nonghyup Financial Group Inc., also saw its investment banking post solid profits.
In the first nine months of the year, NH Investment & Securities reported an operating profit of 209.9 billion won from investment banking, compared with a profit of 210.2 billion won from commission fees.
Although commission fees from stock trading have been a primary source of profit for brokerages, they are vulnerable to stock market fluctuations, analysts said.
Instead, investment banking has become a substantial profit driver for brokerages because it is relatively insulated from market fluctuations, they said.
Jun Bae-seung, an analyst at eBest Investment & Securities Co., said global financial firms have taken steps to expand stable and sustainable profit drivers, while reducing their reliance on commission fees.
“Local brokerages have also reorganized their business portfolio to follow in the footsteps of the global trend,” the analyst said.