 |
| Financial firms' office buildings are seen on Yeouido, the financial district in Seoul. gettyimagesbank |
By Lee Min-hyung
Mid-tier securities firms reported a more drastic fall in earnings compared with their bigger counterparts in 2022, in the aftermath of slumping stock sentiment and a slowdown in the real estate market, which was prompted by sharp interest rate hikes.
Hanwha Investment & Securities recorded a deficit last year with a net loss of 47.6 billion won ($37.72 million). This is a drop of 133 percent from the previous year, according to data from the company.
The company attributed the earnings fall to a profit decline in its wealth management and trading divisions. A heightened uncertainty of real estate project financing last year also negatively influenced the firm's earnings, the Hanwha affiliate said.
Other mid- to small-sized brokerage houses also reported double-digit fall in earnings, hit hard by the then-widening global monetary uncertainty. SK Securities reported a net profit of 1.3 billion won last year, down 96.7 percent from the previous year. Its operating profit also reached just 1.5 billion won, a drop of 97.1 percent, during the same period.
DAOL Investment & Securities also followed the list, with its net profit falling by 56.49 percent last year. Hyundai Motor Securities reported a net profit of 87.1 billion won last year, down 26 percent from a year earlier, hit by a revenue decline in its wealth management and investment banking businesses.
Officials from the securities industry said the top priority for their business this year is to sophisticate their risk management capability during this period of financial uncertainty.
"Even if the stock market showed unexpected signs of bouncing back in January, it is too early to say that the market has entered a stable path for recovery due to lingering monetary uncertainties from the U.S. Fed," an official from the industry said.
"Most brokerage houses would not have expected such huge earnings fall last year, which means that the market is extremely hard to predict," the official said. "Securities firms will have to focus on building stable revenue structures this year, rather than taking further risks into new business areas."
Despite the earnings fall, brokerage houses' stock prices extended a rally on the booming KOSPI in January. Expectations that their earnings had bottomed out last year also boosted their stock valuation.
However, analysts said investors should be cautious in making investments in securities stocks.
"It still remains to be seen whether securities stocks will be able to continue extending their rally momentum, as their investment sentiment has yet to fully recover for the time being," Yoon Yoo-dong, an analyst at NH Investment & Securities, said.
![[INTERVIEW] 'One Day Off' star Lee Na-young, director on creating subtle, feel-good series](https://img.koreatimes.co.kr/upload/thumbnailV2/796618f56a44402eabe81fe4530ab988.jpg/dims/resize/178/optimize)
![[INTERVIEW] Lee Jun-hyuk unrecognizable in 'The Roundup: No Way Out'](https://img.koreatimes.co.kr/upload/thumbnailV2/77a9da6df7da4284adbee249a87307c1.jpg/dims/resize/178/optimize)
