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According to the FSS, securities firms’ net profit from April 1, 2012 to March 31, 2013 was 1.24 trillion won ($1.1 billion), a 43.9 percent drop from the previous year’s 2.2 trillion won. The figure is the lowest net profit since 2.02 trillion won in the 2008 fiscal year. Of the 62 securities firms, 15 companies each saw a net loss amounting to 290.7 billion won in total. Though 47 firms created a total profit of 1.5 trillion won, their net profit plunged significantly compared to the previous fiscal year.
Net profit was hurt by “continuing uncertainty in the financial market triggered by the euro zone crisis that led to a global economic slowdown,” said an FSS official.
FSS data showed the total amount of stock trading last year was at the lowest level since the 2006 fiscal year, which reduced securities firms’ commission fees. In the fiscal 2012, the total volume of stock trading was 1,557.1 trillion won, a 30.7 percent drop from the previous year’s 2,245.4 trillion won. Profit from stock commissions also fell over the same period by 32.2 percent, from 5.4 trillion won in 2011 to 3.7 trillion won in 2012, the regulator said.
“Though securities firms have been putting out efforts to increase their profit by slashing the number of employees and branches, profit hasn’t improved much,” the official said.
In recent years, local brokerages have struggled to boost profitability by streamlining their businesses. As of March last year, securities firms had 1,768 branches; this March there were 1,590. The number of employees at firms dropped from 43,820 to 42,317 over the same period.
To survive, experts say, brokerage firms must diversify, for example, by enhancing their asset management business.
In addition securities firms, other nonbanking financial institutions have seen their profit plunge recently. In addition, the combined net profit of seven credit card firms was down 14.5 percent last year compared to 2011, according to the FSS.
By Lee Eun-joo [angie@joongang.co.kr]
