Korea Investment & Securities Posts 2 Trillion Won Operating Profit in Three Quarters

Korea Investment & Securities is driving growth across the securities industry with record-breaking performance this year. As next year's operating profit forecast approaches 3 trillion won, expectations are rising, with shares of its holding company Korea Financial Holdings more than doubling since the beginning of the year.

According to the financial investment industry on Tuesday, Korea Investment & Securities' cumulative operating profit for the first three quarters of this year reached 1.9832 trillion won ($1.5 billion), surging 71.2% from 1.1587 trillion won in the same period last year. Net profit also increased 60.9% to 1.6761 trillion won. Having earned nearly 2 trillion won in just three quarters, the company is expected to comfortably surpass its 2023 full-year operating profit record of 2.308 trillion won.

The securities industry forecasts Korea Investment & Securities' operating profit to expand to the high 2 trillion won range next year. Analysts predict this will accelerate the company's long-held goal of overtaking Nomura Securities as Asia's top brokerage firm.

Third-quarter results were particularly impressive. Operating profit for the quarter reached 835.3 billion won, up 117.8% year-on-year. This represented an earnings surprise, exceeding the market consensus of 585.6 billion won by approximately 45%. Net profit for the quarter also jumped 96.8% to 650.9 billion won.

The strong performance was driven by a bullish stock market combined with a well-balanced business portfolio. Revenue breakdown for the third quarter shows retail at 30%, sales and trading at 27%, project financing at 13%, investment banking at 9%, wholesale at 9%, and others at 12%.

Specifically, domestic and overseas equity brokerage commissions increased 18.5% quarter-on-quarter, while fund and wrap product sales commissions rose 31.4%. Individual customer financial product balances reached 81 trillion won, increasing by 13.3 trillion won since the beginning of this year. Strong performance of specialized products developed in collaboration with leading global financial firms such as Goldman Sachs and Carlyle supported these results.

Trading operations and investment banking also served as powerful earnings drivers. Korea Investment & Securities is expanding venture capital investments based on 18.7 trillion won in commercial paper issuances, while recording strong performance across all IB areas including IPOs, rights offerings, and bond underwriting.

"Our diversified business portfolio combined with continuous business innovation efforts enabled us to achieve strong results," a Korea Investment & Securities official said. "We will continue to expand our growth foundation to provide global-level financial services to domestic investors."

The Integrated Managed Account (IMA) product set to launch by year-end is considered a key factor that will further boost Korea Investment & Securities' growth potential. Selected as an IMA operator last month, the company is finalizing product terms and investment prospectuses with financial authorities. The corporate finance specialized account offers principal protection with higher returns than bank deposits, and is assessed to have significant potential to trigger money moves from banks and reshape the financial industry landscape.

Shares of Korea Financial Holdings have maintained strength throughout the year on the back of improved performance at its flagship subsidiary. The stock price rose 131% from 70,700 won on January 2 to 164,000 won as of December 5. Securities firms' target prices have also more than doubled from 97,929 won at the beginning of the year to 225,067 won currently, with Kiwoom Securities (039490.KQ) setting the highest target at 260,000 won.

"Brokerage and wealth management fee increases along with trading and other income expansion will continue," said Kim Ji-won, analyst at Daol Investment & Securities, maintaining Korea Financial Holdings as the top pick in the securities sector with a target price of 250,000 won.

Daishin Securities presented a "buy" rating and target price of 218,000 won, stating that Korea Investment & Securities' performance is fully sustainable next year. "The essence of the securities business lies in brokerage and investment, and Korea Investment & Securities has a solid structure with 6.9 trillion won in scale and 456 investment assets," analyst Park Hye-jin at Daishin Securities said.