Korean Brokerages Eye Record Q1 Profits as Market Volatility Drives Trading Surge

Major Korean securities firms are expected to deliver near-"earnings surprise" results for the first quarter as the domestic stock market's roller-coaster ride fueled a surge in trading activity. The KOSPI's rally to record highs, followed by heightened volatility from geopolitical factors, has driven a sharp increase in investor transactions.

According to the financial investment industry on April 15, the combined first-quarter operating profit consensus for five major brokerages—Mirae Asset Securities, Korea Financial Holdings, Samsung Securities, NH Investment & Securities, and Kiwoom Securities—stands at 3.03 trillion won. The figure represents estimates compiled from securities research centers over the past three months.

Revenue is projected at 4.16 trillion won, with net income at 2.31 trillion won. Compared to the same period last year, operating profit is up 65.92%, revenue 46.62%, and net income 64.02%.

By firm, Mirae Asset Securities is forecast to post first-quarter operating profit of 978.2 billion won, a 182.56% year-over-year surge. Korea Financial Holdings is expected at 705.9 billion won (up 33.30%), Samsung Securities at 418.9 billion won (up 25.22%), NH Investment & Securities at 427.2 billion won (up 47.82%), and Kiwoom Securities at 497.7 billion won (up 52.90%).

The earnings improvement stems from soaring trading volumes, as brokerage commissions rise proportionally with transaction values. From the start of the year through April 13, average daily trading value across the KOSPI and KOSDAQ markets reached 45.30 trillion won, with daily volume at 2.1 billion shares. This marks a substantial increase from 18.36 trillion won and 1.3 billion shares in the first quarter of last year. On April 4, when the KOSPI plunged to the 5,000 level recording its largest-ever single-day decline in both percentage and point terms, daily trading value spiked to 79.47 trillion won.

Amid strong earnings expectations, brokerages are expanding shareholder returns. Mirae Asset Securities announced a shareholder return plan of approximately 635.4 billion won last month, including dividends totaling 465.3 billion won. Korea Investment & Securities, a wholly owned subsidiary of Korea Financial Holdings, approved dividends of 620 billion won. Samsung Securities, NH Investment & Securities, and Kiwoom Securities are distributing cash dividends of 357.2 billion won, 487.8 billion won, and 301.3 billion won, respectively.

"Recent market trading values have surged to unusual levels as high expected returns combined with volatility," said Baek Du-san, analyst at Korea Investment & Securities. "The structural expansion of stock market capitalization and household money moves are driving increased trading."

Park Hye-jin, analyst at Daishin Securities, added: "We initially assumed average first-quarter trading value at 54 trillion won, but the surge in transactions points to an earnings surprise for brokerages in Q1. Upward revisions to full-year forecasts are possible following first-quarter results."