South Korean securities firms saw their profits plunge in the third quarter largely due to a sharp drop in commission incomes amid bearishness in the country’s stock market, data showed Tuesday.
According to data released by the Financial Supervisory Service, the combined profit of 55 Korean securities companies for the third quarter ended September plunged 23.1 percent to 957.6 billion won ($864 million) from the previous quarter.
Brokerage firms generated 2.16 trillion won in profit from commissions in the July-September period, down 20.3 percent from the previous quarter. Stock trading commission income plunged 30.2 percent to 910.3 billion won during the same period while investment banking-related commission income plummeted 16.1 percent to 391.6 billion won.
The decline in commission income is due to sluggish stock market where securities transactions dwindled to 573 trillion won in the third quarter from 837 trillion won in the second quarter and 833 trillion won in the first quarter.
Brokerage houses generated 1.04 trillion won in profit from investments with their own capital in the third quarter, similar to the previous quarter, but their securities-related income sank 49.7 percent to 75 billion won. Bond investment income, however, increased 5.9 percent to 1.6 trillion won on an interest rate slowdown that led to a rise in gain on valuation and bond disposition.
Brokerage firms suffered a 644.1 billion won in loss in derivative-related products due to a fall in major benchmark indices and drop in prepayment that led to increased losses in derivative-linked securities evaluation and payments.
By Jin Young-tae and Lee Eun-joo
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