South Korean brokerages reported an all-time high net profit in the first quarter as strong proceeds from bonds, stocks and other assets offset heavy losses in derivatives trading.

The estimated net profit of the country’s 56 securities firms came to 1.46 trillion won ($1.23 billion) in the January-March period, up 183.8 percent from the previous quarter, according to the Financial Supervisory Service (FSS) on Monday. The previous record high was 1.45 trillion won set in the first quarter of 2018.

In-house trading profits fell 41.2 percent on quarter to 728.8 billion won as the derivatives business, namely in equity-linked securities, saw its losses widen to 1.59 trillion won from the previous quarter’s 495.5 billion won.

But bond-related profits climbed 7.2 percent to 2.06 trillion won from the previous quarter amid the falling interest rate climate. Stock-related profits also surged more than 239.8 percent to 260.8 billion won. Commissions edged up 0.7 percent to 2.24 trillion won, helped by the 8 percent and 10 percent profit boost from investment banking and asset management businesses, respectively.

Other assets saw their bottom line improve significantly in the first quarter, turning a 1.48 trillion won profit from a 197.4 billion won loss in the previous quarter. The biggest profit-maker was funds at 701.5 billion won, with loans (648.8 billion won) and foreign exchange (128.1 billion won) businesses also delivering handsome rewards.

Sale and administrative expenses were up 7.8 percent on quarter at 2.21 trillion won. The return on equity, a profitability ratio that measures the ability of a firm to generate profits from shareholder investments, was 2.6 percent, down 0.1 percentage point from the same period a year earlier.

The FSS said the latest results show a more diversified profitability structure compared with the first quarter of 2018 when most of the profits came from increased stock transactions.

As of late March, the combined assets of Korean brokerages totaled 472.2 trillion won, up 7.6 percent from the previous three months. Their total debt was 8.6 percent higher at 415.3 trillion won, with the equity capital up 0.5 percent at 56.9 trillion won.

By Jin Young-tae and Kim Hyo-jin

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