South Korea's major securities houses and primary distributors of structured products in the Asia-Pacific have reported increasing income figures and revenues for the second quarter of 2017 as well as improving wealth management and structured products operations.

Mirae Asset Daewoo reported a pre-tax income of KRW212.3bn (US$187.5m) for the second quarter of 2017, an increase of 35% compared to the first quarter of the year when pre-tax income was KRW138bn. Net operating revenue also increased from KRW297.9bn in the first quarter to KRW386.7bn in the period April to June 2017. Operating profit rose by 44% from KRW91.5bn in the first quarter of 2017 to KRW165.9bn in the second.

Revenue from investment banking increased to KRW87.7bn in the second quarter (from KRW38bn in the first quarter), while revenue from wealth management practices, at KRW56.3bn, also increased slightly. The main wealth management products during the second quarter of 2017 were offshore bonds (KRW330bn) and Atlanta real estate mutual fund (KRW140bn), according to the bank

Wealth management assets under management (AUM) totaled KRW111.6bn. Sales of equity-linked securities (ELS) dropped just over 2% on a quarterly basis to KRW3,501bn, whereas new derivatives-linked securities (DLS) product tranches generated 36% higher sales at KRW970bn, the company reported, noting that 'diverse ELS/DLS issuance led to continuous new issuance'. The end-balance of ELS and DLS products stood at KRW 7,679bn, up 1.5% from the previous quarter.

KB Financial Group, owner of KB Securities which recently merged with Hyundai Securities, reported that net interest income from the securities business 'sharply increased' to KRW72bn in the second quarter of 2017, up from just KRW3bn in the first quarter. For the first half, net interest income from KB Securities totaled KRW141.3bn, up from KRW 4.6bn in first half of last year, in the context of the acquisition of Hyundai Securities. Non-interest income from KB Securities for the second quarter was up 8%, and totaled KRW396.6bn for the first six months of the year, up from KRW 108.2bn in the first half of 2016.

KB Securities, which encompasses the group's structured products business, reported KRW65.9bn in profit, as compared to KRW63.8bn for the first quarter of 2017 and KRW28.5bn in the first half of 2016. The subsidiary recorded profit of KRW129.7bn for the first half of 2017, with a 6.11% return-on-equity (ROE) ratio.

The company's wealth management remained stable. Group AUM as at the end of June stood at KRW236.3trn, up from KRW225.5trn for the first quarter of 2017.

Shinhan Financial posted net income of KRW892bn in the second quarter of 2017, down 10.5% compared to the first quarter of 2017 when net income was KRW997.1bn. Operating income, including interest and non-interest income, increased by 9.9% from KRW2.1trn in first quarter of 2017 to KRW2.3trn in the second quarter of 2017. Fees and commission income also rose from KRW387.6bn in first quarter of this year to KRW437.1 in the second quarter, indicating an increase of 12.8%.

Shinhan Investment, which, among other, includes the group's structured products operations, generated 10% of the group's net income, down from 39% in the first quarter. The company reported a net income of KRW47.8bn, down 4.1% from KRW46bn in the first quarter of 2017.

Of Shinhan Investment's KRW72trn in outstanding financial products, just KRW2.5trn were invested in ELS, down from KRW2.7trn for the previous quarter, and KRW3.1trn for the last quarter of 2016.

Samsung Securities reported net income of KRW66.9bn, up 28% on an annual basis and up 20% as compared to the previous quarter. Operating income rose from KRW74.7bn in the first quarter of 2017 to KRW88.1bn in second quarter of 2017, indicating an increase of 18%. The Group's net revenue rose by 9% compared to the previous quarter and reached KRW236.9bn.

Net revenue from financial products, including mutual funds, wrap accounts, OTC derivative products, bancassurance and trust, went down by 4% to KRW91.9bn due to weak OTC derivatives and trust sales, the bank reported. Compared to the same period last year, financial product sales increased by 4% from KRW88.3bn.

OTC derivatives revenue saw a slight decrease of 4% on a quarterly basis to KRW68.2bn. Samsung held KRW10.2trn in ELS and DLS assets as at the end of the second quarter of 2017, an increase of 3% from the previous quarter.

Korea Investment, reported a net profit of KRW143.2bn for the first quarter, indicating an increase of 9% as compared to the previous quarter when net profit was KRW130bn. The Group's net revenue was KRW348bn for 1Q2017, up by 12% from KRW305bn in the first quarter of this year. ELS/DLS sales in the period totalled KRW6.7trn, up 17% on a quarterly basis.

The five leading groups in South Korea distributed a total of 6,196 structured products in the first half of 2017, according to SRP database. Net estimated sales for the first half of 2017 in South Korea stood at US$41bn, up 19.3% from the same period last year. Mirae Asset Daewoo's net estimated sales for the first six months of 2017 were US$6.5bn and doubled compared to the first half of 2016. Net sales of KB Financial Group rose from US1.3bn in the first half of 2016 to US$4.9bn in the second half of 2017. The net estimated sales of the remaining groups increased by 33% on average.

Click on the respective links to view the full second quarter 2017 results of Mirae, KB, Shinhan, Korea Investment (in Korean) and Samsung.

Picture source: theculturetrip.com.

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