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Brokerages' earnings hit 4-year low in 2012

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(Globalpost/GlobalPost)

SEOUL, May 27 (Yonhap) -- Securities firms operating in South Korea saw their earnings hit the lowest level in four years in fiscal 2012, as lingering economic jitters here and abroad weighed down their profitability, the financial regulator said Monday.

The combined net profit of 62 local and foreign brokerage houses operating here came to 1.24 trillion won (US$1.09 billion) between April 2012 and March this year, down 43.9 percent from 2.21 trillion won the previous year, according to the Financial Supervisory Service (FSS). The firms closed their books on March 31.

The lackluster performance is the worst since the firms posted a 2.2 trillion-won on-year net profit in fiscal 2008, the FSS said.

Such dim results came as local brokerage firms have suffered from the prolonged economic downturns in both local and offshore markets.

In particular, the Seoul bourse has remained weak with its annual stock turnover hitting the lowest level since 2006 of 1.56 trillion won at the end of March, which is down 31 percent compared with a year earlier.

That has led to a steep fall in securities firms' commission income to 3.7 trillion won as of end-March, from 5.45 trillion won a year ago, the FSS said.

However, their on-quarter net income more than tripled to 453.2 billion won in the January-March period from 113.1 billion won three months earlier, as a key interest rate cut by the central bank boosted their bond-related investment, it added.

Their net capital ratio, a gauge of financial soundness, came in at 508.3 percent as of the end of March, down 96.9 percentage points from a year ago, mainly due to an increase in risk-weighted assets as they expanded the amount of bond holdings, according to the regulator.

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