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Brokerages to keep cutting jobs amid falling profitability

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(GlobalPost/GlobalPost)

SEOUL, Nov. 21 (Yonhap) -- South Korea's securities firms are anticipated to continue cutting jobs due mainly to their falling profitability amid the prolonged slump in the local stock market, data showed Thursday.

According to the data compiled by Hyundai Securities Co., local brokerage houses' net operating income reached 9.8 trillion won (US$9.26 billion) in fiscal 2012, which ends in March, down 14.7 percent from a year earlier.

Considering the tallied firms employed 42,317 workers as of end-March this year, the number translates into each worker contributing 230.9 million won to the securities companies on average.

The figure marks a 12.1 percent drop from 262.6 million won posted in fiscal 2011, and a 23.9 percent plunge from 303.3 million won tallied in fiscal 2007, the data also showed, reflecting the firms' decreasing profitability.

Hyundai Securities said local brokerage houses will continue to suffer a decline in their earnings in fiscal 2013, mainly because lower commission returns are hurting their earnings.

The daily average trading volume on the country's main bourse came to 4.18 trillion won over the July-September period this year, down 36.1 percent from 6.55 trillion won tallied two years earlier.

The combined net operating income of local brokerage houses is expected to reach 9.1 trillion won in fiscal 2013, with each worker contributing 226.2 million won, Hyundai Securities said.

Market watchers said the firms are expected to continue eliminating jobs in a bid to tighten their belts and tide over the economic slump.

"Local brokerage houses are likely to downsize, as they are backing up short-term earnings by cutting costs in sales," said Lee Tae-kyung, a researcher at Hyundai Securities.

The combined number of employees at the country's top 10 brokerage houses, meanwhile, came to 24,703 as of end-September, down 1,735 from 26,438 tallied two years earlier, separate data by the Financial Supervisory Service showed.

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