Top brokerages post record W5.94tr profit in Q2 as stock boom fuels earnings surge

South Korea's major brokerages posted sweeping earnings gains in the second quarter, when the Kospi briefly surged past the 9,000 mark on the back of a global semiconductor rally. Analysts attributed the strong results to higher trading volumes driven by the bull market, solid performance in wealth management and trading divisions, and a broad shift of funds from bank deposits into equities — a trend known as "money move."

The combined net profit for the period of 10 major domestic brokerages — Mirae Asset Securities, Korea Investment, Samsung Securities, KB Financial, NH Investment, Shinhan, Meritz Securities, Kiwoom, Hana Securities and Daeshin — reached 5.94 trillion won ($4.2 billion) in the second quarter, according to DART data released Wednesday.

That marked a 37 percent increase from the previous quarter and a 141 percent jump from the second quarter of last year. The 10 firms collectively earned 9.01 trillion won in net profit for all of last year; in the second quarter alone this year, they recorded earnings equivalent to roughly 66 percent of that full-year figure.

Mirae Asset Securities stood out with the sharpest earnings growth. Its second-quarter net profit surged 369.4 percent year on year to 1.91 trillion won, making it the first brokerage in the industry to post net profit above 1 trillion won for two consecutive quarters — following 1.0 trillion won in the first quarter.

A key driver was the valuation gain on SpaceX shares acquired through what was the largest initial public offering in history in June. Based on the closing price of $170.86 at the end of June, the unrealized gain on the SpaceX stake alone reached 1.62 trillion won.

Mirae Asset Securities' second-quarter net profit also exceeded those of major domestic banks over the same period — Shinhan Bank's 1.30 trillion won, KB Kookmin Bank's 1.12 trillion won and Hana Bank's 1.02 trillion won. Earlier, in the first quarter, Mirae Asset Securities had for the first time surpassed the quarterly earnings of NH NongHyup Bank and Woori Bank.

Korea Investment, Samsung Securities, NH Investment and Hana Securities also recorded sharp year-on-year profit increases in the second quarter, with some brokerages posting growth rates exceeding 400 percent. Meritz Securities was an exception, with net profit growth of just over 1 percent — an outcome analysts linked to its commission-free trading policy, which remains in effect through the end of this year.

The strong results reflected a surge of investment funds into equities as the Kospi set successive all-time highs throughout the second quarter. Brokerages benefited not only from higher brokerage commissions on increased trading activity but also from improved performance across key business lines including wealth management, pension and trading.

A broader shift of funds out of bank deposits and savings accounts into the stock market also supported the earnings improvement. According to the KB Financial Management Research Institute, the share of deposits and savings in the financial assets of single-person households fell to 28.3 percent this year from 36.2 percent in 2024, a drop of 7.8 percentage points. Over the same period, the share held in domestic and foreign equities and ETFs rose 6.1 percentage points to 21.1 percent.

Some analysts expect the pace of earnings growth at brokerages to slow from the third quarter onward. The Kospi climbed as high as 9,385.59 during intraday trading on June 19, approaching the 9,400 level, but subsequently fell to 5,262.77 intraday on July 29 amid a correction in global semiconductor stocks, and has since partially recovered.

As market volatility increased, daily trading volumes also declined. After surging to around 50.35 trillion won per day in June, average daily trading value in the domestic stock market has fallen to around 24.82 trillion won so far this month. A sustained decline in trading volumes could weigh on brokerages' key revenue streams, including brokerage commissions.

Some analysts argue that the share price pullback has actually made brokerage stocks more attractive. "As the stock market finds a floor, the strong second-quarter results are highlighting the valuation appeal of brokerage stocks broadly," said Yoon Yu-dong, a researcher at NH Investment.