Hyundai Motor Securities posts 26% rise in Q3 net profit on retail strength

Hyundai Motor Securities posted a third-quarter net profit of 15.4 billion won ($11.6 million) on a consolidated basis, up 25.7 percent from the same period last year, driven by gains in equity trading and financial product sales. The company's cumulative net profit through the first three quarters reached 74.7 billion won, a rise of more than 43 percent year on year.

According to the Financial Supervisory Service's DART system Thursday, the company's third-quarter consolidated net profit came to 15.36 billion won, compared with 12.22 billion won a year earlier. Sales surged 195.2 percent to 720.28 billion won, while operating profit fell 10.0 percent to 12.66 billion won.

Cumulative net profit through the third quarter reached 74.67 billion won, up 43.0 percent from 52.23 billion won in the same period last year. Cumulative operating profit, however, slipped 6.0 percent to 64.1 billion won. Return on equity improved by 1.4 percentage points, rising from 3.6 percent to 5.0 percent.

Revenue from equity brokerage and financial product sales grew sharply. Cumulative net operating revenue from brokerage and financial products through the third quarter reached 220.4 billion won, up 90.5 percent from 115.7 billion won in the same period last year. Average monthly brokerage contract volume also rose 146.2 percent, from 6.5 trillion won last year to 16 trillion won through the third quarter this year.

In the retirement pension segment, defined-benefit reserves declined due to a seasonal effect at the start of the year, while defined-contribution and individual retirement pension reserves increased. DB reserves stood at 15.5 trillion won at the end of the third quarter, down 5.4 percent from 16.4 trillion won at the end of last year. DC and individual retirement pension reserves grew 23.0 percent over the same period, from 2.8 trillion won to 3.4 trillion won, broadening the company's individual customer base.

Hyundai Motor Securities has been expanding its corporate finance operations within its investment banking division. Through an organizational restructuring, the company strengthened its underwriting and bookrunning capabilities while also reducing risk assets tied to real estate project financing. Real estate project financing exposure stood at 519.6 billion won at the end of the third quarter, down 33.3 billion won from 552.9 billion won at the end of last year. The ratio of project financing exposure to equity also fell from 38.3 percent to 35.1 percent over the same period.

However, cumulative net operating revenue from the IB division through the third quarter came to 46 billion won, down 27.7 percent from 63.6 billion won a year earlier, as the company set aside additional provisions and new deal activity declined. Net operating revenue from the asset management division also fell 77.3 percent year on year to 28.6 billion won, from 126 billion won, weighed down by rising bond yields.

Hyundai Motor Securities had already reported strong results in the first half of this year, with consolidated net profit of 59.3 billion won, up 48.2 percent from the same period last year. First-quarter net profit rose 37.9 percent to 26.6 billion won, while second-quarter net profit climbed 57.9 percent to 32.7 billion won.

"Despite an unfavorable market environment marked by declining trading volumes and heightened bond yield volatility, our core business divisions — including retail and IB — held their ground and maintained solid earnings," a company official said. "In particular, through the reorganization of our IB division, we expanded our presence in non-real estate areas and grew our corporate finance operations, including underwriting and bookrunning, restructuring our business portfolio and strengthening our earnings base."

The official added that the company would continue to pursue profitability recovery and revenue diversification across all business divisions in the fourth quarter. "We will reinforce our digital AI competitiveness by securing future growth engines such as our next-generation system and AI Platform Version 2.0," the official said, "and through these efforts, we will faithfully execute our corporate value enhancement plan and continue to improve our medium- to long-term profitability."