South Korean securities companies saw their third-quarter earnings tumble 38.7 percent from three months earlier due to huge losses from derivatives amid a bearish stock market, the financial watchdog said Wednesday.
The combined net profit of 56 brokerage houses came to 747.2 billion won (US$652.2 million) in the July-September period, compared with an eight-year high of 1.2 trillion won in the second quarter, according to the Financial Supervisory Service (FSS).
The weak on-quarter bottom line came as their proprietary trading income plunged a whopping 69.4 percent to 386.4 billion won during the cited period due to huge losses regarding derivatives, the FSS noted.
While bond-related income grew to 1.73 trillion won, derivative-related income logged a 1.32 trillion-won loss, and they registered 387.6 billion won in losses from stock trading amid the market slump, according to the watchdog.
Of the tallied firms, 46 players remained in the black over the same period, logging a combined net income of 769.5 billion won, while 10 others suffered losses of 22.4 billion won combined, according to the watchdog.
Their net capital ratio, a gauge of financial soundness, stood at 486.7 percent as of end-September, up by 19.5 percentage points from three months earlier, with their total assets standing at 371.3 trillion won, up 5 trillion won from the end of June.
Despite unfavorable market conditions, asset management firms fared well during the third quarter, the FSS data showed.
A total of 87 asset managers logged a combined 154.9 billion won of net income in the July-September period, up 4.4 percent from the previous three months.
The growth is attributable to a substantial fall in their selling and administrative expenses of 11.9 billion won, which offset a 32 billion-won decrease in their operating income, the watchdog said.
The asset managers' return on equity, a key gauge of profitability, came in at 15.5 percent, hovering above the 15 percent mark for six consecutive months.
As of end-September, their assets totaled 785 trillion won, up 3.4 percent from three months earlier.