Who’s No. 1 in the Securities Business?

When Woori Investment and Securities aired TV commercials saying, “After reaching the top, we realized that there is a new world there” in April, other securities firms, including Samsung Securities, Daewoo Securities, and Hyundai Securities, resisted.

They responded with comments such as, “Who became No. 1?” and “When the industry leader is another company, why is a fake pretending to be at the top?”

In July and August, Samsung Securities and Daewoo Securities contended for the top spot in a neck-and-neck race in terms of market capitalization. When the media showed an interest in this competition, other securities companies played down the competition, calling it a sham.

Each Company Has Its Strong Points-

Then, who is the real leader? It is difficult to determine who the No.1 is, because each securities company has its own strong points.

Samsung Securities secured the top position last year with 6.272 trillion won in assets and the company is also the leader in terms of investment deposits (28 trillion won) and market share in overseas brokerages as of the end of September. Its market capitalization also ranks first.

After a merger, Woori Investment and Securities tops the list in terms of equity capital with 1.863 trillion won. As of the end of September, the company is No. 1 in terms of wrap accounts and par value, and investment banking (IB) operating revenues.

Daewoo Securities has about 8.5 percent of the market share, ranking it at the top in terms of commission fees, a traditional ranking criterion. The company is highly likely to rank first in operating profits (137 billion won) and net profits (140.3 billion won) for the first half of this year (April-September, for corporations who settle accounts in March).

Hyundai Securities recorded the highest net profits of 54 billion won last year among the top five securities companies. It has most number of branches with 134 across the nation.

Daehan Investment Trust Securities also secures a share of the No.1 position in terms of individual trusts with 7.4 trillion won, while Korea Investment and Securities insists it is the industry leader after a merger, citing its balance of beneficiary certificates sales as the highest and its total assets as among the top.

Competition Is Good-

A few years ago, the Korea Securities Dealers Association (KSDA) announced the market share rankings of the securities companies based on their size of their brokerage arrangements.

At the time, few would object to the ranking because most companies considered commission fees to be a major income source.

Yet, when some decided to refrain from the competition for commission fees, the KSDA stopped announcing the ranking. Since then, all of the companies have been saying that they are the real No. 1.

Park Seok-hyeon, a researcher at Meritz Securities, evaluated the situation, saying, “It is getting difficult to determine who the leader is because all of them are building on their strong points based on different strategies. The transition of the industry from vying for commission fees to competition in various sectors is positive for the industry’s future progress.”

Wan-Bae Lee roryrery@donga.com