Brokerage firms search for new profit centers

Korean securities companies are struggling to draw up emergency plans to boost profitability amid a protracted economic slump, industry sources said yesterday.

Aside from reducing workers or streamlining businesses, major brokerages are pushing for such measures as providing specialized wealth management services for big-pocketed clients and promoting differentiated strategies to tap new profit sources.

No. 1 player Samsung Securities has set up a task force to provide exclusive management services to the wealthy while Hyundai Securities is offering income tax filing services for the super rich.

Thanks to the introduction of electronic signatures, NH Investment & Securities is looking to reel in more clients via smart devices such as tablet computers to make signing deals much simpler for customers.

Another leading brokerage company, Mirae Asset Securities, has put more focus on the financial market for people preparing for retirement, offering pension-management consulting.

Aside from expanding asset management businesses, securities companies have also been merging branches and building larger ones.

Hana Daetoo Securities is merging 10 branches by the end of the year, while Daishin Securities has increased the size of 11 of its branches.

The securities companies’ moves come as their net earnings in the April-June quarter plunged 72.7 percent from a year earlier to 216.3 billion won ($190.5 million).

The outlook for the financial sector as a whole is grim, with growth expected to drop to 2 percent this year from the previous year’s 3 percent, according to the Financial Supervisory Service.

Despite the brokerage firms’ efforts, some market watchers say the current measures may not have much effect on raising profitability considering the economic downturn.

“With current economic conditions, it is crucial for brokerage firms to diversify their business portfolio in order to survive,” said Yon Tae-hoon, a researcher at the Korea Institute of Finance. “Securities companies will not be able to boost profitability by merely following the same kind of strategies as all the other firms.”

Yonhap