The South Korean provider has seen its structured products issuance and sales falling by 8.6% and 36%, respectively, in the first three quarters of 2020 year-on-year.

The subsidiary of KB Financial Group has posted a net profit of KRW209.7 billion (US$230m) during the quarter ended on 30 September, up 39.6% quarter-on-quarter (QoQ), which leads to an accumulative net profit of KRW338.5 billion this year – a 60.5% increase from the first three quarters last year.

The South Korean financial services firm sold 1,931 products worth an estimated US$9.4 billion during the first three quarters of 2019 compared to 1,778 products marketed during the same period of 2020 with an estimated value of US$6 billion.

SRP data shows the broker-dealer has been the second largest issuer in the South Korean market followed by Samsung Securities since 2019. The latter issued 608 products, 550 products and 620 products in the first, second and third quarters of 2020 respectively, with a total sales volume of KRW6.1 trillion and a market share of 10.1%.

The firm issued 565 equity-linked securities (ELS), 31 equity-linked bonds (ELB), as well as 12 derivatives-linked securities (DLS) and 12 derivatives-linked bonds (DLB) from July to September 2020.

Worst of options, protected tracker and knockout remain the most featured payoff types for the firm’s ELS excluding 358 products which have an unknown payoff.

In the South Korean market where indices including the S&P 500 and Eurostoxx 50 have traditionally been favoured as underlyings, the number of products linked to the Kospi 200 rose from 186 to 345 while that linked to Hang Seng China Enterprises Index fell from 237 to 110 QoQ, SRP data shows.

Samsung Electronics remains the most used equity underlyings – the share appears tied to 52 products in Q3 20. The pool of structures linked to single stocks increased with the addition of several new names including Starbucks, Procter & Gamble, Alphabet, Apple, Facebook and Amazon compared with Q2 20. The shares of Naver, a domestic tech group that operates a search engine with the same name, lost visibility appearing in just one product compared to the eight products that offered exposure to this share in Q2 20.

Divisional breakdown

Net fee and commission income rose by 24.9% to KRW280.9 billion in the Q3 20, where 65.2% originated from brokerage and investment banking contributed to 22.5% after it increased by 33.8% to KRW84.7 billion QoQ.

Interest income also climbed by 10.4% to KRW120.2 billion, but trading plunged by 71.1% to KRW26.5 billion QoQ.

General and administration (G&A) expenses remained stable at KRW205.4 billion, and provision for credit loss turned to a negative KRW0.3 billion from KRW3 billion QoQ.

The South Korean securities house had asset under management (AuM) of KRW94 trillion, related to retail products with KRW31 trillion coming from brokerage and KRW63 trillion from wealth management as at 30 September.

The firm’s wealth management assets were dominated by bonds with a volume of KRW18 trillion – more than half of the total – while trusts and funds contributed with KRW6.9 trillion and KRW5.7 trillion, respectively. Meanwhile, ELS and DLS dropped to KRW1 trillion as at 30 September compared with the previous two years (KRW1.5 trillion and KRW1.8 trillion, respectively).

The parent, KB Financial Group, completed the acquisition of Prudential Life Insurance in late August which resulted in a consolidated net profit of KRW1.17 trillion during the third quarter – up 18.8% QoQ.

Click here to view KB Securities’ Q3 20 report.