A number of South Korean securities houses and distributors of structured products in the Asia-Pacific region have reported increasing income figures and revenues for the third quarter of 2017 as well as improving wealth management and structured products activities. SRP data shows that issuance in the South Korean market grew by 6.25% (from 11.291 to 11.971) while sales volume skyrocketed by 43.92% (from KRW35.5bn to KRW63.3bn)

Mirae Asset Daewoo reported a pre-tax income of KRW174.8bn (US$163.2m) for the third quarter of 2017, which represents a decrease of 17.7% compared to the second quarter of the year when pre-tax income was KRW212.3bn. Operating profit also went down 0.6%, from KRW165.9bn in the second quarter of 2017 to KRW164.9bn in the third. Net operating revenue, on the other hand, increased from KRW386.7bn in 2Q17 to KRW397.2bn in 3Q17.

Investment banking revenue decreased by 11.4%, from KRW87.7bn in the second quarter of 2017 to KRW77.2bn in the third quarter, while revenue from wealth management practices, at KRW58bn, also increased slightly from KRW56.7bn. The main wealth management products during the third quarter of 2017 were offshore bonds (approximately KRW300bn) and Global Wrap Account (approx. KRW280bn), according to the bank.

Wealth management assets under management (AUM) totaled KRW110.4bn, down 1.1% quarter-on-quarter. Revenue from equity-linked securities (ELS) dropped 8.6% on a quarterly basis, from KRW16.3bn to KRW14.9bn.

According to SRP data, Mirae Asset Daewoo issued a total of 716 structured products worth KRW3.2trn in the third quarter of 2017. For the same period last year, the group issued 653 structured products worth KRW2.1trn.

KB Financial Group, owner of KB Securities which recently merged with Hyundai Securities, reported that net interest income from the securities business increased to KRW2.02trn in the third quarter of 2017, up 6.3% from just KRW1.9trn in the second quarter. As compared to the same period last year, net interest income went up 26.2% from KRW1.6trn, primarily due to the acquisition of Hyundai Securities. Net fee and commission income decreased 3.7% from KRW510bn to KRW491bn on a quarterly basis. Annually, net fee and commission income went up 30.9%.

The group's gross operating income saw a 6,14% quarterly and 38.4% annual increase in value to KRW2.64trn. Net operating profit, on the other hand, reached KRW1.2trn, indicating an increase of 61.6% compared to the same period last year and of 4.3% compared to the previous period.

An annual increase of 26% in total assets, which reached KRW432trn in 3Q17, was reported by the group. Total liabilities went up 27.5% from KRW313.6trn in 3Q16 to KRW399trn in 3Q17.

KB Securities, which encompasses the group's structured products business, reported KRW33.2bn in net operating profit, as compared to KRW90.6bn for the second quarter of 2017 and KRW10.3bn in the third quarter of 2016. The subsidiary recorded gross operating income of KRW237.3bn in 3Q17, down 14.7% quarter-on-quarter, and up 423.2% year-on-year. The firm's wealth management reported a fall in income from KRW74.6trn in 2Q17 to KRW71trn in 3Q17.

KB Financial Group issued a total of 752 structured products worth KRW3.5trn for the third quarter of 2017, according to SRP data. For the same period last year, the group issued 127 structured products worth KRW907bn.

Shinhan Financial posted net income of KRW2,7trn in the third quarter of 2017, up 25.1% compared to the third quarter of 2016 when net income was KRW2.16trn. Operating income, including interest and non-interest income, increased 4.4% year-on-year and decreased 2.2% quarter-on-quarter to KRW2.3trn in 3Q17. Fees and commission income also rose from KRW1.16trn in 3Q16 to KRW1.28trn in 3Q17, indicating an annual increase of 10.3%. The group's profit

Shinhan Investment, which, among other, includes the group's structured products operations, generated 5.8% of the group's net income, down from 10% in the previous quarter. The company reported a net income of KRW157.2bn in 3Q17, up 83.2% on an annual basis and up 32.7% on a quarterly basis.

According to SRP data, Shinhan Financial issued 701 structured products worth KRW2.8trn. For the same period last year, the group issued 451 structured products worth KRW1.6trn.

Samsung Securities reported net income of KRW87.4bn, up 77% on an annual basis and up 31% compared to the previous quarter. Operating income rose from KRW88.1bn in the first quarter of 2017 to KRW88.1bn in second quarter of 2017, indicating an increase of 18%. The Group's net revenue rose by 9% compared to the previous quarter and reached KRW236.9bn. Operating income saw an increase of 77% on an annual basis, from KRW65.4bn to KRW115.7bn.

Net revenue from financial products, including mutual funds, wrap accounts, OTC derivative products, bancassurance and trust, went up 32% year-on-year, from KRW205bn to KRW271.3bn due to improvement in OTC derivatives and trust sales, the bank reported. Compared to the same period last year, financial product sales increased by 42% from KRW89.4bn to KRW127.3bn.

OTC derivatives revenue saw an increase of 52% quarter-on-quarter and of 64% year-on-year due to record high ELS early termination revenue. ELS early termination revenue grew from KRW38.1bn in 3Q16 to KRW47.3bn in 2Q17 to KRW80.5bn in 3Q17.

For the third period of 2017, Samsung Securities issued a total of 925 structured products worth KRW3.2trn.  For the third quarter of 2016, the group issued 652 structured products worth KRW1.88trn.

Click in the links to access the quarterly reports: Mirae Asset Daewoo, KB Financial Group, Shinhan Financial, Samsung Securities.

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