President Kim Won-kyu will not take any unnecessary risks this year in trying to make NH Investment and Securities Co. more competitive now that the merger between Woori Investment and Securities Co. and NH Securities Co. has been completed.
The company introduced the Qv, a new brand, to strengthen its wealth management operation, and plans to put the “Robo Adviser” service on the market for the first time in the financial industry this year.
At the same time, the company will focus on its hedge fund operation in earnest this year and step up its overseas ambitions, especially in the investment banking operation.
President Kim was surprised that Mirae Asset Management won the bid to take over the KDB Daewoo Securities, nudging past NH Investment and Securities Co. in the process to become the largest securities company in Korea and the first securities company born out of the merger.
Kim has been pleased with the results of the merger of the two securities firms at the end of 2014. NH Investment and Securities Co.’s operation improved through diverse moves to post the largest operating profit in the industry, but the company failed to secure the No. 1 position in net profit as it had to write off 70 billion won to 80 billion won in expenses related to the merger in 2014.
Kim, however, thinks that the completion of the merger in terms of chemistry and physics in a short period of one year is the most significant achievement for the new company.
Since becoming a new securities firm with the merger, NH Investment and Securities Co. led the industry in the scale of its sales, but had to yield the envious position to Daewoo Securities, as it was taken over by Mirae Asset Management, but Kim feels that his securities firm can still be No. 1 in terms of competitiveness over Daewoo Securities.
NH Investment and Securities Co. has led the industry in the equity capital market for three years in a row. The securities firm managed the initial public offering for LIG Nexone, Innovation and Jeju Air and others, to top the IPO market. The company altogether lead-managed IPOs for some 20 firms last year, along with the capital increases for a number of large firms including Korean Air.
Kim believes a securities company’s real power comes from its competitiveness, not its physical scale such as assets, the number of employees and branches.
Kim speculates that the IB sector, which is NH Investment and Securities Co.’s strongest advantage, can make over 100 billion won in operating profit annually, a top-class level in the industry. He thinks the IB sector, in particular, can really blossom this year. He intends to give a big push to the sector for expansion.
The CEO also plans to introduce the company’s first hedge fund product, valued at 300 billion won, in April to kick off its hedge fund operation.
NH I&S will go for a new operational strategy by implementing a huge change in the business environment in the securities industry. Now, online transactions take up around 90 percent of the business in the industry, with the mobile sector taking up around 30 percent of the online deals. Only customers who are very sensitive to new products hold face-to-face consultations, contrary to the 1980s and the early 1990s when almost all of the profits were made physically at branches.
The key in the old days was to locate branches in populous areas. When the securities market was bullish, customers flocked to the branches. But not any more. Many of them make transactions online and avoid physically going to a branche.
Kim’s strategy is to expand the securities firm, but cut the number of branches around the country and strengthen the wealth management sector, which requires extra training of staff. He will also see that various platforms are well stacked with financial products for digital customers. The Qv, for example, will be a brand for its wealth management product, as it means that the company should have various kinds of services and products for customers to suit different tastes for securities products and services.
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