KB Securities Co. has become known as an agent of change in the securities industry since it was born from the merger of KB Investment & Securities and Hyundai Securities in January.
The new securities firm boasts 4 trillion won in capital, making it the largest IB operator among securities firms in Korea, with 30 million customers and synergy with KB Kookmin Bank, its affiliate. It has potential to shake up the securities industry when its operation reaches full capacity.
Some fear surrounded the industry after the merger of the two securities firms was about to happen, with a substantial number of mergers in the past flopping, not live up to their expectations.
But the outstanding results in Q1 of KB Securities showed proved skeptics wrong. KB Securities doubled most financial metrics from the year prior, proving that the two-top management system led by former CEO Yoon Kyung-eun of Hyundai Securities and former President Chon Byung-jo of KB Investment and Securities has been working as expected.
KB Securities logged 1.931 trillion won in sales in Q1 with operating profit topping 140 billion won, up 41.05 percent YoY over the same combined figures of Hyundai Securities and KB Investment and Securities. Operating profit increased 152.44 percent YoY compared to the combined figures of the two securities firms. The merged securities firm’s net profit in Q1 jumped 120.53 percent YoY at 108.8 billion won. The company’s capital stood at 4.214 trillion won in the first quarter.
The quality of the company’s operations is also considered to have been improved substantially with the two CEOs dividing up the management of the company.
President Yoon is in charge of wealth management, sales and trading operations while CEO Chon takes charge of the IB section. The two CEOs have been considered to have made a great contribution to upgrading the company’s operation.
Vice President Kim Seong-hyun of the securities firm’s IB sector, said it will provide tailor-made financial services for the growth stages of its corporate customers, including startups and large corporations.
He said that investment funds the company secured through the merger will be provided to customers with great potential. SME customers will receive funds to invest in R&D and facilities for their plants, while large firms will get solutions for financial restructuring.
The newly merged securities firms will be able to issue corporate bonds to double its capital when its application to start IB activities is permitted by financial authorities this year. It can issue as much as 8 trillion won worth of bonds as its combined capital amounts to around 4 trillion won.
But VP Kim said the company will only issue 1 trillion won worth of bonds this year as the company has to seek corporate customers with great potential and build infrastructure to manage funds smoothly. The company will be ready to issue bonds worth 5 trillion won next year when its investment infrastructure is ready.
Kim said the company will provide a wide range of products and services to its clients, not just limited to loans. “We will act as a financial doctor in charge of advising corporate customers on various matters from new shares issues to convertible bonds,” he said.
The company also decided to target profits of 1.25 percent for funds secured through the issuances of notes. “We will conduct various transaction related with capital market in the future with the business firms that we forged relations with by providing them with corporate financial services,” Kim added.
KB Securities earned the fees as the manager of Cheil Holdings’ initial public offering, which represents a good example of what its future operations would be like.
_KB증권본사.JPG)
A view of the building in downtown Seoul where the newly merged securities firm has its offices.
_KB증권 윤경은 전병조.jpg)
