iM Securities sharply improved its profitability in the third quarter, driven by growth in investment banking and real estate project finance along with gains at newly created business units. Brokerage revenue fell as stock market turnover shrank, but the company said restructuring of existing project finance sites through follow-up management and selective participation in high-quality deals powered the earnings growth.
iM Securities said on the 27th that third-quarter net profit on a separate basis came to 27.3 billion won ($19 million), up 30.0% from the previous quarter. Operating profit rose 22.9% to 33.8 billion won over the same period. On a consolidated basis, third-quarter net profit and operating profit were 21.8 billion won and 32.6 billion won, up 4.1% and 18.4% from the prior quarter, respectively. For the first nine months, net profit on a separate basis was 72.2 billion won and operating profit 88.5 billion won, up 10.4% and 6.0% from a year earlier.
Investment banking, project finance and newly established capital markets operations led the improvement. Net operating revenue from the investment banking and project finance division reached 12.9 billion won in the third quarter, about 2.6 times the 4.9 billion won posted in the previous quarter. The company attributed the gain to integrated management of investment limits across the firm, which allowed it to expand participation in strong projects and new deals while steadily growing fee income from arranging real estate project finance loans. Continued follow-up management and restructuring of existing project finance sites also shored up asset quality.
The retail and trading divisions stalled as equity markets corrected. Net operating revenue from brokerage fell 46.6% to 22.1 billion won in the third quarter from 41.4 billion won in the previous quarter. The proprietary trading division swung to a net loss of 7.2 billion won in the third quarter from a 9.2 billion won profit in the prior quarter. Financial soundness indicators improved following a capital increase. As of the end of the third quarter, iM Securities' net capital ratio stood at 528%, up 126 percentage points from the end of last year.
iM Securities is accelerating efforts to diversify revenue sources through organizational changes. In the third quarter, it set up new business units including an infrastructure finance office to pursue alternative investments and source new deals, expanding its portfolio. "We will continue to seek an expansion in earnings based on thorough risk management," an iM Securities official said. "We aim to stabilize revenue early at newly established business units and other new operations, and to steadily strengthen our earnings power through active asset allocation that responds to volatile markets."