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| Mirae Asset Financial Group headquarters in Seoul / Courtesy of Mirae Asset Financial Group |
By Lee Min-hyung
S&P Global Ratings has revised up Mirae Asset Securities' credit rating on the company's stable business portfolio and strong risk management capabilities.
In a recent statement, the global ratings firm upgraded the outlook for the Seoul-based brokerage house to "stable" from negative.
"S&P revised the outlook on Mirae Asset in view of the company's narrowing capital buffers due to a potential increase in equity investments, higher market risks and lower profits," S&P said in the statement.
Mirae Asset Securities is Korea's largest securities firm, with its equity capital exceeding 9 trillion won ($8.12 billion) as of the end of 2020. The company also achieved a record operating profit of more than 1 trillion won last year. This marked the first time that the nation's securities company exceeded the symbolic figure in annual earnings.
The ratings agency also maintained Mirae Asset's BBB long-term and A-2 short-term issuer ratings in the recent analysis report.
S&P rated highly Mirae Asset's solid risk management system, saying the firm demonstrated stable performance even throughout last year when the stock market fluctuated amid the global pandemic shock.
Mirae Asset Securities is expected to keep improving its capital adequacy for the next 18 to 24 months and will likely maintain its stable capital strength, according to S&P.
Financial authorities and watchdogs here are toughening monitoring on how tightly securities firms are enhancing their internal risk management system in the post-coronavirus era.
A fund mis-selling scandal here in 2020 also sparked the need for brokerage houses to pay more attention to protecting customers from any possible losses in such cases.
Mirae Asset is one of the few securities firms to have not been affected much by the aftermath of the nationwide fund scandal, according to S&P.
S&P expected Mirae Asset to focus on strengthening its internal risk management and stable financing, rather than pushing for excessive business expansion in the foreseeable future, as uncertainties remain in place over the pace of economic recovery after the pandemic.
Mirae Asset is also expected to expand its asset investments in line with a dwindling volatility in the market, and will be able to maintain solid profitability even in 2021 on the firm's diversified business portfolio, S&P said.
In particular, S&P said Mirae Asset would be able to generate outstandingly stable stock-trading commission profits for the next few quarters at a time when stock transaction volume in Korea reached an all-time high in the first quarter.
The stock investment craze started in March last year when the local stock market crashed in the wake of the COVID-19 spread. But the market has since bounced back to a record-high level on the back of retail investors' stock-buying spree.
S&P predicted they would keep injecting capital into the local stock market for the next few quarters due to the virus-sparked low interest rates.
