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A record number of securities firms are poised to join the "1 trillion won club" this year, a status reserved for companies with an annual operating profit exceeding 1 trillion won ($714 million).

Last year, no brokerage house earned that distinction, but this year, as many as seven are expected to join the group, fueled by strong growth in overseas stock commission income, which is anticipated to continue into the fourth quarter, along with the potential for increased bond management profits from further interest rate cuts.

Korea Investment & Securities has already surpassed the 1 trillion won mark in cumulative operating profit within the year's first three quarters.

According to the Financial Supervisory Service's electronic disclosure system on Friday, the brokerage recorded a cumulative operating profit of 1.15 trillion won up to the third quarter this year, making it the first to join the 1 trillion won club. This figure represents a 79-percent increase compared to the same period last year.

Following closely, Samsung Securities, Kiwoom Securities and Mirae Asset Securities reported cumulative operating profits of 994.9 billion won, 918 billion won and 914.5 billion won, respectively, by the third quarter. Industry watchers anticipate that with fourth-quarter operating profits, these three firms are likely to surpass the 1 trillion won milestone with ease.

Meritz Securities, KB Securities and NH Investment & Securities have each reported cumulative operating profits in the 700 billion won range. Depending on their fourth-quarter performance, these three firms could also potentially join the roster.

Financial district in Yeouido, Seoul / gettyimagesbank

In 2020, Mirae Asset Securities was the first securities firm to join the club.

In 2021, Mirae Asset Securities, Korea Investment & Securities, NH Investment & Securities, Samsung Securities and Kiwoom Securities each achieved cumulative annual operating profits of more than 1 trillion won.

However, in 2022, only Meritz Securities surpassed the 1 trillion won mark due to the impact of the real estate project financing (PF) crisis, and last year, no securities firm managed to break the 1 trillion won barrier.

The strong performance of major securities firms this year was largely driven by individual investors in U.S. stocks. While the domestic stock market showed lackluster results, leading to weaker commission income, the surge in interest in U.S. stocks played a significant role in boosting profits.

Mirae Asset Securities and Samsung Securities, both known to have a large base of overseas stock investors, earned 70.9 billion won and 50.8 billion won, respectively, from U.S. stock commissions in the third quarter alone. This represents a 148 percent and 79 percent year-on-year increase in overseas brokerage income, respectively.

Kiwoom Securities also saw a sharp 79.4-percent increase in its overseas stock commission income, reaching 52.4 billion won in the third quarter compared to the same period last year.

The average daily trading volume for overseas stocks also surged to around 1.5 trillion won in the third quarter, marking an increase of nearly 80 percent year-on-year, while the figure for the domestic stock market dropped by 23.4 percent to 17.4 trillion won.

Additionally, the allocation of provisions related to losses in overseas alternative investments and real estate PF — previously a drag on securities firms' performance — has largely concluded, enabling a recovery in the investment banking sector's income, positively impacting overall profitability.

"The decline in interest rates in July and August contributed to bond-related management and valuation gains, while overseas stock trading volume reached an all-time high, supporting strong results," Daeshin Securities analyst Park Hye-jin said.

"It's fair to say that the provisioning for real estate PF and impairment losses on overseas real estate is now mostly behind us."