Korea Investment Holdings’ third-quarter earnings plunge on investment losses... “FX losses and weak bond performance”

[Financial News] Korea Investment Holdings posted third-quarter earnings below market expectations as weak performance in its investment management business coincided with deteriorating results at affiliates.
Brokerage revenue also fell from the previous quarter as stock market trading value declined, while valuation losses related to foreign-currency liabilities and weak bond portfolio performance weighed on profitability.
iM Securities lowered its earnings forecasts and target price, but said the stock’s downside resilience remained intact given its dividend appeal and the potential to expand businesses backed by its own capital.
According to iM Securities on the 6th, Korea Investment Holdings’ third-quarter consolidated net profit attributable to controlling shareholders fell 58.1% year on year to 282.3 billion won. Korea Investment & Securities Co., Ltd. also reported standalone net profit of 304.0 billion won, down 42.9%. Foreign-currency valuation losses and weak bond portfolio performance amid rising interest rates were cited as major reasons for the deterioration in earnings.
By business segment, net brokerage commission income rose 62.7% year on year to 207.8 billion won, but fell 40.6% from the previous quarter.
Domestic stock commission revenue increased, but the decline in trading value weighed on results. IB and other commission revenue rose 29.5% to 195.6 billion won, helped by improved ECM fees for areas such as PF and IPOs. By contrast, gains and losses on valuation and disposal, along with other businesses, plunged 78.8% to 89.6 billion won.
In particular, valuation losses were recorded on roughly $700 million in foreign currency raised in advance to repay foreign-currency liabilities, while rising interest rates also weakened bond portfolio performance.
Margins in the promissory note business also narrowed as the funding environment deteriorated following the entry of new players, including Samsung Securities Co., Ltd. and Meritz Securities. Value Asset Management, a major subsidiary, posted a net loss of about 40 billion won, while the savings bank recorded a loss of about 13 billion won due to provisioning and valuation losses, among other factors.
Seol Yong-jin, an analyst at iM Securities, described the results as “somewhat disappointing, even taking into account the impact of valuation losses on foreign-currency assets.” The analysis said that the simultaneous decline in trading value, volatility in investment gains and losses, and narrowing promissory note margins had increased the burden on a recovery in profitability.
iM Securities cut its target price for Korea Investment Holdings from 284,000 won to 198,000 won. It maintained its Buy rating. “Its dependence on brokerage earnings is relatively low, and it is pursuing profit generation through businesses backed by its own capital, such as promissory notes and comprehensive investment accounts (IMA),” analyst Seol explained.
The company’s dividend appeal was also cited as a factor supporting the stock’s downside. iM Securities forecast a 2026 dividend per common share (DPS) of 10,200 won and estimated a dividend yield of 6.9%.
“Given the appeal of shareholder returns, we expect the stock to be able to withstand some downside pressure,” analyst Seol said. However, a rebound in stock market trading value, normalization of investment gains and losses, and improved promissory note margins are likely to be necessary for earnings to recover.
[email protected] Kang Jung-mo Reporter