[비즈한국] Hana Securities is recording sluggish performance compared to the previous year. If the company fails to improve its earnings in the second half of the year, it is unlikely that CEO Kang Sung-mook of Hana Securities will be reappointed. CEO Kang’s term ends on December 31 of this year. Hana Securities appears to be making a bold move by recently applying to financial authorities for a license for the issuance of promissory notes business.
CEO Kang Sung-mook was appointed as the new CEO of Hana Securities in 2023, while serving as the president of Hana Alternative Asset Management. At the time, the Executive Recommendation Committee of Hana Financial Group086790 explained the appointment by stating, “CEO Kang Sung-mook is the right person to expand the proportion of Hana Securities’ business, which has been heavily focused on investment banking, toward retail and asset management,” and added, “We expect him to lead Hana Securities to its second leap forward.”
CEO Kang Sung-mook’s performance in his first year was poor. According to the Financial Supervisory Service’s electronic disclosures, Hana Securities recorded a net profit of 130.6 billion KRW in 2022, but shifted to a deficit in 2023 with a net loss of 288.9 billion KRW. Fortunately, the company succeeded in returning to a surplus in 2024, posting a net profit of 224 billion KRW. Last year’s net profit of 224 billion KRW is higher than those of its competitors, Shinhan Securities (179.2 billion KRW net profit last year), Daishin Securities003540 (144.2 billion KRW), and Kyobo Securities030610 (117.7 billion KRW).
In recognition of these achievements, CEO Kang Sung-mook was reappointed for one year. However, Hana Securities’ performance this year is weaker compared to last year. Net profit fell by 19.84% from 132 billion KRW in the first half of last year to 105.8 billion KRW in the first half of this year.
Conversely, competitors recorded strong performance in the first half of this year. Shinhan Securities posted a net profit of 258.9 billion KRW, and Daishin Securities and Kyobo Securities also outperformed Hana Securities with net profits of 152.1 billion KRW and 106 billion KRW, respectively. Securities firms that had lower net profits than Hana Securities last year have overtaken it this year.
Hana Securities’ lackluster performance this year is largely due to the reflection of valuation losses from the revaluation of overseas alternative investment assets. Hana Securities explained, “There was a slowdown in trading sector revenue due to the early-year interest rate effect, and conservative loss recognition on overseas assets.” However, since the early-year interest rate effect is not applicable only to Hana Securities, it inevitably draws comparisons to other securities firms that are performing well. The early-year interest rate effect refers to the tendency for government and corporate bond yields to fall and bond prices to rise as fund execution becomes active in the bond market at the beginning of the year.
If Hana Securities’ poor performance continues, CEO Kang Sung-mook’s standing within Hana Financial Group could also be shaken. In some parts of the financial sector, CEO Kang is mentioned as the next chairman of Hana Financial Group, succeeding Chairman Ham Young-joo. In fact, the Hana Financial Group Chairman Recommendation Committee included Chairman Ham Young-joo, Vice Chairman Lee Seung-lyul, and CEO Kang Sung-mook on the final shortlist for chairman at the end of last year.
Hana Financial Group and Hana Bank saw their first-half earnings rise compared to the same period last year. Even Hana Life Insurance, which had not received much attention, is seeing an upward trend in net profit. For CEO Kang Sung-mook, if he fails to prove his capabilities with his second-half performance this year, he cannot even guarantee his reappointment as CEO of Hana Securities, let alone become the next chairman of Hana Financial Group.
CEO Kang Sung-mook appears to be betting on the promissory note business. Hana Securities recently applied for a license for the issuance of promissory notes business to the Financial Supervisory Service (FSS). The FSS stated, “We will try to ensure that the review results are available within this year if possible.”
A promissory note is a short-term financial instrument with a maturity of less than one year issued by a securities firm under its own credit. A securities firm licensed for this business can issue notes up to 200% of its equity capital. Securities firms can use the cash secured through these notes to engage in aggressive investments. However, as the eligibility of major shareholders is a factor in the review, the fact that Hana Financial Group Chairman Ham Young-joo is currently on trial regarding hiring irregularities is considered a variable.