Korea Investment Holdings Overview and FY13 Earnings Release. March 2014

Transcription

1 Korea Investment Holdings Overview and FY13 Earnings Release March 2014

2 Summary FY2013 earnings comment Despite the sluggish performance in the securities industry, KIH achieved the best net income in the industry due to well diversified business portfolio KIS achieved No.1 earnings in the industry for 3 consecutive years (75.5 billion KRW, separated for 9 months) KIS generated stable earnings based on the top tier fee income of Brokerage, Asset Management, Investment Banking KIS achieved the lowest SG&A expenses/net operating income ratio among large securities companies (KIS 77%, the average of large securities companies 103%) The market share of retail off-line brokerage and deep discount brokerage continued to rise Prime Brokerage Service, new business leaped to the top class due to the reinforcement of service competitiveness Customer financial assets increased by 12% yoy, as KIS met customer s demand. Equity type fund market share continued to rise ECM, DCM, PF division achieved the top tier performance in the industry and No.1 IB fee income for 2 consecutive years Asset Management : Combined net income (KIM+KIVAM) leaped to yearly 50 billion KRW Despite the stagnancy of fund market, overall and equity type s AUM increased by persistent new fund inflow KIVAM is rapidly growing due to excellent management performance (AUM increased by +76%, Net income increased by +458% yoy) KIP s venture capital funds AUM was No.1 in the industry, totaling billion KRW KIP is expected to benefit from new government s creative economy support policy backed by its superb track record of 20.1% IRR KISB is top-tier in financial soundness and profitability KISB is operating in the black for 12 consecutive years, records BIS ratio of 18.3% and substandard & below loan ratio of 6.9% KISB is going to expand its business area by taking over Yesung Savings Bank (KIH was selected as a preferred bidder on Feb 2014) 1

3 KIH overview and earnings summary Subsidiaries business performance Appendix : Condensed financial statements 2

4 KIH at a glance Subsidiary introduction (Unit: billion KRW, FY13 K-IFRS consolidated 1 ) 100% KIS (Korea Investment & Securities) KIS, the flagship subsidiary of KIH achieved No.1 earnings in the industry for 3 consecutive years, FY11~13 Asset 19,890 Equity 3,107 (9M) 2 Net Income Ranking st 100% KIM (Korea Investment Management) Korea s first asset management company with 40 years experience Total AUM 26.2 trillion KRW, Equity type AUM 13.1 trillion KRW rd KIH (Korea Investment Holdings) Asset: 21,216 Equity: 2,666 Net Income: 59 (9M) 2 100% 100% 100% KIVAM (Korea Investment Value Asset Management) KIP (Korea Investment Partners) KISB (Korea Investment Savings Bank) Korea s first long-term value investment company Total AUM 4.9 trillion KRW, Equity type AUM 3.1 trillion KRW Venture Capital, Total AUM billion KRW Excellent investment performance since 2001, average IRR 20.1% KISB maintains A0 domestic credit rating for 3 consecutive years and is operating in the black for 12 consecutive years BIS ratio 18.3%, Substandard & below loan ratio 6.9% , (12M) 12th 1st 1st 100% Established in Singapore in 2008, as a hedge fund specialist, Total AUM 190 billion KRW % Specialized private equity fund manager KISB: FY12 (July 2012 ~June 2013) 2. FY13: April ~ December 2013 (9 month) 3. Income basis ranking (KIP: AUM Ranking) 3

5 KIH recorded 58.6 billion KRW of net income based on well diversified business portfolio FY13 KIH s EBIT break down (Unit: billion KRW, K-IFRS consolidated) 100% = 109 KIH net income 지주순이익구성 (Unit: billion KRW, K-IFRS consolidated) KISB 4 (4.1%) Others 3 (3.1%) KIP 5 (4.3%) KIVAM 8 (7.3%) 19 KIS 59* (53.9%) 59 KIM 30 (27.3%) Sum of subsidiaries Earnings KIH Expense Income Tax Net Income (Consolidated) * KIS: excluding KIM & KIVAM 4

6 KIH continued to increase subsidiaries customer asset, now exceeding 108 trillion KRW Subsidiaries customer asset (Unit: trillion KRW) KIH customer asset (Unit: trillion KRW) KIS +13.7% BK AM FY11 FY12 FY13 KIM/KIVAM KIP/ CEP/KIARA % KIM/KIVAM +17.1% KIVAM KIS KIM FY11 FY12 FY13 KISB FY11 FY12 FY13 5

7 Although securities stocks were weak, KIH preserved its shareholder value much better than other large securities companies Share information Relative share price trend (as of December 2013) Total Outstanding 61,584,243 Common Share 55,725,992 Preferred Share 5,858,251 Credit Ratings AA- (Domestic Rating) 2,005p 110 1,863p 1,997p 2,011p Market Cap. (Common) 2.3 tn KRW EPS (FY13) 1,000 KRW ROE (FY13) 2.9% 100 Shareholders (Unit: %, Common Share) Treasury and affiliated persons 90 KIH -11.0% Truston Asset Mgt. National Pension Service 7.8 Other free floating shares Nam goo Kim 20.2 Foreign Long-term investors foreign 25.4 investors Sector -18.9% Average top 4 securities companies -21.9%

8 KIH overview and earnings summary Subsidiaries business performance Appendix : Condensed financial statements 7

9 KIS achieved No.1 in earning due to the most stable fee income based on well diversified business portfolio Overall business performance FY13 Net Income compared to competitors (9M) (Unit: billion KRW, separated) (Unit: billion KRW, separated) 100%=505 YoY -22.5% Net Operating Income Net operating income decreased by 22.5% due to dried-up trading volume and the rise of market interest rate Brokerage %=391 Fee Income WM IB Net interest/ trading % -4.5% +5.6% -40.4% Brokerage Retail off-line M/S has increased despite decline of market volume and brokerage fee income Wealth Management WM product balance has grown up while the portion of high margin product slightly decreased Investment Banking No.2 in seasoned equity offerings, No.3 in bond underwriting Real estate PF, No.1 in industry continued to increase profit through the diversification of income sources Net interest / trading FY12 (9M converted) FY13 Net profit decreased because of the valuation loss of bonds caused by steep rise of market interest KIS W Co. S Co. D Co. H Co. 8

10 KIS: ROE is No.1 among large securities companies, top-tier player in every field of securities industry (Separated) 15% Big5 ROE* trend FY13 primary fee income (Unit: billion KRW, separated) BK Fee Income: 2 nd % 7.7% 7.7% S Co. KIS W Co. D Co. H Co. AM Fee Income : 2 nd 5.0% 5% 3.2% KIS % W Co. S Co. D Co. H Co. S Co. KIS D Co. W Co. H Co. IB Fee Income : 1 st % KIS W Co. S Co. H Co. D Co. * Net Income / Average Total Equity 9

11 KIS maintains the lowest SG&A/ net operating income ratio with effective cost control SG&A compared to competitors (Unit: billion KRW, separated) SG&A/net operating income ratio (Unit: %, separated) KIS Average top 4 securities companies FY (9M) S Co. W Co. D Co. H Co. KIS FY12 S Co. W Co. D Co. KIS H Co. FY12 FY13 10

12 KIS brokerage maintained FY12 trading volume although the stock market was dwindling Market trading volume 1 (Unit: trillion KRW) KIS trading volume FY13 KIS M/S 2 (Unit: trillion KRW) Others Foreign wholesale Domestic wholesale Retail off-line 1, % 1, Growth rate +28% +7% -13% -10% -0% Growth rate +56% +11% -14% -8% M/S & Ranking Others Foreign wholesale 6.5% 3.1% 3 rd Retail on-line 1,361 1,238-9% % Domestic wholesale Retail off-line 4.7% 12.5% 4 th 1 st Retail on-line 7.4% 3 rd FY12 FY13 FY12 (9M converted) (9M converted) FY13 1. KOSPI + KOSDAQ + ETF + ELW 2. Excluding S Co. 11

13 KIS brokerage: No. 1 in retail off-line brokerage, No. 2 in deep discount brokerage of retail on-line market Retail off-line brokerage M/S* Deep discount brokerage M/S* 12.3% 12.5% KIS K Co. (54.4%) 10.7% 9.7% D Co. (10.7%) H Co. (10.0%) W Co. (9.4%) 10.5% 9.9% 10.1% 11.2% KIS E Co. (5.9%) M Co. (4.7%) * KOSPI + KOSDAQ + ETF + ELW, M/S in the retail off-line brokerage market and deep discount brokerage market, respectively 12

14 KIS brokerage: Prime Brokerage Service leaped to top class due to the reinforcement of competitiveness Korea hedge fund market volume* Korea hedge fund M/S (Unit: billion KRW) +326% 2,313 60% 1,834 50% KIS s Client FY11 FY12 FY13 FY14 (Feb) 40% 30% 20% 10% 0% S Co. (33%) 32% KIS 25% D Co. (23%) W Co. (12%) 3% 2% H Co. (1%) FY11 FY12 FY13 FY14 (Feb) 100% = 734 bn. KRW Etc (6%) Daishin Ever-Green (47%) Truston Multi (13%) Truston Korea Long-Short (47%) * AUM 13

15 KIS increased financial product sales balance by continuous growth of alternative products Financial product sales balance (Unit: trillion KRW) Alternative product sales balance (Unit: trillion KRW) +67.2% 42.9 RP +9.5% Trust +2.7% Alternative Product Others* ELS/DLS Retail Bond Trust RP FY12 FY13 FY12 FY13 ELS/DLS Retirement Pension +29.2% +33.3% Fund FY12 FY13 FY12 FY13 ELS/DLS: 2nd (Retail public offering ranking) * Retirement Pension, wrap, deposit recived 14

16 Equity type fund M/S continues to rise, new retail fund is persistently coming through pension fund market Equity type fund M/S 1 KIS private pension fund 30% 25% KIS private pension fund balance (Unit: billion KRW) +62.1% 1,279 1, ,407 20% M Co. (18.5%) 15% 10% 11% 12% 12% 14% KIS S Co. (9.4%) Private pension fund M/S 2 30% 25% 25% 23% 23% 23% 20% KIS (1 st ) H Co. (18.6%) H Co. (7.0%) 15% M Co. (15.0%) 5% 10% 1. Market share in securities industry 2. Market share in Pension Fund Market (Bank, Securities Co., Insurance Co.) 15

17 KIS IB: ECM, DCM, PF division achieved top tier performance in the industry and No.1 IB fee income IB fee income M/S 1 KIS IB volume (Unit: trillion KRW) 10% Seasoned equity offerings 2nd 2nd 8% 5th rd % 4% 6.3% 6.5% 6.0% 6.4% KIS D Co. (5.4%) W Co. (5.1%) S Co. (3.8%) H Co. (3.3%) (9M) Bond underwriting 2nd 1st 3rd 3rd (9M) 2% Real estate PF 2 1st 1st 1st 1st 0% 1. Underwriting commissions + M&A commissions + Bond guarantee fee 2. PF-Loan, ABS, ABCP (9M) 16

18 KIM and KIVAM s AUM increased despite the stagnancy of fund market, especially KIVAM is dramatically growing due to excellent management performance Fund AUM trend 1 KIM/KIVAM AUM 2 AUM index ( AUM = 100) KIM AUM (Unit: trillion KRW) 300 KIVAM % Others Bond / Hybrid bond type funds Equity / Hybrid equity type funds KIVAM AUM (Unit: trillion KRW) KIM +16.5% Market -1.8% Bond / Hybrid bond type funds Equity type funds Fund 2. Fund + institutional mandates 17

19 KIM / KIVAM combined market share increased due to persistent new fund inflow, combined net income leaped to yearly 50 billion KRW Equity type fund AUM M/S* Combined performance (KIM+KIVAM) New fund inflow M/S (Equity type fund) 35% 30% 21.6% 16.2% 20.3% 18.4% 25% 20% M Co. (21.0%) 15% 10% 11.0% 11.5% 12.8% 14.0% KIM/KIVAM S Co. (12.8%) K Co, (9.0%) KIM/KIVAM income trend (Unit: billion KRW) 32.5 KIVAM % KIM % (9M) * Fund AUM (except institutional mandates) 18

20 KIP s AUM is No.1 in the industry, totaling billion KRW and has the superb performance record AUM Performance record (Unit: billion KRW) Cumulative Investment: billion KRW Realized fund: billion KRW IRR 20.1% KAKAO YG Entertainment Sapphire Tech. +186% Investment: % Distribution IRR: 154.4% Investment: 7.4 Distribution: 68.7 IRR: 154.6% Investment: 1.5 Distribution: 31.9 IRR: 267.2% Able C&C Osstem Implant I-sens Investment: 1.5 Distribution: 22.3 IRR: 463.1% Investment: 5.2 Distribution: 37.2 IRR: 110.4% Investment: 1.8 Distribution: 14.3 IRR: 97.8% FY08 FY09 19

21 KISB is operating in the black for 12 consecutive years and has a top tier financial soundness Net Income trend * Financial soundness indicators (Unit: billion KRW) (Unit: %) KISB Industry Avg KISB BIS Ratio FY10 FY11 FY12 FY11 FY12 Industry ,079-1,661 Substandard & below loan ratio ,751 FY11 (2012 년 6 월말 ) FY12 (2013 년 6 월말 ) * Based on Financial Statistics Information System (FSIS), as of June

22 KISB is going to expand its business area to Seoul region by taking over Yesung Savings Bank Company summary (as of Dec 2013) Seoul / Gyeonggi-do Network (Gyeonggi-do, Incheon, Jeollado region license) Total Asset 1,216 bn KRW Total Deposits 982 bn KRW Total Loans 1,142 bn KRW Network 10 Branch Employees 213 Clients 61,319 Korea Investment Savings Bank Yesung Savings Bank (Goyang-si) Yesung Savings Bank (Seoul region license) (Seoul) Total Asset Total Deposits Total Loans Network 112 bn KRW 83 bn KRW 68 bn KRW 2 Branch Employees 44 Clients 21,419 KISB was selected as the preferred bidder of Yesung Savings Bank on Feb 2014 (Gwangmyeong-si) (Anyang -si) (Sungnam-si) (Ansan-si) (Suwon-si) (Pyeongta 다-si) KISB s other branch network: Incheon, Jeollado (Gwangju, Yeosu) 21

23 KIH overview and earnings summary Subsidiaries business performance Appendix : Condensed financial statements 22

24 Appendix1: KIH Financial Summary (Unit: billion KRW, K-IFRS consolidated) Balance Sheet Income Statement FY12 FY13 Cash & Deposits 2, ,993.1 Financial Assets & etc. 15, ,495.8 Loans Receivable 2, ,567.7 Investment Property & Equipment Other Assets Total Assets 20, ,215.6 Deposits & Financial Liabilities 7, ,896.0 Borrowings & Debentures 9, ,022.6 Other Liabilities Total Liabilities 18, ,549.3 Paid-in Capital Capital Surplus Capital Adjustment Accumulated Other Comprehensive Income Retained Earning 1, ,560.5 Non-controlling Invest Equity Total Equity 2, ,666.3 FY12 FY13 Operating Revenue 3, ,765.3 Fee and commission income Interest Income Gain on valuation or sales of Financial Assets/Liabilities 2, ,854.0 Other Operating Revenues Operating Cost 3, ,686.9 Loss on Equity Interest Expense Loss on valuation or sales of Financial Assets/Liabilities (9M) 2, ,006.6 Other cost SG&A Operating Profit Non-OP Income/Expense Net Income Before Tax Net Income BPS* (KRW) 50,072 50,484 EPS* (KRW) 3,196 1,000 ROE* 7.20% 2.94% * BPS, EPS based on 52,738,513 shares of common stock (excluding treasury shares), ROE based on annualized Apr.-Dec. net income. 23

25 Appendix2: KIS Financial Summary (Unit: billion KRW, K-IFRS consolidated) Balance Sheet Income Statement FY12 FY13 Cash & Deposits 1, ,881.5 Financial Assets & etc. 14, ,191.2 Loans Receivable 1, ,480.6 Investment Property & Equipment Other Assets Total Assets 19, ,889.9 Deposits & Financial Liabilities 6, ,993.4 Borrowings & Debentures 8, ,223.9 Other Liabilities Total Liabilities 16, ,782.6 Paid-in Capital Capital Surplus 1, ,360.9 Capital Adjustment - - Accumulated Other Comprehensive Income Retained Earning 1, ,398.3 Non-controlling Invest Equity Total Equity 3, ,107.2 FY12 (9M) FY13 Net Operating Revenue Brokerage Commissions Underwriting Commissions Structured Securities Commissions PF Commissions Fund Sales Fee Net Interest Income/ Net Trading Gains & others SG&A Operating Profit Non-OP Income/Expense Net Income Before Tax Net Income BPS* (KRW) 91,498 88,380 EPS* (KRW) 5,415 2,280 ROE* 5.90% 3.36% * BPS, EPS based on 35,113,960 shares, ROE based on annualized Apr.-Dec. net income. 24

26 Appendix3: KIM, KIVAM, KIP Financial Summary (Unit: billion KRW, K-IFRS consolidated) KIM KIVAM KIP FY12 (9M) (9M) (9M) FY13 FY12 FY13 FY12 FY13 Total Asset Total Liabilities Equity OP Revenue Operating Profit Non-OP Gains Net Income Before Tax Net Income BPS (KRW) 9,021 9,021 EPS (KRW) 2,747 2,246 ROE 30.40% 33.8% Total Asset Total Liabilities Equity OP Revenue Operating Profit Non-OP Gains Net Income Before Tax Net Income BPS (KRW) 7,148 10,385 EPS (KRW) 940 3,987 ROE 13.20% 15.1% Total Asset Total Liabilities Equity OP Revenue Operating Profit Non-OP Gains Net Income Before Tax Net Income BPS (KRW) 1,741 1,968 EPS (KRW) ROE 2.70% 3.46% BPS, EPS based on 13,200,000 outstanding shares ROE based on annualized Apr.-Dec. net income BPS, EPS based on 2,000,000 outstanding shares ROE based on annualized Apr.-Dec. net income BPS, EPS based on 85,700,000 outstanding shares ROE based on annualized Apr.-Dec. net income 25

27 Appendix4: PEF, KISB Financial Summary (Unit: billion KRW, K-IFRS consolidated) CEP FY12 (9M) FY13 KISB (9M) ~ ~ Total Asset Total Liabilities Equity OP Revenue Operating Profit Non-OP Gains Net Income Before Tax Net Income BPS (KRW) - - EPS (KRW) - - ROE - - Total Asset 1, ,212.1 Total Liabilities 1, ,017.0 Equity OP Revenue Operating Profit Non-OP Gains Net Income Before Tax Net Income BPS (KRW) 16,590 16,727 EPS (KRW) 1, ROE 8.60% 1.02% Fiscal year ends in June Financial figures adjusted to KIH fiscal year ending in March BPS, EPS based on 11,666,963 outstanding shares 13.8 bn KRW was reflected as the allowance for bad debts following the savings bank FLC by Financial Supervisory in Nov ROE based on annualized Apr.-Dec.. net income 26

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