SK Securities evaluated NH Investment & Securities' quarterly business performance on the 24th, stating that the market has witnessed a positive surprise exceeding expectations. While favorable results for the first quarter were anticipated due to the overall market boom, the simultaneous increase in asset management profits led to an unexpected strong performance, recording an 'earnings surprise.' Consequently, analysis agencies have adjusted their price targets upward from 42,000 won to 44,000 won and maintained their investment opinion as 'Buy'.
NH Investment & Securities recorded net income attributable to the controlling shareholder of 4.757 billion won in this quarter, surpassing the market consensus estimate by 20.7%. The most decisive factor behind such excellent performance was the sharp increase in asset management profits, which SK Securities' Researcher Young-im Jang identified as the core driver of this 'surprise result.' Researcher Jang emphasized through detailed analysis that asset management profits grew by an impressive 82.2% compared to the previous quarter, despite the sharp rise in interest rates in March.
The background for such a significant increase in asset management profits includes the effective operation of a strategy to reduce the duration of the bond portfolio to lower sensitivity to interest rate fluctuations. Additionally, analysis suggests that FVPL, unrealized gains/losses from financial assets disposal, contributed positively to the results due to their larger-than-expected scale. Along with this financial stability, the brokerage and asset management sectors also showed overall prosperity, further strengthening the overall business environment. Brokerage fee revenues increased by 57.5% compared to the previous quarter, while asset management fee revenues surged by an astonishing 90.3% during the same period.
Researcher Young-im Jang explained that the key to this success was the significant expansion of revenue centered on switchable wrap accounts and funds, driven by the sustained market boom. Although net interest income decreased slightly due to reduced interest-related profits related to asset management, interest-related losses in the brokerage sector increased significantly compared to the previous quarter, based on the growth of credit exposure reserves reaching an average of 5.8 trillion won. With such diversified revenue sources and strategic portfolio management working in harmony, NH Investment & Securities recorded this quarter as a shining growth period and is expected to continue positive momentum in the future.