Meritz Financial Group's earnings slipped in the third quarter of this year amid heightened market volatility. Valuation losses on stocks caused by the market's swings dragged down investment income.
Meritz Financial Group said on the 11th that its consolidated net profit for the third quarter was 490.5 billion won, down 26.6% from a year earlier and 38.0% lower than the 791.4 billion won in the second quarter.
Third-quarter operating profit was 519.9 billion won, down 39.7% year on year. Revenue jumped 78.2% to 13.1348 trillion won.
Cumulative net profit for the first three quarters was 1.9621 trillion won, down 64.7 billion won (3.2%) from 2.0268 trillion won in the same period last year. Cumulative operating profit fell 7.6% to 2.3423 trillion won. Cumulative revenue rose 95.2% to 48.7122 trillion won.
The company analyzed that its core insurance business improved but losses grew in investment. A Meritz Financial official said, "Fire insurance profit increased, but investment income fell sharply due to stock valuation losses caused by stock market volatility." As for securities, the official added that profit rose on asset management performance and higher interest income, but costs such as selling and administrative expenses also increased.
Net profit of its core subsidiary Meritz Fire & Marine Insurance in the third quarter on a separate basis was 328.5 billion won, down 29.2% from a year earlier. Cumulative net profit was 1.3528 trillion won, down 6.8% from 1.4511 trillion won a year earlier.
Core business indicators continued to improve. Cumulative insurance profit rose 7.6% to 1.1022 trillion won. New contract sales of long-term personal insurance rose 15.6% to 105.6 billion won. Long-term personal insurance is a product that covers risks related to a person's body, life and health among long-term policies with terms of one year or more.
Profitability-focused growth in long-term insurance supported earnings. General insurance posted solid results thanks to higher sales. Auto insurance also stayed in the black as accident rates fell. A Meritz Fire & Marine official said, "Strengthened core competitiveness, including profitability-focused growth in long-term insurance and improved insurance profit, drove overall results."
Meritz Fire & Marine's investment yield on asset management at the end of the third quarter was 5.0%. Its preliminary solvency ratio (K-ICS) was 225.7%.
Meritz Securities kept its profit growth trend. Third-quarter consolidated net profit rose 3.2% to 206.4 billion won. Cumulative net profit was 720.5 billion won, up 12.0% from 643.5 billion won a year earlier. However, cumulative operating profit fell 8.6% to 641.3 billion won.
The corporate finance division posted solid results by winning structured finance deals targeting large corporations. The asset management division also delivered good performance amid market volatility. The retail division achieved stable results on a broader customer base.
A Meritz Securities official said the company would grow its retail business qualitatively by leveraging its digital platform competitiveness and expanded customer base. It also announced plans to build a sustainable growth engine through synergies with corporate finance and asset management.
Meritz Financial Group's total assets at the end of the third quarter were 146.4973 trillion won, up 8.1% from the end of last year. Return on equity (ROE) was 23.5%.