The banking industry is an industry where macroeconomic variables such as GDP, asset prices, and interest rates and government policies influence. The banking industry is affected by government policies that are determined by interest income, margins, credit costs and key economic variables.
In the banking industry, interest income accounts for 85% of profits, and interest income may vary depending on the bank’s risk appetite. In the case of the investment banking sector, commission income may arise. The investment banking sector is regarded as the bank’s growth engine. Beneficiary certificates, bancassurance, etc. are new sources of income.
The banking industry is affected by interest income, net interest margin, credit costs, and bank operating profit. Demand for loans is affected by interest rates, future wage income, asset income, investment income, etc., and loan supply is influenced by interest rates, debtor’s repayment ability, and asset value. NIM is affected by interest rates and competitive environment, and credit costs are affected by interest rates and debt repayment ability.
First, the bank’s operating profit is affected by fluctuations in the economy, the rate of GDP growth. Second, it can be affected by changes in asset prices. In terms of loans, the demand for loans increases due to the increase in speculative demand, and the supply of loans increases when the collateral availability increases. In terms of margins, an increase in low-cost deposits can lead to improved margins at banks and lower credit costs as collateral value rises. Finally, the interest rate is affected by the base rate. In this case, the decrease in the interest cost reduces the credit cost.
Representative stocks in the banking industry(KOSPI/KOSDAQ)
- KB금융, 우리은행, 신한지주, 하나금융지주, 기업은행, BNK금융지주, JB금융지주 etc.
The securities industry is an industry that uses securities as a medium to connect investors, who are the fund providers, and companies, who are the funders. Securities brokers account for 50% of total revenue from brokerage.
The securities industry has been accelerating competition among brokerage firms due to its simple revenue sources, and its oligopolistic position has been dominated by online brokerage firms, leading to a decline in market share of large brokerage firms. Also, with the implementation of the Capital Market Law, securities companies are expected to move away from simple brokerage business and turn into investment banks.
Commercial banks have high deposit rates and low lending rates in terms of price competitiveness. Accuracy and speed are more important than service quality, and it is important to have a competitive organization. In terms of capital, sufficient capital can be a key indicator of competitiveness. Investment banking, on the other hand, has the ability to develop a variety of products to meet competitive information production and risk preferences, and the ability to provide financial services.
Commercial banks will try to expand through top-line growth to strengthen their sales capabilities and mergers and acquisitions of similar financial institutions, and investment banks can attempt mergers and acquisitions to secure superior manpower and goodwill.
Representative stocks in the securities industry(KOSPI/KOSDAQ)
- 키움증권, 삼성증권, NH투자증권, 미래에셋대우, 대신증권, 유안타증권, 한화투자증권, DB금융투자, 부국증권, 신영증권, 교보증권, SK증권 etc.
The insurance industry is composed of life insurance and non-life insurance, and the loss ratio of automobiles can be used as a key management indicator. Automobile loss ratio refers to automobile accidents and car insurance premiums, and is used as a representative profitability indicator in the insurance industry. In addition, long-term monthly premiums representing the total monthly premiums for new contracts for the month are representative indicators of growth and are used as indicators of long-term growth potential, accounting for more than 50% of long-term insurance sales.
In the insurance industry, the solvency ratio is a typical stability indicator. If the solvency ratio is less than 150%, it can be judged that sudden changes such as capital increase may occur.
In the insurance industry, external variables related to automobiles, such as high oil prices, slowing consumption and international events, have a positive impact. This is because when the oil price increases or the consumption slows down, the traffic volume decreases and the accident rate decreases. Also, even if there are many international events, the traffic may be reduced because there are more restrictions on forced traffic.
On the other hand, negative variables include low oil prices, holidays, and disasters. Low oil prices and holidays increase the traffic volume, and in the event of a disaster, the property damage of the insured person increases, which is a very negative variable.
In addition, it may be affected by an increase in insurance demand due to an increase in demand due to a long-term population increase, an increase in income, an increase in demand for private insurance due to anxiety due to a deficit in health insurance, and an increase in insurance demand due to an increase in burden due to aging. Generally, profitability increases as the loss ratio declines due to a decrease in corporate activities due to the recession and the solvency increases, resulting in higher profitability.
Factors such as rising interest rates and stock market boom in the investment sector affect the increase in operating income.
Representative stocks in the insurance industry(KOSPI/KOSDAQ)
- Life insurer: 삼성생명, 동양생명 etc.
- Non-life Insurance: 삼성화재, DB손해보험, 롯데손해보험, 메리츠화재, 한화손해보험, 현대해상, 흥국화재 etc.
- Reinsurers: 코리안리 etc.