[Edaily Reporter Kim Kyung-eun ] SamsungSecurities(016360)reported earnings for the second quarter of this year that fell slightly short of market expectations, but analysts predict that its valuation will recover based on expectations of increased shareholder returns going forward.

Ko Yeon-soo, an analyst at Hana Securities, stated in a report on the 5th, “SamsungSecurities plans to announce its ‘Value-Up’ initiative by March of next year,” adding, “If a concrete roadmap is presented to achieve a medium- to long-term shareholder return rate of 50%, expectations for shareholder returns will be highlighted once again.” Accordingly, she maintained her “Buy” investment rating on SamsungSecurities with a target price of 175,000 won.

Analyst Ko assessed, “Although trading volume has been slowing amid increased volatility in the domestic stock market following the launch of single-stock leveraged exchange-traded funds (ETFs), the current stock price—at a price-to-book (P/B) ratio of 0.9x and an expected dividend yield of 7.4%—already reflects a significant portion of concerns regarding the industry slowdown.”

He added, “If regulations on single-stock leveraged ETFs are tightened in the future and market volatility gradually subsides, the valuations of securities stocks are likely to recover.”

SamsungSecurities’ second-quarter consolidated net income attributable to controlling shareholders was 488.2 billion won, up 108.1% year-over-year and 8.3% quarter-over-quarter. However, this fell short of the market consensus (503.2 billion won) by about 3%. The annualized consolidated return on equity (ROE) was 23.2%, up 10.5 percentage points from the same period last year and 1.0 percentage points from the previous quarter.

Analyst Ko explained, “While brokerage and asset management posted solid results, earnings fell slightly short of market expectations due to an increase in selling, general, and administrative expenses resulting from performance-based bonus payments.”

By segment, brokerage performance improved significantly. Second-quarter commission revenue from agency trading totaled 439.8 billion won, up 171.2% year-over-year and 25.9% quarter-over-quarter. Although trading revenue related to the U.S. online brokerage (IBKR) was not disclosed separately, it is estimated that its contribution to this quarter’s results was limited, given that the service launched on May 12.

Wealth Management (WM) fee income rose to 87.6 billion won, up 166.3% year-over-year and 24.0% quarter-over-quarter, driven by expanded sales of wrap accounts.

Net interest income totaled 154.3 billion won, an 8.6% increase year-over-year but a 2.6% decrease quarter-over-quarter. While interest income from loans increased as the loan balance rose from 5.3 trillion won to 5.6 trillion won, interest expenses also rose due to higher funding costs.

Investment banking (IB) and other fee income rose to 94.4 billion won, up 46.0% year-over-year and 25.1% quarter-over-quarter, driven by an increase in real estate project financing (PF) refinancing deals. Net income from asset management and other sources also rose to 267.2 billion won—up 54.3% year-over-year and 31.1% quarter-over-quarter—as the CARRY-focused bond management strategy delivered results despite rising bond yields.

In contrast, selling, general, and administrative expenses (SG&A) rose to 407.4 billion won, up 39.8% year-over-year and 45.7% quarter-over-quarter. This increase was driven by a 29.6% rise in personnel expenses due to performance-based bonuses, as well as factors such as an increase in education tax.