[Edaily Marketin Reporter KIM YEON-SEO ] DB Securities (A+) is set to issue corporate bonds worth up to 200 billion won. While profitability and capital adequacy remain at healthy levels, the deterioration in asset quality—particularly in real estate project financing (PF)—is cited as a key factor in investment decisions.

According to the investment banking (IB) industry on the 12th, DB Securities will conduct a bookbuilding process targeting institutional investors on the 2nd of next month to issue corporate bonds totaling 150 billion won. The tranches (maturities) consist of 70 billion won in 1.5-year bonds and 80 billion won in 3-year bonds.

Depending on the results of the bookbuilding, the company plans to increase the issuance amount to a maximum of 200 billion won. The target interest rate band for the public offering has been set at -30 basis points (bps; 1 bp = 0.01 percentage point) to +30 bps relative to the credit ratings assigned by private bond rating agencies for each maturity. KB Securities and Shinhan Investment Securities are serving as lead underwriters, and the scheduled issuance date is the 10th of next month.

Korea Ratings, Korea Credit Rating, and NICE Credit Rating have assigned DB Securities a corporate credit rating of “A+” with a “Stable” outlook. The credit rating industry assesses that DB Securities holds a mid-tier market position among small and medium-sized securities firms.

DB Securities’ average market share of net operating revenue over the past five years stands at 1.3%, indicating that its overall market position within the securities industry is not particularly strong. However, it is assessed to have secured relative strengths in the investment banking (IB) sector, including financial advisory services and securities underwriting. While the potential for its market position to improve due to the performance gap between large and small-to-medium-sized firms is limited, it is projected to maintain its current competitive position given DB Financial Group’s brand recognition and the complementary sales networks of its affiliates.

Profitability on the Rise… “Capital Adequacy Ratios Also at Excellent Levels”

DB Securities’ profitability has recently shown a trend of improvement. Although its average annual return on assets (ROA) fell to 0.1% in 2022–2023 due to an unfavorable business environment and the burden of loan losses, it reached 0.6% in both 2024 and 2025.

In the first quarter of this year, underwriting and arrangement fees decreased, and losses from bond portfolio management occurred. However, driven by an increase in trading volume in the domestic stock market, brokerage trading profits improved, pushing ROA up to 0.8%.

Capital adequacy ratios also remain at a relatively strong level. As of the end of March, the net capital ratio stood at 317.8%, and the adjusted net capital ratio was 231.1%. Although capital adequacy ratios have declined slightly due to an increase in total risk exposure resulting from the expansion of market risk exposure since 2025, the company is managing these ratios through measures such as the issuance of 55 billion won in subordinated bonds.

However, the increase in risk-weighted asset exposure and the deterioration in asset quality remain concerns. As of the end of March, DB Securities’ credit risk exposure stood at 1.0864 trillion won, equivalent to 111.1% of its equity capital. During the same period, its real estate exposure—comprising debt guarantees, loan receivables, equity securities, and funds—totaled 537.2 billion won.

"High Qualitative Risk in Real Estate Project Financing"

While the quantitative burden of

real estate project financing (PF)

exposure is similar to the average for small and medium-sized securities firms, the qualitative risk was assessed as high. Among total real estate PF, bridge loans accounted for 41.2%, and subordinated and junior-ranking loans accounted for 91%.

As of the end of March, non-performing assets totaled 282.7 billion won, and the non-performing asset ratio stood at 8.4%. Non-performing assets increased by 79.7 billion won compared to the end of last year, largely due to the downgrade in the soundness classification of projects with debt guarantees. The ratio of net substandard assets to equity stood at 24.1%; while this has been improving since 2023, it still significantly exceeds the industry average.

Kim Yeon-soo, a senior researcher at NICE Credit Rating, assessed, “As oligopoly centered on large firms intensifies in the competition for overseas stock services and digital platforms within the brokerage division, DB Securities’ market position in these areas continues to decline.”

He added, “The company possesses relative strengths in the investment banking (IB) sector, including financial advisory services and securities underwriting, and maintains a solid competitive position in the asset management sector based on business synergies with DB Asset Management and DB Savings Bank.” He further predicted, “While the potential for improving its market position is limited, the company should be able to maintain its current competitive standing by leveraging the brand recognition of DB Financial Group and the complementary sales networks of its affiliates.”