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Moody’s raises Mirae Asset’s credit outlook

By Lee Min-hyung mhlee@koreatimes.co.kr

Moody’s has upgraded Mirae Asset Securities’ credit rating outlook to stable from negative due to expectations of the firm’s improved risk management and funding capabilities.

“Mirae Asset Securities’ risk appetite, leverage and funding will improve because of its plans to reduce its balances of equity-linked securities, contingent liabilities, such as guarantees, and exposure to real-estate properties and projects,” the global ratings agency said Tuesday.

It also noted that the Seoul-based securities firm would be able to slow down the growth of its risky assets as a result of various regulatory measures implemented by the Financial Supervisory Service and Financial Services Commission.

“Moody’s regards the firm’s reduced risk appetite and improved funding as a governance strength under its environmental, social and governance framework,

given the implications for the company’s financial strategy and risk management,” it said in a statement.

Mirae Asset Securities is Korea’s biggest securities firm, with more than 9 trillion won ($8.04 billion) in equity capital as of the end of 2020. The company also chalked up a record operating profit of more than 1 trillion won last year. This is the first time that a securities firm here topped the symbolic mark in annual earnings.

The decision by Moody’s came about two weeks after S&P decided to revise up Mirae Asset’s credit rating outlook to stable from negative.

Moody’s also maintained Mirae Asset’s Baa2 issuer rating due to a high possibility of government support for the Korean firm in times of need.

“Mirae Asset’s assessment of a high level of government support reflects the firm’s size and importance in the Korean capital market,” it said.

The ratings agency also cited the legal framework in Korea whereby Mirae Asset Securities can tap into the liquidity facilities of the Bank of Korea and Korea Securities Finance Corporation.

But the agency noted that there is no uplift from the firm’s major shareholder, Mirae Asset Capital, because the parent’s capacity to provide support to Mirae Asset Securities remains weak, due to its high financial leverage and complex corporate structure.

Mirae Asset Securities achieved a record quarterly operating profit of 419.1 billion won for the first three months of this year, soaring 41 percent from the previous quarter.

The company said its robust overseas business and enhanced corporate financing drove the earnings surprise.

Finance

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2021-05-12T07:00:00.0000000Z

2021-05-12T07:00:00.0000000Z

https://ktimes.pressreader.com/article/281616718248963

The Korea Times Co.