MERITZ Securities will embark on a capital increase of 50 billion won to support its wholly-owned subsidiary, Meritz Capital.
MERITZ Securities announced on the 9th that it had resolved to conduct a rights offering during a board meeting. The plan is to issue 4 million new shares, raising 50 billion won at a price of 12,500 won per share. Meriz Financial Group, which holds 100% of MERITZ Securities, is set to pay the capital increase amount on the 16th and receive the new shares the following day.
MERITZ Securities noted that the purpose of the capital increase is "proactive measures to secure capital soundness due to participation in Meritz Capital's capital increase."
Meritz Capital also held a board meeting that day and decided on a rights offering. It plans to issue 1 million new shares at a price of 50,000 won per share, securing 50 billion won. This structure involves a chain investment from Meriz Financial Group to MERITZ Securities to Meritz Capital. Meritz Capital decided to use the secured funds for operating capital.
In the first quarter of this year (January to March), Meritz Capital recorded operating revenue of 206 billion won and net profit of 27.1 billion won, reflecting increases of 1% and 2%, respectively, compared to the same period last year. However, these figures represent declines of 5% and 15% compared to the fourth quarter of last year (October to December).
With issues in real estate project financing (PF) compounded by the Homeplus situation, the asset soundness indicators for Meritz Capital also faced setbacks. As of the end of March this year, the overdue rate for more than one month stood at 5.6%, while the proportion of substandard assets was 9.7%. These numbers increased by 2.2 percentage points and 6.4 percentage points, respectively, compared to the end of last year.
Excluding corporate loans to Homeplus, the proportion of substandard assets for Meritz Capital decreases to 5.9%, yet it remains higher than the industry average of 4.9%.
Credit rating agency NICE Credit Evaluation noted that this capital increase is expected to alleviate concerns over Meritz Capital's financial stability. Additionally, considering that MERITZ Securities' annual net profit last year was 630.1 billion won, the impact on MERITZ Securities' creditworthiness is assessed to be limited.