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Issuer Credit Research

Issuer Flash: NH Investment & Securities Co., Ltd.

Issuer: Nh Investment Securities | Document: Issuer Flash | Date: 2026-08-06 | Event: 2q26 Results

Report date: 2026-08-06 Event date: 2026-07-23 Event title: 2Q26 preliminary operating results

1. Flash Conclusion

NH Investment & Securities reported a second consecutive record quarter in 2Q26, modestly strengthening the near-term earnings component of the existing credit view. Consolidated operating profit was KRW 681.2bn and reported net income was KRW 489.6bn, respectively 111.6% and 90.5% above 2Q25. Operating profit was also 7.0% above the already strong 1Q26 result, while reported net income was 2.9% higher. First-half operating profit of KRW 1.3179tn and net income of KRW 965.2bn were close to FY2025's respective KRW 1.4206tn and KRW 1.0315tn. The result provides more evidence that the franchise can translate favorable client activity and capital-market conditions into internal capital generation.

The interpretation remains deliberately qualified. The 23 July disclosure is a preliminary operating-results announcement, not the detailed June quarterly report. It confirms headline earnings but does not yet provide sufficient evidence on end-quarter asset composition, regulatory capital, liquidity, market funding, credit costs, risk amounts or IMA asset deployment. In addition, the earnings sources that supported the quarter—brokerage, financial-product sales, investment banking and trading/investment-related income—are diversified within a securities-company model but remain sensitive to market turnover, valuations, spreads and client risk appetite. The result is credit-positive as a buffer and franchise signal, not evidence that the issuer has acquired deposit-bank-like earnings stability.

The separately disclosed KRW 400bn rights-issue decision, which named controlling shareholder NongHyup Financial Group as the intended subscriber and scheduled payment for 29 June, adds a concrete capital-support signal alongside retained earnings. This flash has not obtained a post-payment filing that confirms receipt of the proceeds. The planned capital increase supports the assessment of financial flexibility as the company pursues growth, including IMA-related activity, but it must not be treated as a legal guarantee of the issuer's bonds. The overall view therefore remains constructive but conditional on disciplined balance-sheet growth, continued market funding access, confirmation of the capital increase and a detailed confirmation that additional capital is not being consumed by a less-liquid or higher-risk asset mix.

2. What Was Announced

NH Investment & Securities disclosed preliminary consolidated operating results on DART on 23 July. It reported 2Q26 revenue of KRW 12.8482tn, operating profit of KRW 681.2bn and net income of KRW 489.6bn. The disclosure's year-on-year comparisons were 111.6% for operating profit and 90.5% for net income. Operating profit exceeded the 1Q26 record of KRW 636.7bn, while net income rose from KRW 475.7bn, showing a second highly profitable period under favorable market conditions.

The primary disclosure provides the headline results. Secondary reporting by ChosunBiz, citing the company, indicates that the improvement was spread across brokerage, financial-product sales and IB rather than attributed to a single exceptional gain. It reported 2Q brokerage fees of KRW 445.6bn, financial-product-sales fees of KRW 76.8bn, IB fees of KRW 108.3bn, and trading/investment gains plus related interest of KRW 407.3bn. These figures are useful context, but not a substitute for the pending quarterly-report detail. They are consistent with the existing view that client flow, product distribution, corporate-finance activity and principal-market income can all contribute in supportive conditions.

The rights issue is relevant context for the result but should be separated analytically from profitability. The June decision disclosure states that the company planned a third-party allocation of 12,861,736 common shares at KRW 31,100 per share to NongHyup Financial Group, with approximately KRW 400bn earmarked for operating funds; the scheduled payment date was 29 June and the scheduled listing date was 14 July. The materials reviewed for this flash do not include a post-payment filing confirming that the proceeds were received. The announced plan is a visible shareholder-support signal and, if completed as scheduled, would add capacity to manage growth. It does not itself demonstrate that subsequent investment, IMA or corporate-finance assets are low risk, and it does not create direct recourse for holders of unsecured issuer obligations.

3. Credit Read-Through

For bond investors, the clearest positive is that the firm has accumulated an unusually large earnings buffer over two quarters. If retained, such earnings can support equity, regulatory-capital headroom and the capacity to absorb normal credit costs. The second record quarter reduces the risk that 1Q26 was isolated. Reported contributions from client-linked fees, product sales and IB imply that the favorable outcome was not confined to one narrow desk.

That is not the same as establishing a new through-the-cycle earnings run-rate. Brokerage revenue is tied to turnover and investor participation; product-sales income can be affected by market performance and investor demand; IB revenue can be lumpy; and trading, investment gains and related interest are exposed to equity prices, rates, credit spreads, foreign exchange and liquidity. In a market reversal, several of these lines can weaken at the same time. The appropriate credit conclusion is therefore that stronger earnings improve current loss-absorption capacity, but the durability of that benefit has to be tested through less favorable markets and against the risk profile of the enlarged balance sheet.

The announced parent-supported equity issue strengthens the potential buffer side of this assessment, subject to confirmation that it was completed. It is more tangible than a general inference from group affiliation, but is a rating and confidence factor rather than a legal bond guarantee. It may support business expansion, including investment-banking and IMA activity, whose credit effect depends on asset selection, liquidity reserves, maturity matching and risk controls.

The main counterweight is missing end-June detail. The 1Q26 quarterly report had already shown rapid asset and liability growth. Without the 2026.06 quarterly report, this flash cannot determine whether growth in FVTPL assets, amortized-cost assets, deposit liabilities, borrowings, other financial liabilities or contingent corporate-finance exposure accelerated, moderated or changed in quality. It also cannot confirm the latest net capital ratio, adjusted operating-net-capital ratio, liquidity ratio, provisioning, real-estate-finance exposure, short-term funding mix, collateral availability or derivative-margin demand. None of these omissions invalidates the favorable earnings result; they limit how far creditors should extrapolate it.

4. Key Numbers and Context

Metric 2Q26 / disclosed 2026-07-23 Comparator Credit reading
Consolidated revenue KRW 12.8482tn Reported preliminary 2Q26 operating-results metric Event context only; financial-company revenue is not used as a measure of recurring credit strength.
Consolidated operating profit KRW 681.2bn KRW 636.7bn in 1Q26; KRW 321.9bn in 2Q25 Second record quarter supports internal capital generation, subject to market-cycle volatility.
Reported net income KRW 489.6bn KRW 475.7bn in 1Q26; KRW 256.9bn in 2Q25 High profitability improves buffer capacity but should not be annualized mechanically.
1H26 operating profit KRW 1.3179tn KRW 1.4206tn in FY2025 Nearly reached FY2025's full-year level in six months; emphasizes the need to test sustainability.
1H26 net income KRW 965.2bn KRW 1.0315tn in FY2025 Strong earnings accumulation before the pending detailed quarterly report.
Announced rights issue Approx. KRW 400bn Scheduled payment 2026-06-29; completion not confirmed in reviewed materials Shareholder-support signal and potential capital flexibility; not a bond guarantee.

5. What To Watch Next

The immediate next source is the detailed DART quarterly report for the period ended June 2026. It should reconcile the preliminary result with reviewed financial statements and assess end-quarter asset growth, FVTPL, FVOCI and amortized-cost assets; funding liabilities; credit costs; capital, liquidity and leverage indicators; and PF, acquisition-finance, alternative-investment and guarantee exposures.

Earnings quality needs a separate follow-up. The next results should show whether client-flow and fee income remain diversified once Korean equity-market activity normalizes, and whether trading/investment gains remain proportionate to risk limits. A sustained reliance on market-sensitive lines would keep earnings volatility central to the credit view.

IMA and funding are the linked strategic risks. The report should be checked for IMA balances, product maturities, investment-asset composition, reference yields, liquidity reserves and any risk or customer-protection disclosures. The completion status of the announced parent capital increase should also be confirmed; if completed, creditor benefit will still depend on preserving capital headroom and refinancing flexibility as assets grow. Detailed maturity ladders, CP and electronic short-term-note balances, committed lines, secured funding capacity, foreign-currency liquidity, collateral pools and derivative-margin exposure remain unconfirmed and should be obtained before a bond-specific investment conclusion.

6. Sources