HYUNDAI SECURITIES ANNUAL REPORT 2009 CONTENTS 04 Major Achievements 05 Hyundai Securities Awards 06 Message from CEO 08 Board of Directors 10 Innovative Pathfinder for all QnAs 12 Renovative one on one C&C 14 Glocalization over Globalization 16 Vision and Strategy 17 Review of Operations 26 Financial Section 114 Organization Structure 116 International Locations The Power of Hyundai Securities… the Pride that has led the history of Korea’s securities market over the past 47 years. The world can witness the power of Korea through the insights and thrust of Hyundai Securities, which broke through the crisis of the IMF period. Backed by such efforts, Korea has continued on its path of growth even as advanced economies faced difficulties during the global financial crisis. Now, the Pride of Hyundai Securities looks even further beyond. Not content to modestly remain Korea’s leading securities company, Hyundai Securities will embark on a journey to become global Hyundai Securities. ‘Korea’s representative investment bank competing with global investment banks’ Hyundai Securities set the vision of establishing the No. 1 Financial Brand in Korea by 2020 and Joining the Top 10 in Asia and Emerging Markets. Hyundai Securities will grow into a company that competes with global investment banks, by lining up top talent both in and out of Korea for customers around the world in each and every business sector, as it leaps forward to become a most capable investment bank in terms of both scale and internal stability.‘ Korea’s representative investment bank competing with global investment banks’is the pride that hyundai securities will boast. 03 Major Achievements 2006 2007 2006.04 “Hyundai Hero Deposit-type RP”won 2007.05 Hyundai Securities IB signs ＼1.7 trillion the marketing excellence award of the MOU for composite complex development Korea Economic Daily. 2007.07 Hyundai Securities issues ＼150 million in 2006.11 Won Korea Stock Excellence Award, ABS for small and medium businesses an industry excellence award 2007.07 Hyundai Securities invests in Japanese 2006.12 2006 Korea Internet Excellence Award commercial real estate 2007.01 Hyundai Securities opened more than 2007.10 Hyundai Securities signs general business 100,000 CMA accounts, worth partnership MOU with Chinese firm 1 trillion won. Goutai Junan Securities 2007.02 Credit rating on Hyundai Securities 2007.11 Hyundai Securities opens office in was lifted to A+ Ho Chi Minh City, Vietnam 2007.12 Hyundai Securities exceeds 0.3 million CMA accounts and balance of ＼3 trillion 2007.12 Hyundai Securities advances into Kazakhstan. First among Korean securities companies, received approval for a representative office 2008 2009 2008.04 Hyundai Securities opens office 2009.07 No 1. In 1st Half IPO Underwriting in Almaty, Kazakhstan Performance 2008.06 Hyundai Securities customer 2009.07 Hyundai Asset Management was Launched satisfaction center selected best call center 2009.09 Hyundai Securities donated 700 Computers 2008.06 Launched overseas to Elementary and Middle Schools Home-Trading-System(HTS) in the Philippines. 2008.09 Ho Chi Minh office plays lead 2009.11 Hyundai Securities formed a real-time manager for the first time foreign exchange service business tie-up 200809 MOU Signed with RFCA in Kazakhstan with the Korea Exchange Bank. 2008.10 Hyundai Securities’ 2009.11 Hyundai Securities opened a real-time loan “fund fundamental index”first in industry transaction system available for sales. 2008.12 Sharing warmth activities regarding 2009.12 Hyundai newcomers,“We’ve learned the corporate social responsibity corporate culture of sharing!” 2009.12 Hyundai Securities started exchange-traded derivatives sales in the domestic market. 04 Hyundai Securities Awards 2006 YouFirst Award 2007 YouFirst Award 8th Hankyung Marketing Grand Prize Korea Quality Brand Grand Prize Korea Economic Daily Korea Economic Daily Korea Internet Grand Prize Internet Marketing Grand Prize Korea Internet & Security Agency Hangyeore 2006 Money Today Advertisement Grand Prize Money Today Advertisement Grand Prize Money Today Money Today Ranked 1st in Online Trading Service Ranked 1st in Online Trading Service Stockpia Stockpia Customer Satisfaction Mgrnt Grand Prize Ranked 1st Securities Company in Korea Economic Daily corporate image University News Network 2008 YouFirst Award 2009 YouFirst Award Customer Satisfaction Management Grand Prize Customer Satisfaction Management Grand Prize Korea Economic Daily Korea Economic Daily 2008 Internet Marketing Grand Prize Grand Prize in financial products service Donga.com innovation (by Financial Supervisory Service) Best IPO Grand Prize Money Today Korea Herald Ranked 1st in Online Trading Service Grand Prize in Social Contribution Stockpia University News Network 05 Message from CEO Dear shareholders and investors, Dear respected shareholders and investors, In fiscal year 2009, the global financial crisis, triggered by the In fiscal year 2010, it is expected that exports will increase and subprime mortgage in the U.S. and the bankruptcy of a global company performance will improve as the global economy investment bank, was gradually stabilized through liquidity gradually enters the recovery stage. Furthermore, as the supply from central banks all over the world and various domestic economy recovers and the KOSPI is pushed forward governments’aggressive public stimulus packages. The to be included in advanced indices such as the MSCI and WGBI, domestic economy and stock market also showed signs of further bases are expected to be formed for the additional recovery, and the KOSPI index, which started the year at influx of global investment funds in the domestic capital 1,214.06, increased by 39.4% year-over-year to end the year at market. 1,692.85. Backed by this recovery in the securities market, our net operating revenue in 2009 rose by 20% year-over-year to On the other hand, it is expected that competition within the KRW618.4bn, and earnings before tax increased by 24% year- financial investment industry will only become fiercer against over-year to KRW250.5bn. Earnings before tax, which had us the following backdrops: if exit strategies start to be executed ranked sixth in the securities industry in fiscal year 2007, were in full swing all over the world, it is still possible that capital fourth-best in the industry in 2008, a position we continued to market funds may get out of the market; in just one year after hold during the difficult year of 2009. By business sector, the enforcement of the Capital Market Act, securities brokerage marked No. 2 and wealth management ranked No. 3 companies are working hard to reach breakeven points in new in the industry, proving our powerful competitiveness in the businesses such as FX margins, domestic, international brokerage and capital market businesses. futures business, payment settlement services, etc. which they started last year; and newly established bank-based and In terms of profit structure, in fiscal year 2008, the industrial fund-based securities companies are also pushing composition of brokerage vs. non-brokerage was 49.8%: forward with their sales more aggressively. 50.2%. The 2009 composition of brokerage slightly rose to 54.5% : 45.5%, leaving profit structure diversification as an Most of all, as large securities companies, which have been in unresolved task during the year. oligopolistic competition arrangements in the brokerage market, enter the low-commission market, the downward rigidity of commissions has started to collapse, and the profitability of the wealth management market has become aggravated with the introduction of the movement system of fund sales companies and the upper-limit system of sales commission, etc., ultimately bringing the financial investment industry into the turmoil of excessive competition. Amid such competition and change, Hyundai Securities will prepare the grounds for sustainable growth by further cementing our competitiveness in the existing business areas in which we retain a competitive edge, advancing our profit structures by complementing weaker sectors, and realizing considerable business performance in new businesses and global sectors. To achieve these goals, we will push forward with the following priority tasks in fiscal year 2010. First, we have set our management goal of making this year the original year of diversifying profit sources. To achieve this goal, we will reassess our business model from the beginning from the point view of company as a whole, enhance the organizational structure of the core businesses that possess both profitability and growth potential to double our competitiveness, and reorganize the structure of future business areas with strong growth potential, so that capacity can be focused on a company- wide scale. We will also focus our resources on more profitable future business areas while maintaining 06 competitiveness by reviewing the business avenues from depending on the market situation to maintain a certain the aspects of profitability and growth. In addition, based on level of return on shareholders’equity for the company. this business reassessment, the company-wide business The investment banking business will exert its efforts in support system will be reshuffled in terms of resource sales to achieve better performance levels than in the allocation, with changes made to organizational structure, previous year by actively advancing into new markets such budget, manpower, and the establishment of IT as overseas initial public offering(IPO) and special purpose infrastructure, etc. acquisition company(SPAC). Second, we will innovate in all policies and systems by Fourth, we will support all our executives and employees so putting first priority on the smooth communication between that they can grow as top specialists with clear goal- sales and sales operations. Operating revenue of a financial oriented minds in their respective fields. Despite repetitive company is the main source of profit, as it is directly related everyday sales and other work tasks, employees with clear with operating profits. Such operating revenue is first goals and those without them will be set further and further generated at the sales sites.