A series of securities companies "earn a lot" from margin lending

In the second quarter of 2024, the market had several corrections, with the VN-Index repeatedly failing to break through the psychological threshold of 1,300 points . This also caused some securities companies to report declining profits, with many names even reporting losses. However, many securities companies also reported profits increasing by several times thanks to the thriving margin lending segment.

By the end of the second quarter, according to FiinGroup statistics , the margin debt balance of 62 securities companies reached nearly VND220,000 billion. This is a record level so far and surpasses the peak in the first quarter of 2021 (VND184,400 billion ). The ratio of margin loan balance to total capitalization is also a record high, at 9.4%.

"Live well" thanks to margin lending

According to Nguoi Dua Tin's statistics , Techcom Securities (TCBS) is the company with the strongest increase in outstanding loans. As of June 30, 2024, TCBS's outstanding loans reached VND 24,694 billion, ranking first in the securities group. Of which, margin loans increased from more than VND 16,000 billion at the beginning of the year to VND 24,198 billion at the end of the second quarter.

This company is also the securities industry's profit champion with after-tax profit in the second quarter of 2024 increasing nearly 3 times to VND 1,297.5 billion, the company's highest profit ever.

In the first 6 months of the year, TCBS's operating revenue increased by 95% to VND3,927.2 billion and its after-tax profit increased by 2.9 times to VND2,225.8 billion. These are all record results for the company since its inception.

Coming in second is SSI Securities (HoSE: SSI) with margin lending and pre-sales revenue of nearly VND 513 billion, up 42.5% over the same period. As of June 30, 2024, SSI's margin lending balance reached VND 19,600 billion, up 16% over the first quarter and up 33.5% over the end of 2023 thanks to positive market fluctuations.

SSI's total revenue and pre-tax profit in the second quarter reached VND2,368 billion and VND835 billion, up 41% and 50% respectively over the same period in 2023. This is the second highest profit since the operation of this securities giant, only lower than the record profit recorded in the fourth quarter of 2021.

Accumulated in the first 6 months of the year, SSI is estimated to have achieved 4,381 billion VND in total revenue and 2,002 billion VND in pre-tax profit, completing 54% and 59% of the plan, respectively.

Third place belongs to Ho Chi Minh City Securities (HSC) with outstanding margin loans increasing by more than 50% compared to the beginning of the year, reaching more than VND 18,500 billion at the end of the second quarter of 2024.

In the second quarter, HSC recorded operating revenue of VND1,094 billion, up 86% year-on-year and the highest level in two years. After deducting taxes and expenses, HSC Securities reported a net profit of VND313 billion, double the same period last year and the highest level in nearly three years.

In the first 6 months of the year, HSC Securities recorded total revenue of VND 1,957 billion, up 61% over the same period; profit after tax increased 2.2 times to more than VND 590 billion.

According to the recently released financial report for the second quarter of 2024, VPS Securities recorded many bright spots from proprietary trading activities and interest from loans, but the brokerage segment no longer brings the main profit to the company.

Notably, VPS's lending activities have flourished, with interest from loans and receivables reaching VND455.9 billion, up 63% over the same period. As of June 30, 2024, VPS's outstanding loans were recorded at more than VND11,638.4 billion, up VND12 billion compared to the beginning of the year. Of which, the majority was margin loans with VND11,104 billion, ranking 4th in the industry.

Accumulated in the first 6 months of 2024, VPS's operating revenue increased by 12% to VND 3,278 billion and pre-tax profit increased 5 times to VND 1,027.6 billion. Compared to the record pre-tax profit plan of VND 1,500 billion, VPS Securities has achieved 86% of the profit target after the first 6 months of the year.

Margin lending becomes a lifesaver

Besides the bright spots, there are still a few companies whose profits are being dragged down by the self-trading segment , but the thriving lending segment has "saved" the company.

For example, VNDirect Securities (HoSE: VND) , net profit from self-trading of the company The company's revenue in the second quarter recorded 271.8 billion VND, down half compared to the same period. The company is currently temporarily losing 43.8 billion VND. at VPB code, loss of 44.8 billion VND LTG code , hole 15 billion dong when investing in C4G .

In contrast to self-trading, interest from loans and receivables recorded VND 299.3 billion, up 9% over the same period. As of June 30, 2024, outstanding margin loans and sales advances increased by 9% over the beginning of the year, reaching more than VND 11,246 billion, of which outstanding marin loans were more than VND 10,936 billion.

In the second quarter of 2024, VNDirect's operating revenue reached VND1,458.2 billion, down 8% year-on-year. This securities company recorded a profit after tax of VND344.9 billion, down 18% year-on-year.

In the first 6 months of 2024, VNDirect's operating revenue decreased slightly by 1% to VND 2,843 billion and its after-tax profit increased by 71% to VND 962 billion. Compared to the plan of bringing in VND 2,020 billion in after-tax profit, VNDirect has achieved 48% of the profit target after the first 6 months of the year.

Even "poor" self-trading has eroded up to 78% of the profits of VIX Securities (HoSE: VIX) . Specifically, the company recorded profits from FVTPL assets. evaporated 52% to 222.4 billion VND. Meanwhile, the company lost 159.4 billion VND from its main assets FVTPL, far from the profit of more than 39 billion VND in the same period. Minus that, VIX Securities only recorded a net profit of 63 billion VND in this segment, down 87% compared to the same period last year.

According to VIX's explanation, Vietnamese stocks had sharp declines in April and June, which affected the company's proprietary trading activities.

The bright spot in VIX’s financial picture this quarter was that interest from loans and receivables increased 2.4 times, reaching VND118.5 billion. VIX’s outstanding margin loans stood at VND4,084 billion at the end of the second quarter, up 36% compared to the beginning of the year. As a result, the increase in receivables and loans has had a positive impact on the company’s profits.

After deducting all expenses, VIX Securities reported a profit after tax of VND 123.8 billion, down 78% compared to the VND 565.6 billion achieved in the same period.

In the first 6 months of 2024, VIX's operating revenue decreased by 23% to VND 739.4 billion. Profit after tax also decreased by 50% to VND 285.7 billion and only completed 27% of the plan set for the whole year.

Will industry leverage increase in the coming period?

Assessing the increase in margin debt in the second quarter of 2024, Mr. Nguyen The Minh - Director of Analysis at Yuanta Vietnam Securities Company said that it mainly comes from individual stories, focusing on securities companies that often do "deals".

According to this expert, the increase in margin lending is consistent with the capital increase of securities companies in the previous period and the expansion of the number of investors.

Industry leverage will increase to support margin lending and portfolio expansion.

Assessing the prospects of the securities industry in the coming time, VIS Rating forecasts continued improvement as margin lending and investment profits of securities companies grow under favorable conditions.

In particular, large-scale securities companies will increase their investment in fixed-income instruments due to improved market sentiment. With large capital and a wide customer network, large companies have more advantages in expanding margin lending, especially when securities trading activities increase in a low-interest rate environment.

Industry leverage will increase to support margin lending and portfolio expansion, but risks are mitigated by recent capital raises.

"Domestic securities companies will increase debt and raise new capital to support their asset growth. Overall, the leverage ratio of the Vietnamese securities industry is among the lowest in the Asia-Pacific region (APAC)," said the VIS Rating analysis team.

Source: https://www.nguoiduatin.vn/loat-cong-ty-chung-khoan-kiem-dam-tu-cho-vay-margin-204240726111803226.htm