In the second quarter of 2024, the market experienced several corrections, with the VN-Index repeatedly failing to break through the psychological 1,300-point mark . This also led to some securities companies reporting declining profits, with many even incurring losses. However, a number of securities companies also reported profits increasing several times over thanks to a thriving margin lending segment.
As of the end of the second quarter, according to statistics from FiinGroup , the outstanding margin loan balance of 62 securities companies reached nearly 220,000 billion VND. This is a record high and surpasses the peak of the first quarter of 2021 (184,400 billion VND ). The ratio of outstanding margin loans to total market capitalization also reached a record high, at 9.4%.
"Living well" thanks to margin lending.
According to statistics from Nguoi Dua Tin , Techcombank 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 among securities companies. Of this, margin lending increased from over VND 16,000 billion at the beginning of the year to VND 24,198 billion at the end of the second quarter.
This company also holds the record for highest profits in the securities industry, with after-tax profit in Q2/2024 increasing nearly threefold to VND 1,297.5 billion, the highest profit the company has ever achieved.
For the first six months of the year, TCBS's operating revenue increased by 95% to VND 3,927.2 billion, and after-tax profit increased 2.9 times to VND 2,225.8 billion. These are both record results for the company since its inception.
Ranked second is SSI Securities (HoSE: SSI) with margin lending and advance payment services generating nearly VND 513 billion in revenue, a 42.5% increase compared to the same period last year. As of June 30, 2024, SSI's outstanding margin loan balance reached VND 19,600 billion, a 16% increase compared to the first quarter and a 33.5% increase compared to the end of 2023, thanks to positive market movements.
SSI's total revenue and pre-tax profit in the second quarter reached VND 2,368 billion and VND 835 billion, respectively, representing increases of 41% and 50% compared to the same period in 2023. This is the second-highest profit level since the securities giant began operations, only lower than the record profit recorded in the fourth quarter of 2021.
For the first six months of the year, SSI estimates achieving total revenue of VND 4,381 billion and pre-tax profit of VND 2,002 billion, completing 54% and 59% of the set plan respectively.
Third place goes to Ho Chi Minh City Securities (HSC) with margin lending balances increasing by more than 50% compared to the beginning of the year, reaching over VND 18,500 billion at the end of Q2/2024.
In the second quarter, HSC recorded operating revenue of VND 1,094 billion, an 86% increase compared to the same period last year and the highest level in two years. After deducting taxes and expenses, HSC Securities reported a net profit of VND 313 billion, double that of the same period last year and the highest level in nearly three years.
For the first six months of the year, HSC Securities recorded total revenue of VND 1,957 billion, a 61% increase compared to the same period last year; after-tax profit increased 2.2 times to over VND 590 billion.
According to the recently released Q2/2024 financial report, VPS Securities recorded several positive points from its proprietary trading activities and interest income from loans, but the brokerage segment no longer generates the main profit for the company.
Notably, VPS's lending activities flourished, with interest income from loans and receivables reaching VND 455.9 billion, a 63% increase compared to the same period last year. As of June 30, 2024, VPS's outstanding loan balance was over VND 11,638.4 billion, an increase of VND 12 billion compared to the beginning of the year. This was primarily due to margin lending, totaling VND 11,104 billion, ranking fourth in the industry.
For the first six months of 2024, VPS's operating revenue increased by 12% to VND 3,278 billion, and pre-tax profit increased fivefold to VND 1,027.6 billion. Compared to the planned record pre-tax profit of VND 1,500 billion, VPS Securities has achieved 86% of its profit target after the first six months of the year.
Margin lending has become a lifeline.
Alongside the bright spots, some companies still suffered from profits being dragged down by their proprietary trading segment , but the thriving lending segment "saved" the companies.
For example, VNDirect Securities (HoSE: VND) reported net profit from its proprietary trading activities. The company recorded revenue of VND 271.8 billion in the second quarter, a decrease of half compared to the same period last year. The company is currently incurring a temporary loss of 43.8 billion VND. At VPB stock code, the loss was 44.8 billion VND. LTG code , loss 15 billion VND when investing in C4G .
In contrast to proprietary trading, interest income from loans and receivables recorded VND 299.3 billion, a 9% increase compared to the same period last year. As of June 30, 2024, outstanding margin loans and advances against sales increased by 9% compared to the beginning of the year, reaching over VND 11,246 billion, of which margin loans accounted for over VND 10,936 billion.
Overall, in the second quarter of 2024, VNDirect's operating revenue reached VND 1,458.2 billion, a decrease of 8% compared to the same period last year. The securities company recorded a net profit of VND 344.9 billion, a decrease of 18% compared to the same period.
For the first six months of 2024, VNDirect's operating revenue decreased slightly by 1% to VND 2,843 billion, while after-tax profit increased by 71% to VND 962 billion. Compared to the planned after-tax profit of VND 2,020 billion, VNDirect has achieved 48% of its profit target for the first six months of the year.
In fact, poor proprietary trading performance eroded up to 78% of VIX Securities' (HoSE: VIX) profits . Specifically, the company recorded profits from FVTPL assets. It evaporated by 52% to 222.4 billion VND. Meanwhile, the company incurred a loss of VND 159.4 billion from its key FVTPL assets, a far cry from the profit of over VND 39 billion recorded in the same period last year. After deducting these figures, VIX Securities only recorded a net profit of 63 billion VND in this segment, a decrease of 87% compared to the same period last year.
According to VIX's explanation, the sharp declines in Vietnamese stocks in April and June affected the company's proprietary trading activities.
A highlight of VIX's financial performance this quarter is the 2.4-fold increase in interest income from loans and receivables, reaching VND 118.5 billion. VIX's margin loan balance stood at VND 4,084 billion at the end of Q2, a 36% increase compared to the beginning of the year. As a result, the high increase in receivables and loans has positively impacted the company's profits.
After deducting all expenses, VIX Securities reported a net profit of VND 123.8 billion, a sharp decrease of 78% compared to VND 565.6 billion achieved in the same period last year.
For the first six months of 2024, VIX's operating revenue decreased by 23% to VND 739.4 billion. Net profit after tax also decreased by 50% to VND 285.7 billion, achieving only 27% of the annual target.
Will the industry's leverage increase in the near future?
Commenting on the increase in margin debt in Q2/2024, Mr. Nguyen The Minh - Director of Analysis at Yuanta Vietnam Securities Company - believes that it mainly stems from specific situations, concentrated in securities companies that frequently engage in "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.
The industry's leverage will increase to support the expansion of margin lending and portfolio management operations.
Assessing the outlook for the securities industry in the coming period, VIS Rating forecasts continued improvement as margin lending and investment profits of securities companies grow under favorable conditions.
In particular, given the improving market sentiment, large-scale securities firms will increase investment in fixed-income instruments. Thanks to their large capital resources and extensive customer networks, large firms have more advantages in expanding margin lending, especially as securities trading activity increases in a low-interest rate environment.
The industry's leverage will increase to support the expansion of margin lending and portfolio operations, but risks are mitigated by recent capital raising rounds.
"Domestic securities firms will increase their borrowing 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 (APAC) region," VIS Rating's analysis team noted.
Source: https://www.nguoiduatin.vn/loat-cong-ty-chung-khoan-kiem-dam-tu-cho-vay-margin-204240726111803226.htm
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