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Third-quarter downturn will not overwhelm listed firms
Despite their negative third quarter earning results, large listed companies on the Ho Chi Minh Stock Exchange, particularly financial firms, look set to overcome the difficult time, an economist said.
Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) and Asia Commercial Joint Stock Bank (ACB) posted considerable a drop in earnings in the third quarter of the year.
Sacombank, the Ho Chi Minh City stock exchange’s only listed lender and Vietnam's sixth-largest lender, announced its after-tax profit from July to September was VND175.6 billion (US$10.5 million), down 37.5 percent over the previous quarter.
The HCMC-based bank, 10 percent owned by ANZ, said gross profit in the first nine months of this year fell 5.4 percent to VND952 billion ($57.6 million), according to Reuters.
ACB, the Hanoi exchange’s only listed bank and Vietnam’s fifth-largest bank, also reported its after-tax profit decreased 34.6 percent quarter-on-quarter to VND298.4 billion ($17.8 million).
Economist Le Dat Chi of the HCMC Economics University said the fall in earnings have happened because they had to pay high deposit interest rates for raising money and struggled to find borrowers because of high lending interest rates.
Sacombank’s expenses increased constantly as well. Its total expenditure in the fourth quarter of last year was 70.9 percent of the quarter’s total receipts and this figure has risen steadily since at 78.1 in the first quarter of this year, 85 percent in the second quarter and 91.5 percent in the third quarter, according to Chi.
Chi said ACB’s expenses have followed a similar pattern, increasing from 69 percent of the quarter’s earnings in the fourth quarter of last year to 76 percent in this year’s first quarter, 80.5 percent in the second quarter and 89.1 percent in the third quarter.
“But I’m pretty sure that Sacombank, ACB or even small commercial banks will not collapse,” Chi said, adding that unlike developed countries’ companies, Vietnam’s financial firms offer just afew derivative products that carry high risks of losses.
Meanwhile, the stock market’s 50 percent fall in the first nine months of the year hit listed brokerages hard. Bao Viet Securities Joint Stock Company, Vietnam’s third-biggest publicly traded brokerage by number of customers, lost more than VND300 billion ($18 million) from January to September.
Hai Phong Securities Co., a listed brokerage listed on Hanoi stock exchange, lost VND89 billion ($5.3 million) in the first nine months of the year.
Saigon Securities Inc., the country’s largest brokerage known as SSI, said its pretax profit in the first nine months of the year was down 69 percent to VND260 billion($15.5 million).
But Chi said SSI could offset the loss thanks to its third quarter cash reserves of VND1.6 billion. “SSI can spend that to buy shares, which are pretty low now, to help lift the market,” Chi said. “When the market recovers, it can take profit from those shares.”
Listed firms in other sectors – such as rubber and plastic – are experiencing a difficult time as the global financial meltdown has sunk international commodity prices. “International rubber price is on a downward trend but remains higher than domestic firms’ production cost. Therefore the fall in international prices only affects domestic rubber makers’ profit, and will not cause the entire sector to collapse.”
The global slowdown is also expected to suppress demand for rubber in the auto industries in many countries, affecting exports of Vietnamese rubber, according to Bloomberg.
“Rubber stock is safest haven for investors when the economy slows down,” Chi said. “Listed rubber producers – such as Hoa Binh, Dong Phu and Tay Ninh – have an edge over other firms in different sectors as they aren’t affected by bank debts.”
Rubber maker Dong Phu has announced third-quarter net profits of VND104 billion, a 98 percent quarter-on-quarter increase. The Tay Ninh Rubber Joint Stock Co. said its net income in the third quarter was up 45 percent quarter-on-quarter, to more than VND80 billion.
Thanh Nien
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