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Securities company profits go backwards amid the decline of market
Securities companies expect to have a less positive second quarter earnings season, following the gloomy outlook of the stock market.
The domestic stock market closed the second quarter with the VN-Index down by 20 per cent compared to the peak reached at the end of the first quarter. The trading value of the whole market recorded a decrease of nearly 30 per cent.
Phan Van Tuan, Chairman of the Board of Directors of Agribank Securities Company (Agriseco), said that the sharp decline of the stock market had an effect on earnings of businesses in the industry.
Pre-tax profit in the second quarter of Agriseco reached VND60 billion (US$2.6 billion). Loans and receivables contributed the most in profit structure, while bond trading value was not as planned.
In the first six months of the year, the company's brokerage service revenue fell when market liquidity declined, proprietary trading revenue was only 48 per cent of the same period last year, but securities service revenue still grew by 50 per cent. Profit in the six months reached over VND120 billion, down nearly 25 per cent compared to the same period in 2021.
For large securities companies such as HCM Securities Corporation (HSC) and VNDirect (VND), although the profit in the second quarter still grew compared to the same period last year, but compared with the first quarter of 2022, it was still a step backwards.
Specifically, VNDirect’s 6-month pre-tax profit reached VND1.62 trillion, up 43 per cent over the same period in 2021, completing approximately 45 per cent of the full-year business plan. The profit in Q2 alone was VND660 billion, down more than 30 per cent compared to the previous quarter.
Saigon-Hanoi Securities Joint Stock Company (SHS) said the company's profit in the second quarter may still maintain its growth momentum compared to the same period in 2021, but it will be difficult to achieve the result as in the first quarter of 2022.
The situation is similar for securities companies with smaller capital scale. Hoang Anh, General Director of Guotai Junan Vietnam Securities Joint Stock Company, said that the company's profit after tax in the second quarter of 2022 was estimated at VND8 billion, slightly down from VND9 billion achieved in the previous quarter.
The stock market turned negative in the second quarter of 2022, with a sharp decline in scores and liquidity, causing a decrease in gross profit from the brokerage segment, while the proprietary trading segment of many securities companies was affected. The profit of the securities companies in the second quarter was said to come mainly from margin lending services.
According to Fiinpro statistics, the balance of margin loans as of March 31, 2022 was almost flat compared to the end of 2021. Fiinpro forecast that securities companies are expected to grow their profit after tax by 14 per cent this year, sharply decelerating from the 165 per cent increase recorded in 2021.
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