Vietnamese securities firms, despite not being banks, have expanded their lending operations, achieving a record revenue of 112 trillion dong (approximately $6.44 billion) in the first quarter. As traditional revenue sources such as proprietary trading and brokerage have slowed, loans now account for 36% of total revenue. However, a warning has been issued that a margin balance of 415 trillion dong (23.86 trillion won) could pose a burden during market adjustments.
According to a report by VnExpress on May 31, the revenue generated from lending activities surpassed 112 trillion dong, marking an all-time high. The proportion of loan revenue, which typically ranged from 28% to 30%, increased to 36% this quarter.
Securities firms have various revenue sources, including brokerage, margin lending, proprietary trading, investment banking, and underwriting. However, they have actively expanded their lending divisions in recent years.
The VN-Index surpassed 1,900 points this year but experienced significant volatility, dropping over 200 points in March alone. Consequently, the reliance on proprietary trading revenue, which is highly dependent on market conditions, has decreased for two consecutive quarters, leading to a lower overall contribution to revenue. The brokerage sector has also been affected by intense competition and declining fees.
◆ Loan Balance Reaches 420 Trillion Dong... Margin at 415 Trillion Dong
As of March 31, the total loan balance for clients exceeded 420 trillion dong, with 415 trillion dong allocated for margin trading, an increase of approximately 9 trillion dong compared to the end of last year, marking a record high.
By company, TCBS, SSI, VPBankS, VPS, and HSC each provided over $1 billion to investors. Their loan balances are comparable to those of some banks, including PGBank and Saigonbank.
Nguyen Te Minh An, head of the investment banking division at VN-Index, cited excess capital as a reason for the expansion of loans. He explained, "In the past two years, companies have issued stocks in amounts exceeding the market's absorption capacity." He added that many securities firms are opting to expand their loan balances instead of competing fiercely in the brokerage sector or relying heavily on proprietary trading, which is subject to market volatility.
In the past year, the total capital of securities firms has increased by 70 trillion dong. Major companies like TCBS, SSI, VPBank, VPS, and Vietcap have secured additional funds ranging from hundreds of billions to trillions of dong. This is due to the State Securities Commission's regulation limiting the debt ratio to a maximum of 200% of equity.
Min also predicted that the expansion of loans would continue in upcoming quarters, stating, "Once the market upgrade decision takes effect in September, we will also expand funding to foreign investors."
Tran Quoc Tuan, head of the second branch of Mirae Asset Securities, noted that the margin balances of major securities firms have not yet reached regulatory limits, and the overall loan ratio in the market remains below 200%, indicating that it is not at a level to cause extreme shocks to the index. However, Tuan cautioned that the current margin balance exceeding 415 trillion dong could lead to widespread forced selling if it coincides with a significant market correction, suggesting that sharp declines may occur more frequently.
Nevertheless, Nguyen Ha Hai, CEO of VPBank Securities, stated, "The current demand for margin from investors is very high," indicating sustained interest in the stock market.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.