Corporate bond issuance is gloomy, TCBS’s profits drop by 41pct in Q4 of 2020

26-Jan-2021 Intellasia | Dau tu Online | 6:52 AM Print This Post

The primary corporate bond market is quiet after Decree 81 took effect, which has made the revenue from underwriting and securities issuance agency in the fourth quarter (Q4) of 2020 dropped by 56$ over the same period of last tear.

Techcombank Securities Company (TCBS) of Vietnam Technological Commercial Joint Stock Bank (Techcombank) has announced its business results in 2020 with pre-tax profit of the whole year reaching approximately 2.692 trillion dong, up by 47 percent over the same period of last year, maintaining the first position for two consecutive years among securities companies in terms of this indicator.

However, in Q4 of 2020 alone, TCBS’s business reversed with negative growth rate. The total operating revenue and after-tax profit of the company respectively declined by 27 percent and 41%. The revenue structure also changed when the revenue from brokerage and lending increased, while underwriting and securities issuance agency narrowed down.

TCBS’s brokerage revenue grew by 2.5 times over the same period of 2019, exceeding 100 billion dong. This is also the business quarter where revenue from this segment reached a record high level, contributing 38 percent to the brokerage revenue of the whole year. The income from loans (margin granting and cash advance) rose to 76 billion dong from 47.2 billion dong in the same period of 2019.

The revenue from underwriting and securities issuance agency was only 44 percent of Q4 of 2019, but remained the largest contributor to the total revenue (around 297 billion dong).

This activity significantly shrank due to the strong decline in the demand for issuing corporate bonds after Decree 81 took effect in early September 2020. However, right before the deadline, issuers promptly speeded up the capital mobilisation through this channel. in the whole year 2020, TCBS earned 1.590 trillion dong in revenue from this segment, up by 37 percent over the same period of the previous year.

Other business activities of TCBS saw better business growth, in which the brokerage service grew by 116%, revenue from lending increased by 57%, and the Financial asset at fair value through profit or loss (FVTPL) was up by 41.4%. the total operating income in 2020 of TCBS reached nearly 3.260 trillion dong, 1.5 times higher than the same period of the previous year.

With the rapid growth of brokerage segment, TCBS in the near future will hold an extraordinary shareholders meeting to propose shareholders for approval of the derivatives trading services, such as derivatives brokerage service, derivatives investment advisory service, derivative proprietary, clearing and settlement service, derivative trading payment service, etc.

According to Decree 158/2020/ND-CP on derivatives and derivatives market, in order to be eligible for trading derivatives, a securities company must have charter capital and minimum equity from at least 800 billion dong, and at the same time satisfy the conditions for the ratio of available capital not having loss in the recent two years, opinions of the auditing organisation approved in the financial statement of the most recent audited fiscal year, etc.

By the end of 2020, the total assets of TCBS were 8.759 trillion dong, and the charter capital was more than 1.124 trillion dong. The company’s undistributed profit continued to go up thanks to the accumulation of more profit, reaching 4.832 trillion dong. TCBS’s equity as of December 31st 2020 was more than 6.179 trillion dong, contributing more than 70 percent of the total capital. The company’s bank loans and bond issuance accounted for about 18.6 percent of the total capital. In the past year, TCBS actively mobilised from this source from over 1.2 trillion dong to 1.630 trillion dong.

The capital increased from profit accumulation and borrowing of TCBS mainly served the need to expand outstanding margin loans. By the end of 2020, the company’s loans developed by nearly 2.590 trillion dong to 4.383 trillion dong, particularly in Q4 of the year. The promotion of margin granting also directly supported the expansion of brokerage activities of this securities company.

 

Category: Finance, Vietnam

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