How can financial service sector grow by 89pct?

18-May-2018 Intellasia | Dien Dan Doanh Nghiep | 6:00 AM Print This Post

According to Saigon Securities Incorporation, the profit in the first quarter of 2018 of financial service sector grew by 89 percent thanks to the active trading of the stock market with average liquidity reaching 8.5 trillion dong per session, up by 2.3 times compared to the same period of 2017.

However, the profit growth is not widespread but focuses on leading firms. While small firms are suffering losses, such as WSS and PSI, or recording significant profit decline such as AGR, IVS and HBS, the 12 largest securities companies all recorded very positive profit growth, such as SSI (41 percent), HCM (242 percent), VCI (73 percent), MBS (819 percent), BSI (155 percent), and VDS (105 percent), etc.

The pre-tax profit of financial service sector in the quarter mainly came from financial investments (accounting for 54 percent), securities brokerage (38 percent), and margin lending and advanced revenue (44 percent).

The total revenue of brokerage services increased by 172 percent while expenses only rose by 96 percent, helping the profit of this segment to reach 797 billion dong, up by 329 percent, accounting for 38 percent of the total pre-tax profit of the entire sector. The risk of market gaining has attracted investors to the securities companies with higher security level, making the brokerage revenue of the leading firms to grow by over 100 percent, in which VCI’s increased by five times; SSI’s, VND’s and MBS’s increased by three times. The brokerage market share of this group mostly increased positively, except HSC and VCI which lost market share on the HOSE.

The exciting market trading also encouraged securities companies to mobilise more capital in order to boost margin lending. The total value of loans increased by 13 trillion dong (equivalent to 64 percent) to 33.6 trillion dong. In particular, the outstanding loans of SSI, HCM, VCI and VND increased to respectively 3.450 trillion dong, 1.897 trillion dong, 2.438 trillion dong, and 1.518 trillion dong. The profit from this segment of securities companies reached 940 billion dong, up by 61 percent compared to the same period of 2016.

Thanks to the 19 percent increase of the VN Index in the first quarter of 2018, the investment activities of securities companies also recorded positive results. The revenue from financial investments doubled the result in the first quarter of 2017, reaching 1.771 trillion dong. However, the loss of this segment also expanded by six times compared to the same period of the previous year, reaching 620 billion dong, making the net profit to increase by 49 percent to 1.151 trillion dong. VCI and VND recorded negative growth.

The profit from financial consultancy of securities companies grew fairly well from 1.6 billion dong to 56 billion dong. However, as it was only the first quarter, this segment has not contributed significantly to the overall operation of securities companies. Some companies even suffered losses.

Meanwhile, the cost of management only increased by 12 percent, which is a notable factor helping securities companies to record positive profit growth. In addition, the low-interest environment also helped financial expenses to rise by only 47 percent, positively supporting these companies.


Category: Stocks, Vietnam

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