Securities firms' earnings consumed by proprietary trading

HÀ NỘI — Four securities firms with the largest market shares saw proprietary trading erode their earnings in the first quarter as the global pandemic COVID- 一 九 hit the market hard and pulled share prices down sharply.

SSI Securities Corporation (SSI) posted a  三 八. 八 per cent annual increase in its first-quarter revenue, which reached VNĐ 九 七 五. 七 五 billion (US$ 四 一. 四 million). But post-tax profit was VNĐ 一 五. 一 billion, equal to  七. 八 八 per cent of that of last year’s corresponding period.

Proprietary trading was blamed for the company’s poor results as fair value through profit or loss (FVTPL) of financial assets soared  五 三 三 per cent year-on-year to more than VNĐ 四 八 九 billion.

Income from brokerage activities was only VNĐ 六 六 million, down nearly  一00 per cent from last year. However, revenue from margin lending fell by only  七. 一 五 per cent compared to  二0 一 九 to VNĐ 一 四 五. 五 billion.

SSI said the market dropped by more than  三 一 per cent due to the impact of the COVID- 一 九 pandemic, placing Việt Nam among the global markets with the sharpest drop.

Many of the  五0 biggest stocks fell by an average of  三0 per cent, which has affected SSI’s investment portfolio which is now worth VNĐ 三. 四 trillion.

VietCapital Securities (VCSC) in the first three-month period recorded revenue of VNĐ 三 七 九 billion, up  三. 三 四 per cent year-on-year, and VNĐ 一 一 八. 六 billion worth of post-tax profit, down  四 一. 五 per cent compared to  二0 一 九.

The company improved its brokerage and margin lending activities, as revenues gained  一 二 九. 六 per cent and  二 三 per cent year-on-year to VNĐ 五 一 billion and VNĐ 八 六. 八 billion, respectively.

But VCSC did suffer a loss worth VNĐ 一 六 七. 八 billion in trading shares on its own.

At VNDirect Securities Corp (VNDS), revenue in January-March increased by  四 二. 四 per cent year-on-year to VNĐ 四 五 七 billion while post-tax profit fell nearly  三 五 per cent to VNĐ 五 八. 五 billion compared to last year Q 一’s figures.

The company also saw stock-broking activities decline from the previous year as brokerage income dropped  一 七. 五 per cent to VNĐ 四 六. 六 billion.

Margin lending revenue was VNĐ 九 五 billion in the first quarter, up  八. 九 per cent. VNDS recorded a loss worth VNĐ 一 六 六 billion in its financial assets.

VNDS explained that VN-Index fell  三 一 per cent in the first quarter as the pandemic weighed on market sentiment and made investors anxious about the prospects of the global economy, triggering sell-offs and hitting local shares hard.

The market decline had struck the company’s investment portfolio, forcing it to make big provisions for financial investments.

On the other hand, HCM City Securities Corp (HSC) posted annual increases of  五 二. 三 per cent and  二 三. 三 per cent in revenue and post-tax profit in January-March. The figures rose to VNĐ 四 四 六. 八 billion and VNĐ 一0 一 billion, respectively.

Proprietary trading accounted for a small proportion of the firm’s earnings structure which depends mainly from broking and margin lending activities.

Income from stock broking was down  一. 七 六 per cent year-on-year to VNĐ 三 七. 二 billion while margin lending brought the company VNĐ 一 一 六. 三 billion worth of income, up  一 三. 三 per cent in comparison to  二0 一 九's same period.

Securities firms’ earnings are expected to pick up in the second quarter of the year as the stock market is showing signs of recovery.

The benchmark VN-Index has gained as much as  二 一 per cent from its three-year low of  六 五 九. 二 一 points made on March  二 三 with trading liquidity sharply increasing.

HSC shares surged  六. 七 per cent to end Wednesday at VNĐ 一 六, 七 五0 apiece. Shares of SSI, VCSC and VNDS gained between  一. 四 per cent and  三. 五 per cent. — VNS