An office of VNDirect Securities Corporation in Hà Nội. The securities firm's profit after tax fell nearly 30 per cent in the first quarter of 2023. Photo courtesy of the company

HÀ NỘI — The less-optimistic movements of the stock market have negatively impacted the business results of securities firms in the first quarter of the year.

Financial statement reports showed that the securities group, including leading companies, witnessed a sharp decline in profits.

Specifically, VNDirect Securities Corporation reported a plunge of 81.6 per cent year-on-year in profit after tax, from nearly VNĐ762.2 billion in the first quarter of 2022 to VNĐ140.5 billion in Q1 of 2023.

The securities firm explained the strong fall was due to the negative impact of the general market which caused a 27 per cent decrease in its revenue to VNĐ1.29 trillion.

Of which, revenue from margin lending and brokerage activities of VNDirect dipped by 46.2 per cent and 68.4 per cent on-year, respectively. Meanwhile, revenue from proprietary trading was the only business activity posting an increase of 17.8 per cent to VNĐ782 billion.

On the other hand, the company’s expenses rose by 4.2 per cent over the same period last year to VNĐ629 billion, while loss of proprietary trading increased by VNĐ220.5 billion, or 87.8 per cent, and financial expenses also tripled.

Similarly, Saigon - Hanoi Securities JSC (SHS) and Viet Capital Securities JSC reported strong losses in business results. In the first quarter, SHS’s profit after tax plummeted by 87.6 per cent over last year to VNĐ40.9 billion, while Viet Capital recorded a profit after tax of only VNĐ73 billion, down 82.4 per cent year-on-year.

SSI Securities Corporation also couldn’t escape the downtrend. It reported a decrease of nearly 30 per cent in profit after tax compared to the same period in 2022, to VNĐ480.8 billion from VNĐ684 billion.

Its revenue dropped 26.4 per cent on-year to VNĐ1.43 trillion, of which the company’s proprietary trading revenue rose slightly to VNĐ679.1 billion, but interest from loans and receivables halved to VNĐ338.3 billion. Revenue from brokerage activities also fell by 57.1 per cent to VNĐ257.1 billion.

The first quarter profit after tax of Techcombank Securities JSC (TCBS) and Ho Chi Minh City Securities Corporation (HSC) declined by 64.5 per cent and 56.2 per cent over last year, respectively, to VNĐ333.5 billion and VNĐ123.8 billion dong. Meanwhile, Mirae Asset Securities reported a fall of 54.9 per cent year-on-year in profit after tax to VNĐ128.3 billion due to a 53 per cent drop in profit before tax and a 25.1 per cent decrease in revenue.

Most of the securities companies said that the reason for the decline in profits was due to the volatility and uncertainties of the stock market in the first three months of 2023.

Given the high sensitivity to the market, securities companies’ proprietary trading, brokerage, and margin lending activities suffered strongly as the market was gloomy and investors turned extremely cautious.

Particularly, interest rates are a major factor affecting the market mood. High interest rates caused investors to be worried about the prospect of corporate profits, while the severe decline in global purchasing power affected import and export activities.

Higher interest rates are also a significant barrier to investors' demand for margin loans.

The statistics have not shown many signs of improvement. Outstanding balance slightly increased in the first quarter of this year after plummeting in the fourth quarter of last year to the lowest level in seven quarters.

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During the period, the total brokerage revenue of securities companies reached VNĐ2 trillion, a decline of 34 per cent over the previous quarter and less than a third of the value in the fourth quarter of 2021. The figure was the lowest in the last nine quarters.

The expenses for this activity also decreased by 21 per cent compared to the previous quarter to approximately VNĐ1.85 trillion. As a result, the gross profit from brokerage activities during the period fell sharply 76 per cent to about VNĐ200 billion, the lowest level in 11 quarters.

Specifically, VPS Securities JSC continues to lead in brokerage revenue, but the result dropped to VNĐ411.3 billion, down 57.8 per cent year-on-year. This marked the sixth consecutive quarterly fall in brokerage revenue.

Other securities firms also posted a fall of at least 20 per cent in brokerage revenue in the first quarter, of which SSI’s brokerage revenue reached VNĐ257.1 billion; VNDirect’s was VNĐ145.7 billion, HSC’s was VNĐ132 billion and Mirae Asset recorded a brokerage revenue of VNĐ105 billion.

Lower liquidity and gloomy market movements were attributed to the poor performance of the brokerage activities of securities firms.— VNS