TCBS has maintained a consistent growth momentum in margin lending. — Photo tcbs.com.vn

HÀ NỘI — Margin lending activities of the 25 largest securities firms in the domestic market saw an outstanding performance in the first half of the year, with a new record set in total margin outstanding balance. 

Statistics showed that the these firms disbursed around VNĐ201 trillion (US$7.9 billion) as of the end of June 2024, an all-time high in the Vietnamese stock market.

Since the market hit the bottom at the end of 2022, the total margin balance at 25 leading firms has seen six consecutive quarters of growth. The increase in the most recent two quarters was around VNĐ21 trillion, comparable to the level seen in the second quarter of the previous year.

The dominance of the top 25 firms, who control over 90 per cent of the industry's margin debt, likely reflects the broader margin landscape across the country's stock market as a whole.

Margin debt has continued to climb in after surpassing the previous record level of over VNĐ160 trillion at the end of the first quarter of 2022. This increase in the first quarter of the year stems from the substantial capital needs within the industry.

This trend is not surprising, as domestic investors have net purchased over $2 billion worth of stocks, helping to prop up the market when foreign investors were selling. A portion of this capital inflow is being financed through margin lending at securities firms.

While the overall margin's market share has been continuously expanding, the pies are not being evenly distributed among the various players. The dynamics in the lending operations at different enterprises are showing developments that diverge from the perceptions of the majority.

Major players

The margin lending market is heavily concentrated, with over 90 per cent of the total debt held by the top 25 securities firms. The remaining ten per cent is shared among approximately 45 other institutions. 

Within the top 25 firms, the ten leading players have a dominating presence, typically accounting for over two-thirds of the total lending volume.

As of June 30th, there are five securities companies that stand out with margin debt balances exceeding VNĐ10 trillion. These are the familiar names of Techcombank Securities (TCBS), SSI Securities (SSI), the Hồ Chí Minh City Securities (HSC), VNDirect Securities and VP Bank Securities (VPS) - the same firms that also dominate the brokerage market share.

The number of companies that have outstanding balances of VNĐ5 - 10 trillion, has increased, but the new entrants are largely bank subsidiaries, such as VPBankS, MBBank Securities (MBS), ACB Securities (ACBS) and Vietcombank Securities (VCBS), rather than independent players breaking into the top tier.

In fact, VPBankS and MBS currently have margin debt of over VNĐ9.8 trillion and VNĐ9.1 trillion, respectively. These two firms could potentially join the over-VNĐ10 trillion club in the coming quarters, especially as MBS plans to increase its capital base.

TCBS is among the few organisations in the market that have maintained a consistent growth momentum in margin lending.

Strong capital flows of banks

The margin lending market in Việt Nam is seeing the rapid ascent of securities firms backed by major lenders. These enterprises are leveraging the ample capital resources and strong liquidity positions of their parent companies.

Last quarter, TCBS, the securities arm of Techcombank, continued to widen its lead over the second largest player, SSI. TCBS's margin outstanding balance reached nearly VNĐ24.2 trillion at the end of June, surpassing SSI's previous record high of over VNĐ22.7 trillion set in the first quarter of 2022.

TCBS is among the few organisations in the market that have maintained a consistent growth momentum in margin lending for four consecutive quarters, weathering the market volatility. 

Five other securities firms - HSC, VPBankS, ACBS, Kafi and Bảo Việt - have also accomplished this feat. Interestingly, with the exception of HSC, all of these high-performing entities are affiliated with major banking and financial conglomerates.

Kafi, the newest entrant in this group, is closely tied to the family of Đặng Khắc Vỹ, Chairman of VIB Bank. Despite its relatively short history, Kafi has rapidly climbed into the top 20 securities firms, bolstered by its continuous capital injections.

While the overall market margin has grown, a clear divide has emerged among the leading players.

At the forefront are the four dominant securities companies - TCBS, SSI, HSC and Mirae Assets. These giants have collectively disbursed nearly $14.4 trillion in additional margin loans during the latest quarter, solidifying their market positions.

In contrast, several well-established names, including VPS, Vietcap, KIS Vietnam, BSC, SHS, Việt Dragon and VietinBank Securities, have struggled to maintain their margin lending momentum. 

This loss in securities brokerage market share is a key factor constraining their ability to expand their margin activities.

Structurally, the margin lending activities of securities companies can be broadly categorised into two segments: retail lending and institutional lending.

As the larger institutions tend to shift away from institutional lending to focus on the retail segment, this business line is being leveraged by the mid-tier players to seek growth opportunities.

This is a consequence of the mismatch between the margin activities and market share of certain enterprises. — VNS