The amount of margin loans of many securities companies increased sharply at the end of 2024. For example, Vietcap Securities Company (stock code VCI) announced that its operating revenue for the whole year of 2024 reached VND 3,696 billion, equal to 1.5 times that of 2023, and pre-tax profit reached nearly VND 1,100 billion, up 90% compared to 2023. The outstanding margin loan balance at the end of the year reached VND 11,103 billion, up nearly 46% compared to the beginning of 2024. This is also a record margin balance for the company.
Techcom Securities Company (TCBS) announced its business results for the fourth quarter of 2024 and the whole year of 2024. Accordingly, TCBS achieved pre-tax profit of more than VND 4,802 billion, up 59% compared to 2023, exceeding the annual profit plan by 23%. TCBS's margin lending balance at the end of 2024 reached nearly VND 26,000 billion, more than 1.5 times higher than at the beginning of 2024.
Few stocks traded but margin lending amount at many securities companies increased to a record
PHOTO: DAO NGOC THACH
Another unit, VPS Securities Company, announced that it would achieve pre-tax profit of VND3,156.6 billion in 2024, an increase of 278.6% compared to 2023. VPS's margin lending value by the end of the year was VND12,209 billion. This is the company's largest lending amount since its operation.
SSI Securities Corporation reported that the parent company's total revenue for the year was VND8,201 billion and pre-tax profit was VND3,352 billion, up 24%. By the end of 2024, SSI's margin lending balance reached more than VND21,800 billion, up 48.6% compared to the beginning of the year.
Kafi Securities Company even announced its Q4/2024 business results with revenue of VND340 billion, double the same period last year. According to Kafi, the increase in revenue comes from expanding business scale and financial investment after capital increases in the past three years. In the whole year of 2024, Kafi recorded pre-tax profit of VND256.6 billion, which is a record profit figure for Kafi. Of which, the outstanding margin loan balance by the end of 2024 reached more than VND5,322.8 billion, 5 times higher than the outstanding loan balance of just over VND1,000 billion at the beginning of 2024...
Where does the loan money go?
The outstanding margin loans at a series of securities companies have increased while trading on the market has continuously decreased. So where does the lending cash flow of securities companies go? The head of a brokerage department at a securities company in Ho Chi Minh City explained: At many securities companies, large margin loans are often concentrated on a number of VIP customers or business leaders - who are individuals who own a large amount of stocks . At times when the stock market is bustling, large shareholders and business leaders also participate in buying and selling, "surfing" continuously, so they use high margins. That also contributes to increasing the liquidity of many stocks.
However, in the fourth quarter of 2024 until now, market liquidity has decreased, many stocks have been trading sluggishly. However, the amount of margin loans of many securities companies has still increased sharply compared to the beginning of the year, so most of that money may have been withdrawn from the market. Major shareholders and business leaders have pledged their stocks to borrow money from securities companies but have not kept them in their securities accounts but used them for other activities.
Sharing the same view, the General Director of a securities company in Ho Chi Minh City also admitted that many VIP customers use margin but do not trade stocks like individual investors. Because although margin lending at companies has higher interest rates than bank loans, the procedures are simpler. Not to mention that many VIP customers also enjoy preferential interest rates, so borrowing through stock mortgages is the fastest. He commented: In the past, not only business leaders but also listed companies "surfed" a lot. Now, due to the Lunar New Year, trading is low and moreover, in the past year, many companies have also suffered losses due to stock investment, so large cash flows are outside the market. However, the source of margin loans from securities companies is still not returned but can be used for other business activities outside the stock exchange.
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