Securities companies rush to promote margin lending

HÀ NỘI —The recent flourish of the stock market is pushing demand for margin loans, thus securities companies are preparing capital increases to meet the borrowing demand of investors.

Although the number of margin loans peaked in June, experts from MB Securities Joint Stock Company (MBS) forecast that securities companies will promote margin lending due to improved liquidity and an increased number of fresh investors.

Securities firms are seeking ways to extend credit in the form of corporate bonds and margin lending, with more flexible benefits than bank credit.

According to FiinGroup Joint Stock Company, margin loan value reached over VNĐ 一 二 六. 三 trillion (US$ 五. 六 billion) at the end of the second quarter of this year, but accounting for only a small part of the current market liquidity.

However, the gradual increase in margin since the second quarter of  二0 二0 shows the expectation of securities companies towards the market.

According to FiinGroup's estimates, the total capital securities companies expect to increase is VNĐ 一 八. 八 trillion in  二0 二 一. Since the beginning of this year, they have mobilised nearly VNĐ 一 二 trillion. This will allow securities companies to promote margin lending activities, thus increase profits.

Thành Công Securities Joint Stock Company (TCI) recently announced a plan to pay dividends in shares at the rate of  四 per cent, and at the same time offered shares to existing shareholders at the rate of  一00 per cent, in order to raise charter capital to over VNĐ 一 trillion.

Margin lending is increasingly contributing to the revenue of securities businesses. TCI estimates that revenue and profit before tax in the first nine months of  二0 二 一 will be about VNĐ 二 四0 billion and more than VNĐ 一 七 五 billion, respectively, exceeding the plan set at the beginning of the year by  一 二 九 per cent and  一 七 五 per cent, respectively.

As for SSI Securities Joint Stock Company, the margin loans as of September  三0 reached VNĐ 一 八. 一 trillion, an increase of VNĐ 二. 六 trillion compared to the previous quarter, becoming the brokerage with the largest loan balance in the market.

As of June  三0, SSI lent nearly VNĐ 一 六. 二 trillion, of which VNĐ 一 五. 五 trillion was for margin lending. Revenue from the  九-month margin lending segment in  二0 二 一 has increased more than  四 times.

According to MB Securities Co, in order to compete with rivals and attract customers, many securities companies have reduced lending interests and transaction fees.

In  二0 一 九, interest rates for margin lending usually fluctuated between  一 二- 一 四 per cent per year, but fell to below  一 二 per cent in  二0 二0 and fluctuated around  一0- 一 二 per cent in  二0 二 一. At present, most securities are applying low transaction fees, around 0. 二 per cent, even some securities companies apply zero-fee such as Pinetree Securities Joint Stock Company, AIS Securities Joint Stock Company or VPS Securities Joint Stock Company. VNS