Brokerage companies report falling profits in H1
Brokerage companies report falling profits in H1
Over 60 per cent of brokerage companies reported profits in the first six months of this year, but half of them saw their profits drop compared with the same period last year.
Yesterday, 49 securities companies posted their business results, 31 of which reported profits, while 18 declared losses.
Large companies have been making the biggest profits as their market shares continue to dominate both HCM City and Ha Noi stock exchanges.
Saigon Securities Inc (SSI) leads the way with an after-tax profit of nearly VND200 billion (US$9.5 million) at the end of June. However, this is less when compared to the VND280 billion ($13.3 million) profit it earned over the same period last year.
VNDirect Securities Co (VND) came second after posting profits of nearly VND97 billion ($4.6 million), becoming the first company to reach its yearly profit target.
Other major brokerages such as Kim Long Securities (KLS), Techcombank Securities, Bao Viet Securities (BVS), Vietinbank Securities, ACB Securities, HCM City Securities and FPT Securities (FPTS) also reported profits, from VND23 billion ($1.1 million) to VND78 billion ($3.7 million).
However, the revenues and profits of most companies have fallen against last year.
According to market insiders, one of the main reasons why securities companies's have seen a drop in profits is the reduction in interest rates.
The interest rates on deposits fell from 14 per cent per annum earlier this year, to just 7 per cent in June. Such a sharp drop resulted in earnings from bank deposits at many securities companies shrinking substantially.
The hardest hit included SSI, VND, KLS and FPTS, with each firm depositing around VND1 trillion ($47.6 million) with the banks.
In addition, the lending interest rates for margin trading falling from 18 per cent annually to 15 per cent have also affected companies' revenues.
Competition between brokerage firms is becoming fiercer, with the 10 top brokerages making up 63 per cent of market share on the HCM City market, while on the Ha Noi bourse, it is 54 per cent. With such a volatile market as at present, financial analysts predict that it will be a rocky period for securities companies during the second half of this year.
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