What is the future for VN securities companies?

What is the future for VN securities companies?

Brokerage and consultancy services have helped improve the business performance of small-scale securities companies. A report shows that the total pretax profit of 30 securities companies with total assets of less than VND230 billion (G30) was VND50.3 billion in the first six months of the year.

The figures were equal to 3 percent of total profit and 4.5 percent of total revenue of securities companies.

The 30 companies now account for 8.5 percent of the balance and 4.8 percent of total assets of all the 78 members.

Only 13 of them made profit and 12 reported profit growth. Meanwhile, 18 companies reported making profit in the first half of 2014.

Though company revenue from brokerage service in the first six months of the year increased by 26.4 percent compared with 2014’s same period, the higher number of unprofitable companies showed big difficulties securities companies are facing.

The CEO of a securities company in G30 said a small scale securities company has to pay VND900 million – 1 billion a month to maintain its operation. If it cannot earn this amount of money, it will take loss.

Providing securities brokerage and investment consultancy services prove to be the main sources of income for small companies.

They can also make money by depositing money at banks. However, with the current bank deposit interest rates, they will not make high profit unless they have VND200 billion worth of capital or more.

Analysts after considering G30’s finance reports, have realized that the companies that made profit or improved their business performance were the ones which pushed up brokerage services. These included Tam Nhin Securities (HRS), Da Nang (DNSC), Dai Nam (DNSE) and Viet Thanh (VTS).

Which way to follow?

Sixty five percent of the brokerage market share on HOSE is held by the 10 largest securities companies, while the remaining 35 percent is divided among 70 small and medium d companies.

An analyst noted that there are two ways for small securities companies to improve their income – either increasing the number of clients they serve or charging higher fees on clients.

The second method will be applied only by the companies which have special advantages or have powerful human resources and technologies.

Therefore, the first way is being followed by the majority of companies. They have been trying to minimize service fees to attract as many clients as possible.

Will the fee reductions ensure small securities companies’ operation and growth?

Vincent Nguyen, HVS Vietnam’s CEO, said the fees from brokerage and other services are capable of ensuring profit and growth for companies.

In order to cut brokerage service fees while still ensuring profits, companies will have to reduce 50 percent operation cost and cut the commission fees (30-40 percent).

vietnamnet