Securities companies report big profits, but Viet Capital sees sharp fall in profits

Viet Capital Securities (VCSC) of Nguyen Thanh Phuong has been showing signs of decline recently, but the stock market is brightening with strong liquidity.

VCSC has released its business results in Q3 which showed a sharp profit decrease.

Securities companies report big profits, but Viet Capital sees sharp fall in profits

VCSC's chair Nguyen Thanh Phuong

Its post-tax profit in Q3 decreased by 36.5 percent to VND95.5 billion, while the accumulated profit in the first nine months of the year fell by 15 percent to VND419 billion.

VCSC witnessed decreases in nearly all business operations, from brokerage, self-trading, and profits from financial assets, to loans and receivables.

The company said the business results had decreased because the company had reduced interest rates for margin trading in order to support clients during Covid-19. Its financial report showed a decrease of tens of billion dong in comparison with the same period last year in revenue from margin trading loans.

As business results decline, VCSC shares have sold out. The price of shares decreased to the floor level on October 21 to VND37,200 per share, losing 7 percent of its value, and continued dropping on October 22 morning.

Analysts noted that VCSC is good at investment banking. But because of the Covid-19 pandemic, many enterprises have lost great opportunities worth billions of dollars. This has affected VCSC’s business.

Prior to that, VCSC said profit of VND550 billion in 2020 was within reach. However, compared with the targets for the next three years, the figure is a very modest compared with the potential.

One of the reasons behind the prediction about the low profit in 2020 is Covid-19, which has made it impossible for the company to implement investment bank projects worth $2 billion.

 

According to To Hai, a member of VCSC’s board of directors, if Covid-19 had not broken out, VCSC would have had a deal worth $1.5 billion. Because of the epidemic, the deal has been delayed and it is still unclear if VCSC can wrap up the deal by the end of the year.

However, Hai affirmed that the deal would be completed in the future, perhaps next year.

The average fee of the investment banking service is 1.5-2 percent of the total value of deals.

VCSC share prices dropped sharply in May, when Morgan Stanley Capital International (MSCI) excluded VCSC from the MSCI Frontier Markets Small Cap Indexes for frontier markets.

The top 10 shares in the MSCI Frontier Markets Index include three Vietnamese shares, namely VIC of Vingroup, VHM of Vinhomes and VNM of Vinamilk.

Many investment funds with assets of hundreds of millions of dollars, including Schroder International Selection Fund, Templeton Frontier Markets Fund, Morgan Stanley Institutional Fund and Magna Umbrella Fund, are using MSCI Frontier Markets Index as a benchmark. 

M. Ha

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