Securities firms raise capital amid high margin debt

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An investor monitoring securities prices. KIS forecasted that securities firms would achieve good performance in Q1/2022 thanks to revenues from brokerage and margin lending. Photo cafef.vn

HÀ NỘI — Many securities firms have begun to issue additional shares to meet their investors’ rising demand for margin loans.

According to KIS Viet Nam Securities Corp., margin loans have been increasing steadily since 2020 with an average quarterly growth of 15 per cent in 2020 and 19 per cent in 2021.

Total margin loans have hit an all-time high of VNĐ170 trillion (US$7.4 billion) by late 2021, up 98.7 per cent compared with 2020.

Margin ratio of eight out of ten most margin-lending firms has reached 150 per cent by the same period.

Accordingly, these firms have begun to issue more shares to raise capital, thereby improving their margin-lending capacity.

Notably, VNDirect Securities JSC increased its margin loans by 265 per cent after its equity rose by 157 per cent in 2021.

SSI Securities Corp. followed suit with equity growing by 44 per cent and margin loans by 152 per cent in the same year.

Rising equity to step up margin lending could also be observed in other firms but at lower rates of 80 per cent or below.

KIS reported that brokerage and margin lending allowed securities firms to drive their revenues to a record high in 2021.

Total revenues of 25 firms studied by KIS stayed at VNĐ60.5 trillion ($2.7 billion), 9 per cent higher than in 2020.

Notably, VPS Securities JSC posted the largest revenues of VNĐ9.5 trillion ($416.1 million) last year. SSI came next with VNĐ4.7 trillion ($205.9 million).

VNDirect secured third with VNĐ5.8 trillion ($254 million), and was followed by Techcom Securities JSC ($227.8 million).

KIS put the fast-paced growth of brokerage and margin lending to the attractiveness of the Vietnamese securities market, which has been drawing in a mounting number of new investors.

It is also estimated that average daily liquidity would remain at VNĐ22-23 trillion ($0.96-1 billion) during Q1/2022, up 20 per cent against the same period last year. — VNS

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