Securities companies adjust business results amid market downturn

Investors at the trading floor of VNDirect Securities Co. Its pre-tax profit target is set at VNĐ2.99 trillion for the whole year of 2022. Photo courtesy of VNDirect

Securities companies have to adjust business plans lower due to the volatility of the stock market at present as the market is still seeing negative movements in terms of liquidity and scores.

Unpredictable market scenario

KS Securities Company has just announced adjustments to its business plan. The targeted revenue in 2022 decreased by 56.3 per cent compared to the initial plan, from VNĐ2.04 trillion to VNĐ890 billion. Target profit also declined by nearly 37 per cent to VNĐ450 billion.

In the first 9 months of 2022, this company earned VNĐ719 billion in revenue, 3.49 times higher than the same period last year; profit after tax reached VNĐ430 billion, also 3.8 times higher than the same period last year.

The results achieved still fell short of the targets set out at the beginning of the year. Explaining to shareholders, the company's leaders said that the market had witnessed great fluctuations since April 2022. The company's business strategy had changed in the direction of technology development. These two factors had a strong impact on the business plan of KS Securities.

Except for the rare recovery of scores recorded in July-August 2022, Việt Nam's stock market has moved negatively in terms of both scores and liquidity since the second quarter of this year, often named in the group of world’s worst-performing markets. Even in the past week, VN-Index had a time below the 900 landmark.

Market factors strongly affect revenues from brokerage and proprietary trading activities. For securities companies that rely on self-trading revenue, profits can be reduced quickly. Besides, the current unstable situation of the bond market as investors' confidence in this product declines also causes advisory and issuance activities to shrink. Margin lending is one of the few activities that can maintain growth in some companies thanks to the fact that the loan size has not shrunk and some companies have also raised margin lending rates.

VNDirect Securities Co’s pre-tax profit target is set at VNĐ2.99 trillion for the whole of 2022. In the first 9 months of this year, VNDirect reported a profit of VNĐ1.57 trillion, down 19 per cent over the same period last year and also just completed 52 per cent of the profit plan.

SSI Securities Inc also completed only 52 per cent of the profit target set out in the first 9 months of this year. Previously, at the annual general meeting of shareholders in early May 2022, Chairman of the Board of Directors of SSI Nguyễn Đức Hùng was still quite confident with the target of 30 per cent growth in both revenue and profit.

So far, SSI has not commented on the reduction of the business plan. However, at the annual general meeting of shareholders, shareholders accepted the plan of the Board of Directors to adjust the business targets to suit reality.

While SSI or VNDirect have completed over half of the target, many other companies still fell short of targets, even reporting losses in the first 9 months of this year.

Except for the rare recovery rate recorded in July-August 2022, Việt Nam's stock market traded negatively in both scores and liquidity from the second quarter onwards.

APG Securities Co reported a loss of more than VNĐ49 billion in the third quarter of 2022. This dragged the profit of the first 9 months to negative VNĐ48.3 billion, while the initial profit target was set at VNĐ400 billion.

APEC Securities Co (APS) reported a loss of VNĐ370 billion in the first 9 months of this year. The task in the fourth quarter of 2022 is not feasible as the company wants to earn profit of VNĐ480 billion.

VietinBank Securities (CTS) also earned a profit of VNĐ86 billion in 9 months, equivalent to more than 21 per cent of the target set out. BIDV Securities Co (BSC) completed nearly 35 per cent of the 9-month target, although it was profitable in the third quarter.

Some securities companies still beat targets thanks to careful planning. MB Securities Co (MBS)'s 9-month profit has completed 63 per cent of the target set in the negative scenario. Agribank Securities completed 88 per cent of the profit plan thanks to its initial cautious goal, which was behind the results achieved in 2021. VNS