Margin loan interest rates have all decreased
In 2023, the State Bank of Vietnam adjusted and decreased the operating interest rates and savings deposit interest rates of the market to a “bottom”. There are banks mobilizing capital for a 12-month term with interest rates below 5% per year. At the output, lending rates, especially short-term rates, are also adjusted. In this context, despite some delays, securities companies have also started to reduce margin interest rates and actively invite customer borrowing.
Securities companies have started to reduce margin interest rates.
Even though only having a trading account at one securities company, Ms. Thanh Ha (Hanoi) said that she constantly receives introduction emails, guiding preferential margin loans from many other companies in the market. “Emails are not only once, but continuously sent from many different accounts”, Ha said.
The reduced interest rate program, even interest-free for a certain period of time, is also being expanded by securities companies. Techcombank Securities (TCBS) applies a collateral loan interest rate of 7.9% per year with a collateral loan balance within 180 days from the first disbursement date. Shinhan Vietnam Securities applies a margin loan interest rate of 8.8% per year The preferential margin interest rate is applied for 6 months from 1 day (T + 1) when the margin debt reaches 200 million dong during the program. The program lasts until April 30th or when the limit is reached.
JB Vietnam Securities (JBSV) applies the policy of margin interest exemption for customers within 30 days with a maximum loan of 100 million dong. Yuanta Vietnam Securities also applies an interest rate of 0% for 1,000 newly opened collateral account and first registration customers. Previously, Yuanta Vietnam Securities has an attractive margin interest rate of 8% per year, applied for 6 months with an unlimited loan limit…
The margin interest rate reduction signal also appears in many other securities companies such as DNSE, Rong Viet (VDSC), Vietcap. Companies in the banking ecosystem like MBS also adjust and reduce the normal margin loan interest rates of individual clients. SSI refunds 20% margin interest on actual monthly interest income, up to 5 million dong/month and 50 million dong/year.
The “zero fee” race
In addition to reducing and exempting interest rates, on the occasion of the new year, securities companies are also launching many promotions. Zero-fee policy (free trading) is becoming more popular in the securities field. The race from low fees to no fees, bringing brokerage fees to 0. The competition for market share, attracting customers becomes more fierce, but along with that, the main revenue from brokering is also affected.
Companies with a large brokerage market share or rapidly capturing market share are implementing zero fees. VPS Securities holds a 19.06% brokerage market share on HoSE, offering free trading for 6 months. SSI Securities has also applied this policy. Recognizing a growth of 1 rank in the brokerage market share ranking, in the 4th position, Techcombank Securities (TCBS) is currently offering free trading. The market share is expanding, but the brokerage revenue of TCBS contracted significantly, decreasing more than 46% in 2023 while the cost of this segment increased nearly 19% compared to the previous year. Gross profit margin contracted from 82.6% to 61.5%, corresponding to a 60% decrease in gross profit compared to 2022.
Many other securities companies are also applying zero fees, such as DNSE, Pinetree, JBSV, AIS, or the latest is MBS. The brokerage revenue of these companies is all affected. However, in compensating for the revenue shortfall from zero fees, these companies are recording good growth in lending interest income. TCBS earned more than 1,600 billion dong from loan interest and receivables in 2023, ranking first in the industry. This segment accounts for about 30% of the company’s total operating revenue, nearly equal to proprietary trading.
With DNSE, interest from loan and receivables is the largest source of revenue, accounting for 40% of total operating revenue. Similarly, this proportion at Pinetree accounts for more than 55% of revenue.
By the end of Q4/2023, loan balances at securities companies are estimated at about 180,000 billion dong, an increase of about 15,000 billion dong compared to the end of Q4. Of which, margin balances are estimated at about 172,000 billion dong, an increase of 13,000 billion in the last three months of the year.
