Ho Chi Minh City Securities Corporation (HSC, stock code HCM – HOSE) announced Q1.2020 Profit after tax of VND 101 billion, increased 23% over the same period in 2019.

The stock market in the first quarter of 2020 was heavily affected by the Covid-19 epidemic. As of March 31, 2020, VN-Index was 662 points and HNX-Index was 92.61 points, respectively down 31% and down 9.7% compared to the end of 2019; VN30 Index was 610.7 points, down 30.5% compared to the end of 2019. Market liquidity with average daily trading value in Q1. 2020 was VND 4,464 billion, equivalent to Q1. 2019. Regarding stock brokerage, fund certificates and covered warrants market share on HSX, HSC continued to affirm its second position with Q1 / 2020 market share of 11.03%, increased from 10.54% at end of 2019.

End of Q1.2020, HSC’s revenue reached VND 304 billion, an increase of 13.6% compared to the same period last year while expenses increased by 7.6% from VND166 billion to VND178 billion. Profit after tax reached VND101 billion, up 23% compared to the same period in 2019. Business results in the first quarter of 2020 were positive and higher profits than the same period in 2019 despite the unfavorable market.

The return on equity (ROE) was 2.3%, a bit decreased than the 2.7% of Q1. 2019. Earnings per share (EPS) decreased by 12% over the same period last year. The main reason was increasing in equity of more than VND 1,300 billion from June 2019.

(*) In accordance with the accounting policies of securities companies, income from proprietary trading activities (when selling prices are higher than the cost of securities sold) are recorded as revenue and losses from trading activities (when selling prices are lower than the cost of securities sold) are recorded as operating expenses in the income statement. Therefore, the effective performance of proprietary trading activities should be measured as the net of revenue and operating expenses for these activities. Accordingly, for the purpose of comparison, revenue and operating expenses in Q1.2020 and Q1.2019 were restated by reducing the losses from proprietary trading activities by VND143.5 billion and VND26.4 billion, respectively.

Performances of main business lines: brokerage, margin lending, proprietary investment and corporate financial advisory in Q1.2020 are as below: 

• Brokerage revenue was VND 107 billion, slightly decreased 3.4% compared to Q1.2019 and accounted for 35% of HSC's total revenue. Brokerage revenue decreased mainly due to the reduction of the average fee rate in order to attract and retain clients trading at HSC amid fierce competition among Securities Company. In the context of competition, HSC’s ISD still maintained its leading position with a market share of 25% of total foreign transactions in the market.
• Revenue from margin lending reached VND 116 billion, up 13% y-o-y and accounted for 38% of HSC's total revenue. Since the beginning of 2020, HSC has prioritized the development of market shares in the group of good stocks, eliminating the ill-performing and unqualified stocks to reduce risks in margin lending.
• Proprietary investment revenue reached VND 76 billion, increased 56% compared to Q1.2019. The main reason was that in Q1.2020 HSC has been profited from the firm’s stock portfolio and offset income from defensive activities in the derivative market
• Revenue from corporate financial advisory is insignificant due to the timing of revenue recognition.

Since early January 202020, recognizing the negative effects of the Covid-19 epidemic on the stock market, many investors seek for a safe investment channel. Therefore, HSC deployed corporate bond product - Active Bond, which is considered as a safe "shelter" to protect assets but still ensure profitability for clients. Active Bond attracts investors due to the combination of leading issuers and HSC's outstanding brokerage capabilities and market-making experience for other financial products such as CW and ETFVN30 fund certificates. With such advantages: safety, higher yield than savings interest rate from 0.2% -0.8% / year, daily flexible liquidity, Active Bond helps investors to easily transfer money between investment channels, taking advantage of idle money to optimize profits.