Many securities companies have reported record profits for the first quarter of 2010 that they will have to explain to the State Securities Commission (SSC).
Kim Long Securities Company has reportedly got 12 billion dong in post tax profit in the first quarter of 2010, while it took a loss of 3.5 billion dong in the same period of the last year. With the wide gap between the profit in the first quarter of 2010 and the same period of 2009, Kim Long will has some explaining to do.
Under the new regulations on information exposure stipulated in the Circular No.09 dated January 15, 2010 of the Ministry of Finance, listed companies must send reports to the watchdog agency when the quarterly post tax profit is higher by 10 percent than the post tax profit of the same period of the last year.
Meanwhile, under the previously applied regulations, explanation is also required when the quarterly post tax profit is higher by 10 percent than the post tax profit of the two previous quarters.
Many other securities companies will also have to give explanations to SSC, including the Saigon Securities Incorporated (SSI) which has the post tax profit of 270.7 billion dong in the first quarter of the year, an increase of 794 percent in comparison with the same period of the last year, Agribank Securities Company which posted 77.1 billion dong in post tax profit, an increase of 185 percent, and HCM City Securities Company which recorded 55.25 billion dong in profit, an increase of 57 percent in comparison with the same period of the previous year.
Analysts said that the warming up of the stock market is the main reason behind the sharp increase of the profit made by securities companies.
In the first quarter of the year, the VN Index hovered around 500 points. On average, 30-40 million securities were traded every trading session. Meanwhile, at this time of the last year, the stock market was gloomy with the VN Index dropping from 300 points to 280 points. The trading volume in the first quarter of 2009 was low with just 4-5 million securities traded per trading session.
Finance reports of securities companies all showed that the income from their trade and brokerage activities has increased significantly. HCM City Securities Company has the revenue from brokerage service at 36.6 billion dong, while the figure was 4.9 billion dong in the same period last year. SSI claimed 46.2 billion dong in profit from brokerage service, while it got 11 billion only in the same period of the last year, while Kim Long got 5.6-billion dong vs 1.77 billion dong.
Regarding securities trade, SSI got the revenue of 316.4 billion dong, while it got 59.4 billion only in the first quarter of 2009, and Kim Long got 41.44 billion dong, much higher than 678 million dong in the first quarter of 2009.
Watchdog agencies do not see any problems in the wide gap between the profit in the first quarter of 2010 and that of the first quarter of 2009.
Nguyen Son, Director of the Market Development Department under SSC, said that securities companies have made fat profit thanks to the strong recovery of the national economy in general and the robust development of the stock market in particular. Son said that he hopes many more securities companies will have to explain about their profit in some days. “This should be seen as a normal and positive thing,” he said.
vietnamnet, VnExpress