Eighty-seven out of over 100 securities companies have posted their 2010 business results, and 24 of these incurred losses last year which totalled a combined VND574 billion ($27.5 million).
According to data compiled by financial website cafef.vn, Kim Long Securities Co (KLS) led the losers with a whopping loss of almost VND173 billion ($8.3 million), followed by Bao Viet Securities Co (BVS) with a loss of nearly VND93 billion ($4.4 million). Ten firms posted losses of over VND10 billion.
Nine of these losing firms have not been profitable for three years in a row, including KIS, Thanh Cong, Nam An, Navibank, Mien Nam, Hanoi, VinaSecurities, Nam Viet and Tam Nhin. The latter two have incurred losses for four consecutive years.
Even more astonishingly, 35 major securities firms, including some that posted profits in the most recent years, have had cumulative losses over the last three years. Companies with the biggest three-year losses included such major brokerages as BVS, with losses of VND214 billion ($10.2 million), and KLS, with losses of VND169 billion ($8.1 million).
In light of these heavy cumulative losses, 14 securities companies had equity capital less than their charter capital by the end of last year. VinaSecurities, with charter capital of VND185 billion ($8.8 million), had equity of just VND59 billion ($2.8 million) at the end of 2010.
Analysts attributed the losses to a prolonged declining market. Many investors have halted or reduced trading, sharply cutting securities companies' earnings from brokerage services. Many securities companies also trade in stocks themselves and have suffered losses as the markets have continued to plunge.
Ministry of Finance Circular No 226 took effect this month and market insiders viewed this as a step forward in monitoring the operations of securities firms. Under the circular, a securities firm, to be considered healthy, must satisfy a ratio of total usable capital to total risks of no less than 180 per cent.
"This regulation helps securities companies evaluate objectively companies' financial health and adjust their operations in a safer and more effective direction," said Thang Long Securities Co deputy director Mac Quang Huy.