Vietnamese broker ACBS sees profit surge, sustained capital support from parent bank

ACB Securities JSC (ACBS) has reported a surge in both charter capital and profit, fueled by continued investment from its parent company, Asia Commercial Bank (ACB).

ACB, listed on the Ho Chi Minh Stock Exchange (HoSE) as ACB, has just announced a board resolution approving a plan to increase its charter capital of ACBS from VND7 trillion ($277 million) to VND10 trillion ($395.3 million).

This continues a series of capital infusions into the securities firm since it was founded by ACB in 2000 with an initial charter capital of VND43 billion ($1.7 million). In 2009, the company’s capital base rose to VND1.5 trillion ($59.3 million) after five augmentation rounds.

In 2020, ACB considered selling its stake in ACBS but failed to find a suitable partner. It opted instead to continue investing in the securities firm.

After 12 years, in 2021, ACB increased its investment to double ACBS's charter capital to VND3 trillion ($118.6 million). Within a year, it invested another VND4 trillion, raising the broker’s capital to VND7 trillion ($276.7 million).

At ACB's 2024 AGM, chairman Tran Hung Huy said that while the lender remained open to potential strategic partnerships, it would remain the sole investor for capital augmentation up to VND10 trillion.

Alongside capital boosts from the parent bank, ACBS has ramped up short-term borrowing to finance its operations. As of September 2024, it had accumulated more than VND13 trillion ($513.83 million) in short-term debt, primarily from major lenders like BIDV and Eximbank.

The company’s total assets value surged to VND22.62 trillion ($894 million) by the third quarter of 2024, four times higher than at the start of the previous year, according to its Q3 consolidated financial statement.

Aggressive margin lending

ACBS has concentrated its efforts on three key areas: securities services, proprietary trading, and corporate financial advisory. Of these, securities services – particularly margin lending and brokerage – have become the backbone of the company’s revenue model.

To expand its market share, ACBS has heavily invested in technology while raising margin lending limits and increasing the maximum loan amount per stock, making it more attractive to individual investors.

The company’s margin loan book has grown dramatically, reaching VND7.61 trillion ($300.8 million) in the first nine months of 2024, up VND3 trillion from 2023 and 3.8 times from 2022. This makes margin lending a central pillar of ACBS's business strategy, accounting for about one-third of its total assets.

ACBS reported January-September revenue of VND1.89 trillion ($74.7 million), up 60% year-on-year. Its after-tax profit surged 68% to VND546 billion ($21.6 million), driven by strong performances across several key areas.

For example, its fair value through profit or loss (FVTPL) grew 45% to VND833 billion ($33 million); interest income doubled to VND463 billion; and brokerage revenues rose 29% to VND295 billion.