2018 FINANCIAL POSITION

 

In 2018, the total assets of the Company increased dramatically from VND 18,764 billion (as at the end of 2017) to VND 23,826 billion, up by nearly 27% YoY. This growth is mainly attributed to the promotion of margin lending activities for retail investors and treasury activities. 


Outstanding balance of margin lending increased from VND 5,764 billion at the beginning of the year to VND 5,966 billion as at 31/12/2018, being top 1 in the market. However, margin lending has been conducted with rigorous risk control thanks to the co-ordination of multiple control inspections of the Operations Control, Financial Services, Risk Management and periodic review of Internal Audit in collaboration with Internal Control. Risk management process for margin lending activities is an end-to-end process, from the development of a scoring system for stocks qualified for margin lending, to the determination of reasonable limits, monitoring of potential daily volatility, to compliance with risk management discipline when the warning thresholds are hit. Strict risk management supports customers to make flexible and safe investment transactions and preserve capital for the Company, in 2018 no bad debts were incurred in SSI. Margin lending activities were evaluated as fairly effective despite a year of ups and downs, outstanding loans at times reached a record level of over VND 7,043 billion and sometimes decreased to VND 5,000 billion, but overall posing no risk. The average lending interest rate of over 12% of the total outstanding loans has contributed significantly to revenue, accounting for more than 19% of the total operating income of the Company.

 

In addition to margin lending activities, assets grew mainly thanks to treasury activities, i.e. the balance of term deposits at banks. Total bank deposits increased from VND 8,228 billion at the end of 2017 to VND 12,939 billion, equivalent to a 57% growth. This asset is fully financed by loans from commercial banks and some other mobilized sources without resorting to equity. The average interest rate difference between borrowing interest rates and deposit interest rates is 1.5%. Treasury not only bring a part of revenue to the Company, but these impressive figures are also testimony to SSI’s creditworthiness, professionalism and dynamism in business relations with commercial banks. Furthermore, it also brings other benefits such as building a low-cost, fast and effective payment relationship in payment services for investors. Risk management for treasury activities is also very rigorous with partner banks for loans and deposits being prestigious banks with absolutely guaranteed liquidity. In 2018, the Company did not have any payment delay or disputes related to loan and deposit contracts. 


Asset growth also corresponds to the growth of the Company’s capital. In 2018, the Company raised minimal capital under the Employee Stock Ownership Plan (ESOP), equivalent to VND 100 billion. Owner's equity reached more than VND 9,155 billion in 2018, up from VND 8,616 billion at the end of 2017. The remaining source mainly includes bank loans with outstanding short-term loans from banks at the end of 2018 being VND 11,193 billion and SSI’s convertible bonds balance being VND 1,150 billion. The most remarkable deal in 2018 is that SSI successfully issued VND 1,150 billion of convertible bonds to foreign partners at low interest rates, reflecting the high level of credit rating of the Company. Although the loans and bond issuance grew at a large scale, SSI always ensured liquidity at the highest level, in 2018 as well as throughout the business process, the Company never had a liquidity risk event nor generated any bad debts. Capital raising is mainly done in VND, with the exception of one loan made in foreign currency from a foreign bank - Hongkong Sinopac but properly hedged by foreign currency swap contract. As mentioned above, the Company’s loans are mainly to finance the asset growing transactions, namely bank deposits which are free of potential credit risks. Deposit terms are very flexible and are always signed with an overdraft loan limit, along with accurate projections of interest rate fluctuations, so the company are not faced with interest rates risks. 

 

2018 Financial Highlights