Securities firms starved for capital as lending capacity nears limit

The Vietnamese stock market is experiencing a surge in demand for margin lending, pushing many securities companies to the brink of their capital limits. As of the first quarter of 2026, the total outstanding margin debt has hit a new record, marking the twelfth consecutive quarter of growth. This robust demand, while indicative of market vitality, has created a significant challenge for securities firms, compelling them to constantly seek ways to bolster their capital.

While the industry's average lending capacity, legally capped at twice the equity, has seen an improvement, the picture is far from uniform. Nearly half of the companies report low lending room, with several, including Mirae Asset Vietnam, MBS, and HSC Securities, having less than 10% of their lending capacity remaining. Firms like PHS and PSI are practically at their limit, highlighting a critical need for capital injection to sustain their margin lending business, a key revenue stream.

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Capital costs are increasing faster than lending rates in some large securities companies, shrinking the profit margin for margin lending. If this trend continues, expanding outstanding loans may no longer be as effective as before.

This capital crunch is occurring amidst high expectations for market upgrades and new trading mechanisms. Securities companies are under pressure to demonstrate efficiency to shareholders, but the profitability of proprietary trading and margin lending is being squeezed. Rising capital costs are outpacing lending rates for some, shrinking profit margins. Experts suggest that increasing charter capital is essential, even if it means short-term dilution. The advantage, it seems, lies with firms backed by strong financial institutions or banks, which are better positioned to navigate this competitive capital race.

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Companies need to increase capital to reduce capital costs, even if it may lead to short-term stock dilution.