The growth in local investment banking (IB) and retail segment profits at Shinhan Investment Corp's Vietnamese subsidiary (SSV) is drawing attention. Industry observers expect profitability to improve as the business expands, noting that the IB division is preparing for a large deal and the retail division is considering capital expansion.
According to financial investment industry sources on the 1st, SSV's profits are expected to increase significantly this year. SSV's revenue in the first half of this year was 20.6 billion won, an increase of 3.4 billion won from the same period last year (17.2 billion won). Net profit for the half-year was 3.6 billion won, up by 900 million won over the same period. SSV is generating the highest profits among Shinhan Investment Corp's three overseas subsidiaries (Hong Kong, Vietnam, and Indonesia).
SSV is conducting aggressive business operations in coordination with affiliated companies that have entered the local market, from the Shinhan Financial Group headquarters building located in Ho Chi Minh City, Vietnam. The affiliated companies occupying the headquarters include Shinhan Bank, Shinhan Investment Corp, Shinhan Finance, Shinhan Life, and Shinhan DS.
IB division revenue is expected to be recognized immediately in the second half of the year. This is because an IB deal with a major Vietnamese conglomerate is currently underway. The deal is reported to involve domestic funds investing in local infrastructure projects. According to the IB industry, if this deal materializes, at least 4 billion won in bond capital market (DCM) fee revenue is expected to be generated in the second half of this year. Since 2018, SSV's IB division profits have grown at an average annual rate of approximately 16%.
SSV is also expanding its retail business. The core business of Vietnamese securities firms is brokerage. However, unlike in Korea, the center of revenue for brokerage in Vietnam is stock-collateralized loans, such as credit lending. This is because loan interest rates reach 8 to 10%, allowing for high profits.
Since stock-collateralized loans are a lending business, risk management is essential. The local government limits the limit on stock-collateralized loans to twice the net assets. SSV's net assets were 135.9 billion won as of the end of June last month. This ranks sixth among foreign securities firms that have entered Vietnam, which is one-fourth the level of Mirae Asset Securities' Vietnamese subsidiary, ranked first. For this reason, it is reported that Shinhan Financial Group is discussing capital expansion at the group level.
Investments to broaden customer touchpoints and the transition to artificial intelligence (AX) are also accelerating. Shinhan Investment Corp headquarters acquired a 17.66% stake in FireAnt, a financial information company operating Vietnam's largest stock community, in May last year. Through this, SSV secured 2.1 million FireAnt subscribers as potential customers. SSV has 20,000 active accounts, leaving significant room for additional customer inflow.
SSV has signed a separate business cooperation agreement with FireAnt and is jointly developing AI advisors, data analysis-based marketing, non-face-to-face account opening (e-KYC), data visualization, and performance inquiries for remicers (investment solicitation agents). As a result, SSV officially launched an MCP (Model Context Protocol) app called "Shinhan Securities Assistant" on OpenAI's "Apps in ChatGPT" in June last month. Customers holding SSV accounts can retrieve their balances and held stocks from ChatGPT and analyze them through conversation with the AI.
In addition, SSV diversified its revenue sources by listing 31 covered warrant (CW) products on the local stock market and underwriting cross-border bond issuances. CWs are similar to domestic equity warrants (ELWs). This became a turning point for SSV to evolve into a trading house utilizing its own capital. SSV plans to act as an ETF liquidity provider (LP) next year.
SSV was the first among domestic securities firms that have entered Vietnam to lay the foundation for IB. It began by underwriting the issuance of guaranteed private placement bonds (35 trillion won) by local company Gelex, followed by arranging a 100 billion won perpetual loan for CJ Kewjeong, issuing 33 billion won in guaranteed private placement bonds for Mirae Asset Finance's kimchi bond, and refinancing a 58 billion won dollar-denominated loan for the Da Nang Sheraton Hotel. In 2019, when offshore syndicated loans were rare, it advised on a 750 billion won dollar-denominated syndicated loan for Hyosung Vina Chemical, and also underwrote the issuance of 300 billion won in bank bonds by Shinhan Vietnam Bank, a group company that has entered the local market.
"We will continue to maintain the No. 1 market share (MS) position among foreign securities firms in Vietnam. We are currently ranked eighth among all securities firms in Vietnam and aim for higher ranks. We will demonstrate the strength of foreign securities firms in line with the growth of the Vietnamese stock market."
Shin Hyeon-jae, Head of Korea Investment & Securities (KIS) Vietnam, met with MoneyToday on the 17th of last month (local time) and stated as much, saying, "Based on first-half trading volume, our MS is 3.11%, ranking ninth overall in Vietnam. First-half revenue this year was 100.1 billion won, a 50% increase from the same period last year; half-year net profit was 20.4 billion won, up 90.5%; and the number of customers reached 182,000, an increase of 20% since the beginning of this year, indicating that business performance is reflected in metrics."
KIS Vietnam's net assets amount to 437 billion won. Last year, it received a capital increase of $30 million from its parent company, Korea Investment & Securities, to strengthen its capital base. This year, it is also preparing for new loan support of $60 million. It is undergoing the reporting procedure with the Vietnam central bank after approval by the board of directors of Korea Investment & Securities.
With capital expansion, KIS Vietnam is expected to grow its local stock-collateralized loan business. Stock-collateralized loans are so-called "profitable businesses" with interest yield rates reaching 8 to 10%. Head Shin said, "When capital increases, there are many things we can do. In Vietnam, credit lending (stock-collateralized loans) is possible up to twice the net assets. With the help of Korea Investment & Securities headquarters, we are gaining the stamina to compete with top-tier firms."
KIS Vietnam is trying to broaden the local investment base by dispersing stock-collateralized loans, which have been concentrated among some major shareholders, to general individuals. Head Shin said, "The number of stock accounts in Vietnam is at a level of 13% relative to the population (13 million accounts), but stock-collateralized loans are biased toward some investors. For example, we are considering various measures such as dispersing 10 billion won to 100 people at 10 billion won each to increase market share among general retail investors."
There are not many products launched in the Vietnamese financial investment market. The asset management (AM) business, similar to Korea's private bankers (PB), is in its infancy. KIS Vietnam is spreading advanced product design and sales know-how accumulated in the Korean securities industry by issuing covered warrants (CWs locally. Head Shin said, "Experiencing structured products in Korea will be a great strength in Vietnam's future AM market," adding, "While conducting IB (investment banking) work, we are pioneering new business areas by creating AM products and increasing individual participation through them."
In fact, KIS Vietnam also stood out in the IB division this year. Amidst a saturated bond capital market (DCM), it entered the equity capital market (ECM) for the first time among foreign securities firms. The size of the Vietnamese bond market is 35 trillion won. Of this, 97% is concentrated in real estate and banks. The remaining 8% is in manufacturing, with a market size of approximately 300 billion won. Twenty securities firms are competing to secure the 1st% underwriting fee for bond issuances.
Head Shin said, "In April last month, we successfully entered the ECM (equity capital market) by closing a 12 billion won rights offering (paid-in capital increase) deal with SHB, ranked 25th in Vietnam's market capitalization, and are reviewing new deals for the second half as well," adding, "Based on a retail-centric strategy, we are growing into a comprehensive Vietnamese securities firm encompassing IB."
Head Shin earned his bachelor's and master's degrees from Korea University and completed his Master of Business Administration (MBA) at the University of Michigan in the United States. He joined Dongwon Securities and has been with one company for 27 years, up to Korea Investment & Securities. Including Korea Investment & Securities' Hong Kong subsidiary, he worked overseas for a total of seven years. He also handled outsourced asset management (OCIO) sales at Korea Investment & Securities. At KIS Vietnam, he served as head of the institutional investor sales division from 2024 and was appointed head of the subsidiary in January last year.
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