Brokerage Citic Securities posts 54 per cent profit rise in the third quarter

Earnings climb 54 per cent at mainland broker as inside trading investigation clouds outlook

PUBLISHED : Friday, 30 October, 2015, 1:12am
UPDATED : Friday, 30 October, 2015, 1:12am

China's largest brokerage, Citic Securities, reported a 54 per cent rise in third-quarter earnings, bringing some relief to analysts who worry a probe by police and regulatory authorities still overshadow the firm's outlook.

Net profit between June and September climbed to 3.52 billion yuan from 2.29 billion a year before, according to an unaudited stock exchange filing.

The result reflects the firm's diversified business stream, said analysts, as revenues from brokerage, research and product sales likely made up for listings fees lost after regulators earlier halted initial public offerings.

"Their third-quarter report looks beautiful, which shows their comprehensive strengths are stronger than most of their competitors. But we are not recommending investors buy the company at this time," said a senior brokerage analyst with a state-owned institution based in Shanghai who did not want to be named.

"There is a big shadow overhanging the company, given the top management team is under investigation," he added.

According to Xinhua, eight senior Citic executives, including general manager Cheng Boming, are under investigation for inside trading and leaking inside information.

Net profits for the first nine months grew 151.16 per cent to 15.9 billion yuan year on year, suggesting growth slowed in the third quarter, tracking a decline in stock market turnover as investors turned skittish after major indices fell more than 30 per cent in July and August.

"The results are close to expectations," and the firm has outperformed competitors, said Gerry Alfonso, director at Shanghai-based Shenwan Hongyuan Securities.

Citic reported a 34.31 per cent increase in total assets to 644 billion yuan in the first nine months of the year. Earnings per share jumped from 58 fen to 1.40 yuan on a year-on-year basis.

Citic says chairman Wang Dongming will take over the day-to-day work of executive committee member Ge Xiaobo, who is among those detained.