PEREGRINE Investments Holdings has blamed weak stock markets and a drop in corporate finance activity for a fall of almost 25 per cent in attributable profit to $650.73 million for last year. 'It was disappointing. We certainly don't like declaring a downturn in earnings,' said company chairman Philip Tose, who defended the performance of Peregrine when measured against other investment banks. 'This is not nearly as bad as many of the international investment banking houses,' he said. Margins contracted in the year ended December, with turnover soaring 152 per cent to $28.9 billion, from $11.43 billion in 1993, but Mr Tose said the growth was mainly due to the establishment of the Peregrine Fixed Income arm last year. While Peregrine Fixed Income had ended the year with a small loss, he said it was essential for the group to have a fixed-income division to position itself in years to come. Earnings per share were a fully-diluted $1.067, against $1.426 in 1993. The company will pay a final dividend of 25 cents a share, bringing its full dividend to 50 cents a share. But the company was only paying $294.7 million in dividends, against $315.6 million in 1993, because of the number of holders of Peregrine warrants who had chosen to convert them. As a result of the exercise of the warrants, the company had about $5 billion in shareholders' funds. '[This] is very substantial by Asian standards and puts us in a very strong position to weather any storms,' Mr Tose said. The group's treasury operation launched two funding programmes, which increased access to funding lines by more than $5.5 billion. Profit attributable to shareholders was boosted by a $12.87 million profit attributable to minority shareholders, while associated companies added $434.1 million. Mr Tose said British fund management subsidiary INVESCO, South Korean unit Dongbang Peregrine Securities Co and Peregrine's direct investments in the Philippines were showing healthy profit growth. Peregrine Capital, the group's corporate finance arm, acted as adviser, arranger, lead or co-lead manager, or co-underwriter, on 32 fund-raisings in Hong Kong and 14 in China, involving funds of about $24.8 billion. But corporate profits from corporate finance and securities brokerages fell about 68 per cent and 36 per cent, respectively, and weak markets caused the postponement of a number of major fund-raisings which Peregrine was to arrange. 'We had an interesting year, to put it mildly,' said Mr Tose. 'The second half was very much more difficult than the first half and the last quarter was very unfavourable to the investment banking climate - not just here, but throughout the world.' Despite tough market conditions, Peregrine Derivatives improved its profit for the year, and was ranked joint first in its core activity of issuance of covered warrants in Hong Kong and second in terms of value. Mr Tose said derivatives improved 95 per cent last year, but emphasised the firm was not taking risks with its derivatives arm. Direct investments' profits rose about 46 per cent. At the end of last year, the group had direct investment positions in 22 companies with an aggregate book value of about $545 million.