Citic Securities, the mainland's first brokerage to float on the domestic stock market, warned yesterday that earnings fell sharply last year. A preliminary internal audit suggested the company's net profit plummeted more than 50 per cent last year from 2001, the Shenzhen-registered firm said in a statement in leading mainland financial papers. Analysts widely expect that the great majority of the mainland's more than 124 brokerages will post losses for last year, due to a protracted market downturn. But the profit warning from Citic Securities - one of just two brokerages quoted on the domestic market and China's second-most profitable brokerage in 2001 - is bound to be closely read. 'The stock market's capitalisation continued to atrophy in 2002. Stock indices fell and trading commissions were reduced,' Citic Securities said in the statement. 'Those and other factors led to a remarkable shrinkage in the brokerage's business volume. 'The firm's revenues from trading commissions, proprietary trading and trust management declined to different degrees and significantly affected the firm's profits.' Policy uncertainties and a crackdown on securities fraud have depressed the benchmark Shanghai composite index by 34 per cent since its peak in June 2001. Last year, fund-raising on the domestic stock market fell 23.1 per cent from 2001, according to official statistics. Turnover plummeted 26.9 per cent from a year earlier. The bottom lines of brokerages have also been hit by a regulatory decision last May to lower the commission cap on stock trades. Analysts have further blamed industry overcrowding for falling earnings. Last month, Citic Securities revealed an 82.8 per cent year-on-year dive in net earnings in the first 11 months in its listing prospectus.