Red chip Citic International Financial Holdings, the parent company of Citic Ka Wah Bank, has reported that its net profit for last year rose 37.2 per cent year to $901.33 million. The lion's share of the group's earnings came from its banking unit, which reported net profit of $816 million, up 24.9 per cent from the previous year, while Citic Capital Markets Holdings (CCMH) saw its contribution to the bottom line decline 32 per cent to $183 million from $269 million in 2003. Chief executive Dou Jianzhong said the fall in CCMH's contribution was the result of a windfall contribution in 2003 when it recorded a one-off gain from a securities investment. 'Although the fund in question continued to outperform industry benchmarks in 2004, its contribution to profit did not match the magnitude it reached in 2003,' Mr Dou said. Doreen Chan, the managing director and chief executive of Citic Ka Wah Bank, said the lender had managed to contain the impact of falling interest rates and increased competition on net interest margins by actively re-engineering its balance sheet. 'Net interest margin was down by just three basis points, thanks to our efforts to enhance our assets and liabilities,' Ms Chan said. This compared with an industry average of a 26-basis-point fall, she said, adding that the bank's net interest margin was 2.1 per cent. The group - the financial flagship of the central government's biggest investment vehicle, China International Trust & Investment Corp (Citic) - would continue exploiting that relationship to expand its China business, Mr Dou said. The group's priorities this year would be pursuing opportunities arising from the second phase of the Closer Economic Partnership Arrangement with China, and broadening its revenue base by expanding its mainland business, he said. Citic Industrial Bank, the mainland sister bank, would be able to resolve its regulatory difficulties and relaunch a listing bid by next year, said Kong Dan, chairman of the Hong Kong flagship.