A strong pickup in income from commission fees and asset management helped top mainland brokerage Citic Securities arrest an earnings slowdown in the first half to boost full-year net profit 24 per cent.
The state-controlled company said net profit was 5.2 billion yuan (HK$6.49 billion) last year, while revenue jumped 55 per cent to 20.3 billion yuan, thanks mostly to a surge in brokerage fees and income from asset management.
Citic Securities, in which parent firm Citic Group has a 21 per cent stake, said that despite the marked improvement in sales, net operating cash outflow widened to 22.7 billion yuan from 17.2 billion yuan in 2012. It attributed the rise to an expansion of its margin financing and securities business.
Analysts remained concerned about the impact on earnings of low commission rates at brokers striving to gain market share.
Return on equity rose to 6 per cent from 4.9 per cent, even though the group's leverage ratio surged to 60.5 per cent from 35 per cent.
In its bid to become a global investment bank, Citic Securities last month completed its acquisition of 80.1 per cent of Hong Kong-based CLSA for US$843 million from Credit Agricole Corporate and Investment Bank. The deal paves the way for the broker to tap overseas capital markets.