Haitong reaps from rebound in market

Haitong International Securities, a unit of the second-biggest brokerage on the mainland, reported a 44 per cent rise in net profit for the first half, partly because of a mild recovery in stock trading in Hong Kong.

The local brokerage, which seeks to become an all-round investment bank, said net profit reached HK$220.3 million in the January-June period, while revenue rose 20 per cent to HK$702.3 million.

"The firm aims to boost the overall leverage ratio to up to five times in two years, compared with two-and-a-half times currently," chief executive Lin Yong said in a post-results briefing.

"Emphasis would be put on the newly set up department of fixed-income, currencies and commodities, the so-called FICC unit, where the firm will use its own balance to finance transactions."

Lin, who has more than 16 years of investment banking experience on the mainland, said the future of brokers depended much on their capital-based businesses and the ability to manage capital, suggesting the conventional broking business was on the brink of being phased out by capital-based trading and securities lending business, as opposed to fee-based services.

It is believed that the company runs a HK$1 billion book under the FICC unit, which represents about 11 per cent of the overall revenue.