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CITIC posts 40 percent plunge in net income

CITIC Securities Co's net income plunged 40 percent in the first quarter this year despite a recovery in the local stock market.

China's largest brokerage saw profit fall from 2.52 billion yuan (US$369.4 million) in the first quarter last year to 1.5 billion yuan, or 0.23 yuan a share. Its revenue dropped 40 percent to 3.46 billion yuan in the same period, the brokerage said in a statement to the Shanghai Stock Exchange yesterday.

"CITIC Securities Co's first-quarter profit was lower than expected," said Liang Jing, an analyst at Guotai Jun'an Securities Co. "It was mainly due to the 77-percent decline in propriety trading."

The brokerage's investment income plunged 86 percent to 285.49 million yuan and fund management income dropped 33.42 percent to 586 million yuan, the statement said.

Its securities underwriting income slid 80 percent to 117.8 million yuan in the first three months as the securities regulator suspended new share sales after the stock market declined nearly 70 percent last year.

"The underwriting business will not recover until new share sales resume and the Growth Enterprise Market is launched," Liang said.

China's Securities Regulatory Commission has issued guidelines that pave the way for the launch of the Nasdaq-like GEM board for innovative startup companies.

CITIC said in a separate statement yesterday that its profit for last year dropped 41 percent to 7.31 billion yuan compared to 2007, and revenue declined 43 percent to 17.7 billion yuan.

It attributed the drop to a sagging securities market, a reduction of commissions and proprietary trading.

Commission income dropped 43.25 percent from a year earlier and proprietary income fell 56.31 percent.

The combined profit of China's 107 securities firms decreased 63 percent to 48.2 billion yuan last year because of the sagging equity market, according to the Securities Association of China.

However, brokerages will be able to develop other revenue sources this year. The CSRC plans to allow brokers to start margin-lending and short-selling businesses, which could lead to 6.6 billion yuan in revenue this year.


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