H1 profits drop at brokerages
By Winny Wang |
July 24, 2010, Saturday
|
Print Edition
Print Edition
FALLING commissions and proprietary business hurt domestic brokerages in the first half of this year with only seven out of 57 reporting profit growth.
Among the 57 brokerages that had reported first-half results as of Wednesday, only seven saw profit growth compared with a year earlier while four firms reported a loss.
The companies earned a combined 17 billion yuan (US$2.51 billion) in the period, dropping 27 percent from a year earlier. Combined revenue dropped 9 percent to 45.92 billion yuan, according to data compiled by Shanghai Securities News.
Guotai Junan Securities earned 1.4 billion yuan in net income in the period, dropping 40 percent from a year earlier while Shenyin and Wanguo Securities saw profit fall 39 percent to 972 million yuan.
"Commissions fell and that was the key factor in the first half, and the weak proprietary business also affected performance as the stock market slumped during the period," China Securities Research said in a note.
The benchmark Shanghai Composite Index has slumped more than 20 percent this year, becoming one of the worst performers in Asia, after the central government stepped up measures to curb inflation and property speculation.
Weak trading turnover pushed brokerages to reduce commission rates to win clients. Commission income dropped about 15 percent in the first half from a year earlier.
However, the underwriting business did well in the first half backed by massive new share sales.
The 57 firms earned a combined 5.48 billion yuan from underwriting, headed by Ping An Securities and Guosen Securities.
A total of 178 companies launched initial public offerings in the first half to raise a combined 213.2 billion yuan while 71 companies refinanced 193.4 billion yuan in the period.
"The market is still in a bearish mood and brokerages can't expect extra returns. We estimate whole-year revenue for brokerages will decline 30 percent on a yearly basis," Guotai Junan Securities said.
Huatai United Securities expects whole-year profit will drop 41 percent to 54.9 billion yuan at brokerages.
Among the 57 brokerages that had reported first-half results as of Wednesday, only seven saw profit growth compared with a year earlier while four firms reported a loss.
The companies earned a combined 17 billion yuan (US$2.51 billion) in the period, dropping 27 percent from a year earlier. Combined revenue dropped 9 percent to 45.92 billion yuan, according to data compiled by Shanghai Securities News.
Guotai Junan Securities earned 1.4 billion yuan in net income in the period, dropping 40 percent from a year earlier while Shenyin and Wanguo Securities saw profit fall 39 percent to 972 million yuan.
"Commissions fell and that was the key factor in the first half, and the weak proprietary business also affected performance as the stock market slumped during the period," China Securities Research said in a note.
The benchmark Shanghai Composite Index has slumped more than 20 percent this year, becoming one of the worst performers in Asia, after the central government stepped up measures to curb inflation and property speculation.
Weak trading turnover pushed brokerages to reduce commission rates to win clients. Commission income dropped about 15 percent in the first half from a year earlier.
However, the underwriting business did well in the first half backed by massive new share sales.
The 57 firms earned a combined 5.48 billion yuan from underwriting, headed by Ping An Securities and Guosen Securities.
A total of 178 companies launched initial public offerings in the first half to raise a combined 213.2 billion yuan while 71 companies refinanced 193.4 billion yuan in the period.
"The market is still in a bearish mood and brokerages can't expect extra returns. We estimate whole-year revenue for brokerages will decline 30 percent on a yearly basis," Guotai Junan Securities said.
Huatai United Securities expects whole-year profit will drop 41 percent to 54.9 billion yuan at brokerages.
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