SHANGHAI, March 27 CITIC Securities Co Ltd
, China's biggest brokerage, reported its
fastest profit growth in three years in 2013, as revenue from
newer lines of business more than offset a fall in traditional
investment banking income.
CITIC reported a 25 percent rise in net profit on Thursday,
a sharp turnaround from the previous year when profit fell by
The broker's return to profit reflects its strength in new
lending businesses, such as margin and stock-repo financing, a
sign that China's initiatives to encourage this area are
Net profit rose to 5.24 billion yuan ($843.9 million) in
line with its preliminary results released in January.
The profit rise in 2013 marks the highest growth since 2010,
when net profit rose nearly 26 percent.
China resumed initial public offerings (IPOs), earlier this
year after freezing them in late-2012, which should boost
earnings for CITIC, a heavyweight in organising stock market
Revenue from its lending business increased almost fourfold
in 2013 to 33.42 billion yuan, helped by regulatory changes.
CITIC's results mirror other Chinese brokerages, which
dipped in 2012 and recovered the following year as they
diversified their businesses.
"Traditional brokerage business is not very profitable,
margins are declining, because the business is very fragmented
and all the players want to compete on price," Leon Qi, an
analyst at Daiwa Capital Markets, said before the earnings were
"Interest rates in China are much higher than the rest of
the world, so brokerages are able to charge a very high interest
on margin and collateralized lending... so they are moving to
that area," he said.
CITIC's revenue from its traditional brokerage business,
which mainly consists of trading commissions, rose 80.2 percent
to 6.50 billion yuan in 2013, while investment banking revenue
fell 19.5 percent to 2.22 billion yuan. The CSI300 index of top
Chinese companies fell 7.6 percent last year.
Profits for Chinese brokerages rose 33.3 percent to 44
billion yuan in 2013 from 33 billion yuan in 2012, according to
figures from the Securities Association of China.
($1 = 6.2094 Chinese Yuan)
(Reporting by Shanghai Newsroom; Editing by Erica Billingham)