March 19, 2020 / 11:51 AM / in 16 days

UPDATE 1-China's top brokerage CITIC sounds warning after strong start to year

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BEIJING/SHANGHAI, March 19 (Reuters) - CITIC Securities Co , China’s biggest brokerage, warned on Thursday of the potential impact of the coronavirus on its business after figures showed a big jump in net profit in February.

The securities industry started 2020 strongly with monetary easing and relaxed financing rules to soften the economic blow of the outbreak buoying trading and underwriting businesses.

The firm said it expected the coronavirus outbreak to have a short-term impact on its asset quality and investment returns and the gravity would depend on how long the outbreak lasts globally, and what measures and policies are taken to control the epidemic.

CITIC Securities’ annual profit jumped 30% in 2019, it said. Its net profit in February jumped 37% from January, and is up 45% from a year earlier, according to Reuters calculations based on monthly results of the parent company, CITIC Group Corp .

Major segments of CITIC’s businesses - underwriting and investment - saw a jump in revenue, driven by a 22.3% rise in the benchmark index amid government stimulus measures, bold market reforms, and heavy foreign inflows.

CITIC’s net profit for the 12 months ended December rose to 12.23 billion yuan ($1.72 billion) from 9.4 billion yuan a year ago, the company said, largely in line with the preliminary results released in January.

Revenues generated from stock investment jumped by 33.6% to 12.2 billion yuan for CITIC, while deal fees rose by 54.5% to 4.3 billion yuan, the annual report showed.

China’s brokerages earned 123.1 billion yuan in net profit in 2019, up 85% from a year earlier, while their revenue rose by 35%, Reuters calculations based on data from the Securities Association of China show.

Hong Kong shares of CITIC closed down 5.8% on Thursday at HK$13 before the results were announced, in a broader market that declined 2.6%.

Its Shanghai shares edged up by 0.58% on the day.

$1 = 7.1005 Chinese yuan renminbi Reporting by Cheng Leng, Zhang Yan in Beijing and Engen Tham in Shanghai; Editing by Himani Sarkar and Elaine Hardcastle

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