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Earnings

CITIC Securities' first-half profit growth strongest in five years

BEIJING/SHANGHAI (Reuters) - CITIC Securities Co 600030.SS6030.HK, China's largest brokerage, on Monday reported a 38.5% jump in first-half profit, its biggest profit increase since 2015, led by gains from its equity investments.

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Net profit for the six months to June 30 rose to 8.93 billion yuan ($1.29 billion) from 6.45 billion yuan a year earlier, the company said, largely in line with preliminary results released in July.

Revenues in securities underwriting and investment - major parts of CITIC's business - jumped, helped by gains in the benchmark stock index .SSEC following government stimulus measures to support China's virus-hit economy.

The company also benefited from reforms at China’s STAR Market in Shanghai that boosted the number of listings on the tech-focused exchange.

Revenue generated from stock investment jumped by 50.8% to 8.92 billion yuan, while brokerage business revenues rose 28.6% to 6.57 billion yuan, CITIC’s interim report said.

CITIC said it would look out for risks in derivative, commodity and foreign currency-linked products that may be caused by pandemic induced market fluctuations.

China is trying to bolster the country's local brokerage industry as it opens up its financial markets to foreign players such as Goldman Sachs GS.N and Morgan Stanley MS.N.

International media has reported that there are merger plans between CITIC and smaller rival China Securities Co Ltd 6066.HK. Both brokerages have said they were not aware of any information about such plans.

Also, China’s securities regulator plans to grant investment banking licences to domestic commercial banks to create financial services companies big enough to compete with the Wall Street groups, Caixin reported in June.

China’s brokerage sector - which has more than 100 players - earned 83.1 billion yuan in net profit in the first half, up 24.7% from a year earlier, while revenue rose by 19.3%, Reuters calculations, based on data from the Securities Association of China, showed.

($1 = 6.9125 Chinese yuan renminbi)

Reporting by Zhang Yan and Cheng Leng in Beijing and Engen Tham in Shanghai; Editing by David Goodman and Jane Merriman

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