Haitong Securities' First-Half Profit Drops 25% on Commission Competition

Haitong Securities Co., China’s second-biggest brokerage by market value, reported a 25 percent decline in first-half profit as competition squeezed commissions and investors traded fewer stocks.

Net income fell to 1.8 billion yuan ($265 million), or 0.22 yuan per share, from 2.3 billion yuan, or 0.30 yuan, a year earlier, the company said in a statement to the Shanghai Stock Exchange today.

China’s securities companies are facing more intense competition as trading outlets expand. Only Tibet and five other provinces and regions in China need more brokerage outlets, because the remaining 30 are all “relatively saturated” at the end of July, the Securities Association of China said in a statement.

Shanghai-based Haitong earned about 2.4 billion yuan, 55 percent of its revenue, from trading shares for clients, 17 percent less than in the same period a year earlier.

Falling stock trading volumes also eroded Haitong’s profit. China’s investors traded an average of 13.58 billion shares a day in the first half, 34 percent less than the average of 20.61 billion shares in the same period last year.

The company made 181 million yuan from proprietary trading in the first half, down 47 percent from a year earlier as China’s benchmark Shanghai Composite Index declined 27 percent.

Haitong made 615 million yuan from arranging equity sales in the first half, 659 percent more than a year earlier.

--Yidi Zhao and Li Xiaowei. Editors: Russell Ward, Josh Fellman

To contact the reporter on this story: Yidi Zhao in Beijing at at yzhao7@bloomberg.net

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