Citic’s Profit Plunges on ‘Lackluster’ Share Market, Yuanby
First-half net income falls 46% from same period in 2015
Yuan’s decline reduces profit reported in Hong Kong dollars
Citic Ltd., China’s biggest conglomerate, posted a 46 percent decline in half-year profit, citing the yuan’s slide and weakness in a securities unit’s performance because of a “lackluster” Chinese share market.
Net income for the six months through June 30 dropped to HK$20.2 billion ($2.6 billion) from HK$37.7 billion a year earlier, according to a filing to Hong Kong’s stock exchange on Friday. The company warned last month of a decline of between 40 percent and 50 percent.
The yuan’s depreciation crimped profit because the company reports in Hong Kong dollars.
In a letter to shareholders, Chairman Chang Zhenming cautioned that Chinese banks’ profitability and capital will likely be eroded “in the near term.” China Citic Bank Corp. said Thursday that it plans to raise as much as 40 billion yuan ($6 billion) selling convertible bonds.
Chang also focused on the potential gains for Citic -- which operates across financial services, real estate and energy -- in tapping big data.
Citic sprang from Citic Group, China’s first state-owned investment corporation, which was set up in 1979. The Hong Kong-listed entity holds stakes in companies including Citic Securities Co., China’s biggest listed brokerage.