...August 8, 2024 HONG KONG (S&P Global Ratings) Aug. 9, 2024--China Citic Financial Asset Management Co. Ltd. (Citic Financial) expects a sharp increase in net profit in the first half of 2024 from a net loss in the first half of 2023. Although the company's first-half results signaled some improvements in its earnings prospects, its return on average assets is likely to stay below 1% in 2024-2025. This is because credit impairments will continue to strain its profitability. In our view, Citic Financial's (###-/Stable/A-3) leverage will remain weak, exceeding 12x in 2024 and 2025, given our calculation of capital base excludes unconsolidated equity investments in financial institutions. In 2023, the company recognized unrealized gains from a few equity investment transactions. This helped the company to turn a half-year loss into a full-year profit in 2023. Citic Financial also boosted its regulatory capital ratio to 15.1% by end-2023, well beyond the minimum requirement of 12.5%. We believe...
