Chinese investment banks' first-quarter results indicate another gloomy start after they took a hit from depressed equity markets last year.

Changjiang Securities Co Ltd, Guangfa Securities Co Ltd and Hongyuan Securities Co Ltd issued their first-quarter results on Thursday. All three reported a year-on-year decline in profits.

Industry watchers said the results are an indication of the upcoming results of the other 15 domestically listed investment banks.

The poor results add to concerns over the sector's profitability, which was hurt badly last year by falling brokerage commissions caused by low trading volumes and a decreased IPO volume.

In a statement released to the Shenzhen Stock Exchange, Changjiang Securities said that trading volumes, despite a slight rebound, "shrank significantly" from the same period last year, hitting its brokerage income.

Meanwhile, income from proprietary trading declined as a result of the Shanghai Composite Index rising less than in the same period last year, it added.

Investment banks in China are less sophisticated than most of their foreign counterparts. They mainly focus on brokerage, underwriting and proprietary trading.

Unlike most global investment banks, they rely heavily on brokerage fees to make a profit, which are highly subject to market fluctuations.

Official figures show the average daily trading volume in the A-share market shrank 23.36 percent last year. That helped cut the banks' profits by 40.85 percent to 21.8 billion yuan ($3.46 billion).

Wang Jianhui, chief economist with Southwest Securities, believes the situation for investment banks is about to bottom out.

Source:chinesestock