Citigroup maintained its 0053.HK buy rating after it reported an interim net profit of HK $1.063 billion, compared with a net loss of HK $2.505 billion a year earlier.

Citigroup said its medium-term net profit was equivalent to about 90% of the bank's original forecast for its full-year net profit in fiscal 2010, driven by profits from special projects in its proprietary asset management business, which made an interim profit of HK $613.8 million and a loss of HK $3.1 billion in the same period last year. Because the company has made full use of market opportunities in the past few months to increase the size of its investment at a time of weak prices.

Citigroup raised its earnings forecast for the fiscal year 2010-2012 by 68%, mainly based on higher expectations of profit contribution from its proprietary asset management business. However, Citi lowered its target price from HK $120 to HK $88.80 as it restored its valuation discount to net asset value to a long-term historical level of about 30 per cent and now expects potential M & An activity to be less likely because Bank of East Asia did not allow Guohao to participate in the rights issue in December.

Guohao closed at HK $79.3 yesterday.