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Published on January 30, 2008

On Monday, Seamico Securities also reported a grim 2007 net profit of Bt53.28 million, down 65.87 per cent year on year from Bt156.13 million.

The two brokers' poor results suggest other brokers will share the same fate.

Phatra Securities told the Stock Exchange of Thailand (SET) yesterday that brokerage fees from securities business, which provide 68.64 per cent of its income, had fallen from Bt1.23 billion in 2006 to Bt1.08 billion last year.

A decline in fees and services income, interest and dividends and other income exacerbated Phatra's earnings problems.

The lower brokerage fees from securities business can be ascribed to its executive partnership deal with Merrill Lynch, which reduced the company's average brokerage fee rate from 0.25 per cent in 2006 to 0.22 per cent, the company said.

"Brokerage fees from securities business, which were the company's main source of revenue, accounting for 68.64 per cent of total revenue in 2007, decreased by 12.76 per cent from Bt1.23 billion in 2006 to Bt1.08 billion in 2007," the broker said.

"The decrease was because the company had received approval from the SET to act as a securities brokerage for Merrill Lynch, as an exclusive partner. The brokerage fee rate to be charged to Merrill Lynch was changed from 0.25 per cent to 60 per cent of the commission rate permitted by the SET and was effective from August 3, 2007."

Phatra will pay an annual dividend of Bt2 per share, representing a 6.6-per-cent yield, for 2007 performance.

Phatra Securities' stock closed unchanged yesterday at Bt30.25.

Despite the sharp decline in Phatra's net profit, United Securities has maintained its "buy" recommendation on Phatra's stock, given that big investment-banking deals will be closed this year and this will boost Phatra's bottom line and increase returns from its investment portfolio.

Trinity Securities was more pessimistic. It made a "speculative buy" recommendation for Phatra Securities stock with a target price of Bt34.

The Nation