(Yicai) Jan. 24 -- China Huarong Asset Management, the country's biggest state-owned bad loans manager, said it swung back into the black last year for the second time since the start of its financial woes in 2020, with the help of the firm’s largest shareholder Citic Group.

Net profit was probably between CNY1 billion and CNY2 billion (USD139.4 million and USD278.7 million) last year, compared with a net loss of CNY27.6 billion (USD3.9 billion) the previous year, the Beijing-based firm said in an earnings estimate released on Jan. 22.

Huarong's financial troubles followed an aggressive business expansion in its early years, with it posting a CNY102.9 billion (USD14.3 billion) loss in 2020. The company then managed to turn a profit in 2021, but Covid-19 outbreaks and a downturn in the capital market pushed it back into the red a year later.

Last year, Huarong expanded its market and strengthened its asset management, with the year-on-year improvement in the capital market and rise in the fair value of equities also positively contributing to its profit, according to the company. the firm also made major investments and enhanced its asset structure, it added.

After suffering financial difficulties, Huarong introduced five investors in 2021, including the state-owned conglomerate Citic Group, to help with the disposal of risky assets. Citic Group bought more stock in Huarong the following year and became its biggest shareholder with a 27 percent stake.

Last November, Huarong said it would take a 5 percent stake in Citic Group's Hong Kong-based listed arm Citic Limited for HKD13.6 billion (USD1.7 billion) and rename itself as China Citic Financial Asset Management.

The deal would help Huarong to improve its asset quality and financial status as well as optimize its business positioning, replenish its capital, and boost profitability, the firm said at the time. Citic Group would support its business transformation and development through brand licensing, personnel exchanges, and asset transactions under the principle of marketization and legalization, it noted.

Impacted by the economic environment and the sector as a whole, Huarong had about CNY40 billion (USD5.6 billion) of impairment losses and unrealized fair value changes for last year that offset the profit, it pointed out.

Editors: Dou Shicong, Martin Kadiev