Guotai Haitong Securities (GTHT) released a research report stating that in the first quarter of 2026, the 43 listed securities companies collectively achieved net operating revenue and net profit attributable to parent company shareholders of 602 billion yuan, representing strong year-on-year growth. The annualized weighted average Return on Equity (ROE) rose to 9.2%. The industry is entering an era of competition among leading firms, emphasizing both willingness and capability, and combining proactive expansion with client demand-driven growth. Currently, high-quality leading brokerages show significant advantages in terms of ROE levels, growth potential, and valuation attractiveness. GTHT recommends a dual focus on international business and wealth management, specifically recommending CITIC Securities (600030.SH, 06030) and GF Securities (000776.SZ, 01776). The main points of GTHT's report are as follows:
Benefiting from strong growth in retail business, adjusted profits increased by nearly 40%. 1) In Q1 2026, the 43 listed brokerages collectively achieved net operating revenue of 1.504 trillion yuan, a year-on-year increase of 31%, and net profit attributable to parent company shareholders of 602 billion yuan, a year-on-year increase of 39%. The annualized weighted average ROE improved to 9.2%. 2) Breaking down the performance drivers, brokerage net revenue and net interest income increased by 44% and 88% year-on-year respectively, contributing 40% and 19% to the net revenue growth. This was primarily due to the average daily stock and fund trading volume and average daily margin financing balance increasing by 80% and 36% year-on-year respectively in Q1 2026. Proprietary trading, asset management, and investment banking businesses also showed growth.
Against a backdrop of increased uncertainty in proprietary trading, differentiated growth is a key theme. 1) Among the 43 listed brokerages, 13 companies (30%) achieved a year-on-year net profit growth rate exceeding 50%, while 12 companies (28%) experienced a year-on-year decline. 2) The primary reason for this divergence is the uncertainty in proprietary trading business. While the sector's total proprietary trading income increased by 12% year-on-year, nearly half of the brokerages saw negative growth. Amid fluctuations in stocks and bonds, some small and medium-sized brokerages achieved high growth due to realized gains on bonds classified as Other Comprehensive Income (OCI) or low base effects, while most faced year-on-year pressure. In contrast, most leading brokerages posted growth.
More importantly, the industry is entering an era of competition among top players, where both intent and capability are crucial, combining proactive strategies with client demand expansion. 1) The top ten brokerages by size achieved an average annualized ROE of 11% and a profit growth rate of 47% in Q1. Unlike previous bull markets, the advantages of high-quality leading brokerages in both ROE levels and growth potential were prominently highlighted in the first quarter. 2) From an income statement perspective, the strengths of leading brokers like CITIC Securities, GF Securities, and Huatai Securities in international business, client-driven proprietary trading, and even wealth management began to manifest in Q1. Proprietary trading growth is expected to exceed expectations, benefiting from domestic and international client demand & proprietary trading, as well as the release of gains from primary investments. Advantages in wealth management (including distribution services, international business, etc.) were also leveraged, leading to higher growth rates in brokerage business. 3) From a balance sheet perspective, spurred by a 'catfish effect' from consolidation among leading peers, top brokerages have accelerated balance sheet expansion, driven by both domestic and international proprietary trading and client-driven businesses. From last year to the present, the operating leverage of CITIC Securities, GF Securities, and Huatai Securities increased by 0.25x, 0.93x, and 1.11x respectively, with ending operating leverage nearing or exceeding recent peak levels.
Risk warnings include fluctuations in the equity market and macroeconomic recovery falling short of expectations.
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