GF Securities 2025 Annual Report: Proprietary Investment Return Underperforms the Industry, Capital Leverage Ratio Temporarily Ranks at the Bottom

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Produced by: Sina Finance Listed Company Research Institute

By: Turing

As of March 31, 2026, 25 A-share listed securities firms that operate purely securities businesses have released their annual reports. Among the 24 firms that disclosed their results (Oriental Fortune has not published), GF Securities’ capital leverage ratio is temporarily at the bottom. In 2025, GF Securities (the parent company) rapidly expanded assets both on- and off-balance sheet, while its core net capital essentially stagnated in place.

Looking at sub-businesses, GF Securities’ proprietary business income showed a clear increase, but its investment return rate lagged behind the industry. Although the firm’s overall asset management business income achieved growth, its asset management subsidiary, GF Asset Management, has had negative revenue for two consecutive years, with consecutive losses. By contrast, other securities firms’ asset management subsidiaries not only did not have negative revenue and consecutive losses problems; most of them delivered positive revenue growth. GF Asset Management’s rare performance puts pressure on the adequacy of its accounting treatment, its investment capability, and whether there are major hidden risks. Although the company’s investment banking business income increased significantly, certain issues in some sponsorship and continuing supervision projects continued to surface, raising the question of whether GF Securities will face another “Waterloo” in the future.

Rapid expansion of on- and off-balance-sheet assets; core net capital essentially stagnant

The CSRC’s “Administrative Measures for Risk Control Indicators” clearly defines a risk control indicator system centered on net capital, and also imposes mandatory requirements on risk coverage ratio, liquidity coverage ratio, net stable funding ratio, capital leverage ratio, and others.

The capital leverage ratio is the core indicator used to measure a securities firm’s capital adequacy and leverage risk. The calculation formula is: “Capital leverage ratio = Core net capital / Total on- and off-balance-sheet assets × 100%.” Regulatory requirements state that this indicator must not be lower than 8%, with an early-warning line of 9.6%.

Among the 24 pure-securities-business securities firms that disclosed their 2025 annual reports, Hongta Securities has the highest capital leverage ratio at 45.68% (parent company basis, same as below); the lowest is GF Securities at 11.32%.

Source: Wind

In fact, GF Securities’ capital leverage ratio in 2024 was the lowest among 42 listed pure-securities-business securities firms, at 11.98%. In 2025, GF Securities’ capital leverage ratio continued to decline as on- and off-balance-sheet assets expanded rapidly while core net capital essentially remained flat.

At the end of 2025, GF Securities’ (parent company basis) core net capital was 70.2B yuan, up slightly by 1.07% compared with the end of 2024; the firm’s total on- and off-balance-sheet assets at end-2025 were 35.49B yuan, up sharply by 19.66% compared with end-2024.

A capital leverage ratio that is too low means the denominator (total on- and off-balance-sheet assets) is approaching the limit of the numerator (core net capital). Even if the company sees high-quality business opportunities, it may still be forced to stop because it hits the upper limit for the capital leverage ratio.

For GF Securities, a capital leverage ratio of 11.32% means there is very limited room to add leverage. If it wants to further expand capital-intensive businesses, innovate, and so on, it must first thicken core net capital through refinancing. This is also one of the underlying logics behind the company’s recent issuance of bonds and the launch of an H-share convertible bond.

In a bull market environment, high leverage acts as a profit multiplier—GF Securities’ 2025 proprietary investment return increased year over year by 59.64%. But when the market turns, everything reverses. In addition, with the capital leverage ratio staying at a low level for a long time, rating agencies and creditors may view it as a risk signal that the capital buffer is insufficient, directly pushing up the cost of debt financing.

**　　Proprietary investment returns lag behind peers**

In 2025, GF Securities achieved operating revenue of 13.7B yuan, up 34.33% year over year; net profit attributable to shareholders was 11.17B yuan, up 42.18% year over year; and net profit attributable after excluding non-recurring items was 12.3B yuan, up 59.93% year over year.

One important reason for GF Securities’ surge in performance is that trading and institutional business income—including proprietary business—grew strongly. In 2025, the company’s trading and institutional business income was 12.38B yuan, up significantly by 60.19% year over year, the highest growth rate.

According to a research report titled “GF Securities (000776.SZ): Wealth + Proprietary Drives High Performance Growth, Equity Investment Contributes Elastic Increment” published by Shenwan Hongyuan, based on its calculations, GF Securities’ proprietary investment income in 2025 was 12.31 billion yuan, and the full-year investment return rate was estimated at 2.85%.

An investment return of 1.23 billion yuan can roughly be derived using the formula “Net investment gains + Net fair value changes—Investment gains from investments in associates and joint ventures”; a 2.85% investment return rate can roughly be derived using “Proprietary business revenue / ((Financial investments at beginning of period + Financial investments at end of period) / 2).”

Meanwhile, according to a research report by Orient Securities titled “China Galaxy (601881) Financial Statement Review: ROE Significantly Improves, Multi-Dimensional Efforts Moving Toward a First-Class Investment Bank,” China Galaxy’s proprietary business revenue was 13.1 billion yuan, and its investment return rate was 3.39%. These two figures can be derived using the formula “Proprietary business revenue = Net investment gains + Net fair value changes—Investment gains from investments in associates and joint ventures,” and “Proprietary business investment return rate = Proprietary business revenue / ((Financial investments at beginning of period + Financial investments at end of period) / 2).”

Therefore, using the formulas above, we calculate that GF Securities’ proprietary business revenue in 2025 was 483.34B yuan, up 59.64% year over year, and its proprietary investment return rate was about 2.9%.

But it is worth noting that as of March 31, 2026, the average proprietary business investment return rate for the 25 A-share pure-securities-business listed securities firms for 2025 was approximately 3.3%. This means that GF Securities’ proprietary business investment return rate lagged behind the industry.

At the end of 2025, GF Securities’ financial investment assets were 369.51B yuan, while beginning-period assets were 7.7B yuan. In today’s environment where proprietary business has become the “decider” for securities firms’ performance, the proprietary investment return rate is not only a direct indicator of the company’s investment capability, but also a key dimension for assessing its overall competitiveness and long-term development potential.

Asset management subsidiaries of securities firms with negative revenue for two consecutive years—extremely rare in the industry

In 2025, GF Securities’ overall asset management business (including stakes in fund management companies) performed steadily, but there was significant differentiation at the subsidiary level. The company’s overall asset management fee net income was 9.24B yuan, up about 12% year over year. Total revenue from all-coverage investment management business was 276M yuan, up 21.63% year over year.

At the level of securities firms’ asset management subsidiaries, GF Asset Management became the only company among 14 disclosed-annual-report subsidiaries of securities firms whose revenue and net profit have been negative for two consecutive years. For full-year 2025, its revenue was -276M yuan, net losses were -0.67 billion yuan, which is larger than its “loss” in 2024.

Source: Wind

It is worth pointing out that the “revenue” definition for securities firms’ asset management subsidiaries differs from that of ordinary companies. It includes the accrual and reversal accounting treatment of performance fees; therefore, negative revenue is technically possible in terms of accounting logic. For asset management companies, when revenue is negative, it may be because the performance-fee terms of asset management products (especially private placement products) adopt a “high-water mark method” or a “hurdle rate method.” If a product previously made money and had performance fees accrued, but then in subsequent reporting periods the product’s net value drops sharply and falls below the prior high-water mark, accounting standards require institutions to reverse the “paper gains” performance fees that were previously recognized but not yet actually collected, resulting in a negative revenue figure on the books.

But GF Asset Management’s revenue has been negative for two consecutive years, with cumulative net losses exceeding 1.2 billion yuan—extremely rare in the industry—raising questions about the prudence of its accounting treatment and whether its investment management capability is weak.

As of the end of December 2025, the net asset value scale of GF Asset Management’s single-asset management plans and special asset management plans increased by 12.61% and 38.08%, respectively, compared with the end of 2024; the net asset value scale of its collective asset management plans decreased by 38.68% compared with the end of 2024. As a result, the combined scale decreased by 16.82% compared with the end of 2024. As of December 2025, the outstanding scale of GF Asset Management’s asset management plans (excluding the securities firm’s large collective and ABS products) ranked 8th.

Since GF Asset Management’s asset management plan scale ranks in the top eight in the industry, why did it experience negative revenue for two consecutive years, very different from peers’ performance? Among 13 securities firms’ asset management companies that have already published annual reports (not considering Huitong Asset Management due to the impact of consolidation), 11 had positive revenue growth; Shenwan Hongyuan Asset Management had a slight revenue decline; and only GF Asset Management had revenue of -8.54B yuan and consecutive negative results. Investors are questioning whether, besides accounting treatment methods and performance issues, GF Asset Management has other “landmines” that have not been cleared. This requires the company to provide further explanations.

GF Securities’ “twin stars” fund companies have performed reasonably well. GF Fund, which it controls, had revenue of 2.75B yuan in 2025, up 17.64%; and net profit of 13B yuan, up 37.7%. GF’s equity-investee, E Fund, had operating revenue of 3.81B yuan, up 7.33%; and net profit of 884M yuan, down 2.42% year over year.

Is the investment banking business facing “Waterloo” again?

In 2025, GF Securities’ investment banking business fee net income was 30B yuan, up 13.6% year over year.

As of March 31, 2026, GF Securities’ A-share IPO reserve project count was 13 projects (based on exchange acceptance; excluding projects that have been terminated and already issued), ranking sixth in the industry.

From the data, GF Securities’ investment banking business shows signs of a rebound. But for investment banking—especially equity sponsorship business—what matters is quality, not quantity. If a sponsored project has serious violations, it could seriously impact the company’s investment banking business. For example, in the past few years, due to the Kangmei Pharmaceutical case, GF Securities has taken many years to recover.

In July 2020, GF Securities was hit with one of the most severe punishments in CSRC history specifically targeting investment banking business, due to the nearly 649M yuan financial fraud case involving Kangmei Pharmaceutical. The regulator determined that in multiple projects of GF Securities from 2014 to 2018 related to Kangmei Pharmaceutical, the firm failed to perform due diligence, with basic procedures missing in the due diligence phase, and a lack of appropriate professional prudence in practice, while internal quality control became a mere formality. As a result, GF Securities was suspended from its sponsorship institution qualification for 6 months and was temporarily not accepted for documents related to bond underwriting business for 12 months.

In 2020, GF Securities’ investment banking business fee net income was 0.649 billion yuan, down sharply by 55% year over year. The industry ranking fell from within the top ten to beyond 30. Even until 2025, GF Securities’ investment banking business fee net income still did not reach the level of 14.38 billion yuan in 2019.

Although GF Securities carried out rectification of relevant issues after receiving heavy penalties, there are still certain projects with extremely high risk—for example, the Beifang Long project that was frequently penalized.

Beifang Long was listed on the Shenzhen Stock Exchange’s ChiNext in April 2023, and GF Securities served as the sponsoring institution. In the listing year, the company immediately fell into losses: operating revenue declined year over year by 46.09%, and net profit attributable to shareholders was only 11.54 million yuan, while net profit after excluding non-recurring items was -7.11 million yuan. The CSRC determined that Beifang Long had “losses in the same year as its securities issuance and listing,” and issued a warning letter to GF Securities. If the sponsored company couldn’t even make it through the first year after listing, was the due diligence and investigation verification really adequate?

Recently, Beifang Long, which GF Securities continues to supervise as a sponsoring institution, also received both a regulatory letter from the Shenzhen Stock Exchange and an administrative regulatory measures decision from the Shaanxi CSRC—directly pointing to serious issues in its 2024 annual report, including revenue recognition across periods and internal control deficiencies (not formulating product acceptance rules according to actual business classification, and not strictly reviewing acceptance documents), as well as employees violating regulations in handling and responding to client inquiry letters.

In the field of audit and financial compliance, the independence of inquiry letters is the bottom line. If employees illegally step in to handle return responses, it directly undermines the credibility of financial data.

And just three months earlier, its sponsoring institution GF Securities had just issued a “no objections” 《2025 periodic on-site inspection report》 for Beifang Long. The question is: why did GF Securities fail to detect such a typical internal control failure as employees processing return responses in violation of rules?

The reason the Kangmei Pharmaceutical case triggered “top-tier penalties” is rooted in the scale of the financial fraud (nearly 30B yuan), the long duration (2016–2018), and GF Securities’ dereliction of duty as a long-established sponsorship institution. This was a full-chain, systemic collapse of internal controls. In contrast, for the Beifang Long case, the issues currently exposed are concentrated on losses in the listing year, internal control violations during the continuing supervision phase, and revenue recognition across periods. The magnitude of the violations is quite different from that of the Kangmei case.

But Beifang Long has long been a relatively large hidden risk, because the authenticity of its finances—especially the authenticity during the IPO reporting period—still needs verification. See, for details, the article “Beifang Long suffered losses in its first year after listing and almost got *ST last year; revenue and accounts receivable growth rates severely diverged; a 511% premium acquisition of a tiny target could be used to avoid delisting risks,” etc.

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