CITIC Securities: Leading brokerage advantages further strengthened, focus on top-tier and mid-sized brokerages

How can AI · International Business become a new growth engine for securities firms?

In every Data AI Express, CITIC Securities’ research report dated May 7 stated that in 26Q1, listed securities firms’ net profit attributable to shareholders excluding non-recurring gains and losses increased by 39.9% year-on-year, and the ROE excluding non-recurring gains and losses rebounded to 2.06% (up 0.46 percentage points year-on-year). The proportion of both light- and heavy-capital businesses was 46%, with the business structure moving toward balance. The advantages of leading securities firms have been further strengthened: the ROE excluding non-recurring gains and losses reached 2.35%, and profit concentration was 74.7%. Business lines showed differentiated recovery: in 26Q1, asset management and net interest income had already surpassed 25Q3; brokerage and investment banking net income were close to 25Q3 levels. Investment and trading was dragged by market volatility, but leading firms with deeper non-directional positioning performed steadily. Profit elasticity was supported jointly by optimization of management fee rates and the release of credit impairment. International business is emerging with the “high leverage + high ROE” dual strengths, and is expected to become a new growth engine for leading securities firms to navigate the domestic cycle. It is recommended to deploy along two main lines: high certainty of performance and improvements in the long-term competitive landscape. It is expected that within the year, the securities industry’s ROE could reach close to the 90th percentile of the past decade, while current PE and PB are only below the 20th percentile, highlighting strong valuation value. Focus on leading securities firms and mid-sized securities firms.

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