Investment bank Orient Securities has released a research report highlighting that a combination of balance sheet expansion and improved profitability is driving a meaningful recovery in return on equity (ROE) across the securities industry. Operating leverage has risen to 6.06 times, serving as a key incremental driver in this round of ROE improvement for the sector.

Proprietary trading has emerged as the core pillar of earnings growth, with business models continuing to shift from directional investment toward diversified client-driven operations. As proprietary trading, wealth management, investment banking, and international business accelerate their upgrades, top-tier brokerages with stronger capital strength, licensing advantages, research capabilities, and client bases are expected to sustain superior earnings resilience relative to the broader industry.

Higher Earnings and Leverage Accelerate ROE Recovery for Brokerages

For the first half of 2026, listed brokerages generated total operating revenue of RMB 371.53 billion and net profit attributable to shareholders of RMB 167.22 billion, representing year-on-year increases of 43.9% and 48.7%, respectively. The net profit margin rose to 45.0%, while annualized ROE reached 10.5%, up 2.76 percentage points year-on-year. Both improved profitability and balance sheet expansion contributed to the ROE rebound, with operating leverage climbing to 6.06 times, becoming a significant incremental source of this upward trend.

Proprietary Trading Leads Growth as Business Models Evolve

In the first half of 2026, net proprietary trading income for listed brokerages reached RMB 175.44 billion, up 48.9% year-on-year, with its revenue share rising to 47.2%. Annualized proprietary investment returns improved to 4.3%. While returns from science and technology innovation investments and alternative assets are gradually being realized, leading brokerages are also accelerating their expansion into derivatives, market making, cross-border hedging, and global asset allocation. Non-directional client-driven businesses are expected to reduce earnings volatility that comes from relying solely on directional equity and FICC positions.

Brokerage and Credit Businesses Surge on Market Activity, Asset Management Improves

Net brokerage income for listed brokerages in the first half of 2026 totaled RMB 99.89 billion, up 55.0% year-on-year, as higher trading volumes effectively offset declining commission rates. Net interest income grew 56.6% year-on-year, while margin financing balances expanded 62.6%, further boosting credit business revenues. During the same period, net asset management income grew 29.9% year-on-year, with assets under management recovering and fee rates improving. The industry continues to transition from channel-based business toward active management and comprehensive wealth management services.

IPO Recovery Continues as Resources Concentrate Among Leading Brokers

Net investment banking fee income for listed brokerages in the first half of 2026 increased 24.1% year-on-year, while A-share IPO financing scale grew 65.3%. Due to the high base effect from large bank refinancing activities in the prior year, total equity financing scale still declined 40.7% year-on-year, though bond underwriting remained stable.

With proprietary trading, wealth management, investment banking, and international operations undergoing accelerated upgrades, top-tier brokers equipped with robust capital, licensing resources, research capabilities, and client networks are well-positioned to maintain earnings resilience that outpaces the sector average.

Risk Warnings

Potential risks include a decline in market trading activity, significant volatility in equity and fixed income markets, changes in capital market reforms and regulatory policies, and underperformance in investment banking issuance.