As the 2025 interim reports of securities firms conclude, investment banking business shows a new trend of overall recovery with internal differentiation. Wind data reveals that industry-wide investment banking losses have significantly decreased compared to the same period last year. However, some securities firms remain trapped in losses or have even turned from profit to loss, reflecting both opportunities and challenges during the current transformation period in the securities industry.

From a profitability perspective, only 10 securities firms reported investment banking losses among those disclosing investment banking profits this year, down from 20 firms in the same period of 2024 - a reduction of half. Particularly noteworthy is that leading securities firms including CICC and CITIC Securities Construction Investment have all turned losses into profits. CICC's performance was especially outstanding, with investment banking revenue surging 149.70% year-on-year to 14.45 billion yuan, jumping to second place in the industry and returning to the top three investment banks.

However, it's a tale of two extremes. Ten securities firms still report investment banking losses, with Guojin Securities losing 98.07 million yuan, becoming the industry's largest loss-maker. Zhongtai Securities turned from a profit of 139 million yuan in the same period last year to a loss of 37.59 million yuan. The sharp decline in IPO projects is one of the key factors leading to performance deterioration at these firms.

Notably, new trends in investment banking are emerging: facing IPO pace adjustments in A-share markets, leading securities firms are increasingly turning their attention to Hong Kong stock markets. CICC, CITIC, and other institutions are expanding their presence through Hong Kong subsidiaries, actively participating in Hong Kong IPO business. CICC International (CICC's Hong Kong subsidiary) achieved Hong Kong stock underwriting scale of 22.582 billion yuan in the first eight months of this year, exceeding the full year 2024, with market share far ahead of competitors.

However, expansion in Hong Kong business brings new challenges. According to Wind data, although leading securities firms have seen significant revenue growth, profit margins have generally declined to around 20%, less than half of the 50% level before the "827 New Policy" in 2023. This reflects that in the highly competitive Hong Kong market, some securities firms have had to trade price for volume, competing for market share through more competitive pricing.

Despite profit margin pressures, domestic securities firms' competitiveness in the Hong Kong market is rapidly improving. As of September 11, domestic securities firms occupy four of the top five positions in Hong Kong IPO underwriting amounts this year, demonstrating strong market competitiveness.

**Tale of Two Extremes**

Securities firms' investment banking is gradually emerging from the winter period.

The 2024 interim report showed that among 48 securities firms disclosing investment banking business profits, 20 reported losses, accounting for 41.67%. These included leading securities firms with strong investment banking capabilities, such as CICC and CITIC Securities Construction Investment.

Looking at the 2025 interim report, investment banking profitability has significantly improved, with the number of securities firms reporting investment banking losses dropping to 10, half of last year's figure. Leading securities firms' investment banking operations have all turned profitable, while those still in loss are mostly small and medium-sized securities firms. Securities firms still reporting investment banking losses this year include: Guojin Securities, Shanxi Securities, Guosen Securities, Zhongtai Securities, Zhongyuan Securities, Huaxi Securities, Pacific Securities, Changjiang Securities, Guoyuan Securities, and Hualin Securities.

It's worth noting that while most securities firms' investment banking profits increased in 2025, some individual firms saw expanded losses, and some firms that were profitable in the 2024 interim report reported losses in this year's interim report.

The most typical case is Zhongtai Securities' investment banking division, which reported a profit of 139 million yuan in the 2024 interim report, ranking tenth in the industry, but suffered a loss of 37.59 million yuan in the first half of this year. Zhongtai Securities is a leading regional mid-tier securities firm, with operating revenue consistently ranking between 15th and 20th in the industry in recent years. In the 2025 interim report, it ranked 18th in the securities industry with 5.257 billion yuan, with investment banking performance ranking roughly matching its operating revenue ranking.

Notably, although Zhongtai Securities' investment banking lost 37.59 million yuan in the first half, making it one of only 10 loss-making investment banks among those disclosing investment banking profits, its investment banking operating revenue of 261 million yuan in the first half still ranked 16th in the industry.

Another securities firm with good investment banking revenue ranking but expanded profit losses is Guojin Securities. Its investment banking division ranked 11th in the securities industry with relatively high revenue of 377 million yuan in the first half of this year, but suffered losses as high as 98.07 million yuan. In the same period last year, Guojin Securities' investment banking loss was 17.51 million yuan, far lower than the loss scale of leading securities firms like CICC and CITIC Securities Construction Investment at that time.

Now, CICC and CITIC Securities Construction Investment have turned losses into profits, with first-half profits reaching 276 million yuan and 180 million yuan respectively, ranking fifth and ninth in the industry. However, Guojin Securities' investment banking losses have further expanded, making it the securities firm with the largest investment banking profit loss scale this year.

Why have leading securities firms' investment banking operations turned profitable while Guojin Securities and Zhongtai Securities' investment banking profits have significantly shrunk? One key factor is the sharp decline in IPO projects.

According to Wind data, in the first half of last year, Guojin Securities and Zhongtai Securities sponsored 3 and 2 A-share listings respectively, while in the first six months of this year, both securities firms sponsored only 1 listed enterprise each. Additionally, the main board project Kent Catalyst sponsored by Guojin Securities for listing failed to meet fundraising expectations, originally planning to raise 571 million yuan but actually raising only 339 million yuan, with a completion rate of only 59.37%.

However, in August, Guojin Securities successively sponsored Energylink and Balansi for listing on the Beijing Stock Exchange, with fundraising completion rates both exceeding 96%. Among them, Balansi actually raised 345 million yuan, even exceeding the actual fundraising amount of the main board project Kent Catalyst sponsored by Guojin Securities. Affected by this, Guojin Securities' investment banking performance in the second half may improve significantly.

It should be noted that leading securities firms like CITIC Securities and CICC previously concentrated more energy on main board and STAR Market projects with larger fundraising scales and higher revenue cost-effectiveness. With IPO pace adjustments, leading securities firms have moved downstream, increasing investment in various projects including the Beijing Stock Exchange and New Third Board, further squeezing market space originally belonging to small and medium securities firms' investment banking. The "827 New Policy" has been implemented for over two years, and the effects of leading securities firms' strategic adjustments are gradually showing, correspondingly making the disadvantages of small and medium securities firms' investment banking increasingly apparent.

Additionally, two other investment banking operations in losses this year deserve attention: Pacific Securities, whose investment banking turned from profit to loss in the first half of this year, with profits of 18.52 million yuan from January to June last year turning to losses of 10.85 million yuan in the first half of this year. However, the difference between Pacific Securities' investment banking profit turning to loss is relatively small, and its comprehensive ranking among listed securities firms is also relatively low.

The other is Guosen Securities. This securities firm showed excellent performance in operating revenue and net profit in the first half of this year, with total revenue of 11.075 billion yuan ranking eighth among securities firms. This is the first time since 2018 that it has entered the top ten securities firms by revenue in an interim report, achieving an important breakthrough in ranking. However, investment banking business became the biggest drag on Guosen Securities' performance, with losses of 40.73 million yuan in the first half, slightly narrowing from losses of 41.69 million yuan in the same period last year.

**CICC's Strong Return**

Which securities firm's investment banking has made the greatest progress?

Looking solely at investment banking revenue year-on-year growth rates, three firms exceeded 200%: Bank of China Securities (216.81%), Guolian Minsheng (214.94%), and Huaan Securities (214.50%). Among them, Bank of China Securities and Huaan Securities had relatively small bases, with investment banking revenue of over 30 million yuan each in the first half of last year, increasing to around 100 million yuan in the first half of this year.

Guolian Minsheng's investment banking revenue in the first half was 544 million yuan, ranking seventh in the industry, being the fastest-growing among medium-to-large scale investment banks. However, its significant investment banking revenue growth was more due to securities firm merger - the 2025 interim report is the first detailed financial data disclosed after the merger of Guolian Securities and Minsheng Securities. It should be noted that before the merger, the listed securities firm Guolian Securities' investment banking was not its advantageous business, with rankings consistently outside the top 20; while Minsheng Securities was characterized by investment banking, frequently entering the industry's top ten, ranking seventh in the securities industry with 539 million yuan in the first half of 2024, second only to CICC.

Excluding merger factors, CICC has the fastest growth among leading investment banks, with significant improvements in both revenue and profit.

In terms of profit, CICC's investment banking once suffered losses in 2024, losing 784 million yuan in the first 6 months. At that time, CICC faced multiple pressures in various investment banking segments including A-share and Hong Kong stock market IPOs, combined with its large investment banking team scale and many high-cost overseas deployments, making it bear more pressure than most securities firms.

Starting from the fourth quarter of 2024, the Hong Kong stock market warmed up, with IPO acceleration and increased fundraising scale. CICC's investment banking, which has long held the top position among Chinese securities firms in the Hong Kong market, began to quickly "recover." By the end of that year, investment banking had turned losses into profits, achieving a profit of 423 million yuan. In the first half of this year, the Hong Kong stock market continued to improve, and CICC's investment banking revenue also increased significantly, with profits reaching 276 million yuan from January to June this year.

From a revenue perspective, the progress was even more significant. In the first half of last year, CICC's investment banking revenue was only 579 million yuan. In the first half of this year, it surged to 1.445 billion yuan, a year-on-year increase of 149.70%, with its ranking rising from sixth in the same period last year to second, narrowing the gap with industry leader CITIC Securities to 609 million yuan.

Actually, the key to CICC's significant investment banking performance growth lies in Hong Kong stock business. Its Hong Kong business is conducted through subsidiary CICC International. In the first half of this year, CICC completed star projects including CATL's Hong Kong IPO (the largest IPO globally since 2023), Haitian Flavouring & Food, and Sanhua Intelligent Controls, serving Chinese enterprises' global IPO financing scale of approximately $11.1 billion, ranking first in the market.

Taking a longer timeline, according to Wind data, in the first eight months of this year, CICC International's Hong Kong IPO underwriting amount has reached 22.582 billion yuan, exceeding the full year 2024, with an advantage of 11.277 billion yuan over second-placed CITIC CLSA (CITIC Securities' Hong Kong subsidiary), showing a very significant advantage.

**Hong Kong Stocks Become New Battlefield for Leading Securities Firms**

Examining securities firms' investment banking interim report data closely, another significant signal deserves attention: leading securities firms show significant revenue growth momentum, but profit margins are not high, mostly around 20%. Before the "827 New Policy" in 2023, many leading securities firms had investment banking profit margins exceeding 50%.

Taking CITIC Securities' investment banking as an example, its profit margin in the first half of this year was only 21.94%, compared to 25.33% in the same period last year, 48.72% in the same period of 2023, 53.51% in the same period of 2022, and 54.55% in the same period of 2021. In other words, CITIC Securities' investment banking profit margin has declined for four consecutive years, with current profit margins less than half of previous peaks.

Although CITIC Securities' investment banking profit margin was only 21.94% in the first half of this year, it was already at a relatively high level among leading securities firms' investment banking. Securities firms with investment banking revenue exceeding 1 billion yuan in the first half include five firms: CITIC Securities, CICC, Guotai Haitong, Huatai Securities, and CITIC Securities Construction Investment. Except for Huatai Securities' relatively high profit margin and CITIC Securities' profit margin of 21.94%, the other three securities firms' investment banking profit margins were all below 20%, with Guotai Haitong's investment banking profit margin being the lowest at only 13.38%.

What causes the sharp decline in leading securities firms' investment banking profit margins?

According to interviewed investment banking representatives' analysis, multiple reasons jointly caused this phenomenon, with two most core factors.

First, for leading securities firms, large-scale over-fundraising in A-share IPOs was once common, with investment banks receiving higher commissions on over-raised portions, which was an important source of high profit margins for investment banking previously. After the "827 New Policy," the sharp reduction in IPO fundraising scale, subsequent regulations prohibiting underwriting fees from increasing proportionally based on issuance scale, plus regulatory guidance on underwriting fees for some projects, significantly reduced investment banks' income from IPO projects, causing profit margins to drop substantially.

Second, with continued adjustments to A-share IPO pace, securities firms with Hong Kong subsidiaries have invested more energy in Hong Kong stocks, leading to cooperation between A-share investment banking staff and Hong Kong investment banking staff - A-share representatives persuade some enterprises originally planning to target Shanghai, Shenzhen, or Beijing exchanges to list in Hong Kong, with that representative's Hong Kong investment banking colleagues cooperating with A-share representatives to jointly sponsor enterprises targeting Hong Kong IPOs.

Since enterprises listing in Hong Kong must be sponsored by representatives holding relevant Hong Kong qualifications, A-share representatives cannot directly sponsor enterprises for Hong Kong listings. Additionally, since domestic securities firms' Hong Kong investment banking staff are generally far fewer than A-share staff, A-share representatives undertake most of the actual work in this cooperation, with income shared between the two teams.

Unlike the A-share IPO market dominated by Chinese enterprises, in the Hong Kong stock market, domestic securities firms face strong competition from internationally renowned investment banks like Goldman Sachs and Morgan Stanley, as well as local Hong Kong securities firms. After shifting more energy to Hong Kong stocks, some domestic securities firms adopted a strategy of prioritizing market share improvement. Low-price market grabbing became a common subsequent operation. Affected by this, some investment banks saw significant increases in Hong Kong stock business revenue but limited profit margins, further exacerbating the overall decline in investment banking profit margins.

Encouragingly, domestic securities firms' competitiveness in the Hong Kong market is rapidly improving.

As of September 11, domestic securities firms occupy four of the top five positions in 2025 Hong Kong IPO underwriting amounts (by issuance date), with leader CICC International's underwriting scale of 25.618 billion yuan far ahead, more than double second-placed CITIC CLSA (CITIC Securities' Hong Kong subsidiary). The second through fifth places are CITIC CLSA (CITIC Securities' Hong Kong subsidiary, 11.309 billion yuan), Morgan Stanley (10.420 billion yuan), Huatai Financial Holdings (Huatai Securities' Hong Kong subsidiary, 10.034 billion yuan), and CITIC Securities Construction Investment International (9.195 billion yuan). In previous years, Chinese securities firms held at most three positions in the Hong Kong IPO top five.