Brokerage Q1 Earnings Diverge as Proprietary Trading Becomes the Deciding Factor

Q1 Reports Pour In, Revealing a Tale of Two Extremes for Brokerages

As listed brokerages or their parent companies released a wave of Q1 2026 earnings reports, the industry's profit landscape is becoming increasingly clear. According to Wind data, as of April 28, 19 A-share listed brokerages or their parent companies had disclosed Q1 reports or preliminary earnings, presenting a notable pattern of "the strong getting stronger while the weak face mounting pressure."

Among them, CITIC Securities posted a record-breaking net profit attributable to shareholders exceeding 10 billion yuan for a single quarter for the first time in history, setting a new industry record and further solidifying its position as the sector leader. Mid-to-small-sized brokerages such as Caitong Securities and Northeast Securities also delivered impressive results, with year-on-year net profit growth exceeding 100%, emerging as dark horses in this earnings cycle. However, not all brokerages enjoyed a strong start to the year — Guosheng Securities and Xiangcai Co., Ltd. saw declines in net profit, underscoring the sharp intra-industry divergence.

Proprietary Trading: The Decisive Factor in Earnings Performance

From a business structure perspective, proprietary trading has become the critical variable shaping brokerage Q1 results. Multiple industry analysts noted that the A-share market exhibited structural trends in Q1 2026, with heightened volatility in major indices creating a landscape of both opportunities and challenges for proprietary investment operations.

Brokerages that achieved substantial earnings growth generally benefited from outstanding proprietary trading performance. CITIC Securities, for example, leveraged its massive proprietary asset base and precise investment strategies to achieve significant investment returns amid market fluctuations, propelling overall profits to new heights. Caitong Securities and Northeast Securities similarly achieved strong returns in both equity and fixed-income proprietary investments, driving robust earnings growth.

Conversely, brokerages under earnings pressure were largely dragged down by proprietary trading underperformance. Some mid-to-small-sized firms misjudged market conditions and made suboptimal asset allocation decisions. Combined with high base effects from the same period last year, proprietary investment returns contracted sharply, weighing on overall profitability.

Brokerage and Investment Banking: Stable with Subtle Shifts

Beyond proprietary trading, traditional brokerage and investment banking businesses delivered relatively stable Q1 performances. Market trading activity remained at elevated levels during the quarter, with average daily turnover across both exchanges staying above one trillion yuan, providing a degree of support for brokerage commission income. However, the ongoing downward trend in commission rates limited the marginal contribution of brokerage services to overall earnings.

On the investment banking front, as the comprehensive registration-based IPO system deepened and regulators raised quality requirements for listed companies, IPO pacing remained prudent overall. Revenue divergence in investment banking was also pronounced across firms, with leading brokerages continuing to dominate thanks to their project pipelines and brand advantages.

Industry Outlook: Divergence Likely to Persist

Looking ahead, multiple institutions believe the divergence in brokerage earnings will likely continue in the near term. On one hand, ongoing capital market reforms are expected to further increase industry concentration, amplifying the advantages of leading brokerages in capital strength, risk management capabilities, and business synergies. On the other hand, the inherent volatility of proprietary trading means its impact on earnings remains uncertain, making investment capability and risk management proficiency the core metrics for differentiating competitive strength.

Notably, as AI technology accelerates its penetration into the financial sector, several leading brokerages have already deeply integrated artificial intelligence into quantitative trading, intelligent investment research, and risk management. This has, to a certain extent, enhanced decision-making efficiency and risk control in proprietary trading operations. Going forward, fintech capabilities may become yet another critical variable influencing brokerage proprietary trading performance.

For investors, while short-term earnings elasticity warrants attention, greater emphasis should be placed on brokerages' long-term competitive moats, including comprehensive business layouts, risk management frameworks, and progress in digital transformation.