Ask AI · How can optimizing brokerage profit structures enhance resilience to economic cycles?

From “Bull Market Flexibility” to “Structural Capability”.

Author | Li Baiyu

Editor | Gao Yuanshan

Source | Wild Horse Finance

Since 2025, the brokerage sector has experienced a long-awaited profit recovery.

Driven by increased trading activity and improved market risk appetite, most listed brokerages have seen varying degrees of performance rebound, and the industry as a whole has shaken off previous sustained pressure. But unlike past cyclical recoveries where “market upturns lead to simultaneous performance growth,” behind this recent warming, a clearer trend is emerging — profits are recovering, but divergence is intensifying.

The market is no longer solely focused on revenue scale but is paying more attention to profit quality, cyclical resilience, and strategic steadfastness.

2025 is regarded as a pivotal year for the brokerage industry’s shift from “scale expansion” to “value reconstruction.” The competitive logic of brokerages is shifting from “bull market elasticity” to “structural capability.” When “performance recovery” itself is no longer rare, the real differentiators are increasingly rooted in deeper capabilities such as profit structure, client management, and global resource allocation.

Image source: Canned图库

01

Brokerages No Longer Rely on “Waiting for Market”

But on “Structural Profitability”

For a long time, brokerage performance has been closely tied to market conditions.

In traditional models, proprietary trading often served as the “profit engine.” By making investment decisions based on market direction, and capitalizing on favorable trends to earn excess returns, many brokerages achieved performance elasticity through this approach. But this model also carries high uncertainty: when market volatility intensifies, profits fluctuate sharply.

Over the past year, increased market turbulence exposed the fragility of traditional proprietary models. The industry has begun to realize that, compared to short-term high growth in profits, stable and sustainable profitability is the core of long-term value for brokerages. This shift is directly reflected in key industry metrics — Return on Equity (ROE).

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In 2025, the ROE of listed brokerages further diverged. Amid industry-wide pressure on overall ROE, those able to maintain relatively stable profits are gradually gaining higher market recognition. ROE is no longer just a financial indicator but has become an important measure of a brokerage’s “cyclical resilience.”

As of March 30, 26 brokerages or their main entities have announced their 2025 annual results. In the context of active capital market trading, these 26 firms all reported year-on-year increases in net profit attributable to shareholders, continuing the industry’s high prosperity. Some leading brokerages delivered unexpectedly strong results, with China International Capital Corporation (CICC) reporting a 71.93% YoY increase in net profit attributable to shareholders, exemplifying a typical case of industry profit model evolution.

According to CICC’s 2025 annual report, the company’s ROE last year was 9.39%, a significant improvement from 5.52% in 2024 — an increase of 3.87 percentage points YoY. Compared to the industry overall, according to a weekly report from Shanghai ShenYinWanGuo Securities Research, as of March 27, 15 brokerages had disclosed annual report data, with the industry average ROE rising by 1.77 percentage points YoY in 2025. CICC’s ROE increase notably outpaced the industry average.

A deeper breakdown of its profit structure reveals that this performance is not reliant on high-risk bets on a single business line, but rather on systemic optimization of income sources.

On one hand, CICC continues to strengthen client-oriented business layouts, significantly increasing the proportion of derivatives, cross-border services, and other “client-demand-driven” businesses. The annual report shows that in 2025, overseas revenue grew by 58% YoY, accounting for nearly 30% of total income. In derivatives, CICC’s stock trading services cover over 15k domestic and international investors, ranking first in Hong Kong stock placements, with QFII business maintaining the top position for 22 consecutive years, and interconnectivity trading share leading among Chinese brokerages. In fixed income, as the only Chinese investment bank to serve the Ministry of Finance’s offshore sovereign bond issuances for nine consecutive years, CICC has become one of the first “Bond Connect” Northbound market makers, continuously strengthening its international business capabilities.

On the other hand, CICC has effectively controlled profit volatility by reducing dependence on directional investments. Data shows the company’s product holdings exceed 460 billion yuan, with client buy-side advisory assets surpassing 130 billion yuan — a record high; in asset management, the managed scale reaches 596.9B yuan, up 25% YoY to 273.4B yuan. In a volatile equity market environment, these client-centric businesses can hedge some market risks, smoothing overall profit margins.

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This shift’s deeper significance lies in the fact that brokerages’ profit sources are moving from “market dividends” to “capability dividends.” The true determinant of competitiveness is whether they possess a replicable, synergistic comprehensive capability system.

The integrated advantage of “Investment + Investment Banking + Research” is reshaping brokerage competition logic. In the past, these three core businesses often operated independently: investment banking handled underwriting and sponsorship, research provided sell-side services, and trading managed proprietary funds. But in the era of “patient capital,” these functions need to collaborate: investment discovers quality enterprises and provides long-term capital support, investment banking accompanies companies through their growth and offers full lifecycle services, and research offers in-depth industry insights to support corporate strategies and investor decisions. This triad of capabilities, once established, becomes a formidable and hard-to-copy competitive moat.

As an industry benchmark, in 2025, CICC leverages its “investment + investment banking + research” integrated advantages to serve national strategic development, actively seize market opportunities, and steadily improve financial service quality. Its core business segments — investment banking, equity trading, wealth management — have achieved steady growth.

From an industry perspective, the differentiation in proprietary trading has become more pronounced in 2025. Some brokerages still rely on traditional directional investments, with performance fluctuating significantly amid market volatility; others, having completed their “client demand-oriented” transformation, demonstrate stronger profit stability.

It’s clear that the first major dividing line among brokerages is no longer “who earns more,” but rather “who has more stable profits and healthier profit structures.”

02

From “Selling Products” to “Managing Accounts”

If restructuring profit models addresses “how money is made,” then transforming wealth management is about “where the money comes from.”

For years, brokerage wealth management relied heavily on “product distribution” — selling mutual funds, wealth management products, and earning channel fees, with revenue driven by scale expansion. While this “traffic-based” model generated substantial income during bullish markets, fundamentally it remains a “traffic business” — low client stickiness and high revenue volatility.

2025 marks a critical year for brokerages’ wealth management shift from “product distribution” to “buy-side advisory.” The “traffic model” based solely on fund distribution volume is no longer sustainable. Those who can truly establish an “account management” model centered on client account returns will secure future growth. The industry broadly recognizes that the core of wealth management is no longer “selling products,” but “managing accounts.”

In this process, income structures are also changing. Fee models based on client account size (AUM) and account returns are gradually replacing one-time sales commissions, becoming more stable revenue sources. This trust- and service-based business model enhances the resilience of wealth management to economic cycles.

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As a leading brokerage, CICC’s transformation is quite representative. The annual report shows that the company’s wealth management product holdings have grown positively for six consecutive years, surpassing 460 billion yuan, with buy-side advisory assets exceeding 130 billion yuan — a record high. Its flagship product “China 50” generated over 450k yuan in client returns in 2025, with nearly all proprietary accounts (over 99%) profitable after one year. The “50 Service Matrix,” upgraded to cover different client segments, has served over 450k clients, with signed client assets exceeding 400 billion yuan.

By the end of 2025, CICC’s total wealth management clients approached 10 million, with client account assets totaling 42.8 trillion yuan. More importantly, its business model is shifting from simple product sales to “solution-oriented” asset allocation services.

It’s clear that future brokerage competition will be about “who can manage effectively,” not “who sells more.”

From an industry trend perspective, wealth management is undergoing a profound shift from “traffic” to “stock.” Previously, growth depended on new clients and new funds — a “traffic monetization” model. But as client growth slows and competition intensifies, relying solely on incremental inflows is no longer sustainable. In 2025, more brokerages realize that the real growth potential lies in deepening existing client relationships — how to keep assets “locked in, well-managed, and profitable.”

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In 2025, with the pilot program for fund advisory officially becoming a regular business, the institutional foundation for wealth management has been laid. The next challenge is whether brokerages can truly build a client-centric service system, including professional advisory teams, mature asset allocation models, and long-term client trust. Developing these capabilities is not quick, but once established, they will form a core, hard-to-copy competitive advantage.

03

Global Pricing Power

Begins to Determine Brokerage Tiering

Beyond profit structure and client management, another dimension widening the gap is internationalization capability.

In the past, international business was viewed more as a “strategic layout” — important but with limited short-term contribution. Many firms’ overseas operations were still exploratory, with low revenue contribution and minimal impact on overall performance.

But this is changing. As Chinese companies go global and demand for cross-border capital allocation rises, cross-border investment banking and global asset allocation are becoming increasingly important.

However, this field has high entry barriers. Most brokerages remain at the “channel service” stage, lacking core pricing power and a global client network. External environment shifts can cause revenue volatility.

Some top brokerages, however, have significantly increased their international income share, with cross-border investment banking and trading capabilities, giving them advantages in Hong Kong stocks, Chinese concept stocks, and cross-border financing.

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Taking CICC as an example, the annual report shows that in 2025, overseas revenue grew by 58% YoY, accounting for nearly 30% of total income. Its international business layout is the result of years of strategic effort. In 2025, CICC’s stock trading services covered over 15,000 domestic and international investors, ranked first in Hong Kong stock placements, with QFII business maintaining the top position for 22 years, and interconnectivity trading share leading among Chinese brokerages.

In fixed income, as the only Chinese investment bank to serve the Ministry of Finance’s offshore sovereign bond issuances for nine consecutive years, CICC became one of the first “Bond Connect” Northbound market makers, continuously expanding its international service network. In cross-border financing, CICC completed several landmark projects in 2025, including the world’s first simultaneous listing of Hong Kong and Kazakhstan, and the first Chinese concept stock IPO after the offshore listing registration system was implemented, consolidating its leadership in cross-border investment banking.

From the perspective of brokerage differentiation, internationalization capability is becoming a key dividing line. Brokerages with strong global pricing power can better seize cross-border capital flows and access high-quality opportunities; those lacking such capabilities risk missing out in the current global capital reallocation.

Looking back at 2025, this profit recovery is important, but the more critical aspect is the structural change behind it.

When “performance recovery” becomes industry-wide, the real differentiator is the “structural capability” gap among brokerages. Those that can break free from “dependence on market luck,” establish stable profit structures, develop “account management” rather than “product selling,” and possess global pricing power to serve cross-border capital flows will lead the next industry segmentation.

2025 is the year of the industry’s shift from “scale expansion” to “value reconstruction.” The ultimate goal of this transformation is a fundamental reshaping of brokerage competition logic — from “business differentiation” to “capability stratification,” from “relying on market luck” to “capability supremacy.”

In this wave of “capability reconstruction,” which type of brokerage do you believe has stronger long-term competitiveness? Share your thoughts in the comments.