CITIC Securities at thirty: How far is it from the "Goldman Sachs dream"?

In October 1995, when CITIC Securities was first established in Beijing, did the founding elders anticipate that the company would maintain its leading position in the securities industry for many years to come?

Entering its "thirties," CITIC Securities is the closest entity to an international investment bank in the domestic securities industry, and the "Goldman Sachs dream" has indeed been CITIC Securities' long-standing aspiration for the past decade.

In the recently concluded year of 2024, CITIC Securities achieved revenue close to 64 billion yuan and earned a net profit attributable to shareholders exceeding 21.7 billion yuan, marking approximately a doubling of growth compared to 2014. However, there remains a significant gap compared to international leading institutions represented by Goldman Sachs.

This year also marks the tenth year that Chairman Zhang Youjun has been at the helm of this securities giant.

With aspirations in the front and competitors in pursuit, the wave of consolidation in the securities industry is beginning to unfold.

The integration of leading institutions such as "Guotai Junan + Haitong" and "Galaxy + CICC" is bringing more changes to this "king of the securities industry."

Emerging from the Darkest Hour

CITIC Securities is gradually emerging from the quagmire of dual revenue and profit slowdown over the past two years.

In 2024, revenue and net profit attributable to shareholders were 63.789 billion yuan and 21.704 billion yuan, respectively, with year-on-year growth rates of 6.2% and 10.06%, escaping the cyclical difficulties of the past two years.

The impact of the "924 market" may have played a significant role.

In the fourth quarter alone, CITIC Securities' revenue reached 17.648 billion yuan, a year-on-year increase of nearly one-quarter, setting a new quarterly high since the third quarter of 2022.

Despite the significant growth in revenue, net profit in the fourth quarter of 2024 fell by nearly 20% compared to the previous quarter.

Xi Zhiying, head of the financial planning department, provided an explanation: due to the expense cutoff testing and provisions made in the fourth quarter, as well as the assessment of risk assets and increased impairment provisions.

In terms of business, securities investment income saw significant growth, generating 24.04 billion yuan in 2024, a notable year-on-year increase of 23.95%.

On the asset allocation side, the improvement in market conditions has greatly enhanced profits from trading financial assets.

By the end of 2024, the amount of these assets reached 690.862 billion yuan, accounting for over 70% of the fair value measurement items, contributing 51.409 billion yuan in profit, nearly 20 billion yuan more than the previous year.

This asset allocation consisted of nearly 50% bonds and nearly 30% stocks, with fair values at the end of the period of 338.998 billion yuan and 200.456 billion yuan, respectively.

Brokerage business also saw significant growth.

Although it was still in a downward trend in the first half of the year, it ultimately achieved revenue of 16.557 billion yuan for the year, a year-on-year increase of 8.92%, reversing the previous decline.

Investment Banking Warming Up

Affected by the slowdown in IPOs, investment banking business faced significant pressure.

In 2024, CITIC Securities' securities underwriting business revenue was only 4.033 billion yuan, a year-on-year decline of 35.43% The underwriting amount during the same period was 54.807 billion yuan, accounting for 26.25% of the total among 50 listed securities firms, still ranking first.

A turning point may be approaching.

According to previous reports from Xinfeng, due to a shortage of personnel in the ECM (Equity Capital Markets) team responsible for stock issuance underwriting, CITIC Securities is planning to reallocate personnel from other teams. (For details, see Xinfeng's March 11 article "[Exclusive | Signals of a Recovery in Equity Financing? CITIC Securities Plans to Increase ECM Team Personnel](http://独家丨股权融资回暖信号？中信证券计划调增 ECM 团队人手%20https//wallstreetcn.com/articles/3742785#from=ios)")

CITIC Securities General Manager Zou Yingguang holds an optimistic view on the development of the primary market in 2025.

"Regarding the situation in 2025, we feel that the overall investment banking business has begun to gradually improve this year. The number of domestic and overseas listed companies filing applications is gradually increasing," Zou Yingguang pointed out. "We believe that the company's investment banking business still has great potential."

In the bond underwriting segment, CITIC Securities' underwriting amount reached 21.2 trillion yuan in 2024, ranking first in the market, accounting for 14.97% among 95 securities firms, which is basically flat compared to 2023.

However, according to exclusive information from Xinfeng, CITIC Securities previously reallocated some personnel responsible for equity underwriting and industry projects to the bond underwriting team due to a decline in equity underwriting business. But with the recovery of the equity underwriting market, those personnel have been returned to their original teams.

A Ten-Year Commitment

Looking back over the past decade from the "standing at thirty," it has been an important phase for CITIC Securities to stabilize its position as the industry leader and to make strides toward becoming an international investment bank.

Ten years ago, in 2014, benchmarking against Goldman Sachs became a long-held aspiration and future commitment for CITIC Securities, and "Maizidian Goldman Sachs" and "big platform" became industry jargon referring to CITIC Securities.

Another significant opportunity that year was the industry-wide capital replenishment plan for securities firms, which mandated the expansion of asset scale, becoming a pivot for CITIC Securities' further expansion.

In the following ten years, CITIC Securities continuously expanded its scale through mergers and acquisitions, acquiring control of Kunlun International Financial in 2015 and spending 13.4 billion yuan to acquire 100% equity of Guangzhou Securities in 2019.

Compared to ten years ago, many businesses have indeed shown significant expansion.

In 2024, overseas revenue reached 10.948 billion yuan, accounting for 17.16%. Compared to ten years ago, when overseas regional revenue was not separately listed, the international business has made substantial progress.

The investment banking business even surpassed Goldman Sachs at one point.

In 2022, when the Shanghai and Shenzhen IPOs led the world with the registration system reform, CITIC Securities' main underwriting amount for A-share IPOs approached 150 billion yuan, surpassing Goldman Sachs to become the world's largest IPO underwriter with over 1/4 of the market share, compounded by external factors such as a quiet overseas financing environment.

The following year, with A-share financing remaining stable, CITIC Securities continued to outperform foreign securities firms such as Goldman Sachs and JP Morgan, retaining its title as the world's largest new stock underwriter—2023 IPO underwriting amount reached 50.033 billion yuan, more than twice that of Goldman Sachs (based on US stock IPO financing amount) However, the IPO rhythm was braked later, and this lead maintained for nearly two years came to an abrupt end.

In 2024, CITIC Securities' IPO underwriting amount was 13.278 billion yuan, falling back to about 60% of Goldman Sachs.

The brokerage business has also shown signs of fatigue. In terms of "net income from brokerage business fees," the figure for 2024 was 10.713 billion yuan, which is only about a 20% increase compared to 2014.

The change in market share has also been relatively limited. Taking 2023 as an example, CITIC Securities' "net income from brokerage business fees" accounted for 10.93% of the domestic peer market share, which is even a slight decrease from 11% in 2014.

CITIC Securities still seems to maintain a certain relative distance from its dream of becoming an international investment bank.

In 2014, CITIC Securities had a net asset of 99.099 billion yuan, which was 17% of Goldman Sachs at the same time; by 2024, net assets had grown to 293.109 billion yuan, narrowing the gap, but still only about one-third of the latter.

This is largely related to the strict separation regulatory model surrounding the securities industry in China. Due to business restrictions, there has long been a noticeable gap in scale between brokerages and banks.

Ten years ago, CITIC Securities, with a net asset scale of 99.1 billion yuan, was comparable in size to a Beijing Bank.

Now, with a net asset of 293.109 billion yuan, although it has nearly doubled compared to ten years ago, under the uniform growth of the banking industry, its scale has actually lagged behind Beijing Bank by more than 60 billion yuan.

This means that despite a decade-long capital replenishment plan and asset expansion, the relative distance between leading brokerages and banks has not only failed to shorten but has shown signs of further widening.

The Landscape Will Change

More new challenges have quietly formed today, ten years later.

The major merger of Guotai Junan and Haitong Securities is basically coming to an end, and the new name for the merger, "Guotai Haitong," has been pre-approved.

Through the two-way merger, the distance between Guotai Haitong and CITIC Securities is continuously being narrowed.

If we simply sum up the financial indicators of Guotai Junan and Haitong Securities, in 2023, Guotai Haitong's net assets, revenue, and net profit could reach 330.213 billion yuan, 59.094 billion yuan, and 10.383 billion yuan, respectively.

The expectations for the merger and integration of China Galaxy (601881.SH) and CICC (601995.SH) are also rampant.

The combined net assets, revenue, and net profit of "China Galaxy + CICC" in 2024 could reach 255.828 billion yuan, 56.805 billion yuan, and 15.725 billion yuan, respectively Under the continuous consolidation of domestic peers, there are speculations in the industry about a merger between CITIC Securities Co., Ltd. and CITIC Construction Investment.

At the performance release conference, CITIC Securities Chairman Zhang Youjun acknowledged that industry restructuring is indeed a pressure and challenge that CITIC Securities is facing.

"But I believe it is precisely because of these pressures and challenges that CITIC Securities will be prompted to better think about its future development layout. This adds a lot of motivation for our future development."

"As CITIC Securities, we have always adhered to our consistent thought, which is to achieve the vision goal of being a leading domestic and world-class Chinese investment bank," Zhang Youjun further pointed out.

Born in 1965, Zhang Youjun will turn 60 this year. In the face of a new competitive landscape where China's aircraft carrier-level securities firms are slowly setting sail, how CITIC Securities continues to maintain its lead is awaiting the test of history.

(Intern Zhao Qian also contributed to this article)