Orient: Economic recovery and the resonance of balance sheet expansion accelerate the release of bond business performance elasticity.

Orient has released a research report stating that the expansion of balance sheets is jointly driving the rebound in ROE, with operating leverage increasing to 6.06 times, becoming an important incremental source for the current round of ROE growth in the securities industry. Prop trading has become the core pillar of performance growth, with the business model continuously upgrading from directional investment to diversified client-driven operations. As prop trading, wealth management, investment banking, and international business accelerate upgrades, leading securities firms with stronger capital strength, license resources, research capabilities, and client bases are expected to maintain performance resilience above the industry average. Orient's main points are as follows: High growth in performance coupled with increased leverage accelerates the recovery of broker ROE. In the first half of 2026, listed brokerages achieved operating revenue of 371.53 billion yuan and net profit attributable to shareholders of 167.22 billion yuan, representing year-on-year growth of 43.9% and 48.7%, respectively. The net profit margin rose to 45.0%; the annualized ROE reached 10.5%, an increase of 2.76 percentage points year-on-year. The improvement in profitability and the expansion of the balance sheet jointly drove the recovery of ROE, with operating leverage rising to 6.06 times, becoming an important source of the current ROE upturn. Prop trading has become the core pillar of performance growth, with the business model continuously upgrading from directional investment to diversified client-driven operations. In the first half of 2026, listed brokerages' net income from prop trading amounted to 175.44 billion yuan, an increase of 48.9% year-on-year, with the income proportion rising to 47.2%; the annualized prop investment yield increased to 4.3%. Technology innovation and alternative investments are gradually being realized, while leading brokerages are accelerating their layout in derivatives, market making, cross-border hedging, and global asset allocation. Non-directional client-driven operations are expected to reduce the profit volatility stemming from a pure reliance on equity and FICC directional positions. Increased market activity leads to significant growth in brokerage and credit businesses, with asset management improving simultaneously. In the first half of 2026, listed brokerages' net income from brokerage services reached 99.89 billion yuan, up 55.0% year-on-year, as trading volume effectively countered the decline in commission rates; net interest income increased by 56.6% year-on-year, and the scale of funds lent grew by 62.6% year-on-year, further augmenting income from credit businesses through margin financing expansion. At the same time, net income from asset management services grew by 29.9% year-on-year, with assets under management recovering and fee rates increasing. The industry continues to transition from channel-oriented services to active management and integrated wealth management. IPO continues to recover, with business resources further concentrating on leading brokerages with comprehensive strengths. In the first half of 2026, listed brokerages' net income from investment banking fees increased by 24.1% year-on-year, while the financing scale of A-share IPOs grew by 65.3% year-on-year. Due to the high base of refinancing by large banks last year, the total scale of equity financing still decreased by 40.7% year-on-year, though bond underwriting remained stable. As prop trading, wealth management, investment banking, and international business accelerate upgrades, leading brokerages with stronger capital strength, license resources, research capabilities, and client bases are expected to maintain performance resilience above the industry average. Risk Warning Decreased market turnover; significant fluctuations in equity and fixed income markets; changes in capital market reforms and regulatory policies; investment banking business issuance not meeting expectations.