Is the era of high salaries for brokerages over?

With the release of the "report card" in 2022, the salary of listed securities companies has surfaced. According to Wind data, the Beijing News shell financial reporter saw that about ninety percent of the nearly 30 securities companies that have released annual reports have experienced a decline in the average salary of employees. Up to now, the average salary of employees of 9 listed securities firms has exceeded 50,2021 yuan, compared with 28 in <>.

This round of salary shrinkage, executives are at the forefront. Among them, the total annual compensation of Dongxing Securities management fell the most, reaching 61%. "Compared with previous years, the basic salary has not changed, and the year-end bonus has been uniformly discounted by seven." A leading brokerage practitioner told the Beijing News shell financial reporter.

The securities industry has opened the curtain of salary cuts, which is not unrelated to the pressure of business performance. However, in the industry's view, salary cuts are also a manifestation of the technological revolution in the financial industry, and will become the norm in the future. The reduction of salary level is the adjustment of the market to the allocation of human resources.

Brokerage reshuffle bureau, Haitong Securities "lost light"

In the past year, due to the impact of multiple factors exceeding expectations, the operating performance of the securities industry was under short-term pressure. According to data from the China Securities Association, 140 securities companies in the industry achieved revenue of 2022.3949 billion yuan and net profit of 73.1423 billion yuan in 01, down 21% and 26% respectively year-on-year.

As of April 4, nearly 10 listed securities companies have announced their 30 financial reports, and the top securities companies have initially been determined. CITIC Securities secured the top spot and opened the gap with second place.

In 2022, CITIC Securities achieved annual revenue of 651.09 billion yuan, net profit attributable to the parent company of 213.17 billion yuan, although both fell by 14.92% and 7.72%, but CITIC Securities is still the only brokerage with a net profit attributable to the parent company of more than 200 billion yuan. Guotai Junan followed with revenue of 354.<> billion yuan.

Last year, the vast majority of the top ten brokerages performed better than the industry average. However, revenue has not broken through the overall poor performance of the industry, and the top brokerage has undergone a round of reshuffle. The revenue of four leading brokerages, Haitong Securities, Shenwan Hongyuan, China Merchants Securities and GF Securities, fell more than the industry average, of which Haitong Securities and Shenwan Hongyuan fell by 4%.

In one year, Haitong Securities' revenue ranking slipped from 2021nd in 2 to 2022th in 7. Shenwan Hongyuan and GF Securities dropped from 6th and 7th in the previous year to 9th and 8th respectively. At the same time, China Galaxy, CSC and CICC all achieved 2-3 jumps, ranking 3rd, 5th and 6th respectively.

In 2022, the net profit attributable to the parent of the top brokerage will also experience large changes, among which. Haitong Securities still recorded the largest decline - 49%, which also dropped its ranking directly to tenth place.

It is worth noting that in 2021, 10 listed securities companies entered the 2022 billion club. By 3, only three brokerages, CITIC Securities, Guotai Junan and Huatai Securities, will have a net profit of more than 85 billion yuan. At the same time, the top brokerage appeared Oriental Wealth, which ranked fourth with a net profit of 09.4 billion yuan.

The Beijing News shell financial reporter combed and found that in 2022, the performance of the securities industry will be under pressure mainly because of the decline in investment yield. Affected by market volatility, the operating profit of the trading and institutional sector of Haitong Securities in 2022 was -40.44 billion yuan, compared with 65.99 billion yuan in the previous year.

Wang Jianhui, a veteran of the securities industry, believes that due to the significant growth of residents' savings, a large part of this money will appear in various forms of investment in the future, and the financial needs of residents or families are growing day by day and have broad prospects. In this case, brokers who are good at asset management have a lot to offer.

In his view, the securities industry will have a high level of growth in the next few decades. "At present, the overall market environment at home and abroad is relatively weak, and the short- and medium-term performance of securities companies may be under pressure, and this year may be partially improved compared with last year, but there will be no fundamental change."

Tian Lihui, dean of the Institute of Financial Development of Nankai University, believes that with the economic recovery and market recovery, the performance of securities firms is expected to improve in the short term. However, in the impact of financial technology development and the homogeneous market competition of securities companies, it is a high probability event that the profits of securities firms will not improve significantly in the long run.

Salaries have generally shrunk, and executives say goodbye to tens of millions of annual salaries

The results of securities firms were released, and the rumor of "salary limit" was also settled.

In March, the top brokerage companies cut their salaries and became the focus of public opinion - the salary reduction rate is between 3% and 30%, depending on the level.

Now, the salary reduction of brokerages has appeared. According to Wind data, the Beijing News shell financial reporter found that nearly 30 securities companies released annual reports, and nearly ninety percent of employees experienced a decline in average salaries, while some executive salaries were directly "cut".

According to the annual average salary formula of employees, the Beijing News shell financial reporter calculated that up to now, the average salary of employees of 9 listed securities companies has exceeded 50,83 yuan, of which "one brother" CITIC Securities ranks first with an average salary of 64,2021 yuan. In 28, the average salary of employees of 50 listed securities firms exceeded 5,80 yuan, and <> exceeded <>,<> yuan.

A number of securities practitioners told the Beijing News shell financial reporter that this round of salary cuts affected the entire industry, and the salary reduction of ordinary employees was small, especially for executives. A middle and back office practitioner of a leading securities firm told the Beijing News shell financial reporter that his salary has not changed significantly, mainly because the company's management salary has shrunk significantly.

In the reporter's interview, some top securities company practitioners were worried about wages, "At present, my company has not issued a year-end bonus, and I hope that the end of the month will not drop too much." ”

For the salary adjustment of securities firms, a leading brokerage practitioner told the Beijing News shell financial reporter: "In previous years, the pre-tax salary would have increased by 300 yuan, but this year it has not increased." In other words, the basic salary is not moved, and the year-end bonus is uniformly discounted by seven. The management of a "waist" brokerage research institute told the Beijing News shell financial reporter that the current salary reduction is mainly reflected in the deferral of income and the reduction of year-end bonuses.

The Beijing News shell financial reporter combed and saw that the total annual compensation of the management in 2022 generally declined. Dongxing Securities had the highest decline, reaching 61%; The total annual compensation of CICC and Shenwan Hongyuan executives was "cut back", of which CICC fell from 9441.6 million yuan in the previous year to 4126.3 million yuan.

In addition, the total annual compensation of executives of Haitong Securities, Zhongtai Securities, CITIC Securities and CSC also fell by more than 30%.

For executives, tens of millions of compensation may be a thing of the past. In 2021, the total compensation of the top three executives of the 17 listed securities firms exceeded 1000 million yuan. In 2022, only five companies currently offer such high salaries. In the past year, CITIC Securities still ranked first in terms of total executive compensation, but the average compensation has fallen to 600 million yuan, falling below <> million yuan.

In May 2022, the China Securities Association's Guidelines for Securities Companies to Establish a Robust Remuneration System mentioned that securities companies should incorporate compensation management into the company's reputation risk management system and strengthen compensation-related reputation risk management. At the same time, securities companies are required to formulate a stable salary plan based on the characteristics of the industry when formulating the remuneration system, appropriately smooth the salary payment arrangement, and at the same time do a good job in controlling the extreme value and rhythm of salary incentives.

A few days ago, a number of listed companies publicly responded to salary cuts.

Zhang Youjun, Chairman of CITIC Securities, said, "We have formulated and implemented a number of salary management systems in strict accordance with the China Securities Association's Guidelines for Establishing a Stable Remuneration System for Securities Companies and the management systems of other superior units. Through relevant systems, comprehensively consider the risk attributes and characteristics of business and positions, social responsibility and professional responsibility, adhere to the principle of sharing system, adhere to the implementation of the salary deferral policy for managers and business personnel, and ensure that the allocation of resources is further tilted towards front-line employees and grassroots employees. ”

Zhang Youjun said, "We will fully consider the role of the entire salary system in the development of the industry and the long-term securities industry in the future, so the future salary system will also fully reflect the different requirements and layouts of short-term and long-term, individual and collective, different levels, front and back office." ”

Talking about the "wave of salary cuts" in the brokerage industry, many industry insiders said that it is linked to performance to a certain extent - performance decline, salary cuts are also normal.

Tian Lihui believes that the phenomenon of salary cuts is a manifestation of the technological revolution in the financial industry. "As the degree of replacement of professionals by artificial intelligence continues to increase, salary cuts for financial industry practitioners such as securities firms will become the norm. The reduction of salary level is the market's adjustment of the allocation of talent resources, which will promote more and better high-quality personnel to enter high-tech and other industries. ”

In his view, China's securities industry needs to actively face highly market-oriented industry competition and create its own unique competitive advantage. The reduction of the salary of securities practitioners and the efficiency improvement brought about by digitalization can reduce the transaction costs of China's capital market and promote the further prosperity and development of the market.

In this regard, Wang Jianhui said that the remuneration of securities firms needs to properly consider the salary situation of other brother industries, and if it is too prominent, it may cause an imbalance in the flow of talents between industries. At the same time, too high a salary system will also have some unnecessary side effects and even hidden risks on daily operation and management.

"For example, some employees may pursue high performance growth in order to pay high salaries, and sometimes take unnecessary risks." Wang Jianhui pointed out that in addition to being linked to performance and market-oriented adjustments, salary adjustments should also be controlled through division of labor, position or business line adjustments, so that the salary gap within the company and the industry can be controlled.

"We are not talking about pursuing egalitarianism, but the gap is too large, which is not conducive to the internal development of the company and the industry, pay due attention to balance, and at the same time, in key areas and key positions, we will enhance the enthusiasm of employees in a diversified way." Wang Jianhui said that the recent salary of the banking industry, especially the large state-owned banks, has rebounded to varying degrees, and this rise and fall has helped to level the gap between industries and make the overall healthy development of the financial industry. However, even after the salary cut, brokerage salaries are still very attractive at the moment.

To create an aircraft carrier-level brokerage, the head is now in the competitive landscape

Building an aircraft carrier-level brokerage has entered its fourth year.

As early as November 2019, the China Securities Regulatory Commission (CSRC) said in response to the proposal of the two sessions that it proposed the specific work content of building an aircraft carrier-level head securities company from six perspectives: capital, incentive mechanism, product and service, scientific and technological innovation, international layout, and risk compliance. These include multi-channel enrichment of capital of securities companies, encouragement of market-oriented mergers and acquisitions, support of industry excellence and strengthening, support of securities companies to optimize incentive and constraint mechanisms, and encourage securities companies to increase investment in information technology and scientific and technological innovation.

In recent years, securities firms have continuously accelerated the pace of capital replenishment. According to the Beijing News shell financial reporter did not completely comb and found that in terms of equity financing, Cinda Securities and Capital Securities landed in the capital market in 2022. In addition, CITIC Securities, Orient Securities, Industrial Securities, Caitong Securities, Great Wall Securities, Guojin Securities and other securities firms raised 685.2 billion yuan through allotments and fixed placements.

During the same period, Huatai Securities and CICC respectively threw out allotment fundraising plans of up to 280 billion yuan and 270 billion yuan, and seven securities firms, including Zhongyuan Securities, Guolian Securities, Caida Securities and Zheshang Securities, were also on the way to raise additional funds.

In terms of mergers and acquisitions, there have been many rumors in the market in recent years. In 2022, many securities firms such as Pacific Securities and Netinfo Securities triggered the "M&A and Reorganization" button. In addition, with the gradual landing of the restructuring of Founder Group, the merger conjecture of Founder Securities and Ping An Securities intensified due to intra-industry competition issues.

Industry insiders pointed out that mergers and acquisitions are an important means for many securities companies to explore rapid expansion of asset scale, especially for small and medium-sized securities firms, mergers and acquisitions can quickly enter the forefront of the securities industry.

At the beginning of 2023, the securities industry staged a "merger and acquisition" drama. Zheshang Securities, Soochow Securities and Guolian Group bid for the equity of Minsheng Securities, and finally Guolian Group auctioned 91.05% of the equity of Minsheng Securities for 30.3 billion yuan.

It is understood that "one brother" CITIC Securities has always been regarded as the first candidate for aircraft carrier-level brokerage. By the end of 2022, CITIC Securities' total assets reached 1.31 trillion yuan, more than double the 2019.0 trillion yuan at the beginning of 65.

Sun Jiageng, a non-banking analyst at Orient Securities, pointed out in his comments on CITIC Securities' 2022 results that the potential of aircraft carrier-level securities firms has emerged, and industry leaders continue to expand their leading edge.

Tian Lihui believes that China needs to become a bigger securities company on the premise of strengthening securities firms, build aircraft carrier-level securities firms, and participate in international competition. However, the improvement of the international business capabilities of Chinese securities firms in recent years is still limited. In his view, leading securities companies should effectively build international competitiveness and find a growth path to become stronger and bigger. Small and medium-sized securities firms need to form their own characteristics, create unique advantages, and carry out differentiated competition. In the current market development pattern, securities firms that take the lead in completing digital transformation and forming intelligent capabilities will achieve leapfrog development.

"Aircraft carrier-level brokerage, I think it has been formed in a sense." Wang Jianhui believes that the top securities companies have basically established a competitive landscape. For example, from the perspective of research institutions, the top ten securities companies have accounted for more than 90% of the divided positions, and the creation of aircraft carrier-level securities companies has seen results.

The Beijing News shell financial reporter learned that compared with foreign securities industries, the business structure of various securities firms in Western developed countries such as the United States is quite different, but the development model of aircraft carrier-level securities firms mainly includes Goldman Sachs model, Merrill Lynch model, Schwab financial model and related Internet brokerage model. At present, China's securities firms are in the process of transformation from channel business to capital intermediary business, such as investment banking business from regulatory communication capabilities to value discovery, pricing underwriting and other professional capabilities; Brokerage business gradually shifted from channel service capabilities to investment advisory service capabilities; The asset management business has shifted from licensing and channel capabilities to active management and product creation capabilities.

"Personally, I believe that the situation in which one broker or several brokerages dominate half of the industry may adversely affect the risk of the control system. From the perspective of trading mode, brokerage is only one aspect of financial services, and its scale has a certain ceiling, and exceeding the ceiling may bring more challenges to risk control and operation. Wang Jianhui said that in the future, the development of securities companies should pursue more characteristic and differentiated competition.

At present, supervision continues to guide the differentiated development of securities companies, and actively exploring differentiated development paths has become a common choice for the vast majority of domestic securities companies.

Beijing News shell financial reporter Hu Meng