Zhongyuan Securities 2025 Annual Report: Investment Banking Revenue Halved, Massive Overseas Losses, Compliance and Business Shortcomings Await Optimization

Securities Star Zhao Zixiang

Recently, Zhongyuan Securities (601375.SH) released its 2025 annual report. For the full year, the company achieved operating revenue of RMB 1.96B, up 40.97% year over year; attributable net profit to the parent company was RMB 456 million, up 85.41% year over year. Overall, it showed a year-over-year growth trend.

Securities Star noted that beneath the growth headline, multiple key indicators and operational issues also cannot be ignored. Among them, investment banking business revenue was cut by about half, down more than 50% year over year; fourth-quarter earnings fell significantly quarter over quarter, and earnings stability was lacking.

At the same time, large losses emerged at overseas subsidiaries, continuously dragging down overall performance. The lingering effects of prior regulatory penalties for bond underwriting are evident. The business recovery process is slow. In addition, compliance incidents at subsidiaries occur frequently. The group’s compliance and internal control shortcomings are prominent, becoming an important factor constraining its steady and sound development.

Imbalanced performance structure; overseas losses drag growth

Although the securities industry in 2025 saw an overall rebound and Zhongyuan Securities also achieved year-over-year increases in revenue and net profit, the company’s core business performance was weak, earnings volatility increased, and its overseas segment recorded large losses—making these issues stand out in the annual report.

On March 27, Zhongyuan Securities released its 2025 annual report. The company’s operating revenue was RMB 1.96 billion, up 40.97% year over year; attributable net profit to the parent company was RMB 456 million, up 85.4% year over year; non-recurring item excluded attributable net profit was RMB 475 million, up 126.2% year over year.

Looking at the fourth quarter alone, the company’s operating revenue was RMB 524 million. Attributable net profit to the parent company was RMB 66.37 million, down 19.7% year over year; non-recurring item excluded attributable net profit was RMB 91.87 million, up 37.0% year over year.

By business segment, investment banking business—an important embodiment of a securities firm’s core competitiveness—showed clear contraction in 2025. According to the company’s annual report data, Zhongyuan Securities’ 2025 investment banking business fee net income was only RMB 24.2836 million, down 56.85% from the same period last year, nearly halving.

Insufficient earnings stability is also a notable weakness for Zhongyuan Securities in 2025. Observed by quarter, the company’s profits were relatively steady in the first three quarters. From the first to third quarters, net profit stayed above the RMB 100 million range. However, in the fourth quarter, net profit was only RMB 66 million, dropping sharply by nearly 50% quarter over quarter compared with the third quarter.

The rapid drop in earnings in the fourth quarter was, on the one hand, driven by the continued weakness of the investment banking business. On the other hand, it stemmed from market volatility that reduced proprietary investment returns. In addition, the company accrued an expected liability of RMB 46.45 million due to contract disputes, further eroding the profit for the period. Non-recurring gains and losses were RMB -18.9992 million for the full year, also reflecting a weakening in earnings quality to some extent.

Overseas business became an important drag on performance. In its overseas platform, Zhongzhou International Financial Holding Co., Ltd., operating revenue in 2025 was only RMB 2 million, while net profit recorded a loss of RMB 72 million, with a relatively large loss scale. Affected by fluctuations in international financial markets, declines in asset returns, and the shrinking of business deployment, overseas business has remained loss-making, failing to generate effective profit contribution.

Meanwhile, at its alternative investment subsidiary, Zhongzhou Blue Sea, the company reduced capital multiple times during the year, leading to a contraction in business scale and relatively weak profitability. With multiple weak businesses operating in parallel, Zhongyuan Securities’ business structure became highly dependent on a single wealth management segment, leaving it with weak risk resistance and insufficient growth stability.

Compliance pressure continues to mount; subsidiaries and internal control shortcomings exposed

Alongside performance pressure, are Zhongyuan Securities’ compliance risks and internal control shortcomings that persisted throughout 2025. The long-tail effects of prior regulatory penalties ran through the entire year. Compliance issues at subsidiaries reappeared, and weaknesses were clearly present in the group’s overall risk control system.

On October 17, 2024, Zhongyuan Securities was notified by the CSRC due to违规 in bond underwriting business, and was ordered to suspend bond underwriting business for 6 months. At the same time, regulatory talks were held for General Manager Li Zhaoxin and for Jin Zhongqing, then in charge of investment banking business.

The duration of the above measures was from October 17, 2024 to April 16, 2025, and ultimately business restrictions were only lifted in September 2025. This meant that in 2025, Zhongyuan Securities completed only bond distribution of RMB 569 million, one New Third Board listing, and one follow-on offering, with no IPO main underwriting projects. It also continued to provide ongoing supervision to 36 New Third Board listed companies in Henan Province.

The impact of the 2024 bond underwriting violation penalty continued to be evident in 2025. In addition to the large decline in investment banking business revenue, the company carried out comprehensive internal control rectification to meet regulatory requirements. Process restructuring, personnel adjustments, strengthened compliance reviews, and other steps also resulted in high rectification costs.

In addition, compliance risk at subsidiaries became a new pressure point. In August 2025, Zhongyuan Securities’ controlling subsidiary, Zhongyuan Futures, was issued a warning and disciplinary action by the China Foreign Exchange Trade System? (Interbank market) trade association. The reason was that, as the manager of an asset management plan, it failed to penetrate and verify related relationships as required. Objectively, it assisted the issuer in achieving self-financed issuance, disrupted the market pricing order, and its risk control was not in place.

This incident reflects shortcomings in Zhongyuan Securities’ group-level management and control. The compliance standards between the parent and subsidiaries were not fully unified; supervision over subsidiaries’ risk control was not strict enough; implementation of penetrative management was not adequate. As a result, risks at subsidiaries could easily transmit to the group as a whole, affecting the group’s overall compliance image.

At a deeper level, the company’s internal control mechanism still has systemic shortcomings. From insufficient quality control and gatekeeping in investment banking, to missing penetrative verification in asset management business, to weakening risk management of subsidiaries—multiple issues point to a lack of execution strength in the compliance and risk control system.

Regulatory authorities had previously indicated that the company had issues such as missing unified credit granting, weak control over subsidiaries, and non-standard management of branch institutions. However, the compliance incidents in 2025 show that those issues were not fundamentally resolved.

Overall, the year-over-year improvement in Zhongyuan Securities’ operating revenue and net profit in 2025 relied more on the rebound in the market environment, rather than being high-quality growth brought about by optimization of business structure and enhancement of core capabilities. Deep adjustments to investment banking, clear quarterly earnings volatility, overseas subsidiaries’ losses, the continued impact of regulatory penalties, and prominent compliance shortcomings in subsidiaries and internal control—all together constitute the core challenges the company faces at present.

As a regional securities firm industry leader, the development of Zhongyuan Securities not only concerns its own operational soundness, but also has a certain industry representativeness. Earnings growth can rely on market cycles, but steady development must rely on governance capabilities. Whether Zhongyuan Securities can truly resolve structural contradictions, get rid of compliance troubles, and achieve sustainable operations still requires continued testing of subsequent operating performance and rectification outcomes. (This article was first published by Securities Star; author | Zhao Zixiang)