Chinese securities firms on borrowing spree
Chinese securities firms are tapping the offshore loan market at an accelerating pace, with record profits, resurgent equity markets and a regulatory overhaul set to expand balance-sheet capacity at the country’s leading brokerages.
A slew of brokerages raised sizeable loans in recent months, underscoring growing funding needs and renewed confidence in the Chinese securities sector among lenders.
China Industrial Securities International Financial Group is the latest such borrower to jump onto the bandwagon with a US$514m-equivalent one-year loan that closed to a strong response after attracting 15 banks in general syndication and was increased from an original target of HK$1.5bn–$2.5bn (US$193m–$321m).
Since October, Citic Securities Finance (HK), Guotai Haitong Financial Holdings and Guotai Junan International Holdings are among those that have tapped the loan market.
The latter two entities are units of Guotai Haitong Securities, which was formed from the April 2025 merger of Guotai Junan Securities and Haitong Securities into China's largest securities firm by asset value. Citic Securities Finance (HK) was formerly known as CLSA Finance and its parent Citic Securities is China's second-largest brokerage.
“Banks view their relationships with these strong brokers, especially those backed by large groups or state-owned parents, as strategic, which is why their loans have attracted lenders,” said a Hong Kong-based senior loan banker. “Chinese securities firms are generally considered as safer credits in an increasingly risk-averse environment.”
Most of the loans to the sector have short tenors, giving borrowers and lenders the flexibility to reprice and resize facilities as market conditions evolve.
“Securities firms tend to favour one-year loans because their funding needs are short-cycle and market-driven, while this structure also lets lenders frequently reassess the credit profiles of the borrowers, volatility in their earnings and the regulatory environment, and adjust pricing or limits accordingly,” said a second Hong Kong-based loan banker.
In December, Guotai Haitong Financial Holdings raised an HK$8bn dual-tranche club loan from nine banks. The borrowing comprises a HK$4.5bn three-year term loan and a HK$3.5bn one-year revolving credit facility.
That followed a HK$1.95bn one-year revolver for Guotai Junan International Holdings completed in November. The same month, Citic Securities Finance (HK) more than tripled a self-arranged one-year revolver to US$1.83bn-equivalent from US$500m-equivalent, with 14 banks joining.
That came on the heels of an increased US$1.624bn sustainability-linked loan Citic Securities Finance (HK) closed in October – the first such syndicated SLL from China's investment-banking and brokerage industry.
The bullish equity market in China and a revival of IPOs in Hong Kong are key drivers behind the deals from Chinese securities firms.
“These translate directly into more brokerage fees, improved capital adequacy and stronger ratings, making it easier and cheaper for large brokers to tap the loan market when they need balance-sheet funding,” the first banker said.
Offshore loan volumes for Chinese securities firms surged almost nine-fold to about US$4.31bn in 2025 from just US$484.5m in 2024, which was the second-lowest annual tally in five years, according to LSEG LPC data.
Record earnings
Last year, Chinese brokerages posted sharp improvements in their financial results. Citic Securities reported a record net profit of Rmb30.1bn (US$4.36bn) for 2025, up 38.5% year on year and the first time the company crossed the Rmb30bn threshold. Guotai Haitong said in January that it expects net profit attributable to shareholders for 2025 to reach Rmb27.5bn– Rmb28bn, a year-on-year increase of 111%–115%.
The strong results mirror a broad rebound in China’s equity markets. Share prices of companies on the Chinese and Hong Kong stock exchanges posted robust annual gains in 2025 as Sino-US trade tensions receded and China’s economy proved more resilient than expected.
The total market capitalisation of A-shares reached Rmb108.86trn as of December 31, up 29.7% year on year, according to the China Association for Public Companies, a self-regulatory organisation supervised by the China Securities Regulatory Commission.
Hong Kong's benchmark Hang Seng Index gained 27.8% in 2025, its best annual performance since 2017. Hong Kong and mainland stock indices are more or less flat so far this year, after dropping following the conflict between the US/Israel and Iran.
Regulatory tailwind
Regulatory support is adding further impetus to the sector’s growth. In December, the CSRC said it would moderately ease leverage limits for high-performing securities firms, as part of broader efforts to nurture internationally competitive investment banks and advance the development of China's capital markets.
The average leverage ratio of 43 listed Chinese brokerages stood at 3.47x for the first three-quarters of 2025, excluding client funds, with leading firms approaching 5x – far below the more than 10x typical at global investment banks such as Goldman Sachs and Morgan Stanley, according to a report from China Securities.
“The easing is expected to further boost earnings for top brokers by allowing them to deploy more balance sheet into margin financing and investment-banking activities, thereby lifting their returns,” said a senior Shanghai-based loan banker.
“More securities firms are expected to tap the market to fund trading inventory, client financing and overseas expansion, and relationship banks are also more comfortable providing larger tickets and longer-tenor loans for those top names,” he said.