Guosen Securities' investment banking income plummeted, down 24.58% year-on-year

A few days ago, Guosen Securities' annual report last year was released, and in 2023, it will achieve operating income of 17.317 billion yuan, an increase of 9.08% year-on-year, and net profit attributable to shareholders of listed companies of 6.427 billion yuan, an increase of 5.57% year-on-year.

Under the market shock, Guosen Securities' overall performance has achieved steady growth, but the performance of the business segments has diverged. In 2023, the revenue of the company's investment and trading business and asset management business increased significantly year-on-year, but the investment banking business, wealth management and institutional business declined.

Differentiation of performance

net profit was 6.427 billion, an increase of more than 5%

On the night of April 16, Guosen Securities disclosed last year's annual report that in 2023, Guosen Securities achieved operating income of 17.317 billion yuan, an increase of 9.08% year-on-year, and net profit attributable to shareholders of listed companies of 6.427 billion yuan, an increase of 5.57% year-on-year.

From the perspective of revenue composition, wealth management and institutional business, investment and trading business are the main sectors, accounting for 43.13% and 30.79% of the total revenue respectively.

However, in terms of year-on-year growth, the performance of various business segments has diverged. Specifically, in 2023, Guosen Securities' investment and trading business will perform particularly well, with a year-on-year increase of 94.09%. Judging from the financial data released by other brokerages, the income from investment business in 2023 has become a prominent highlight of the performance growth of most brokerages.

In 2023, Guosen Securities' asset management business will also perform well, with a year-on-year increase of 45.23%. However, investment banking, wealth management and institutional business, and other business income all shrank.

Among them, the investment banking business declined the most, with a year-on-year decrease of 24.58%, achieving revenue of 1.419 billion yuan. During the reporting period, the company completed 23.83 stock lead underwriting projects and raised 26.045 billion yuan, ranking 10th and 8th in the industry respectively. 11.5 IPO projects have been completed, ranking 10th in the industry, including 4 IPO projects on the main board, ranking 3rd in the industry, and 12.33 refinancing projects have been completed, ranking 12th in the industry.

Since the China Securities Regulatory Commission issued a document in the second half of last year to tighten IPO and refinancing policies in stages, the pace of IPO issuance has slowed down significantly.

In 2023, a total of 762 stock projects will be issued in the A-share market, a year-on-year decrease of 15.61%, and 971.9 billion yuan will be raised, a year-on-year decrease of 33.82%; There were 285 IPO projects, down 51.2% year-on-year, 313 IPO projects issued in the market, down 26.87% year-on-year, raising 356.539 billion yuan, down 39.26% year-on-year, and 449 equity refinancing projects, down 5.47% year-on-year, raising 615.352 billion yuan, down 30.20% year-on-year.

Guosen Securities said that the company will further serve the development of the real economy, vigorously support scientific and technological innovation, and create a "positive and stable investment bank". Efforts will be made to build an "investment banking +" ecosystem, give full play to the role of investment banking business as a flow portal for corporate customers, create a "investment research + investment banking + investment" trinity synergy model, and further improve the comprehensive service level of strategic customers.

Three fines

The latest warning letter shows the "four" problem of compliance and internal control

Since last year, Guosen Securities has been fined three times. In August 2023, the securities business department of Guosen Securities Shengzhou Xingsheng Street was punished by the Zhejiang Securities Regulatory Bureau. After investigation, the business department had the following problems: first, the sales department had the behavior of employees entrusting others to engage in customer solicitation activities, and the sales department did not manage the employees' customer solicitation activities in place, and failed to strictly regulate the professional behavior of the staff; second, the sales department failed to fully prevent compliance risks in the process of cooperative marketing with the bank, and conveyed improper benefits to others, and the compliance management and integrity management of the business department were not in place.

According to the relevant regulations, the Zhejiang Securities Regulatory Bureau decided to take supervision and management measures to issue a warning letter to the business department, and recorded it in the integrity file of the securities and futures market.

In September 2023, the China Securities Regulatory Commission also disclosed a fine against Guosen Securities. After investigation, the company has unreasonable salary assessment, failure to strictly implement the requirements for deferred payment of income, the salary income of some bond contractors is directly linked to the project, the internal accountability mechanism is not perfect, the internal control tracking of individual projects is not in place, the independence of some core employees is insufficient, and the risk of integrity practice is a mere formality for some post personnel.

According to the relevant regulations, the China Securities Regulatory Commission decided to take administrative supervision and management measures against Guosen Securities to order corrections, and emphasized that the company should take warning, conscientiously find and rectify problems, establish, improve and strictly implement the internal control system, work process and operation specifications of investment banking business, be honest and trustworthy, be diligent and responsible, and effectively improve the quality of investment banking business.

On April 19 this year, the Shenzhen Securities Regulatory Bureau also disclosed its decision to issue a warning letter to Guosen Securities.

After investigation, Guosen Securities has the following problems in compliance and internal control: First, the blacklist management of individual targets of the stock pledged repurchase business is not in place, the due diligence of individual targets is insufficient, and there are still many conditional delays after the risk of the business integration party, resulting in large losses. Second, the management of bail-out products is insufficient, and the funds invested in some bail-out asset management products for bail-out purposes have not reached the required proportion. Third, the management of private equity subsidiaries is not in place, individual products carry out business without filing, and part of the investment funds of individual funds are misappropriated by partners; fourth, there are problems such as facilitating the evasion of supervision by financial institutions and their management products, providing outsourcing services for private equity products that have not been filed, and failing to implement the information barrier system.

Rookie Senior

The new vice president has worked for the China Securities Regulatory Commission and China Galaxy

On April 16 this year, when announcing last year's annual report, Guosen Securities also disclosed a personnel change. On the evening of the same day, Guosen Securities announced that it agreed to appoint Wu Guofang as the vice president of the company, and his term of office will be from the date of deliberation and approval of the company's board of directors to the date of expiration of the fifth board of directors of the company. At the same time, Chen Chuanli was dismissed from the post of vice president of the company.

Among them, Wu Guofang was born in July 1971 and has a doctorate. He used to be the director of the issuance supervision department and the deputy director of the legal department of the China Securities Regulatory Commission, a member of the executive committee and the business director of China Galaxy Securities Co., Ltd. He is currently a member of the Party Committee and President of the Investment Banking Division of Guosen Securities.

More than half a month ago, China Galaxy issued an announcement saying that due to the adjustment of work arrangements, it was agreed that Wu Guofang would no longer serve as the company's business director and member of the executive committee, which would take effect from the date of deliberation and adoption of the bill. After leaving the above positions, Wu Guofang does not hold any position in the company and its holding subsidiaries.

Chen Chuanli was born in February 1964 and is 60 years old this year. He used to be a staff member, deputy chief staff member, chief staff member, deputy director, director of the Shenzhen Securities Regulatory Bureau (Securities Management Office), director of the Second Division of Listed Company Supervision, a member of the 6th GEM Issuance Examination Committee of the China Securities Regulatory Commission, and the director of the Second Inspection Division of the Shenzhen Securities Regulatory Bureau.

In December 2017, Chen Chuanli joined Guosen Securities and successively served as vice president of the company and president of the investment banking department. Currently, Chen Chuanli also serves as the secretary of the board of directors of Guosen Securities, the chairman of Guosen Securities (Hong Kong) Financial Holdings Co., Ltd., a member of the Investment Banking Committee of the Securities Association of China, and the executive vice chairman of the Secretary Committee of the Board of Directors of the China Association of Listed Companies.

Written by: Nandu Bay Finance Society reporter Wang Yufeng