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First batch of brokerage interim dividends announced as 28 firms pay nearly RMB28 billion

China Merchants Securities (600999.SH; 6099.HK) fired the starting gun on 2026 brokerage interim dividends on September 15. Its A shares will receive a cash dividend of RMB1.239 billion, or RMB0.167 per share before tax. Including H shares, the total payout will reach RMB1.452 billion, equivalent to about HK$1.59 billion. Hong Kong investors holding China Merchants Securities H shares will receive the dividend directly in Hong Kong dollars. Almost at the same time, CITIC Securities (600030.SH; 6030.HK) announced that it had received approval from the China Securities Regulatory Commission to publicly issue perpetual subordinated bonds with a face value of up to RMB40 billion, or about HK$43.7 billion, to professional investors.

On one side, cash is being returned to shareholders; on the other, a sizeable capital-replenishment instrument has been approved. This seemingly contradictory combination of paying out while borrowing highlights the changes under way in the brokerage sector: interim dividends have evolved from an occasional event into an industry norm.

According to Wind data, as of September 15, 28 listed brokerages had announced plans for 2026 interim dividends, with total cash distributions of RMB27.916 billion, up about 45% from the same period last year. Changjiang Securities and Guosen Securities have joined the interim-dividend ranks for the first time. For Changjiang Securities, it is the first interim dividend since its listing. Hongta Securities and First Capital Securities will follow on September 17. Together with China Merchants Securities, the three firms will distribute more than RMB1.7 billion.

Can brokerage profits support RMB28 billion in cash payouts?

The key to determining whether this wave of dividends can continue is the strength of the companies’ underlying earnings.

Disclosed figures show considerable variation in interim payout ratios among leading brokerages this year, rather than the sector-wide jump to 40% to 50% described in the original account. The actual picture is more complicated. CITIC Securities plans an interim dividend of RMB6.672 billion for 2026, equivalent to 29.39% of interim net profit attributable to shareholders. Under its 2026-2028 shareholder-return plan, the company has pledged to distribute, where possible, at least 20% of annual net profit attributable to shareholders. Its differentiated dividend policy stipulates that, when a company is in a mature stage and has significant capital expenditure plans, its minimum cash payout ratio must be 40%. This is a minimum requirement, rather than the 40% payout ratio and RMB10.5 billion annual ceiling cited in the original account. No public document has been found referring to the alleged RMB10.5 billion annual dividend cap. Galaxy Securities’ payout ratio for 2025 was about 30.57%, broadly in line with the claim that it would maintain a ratio of no less than 30%. By contrast, China International Capital Corporation’s actual payout ratio was among the lower levels in the sector. Its cash payout ratio for 2025 was about 15.78%, well below the 45% to 50% claimed in the original account, reflecting its continued expansion and preference for retaining more capital to support growth in net capital.

In other words, the view that the sector’s payout ratios have collectively broken through the traditional 30% ceiling does not fully apply to individual leading brokerages. CITIC Securities’ interim ratio is close to, or slightly below, 30%, while CICC’s is notably lower. What is genuinely showing an upward trend is the total amount and frequency of dividends, rather than a uniform increase in payout ratios across all firms.

As for the quality of earnings, CITIC Securities’ growth in the first half of this year was driven mainly by its brokerage business, which generated revenue of RMB13.142 billion, up 41% year on year, and proprietary investment, which generated RMB19.854 billion, up 37%. Both businesses are directly linked to the level of activity in the A-share market during the first half. If market conditions cool and trading volumes fall in the second half, these market-sensitive revenue sources face clear cyclical risks, meaning the strong growth in interim dividends may not continue through the full year.

Who is driving brokerages to pay out?

Given the profit-seeking nature of capital, there must be forces behind the sudden decision by leading brokerages to distribute portions of their earnings.

Those forces come from the combined influence of regulators and the state-owned-assets management system. The Shanghai Stock Exchange’s recent review, titled “Momentum shifting towards the new, structure improving and performance strengthening — review of 2026 interim results of Shanghai-listed companies”, said 427 Shanghai-listed companies had announced interim dividends in the first half, with total cash payouts reaching RMB633 billion, maintaining year-on-year growth. The six major state-owned commercial banks accounted for RMB220.9 billion of that sum, while 16 companies each declared interim dividends of more than RMB10 billion.

The official report unusually described interim dividends as a “normalised” measure. This suggests that, in the eyes of regulators, interim dividends are no longer simply a voluntary gesture by companies, but have become one of the key tools for improving listed companies’ shareholder-return mechanisms and stabilising expectations in the capital market.

For leading brokerages with central-government enterprise backgrounds, the significance of this normalisation is even greater. In recent years, the State-owned Assets Supervision and Administration Commission has tightened its assessment of centrally administered state-owned enterprises’ listed subsidiaries. In addition to total profits, the cash payout ratio has also become a core assessment indicator. Under this hard constraint, dividend decisions by state-owned brokerages are no longer purely a matter for boardroom debate, but are increasingly an operating discipline that must be fulfilled.

With policy direction and corporate-governance pressure reinforcing each other, large interim payouts by brokerages have become a form of market communication. By raising the frequency and scale of dividends, leading firms are seeking to signal to investors that their underlying assets are secure and their earnings relatively predictable. This cultivated “bond-like” quality is quietly changing the sector’s valuation benchmark.

Paying out while borrowing? The logic behind the RMB40 billion perpetual bond programme

If the nearly RMB28 billion in dividends from 28 brokerages is the headline act, CITIC Securities’ approved RMB40 billion quota for perpetual subordinated bonds is the more significant underlying development.

According to announcements by the Shanghai Stock Exchange and the company, CITIC Securities received approval from the China Securities Regulatory Commission under approval document No. 2414 [2026]. Within 24 months of the approval taking effect, it may issue, in instalments, capital bonds with no fixed maturity and a total value of up to RMB40 billion. Of the proceeds, RMB11 billion is intended to repay existing debt, involving two corporate bonds — “26中证S3” and “25中证12” — while RMB29 billion will be used to replenish working capital.

So what are perpetual subordinated bonds? Put simply, they are a super-sized IOU with no clearly defined repayment date. During the life of the instrument, the issuer only needs to pay interest on schedule and does not have to repay the principal at maturity. It may redeem the bonds only if certain trigger conditions are met. Such special capital-replenishment instruments are generally recorded as “owners’ equity” rather than liabilities.

This is crucial to the expansion of brokerage businesses. Brokerages operate under highly leveraged financial licences, and the size of their net assets directly determines the scale of their brokerage, margin-financing and derivatives businesses. Without sufficient net assets as a cushion, they cannot expand their operations.

The logic behind CITIC Securities’ combination of measures is therefore clear: the interim dividend supports its existing share price and valuation while demonstrating its earning power; issuing a large volume of perpetual bonds builds up capital for future business expansion. It is returning money to shareholders with one hand while expanding its capital base with the other. CITIC Securities has completed five issues of perpetual subordinated bonds so far this year, raising a total of RMB21.3 billion. Including the newly approved RMB40 billion quota, its capital-replenishment activity has been frequent.

But there is no such thing as a free lunch. The coupon rates on perpetual instruments are often much higher than those on government bonds and ordinary credit bonds of comparable maturity, making them a relatively expensive source of funding. With competition among brokerages intensifying and capital consumption accelerating, only time will tell whether the economics of this strategy are sound.

Will investors see any benefit?

Returning to the original question: now that brokerages have collectively handed out nearly RMB28 billion, can retail investors get a share?

The most direct benefit goes to investors holding dividend-paying brokerage shares: the money will indeed be credited to their accounts. Taking China Merchants Securities as an example, a pre-tax dividend of RMB0.167 per share would give an investor holding 10,000 shares about RMB1,670 in dividend income. Holders of its H shares will receive the dividend directly in Hong Kong dollars. In the current market environment, this cash return may appeal to investors who favour income-generating strategies.

The deeper impact lies in a shift in asset-allocation logic. As more leading brokerages demonstrate the ability to pay stable interim dividends, the sector’s pricing logic is shifting from that of a highly volatile cyclical play towards a bond-like allocation with lower volatility and greater predictability. This directly improves the sector’s resilience in a range-bound market. Leading companies able to provide consistent cash flow are taking on the role of core holdings.

But the transition also carries risks. Two high-frequency cash outflows a year place greater demands on liquidity management. If revenue falls in the second half but dividends are maintained at all costs, cash flow could be overstretched. More importantly, if everyone starts buying these “high-quality brokerages” as bond substitutes, could a systemic shock turn their former predictability into a focal point for concentrated selling?

Three indicators to watch next

For individual investors following this theme, rather than listening to every market expert, it may be more useful to monitor three hard indicators:

Growth in the brokerage sector’s net profit in the second half of the year — this is the lifeline for dividend sustainability. If growth slows, even the biggest firms may reduce their payouts.

The number of brokerages newly entering the interim-dividend ranks — 28 firms are currently leading the way, but will more second- and third-tier brokerages follow suit?

The coupon rates on perpetual bonds actually issued by large brokerages — these are the most honest barometer of market conditions. Persistently high rates would indicate that the market remains concerned about debt burdens.

Understanding the economics behind this market drama, rather than simply remembering the headline figures running into the hundreds of billions of renminbi, will help investors make more measured decisions.