(Yicai) April 3 -- After revenue from investment banking tumbled last year, Chinese brokerages are setting their sights on a rebound in 2025, as the initial public offerings market picks up and mergers and acquisitions gain momentum.

“The investment banking business has begun to gradually improve this year, with the number of IPO applications increasing both domestically and internationally,” according to Zou Yingguang, general manager of Citic Securities.

An anticipated uptick in M&A activity also offers securities companies the chance of new business. “With policy support, M&As are expected to increase significantly,” noted Soochow Securities analyst Sun Ting.

The optimism follows a tough 2024. Based on figures from data compiler Choice, the combined revenue from investment banking at the 21 listed brokerages that have so far reported earnings for last year tumbled 29 percent to CNY23.2 billion (USD3.2 billion). Their net fee income sank 28 percent to CNY22.1 billion.

Of the 21 companies, 18 saw revenues from investment banking decline, with only three achieving growth. At China Securities, the figure plunged 46 percent, the most among Chinese brokerages. Citic Securities came out top again, despite a 30 percent drop to CNY4.4 billion (USD596.8 million).

Investment banking revenue, which comes from underwriting, sponsorship, and financial advisory services, with the former accounting for the largest share, mainly fell last year because of less underwriting and sponsorship business. For instance, China Securities saw its net fee income from sponsorships sink 52 percent, while China Merchants Securities suffered a 62 percent decline.

Executives at China Securities attributed the Beijing-based company’s revenue decline to the significant drop in income from investment banking, which accounts for a large share of its total revenue.

Editors: Tang Shihua, Futura Costaglione