With the successive disclosure of the trust company's 2023 annual report, issues such as the increase in scale and the decline in performance, and the increase in income without increasing profits have been exposed, and there are endless discussions about whether some trust companies are "fat".
From the information in the annual report, it can be seen that the total trust assets of some trust companies continue to grow and grow rapidly, but contrary to the growth of asset scale, their performance is on a downward trend.
1
Scale "Hold the Ground"
The Financial Times reporter combed and found that in 2023, there will be 4 trust companies with trust assets exceeding one trillion yuan, namely China Resources Trust, CITIC Trust, Foreign Trade Trust and CCB Trust.
Among them, the company with the highest trust assets is China Resources Trust. As of the end of 2023, the scale of trust assets of China Resources Trust reached 2,598.497 billion yuan, an increase of nearly 1 trillion yuan over the previous year. Its trust assets are mainly invested in the securities market. According to the disclosure, the trust funds invested by China Resources Trust in the securities market reached 2.28 trillion yuan, accounting for 87.70%. In addition, the proportion of funds invested in industry, basic industry and real estate industry was 6.76%, 0.43% and 0.25% respectively. It was followed by CITIC Trust, with assets of 2,059.335 billion yuan, an increase of 500 billion yuan over 2022, of which the scale of asset service trusts rose to 1.19 trillion yuan at the end of the year.
Overall, among the 58 companies, 36 have increased their asset scale compared with the previous year, and many trust companies will have a significant increase in the scale of entrusted asset management in 2023, such as Shaanxi Guotou Trust, COFCO Trust, Tibet Trust, etc., with a growth rate of more than 80%. In addition, the asset scale of companies such as Western Trust, Hangzhou Industrial and Commercial Trust, Northern Trust and Huaxin Trust has also increased by more than 50%.
The experts interviewed believe that the overall stabilization of the scale of trust assets is the key guarantee for the transformation and development of the industry, and the main reason for the stable growth of the scale is that some trust companies have complied with regulatory requirements and combined with their own advantages to develop trust business based on the positioning of trust source trustee services.
2
Net profit basically bid farewell to the era of 3 billion yuan
The Financial Times reporter combed through the annual report data and found that in terms of net profit indicators, according to the statistics of the parent company, a total of 27 trust companies will achieve year-on-year growth in 2023, and 31 companies will decline year-on-year. Among the top 10 trust companies in terms of net profit, half of them increased year-on-year and half declined. Among them, Shanghai Trust achieved a net profit of 4.952 billion yuan, a year-on-year increase of 417.57%; Huaxin Trust achieved a net profit of 1.779 billion yuan, a year-on-year increase of 39.70%, the second largest increase in the industry, and the fifth in the industry in terms of net profit.
According to the analysis, the performance of Shanghai Trust will increase significantly in 2023, mainly because of the increase in income brought by the sale of its shares in China Investment Morgan. If you don't count the No. 1 Shanghai Trust, the net profit of the trust company basically bids farewell to the era of 3 billion yuan. The Financial Times reporter noted that in 2021, the net profit of Huaneng Trust and China Resources Trust will be 3.79 billion yuan and 3.311 billion yuan respectively, and in 2022, the net profit of CITIC Trust will be 3.036 billion yuan. In 2023, Jiangsu Trust will rank second in terms of net profit, with a net profit of 2.543 billion yuan, 3 companies with a net profit of 3 billion yuan to 2 billion yuan, 9 trust companies with a net profit of 2 billion yuan to 1 billion yuan, and a total of 13 trust companies with a net profit of more than 1 billion yuan, one less than in 2022.
The top 10 trust companies in the industry still showed strong competitive advantages in terms of performance, with their operating income, total profit and net profit market share of 45.07%, 57.56% and 58.75% respectively, an increase of 1.64, 4.24 and 4.52 percentage points year-on-year respectively.
According to the statistics of the Financial Times, in 2023, the average net profit of 58 trust companies will be about 600 million yuan, which is little changed compared with the previous year. In 2023, there will be 22 companies whose net profit exceeds the industry average; In 2022, there are 26 companies whose net profit exceeds the industry average. Judging from the year-on-year increase and decrease, about 31 trust companies saw a year-on-year decline in net profit, and about 46% of trust companies maintained growth in net profit business income. Among the top 10 trust companies, the trust companies whose net profit growth is consistent with the total profit mainly include Shanghai Trust, Jiangsu Trust, Huaxin Trust and Yingda Trust.
3
The main revenue continued to decline
In 2023, the average trust business income (fee and commission income) of 58 trust companies will be 895 million yuan, a decrease of 220 million yuan from 2022, a year-on-year decrease of 19.73%; There are 20 companies that exceed the industry average.
According to the data previously disclosed by the China Trust Association, the income of trust business has begun to decline since 2022, but the proportion of income still exceeds half of the total. As of the end of the third quarter of 2023, the scale of trust business income was 38.738 billion yuan, accounting for 59.48%, a year-on-year decrease of 21.84%.
Analyzing the annual report data of 58 trust companies, it can be seen that the average trust business income in 2023 will account for 66.11%, a decrease of 14.58 percentage points from 2022, and the lowest level since the implementation of the new asset management regulations in 2018. Judging from the performance of each company, more than sixty percent of the company's trust business income fell year-on-year, and some companies experienced a large decline. In 2023, 22 trust companies will achieve year-on-year growth in trust business income, compared with only 16 of the 60 trust companies in 2022, compared with the year-on-year growth, in 2023, the number of year-on-year growth will increase; 36 trust companies decreased year-on-year, of which 20 companies fell by more than 20% year-on-year, and 9 companies exceeded 40%.
From the perspective of the trust companies ranked among the top in the industry, the decline in trust business income is also relatively large. Four of the top 10 companies saw year-over-year growth, six saw year-over-year declines, and five of them fell by more than 30% year-over-year. In 2023, the top 10 trust companies in the industry will achieve an average trust business income of 2.177 billion yuan, a year-on-year decrease of 22.39%. Among them, the trust business income of China Chengxin Trust increased significantly year-on-year, reaching 39.10%; In addition, Shaanxi Guotou Trust, Huaxin Trust and Yingda Trust achieved year-on-year growth of 17.40%, 9.92% and 9.04% respectively.
4
Why is performance under pressure?
Analyzing the 2023 annual report of trust companies, it can be found that trust companies continue to promote innovation and transformation, and the asset management trust and asset service trust business based on standard products have achieved rapid development, but the return rate of transformation business is low and the market competition is fierce, and the average trust return rate of the industry continues to decline.
There are many reasons for this phenomenon, including individual and common problems.
From the perspective of the external environment, factors such as the adjustment of regulatory policies, changes in the market environment and the improvement of customer needs have led to many challenges for trust companies to face such as changing their development models and changing their growth momentum.
From the analysis of the industry level, there are three reasons for the "low rate of return although there is a scale effect":
First, the inertia of traditional business philosophy. In the past, the extensive business development model still has a certain inertia effect, and some companies are still blindly pursuing scale, pursuing a large and complete, quantity-winning development path, under the new situation of new classification transformation, this development model and business philosophy need to be abandoned as soon as possible.
Second, short-term fluctuations in the process of establishing a new model. In the context of the new classification, some trust companies have begun to explore new business categories, and new business models and profit models are being established. In this process, especially some asset service trust business, the rate of return is often relatively low in the initial exploration period, and the trust company is to exchange intangible assets such as its own service ability for tangible income, which takes time and needs to slowly gain the trust of the settlor and the recognition of the market. In addition, in the initial stage, the management commission standard or service fee standard is often not very high. At this stage of development, although the scale of asset servicing trusts has increased rapidly, the profits have not increased at the same time.
Third, a small number of institutions have unfair competition behaviors such as "price wars". In the face of the pressure of operation and transformation, a small number of trust companies in the process of transformation from the traditional trust financing business to the asset service trust business, asset management trust business and public welfare and charity business, do not focus on how to improve their professional capabilities, but simply through price competition to gain market share, through the violation of market rules of low fees, less fees or even no fees to squeeze out the market of other institutions, such a way will also directly lead to the rapid growth of their asset scale. But profits are lower, and even losses. In fact, this is a means of vicious competition, which is a harm to the healthy and sustainable development of the industry, fair competition among peers and its own long-term sustainable development, and is a serious short-term behavior.
Industry insiders believe that as far as the future development of trust companies is concerned, the era of making "quick money" is long gone, and the next step should be to further enhance the income capacity of the main business of the trust, and enhance its own asset management and asset service capabilities to support the steady growth of the profitability of the trust company.
Source: Financial Times client
Reporter: Hu Ping, Zhang Modong
Editor: Duan Jiaxi
Email: [email protected]