KPMG: China’s trusts may soon be second largest sector for financial services

By Rob Starr, Content Manager, Big4.com

According to a recent KPMG report, China’s trusts may overtake insurance as the second largest sector for financial services, due to rapid growth which is being driven by abundant liquidity and a corresponding shortage of investment options in China.

Net profit growth for the sector was 47 percent, with the primary driver being the expansion in fee and commission income, which now accounts for 73 percent of total sector income (compared to 58 percent in 2010). Throughout 2011, the sector has demonstrated rising growth, with a 58.25 percent year on year increase in assets under management, an additional RMB 1.8 trillion (USD 282.4 billion) of assets injected into the industry.

KPMG’s second annual Mainland China Trust Survey and its fourth report on the sector to date, contains the summary financials of 64 out of 66 registered trust companies in China. Increasing competition between the trust companies themselves and other players in the market are also changing some of the dynamics in this sector.

Simon Gleave, Regional Head of Financial Services, KPMG Asia-Pacific comments:

“Trust companies also face rising competition from the financial services industry, mainly being driven by securities companies with their increasing wealth management capabilities, and the launch of a junk bond market in 2012 on the Shanghai Stock Exchange with bonds offering rates competitive with that of trust debt products.”