Trust Companies Sees 20% Profit Drop Amidst Squeeze on Chinese Shadow Banking


The trust sector in China posted a sharp decline in both profits and asset scale in 2020 as regulators stepped up the pressure on shadow banking financial activities.

Trust companies in China saw profits of 58.313 billion yuan in 2020, for a decline of 19.79% compared to profits of 72.705 billion yuan the year previously, according to figures released by the China Trustee Association (信托业协会) on 8 March.

Sources said to Diyi Caijing that at the start of 2020 Chinese regulators set a target of reducing trust sector assets by at least 1 trillion yuan that year, and have since set a target of reducing “finance-category trust assets” by a further 20% in 2021.

As of the end of 2020 trust sector assets in China had fallen to 20.49 trillion yuan, for a decline of 1.12 trillion yuan compared to the end of 2019, and a drop of 5.76 trillion yuan compared to a historic peak of 26.25 trillion yuan at the end of 2017.

“Following the squeeze on shadow banking-style trust activity, it is expected that in 2021 net profits in the sector will further narrow,” said Jin Li (金李), deputy-chair of the Economics and Management Faculty of Peking University.

“At the same time the quality of the trust sector will improve, with funds directed more towards the real economy.”