Against the background where the liquidity is relatively contractive, trust industry forges ahead very quickly regardless of the dual pressure of decline of economic growth and abnormal fluctuation of stock market in the first half of 2015. Funds provided by the trust industry for the real economy played a vital role in the current economic growth and structural optimization. Major business data of trust companies at the end of the second quarter of 2015 released by China Trustee Association showed that: in the second quarter of 2015, trust industry was developing steadily, and the size of trust rose to a higher level with the business structure tending to be reasonable and investment function becoming prominent; trust companies started to pay more attention to the prejudgment on the trend of capital market and to the financial risks that market fluctuation may bring, in order to reduce negative impact resulting from the volatility of stock price; the growth pace of trust assets accelerated in the second quarter, and the operating income and profits increased significantly.

I. Trust assets under management

A.Trust Assets

At the end of the second quarter of 2015, trust assets under management totalled 15.87 trillion Yuan, with an annual growth rate of 27.16%. The quarterly growth rate was 10.13%. Trust industry has entered into the “era of 15 trillion Yuan”.

B.Non-trust Assets and Equity

At the end of the second quarter of 2015, total non-trust assets reached 416.176 billion Yuan, growing by 36.07% compared to 305.857 billion Yuan at the end of the second quarter of 2014. Non-trust assets grew steadily from 2012 to 2014, with an annual growth rate of 24.13%, 25.64% and 21.50% at the end of the second quarter of each year respectively.

Investment reached 296.118 billion Yuan at the end of the second quarter of 2015, accounting for 71.15% in non-trust assets. Meanwhile, proportion of monetary assets and loans reduced. Monetary assets at the end of the second quarter of 2015 was 55.017 billion Yuan, growing by 19.89% on a quarterly basis, with proportion in non-trust assets dropping to 13.22% compared to 14.26% at the same point of previous year. Loans represented a slight increase, totalling 38.480 billion Yuan, up by 1.24% compared to that at the same point of 2014.  

Equity reached 354.752 billion Yuan, growing by 29.02% compared to 274.961 billion Yuan at the same point of 2014.
Paid-up capital was rising year by year, and totalled 143.056 billion Yuan at the end of the second quarter of 2015, an increase of 20.35% compared to that at the same point of 2014. It is worth noticing that proportion of paid-up capital in equity has been declining, from 54.62% at the end of the second quarter of 2011, to 43.23% at the end of the second quarter of 2014, until 40.33% at the end of the second quarter of 2015.

Proportion of trust compensation provision in equity represented a progressive tendency, reaching 3.80% at the end of the second quarter of 2015, increasing from 3.61% at the end of the second quarter of 2014.

C. Risk Projects

There were 450 risk projects at the end of the second quarter of 2015, totalling 103.4 billion Yuan, rising by 6 billion Yuan compared to that at the end of previous quarter, with quarterly growth of 6.16%. Non-performing assets accounted for 0.65% in total trust assets under management. The Trust Insurance Fund established in December 2014 introduced an effective risk-buffer mechanism to the industry, making liquidity risks generated during trust business controllable.

II. Trust business performance

With more expectations posed to the bull stock market in the first half of 2015, the short-term return of trust assets also experienced a rising process for once. Accurate prejudgment of market trends and effective control of market risks are one of the strategies adopted by trust companies to tackle with the new changes in stock market in the first half of the year.

A. Operating Performance

The operating income reached 54.406 billion Yuan, an increase of 36.59% compared with that at the end of previous quarter. Its annual growth  rate  at the end of the second quarter of 2015 was 36.43%, 23 percentage points higher than that at the end of the second quarter of 2014.

The total profits of trust industry achieved were 39.186 billion Yuan for the second quarter of 2015, an increase of 31.45% compared with 16.931 billion Yuan for previous quarter, with an annual growth rate of 35.27%. The profits of per staff member for the second quarter of 2015 reached 1,811,000 Yuan, increasing 341,400 Yuan compared with that for the second quarter of 2014, growing by 23.23% on an annual basis.

B. Effectiveness in management as trustees

In terms of liquidated trust schemes, the real annualized return rate to beneficiaries was 10.19% in the second quarter of 2015, an increase of 3.32 percentage points compared with 6.87% in the second quarter of 2014; compared with 8.11% in the first quarter of 2015, rising by 2.08 percentage points.

The average annualized return rate to trustees reached 0.50% in the second quarter of 2015, even a little bit lower than that at the same point in 2013 and 2014, nevertheless, a slight increase than 0.40% in the first quarter of 2015.

III. Assets allocation

A. Investment function became more prominent

The proportion of financing trust has been declining in recent years, being 33.65% at the end of 2014, 31.32% at the end of the first quarter of 2015 and 26.55% at the end of the second quarter of 2015. Investment trust accounted for 33.70% at the end of 2014, 35.52% at the end of the first quarter of 2015, and reached 39.33% at the end of the second quarter of 2015. Proportion of non-discretionary trust has been relatively stable, with a slight rising tendency, making 32.65% at the end of 2014, 33.16% at the end of the first quarter of 2015 and 34.13% at the end of the second quarter of 2015. There have been growing sighs that, since 2015, the conventional transient structure in assets allocation has been changing and investment trust has been gaining weight. 

B. Sources of trust assets

The collective pecuniary trust reached 5.6113 trillion Yuan at the end of the second quarter of 2015, with an annual growth rate of 70.57%, accounting for 35.37% in total trust assets, approximately rising by 9 percentage points compared to 23.36% at the end of the second quarter of 2014 and by 2 percentage points compared to 33.26% at the end of previous quarter in terms of proportion. Single pecuniary trust mainly invested by institutional clients has been on dominate position in terms of amount, accounting for 74.51% in total trust assets at the end of 2010, nevertheless, representing continuously shrinking proportion in recent years. At the end of the second quarter of 2015, single pecuniary trust was 9.2038 trillion Yuan, accounting for 58.01%, reducing by nearly 10 percentage points compared to 67.99% at the end of the second quarter of 2014.

Property trust was 1.0507 trillion Yuan at the end of the second quarter of 2015, taking 6.62% in proportion, a slight increase compared to 5.80% at the end of the second quarter of 2013 and 5.65% at the end of the second quarter of 2014.

C. Investment targets

At the end of the second quarter of 2015, 14.82 trillion Yuan of pecuniary trust were still mainly invested in five major fields, i.e., industrial and commercial enterprises, infrastructure, securities, inter-financial institutions and real estates. However, the amount invested in each fields changed.

Assets invested in industrial and commercial enterprises reached 3.18 trillion Yuan, accounting for 21.50%, reducing by 2 percentage points compared to 23.49% at the end of previous quarter and by 6 percentage points compared to 27.36% at the end of the second quarter of 2014. Assets invested in infrastructure reached 2.74 trillion Yuan, accounting for 18.48%, down by 2 percentage points compared to 20.75% calculated at the end of previous quarter. Securities investment was 3.02 trillion Yuan; investment in stocks totalled 1.41 trillion Yuan, making 9.53% in proportion, an increase of 3.76 percentage points compared to 5.77% at the end of previous quarter; investment in bonds totalled 1.34 trillion Yuan, accounting for 9.03%; investment in funds totalled 267.688 billion Yuan, accounting for 1.81%. Assets invested in financial institutions reached 2.27 trillion Yuan, contributing 15.40% of total pecuniary trust. Assets invested in real estates reached 1.32 trillion Yuan, with annually growth of 4.76%, accounting for 8.93%.

IV. The changing trust culture

All financial intermediaries are basically established to facilitate financing economic growth. While a diversified competitive system where various financial institutions co-exist plays a fundamental role in fostering more effective allocation of financial resources. Conventionally, trust industry is strongly focused on the culture and management strategy of “managing money for clients in good faith”, and the experience of China’s trust industry indicates that, the industry’s primary mission is to allocate all kinds of social funds into the departments which can highly support the economic structure reforms with satisfactory return.

On May 28, 2015, Xi Jinping, the President of China, brought forth “studying the measures and methods for economic growth further”. It should be learnt that development-oriented economic policies can create more social wealth, and drive more capital flows to support the real economy. Rapid growth in wealth will give birth to the demand of wealth management. Wealth is created and reproduced through investment. All data, including those in the second quarter of 2015, showed that the proportion of investment trust in the recent years goes with the stream of economic structure reforms; in another way, it is enhancing and enlarging the positive role of various savings in China in capital formation and economic growth. Savings can only bring a higher rate of return when they are converted to effective investment, and only proper investment can enhance a country’s production capacity and productivity. The positive and proactive trust industry will definitely maintain competitive and motivatedwhile striding ahead.