Challenging Time for Trust Firms as Six Out of 10 Report Weaker Results

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China had 67 licensed trust companies by the end of 2023, government data show

Nearly six out of 10 of China’s trust companies saw their revenue and profit decline in the first half of 2024, reflecting challenges amid a regulator crackdown on an industry plagued by scandals.

Among the 53 trust companies that have published their unaudited first half financial results, 13 reported net profits of less than 100 million yuan ($13.8 million) and three posted net losses.

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Nearly 60% of China's trust companies faced revenue and profit declines in H1 2024 due to regulatory crackdowns and industry challenges.
Among 53 trust companies reporting results, 13 had net profits under 100 million yuan, and three posted net losses.
Regulatory changes in late 2023 aimed to shift trust firms towards wealth management services, emphasizing risk prevention.

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Who’s Who

China Credit Trust Co. Ltd.: China Credit Trust Co. Ltd. issued a research report indicating that nearly 60% of China’s trust companies experienced declines in operating revenue, total profit, and net profit in the first half of 2024. This highlights significant business pressures and performance disparities across the industry.

Sichuan Trust Co. Ltd.: In June 2020, investors in Sichuan Trust Co. Ltd. protested at its headquarters after the company defaulted on matured products. The firm went bankrupt in April.

Zhongrong International Trust Co. Ltd.: Zhongrong International Trust Co. Ltd. failed to repay investors in some of its trust products last year. Its second-largest shareholder, Zhongzhi Enterprise Group Co. Ltd., subsequently filed for bankruptcy liquidation, revealing a financial shortfall of up to 260 billion yuan.

Zhongzhi Enterprise Group Co. Ltd.: Last year, Zhongrong International Trust Co. Ltd. failed to repay investors, leading its second-largest shareholder, Zhongzhi Enterprise Group Co. Ltd., to file for bankruptcy liquidation. Zhongzhi disclosed a financial shortfall of up to 260 billion yuan.

Jiangsu International Trust Corp. Ltd.: Jiangsu International Trust Corp. Ltd. reported a net profit of 1.6 billion yuan in the first half of 2024, marking a nearly 300-million-yuan increase from the previous year. Its revenue remained steady at 1.5 billion yuan. The company's strong performance is attributed to sound returns from equity investments, holding significant stakes in Bank of Jiangsu Co. Ltd. and Li’an Life Insurance Co. Ltd.

Citic Trust Co. Ltd.: Citic Trust Co. Ltd. recorded 2.8 billion yuan in revenue in the first half of 2024, the highest in the industry. Its net profit was 1.4 billion yuan, resulting in a net margin of 49%. Despite high revenue, the company faces challenges due to substantial impairment provisions and slower-than-expected disposal of non-performing assets.

Bank of Jiangsu Co. Ltd.: Bank of Jiangsu Co. Ltd. is partially owned by Jiangsu International Trust Corp. Ltd., which holds a 6.98% stake as of April 29. This equity investment has contributed to Jiangsu International Trust's strong financial performance, including a significant increase in net profit in the first half of 2024.

Li’an Life Insurance Co. Ltd.: Li’an Life Insurance Co. Ltd. is partially owned by Jiangsu International Trust Corp. Ltd., which holds a 22.8% stake in the company.

AI generated, for reference only

What Happened When

June 2020：: Investors in Sichuan Trust Co. Ltd.’s products protested outside the headquarters of the trust firm after it defaulted on products that had matured.

Late 2023：: Regulators revamped regulations for the trust industry, putting greater emphasis on risk prevention, encouraging trust firms to focus on providing wealth management services rather than acting as financing channels.