China’s trust assets grew the least since 2010 in the third quarter as regulators tried to limit shadow banking risks and investors grew more wary of defaults.
Trust companies’ assets under management climbed 3.8 percent to 12.9 trillion yuan ($2.1 trillion) as of Sept. 30 from three months earlier, the China Trustee Association said in a statement today.
Government efforts to control shadow banking are sapping momentum from an economy that expanded in the third quarter at the slowest pace since 2009.
China had 397 “risky” trust products valued at 82.4 billion yuan as of September, today’s report said, down from 91.7 billion yuan three months earlier.
“Slower growth in the supply of credit as a result of the efforts to address shadow banking risks is weighing on investment, resulting in slower economic growth,” Julian Evans-Pritchard, China economist at Capital Economics Ltd. in Singapore, said before the release of the data.
Moody’s Investors Service warned last month that significant risks remain in the $6.2 trillion shadow banking industry after delayed payments and last-minute bailouts of trust products.
Today’s report showed that the 68 trust firms had net assets of 288 billion yuan, suggesting a limited ability to shoulder any implicit guarantee for their products.
Default Averted
The pool of trust assets has swelled more than 500 percent in less than five years. China averted its first trust default in January as investors in a 3 billion-yuan product issued by China Credit Trust Co. were bailed out days before it matured.
“The government has made good progress in addressing shadow banking risks and credit risks as a whole,” said Evans-Pritchard.
“That said, there is still a long way to go given that credit growth still looks unsustainable, outpacing nominal gross domestic product growth by quite a wide margin.”
Trust products’ average yield rose to 7.92 percent in the third quarter from 6.87 percent three months earlier, the trustee association said. Trust companies sold 15,289 products in the first nine months of 2014, compared with 15,332 a year earlier.
Combined profits at China’s trust companies rose 11.4 percent to 43.4 billion yuan for the first nine months of this year, according to today’s data.
bloomberg.com
Trust companies’ assets under management climbed 3.8 percent to 12.9 trillion yuan ($2.1 trillion) as of Sept. 30 from three months earlier, the China Trustee Association said in a statement today.
Government efforts to control shadow banking are sapping momentum from an economy that expanded in the third quarter at the slowest pace since 2009.
China had 397 “risky” trust products valued at 82.4 billion yuan as of September, today’s report said, down from 91.7 billion yuan three months earlier.
“Slower growth in the supply of credit as a result of the efforts to address shadow banking risks is weighing on investment, resulting in slower economic growth,” Julian Evans-Pritchard, China economist at Capital Economics Ltd. in Singapore, said before the release of the data.
Moody’s Investors Service warned last month that significant risks remain in the $6.2 trillion shadow banking industry after delayed payments and last-minute bailouts of trust products.
Today’s report showed that the 68 trust firms had net assets of 288 billion yuan, suggesting a limited ability to shoulder any implicit guarantee for their products.
Default Averted
The pool of trust assets has swelled more than 500 percent in less than five years. China averted its first trust default in January as investors in a 3 billion-yuan product issued by China Credit Trust Co. were bailed out days before it matured.
“The government has made good progress in addressing shadow banking risks and credit risks as a whole,” said Evans-Pritchard.
“That said, there is still a long way to go given that credit growth still looks unsustainable, outpacing nominal gross domestic product growth by quite a wide margin.”
Trust products’ average yield rose to 7.92 percent in the third quarter from 6.87 percent three months earlier, the trustee association said. Trust companies sold 15,289 products in the first nine months of 2014, compared with 15,332 a year earlier.
Combined profits at China’s trust companies rose 11.4 percent to 43.4 billion yuan for the first nine months of this year, according to today’s data.
bloomberg.com
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