China Q1 trust asset growth eases on slowing economy

BEIJING, April 23 Wed Apr 23, 2014 4:14am EDT

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BEIJING, April 23 (Reuters) - Assets managed by Chinese trust companies grew at a slower pace in the first quarter from the fourth, data from an industry association showed on Wednesday, reflecting a slowdown in the broader economy.

The China Trustee Association said assets managed by the country's 68 trust firms totalled 11.7 trillion yuan ($1.9 trillion) at the end of March, up 7.5 percent from the end of December.

The quarterly growth pace eased from an average of 11.8 percent between 2010 and 2013.

"We must be mindful of challenges lying ahead," Wang Lijuan, deputy head of the association told reporters at a media conference.

"The economic slowdown is adding pressure to the industry and the previous model of fast expansion in trust assets has become unsustainable, as the government shifts its focus to structural reforms."

Wang said the industry is also facing competition from a mushrooming of innovative financial products, while the government's push towards interest rate liberalisation will pull down the return ratios of trust assets.

Data from the association showed the annualised return rate of trust products averaged 6.4 percent at the end of the first quarter, down from 7.4 percent in 2013.

Trust products, sought by depositors seeking higher returns, have seen explosive growth in China in recent years, with total assets nearly quadrupling from 2010.

But the industry is being challenged by the emergence of internet finance businesses, such as money market fund Yu'e Bao from Alibaba Group Holding Ltd, as well as products launched by Baidu Inc and Tencent Holdings Ltd.

($1 = 6.2375 Chinese Yuan) (Reporting by Aileen Wang and Jonathan Standing; Editing by Christopher Cushing)

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