Core Insights - The trust industry in China is facing a dual challenge of transitioning from old profit growth points to new ones while managing existing business risks [1][2] - As of the end of 2024, the total trust assets managed by 67 companies reached 29.56 trillion yuan, marking a year-on-year growth of 23.58%, despite a significant profit decline of 45.52% to 23.087 billion yuan [1] - The shift in the trust business model from financing and asset management to asset service trusts reflects a fundamental change, but this transition is associated with lower returns, making it difficult to replicate past profit peaks [1] Industry Challenges - Many trust companies are currently experiencing a disconnect between new and old profit growth points, alongside the need to address risks from existing business operations [2] - The ongoing decline in profits may undermine the long-term development momentum of the trust industry, with an increasing number of companies facing operational challenges and liquidity risks [3] - The number of trust companies unable to disclose their 2024 annual reports has risen to 10, with 8 companies reporting losses [3] Risk Management - Trust companies are urged to accelerate the resolution of existing business risks by leveraging the advantages of the trust system and collaborating with shareholders [4] - The real estate sector and local government financing platforms, which have been heavily relied upon by the trust industry, are undergoing significant adjustments, leading to increased defaults and disputes [4] - In 2022 and 2023, 34 and 32 trust companies reported a total of 1,005 and 296 litigation cases, respectively, with the amounts involved reaching approximately 86.3 billion yuan and 72.6 billion yuan [4] Investment Strategy - Trust companies need to enhance their capabilities in equity asset investments and focus on building professional teams to adapt to the changing market [6] - The shift of trust funds from traditional sectors like real estate to capital markets is evident, but only 1.12 trillion yuan, or 5.04%, of the over 10 trillion yuan in funds directed towards securities is allocated to stocks and funds [6] - Trust companies are encouraged to utilize their proprietary funds to support key sectors like technology innovation while managing bad debt rates effectively [6] Regulatory Environment - The trust industry requires more comprehensive and definitive supporting policies to facilitate the transition from old to new growth drivers [7] - Recent pilot programs for real estate and equity trust property registration in major cities provide a framework for the industry’s development, but further improvements in cross-regional coordination and tax policies are necessary [7] - Optimizing policies and legal frameworks for trust companies' participation in capital markets can help alleviate existing barriers and create new growth opportunities [7]