Report Industry Investment Rating - Not provided in the content Core Viewpoints of the Report - In 2025, the issuance of credit ABS showed a stable recovery trend, featuring "small but numerous" characteristics. The non-performing loan ABS had a high growth rate and became the main growth engine. The concentration of the top ten sponsoring institutions decreased, and the average issuance interest rate declined year-on-year [2][4]. - In 2026, under the policy guidance of preventing and resolving financial risks, non-performing loan ABS is expected to continue to be the core engine for the expansion of the credit ABS market, and the continuous improvement of the regulatory framework will enhance market standardization and attract diversified investors [3][33]. - In the context of the increasing penetration rate of new energy vehicles, green auto loan ABS is expected to become an important growth point in the market, but attention should be paid to potential asset quality risks [34]. - With the maturity of AI technology, its application in the risk identification and management of the credit ABS market will deepen, which is expected to improve asset pricing accuracy and management efficiency [35]. Summary by Relevant Catalogs Issuance Overview - In 2025, a total of 238 credit ABS products were issued, with a total issuance scale of RMB 291.522 billion, a year-on-year increase of 7.82%. The average issuance scale per product was RMB 1225 million, a year-on-year decrease of 13.02%. The issuance scale accounted for 12.80% of the asset securitization market, a slight year-on-year decrease [4]. - The non-performing loan ABS issued 178 products, with a scale of RMB 82.057 billion, a year-on-year increase of 61.31%. The personal auto loan ABS had the same number of issuances as in 2024, with a scale of RMB 118.543 billion, accounting for 40.66% of the total. The issuance of micro-enterprise loan ABS declined, with 10 products issued and a scale of RMB 58.645 billion. The credit card installment loan ABS issued 2 products, with a scale of RMB 939 million. The bank/internet consumer loan ABS had a slightly lower number of issuances, but the scale reached RMB 31.338 billion, a year-on-year increase of 28.84% [5]. - There were 47 sponsoring institutions in the credit ABS market in 2025, mainly including auto finance companies and commercial banks. The top ten sponsoring institutions had a combined issuance scale accounting for 57.65%, with a decreased concentration [8][9]. - The average issuance interest rate of credit ABS was 2.13% in 2025, lower than that in 2024, and the average spread with the 3-year maturity yield of ChinaBond Medium and Short - term Notes was 23 BPs, showing a certain dispersion in the overall interest rate distribution [14]. Asset Classification Personal Auto Loan ABS - In 2025, the issuance scale was RMB 118.543 billion, accounting for 40.66% of the total credit ABS issuance, ranking first. The top ten manufacturers' issuance volume accounted for 86.21%, with a high concentration. The AAAsf - rated securities' coupon rate ranged from 1.60% to 1.96%, with a weighted average of 1.75%, a year-on-year decrease of 0.24 percentage points [17][19]. Non - performing Loan ABS - The issuance scale in 2025 was RMB 82.057 billion, a year-on-year increase of 61.32%, accounting for 28.15% of the total. Twenty banks participated in the issuance, mainly state - owned large commercial banks and national joint - stock banks. The top five banks' issuance scale accounted for 58.32%. The main underlying assets were personal housing mortgage non - performing loans and micro - enterprise non - performing loans. The AAAsf - rated securities' coupon rate ranged from 1.90% to 3.20%, with a weighted average of 2.32%, a year-on-year decrease of 0.09 percentage points [20][22][23]. Micro - enterprise ABS - The issuance scale in 2025 was RMB 58.645 billion, accounting for 20.12% of the total. China Construction Bank Corporation's issuance scale accounted for 84.60% of the total credit ABS issuance. The AAAsf - rated securities' coupon rate ranged from 1.58% to 1.96%, with a weighted average of 1.63%, a year-on-year decrease of 0.41 percentage points [24][25][28]. Personal Consumer Loan and Credit Card Installment Loan ABS - The personal consumer loan ABS issuance scale in 2025 was RMB 31.338 billion, accounting for 10.75% of the total. The top five sponsoring institutions' combined issuance scale accounted for 86.15%. The AAAsf - rated securities' coupon rate ranged from 1.70% to 2.05%, with a weighted average of 1.85%, a year-on-year decrease of 0.31 percentage points. The credit card installment loan ABS issued 2 products, with a total scale of RMB 939 million, accounting for 0.32% of the total, and the coupon rate of both products was 1.85% [29][30][32]. Outlook - In 2026, non - performing loan ABS is expected to continue to drive the expansion of the credit ABS market, and the regulatory framework will be further improved to attract more diversified investors [33]. - Green auto loan ABS may become an important growth point, but attention should be paid to the potential impact on asset quality from the changes in auto finance companies' operating strategies and credit access standards [34]. - The application of AI technology in the credit ABS market will deepen, which is expected to improve asset pricing accuracy and management efficiency, but attention should be paid to "model risk" [35].

Regulatory Dynamics - The financial industry is intensifying efforts to combat "involution" competition, with Ping An Bank's Guangzhou branch holding a meeting to promote this initiative and requiring over 2,000 employees to sign a commitment letter [1] - The Guangdong Banking Association has established a "1+3+N" system to address "involution" competition, which includes a negative list from regulatory authorities and self-regulatory measures from various business sectors [1] - The Haidian District Financial Management Bureau in Beijing has issued a risk warning against illegal fundraising under the guise of stablecoins, emphasizing that any fundraising without government approval is prohibited [1] Industry Dynamics - Bank deposit rates continue to decline, with the average interest rate for 3-month deposits dropping to 0.949%, marking a decrease of 5.5 basis points from the previous month [2] - Eight gold mining companies have reported significant profit increases, with three companies expecting net profit growth exceeding 100% and five others projecting over 50% growth [4] - CITIC Financial Assets has increased its stake in China Everbright Bank by 0.92%, raising its ownership from 7.08% to 8.00%, with an estimated investment of approximately 22.25 billion yuan [4] - Three banks in East China have reported positive earnings forecasts for the first half of 2025, with Ningbo Bank achieving a revenue of 371.60 billion yuan, up 7.91% year-on-year [4] - Public funds have increased their holdings in bank stocks by approximately 27% in the second quarter, reaching a total market value of 205.37 billion yuan [5] Corporate Dynamics - Changshu Bank is expanding its operations by absorbing three local village banks in Jiangsu Province, with plans to submit the proposal for shareholder approval [6] - JD Finance has announced a business cooperation with JD Technology Information, adhering to fair pricing principles [7] - Ping An Consumer Finance has received approval to commence credit asset securitization business, subject to regulatory compliance [7] - HSBC Life Insurance has increased its registered capital from 2.314 billion yuan to 2.676 billion yuan [7] - China Pacific Insurance has reported total managed assets exceeding 4 trillion yuan, reflecting an 11.3% growth since the beginning of the year [8] Overseas Dynamics - Indonesia's central bank reported a growth in new loan demand in Q2 2025, with a weighted net balance of 85.22%, although lower than the previous year's 89.11% [9] - Mexico's National Banking and Securities Commission has tightened credit issuance regulations for popular financial companies to mitigate credit concentration risks [10]

Company Overview - Zhonghai Trust Co., Ltd. is a state-owned non-bank financial institution jointly established by China National Offshore Oil Corporation (CNOOC) and CITIC Limited [3] - The company was founded in July 1988 and has undergone several name changes and capital increases, with the current registered capital being RMB 2.5 billion [5][7] - As of the end of 2024, the company managed trust assets totaling RMB 132.378 billion, with an annual cumulative management scale of RMB 289.75 billion [8] Financial Performance - In 2024, the company achieved operating income of RMB 1.474 billion and a net profit of RMB 338 million, with a per capita net profit of RMB 1.4015 million [8] - The total assets of the company reached RMB 7.799 billion, with net assets of RMB 6.206 billion and net capital of RMB 5.247 billion by the end of 2024 [28] Governance Structure - The company has two shareholders: CNOOC and CITIC Limited, with a total share count of 2.5 billion shares [9] - The sixth board of directors was elected on October 25, 2024, with the chairman being Zhu Xinqiao [11] Business Strategy - The company aims to serve the real economy and CNOOC's main business, focusing on risk prevention and high-quality development [14] - The strategic plan emphasizes risk control, innovation, and service to the main business, aligning with CNOOC's development strategies [14] Business Operations - The company is authorized to conduct trust business and proprietary business, including trust loans, credit asset securitization, and private equity funds [14] - The company has established a comprehensive risk management system and focuses on three main business areas: standard product trusts, supply chain finance, and industrial finance [17] Market Analysis - The company benefits from a strong brand image and a loyal customer base, supported by CNOOC's financial strength [17] - The company faces challenges from economic restructuring, market fluctuations, and intensified competition within the financial industry [18] Risk Management - The company has a robust risk control framework, emphasizing compliance and risk prevention as core principles [26] - Credit risk management includes establishing a credit risk governance structure and optimizing risk control processes [33] - The company has not reported any direct or indirect losses due to operational risks in 2024 [31]