The Cause Study On The High Growth Of Bank Profits From The Perspective Of Banking And Trust Cooperation

With the rising financial awareness of people and the comprehensive innovation and development of commercial banking business, the market of wealth-management products witnesses an overwhelmingly rapid development in recent years. The net income of service charges and commissions is increasing faster than that of interest, and has taken a rising percentage of the total banking revenue, which is even much obvious in2011. According to statistical data, the increase of total loans and deposits has fallen last year. By the end of2011, the gross amount of deposits measured in Renminbi was80.9trillion, which had increase by13.5%compared with that of last year, while the growth rate was6.7%lower than that of last year. And the gross amount of loans measured in Renminbi was54.8trillion, which had increased by15.8%compared with that of last year, while the growth rate was4.1%lower than that of last year. However it is reported that the total profits of banking industry is1.04trillion in2011, which has increased by36.3%compared with that of0.76trillion last year, and over half of the profits is composed of service charges and commissions. On the other hand, affected by the tight credit policy, the growth rate of M2and money multiplier has both slowed down, and bank loans have been much heavily influenced. But the market has ample liquidity outside the banking system, and the demand of society and enterprises for money has been satisfied. According to People’s Bank of China, the total social financing scale amounts to12.83trillion last year, and the banking loans, which is the traditional supervision, just takes the percentage of58.3%, indicator, while that of2002was92%. For2011in which the credit was rather tight, the growth rate of banking profits exceeded that of loans and deposits, and social financing scale exceeded new loans in quantity, which turned out to be abnormal, has attracted much attention. The reasons that why commercial banks depend less on interest spreads and social financing scale was slightly influenced by monetary policy may have more than one, but the booming market of banking and trust cooperated products must be especially noted. Since the first financial product was introduced to the market through the cooperation between bank and trust in2006, it is common that there is close relation between banking and trust. And the experience from western countries shows that the development of trust industry has close contact with banking industry. On the one hand, by absorbing a great deal of money in the name of financing products and investing to trust company, banks can put these capitals into real economy through trust channels, namely banks can convert actual loans into other reasonable forms which are not under supervision of credit. On the other hand, it is quite difficult for many enterprises to get loans from commercial banks, thus they all turn to trust company for assistance, and the amount of money that flow into real economy through trust products is increasing rapidly recently. According to statistics, by the end of2011, the amount of trust products used for loans was2.48trillion, and the amount of those used for investment was1.72trillion, which added up to56%of new banking loans measured in Renminbi. By issuing bank and trust cooperated financing products, the money and "loans" are off-balance sheet, so that banks can not only avoid the supervision of loans and deposits, but also gain abundant intermediate business income. Meanwhile, as regulatory authorities seriously control credit, a great deal of money flows into market by direct financing means outside the banking system. As a result, the credit crunch fails to come into effect, and the validity of monetary policy is weakened. In this process, trust companies have played important role.This paper will analyze the composition of the commercial banks’profits and the social financing scale in the micro-environment of credit crunch, base on the bank and trust cooperative products, and will demonstrate with data the crucial roles that trust companies have played. The focus of this paper is the development status of China’s trust companies, which do not fulfill the function of financial management on behalf of trustee, since their core businesses are in the form of bank and trust cooperation. The reason for trust companies to expand in scale is that there comes the contraction of traditional banking credit, and is resulted by the superposition of double effects of the long-term interest rate control and short-term tight monetary policy in China. Therefore, as the trust industry has be in a new legal framework of "one law and three regulatory" and the bank and trust cooperative business has been severely constrained, the research of this paper has practical significance in exploring the problems trust companies meet with at present and providing suggestions in how to enhance the ability of active management and realize business transformation. And this paper is divided into six parts.The innovation of this paper lies in the original research entry point. It explores the underlying problem according to the present market situation, thus is a timely research. However, as the writer is limited in theoretical and professional approach, there are many difficulties in the research process.