Domestic Trust Assets Reach 1,300 Trillion Won Era... Securities Firms Step Back

Yeouido Financial Supervisory Service building in Seoul (right) and securities buildings. Photo by Younghan Heo younghan@

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Last year, the total assets under management (AUM) of domestic trust companies exceeded 1,300 trillion won, driven by demand for retirement pensions. However, securities companies' trust assets declined for the second consecutive year due to the suspension of bond-type trust redemptions and a decrease in new deposits for fixed-term deposit-type trusts.

On the 11th, the Financial Supervisory Service (FSS) announced that the total AUM of 60 trust companies at the end of 2023 was 1,310.7 trillion won, an increase of 8.68 trillion won (7.1%) compared to the previous year.

The AUM of 46 integrated trust companies, including banks, securities, and insurance firms, was 908.6 trillion won, up 7.67 trillion won (9.2%) from the end of 2022. The AUM of 14 specialized real estate trust companies was 402.1 trillion won, an increase of 1.01 trillion won (2.6%) year-on-year.

By sector, banks recorded 632 trillion won, up 90.2 trillion won, and insurance companies recorded 23.8 trillion won, up 4.1 trillion won. The increase in bank and insurance trust assets is believed to be due to the growth in retirement pensions.

On the other hand, securities companies recorded 252.8 trillion won, down 17.6 trillion won. Securities companies' trust assets have been declining for two consecutive years since reaching a peak of 310.7 trillion won at the end of 2021. The FSS explained, "Since the second half of 2022, bond-type trust redemptions have been suspended or delayed due to tightening in the money market, and recently, new deposits for fixed-term deposit-type trusts have decreased due to the reduction in bank deposit interest rates."

By trust asset type, monetary trusts increased by 1.9% to 601.6 trillion won, with specific monetary trusts accounting for most of it at 587.2 trillion won (97.6%). Property trusts increased significantly by 11.9% to 708.3 trillion won, influenced by large increases of 4.48 trillion won and 2.48 trillion won in monetary claim trusts and collateral trusts, respectively.

Regarding trust fees, the total trust fees of all trust companies rose 1.7% year-on-year to 2.3384 trillion won, but trust fees of specialized real estate trust companies decreased by 66.4 billion won (6.3%) to 980.8 billion won. This contrasts with integrated trust companies, whose trust fees increased by 105.2 billion won (8.4%) to 1.3576 trillion won compared to the previous year.

The gap in trust fee market share between banks and real estate trust companies, which compete for first and second place by sector, also widened. Banks recorded 46.5%, up 4.3 percentage points, while real estate trust companies accounted for 41.9%, down 3.6 percentage points. Securities accounted for 10.1%, down 1.2 percentage points, and insurance accounted for 1.4%, up 0.4 percentage points. In this regard, the FSS noted, "Securities appear to have experienced a decline in trust assets due to bond-type trusts, and real estate trust companies seem to have somewhat stagnated growth due to the real estate market downturn."

The FSS stated, "We plan to strengthen risk management for trust companies by continuously monitoring potential risk factors of integrated and specialized trust companies. In particular, for sectors such as securities where growth has somewhat stagnated, we will monitor the current status and causes while ensuring thorough investor protection."

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