China’s banking asset management sector to double by 2021, says McKinsey
Chinese banks are driven to grow the fee-based income segment, as they strive to reduce reliance on traditional credit business
China's banking asset management sector will almost double in size by 2021 on rising demand for investment products and banks’ drive to expand fee-based income, despite a recent decline caused by tighter regulatory scrutiny, McKinsey said on Thursday.
The sector is expected to grow by a compound annual growth rate of 15 per cent to reach almost 60 trillion yuan (US$9 trillion) by 2021, or nearly double the size in 2016, according to a report released by the consultancy on Thursday.
Banks account for the biggest portion of China’s total asset management market, or one quarter of the 114 trillion yuan of assets in 2016. The total asset management market, which covers assets managed by banks, fund houses, insurers and trust firms, was expected to top 249 trillion yuan by 2021, up 118 per cent from that in 2016, the report said.
“We see a continued trend for the asset management sector to grow,” said John Qu, a senior partner at McKinsey in Shanghai, attributing the growth to factors including the nation’s wealth accumulation and underlying financial need.
In addition, banks were also driven to grow the fee-based income business, as they strive to reduce reliance on traditional credit business, said Nicole Zhou, a McKinsey partner in Shanghai.
We see a continued trend for the asset management sector to grow
Chinese banks are under mounting pressure to seek new growth engines amid slower economic growth and the nation’s gradual transition to a more liberal, market-based interest rate mechanism that draw fiercer competition and lower interest margin.