Banks are increasingly introducing customized trust products targeting diverse needs, from physical gold to children's education and senior housing. The surge in trust fee income this year, driven by strong sales of exchange-traded fund (ETF) trusts, reflects a shift towards personalized asset management that fosters long-term customer relationships. The volatility in the stock market and changes in the fee structure by financial authorities are also heightening the need for business diversification.
According to the financial sector on October 13, the top five banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) reported trust fee income of 1.02 trillion won in the first half of the year, marking a 110.95% increase compared to the same period last year. This figure is 93.5% of last year's total annual income of 1.09 trillion won, with the rise in ETF trust sales due to a booming stock market driving the improved performance.
However, the sustainability of the fee increase centered on ETF trusts remains uncertain. As customers who achieve their target returns actively sell and reinvest, fee income rises, but a downturn in the stock market could dampen sales.
Changes in the fee structure by financial authorities also present a variable. From January to May of this year, the sales of ETF trusts by six major banks reached 64 trillion won, but the average holding period was only 42 days. A staggering 94.6% of transactions were sold within six months, with 91.7% subject to upfront fees. The Financial Supervisory Service conducted on-site inspections in August and September and announced plans to improve the fee and bank performance evaluation system on September 17.
Banks are focusing on customized trusts that can secure long-term customer relationships. Shinhan Bank's cumulative balance for its will substitute trust recently surpassed 1.5 trillion won, with cumulative sales exceeding 1 trillion won this year. The bank has eliminated minimum investment limits and introduced a dementia care trust to enhance customer accessibility and expand its product range.
Trust products utilizing physical assets have also emerged. NH Nonghyup Bank launched the 'NH Gold Filling Trust (Physical Type)' on October 1, allowing customers to invest in physical gold, such as gold bars or rings. This product, developed in collaboration with Samsung Gold Exchange, requires a minimum investment of 30 grams of pure gold.
Products aimed at children's education and asset succession are also on the rise. Hana Bank introduced a 'Children's Education Trust' this month, which pays a predetermined amount based on the achievement of educational goals, such as college admission or certification acquisition. Parents can set the conditions and timing for payments, managing assets according to their children's developmental stages. KB Kookmin Bank previously launched a will substitute trust that allows the transfer of senior residence deposit return claims to designated beneficiaries after death.
A bank official stated, "While ETF trusts exhibit significant volatility in sales performance depending on market conditions, customized trusts can foster long-term trading relationships with customers. The trust business will expand in a direction that broadens the customer base and secures stable non-interest income sources."
* This article has been translated by AI.
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