Asset custody business has the unique advantages of "stable fees, one-time marketing and long-term benefits". As long as the custody portfolio exists, stable custody fee income can be collected every year, which directly increases the income of intermediary business.
Second, asset custody business can bring low-cost liabilities.
As the custody funds are used for investment or trading purposes, there is generally no other demand for custody banks. During the existence of the custody portfolio, the maintenance cost of this part of the deposited funds is very low. Because the investment of the fund has a long period, the uninvested part of the fund itself forms bank deposit funds.
Third, the asset custody business helps banks improve ROA indicators.
Expanding the scale of custody business and creating income from custody business have contributed significantly to the ROA of banks and played an important role in promoting the transformation of banking business. Asset custody business is a new type of intermediary business that relies entirely on service charges and does not occupy commercial banks' risk assets and banks' own capital. The scale of custody assets is off-balance-sheet assets, not included in the denominator of ROA, and custody business income is included in the numerator. In this way, with the further development of custody business, the scale will be further enlarged, and the assets on the balance sheet will not be increased, and the income from custody fees will be increased among molecules, which will obviously enhance ROA.
The content of this article comes from People's Republic of China (PRC) Financial Code: Applied Edition published by China Law Publishing House.