Q3 Net Profit of Asset Management Firms at 459 Billion KRW... Up 44% from Previous Quarter

[Asia Economy Reporter Minji Lee] At the end of the third quarter this year, domestic asset management companies recorded assets under management of 1,194.2 trillion KRW, an increase of 0.6% (6.7 trillion KRW) compared to the end of the previous quarter. Asset management companies earned a net profit of 459 billion KRW in the third quarter, surpassing both the previous quarter and the same period last year.

According to the "2020 Q3 Asset Management Company Business Performance (Preliminary)" announced by the Financial Supervisory Service on the 2nd, the fund custody of domestic asset management companies as of the end of September was 689.3 trillion KRW, up 1.1% (7.5 trillion KRW) from the end of June. Public funds decreased by 500 billion KRW compared to the previous quarter, but private fund assets increased by a total of 8 trillion KRW, mainly in special assets (4.5 trillion KRW) and bond-type funds (3.1 trillion KRW).

The discretionary investment contract balance was 503.9 trillion KRW, down 80 billion KRW (0.2%). Approximately 2.3 trillion KRW and 400 billion KRW were withdrawn from equity and derivative types, respectively. Accordingly, asset management companies earned a total net profit of 459 billion KRW in the third quarter. This represents a 44.4% (141.2 billion KRW) increase from the previous quarter and a 97.9% (227.1 billion KRW) increase from the same period last year.

By sector, fee income totaled 794.2 billion KRW, increasing 16.7% (113.7 billion KRW) from the previous quarter due to growth in assets under management and performance fees, and rose 18.2% compared to one year ago. Selling and administrative expenses were 461.9 billion KRW, up about 8.1% from the previous quarter and 16.1% (64 billion KRW) from the same period last year.

Securities investment gains from proprietary asset management were recorded at 156.1 billion KRW, a 67.4% (62.8 billion KRW) increase from the previous quarter. This is interpreted as a result of the stock market, which had been depressed due to the novel coronavirus disease (COVID-19), steadily recovering since April.

By company, the number of asset management companies totaled 324 at the end of the third quarter, an increase of 15 companies compared to the end of June. All of these were specialized private asset management companies. Among the 324 companies, 238 recorded profits, while 86 recorded losses. The ratio of loss-making companies was 26.5% of the total, down 11.7 percentage points from 38.2% in the previous quarter. The number of employees totaled 10,442, an increase of 3.4% (345 people) from the previous quarter.

The Financial Supervisory Service explained, "The asset management industry is generally showing stability, with the ratio of loss-making companies significantly decreasing due to improved profitability," and added, "Considering that the resurgence of COVID-19 and the slowdown in economic recovery could act as risk factors for the domestic stock market, we plan to continue monitoring asset management companies and the fund market."