Asset Management Firms Show Recovery... Q1 Assets Under Management and Operating Profit Both Increase

268 out of 448 Asset Management Firms Recorded Profits
Financial Market Improvement... Some Profitability Indicators Improved

With the stock market recovery leading to increased securities investment profits, asset management companies' operating profits rose in the first quarter of this year.

The Financial Supervisory Service (FSS) announced that the operating profit of asset management companies in the first quarter of this year was 413.4 billion KRW, up 21.9 billion KRW (5.6%) from the same period last year. Securities investment gains (including derivative gains) amounted to 153.6 billion KRW, an increase of 90.1 billion KRW (141.9%) from 63.5 billion KRW in the same period last year. Net profit for the period was 421.4 billion KRW, up 17.2% (61.7 billion KRW) compared to the same period last year.

By company, out of 448 asset management firms, 268 recorded profits while 180 posted losses. The assets under management (fund custody + discretionary investment contracts) of asset management companies totaled 1,430.6 trillion KRW, an increase of 32.7 trillion KRW (2.3%) from 1,397.9 trillion KRW at the end of the previous year. Fund custody amounted to 870.7 trillion KRW, up 4.8% (39.6 trillion KRW) from the end of last year. Discretionary investment contracts stood at 559.9 trillion KRW, down 1.2% (6.9 trillion KRW) from the end of the previous year.

Fee income of asset management companies was 89.12 billion KRW, down 5.31 billion KRW (5.6%) from the previous quarter and decreased by 9.4 billion KRW (9.5%) compared to the same period last year. In particular, fund fees were 73.36 billion KRW, down 7.4% from the same period last year, and discretionary advisory fees were 15.76 billion KRW, a decrease of 18.4% compared to last year. The FSS explained, “Although assets under management slightly decreased in the previous quarter, they increased again in the first quarter, and profitability indicators such as operating profit also partially improved. This is mainly due to securities valuation gains resulting from a somewhat improved financial market compared to last year, when market uncertainties such as stock price declines and interest rate hikes were in full swing.”

The FSS added, “However, fee income such as performance fees is still on a declining trend, indicating that the financial market improvement has not yet translated into a substantial improvement in asset management companies' operating results. We will regularly review the financial and profit and loss status of each asset management company in preparation for market volatility such as stock price and interest rate trends, and continue to monitor fund inflow and outflow trends and potential risk factors.”