Q3 Asset Management Firms' Net Profit Increases by 12% from Previous Quarter... Deficit Ratio Rises

Net profit of asset management companies in the third quarter of this year increased by more than 12% compared to the previous quarter.

According to the Financial Supervisory Service on the 8th, the total net profit of all asset management companies in the third quarter was 431.9 billion KRW, up 12.5% from the previous quarter. Compared to the same period last year, it increased by 19.4%.

Operating revenue was 1.1317 trillion KRW, down 8.6% from the previous quarter as both fee income and securities investment gains decreased. Operating expenses were 790.1 billion KRW, down 4.1% from the previous quarter due to a decrease in selling and administrative expenses.

Among 465 asset management companies, 216 recorded profits while 249 recorded losses. The ratio of loss-making companies was 53.5%, up 3.3 percentage points from the previous quarter. Among 383 private asset management companies, the ratio of loss-making companies was 59.8%, up 3.0 percentage points from the previous quarter. The return on equity (ROE) for the third quarter was 11.9%, up 1.0 percentage point from the previous quarter and 0.4 percentage points higher than the same period last year.

As of September, the fund custody amount was 902.7 trillion KRW, of which public funds accounted for 315.4 trillion KRW (34.9%) and private funds 587.3 trillion KRW (65.1%). The custody amount of public funds increased by 8.6 trillion KRW compared to the end of June. Private funds increased by 12.7 trillion KRW.

As of the end of September, the investment discretionary contract amount was 562.6 trillion KRW, with bond-type funds at 428.3 trillion KRW, stock-type funds at 92.5 trillion KRW, and mixed bond funds at 9.6 trillion KRW in order.

The Financial Supervisory Service explained, "While the assets under management of asset management companies have maintained an increasing trend this year, net profit also improved compared to the previous quarter. However, this is mainly due to an increase in non-operating income and losses, and the core fee income has shown a declining trend since 2021. Additionally, the ratio of loss-making and capital-erosion companies continues to rise, making it difficult to say that the overall business conditions of the asset management industry have improved."

It added, "In preparation for domestic and international uncertainties surrounding the financial market, we will periodically check the financial soundness and profit and loss trends of each management company, and continuously monitor fund inflow and outflow trends as well as potential risk factors of asset management companies."