Korean Asset Managers Earn Record Profits in Q1

Lower operating costs helped South Korea’s asset management firms earn record income of 615 billion won ($550 million) during the first quarter of the year, a 424.7% jump from the same time last year, and a 53% rise from the previous quarter, according to the state regulator Financial Supervisory Service.

The results topped the previous record profit of 457.5 billion won reported during the third quarter of 2020.

Total assets under management (AUM), which includes fund assets and assets under discretionary management, hit 1,237.8 trillion won or $1.1 trillion as of the end of March, a 3.3% rise from the previous quarter, and a 7.7% increase from the year-ago quarter.

Fund assets totaled 722.5 trillion won, a 4.4% increase from three months earlier, and a 9.6% rise from the first quarter of 2020, while discretionary assets rose 1.9% from the previous quarter to 515.3 trillion won, which was up 5.1% from the same quarter last year.

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Bond funds and stock funds grew by 3 trillion won and 2.4 trillion won, respectively, from the previous quarter, while privately offered funds increased 7.3 trillion won to 443 trillion won during the period.

The firms’ aggregate operating income rose 31.7 billion won, or 6.4% from the previous quarter to 529.5 billion won, which the Financial Supervisory Service also attributed mainly to lower operating expenses. Meanwhile, non-operating income soared 218.1% to 224.2 billion won based on better gains using the equity method, the regulator said.

Of the 328 asset management firms in Korea, 259 were in the black during the first quarter, with the remaining 69 posting a loss. The ratio of companies reporting a net loss was 21%, 0.8% lower than in the first quarter of 2020. Return on equity was 25.7% for the quarter, compared with 17.9% during the previous quarter and 6.1% during the year-earlier quarter.

Revenue from fees and commissions dropped 10.9% from the previous quarter to 924.8 billion won, but surged 31% from the same time last year, while selling and administrative expenses decreased 24.1% to 527.4 billion won.

“The asset management segment has well performed so far,” an official from the FSS told the Korea Herald, “but the FSS will continue to keep a close eye on some companies with bad balance sheets in a bid to quickly respond to potential market downturns.”