The fall in assets under management (AUM) in financial year 2008-09 has hit the net profit of the mutual fund industry. The industry’s average net profit has declined 29.84 per cent in financial year 2008-09, acccording to an ICRA report released today.
The average net profit of the industry stood at Rs 230.3 crore compared with Rs 328.24 crore in 2007-08.
The average growth in net profit of top 11 players fell 10.17 per cent, due to a steep decline in net profits of HSBC AMC (-271.65%), ICICI Prudential MF (-99.13%) and UTI AMC (-19.87%).
Reliance Mutual Fund, the country’s largest fund house in terms of AUM, posted a rise of 38.22 per cent in net profit for the year ended March 31 at Rs 132.9 crore compared with Rs 96.18 crore in the previous financial year.
| HOW THEY STACK UP Net profit and profitablity of top fund players | |||
| AMCs | Profit (Rs cr) | Change (%) | Profitability (bps) |
| Reliance | 132.90 | 38.20 | 22 (16) |
| HDFC | 129.11 | 9.60 | 35 (40) |
| ICICI | 0.71 | -99.10 | 0 (23) |
| UTI | 114.90 | -19.80 | 33 (42) |
| Birla | 9.27 | 234.20 | 3 (1) |
| SBI | 68.90 | -2.00 | 37 (37) |
| Tata | 26.86 | -4.70 | 26 (21) |
| DSP | 40.77 | 45.30 | 42 (23) |
| HSBC | -16.90 | -271.65 | -14 (10) |
| Deutsche | 16.36 | 375.70 | 24 (4) |
| Kotak | 10.33 | 907.00 | 38 (1) |
| Industry Average | 230.30 | -29.04 | 11 (14) |
| Figures in brackets are of previous year Source : ICRA Online | |||
Birla Sunlife AMC, Deutsche AMC and DSP BlackRock AMC posted considerably higher net profits during the year. Kotak AMC reported a rise of 907 per cent in net profit at Rs 10.33 crore.
HSBC AMC was the worst hit among the top ten fund houses as it reported a net loss of Rs 16.9 crore as against a net profit of Rs 9.87 crore in 2007-08, a 271.65 per cent decline. The fund house could not control its establishment and other expenses, said the report. ICICI Prudential is another big AMC that reported a decline in net profit. It posted a net profit of Rs 0.71 crore as against Rs 82.1 crore in the previous year.
In terms of profitability, mainly gauged by the profit before tax to AUM ratio, ICICI was hit the hardest. The ratio reached zero compared with 23 basis points (bps) in the previous year.
For the industry, profitability plunged from 14 basis points in 2007-08 to 11 basis points in 2008-09. However, the top players managed to keep their profitability at 21 basis points, almost double the industry average. Despite being a tough year for the fund market as liquidity crisis hit the players due to high redemptions, players like Reliance Mutual Fund, Tata AMC, DSP and Deutsche posted a rise in profitability. Reliance’s profitability improved from 16 bps to 22 bps in FY09, while that of Tata improved to 26 bps from 21 bps. In case of DSP, Deutsche and Kotak, profitability stood at 42 bps, 24 bps and 38 bps, respectively.