HDFC MF the most profitable, followed by Reliance, UTI & ICICI Prudential.
The domestic mutual fund industry recorded its highest profit after tax (PAT) in 2009-10. The industry’s total profit rose four-fold from the previous financial year.
Importantly, the industry made such profits in a challenging year marked by several regulatory changes, like the infamous ban on entry load on equity schemes.
According to a report by the fund industry tracker, Morningstar, fund houses’ consolidated profit after tax in 2009-10 stood at Rs 911 crore as against Rs 224 crore in 2008-09. Prior to the global financial crisis, the consolidated PAT had peaked in 2007-08 at Rs 427 crore, less than half of last year.
The industry profitability, measured by dividing the consolidated profit by total average assets for the financial year, rose sharply to 13 basis points in 2009-10 as against four basis points in the previous year.
HDFC Mutual Fund emerged as the most profitable fund house, with a PAT of Rs 208 crore, followed by Reliance MF (Rs 195 crore).
“The gross income of fund houses has risen substantially, resulting in higher profitability for the industry this year,” said Dhruva Chatterji, a senior research analyst at Morningstar India.
OUT OF THE WOODS
Performance of domestic fund industry in the last four years |
| |
FY10 |
FY09 |
FY08 |
FY07 |
| Consolidated PAT |
910.87 |
223.71 |
426.74 |
297.22 |
| Industry AAUM |
7,24,956 |
5,03,566 |
4,87,239 |
3,08,731 |
| Equity assets (%) |
32 |
26 |
34 |
38 |
| Industry Profitability |
13 bps |
4 bps |
9 bps |
10 bps |
All figures in Rs crore except equity assets and profitability
Source: Morningstar |
| PAT OF TOP FIVE PLAYERS IN 2009-10 |
| |
PAT |
Change
(%) |
Gross
income |
Change
(%) |
| Reliance MF |
195.13 |
46.77 |
654.25 |
47.24 |
| HDFC MF |
208.37 |
61.39 |
624.25 |
38.64 |
| ICICI Pru* |
128.03 |
17,906.40 |
467.39 |
45.77 |
| UTI MF |
170.27 |
48.11 |
484.9 |
37.12 |
| Birla Sunlife |
48.45 |
422.45 |
313.11 |
60.16 |
Change (%) is year-on-year
*ICICI Pru’s PAT is not comparable due to one-off debit in 2008-09 |
Other fund houses that recorded strong profit growth in FY10 were ICICI Prudential, Birla Sunlife, Kotak and LIC, among others. The 10 largest asset management companies (in terms of assets) accounted for 80 per cent of the industry’s gross income. In 2009-10, their consolidated profit rose 83 per cent, while the consolidated gross income climbed 41 per cent.
Smaller players, such as Quantum, Edelweiss, AIG and Mirae, managed a decent performance on the back of improved profitability.
The industry’s chief executive officers were quite concerned over profitability last year.
The players whose profits dropped include Benchmark, Shinsei, Morgan Stanley, IDFC, Sahara and Baroda Pioneer.
Of the 38 AMCs, 15 were in the red during 2009-10, though their losses fell.
