In spite of the slowdown in assets under management growth in 2016, China's fund management companies saw steady profitability overall.
Although net profit growth varied widely by individual firm, for the 20 largest managers in China, the average net profit margin was 30.8 percent in 2016.
The average profit yield, which measures how much managers earn in basis points (bps) for each dollar they manage, (only based on mutual fund AUM) is approximately 28.3bps, similar to 2015 figures.
Swiss Connection
These are some of the key findings of the second quarter 2017 Strategic Overview, part of a research initiative by Cerulli Associates, titled Asset Management in China 2017.
According to Cerulli, six Fund Management Companies (FMC's) reported net earnings of more than 1 billion Renminbi (RMB) in 2016.
This was led by ICBC Credit Suisse Asset Management at RMB1.6 billion, followed by Tianhong Asset Management's RMB1.5 billion.
Banking Support
Institutions continue to play a significant role in the growth of FMCs' revenues and bottom lines.
«Among the 20 largest managers, those backed by banks showed outstanding year-on-year profit growth of 48 percent on average, compared to the 2 percent growth of their non-bank-backed peers,» says Miao Hui, senior analyst at Cerulli who leads the China research initiative.
Bottom Line Under Pressure
In 2017 As regulators concentrate on restricting the shadow banking business, and investment products continue to proliferate despite the relatively weak market sentiment, fund managers face greater regulatory scrutiny and fierce competition.
Many managers told Cerulli that they planned to hire more salespeople and improve their distribution networks this year--factors which would affect operating costs in 2017.
