Asset management companies have aggressively pursued exchange-traded fund (ETF) businesses and significantly increased their assets under management (AUM) in recent years, but profitability has actually declined. In particular, there are evaluations that excessive market share competition between large companies such as Mirae Asset Global Investments and Samsung Asset Management has revealed the limits of growth that has only expanded in size.
According to the Korea Financial Investment Association, the total assets under management of eight domestic asset management companies (Samsung, Mirae Asset, KB, Shinhan, Hanwha, NH Amundi, Kiwoom, Korea Investment) with AUM exceeding 50 trillion won surged 40% (36 trillion won) from 895 trillion won in the first half of 2021 to 1,256 trillion won in the first half of this year.
However, net income only increased from 498.1 billion won to 563.8 billion won, a rise of 13% (65.7 billion won) during the same period. Calculated as a profitability indicator reflecting how much money was earned relative to the size of the assets under management, the net profit margin actually dropped by 19%. Despite the increased scale, profitability has worsened.
During the same period, the primary revenue source for asset managers, commission revenue, also rose only by 10% (635.1 billion won to 698.9 billion won). While the number of ETF-centered products increased due to competitive pressure among asset managers featuring low-fee products, it is interpreted that fees have decreased and the burden of expenses such as labor costs and marketing has grown.
In particular, the poor profitability of large companies has been prominent. In monetary terms, Mirae Asset Global Investments' net income in the first half of this year was 326.7 billion won, significantly surpassing the second-place KB Asset Management (74.4 billion won). Commission revenue of Mirae Asset Global Investments was also 193 billion won, higher than Samsung Asset Management (161.8 billion won), which was in second place. However, compared to four years ago, the net profit margin has plummeted by 36%, recording the second-largest drop following Shinhan Asset Management (-42%). Operational efficiency has significantly declined.
As of the end of June this year, Samsung Asset Management, ranked first in the industry with an AUM of 392 trillion won, has seen its asset expansion and net income growth proceed at a similar pace, resulting in a stagnant net profit margin. The net profit margin (0.013%) is the lowest among the top asset managers, at eighth place. While the absolute profit size is among the highest, profitability relative to assets is the lowest.
Amid this, Kiwoom Asset Management and Hanwha Asset Management have relatively performed well, increasing their net profit margins by 45% and 31%, respectively, over the past four years. However, they too have not reached a net profit margin of even 0.1%, indicating they have not escaped the low-profit structure prevalent in the industry.
In this regard, there are criticisms that the strategy centered on 'scale growth' has hit its limits across the industry. An official from one asset management company noted, "The decline in asset managers' profitability is not merely a temporary issue but a structural problem accumulated from low-fee competition and fixed cost burdens," and stated, "There is a need to break away from the 'chicken game' and improve the revenue structure."