HDFC AMC and Reliance Nippon Life AMC have recorded healthy increase in their profitability last fiscal, says the earnings report of both the listed asset management companies.
While HDFC AMC registered a robust 31% growth in its profit after tax (PAT), Reliance Nippon Life witnessed a moderate 7% increase in its PAT last fiscal.
An analysis of earnings growth of both AMCs shows that the recent regulatory changes that banned upfront commission and asked AMCs to pay commission from the scheme instead of AMC book have helped fund houses reduce their expenses incurred on distribution commission.
While another key contributor for AMCs to increase profitability is growth in equity assets, both the fund houses saw marginal growth in their equity assets last fiscal. While HDFC MF saw its equity AUM grow by 2% to reach Rs.1.58 lakh crore, Reliance Nippon Life MF equity AUM went up by 5% to reach Rs.91,354 crore in FY 2018-19.
AMCs also derive profit from portfolio management, alternative investment funds and offshore advisory services among other things.
HDFC AMC
The fund house registered net profit of Rs.930 crore in FY 2018-19, a 31% rise in its bottom line of Rs.711 crore in FY 2017-18. For the March quarter, the fund house’s net profit stood at Rs.276 crore, up 61% from Rs.172 crore in the March quarter of 2018.
The AMC incurred expenses worth Rs.240 crore as fees and commission in FY 2018-19, 27% lower from Rs.327 crore that it spent in the corresponding period last year. A major part of this decline came in the March quarter, when the company spent Rs.30 crore, 70% lower compared to Rs.100 crore spent in the same period of 2018.
HDFC AMC earnings table
|
Particulars |
FY19 (in crore) |
FY18 (in crore) |
change (in crore) |
Change (%) |
|
Revenue from operations |
1915.2 |
1756.8 |
158.4 |
9% |
|
Other Income |
181.6 |
113 |
68.6 |
61% |
|
Total Revenue |
2096.8 |
1869.8 |
227 |
12% |
|
Fees and commission expenses |
240.3 |
327 |
-86.7 |
-27% |
|
Impairment on financial instruments |
40 |
|
40 |
|
|
Employee benefit expenses |
206.3 |
186.1 |
20.2 |
11% |
|
Depreciation and Amortization expenses |
12.8 |
9.4 |
3.4 |
37% |
|
Other expenses |
222.7 |
289 |
-66.3 |
23% |
|
Total Expenses |
722.1 |
811.5 |
-89.4 |
11% |
|
Profit before tax |
1374.7 |
1058.3 |
316.4 |
30% |
|
Tax expenses |
444.1 |
346.9 |
97.2 |
28% |
|
Profit after tax |
930.6 |
711.4 |
219.2 |
31% |
Source: HDFC AMC website
Reliance AMC
Reliance AMC clocked a consolidated net profit of Rs.486 crore in FY 2018-19, a 7% rise from Rs.456 crore in FY 2017-18. For the March quarter, the fund house’s net profit stood at Rs.151 crore, 35% higher from Rs.112 crore in the March quarter of 2018.
The AMC spent Rs.258 crore as fees and commission in FY 2018-19, 17% lower from Rs.310 crore that it spent in FY 2017-18. A considerable part of this decline in fees and commission came in the March quarter, when it spent Rs.63 crore compared to Rs.103 crore in the same period of 2018.
Reliance Nippon Life AMC earning table
|
Particulars |
FY19 (in crore) |
FY18 (in crore) |
Change (in crore) |
Change (%) |
|
Revenue from operations |
1478.6 |
1591.8 |
-113.2 |
-7% |
|
Other Income |
171.3 |
156.9 |
14.4 |
9% |
|
Total Revenue |
1649.9 |
1748.7 |
-98.8 |
-6% |
|
Fees and commission expenses |
258.3 |
310.5 |
-52.2 |
-17% |
|
Employee benefit expenses |
293.5 |
257.2 |
36.3 |
14% |
|
Depreciation and Amortization expenses |
10.1 |
10.7 |
-0.6 |
-6% |
|
Other expenses |
387.7 |
514.6 |
-126.9 |
-25% |
|
Total Expenses |
949.6 |
1093 |
-143.4 |
-13% |
|
Profit before tax |
700.3 |
655.7 |
44.6 |
7% |
|
Profit after tax |
486.1 |
455.8 |
30.3 |
7% |
Source: Reliance Nippon Life AMC
