Asset Managers' Profits Back To Pre-Recessionary Levels

Mark Shapland

24 June 2014

The asset management industry recorded a stellar performance last year - shooting back to profit levels last seen before the recession.

A new report by consultancy firm revealed that operating profits jumped 24 per cent to €46.9 billion ($63.8 billion) in 2013, taking earnings above their 2007 peak of €40.8 billion. The industry’s total assets under management surged by 13 per cent, to an all-time high of €46.4 trillion.

Profits in North America are now 18 per cent above their pre-crisis peak, at €26.9 billion, having risen 30 per cent in 2013. Those in emerging markets are 55 per cent above 2007 levels at €7.9 billion, despite a rise of just 9 per cent last year.

However it was less positive for Europe. Western Europe's operating profits were 6 per cent below their 2007 peak, at €12.1 billion, despite increasing 24 per cent last year.

Globally the industry regained its pre-crisis market share of financial assets, climbing to 25.1 per cent of total financial assets, against 23.6 per cent in 2012.

There are still threats standing in the way of a full recovery - namely increased legislation. In the UK, regulatory fines against asset managers in the last year totalled £408 million ($694 million), equalling over half the total amount of fines for the previous 11 years - just £752 million.

Meanwhile McKinsey also points out that it expects retail fees in Europe to fall further, especially from Retail Distribution Review-like regulations. Retail fees are currently 42 per cent higher in the UK than the US.

The survey data was collected from more than 300 firms worldwide.