Most investment advisory firms lose money in H1

A majority of investment advisory companies in South Korea suffered losses in the first half of fiscal 2012 mainly due to a decrease in commissions income, the financial regulator said Thursday.

The combined net loss of 149 local and foreign investment advisers operating here reached 7.1 billion won (US$6.55 million) in the March-September period, a turnaround from a 13.8 billion won net profit a year earlier, according to the Financial Supervisory Service (FSS). They close their books on March 31.

Of the tallied firms, 104 players, or 70 percent, logged net losses, the FSS added.

In the second quarter, however, the firms posted a combined net profit of 14 billion won, compared with a combined 21.1 billion net loss in the previous quarter.

The first-half net loss came as boutique-type firms suffered a decline in their investment contracts amid a prolonged market slump, leading to a decrease in their commission incomes. The outstanding amount of their contracts stood at 19.5 trillion won as of the end of September, down 29 percent from a year earlier.

The FSS noted that the top two local advisory firms' license transfer to the asset management business also contributed to the lackluster industry performance.

Their operating profits nearly halved to 123.6 billion won in the first half, from 212.6 billion won over the cited period, the FSS said.

Their combined assets totaled 629.8 billion won, down 97.9 billion won from a year earlier. The average equity capital shrank by 70.8 billion won to 568.5 billion won, according to the regulator. (Yonhap)