SBI Funds Management Reports 6% Decline in Q2 Net Profit Due to Higher Expenses

SBI Funds Management reported a 6 percent decline in its net profit for the September quarter, dropping to ₹701 crore from ₹746 crore in the corresponding period last year. The profit contraction occurred despite a 9 percent increase in revenue, driven by higher employee benefit and operational expenses, alongside a decline in other income.

Mumbai: SBI Funds Management, India's largest mutual fund house, has reported a 6 percent decline in its net profit for the September quarter, standing at ₹701 crore compared to ₹746 crore recorded in the same period of the previous financial year.

During the quarter under review, the company's revenue registered a 9 percent growth, reaching ₹1,193 crore up from ₹1,095 crore in the corresponding period last year. However, overall other income experienced a significant drop of 57 percent, falling to ₹45 crore from ₹105 crore.

The decline in net profit was primarily attributed to an increase in overall expenses, which rose by 28 percent to ₹301 crore compared to ₹242 crore in the previous year. This rise was driven by higher employee benefit expenses, which increased to ₹131 crore from ₹108 crore, and other operational expenses, which grew to ₹139 crore from ₹113 crore.

Despite the profit dip, the company's average quarterly assets under management (AUM) expanded by 10 percent to reach ₹13.14 lakh crore, compared to ₹11.99 lakh crore in the corresponding quarter last year. This growth was supported by an 11 percent increase in equity assets, which totaled ₹6.22 lakh crore compared to ₹5.58 lakh crore previously.

Asset performance across different segments showed mixed trends. Debt-oriented assets declined by 10 percent to ₹1.56 lakh crore from ₹1.74 lakh crore. Conversely, liquid AUM recorded a substantial growth of 31 percent, reaching ₹1.20 lakh crore compared to ₹91,800 crore. Passive quarterly average AUM also saw an 11 percent increase, standing at ₹4.15 lakh crore against ₹3.75 lakh crore.

Retail and systematic investment channels maintained steady growth. Inflows through Systematic Investment Plans (SIP) increased by 3 percent to ₹3,900 crore compared to ₹3,800 crore, while total SIP assets grew by 15 percent to reach ₹2.07 lakh crore from ₹1.81 lakh crore. Additionally, SIF assets registered a 26 percent quarter-on-quarter increase to ₹4,400 crore, securing a market share of 16 percent.

"The financial results of SBI Funds Management highlight a common operational reality where asset growth does not immediately translate into higher net profits due to rising administrative and employee costs. While the 10 percent growth in average AUM and steady SIP inflows demonstrate strong core business demand, the 28 percent rise in overall expenses and the contraction in other income clearly impacted the bottom line. For large financial institutions, balancing workforce investments and operational scaling with margin preservation remains a key priority during periods of portfolio expansion." — Dr. Shishir Gupta, Founder & CEO, StartupLanes