Afore profits fell 74.6% annually in the third quarter: Consar

The National Commission of the Retirement Savings System (Consar) reported that the 10 administrators of retirement funds (afores) had a profit of 2,953 million pesos, at the end of September, this is an annual drop of 74.6% in terms real.

Official data revealed that three of the 10 fund administrators have not registered positive numbers at the end of the third quarter of the year.

The utility of the Retirement Savings System (SAR) at the end of the ninth month was less than the 3,189 million pesos observed at the end of August, that is, the administrators had a moderation in their utility of 236.1 million pesos in comparison monthly.

In January, the 10 Afores started the year on the wrong foot as they had losses of 68.1 million pesos, an amount that had never occurred in the 25 years of the SAR.

The foregoing has been a consequence of the historical decrease in the average commission, which went from 0.80% in 2021 to 0.57% this year.

Francisco Uriostegui, deputy vice president of Moody’s in Mexico, mentioned to El Economista that after 2023 the fund managers could absorb most of the impact in the reduction of the charge to commissions on balance.

Definitely 2022 is going to be a historical low in the profit report (of the administrators) although we expect that there will be extraordinary income, especially in the last quarter of 2022 and in the first quarter of 2023, which would help them mitigate the drop in profits. In the following year we could be seeing an effort by the Afores to adjust their cost structures,” said the analyst.

In this context, Moody’s Latin America considers that the drop in fee income will not compromise the continuity of the Afores’ business. He points out that the weak profitability is also attributable to the poor performance of financial income that has been impacted by market volatility.

Impact on collection

The annual contraction of the utility of the SAR has a direct impact on the payment of the tax on the utility of the Afores to the Treasury of the Federation (Tesofe).

The payment of the income tax was 863.4 million pesos in the January-September period, an annual drop of 80% in real terms and was less than the 967.9 million pesos observed at the end of August, that is to say that the administrators contributed to the federal treasury with 104.5 million pesos less as a result of lower profits in September.

commission income

Consar reported that the 10 Afores accounted for 21,775 million pesos in income from commission collection at the end of September, an annual contraction of 31.4% in real terms.

Only in the ninth month of the year, income from the collection of commissions from the Afores totaled 2,392 million pesos, 33.6% less than a year before.

The drop of 23 percentage points in the collection of commissions will mean a saving of 11,800 million pesos for the more than 70 million workers registered in the SAR.

santiago.renteria@eleconomista.mx