Yu’ebao boosts Tianhong

China's first online monetary fund Yu'ebao, co-launched by Tianhong Asset Management Co and Alipay, the online payment arm of e-commerce giant Alibaba Group, contributed more than half of Tianhong's total revenue in 2013, the Beijing-based fund company said Thursday.

A statement posted by the company on its official website Thursday showed that it took in 190.3 million yuan ($30.6 million) from managing Yu'ebao, launched in June 2013, lifting total revenue to 311 million yuan for 2013. In 2012, its revenue was just 114 million yuan, according to the financial information disclosed by Tianhong's Shanghai-listed shareholder Inner Mongolia Junzheng Energy & Chemical Industry Co.

Tianhong was reportedly the most profitable among 74 comparable domestic peers in the fourth quarter of 2013, making a profit of 1.2 billion yuan, largely thanks to Yu'ebao's good performance.

But analysts said that this cannot last for long.

The Chinese public's interest in online monetary fund products is cooling, as the high return rates can hardly be maintained, said Li Bo, an analyst from Guangzhou-based GF Securities.

The seven-day annualized return rate of Yu'ebao, for instance, has dropped recently, falling to 5.445 percent on Thursday, compared with 6.001 percent on March 1.

Zeng Linghua, an analyst with Shanghai-based fund consultancy Howbuy, also said that the market is very likely to see the weekly return rates offerred by funds like Yu'ebao drop to lower than 4 percent this year, citing the declining deposit reserve ratio.

Zeng also told the Global Times Thursday that despite the big boost from Yu'ebao, Tianhong's profit may still be low, partially due to its huge investment in Internet maintenance.

Shenzhen-listed Zhejiang Materials Development, in which Tianhong is expected to buy shares, revealed in a February unaudited filing that Tianhong lost 2.4 million yuan in 2013, compared to a loss of 15.4 million yuan in 2012.

But Ding Xuemei, assistant to the general manager with Tianhong's brand department, told the Global Times Thursday that the company earned profits last year, "although the amounts were not as big as expected."

She refused to reveal the specific amount, saying Inner Mongolia Junzheng Energy & Chemical Industry Co will reveal the results at the end of April.

Li noted that asset management companies that are mainly depending on monetary funds will have a hard time.

Banks are very likely to require fund asset management companies to pay punitive interest for early withdrawals, which will increase the cost of managing monetary funds, especially over the Internet where consumers like to make frequent withdrawals, he told the Global Times on Thursday.

In fact, banks have already begun stepping up efforts to cope with competition from Internet financing products, said Zeng.

In February, major domestic banks, including China Construction Bank, Agricultural Bank of China and Industrial and Commercial Bank of China, all set transfer caps for online quick payment services, which analysts said was aimed at slowing down outflows of deposits.

Despite this, there are still Internet companies actively tapping the financing sector.

Leading online retailer jd.com launched an online wealth management platform dubbed "Xiaojinku" Thursday, offering two funds, with seven-day annualized returns reaching 5.681 percent and 5.543 percent.