Fourteen fund companies reported a total net profit of 1.7 billion yuan ($273.5 million), according to the brokerages' annual report released on March 26, but many reported a year-on-year net-profit drop.

The China Securities Journal reported that 13 companies reported a 19 percent year-on-year drop in total profits.

Analysts said shrinking sales volume and surging costs of launching new fund products are the major reasons for the smaller profit margins and reduced net profits.

The sluggish A-share market in 2012 also dampened investors' enthusiasm, and trading in the A-share market was cool for many months that year, analysts said.

Fund companies set up by banks are facing great pressure as banks are losing the wide profit margins they have enjoyed because of the increased liberalization of interests rates, analysts said.

Fund companies said they are looking at innovative products and specialized products to win niche markets in 2013 in order to be profitable and get shareholders' interest.

[email protected]