BlackRock's third-quarter profit rises as investors flock to its funds
BlackRock ended the third quarter with $9.10 trillion in assets under management
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BlackRock BLK.N handily beat third-quarter profit estimates on Friday but posted a sharp drop in net inflows, sending shares of the world's largest asset manager down 1% in premarket trade.
The company's adjusted profit of $10.91 per share breezed past analysts' estimates of $8.26, according to LSEG data, helped by strong investment advisory fees.
However, its net inflows for the quarter fell to $2.57 billion from $16.9 billion last year, reflecting $49 billion of net outflows from lower-fee institutional index equity strategies, including $19 billion from a single international client, the company said.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BLK | BLACKROCK INC. | 1,023.79 | -4.37 | -0.43% |
BlackRock ended the third quarter with $9.10 trillion in assets under management (AUM), up from $7.96 trillion a year earlier and lower than $9.4 trillion in the second quarter this year.
"For the first time in nearly two decades, clients are earning a real return in cash and can wait for more policy and market certainty before re-risking. This dynamic weighed on industry and BlackRock third quarter flows," CEO Larry Fink said in a statement.
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Hopes that the Federal Reserve could soon be done with its monetary tightening has helped calm investor worries about a potential recession.
BlackRock CEO Larry Fink speaks at event on the sidelines of the opening day of the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 17, 2023. (Hollie Adams/Bloomberg via Getty Images / Getty Images)
But the central bank has also indicated it would keep its benchmark interest rate higher for longer, keeping a lid on the positive sentiment.
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Revenue at BlackRock rose nearly 5% to $4.52 billion from a year earlier, driven by organic growth and the impact of market movements over the past 12 months on average AUM and higher technology services revenue, it said.
The New York-based company's chief source of revenue is the management fees it earns as a percentage of the total AUM.
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