Strong performance and growth for BlackRock as markets rebound

Adelaine Nelson
July 14, 2023
2:24 pm

BlackRock Inc reported better-than-expected second-quarter profits, showcasing a solid recovery in markets following a challenging start to the year.

Picture of BlackRock office pictured here. Photo: Shutterstock

The New York-based asset manager ended the quarter with $9.4 trillion in assets under management (AUM), a significant increase from $8.5 trillion in the same period last year and $9.1 trillion in the previous quarter.

Despite a slight decline in net inflows to $80 billion compared to $89.6 billion a year ago, BlackRock displayed resilience and maintained strong investor confidence.

The company attributed a 1.4% decrease in revenue to $4.4 billion to the impact of market movements on average AUM over the past 12 months.

Kyle Sanders, a senior equity research analyst at Edward Jones, commented on the revenue growth, stating that it could face near-term pressure until there is more clarity on inflation and economic growth.

However, during its investors day in June, BlackRock projected a 5% organic growth in base fee revenues between 2023 and 2027, along with increased market share.

The asset manager’s second-quarter adjusted profit of $9.28 per share surpassed analysts’ estimates of $8.46, signaling an impressive 25% rise.

This boost was supported by gains in BlackRock’s private equity investments, reinforcing the company’s diversified portfolio.

Larry Fink, BlackRock’s chairman and CEO, noted that existing clients were entrusting more business to the company, indicating potential for future growth.

Fink also highlighted the anticipated migration of investor portfolios to fixed income assets in response to the Federal Reserve’s interest rate hikes.

With over 80% of fixed income now yielding over 4%, Fink described this as a rare opportunity that may shape an entire generation.

Regarding expenses, Chief Financial Officer Martin Small shared that BlackRock expected mid to high single-digit growth by the end of 2023 as the company continues to invest in its business.

Despite some workforce reductions earlier in the year and last month’s additional layoffs affecting less than 1% of the total workforce, the headcount is projected to remain stable.

BlackRock’s robust performance in the second quarter, driven by market recovery and strategic investments, positions the company for continued growth and solidifies its position as the world’s largest asset manager.

To get in contact with feedback on this article please email us at publishing@krugmaninsights.com

[/membership]