BlackRock reports 'strong momentum' as quarterly profits fall

BlackRock reported an 18% fall in its fourth-quarter adjusted profits on Friday, to $1.36bn, as weakening economic sentiment put a lid on its fee income.

The company reported $146bn of quarterly long-term net inflows, including $61bn of active net inflows, with total net inflows of $114bn reflecting net outflows from cash management.

Full-year long-term net inflows totalled $393bn, reflecting 4% in organic asset growth and positive organic base fee growth, led by record flows into bond exchange-traded funds (ETFs), “significant” outsourcing mandates, and growth in private markets.

BlackRock reported an 8% decrease in full-year revenue to $17.87bn, which it said was primarily driven by the impact of “significantly lower” markets and dollar appreciation on average assets under management, and lower performance fees.

The company said full-year net new sales of Aladdin reached a record, alongside continued growth in technology services revenue, despite the negative impact of foreign exchange movements.

It booked a restructuring charge of $91m from its initiative to “modify the size and shape of the workforce” to “align more closely with strategic priorities”, excluded from its adjusted results.

Full-year operating income decreased 14% to $6.39bn, or 13% on an adjusted basis, while full-year diluted earnings per share were down 11% to $33.97, or an adjusted 13%, which it put down to a lower effective tax rate and lower non-operating income in the current year.

A total of $4.9bn was returned to shareholders in 2022, including $1.9bn in share buybacks.

“BlackRock delivered over $300bn of net inflows and positive organic base fee growth in 2022,” said chairman and chief executive officer Laurence Fink.

“These industry-leading results reflect the decisions by thousands of organisations and investors that continually place their trust in BlackRock.

“The consistency of our results - across all market environments - comes from our clients’ confidence in BlackRock’s performance, guidance, and fiduciary standards.”

Fink said BlackRock’s “diversified investment and technology capabilities” were providing clients with “more choice” to address their “unique risk preferences and priorities”.

“In the United States alone, we generated $230bn of long-term net inflows - flows were positive across each of our three regions.

“iShares led the global ETF industry with $220bn of net inflows, including record flows into bond ETFs.

“We continued to scale our private markets platform, raising $35bn of capital, with particular strength in private credit and infrastructure.”

The company also saw record net new sales of Aladdin, Laurence Fink noted, further underscoring its “importance” amid market volatility.

“We ended the year with strong momentum, generating $114bn of fourth quarter net inflows, representing 3% annualised organic base fee growth, reflecting continued strength in ETFs and significant outsourcing mandates.

“Like our clients - pensions, insurers, governments, and individual savers - BlackRock’s focus remains on investing for the long term.

“The current environment offers incredible opportunities for long-term investors, and we enter 2023 well-positioned and confident in our ability to deliver for our clients, employees, and shareholders.”

At 1143 EST (1643 GMT), shares in BlackRock were down 0.49% in New York at $750.18.

Reporting by Josh White for Sharecast.com.