BlackRock first-quarter net climbs as money manager adds $27B in net new money

Firm growing quicker than peers; quarterly profit up 20% as revenue rises 9% to $2.7B

Apr 17, 2014 @ 9:29 am

BlackRock Inc. (BLK), the world's biggest money manager, said first-quarter profit rose 20% as investors added money to its funds, boosting assets by 1.8% to $4.4 trillion and the fees for managing them.

The firm's retail business added $14 billion in net new money, with $9.8 billion coming from outside the U.S. That was “driven by investor demand for top-tier nontraditional income solutions,” according to a company statement released Thursday. The BlackRock Strategic Income Opportunities Portfolio run by Rick Rieder drew $2.7 billion in the quarter.

BlackRock chief executive Laurence D. Fink has said the money manager has the potential to increase its asset base by about 5% annually by developing new ETFs and expanding its reach among individual investors.

Net income increased to $756 million, or $4.40 a share, from $632 million, or $3.62 a share, a year earlier, the company said in its earnings statement. Adjusted profit of $4.43 a share beat the $4.10 a share average estimate of 16 analysts surveyed by Bloomberg.

(More: BlackRock expands top ranks in second revamp in two years)

Mr. Fink has expanded his management team and reorganized leadership as the firm seeks to improve the performance of its active products, appeal to individual investors and attract more money into its funds globally. During the quarter, the firm attracted about $27 billion in net new money from investors, including deposits into its exchange-traded funds.

“You've had favorable tail winds the past year from markets, so that certainly has driven higher assets under management, and then on top of that, they've done a pretty good job in the past year of generating inflows and organic growth,” Robert Lee, an analyst at Keefe Bruyette & Woods Inc., said before earnings were released.

BlackRock reported earnings before the start of regular U.S. trading. The shares rose 3.1% to close at $310.15 Wednesday in New York. They've gained 24% in the past 12 months, including reinvested dividends, compared with the 20% increase in Standard & Poor's 18-company index of asset managers and custody banks.

MANAGEMENT RESHUFFLE

BlackRock is growing faster than peers as the firm attracted money across its product offerings, Mr. Fink said Thursday in an interview. Revenue rose 9% from a year earlier to $2.7 billion.

BlackRock this month expanded its top management ranks, grooming the next generation of leaders in the biggest management reorganization since 2012. The firm on April 6 named Charles Hallac, 49, co-president and appointed Rob Goldstein chief operating officer. At least 10 senior executives were given new roles.

“My intention is to be here for many, many years,” Mr. Fink said. “We are not under any pressure” to groom a successor, he said.

Mr. Fink said he and President Robert Kapito, 56, “aren't going anywhere.” BlackRock's growth had been largely fueled through acquisitions, culminating in its 2009 purchase of Barclays PLC's investment unit, which helped it expand into passive investments. The firm manages everything from open-end mutual funds to private hedge funds, exchange-traded products and real estate.

Institutional investors pulled $7 billion from actively managed fixed-income products and $8 billion from active stock offerings, BlackRock said.

(Bloomberg News)

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