BlackRock Profit Increases 22% As Assets Rise
BlackRock Inc., the world's biggest asset manager, said fourth-quarter profit increased 22 percent as investors put money into funds, boosting client assets and fees for managing them.
Net income rose to $841 million, or $4.86 a share, from $690 million, or $3.93, a year earlier, the New York-based company said Thursday in a statement. Adjusted profit of $4.92 beat the $4.33 a share average estimate of 19 analysts surveyed by Bloomberg, excluding certain items. BlackRock increased its quarterly dividend by 15 percent to $1.93 per share.
Assets increased 5.6 percent during the quarter to $4.32 trillion as the firm attracted $40 billion from investors. Chief executive officer Laurence D. Fink, 61, has said BlackRock has the potential to increase its asset base by about 5 percent annually by developing new exchange-traded funds and expanding its reach among individual investors. Fink said U.S. stocks may gain 10 percent this year, after surging 30 percent in 2013.
"They look very strong to me," Luke Montgomery, a research analyst who covers asset managers at Sanford C. Bernstein & Co. in New York, said in an interview. "The flows are very encouraging across the board."
BlackRock shares have gained 44 percent in the past 12 months, including reinvested dividends, compared with the 39 percent increase in Standard & Poor's 20-member index of asset managers and custody banks.
Investors put $24.1 billion into BlackRock's stock ETFs while pulling $3.5 billion from the fixed-income ETFs. Active bond funds had deposits of $4.3 billion as their stock counterparts saw deposits of $892 million. Multi-asset products, which invest in a mix of stocks, bonds and other assets, attracted $17.4 billion.
"Our client mix continues to shift toward higher fee retail and iShares business," Fink said Thursday during a conference call with analysts and investors.
The firm, which emerged largely unscathed from scandals including one in 2003 when competitors were accused of market timing, has drawn regulatory scrutiny recently. The firm on Jan. 8 agreed to end an analyst survey program that New York's Attorney General concluded could be used to execute trades based in part on nonpublic information. BlackRock didn't admit or deny the attorney general's findings.
Also last week, BlackRock said one of its employees is facing a civil proceeding by an Italian securities regulator that alleges he used nonpublic information to avoid losses for clients last year. BlackRock conducted its own investigation and found no evidence to support the allegations, according to a regulatory filing.
"Especially in today's regulatory climate, it is vital that every employee of BlackRock look to do the right thing in every situation every day," Fink said in the earnings statement. He declined to comment on the investigations during a telephone interview today.