BlackRock’s profits jump as markets recover

Receive free BlackRock Inc updates

We’ll send you a myFT Daily Digest email rounding up the latest BlackRock Inc news every morning.

BlackRock reported a jump in profits in the second quarter as rebounding markets and rising inflows pushed assets under management at the world’s largest money manager to $9.4tn.

The New-York based group reported $1.4bn in net income, a rise of 27 per cent over the same period last year, as a handful of major tech stocks drove a recovery in the benchmark S&P 500 index.

Net inflows topped $80bn, but were below expectations of $92bn. Cash management products had inflows of $23bn as investors flocked to take advantage of rising interest rates.

BlackRock’s rising profits comes as rival asset managers struggle with compressed margins and increased competition, and despite sustained attacks from Republican politicians in the US for what they contend is a “woke” approach to investing.

The group has sought to deflect the criticism by emphasising the breadth of its offerings, from index trackers through alternatives.

BlackRock’s overall revenue was down 1 per cent year on year to $4.5bn and operating income was down 3 per cent, reflecting the fact that BlackRock’s assets under management have not completely recovered from last year’s sharp fall in equity and bond markets.

But the group’s recent cost-cutting efforts have enabled it to claw its way back to an adjusted operating margin of 42 per cent, almost where it was in the second quarter of 2022.

BlackRock reported $9.06 in diluted earnings per share, up 28 per cent year on year. The adjusted figure of $9.28 was above the $8.41 analysts polled by Bloomberg had expected.

Revenues from the group’s Aladdin risk management system and other technology services rose 8 per cent year on year to $359mn, above analysts’ expectations. The company said at last month’s investor day that two-thirds of its 25 largest clients had given BlackRock a bigger share of their spending over the past five years.

“They have built a better mousetrap in terms of having better technology and options across all asset classes,” said Kyle Sanders, equity analyst at Edward Jones. “Most asset managers are shrinking and BlackRock has been growing.”

T Rowe Price on Thursday reported net outflows of $20bn for the quarter, although assets under management climbed to $1.4tn because of rising markets.