BlackRock looking for ‘transformation’ opportunities as assets hit $9.1 billion

BlackRock is seeking “transformation” opportunities created by recent banking turmoil and market dislocation, Chief Executive Larry Fink said on Friday, as the world’s largest fund manager announced that assets under management recovered to $9.1 billion.

“If there is an opportunity to do something transformational, we will be ready to do it,” he told analysts. “How can we double what we do with . . . technology. How can we grow our global footprint right now? »

Regional banks, brokers and wealth managers in the United States are under pressure after the collapse of Silicon Valley Bank last month raised concerns about unrealized losses in their securities and loan portfolios and sent depositors rush to big banks and money market funds.

BlackRock sent a team to Switzerland to consider buying part of Credit Suisse before it was forcibly merged with UBS last month, and Fink indirectly referenced the move, repeating what he told its leaders that week: “I said to be in the game, you have to play the game. And so we are in the game.

Fink bought what became his massive exchange-traded fund business from iShare when Barclays needed cash during the 2008 financial crisis, and he struck a series of small deals to expand the reach of his Aladdin tech business.

Friday’s remarks came as BlackRock reported that first-quarter net profit fell 19% year on year to $1.1 billion due to squeezed margins, weak markets and falling performance fees. That translated to $7.93 per share, ahead of the $7.67 expected by analysts polled by Bloomberg.

Revenue fell 10% year on year to $4.2 billion, with performance fees on its hedge funds and other alternative investment offerings down more than 40% to $55 billion, the report said. fund manager.

However, assets under management increased by $500 billion in the quarter to $9.1 billion, more than analysts had expected, although still well below the peak of $10 billion. dollars at the end of 2021. BlackRock also saw inflows of $110 billion, with bond exchange-traded funds performing particularly well.

BlackRock is one of the first fund managers to report in a quarter that is expected to see the sector attempt to cut costs to offset lower earnings after a tough 2022. Its operating margin of 33.9% in the first quarter was down sharply from the same quarter. last year, and slightly missed expectations.

The inflows include $103 billion for long-term funds and reflect a strong performance in the United States where BlackRock has faced persistent attacks from state officials and legislatures in Republican states over its use. environmental, social and governance factors in its investments.

Republican state treasurers have withdrawn more than $4 billion in pension funds and government cash from the company on the grounds that it is “boycotting” fossil fuels. BlackRock hit back, denying these claims and saying it invests money as its clients want.

The company saw cash outflows from its cash management products in January and February, then $40 billion in inflows in March as investors fled regional banks.

BlackRock complements its money management business with a significant technology services business centered on its Aladdin risk management platform. Revenue in this division was virtually flat year-over-year at $340 billion, a bright spot when most other areas were down.

Edward Jones’ Kyle Sanders said the results “exceeded low expectations” and highlighted BlackRock’s “ability to maintain strong asset inflows in volatile markets”, but warned profit margins would remain under pressure until further notice. until the markets recover.

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