BlackRock Inc (BLK.N) reported a bigger fall in quarterly profit than expected on Friday as the turmoil in global markets shrank the world's largest asset manager's fee income and retail investors redeemed their savings.
Adjusted profit fell to $1.12 billion, or $7.36 per share, for the three months ended June 30, from $1.61 billion, or $10.45 per share, a year earlier. It missed an average analyst estimate of $7.90 per share, according to IBES data from Refinitiv.
Retail investors withdrew roughly $10 billion in the quarter, BlackRock showed. Still, the firm attracted $89.6 billion in total net inflow from clients.
BlackRock's assets under management (AUM) fell 11% to $8.49 trillion compared to last year, well below the $10 trillion milestone from the fourth quarter of 2021.
"Investors are simultaneously navigating high inflation, rising rates and the worst start to the year for both stocks and bonds in half a century," said Chief Executive Officer Larry Fink said in a statement.
The current macroeconomic environment, ridden with worries of surging inflation, geopolitical turmoil and rate hikes, has only added to the pressures of fund managers, as a large part of their business is dependent on market conditions.
Moreover, the pullback in the pandemic-era stimulus from the U.S. Federal Reserve has hit the risk appetite of investors who have rejigged portfolios this year towards safe-haven and fixed-income products, with equity markets tumbling on recession fears.
More rate hikes by the U.S. central bank to combat decades-high inflation could put more pressure on asset managers as investors refrain from large investments. They also face tough comparisons to last year, when easy monetary policy and cheap borrowing led to frenzied investment activity.
BlackRock's shares, which have shed nearly 36% so far this year, were down 0.8% in premarket trading after results. Revenue in the quarter for BlackRock fell 6% to $4.53 billion, also missing analysts' estimate. The company bought back shares worth $500 million in the quarter.
