Inside BlackRock’s 3Q17 Performance in Retail, Institutional
Beating the estimates
BlackRock (BLK), the world’s largest asset manager, posted 3Q17 EPS (earnings per share) of $5.92—higher than the estimates of $5.56 and its prior year EPS of $5.14. This growth came due to strong inflows across the categories including retail and institutional, as well as due to the continued rise in broader markets (SPX-INDEX) (SPY).
The asset management giant saw $96 billion in net inflows in 3Q17, scaling its assets under management to $5.98 trillion.
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BlackRock’s revenues climbed to ~$3.2 billion, a 14% YoY (year-over-year) rise, on the back of higher base fees, a rise in performance fees and technology, and risk management revenues.
On September 30, 2017, the company was managing total assets of ~$6.0 trillion, compared with ~$5.1 trillion per year in 3Q16 and ~$5.7 trillion in 2Q17. Peers State Street (STT) and JPMorgan Chase (JPM) have yet to report their 3Q17 results and are expected to see higher inflows.
BlackRock’s operating income grew 15%, reflecting improved expense management and higher economies of scale.
Growth across categories
BlackRock saw strong flows in the retail and institutional categories, in addition to raking in $52 billion from ETF offerings. Notably, iShares saw a decline in inflows on a quarter-over-quarter basis, reflecting lower deployments toward equities and high valuations.
In the subsequent parts of this series (below), we’ll go deeper into BlackRock’s performance in 3Q17, analyzing its flows, iShares offerings, strategic initiatives, dividends and repurchases, outlook, competition, and valuations.