BlackRock’s Third-Quarter Net Climbs 26% as Assets Rise

By Mary Childs

BlackRock Inc. (BLK), the world’s biggest money manager, said third-quarter profit rose 26 percent as investors added cash to its funds, boosting assets and the fees for managing them.
Net income increased to $917 million, or $5.37 a share, from $730 million, or $4.21, a year earlier, the New York-based company said today in a statement. Excluding certain items, adjusted earnings of $5.21 a share beat the $4.66 average of 19 analysts surveyed by Bloomberg.
BlackRock Chief Executive Officer Laurence D. Fink, 61, has reorganized the firm’s leadership as it seeks to improve performance at its active products and appeal to individual investors. The firm attracted about $28.7 billion in investor money during the quarter, compared with
$38 billion in the previous three months. The firm’s bond exchange-traded funds have also drawn money since Sept. 26 as investors reallocated cash they pulled from Pacific Investment Management Co. following co-founder Bill Gross’s abrupt departure.
BlackRock should benefit from “higher organic growth outlook resulting from potential Bill Gross related attrition at key peer Pimco,” according to William Katz, a stock analyst focused on brokers and asset managers at Citigroup Inc. who has a neutral rating on the shares.
BlackRock shares have declined 3.1 percent this year, compared with the 5.4 percent decrease in the Standard & Poor’s 18-company index of asset managers and custody banks.
Assets at BlackRock fell 1.5 percent during the quarter to $4.52 trillion, from $4.59 trillion in the three months ended June 30, and rose 10 percent from a year earlier.

Surging Markets

BlackRock, which earns fees based on the amount of money it oversees for clients, benefited from higher global markets in the third quarter compared with last year. The average value of the S&P 500 increased 18 percent in the three months ended Sept. 30 from the same period a year earlier.
The firm co-founded by Fink in 1988 acquired Barclays Global Investors in December 2009 to expand into passive investments such as exchange-traded funds. It also offers actively managed stock and bond funds, hedge funds and portfolios that use mathematical models.
BlackRock is among money managers lobbying against attempts by regulators to label some nonbank finance companies as “systemically important financial institutions,” or SIFI. BlackRock Vice Chairman Barbara Novick said on Oct. 10 that the lack of a major market disruption from Gross’s departure from Pimco refutes some fears that issues at large asset managers can cause contagion for the broader markets.