BlackRock, Inc. (BLK: Quote), the world's largest asset manager, reported Wednesday an 11 percent decline in second-quarter profit, reflecting a drop in investment advisory revenue as well as loss on investments. Assets under management or AUM decreased from last year. However, adjusted earnings increased and topped analysts' expectations.
Investment advisory, administration fees and securities lending revenues were $1.99 billion, down from $2.1 billion a year ago, as higher revenues from fixed income products, predominantly iShares, were more than offset by lower fees from equity products due to market-driven reduction in average equity AUM.
As at June 30, the company's AUM was $3.56 trillion, down 3 percent from last year and from the preceding first quarter, mainly driven by $94.7 billion of market-related declines across products. Total net outflows were $29.4 billion.
In the second quarter, net income attributable to the company declined to $554 million or $3.08 per share from $619 million or $3.21 per share in the previous year.
On an adjusted basis, earnings increased to $3.10 per share from $3.00 per share in the prior year. On average, 18 analysts polled by Thomson Reuters expected the company to earn $3.01 per share for the quarter. Analysts' estimates typically exclude special items.
Laurence Fink, chairman and CEO of the company said, "Our second quarter 2012 financial performance again demonstrated the strength and resilience of BlackRock's diversified platform and our commitment to delivering for shareholders."
Total revenues for the quarter decreased 5 percent to $2.23 billion and came in below analysts' estimate of $2.27 billion.
Operating margin improved to 37.2 percent from 36.9 percent a year earlier, while adjusted operating margin was 39.2 percent, slightly lower than 39.7 percent in the prior year. .
Looking ahead, Fink added, "While we remain cautious around the prospects for the global economy, we are confident that the model we have built will continue to serve our clients and shareholders and deliver attractive long-term returns."
BLK closed Tuesday's regular trading at $176.15 on the NYSE.
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by RTT Staff Writer
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