BlackRock earnings and assets are hurt by market turbulence

Marion Dakers
ASSET manager BlackRock reported a 10.5 per cent drop in net income to $554m (£353.9m) for the second quarter, and warned that skittish global markets could hamper its progress for the rest of the year.

Assets under management slipped to $3.56 trillion, down three per cent compared to both last quarter and last year, pushed lower by $94.6bn of market-related declines.

“For the remainder of 2012, unfortunately, all eyes are still going to be on politics and the economy,” said chief executive Laurence Fink during a call with analysts.

The firm managed to attract net inflows to its fixed income and multi-asset class products, but this was offset by investor exits from equities and alternatives to take net outflows to $29.4bn.

Meanwhile the firm’s iShares business added $6.1bn in additional investor funds, though this was overwhelmingly wiped out by a $32.8bn slump in market valuations. The exchange-traded platform unit generated $596m in revenues, or 31 per cent of overall long-term base fees.

Since the quarter ended, iShares alone has pulled in another $3.5bn in July so far, Fink said.

Group revenues fell 5.1 per cent on last year to $2.2bn, with the slide in the equities business also knocking performance fees down by half on the previous quarter to $41m.

Total remuneration costs fell 2.6 per cent to $1.61bn as the volatile markets took a chunk out of performance-related bonuses.