INVESTMENT manager BlackRock yesterday cheered the market with forecast-topping fourth quarter profits, although its acquisition of exchange-traded funds (ETF) business Barclays Global Investors (BGI) took some of the shine off the figures.
The world’s biggest asset manager reported net income of $256m (£158m), or $1.62 a share, in the quarter to 31 December, up 392 per cent from $52m, or 39 cents a share, a year ago.
Excluding special items, BlackRock said profit increased to $379m from $90m, or $2.39 a share from 66 cents. On that basis, the results surpassed the analysts’ average forecast of $2.10.
But BlackRock also incurred $152m in added expenses because of the deal and the integration of the ETF business. Fourth-quarter operating expenses tallied $1.16bn, up from $726m a year earlier.
BlackRock chief executive Laurence Fink said: “Notwithstanding our early accomplishments, we are under no illusion: integrations are hard and we have a great deal of work ahead.”
New York-based BlackRock bought BGI on 1 December, adding 3,500 staff to its workforce and giving it more staff in London than anywhere else.
BGI contributed $94m to fourth quarter net income, more than offset by the $108m after-tax costs of the acquisition and integration.
BlackRock acknowledged the ongoing debate about financial regulation after the credit crunch, but said it had little debt on its balance sheet and was not involved in proprietary trading, where banks use their own money to invest, as well as investing funds on behalf of their clients.
“We are always on the side of our clients, and sustaining their trust and confidence is our foremost objective,” Fink said. Sales rose 45 per cent to $1.54bn, including $278m in fees generated from BGI in December, the company said. Its stock closed up 0.9 per cent at $226.77 in New York.