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July 18, 2022

BlackRock Q2 profit down 22%; halts hiring plans

BlackRock reported a net income of $1.08bn for the second quarter of 2022, a fall of 22% from $1.38bn in the same period a year earlier.

Earnings amounted to $7.06 a share compared with $8.92 in the year-ago quarter.

In the three months to June 2022, revenue decreased 6% to $4.53bn due to lower markets and dollar appreciation on average asset under management (AUM) and lower performance fees.

BackRock also reported a 14% year-over-year dip in operating income while its AUM fell to $8.5trn due to declining asset prices and a strengthening dollar.

The US fund manager attracted $90bn of quarterly net inflows despite the challenging market backdrop and reported positive flows across all product types and regions.

The group’s iShares ETF platform brought in the majority of new investor capital while its cash platform registered record-breaking net inflows of $21bn.

The performance fees for BlackRock’s advisory services plummeted year over year. The retail funds attracted net outflows of $10bn.

BackRock chairman and CEO Laurence Fink said that the year “brought an investment environment that we have not seen in decades” and it was “the worst start to the year for both stocks and bonds in half a century.”

Speaking about the results, Fink said: “BlackRock generated net inflows of $90bn in the second quarter demonstrating our ability, once again, to deliver industry-leading organic growth even in the most challenging of environments.

“Our connectivity with clients has never been stronger. Over the last twelve months, we’ve delivered over $460bn of net inflows reflecting 5% organic base fee growth.

“Over the course of BlackRock’s 34-year history, we have experienced numerous periods of volatility and uncertainty, and BlackRock has always come through stronger. It is during periods like these that we differentiate ourselves even more with clients and further deepen those relationships. I see more opportunities for BlackRock today than ever before, and remain confident in our ability to deliver long-term growth for our clients, shareholders and employees.”

Meanwhile, BlackRock has decided to pull back its hiring initiative and postpone senior hires into next year, reported Reuters.

The asset manager is also planning to recruit more junior employees to some of the roles as it expects its total expenses to climb 15% at the end of 2022. BlackRock CFO Gary Schedlin was quoted as saying: “We are mindful of the current environment and you are proactively managing the pace of what I would call certain of our discretionary investments.”

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