BlackRock records a 23% decline in quarterly profit as Coronavirus hits the global economy

The Coronavirus pandemic has weighed heavily on asset managers. On Thursday, BlackRock (NYSE:BLK) said that it saw a massive 23% decline in its quarterly profit. The largest asset manager across the globe attributed the decrease to rising costs as COVID-19 hit the global economy hard and pushed investors into preferring cash management services.

Investors added a total of £28 billion of new money in the first quarter that marked an around 50% decline as compared to the year-ago figure. BlackRock said that the new money was mostly in cash hinting that the majority of the inflow was targeted at less lucrative products.

At £646 million (£4.13 per share), the NY-based asset manager’s net income came out significantly lower in the first quarter than £840 million (£5.30 per share) that was recorded in the same quarter last year.

BlackRock’s Assets Under Management Drop To £5.20 Trillion

BlackRock said that the assets under management at the end of the recent quarter were worth £5.20 trillion as compared to £5.94 trillion that it managed at the end of last year. In terms of operating expenses, the asset manager highlighted a 43% increase to £2.43 billion.

Global financial markets, as per economists, remained severely under pressure in the first quarter due to the ongoing health crisis and wiped the demand for stocks and other riskier assets. Such is evident in a significant drop of 20% in the benchmark SPX index.

According to CEO Larry Fink of BlackRock, recording £8.0 billion in net inflows, Q1 was the best in history for Ishares sustainable ETFs. Investors from across the globe, he added, are again relying on bond ETFs seeking incremental liquidity and price transparency in volatile markets.

BlackRock’s Quarterly Financial Results Versus FactSet’s Estimates

According to FactSet, experts had forecast BlackRock to print £2.91 billion in revenue in the first quarter. They had anticipated the asset manager to make £5.12 of earnings per share in the recent quarter.

In its report on Thursday, however, BlackRock highlighted a greater £2.97 billion in revenue (10.7% higher than £2.68 billion recorded in the same quarter last year) and said that it made an adjusted £5.29 of earnings per share in Q1 (excluding items).

At the time of writing, BlackRock is exchanging hands at £355 per share in the stock market that translates to around 12% decline in 2020 so far. In late March, the stock had dropped to as low as £262 per share.

In 2019, on the contrary, BlackRock’s performance was reported fairly upbeat with an annual gain of just under 30%.

The world’s top asset manager currently has a market cap of £54.76 billion and a price to earnings ratio of 15.59.