(Bloomberg News) BlackRock Inc., the world's biggest asset manager, said third-quarter profit increased 8 percent on higher fees for managing client assets and advising institutions on hard-to-value securities.
Net income increased to $595 million, or $3.23 a share, from $551 million, or $2.83, a year earlier, the New York-based company said today in a statement. Excluding certain one-time items, BlackRock earned $2.83 a share, compared with the $2.66 average estimate of 14 analysts surveyed by Bloomberg.
BlackRock said assets fell 8.6 percent from the prior quarter to $3.35 trillion, driven by $303.9 billion in market declines and $10.2 billion in net withdrawals. Chief Executive Officer Laurence D. Fink, 58, is trying to expand products in "high-fee businesses" such as hedge fund-like mutual funds, commodities and private-equity strategies as investors are reassessing their investments because of macroeconomic uncertainty.
"BlackRock exceeded expectations despite a challenging quarter for the markets," Macrae Sykes, an analyst at Rye, New York-based Gabelli & Co., said in an interview. "The flows show strength in their ETF business."
Sykes had expected BlackRock to earn $2.64 per share on an adjusted basis.
Earnings were curbed by an 18 percent slump in global stocks during the quarter, as European leaders clashed over how to assist Greece and American lawmakers struggled to agree on raising the federal government's debt limit.
"With the persistence of volatile markets, low interest rates and the low-growth environment, an increasing number of investors are re-evaluating their investment and asset- allocation decisions," Fink said in today's statement.
Investment advisory fees rose 8.6 percent from the prior year to $1.95 billion, while revenue at the BlackRock Solutions unit, which advises governments and institutions on troubled assets, rose 16 percent to $117 million. Performance fees, which are tied to returns earned by funds, fell 20 percent to $91 million.
Investors removed $8 billion from BlackRock's active stock funds during the quarter, while adding $9.8 billion to index- tracking products including the firm's iShares exchange-traded funds. Clients pulled $14 billion from BlackRock's fixed-income funds driven by a single withdrawal of $9.1 billion from an institutional investor, which BlackRock said had "minimal revenue impact."