BlackRock Earnings on a downward trend

BlackRock, the world’s biggest asset manager, is expected to report a fourth consecutive quarterly fall in revenue and profits, mainly driven by market turmoil in the investment and advisory business. Analysts suggest that earnings per share (EPS) will drop 19% YoY to $7.54. Total revenue, of which three-quarters come from investment advisory and administration fees, are expected to fall by 11% YoY to $3.3bn. BlackRock is expected to report AUM of $8.9tn, a 4% increase from the previous quarter. Around 73% of the increase in AUM is expected to come from rising market values and foreign exchange benefits. BlackRock will report its earnings on 14 April.

BlackRock’s first-quarter earnings are expected to reflect the impact of a year of upheavals, including the war in Ukraine, volatile commodities prices, rampant inflation, aggressive rate hikes, and the regional banking crisis. The CEO of BlackRock, Larry Fink, recently warned that the markets were paying for years of easy money and that his firm would show the effects of a tumultuous year.

Investors will be watching to see how adverse market conditions have affected fund management inflows and the exchange-traded funds (ETFs) business. In its recent Q2 update of its 2023 global outlook, BlackRock pointed out the cracks in the financial system created by the fastest rate hike cycle in 40 years. The company expects higher yields in the near term, but it does not anticipate central banks cutting rates this year to provide relief to the financial system.

The outlook for BlackRock remains positive despite the fall in profits and revenue. BlackRock’s ETFs have gained in popularity in recent years as investors have sought low-cost and passive investment options. BlackRock’s AUM is expected to continue to grow in the coming years, mainly driven by increasing interest in sustainable investing. BlackRock recently acquired Baringa’s Climate Change Scenario Model and has also pledged to invest more in sustainable investment options.