BlackRock Posts Higher-Than-Expected Profit, Cites Strong Markets

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BlackRock 4Q earnings

Earnings HQ: FBN's Diane Macedo breaks down BlackRock's fourth-quarter earnings report.

BlackRock Inc (BLK), the world's largest money manager, on Thursday reported a higher-than-expected quarterly profit, benefiting from strong markets and a flow of new money into its exchange-traded funds.

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The New York-based company said fourth-quarter net income rose 24 percent to $841 million, or $4.86 per share, up from $690 million, or $3.93 per share, a year earlier.

Excluding long-term compensation expenses and other items, earnings were $4.92 a share, above the analysts' average forecast of $4.33, according to Thomson Reuters I/B/E/S.

Revenue increased 9 percent to $2.8 billion.

Of the $40.5 billion that investors poured into long-term funds during the quarter, nearly half - $19.1 billion - went into the company's iShares exchange-traded funds business. Retail investors accounted for $16.6 billion, or 41 percent of total long-term net flows.

BlackRock has benefited from increased investor appetite for the less-expensive indexed funds provided by iShares, which the company acquired from Barclays in 2009 and is now the largest U.S. provider of ETFs. IShares now accounts for about 21 percent of the company's assets under management.

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The bulk of investor money during the quarter went into equities, which accounted for $24.7 billion, or roughly 61 percent, of BlackRock's long-term net inflows. Investors also added more money than they withdrew into fixed-income funds, which had net inflows of $1.5 billion, and multi-asset products, which had $17.4 billion.

BlackRock ended the quarter with assets under management of $4.3 trillion, including new money and market gains. The company and its peers make money by charging fees as a percentage of assets under management.

Revenue generated by fees based on a portfolio's performance rose 2 percent to $268 million from a year earlier.

The company also said its board had approved a 15 percent increase in its quarterly cash dividend to $1.93 per common share, payable in March.