BlackRock's assets exceed $10 trillion for the first time

On April 13, according to the Financial Times, the world's largest fund management giant BlackRock released its first quarter report. According to the financial report, Benefiting from the stock market boom and the record growth of the newly launched Bitcoin spot ETF, BlackRock's asset management scale exceeded the $10 trillion threshold for the first time, and net profit also showed a significant growth trend, up 36% year-on-year to $1.57 billion, and revenue increased by 11% year-on-year to $4.7 billion. These figures and the adjusted net profit of $1.47 billion exceeded analysts' expectations.

The full report is for reference:

The stock market boom and the popularity of Bitcoin spot ETFs have prompted the world's largest fund management giant BlackRock's asset management scale to surpass the record of $10.5 trillion for the first time, and net profit has increased by more than one-third. According to BlackRock's first quarter financial report, net profit in the first quarter increased by 36% year-on-year to $1.57 billion, and revenue increased by 11% year-on-year to $4.7 billion. Those numbers, along with an adjusted net profit of $1.47 billion, beat analyst expectations.

The $57 billion in net inflows, however, was disappointing. Investors remain cautious about plowing cash back into stocks and bonds as the Federal Reserve keeps interest rates at a 23-year high.

"There's still record amounts of cash sitting on the sidelines, with money market fund balances now approaching $9 trillion. I think that's rooted in fear and uncertainty," BlackRock Chief Executive Larry Fink told analysts on Friday.

Fink said large pension funds with large allocations to private equity are particularly reluctant to invest because those funds have been slow to return money to investors amid a slowdown in buyouts and initial public offerings.

"More and more clients are keeping higher cash balances to meet their debt repayments," he said. "If there's an unlock in private equity, I believe you'll see an acceleration in allocations to fixed income and other income-generating products."

BlackRock is one of 11 providers that are targeting the launch of a bitcoin spot ETF in the first quarter of 2024, and its product IBIT has been a huge success: it reached $10 billion in assets in record time and has now reached $18.7 billion. This brings total ETF inflows to $67 billion this quarter.

Fink highlighted BlackRock’s enthusiasm for private markets and infrastructure, as the company aims to capitalize on global decarbonization and digitalization investments. BlackRock said the $12.5 billion acquisition of Global Infrastructure Partners, announced in January, is on track to close in the third quarter, pending regulatory approvals and funded by $3 billion in newly issued debt.

Fink also said BlackRock is seeing “accelerating momentum” as it is winning new business from “big-name” clients with its technology, retirement and portfolio management services. “All of this is going to lead to bigger opportunities,” he said. Technology revenue rose $37 million year-over-year to $377 million, and Fink told analysts that its Aladdin platform had accomplished several "significant tasks" with more to come.  

We view Aladdin as a differentiated source of growth. Providing a reliable source of recurring revenue during market downturns, Edward Jones analyst Kyle Saunders wrote in a client note. Much of the growth in assets under management of nearly $500 billion in the first quarter was due to rising stock markets. In the United States, the S&P 500 had its best first quarter since 2019. Fixed-income funds reported inflows of $42 billion, equity funds had inflows of $18 billion, and long-term funds had inflows of $76 billion in total.

BlackRock's operating margin improved to 35.8%, slightly better than analysts expected. Chief Financial Officer Martin Small said on a conference call with analysts that he expects headcount to be "essentially flat" in 2024, as it has been for the past two years. Fink added that he believes artificial intelligence will enable companies to do more with fewer people.

BlackRock shares fell 2% in afternoon trading Friday. They are down more than 5% in 2024. The company's stock price previously had a strong fourth quarter, during which the company's shares rose more than 25%.