BlackRock earnings fall short of estimates in the fourth quarter

BlackRock, Inc. (BLK) on Wednesday reported underwhelming financial results for the three months ended December 31, 2018, before the market opened for regular trade.

Net income slumped 60% to $927 million or $5.78 per diluted share, on a revenue slide of 9% to $3.43 billion.

Analysts had expected $6.35 per share earnings on revenue of $3.61 billion. Both top line and bottom line failed to beat the consensus.

Assets Under Management (AUM) for BlackRock slipped 5% in the quarter, while operating income slumped 16% to $1.25 billion.

“BlackRock generated total net inflows of $124 billion in 2018. This included $50 billion of fourth quarter net inflows and record quarters for iShares and illiquid alternative strategies. Technology services revenue grew 19% in 2018, driven by strong demand for Aladdin and our digital wealth technologies,” said BlackRock CEO Laurence D. Fink.

DIVIDEND HIKED

BlackRock announced that its board approved a 5% rise in the quarterly cash dividend to $3.30 per share, payable March 21, 2019, to shareholders of record at the close of business on March 6, 2019.

FALL IN REVENUES

BlackRock reported that its advisory, administration fees and securities lending revenue fell $118million in the fourth quarter from a year ago. This trend continued from the third quarter when it lost $104 million.

BlackRock has failed to capitalize on the positive organic growth and AUM acquired from its TCP and Citibanamex transactions. This looks like the impact of lower markets, pricing changes to select investment products and lower borrowing demand for securities lending in the current environment.

Securities lending revenue was just $129 million in the current quarter, vs. $150 million in the fourth quarter of 2017.

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