BlackRock: Earnings up as clients clamor to avoid volatility, de-risk

By Andrea Heisinger

New York, July 20 - BlackRock Inc. continues to see volatility in markets and is working with clients on handling the global uncertainty, executives said during the company's second-quarter earnings call on Wednesday.

Although BlackRock's earnings jumped to $3 per share for the quarter on 16% revenue growth, it has to contend with volatility and persistently low interest rates, said chief financial officer and senior managing director Ann Marie Petach.

The company has "clients coming to us seeking multi-asset and fiduciary solutions, yield-oriented products and advice on dealing with uncertainty and risk/return trade-off," Petach said.

As a result, the company generated a record level of base fees in the second quarter.

A 13.6 million share buyback from Bank of America Corp. was done for $2.5 billion in the quarter. The transaction funding included $1.5 billion of long-term debt.

"At the same time, the ratings agencies affirmed our strong single A credit rating," Petach said.

Clients continued to pull out of low-yielding money market funds across all long-dated asset classes, she said.

Net interest expense of about $37 million included one month of interest expense associated with new debt put on in association with the share repurchase.

Chairman and chief executive officer Laurence Fink gave some perspective on how worldwide volatility is affecting the business.

"Investors worldwide are seeking more advice and in many cases more hand holding in investment strategies and portfolio allocation," he said.

"Some of our clients are actually de-risking and slowing down investment decisions."

Politics is driving uncertainty and confusion globally, Fink said.

"Customers are de-risking because they're focusing on today's headlines, and I think it's a mistake."

Long term, the markets will be able to overcome all of the global issues, he said.

Uncertainty will be great in the second part of the year and volatility could be more extreme.

"We have clients focus on their liabilities and not headlines," Fink said.

The financial managers and advisers are based in New York.

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