Posted on Jul 30, 2021 at 7:05 am
For her first quarterly results at the head of Amundi, Valérie Baudson hit the jackpot. The number one European asset management company, which managed 1.794 billion euros at the end of June, published a net profit of 448 million in the second quarter on Friday. Profit up 103% over one year and 51% over three months. “This is the highest since the listing of Amundi,” said the new CEO of the listed subsidiary of Crédit Agricole, during a conference call.
This unusual result stems from an “exceptional tax gain of 144 million euros linked to the activation of the Affrancamento device authorized by the Italian finance law for 2021”, explains Nicolas Calcoen, the chief financial officer. The group was able to benefit from a deferred tax asset on goodwill (goodwill) generated by the takeover of the Italian manager Pioneer in 2017.
Scholarships at the highest
Adjusted for this accounting measure, the restated net income remains at a record level, at 345 million euros, and growing by 48%. Over the first half of the year, it increased by 49%. Amundi’s main listed European competitors, the German DWS and the British Schroders, are also in great shape. They announced, on Thursday, half-yearly profits up by 40% and 37%, respectively.
Hit hard in the spring of 2020 by the Covid pandemic and the stock market crash, asset managers, on the other hand, are benefiting from the euphoria of investors this year. In particular, the soaring stock markets, at their highest for 20 years.
Amundi’s revenues increased 37% in the second quarter to 832 million euros, thanks to market effects and the multiplier effect of outperformance fees. This invoicing, which is in addition to the traditional management fees paid by clients, is applied by the funds when they exceed their performance objective.
The jackpot reached 124 million euros at the end of June, against a quarterly average of 83 million between 2017 and 2020, Amundi points out. “This should normalize over the following quarters,” warns Nicolas Calcoen.
New rules of the game
Esma, the European market regulator, has indeed changed the rules of the game. Coming into force in July, the reform notably extends from one year to five years the reference period taken into account for the calculation of outperformance fees. . This will cause a mechanical drop. “The assessment is in progress”, but the chief financial officer of Amundi expects an order of magnitude of “-30%”. This represents an annual impact of around 70 million euros for the company compared to its historical average, according to our calculations.
For Amundi, the challenge of growth lies above all on the commercial level. After a difficult first quarter, sales returned to the green with 7 billion euros in net flows. The group has garnered 21 billion for its management of medium and long-term assets, with higher margins. On the other hand, it suffered a new outflow (-14 billion) on its money market funds, with almost zero returns. This is mainly due to withdrawals made by listed companies to pay their dividend. Over the half-year, Amundi totaled 5.5 billion euros in net outflows, while DWS and Schroders each posted around 21 billion euros in inflows, despite assets under management twice as low.
Amundi has provisioned an additional 18 billion euros to cover the risk of a fine from the Autorité des marchés financiers. The college of the regulator requested 38 million against the manager, two former employees of which are accused of price manipulation.