BlackRock’s fourth quarter 2009 net income was USD256m, up USD204m compared to 2008.
The Barclays Global Investors transaction closed on 1 December 2009 and contributed USD94m to fourth quarter net income, more than offset by a USD108m after-tax expense associated with BGI transaction and integration costs.
Operating income was USD389m and non-operating income, net of non-controlling interests, was USD17m. The operating margin was 25.2 per cent, which included the impact of USD152m of pre-tax BGI transaction and integration costs.
BlackRock’s results reflect the acquisition of BGI, continued positive business momentum, net asset growth and improvements in the external market environment.
Fourth quarter net income, as adjusted, was USD2.39 per diluted common share or USD379m, up more than three and a half times compared to fourth quarter 2008 diluted EPS of USD0.66 and up 14 per cent from the third quarter.
Net income, as adjusted, for the full year 2009 was USD1,021m, an increase of 19 per cent compared to 2008.
Revenue was USD1,544m, up 45 per cent compared to fourth quarter 2008 and 35 per cent compared to third quarter 2009. Fourth quarter 2009 revenue included USD278m of base fees associated with the USD1.85trn of acquired BGI assets under management, revenue associated with USD62.6bn of net new business and net market appreciation and USD125m of combined firm performance fees.
Fourth quarter 2009 included as-adjusted operating income of USD2.34 per diluted share and as-adjusted net non-operating income of USD0.05 per diluted share.
Operating income, as adjusted, of USD561m improved USD191m or 52 per cent compared to 2008 and USD161m or 40 per cent compared to the third quarter, explained partially by USD141m of operating income resulting from the BGI acquisition.
The operating margin, as adjusted, for fourth quarter 2009 remained strong at 39.7 per cent reflecting revenue growth and continued cost control. The 2009 compensation to revenue ratio was 35 per cent, consistent with 2008 and 2007, excluding integration costs, LTIP and market valuation changes on deferred compensation plans.
Fourth quarter 2009 net non-operating income, as adjusted, of USD13m compares to a non-operating loss of USD270m in 2008 and non-operating income of USD52m in the third quarter. Fourth quarter non-operating income included interest expense on our USD2.5bn long-term note issuances on 10 December.
“BlackRock’s performance in 2009 was strong by any measure,” says Laurence D. Fink, chairman and chief executive of BlackRock. “Adjusted earnings per share increased 13 per cent, investment performance was competitive across a broad array of products, and our work with clients was rewarded with USD155.7bn of combined net new business and 48 net new assignments in BlackRock Solutions. During the fourth quarter, we closed the transaction with BGI, adding substantial capabilities and welcoming more than 3,500 new colleagues to the combined organization. Clients have been highly supportive, and we have already won assignments that leverage our broader platform.
“Combined new business flows reflected continuation of key industry trends. Investors worldwide redeployed assets out of money market accounts yielding near zero to a variety of long-only and alternative investment strategies. Their renewed risk appetite drove a substantial tightening of credit spreads and a sharp rebound in global equity markets. Investors increasingly used a mix of passive strategies, including iShares, to achieve efficient exposure to market beta along with active strategies to enhance portfolio returns. Client interest in customized and comprehensive investment solutions, including liability driven investments, global allocation strategies, target date funds and fiduciary outsourcing, remained strong. In addition, institutional investors continued to address risk management needs, leading to strong growth in BlackRock Solutions.”
