Amundi reported a decline in revenues and earnings in the first half that threatens to end a decade-long streak of rising annual profits for Europe’s largest asset manager.
Investors pulled €4bn from Amundi in the six months ended June 30 as withdrawals from core markets in France and Italy outweighed an increase in new business activity in Asia. Inflows of €6.2bn into medium and long-term strategies were swamped by outflows of €10.2bn from short-term money market funds.
Amundi’s joint ventures in India and China were the main drivers of new business growth. It also won a €2.6bn index tracking climate change mandate from Pensam, the Danish pension fund, which lifted inflows into environmental, social and governance strategies to €6bn.
Adjusted net income dropped 13.1 per cent to €439m compared with the same six month period last year, with revenue down 7.2 per cent to €1.24bn.
Amundi has increased annual profits each year since it was created in 2010, a record that now looks vulnerable.
Yves Perrier, chief executive, said the coronavirus pandemic had led to increased risk aversion among investors. He added Amundi’s “solid” earnings and business activity during the unfavourable market conditions had demonstrated the business model was sound.
Amundi said it had secured a new 5-year distribution partnership with Société Generale to replace an agreement that ends in November. The terms of the partnership have changed slightly and analysts expect this to have a modest negative impact on earnings as Amundi will now face more competition across SocGen’s distribution network.
“Amundi will potentially capture a smaller proportion of SocGen’s flows over time, although it is not possible to quantify this further,” said Chris Turner, an analyst at Berenberg.
Another analyst who declined to be named said: “SocGen and Amundi may be starting to drift apart. It raises questions about how the relationship might evolve from here.”
Cuts in travel expenses and advertising spending helped trim operating expenses but the cost-to-income ratio rose to 52.5 per cent, an increase of 1.4 percentage points on the first six months of 2019, due in part to the hiring of 80 new staff members.
Mr Perrier plans to double Amundi’s presence in Spain, the fourth largest asset management market in Europe, after buying Sabadell Asset Management in a €430m cash deal. Sabadell is expected to deliver net profits of €33m this year and to be accretive to Amundi’s earnings.
In China, Amundi signed a wealth management joint partnership in December with Bank of China, which has 500m private customers. Mr Perrier said the senior management team of the joint venture was now in place and the launch of the first wealth management products was expected later this year, pending final approval from the local regulator.
Amundi’s share price has rebounded 50 per cent from its 2020 low reached in mid-March. Staff will be able to buy up to 1m new shares at a 30 per cent discount in the second half as part of an initiative to strengthen employees’ ties with the company.