2020 H1 and Q2 Results

Paris, Friday 31 July 2020

Financial Communication

Key Figures 2020 Q2

   

On this Friday 31th of July, Amundi publishes steady results for the first semester and the second quarter of 2020, with assets under management reaching €1,592bn, an increase of +7% year-on-year.

These solid results, in an unfavourable business environment and in an European asset management sector posting outflows2, demonstrate once again the solidity of Amundi's business model.

Activity resilient in a challenging climate

Amundi’s assets under management totalled €1,592bn1 at 30 June 2020, an increase of 7% year-on-year and 4.2% vs. the end of March 2020. During the quarter, the market effect was positive by +€64.9bn, and inflows virtually stable (-€0.8bn), featuring a recovery in MLT asset flows.

A less favourable market environment than in 2019

Overall, the market environment in the first half of 2020 was unfavourable to activity:

  • After a major shock in March due to the Covid-19 epidemic, the Equity markets recovered partially in the second quarter 2020 thanks to measures taken by the central banks at the end of March.
  • Meanwhile, the exceptional circumstances of the pandemic resulted in increased risk aversion from savers and investors. Accordingly, the European asset management sector posted outflows of -€69bn at the end of May 20202 (including -€161bn in MLT assets).

In the second quarter of 2020

In the second quarter of 2020, Amundi posted resilient activity with virtually stable total net inflows (-€0.8bn), with a strong momentum of MLT products (+€3.5bn, an improvement over Q1 2020) offsetting outflows in money market products (-€4.3bn).

  • Momentum in MLT products(+€2.9bn) excl. JVs :
    • In spite of heightened risk aversion, the Retail segment (-€1.7bn in MLT asset inflows) was quite resilient, specifically in the French networks (+€1.2bn) and international networks (balanced inflows).
    • Among institutional clients, this quarter was characterised by a sharp recovery in net inflows in MLT assets, to +€4.6bn (vs. -€11.8bn in Q1 2020).

This business dynamic is driven by the success recorded in passive management and in real assets.

Robust activity in JVs : In the Asian JVs, activity remained high (+€3.1bn), driven by India (net inflows were still strong at +€5.8bn), despite the Covid-19 crisis; Indian JV SBI-FM reached the top spot in the Indian market3.

In the first half of 2020

In all, over the first six months of the year, the trend was positive in Medium-Long-Term assets (+€6.2bn), driven primarily by resilient networks in France (+€3.3bn) and continued growth in the JVs (+€11.7bn), especially in India.

Outflows on treasury products (-€10.2bn) were attributable to the exit of Corporate clients affected by the crisis, which were concentrated in the March-to-May period. Since June, inflows on these products have turned positive once again.

In total, first-half outflows were limited (-€4.0bn).

High level of results maintained

Amundi's results remained high, confirming its business model is solid. The impact of the market downturn on revenues was countered by the reduction in operating expenses, which kept the cost/income ratio low and profitability high.

In this way, Amundi demonstrated its capacity to control its costs and maintain excellent operational efficiency (regardless of the market environment) while continuing to invest.

In the second quarter of 2020

The trend in total net revenues (€625m vs. €673m in Q2 2019) was attributable in large part to the market situation:

  • Net asset management fees were impacted by average market levels (down Q2/Q2) and a less-favourable mix effect. 
  • Performance fees were maintained at a good level (€34m).
  • Financial income totalled €17m thanks to the market recovery from late March to end-June

Operating expenses were down markedly (€318m or -7.8% vs Q2 2019), thanks to the full effect of synergies from the Pioneer acquisition, the adjustment of variable compensation in relation with the profit trend, and lower travel and advertising expenses considering the context of the crisis. The operating expenses to average AuM ratio (excl. JVs) remains one of the lowest in the industry at 9.6bp.

Changes in the workforce since end-June 2019 illustrate Amundi's capacity to control its costs while maintaining investments for growth, which are financed by ongoing efforts toward greater productivity. Over 12 months, nearly 80 employees were hired in passive management/ETF, real assets and IT.

Consequently, the cost/income ratio stood at 50.9%, an improvement on Q2 2019 (-0.3 pt) and Q1 2020 (-3.2 pts).

Taking into consideration the improved contribution to €15m from equity-accounted entities (primarily the Asian joint ventures) and the tax charge, adjusted net income, Group share, totalled €233m (-9.5% vs. Q2 2019).Excluding the impact of the market downturn, it was comparable to that of second-quarter 2019.

In the first half of 20204

Total revenues were €1,236m (-7.2% due to the market strong negative effect on financial income).

With operating expenses down (-4.7%), the cost/income ratio came to 52.5%, and Gross Operating Income was €588m.

After the contribution from equity-accounted entities (primarily the Asian joint ventures) and tax expenses, adjusted net income, Group share was maintained at a solid €439m (-13.1% vs. H1 2019). This erosion was due primarily to the effect of the market slump on revenues.

Partnerships and growth drivers

  • Partnership with Societe Generale renewed
    The partnership between Amundi and Societe Generale, resulting from Amundi's creation (CAAM/SGAM merger), was renewed at the time of Amundi's IPO (November 2015) for five years. The framework partnership agreement has once again been renewed for a five-year period beginning on 13 November 2020
  •  Banco Sabadell: a strategic partnership that boosts Amundi's European leadership, with integration well underway
    Amundi's acquisition of 100% of Sabadell Asset Management, announced on 21 January 2020, was finalised on 30 June 2020. At the same time, the partnership for distribution of Amundi products through the Banco Sabadell network in Spain had a successful start.
  • New JV in China: a strategic project, with implementation right on target
    In December 2019, the Chinese regulatory authority approved the plan to create a wealth management Joint Venture between Amundi (55%) and BOC Wealth Management (45%). BOC Wealth Management is a subsidiary of Bank of China, the fourth-largest Chinese bank, with 500 million private customers and 11,000 branches. With respect to the first months of cooperation between Amundi and BoC Wealth Management, the project's potential is confirmed, giving both partners promising growth outlooks on the Wealth Management market in China.

Despite an unfavourable market environment, Amundi’s business activity and income were solid in the 2nd quarter, which proves the company’s business model is sound. Medium-Long-Term assets inflows turned positive, thanks notably to real assets and to the passive management.
The Q2 2020 cost/income ratio of 50.9% was improved by 0,3 pt vs. the second quarter of 2019. Adjusted net income amounted to €233m. Excluding the impact on revenues of the average financial markets levels decrease, this net income would be comparable to the Q2 2019.
The partnership with Societe Generale has been renewed in all its aspects, which strengthens Amundi's position as a reference partner of the Retail networks in Europe
The growth drivers initiated at the start of the year are taking shape in line with our targets.
The acquisition of Sabadell AM, making Amundi the 4th player in Spain, was finalized at end June, and the synergies have been revaluated.
The implementation of the joint-venture with  BOC in China in line with the envisaged plan, with a launch of operations planned in Q4 2020
Lastly, Amundi continued to implement its ESG plan announced in October 2018, stepping up responsible investing initiatives

comments Yves Perrier, Amundi's CEO

1. Assets under management and net inflows (excluding Sabadell AM) include assets under advisory and assets sold and take into account 100% of assets under management and net inflows on the Asian JVs. For Wafa in Morocco, assets are reported on a proportional consolidation basis.
2. Source: Broadridge. European open-ended & cross-border funds (excluding mandates and dedicated funds). Data at end-May 2020.
3. Source: Association of Mutual Funds in India, open-ended funds
4. Adjusted data: excluding amortisation of distribution contracts.


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