Published 31 July, 2020
Published 31 July, 2020
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.
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.
Overall, the market environment in the first half of 2020 was unfavourable to activity:
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).
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).
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:
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.
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
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.