2021 1st half and 2nd quarter results

On this Friday 30th July, Amundi publishes its 2021 H1 and Q2 results. Very good results in a highly favourable market context, strong inflows¹ in MLT assets² (+€21.7bn)3, and assets under management reaching €1,794bn at 30/06/2021, up +12.7% year-on-year. 

Amundi’s assets under management totalled €1,794bn at 30 June 2021, an increase of +12.7% year-on-year and +2.2% vs. the end of March 2021.

In very favourable market conditions (average equity market increase of 36% year-on-year and +8% in Q24), the second quarter featured confirmation of improved customer risk appetite, resulting in high inflows in MLT assets (+€22bn excluding JVs) and seasonal outflows in treasury products (-€17.0bn excl. JVs).

In total, net flows amounted to +€7.2bn over the quarter:

• In Retail, inflows were once again robust in MLT assets (+€9.5bn vs. +€7.8bn in Q1 2021), driven by most customer segments, specifically third-party distributors (+€4.4bn), as well as international networks (+€3.2bn), particularly in Italy and Spain (Banco Sabadell network).
• In terms of institutional clients, this quarter was characterised by +€12.1bn of inflows in MLT assets (vs. +€2.0bn of inflows in Q1 2021) driven by all institutional client segments. In Treasury Products, the -€15.0bn outflow was due to the market context (negative yield on treasury products) and the seasonal effect of dividend payments.
• Business activity in the JVs was marked by good momentum, despite expected outflows on Channel Business in China. Inflows in the JVs totalled +€2.6bn, an improvement over the first quarter of 2021 (-€4.0bn).
   

High inflows of +€22bn in MLT assets³ were driven primarily by active management:

• Active investment strategies showed significant inflows (+€18.9bn), driven by all asset classes and illustrated by the success of multi-+asset funds for Retail, OCIO⁵ solutions for Institutional investors, thematic funds  and launches fixed-income ESG dedicated funds.
• Real and Structured Assets activity was mixed, with -€1.2bn of outflows in Q2 2021, linked to early redemptions in structured products. Real asset flows remained solid (+€1.0bn), specifically in private debt and Real Estate.
• Passive management, ETFs and smart beta had a good second quarter with +€4.0bn in net inflows, bringing AuM to €184bn at end-June 2021. With inflows of +€2.3bn in Q2 2021 in ETPs⁶, Amundi is the number five provider in Europe⁷. In total, ETP assets were €77bn at 30 June 2021 (ranked fifth in Europe⁷).

Adjusted data⁸

At €345m, Amundi's quarterly adjusted net income rose sharply compared to both the second quarter of 2020 and the first quarter of 2021. This growth is notably due to the very high performance fees, related in particular to the market upswing over the past 12 months. The effect of this exceptional level of performance fees on adjusted net income is estimated at about €70m in Q2 2021 and €40m in Q1 2021⁹.

Revenues benefited from improved market conditions and business dynamics:

• Net asset management fees were up significantly compared to both Q2 2020 (+20.2%) and Q1 2021 (+3.8%)
• Performance fees were exceptionally high (€155m, compared to a quarterly average of €42m between 2017 and 2020). This exceptional level was largely a reflection of the 12-month increase in the Equity markets and should normalise over the next few quarters¹⁰.

Operating expenses were under control (€388m). Their increase (+22.2% compared to Q2 2020 and +3.4% compared to Q1 2021) was driven by:

• increased variable compensation provisioning, owing to growth in operating income
• the scope effect compared to Q2 2020 (+€14m) linked to the creation of Amundi BOC WM¹¹, the integration of Sabadell AM¹², and the full consolidation of Fund Channel¹³;
• continued development investments, specifically at Amundi Technology.

The result was an exceptionally low cost/income ratio of 45.7%, vs. 50.9% in Q2 2020 and 48.8% in Q1 2021. Excluding the exceptional level of performance fees14, the cost/income ratio was about 50%.

Given the robust activity of the equity-accounted companies (mainly the Asian joint ventures), their contribution to income increased to €21m compared to €18m in Q2 2021.

Accounting data

Net accounting income (Group share) was €448m. It includes the usual amortisation on distribution contracts (‑€12m per quarter). It also includes a one-off tax gain (net of substitution tax) of +€114m (no cash impact) resulting from the application of the “Affrancamento” mechanism of the Italian Budget Law for 2021 (Law no. 178/2020), resulting in the recognition of Deferred Tax Assets on intangible assets (goodwill).

The year 2020 saw the launch of several strategic initiatives that will bolster the group's growth in the coming years and are already showing results in the first quarter of 2021: 

• Sabadell AM: successful integration and partnership with Banco Sabadell:

Twelve months after the acquisition of Sabadell AM on 30 June 2020, its integration is complete both technologically and operationally (management teams, sales teams, and control functions). The beginning of the partnership with Banco Sabadell is very promising, resulting in gains in market share¹⁵; record business activity was achieved over the first 12 months with more than €1.5bn in net inflows (Amundi and Sabadell AM funds) in the Banco Sabadell network. More than 50% of the announced synergies¹⁶ should be achieved in 2021.

• Successful start-up of the new Wealth Management subsidiary with Bank of China (fourth-largest Chinese bank) 

After the operational start-up of this new subsidiary (of which Amundi holds 55%) in the fourth quarter of 2020, sales momentum is strong with the launch of ~50 funds since its creation and increasing interest from the BoC network for the subsidiary’s products (specifically maturity funds and green funds). Total net inflows for the first half of the year already stand at +€3.4bn.

• Ramping up of Amundi Technology

Amundi Technology, the new business line dedicated to technology services, expanded its development, generating €19m in revenue in the first half of 2021, including €12m in Q2 2021. Deployment of services continued with seven new customers (i.e. 29 customers overall at the end of June 2021).

Valerie Baudson, Amundi's CEO comments:

Amundi posted very good financial and operating performance in the second quarter of 2021, driven by a growth momentum in all business lines, notably with buoyant MLT assets inflows. The strong growth in net income was amplified by a very favourable market environment.
The recent strategic initiatives (the partnership with Banco Sabadell, the joint venture with Bank of China, and Amundi Technology) are starting to bear fruits. The acquisition of Lyxor, whose integration is being actively prepared, will be a new growth driver.
Such strong performances prove that Amundi's development strategy is relevant. Our Group has all the strengths needed to pursue its profitable growth trajectory.

<sub>1. Assets under management and net inflows, including Sabadell AM as of Q3 2020 and BOC WM as of Q1 2021, include assets under advisory and assets marketed and take into account 100% of the Asian JVs’ assets under management and net inflows. For Wafa in Morocco, assets are reported on a proportional consolidation basis. 
2. Medium/Long-Term Assets: excluding treasury products
3. Excl. JVs
4. Eurostoxx 600 Index Average: +36% Q2 2021/Q2 2020 and +8% Q2 2021/Q1 2021
5. Outsourced Chief Investment Officer Solutions
6. ETP: Exchange Traded Products, including ETF (Exchange Traded Funds) and ETC (Exchange Traded Commodities).
7. Source:  ETF GI, end of June 2021
8. Adjusted data: excluding amortisation of the distribution contracts and Affrancamento. See page 8 of the press release for definitions and methodology.
9. Exceptional performance fees = difference compared to average performance fees per quarter in 2017-2020
10. NB: Under the new ESMA regulations ("Guidelines on Performance Fees,” applicable mainly to UCITS funds) and implemented in July 2021 for existing funds, the reference period will be five years if the funds underperform their benchmark.
11. Consolidated from Q4 2020
12. Consolidated from Q3 2020
13. Consolidated from Q1 2021
14. Exceptional performance fees = difference compared to average performance fees per quarter in 2017-2020
15. Announced run-rate synergies of €20m before  tax
16. Adjusted data: excluding amortisation of the distribution contracts and Affrancamento. See page 8 of the press release for definitions and methodology</sub>