This Wednesday February 8th, Amundi publishes its 2022 annual and Q4 results.
- Inflows were positive at +€7bn for the year: business activity stayed solid, and the mix was positive for margins, with inflows +€10bn in the Retail segment (excluding JV) and +€8bn in MLT Assets.
Adjusted net income 1,2 was €1.2bn: high profitability was maintained, after a FY 2021 that enjoyed an exceptional level of performance fees; 2022 income is virtually stable compared to 2021 once this exceptional level is normalised.
- This performance was achieved in volatile and bearish markets: equity markets3 fell ‑13% during the year, and fixed income markets4 lost -17%.
- As a result, the open-ended fund market in Europe saw significant outflows in 2022, reflecting the rise in risk aversion from investors: -€57bn, including -€130bn on MLT assets and +€73bn on treasury products.
Amundi is adapting with agility: investment management generated a strong performance, the product offering was adapted to the new market environment, in particular with fixed income and structured products, and the cost base wa reduced steadily throughout the year.
At the same time, Amundi is continuing its development along the lines of the Ambitions 2025 Plan:
- Strengthening Amundi's leadership in asset management, particularly in real assets, passive management and Asia;
- Responsible Investing offers raised +€9bn5 in 2022 and new funds were launched in the “Ambitions Net Zero” range, covering 4 major asset classes;
- Amundi’s position as a leading supplier of technology and services all along the savings and investment value chain draws on the growth of Amundi Technology, and on Fund Channel, Amundi’s fund distribution platform.
Finally, the acquisition of Lyxor, completed in 2021, fits well with Amundi's objective to execute value-creative M&A transactions. Integration was completed in 2022, in less than nine months, and the first synergies achieved ahead of planning.
Financial year 2022
Strong business activity in 2022
Amundi’s assets under management at 31 December 2022 totalled €1,904bn, a decline of -7.7% or -€160bn year-on-year, due to the negative market effect (-€167bn), and despite positive net inflows of +€7bn over the year.
The net inflows break down into +€7.8bn in Medium-Long Term (MLT) Assets excluding joint ventures (JV), +€14.0bn for JVs, and net outflows of -€14.9bn in treasury products.
In 2022 :
- Retail excluding JV collected +€9.9bn mainly in MLT Assets, +€7.9bn ;
- JV +€14.0bn despite continued outflows on Channel business6 and an unfavorable economic context in China. The JV in India SBI MF, on the other hand, collected +€18.0bn over the year;
- and Institutional clients -17.0bn, affected by outflows of treasury products and MLT assets at Insurers; Excluding these two elements, inflows in MLT Assets reached +€5.7bn, thanks to the winning of several large mandates, particularly in index and diversified management.
High net income in 2022
In 2022, adjusted net income2 was €1,178m, a 10.5% decline on adjusted net income published in 2021 and ‑13.0% down on like-for-like5 adjusted net income, i.e. including Lyxor as of 2021. This was largely a factor of exceptional performance fees in 2021: €427m, compared to the more typical €171m in 2022.
By “normalising” the 2021 level of performance fees to the 2017-2020 average, 2022 adjusted net income was virtually stable on 2021, and down very slightly like-for-like7.
These solid results in volatile bear markets were due to multiple factors.
Net revenues2 totalled €3,137m.
- Net management fees maintained at a high level: €2,965m, up by +7.6% compared to 2021 as reported, and stable like-for-like7, thanks to the improved business mix (Retail, MLT Assets) mentioned earlier; this offset the drop in AuM tied to the market effect, with a slight improvement in the margin on average AuM, at 17.8 basis points in 2022 versus 17.5 in 2021;
- Amundi Technology’s revenues posted robust growth (+35% compared to 2021), with €48m;
- Performance fees (€171m) normalised throughout 2022 compared to 2021, as had been expected at the time, and remained strong in light of bearish market environments for the majority of asset classes, thanks to the successful adaptation of management strategies.
Note that the decline in adjusted revenues like-for-like7 (-8.2%) was caused almost entirely by the drop in performance fees between the two financial years across the combined scope.
Operating expenses2 remained well under control, at €1,671m, up +8.9% on 2021, but down -1.1% like-for-like7. Investments and the unfavourable currency effect were absorbed by gains in productivity and the first synergies generated by the integration of Lyxor, which totalled some €20m for FY 2022. Synergies are already ahead of the target of €60m in 2024, which was based on a minimum amount in 2022 and a true takeoff in 2024. Amundi continued its policy of investing in its growth drivers, but these were financed by the gains in productivity.
This cost control helped to contain the cost/income ratio2 to 53.3%. The 2021 cost/income ratio4 was 49.4% like-for-like, i.e. including Lyxor as of 2021, in a much more positive market environment and leveraging the exceptional performance fees, and 52.5% excluding this exceptional effect.
This put Gross Operating Income (GOI)2 at €1,466m, down -12.2% from 2021 as reported, and -15.1% like-for-like7.
The contribution from equity-accounted entities, which reflects Amundi's share in the net profits of the JVs in India, China, (ABC-CA), South Korea and Morocco, rose +4.6% to €88m.
Net accounting income stood at €1,074m and includes the costs of Lyxor’s integration on a full-year basis (-€46m after tax in 2022), the amortisation of an intangible asset (client contracts) also connected to the acquisition of Lyxor (-€10m after tax, which did not begin until 2022), the amortisation of distribution agreements (stable compared to 2021, at €49m after tax).
Earnings per share totalled €5.28.
Inflows marked by persistent client risk aversion
Total inflows were +€15.0bn, driven by treasury products (+€20.8bn) and MLT Assets (excl. JVs) at equilibrium (+€0.4bn). The high inflows in treasury products were mainly the result of the Corporates segment, evidence of their renewed appeal amid the return to positive short-term rates.
In Retail, the French and International networks (excluding Amundi BOC WM) posted a solid quarter in MLT assets, with +€2.6bn net inflows, specifically on structured products (France, Spain), real assets and index management (France), and Buy & Watch bond funds (Italy). Third-Party Distributors were virtually at equilibrium, as their clients had carried out risk-reducing arbitrages which benefited treasury products at the expense of MLT assets. Lastly, Amundi BOC WM recorded outflows in the fourth quarter (-€2.4bn) as it did for the year as a whole;
In the Institutional client segment, inflows in Treasury products were +€17.2bn, driven by corporates, and in MLT assets +7.9bn€ excluding CA & SG Insurers, particularly in index and diversified management, CA & SG insurers saw outflows (-€4.9bn) as they did throughout the year, due to withdrawals from traditional life insurance (euro funds);
The JVs had outflows of -€6.2bn, owing to withdrawals in China (ABC CA): €6.7bn, of which €1.7bn on Channel Business. The other JVs all showed positive flows, driven by India.
Growing fourth-quarter profitability despite persistent client risk aversion
In the fourth quarter of 2022, Amundi’s adjusted net income (€303m) rose +7.5% quarter-on-quarter. This growth was the product of increased net revenues and sustained operational efficiency.
Net revenues2 were up +4.2% compared to the third quarter of 2022:
- Net management fees declined by a slight 3.6% to €720m;
- Performance fees posted strong gains, at €63m compared to €13m in the third quarter of 2022, benefiting from the seasonal effect of the funds’ anniversary dates on which performance fees are calculated (higher concentration in the fourth quarter) and the good performance by Amundi's asset management across a wide range of strategies in 2022;
- Finally, Amundi Technology revenues grew by +22% compared to the third quarter of 2022, to €15m.
Operating expenses2 were down by 0.7% from the third quarter, to €412m, the third quarter of decline since the integration of Lyxor in the first quarter, stemming primarily from cost synergies related to that acquisition and the adjustment of expenses to the market backdrop.
As a consequence of the positive jaws effect between the two quarters, the cost/income ratio improved by 2.6 percentage points compared to the third quarter of 2022, to 52.1%. This improvement was largely driven by solid performance fees and Lyxor synergies in the fourth quarter.
Gross operating income2 rose +10.2% compared to the third quarter.
The contribution from equity-accounted entities (JVs) stood at €24m in the fourth quarter of 2022, up +3.8% on the third quarter.
Net accounting income stood at €286m and includes costs related to integrating Lyxor ( €16m after tax in Q4 2022), amortisation of intangible assets (client contracts) related to Lyxor (€2m after tax) and the usual amortisation of distribution agreements.
Valérie Baudson, CEO, comments
Amundi posted strong performances in 2022. Our net income1 stood at €1.2bn, and our net inflows ended the year in decidedly positive territory, in contrast to the European asset management market. These results were achieved thanks to the quality of our investment management teams, the adaptation of our product offering, but also thanks to our ability to lower our cost base in an unfavourable market environment. In 2022 Amundi continued its development, focusing on the growth drivers of its 2025 Ambitions Plan, namely in real assets, passive management, technology, services and Asia. Lastly, the integration of Lyxor was successfully completed in less than nine months. It makes Amundi a European leader in ETFs, with a fully-operational platform, and it is already delivering cost and revenue synergies. Our agility, growth drivers, diversification, high level of profitability and financial solidity allow us to be confident in Amundi’s value-creating capacity. We propose to our shareholders a dividend for 2022 stable vs. 2021
1. Net income, Group share
2. Adjusted data: excluding amortisation of the intangible assets, the integration costs related to Lyxor, and, in 2021, the impact of Affrancamento.
3. EuroStoxx 600
4. Bloomberg Euro Aggregate Index
5. MLT Assets only
6. Run-off, low-margin products, in China
7. Constant scope: including Lyxor in 2021