Business activity held up well, in unfavourable market conditions
On this Friday 28th October, Amundi publishes its results for the first 9 month and 3rd quarter of 2022, robust despite an unfavourable market environment, with continued high net income1 (€875m) and operating efficiency in the first nine months, and adjusted net income1 of €282m in 3rd quarter.
The third quarter was characterised by unfavourable market conditions:
- equity markets declined sharply: the EuroStoxx lost 5% over 3 months2, and is down 24% since the end of 2021; on average it dropped 15% vs. Q3 2021, 5% vs. Q2 2022 and 5% between 9M 2021 and 9M 2022;
- bond markets declined (-5% between 30/06/2022 and 30/09/20223), with rates4 up around 75bps in the third quarter and 250bps over the first nine months of the year;
- the US dollar appreciated 6% against the Euro between 30/06/2022 and 30/09/2022;
- an overall increase in risk aversion
The European asset management market5 displayed substantial outflows in Q3 (-€111bn of which -€101bn in MLT assets).
Amundi's assets under management totalled €1,895bn at 30 September 2022, up 4.7% over one year and down 1.5% from the end of June 2022.
Q3 2022 business activity
Against this backdrop, Amundi showed resilient business activity in MLT assets ex JVs (-€3.5bn compared to -€10.0bn in Q2).
- In Retail, business activity was solid in the French (+€0.5bn in MLT, specifically in active management and real assets) and international networks (+€1.4bn6 in MLT).
- Active management flows were positive (+€1.1bn in MLT), driven by equity (thematic management) and bond products.
- Outflows in passive management (-€3.8bn) were attributable to the derisking prevailing among Institutionals and third-party distributors
In treasury products, outflows of -€8.1bn (ex JVs) were concentrated in Corporate and Institutional clients.
Business activity in the JVs was negative this quarter (-€1.3bn) owing to outflows in treasury products and in Channel Business7 in China. In MLT assets8, flows were positive (+€3.8bn), thanks to the momentum of the Indian JV SBI MF, which consolidates its leadership in the Indian market9.
Total flows in Q3 were -€12.9bn.
Continued development of Amundi Technology
Amundi Technology continued to grow with 45 clients at end September 2022 (compared to 42 at end June). Three new clients subscribed to the ALTO Wealth & Distribution offer.
9M 2022 business activity
Over the first 9 months of 2022, Amundi had -€8.0bn in outflows, driven by outflows in treasury products (-€35.6bn).
Excluding JVs, MLT flows were significant (+€7.5bn) thanks to Retail (+€10.6bn in MLT, essentially in third-party distributors); in the Institutional segment, outflows were limited (-€3.1bn in MLT).
- Active management: in generally falling markets, Amundi's flows were positive (+€1.6bn), with flows in particular in Equities (especially thematic management). Fund performance was solid, with over 69% of assets in open-ended funds in the top two quartiles according to Morningstar10 over 1 and 3 years, and over 76% over 5 years. With 306 funds rated 4 and 5 stars, Amundi is the second largest player in Europe in terms of number of funds.
- Activity in Real Assets (excluding alternative assets) was strong, with net inflows of +€3.0bn, particularly in Real Estate and Private Equity, bringing assets under management to €66bn at 30/09/2022.
- Passive management, ETFs and Smart beta posted net inflows of +€7.5bn, bringing AuM to €275bn at the end of September 2022. This performance was significant amid the merger with Lyxor. In ETFs, while the start of the year was particularly promising, the market experienced a slowdown in a general climate of derisking. Nonetheless, with inflows of +€4.6bn11 over 9 months, Amundi consolidated its position as the second ETF player in Europe and the European leader with a market share of around 13.5%12 (AUM of €167bn at 30/09/2022).
In the Asian JVs, business activity was strong with inflows of +€20.2bn, mainly in India and China.
Continued high level of profitability and operational efficiency
Q3 2022 results (adjusted data)
Amundi’s quarterly adjusted net income of €282m remained high, a considerable increase (+4.7%) compared to Q2 2022, thanks to the positive jaws effect between net management fees and well-controlled expenses.
Net revenues at €758m:
- Net management fees13 were €747m, a slight increase over Q2 2022 (+1.9%) thanks to the improved client/product mix, a positive currency effect (US dollar / euro), and some non-recurring items.
- The normalisation of performance fees (€13m) was more pronounced in light of the market environment.
- Amundi Technology’s revenues (€12m) were stable Q3/Q2 and up vs. Q3 2021 (+43%), confirming its development over 12 months.
- Financial and other revenues were -€13m, given the market backdrop.
Operating expenses (€415m) were down by 1.7% from Q2 2022, and down 2% vs. Q3 2021 on a like-for-like basis. These evolutions are related to the initial effects of costs synergies related to the Lyxor integration and to cost control efforts, which offset a negative currency effect (US dollar/euro).
Cost/income ratio was 54.7%, an improvement compared to Q2 2022.
The contribution to income from equity-accounted entities (mainly Asian joint ventures) increased by +11.9% vs. Q2 2022, to €23m.
9M 2022 results (adjusted data)
Adjusted net income stood at €875m, an increase of +3.4% vs 2021 excluding the exceptional level of performance fees recorded in 202114, and virtually stable (+0.5%) on a like-for-like basis (including Lyxor in 2021).This continued high level of profitability can be attributed, as for Q3, to two factors:
- net management fees15(€2,245m) up by +2.6% on a like-for-like basis, in spite of the steep decline of equity and bond markets; this can be attributed to the momentum of inflows over 12 months and the improved client/product mix.
- stable expenses on a like-for-like basis (-0.1% vs. 9M 2021) thanks to cost control and the initial effects of synergies, which offset investments in our growth engines and the negative currency effect.
As such, Amundi demonstrated its ability to maintain its operational efficiency, even in a difficult market environment. Cost/income ratio was 53.7%, one of the best in the industry.
To be noted: the continued development of Amundi Technology whose revenues grew by 24% to €34m.
Valérie Baudson, Amundi's CEO comments
Over the first nine months of the year, Amundi showed solid performance in a persistently tough market environment, maintaining a high level of profitability and operational efficiency. In the third quarter, Amundi’s activity held up well, particularly in medium/long-term assets, in a market characterised by strong outflows5. Lyxor's operational integration was successfully completed, allowing to record the initial effects of revenue and cost synergies. These results confirm the robustness of Amundi's profile
1. Adjusted data: excluding amortisation of intangible assets and excluding integration costs and, for 9M 2021, excluding the impact of Affrancamento. See page 11 of the press release for definitions and methodology.
2. Between 30/06/2022 and 30/09/2022
3. Bloomberg Euro Aggregate Index
4. 10-year OAT
5. Morningstar open-ended fund data at end September 2022
6. Excluding the Amundi BOC WM subsidiary in China
7. Low-margin products
8. Excluding Channel Business
9. 17.5% market share in open-ended funds, vs. 17.2% at end June. Source: AMFI
10. Source: Morningstar Direct, Broadridge FundFile - Open-ended funds and ETFs worldwide, end of September 2022
11. ETFs & ETCs
12. Source: ETF GI, end of September 2022
13. Excluding Amundi Technology’s revenues, which are now reported on a separate line of the income statement
14. Normalised data: data excluding exceptional performance fees (= higher-than-average performance fees per quarter in 2017-2020).
15. Excluding Amundi Technology’s revenues, which are now reported on a separate line of the income statement