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Amundi - Results for the first half and the second quarter of 2016

Paris, France, 7/29/16,  by Amundi

Strong results and activity

Business

 

§ AUM[1]: more than €1 trillion[2] at 30 June 2016, +5% vs. 30 June 2015

 

§ Buoyant business activity: net inflows1 of +€16.8bn, of which +€3.0bn in Q2

 

§ Net inflows1 focused on medium- to long-term assets[3] in H1

 

Income

 

§ High net income Group share: €278m, +1% vs. H1 2015,
Q2: €148m, +2% from Q2 2015, the highest since Amundi was created

 

§ Stable net revenue: -1% from H1 2015 to €838m, +1% for Q2 2016 vs. Q2 2015

 

§  Cost/income ratio 51.9% vs. 52.5% in H1 2015, Q2: 50.3% (-2pp vs. Q2-15)

 

Financial structure

 

§ Net tangible assets[4]: €3.2bn

 

§ Free capital4: €1.5bn after payment of 2015 dividend (€343m) in May

 

Acquisition

 

§ KBI: €8bn in AUM for global equity, +28% CAGR for 2011-2015

 

§ A profitable, fast-growing company that complements Amundi’s activities very well

 

§ The transaction is expected to be finalised in the third quarter 2016

 

 


[1] Assets under management (AUM) and net inflows include 100% of the assets under management and net inflows of joint ventures, excluding Wafa in Morocco, for which assets under management are reported on a proportional consolidation basis.

 

[2] Assets under management and assets sold at 30 June 2016: €1,003.8 billion.

 

[3] MLT assets excluding Treasury products: equities, fixed income, multi assets, structured, real assets and alternative.

 

[4] Net tangible assets: Equity, Group share net of goodwill and intangible assets. For the principles used to calculate free capital, please see the technical appendix at the end of this press release.

 

 

Amundi’s Board of Directors, chaired by Xavier Musca, met on 29 July 2016 to review the financial statements for the first half and second quarter of 2016[1].

Commenting on these results, Yves Perrier, CEO, said:

“Amundi’s high level of activity and results in the first half of 2016, in a tough market environment, confirms the strength of its business model and excellent operating efficiency, as well as the value of the strategy presented at the time of its IPO.”

In a tough market environment, Amundi reached one year ahead of schedule the 1 trillion euro AUM target that was announced beginning of 2014. This objective was reached almost exclusively through organic growth[2].

The profit for the first half is the best since Amundi was created thanks to high net inflows coupled with excellent operating efficiency.


[1] The limited review on the interim condensed consolidated financial statements for the first half of 2016 is being carried out.

A tough market environment in the first half, affected by high volatility

The first half was marked by an environment of highly volatile markets, under the influence of increased economic and geopolitical uncertainties. At the end of the period this was amplified by the outcome of the UK referendum on the European Union.

European equity markets fell on average[3] by -13% compared to the first half of 2015, following a particularly bumpy trajectory: the Stoxx 600 lost -7% in the first quarter, then gained +2% in the second quarter until 23 June, and then promptly lost -5% between that date and the end of the quarter.

The decline in interest rates on the bond markets was more constant over the period: -80bp for 10-year OAT including -20bp over the second quarter, -50bp for the 10-year Bund, most of which was lost in the first quarter. The average for the 3-month Euribor, which had fallen into negative territory in the second half of 2015, kept dropping, reaching -0.3% at the end of the first half of 2016.

This volatility encouraged mounting risk aversion, which negatively impacted the asset management business over the period.

 

The market effect on Amundi’s assets under management was negative by -€11.6bn in the first quarter and positive by +€13.6bn in the second quarter, resulting in a slightly positive +€2.0bn over the first half.

 

Business activity: €1tn threshold crossed, high net inflows

Amundi crossed the €1tn threshold for assets under management[4], a target which had been set for the end of 2016 in Crédit Agricole S.A.’s Medium-Term Plan presented in March 2014. It should also be noted that growth over the period was almost entirely organic[5].

In the first half, net inflows reached +€16.8bn, equal to 3.4%[6] of AUM at the beginning of the period. This is almost in line with the objectives set during the IPO last November.

Net inflows for the first half were focused on medium- to long-term assets[7]: +€17.2bn, i.e. 4% annualised of AUM at the beginning of the period, thanks to the positive contribution from all asset classes in this category, particularly equity, which brought in +€5.7bn, in all regions, for both active and passive management, as well as fixed income (+€6.3bn) and multi-asset (+€2.7bn).

Noteworthy developments include, in real assets, the ongoing strong business volume in real estate, with +€1.7bn in inflows over the period, and high inflows in volatility products, which also brought in +€1.7bn over the period. Amundi is a leader in this asset class, which has sparked renewed investor interest thanks to the return of volatility on the markets. Assets under management at end-June 2016 totalled €4.1bn.

The Retail segment[8] proved very resilient, despite high levels of risk aversion. This segment represents the majority (60%) of inflows in the first half of 2016, with +€10.1bn. Joint Ventures (JV) contributed most of these inflows, with +€10.2bn. The other sub-segments are nearly at equilibrium, thanks to the solid performance of Third-Party Distributors, which brought in €3.7bn over the period, and the turnaround in the performance of the French networks in the second quarter: +€0.6bn, primarily from individuals for medium- and long-term assets. Throughout the period, medium- to long-term assets for the French networks stayed flat (+€0.0bn), but showed outflows of -€4.0bn for Treasury products held by companies, mainly due to seasonal effects.

Institutionals are also performing well: net inflows reached +€6.7bn over the period. Mandates from CA and SG insurance companies contributed half of these inflows, i.e. +€3.4bn. All of the sub-segments posted net positive inflows, including for medium- to long-term assets, except for corporates that, as with the Retail segment, recorded outflows for Treasury products, i.e. -€3.3bn over the period.

 

More than 90% of net inflows in the first half were from international activities[9], i.e. +€15.2bn, of which 79% of net inflows from outside France were from Asia and 26% from Europe excluding France. Particularly noteworthy were the performances of Joint Ventures in Asia (+€10.1bn in inflows over the period) and Italy (+€2.0bn). International AUM increased by +22% compared to 30 June 2015.

 

In the second quarter of 2016, net inflows amounted to +€3.0bn. They were driven by:

  • In terms of client segments, Retail: +€8.3bn
  • In terms of asset classes, Medium- to long-term assets: +€10.3bn[10], with a particularly strong contribution from equities (+€3.4bn) ;
  • and in terms of geographical areas, activities outside France: +€5.9bn

Treasury products experienced heavy outflows in the second quarter (-€7.3bn12), which offset first-quarter inflows. However, inflows recovered in July. Inflows for this asset class remain volatile, but are growing.

 

 

Net income for H1 2016: €278m, highly resilient revenues and strict cost control

At €278m, income for the first half of the year was the highest since Amundi was created in 2010, up by +1.4% compared to the same period in 2015.

 

This increase is attributable to strong operating performance, with very resilient revenues and additional improvements to operating efficiency.

  • revenues were down slightly by -1.3%; net management fees were stable with respect to the first half of 2015, owing to resilient margins. Performance fees also proved resilient: at €53m they were nearly unchanged from the first half of 2015. At €35m, only financial income is down, falling by
    -27% compared to the first half of 2015.
  • the decrease in operating expenses at constant scope and exchange rates was -2.3% compared to the first half of 2015; this decline is mainly the result of adjusting variable compensation to match changes in revenue; investment in business development was maintained, particularly international recruitment.

 

At €403m, gross operating income (GOI) was almost the same as in the first half of 2015. The cost/income ratio improved by 0.5 percentage point to 51.9% compared to the first half of 2015.

The net income Group share came out slightly higher (+1.4%), due to the reduced tax charge during the period (-6.4% compared to the first half of 2015) because of the French corporate tax cut. The earnings per share came to €1.66 for the period.

 

In the second quarter of 2016, the net income Group share was the highest it has been since Amundi was set up in 2010. €148m, up +1.9% from Q2 2015.

Net revenue – €443m – rose slightly by +0.6% compared to the first half of 2015, which nevertheless proved to be a high basis of comparison due to a more favourable market environment. This income was generated thanks to strong increase of performance fees posted over the quarter (+28%) at €35m.

Operating expenses fell by -3.2% compared to the second quarter of 2015. As a result, the cost/income ratio improved by 2 percentage points to 50.3% compared to the second quarter of 2015.

 

A robust financial structure

Tangible equity[11] totalled €3.2bn, almost unchanged compared to end-2015, as capital resulting from accrual of net income for the period (+€278m) was more than offset by the 2015 dividend payment
(-€343m). Net financial debt is still nil and free capital[12], after taking regulatory requirements into account and deducting non-money-market seed money and investments, remains at €1.5bn.

 

KBI, an acquisition[13] that strengthens Amundi’s platform and fits its strategy perfectly

On 23 May, Amundi announced that it had signed an agreement to acquire KBI, a fast-growing asset management firm based in Ireland that specialises in global equity (€8bn in assets under management). This acquisition, which is expected to be finalised in the third quarter 2016, offers major potential synergies thanks to the complementary nature of KBI and Amundi’s client bases. It will also meet the acquisition criteria set during the IPO, particularly a 10% return on investment in three years.

 

 

 

[1] The limited review on the interim condensed consolidated financial statements for the first half of 2016 is being carried out.

[2] Under Crédit Agricole S.A.’s 2014 Medium-Term Plan, projected growth was expected to be two-thirds external and one-third organic.

[3] Calculated as the change in the average closing price in the first half of 2016 versus the first half of 2015: Stoxx 600 -13.3%, EuroStoxx -12.6%, CAC 40 -11.1%, SBF 120 -10.6%.

[4] €1,003.8bn at 30 June 2016, +5.2% compared to 30 June 2015 and +1.9% compared to 31 December 2015

[5] Under Crédit Agricole S.A.’s Medium-Term Plan, projected growth was expected to be two-thirds external and one-third organic. In fact, only 5% of growth in assets under management over the period came from acquisitions.

[6] Annualised.

[7] See Table – Assets under management and inflows by asset class.

[8] See Table – Assets under management and inflows by client segment

[9] See Table – Assets under management and inflows by region

[10] After €2.5bn of net inflows on treasury products in Q1 was restated as fixed income products

[11] Net of goodwill and other intangible assets

[12] Free capital: for the principles used to calculate free capital, please see the technical appendix at the end of this press release.

[13] Finalisation of the transaction expected in the third quarter 2016, no effect on the 30 June 2016 interim financial statements

 

Summary income statement

 

(€m)

 

 

H1 2016

 

H1 2015

 

% chg. vs. H1 2015

 

 

Q2 2016

 

% chg. vs. Q2 2015

 

 

% chg. vs. Q1 2016

 

Net revenue

 

 

838

 

849

 

-1.3%

 

 

443

 

+0.6%

 

 

+12.2%

 

Net AM revenues

 

 

813

 

813

 

0.0%

 

 

 

 

 

 

 

 

 

 

o/w net fee and commission income

 

 

760

 

759

 

+0.1%

 

 

 

 

 

 

 

 

 

 

o/w performance fees

 

 

53

 

54

 

-1.3%

 

 

35

 

+28.3%

 

 

+98.2%

 

Net financial income

 

 

35

 

48

 

-26.7%

 

 

 

 

 

 

 

 

 

 

Other net income

 

 

-10

 

-12

 

-14.8%

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

-435

 

-445

 

-2.3%

 

 

-223

 

-3.2%

 

 

+5.1%

 

Gross operating income

 

 

403

 

403

 

-0.1%

 

 

220

 

+4.8%

 

 

+20.3%

 

Cost/income ratio (%)

 

 

51.9%

 

52.5%

 

-0.5 pts

 

 

50.3%

 

-2.0 pts

 

 

-3.4 pts

 

Cost of risk

 

 

0

 

-5

 

NS

 

 

0

 

NS

 

 

NS

 

Gains (losses) on other assets

 

 

0

 

10

 

NS

 

 

0

 

NS

 

 

NS

 

Share of net income of equity-accounted entities

 

 

13

 

12

 

+2.4%

 

 

6

 

-6.7%

 

 

-4.4%

 

Pre-tax income

 

 

416

 

421

 

-1.2%

 

 

226

 

+0.7%

 

 

+19.6%

 

Taxes

 

 

-137

 

-147

 

-6.4%

 

 

-78

 

-1.5%

 

 

+31.4%

 

Net income

 

 

278

 

274

 

+1.5%

 

 

148

 

+1.9%

 

 

+14.2%

 

Net income - Group share

 

 

278

 

274

 

+1.4%

 

 

148

 

+1.9%

 

 

+14.5%

 

Adjusted earnings per share (€)

 

 

€1.66

 

€1.65

 

+0.5%

 

 

€0.89

 

+0.5%

 

 

+14.5%

 

 

Change in assets under management from 31 December 2014 to 30 June 2016

 

 

 

Assets under

 

Net

 

Market

 

Scope

 

(€bn)

 

management

 

inflows

 

effect

 

effect

 

31/12/2014

 

877.5

 

 

 

 

 

 

 

Flow for Q1 2015

 

 

+24.0

 

47.5

 

5.3

 

31/03/2015

 

954.3

 

 

 

 

 

 

 

Flow for Q2 2015

 

 

+22.6

 

-22.9

 

-

 

30/06/2015

 

954.0

 

 

 

 

 

 

 

Flow for Q3 2015

 

 

+19.2

 

-21.2

 

-

 

30/09/2015

 

952.0

 

 

 

 

 

 

 

Flow for Q4 2015

 

 

+14.1

 

+19.0

 

-

 

31/12/2015

 

985.0

 

 

 

 

 

 

 

Flow for Q1 2016

 

 

+13.8

 

-11.6

 

-

 

31/03/2016

 

987.2

 

 

 

 

 

 

 

Flow for Q2 2016

 

 

+3.0

 

+13.6

 

-

 

30/06/2016

 

1,003.8

 

 

 

 

 

 

 

 

Details of assets under management and net inflows by client segment

 

 

 

 

 

AuM

 

AuM

 

% chg. vs

 

 

Net inflows

 

Net inflows

 

 

Net inflows

 

Net inflows

 

(€bn)

 

 

30/06/2016

 

30/06/2015

 

30/06/2015

 

 

H1 2016

 

H1 2015

 

 

Q2 2016

 

Q2 2015

 

French networks*

 

 

95

 

109

 

-12.6%

 

 

-4.0

 

+2.7

 

 

+0.6

 

+1.8

 

International networks & JVs

 

 

104

 

75

 

+38.0%

 

 

+10.4

 

+11.9

 

 

+6.7

 

+8.9

 

Third-party distributors

 

 

69

 

66

 

+3.5%

 

 

+3.7

 

+10.2

 

 

+1.0

 

+4.1

 

Retail

 

 

268

 

251

 

+6.8%

 

 

+10.1

 

+24.7

 

 

+8.3

 

+14.8

 

Institutionals & sovereigns

 

 

243

 

229

 

+6.3%

 

 

+4.6

 

+13.8

 

 

-3.9

 

+8.4

 

Corporates & employee savings

 

 

84

 

80

 

+5.5%

 

 

-1.3

 

+4.0

 

 

+2.8

 

-0.2

 

CA & SG insurers

 

 

409

 

395

 

+3.6%

 

 

+3.4

 

+4.1

 

 

-4.2

 

-0.3

 

Institutionals

 

 

736

 

703

 

+4.7%

 

 

+6.7

 

+21.9

 

 

-5.3

 

+7.8

 

                     

TOTAL

 

 

1,004

 

954

 

+5.2%

 

 

+16.8

 

+46.6

 

 

+3.0

 

+22.6

 

O/W JV

 

 

82

 

53

 

+55.5%

 

 

+10.2

 

+10.7

 

 

+6.7

 

+8.3

 

* French networks: long-term asset net inflows of €0.0bn in H1 2016 (o/w €0.2bn in Q2 2016)

 

 

 

Details of assets under management and net inflows by asset class

 

 

 

 

 

 

 

 

AuM

 

AuM

 

% chg. vs.

 

 

Net inflows

 

Net inflows

 

 

Net inflows

 

Net inflows

 

(€bn)

 

 

30/06/2016

 

30/06/2015

 

30/06/2015

 

 

H1 2016

 

H1 2015

 

 

Q2 2016

 

Q2 2015

 

Equities

 

 

125

 

122

 

+2.4%

 

 

+5.7

 

+0.8

 

 

+3.4

 

+2.0

 

Multi-asset

 

 

118

 

117

 

+0.7%

 

 

+2.7

 

+9.8

 

 

+1.3

 

+3.5

 

Bonds

 

 

526

 

486

 

+8.2%

 

 

+6.3

 

+15.4

 

 

+4.6

 

+9.5

 

Real assets, alternative & structured

 

 

66

 

65

 

+2.5%

 

 

+2.5

 

+1.6

 

 

+1.1

 

+0.5

 

MEDIUM TO LONG TERM ASSETS

 

 

835

 

790

 

+5.8%

 

 

+17.2

 

+27.6

 

 

+10.3

 

+15.4

 

Treasury

 

 

168

 

164

 

+2.7%

 

 

-0.4

 

+19.0

 

 

-7.3

 

+7.2

 

                     

TOTAL

 

 

1,004

 

954

 

+5.2%

 

 

+16.8

 

+46.6

 

 

+3.0

 

+22.6

 

* Reclassification of one fund (€14bn in assets under management) from Treasury to Fixed Income in the first half of 2016

 

Details of assets under management and net inflows by geographical area

 

 

 

 

 

 

AuM

 

AuM

 

% chg. vs.

 

 

Net inflows

 

Net inflows

 

 

Net inflows

 

Net inflows

 

(€bn)

 

 

30/06/2016

 

30/06/2015

 

30/06/2015

 

 

H1 2016

 

H1 2015

 

 

Q2 2016

 

Q2 2015

 

France

 

 

743

 

741

 

+0.3%

 

 

+1.6

 

+19.8

 

 

-3.0

 

+7.3

 

Europe outside France

 

 

105

 

90

 

+16.4%

 

 

+4.0

 

+12.3

 

 

-0.0

 

+4.3

 

Asia

 

 

130

 

96

 

+35.8%

 

 

+12.0

 

+13.6

 

 

+7.0

 

+10.3

 

Rest of the world

 

 

26

 

27

 

-4.8%

 

 

-0.7

 

+0.9

 

 

-1.0

 

+0.7

 

                     

TOTAL

 

 

1,004

 

954

 

+5.2%

 

 

+16.8

 

+46.6

 

 

+3.0

 

+22.6

 

TOTAL OUTSIDE FRANCE

 

 

261

 

213

 

+22.4%

 

 

+15.2

 

+26.8

 

 

+5.9

 

+15.3

 

 

Technical appendix: calculation of net tangible equity and free capital[1]

 

Amundi’s capital significantly exceeds requirements under regulations governing credit institutions as presented in Section 5.5.2 “Regulatory Capital” of this Registration Document. In addition, Amundi has adopted a prudent policy regarding the financing of its equity investments and seed money, which it funds

 

primarily from its own capital.

 

Amundi measures the Group’s surplus capital using an indicator that it calls “free capital.” Free capital equals net tangible equity less (i) the adjusted regulatory capital requirement, (ii) the carrying amount of equity investments and (iii) the run-rate amount of non-money-market seed money:

 

-          net tangible equity: equity Group share after deduction of goodwill and other intangible assets;

 

-          adjusted regulatory capital requirement: this indicator is based on a CET1 (Common Equity Tier 1) ratio of 10% applied to risk-weighted assets (RWAs) after deduction of RWAs relating to non-money-market seed money, equity investments and voluntary investments (corresponding to the investment of the Group’s equity), and after taking into account deductions from regulatory capital under applicable regulations. RWAs relating to non-money-market seed money and equity investments are excluded from the adjusted regulatory capital requirement calculation because the net tangible equity used to finance them is directly deducted in the free capital calculation. For information purposes, the unadjusted regulatory capital requirement, based on a CET1 ratio of 10%, was €798 million at 30 June 2016 compared to €846 million at 31 December 2015;

 

-          equity investments: these are non-consolidated investments in financial institutions (mainly Resona) and in entities accounted for under the equity method;

 

-          run-rate amount of non-money market seed money: Management believes that, given the rate at which Amundi launches new funds in normal market conditions, Amundi should maintain a level of seed-money investment (excluding money-market funds) between €600 million and €800 million. the middle of the range, that is, €700 million, was assumed in calculating the following table. At 30 June 2016, non-money-market seed-money was €395 million.

 

The table below sets out the calculation of Amundi’s free capital at 30 June 2016, 31 December 2015 and 30 June 2015:

 

 

 

(€m)

 

 

30/06/2016

 

31/12/2015

 

30/06/2015

 

Equity, Group share

 

 

6,288

 

6,407

 

6,170

 

- intangible assets

 

 

(109)

 

(111)

 

(117)

 

- goodwill

 

 

(3,003)

 

(2,999)

 

(2,997)

 

Net tangible equity (Group share)

 

 

3,176

 

3,297

 

3,055

 

- adjusted regulatory capital requirement

 

 

(624)

 

(676)

 

(713)

 

- equity investments

 

 

(335)

 

(378)

 

(381)

 

- non-money market Seed money (normatif)

 

 

(700)

 

(700)

 

(700)

 

Free capital

 

 

1,517

 

1,544

 

1,261

 

 

 

Amundi’s free capital may be used to finance acquisitions, and also is available to support of the Group’s distribution policy.

 

 

 

 

 


[1] See also Section 4.6 of the Registration Document filed with the AMF on 20 April 2016 under Number R. 16-025.

 

 

 

 

 

 

 

Contact
About Amundi

Amundi is Europe’s largest asset manager by assets under management and ranks in the top 10[1] globally. It manages more than 1.470 trillion[2] euros of assets across six main investment hubs[3]. Amundi offers its clients in Europe, Asia-Pacific, the Middle East and the Americas a wealth of market expertise and a full range of capabilities across the active, passive and real assets investment universes. Clients also have access to a complete set of services and tools. Headquartered in Paris, and listed since November 2015, Amundi is the 1st asset manager in Europe by market capitalization[4].

 

Thanks to its unique research capabilities and the skills of close to 4,500 team members and market experts based in 37 countries, Amundi provides retail, institutional and corporate clients with innovative investment strategies and solutions tailored to their needs, targeted outcomes and risk profiles.

 

Amundi. Confidence must be earned.

 

Visit www.amundi.com for more information or to find an Amundi office near you.

 

Footnotes

 

  1. ^ [1] Source IPE “Top 400 asset managers” published in June 2018 and based on AUM as of end December 2017
  2. ^ [2] Amundi figures as of September 30, 2018
  3. ^ [3] Investment hubs: Boston, Dublin, London, Milan, Paris and Tokyo
  4. ^ [4] Based on market capitalization as of September 30, 2018

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