Take a look at asset management giant BlackRock BLK + 1.34%
$ 563 $ 7.47 (+ 1.34%)
As of 01/17/2018, EST 02:48 AM
Booming Markets Help BlackRock Cross $ 6 Trillion Mark, Strong Economy Bolsters JPMorgan Profits
7 Experts Share 10 Favorites Among REITs
As a big beneficiary of the booming global market, not JPMorgan and its investment bank rivals on Wall Street. For the big U.S. banks that once spiked their earnings on Wall Street trading, their best results came from general banking and the real economy.
From 2017 onwards, it is the global stock market soaring by more than 20%. Central banks in developed economies such as the United States have raised interest rates and alleviated some emergency stimulus measures.
The new stock market record makes BlackRock top and bottom line in 2017 up 20%, the world’s largest fund management company assets of more than 6 trillion US dollars. Quarterly revenue for the BlackRock index and ETF products hit a record 103 billion U.S. dollars, making it the year to come. The result is an eye-opener.
In the fourth quarter, BlackRock reached 3.5 billion U.S. dollars, an increase of 20% over the same period of last year, and its net profit eclipsed the deficit by one billion U.S. dollars. Even though investors flocked to low-fee products, the operating profit margin of the company continued to rise, which showed the economies of scale. Operating profit margin of more than 44% for the whole year, net assets of about 36.7 billion US dollars into BlackRock products, profit margins in the fourth quarter fell 20 basis points, setting a record quarter-point level of 45%. Overall, the results have reached or exceeded the expectations of most analysts. What should investors expect from 2018?
The same is true for Larry Fink, a billionaire co-founder and CEO at BlackRock. He believes global investors are still in low-risk stocks, with everyone from retirement savers to large pension funds putting money on the market and increasingly choosing low-cost ways to build their exposure. Fink said in a earnings report: “Investors are increasingly looking for a comprehensive solution, and BlackRock in the provision of large-scale investment strategy, industry-leading risk management and portfolio construction technology and thought leadership Differentiation capabilities are driving more customer partnerships.
The next BlackRock is China. In January, the company gained local registration, manufacturing and distribution of onshore investment products. Back in the United States, the Trump administration’s change means that its profit margins have risen into the pockets of its shareholders. With the tax reform coming, BlackRock’s dividend rose 15% quarter on quarter to $ 2.88. The company repurchased 2.8 billion shares in 2017, and its share price has risen more than 40% in the past year. (Read our December BlackRock Technology story and why it’s the size that will create Amazon on Wall Street.)
In 2017, no other large financial stocks directly benefit from more Blackstone rising from the market. This is the counterpart from the ETF State Street STT -1.18% WisdomTree also keep up with the S & P 500.
When it comes to Wall Street other “billionaires” such as JPMorgan Chase JPM -0.36%, Bank of America BAC + 0.16% and Citigroup C + 0.35%, earnings are not driven by the market. On the contrary, the real economy is driving profits.
U.S. gross domestic product is growing 3% and U.S. consumers and businesses are increasing their lending and financial activities. This sustained growth (emerging from the bottom in both the European and emerging markets) is allowing the Federal Reserve to normalize its policies by raising short-term interest rates. This is the factor driving the bottom line of the bank. Take JP Morgan as an example.
On Friday morning, the company’s quarterly revenue rose 5% to $ 25.5 billion, excluding the one-time tax revenue of $ 6.7 billion due to legal changes, up more than 10%. It is noteworthy that the source of growth from where.
The company’s consumer bank top and bottom line growth of more than 10%, consumer and commercial banking business increased by 15%. In total, the department’s revenue was 12.1 billion U.S. dollars and its profit was 2.6 billion U.S. dollars.
This is often a driver of the company’s overall profitability compared to JPMorgan’s market-oriented investment banks. Fourth quarter net income fell 12% to $ 7.5 billion and profits fell 32% to $ 2.3 billion. Trading revenue fell 22% due to a 34% decline in fixed income trading. This was a particularly strong quarter a year ago, but the same was true of the market: Low and volatile credit spreads contained profits. Tax changes exacerbate the decline in profits, but this may be one-off. It is worth noting that the trading unit lost 143 million U.S. dollars due to a margin loan involving Steinhoff, a troubled South African retailer. Exchange rates and other Citigroup-related Stanford-related banks may record the data first, potentially exceeding $ 1 billion. 2016 High share prices, while the share price of shareholder Christopher Wiese fell,
Other areas of JPMorgan are commercial banks and asset and wealth management, with top lines up 20% and 9% respectively. Revenue from commercial banking was supported by strong loan growth, with profit for the quarter up 32%. In asset and wealth management, the influx of funds and the increase in client accounts mean AuM has risen 15% to $ 2 trillion.
JPMorgan’s major event is to increase the demand for banks from the average consumer, small and large businesses, and wealthy savers. Together with rising interest rates, JP Morgan’s share prices are soaring. Net interest income rose 11% to $ 13.4 billion. As the largest bank in the United States, the positive changes in the real economy and the normalization of the Federal Reserve have a significant impact. Net interest income rose 9% in 2017 to $ 50.1 billion, more than double JPM’s 4% revenue growth.
There are two disparate stories between BlackRock and JP Morgan. Investors face emerging markets directly with companies such as BlackRock, Apollo, Blackstone and KKR, which are increasingly investing in money. The traditional Wall Street banking giants are finding market revenue not a passion, but as the economy continues to recover, their usual earnings growth comes from basic banking like loans.
Look at MS -0.94% earnings from Goldman Sachs and Morgan Stanley to verify this trend. JP Morgan Chase & Co. may see their trading business decline. However, growth may come from emerging sectors such as Goldman’s Marcus Consumer Loans Services and Morgan Stanley’s wealth loan business.
Early Friday, BlackRock hit a new high of 551 U.S. dollars. Since its listing in 1999, the stock has seen a compound annual increase of nearly 25%. Shares of JPMorgan, which hit a record high of 112 U.S. dollars, added to Jamie Dimon’s bank account, bought millions of dollars in a market collapse in early 2016, He seldom sold shares during his tenure.