Amundi: First quarter 2023 results

A high net income^1,2 at €300 million

Paris, 28 April 2023

The Amundi Board of Directors meeting of 27 April 2023, chaired by Yves Perrier, approved the financial statements for Q1 2023.

CEO Valérie Baudson stated:

“Amundi delivered a good performance in the first quarter of 2023, in an uncertain market environment.

Our adjusted net income remained stable at €300 million compared to the fourth quarter of 2022, thanks to the resilience of our revenues and good cost control. The productivity gains and continued synergies generated by the integration of Lyxor have enabled us to absorb the effects of inflation while continuing to invest.

I would also like to underline the healthy inflows of our Retail activities over the quarter, whether for our partner networks in France and abroad or for our third-party distributors”.

* * *

A market context remaining uncertain

Over one year, the equity and bond markets⁵ were down -5% and -12% respectively. Despite a rebound during the first quarter (+9% on average for the quarter compared to Q4 2022), the equity markets remain volatile.

1. Results

A healthy financial performance for the first quarter

Adjusted data⁶

Adjusted net income⁶ reached €300 million in Q1 2023, essentially stable compared to Q4 2022, and down -7.5% from Q1 2022, in line with the unfavourable evolution of the market.

This strong performance is explained by the diversification of Amundi's activities and its operational efficiency, and is reflected in revenue resilience and good cost control.

Net revenue⁵ amounted to €794 million, down -4.9% from Q1 2022 but stable (+0.4%) relative to Q4 2022.

• Net management fees were sustained at a high level: €736 million, down -3.9% year-on-year, to be compared to a -5.9% average drop in assets under management excluding JVs over the same period, reflecting the higher margins thanks to the mix effect; net management fees increased by +2.3% compared to Q4 2022;

• Revenue growth for Amundi Technology was robust (+35% compared to Q1 2022), at €13 million, confirming its development;

• Performance fees (€28 million) were down significantly compared to the high comparison base in Q1 and Q4 2022 (respectively €71 million and €63 million);

• Finally, net financial and other income was positive (€16 million), thanks to both the return to positive yields on the net cash and positive mark-to-market of the investment portfolio in the quarter.

Operating costs⁵ were well under control at €425 million, an increase of only +0.6% compared to Q1 2022, in a context of high inflation.

Inflation, development investments, and the unfavourable exchange rate effect were largely absorbed by productivity gains and the pursuit of synergies generated by the integration of Lyxor.

In this context, the very moderate increase in costs over one year, well below the inflation rates seen in most of the countries where Amundi operates, reflects the agility Amundi’s to adjust its cost base, delivering the best cost/income ratio in the sector again this quarter: 53.6%⁶.

Gross operating income⁵ (GOI) amounted to €369 million, down -10.5% from Q1 2022 and -2.5% from Q4 2022.

The share of net income of equity-accounted companies, reflecting Amundi's share in the net income of minority JVs in India (SBI MF), China (ABC-CA), South Korea (NH-Amundi), and Morocco (Wafa Gestion), was up +11.2% relative to Q1 2022, at €22 million.

Accounting data

Net accounting income (group share) was €285 million in the first quarter, including the amortisation of the intangible assets (customer contracts related to the acquisition of Lyxor and the distribution contracts related to previous transactions), ie -€15m after tax in Q1 2023.

Accounting earnings per share was €1.40.

1. Activity

Healthy Retail inflows and favourable business mix

The assets managed by Amundi as of 31 March 2023 were down -4.3% over one year, but up +1.6% compared to end-2022, at €1,934 billion.

Retail recorded satisfactory inflows: +€4.3 billion excluding the Chinese subsidiary Amundi BOC WM. As in 2022, inflows mainly came from MLT assets, +€4.2 billion, driven by all segments:

• The French networks posted net inflows of +€2.7 billion, of which +€0.8 billion in MLT assets and +€1.9 billion in treasury products. MLT inflows were driven, as in H2 2022, by structured products, at +€1.5 billion;

• Inflows from the International networks (excluding Amundi BOC WM in China) reached +€1.2 billion, entirely in MLT assets; as for the French networks, both structured products (+€0.5 billion) and bond strategies continued their success achieved in the latter part of 2022; the performance was well-diversified by country and network, with healthy inflows particularly in Italy with UniCredit, in the Czech Republic with the Société Générale and UniCredit subsidiaries, and in Spain with Sabadell.

• Third Party Distribution experienced a reversal of the trend observed in Q4 2022: in the first quarter, total inflows of +€0.4 billion break down into a strong performance of +€2.2 billion in MLT assets, notably in ETFs, and conversely outflows in treasury product; by geography, the good performance of Asia should be noted for the quarter.

The strong performance for Retail is more than offset, however, by MLT asset outflows in very low margin segments or products, as well as outflows in China, where the asset management market still shows net redemptions in MLT assets; this latter factor also explains the net outflows at our JVs:

• Outflows for the Institutional segment (-€11.7 billion, of which -€13.7 billion in MLT assets) were largely limited to a few very-low-margin insurance and institutional mandates, in particular in the CA & SG Insurers segment, which experienced redemptions in the traditional life (“euro”) contracts, and a large sovereign client in index management;

• In China, Amundi BOC WM recorded outflows of -€2.8 billion, still related to maturing term funds, and the ABC-CA JV was impacted by redemptions from large institutions (outflows of -€5.0 billion).

Excluding the Chinese JV, inflows in the other JVs were very satisfactory, particularly in India (+€2.8 billion) and Korea (+€1.6 billion), both continuing to benefit from strong activity, particularly in MLT assets.

Total net inflows for the quarter were negative at -€11.1 billion.

1. Continuing development initiatives

Several important milestones of the Ambitions 2025 development plan were reached during the first quarter:

• Amundi Technology saw its earnings increase by +35% compared to Q1 2022 and added 4 new customers, including 3 in Asia. Amundi Technology and HSBC Securities Services in Asia have signed an agreement for the use of the ALTO platform. This is a major new client for the ALTO offering to asset servicers, which already counts CACEIS, Société Générale Securities Services and Bank of NY Mellon among its clients. BNY Mellon has successfully deployed ALTO across 7 of its entities in EMEA;

• Amundi's fund distribution platform Fund Channel is announcing today the closing of its transaction with CACEIS. The latter is acquiring 33.33% of the capital of Fund Channel, to develop fund execution and offer integrated services to distributors.

• Assets under management in Responsible Investment reached €822 billion, compared to €800 billion at end-2022, thanks to a positive market effect.        
  As part of its Net Zero commitment, on 17 April Amundi announced the launch of a full range of funds across a wide range of asset classes aligned to a Net Zero trajectory⁷, targeting a reduction by 30% in carbon intensity in 2025 compared to 2019, and by 60% in 2030.

***

Amundi's Annual General Meeting will take place on 12 May at 10am CET. As announced on 8 February upon the publication of the results for 2022, the Board of Directors will propose to the General Meeting a cash dividend of €4.10 per share, stable relative to the dividend paid for 2021. This dividend represents a payout ratio of approximately 75% of net accounting income (Group share) in 2022, excluding integration costs, and a yield of 7% based on the closing share price on 25 April 2023.

Financial disclosure schedule

• AGM for the 2022 financial year: Friday 12 May 2023

• Publication of H1 2023 results: 28 July 2023

• Publication of 9M 2023 results: 27 October 2023
  
  

Dividend schedule (€4.10 per share proposed to the General Meeting of 12 May 2023)

• Ex-dividend date: Monday 22 May 2023

• Payment: as from Wednesday 24 May 2023

***

APPENDICES

Quarterly Statement of income

Change in assets under management from end-2019 to end-March 2023

Total one year between 31 March 2022 and 31 March 2023: - 4.3%

• Net inflows        €7.3 bn

• Market & forex effect        -€79.3 bn

Breakdown of assets under management & net inflows by client segment¹⁰

(*) including funds of funds

Breakdown of assets under management & net inflows by asset class¹⁰

Breakdown of assets under management & net inflows by geographic area¹⁰

Breakdown of assets under management & net inflows by management type and asset class¹¹

Methodology & Alternative Performance Measures (APM)

Accounting and adjusted data

• Accounting data: in 2022 and Q1 2023, accounting data include the amortisation of intangible assets. In 2022, they also include Lyxor integration costs.

• Adjusted data: the following adjustments were made to present the most economically accurate income statement: restatement of the amortisation of distribution contracts with Bawag, UniCredit, and Banco Sabadell, and the intangible assets representing the Lyxor’s client contracts recorded as deduction from net income; costs of the Lyxor consolidation in 2022

In the accounting data, amortisation of distribution contracts:

• Q1 2022: -€20 m before tax and -€15 m after tax

• Q4 2022: -€20 m before tax and -€15 m after tax

• Q1 2023: -€20 m before tax and -€15 m after tax
  
  

Acquisition de Lyxor

• In accordance with IFRS 3, recognition on Amundi’s balance sheet as of 31/12/2021 of:

  • goodwill in the amount of €652 m;

  • an intangible asset (representing client contracts), of -€40 m before tax (-€30 m after tax), which will be amortised on a straight-line basis over 3 years;

• In the Group income statement, the above-mentioned intangible asset will be amortised on a straight-line basis over 3 years starting in 2022; the full-year impact of this amortisation will be -€10 m net of tax (i.e. -€13 m before tax). This amortisation will be recognised as a deduction from net income and will be added to the existing amortisation of distribution agreements.
  For Q1 2022, Q4 2022, and Q1 2023 the amortisation expense for this intangible asset was respectively -€2 m (-€3 m before tax).

• €10 m in integration costs before tax were recorded for Q1 2022 and €2 m for Q4 2022. Integration costs were fully recorded in 2021 and 2022, for a total of €77 m before tax (including €16 m in Q4 2021 and €57 m after tax including €12 m in Q4 2021).
  

Alternative Performance Measures¹²

To present the most economically accurate income statement, Amundi publishes adjusted data which excludes amortisation of intangible assets and the impact of Affrancamento (see above).

These adjusted and normalised data are reconciled with accounting data as follows: