On Wednesday 11 February, Amundi publishes its annual and Q4 results for 2020.
With a positive market effect (+€52bn), and €14.4bn of inflow1 in Q4, Amundi's assets1 reached €1.729tn as of 31 December 2020, up 4% for the quarter.
In 2020, a year marked by a good number of strategic initiatives, Amundi’s profitable growth continued on, maintaining solid results with +€45bn in good, annual net inflows.
https://twitter.com/Amundi_ENG/status/1359433023591239682
Q4 2020
Sharp improvement in results
In the fourth quarter of 2020, Amundi posted a net income of €288m2, an increase of +5.1% on the last quarter of 2019 and of +22.5% vs. Q3 2020. This is the highest quarterly income since Amundi was created. This sound quarterly income figure was the result of three factors:
- Growth in net revenues of +1.6%2 vs Q4 2019, with a good hold on net management fees (+0.9%) and a high level of performance fees (€94m), reflecting the quality of the investment expertise.
- Excellent control of operating expenses.
- An increase in the contribution of JVs, which totalled €20m (compared to €14m in Q4 2019).
Strong business activity
In a recovering market environment, net inflows for the fourth quarter of 2020 stood at +€29.8bn excluding JVs, driven by all client segments and asset classes. MLT asset flows (+€12.3bn) improved significantly:
- In Retail (excl. JVs), the recovery in net MLT asset flows (+€6.4bn compared to +€2.4bn in Q3 2020) was confirmed.
- In the Institutionals segment, net flows (+€21.3bn) benefited from a rebound in MLT asset business (+€5.8bn, compared to +€2.2bn in Q3 2020), driven by Institutional & Sovereign clients. In Treasury products, inflows remained robust (+€15.5bn).
- The Asian JVs continued their momentum in long-term funds in India and China (+€6bn), but were affected by outflows in low-margin products.
- Overall, JVs recorded outflows of -€15.4bn in the fourth quarter of 2020.
2020 annual results
Profitability stayed high
Adjusted net income2 stood at €962m, down -4.7% on 2019, but stable excluding the impact of the market downturn3 in 2020.
This net income is close to the objective in the 2018-2020 plan4, which envisaged net income to virtually double compared to the IPO year.
This high level of result factors in several opposing effects:
- Net revenues2, down by -4.1%, suffered from the effects of the crisis. Management fees were impacted by the market downturn (-4% decline in the average level of the EuroStoxx index vs. 2019) and an unfavourable mix effect. The markets’ decline also had a significant impact on financial income, which fell from €44m to ‑€38m. Conversely, performance fees increased (€200m or +17.1%), reflecting the quality of our investment expertise.
- The substantial drop in operating expenses (-2.6% vs. 2019), in spite of scope effects (Sabadell AM consolidated in the second half, and the new subsidiary with BOC in China created in Q4), confirms Amundi’s capacity to adjust its costs and finance its investments through a continuous push for productivity. The result is a cost/income ratio of 51.7%, still far below the announced maximum of 53%.
- The contribution from equity-accounted entities (mostly Asian joint ventures) rose significantly to €66m, compared to €46m in 2019, thanks to better results in China (€16m) and India (€39m).
Robust business momentum in spite of the crisis
In a volatile market environment, Amundi posted resilient business activity, at +€45.1bn, with limited outflows in the first half (-€4bn) and a particularly vigorous second half (+€49bn). This solid business activity was driven by all client segments:
- Net flows from Retail clients (excl. JVs) totalled +€11.7bn
- Inflows from Institutional clients stood at +€28.1bn, driven by a high level of inflows on treasury products (+€27.3bn), specifically from Corporate clients.
- The JVs recorded brisk inflows of +€16.7bn excluding the impact of outflows on low-margin “channel business” products in China (-€11.3bn), in connection with regulatory changes.
This strong business activity primarily benefited from two positive factors:
- Innovative expertise meeting market expectations: passive, ETF and Smart Beta management inflows were +€21.6bn (vs. +€16.2bn in 2019), bringing assets under management to €158bn. Furthermore, the trend for real and alternative assets continued, with +€4.4bn in flows (particularly in real estate), bringing AuM to €56.6bn. Lastly, active equity fund management generated positive inflows of +€3.4bn thanks to the success of our thematic funds.
- Solid, regular investment performance: almost 74% of assets in open-ended funds are in the top two quartiles over five years5. Overall, 177 Amundi funds have a 4- or 5-star5 Morningstar rating.
Major strategic initiatives in 2020
In 2020, several strategic initiatives were launched that will bolster the group’s growth in years to come:
- Partnership with Société Générale renewed for 5 years
Amundi is still the leading supplier of savings products and solutions for the Société Générale network, which consolidates Amundi's leadership in France.
- New 10-year partnership with Banco Sabadell, supplemented by the acquisition of Sabadell AM
With the acquisition of Sabadell Asset Management, which was finalised on 30 June 2020, Amundi became a top-5 player in Spain, doubling its AuM (€43bn).
- New subsidiary created with Bank of China Wealth Management
The operational start-up of this new subsidiary (in which Amundi holds a 55% stake) was effective in the fourth quarter, on schedule, after being authorised by the Chinese regulator. The first products were marketed in the BOC network.
- Creation of Amundi Technology, a new technology services business line
Since its creation in 2010, Amundi has benefited from its own high-grade IT platform, with which it has ensured the quality of management and services for its clients, successfully integrated acquisitions (specifically Pioneer), and had a major competitive advantage in terms of cost.
Since 2016, these cutting-edge technology services (specifically ALTO Investments6) have been marketed to third-party clients (24 user clients in France, Europe, and Asia).
Leveraging on this experience, Amundi is looking to expand its growth by creating a new business line, backed by dedicated IT and sales teams of more than 700 people at two hubs (Paris and Dublin).
Commercialisation of these technology solutions covering all asset management and savings business lines is expected to generate €150m in revenues between now and 2025 (compared with €25m in 2020).
Evolution of gouvernance
During its meeting on 9 February 2021, the Board of Directors has approved the following changes which will be effective after the AGM to take place on 10 May 2021 :
- Valérie Baudson will succeed Yves Perrier as Amundi’s CEO
- Yves Perrier will become Chairman of The Board of Directors
This governance evolution ensures continuity of Amundi development, in line with the strategy implemented successfully since its creation
https://twitter.com/Amundi_ENG/status/1359394930368643073
Yves Perrier, Amundi’s CEO, comments:
"In 2020, Amundi once again demonstrated the strength of its business model through its economic and financial performance.
2020 also saw the launch of several strategic initiatives that will support the future growth of the company: the renewal of the partnership with Societe Generale, the acquisition of Sabadell AM combined with a long-term distribution agreement with Banco Sabadell in Spain, and finally the launch of the new subsidiary in China with BOC. This growth trend in our core business is enhanced by the creation of Amundi Technology, a new business line dedicated to technology services.
Amundi has a clear strategy that has been unchanged since the company was founded: remaining an efficient organisation with talented and tight-knit management.
In these circumstances, I felt it was time to pass on the general management torch. I am pleased that Valérie Baudson has been chosen by the Board, because I have complete confidence in her ability to continue and amplify Amundi’s development trajectory. It is the choice of competence, continuity and shared values.
I would like to thank all Amundi employees for their commitment over the years. Amundi's success is their success.
Crédit Agricole Group has played a very important role in Amundi’s development. I would like to thank Philippe Brassac, Chief Executive Officer of Crédit Agricole SA, and Xavier Musca, who has been serving as Amundi’s Chairman of the Board since its IPO, for the unwavering support they have given to me and to the company."
Source: Amundi
