BlackRock CEO warns of inflation for employees with 8% salary increase

BlackRock CEO Larry Fink warned that the United States should prepare for a period of higher inflation because the world’s largest asset management company provides 8% for most of its employees Salary increase.

The forecast was released after data showed that the US consumer price index rose at the fastest rate in more than a decade in June, which has exacerbated concerns about the possible overheating of the economy.

“We are accustomed to an inflation rate of less than 2%,” Fink said. Due to rising energy costs, disruption of the global supply chain, and the Fed’s focus on employment growth, he did rule out the possibility that the inflation rate would remain above 3%.

“In conversations with business leaders, they have seen commodity prices rise, and some people are raising prices and wages,” Fink told the Financial Times.

BlackRock announced that it will raise the basic salary of all its employees to the level of directors, and its second-quarter earnings easily exceeded analyst expectations.

Driven by the stock market rebound, BlackRock’s assets under management soared to a record $9.5 trillion. Thanks to strong organic growth and higher performance fees, revenue increased by 32% to US$4.8 billion, exceeding the expected US$4.6 billion.

Net income climbed 14% to 1.38 billion U.S. dollars, while adjusted earnings per share was 10.03 U.S. dollars, exceeding Wall Street’s expectations of 9.48 U.S. dollars.

Fink stated that the decision to increase the base salary of nearly 95% of its 16,500 employees reflects a desire to share in the group’s growth gains, rather than a reaction to the broader inflationary pressures employees may face. The increase will take effect in September.

BlackRock’s operating profit margin climbed from 38.5% a year ago to 40.1% this quarter, highlighting the prosperity that BlackRock is enjoying.

Although the assets under management set a new record, the net inflow of US$81 billion in the three months to the end of June ended four consecutive quarters of more than US$100 billion.

The long-term investment flow excluding cash management was US$60 billion, which was lower than the US$94 billion expected by analysts. During the quarter, a U.S. pension fund client withdrew $58 billion from stock index authorization.

Edward Jones analyst Kyle Sanders said: “Although the loss of pension funds puts pressure on the overall flow data, the underlying trend is solid.”

Wall Street remains optimistic about BlackRock’s long-term growth prospects because it is ahead of its competitors in ETFs and technical services through its Aladdin platform. Like its competitors, the group is also targeting the prosperity of environmental, social and governance investments.

BlackRock’s assets iShares franchise It surpassed US$3 trillion for the first time in May. Net inflows this quarter reached 75 billion U.S. dollars, up from 51 billion U.S. dollars a year ago. The asset management company told investors in June that it expects the current US$9 trillion global ETF market to surge to US$15 trillion by 2025.

As Beijing opens China to foreign fund managers, China remains another important area for the group’s long-term growth.

BlackRock is approved as a Wealth manager, Was established as a joint venture with China Construction Bank and Singapore National Fund Temasek this quarter. Last month, it became the first foreign asset management company approved to conduct a wholly-owned mutual fund business in China.

Credit Suisse analyst Craig Siegenthaler said: “BlackRock has invested in the region and spent time building relationships to help them become a major asset management company in China.”

BlackRock’s stock price, which closed at a record high this week, fell 4% in New York trading. The stock has risen 21% this year, surpassing the 16.7% gain of the Standard & Poor’s 500 Index.

The bar chart of the S&P Asset Management and Custodian Bank Index shows that BlackRock's stock has recently outperformed most of its competitors

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