Amundi Earnings: Steady Fee Margins Despite Structural Pressure

Narrow-moat Amundi delivered a solid final quarter to finish 2023 ahead of our expectations, with management fee margins holding up better than we thought. This is an admirable outcome considering the ongoing client shift toward lower-margin passive products and the sizable inflows into treasury products as clients sought an alternative to the low interest rate on offer for bank deposits. Amundi managed to keep inflationary pressures at bay, keeping costs stable across all four quarters. Active management products continued to suffer from outflows, which Amundi managed to recoup in its passive products. Amundi announced the acquisition of Swiss private markets multimanager Alpha Associates. It believes the acquisition will add around 2% to Amundi’s earnings. It is far from a transformational acquisition but signals Amundi’s intent to hunt for opportunities in higher-margin market areas to deploy capital. While this is not the type of acquisition that will excite the market, we view it as an excellent example of sound capital allocation. It will help Amundi defend its margins, and the small scale limits downside risk.