GuruFocus -
- Assets Under Management (AUM): Record high of EUR963 billion, a 3% increase quarter on quarter.
- Net Inflows: Total net flows of EUR18.3 billion, with long-term net flows of EUR16.7 billion.
- Management Fees: EUR626 million, a 2% increase quarter on quarter.
- Adjusted Revenues: EUR685 million, a 1% increase quarter on quarter.
- Adjusted Profit Before Tax: EUR262 million, a 5% increase quarter on quarter.
- Adjusted Cost Income Ratio: Improved to 61.7%, below the full-year guidance of 62% to 64%.
- Adjusted Costs: EUR423 million, a 1% decrease quarter on quarter.
- Passive Business AUM: EUR307 billion, a 6% increase quarter on quarter.
- Active Asset Classes AUM: EUR447 billion, benefiting from market tailwinds and net inflows.
- Alternatives AUM: Remained flat at EUR106 billion.
- Performance and Transaction Fees: EUR12 million, with expectations to reach 3% to 6% of adjusted revenues.
- ESG Net Inflows: EUR3.1 billion, mainly driven by the EMEA region.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DWS Group GmbH & Co KGaA (XTER:DWS) reported record levels for assets under management, reaching EUR963 billion, driven by strong net inflows and market appreciation.
- The company achieved a record high for long-term net flows, particularly in passive and Xtrackers businesses, and active fixed income.
- DWS Group GmbH & Co KGaA (XTER:DWS) improved its adjusted cost income ratio to 61.7%, below the guidance for the full year 2024.
- Management fees increased by 2% quarter on quarter, reflecting a continued increase in average total assets under management.
- The company is confident in achieving its 2025 financial targets, including an adjusted cost income ratio of below 59% and earnings per share of EUR4.50.
- DWS Group GmbH & Co KGaA (XTER:DWS) experienced outflows in alternatives during Q3, although they expect a return to net inflows in this asset class by the end of the year.
- There was a slight decline in the management fee margin, attributed to technical effects, impacting the overall revenue composition.
- The company faced challenges in active equity, with continued risk aversion affecting inflows despite some positive examples.
- Performance and transaction fees remained low, with a slight negative impact on overall revenue growth.
- The company is still addressing ongoing cost challenges, including external vendor costs and transformation costs, despite significant progress in cost management.
A: The increase is mainly due to hires in offshore locations like India and the Philippines, and a graduate intake in September. These did not materially impact compensation and benefit costs. - Markus Kobler, CFO
Q: There was a decline in fund performance, especially in retail. How do you plan to address this?
A: The decline was mainly due to two large funds underperforming in Q3. We are confident in our fund managers' ability to turn this around, as these funds have historically performed well. - Stefan Hoops, CEO
Q: With inflation stabilizing, is there an opportunity to lower costs further?
A: Our focus is on strategic reinvestment into people and growth rather than just cutting costs. We manage inflation proactively to fund necessary investments. - Markus Kobler, CFO
Q: How flexible is the cost base in a market downturn, and what cost-income ratio can you manage in such a scenario?
A: We manage costs through discipline-based categories, which are 75% of our cost base. We can adjust costs like business travel and marketing quickly, but building leases take longer. - Markus Kobler, CFO
Q: What is the outlook for alternatives in 2025, and what is the redemption pipeline for real estate funds?
A: We expect positive inflows in alternatives, driven by infrastructure investments. Redemptions in European real estate are decreasing, and we have won a significant mandate, which will help offset outflows. - Stefan Hoops, CEO
Q: How are you addressing the post-retirement market opportunity?
A: We are focusing on solutions like CPPI products and collaborating with distribution partners to address the post-retirement market, especially in Germany. - Stefan Hoops, CEO
Q: How do you view the competitive landscape after the BNP IM and (inaudible) merger?
A: We focus on organic growth and strategic partnerships, particularly in Asia, rather than large-scale M&A. We believe in leveraging our strengths in alternatives and infrastructure. - Stefan Hoops, CEO
Q: Can you explain the internalization strategy for cost management?
A: We are internalizing roles previously held by external contractors, particularly in locations like Mumbai and Manila, to reduce costs and enhance our internal human capital. - Markus Kobler, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.