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T. Rowe posts 24% increase in 4Q profit

Baltimore-based asset manager T. Rowe Price Group Inc., which has posted a profit every quarter since it went public in 1986, posted a fourth-quarter jump in profit Tuesday of 24 percent.

T. Rowe reported net income of $284.8 million, or $1.06 a share, for the three months ended Dec. 31, compared with $229.9 million, or 88 cents, a year earlier.

T. Rowe Price

In this Jan. 29, 2009 file photo, pedestrians pass the T. Rowe Price Investment Center in downtown Baltimore. (The Daily Record/Maximilian Franz)

T. Rowe benefited from a 30 percent rally by the Standard & Poor’s 500 Index of U.S. stocks in 2013, which helped to boost assets under management to a record $692.4 billion. Clients added about $100 million in net new money as retail customers made deposits, primarily through retirement-oriented products, while institutional clients withdrew money.

Institutional withdrawals were largely driven by one large, non-U.S. client that has been pulling money out for multiple quarters, President and CEO James A.C. Kennedy said in an interview with Bloomberg. Kennedy said the client’s withdrawals were “almost done.”

The company mentioned the opening of two new buildings in the latest quarter at its Owings Mills campus.

In his comments accompanying the earnings release, Kennedy noted another bump in an otherwise good performance: staff turnover.

“Our record level of assets under management and operating results are primarily the result of the quality work performed over the past year and past decade by T. Rowe Price associates on behalf of our clients,” Kennedy said.

“A large majority of our portfolios have outperformed over most time periods, our clients are generally very pleased with our service, and our financial position has never been stronger.

“In spite of these overall favorable facts, we did experience uncharacteristic net outflows from clients this year, and we had an increase in the normally very low turnover of our investment professionals. We have taken active steps on both of these fronts, to broaden and deepen our distribution capabilities, especially outside of the U.S., and to reinvigorate our efforts to retain our talent across the firm.

“Our business is very competitive but our positioning is strong and we are confident in our abilities to continue to add significant value for our clients over time.”

Shares in T. Rowe closed Tuesday at $80.70, up $4.19, or more than 5 percent, from Monday’s close.