On October 26, 2023, Federated Hermes Inc (FHI, Financial), a global leader in active, responsible investing, reported its Q3 2023 earnings. The company reported earnings per diluted share (EPS) of $0.86, compared to $0.78 for the same quarter last year. The net income for Q3 2023 was $75.0 million, up from $69.5 million in Q3 2022. The company's total managed assets reached a record $715.2 billion at the end of September 2023, up 15% from the same period last year.
Financial Performance
FHI's total average managed assets for Q3 2023 were $711.2 billion, up 13% from the $631.8 billion reported for Q3 2022. The increase in assets under management was primarily driven by investor demand for the company's prime money market offerings in the current interest rate environment. The company's board of directors declared a dividend of $0.28 per share and authorized an additional share repurchase program, allowing the buyback of up to an additional 5 million shares of FHI class B common stock in the open market with no expiration date.
Commentary
Record assets under management at the end of the third quarter were again driven by money market asset increases, particularly investor demand for our prime money market offerings in the current interest rate environment, where general market volatility made the improved yields of our cash offerings an appealing haven for investors," said J. Christopher Donahue, president and chief executive officer.
Asset Breakdown
Equity assets were $77.3 billion, up 4% from the same period last year. Fixed-income assets were $89.8 billion, up 5% from the same period last year. Alternative/private markets assets were $20.3 billion, up less than 1% from the same period last year. Money market assets were a record $525.1 billion, up 19% from the same period last year.
Financial Summary
Revenue for Q3 2023 increased by 6% primarily due to an increase in revenue from money market assets and an increase in carried interest and performance fees. Operating expenses increased by 6% primarily due to increased compensation expenses. Nonoperating income increased by $7.1 million primarily due to an increase in investment yields due to rising interest rates.
Looking Forward
FHI will continue to focus on delivering investment solutions that help investors target a broad range of outcomes and provide equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies to more than 10,000 institutions and intermediaries worldwide.
Explore the complete 8-K earnings release (here) from Federated Hermes Inc for further details.
