(Bloomberg) -- Amundi SA posted surprise outflows in the first quarter, even as the firm’s expense controls helped it post higher-than-expected profit.

Europe’s largest asset manager said clients pulled €11.1 billion ($12.2 billion) in the three months through March, according to a statement Friday, while analysts surveyed by Bloomberg News estimated about €14 billion of inflows. 

Several of the firm’s institutional and insurance mandates recorded withdrawals as traditional life insurance products lost their appeal amid rising markets and interest rates. Also, Amundi saw one sovereign client pull more than €3 billion from its index-management products. 

The outflows were focused on market segments with “low, even very low margins,” Chief Executive Officer Valerie Baudson said on a call with reporters. The sovereign client’s exit has “almost zero impact on Amundi’s income,” she said.

Amundi shares remained little changed in early Paris trading Friday, and were trading up 0.17% at €58.60 at 9:09 a.m.

The outflows contrast with the performance at some of Amundi’s competitors, which benefited from rising markets after a volatile 2022. In the first quarter, the Euro Stoxx 50 index gained 14%, while the S&P 500 increased 7%.

In the US, BlackRock Inc. saw clients increase their deposits as they sought cover following the collapse of several US regional banks, driving its assets above $9 trillion. In Europe, Deutsche Bank AG’s asset-management arm, DWS Group — which is still being investigated for allegedly misrepresenting its ESG work — reported inflows that beat analysts’ estimates earlier this week.

Still, Amundi’s adjusted net income, at €300 million, provided a positive surprise for analysts, who expected it at almost €270 million. In particular, the firm managed to contain its cost base more effectively than anticipated despite rampant inflation. At 53.6%, the firm’s adjusted cost-to-income ratio remained above the 53% objective Amundi set for itself for 2025, but came in below the 55.5% that analysts anticipated. 

Benefiting from favorable market and foreign-exchange effects, Amundi’s assets under management increased slightly for the second quarter in a row, gaining 1.6% to €1,934 billion. 

Asia Assets

In Asia, a key region for Amundi where it aims to have €500 billion in assets by 2025, the firm saw clients pull €4.8 billion over the period, bringing its total local assets to €371 billion at the end of March, 4% lower than a year earlier.

Outflows in Amundi’s wealth-management joint venture with Bank of China were caused by increased competition from local bank savings products, according to Baudson. Also, some clients chose not to reinvest their cash this year after the disappointing performance of several asset-management products across the sector as interest rates rose in 2022, she said. 

“This group of factors is rather circumstantial, and does not call into question in any way, I again insist, my conviction of the importance for Amundi to be in the Chinese market,” Baudson said.

As part of its 2025 strategic plan, Amundi earmarked €2 billion in excess capital through that year for exceptional payouts or mergers and acquisitions. The firm, which grew into Europe’s largest money manager through a string of acquisitions, is bidding for the asset-management arm of Thailand’s Kasikornbank Pcl, Bloomberg News has reported. 

(Updates with shares in fifth paragraph)

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