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T. Rowe Price's AUM grows 6.3% YOY in Q4'16

T. Rowe Price Group Inc. reported fourth-quarter 2016 net income allocated to common shareholders of $371.4 million, or $1.50 per share, up from $298.5 million, or $1.17 per share, in the year-ago period.

Adjusted net income attributable to the company totaled $304.7 million, or $1.21 per share, versus $277.2 million, or $1.07 per share, in the 2015 fourth quarter.

The S&P Capital IQ consensus normalized EPS estimate for the quarter was $1.41.

The company recognized in fourth-quarter operating expenses an insurance recovery of $100 million before taxes, or 24 cents after-tax EPS. The recovery was a partial offset to the $166.2 million nonrecurring operating charge related to the Dell Inc. appraisal rights matter recorded in the second quarter of 2016.

Net revenues for the quarter increased to $1.09 billion from $1.05 billion in the prior-year quarter. Investment advisory revenues climbed to $966.8 million from $926.0 million in the year-ago period.

Assets under management totaled $810.8 billion at Dec. 31, 2016, an increase of 6.3% from $763.1 billion at Dec. 31, 2015. The company recorded net cash outflows after client transfers of $5.0 billion in the quarter, largely attributable to institutional and intermediary clients reallocating to passive investments. The trend to passive also impacted the net cash flows originating in the the company's target-date retirement portfolios. These portfolios were the source of net cash outflows of $1.9 billion in the fourth quarter of 2016.

"The trend to passive has been persistent and has accelerated in recent years," President and CEO William Stromberg said in a statement. "We cannot predict when it will reach a new equilibrium."

The company repurchased 2.0 million shares at a cost of $130.0 million during the fourth quarter.

For the full year 2016, the company reported net income allocated to common shareholders of $1.19 billion, or $4.75 per share, down from $1.21 billion, or $4.63 per share, in 2015. Adjusted net income attributable to the company came in at $1.15 billion, or $4.49 per share, versus $1.16 billion, or $4.39 per share, in 2015.

The S&P Capital IQ consensus normalized EPS estimate for 2016 was $4.59.