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April 24 (Bloomberg) -- T. Rowe Price Group Inc., the money manager that has reported a profit every quarter since going public in 1986, said first-quarter earnings rose 25 percent as retirement savers helped boost assets.

Net income increased to $301.1 million, or $1.12 a share, from $240.1 million, or 91 cents, a year earlier, the Baltimore-based company said today in a statement. Earnings beat the $1.03 average estimate of 10 analysts in a Bloomberg survey.

T. Rowe has relied on individual investors saving for retirement and rising stock-market valuations to bolster assets for much of the past year as it struggled with withdrawals by institutional clients. Retail deposits once again drove asset gains, and institutions added money for the first time in two years. Assets rose 2.7 percent from the prior quarter to $711.4 billion.

“The inflows in institutional were directionally positive, though clearly not robust,” James Shanahan, an analyst who covers the company at Edward Jones & Co. in St. Louis, said in a telephone interview. Shanahan expected T. Rowe to earn $1.03 a share.

The shares rose 0.8 percent to $81.82 at the close of trading in New York. T. Rowe has dropped 2.3 percent this year, compared with a 5.6 percent drop for the Standard & Poor’s 18-company index of asset managers and custody banks.

Investors Added

Investors added $8.8 billion in the first three months of 2014, including $6 billion to target-date retirement funds and trusts. Market appreciation and income boosted assets by $10.2 billion as the Standard & Poor’s 500 Index of large U.S. stocks advanced 1.3 percent during the quarter. The index jumped 19 percent in the year ended March 31.

Institutional and other large clients deposited about $400 million, after seven consecutive quarters of withdrawing money, Shanahan said. Those customers had pulled about $22.2 billion in 2013, according to the company.

“Sales to institutions have been relatively consistent,” Chief Executive Officer James Kennedy said today in a telephone interview. “It’s the redemptions that have been sometimes surprising.”

Kennedy said deposits and withdrawals since the end of March were “consistent with what we saw in the first quarter.”

Higher assets drove investment management fees up 18 percent, helping revenue increase 17 percent in the quarter to $954.6 million. Expenses climbed 14 percent to $505.5 million, driven by an equivalent increase in compensation costs.

Kennedy said he expected more modest returns from equity and bond markets for the rest of this year relative to recent years despite an improved macroeconomic outlook in the U.S. and globally.

“Valuations are relatively full, so I would expect the market base will grow in line with GDP growth,” he said.

BlackRock Inc., the world’s largest asset manager, said on April 17 that its first-quarter net income climbed 20 percent to $756 million. Investors deposited a net $27 billion.

To contact the reporter on this story: Christopher Condon in Boston at

To contact the editors responsible for this story: Christian Baumgaertel at Pierre Paulden

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