BlackRock Inc , the world's largest asset manager, said first-quarter profits were steady, bolstered by strong inflows into its popular iShares exchange-traded fund business.

But despite the inflows and booming equity markets during the first quarter, revenue at New York-based BlackRock declined $33 million, or 1 percent, to $2.2 billion, the firm said on Wednesday. Investors continued to favour the firm's indexed funds over actively managed accounts, which typically generate higher fees, though not necessarily higher profit margins.

Chief executive Laurence Fink kept a tight hand on expenses. Even as BlackRock rolled out a new global ad campaign around the slogan Investing for a New World, Fink cut operating expenses by $50 million, or 3 percent, to $1.4 billion on lower office occupancy, fund and compensation costs.

Net income increased to $572 million, or $3.14 per share, from $568 million, or $2.89 per share, in the same quarter a year before.

Assets under management at BlackRock totalled $3.68 trillion, up 5 percent during the quarter and 1 percent from a year earlier.

Customers withdrew a net $10.3 billion from long-term funds; but excluding a single, previously announced withdrawal of $36 billion from an indexed fixed income account, BlackRock said it had inflow of $25.7 billion. Just in iShares alone, customers added a net $18.2 billion, a 74 percent increase from the same quarter last year. Over half the total went into bond ETFs.

The flows reflected a preference for BlackRock's indexed offerings. For example, investors added $7.4 billion to stock index funds and withdrew $4.5 billion from active stock funds.

Profit per share increased 9 percent even as net income rose less than 1 percent. BlackRock's number of fully diluted shares outstanding declined to 182 million from 194 million a year earlier.

Excluding the costs of some compensation plans and some other expenses, the firm earned $3.16 per share. On that basis, analysts on average had expected $3.04, according to Thomson Reuters I/B/E/S.

Shares of BlackRock, partially owned by PNC Financial Services Group Inc
and Barclays Plc , gained 2 percent to close at $201.81 on Tuesday on the New York Stock Exchange. Through Tuesday, the shares had gained 12 percent this year, compared with a 10 percent gain in the S&P 500 index <.SPX>.

(Reporting By Aaron Pressman; Editing by Gerald E. McCormick, Dave Zimmerman)