During the three months the firm generated net new business of £2.7bn, comprised of £4.5bn in institutional inflows, offset by outflows of £1.8bn from its intermediary business. These outflows, Schroders said were the result of the increased market volatility which impacted retail demand.
The firm’s asset management division generated net operating revenue of £335.8m marginally lower than the first quarter of 2015. Pre-tax profit came in at £124.4m, down from £130.7m in the comparable period in 2015.
Wealth management was roughly flat, at £51.9m, while net profit was marginally higher at £13.7m, while the group segment reported a loss of £0.2m, after accounting for exceptional items of £1.1m.
In a note out following the results, RBC Capital Markets said the numbers were marginally higher than the consensus estimates, resulting in: “A surprisingly respectable set of results, which is pleasing given the market backdrop.
It added: “Even though we have a positive rating on the shares, we feared the quarter would be much worse given the market backdrop…While we still expect a slight moderation in 2016 consensus given business mix changes, we do not believe it will be as large as originally feared.”
Liberum was perhaps a little less excited saying in a note that while the numbers met expectations, they offered little to excite. But, it added: “As an aside, the retail market looks like it has been tough in Q1’16 according to IMA stats. This could dampen sentiment towards the likes of Hargreaves Lansdown (HOLD). We do not see major moves to consensus forecasts but if anything would see the pressure marginally to the downside.”
Numis analyst David McCann, was more bullish stating that the firm’s defensive qualities and diversification make it its top asset management pick.
“While it is a little dull and boring, we see this as a positive for long term investors. We think growth in line with or slightly better than the sector average is reasonable over the long term. We believe it is likely to outperform, possibly significantly, in weaker markets. We continue to regard Schroders as a core sector holding for the long term.”
Shares in the asset management firm were down 1.1% in morning trade.
