Reporting results for the six months to end June 2015, the wealth manager said investment funds under management grew at an annualised growth rate of 5.1%, less than half the 12.2% level recorded in the comparable period of 2014.
This number includes organic growth of £300m, down from £400m in 2014, which the firm said reflected: “Both the considerable uncertainty that surrounded the UK general election and a tendency for UK private clients in general to allocate more of their wealth to property in the current climate.”
Overall, the firm said, combined total net funds under management grew by £700m in the first half, half the 2014 comparable amount of £1.5bn. This number was boosted by £107m in net inflows reported by the firm’s unit trust management division. While it reported £335m in redemptions over the period, these it said were more than matched by inflows.
According to Philip Howell, Rathbone Brothers CEO, the full benefit of the acquisitions made in 2014, is reflected in the latest set of results. And, he added: “In a period when markets made little progress, we continued to grow both organically and through acquisition.”
However, the firm said: “As expected, our overall organic growth rate has been softened this year by recently-arrived teams whose priority is their existing clients rather than pursuing new business. In light of the size of acquisitions made in 2014, this has been a significant factor this half year. Adjusting for this, we estimate that the annualised net organic growth rate would be 3.2%.
During the period, he pointed out, the firm added 13 investment professionals and opened an office in Glasgow and the group said, it plans to make some key additions to its newly developed private office service in the second half of the year. A decision on whether or not to exercise its option to acquire the remaining part of Vision Independent Financial Planning Limited is expected to be made before the end of September.
On the income front, net commission income grew 11.9% to £26.3mm while net interest income increased 25.0% to £5.5m. At the same time, operating expenses rose 15.7% year on year on the back of increased fixed staff costs.
As a result, underlying profit before tax for the first six months of 2015 rose 27% to £37.2m and underlying earnings per share came in at 62.4p.
Looking ahead, the firm expects to see its revenue margin rise by around 3 basis points on around £12bn in existing funds under management as it amends the fee schedules for some existing private clients to bring them into line with the fee-only rate implemented for new private clients at the beginning of the year.
It adds, while it remains cautiously optimistic about the future, it does expect to see continued volatility in financial markets in the second half of 2015, as a number of geo-political risks remain.
