Cazenove Capital Management saw its pre-tax profits plummet by more than 40 per cent in 2010, from £23.4 million ($37.9 million) at the end of 2009 to £13.9 million, despite a 30 per cent increase in revenues at its wealth management division, according to the firm’s 2010 financial results.

After tax, the UK-based stockbroker and investment bank’s profits fell by slightly less, down from £18 million in 2009 to £11.3 million at the end of 2010 – a drop of 37.4 per cent.

Excluding performance fees, overall revenues at the firm actually increased thanks to higher revenues from wealth management, but Cazenove’s profitability was hit particularly hard by a 96 per cent fall in hedge fund performance fees, from £14.7 million in 2009 to just £0.6 million at the end of 2010.

Profits at the firm were also dented by a £2.6 million pre-tax payout for the Financial Services Compensation Scheme levy, which provides compensation to customers if a firm is unable, or likely to be unable, to pay claims against it. Cazenove’s obligation was just £44,000 the year before.

David Mayhew, chairman of Cazenove, described the levy as “unexpected and undeserved”. “The increases in the levels of payments required from our sector were very significant and shocked many of the firms involved, our company included,” he said in a statement.

However, despite these difficulties, overall revenues at Cazenove went up from £92.5 million in 2009 to £97.3 million - an increase of 5.2 per cent - and the firm’s assets under management increased to £15.4 billion, £11.1 billion of which are attributable to its wealth management arm.

Mayhew says earnings before interest, tax, depreciation and amortisation at the firm actually grew from £27.1 million in 2009 to £30.5 million in 2010, a rise of 12 per cent.