London-listed investment manager Rathbones Group has just released its interim financial results for the first half of 2023.

Rathbones' funds under management and administration (FUMA) grew 2.7 per cent to £60.5 billion ($78 billion) in the first six months of 2023, up from £58.9 billion a year earlier.

Underlying net operating income totalled £238 million in the first six months of this year, an increase of 2.6 from the £231.9 million in the corresponding period in 2022, the firm said in a statement.

Although gross organic inflows were strong in the period, representing an annualised growth rate of 11.4 per cent of opening FUMA, outflows were elevated reflecting net losses in the firm’s charities business. Total discretionary and managed net inflows were consequently £0.2 billion, compared with £0.6 billion a year earlier, indicating an annualised growth rate of 0.7 per cent, down from 2.3 per cent a year ago, the firm continued. 

"After a more positive last half of 2022, the first half of 2023 was a challenging period for investors as markets digested material changes in inflation expectations and interest rates,” Paul Stockton, group chief executive of Rathbones, said.

“Client retention rates remain high at 92.8 per cent, albeit economic conditions have resulted in a marginally higher incidence of low value outflows from accounts that remain with us,” Stockton continued. 

“We are grateful for the strong support from shareholders who in June 2023 voted convincingly in favour of the Investec Wealth & Investment combination. Integration plans are progressing well, and we expect to complete towards the end of the third quarter of 2023,” he said. The enlarged Rathbones Group will have about £100 billion in funds under management and administration, another example of M&A consolidation in the wealth management industry – see here.

Meanwhile, underlying profit before tax at Rathbones totalled £50.7 million in the first six months of 2023, compared with £50 million a year earlier, and statutory profit before tax reached £26 million, compared with £32.6 million in 2022, the firm added. Those figures included £11.2 million of costs relating to the merger with UK-based Investec W&I, mainly comprising professional and legal fees.

Rathbones has also increased its interim dividend by 3.6 per cent to 29p, compared with 28p a year earlier. The record date will be 4 August 2023 and the dividend will be paid on 25 August 2023. In view of the merger with Investec W&I, and to ensure that dividends paid remain appropriately aligned to earnings, the firm expects to bring forward payment of a portion of the final dividend for FY23 to shareholders on the register shortly prior to the completion of the combination by way of a second interim dividend. The final dividend in respect of FY23 will then be reduced accordingly. 

The firm also said that Sarah Gentleman is stepping down as chair of the Remuneration Committee after six years to focus on her role as senior independent director. She will be replaced by non-executive director Dharmash Mistry in September, subject to regulatory approval.