Clients pulled out £9.5 billion in net money last year.
UK-listed Schroders, which last year entered a wealth management joint venture with Lloyds Banking Group and has also recently bought a Singapore-based business, today said that 2018 net income before one-off items rose by 3 per cent from 2017 to £2.124 billion ($2.8 billion).
Meanwhile, pre-tax profit before exceptional items fell by 5 per cent to £761.2 million; pre-tax profit fell by 15 per cent to £649.9 million.
Explaining the results, Schroders said that the accounting benefit it took in 2017 from the treatment of deferred compensation partially reversed through 2018 and performance fees fell from the “unusually high levels” generated in the prior year. The firm’s cost/income ratio remained below its long-term target at 64 per cent. Assets under management and administration fell by 6 per cent to £421.4 billion from a year before. Clients took out a net £9.5 billion, versus making net inflows of £9.6 billion in 2017.
Investors appeared unimpressed by the figures. Shares in Schroders fell 5.5 per cent at the close of London trade at 2606 pence per share.
“Outflows were generally from lower margin business while there was continued demand for higher margin strategies, including within our private assets and alternatives capabilities,” the firm said, noting that net operating revenue margin remained unchanged at 47 basis points.
“We continued to invest for growth and saw good progress in a number of strategically important areas. There was strong demand from wealth management clients and we announced that we would be entering into a partnership with Lloyds Banking Group to expand our proposition in the UK savings market, under the brand of Schroders Personal Wealth,” Peter Harrison, chief executive, said.