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Schroders Wealth Arm's Profits Swell In 2017

Robbie Lawther

2 March 2018

Global financial services firm has logged a 20 per cent profit before tax rise in its wealth management arm, from £56.3 million in 2016 to £67.4 million.

The wealth arm’s net operating revenue increased by 20 per cent to £266.9 million (2016: £223.3 million), including performance fees of £0.9 million (2016: £2.4 million). 

The firm’s assets under management in wealth management stood at £45.9 billion in December 2017 (2016: £39.6 billion), and assets under administration increased by 22 per cent to £11.3 billion (2016: £9.3 billion).

Wealth management clients introduced £2 billion of net new money in 2017 (2016: net outflows of £300 million). There was client demand from each division within wealth management, with £1.1 billion through the Cazenove Capital business and £900 million through Benchmark Capital.

The net operating revenue margin before performance fees was 61 basis points (2016: 65 basis points), with the reduction primarily due to the full year impact of Benchmark Capital.

Asset management
Schroders’ asset management arm logged a 24 per cent rise in profit before tax to £688.7 million (2016: £553.9 million).  

Assets under management at the end of December stood at £389.8 billion (31 December 2016: £346.4 billion).  The firm’s asset management operation generated net inflows from clients of £7.6 billion (2016: £1.4 billion).

Net operating revenue increased by 17 per cent to £1.7 billion (2016: £1.5 billion). Schroders’ AM performance fees weighed in at £77.5 million (2016: £38.8 million). 

The net operating revenue margin before performance fees for asset management was 45 basis points (FY 2016: 46 basis points).

The group’s profit before tax was up 23 per cent to £760.2 million (2016: £618.1 million). Net income before exceptional items rose by 15 per cent to £2.1 billion (2016: £1.8 billion).

Assets under management and administration increased by 13 per cent to £447 billion (31 December 2016: £395.3 billion) The firm reported net inflows of £9.6 billion (2016: £1.1 billion).

Full-year dividend was up 22 per cent to 113.0 pence per share (2016: 93.0 pence).

Schroders revealed that it paid £72 million to acquire the discretionary wealth management business of C Hoare & Co.

The acquisition, which was announced in October 2016, contributed £2.5 billion in assets under management to Cazenove Capital, the wealth management arm of the business. The deal completed in February 2017.

In the results, the company also revealed that it acquired Winchester-based wealth management boutique Chilcomb Wealth for a consideration of £1.7 million, on 1 November 2017.

Board changes
The firm confirmed that Lord Howard of Penrith will be stepping down from the company’s board on 26 April.

He had been on the board for over nine years, and will be succeeded by Ian King as senior independent director. King had been a non-executive director since January 2017.

In addition, Nichola Pease will replace Howard as chairman of the remuneration committee. She has been a member of the committee since 2014 and was appointed as a non-executive director in September 2012.

“Focusing on the longer term, we have continued to see good progress in a number of key strategic areas, with the expansion of our investment capabilities in private assets, an improvement in wealth management and strong underlying momentum in North America,” said Peter Harrison, group chief executive. “There are headwinds facing the industry but we continue to believe that there remain opportunities for growth. Our diversified business model, ongoing focus on costs, strong financial position and willingness to invest mean that we continue to be well placed.”