Schroders half-year profits rise on AuM and new inflows

8th Aug 2013 07:04

Schroders achieved a 25 per cent increase in pre-tax profit to 221.7m pounds in the first half as assets under management (AuM) and net inflows increased. AuM was up 21% to £235.7bn, compared to a year earlier, while net inflows jumped 67% to £4.5bn.The fund manager said financial markets made significant gains in the first five months of 2013 with investors continuing to favour equities over low-yielding bonds and cash. In late May through June, the group saw a sharp correction in markets as the US Federal Reserve voiced its intention to unwind the quantitative easing programme and as concerns grew over the slowdown in China. Asset Management net revenue increased 19% to £585.7m, including performance fees of £11.8m. Net revenue margins, excluding performance fees, were unchanged at 54 basis points. Profit before tax was up 21% to £211.8m.Net revenues in the Private Banking business rose modestly to £53.5m from £52.6m and profit before tax edged up to £10.6m from £10.4m. Withdrawals from continuing client relationships led to net outflows of £0.3bn in the first half which offset positive business flows. The acquisition of Cazenove Capital's wealth management business, completed in July, is expected to materially increase the scale of the group's Private Banking business in the UK.In April, the company also completed the acquisition of STW to strengthen its fixed income business and broaden the scope of its institutional division in the US. The integration of STW progressed well in the first half. The company recommended an interim dividend of 16p per share, up 23% from the prior year, reflecting the firm's strong results and confidence in long-term growth prospects.Looking ahead, Old Mutual is wary that the prospect of monetary policy being unwound is likely to weigh on markets and investor demand."However, we continue to strengthen our business in the UK and internationally and we believe this will lead to further opportunities for growth in the long term," the company concluded. RD