Rathbone boosts funds

Total funds under management grew by 4 per cent to £28.3bn, while the company's net commission income grew by 11.9 per cent to £26.3m, following a particularly strong first quarter. Net interest income was up 26 per cent at £5.5m, reflecting higher deposit levels as average liquidity rose from £1.1bn to £1.6bn. Fees from advisory services were flat at £7.3m, although this included a non-recurring gain of £600,000 on the repayment of loan notes.

Underlying operating expenses rose by 15.7 per cent to £79.6m, mainly as a result of a rise in employee numbers following acquisitions made last year, but also reflecting higher variable staff costs as a result of increased profitability. Predictably, overall organic growth slowed to an annualised rate of 2.8 per cent, as newly arrived investment teams concentrated on retaining their existing clients at the expense of chasing new business. Without this, Rathbone reckons organic growth would have been 3.2 per cent.

The full effects are unclear as yet, but Budget measures, including a banking surcharge and restrictions on the deduction of amortisation of intangible assets, could affect full-year figures.

Analysts at Numis Securities are forecasting full-year pre-tax profits of £71.6m and EPS of 116.3p (from £61.5m and 101.6p in 2014).