Acquisitions boost Schroders

Total assets of £263bn were boosted by the purchases of Cazenove Capital, which at the year-end had £23.8bn of funds under management, and of US fixed-income specialist STW Fixed Income, with £5.7bn. Net inflows were down but still brought in £7.9bn of funds, and the balance of assets growth came from a positive investment return, which also boosted performance fee income from £28.5m to £80.6m. With more assets on board, management fee income also rose 25 per cent to £1.53bn. And while net new business was marginally lower at £9.4bn, demand was well diversified both geographically and between IFAs and institutional investors.

The Cazenove acquisition helped revive the private-banking division, where net revenue jumped 59 per cent to £150m, with underlying profits nearly three times higher at £34.3m. However, most of this disappeared after taking into account firstly the £30.9m of costs associated with the Cazenove acquisition, and secondly a provision relating to a possible liability involving accounts held in Swiss banks that may not have been compliant with US tax laws. And the loss of two large mandates in the second half meant that net outflows from private banking increased from £300m to £1.5bn.

Analysts at Numis Securities are currently forecasting underlying pre-tax profits of £508m and EPS of 145p (2013: 150p), but could upgrade estimates by as much as 5 per cent.