A combination of organic growth and acquisitions boosted funds under management for Rathbone Brothers from £10.5bn to £13.1bn, back to the levels seen in 2007, but profits were dented by a weak performance on the unit trust management side and a fall in interest income.
With interest rates falling to nominal levels, a decline in net interest income on client funds from £31m to £18.5m was to be expected. On the unit trust side, net operating income fell from £12.5m to £7.7m, with markets particularly weak in the first quarter of the year.
Net fee income on the investment management side showed a modest 2 per cent improvement to £55.8m, though, thanks to the positive net inflow of funds. However, as a result of the fall in interest income, underlying costs as a ratio of income rose from 62.8 per cent to 69.1 per cent.
Looking ahead, Rathbone has yet to reap the full benefits of an agreement in October for the transfer of certain discretionary investment management assets from Lloyds Banking. Two-thirds of its clients have already agreed to switch to Rathbone, bringing assets of £500m.
Broker Numis expects full-year pre-tax profits of £34.6m and EPS of 55.9p (from £29.6m and 48.7p in 2009).
| RATHBONE BROTHERS (RAT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 820p | MARKET VALUE: | £354m | |
| TOUCH: | 820-823p | 12-MONTH HIGH: | 987p | LOW: 668p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 423p | |||
| Year to 31 Dec | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2005 | 35.3 | 60.1 | 30.0 |
| 2006 | 44.7 | 76.6 | 35.0 |
| 2007 | 47.3 | 87.9 | 41.0 |
| 2008 | 42.3 | 67.6 | 42.0 |
| 2009 | 29.5 | 46.9 | 42.0 |
| % change | -30 | -31 | - |
Ex-div: 3 Mar Payment: 31 Mar | |||
