St James’s Place net inflows fall

St James’s Place (STJ) has always been a business of wide moats and these results, despite the huge complexity of running a hybrid asset manager and life insurance company, showed the willingness of its customer base to pay high fees for the company’s services, even though many cost-effective alternatives exist. Despite the strange quirks of its insurance business on the reported results, St James’s Place still delivered where it counts.

Wealth management remained the driving force behind the results, and the company’s ability to bring a dash of London glamour to its services across the country meant that fees from this segment grew 7 per cent to £1.03bn, while post-retail distribution review advice fees were over £40mn higher at £987mn.

That performance was commendable given that both net inflows and funds under management slowed during the year. Inflows were £1.2bn lower at £9.8bn, while funds under management (which are subject to asset price falls) eased back to £148bn, down 4 per cent. Market conditions, plus rising interest leading to customers depositing more cash in banks, were the main reasons for the falls. Interestingly, despite widespread cost inflation, St James’s Place managed to limit its controllable expenses to rises of 5 per cent.

St James’s Place shares trade on a 2023 cash profit price/earnings ratio of 15, implying a full-year dividend yield of 5 per cent, according to broker Numis’s forecasts. We tend to rate the business, despite its complexity, but we remain cautious about the direction of net inflows. For the time being, hold.

Last IC view: Hold, 1,217, 29 Jul 2022