Rathbones Group PLC on Wednesday reported a fall in funds under management as its single-strategy funds suffered net outflows during a tough 2022 that ‘few of us correctly predicted’.
The investment manager also reported a profit fall. It lifted its payout, however, due to its ‘robust balance sheet’.
Pretax profit fell by a third in 2022 to £64.1 million from £95.0 million in 2021. Profit was hurt by a 15% rise in total operating expenses to £391.8 million. Rathbones pumped £16.3 million into its ‘digital transformation’ last year. No such costs were recorded in 2021.
Operating income, however, climbed 4.6% to £455.9 million from £435.9 million. The top-line figure includes investment management fee income, commission income and net interest income.
Rathbones declared a final dividend of 56 pence per share, up 3.7% from 54p. Its total payout for 2022 amounted to 84p, also up 3.7%, from 81p.
Funds under management & administration as of December 31 decreased 12% to £60.2 billion, from £68.2 billion the year prior. The figure was in line with those provided in a January trading statement.
‘As I look back to the start of 2022, few of us correctly predicted the full global economic impacts of the aftermath of the coronavirus pandemic, together with implications of the unprovoked war in Ukraine. With UK inflation at its highest in 40 years (more than double the rate it was when I wrote this statement last year), the resulting ’cost-of-living’ crisis has highlighted even more the importance of the work we do for our clients and all our stakeholders,’ Chair Clive Bannister said.
Its single-strategy funds suffered net outflows of £400 million in 2022, compared to inflows of £1.2 billion in 2021.
There were signs of positivity as the year concluded, however.
Rathbones said: ‘As the year progressed, we saw a reduction in the level of outflows as investors began to adopt higher risk positions as inflation and interest rate fears abated somewhat.’
Market volatility hit its funds under management by £8.4 billion in 2022, swinging from favourable market moves of £5.9 billion in 2021.
Looking ahead, it said: ‘Investment in our medium-term strategy will continue in 2023, to complete the integration of Saunderson House and the investment in our digital programme. We remain on track to invest a total of £40 million in this programme, continuing to target a return to more usual ’higher 20s‘ underlying operating margin levels by the end of 2024, as benefits from recent acquisitions and planned investment are achieved.’
Its underlying operating margin in 2022 weakened to 21.3% from 27.7% in 2021. That outcome was in line with expectations, however, ‘after planned investment in change and technology’.
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