Rathbones posts drop in full-year profits but net inflows hold up

Rathbones reported a big drop in full-year profits and a reduction in funds under management and administration, although net inflows held up.

Commenting on the results, chief executive officer, Paul Stockton, said that the UK wealth and asset management sector remained "fundamentally attractive" thanks to the underlying long-term trends.

"Our financial results reflect the difficult market conditions faced by many investors in 2022, but also the very deliberate investment in technology we have committed to, which will provide critical support to the delivery of the personal service we offer and improve our investment capability."

For the year ending on 31 December, the group posted a

19.6% drop in full-year underlying profit before tax to reach £97.1m.

Income was ahead by 4.6% but offset by a 13.8% jump in operating expenses.

Earnings per share meanwhile came in at 83.6p for a 37.4% drop versus 2021.

Total Funds Under Management and Administration at the investment and wealth management outfit fell by 11.6% over the year to reach £60.2bn, but discretionary and managed net inflows were "resilient", the group said, growing by £1.3bn or 2.6%.

The firm also reiterated a goal to return to "a more usual higher 20s underlying operating margin by end 2024 as the benefits of recent acquisitions and planned investments were achieved.

A final dividend of 56.0p per share was declared for 2022, against 54.0p for the year before, taking the total dividend payout per share from 81.0p to 84.0p.

Peel Hunt's Stuart Duncan said that Rathbone's results were in line with his estimates, labelling the company's performance "resilient".

"We remain conscious that market sentiment is fragile and consider it is too early in the year to change forecasts (the next key billing date is at the start of April)," he added.

"We therefore continue to forecast PBT/EPS of £103m/132p (consensus stands at £98m/126p). The shares are now little changed over the last three months, and trade on a December 2023E EV/EBIT of c.11x, whilst yielding 4.5%. We retain our 2,350p target price and Buy recommendation."

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